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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-5587
READING & BATES CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 73-0642271
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
901 Threadneedle, Suite 200, Houston, Texas 77079
(Address of principal executive offices)(Zip Code)
(713)496-5000
(Registrant's telephone number, including area code)
NONE
(Former name, former address and former fiscal year, if changed since
last report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X
No___
NUMBER OF SHARES OUTSTANDING OF REGISTRANT'S COMMON STOCK
AT JULY 14, 1995 : 59,758,923
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<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Company or Group of Companies for Which Report is Filed:
Reading & Bates Corporation and Subsidiaries
The financial statements for the three and six month periods ended June
30, 1995 and 1994, include, in the opinion of the Company, all
adjustments (which consist only of normal recurring adjustments)
necessary to present fairly the financial position and results of
operations for such periods. The financial data for the three and six
month periods ended June 30, 1995 included herein have been subjected to
a limited review by Arthur Andersen LLP, the registrant's independent
public accountants, whose report is included herein. Results of
operations for the three and six month periods ended June 30, 1995 are
not necessarily indicative of results of operations which will be
realized for the year ending December 31, 1995. The financial statements
should be read in conjunction with the Company's Form 10-K for the year
ended December 31, 1994.
READING & BATES CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(in thousands)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1995 1994
---------- -----------
(unaudited)
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 40,386 $ 42,319
Accounts receivable:
Trade, net 40,956 34,430
Other 4,023 2,952
Materials and supplies inventory 9,516 8,421
Other current assets 2,014 4,038
--------- ---------
Total current assets 96,895 92,160
--------- ---------
PROPERTY AND EQUIPMENT:
Drilling 787,280 775,189
Other 6,454 6,270
--------- ---------
Total property and equipment 793,734 781,459
Accumulated depreciation
and amortization (302,864) (291,140)
--------- ---------
Net property and equipment 490,870 490,319
--------- ---------
DEFERRED CHARGES AND OTHER ASSETS 3,916 3,584
--------- ---------
TOTAL ASSETS $ 591,681 $ 586,063
========= =========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
READING & BATES CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(in thousands)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1995 1994
--------- -----------
(unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES:
Short-term obligations $ 20,177 $ 12,222
Long-term obligations due
within one year 43,476 44,099
Accounts payable - trade 10,365 12,398
Accrued liabilities 16,419 16,763
Income taxes 6,489 6,580
--------- ---------
Total current liabilities 96,926 92,062
LONG-TERM OBLIGATIONS 81,286 81,937
OTHER NONCURRENT LIABILITIES 43,718 42,958
DEFERRED INCOME TAXES 2,977 3,075
--------- ---------
Total liabilities 224,907 220,032
--------- ---------
COMMITMENTS AND CONTINGENCIES
MINORITY INTEREST 44,436 43,871
--------- ---------
STOCKHOLDERS' EQUITY:
Preferred stock, $1.00 par value 2,990 2,990
Common stock, $.05 par value 2,988 2,986
Capital in excess of par value 337,856 337,406
Accumulated deficit from March 31, 1991 (20,351) (19,984)
Other (1,145) (1,238)
--------- ---------
Total stockholders' equity 322,338 322,160
--------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 591,681 $ 586,063
========= =========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
READING & BATES CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------ ------------------
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
OPERATING REVENUES $ 50,382 $ 39,493 $ 98,357 $ 81,850
-------- -------- -------- --------
COSTS AND EXPENSES:
Operating expenses 31,234 30,973 63,145 59,598
Depreciation and amortization 7,380 7,121 14,813 14,041
General and administrative 4,354 4,555 8,435 8,970
-------- -------- -------- --------
Total costs and expenses 42,968 42,649 86,393 82,609
-------- -------- -------- --------
OPERATING INCOME (LOSS) 7,414 (3,156) 11,964 (759)
-------- -------- -------- --------
OTHER INCOME (EXPENSE):
Interest expense (3,939) (3,204) (7,753) (6,317)
Interest income 480 1,052 905 1,803
Other, net (472) (367) (682) (759)
-------- -------- -------- --------
Total other income
(expense) (3,931) (2,519) (7,530) (5,273)
-------- -------- -------- --------
INCOME (LOSS) BEFORE INCOME
TAX EXPENSE AND MINORITY
INTEREST 3,483 (5,675) 4,434 (6,032)
INCOME TAX EXPENSE 569 1,174 1,732 2,082
-------- -------- -------- --------
INCOME (LOSS) AFTER INCOME
TAX EXPENSE AND BEFORE
MINORITY INTEREST 2,914 (6,849) 2,702 (8,114)
MINORITY INTEREST (482) 811 (639) 585
-------- -------- -------- --------
NET INCOME (LOSS) 2,432 (6,038) 2,063 (7,529)
DIVIDENDS ON PREFERRED STOCK 1,215 1,215 2,430 2,430
-------- -------- -------- --------
NET INCOME (LOSS) APPLICABLE
TO COMMON STOCKHOLDERS $ 1,217 $ (7,253) $ (367) $ (9,959)
======== ======== ======== ========
NET INCOME (LOSS) PER
COMMON SHARE $ .02 $ (.13) $ (.01) $ (.18)
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
READING & BATES CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-------------------
1995 1994
-------- -------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income (loss) $ 2,063 $ (7,529)
Adjustments to reconcile net income
(loss) to net cash provided
by operating activities:
Depreciation and amortization 14,813 14,041
Loss (gain) on dispositions of
property and equipment 335 (710)
Recognition of deferred expenses 4,609 1,806
Minority interest in income
(loss) of consolidated subsidiaries 639 (585)
Changes in assets and liabilities:
Accounts receivable, net (7,435) 1,553
Materials and supplies inventory (1,095) (572)
Deferred charges and other assets (2,979) (2,951)
Accounts payable - trade (2,033) 3,254
Accrued liabilities (874) 663
Accrued interest 2,690 2,491
Accrued lease expense - (2,335)
Deferred revenue - 3,543
Income taxes (91) 193
Deferred income taxes (98) 131
Other, net 1,026 1,942
-------- --------
Net cash provided by
operating activities 11,570 14,935
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Dispositions of property and equipment 281 436
Purchases of property and equipment (15,862) (8,613)
Business acquisitions (356) (4,502)
Increase in investments in and advances
to unconsolidated investees (554) (221)
-------- --------
Net cash used in investing activities (16,491) (12,900)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term obligations 12,500 -
Net proceeds from short-term obligations 7,955 4,172
Principal payments on long-term obligations (15,037) (10,117)
Dividends paid on preferred stock (2,430) (2,430)
-------- --------
Net cash provided by (used in)
financing activities 2,988 (8,375)
-------- --------
NET DECREASE IN CASH AND CASH EQUIVALENTS (1,933) (6,340)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 42,319 80,385
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 40,386 $ 74,045
======== ========
Supplemental Cash Flow Disclosures:
Interest paid $ 5,319 $ 3,404
Income taxes paid $ 1,947 $ 2,135
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
READING & BATES CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
A) COMMITMENTS AND CONTINGENCIES
LITIGATION - On March 17, 1995, an action was filed by Louis
Silverman, individually and on behalf of all other shareholders of
Reading & Bates Corporation similarly situated, against the Company
and the individual members of its board of directors in the Court of
Chancery of the State of Delaware, New Castle County. On April 7,
1995 three additional actions were filed on behalf of Congregation
Beth Joseph, Harry Lewis and Mortimer Shulman against the Company and
its directors in the Court of Chancery of the State of Delaware. In
each of the four actions, the plaintiff alleges, inter alia, that the
directors breached their fiduciary duties by rejecting the previously
announced unsolicited merger proposal made by Sonat Offshore Drilling
Inc. and by adopting the previously announced shareholder rights
plan. Each of the named plaintiffs in the four actions purports to
be an owner of the Company's Common Stock and seeks to represent a
class of shareholders of the Company who are similarly situated.
Each of the plaintiffs seeks injunctive relief, damages in
unspecified amounts and certain other relief, including costs and
expenses. The Company believes each of the plaintiff's claims in
these four actions are groundless and that the defendants have
meritorious defenses in each action. The Company intends to defend
each action vigorously.
B) LONG-TERM OBLIGATIONS
<TABLE>
<CAPTION>
(in thousands)
------------
<S> <C>
Debt obligations at December 31, 1994 $ 126,036
Proceeds from CIT Group (1) 12,500
Less cash payments (15,037)
Other 1,263
---------
Debt obligations at June 30, 1995 124,762
Less long-term obligations due
within one year (43,476)
---------
Long-term obligations at June 30, 1995 $ 81,286
=========
</TABLE>
(1) In May 1995, the Company entered into a $25 million loan
agreement with The CIT Group/Equipment Financing, Inc. (the "CIT
Group"). The terms of the loan agreement allow the Company to
receive advances (up to $25 million) from the CIT Group until
December 29, 1995 and at such date the entire $25 million is
required to be outstanding. As of June 30, 1995, the Company had
received $12.5 million and subsequent to June 30, 1995, the Company
received the remaining $12.5 million on July 17, 1995. The loan
bears interest at the one month LIBOR (6.0625% at June 30, 1995)
plus 2.5%, and interest is payable monthly. Loan principal is
repayable commencing in November 1996 in 35 equal monthly
installments of $416,666 and one payment of $10,416,690 in October
1999. The loan agreement contains covenants which require the
Company to meet certain financial conditions, including, among
others, a cash flow coverage ratio and a long-term debt to total
assets ratio, and is collateralized by vessel mortgages on two of
the drilling units owned by the Company and related assignments of
insurance and earnings.
C) OTHER NONCURRENT LIABILITIES
The components of "OTHER NONCURRENT LIABILITIES" were as follows
(in thousands):
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
-------- -----------
<S> <C> <C>
Postretirement benefit obligations $ 16,080 $ 15,950
Net liabilities associated with
discontinued operations 6,916 7,003
Pension obligations 6,808 6,994
Accrued interest expense related to the
8% Senior Subordinated Convertible
Debentures due December 1998 11,163 10,419
Other 2,751 2,592
-------- --------
Total $ 43,718 $ 42,958
======== ========
</TABLE>
D) CAPITAL SHARES
On March 15, 1995, the Company's board of directors declared a
dividend of one preferred share purchase right (a "Right") for each
outstanding share of the Company's Common Stock outstanding on March
31, 1995 (the"Record Date"). Each Right entitles the registered
holder to purchase from the Company one one-hundredth of a share of
Series B Junior Participating Preferred Stock, par value $1.00 per
share (the "Preferred Shares") of the Company at a price of $30.50,
subject to adjustment. The Rights will not become exercisable until
10 days after a public announcement that a person or group has
acquired 10% or more of the Company's Common Stock (thereby becoming
an "Acquiring Person") or the commencement of a tender or exchange
offer upon consummation of which such person or group would own 10%
or more of the Company's Common Stock (the earlier of such
dates being called the "Distribution Date"). Rights will be issued
for all shares of the Company's Common Stock issued and outstanding
on the Record Date. Until the Distribution Date, the Rights will be
evidenced by the certificates representing the Company's Common Stock
and will be transferrable only with the Company's Common Stock. In the
event that any person or group becomes an Acquiring Person, each Right,
other than Rights beneficially owned by the Acquiring Person (which
will thereafter be void), will thereafter entitle its holder to
purchase shares of the Company's Common Stock having a market value
of two times the exercise price of the Right. After any person or
group has become an Acquiring Person and prior to the acquisition by
such person or group of 50% or more of the outstanding shares of
Common Stock, the Company's board of directors may exchange each
Right (other than Rights of the Acquiring Person), in whole or in
part, at an exchange ratio of one Common Share or one one-hundredth
of a Preferred Share per Right. If after a person or group has
become an Acquiring Person, the Company is acquired in a merger or
other business combination transaction or 50% or more of its assets
or earning power are sold, each Right will entitle its holder to
purchase, at the Right's then current exercise price, that number of
shares of common stock of the acquiring company which at the time of
such transaction will have a market value of two times the exercise
price of the Right. The board of directors of the Company may redeem
the Rights in whole, but not in part, at a price of $.01 per Right at
any time prior to such time as any person or group becomes an
Acquiring Person. The Rights expire on March 31, 2005. Preferred
Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to a preferential
quarterly dividend payment equal to the greater of $1 per share or
100 times the dividend declared per Common Share. Liquidation
preference will be equal to the greater of $100 per share or 100
times the payment made per Common Share. Each Preferred Share will
have one vote, voting together with the Common Stock.
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders
Reading & Bates Corporation
We have reviewed the accompanying consolidated balance sheet of
Reading & Bates Corporation (a Delaware corporation) and Subsidiaries as
of June 30, 1995, and the related consolidated statements of operations
for the three and six month periods ended June 30, 1995 and 1994 and the
consolidated statement of cash flows for the six month periods ended June
30, 1995 and 1994. These financial statements are the responsibility of
the Company's management.
We conducted our review in accordance with standards established by
the American Institute of Certified Public Accountants. A review of
interim financial information consists principally of applying analytical
procedures to financial data and making inquiries of persons responsible
for financial and accounting matters. It is substantially less in scope
than an audit conducted in accordance with generally accepted auditing
standards, the objective of which is the expression of an opinion
regarding the financial statements taken as a whole. Accordingly, we do
not express such an opinion.
Based upon our review, we are not aware of any material modifications
that should be made to the financial statements referred to above for
them to be in conformity with generally accepted accounting principles.
Arthur Andersen LLP
Houston, Texas
July 18, 1995
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
MATERIAL CHANGES IN FINANCIAL CONDITION
On February 28, 1995, the Company announced that it had received
an unsolicited merger proposal from Sonat Offshore Drilling Inc. ("Sonat
Offshore") providing for the acquisition of 100% of the common stock of
the Company for a combination of Sonat Offshore common stock and $100
million in cash. As proposed by Sonat Offshore, the Company's
shareholders would have, at their election, received either (i) .357
shares of Sonat Offshore common stock or (ii) $7.50 of cash for each share
of the Company. To the extent that the election resulted in an under-
or oversubscription as to the $100 million of cash, a proration formula
would have been utilized. The Company engaged Morgan Stanley & Co.
Incorporated to act as its financial advisor with respect to evaluating
the Sonat Offshore proposal. On March 16, 1995, the Company announced
that its board of directors had rejected the Sonat Offshore proposal on
the basis that it was not in the best interests of the Company and its
shareholders. On April 18, 1995, Sonat Offshore announced that the
merger discussions had broken off following the rejection by the Company
of Sonat Offshore's proposal. The Company responded the same day
announcing that discussions with Sonat Offshore had not to that date
demonstrated a willingness on the part of Sonat Offshore to consider a
transaction that would be reflective of the short-term or long-term
business prospects and value of the Company. Subsequent to their
announcing their intent to break off discussions in April 1995, Sonat
Offshore initiated additional discussions in May 1995 with regard to
potential merger transactions. However, the Company feels those
subsequent discussions likewise did not result in terms that recognize
the Company's current or long-term value. The Company and Sonat
Offshore discontinued discussions in June 1995. The Company remains
willing to engage in discussions regarding possible business
combinations that would potentially strengthen its competitive position
in the offshore drilling industry and appropriately reflect the
underlying value of the Company
On March 15, 1995, the Company's board of directors declared a
dividend of one preferred share purchase right (a "Right") for each
outstanding share of the Company's Common Stock outstanding on March 31,
1995 (the "Record Date"). Each Right entitles the registered holder to
purchase from the Company one one-hundredth of a share of Series B
Junior Participating Preferred Stock, par value $1.00 per share (the
"Preferred Shares") of the Company at a price of $30.50, subject to
adjustment. The Rights will not become exercisable until 10 days after
a public announcement that a person or group has acquired 10% or more of
the Company's Common Stock (thereby becoming an "Acquiring Person") or
the commencement of a tender or exchange offer upon consummation of
which such person or group would own 10% or more of the Company's Common
Stock (the earlier of such dates being called the "Distribution Date").
Rights will be issued for all shares of the Company's Common Stock
issued and outstanding on the Record Date. Until the Distribution Date,
the Rights will be evidenced by the certificates representing the
Company's Common Stock and will be transferrable only with the Company's
Common Stock. In the event that any person or group becomes an
Acquiring Person, each Right, other than Rights beneficially owned by
the Acquiring Person (which will thereafter be void), will thereafter
entitle its holder to purchase shares of the Company's Common Stock
having a market value of two times the exercise price of the Right.
After any person or group has become an Acquiring Person and prior to
the acquisition by such person or group of 50% or more of the
outstanding shares of Common Stock, the Company's board of directors may
exchange each Right (other than Rights of the Acquiring Person), in
whole or in part, at an exchange ratio of one Common Share or one one-
hundredth of a Preferred Share per Right. If after a person or group
has become an Acquiring Person, the Company is acquired in a merger or
other business combination transaction or 50% or more of its assets or
earning power are sold, each Right will entitle its holder to purchase,
at the Right's then current exercise price, that number of shares of
common stock of the acquiring company which at the time of such
transaction will have a market value of two times the exercise price of
the Right. The board of directors of the Company may redeem the Rights
in whole, but not in part, at a price of $.01 per Right at any time
prior to such time as any person or group becomes an Acquiring Person.
The Rights expire on March 31, 2005. Preferred Shares purchasable upon
exercise of the Rights will not be redeemable. Each Preferred Share will
be entitled to a preferential quarterly dividend payment equal to the
greater of $1 per share or 100 times the dividend declared per Common
Share. Liquidation preference will be equal to the greater of $100 per
share or 100 times the payment made per Common Share. Each Preferred
Share will have one vote, voting together with the Common Stock.
The Company's principal credit facility (the "ING Facility") with
ING Bank was amended and restated April 27, 1995. The ING Facility
currently consists of six facilities, "Facility A", "Facility B",
"Facility C", "Facility D", "Facility E", and "Facility F". Facility A
is in the form of a term loan with a restated principal amount
outstanding at December 31, 1994 of $15 million. Principal payments
which commenced on December 31, 1994 under the restated facility
agreement consist of four equal semiannual installments of $3.75 million
with interest payments at a varying rate equal to the 6 month London
Interbank Offered Rate ("LIBOR") (6% at June 30, 1995) plus 1.5%.
Facility B, which was not restated in the amendment, is also in the form
of a term loan with an original balance of $45 million. Principal
payments which commenced on June 30, 1993 consist of nine equal
semiannual installments of approximately $4.4 million and a final
installment of $5.2 million. Interest is payable quarterly at the 3
month LIBOR (6.0625% at June 30, 1995) plus 1.9375%. Facilities C, D, E
and F consist of $50 million of working capital financing. Facility C
is in the form of an overdraft account with up to $15 million available
through August 1, 1995 (the Company expects to conclude an extension of
this facility until December 31, 1995 prior to August 1, 1995).
Interest on amounts outstanding under Facility C is paid quarterly at
the prime rate of Citibank, N.A. (9.0% as of June 30, 1995) plus 1.25%.
Facility D is in the form of a $5 million letter of credit for a term
not to extend beyond April 30, 1996. Facility E is in the form of
standby letters of credit in an aggregate amount of $15 million with
expiration dates on or before June 30, 1997. Facilities D and E letters
of credit support bid, performance, and other bonds needed by the
Company in the ordinary course of business. Facility F is in the form
of standby letters of credit used to obtain customs bonds respecting
duties assessed on the Company's drilling equipment or rigs in Indonesia
in a total amount not to exceed $15 million. The terms of Facility F
letters of credit shall not extend beyond June 30, 1997. The amendment
allows for the transfer of the unused portion of commitment under
Facility C to Facility E or Facility F, or under Facility E to Facility
C or Facility F. As of June 30, 1995, the Company had drawn down $14.2
million available from Facility C and had drawn down an additional $6
million which was transferred from Facility E to Facility C for a total
of $20.2 million included in Short-term obligations.
Liquidity of the Company should be considered in light of the
significant fluctuations in demand experienced by drilling contractors
as rapid changes in oil and gas producers' expectations, budgets and
drilling plans occur. These fluctuations can rapidly impact the
Company's liquidity as supply and demand factors directly affect
utilization and dayrates, which are the primary determinants of cash
flow from the Company's operations. As of June 30, 1995, approximately
$18.5 million of total consolidated cash and cash equivalents of $40.4
million are restricted from the Company's use outside of Arcade Drilling
AS ("Drilling"). The Company's management currently expects that its
cash flow from operations, in combination with cash on hand and other
sources will be sufficient to satisfy the Company's 1995 working capital
needs, dividends on preferred stock, capital expenditures on its
existing fleet, debt, lease, and other payment obligations. Other
sources of cash might include short-term loans, debt rescheduling, new
debt, new equity, asset disposals and/or by delaying a portion of
planned capital or other expenditures. As disclosed at the end of the
first quarter of 1995, in view of the Company's debt repayment schedule
for the balance of 1995 currently amounting in the aggregate to $56.1
million (including that of Drilling and amounts to be repaid to ING Bank
as described below), the Company expected certain debt rescheduling
and/or other financing would likely be required by yearend.
Accordingly, in May 1995, the Company entered into a $25 million loan
agreement with The CIT Group /Equipment Financing, Inc. (the "CIT
Group"). The terms of the loan agreement allow the Company to receive
advances up to $25 million from the CIT Group until December 29, 1995 at
which date the entire $25 million is required to be outstanding. See
Note B of Notes to Consolidated Financial Statements for a further
discussion of the CIT Group loan terms. The Company has agreed to pay
off the ING Facility by December 31, 1995. The principal balance
outstanding to ING Bank at December 31, 1995 is expected to be
approximately $26.0 million of which $17.8 million is currently
classified as long-term. Presently, the Company is confident in its
ability to secure replacement financing prior to the pay off and has
therefore not included the $17.8 million at June 30, 1995 in the CURRENT
LIABILITIES section of the Company's Consolidated Balance Sheet.
Management is constantly evaluating financing alternatives available to
the Company and believes that sufficient flexibility exists to meet any
liquidity shortfalls.
The Company intends to continue to modernize and expand its fleet,
in order to meet the requirements of competitive conditions and the
changing needs of its customers. In this regard, the Company has from
time to time in the past engaged in, and currently remains willing to
engage in, preliminary discussions with other industry participants with
respect to business combinations that would potentially strengthen its
competitive position in the offshore drilling industry. Moreover, the
Company continues to consider the selective acquisition of existing
rigs, directly or through business combination transactions. In
addition, the Company's wholly owned subsidiary, Reading & Bates
Development Co. ("Development") is the General Contractor for the
provision of a semisubmersible floating production system for the Liuhua
11-1 Project being jointly developed by Amoco Orient Petroleum Company
("Amoco") and China Offshore Oil Nanhai East Corporation in the South
China Sea. The Liuhua 11-1 Project is near completion and the floating
production system was delivered to Amoco on June 12, 1995. In April
1995, Development entered into a letter of intent with Enserch
Exploration, Inc. ("Enserch") to acquire a 20% working interest in
Enserch's Green Canyon 254 Project in the U.S. Gulf of Mexico. Subject
to the rights of the working interest owners under the joint operating
agreement, the Company's third-generation semisubmersible "M. G. HULME,
JR." would also receive a three year drilling contract, plus options,
for the field's development drilling upon completion of an upgrade of
the unit for operations in up to 3,300 feet of water, and the Company
would convert its second-generation semisubmersible "RIG 41", or an
equivalent unit, to a floating production vessel capable of processing
up to 70,000 barrels of oil per day. The project, if successful, would
have a substantial impact on the Company's future earnings and cash
flow. In May 1995, Mobil Exploration & Producing U.S. Inc., an
affiliate of Mobil Corporation, signed a letter of intent to purchase a
40% working interest in the project. Enserch is expected to retain the
remaining 40% working interest in the Project. The Company continues to
consider selective expansion in floating production through additional
management contracts, alliances with other companies, the acquisition of
floating production equipment and/or participation in field development
projects.
MATERIAL CHANGES IN RESULTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1995 COMPARED
TO SIX MONTHS ENDED JUNE 30, 1994
The Company's net income for the six months ended June 30, 1995 was
$2.1 million ($.01 loss per share after preferred stock dividends of
$2.4 million) as compared to a net loss of $7.5 million ($.18 loss per
share after preferred stock dividends of $2.4 million). The Company's
rig utilization for the six months ended June 30, 1995 and 1994 was 84%
and 73%, respectively.
Operating revenues are primarily a function of dayrates and
utilization. The $16.5 million increase in operating revenues for the
six months ended June 30, 1995 over the same period in 1994 is mainly
attributable to increased utilization of the jackup and fourth-
generation fleets. In regards to the jackup fleet in particular,
utilization increased from 69% in the first half of 1994 to 83% in the
first half of 1995. As an offset to this increase, included in
operating revenues for the first half of 1994 is $1.8 million generated
from the operations of the "SONNY VOSS" which in December 1994 was
removed from the Company's fleet as a result of the Company negotiating
an early release from its remaining lease obligation. Further
offsetting the improvement in the jackup fleet was the performance of
the Company's one mat-supported jackup, the "D. K. MCINTOSH". While
this rig was 100% utilized during the first half of 1994, the rig
operated only 5 days during the first half of 1995. In regards to the
fourth-generation fleet in particular, the "JACK BATES" and the "ARCADE
FRONTIER" both had significantly improved utilization rates and
moderately improved dayrates for the first half of 1995 as compared to
the first half of 1994. Mitigating the improvements in operating
revenues reported for the "JACK BATES" in the first half of 1995 as
compared to the first half of 1994 is the reporting of $2.4 million of
operating revenues due to the 1994 settlement of the loss of hire claim
relating to the "JACK BATES" casualty caused by Hurricane Andrew.
Countering the overall improvements in utilization and dayrates of the
jackup and fourth-generation fleets, the utilization for the tender and
third-generation fleets dropped considerably in the six months ended
June 30, 1995 as compared to the six months ended June 30, 1994. In
particular, the tender, "CHARLEY GRAVES" completed a three and one-half
year contract in Malaysia in mid April of 1995 then remained stacked for
the remainder of the second quarter of 1995. Additionally, the third-
generation semi, "JIM CUNNINGHAM" experienced considerable downtime
during the first half of 1995 as compared to the first half of 1994 due
to drydocking for hull enhancements and contract preparation work.
Operating expenses do not necessarily fluctuate in proportion to
changes in operating revenues due to the continuation of personnel on
board and equipment maintenance when the Company's drilling units are
stacked. It is only during prolonged stacked periods that the Company
is significantly able to reduce labor costs and equipment maintenance
expense. Additionally, labor costs fluctuate due to the geographic
diversification of the Company's drilling units and the mix of labor
between expatriates and nationals as stipulated in the drilling
contracts. In general, labor costs increase primarily due to higher
salary levels and inflation. Equipment maintenance expenses fluctuate
depending upon the type of activity the drilling unit is performing and
the age and condition of the equipment. Scheduled maintenance of
equipment and overhauls are performed in accordance with the Company's
preventive maintenance program.
Operating expenses increased $3.5 million for the six months ended
June 30, 1995 as compared to the same period in 1994 in part due to the
increased utilization of the "JACK BATES" between those periods. The
"JACK BATES" operated for most of the first half of 1995 (92%) as
compared to the first half of 1994 when the rig was under tow to
offshore Indonesia for almost three months. Extended mobilization
periods and contract preparation periods generally result in lower
operating expenses since net mobilization and contract preparation
expenses are normally deferred and amortized over the following
contract. Also, the "ARCADE FRONTIER" experienced significantly higher
operating costs in the first half of 1995 as compared to the first half
of 1994 because the rig was stacked for an extended period during the
first half of 1994 and had reduced operating expenses somewhat during
that period. In addition, two of the Company's jackups moved into
geographic areas with higher operating costs. Countering these
operating expense increases were two items which reduced operating
expenses in the first half of 1995 as compared to the first half of
1994: Included in operating expenses for the six months ended June 30,
1994 is $3.1 million of operating expenses (net of a $.9 million credit
due to the recognition of the deferred gain on the sale/leaseback)
generated from the operation of the "SONNY VOSS" which in December 1994
was removed from the Company's fleet as a result of the Company
negotiating an early release from its remaining lease obligation. Also
included in operating expenses for the six months ended June 30, 1994 is
$3.1 million of lease expense relating to two of the Company's jackups.
In September 1994, the Company purchased certain notes and interest
relating to the lease debt outstanding associated with the operating
leases of the two jackups.
Income tax expense decreased for the six months ended June 30, 1995
compared to the same period in 1994 despite the increase in income
before income taxes. Such decrease is primarily due to a change in the
Company's foreign geographic areas of operations.
THREE MONTHS ENDED JUNE 30, 1995 COMPARED
TO THREE MONTHS ENDED JUNE 30, 1994
The Company's net income for the three months ended June 30, 1995 was
$2.4 million ($.02 per share after preferred stock dividends of $1.2
million) compared with a net loss of $6.0 million ($.13 per share after
preferred stock dividends of $1.2 million) for the same period of 1994.
Income from operations for the three months ended June 30, 1995 was $7.4
million compared to a net loss from operations of $3.2 million in 1994.
The Company's rig utilization for the three months ended June 30, 1995
and 1994 was 83% and 69%, respectively.
As mentioned, operating revenues are primarily a function of dayrates
and utilization. The $10.9 million increase in operating revenues for
the three months ended June 30, 1995 over the same period in 1994 is
mainly attributable to increased utilization of the jackup and fourth-
generation fleets. In regards to the jackup fleet in particular, four
specific rigs, the "D. R. STEWART", the "H. H. WARD", the "ROGER
MOWELL", and the "C. E. THORNTON" all experienced significant
improvements in their utilization rates for the second quarter of 1995
as compared to the second quarter of 1994. The average utilization for
those rigs mentioned during the three months ended June 30, 1995 was
approximately 92% as compared to average utilization for the same four
rigs of approximately 23% during the three months ended June 30, 1994.
This 69% improvement in average utilization for those specific rigs
translates to an approximately $6.7 million improvement in operating
revenues for the Company. This improvement in the jackup fleet was
partially offset by the performance of the Company's one mat-supported
jackup, the "D. K. MCINTOSH". While this rig was 100% utilized during
the second quarter of 1994, the rig was stacked the entire second
quarter of 1995 contributing an approximately $1.4 million unfavorable
variance between the two periods. In regards to the fourth-generation
fleet in particular, the "JACK BATES" and the "ARCADE FRONTIER" both had
significantly improved utilization rates for the second quarter of 1995
as compared to the second quarter of 1994. The "JACK BATES" recorded
55% utilization for the three months ended June 30, 1994 versus 85% for
the three months ended June 30, 1995. The "ARCADE FRONTIER" went from
19% to 100% utilization for the same periods. Additionally, these same
two rigs experienced significant increases in dayrates between the two
periods. Countering the improvements in utilization and dayrates of the
jackup and fourth-generation fleets, the utilization for the tenders and
third-generation fleets dropped considerably in the second quarter of
1995 as compared to the second quarter of 1994. In particular, the
tender, "CHARLEY GRAVES" completed a three and one-half year contract
in Malaysia in mid April of 1995 then remained stacked for the remainder
of the second quarter of 1995. Additionally, the third-generation
semi, "JIM CUNNINGHAM" experienced considerable downtime during the
second quarter of 1995 as compared to the second quarter of 1994 due to
drydocking for hull enhancements and contract preparation work.
Operating expenses increased only $.3 million for the three months
ended June 30, 1995 as compared to the same period in 1994. The $.3
million is inclusive of a few relatively large offsetting variances.
The "JACK BATES" operated for most of the second quarter of 1995 (85%)
as compared to the second quarter of 1994 when the rig was under tow to
offshore Indonesia and\or stacked for almost half the quarter. Also,
the "ARCADE FRONTIER" experienced significantly higher operating costs
in the second quarter of 1995 as compared to the second quarter of 1994
because the rig was stacked for an extended period during the first half
of 1994 and had therefore reduced operating expenses somewhat during
that period which includes the second quarter. In addition, two of the
Company's jackups moved into geographic areas with higher operating
costs. Countering these operating expense increases were two items
which reduced operating expenses in the second quarter of 1995 as
compared to the second quarter of 1994: Included in operating expenses
for the three months ended June 30, 1994 is $1.4 million of operating
expenses generated from the operation of the "SONNY VOSS" which in
December 1994 was removed from the Company's fleet as a result of the
Company negotiating an early release from its remaining lease
obligation. Also, included in operating expenses for the three months
ended June 30, 1994 is $1.6 million of lease expense relating to two of
the Company's jackups. In September 1994, the Company purchased certain
notes and interest relating to the lease debt outstanding associated
with the operating leases of the two jackups.
Income tax expense decreased for the three months ended June 30, 1995
compared to the same period in 1994 despite the increase in income
before income taxes. Such decrease is primarily due to a change in the
Company's foreign geographic areas of operations.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
LITIGATION - The Company is one of the defendants in certain
litigation brought in July 1984 by the Cheyenne-Arapaho Tribes of
Oklahoma in the U.S. District Court for the Western District of
Oklahoma, seeking to set aside two communitization agreements with
respect to three leases involving tribal lands in which the Company
previously owned interests and to have those leases declared expired. In
June 1989, the U.S. District Court entered an interim order in favor of
the plaintiffs. On appeal, the U.S. Court of Appeals for the Tenth
Circuit upheld the decision of the trial court and petitions for
rehearing of that decision were denied. Petitions for writs of
certiorari filed by the parties with the U.S. Supreme Court have been
denied, and the case has been remanded to the trial court for
determination of damages.
In November 1988, a lawsuit was filed in the U.S. District Court for
the Southern District of West Virginia against Reading & Bates Coal Co.,
a wholly owned subsidiary of the Company, by SCW Associates, Inc.
claiming breach of an alleged agreement to purchase the stock of Belva
Coal Company, a wholly owned subsidiary of Reading & Bates Coal Co. with
coal properties in West Virginia. When those coal properties were sold
in July 1989 as part of the disposition of the Company's coal
operations, the purchasing joint venture indemnified Reading & Bates
Coal Co. and the Company against any liability Reading & Bates Coal Co.
might incur as the result of this litigation. A judgment for the
plaintiff of $32,000 entered in February 1991 was satisfied and Reading
& Bates Coal Co. was indemnified by the purchasing joint venture. On
October 31, 1990, SCW Associates, Inc., the plaintiff in the above-
referenced action, filed a separate ancillary action in the Circuit
Court, Kanawha County, West Virginia against the Company and a wholly
owned subsidiary of Reading & Bates Coal Co., Caymen Coal, Inc. (former
owner of the Company's West Virginia coal properties), as well as the
joint venture, Mr. William B. Sturgill personally (former President of
Reading & Bates Coal Co.), three other companies in which the Company
believes Mr. Sturgill holds an equity interest, two employees of the
joint venture, First National Bank of Chicago and First Capital
Corporation. The lawsuit seeks to recover compensatory damages of
$50 million and punitive damages of $50 million for alleged tortious
interference with the contractual rights of the plaintiff and to impose
a constructive trust on the proceeds of the use and/or sale of the
assets of Caymen Coal, Inc. as they existed on October 15, 1988.
Subsequently, the court entered an order dismissing the Company's
indirect subsidiary. The Company intends to defend its interests
vigorously and believes the damages alleged by the plaintiff in this
action are highly exaggerated. In any event, the Company believes that
it has valid defenses and that it will prevail in this litigation.
On March 17, 1995, an action was filed by Louis Silverman,
individually and on behalf of all other shareholders of Reading & Bates
Corporation similarly situated, against the Company and the individual
members of its board of directors in the Court of Chancery of the State
of Delaware, New Castle County. On April 7, 1995 three additional
actions were filed on behalf of Congregation Beth Joseph, Harry Lewis
and Mortimer Shulman against the Company and its directors in the Court
of Chancery of the State of Delaware. In each of the four actions, the
plaintiff alleges, inter alia, that the directors breached their
fiduciary duties by rejecting the previously announced unsolicited
merger proposal made by Sonat Offshore Drilling Inc. and by adopting the
previously announced shareholder rights plan. Each of the named
plaintiffs in the four actions purports to be an owner of the Company's
Common Stock and seeks to represent a class of shareholders of the
Company who are similarly situated. Each of the plaintiffs seeks
injunctive relief, damages in unspecified amounts and certain other
relief, including costs and expenses. The Company believes each of the
plaintiff's claims in these four actions are groundless and that the
defendants have meritorious defenses in each action. The Company
intends to defend each action vigorously.
The Company is involved in these and various other legal actions
arising in the normal course of business. After taking into
consideration the evaluation of such actions by counsel for the Company,
management is of the opinion that the outcome of known claims and
litigation will not have a material adverse effect on the Company's
business or consolidated financial position or results of operations.
Item 4. Results of Votes of Security Holders
At the annual meeting of stockholders of Reading & Bates
Corporation, held on May 2, 1995, three Class I directors were
elected by a vote of common stock shareholders, as outlined in the
Company's Proxy Statement relating to the annual meeting. Proxies
for the annual meeting were solicited pursuant to Regulation 14 under
the Securities and Exchange Act of 1934, there was no solicitation in
opposition to the management's nominees as listed in the Proxy
Statement and all of such nominees were elected, with 41,428,349,
41,427,536 and 41,426,270 votes for each of Mr. Donabedian, Mr. Rhein
and Mr. Sandmeyer, respectively, and 460,136, 460,936 and 462,215
votes withheld from each of such nominees, respectively. In addition
four proposals were voted upon: i) a proposal to approve the
Company's 1995 Long-Term Incentive Plan, with 31,291,448 votes for
the proposal, 9,685,728 votes against the proposal and 911,309
abstentions, ii) a proposal to approve the Company's 1995 Director
Stock Option Plan, with 38,697,920 votes for the proposal, 2,424,258
votes against the proposal and 766,307 abstentions, iii) a proposal
to ratify and approve the appointment of Arthur Andersen LLP as
independent public accountants for the Company for its fiscal year
1995, with 41,336,299 votes for the proposal, 359,426 votes against
the proposal and 192,760 abstentions and iv) a proposal by a
stockholder, as set out under the heading "Stockholder Proposal" in
the Company's Proxy Statement dated March 29, 1995, with 1,524,168
votes for the proposal, 25,178,415 votes against the proposal and
840,758 abstentions.
Item 6(a). Exhibits
Exhibit 10.1- Loan Agreement dated as of May 25, 1995 among the
Registrant and Reading & Bates Offshore, Limited, a
subsidiary of the Registrant, and the CIT
Group/Equipment Financing, Inc.
Exhibit 10.2- Amended and Restated Credit Facility Agreement dated as
of April 27, 1995 among the Registrant, Reading & Bates
Drilling Co., Reading & Bates Exploration Co., Reading
and Bates, Inc., Reading and Bates Borneo Drilling Co.,
Ltd. and Reading & Bates (A) Pty. Ltd., subsidiaries of
the Registrant, and Internationale Nederlanden Bank
N.V.
Exhibit 11- Computation of Earnings Per Common Share, Primary and
Fully Diluted.
Exhibit 15- Letter regarding unaudited interim financial
information.
Exhibit 27- Financial Data Schedule. (Exhibit 27 is being submitted
as an exhibit only in the electronic format of this
Quarterly Report on Form 10-Q being submitted to the
Securities and Exchange Commission.)
Item 6(b). Reports on Form 8-K
There were eight Current Reports on form 8-K filed during the
three months ended June 30, 1995. A Current Report on Form 8-K was
filed April 6, 1995 disclosing an action filed against the Company
and the individual members of its board of directors by a
shareholder; filed April 12, 1995 disclosing additional actions filed
by three shareholders against the Company and individual members of
its board of directors; filed April 18, 1995 disclosing the Company's
response to a press release issued on April 18, 1995 by Sonat
Offshore Drilling Inc.; filed April 19, 1995 disclosing the Company's
first quarter 1995 earnings; filed April 20, 1995 disclosing a letter
of intent with Enserch Exploration, Inc.; filed April 21, 1995
disclosing the text of the Company's reply to Sonat Offshore Drilling
Inc.'s letter dated April 13, 1995; filed May 2, 1995 disclosing the
resignation of Mr. Willem Cordia from the board of directors due to
health reasons and the appointment of Mr. M.A.E. Laqueur to the board
of directors; and filed May 15, 1995 disclosing the signing of a
letter of intent by Mobil Exploration & Producing U.S. Inc. with
Enserch Exploration, Inc.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
READING & BATES CORPORATION
Date: July 21, 1995 By /s/T. W. Nagle
------------------------
T. W. Nagle
Vice President and Chief
Financial Officer
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
10.1 Loan Agreement dated as of May 25, 1995 among the Registrant
and Reading & Bates Offshore, Limited, a subsidiary of the
Registrant, and the CIT Group/Equipment Financing, Inc.
10.2 Amended and Restated Credit Facility Agreement dated as of
April 27, 1995 among the Registrant, Reading & Bates Drilling
Co., Reading & Bates Exploration Co., Reading and Bates, Inc.,
Reading and Bates Borneo Drilling Co., Ltd. and Reading & Bates
(A) Pty. Ltd., subsidiaries of the Registrant, and
Internationale Nederlanden Bank N.V.
11 Computation of Earnings Per Common Share, Primary and Fully
Diluted.
15 Letter re: unaudited interim financial information.
27 Financial Data Schedule. (Exhibit 27 is being submitted as an
exhibit only in the electronic format of this Quarterly Report
on Form 10-Q being submitted to the Securities and Exchange
Commission.)
EXHIBIT 10.1
LOAN AGREEMENT
AMONG
THE CIT GROUP/EQUIPMENT FINANCING, INC.,
as Lender,
READING & BATES CORPORATION
as Guarantor,
and
READING & BATES OFFSHORE, LIMITED,
as Borrower
Dated as of May 25, 1995
<PAGE>
TABLE OF CONTENTS
R E C I T A L S :
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
DEFINITIONS
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE I
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Loan
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 1.01 Amount . . . . . . . . . . . . . . . . . . . . .
Section 1.02 Revolving Loan Availability Period . . . . . . .
Section 1.03 Term Loan Period . . . . . . . . . . . . . . . .
Section 1.04 Interest . . . . . . . . . . . . . . . . . . . .
Section 1.05 Payments . . . . . . . . . . . . . . . . . . . .
Section 1.06 Prepayment . . . . . . . . . . . . . . . . . . .
Section 1.07 Security . . . . . . . . . . . . . . . . . . . .
Section 1.08 Facility Fee . . . . . . . . . . . . . . . . . .
Section 1.09 Revolving Loan Fee . . . . . . . . . . . . . . .
ARTICLE II
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Conditions Precedent
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 2.01 Conditions Precedent to First Advance . . . . . .
Section 2.02 Conditions Precedent to Subsequent Advances . . .
Section 2.03 Waiver of Conditions Precedent . . . . . . . . .
ARTICLE III
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Representations, Warranties and Covenants
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 3.01 Representations of the Borrower . . . . . . . . .
Section 3.02 Covenants of the Borrower . . . . . . . . . . . .
Section 3.03 Covenants of the Guarantor . . . . . . . . . . .
ARTICLE IV
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Events of Default
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE V
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Miscellaneous
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 5.01 Notices . . . . . . . . . . . . . . . . . . . . .
Section 5.02 No Waiver . . . . . . . . . . . . . . . . . . . .
Section 5.03 Applicable Law and Jurisdiction . . . . . . . . .
Section 5.04 Severability . . . . . . . . . . . . . . . . . .
Section 5.05 Amendment . . . . . . . . . . . . . . . . . . . .
Section 5.06 Assignment and Participation . . . . . . . . . .
Section 5.07 Costs, Expenses and Taxes . . . . . . . . . . . .
Section 5.08 Counterparts . . . . . . . . . . . . . . . . . .
Section 5.09 Section Headings . . . . . . . . . . . . . . . .
Section 5.10 Merger . . . . . . . . . . . . . . . . . . . . .
Exhibit A - Secured Promissory Note
Exhibit B - Guaranty
Exhibit C - Notice of Drawing
THIS LOAN AGREEMENT dated as of May 25, 1995 among READING & BATES
OFFSHORE, LIMITED, an Oklahoma corporation (the "Borrower"), READING &
BATES CORPORATION, a Delaware corporation, as Guarantor (the "Guarantor")
and THE CIT GROUP/EQUIPMENT FINANCING, INC., a New York corporation (the
"Lender"). Capitalized terms used herein and not otherwise defined herein
are used with the meanings given to them in the Definitions Section of this
Agreement.
R E C I T A L S :
The Borrower is the owner of the United States flag drilling rig, F.G.
McCLINTOCK, Official No. 562059 (the "McCLINTOCK") and is the prospective
owner of the United States flag drilling rig GEORGE H. GALLOWAY, Official
No. 651646 (the "GALLOWAY"; each a "Vessel and collectively, the
"Vessels").
The GALLOWAY is presently owned by Shawmut Bank Connecticut, National
Association, as Owner Trustee, is bareboat chartered to Reading & Bates
Drilling Co., an affiliate of the Borrower, and the Borrower intends to
complete its purchase of the GALLOWAY within sixty (60) days of the Closing
Date.
The Borrower has requested a loan from the Lender in a principal
amount of up to Twenty Five Million United States Dollars (USD 25,000,000)
(as more specifically described in Section 1.01 hereof, the "Loan") in
order to provide working capital and for other corporate purposes for the
Borrower and its affiliates upon the terms and conditions contained herein
and in the Note.
The Loan shall be evidenced by a secured promissory note made by the
Borrower to the Lender (the "Note") substantially in form and substance of
Exhibit A annexed hereto and made a part hereof.
In order to secure its obligations hereunder and under the Note, the
Borrower has agreed (a) to grant to the Lender a first preferred fleet
mortgage on the Vessels and a first priority security interest on its
rights to receive moneys on account of the operation thereof pursuant to
the Mortgage, the Earnings Assignment and the Insurance Assignment; and (b)
to obtain the agreement of the Guarantor to issue the Guaranty in favor of
the Lender guaranteeing Borrower's obligations hereunder and under the
Note, the Mortgage, the Earnings Assignment and the Insurance Assignment.
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the parties hereto agree as follows:
DEFINITIONS
The following terms shall have the following meanings for all purposes
of this Agreement and shall be equally applicable to both the singular and
the plural forms of the terms herein defined.
"Agreement", "this Agreement", "herein", "hereunder" or other like
words mean this Loan Agreement as originally executed or as modified,
amended or supplemented from time to time pursuant to the provisions
hereof.
"Advance" means a loan by the Lender to the Borrower pursuant to
Section 1.01 of this Agreement.
"Assignments" mean the Earnings Assignment and the Insurance
Assignment.
"Borrower" means Reading & Bates Offshore, Limited and its successors
and permitted assigns.
"Business Day" means a day other than a Saturday or a Sunday or a day
on which commercial banks are authorized to be closed in the State of New
York or the State of Texas.
"Cash Flow Coverage Ratio" means the sum of the Guarantor's
consolidated net income, before interest expense, income taxes,
depreciation, amortization and Lease Expense, in the prior four quarters;
divided by the sum of interest expense and Lease
Expense.
"Closing Date" means any Business Day on or prior to June 15, 1995
which shall be the day on which the first Advance is made as designated by
the Borrower in its Notice of Drawing.
"Dollars" or "USD" means lawful currency of the United States of
America.
"Earnings Assignment" means the General Assignment of Earnings dated
the Closing Date granted by the Borrower in favor of the Lender, in form
and substance satisfactory to the Lender, as the same may be modified,
amended or supplemented from time to time.
"Event of Default" has the meaning set forth in Article IV of this
Agreement.
"Excluded Income Taxes" has the meaning set forth in Section 1.05(a)
of this Agreement.
"Fair Market Value" has the meaning set forth in Section 1.06(a)(iii).
"Governmental Agencies" means any government or any state, department
or other political subdivision thereof or governmental body, agency,
authority, department or commission having jurisdiction over the Borrower
or its properties (including without limitation any court or tribunal)
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government and any corporation, partnership
or other entity directly or indirectly owned by the foregoing.
"Guarantor" means Reading & Bates Corporation and its successors and
permitted assigns.
"Guaranty" means the Guaranty dated the Closing Date given by the
Guarantor in favor of the Lender, substantially in the form of Exhibit B
attached hereto and made a part hereof, as the same may be modified,
amended and supplemented from time to time.
"Hazardous Substances" means petroleum and used oil, or any other
pollutant or contaminant, hazardous, dangerous or toxic waste, substance or
material as defined in the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. Sec. 9601, et
seq. (hereinafter called "CERCLA"); the Resource Conservation and Recovery
Act, as amended, 42 U.S.C. Sec. 6901, et seq. (hereinafter called "RCRA");
the Toxic Substances Control Act, as amended, 15 U.S.C. Sec. 2601, et seq.
(hereinafter called "TSCA"); the Hazardous Materials Transportation Act, as
amended, 49 U.S.C. Sec. 1801, et seq. (hereinafter called "HMTA"); the Oil
Pollution Act of 1990, Pub.L. No. 101-380, 104 Stat. 484 (1990)
(hereinafter called "OPA"); or any other statute, law, ordinance, code or
regulation of any Governmental Agency relating to or imposing liability or
standards of conduct concerning the use, production, generation, treatment,
storage, recycling, handling, transportation, release, threatened release
or disposal of any hazardous, dangerous or toxic waste, substance or
material, currently in effect or at any time hereafter adopted.
"Insurance Assignment" means the Assignment of Insurance dated the
Closing Date granted by the Borrower in favor of the Lender, in form and
substance satisfactory to the Lender, as the same may be modified, amended
or supplemented from time to time.
"Interest Rate" has the meaning set forth in Section 1.04(b) of this
Agreement.
"Lease Expense" means the expense associated with leases by any direct
or indirect subsidiary of the Guarantor, which leases qualify as operating
leases in accordance with generally accepted accounting principles in
effect from time to time in the United States.
"LIBOR Rate" means with respect to any Interest Period, the one-month
rate of interest per annum at which deposits in U.S. dollars are offered to
major banks in the London interbank market at approximately 11:00 a.m.
(London time), as reported by the Telerate System page 3750 (or such other
page as may replace such page 3750 on such system for the purpose of
reporting London Interbank Offered Rates of major banks) under the heading
for British Bankers Association Interest Settlement Rates in the column
designated "USD" (U.S. Dollar) two (2) Business Days before the first day
of an Interest Period.
"Loan" has the meaning set forth in Section 1.01 of this Agreement.
"Loan Documents" means the Note, the Mortgage, the Guaranty, the
Earnings Assignment and the Insurance Assignment.
"Maturity Date" means November 25, 1999.
"Long Term Debt" means all long term obligations of the Guarantor on a
consolidated basis, excluding the current portion of long term debt and the
obligations of any direct or indirect subsidiary of the Guarantor (other
than the Borrower) that is non-recourse to the Guarantor, Reading & Bates
Drilling Co. or the Borrower, all according to generally accepted
accounting principles in effect from time to time in the United States of
America.
"Mortgage" means the United States first preferred fleet mortgage
dated the Closing Date granted by the Borrower in favor of the Lender, in
form and substance satisfactory to the Lender, as the same may be modified,
amended or supplemented from time to time, and any substantially similar
instrument which may be executed, delivered and recorded in substitution
therefor.
"Note" has the meaning set forth in paragraph 4 of the Recitals of
this Agreement.
"Notice of Drawing" means the notice of drawing given by the Borrower
pursuant to Section 1.02 substantially in the form of Exhibit C attached
hereto.
"Payment Date" has the meaning set forth in Section 1.04(a) of this
Agreement.
"Prepayment Premium" has the meaning set forth in Section 1.06(b) of
this Agreement.
"Responsible Officer" means, as to the Borrower and the Guarantor,
either of such corporation's chief executive officer, chief financial
officer or any other officer having principal responsibility for the
financial affairs of such company.
"Revolving Loan Availability Period" means the period of time
beginning on the Closing Date and ending on December 29, 1995.
"Taxes" has the meaning set forth in Section 1.05(a) of this
Agreement.
"Term Loan Period" means the period of time beginning on the date
eighteen (18) months after the Closing Date and ending on the Maturity
Date.
"Term Loan Conversion Date" means the date eighteen (18) months after
the Closing Date.
"Total Assets" means the value of all of the assets of the Guarantor
on a consolidated basis using book value except that the Vessels shall be
included in such valuation at their Fair Market Values as determined
pursuant to Section 1.06(a)(iii) of this Agreement.
"Total Loss" has the meaning set forth in Section 1.06(a) of this
Agreement.
"Vessel Value" has the meaning set forth in Section 1.06(a)(ii).
ARTICLE I
The Loan
Section 1.01 Amount. Subject to the terms and conditions of Section
2.01 of this Agreement, the Lender agrees to make Advances to the Borrower
in an aggregate principal amount equal to the lesser of (1) 50% of the
Vessel Value determined in accordance with Section 1.06(a)(ii) and as
substantiated by the appraisal to be delivered to the Lender pursuant to
Section 2.01(p) hereof and (2) USD 25,000,000 (the "Loan").
Section 1.02 Revolving Loan Availability Period. (a) During the
Revolving Loan Availability Period, the Lender agrees to make Advances to
the Borrower from time to time on any Business Day in the aggregate not to
exceed the amount of the Loan available to the Borrower referred to in
Section 1.01 hereof. All Advances shall be used by the Borrower for
working capital and other general corporate purposes. Each Advance shall
be in an integral multiple of One Million United States Dollars (USD
1,000,000) and no more than one Advance shall be made by the Lender during
any thirty (30) calendar days. Within the limits referred to above, the
Borrower may borrow, prepay and reborrow under this Section 1.02(a).
(b) From and after the Closing Date until the Term Loan Conversion
Date, the Borrower shall maintain an average daily outstanding principal
amount of the Loan of no less than USD 10,000,000 and, subject to the
acquisition of the GALLOWAY by the Borrower and its addition to the lien of
the Mortgage, there shall be no less than USD 25,000,000 outstanding
principal amount of the Loan from December 29, 1995 until the Term Loan
Conversion Date.
(c) The Borrower shall make a request for an Advance by sending to
the Lender a written Notice of Drawing not later than 11:00 a.m., New York
Time, three (3) Business Days prior to the date such Advance is requested
setting forth the date the Advance is required and the bank account or
accounts to which the Advance is to be remitted. The first Notice of
Drawing shall be received by the Lender no later than three (3) Business
Days immediately preceding the Closing Date. All Notices of Drawing shall
be irrevocable.
Section 1.03 Term Loan Period. (a) On the Term Loan Conversion
Date, all amounts outstanding under the Loan will be converted to a thirty-
six (36) month term loan. During the Term Loan Period, the Lender shall
make no further Advances to the Borrower hereunder.
(b) In the event that the amount of the Loan outstanding on the Term
Loan Conversion Date is less than USD 10,000,000, the Borrower shall pay to
the Lender on the Term Loan Conversion Date a non-utilization fee equal to
the difference between USD 10,000,000 and the amount of the Loan then
outstanding, multiplied by two percent (2%).
(c) The Borrower shall repay the principal amount of the Note in
thirty-six (36) consecutive monthly installments, each such installment to
be paid by the Borrower to the Lender on a Payment Date commencing November
25, 1996 and ending on the Maturity Date. The amount of principal to be
repaid on each Payment Date shall be the amount necessary to amortize (over
thirty-six equal monthly installments) sixty percent (60%) of the balance
of the Loan outstanding on the Term Loan Conversion Date, provided,
however, that such final installment shall include a balloon amount
sufficient to discharge the accrued and unpaid interest, unpaid principal
and unpaid premium, if any, in respect of the Note.
(d) The Loan shall be evidenced by and repayable in accordance with
the terms hereof and of the Note.
Section 1.04 Interest.
(a) The Borrower shall pay interest, in arrears, on the unpaid
principal amount of the Note from the Closing Date until the principal
amount of the Note is paid in full on the last Business Day of each
calendar month, commencing June 30, 1995 to and including the Maturity Date
(each such date a "Payment Date") at a rate of interest per annum (computed
on the basis of a 365-day year and the actual number of days elapsed) equal
to the Interest Rate, provided, however, that all interest accrued on the
Loan and unpaid on the Maturity Date shall be paid on the Maturity Date.
(b) The term "Interest Rate" shall mean, for an Interest Period (as
hereinafter defined), an interest rate equal to the LIBOR Rate plus 2.5%
per annum, subject to periodic adjustment as provided below. The LIBOR
Rate shall become effective as of the date of the first Advance and the
corresponding day of the calendar month next succeeding each such
determination and shall continue in effect to, and including the
corresponding date of the next succeeding calendar month. If at any time
the Lender shall determine that by reason of circumstances affecting the
London interbank market (i) adequate and reasonable means do not exist for
ascertaining the LIBOR Rate for the succeeding Interest Period or (ii) the
making or continuance of the Loan at the LIBOR Rate has become
impracticable as a result of a contingency occurring after the date of this
Agreement which materially and adversely affects the London interbank
market, the Lender shall notify the Borrower. As used in this Agreement,
"Interest Period" shall mean each respective and successive one month
calendar period commencing on the Closing Date or the last day of the
immediately preceding Interest Period, as the case may be, provided,
however, that (i) if any Interest Period includes a Payment Date, but does
not end on such date, then the principal amount of the Loan required to be
paid on such date shall have an Interest Period ending on such date and
(ii) no Interest Period shall commence on, or extend past, the Maturity
Date of the Note.
(c) Any amount of principal or any other amount due hereunder which
is not paid when due, whether at stated maturity, by acceleration or
otherwise, shall bear interest from the date when due until such amount is
paid in full, payable on demand, at a rate per annum equal at all times to
2% above the Interest Rate.
(d) In no event shall any interest rate provided for in this
Agreement or the Note exceed the maximum rate permitted by the then
applicable law. It is the intention of the parties hereto to strictly
comply with applicable usury laws; accordingly, it is agreed that,
notwithstanding any provision to the contrary in this Agreement, in the
Note, or in any other Loan Document, in no event shall this Agreement, the
Note, or the other Loan Documents be construed to charge, contract for or
require the payment or permit the collection of interest in excess of the
maximum amount permitted by applicable law. If any such excess interest is
contracted for, charged or received under this Agreement, the Note or the
other Loan Documents, or in the event that all of the principal balance
shall be prepaid, so that under any of such circumstances the amount of
interest contracted for, charged or received on the principal balance shall
exceed the maximum amount of interest permitted by applicable law, then in
such event (i) the provisions of this Section 1.04(d) shall govern and
control, (ii) neither the Borrower nor any other person or entity now or
hereafter liable for the payment thereof shall be obligated to pay the
amount of such interest to the extent that it is in excess of the maximum
amount of interest permitted by applicable law, (iii) any such excess
which may have been collected shall be either applied as a credit against
the then unpaid principal balance or refunded to the Borrower, at the
option of the Lender, and (iv) the effective rate of interest shall be
automatically reduced to the maximum lawful contract rate allowed under
applicable law as now or hereafter construed by the courts having
jurisdiction thereof. It is further agreed that without limitation of the
foregoing, all calculations of the rate of interest contracted for, charged
or received under this Agreement, the Note and the other Loan Documents
which are made for the purpose of determining whether such rate exceeds the
maximum lawful contract rate, shall be made, to the extent permitted by
applicable law, by amortizing, prorating, allocating and spreading in equal
parts during the period of the full stated term of the indebtedness
evidenced hereby, all interest at any time contracted for, charged or
received from the Borrower or otherwise by the Lender in connection with
such indebtedness; provided, however, that if any applicable state law is
amended or the law of the United States of America preempts any applicable
state law, so that it becomes lawful for the Lender to receive a greater
simple interest per annum rate than is presently allowed, the Borrower
agrees that, on the effective date of such amendment or preemption as the
case may be, the lawful maximum hereunder shall be increased to the maximum
simple interest per annum rate allowed by the higher of the amended state
law or the law of the United States of America.
Section 1.05 Payments.
(a) The payment obligations of the Borrower under the Note and all
other amounts payable under this Agreement to the Lender shall be paid, in
immediately available funds, to the Lender at Chemical Bank, 640 Madison
Avenue, New York, New York 10021, ABA No. 021-000-128, for credit to the
account of The CIT Group/Equipment Financing, Inc., Account No. 134-086460
(ref. Reading & Bates Offshore, Contract No. 08371), or at such other place
as the Lender may designate, not more than one (1) Business Day prior to
the due date therefor, not later than the close of business on the due date
thereof, in lawful money of the United States. All payments shall be made
(i) without set-off, counterclaim or condition and (ii) free and clear of,
and without deduction for or on account of, any present or future taxes,
levies, duties, imposts, charges, fees, deductions or withholdings of any
nature ("Taxes"), unless the Borrower is required by law or regulation to
make payment subject to any Taxes. In the event that the Borrower is
required by law or regulation to make any deduction or withholding on
account of any Taxes from any payment due under this Agreement, then: (a)
the Borrower shall notify the Lender promptly as soon as it becomes aware
of such requirement and shall remit promptly the amount of such Taxes to
the appropriate taxation authority, and in any event prior to the date on
which penalties attach thereto; and (b) such payment shall be increased by
such amount as may be necessary to ensure that the Lender receives a net
amount, free and clear of all Taxes, equal to the full amount which the
Lender would have received had such payment not been subject to such Taxes
(other than Excluded Income Taxes as such term is defined below).
Notwithstanding the foregoing, the Borrower shall not be liable for, or
required to pay, any Taxes which are overall income or franchise taxes
imposed at any time on the Lender in the United States of America or any
state or local government or taxing authority in any state in which the
Lender conducts business ("Excluded Income Taxes"). Each such payment or
reimbursement by the Borrower shall be net of any credit or the value of
any deduction received by the Lender thereon to the extent that the same
can be determined by the Lender (as certified by the Lender to the
Borrower, such certificate to be conclusive absent manifest error). The
Borrower shall indemnify the Lender against any liability of the Lender in
respect of such Taxes (but not Excluded Income Taxes) and shall supply
copies of applicable tax receipts.
(b) If any payment to be made by the Borrower shall become due on a
day which is not a Business Day, such payment shall be made on the next
succeeding Business Day.
(c) Each payment to be made on a Payment Date and all prepayments and
other payments shall be applied first to the payment of accrued and unpaid
interest on the Note, then to the payment of all other amounts due under
this Agreement and the Loan Documents, and the balance shall be applied to
the payment of principal due under the Note.
(d) The Borrower shall indemnify the Lender on demand against all
costs, expenses, liabilities and losses (including funding losses)
sustained or incurred by the Lender as a result of or in connection with:
(a) the occurrence and/or continuance of any Event of Default (or event
which, with the giving of notice and/or lapse of time or other applicable
condition might constitute an Event of Default); and/or (b) any judgment or
order which relates to any sum due hereunder being expressed in a currency
other than the currency expressed to be due hereunder and as a result of a
variation in rates of exchange between the rate at which such amount is
converted into such other currency for the purposes of such judgment or
order and the rate prevailing on the date of actual payment of such amount
pursuant thereto; and/or (c) any postponement of the Closing Date occurring
because of one or more of the conditions precedent set forth in Section
2.01 shall not have been satisfied by the Borrower or the Guarantor or
waived by the Lender; and/or (d) any payment of principal of or interest on
the Note made on a date which is not a Payment Date. The above indemnities
are separate and independent obligations of the Borrower and apply
irrespective of any indulgence granted by the Lender.
Section 1.06 Prepayment.
(a) Mandatory Prepayment.
(i) Total Loss. If there shall have occurred a Total Loss as herein
defined, on the earlier of (x) the date insurance proceeds are received or
(y) ninety (90) days after the date of occurrence of the Total Loss, the
Borrower shall (A) prepay the outstanding principal balance under the Note
in an amount equal to the outstanding principal amount of the Loan on the
date of prepayment (without counting any amount being prepaid on such
date), multiplied by a fraction, the numerator of which is Fair Market
Value of the lost Vessel as most recently determined under Section
1.06(a)(iii) and the denominator of which is the Vessel Value as of such
date (including the lost Vessel), and (B) pay accrued interest thereon to
the date of such prepayment together with any other amount due hereunder or
under any Loan Document. The Lender shall apply payments received pursuant
to this Section 1.06(a)(i) in accordance with Section 1.05(c) hereof,
provided, however, that the principal repayments shall be applied so that
the remaining installments of principal, if any, are reduced on a pro rata
basis, such reduction to be confirmed by the Lender in a certificate
delivered to the Borrower, which certificate shall be conclusive absent
manifest error. No Prepayment Premium shall be payable with respect to any
Mandatory Prepayments made by the Borrower pursuant to this Section
1.06(a)(i). "Total Loss" means in respect of a Vessel (i) actual or
constructive or compromised or arranged total loss of such Vessel; or (ii)
requisition for title or other compulsory acquisition of such Vessel
otherwise than by requisition for hire; or (iii) capture, seizure, arrest,
detention or confiscation of such Vessel by any government or by persons
acting or purporting to act on behalf of any government unless such Vessel
is released from such capture, seizure, arrest, detention or confiscation
within thirty days of the occurrence thereof. A Total Loss shall be deemed
to have occurred (a) in the event of an actual total loss of a Vessel, on
the date of such loss, (b) in the event of damage to a Vessel which
results in a constructive or compromised or arranged total loss of such
Vessel, on the date of the occurrence of the event giving rise to such
damage, or (c) in the case of any event referred to in clauses (ii) or
(iii) above, on the date of the occurrence of such event. In the event of
any Total Loss or requisition of a Vessel, the Borrower shall give written
or telegraphic notice to the Lender not later than ten (10) days after a
Responsible Officer of the Borrower has actual knowledge of such
occurrence.
(ii) Vessel Value. On or before the Closing Date and again on or
before the Term Loan Conversion Date, the Lender shall arrange to
have the Fair Market Value of each of the Vessels determined at the
Borrower's expense by an independent appraisal firm nominated by the
Lender. Each such valuation shall be based on the Fair Market Value
of each Vessel. The aggregate of the most recent valuations of each
Vessel then wholly owned by the Borrower is hereinafter referred to
as the "Vessel Value". If, on the Term Loan Conversion Date, the
outstanding principal amount of the Loan shall exceed fifty percent
(50%) of Vessel Value, then the Borrower shall either prepay within
five days of Lender's demand the amount of the Loan necessary to
restore the ratio referred to herein together with payment of accrued
interest thereon or provide additional security for the Loan which
shall be acceptable in the sole opinion of the Lender for these
purposes. The Lender shall apply payments received under this
Section 1.06(a)(ii) in accordance with Section 1.05(c) hereof,
provided, however, that the principal repayments shall be applied so
that the remaining installments of principal, if any, shall be
reduced on a pro rata basis, such reduction to be confirmed by the
Lender in a certificate delivered to the Borrower which certificate
shall be conclusive absent manifest error.
(iii) Fair Market Value. The "Fair Market Value" of any Vessel
shall be the value determined by the independent appraisal firm
chosen by the Lender in accordance with clause (ii) above on the
basis of an arm's-length purchase by a willing buyer from a willing
seller and without consideration of any drilling contract, charter
party or other vessel employment contract. The appraisal firm's
valuation shall be made without physical inspection, unless otherwise
required by the Lender.
(b) Voluntary Prepayment during Term Loan Period. (i) After the
eighteenth (18th) Payment Date of the Term Loan Period, the Borrower may
prepay in full or in part in amounts of not less than USD 1,000,000, its
indebtedness under the Note on the next Payment Date after giving at least
thirty (30) Business Days prior notice of such prepayment and payment to
the Lender of accrued and unpaid interest under the Note and all other
amounts due under this Agreement and the other Loan Documents including a
premium in an amount equal to one percent (1%) of the principal amount
prepaid (the "Prepayment Premium"). Any notice of prepayment hereunder
shall be irrevocable.
(ii) The Lender shall apply payments received pursuant to this
Section 1.06(b) in accordance with Section 1.05(c) hereof, provided,
however, that the principal repayments shall be applied so that the
remaining installments of principal, if any, shall be reduced on a pro rata
basis, such reduction to be confirmed by the Lender in a certificate
delivered to the Borrower, which certificate shall be conclusive absent
manifest error.
(c) Voluntary Prepayment during Revolving Loan Availability Period.
During the Revolving Loan Availability Period the Borrower may prepay
amounts outstanding under the Loan on the following terms and conditions:
(i) the Borrower shall give the Lender at least three (3) Business Days'
prior written notice of its intent to prepay the Loan and the amount of
such prepayment; (ii) such repayments are made no more than once each
calendar month; and (iii) each prepayment of the Loan shall be in a
principal amount of at least USD 1,000,000. No Prepayment Premium shall be
due for any prepayment under this Section 1.06(c).
Section 1.07 Security. All amounts due hereunder and under the Note
shall be secured by the following, each in form and substance satisfactory
to the Lender (A) the Mortgage, (B) the Earnings Assignment, (C) the
Insurance Assignment and (D) the Guaranty.
Section 1.08 Facility Fee. The Borrower has paid to the Lender a
non-refundable facility fee of USD 125,000.
Section 1.09 Revolving Loan Fee. The Borrower shall pay to the
Lender a revolving loan fee of one half of one percent (.50%) per annum on
the unused portion of the Loan for the period from the Closing Date to the
Term Loan Conversion Date, computed on the difference between USD
25,000,000 and the average daily outstanding balance of the Loan, payable
quarterly in arrears on the last Business Day of each calendar quarter,
beginning June 30, 1995.
ARTICLE II
Conditions Precedent
Section 2.01 Conditions Precedent to First Advance. The Lender's
execution and delivery of this Agreement and the making of the first
Advance is subject to the following conditions having been satisfied in the
opinion of the Lender on or prior to the Closing Date:
(a) Each of this Agreement and the other Loan Documents shall have
been duly authorized and executed with original counterparts thereof
delivered to the Lender.
(b) The Lender shall have received copies of the charters or drilling
contracts respecting the McCLINTOCK certified as to correctness by a
Responsible Officer of the Borrower or the Guarantor.
(c) The Borrower and the Guarantor shall have delivered to the Lender
evidence of good standing, certificates of incumbency and duly certified
resolutions of their respective Boards of Directors and all such other
corporate documentation authorizing each of them to enter into the
transactions contemplated by this Agreement and the other Loan Documents.
(d) The Lender shall have received opinions from counsel to the
Borrower and the Guarantor, as the case may be, and an opinion of its
special counsel, Haight, Gardner, Poor & Havens, each in form and substance
satisfactory to the Lender.
(e) The representations and warranties contained in Article III of
this Agreement and in each other Loan Document shall be true on the Closing
Date with the same effect as though such representations and warranties had
been made on and as of such date, and no Event of Default specified in
Article IV hereof and no event which, with the lapse of time or the notice
and lapse of time specified in Article IV hereof, would become such an
Event of Default, shall have occurred and be continuing or shall have
occurred at the completion of the making of the Loan, and the Lender shall
have received satisfactory certificates signed by a Responsible Officer of
the Borrower and the Guarantor, as to all questions of fact involved in
this condition.
(f) The Lender shall have received interim financial statements dated
as of the period ending on March 31, 1995 for the Guarantor prepared on a
consolidated basis and in accordance with generally accepted United States
accounting principles, certified by a Responsible Officer of the Guarantor,
and the results set forth therein shall be consistent in all material
respects with the forecasted trends otherwise provided by the Guarantor to
the Lender.
(g) There shall have been no material adverse change in the business,
financial condition or operations of the Borrower or the Guarantor since
December 31, 1994.
(h) The Lender shall have received evidence that the person specified
to act as agent for service of process for the Borrower, and the Guarantor
pursuant to Section 5.03 has agreed to so act.
(i) The Lender shall have received a certificate of the Guarantor
signed by an officer in charge of environmental affairs and safety of the
Guarantor as to compliance by each of the Borrower and the Guarantor with
all environmental, safety and public health laws and regulations applicable
to each of the Borrower and the Guarantor, without limitation of the
foregoing, all other laws and regulations affecting or relating to the
Vessels, the non-compliance with which would have a material adverse effect
on the business, properties or condition (financial or otherwise) of any
thereof.
(j) The McCLINTOCK shall be duly registered in the name and ownership
of the Borrower under the laws and flag of The United States of America.
(k) The Borrower shall have provided evidence of insurance maintained
by the Borrower on the McCLINTOCK, in form and substance satisfactory to
the Lender, from insurance underwriters providing such coverage and
conforming with the requirements of Section 1.18 of the Mortgage together
with a broker's opinion meeting the requirement of Section 1.20 of the
Mortgage.
(l) The Lender shall have received evidence dated no later than ten
(10) days prior to the Closing Date of the McCLINTOCK's classification, as
A-1, self-elevating drilling unit, free of recommendations affecting class.
(m) The Mortgage shall have been duly executed and delivered and
shall constitute a first preferred ship mortgage lien on the McCLINTOCK
under the laws of The United States of America and shall have been duly
filed under those laws at the Vessel Documentation Office of the United
States Coast Guard, Port of Houston, Texas.
(n) Financing statements or other documents necessary to perfect the
Lender's security interests under any of the Loan Documents in the United
States, the jurisdiction of incorporation of any of the Borrower, the
Guarantor or any other relevant jurisdiction shall have been filed.
(o) The Lender shall have received a report appraising the Fair
Market Value of the McCLINTOCK prepared by M.E.L. Valuations, Inc. in form
and substance satisfactory to the Lender.
(p) The McCLINTOCK shall not have been the subject of a Total Loss
and shall not have sustained any material damage to its condition since the
date of the inspection and survey reports therefor delivered to the Lender
pursuant to Section 2.01(o), or materially decreased in value from the
value attributed thereto as set forth in the appraisal report therefor
delivered to the Lender pursuant to Section 2.01(o).
(q) The Lender shall have received such other documents and
instruments it may reasonably request, in each case in form and substance
reasonably satisfactory to it.
Section 2.02 Conditions Precedent to Subsequent Advances. The
Lender's obligations to make any Advance subsequent to the first Advance in
an amount greater than 50% of the Fair Market Value of the McCLINTOCK is
subject to the following conditions having been satisfied in the opinion of
the Lender on or prior to the date of each such Advance:
(a) The GALLOWAY shall be duly registered in the name and ownership
of the Borrower under the laws and flag of the United States of America.
(b) The Borrower shall have provided evidence of insurance maintained
by the Borrower on the GALLOWAY, in form and substance satisfactory to the
Lender, from insurance underwriters providing such coverage and conforming
with the requirements of Section 1.18 of the Mortgage together with a
broker's opinion meeting the requirement of Section 1.20 of the Mortgage.
(c) The Lender shall have received evidence as to the GALLOWAY'S
classification, as A-1, self-elevating drilling unit, free of
recommendations affecting class.
(d) The Mortgage shall have been supplemented to add the GALLOWAY
and, as so supplemented, the Mortgage shall constitute a first preferred
ship mortgage lien on the GALLOWAY under the laws of the United States of
America and shall have been duly filed under those laws at the Vessel
Documentation Office of the United States Coast Guard, Port of Houston,
Texas.
(e) The Lender shall have received copies of the charters or drilling
contracts respecting the GALLOWAY certified as to correctness by a
Responsible Officer of the Borrower or the Guarantor.
(f) The Lender shall have received a report appraising the Fair
Market Value of the GALLOWAY prepared by M.E.L. Valuations, Inc. in form
and substance satisfactory to the Lender.
(g) The GALLOWAY shall not have been the subject of a Total Loss and
shall not have sustained any material damage to its condition since the
date of the inspection and survey reports therefor delivered to the Lender
pursuant to Section 2.02(f), or materially decreased in value from the
value attributed thereto as set forth in the appraisal report therefor
delivered to the Lender pursuant to Section 2.02(f).
Section 2.03 Waiver of Conditions Precedent. All of the conditions
precedent contained in this Section 2 are for the sole benefit of the
Lender and the Lender may waive any or all of them in its absolute
discretion.
ARTICLE III
Representations, Warranties and Covenants
Section 3.01 Representations of the Borrower. The Borrower
represents and warrants that:
(a) The Borrower is a corporation, duly organized and validly
existing in good standing under the laws of the State of Oklahoma and has
the requisite power and authority (i) to carry on its business as presently
conducted, (ii) to enter into and perform its obligations under each Loan
Document to which it is a party, (iii) to borrow moneys, and (iv) to
mortgage the Vessels and give the security provided in the Loan Documents
to which it is a party.
(b) The execution, delivery and performance by the Borrower of each
Loan Document to which it is a party, and any other instrument or agreement
provided for by this Agreement to which the Borrower is a party, have been
duly authorized by all necessary corporate action, do not require
stockholder approval other than such as has been duly obtained or given, do
not or will not contravene any of the terms of its articles of
incorporation or by-laws, and will not violate any provision of law or of
any order of any court or governmental agency or constitute (with or
without notice or lapse of time or both) a default under, or result (except
as contemplated by this Agreement) in the creation of any security
interest, lien, charge or encumbrance upon any of its properties or assets
pursuant to, any agreement, indenture or other instrument to which it is a
party or by which it may be bound; this Agreement and each Loan Document to
which it is a party has been duly executed and delivered by the Borrower
and constitutes its legal, valid and binding agreement or instrument,
enforceable in accordance with the respective terms thereof. The
enforceability of this Agreement, however, is subject to all applicable
bankruptcy, insolvency, reorganization, moratorium and other laws affecting
the rights of creditors and to general equity principles.
(c) There are no suits or proceedings pending or to its knowledge
threatened against or affecting the Borrower which if adversely determined
would have a material adverse effect upon its financial condition,
operations or business.
(d) The registered office of the Borrower is c/o The Prentice-Hall
Corporation System Oklahoma, Inc., 115 S.W. 89th Street, Oklahoma City,
Oklahoma 73139-8511. The principal place of business of the Borrower and
the place where all records relating to the transactions contemplated
hereby, including records relating to the chartering and operations of the
Vessels are kept is 901 Threadneedle, Houston, Texas 77079.
(e) Other than such as have been obtained, no license, consent or
approval of any Governmental Agency or other regulatory authority is
required for the execution, delivery and performance of this Agreement or
any Loan Document or any instrument contemplated herein or therein. The
Borrower is the holder of all certificates and authorizations of
governmental authorities required by law to enable it to engage in the
business transacted by it.
(f) No part of the proceeds of the Loan will be used for any purpose
that violates the provisions of any of Regulation G, T, U or X of the Board
of Governors of the Federal Reserve System or any other regulation of such
Board of Governors. The Borrower is not engaged in the business of
extending credit to others for the purpose of purchasing or carrying margin
stock within the meaning of Regulations G, T, U and X of the Board of
Governors of the Federal Reserve System. If requested by the Lender, the
Borrower will furnish to the Lender in connection with the Loan hereunder a
statement in conformity with the requirements of Federal Reserve Form U-1
referred to in said Regulation U. The Borrower is not an "investment
company" or a company "controlled" by an "investment company" (as each of
such terms is defined or used in the Investment Company Act of 1940, as
amended). No proceeds of the Loan will be used to acquire any security in
any transaction which is subject to Sections 13 and 14 of the Securities
Exchange Act of 1934, as amended.
(g) The McCLINTOCK is and will be on the Closing Date and the
GALLOWAY will be on the date it is acquired by the Borrower: (i) owned by
the Borrower, free and clear of all liens, charges and rights of others
except the Mortgage; (ii) duly documented under the laws and flag of The
United States of America in the name of the Borrower; and (iii) in class
without recommendations and in good condition, working order and repair.
(h) The Borrower has filed or caused to be filed all tax returns
required by any applicable jurisdiction which are required to be filed and
has paid or caused to be paid all taxes as shown on such returns or on any
assessment received by it to the extent that such taxes have become due and
except as to such taxes being contested in good faith by appropriate
proceedings for which adequate reserves are being maintained. The Borrower
has set up reserves to the extent believed by it to be adequate for the
payment of additional taxes for years which have not been audited by the
respective tax authorities.
(i) The Borrower has no subsidiaries. The Borrower is a wholly-owned
indirect subsidiary of the Guarantor.
(j) The Borrower has not incurred any indebtedness except such as
generally incurred from time to time in the ordinary course of business and
it has not incurred any inter-company debts to the Guarantor or any of its
affiliates, except as disclosed in writing to the Lender and subordinated
to the Loan.
(k) (i) The Borrower has duly complied in all material respects
with, and the Vessels and its other properties and operations are,
or, in respect of the GALLOWAY, when acquired by the Borrower, will
be in compliance in all material respects with, the provisions of all
applicable environmental, health and safety laws, codes and
ordinances and all rules and regulations promulgated thereunder of
all Governmental Agencies unless such compliance would violate the
laws or regulations of the jurisdiction in which the Vessels are
operating.
(ii) As of the date of this Agreement, except as disclosed to
the Lender in writing, the Borrower has received no notice from any
Governmental Agency, and has no knowledge, of any fact(s) which
constitute a violation of any applicable environmental, health or
safety laws, codes or ordinances, and any rules or regulations
promulgated thereunder of all Governmental Agencies, which relate to
the use or ownership of the Vessels or other properties owned or
operated by the Borrower.
(iii) The Borrower has been issued all required permits,
licenses, certificates and approvals of all Governmental Agencies
relating to (a) air emissions, (b) discharges to surface water or
ground water, (c) noise emissions, (d) solid or liquid waste
disposal, (e) the use, generation, storage, transportation,
treatment, recycling or disposal of Hazardous Substances or (f) other
environmental, health or safety matters which are material and
necessary for the ownership or operation of the Vessels or other
properties owned or operated by the Borrower and such permits,
licenses, certificates and approvals are in full force and effect on
the date of this Agreement.
(iv) Except as disclosed to the Lender in writing, to the best
of the Borrower's knowledge, except in accordance with a valid
governmental permit, license, certificate or approval, there has been
no spill or unauthorized discharge or release of any Hazardous
Substance to the environment at, from, or as a result of any
operations on the Vessels or other properties and operations owned or
operated by the Borrower required to be reported to any Governmental
Agency.
(v) Except as disclosed to the Lender in writing, there has
been no material complaint, compliance order, compliance schedule,
notice letter, notice of citation or other similar notice from any
applicable environmental agency which concerns the operations of the
Vessels or other properties owned or operated by the Borrower.
(l) All representations and warranties made by the Borrower herein or
pursuant to any Loan Document to which it is a party or made in any
certificate or written statement delivered pursuant hereto or thereto (i)
do not contain any untrue statement of or omit to state a material fact
necessary to make the statements contained herein or therein not misleading
and (ii) shall survive the making of the Loan hereunder and the execution
and delivery to the Lender of the Note and any other Loan Document to which
it is a party.
Section 3.02 Covenants of the Borrower. After the date of execution
of this Agreement and until payment in full of the Note and performance by
the Borrower and the Guarantor of their respective obligations under this
Agreement and the Loan Documents, the Borrower agrees that it will:
(a) promptly inform the Lender of any event which constitutes or will
constitute, by giving of notice or lapse of time, or both, an Event of
Default or adversely affect its ability to fully perform its obligations
under this Agreement and the Loan Documents to which it is a party;
(b) pay and discharge, or cause to be paid and discharged, any taxes,
assessments and governmental charges or levies that may be imposed upon the
Borrower or upon its income or profits or upon any of its properties prior
to the date on which penalties attach thereto and all lawful claims which,
if unpaid, might become a lien or charge upon their respective properties;
provided, however, that this provision shall not be deemed to require
payment of any taxes, assessments, governmental charges, levies or claims
while the Borrower contests the validity thereof by appropriate proceedings
in good faith and so long as it shall have set aside on its books adequate
reserves with respect thereto;
(c) preserve and maintain, or cause to be preserved or maintained,
(i) its existence in good standing in the jurisdictions where it is
incorporated and in all jurisdictions where it is currently conducting
business, and (ii) all its rights, privileges and franchises thereunder;
(d) file or cause to be filed in such offices as shall be required or
appropriate under any applicable Uniform Commercial Code of any State or
any other statute of any other jurisdiction, and in such manner and form as
the Lender may require or as may be reasonably necessary or appropriate
under applicable law, any financing statement or statements or other
instruments that may be reasonably necessary or desirable or that the
Lender may request in order to create, perfect, preserve, continue,
validate or satisfy the Lender's liens on and security interests and rights
in collateral arising out of or related to this Agreement and any Loan
Document;
(e) promptly notify the Lender of any proposed change in location of
its registered office or the office where its records are kept or any
principal place of business located within the United States of America for
purposes of effecting its obligations under Section 3.01(d) hereof;
(f) promptly obtain and upon the reasonable request, deliver to the
Lender all authorizations, approvals, consents and licenses and renewals
thereof required under any applicable law or regulation with respect to
this Agreement, the Loan Documents, and the Vessels and it shall comply
with the terms of the same;
(g) as soon as practicable after the date of execution of the
Mortgage, (i) cause the Mortgage to be duly recorded under the laws and
regulations of the United States of America at the Vessel Documentation
Office of the United States Coast Guard, Port of Houston, Texas; and (ii)
cause a certified copy of the Mortgage to be placed aboard the Vessels,
together with the required Notice of Mortgage provided for therein;
(h) promptly notify the Lender of any suit or proceedings brought
against the Borrower or the Guarantor or, to the knowledge of the Borrower,
threatened against or affecting either the Borrower or the Guarantor which,
if adversely determined, would have a material adverse effect upon the
financial condition, operations or business of the Borrower or the
Guarantor;
(i) upon the request of the Lender, give the Lender or any
representative of the Lender access during normal business hours to, and
permit the Lender or such representative to inspect, all properties
belonging to the Borrower and permit such representative to examine, copy
and make extracts from such books, records and documents in the possession
of the Borrower, relating to the affairs of the Borrower, as such
representative may reasonably request;
(j) comply with and use its best efforts to cause its agents,
contractors and sub-contractors (while such persons are acting within the
scope of their contractual relationship with the Borrower) to so comply
with all material, applicable environmental, health and safety laws, codes
and ordinances, and all rules and regulations promulgated thereunder of all
Governmental Agencies; and with the terms and conditions of all applicable
permits, licenses, certificates and approvals of all Governmental Agencies
now or hereafter granted or obtained with respect to the Vessels or other
properties owned or operated by the Borrower unless such compliance would
violate the laws or regulations of the jurisdictions in which the Vessels
are operating.
(i) The Borrower will use its best efforts and safety practices
to prevent the unauthorized release, discharge, disposal, escape or
spill of Hazardous Substances on or about the Vessels or other
properties owned or operated by the Borrower.
(ii) The Borrower shall notify the Lender, in writing, within
five (5) Business Days of any of the following events occurring after
the date of this Agreement:
(A) Any written notification made by the Borrower to any
federal, state or local environmental agency required under any
federal, state or local environmental statute, regulation or
ordinance relating to a spill or unauthorized discharge or
release of any Hazardous Substance to the environment at, from,
or as a result of any operations on, the Vessels or other
properties and operations owned or operated by the Borrower;
(B) Knowledge by a Responsible Officer of the Borrower of
receipt of service by the Borrower of any complaint, compliance
order, compliance schedule, notice letter, notice of
violation, citation or other similar notice or any judicial
demand by any court, federal, state or local environmental
agency, alleging (i) any spill, unauthorized discharge or
release of any Hazardous Substance to the environment from, or
as a result of the operations on, the Vessels or other
properties owned or operated by the Borrower or (ii) violations
of applicable laws, regulations or permits regarding the
generation, storage, handling, treatment, transportation,
recycling, release or disposal of Hazardous Substances on or as
a result of operations on the Vessels or other properties and
operations owned or operated by the Borrower.
(C) It is understood by the parties hereto that the
aforementioned notices are solely for the Lender's information,
may not otherwise be required by any federal, state or local
environmental laws, regulations or ordinances, and are to be
considered confidential information by the Lender.
(D) The term "environmental agency" as used herein shall
include, but not be limited to, the United States Environmental
Protection Agency, the United States Coast Guard, the United
States Minerals Management Service, the United States
Department of Transportation (in its administration of the
Hazardous Materials Transportation Act, 49 U.S.C. Sec. 1801, et
seq.) and other analogous or similar Governmental Agencies
regulating or administering statutes, regulations or ordinances
relating to or imposing liability or standards of conduct
concerning the generation, storage, use, production,
transportation, handling, treatment, recycling, release or
disposal of any Hazardous Substance.
(iii) The Borrower hereby agrees to indemnify and hold the
Lender harmless from and against any and all claims, losses,
liability, damages and injuries of any kind whatsoever asserted
against the Lender with respect to or as a direct result of the
presence, escape, seepage, spillage, release, leaking, discharge or
migration from either Vessel or other properties owned or operated by
the Borrower of any Hazardous Substance, including without
limitation, any claims asserted or arising under any applicable
environmental, health and safety laws, codes and ordinances, and all
rules and regulations promulgated thereunder of all Governmental
Agencies, regardless of whether or not caused by or within the
control of the Borrower subject to the following:
(A) It is the parties' understanding that the Lender does
not now, has never and does not intend in the future to
exercise any operational control or maintenance over the
Vessels or any other properties and operations owned or
operated by the Borrower, nor has it in the past, presently, or
intends in the future to, maintain an ownership interest in the
Vessels or any other properties owned or operated by the
Borrower except as may arise upon enforcement of the Lender's
rights under the Mortgage.
(B) Should, however, the Lender hereafter exercise any
ownership interest in or operational control over the Vessels
or any other properties owned or operated by the Borrower,
e.g., including but not limited to, through foreclosure, then
the above stated indemnity and hold harmless shall be limited
with respect to any actions or failures to act by the Lender
subsequent to exercising such interest or operational control,
to the extent such action or inaction by the Lender is found by
a court or Governmental Agency with competent jurisdiction to
have caused or made worse any condition for which liability is
asserted, including but not limited to, the presence, escape,
seepage, spillage, leaking, discharge or migration on or from
the Vessels or other properties owned or operated by the
Borrower of any Hazardous Substance.
(C) The indemnity and hold harmless contained in this
Subsection (j) shall not extend to the Lender in its capacity
as an equity investor in the Borrower or as an owner of any
property or interest as to which the Borrower is also an owner
but only to its capacity as a lender, a holder of security
interests, or a beneficiary of security interests.
(k) not, without the prior written consent of the Lender, (i) sell,
transfer, lend, lease or otherwise dispose of the whole or, in the opinion
of the Lender, any substantial part of its business, property or assets,
whether by a single transaction or by a series of transactions (related or
not) unless Standard & Poor's Ratings Group ("Standard & Poor's") affirms
in writing that such transaction or series of transactions will not result
in a downgrade of the Guarantor's implied senior debt rating, or result in
such debt being placed on credit watch for negative implications, (ii)
change the management or stock ownership of the Borrower, or (iii) permit
the Vessels to be bareboat chartered for a period longer than twelve months
(including any committed extensions or renewals) to an entity not an
affiliate of the Guarantor;
(l) other than pursuant to or permitted by those Loan Documents to
which it is a party it will not create, assume or permit to exist any
encumbrance upon any of its property or assets (whether now owned or
hereafter acquired);
(m) not, without the prior written consent of the Lender: (i) conduct
or manage any business or activity other than as presently conducted or
managed or as is contemplated by this Agreement and the Loan Documents;
(ii) incur or agree to incur or issue any indebtedness nor make any
commitments other than (A) in the ordinary course of day-to-day trading;
and (B) to the Guarantor or its affiliates, the payment of which are
expressly subordinated to the Loan pursuant to documentation which is in
form and substance satisfactory to the Lender; and (iii) liquidate or
dissolve or consolidate or amalgamate with, or merge into, any other entity
unless Standard & Poor's affirms in writing that such transaction will not
result in a downgrade of the Guarantor's implied senior debt rating or
result in such debt being placed on credit watch for negative implications;
(n) not, without the prior written consent of the Lender repay any
stockholders' loan nor make any loans or advances to any other person;
(o) not, without the prior written consent of the Lender, acquire by
purchase or otherwise or make any investment in any firm, corporation or
person not a wholly owned subsidiary of the Borrower whether by acquisition
of stock or indebtedness, by loan, guarantee or otherwise;
(p) at all times conduct its business in a manner so as to qualify
and to maintain its qualification to register the Vessels in the registry
and under the flag of the United States of America;
(q) immediately upon receipt from the United States Coast Guard or
other governmental official having jurisdiction over the Vessels of notice
in respect of the invalidity or possible invalidity of the registration of
the Vessels or the disqualification or possible disqualification to
maintain the registration of the Vessels, (i) give written notice to the
Lender of the receipt of such notice and (ii) take all action as may be
required by the Lender to effect the proper registration of the Vessels;
(r) if in the sole reasonable opinion of the Lender, the Lender's
security may otherwise be imperilled and at the Lender's written request,
effect a change of registration of the Vessels;
(s) forthwith upon demand by the Lender and at the Borrower's sole
cost and expense, execute and provide all such assurances and do all acts
and things as the Lender or any receiver in its absolute discretion may
require for: (i) perfecting or protecting the security created (or intended
to be created) by any of the Loan Documents, including, without limitation,
granting in favor of the Lender a security interest covering the security
created (or intended to be created) by any of the Loan Documents with
respect to any obligations of the Borrower hereafter owing to the Lender;
or (ii) preserving or protecting any of the rights of the Lender under any
of the Loan Documents; or (iii) facilitating the appropriation or
realization of any of the collateral assigned or granted to the Lender
under any of the Loan Documents and enforcing the security constituted by
any of the Loan Documents on or at any time after the same shall have
become enforceable; or (iv) the exercise of any power, authority or
discretion vested in the Lender under any of the Loan Documents;
(t) deliver to the Lender such financial or other information
relating to it, any of the transactions contemplated by this Agreement or
any of the Loan Documents, as may be requested by the Lender;
(u) upon the request of the Lender, give the Lender or any
representative of the Lender at any reasonable time, access to the Vessels
and permit the Lender or such representative to inspect the Vessels and any
part thereof, as the Lender or such representative may reasonably request,
all at the sole cost and expense of the Borrower; provided, however, that
any inspection of the Vessels shall be subject to any consents required by
operators under applicable drilling contracts or by applicable Government
Agencies; which consents the Borrower shall use its best efforts to obtain;
(v) obtain an agreement in form and substance reasonably satisfactory
to the Lender from any person retained by or for the benefit of the
Borrower relating to the management of the Vessels that any indebtedness
incurred by such person for the benefit of the Vessels and any fees and
expenses paid to such manager shall be subject and subordinate to the lien
of the Mortgage, excluding masters or other persons-in-charge, crew,
stevedores and salvage vessels.
Section 3.03 Covenants of the Guarantor. After the date of execution
of this Agreement and until payment in full of the Note and performance by
the Borrower, its obligations under this Agreement and the Loan Documents,
the Guarantor agrees that it will:
(a) deliver, or shall cause to be delivered, to the Lender at least
two copies and as many additional copies as the Lender may reasonably
require from time to time of, (i) its audited annual consolidated financial
statements (including the balance sheet and income statement of the
Borrower), in a form consistent with generally accepted United States
accounting principles and practices consistently applied, as soon as is
practicable after the same have been issued but in any case within one
hundred twenty (120) days of the end of its fiscal year audited by Arthur
Andersen, L.L.P. or other auditors as may be acceptable to the Lender that
the consolidated financial statements present fairly, in all material
respects, the financial position of the Guarantor as of the date thereof,
and an unaudited worksheet reflecting the balance sheet and income
statements of Arcade Drilling AS and the consolidated balance sheet and
income statements of the Guarantor (excluding Arcade Drilling AS), (ii) its
quarterly consolidated financial statements (including the balance sheet
and income statement of the Borrower) in a form consistent with generally
accepted United States accounting principles and practices consistently
applied, as soon as is practicable after the end of each financial quarter
but in any case within ninety (90) days of the end of its financial quarter
certified by one of its Responsible Officers that the consolidated
financial statements present fairly, in all material respects, the
financial position of the Guarantor as of the date thereof and an unaudited
worksheet reflecting the quarterly balance sheet and income statements of
Arcade Drilling AS and the quarterly consolidated balance sheet and income
statements of the Guarantor (excluding Arcade Drilling AS), (iii) such
financial or other information relating to it, any of the transactions
contemplated by this Agreement or any of the other Loan Documents, as may
reasonably be requested by the Lender or generally made available to its
other creditors, its shareholders and to any governmental authorities;
(b) not, on a consolidated basis, allow its ratio of Long Term Debt
to Total Assets to exceed .28 to 1 at the end of any calendar quarter;
(c) maintain a consolidated Cash Flow Coverage Ratio of at least 2.0
to 1.0 at the end of each fiscal year;
(d) maintain and cause the Borrower to maintain all permits and
certificates which are material and necessary under all applicable
environmental, safety and public health laws and regulations applicable to
itself or the Borrower and the Vessels, and all other laws and regulations
affecting or relating to the Vessels;
(e) deliver to the Lender, contemporaneously with the delivery to the
Lender of the annual and quarterly financial statements specified in clause
(a) above, its certificate (in form and substance satisfactory to the
Lender), signed by one of its Responsible Officers, (i) stating that such
officer has reviewed the relevant terms of this Agreement, the other Loan
Documents and all other agreements of the Borrower and the Guarantor which
evidence indebtedness for borrowed money, lease or other financial
obligations on the part of either entity in excess of USD 500,000 (the
"Financial Obligation Agreements") and has made or caused to be made under
his supervision, a review of the transactions and condition of the Borrower
and the Guarantor during the relevant fiscal quarter or year, as the case
may be, and that such review has not disclosed the existence during such
period, nor does such Responsible Officer have knowledge of the existence
as at the date of such certificate, of any condition or event which
constitutes an event of default under any of the Loan Documents or
Financial Obligation Agreements, or which, after notice or lapse of time or
both would constitute an event of default under any of the Loan Documents
or Financial Obligation Agreements, or if any such condition or event
existed or exists, specifying the nature and period of existence thereof
and what action the Guarantor or the Borrower has taken or proposes to take
with respect thereto, (ii) setting forth in form and detail satisfactory to
the Lender the calculations respecting compliance with the financial
covenants of this Agreement and (iii) for purposes of the annual
certificate only, attaching and certifying as true and correct copies, the
insurance certificates and brokers opinions required to be provided to the
Lender pursuant to Section 1.18 and Section 1.20 of the Mortgage;
(f) deliver, or shall cause to be delivered, to the Lender at least
two copies and as many additional copies as the Lender may reasonably
require from time to time, within thirty (30) days of each quarterly
financial statement referred to in Section 3.03(a) above, a report (in form
and substance reasonably satisfactory to the Lender) on each drilling rig
directly or indirectly owned, controlled or managed by the Borrower stating
the then current employment; operator contracted with; the then current day
rate; contract expiration date; average utilization during the past quarter
and the average net day rate earned by such rig for the past quarter for
the days it was under contract; all such information to be kept
confidential by the Lender and not disclosed to any third parties, other
than the Lender's outside auditors or as required by applicable law,
without the prior written consent of the Guarantor;
(g) not, without the prior written consent of the Lender, (i) sell,
transfer, lend, lease or otherwise dispose of the whole or, in the opinion
of the Lender, any substantial part of its business, property or assets,
whether by a single transaction or by a series of transactions, (related or
not), or (ii) change the management of the Guarantor, unless Standard &
Poor's affirms in writing that such sale, transfer, etc. or such change in
management will not result in a downgrade of the Guarantor's implied senior
debt rating or result in such debt being placed on credit watch for
negative implications; and
(h) not, without the prior written consent of the Lender: (i) conduct
or manage any business or activity other than as presently conducted or
managed or as is contemplated by this Agreement and the Loan Documents; or
(ii) liquidate or dissolve or consolidate or amalgamate with, or merge
into, any other entity unless Standard & Poor's affirms in writing that
such transaction will not impair the Guarantor's implied senior debt
rating.
ARTICLE IV
Events of Default
If any of the following events shall occur and be continuing, (each an
"Event of Default"):
A. the Borrower shall fail to pay any principal of or interest on the
Note, which failure shall continue for five days after the date when due;
B. any representation or warranty made by either the Borrower or the
Guarantor herein or made in any certificate or financial statement
furnished to the Lender hereunder or under any of the Loan Documents shall
prove to have been incorrect, or shall be breached, in any material
respect;
C. default in the performance of any agreement, covenant, term or
condition contained herein or in any Loan Document to be performed by the
Borrower or the Guarantor, as the case may be, (other than any covered in
paragraph A of this Article IV and Sections 3.02 (l), 3.03 (b) and 3.03(c)
hereunder) which shall continue for 30 days after the giving of notice
thereof to the Borrower, or the Guarantor, as the case may be, by the
Lender;
D. default in the performance of the covenants contained in Sections
3.02(l), 3.03(b) and 3.03(c);
E. a Default under the Mortgage;
F. any payment default under any loan agreement, credit agreement,
security agreement, guaranty agreement, lease agreement or other agreement
now existing or hereafter entered into by the Borrower or the Guarantor or
any of its subsidiaries shall have occurred and shall not have been
remedied;
G. any license, consent or approval of any governmental body or other
regulatory authority required for the making and performance of this
Agreement or any instrument contemplated hereby or thereby shall have been
revoked, withdrawn, materially modified or withheld or shall otherwise fail
to remain in full force and effect;
H. Any of the following events shall occur:
(i) Either the Borrower or the Guarantor commences a voluntary
case under Title 11 of the United States Code as now or hereafter in
effect, or any successor thereto (the "Bankruptcy Code"); or
(ii) an involuntary case is commenced against the Borrower or
the Guarantor under the Bankruptcy Code and relief is ordered against
the Borrower or the Guarantor or the petition is controverted but is
not dismissed or stayed within ninety (90) days after the
commencement of the case; or
(iii) a custodian (as defined in the Bankruptcy Code) or a
similar official is appointed for, or takes charge of, all or
substantially all of the property of the Borrower or the Guarantor
and such appointment is not terminated within ninety (90) days; or
(iv) either the Borrower or the Guarantor commences any other
proceeding under any reorganization, arrangement, readjustment of
debt, relief of debtors, dissolution, insolvency, liquidation or
similar law of any jurisdiction relating to the Borrower or the
Guarantor (whether now or hereafter in effect), or there is commenced
against the Borrower or the Guarantor any such proceeding which
remains undismissed or unstayed for a period of ninety (90) days or
the Borrower or the Guarantor is adjudicated insolvent or bankrupt;
or the Borrower or the Guarantor fails to controvert in a timely
manner any such case under the Bankruptcy Code or any such
proceeding, or any order of relief or other order approving any such
case or proceeding is entered; or
(v) either the Borrower or the Guarantor by any act or failure
to act indicates its consent to, approval of or acquiescence in any
such case or proceeding or in the appointment of any custodian of or
for it or any substantial part of its property or suffers any such
appointment to continue undischarged or unstayed for a period of
ninety (90) days; or
(vi) either the Borrower or the Guarantor makes a general
assignment for the benefit of creditors; or
(vii) any corporate action is taken by either the Borrower or
the Guarantor for the purpose of effecting any of the foregoing.
I. an order, judgment or decree shall be entered, without the
application, approval or consent of the Borrower or the Guarantor by any
court of competent jurisdiction, approving a petition seeking
reorganization of the Borrower or the Guarantor seizure or attachment of
all or a substantial part of the Borrower's or the Guarantor's or
respective assets, and such order, judgment or decree shall continue
unstayed and in effect for any period of ninety (90) consecutive days; or
J. judgments or orders for the payment of monies in excess of USD
1,000,000 in aggregate shall be rendered against the Borrower, or in excess
of USD 5,000,000 against the Guarantor and such judgments or orders shall
continue unsatisfied, unstayed or unbonded for a period of 30 days;
then the Lender may by written notice to the Borrower (1) immediately
terminate the commitment of the Lender hereunder or (2) declare the
principal of, and interest accrued to the date of such declaration on, the
Note together with all other amounts due hereunder or under any of the Loan
Documents, to be forthwith due and payable, whereupon the same shall become
forthwith due and payable (provided, however, no notice or declaration
shall be required and such amounts shall be immediately due and payable
upon the occurrence of an event described in Article IV(H) or (I) hereof)
and (3) exercise any remedies to which it may be entitled by any Loan
Document or by applicable law.
ARTICLE V
Miscellaneous
Section 5.01 Notices. All notices, requests and demands shall be in
writing (including telecopier transmission) given to or made upon the
respective parties hereto as follows:
In the case of the Borrower or the Guarantor, at
901 Threadneedle, Suite 200
Houston, Texas 77079
Attention: Chief Financial Officer
Telecopier: (713) 496-0285
In the case of Lender, at
The CIT Group/Equipment Financing, Inc.
1211 Avenue of the Americas
New York, New York 10036
Attention: (a) Senior Vice President - Credit
Telecopier: (212) 536-1385
(b) Legal Department
Telecopier: (212) 536-1388
with a copy to:
The CIT Group/Equipment Financing, Inc.
300 Grand Avenue, 3rd Floor
Los Angeles, CA 90071
Attention: (a) Vice President - Credit
Telecopier (213) 628-7083
(b) Legal Department
Telecopier (213) 628-7083
or in such other manner as any party hereto shall designate by written
notice to the other parties hereto. All such notices shall be effective
upon delivery or 3 days after being deposited in the United States mail
with postage prepaid certified, return receipt requested in a correctly
addressed wrapper, or upon receipt if delivered to Federal Express or
similar courier company or transmitted by telefax during normal business
hours, except that all notices, requests and demands to the Lender shall
not be effective until received by the Lender. All notices, demands,
requests, communications and other documents delivered hereunder or under
the Loan Documents, unless submitted in the English language, shall be
accompanied by certified English translation thereof.
Section 5.02 No Waiver. No failure on the part of the Lender to
exercise, and no delay in exercising, any right hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise by the Lender of
any right hereunder preclude any other or further exercise thereof or the
exercise of any other right.
Section 5.03 Applicable Law and Jurisdiction. (a) This Agreement
and the Loan Documents provided for herein (including, but not limited to,
the validity and enforceability hereof and thereof) shall be governed by,
and construed in accordance with, the laws of the State of New York, other
than conflict of laws rules thereof. Any legal action or proceeding
against the Borrower or the Guarantor with respect to this Agreement or any
Loan Document may be brought in the courts of the State of New York, the
U.S. Federal Courts in such state, sitting in the County of New York, or in
the courts of any other jurisdiction where such action or proceeding may be
properly brought, and each of the Borrower or the Guarantor hereby
irrevocably accepts the jurisdiction of such courts for the purpose of any
action or proceeding. Each of the Borrower and the Guarantor hereby
designates and irrevocably appoints and empowers The Prentice-Hall
Corporation System, Inc. (the "Process Agent"), currently located at 500
Central Avenue, Albany, New York 12206-2290 in each case as its authorized
agent to accept, receive and acknowledge for and on behalf of each and its
property service of any and all process which may be served but only in any
action, suit or proceeding of the nature referred to above in the State of
New York and further agrees that failure of such firm to give the Borrower
and the Guarantor, as the case may be, any notice of any such service shall
not impair or affect the validity of such service or of any judgment
rendered in any action or proceeding based thereon. Each of the Borrower
and the Guarantor hereby irrevocably authorizes and directs the Process
Agent to accept such service on its behalf. Each of the Borrower and the
Guarantor further irrevocably consents to the service of process out of
said courts by the mailing thereof by the Lender by U.S. registered or
certified mail postage prepaid to the party to be served at its address
designated in Section 5.01. Each of the Borrower and the Guarantor agree
that a final judgment in any action or proceeding shall be conclusive and
may be enforced in any other jurisdiction by suit on the judgment or in any
other manner provided by law. Nothing in this Section 5.03 shall affect
the right of the Lender to serve legal process in any other manner
permitted by law or affect the right of the Lender to bring any action or
proceeding against the Borrower or the Guarantor or their respective
properties in the courts of any other jurisdiction. To the extent that the
Borrower or the Guarantor has or hereafter may acquire any immunity from
jurisdiction of any court or from any legal process (whether through
service of notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to either itself or its
respective property, each of the Borrower and the Guarantor hereby
irrevocably waive such immunity in respect of its obligations under this
Agreement and the other Loan Documents. Each of the Borrower and the
Guarantor hereby irrevocably waive any objection which it may now or
hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or any Loan Document brought
in the Supreme Court of the State of New York, County of New York or the
U.S. District Court for the Southern District of New York, and hereby
further irrevocably waives any claim that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient
forum.
(b) THE LENDER AND THE BORROWER AND THE GUARANTOR IRREVOCABLY WAIVE
ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTE OR ANY OTHER LOAN
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
(c) If for the purposes of obtaining a judgment in any court it
becomes necessary to convert the sum due hereunder or under any of the
other Loan Documents or under any instrument delivered hereunder or
thereunder in United States Dollars into another currency, the parties
hereto agree, to the fullest extent permitted by law, that the rate of
exchange used shall be that at which in accordance with normal banking
procedures the Lender would purchase United States Dollars with such other
currency on the Business Day preceding that on which the final judgment is
given. The obligation of the Borrower or the Guarantor in respect of any
sum due to the Lender hereunder or under any of the Loan Documents or under
any instrument delivered hereunder or thereunder shall, notwithstanding any
judgment in currency other than United States Dollars, be discharged only
to the extent that on the Business Day following receipt by the Lender of
any sum adjudged to be so due in such other currency, the Lender may in
accordance with normal banking procedures purchase United States Dollars
with such other currency; if the United States Dollars so purchased are
less than the sum originally due to the Lender in United States Dollars,
the Borrower and the Guarantor agree, as a separate obligation and
notwithstanding any such judgment, to indemnify the Lender against such
loss and if the United States Dollars so purchased exceed the sum
originally due to the Lender, in United States Dollars, the Lender agrees
to remit to the Borrower or the Guarantor, as the case may be, such excess.
Section 5.04 Severability. In the event that any provision of this
Agreement is held to be void or unenforceable in any jurisdiction, all
other provisions shall remain unaffected and be enforceable in accordance
with their terms in such jurisdiction, and all provisions of this Agreement
shall remain unaffected and shall be enforceable in accordance with their
terms in all other jurisdictions.
Section 5.05 Amendment. Neither this Agreement nor any provision
hereof, including without limitation this Section 5.05, may be amended,
modified, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of the
amendment, modification, waiver, discharge or termination is sought. This
Agreement shall be binding upon and inure to the benefit of the Borrower,
the Guarantor and the Lender and their respective successors and assigns,
except that neither the Borrower or the Guarantor shall have the right to
assign their respective rights hereunder or any interest herein without the
prior written consent of the Lender.
Section 5.06 Assignment and Participation. The Lender shall have the
right to assign or grant participations in all or any portion of the Loan
outstanding under this Agreement or the Note to any affiliate of the Lender
or to any foreign, federal or state banking institution, savings and loan
institution or finance company upon thirty (30) days written notice to the
Borrower of such assignment or participation.
Section 5.07 Costs, Expenses and Taxes. The Borrower agrees to pay
on demand all reasonable fees, costs and expenses in connection (i) with
the preparation, execution, delivery, administration, amendment and
enforcement of this Agreement, the Note, any other Loan Document and any
other documents to be delivered hereunder and thereunder (including,
without limitation, the appraisal and inspection and survey reports
required hereunder) and any amendment, modification or supplement hereto or
thereto, including, without limitation, the reasonable fees and out-of-
pocket expenses of counsel for the Lender, and any special counsel
associated with them, and with respect thereto and the filing of any
document or instrument in connection with any of the foregoing, (ii) the
fees and expenses of counsel for advising the Lender as to its rights and
responsibilities under this Agreement and the transactions contemplated
thereby after an Event of Default or an event which, with the giving of
notice or lapse of time, or both, shall have occurred, and (iii) with any
filing or recording of any document or instrument. In addition, the
Borrower shall pay any and all stamp and other taxes (including, without
limitation penalties and interest assessed thereon) other than Excluded
Taxes payable or determined to be payable in connection with the execution,
delivery or performance of this Agreement and the Loan Documents and any
other documents to be delivered hereunder and thereunder and agrees to save
the Lender harmless from and against any and all liabilities with respect
to or resulting from any delay in paying or omission to pay such taxes.
Section 5.08 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original, but all of
which, when taken together, shall constitute but one instrument.
Section 5.09 Section Headings. The headings of the various Sections
and subsections of this Agreement are for convenience of reference only and
shall not define or limit any of the terms or provisions hereof.
Section 5.10 Merger. THIS AGREEMENT AND THE LOAN DOCUMENTS EMBODY
THE ENTIRE AGREEMENT BETWEEN THE BORROWER AND THE GUARANTOR ON THE ONE HAND
AND THE LENDER ON THE OTHER HAND AND SUPERSEDE ALL PRIOR AGREEMENTS,
REPRESENTATIONS AND UNDERSTANDINGS, IF ANY, RELATING TO THE SUBJECT MATTER
HEREOF AND THEREOF.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
READING & BATES CORPORATION
By: ____________________________
Name: T. W. Nagle
Title: Vice President
READING & BATES OFFSHORE, LIMITED
By: ____________________________
Name: T. W. Nagle
Title: Vice President and
Treasurer
THE CIT GROUP/EQUIPMENT
FINANCING, INC.
By: ____________________________
Name: Joseph M. Pitch
Title: Vice President
Exhibit A to
Loan Agreement
SECURED PROMISSORY NOTE
USD 25,000,000 May 25, 1995
The undersigned (the "Borrower") for value received, hereby
promises to pay to the order of THE CIT GROUP/EQUIPMENT FINANCING, INC.
(the "Lender") or any subsequent holder hereof the principal sum of
Twenty Five Million United States Dollars (USD 25,000,000) or such lesser
amount as may be loaned to the Borrower pursuant to the Loan Agreement
dated as of May 25, 1995 among the Borrower, Reading & Bates Corporation,
as Guarantor and the Lender (the "Loan Agreement").
PRINCIPAL AND INTEREST
1.1 (a) Interest on this Note shall be payable at the times and
the rates as provided in Section 1.04 of the Loan Agreement.
(b) Subject to the terms of Section 1.5 hereof, in case any
payment of principal or interest is not paid when due, additional
interest at the rate determined as provided in Section 1.04(c) of the
Loan Agreement shall be payable on all overdue principal and, to the
extent that the same may be lawful, on all overdue interest.
1.2 Interest shall be calculated as provided in Section 1.04(b)
of the Loan Agreement.
1.3 The principal of this Note shall be payable in installments
as provided in Section 1.03(c) of the Loan Agreement and in such amounts
as are set forth in Schedule 1 hereto.
1.4 All principal, interest, premium, if any, and other amounts
due hereunder shall be payable in lawful money of the United States of
America in immediately available funds to the Lender at Chemical Bank,
640 Madison Avenue, New York, New York 10021, ABA No. 021-000-128, for
credit to The CIT Group/Equipment Financing, Inc., Account No. 134-086460
(Ref. Reading & Bates Offshore Contract No. 08371) as provided in Section
1.05 of the Loan Agreement.
1.5 In no event shall any interest rate provided for in this Note
exceed the maximum rate permitted by the then applicable law. It is the
intention of the Lender and the Borrower to strictly comply with
applicable usury laws; accordingly, it is agreed that, notwithstanding
any provision to the contrary in this Note, the Loan Agreement or in the
other Loan Documents, in no event shall this Note require the payment or
permit the collection of interest in excess of the maximum amount
permitted by applicable law. If any such excess interest is contracted
for, charged or received under this Note, or in the event that all of the
principal balance shall be prepaid, so that under any of such
circumstances the amount of interest contracted for, charged or received
on the principal balance shall exceed the maximum amount of interest
permitted by applicable law, then in such event (i) the provisions of
Section 1.04(d) of the Loan Agreement shall govern and control,
(ii) neither the Borrower nor any other person or entity now or hereafter
liable for the payment thereof shall be obligated to pay the amount of
such interest to the extent that it is in excess of the maximum amount of
interest permitted by applicable law, (iii) any such excess which may
have been collected shall be either applied as a credit against the then
unpaid principal balance or refunded to the Borrower, at the option of
the Lender, and (iv) the effective rate of interest shall be
automatically reduced to the maximum lawful contract rate allowed under
applicable law as now or hereafter construed by the courts having
jurisdiction thereof. Without limitation of the foregoing, all
calculations of the rate of interest contracted for, charged or received
under this Note which are made for the purpose of determining whether
such rate exceeds the maximum lawful contract rate, shall be made, to the
extent permitted by applicable law, by amortizing, prorating, allocating
and spreading in equal parts during the period of the full stated term of
the indebtedness evidenced hereby, all interest at any time contracted
for, charged or received from the Borrower or otherwise by the Lender in
connection with such indebtedness; provided, however, that if any
applicable state law is amended or the law of the United States of
America preempts any applicable state law, so that it becomes lawful for
the Lender to receive a greater simple interest per annum rate than is
presently allowed, on the effective date of such amendment or preemption
as the case may be, the lawful maximum hereunder shall be increased to
the maximum simple interest per annum rate allowed by the higher of the
amended state law or the law of the United States of America.
SECURITY
2.1 This Note is the secured promissory note issued under and
pursuant to the Loan Agreement and is secured by, among other things, a
U.S. First Preferred Fleet Mortgage dated May 25, 1995 in favor of the
Lender (the "Mortgage"). Reference is hereby made to the Mortgage for a
description of the property thereby mortgaged, the nature and extent of
the security afforded thereby and the rights of the Borrower and the
Lender with respect to such security as provided in the Mortgage.
Payment of this Note may be demanded prior to the maturity of this Note
under certain circumstances and conditions, in the manner, and with the
effect, provided in the Mortgage or the Loan Agreement. A true and
complete copy of the form of the Loan Agreement is attached to the
Mortgage and made a part thereof.
2.2 This Note evidences Advances made by the Lender under Section
1.02 of the Loan Agreement.
MISCELLANEOUS
3.1 All parties hereto, including endorsers hereof, hereby waive
presentment for payment, demand, protest and notice of protest and non-
payment hereof and hereby consent that any and all securities or other
property, if any, held by or for the holders hereof at any time as
security for this Note may be exchanged, released or surrendered and that
the time of payment of this Note may be extended, all in the sole
discretion of the holders hereof and without notice and without affecting
in any manner the liability of the parties hereto.
3.2 No course of dealing between the Borrower and the Lender in
exercising any rights hereunder shall operate as a waiver of any right of
any holders except to the extent expressly waived in writing by such
holder.
3.3 Whenever any payment to be made hereunder shall be due on a
day which is not a Business Day, such payments shall be made on the next
succeeding Business Day.
3.4 Any notice to be given pursuant to this Note shall be given
in accordance with Section 5.01 of the Loan Agreement.
3.5 THIS NOTE (INCLUDING, BUT NOT LIMITED TO, THE VALIDITY AND
ENFORCEABILITY HEREOF) SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, OTHER THAN THE CONFLICT OF LAWS
RULES THEREOF.
3.6 THE BORROWER HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL
PROCEEDING TO WHICH IT IS A PARTY INVOLVING, DIRECTLY OR INDIRECTLY, ANY
MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY
ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS NOTE OR ANY OF THE
LOAN DOCUMENTS.
3.7 Capitalized terms used in this Note but not defined herein
shall have the meanings given to them in the Loan Agreement.
IN WITNESS WHEREOF, the Borrower has caused this Note to be duly
executed the day and year first above written.
READING & BATES OFFSHORE, LIMITED
By: ____________________________
Name: T.W. Nagle
Title: Vice President and Treasurer
Exhibit B to
Loan Agreement
GUARANTY
GUARANTY, dated as of May 25, 1995, made by READING & BATES
CORPORATION, a corporation organized and existing under the laws of the
State of Delaware (the "Guarantor") in favor of THE CIT GROUP/EQUIPMENT
FINANCING, INC., a corporation organized and existing under the laws of
the State of New York (the "Lender").
WHEREAS, READING & BATES OFFSHORE, LIMITED, an Oklahoma corporation
(the "Borrower"), wishes to borrow funds in an aggregate amount up to
USD 25,000,000 (the "Loan") from the Lender pursuant to the terms of the
Loan Agreement dated as of May 25, 1995 (as the same may be amended,
supplemented or otherwise modified from time to time, the "Loan
Agreement") by and among the Borrower, the Guarantor and the Lender; and
WHEREAS, the Borrower is a wholly owned indirect subsidiary of the
Guarantor and it is to the corporate benefit of the Guarantor that the
Borrower obtain the Loan; and
WHEREAS, the Loan will be evidenced by the promissory note of the
Borrower in favor of the Lender (as the same may be amended, supplemented
as otherwise modified from time to time, the "Note"); and
WHEREAS, in order to induce the Lender to make the Loan, the
Guarantor is prepared to guarantee the performance by the Borrower of its
obligations under the Loan Agreement and the Note; and
WHEREAS, the Lender is prepared to make the Loan in consideration,
among other things, of such guaranty by the Guarantor;
NOW, THEREFORE, in consideration of the premises, the Guarantor
hereby agrees as follows:
SECTION 1. Guaranty. As independent and additional security for
the Loan, the Guarantor hereby unconditionally and irrevocably guarantees
the payment by the Borrower of all amounts due and to become due from the
Borrower under the Loan Agreement and the Note (the "Obligations") and
agrees to pay any and all expenses incurred by the Lender in enforcing
any of its respective rights under this Guaranty.
SECTION 2. Guaranty Absolute. (a) The Guarantor hereby
guarantees that the Obligations will be paid strictly in accordance with
the terms of the Loan Agreement and the Note, regardless of any law,
regulation or order now or hereafter in effect in any jurisdiction
affecting any of such terms or the rights of the Lender with respect
thereto. The liability of the Guarantor under this Guaranty shall be
absolute and unconditional irrespective of:
(i) any lack of validity or enforceability of the Loan
Agreement, the Note or any other agreement or instrument entered
into between the Borrower, the Lender or the Guarantor;
(ii) any change in the time, manner 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 consent to departure from the
Loan Agreement or the Note;
(iii) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Borrower in respect of
the Obligations or the Guarantor in respect of this Guaranty.
(b) 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 rescinded or must otherwise be returned by the Lender upon the
insolvency, bankruptcy or reorganization of the Borrower or otherwise,
all as though such payment had not been made.
SECTION 3. Waiver. The Guarantor hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to any
of the Obligations and this Guaranty and any requirement that the Lender
or any other person exhaust any right or take any action against the
Borrower or any other person or entity or any collateral. This is a
guaranty of payment and not of collection only.
SECTION 4. Subrogation. The Guarantor will not exercise any
rights which it may acquire by way of subrogation under this Guaranty, by
any payment made hereunder or otherwise, until all the Obligations shall
have been paid in full. If any amount shall be paid to the Guarantor on
account of such subrogation rights at any time when all the Obligations
shall not have been paid in full, such amount shall be forthwith paid to
the Lender to be credited and applied against the Obligations. If (i)
the Guarantor shall make payment to the Lender, of all or any part of the
Obligations and (ii) all the Obligations shall be paid in full, the
Lender will, at the Guarantor's request, execute and deliver to the
Guarantor appropriate documents, without recourse and without
representation or warranty, transferring to the Guarantor any and all
rights the Lender, may have against the Borrower or necessary to evidence
the transfer by subrogation to the Guarantor of any interest in the
Obligations resulting from such payment by the Guarantor.
SECTION 5. Payments Free and Clear of Taxes, Etc. (a) All sums
payable by the Guarantor under this Guaranty, whether of principal,
interest, fees or otherwise, shall be paid in full without set-off or
counterclaim and in such amounts as may be necessary in order that all
such payments (after deduction or withholding for or on account of any
present or future taxes, levies, imposts, duties or other charges of
whatsoever nature imposed by any Governmental Agency or taxing authority
thereof, other than any tax or fee on or measured by the net income of
the Lender; collectively the "Taxes") shall not be less than the amounts
otherwise specified to be paid under this Guaranty.
(b) A certificate as to any additional amounts payable to the
Lender under this Section 5 submitted to the Guarantor by the Lender
shall show in reasonable detail the amount payable and the calculations
used to determine in good faith such amount and shall be deemed prima
facie correct.
(c) With respect to each deduction or withholding for or on
account of any Taxes, the Guarantor shall promptly furnish to the Lender
such certificates, receipts and other documents as may be required (in
the reasonable judgment of the Lender) to establish any income tax credit
to which any of the Lender may be entitled.
SECTION 6. APPLICABLE LAW AND JURISDICTION. (a) THIS GUARANTY
(INCLUDING, BUT NOT LIMITED TO, THE VALIDITY AND ENFORCEABILITY HEREOF)
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK, OTHER THAN CONFLICT OF LAWS RULES THEREOF. ANY LEGAL
ACTION OR PROCEEDING AGAINST THE GUARANTOR WITH RESPECT TO THIS GUARANTY
MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK, THE U.S. FEDERAL
COURTS IN SUCH STATE, SITTING IN THE COUNTY OF NEW YORK, OR IN THE COURTS
OF ANY OTHER JURISDICTION WHERE SUCH ACTION OR PROCEEDING MAY BE PROPERLY
BROUGHT, AND THE GUARANTOR HEREBY IRREVOCABLY ACCEPTS THE JURISDICTION OF
SUCH COURTS FOR THE PURPOSE OF ANY ACTION OR PROCEEDING. THE GUARANTOR
HEREBY DESIGNATES AND IRREVOCABLY APPOINTS AND EMPOWERS THE PRENTICE-HALL
CORPORATION SYSTEM, INC. (THE "PROCESS AGENT"), CURRENTLY LOCATED AT 500
CENTRAL AVENUE, ALBANY, NEW YORK 12206-2290 AS ITS AUTHORIZED AGENT TO
ACCEPT, RECEIVE AND ACKNOWLEDGE FOR AND ON BEHALF OF ITS PROPERTY,
SERVICE OF ANY AND ALL PROCESS WHICH MAY BE SERVED BUT ONLY IN ANY
ACTION, SUIT OR PROCEEDING OF THE NATURE REFERRED TO ABOVE IN THE STATE
OF NEW YORK AND FURTHER AGREES THAT FAILURE OF SUCH FIRM TO GIVE THE
GUARANTOR ANY NOTICE OF ANY SUCH SERVICE SHALL NOT IMPAIR OR AFFECT THE
VALIDITY OF SUCH SERVICE OR OF ANY JUDGMENT RENDERED IN ANY ACTION OR
PROCEEDING BASED THEREON. THE GUARANTOR HEREBY IRREVOCABLY AUTHORIZES
AND DIRECTS THE PROCESS AGENT TO ACCEPT SUCH SERVICE ON ITS BEHALF. THE
GUARANTOR FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF
SAID COURTS BY THE MAILING THEREOF BY THE LENDER BY U.S. REGISTERED OR
CERTIFIED MAIL POSTAGE PREPAID TO THE GUARANTOR AT ITS ADDRESS DESIGNATED
IN SECTION 10 HEREOF. THE GUARANTOR AGREES THAT A FINAL JUDGMENT IN ANY
ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN ANY OTHER
JURISDICTION BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY
LAW. NOTHING IN THIS SECTION 6 SHALL AFFECT THE RIGHT OF THE LENDER TO
SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE
RIGHT OF THE LENDER TO BRING ANY ACTION OR PROCEEDING AGAINST THE
GUARANTOR OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION. TO
THE EXTENT THAT THE GUARANTOR HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY
FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH
SERVICE OF NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF
EXECUTION, EXECUTION OR OTHERWISE) WITH RESPECT TO EITHER ITSELF OR ITS
PROPERTY, THE GUARANTOR HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN
RESPECT OF ITS OBLIGATIONS UNDER THIS GUARANTY. THE GUARANTOR HEREBY
IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO
THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS GUARANTY BROUGHT IN THE COURTS OF THE STATE OF NEW YORK,
OR THE U.S. FEDERAL COURTS IN SUCH STATE, SITTING IN THE COUNTY OF NEW
YORK, AND HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.
(b) THE LENDER AND THE GUARANTOR IRREVOCABLY WAIVE ALL RIGHT TO A
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 7. Representations and Warranties. The Guarantor hereby
represents and warrants as follows:
(a) It is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware, duly qualified to
do business wherever its business or ownership of property requires it to
be so qualified.
(b) The execution, delivery and performance by the Guarantor of
this Guaranty and any other documents contemplated herein and the
completion of all other transactions herein contemplated are within the
Guarantor's corporate authority, are in furtherance of its corporate
purposes, have been duly authorized by all necessary corporate action and
will not contravene any applicable law or regulation nor violate the
Guarantor's Articles of Incorporation or By-Laws nor any agreement
binding on the Guarantor nor any applicable law or regulation or order or
decree of any governmental authority or agency of the State of Texas, the
United States of America or the State of New York.
(c) This Guaranty is supported by adequate and sufficient
consideration, has been validly signed on behalf of the Guarantor and
represents the valid and binding obligation of the Guarantor, enforceable
in accordance with its terms and will not result in the Guarantor's
liabilities (including the maximum amount of liabilities that may be
reasonably expected to result from all contingent liabilities and giving
effect to rights of contribution and subrogation) exceeding the fair
market value of its assets. The enforceability of this Guaranty,
however, is subject to all applicable bankruptcy, insolvency,
reorganization, moratorium and other laws affecting the rights of
creditors generally and to general equity principles.
(d) The legality, validity, enforceability or admissibility of
this Guaranty are not subject to or conditional upon this Guaranty being
filed, recorded or enrolled with any governmental authority or agency or
stamped with any stamp, duty or similar transaction tax of the State of
Texas, the United States of America or the State of New York.
(e) There are no pending, or to the best of the Guarantor's
knowledge, any threatened actions or proceedings affecting the Guarantor
or any of the Guarantor's subsidiaries before any court, governmental
agency or arbitrator in any country, which may materially adversely
affect the financial condition or operations of the Guarantor.
(f) The covenants, recitals, representations and warranties of the
Guarantor set forth in Section 3.03 of the Loan Agreement are true and
correct on the date hereof as if made on the date hereof.
SECTION 8. The Loan Agreement and the Note. The Guarantor hereby
acknowledges receipt of the Loan Agreement and the Note in execution form
and hereby consents and agrees to the Loan Agreement and the Note and to
all the terms and provisions thereof.
SECTION 9. Amendments, Etc. No amendment or waiver of any
provision of this Guaranty nor consent to any departure by the Guarantor
therefrom shall in any event be effective unless the same shall be in
writing and signed by the Lender, and then such waiver or consent shall
be effective only in the specific instance and for the specific purpose
for which given.
SECTION 10. Notices. (a) All notices, requests, consents,
demands and other communications provided for or permitted hereunder
shall be made as required in Section 5.01 of the Loan Agreement, except
that notices to the Lender shall not be effective until received.
(b) Any of the parties hereto may change its respective address by
notice in writing given to the other parties to this Agreement.
SECTION 11. No Waiver; Remedies. No failure on the part of the
Lender 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. The remedies herein provided are cumulative
and not exclusive of any remedies provided by law.
SECTION 12. Continuing Guaranty. This Guaranty is a continuing
guaranty and shall (i) remain in full force and effect until payment in
full of the Obligations and payment in full of all other amounts due
under this Guaranty, (ii) be binding upon the Guarantor, its successors
or assigns, as the case may be, and (iii) inure to the benefit of and be
enforceable by the Lender and its respective successors, transferees and
assigns, provided, however, that the Guarantor may not transfer this
Guaranty or any part of it without the prior written consent of the
Lender.
SECTION 13. Capitalized Terms. All capitalized terms used in this
Guaranty which are not defined herein shall have the meanings given to
them in the Loan Agreement.
IN WITNESS WHEREOF, the Guarantor has duly executed and delivered
this Guaranty, as of the date first above written.
READING & BATES CORPORATION
By: __________________________
Name: T. W. Nagle
Title: Vice President
ACCEPTED:
THE CIT GROUP/EQUIPMENT FINANCING, INC.
By: _______________________________
Name: Joseph M. Pitch
Title: Vice President
Exhibit C to
Loan Agreement
NOTICE OF DRAWING
_______________, 199_
By Facsimile
(213) 628-7083
The CIT Group/Equipment Financing, Inc.
300 South Grand Ave., 3rd Fl.
Los Angeles, CA 90071
Attention: Vice President - Credit
Vice President - Legal
Ladies and Gentlemen:
The undersigned, Reading & Bates Offshore, Limited, refers to the
Loan Agreement dated as of May , 1995 (the "Loan Agreement") among the
undersigned as Borrower, Reading & Bates Corporation as Guarantor and the
Lender and hereby gives you irrevocable notice pursuant to Section 1.02(c)
of the Loan Agreement that the undersigned hereby requests an Advance under
the Loan Agreement, and in that connection sets forth below the information
relating to such Advance (the "Proposed Advance"):
(i) The date of the Proposed Advance is ________ ___, 1995.
(ii) The amount of the Proposed Advance is USD _____________.
(iii) The bank account to which the Proposed Advance is to be
remitted is as follows:
(iv) The proceeds of the Proposed Advance will be used by the
undersigned for working capital and for other corporate
purposes.
The undersigned hereby certifies that the following are true on the
date hereof, and will be true on the date of the Proposed Advance:
(A) the representations and warranties contained in
Section 3.01 of the Loan Agreement will be
correct, before and after giving effect to the
Proposed Advance and to the application of the
proceeds therefrom, as though made on and as of
such date;
(B) no Default or Event of Default will have occurred
and be continuing, or will result from such
Proposed Advance or from the application of the
proceeds therefrom; and
(C) no material adverse change has occurred since
[date of most recent quarterly statement], in the
business, operations, properties, prospects or
condition (financial or otherwise) of the Borrower
or the Guarantor.
If the Proposed Advance fails to take place or is delayed for any
reason (other than attributable to the Lender), the undersigned hereby
agrees to indemnify the Lender against any loss incurred as a result
of giving of this Notice of Drawing.
All capitalized terms used in the letter and not defined herein
shall have the meanings given to them in the Loan Agreement.
Very truly yours,
READING & BATES OFFSHORE, LIMITED
By: ____________________________
Name: T. W. Nagle
Title: Vice President and
Treasurer
EXHIBIT 10.2
USD 65,000,000
AMENDED AND RESTATED
CREDIT FACILITY AGREEMENT
Provided By
Internationale Nederlanden Bank N.V.
to
Reading & Bates Corporation
Reading & Bates Drilling Co.
Reading & Bates Exploration Co.
Reading and Bates, Inc.
Reading and Bates Borneo Drilling Co., Ltd.
Reading & Bates (A) Pty. Ltd.
Dated as of April 27, 1995
<PAGE>
TABLE OF CONTENTS
Section 1. Definitions . . . . . . . . . . . . . . . . . . . . . . .
1.1 Certain Definitions . . . . . . . . . . . . . . . . . . .
1.2 Accounting Terms . . . . . . . . . . . . . . . . . . . .
Section 2. Facility A . . . . . . . . . . . . . . . . . . . . . . .
2.1 Term Loan . . . . . . . . . . . . . . . . . . . . . . . .
2.2 The Facility A Note . . . . . . . . . . . . . . . . . . .
Section 3. Facility B . . . . . . . . . . . . . . . . . . . . . . .
3.1 Prepayment . . . . . . . . . . . . . . . . . . . . . . .
3.2 Charter Payment Guaranty . . . . . . . . . . . . . . . .
Section 4. Facility C. . . . . . . . . . . . . . . . . . . . . . . .
4.1 Overdraft Facility . . . . . . . . . . . . . . . . . . .
4.2 Extension of Maturity Date . . . . . . . . . . . . . . .
4.3 The Facility C Note . . . . . . . . . . . . . . . . . . .
Section 5. Facility D . . . . . . . . . . . . . . . . . . . . . . .
5.1 Letter of Credit . . . . . . . . . . . . . . . . . . . .
5.2 Counter Indemnity . . . . . . . . . . . . . . . . . . . .
5.3 Drawings Under Letter of Credit . . . . . . . . . . . . .
5.4 Variations . . . . . . . . . . . . . . . . . . . . . . .
5.5 Security . . . . . . . . . . . . . . . . . . . . . . . .
5.6 Certificates . . . . . . . . . . . . . . . . . . . . . .
5.7 The Facility D Note . . . . . . . . . . . . . . . . . . .
Section 6. Facility E . . . . . . . . . . . . . . . . . . . . . . .
6.1 Letters of Credit . . . . . . . . . . . . . . . . . . . .
6.2 Counter Indemnity . . . . . . . . . . . . . . . . . . . .
6.3 Drawings Under Letters of Credit . . . . . . . . . . . .
6.4 Variations . . . . . . . . . . . . . . . . . . . . . . .
6.5 Security . . . . . . . . . . . . . . . . . . . . . . . .
6.6 Certificates . . . . . . . . . . . . . . . . . . . . . .
6.7 The Facility E Note . . . . . . . . . . . . . . . . . . .
Section 7. Facility F . . . . . . . . . . . . . . . . . . . . . . .
7.1 Letters of Credit . . . . . . . . . . . . . . . . . . . .
7.2 Counter Indemnity . . . . . . . . . . . . . . . . . . . .
7.3 Drawings Under Letters of Credit . . . . . . . . . . . .
7.4 Variations . . . . . . . . . . . . . . . . . . . . . . .
7.5 Security . . . . . . . . . . . . . . . . . . . . . . . .
7.6 Certificates . . . . . . . . . . . . . . . . . . . . . .
7.7 The Facility F Note . . . . . . . . . . . . . . . . . . .
7.8 Insurance . . . . . . . . . . . . . . . . . . . . . . . .
Section 8. Manner of Drawdown and Issuance of Letters of Credit . .
8.1 Manner of Drawdown or Issuance. . . . . . . . . . . . . .
8.2 Making Commitment Available . . . . . . . . . . . . . . .
8.3 Transfer of Unused Portion of Commitment. . . . . . . . .
8.4 Failure to Borrow; Delay. . . . . . . . . . . . . . . . .
Section 9. Interest . . . . . . . . . . . . . . . . . . . . . . . .
9.1 Rate of Interest . . . . . . . . . . . . . . . . . . . .
9.2 Payment of Interest . . . . . . . . . . . . . . . . . . .
9.3 Overdue Payment of Principal and Interest . . . . . . . .
9.4 Computation of Interest . . . . . . . . . . . . . . . . .
Section 10. Payments . . . . . . . . . . . . . . . . . . . . . . . .
10.1 Payments on Non-Business Days . . . . . . . . . . . . . .
10.2 Repayment . . . . . . . . . . . . . . . . . . . . . . . .
10.3 Voluntary Prepayments . . . . . . . . . . . . . . . . . .
10.4 Mandatory Prepayment . . . . . . . . . . . . . . . . . .
10.5 Method and Place of Payment . . . . . . . . . . . . . . .
10.6 Net Payments . . . . . . . . . . . . . . . . . . . . . .
10.7 Rights of Set-Off . . . . . . . . . . . . . . . . . . . .
10.8 Changes in Circumstances . . . . . . . . . . . . . . . .
10.9 Unavailability of Dollars . . . . . . . . . . . . . . .
Section 11. Security . . . . . . . . . . . . . . . . . . . . . . . .
11.1 Mortgages. . . . . . . . . . . . . . . . . . . . . . . .
11.2 Assignments. . . . . . . . . . . . . . . . . . . . . . .
11.3 Pledges . . . . . . . . . . . . . . . . . . . . . . . .
11.4 Pledge of Earnings Accounts . . . . . . . . . . . . . .
11.5 Pledge of Arcade Drilling Shares . . . . . . . . . . . .
11.6 Security Deposits . . . . . . . . . . . . . . . . . . .
11.7 Further Assurances . . . . . . . . . . . . . . . . . . .
Section 12. Conditions Precedent . . . . . . . . . . . . . . . . . .
12.1 Documents Required as Conditions Precedent to the
Amendment and Restatement . . . . . . . . . . . . . . . .
12.2 Waiver of Conditions Precedent . . . . . . . . . . . . .
Section 13. Fees and Expenses . . . . . . . . . . . . . . . . . . . .
13.1 Fees . . . . . . . . . . . . . . . . . . . . . . . . . .
13.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . .
Section 14. Representations and Warranties of Borrowers . . . . . . .
14.1 Due Incorporation, Qualification, Etc . . . . . . . . . .
14.2 Capacity . . . . . . . . . . . . . . . . . . . . . . . .
14.3 Authority and Enforceability . . . . . . . . . . . . . .
14.4 Governmental Approvals . . . . . . . . . . . . . . . . .
14.5 Compliance with Other Instruments . . . . . . . . . . . .
14.6 Financial Statements . . . . . . . . . . . . . . . . . .
14.7 Material Adverse Events . . . . . . . . . . . . . . . . .
14.8 Litigation, Etc . . . . . . . . . . . . . . . . . . . . .
14.9 Principal Place of Business . . . . . . . . . . . . . . .
14.10 Patent and Other Rights . . . . . . . . . . . . . . . . .
14.11 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . .
14.12 Compliance with Federal Reserve Board
Regulations . . . . . . . . . . . . . . . . . . . . . . .
14.13 Employee Retirement Income Security Act of 1974 . . . . .
14.14 Investment Company Act of 1940 . . . . . . . . . . . . .
14.15 Subsidiaries . . . . . . . . . . . . . . . . . . . . . .
14.16 Environmental Compliance . . . . . . . . . . . . . . . .
Section 15. Affirmative Covenants of Borrowers . . . . . . . . . . .
15.1 Financial Statements and Reports and Inspection . . . . .
15.2 Consolidated Financial Statements . . . . . . . . . . . .
15.3 Insurance . . . . . . . . . . . . . . . . . . . . . . . .
15.4 Other Debt . . . . . . . . . . . . . . . . . . . . . . .
15.5 Maintenance of Existence; Conduct of Business . . . . . .
15.6 Financial Records . . . . . . . . . . . . . . . . . . . .
15.7 Maintenance of Rigs . . . . . . . . . . . . . . . . . . .
15.8 Environmental Compliance . . . . . . . . . . . . . . . .
15.9 Environmental Notifications . . . . . . . . . . . . . . .
15.10 Environmental Indemnification . . . . . . . . . . . . . .
15.11 Charter Parties . . . . . . . . . . . . . . . . . . . . .
Section 16. Negative Covenants of Borrowers . . . . . . . . . . . . .
16.1 Liens . . . . . . . . . . . . . . . . . . . . . . . . . .
16.2 Dividends . . . . . . . . . . . . . . . . . . . . . . . .
16.3 Consolidation, Merger, Etc . . . . . . . . . . . . . . .
16.4 Modification of Agreements . . . . . . . . . . . . . . .
16.5 Indebtedness . . . . . . . . . . . . . . . . . . . . . .
16.6 Reportable Event . . . . . . . . . . . . . . . . . . . .
16.7 Change of Legal Structure . . . . . . . . . . . . . . . .
16.8 Change of Place of Business . . . . . . . . . . . . . . .
16.9 Management of Rigs . . . . . . . . . . . . . . . . . . .
16.10 Subsidiaries . . . . . . . . . . . . . . . . . . . . . .
16.11 Prepayment of Debt . . . . . . . . . . . . . . . . . . .
16.12 Sale of Rigs, Etc . . . . . . . . . . . . . . . . . . . .
16.13 Consolidated Tangible Net Worth . . . . . . . . . . . . .
16.14 Current Ratio . . . . . . . . . . . . . . . . . . . . . .
16.15 Fixed Charge Coverage Ratio . . . . . . . . . . . . . . .
16.16 Funded Debt . . . . . . . . . . . . . . . . . . . . . . .
16.17 Standstill Agreement . . . . . . . . . . . . . . . . . .
Section 17. Events of Default . . . . . . . . . . . . . . . . . . . .
17.1 Events of Default . . . . . . . . . . . . . . . . . . . .
Section 18. Evaluation and Additional Security . . . . . . . . . . .
18.1 Evaluation . . . . . . . . . . . . . . . . . . . . . . .
18.2 Expenses of Evaluations . . . . . . . . . . . . . . . . .
Section 19. Miscellaneous . . . . . . . . . . . . . . . . . . . . . .
19.1 Entire Agreement . . . . . . . . . . . . . . . . . . . .
19.2 No Waiver . . . . . . . . . . . . . . . . . . . . . . . .
19.3 Survival . . . . . . . . . . . . . . . . . . . . . . . .
19.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . .
19.5 Termination . . . . . . . . . . . . . . . . . . . . . . .
19.6 Severability of Provisions . . . . . . . . . . . . . . .
19.7 Successors and Assigns . . . . . . . . . . . . . . . . .
19.8 Assignment and Participation . . . . . . . . . . . . . .
19.9 Counterparts . . . . . . . . . . . . . . . . . . . . . .
19.10 Jurisdiction . . . . . . . . . . . . . . . . . . . . . .
19.11 Choice of Law . . . . . . . . . . . . . . . . . . . . . .
19.12 Amendment and Waiver . . . . . . . . . . . . . . . . . .
19.13 Agent for Borrowers . . . . . . . . . . . . . . . . . . .
19.14 No Oral Agreements . . . . . . . . . . . . . . . . . . .
19.15 Headings, Etc . . . . . . . . . . . . . . . . . . . . . .
Schedule 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exhibits
A-1 - Form of Amended and Restated Facility A Note
A-2 - Form of Amended and Restated Facility C Note
A-3 - Form of Amended and Restated Facility D Note
A-4 - Form of Amended and Restated Facility E Note
A-5 - Form of Amended and Restated Facility F Note
B - Form of Notice of Drawdown
C - Form of Request for Letter of Credit
D - Form of Pledge Agreement and Proxy
E - Form of Assignment, Assumption and Amendment No. 6 to First
Preferred Fleet Mortgage
F - Form of Assignment of Insurances
G - Form of Assignment of Drilling Contract Revenues and Earnings
H-1 - Form of Facility D Letter of Credit
H-2 - Form of Facility E Letter of Credit
H-3 - Form of Facility F Letter of Credit
I - Form of Panamanian First Naval Mortgage
J - Form of Australian First Registered Mortgage
K - Form of Assignment, Assumption and Amendment No. 2 to Trust
Indenture
L - Form of Amendment No. 1 to Charter Payment Guaranty
M - Form of Assignment, Assumption and Amendment of Assignment of
Insurances
N - Form of Assignment, Assumption and Amendment of Assignment of
Drilling Contract Revenues and Earnings
<PAGE>
AMENDED AND RESTATED CREDIT FACILITY AGREEMENT
THIS AMENDED AND RESTATED CREDIT FACILITY AGREEMENT, dated as of
April 27, 1995, among READING & BATES CORPORATION, a corporation
organized and existing under the laws of the State of Delaware ("RBC"),
READING & BATES DRILLING CO., a corporation organized and existing under
the laws of the State of Oklahoma ("RBD"), READING & BATES EXPLORATION
CO., a corporation organized and existing under the laws of the State of
Oklahoma ("RBX"), READING AND BATES, INC., a corporation organized and
existing under the laws of the State of Oklahoma ("RBI"), READING AND
BATES BORNEO DRILLING CO., LTD. a corporation organized and existing
under the laws of the State of Oklahoma ("RBB"), Reading & Bates (A) Pty.
Ltd., a company incorporated under the laws of the State of Western
Australia, Commonwealth of Australia ("RBA") (RBC, RBD, RBX, RBI, RBB and
RBA being referred to collectively as the "Borrowers" and individually as
a "Borrower") and INTERNATIONALE NEDERLANDEN BANK, N.V., a company
incorporated under the laws of the Netherlands, formerly known as NMB
POSTBANK GROEP N.V. (the "Lender").
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Facility Agreement dated as of March
27, 1991, as amended May 24, 1991, June 28, 1991, August 30, 1991, June
30, 1992 and February 23, 1993 (as so amended, the "Original Credit
Agreement"), the Lender agreed to provide funding to certain of the
Borrowers in the aggregate principal amount of up to USD 112,000,000; and
WHEREAS, the Borrowers and the Lender wish to restate the Original
Credit Agreement in order to add RBB and RBA as Borrowers, increase the
amount of Facility E, add a new letter of credit facility and amend
certain terms and covenants.
NOW, THEREFORE, in consideration of the above recitals, and other
good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties agree to amend and restate the Original
Credit Agreement as follows:
Section 1. Definitions.
1.1 Certain Definitions. As used herein, the following terms shall
have the following respective meanings:
"Advance" means a loan by the Lender to any Borrower under Facility
A or Facility C.
"Agreement" means this Amended and Restated Credit Facility
Agreement and all future amendments and supplements, if any, hereto.
"Arcade Drilling" means Arcade Drilling AS, a corporation organized
and existing under the laws of the Kingdom of Norway.
"Arcade Shipping" means Arcade Shipping AS, a corporation organized
and existing under the laws of the Kingdom of Norway.
"Assignment Amendments" means the Assignments of Insurances and
Drilling Contract Revenues and Earnings by RBB and RBA substantially in
the forms of Exhibits F and G, respectively attached hereto.
"Assignments" means the Assignment Amendments and the Assignment,
Assumption and Amendment of the Assignment of Insurances on the Rigs and
the Assignment, Assumption and Amendment of the Assignment of Drilling
Contract Revenues and Earnings of the Rigs both dated March 27, 1991, as
amended, substantially in the forms of Exhibits M and N, respectively
attached hereto.
"Business Day" means any day on which commercial banks are open for
business in Amsterdam, The Netherlands, Houston, Texas, New York, New
York and, in respect of Facility A only, London, England.
"Charter Notes" means the 13-5/8% Secured Notes due June 21, 2000
(Reading & Bates "George H. Galloway" Equipment Trust) and the 15%
Secured Notes due December 7, 1999 (Reading & Bates "C.E. Thornton"
Equipment Trust) of the Charter Trustee.
"Charter Payment Guaranty" means the Guaranty dated as of June 28,
1991, as amended by Amendment No. 1 to Charter Payment Guaranty dated the
date hereof, substantially in the form of Exhibit L attached hereto of
the Borrowers' obligations of the Charter Trustee to pay those portions
of the Charter Notes which are equivalent to the future payment of
Alternative Basic Hire or Regular Basic Hire, as defined in the Charters.
"Charter Trustee" means The Connecticut National Bank, in its
capacity as owner trustee under the Trust Agreements dated as of November
30, 1984, as amended, and as of June 19, 1985, as amended.
"Charters" means the Bareboat Charter Party dated December 7, 1984,
as amended and restated as of March 27, 1991, between RBX and the Charter
Trustee concerning the U.S. flag drilling rig C.E. THORNTON, Official No.
673210 and the Bareboat Charter Party dated June 21, 1985, as amended and
restated as of March 27, 1991 between RBD and the Charter Trustee
concerning the U.S. flag drilling rig GEORGE H. GALLOWAY, Official No.
651646.
"Commitment" means a maximum of USD 65,000,000.
"Controlled Group" means a "controlled group of corporations" as
defined in Section 1563(a) of the Internal Revenue Code of 1986, as
amended, determined without regard to Section 1563(a)(4) and (e)(3)(C) of
such Code, of which the Borrowers are a part.
"Consolidated Tangible Net Worth" means the consolidated
stockholders equity of RBC less intangible assets and unamortized debt
discount expenses.
"Credit Facility" means the aggregate amount of Advances made, and
Letters of Credit issued, hereunder and the aggregate amount of the
unused but still available portion of the Commitment under all of the
Facilities and the obligations of the Borrowers under the Charter Payment
Guaranty.
"Current Assets" means those assets of RBC and its consolidated
subsidiaries which would in accordance with generally accepted accounting
principles in the United States be classified as current assets of a
corporation conducting a business the same as or similar to the
businesses of such Borrower.
"Current Liabilities" means Indebtedness of RBC and its consolidated
subsidiaries which would in accordance with generally accepted accounting
principles in the United States be classified as current liabilities of a
corporation conducting a business the same as or similar to the business
of RBC and its consolidated subsidiaries; provided, however, that in
determining current liabilities, current maturities of long term
indebtedness (including principal and interest) shall not be taken into
account.
"Dollars" and the sign "USD" mean lawful money of the United States
of America.
"Drawdown Date" means the date upon which an Advance is made or a
Letter of Credit is issued.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"Event of Default" means each of the Events of Default described in
Section 17.
"Facility" means any facility described in Section 2, 3, 4, 5, 6 or
7 of this Agreement.
"Facility A" means the term loan facility described in Section 2 of
this Agreement.
"Facility B" means the guarantee obligations of certain of the
Borrowers described in Section 3 of this Agreement.
"Facility C" means the overdraft facility described in Section 4 of
this Agreement.
"Facility D" means the long term standby letter of credit facility
described in Section 5 of this Agreement.
"Facility E" means the short term standby letter of credit facility
described in Section 6 of this Agreement.
"Facility F" means the standby letter of credit facility described
in Section 7 of this Agreement.
"Facility A Maturity Date" means December 31, 1996.
"Facility C Maturity Date" means August 1, 1995, or as extended by
the Lender pursuant to Section 4.2.
"Fixed Charge Coverage Ratio" means the consolidated earnings of RBC
before depreciation, amortization, interest expense, lease rentals and
taxes, divided by interest expense and lease rentals.
"Funded Debt" means consolidated indebtedness of RBC for borrowed
money.
"Governmental Agency" means any government or any state, department
or other political subdivision thereof or governmental body, agency,
authority, department or commission (including without limitation any
court or tribunal) exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government and
any corporation, partnership or other entity directly or indirectly owned
by or subject to the control of the foregoing.
"Guarantee Payments" means the joint and several obligations of the
Borrowers to reimburse the Lender sums equal to any amount paid out by
the Lender as a result of any drawing under any Letter of Credit issued
pursuant to this Agreement.
"Hazardous Substances" means flammables, explosives, radioactive
materials, asbestos or any materials containing asbestos, polychlorinated
biphenyls, toxic substances or related materials, oil, including
petroleum and used oil, production and development wastes or any other
hazardous, dangerous or toxic waste, substance or material as defined in
the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended, 42 U.S.C. Sec. 9601, et seq. (hereinafter called
"CERCLA"); the Resource Conservation and Recovery Act, as amended, 42
U.S.C. Sec. 6901, et seq. (hereinafter called "RCRA"); the Toxic
Substances Control Act, as amended, 15 U.S.C. Sec. 2601, et seq.
(hereinafter called "TSCA"); the Hazardous Materials Transportation Act,
as amended, 49 U.S.C. Sec. 1801, et seq. (hereinafter called "HMTA"); the
Oil Pollution Act of 1990, Pub.L. No. 101-380, 104 Stat. 484 (1990)
(hereinafter called "OPA"); or any other statute, law, ordinance, code or
regulation of any Governmental Agency relating to or imposing liability
or standards of conduct concerning the use, production, generation,
treatment, storage, recycling, handling, transportation, release,
threatened release or disposal of any waste, substance or material,
currently in effect or at any time hereafter adopted.
"Indebtedness" of any Borrower means all items of indebtedness
which, in accordance with generally accepted accounting principles in the
United States, would be included in determining liabilities as shown on
the liability side of a balance sheet, as of the date as of which
indebtedness is to be determined and shall also include all indebtedness
and liabilities of others assumed or guaranteed by any Borrower or in
respect of which any Borrower is secondarily or contingently liable
(other than by endorsement of instruments in the course of collection and
performance guarantees and similar transactions entered into in the
ordinary course of business) whether by reason of any agreement to
acquire such indebtedness or to supply or advance sums or otherwise.
"Installment Payment Dates" means the five semi-annual installments
of principal outstanding under Facility A referred to in Section 10.2(a)
hereof.
"Interest Payment Date" means as to Facility A, the last Business
Day of each Interest Period and as to Facility C, it means the first
Business Day in the last month of each calendar quarter commencing June
1, 1995, unless the Lender notifies the Borrower that the Interest
Payment Date as to Facility C shall be changed to the first Business Day
of the first month in each calendar quarter, in which case payments of
Interest shall be made by the Borrowers in arrears, on each January 1,
April 1, July 1 and October 1.
"Interest Period" means each period selected by RBC in connection
with Facility A, the most recent of which commenced on December 31, 1994
and shall end on June 30, 1995 and the remaining being the periods of
time which begin on the date immediately after the expiration of the
preceding Interest Period and end on the day selected by RBC which is
either three or six months after such date.
"Letters of Credit" means the stand-by letters of credit issued by
the Lender pursuant to Sections 5.1, 6.1 and 7.1 below, respectively,
under Facility D, Facility E or Facility F, substantially in the forms
attached hereto as Exhibit H-1, H-2 and H-3 or as agreed to by the
Lender.
"LIBOR" means the rate (rounded upwards, if necessary, to the
nearest one sixteenth of one per cent) for deposits in Dollars equal to
the outstanding amount of Facility A for the duration of the relevant
Interest Period which is fixed in the London Interbank Market and quoted
on the Reuters Screen LIBO Page as of 11:00 a.m. London time two days
prior to the commencement of the relevant Interest Period. If more than
one rate appears on the Reuters Screen LIBO Page, LIBOR will be the
arithmetic mean of such rates. If fewer than two rates appear, LIBOR will
be determined by the Lender by reference to the arithmetic mean of the
rates offered by Barclays Bank, Bank of Tokyo, Bankers Trust and the
Lender in the London Interbank Market.
"Loan Documents" means this Agreement, the Mortgages, the Mortgage
Amendments, the Assignments, the Assignment Amendments, the Pledge, the
Pledge of Earnings Account, the Pledge of Arcade Shares, the Trust
Indenture, the Letters of Credit and the Notes.
"Mortgage Amendments" means the Assignment, Assumption and
Amendments No. 6 to the U.S. Preferred Fleet and Preferred Vessel
Mortgages, substantially in the form of Exhibit E attached hereto.
"Mortgages" means the U.S. Preferred Fleet and Preferred Vessel
Mortgages on the U.S. flag Rigs dated March 27, 1991, as amended, the
Panamanian First Naval Mortgage on the CHARLEY GRAVES dated as of April
27, 1995, substantially in the form of Exhibit I attached hereto, and the
Australian First Registered Ship Mortgage on the RON TAPPMEYER dated as
of April 27, 1995, substantially in the form of Exhibit J attached
hereto.
"Notes" means the amended and restated promissory notes of the
Borrowers substantially in the form of Exhibit A-1, A-2, A-3, A-4 and A-5
attached hereto.
"Notice of Drawdown" means the notice of drawdown under Facility C
given by one or more of the Borrowers pursuant to Section 4.1(c) hereof,
substantially in the form attached hereto as Exhibit B.
"Overdraft Account" means any account in the name of all or any of
the Borrowers established at the Lender's Amsterdam Branch Office in
Amsterdam South East from which drawings and into which repayments under
Facility C are to be made.
"Person" means any natural person, corporation, firm, association,
government, Governmental Agency or any other entity other than the
Borrowers and whether acting in an individual, fiduciary or other
capacity.
"Plan" means any employee pension benefit plan subject to Title IV
of ERISA and maintained by the Borrowers or any member of a Controlled
Group, or any such plan, to which the Borrowers or any member of a
Controlled Group is required to contribute on behalf of any of its
employees.
"Pledges" means the pledge of all of the issued and outstanding
shares of RBD by RBC, the pledge of all of the issued and outstanding
shares of RBI, RBX and RBB by RBD, and the pledge of all of the issued
and outstanding shares of RBA by RBX, all in favor of the Trustee, and
all substantially in the form of Exhibit D attached hereto.
"Pledge of Earnings Accounts" means the pledge of the Borrowers'
accounts with the Lender pursuant to Section 11.4 hereof.
"Pledge of Arcade Shares" means the pledge of all shares owned or
hereafter acquired by any of the Borrowers of Arcade Drilling referred to
in Section 11.5 hereof.
"Prime Rate" means the rate announced by the New York office of
Citibank, N.A. from time to time as its prime or base rate.
"Reportable Event" means a reportable event as defined in Title IV
of ERISA, except actions of general applicability by the Secretary of
Labor under Section 110 of ERISA.
"Request for Letter of Credit" means the Request for Letter of
Credit given by one or more Borrowers pursuant to Section 8.1(c)(i)
hereof, substantially in the form attached hereto as Exhibit C.
"Restructure Date" means the date on which the amendment and
restatement of the Facilities is completed pursuant to this Agreement.
"Rigs" means the nine (9) U.S. flag drilling rigs, the one (1)
Panamanian flag drilling rig and the one (1) Australian flag drilling rig
listed on Schedule 1 attached hereto.
"Security Deposits" means the deposits required to be made by the
Borrowers with the Lender pursuant to Sections 10.4, 10.8(a),
10.8(b)(iii)(C), 10.9(b) and 17.1 hereof.
"Trust Indenture" means the Trust Indenture between the Borrowers
and the Trustee dated March 27, 1991, as amended by Amendment No. 1 dated
February 25, 1993 and as further amended on the date hereof by
Assignment, Assumption and Amendment No. 2 to Trust Indenture,
substantially in the form of Exhibit K attached hereto.
"Trustee" means Bank One, Texas, National Association, in its
capacity as trustee for the Lender pursuant to the Trust Indenture.
1.2 Accounting Terms. Except as expressly stated herein, all
accounting terms not specifically defined herein shall be construed in
accordance with generally accepted accounting principles in the United
States consistent with those applied in preparation of the consolidated
financial statements of RBC referred to in Section 14.6 hereof (with such
adjustments as shall be necessary, and with which RBC's independent
auditors concur, to reflect any differences between the stated
assumptions made in preparing such financial statements and actual
events).
Section 2. Facility A.
2.1 Term Loan. Upon the terms and subject to the conditions herein
set forth, the Lender has made a term loan in the form of one Advance in
the amount of USD 31,300,000.00 to certain of the Borrowers, jointly and
severally, under Facility A of the Original Credit Agreement, which was
paid to such Borrowers' senior creditors to refinance their existing long
term indebtedness. The Borrowers hereby acknowledge that they are
jointly and severally liable to the Lender for the amount of USD
15,000,000, representing the principal amount outstanding under Facility
A. The Borrowers may not reborrow any portion of such term loan that has
already been borrowed and repaid or prepaid.
2.2 The Facility A Note. The joint and several obligation of the
Borrowers to pay the principal of, and interest on, the term loan shall
be evidenced by the Amended and Restated Facility A Note, substantially
in the form of Exhibit A-1 attached hereto.
Section 3. Facility B.
3.1 Prepayment. (a) On June 28, 1991, RBC, RBD, RBX and RBI
caused to be prepaid to the Lender the amount of USD 45,000,000 which
represented the outstanding amount of the Facility B term loan under the
Original Credit Agreement.
(b) The Lender agreed at that time, as an accommodation to
certain of the Borrowers, to use the amount of such prepayment to
purchase interests in the Charter Notes equivalent to the future payments
by RBD and RBX of Alternative Basic Hire or Regular Basic Hire, as
defined in the Charters, up to the amount of USD 45,000,000, pursuant to
the Assignment Agreements dated as of June 28, 1991 (the "Assignment
Agreements").
3.2 Charter Payment Guaranty. (a) The Borrowers have agreed to
jointly and severally guarantee the obligations of the Charter Trustee to
pay the interests in the Charter Notes purchased by the Lender pursuant
to the terms of the Charter Payment Guaranty. The parties hereto agree
that the obligations of the Borrowers under the Charter Payment Guaranty
shall be considered as amounts due to the Lender under the Credit
Agreement and will therefore be secured by the Assignments, the Pledges,
the Pledge of Earnings Accounts, the Pledge of Arcade shares and the
Security Deposits.
(b) RBD, RBX, RBI, RBB and RBA have agreed to secure the payment
and other obligations under the Charter Payment Guaranty by, among other
things, the Mortgages on the Rigs owned by them.
Section 4. Facility C.
4.1 Overdraft Facility. (a) Upon the terms and subject to the
conditions herein set forth, the Lender agrees to make an overdraft
facility available to the Borrowers by allowing any of them from time to
time prior to the Facility C Maturity Date to draw on the Overdraft
Account in amounts in the aggregate not to exceed at any time
USD 15,000,000.
(b) Any drawing under Facility C shall be an Advance under this
Agreement. Within the USD 15,000,000 limit referred to above, any of the
Borrowers may borrow and prepay such Advances pursuant to Section 4.1(d)
below and reborrow under Section 4.1(c).
(c) Drawings under Facility C may be made by tested telefax
Notice of a Drawdown sent by any Borrower to the Lender signed by any
officer or representative of the Borrowers previously designated in a
written notice to the Lender.
(d) Amounts outstanding under Facility C may be prepaid without
penalty by the Borrowers transferring any amount into the Overdraft
Account without any prior notice to the Lender.
4.2 Extension of Maturity Date. Following a written request from
the Borrowers, the Facility C Maturity Date may be extended by the Lender
in its sole discretion by written notice to the Borrowers; provided,
however, that such extensions shall in no event extend the final maturity
of Facility C beyond the Facility A Maturity Date.
4.3 The Facility C Note. The Borrowers' joint and several
obligations to pay the principal of and the interest on, all amounts
outstanding under Facility C shall be evidenced by the Amended and
Restated Facility C Note substantially in the form of Exhibit A-2
attached hereto.
Section 5. Facility D.
5.1 Letter of Credit. On the terms and subject to the conditions
hereof, the Lender has issued a standby letter of credit in the amount of
USD 5,000,000 for the account of RBC in substantially the form attached
as Exhibit H-1 hereto for a term of which shall not extend beyond April
30, 1996.
5.2 Counter Indemnity. The Borrowers jointly and severally agree to
reimburse the Lender a sum equal to any amount paid out by the Lender as
a result of any drawing under the Facility D Letter of Credit (a
"Facility D Guarantee Payment") within thirty (30) days of any Facility D
Guarantee Payment.
5.3 Drawings Under Letter of Credit. The Lender shall not concern
itself with the regularity or propriety of any demand made under the
Facility D Letter of Credit beyond the face thereof, provided that such
demand strictly complies with the terms of such Letter of Credit and
(subject to such proviso) it shall not be a defense to a claim of the
Lender under this section that the Lender could have resisted the payment
in respect of which such claim is made.
5.4 Variations. The obligations of the Borrowers under this
Section 5 shall not be in any way discharged or impaired by any variation
of the terms of the Facility D Letter of Credit or this Agreement or any
document executed pursuant hereto.
5.5 Security. The obligations of the Borrowers under Section 5.2
above shall be in addition to and not in substitution for any security
now or hereafter held by the Lender in respect of such Borrowers'
obligations under this Agreement.
5.6 Certificates. A certificate together with evidence of payment
submitted by the Lender to the Borrowers as to the amount of any Facility
D Guarantee Payment made by the Lender shall (save for manifest error) be
conclusive and binding on the Borrowers for all purposes.
5.7 The Facility D Note. The obligations of the Borrowers to
reimburse the Lender for any Facility D Guarantee Payment and interest
thereon and to make any required Security Deposits shall be evidenced by
the Amended and Restated Facility D Note, substantially in the form of
Exhibit A-3 attached hereto.
Section 6. Facility E.
6.1 Letters of Credit. On the terms and subject to the conditions
hereof, the Lender hereby agrees that it will issue standby letters of
credit in a total amount not to exceed at any time USD 15,000,000 for the
account of any Borrower in substantially the form attached as Exhibit H-2
hereto or in such other form as shall be acceptable to the Lender with
expiration dates on or before June 30, 1997. Within such USD 15,000,000
limit the Borrowers may request new Facility E Letters of Credit with
expiration dates on or before June 30, 1997 to be issued by the Lender as
old Facility E Letters of Credit terminate or expire.
6.2 Counter Indemnity. The Borrowers jointly and severally agree to
reimburse the Lender a sum equal to any amount paid out by the Lender as
a result of any drawing under any Facility E Letter of Credit (a
"Facility E Guarantee Payment") within thirty (30) days of any Facility E
Guarantee Payment.
6.3 Drawings Under Letters of Credit. The Lender shall not concern
itself with the regularity or propriety of any demand made under any
Facility E Letter of Credit beyond the face thereof, provided that such
demand strictly complies with the terms of such Letter of Credit and
(subject to such proviso) it shall not be a defense to a claim of the
Lender under this section that the Lender could have resisted the payment
in respect of which such claim is made.
6.4 Variations. The Borrowers' obligations under this Section 6
shall not be in any way discharged or impaired by any variation of the
terms of any Facility E Letter of Credit or this Agreement or any
document executed pursuant hereto.
6.5 Security. The Borrowers' obligations under Section 6.2 above
shall be in addition to and not in substitution for any security now or
hereafter held by the Lender in respect of their obligations under this
Agreement.
6.6 Certificates. A certificate together with evidence of payment
submitted by the Lender to the Borrowers as to the amount of any Facility
E Guarantee Payment made by the Lender shall (save for manifest error) be
conclusive and binding on the Borrowers for all purposes.
6.7 The Facility E Note. The Borrowers' obligation to reimburse
the Lender for any Facility E Guarantee Payment and interest thereon and
to make any required Security Deposits shall be evidenced by the Amended
and Restated Facility E Note, substantially in the form of Exhibit A-4
attached hereto.
Section 7. Facility F.
7.1 Letters of Credit. On the terms and subject to the conditions
hereof, the Lender has issued and hereby agrees that it will issue
standby letters of credit to obtain customs bonds respecting duties
assessed on the Borrowers' drilling equipment or rigs in Indonesia in a
total amount not to exceed USD 15,000,000 or its counter value in
Indonesian Rhupias, for the account of any Borrower in substantially the
form attached as Exhibit H-3 hereto or in such other form as shall be
acceptable to the Lender for a term of which shall not extend beyond June
30, 1997.
7.2 Counter Indemnity. The Borrowers jointly and severally agree
to reimburse the Lender a sum equal to any amount paid out by the Lender
as a result of any drawing under either Facility F Letter of Credit (a
"Facility F Guarantee Payment") within thirty (30) days of any Facility F
Guarantee Payment.
7.3 Drawings Under Letters of Credit. The Lender shall not concern
itself with the regularity or propriety of any demand made under any
Facility F Letter of Credit beyond the face thereof, provided that such
demand strictly complies with the terms of such Letter of Credit and
(subject to such proviso) it shall not be a defense to a claim of the
Lender under this section that the Lender could have resisted the payment
in respect of which such claim is made.
7.4 Variations. The obligations of the Borrowers under this
Section 7 shall not be in any way discharged or impaired by any variation
of the terms of either Facility F Letter of Credit or this Agreement or
any document executed pursuant hereto.
7.5 Security. The obligations of the Borrowers under Section 7.2
above shall be in addition to and not in substitution for any security
now or hereafter held by the Lender in respect of such Borrowers'
obligations under this Agreement.
7.6 Certificates. A certificate together with evidence of payment
submitted by the Lender to the Borrowers as to the amount of any Facility
F Guarantee Payment made by the Lender shall (save for manifest error) be
conclusive and binding on the Borrowers for all purposes.
7.7 The Facility F Note. The obligations of the Borrowers to
reimburse the Lender for any Facility F Guarantee Payment and interest
thereon and to make any required Security Deposits shall be evidenced by
the Amended and Restated Facility F Note, substantially in the form of
Exhibit A-5 attached hereto.
7.8 Insurance. The Borrowers may, at their own expense, insure or
cause to be insured the risk of a claim or claims under a Facility F
Letter of Credit in case drilling equipment or rigs for which a Facility
F Letter of Credit has been issued become a total loss. If obtained by
the Borrowers, such insurance shall (i) name the Lender as an additional
assured and loss payee and (ii) have its proceeds assigned to the Lender
for so long as a Facility F Letter of Credit is outstanding.
Section 8. Manner of Drawdown and Issuance of Letters of Credit.
8.1 Manner of Drawdown or Issuance. The Borrowers may draw an
Advance or have a Letter of Credit issued upon:
(a) The Lender's prior satisfaction that the relevant conditions
set out in Section 12 herein have been complied with,
(b) No event having occurred to the actual knowledge of the
Borrowers which, with or without notice or lapse of time, would
constitute an Event of Default; and
(c) The Lender having received from the relevant Borrowers:
(i) for the issuance of a Letter of Credit under Facility D,
Facility E, and Facility F, an irrevocable Request for Letter of Credit
at least five (5) Business Days prior to the Drawdown Date on which the
Letter of Credit is to be issued;
(ii) for an Advance under Facility C, a Notice of Drawdown.
(d) Each Request for Letter of Credit and Notice of Drawdown
shall constitute a certification by the Borrowers giving such Request or
Notice that:
(i) the representations and warranties contained in Section
14 hereof applicable to such Borrowers at such time are correct on and as
of the date of such Request for Letter of Credit or Notice of Drawdown as
though made on and as of such date; and
(ii) no event has occurred and is continuing, or would
result from the Advance or the issuance of the Letter of Credit which
constitutes an Event of Default or with the passing of time or the giving
of notice would constitute an Event of Default.
8.2 Making Commitment Available. The Lender shall, on a Drawdown
Date, make the Commitment available to the relevant Borrowers by:
(a) in the case of Facility A, the Advance has been made by
crediting RBC's account maintained at the Lender's Amsterdam Branch
Office in Amsterdam South East; or
(b) in the case of Facility C, by any Borrower making a drawing
pursuant to Section 4 hereof.
(c) in the case of Facility D, Facility E, or Facility F by
issuing a Letter of Credit pursuant to the instructions of the relevant
Borrowers contained in the Request for Letter of Credit.
8.3 Transfer of Unused Portion of Commitment
(a) The Borrowers may request the Lender to transfer all, or a
portion no less than USD 500,000, of the Commitment not used by the
Borrowers under Facility C to Facility E or F or under Facility E to
Facility C or F.
(b) If, in its sole discretion, the Lender agrees to such
transfer, the Facility from which the amount is being transferred shall
be reduced by the amount being transferred and the Facility to which the
amount is being transferred shall be increased by the amount being
transferred without the requirement of amending this Agreement, however
endorsements to the Facility C, Facility E and Facility F Notes shall be
made evidencing such transfers.
(c) The Borrowers may request a transfer of unused Commitment
under this Section as many times as they wish.
8.4 Failure to Borrow; Delay. If the borrowing or issuance of a
Letter of Credit described in any Request for Letter of Credit or Notice
of Drawdown, as the case may be, fails to take place or is delayed
because any of the conditions specified in Section 12 are not satisfied,
the Borrowers shall indemnify the Lender against any loss incurred as a
result of the giving of such Request for Letter of Credit or Notice of
Drawdown, including without limitation any loss resulting from actions
taken by the Lender to fund the Commitment; provided, however, the Lender
will attempt to mitigate its losses in such situation. A certificate of
the Lender stating in reasonable detail the amount of, and basis for, any
such loss incurred by it shall be conclusive absent manifest error.
Section 9. Interest.
9.1 Rate of Interest. (a) Subject to Section 9.4 below:
(i) The Borrowers jointly and severally agree to pay
interest in respect of all amounts outstanding under Facility A at a rate
per annum of LIBOR plus 1-1/2%;
(ii) The Borrowers jointly and severally agree to pay
interest in respect of all amounts outstanding under Facility C at a rate
per annum of the Prime Rate plus 1-1/4%;
(iii) The Borrowers jointly and severally agree to pay
interest in respect of any Facility D Guaranty Payment at a rate per
annum of the Prime Rate plus 1-1/4%;
(iv) The Borrowers jointly and severally agree to pay
interest in respect of any Facility E Guaranty Payment at a rate per
annum of the Prime Rate plus 1-1/4%.
(v) The Borrowers jointly and severally agree to pay
interest in respect of any Facility F Guaranty Payment at a rate per
annum of the Prime Rate plus 1-1/4%;
(b) Interest on unpaid principal amounts outstanding under this
Agreement shall be computed on the basis of a year of 360 days and the
actual number of days elapsed in the case of Facility A and 365 days and
the actual number of days elapsed in the case of the other Facilities.
(c) For Facility A, RBC shall elect an Interest Period by
delivering written notice to the Lender not less than three (3) Business
Days prior to the beginning of any Interest Period, provided, however,
that if no such notice shall be given, such Interest Period shall be
three months.
(d) All Interest Periods shall end on March 31, June 30,
September 30, or December 31; provided, however, that:
(i) if during the term of this Agreement RBC wishes to choose
an Interest Period which would extend beyond the next Installment Payment
Date, RBC shall in the written notice electing an Interest Period divide
amounts then outstanding under Facility A into two tranches, the first of
which shall consist of the amount of the Facility A Advance to be repaid
on the next Installment Payment Date and the second of which shall
consist of the remaining outstanding amount of the Facility A Advance;
(ii) if the written notice of RBC referred to above designates
different Interest Periods for the two tranches no Interest Period for
any first tranche may extend beyond the next Installment Payment Date.
9.2 Payment of Interest. Interest shall be paid by the relevant
Borrowers as follows:
(a) In respect of the unpaid principal amount outstanding under
Facility A, in arrears, on the last day of each Interest Period.
(b) In respect of the unpaid principal amounts outstanding under
Facility C, in arrears, on each March 1, June 1, September 1 and
December 1, unless the Lender notifies the Borrower that the Interest
Payment Date as to Facility C shall be changed to the first Business Day
of the first month in each calendar quarter, in which case such payments
of Interest shall be made by the Borrowers, in arrears, on each January
1, April 1, July 1 and October 1.
(c) In respect of any Guarantee Payment under Facility D,
Facility E or Facility F interest from the date of such Guarantee Payment
up to the date such amount is paid by the relevant Borrowers on the date
such payment is made.
9.3 Overdue Payment of Principal and Interest. Overdue principal
of, and (to the extent permitted by law) overdue interest in respect of,
amounts due under any Facility shall bear interest, payable on demand, at
a rate per annum which shall be 2% in excess of the interest rate
otherwise applicable from time to time to such Facility.
9.4 Computation of Interest. Notwithstanding any provision of this
Agreement, the Notes, the other Loan Documents or any other document or
instrument executed in connection therewith to the contrary it is the
intent of the parties hereto that, in no event shall the aggregate amount
of consideration which constitutes interest under any applicable law
which is contracted for, charged or received hereunder or under the
Notes, the other Loan Documents or otherwise ("Interest") exceed the
maximum amount of nonusurious interest allowed by law, and any excess
shall be credited on this Agreement, the Notes or the other Loan
Documents (or if all such obligations shall have been paid in full,
refunded to the Borrowers). For purposes of the foregoing, the maximum
amount of interest allowed by law shall be calculated by determining the
amount of interest that could be contracted for, charged or received
during the term hereof at the maximum rate of nonusurious interest
allowed from time to time by applicable law as is now or, to the extent
allowed by law, as may hereafter be in effect (the "maximum nonusurious
interest rate") and, if at any time the rate of Interest to accrue would
exceed the maximum nonusurious interest rate, the rate of Interest to
accrue under this Agreement, the Notes or the other Loan Documents shall
be limited to the maximum nonusurious interest rate, but any subsequent
reductions in either LIBOR or the Prime Rate, as the case may be, shall
not reduce the rate of Interest to accrue on this Agreement, the Notes or
the other Loan Documents below the maximum nonusurious interest rate
until the total amount of Interest accrued and paid on this Agreement or
the Notes equals the amount of Interest which would have accrued if a
rate per annum equal to LIBOR plus one and one-half percent (1 1/2%),
LIBOR plus two and one-half percent (2 1/2%), the Prime Rate plus one and
one-fourth percent (1 1/4%), or the interest rate charged pursuant to
Section 9.3 herein, whichever is applicable, had at all times been in
effect. It is further agreed that, without limitation of the foregoing,
all calculations of the rate of Interest that are made for the purpose of
determining whether such rate exceeds the maximum nonusurious interest
rate applicable to the Lender, shall be made to the extent possible
permitted by usury laws applicable to the Lender (now or hereafter
enacted) by amortizing, prorating and spreading all Interest in equal
parts during the period of the full stated term of the obligations
evidenced by this Agreement, the Notes or the other Loan Documents.
Section 10. Payments.
10.1 Payments on Non-Business Days. Whenever any payment to be
made hereunder or under the Notes shall be stated to be due on a day
which is not a Business Day, the due date thereof shall be extended to
the next succeeding Business Day; provided, however, that if such next
succeeding Business Day is in a new month, then the payment required
under this Agreement or the Notes shall be made on the first Business Day
preceding the original date on which payment was due. If a payment of
principal has been extended pursuant to this Section 10.1, interest shall
be payable on such principal at the applicable rate during such
extension.
10.2 Repayment. All amounts outstanding under this Agreement shall
be repaid by the relevant Borrowers as follows:
(a) All amounts of principal outstanding under Facility A shall
be repaid in four semi-annual installments on June 30 and December 31 of
each year commencing on December 31, 1994. The installments shall be in
the amount of USD 3,750,000; provided, however, that the final such
installment shall be in an amount sufficient to repay all amounts
outstanding under Facility A.
(b) All amounts outstanding under Facility C shall be paid in
full on the Facility C Maturity Date.
10.3 Voluntary Prepayments. The Borrowers shall have the right to
prepay all amounts outstanding under Facility A in whole or in part,
without premium or penalty, from time to time pursuant to this Section
10.3 on the following terms and conditions: (a) The Borrowers shall give
the Lender at least three Business Days' prior written notice of its
intent to prepay such amounts, the amount of such prepayment, the
Facility such prepayment is to be applied to and the date of such
prepayment which shall be a Facility A Interest Payment Date; (b) each
such prepayment shall be in a principal amount of at least USD 250,000;
(c) at the time of any prepayment, the Borrowers shall pay all interest
accrued on the principal amount of said prepayment.
10.4 Mandatory Prepayment. (a) Upon the sale or actual or
constructive total loss of any Rig the sale or insurance proceeds shall
be used to (i) prepay amounts outstanding under Facility A, along with
all interest accrued on such amount and all fees and other costs incurred
by the Lender, (ii) then to prepay any amounts outstanding under Facility
C along with all interest accrued on such amounts and all fees and other
costs incurred by the Lender and (iii) finally, if all amounts referred
to in (i) and (ii) above have been paid, any such proceeds shall be paid
to the Lender and held in an interest bearing account at the Lender which
shall serve as additional security for the Credit Facility (unless the
Borrowers provide the Lender with other security acceptable to the Lender
in an amount equal to, or in excess of, any such proceeds). If such
proceeds are placed in an interest bearing account, such funds and any
interest earned on them will be returned to the Borrowers upon the
repayment of all amounts due under this Agreement and the termination of
all Letters of Credit. The payments referred to in this Section 10.4
shall be made immediately to the Lender if the Borrowers receive the
proceeds from any such sale on a Facility A Interest Payment Date. If
such payment is not received on a Facility A Interest Payment Date, the
Borrowers shall immediately upon receipt place such proceeds of such sale
as are necessary to make the prepayment required by this Section 10.4 in
an interest bearing account at the Lender for the benefit of the Lender
and all amounts in such account shall be paid to the Lender on the next
Interest Payment Date; provided, however, that all interest earned
thereon shall be paid to the Borrowers.
(b) Any prepayment made pursuant to Section 10.4(a) above which
is large enough to pay amounts outstanding under Facility C shall also
reduce the amount available to be drawn under Facility C by the same
amount unless the Borrowers provide security acceptable to the Lender in
an amount equal to such reduction.
10.5 Method and Place of Payment. All payments under this
Agreement shall be made to the Lender to such account with its Amsterdam
Branch Office in Amsterdam South East (or such other account elsewhere)
as the Lender may designate and in immediately available funds, not later
than 12:00 noon (Amsterdam time) on the date when due, each payment to be
advised to the Lender by tested telex or telefax one (1) Business Day
before the date when due except if such payment is made from an account
at the Lender.
10.6 Net Payments. (a) All sums payable by the Borrowers under
this Agreement, whether of principal, interest, fees or otherwise, shall
be paid in full without set-off or counterclaim and in such amounts as
may be necessary in order that all such payments (after deduction or
withholding for or on account of any present or future taxes, levies,
imposts, duties or other charges of whatsoever nature imposed by any
Governmental Agency or taxing authority thereof, other than any tax, on
or measured by the net income of the Lender pursuant to the income tax
laws of the jurisdiction where the Lender's principal or lending office
is located, including but not limited to the Branch Profits Tax under
Section 884 of the Internal Revenue Code of 1986, (collectively the
"Taxes")) shall not be less than the amounts otherwise specified to be
paid under this Agreement or the Notes.
(b) A certificate as to any additional amounts payable to the
Lender under this Section 10.6 submitted to the Borrowers by the Lender
shall show in reasonable detail the amount payable and the calculations
used to determine in good faith such amount and shall be conclusive
absent manifest error.
(c) With respect to each deduction or withholding for or on
account of any Taxes, the Borrowers shall promptly furnish to the Lender
such certificates, receipts and other documents as may be required (in
the reasonable judgment of the Lender) to establish any income tax credit
to which the Lender may be entitled. In the event that such a deduction
or withholding for Taxes becomes so applicable, the Lender, and the
Borrowers will enter into negotiations in good faith in an effort to
attempt to minimize the effect of such Taxes.
(d) Within thirty (30) days of the execution of this Agreement,
the Lender shall provide the Borrowers with a duly executed United States
Department of Treasury Form 1001, Ownership, Exemption, or Reduced Rate
Certificate which form shall permit the Borrowers to avail themselves of
the current Income Tax Treaty between the United States and The
Netherlands.
10.7 Rights of Set-Off. The Lender shall with respect to all
amounts payable hereunder have all rights of set-off, banker's lien, and
counterclaim as it is entitled to exercise under the law of the
jurisdiction in which such rights are exercised.
10.8 Changes in Circumstances. (a) If, by reason of any change in
applicable law or regulation or regulatory requirement or directive
whether or not having the force of law or in the interpretation or
application thereof by the governmental or quasi-governmental or judicial
authority or central bank charged with the administration or
interpretation of such law or regulation, it shall appear to the Lender
that it has become unlawful or impossible for the Lender to perform its
obligations hereunder, the Lender shall immediately notify the Borrowers
and, after such notice, the liability of the Lender to advance or
maintain the Commitment or any Facility shall immediately cease or, if
any Advance has been made or a Letter of Credit issued, the Borrowers
shall prepay such Advance and shall cooperate with the Lender in order to
permit any outstanding Letters of Credit to be terminated by the Lender,
or if such termination cannot be accomplished, the Borrowers shall
deposit with the Lender an amount equal to the aggregate amounts of any
outstanding Letters of Credit which deposit shall be held by the Lender
as security until the Letters of Credit are terminated or expire. In any
such event, but without prejudice to the aforesaid obligation of the
Borrowers to prepay, the Borrowers and the Lender shall negotiate in good
faith for a period not to exceed ninety (90) days commencing from the
date notice is given by the Lender as provided above, with a view to
agreeing to terms for making or continuing to make available the
Commitment available from another jurisdiction or funding it from
alternative sources.
(b) If the effect of any change in applicable law or regulation
or regulatory requirement or in the interpretation thereof or if
compliance by the Lender with any applicable direction or official
request or requirement (whether or not having the force of law) of any
governmental or other authority, in any case having effect after the date
hereof, is to:
(i) change the basis of taxation to the Lender of payment
of principal or interest or any other payment due pursuant to the terms
of this Agreement (other than an increase in the rate of taxation on the
Lender's overall net income or franchise taxes); or
(ii) impose or modify or deem applicable any reserve
requirements or require the making of any special deposits against or in
respect of any assets or liabilities of, deposits with or for the account
of or loans by the Lender; or
(iii) impose on the Lender any other condition affecting the
Commitment or the Credit Facility or any part thereof, the result of
which is either to increase the cost to the Lender of making available or
maintaining the Commitment or any Facility or any part thereof or to
reduce the amount of any payment received by the Lender hereunder then
and in any such case if such increase or reduction in the opinion of the
Lender materially affects the interests of the Lender;
(A) the Lender shall notify the Borrowers of any of the
above circumstances and use all reasonable efforts (without any financial
commitment on its part) to avoid the effects of any such change and in
particular, the Lender shall consider (without any commitment on its
part) fulfilling its obligations under this Agreement through another
office or transferring its interest in this Agreement and the Notes at
par to one or more of its affiliates not affected by the change in
applicable law or regulation referred to in this Section 10.8 if such
transfer can be accomplished without material added cost to the Lender
and in a manner compatible with its operational procedures; or
(B) if the efforts referred to in (A) above fail to
have the effect of eliminating the increased cost or the reduction in the
amount of any payment received, the Borrowers shall on demand (whether
made before or after any repayment of the amounts outstanding under
Facilities A, C, D, E and F) pay to the Lender such amount as the Lender
certifies together with supporting documentation to be necessary to
compensate it for such additional cost or reduction; and
(C) at any time thereafter, so long as the
circumstances giving rise to the obligation to make the compensating
payment continue, the Borrowers may, upon giving the Lender not less than
thirty (30) days' written notice which shall be irrevocable, prepay any
amounts outstanding under this Agreement to the Lender and cooperate with
the Lender in order to permit any outstanding Letters of Credit to be
terminated by the Lender, or if such termination cannot be accomplished,
the Borrowers shall deposit with the Lender an amount equal to the
aggregate amounts of any outstanding Letters of Credit which deposit
shall be held by the Lender as security until the Letters of Credit are
terminated or expire.
(c) If any amounts outstanding under this Agreement are to be
prepaid by the Borrowers pursuant to any of the provisions of this
Section 10.8 , the Borrowers shall simultaneously with such prepayment
pay to the Lender all accrued interest and fees on the amounts
outstanding under this Agreement and all other sums payable by the
Borrowers to the Lender pursuant to this Agreement.
(d) The certificate or determination of the Lender, as to any
matters referred to in this Section 10.8 shall, save for any manifest
error, be conclusive and binding on the Borrowers.
10.9 Unavailability of Dollars.
(a) In the event that the Lender is not able to obtain deposits
in Dollars in the London Interbank Market, the dollars required to fund
the amounts outstanding under this Agreement shall be made available from
such other financial sources as may be available to the Lender. In such
an event the rate of interest will be, subject to Section 9.4 above, the
aggregate of 1-1/2% and the cost to the Lender from such financial
sources and for periods as may be elected by the Lender. Each change in
such cost in respect of funding the amounts outstanding under this
Agreement will cause an immediate corresponding change in the rate of
interest payable by the relevant Borrowers. This arrangement shall be
temporary and should deposits in Dollars subsequently become available to
the Lender in the London Interbank Market, then from the conclusion of
the then current Interest Period for funding from alternative sources,
the amounts outstanding under this Agreement will bear interest at the
rates detailed in Section 9.1(a) hereof.
(b) In the event that the Lender is unable (for any reason
whatsoever) to acquire the required deposits from any source, the parties
hereto shall meet to discuss an alternative arrangement. In the absence
of mutual agreement and at the end of thirty (30) days after the above
mentioned date the obligation of the Lender hereunder to make available
the Commitment shall be extinguished forthwith and/or (as the case may
be) any amounts drawn hereunder and any other amounts due hereunder,
shall be repaid forthwith by the relevant Borrowers and the relevant
Borrowers shall cooperate with the Lender in order to permit any
outstanding Letters of Credit to be terminated by the Lender, or if such
termination cannot be accomplished, such Borrowers shall deposit with the
Lender an amount equal to the aggregate amounts of any outstanding
Letters of Credit which deposit shall be held by the Lender as security
until the Letters of Credit are terminated or expire.
Section 11. Security.
11.1 Mortgages. The Credit Facility shall be secured in accordance
with the provisions of the Mortgages.
11.2 Assignments. The Credit Facility shall be secured in
accordance with the provisions of the Assignments.
11.3 Pledges. The Credit Facility shall be secured in accordance
with the provisions of the Pledges.
11.4 Pledge of Earnings Accounts. The Credit Facility shall be
secured by a pledge under Dutch law of the Borrowers' accounts no.
02.19.63.932, 02.19.94.625, 02.14.41.685, 02.14.41.723, 02.14.41.731,
02.14.41.790, 02.14.45.184, 02.14.45.168, 02.14.45.257, 02.20.28.579,
02.17.78.981 and 02.17.78.949 at the Lender (the "Pledge of Earnings
Accounts"). The Pledge of Earnings Accounts shall be in form and
substance satisfactory to the Lender but the remedies of such pledge
shall only be exercisable by the Lender in the event of a default under
Section 17.1(a) below.
11.5 Pledge of Arcade Drilling Shares. The Credit Facility shall
be secured by a pledge or pledges under Norwegian law of all Arcade
Drilling shares now owned or hereafter acquired by any Borrower and an
assignment of any cash dividends or other cash distributions paid to any
of the Borrowers as a shareholder of Arcade Drilling. The Pledge of
Arcade Drilling Shares shall be in form and substance satisfactory to the
Lender. Such pledge shall be subject to the Standstill Agreement dated
August 31, 1991 among Arcade Shipping, RBC and Sonat Offshore Drilling,
Inc. (the "Standstill Agreement"). The Lender agrees to be bound by the
undertakings in paragraph 1(H) of the Standstill Agreement with respect
to the sale of such shares in the event of a foreclosure of the Pledge of
Arcade Drilling Shares.
11.6 Security Deposits. The Credit Facility shall be secured by
the Security Deposits.
11.7 Further Assurances. The Borrowers agree to execute and
deliver to the Lender such financing statements or other instruments or
documents as the Lender may reasonably request in order to perfect the
security created by the Mortgages, the Pledges and the Assignments or
otherwise required by this Agreement.
Section 12. Conditions Precedent.
12.1 Documents Required as Conditions Precedent to the Amendment
and Restatement. The obligation of the Lender to complete the Amendment
and Restatement of the Facilities is subject to the condition precedent
that the Lender shall have received all of the following, each dated on
or before the Restructure Date and each in form and substance
satisfactory to the Lender:
(a) The Notes.
(b) Certified copies of the resolutions of the Boards of
Directors of each of the Borrowers authorizing the execution and delivery
by each of the Borrowers of the Loan Documents on behalf of each of the
Borrowers, and all documents evidencing other necessary corporate action
with respect to the Loan Documents.
(c) Certificate of the Secretary or the Assistant Secretary of
each Borrower certifying the names and true signatures of the officers of
each Borrower authorized to sign the Loan Documents on behalf of such
Borrower and the other documents or certificates to be executed by such
Borrower pursuant to this Agreement.
(d) Copies certified as of a recent date by the Secretary or the
Assistant Secretary of each Borrower of its By-Laws.
(e) a copy of each Borrower's Certificate of Incorporation
certified by the Secretary of State of the state of incorporation within
thirty (30) days from the date of this Agreement and certificates dated
as of a recent date of the Secretary of State of the state of
incorporation as to the existence and good standing of each Borrower.
(f) Executed counterparts of each of the Loan Documents, all in
a form satisfactory to the Lender and its counsel.
(g) An opinion of counsel to the Borrowers in form and substance
acceptable to the Lender.
(h) If the Restructure Date is not a Drawdown Date, a
certificate dated the first Drawdown Date of an officer of each of the
Borrowers certifying that:
(i) The representations and warranties contained in Section
14 hereof are correct on and as of the Drawdown Date as though made on
and as of such date; and
(ii) No event has occurred and is continuing, or would
result from the Advance, or the issuance of a Letter of Credit which
constitutes an Event of Default or with the passing of time or the giving
of notice would constitute an Event of Default.
(i) The Borrowers shall have executed and delivered to the
Lender copies of all documents and filings and shall have taken all
actions necessary to continue the perfection of the security interests
created by the Mortgages, the Pledges, the Assignments, the Pledge of
Earnings Accounts and the Pledge of Arcade Drilling Shares as first
priority perfected security interests except that the Mortgage as to the
drilling rigs ROGER W. MOWELL, J. T. ANGEL and JIM CUNNINGHAM may be a
second priority perfected security interest.
(j) All orders, consents, approvals, licenses, authorizations
and validations of, and filings, recordings and registrations with and
exemptions by any Governmental Agency or any Person (other than any
routine filings which may be required after the date hereof with
appropriate governmental authorities in connection with the operation of
the Rigs) required to (i) authorize the execution, delivery and
performance by the Borrowers of the Loan Documents or (ii) prevent the
execution, delivery and performance by the Borrowers of the Loan
Documents from resulting in a breach of any of the terms or conditions
of, or resulting in the imposition of any lien, charge or encumbrance
upon any properties of the Borrowers pursuant to, or constituting a
default (with due notice or lapse of time or both), if such breach,
imposition or default would result in a materially adverse change in the
financial position of the Borrowers, or resulting in an occurrence of any
event for which any holder or holders of Indebtedness may declare the
same due and payable under, any indenture, agreement, order, judgment or
instrument under which any Borrower is a party (other than the Mortgage,
the Pledges or the Assignments) or to the Borrowers' knowledge after due
inquiry by which the Borrowers or their property may be bound or
affected, or under the Certificates of Incorporation or By-Laws of the
Borrowers, shall have been obtained or made.
(k) Evidence of the insurance required by Section 15.3 of this
Agreement and the insurance brokers report referred to in Article I,
Section 15(b) of the Mortgages.
(l) Evidence that RBC has made a capital contribution to RBD of
all the issued and outstanding shares of common stock of RBX, RBI and
RBB.
(m) An opinion of Haight, Gardner, Poor & Havens, counsel to the
Lender, in form and substance acceptable to the Lender.
(n) A certificate signed by the chief executive officer or chief
financial officer of RBC as to any liens (as defined in Section 16.1(f)
below) on any properties of the Borrowers.
(o) An opinion of Arias, Fabrega & Fabrega in form and substance
acceptable to the Lender.
(p) An opinion of Clayton Utz in form and substance acceptable
to the Lender.
12.2 Waiver of Conditions Precedent. All of the conditions
precedent contained in this Section 12 are for the sole benefit of the
Lender and the Lender may waive any or all of them in its absolute
discretion.
Section 13. Fees and Expenses.
13.1 Fees. The following fees have been or shall be paid to the
Lender by the relevant Borrowers:
(a) as to the Commitment, the Borrowers,jointly and severally,
have paid an arrangement fee of USD 1,800,000;
(b) as to Facility D, the Borrowers, jointly and severally,
shall pay a facility fee of 1% per annum of the amount of the Facility D
Letter of Credit outstanding during each calendar quarter; such fee to be
payable in arrears on the last Business Day of each calendar quarter;
(c) as to Facility E, the Borrowers, jointly and severally,
shall pay an arrangement fee of USD 50,000 on the date hereof and a
facility fee of 1% per annum of the total amount of Facility E Letters of
Credit issued or outstanding from time to time during each calendar
quarter; such fee to be calculated on a daily basis for the actual
amounts outstanding and payable in arrears on the last Business Day of
each calendar quarter;
(d) as to Facility E, the Borrowers, jointly and severally,
shall pay a commitment fee of 1/2% per annum of the total amount of such
Facility not utilized by the issuance of Facility E Letters of Credit
during each calendar quarter; such fee to be payable in arrears on the
last Business Day of each calendar quarter.
(e) as to Facility F, the Borrowers, jointly and severally,
shall pay an arrangement fee of USD 125,000 on the date hereof and a
facility fee of 1% per annum of the highest amount of Facility F Letters
of Credit issued or still outstanding from time to time during each
calendar quarter; such fee to be calculated on a daily basis for the
actual amounts outstanding and payable in arrears on the last Business
Day of each calendar quarter;
(f) as to Facility F, the Borrowers, jointly and severally,
shall pay a commitment fee of 1/2% per annum of the total amount of such
Facility not utilized by the issuance of Facility F Letters of Credit
during each calendar quarter; such fee to be payable in arrears on the
last Business Day of each calendar quarter;
13.2 Expenses. The Borrowers jointly and severally agree, whether
or not any Advance is made or any Letter of Credit is issued hereunder,
to promptly reimburse the Lender upon demand for all reasonable fees and
disbursements of the Lender, including, but not limited to, travel and
other out-of-pocket expenses of the Lender and the fees and expenses of
external counsel to the Lender, incurred in connection with (a) the
preparation, execution and delivery of the Loan Documents, and the making
of Advances and the issuance of Letters of Credit under this Agreement
and all other documents referred to herein, and any amendments or waivers
to or termination of any thereof, (b) the recording, filing and
perfection of all security interests created by the Loan Documents and
(c) the protection of the rights of the Lender and the Trustee under this
Agreement and all other documents referred to herein and the enforcement
of payment of the Obligations, whether by judicial proceedings or
otherwise. The obligation of the Borrowers under this Section 13.2 shall
survive payment of all other amounts due under this Agreement.
Section 14. Representations and Warranties of Borrowers.
The Borrowers represent and warrant to the Lender as follows:
14.1 Due Incorporation, Qualification, Etc. Each Borrower is a
corporation duly organized, validly existing and in good standing under
the laws of (i) the State of Delaware with respect to RBC (ii) the State
of Oklahoma with respect to RBB, RBD, RBX and RBI and (iii) the State of
Western Australia with respect to RBA and each is duly qualified and in
good standing as a foreign corporation to do business in the
jurisdictions in which its ownership of property or conduct of business
legally requires such qualification, and each has full corporate power
and authority to own its properties and assets and to conduct its
business as presently conducted.
14.2 Capacity. Each Borrower has full corporate power and
authority to execute and deliver, and to perform and observe the
provisions of the Loan Documents to which it is a party and to carry out
the transactions contemplated hereby and thereby.
14.3 Authority and Enforceability. The execution, delivery and
performance by the Borrowers of the Loan Documents to which they are
parties have been or will be duly authorized by all necessary corporate
action. This Agreement (including the New York choice of law)
constitutes, and the Notes, the Mortgages, the Assignments, the Pledges,
the Pledge of Earnings Accounts and the Pledge of the Arcade Shares when
delivered by the Borrowers hereunder will constitute legal, valid and
binding obligations of the Borrowers party to such documents enforceable
against them in accordance with their respective terms, subject to laws
affecting creditors' rights generally and applicable equitable
principles. The Mortgages, the Assignments, the Pledges, the Pledge of
Earnings Accounts and the Pledge of the Arcade Shares shall on the first
Drawdown Date create and constitute valid and perfected security
interests in and to the properties covered thereby, subject to the
exceptions contained therein, enforceable against all third parties and
shall secure the payment of all amounts due under this Agreement. The
Mortgages shall constitute first priority security interests as to all of
the Rigs except as to the ROGER W. MOWELL, J. T. ANGEL and JIM CUNNINGHAM
as to which second priority security interests shall be created.
14.4 Governmental Approvals. No order, consent, approval, license,
authorization, or validation of, or filing, recording or registration
with (other than any routine filings which may be required after the date
hereof with appropriate governmental authorities in connection with the
operation of the Rigs), or exemption by, any Governmental Agency, is
required to authorize the execution, delivery and performance by the
Borrowers of the Loan Documents to which they are parties.
14.5 Compliance with Other Instruments. The execution and delivery
of this Agreement and compliance with its terms, the issuance of the
Notes and the execution and delivery of the Mortgages, the Assignments,
the Pledges, the Pledge of Earnings Accounts and the Pledge of the Arcade
Shares and the compliance with their terms as contemplated herein, will
not result in a breach of any of the terms or conditions of, or result in
the imposition of any lien, charge or encumbrance upon any properties of
the Borrowers pursuant to, or constitute a default (with due notice or
lapse of time or both), or result in an occurrence of any event for which
any holder or holders of Indebtedness may declare the same due and
payable under any indenture, agreement, order, judgment or instrument
under which any of the Borrowers is a party or to the Borrowers'
knowledge, after due inquiry, by which the Borrowers or their property
may be bound or affected, or under the Certificates of Incorporation or
By-Laws of the Borrowers, and, to the Borrowers' knowledge, after due
inquiry, will not violate any provision of applicable law.
14.6 Financial Statements. The consolidated balance sheets of RBC
as of December 31, 1994 and the related consolidated statements of income
and changes in financial position and shareholders' equity of RBC for the
fiscal year ended on that date, copies of which have been furnished to
the Lender, have been prepared in accordance with generally accepted
accounting principles and fairly present the financial conditions of RBC
and the other Borrowers on a consolidated basis, as of such date and the
results of the operations of RBC and the other Borrowers on a
consolidated basis for the period ended on such date. RBC and the other
Borrowers have no contingent liabilities which, if determined adversely
to them (either singly or in the aggregate), would have a material
adverse effect on RBC and the other Borrowers on a consolidated basis
except as heretofore disclosed to the Lender in writing.
14.7 Material Adverse Events. Since December 31, 1994, neither the
business, the prospects, the properties nor the condition (financial or
otherwise) of RBC and the other Borrowers on a consolidated basis has
been materially and adversely affected in any way.
14.8 Litigation, Etc. Except as heretofore disclosed by the
Borrowers to the Lender in writing, there are no actions, suits or
proceedings pending, or to the knowledge of the Borrowers threatened,
against or affecting any of the Borrowers at law or in equity, which, if
adversely determined, would have a material adverse effect on the
business, prospects, properties or condition (financial or otherwise) of
RBC or the other Borrowers on a consolidated basis. To the Borrowers'
knowledge, none of the Borrowers are in violation or default with respect
to any applicable laws and/or regulations which non-compliance would
materially affect the business, prospects, properties or condition
(financial or otherwise) of the Borrowers nor is any Borrower in
violation or default with respect to any order, writ, injunction, demand
or decree of any court or any Person or in violation or default (nor is
there any waiver in effect which, if not in effect, would result in a
violation or default) in any material respect under any indenture,
agreement or other instrument under which any Borrower is a party or may
be bound, default under which might materially and adversely affect the
business, prospects or condition (financial or otherwise) of any
Borrower.
14.9 Principal Place of Business. The chief executive office and
principal place of business of the Borrowers is located at 901
Threadneedle, Suite 200, Houston, Texas 77079.
14.10 Patent and Other Rights. The Borrowers have the right to
use all patents, licenses, trademarks, trade names, trade secrets,
copyrights and all rights with respect thereto, which are required to
conduct their businesses as now conducted without known conflict with the
rights of others which would materially and adversely affect such
businesses.
14.11 Taxes. The Borrowers have filed or caused to be filed all
tax returns which are required to be filed by them, pursuant to the laws,
regulations or orders of each Person with taxing power over the Borrowers
or their assets. The Borrowers have paid, or made provision for the
payment of, all taxes, assessments, fees and other governmental charges
which have or may have become due pursuant to said returns, or otherwise,
or pursuant to any assessment received by the Borrowers, except such
taxes, if any, as are being contested in good faith and as to which
adequate reserves (determined in accordance with generally accepted
accounting principles) have been provided. The charges, accruals and
reserves in respect of taxes on the books of the Borrowers are adequate
(determined in accordance with generally accepted accounting principles).
Other than as disclosed to the Lender in writing, the Borrowers know of
no proposed material tax assessment against any Borrower, and no
extension of time for the assessment of federal, state or local taxes of
the Borrowers is in effect or has been requested.
14.12 Compliance with Federal Reserve Board Regulations. No part
of the proceeds of any Advance or any Letter of Credit will be used,
directly or indirectly, for the purpose of purchasing or carrying any
margin security within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System, or for the purpose of purchasing
or carrying or trading in any securities under such circumstances as to
involve the Borrowers in a violation of Regulation X of said Board or the
Lender in a violation of Regulation U of said Board. In particular,
without limitation of the foregoing, no Borrower will use any part of the
proceeds of any Advance or any Letter of Credit to be made hereunder to
acquire for itself or for any other person any publicly-held securities
of any kind. The assets of the Borrowers do not include any margin
securities, and the Borrowers have no present intention of acquiring any
margin securities except as heretofore disclosed to the Lender in
writing. As used in this Section 14.12, the terms "margin security" and
"purpose of purchasing or carrying" shall have the meanings assigned to
them in the aforesaid Regulation U, and the term "publicly-held", in
respect of securities, shall have the meaning assigned to it in Section
220.7(a) of Regulation T of said Board. If requested by the Lender, the
Borrowers will furnish to the Lender a statement or statements in
conformity with the requirements of Federal Reserve Form U-1 referred to
in said Regulation U.
14.13 Employee Retirement Income Security Act of 1974. No
Reportable Event has occurred and is continuing with respect to any Plan.
14.14 Investment Company Act of 1940. None of the Borrowers is an
"investment company" within the meaning of the Investment Company Act of
1940.
14.15 Subsidiaries. RBB, RBX and RBI are wholly owned subsidiaries
of RBD. RBD is a wholly owned subsidiary of RBC. RBA is a wholly owned
subsidiary of RBX.
14.16 Environmental Compliance.
(a) The Borrowers have duly complied with, and the Rigs and
their other properties and operations are in compliance in all material
respects with, the provisions of all applicable environmental, health and
safety laws, codes and ordinances and all rules and regulations
promulgated thereunder of all Governmental Agencies.
(b) The Borrowers have received no notice of, and neither know
of nor suspect, any fact(s) which might constitute a material violation
of any applicable environmental, health or safety laws, codes or
ordinances, and any rules or regulations promulgated thereunder of all
Governmental Agencies, which relate to the use or ownership of the Rigs
or other properties owned or operated by the Borrowers.
(c) The Borrowers have been issued all required applicable
permits, licenses, certificates and approvals of all Governmental
Agencies relating to (i) air emissions, (ii) discharges to surface water
or ground water, (iii) noise emissions, (iv) solid or liquid waste
disposal, (v) the use, generation, storage, transportation, treatment,
recycling or disposal of Hazardous Substances or (vi) other
environmental, health or safety matters necessary for the Rigs or other
properties and operations owned or operated by the Borrowers and such
permits, licenses, certificates and approvals are in full force and
effect on the date of this Agreement.
(d) Except in accordance with a valid governmental permit,
license, certificate or approval, there has been no spill or unauthorized
discharge or release of any Hazardous Substance to the environment at,
from, or as a result of any operations on the Rigs or other properties
and operations owned or operated by the Borrowers.
(e) There has been no material complaint, compliance order,
compliance schedule, notice letter, notice of citation or other similar
notice from any applicable environmental agency which involves actions
on, or concerns the operations of the Rigs or other properties and
operations owned or operated by the Borrowers.
(f) The Charters remain in full force and effect and continue to
be the valid and binding obligations of the parties thereto following the
purchase of the interests in the Charter Notes referred to in Section
3.1(b) above.
Section 15. Affirmative Covenants of Borrowers.
Until the payment in full of all amounts due under this Agreement
and the Notes by the Borrowers and the expiration of all Letters of
Credit, unless compliance shall have been waived by the Lender, the
Borrowers agree that:
15.1 Financial Statements and Reports and Inspection.
(a) RBC will furnish to the Lender:
(i) as soon as possible and in any event within five (5)
Business Days after the occurrence of each Event of Default or of any
default in the performance of the Loan Documents, or each event which
with the giving of notice or lapse of time, or both, would constitute an
Event of Default or such a default, which is continuing on the date of
such statement, the statement of the chief financial officer of RBC
setting forth the details of such Event of Default or event or default
and the action which the Borrowers propose to take with respect thereto;
(ii) as soon as available and in any event within 45 days
after the close of each of the first three quarters of RBC's fiscal
years, a copy of quarterly consolidated financial statements for RBC
prepared in accordance with generally accepted accounting principles and
certified by the chief financial officer of RBC;
(iii) as soon as available and in any event within 90 days
after the close of RBC's fiscal years, a copy of the consolidated annual
audit report for such year for RBC, including therein, consolidated
financial statements consisting of the balance sheet of RBC as of the end
of such fiscal year, consolidated statements of income and changes in the
financial position of RBC for such fiscal year certified by Arthur
Andersen & Co. or other independent public accountants of recognized
standing reasonably acceptable to the Lender, and the independent public
accountants shall certify that in the course of their audit activities
they have not become aware of any event which constitutes an Event of
Default hereunder or which would constitute an Event of Default but for
the requirement that notice be given or that time has elapsed;
(iv) such other financial information as the Lender may
reasonably request; and
(v) (A) as soon as possible, and in any event, within 30
days after the Borrowers know, or have reason to know, that any
Reportable Event with respect to any Plan has occurred, a statement of
the chief financial officer of the Borrowers setting forth details as to
such Reportable Event and the action which the Borrowers propose to take
with respect thereto, together with a copy of the notice of such
Reportable Event given to the Pension Benefit Guaranty Corporation, if a
copy of such notice is available to the Borrowers, (B) promptly after
filing thereof with the United States Secretary of Labor or the Pension
Benefit Guaranty Corporation copies of each annual report with respect to
each Plan, and (C) promptly after receipt thereof a copy of any notice
the Borrowers, or any member of the Controlled Group may receive from the
Pension Benefit Guaranty Corporation or the Internal Revenue Service with
respect to any Plan; provided, however, this Section 15.1(a)(v)(C) shall
not apply to notice of general application promulgated by the Department
of Labor.
(b) The Borrowers will, upon request, furnish to the Lender such
information as the Lender may reasonably request with respect to the
business, affairs or condition (financial or otherwise) of the Borrowers
and will permit the Lender or its representatives at any reasonable time
or times during normal business hours, to inspect the properties of the
Borrowers, to inspect, audit and examine the books or records of the
Borrowers and to take extracts therefrom and will reimburse the Lender
for all reasonable expenses incurred in connection therewith; provided,
however, that any inspection of the Rigs shall be subject to the consent
of the operators under applicable drilling contracts and the consent of
applicable Governmental Agencies; which consents the Borrowers shall use
their best efforts to obtain.
(c) The Borrowers will, upon request, furnish to the Lender all
financial information distributed to creditors or shareholders in any
recapitalization or reorganization in which any of the Borrowers are
involved as debtors or creditors.
(d) All non-public information obtained by the Lender pursuant
to any Loan Document concerning the Borrowers, the Rigs, the Borrowers'
other assets or the Borrowers' financial condition and prospects shall be
kept confidential by the Lender subject, however, to requests from any
applicable Governmental Agencies and to disclosures of such information
to assignees and participants (and potential assignees and participants)
pursuant to Section 19.8 hereof unless such non-governmental parties
shall agree prior to such disclosure to be bound by this Section 15.1(d).
(e) the Borrowers shall furnish to the Lender as soon as
possible any information available to them concerning material business
developments at Arcade Drilling including, but not limited to, notice of
any cash dividends or other cash distributions paid to shareholders of
Arcade Drilling.
15.2 Consolidated Financial Statements. Notwithstanding anything
in this Agreement to the contrary, the consolidated financial statements
of RBC include and shall continue to include the financial results of
RBC, the other Borrowers and all subsidiaries of the Borrowers and all of
the financial tests and ratios contained in Section 16 of this Agreement
shall be based on such consolidated financial results.
15.3 Insurance. The Borrowers shall insure, or cause to be
insured, the Rigs pursuant to the terms of Article I, Section 15 of the
Mortgages. The Borrowers shall on each anniversary of the date of this
Agreement furnish the Lender with evidence of all such insurance policies
currently in force.
15.4 Other Debt. The Borrowers will promptly pay and discharge any
and all Indebtedness, liens, charges, all taxes, assessments and
governmental charges or levies imposed upon them or upon their income or
profits, or upon any of their properties prior to the date on which
penalties accrue thereon, and lawful claims which, if unpaid, might
become a lien or charge upon the property of the Borrowers, except such
as may in good faith be contested or disputed, provided appropriate
reserves are maintained to the satisfaction of the Lender.
15.5 Maintenance of Existence; Conduct of Business. The Borrowers
will preserve and maintain their corporate existence, their business as
presently conducted, and all of their rights, privileges and franchises
necessary or desirable in the normal conduct of said businesses, and
conduct their businesses in an orderly, efficient and regular manner.
15.6 Financial Records. The Borrowers will keep books of record
and account in which proper entries will be made of their transactions in
accordance with generally accepted accounting principles.
15.7 Maintenance of Rigs. The Borrowers will maintain, or cause to
be maintained, the Rigs in the highest classification for such drilling
rigs with the American Bureau of Shipping or such other classification
society as the Trustee may approve.
15.8 Environmental Compliance.
(a) The Borrowers will comply with and cause all of their
employees, agents, contractors and subcontractors to so comply with (i)
all applicable environmental, health and safety laws, codes and
ordinances, and all rules and regulations promulgated thereunder of all
Governmental Agencies and (ii) the terms and conditions of all applicable
permits, licenses, certificates and approvals of all Governmental
Agencies now or hereafter granted or obtained with respect to the Rigs or
other properties and operations owned or operated by the Borrowers.
(b) The Borrowers will use their best efforts and safety
practices to prevent the release, threatened release, discharge,
disposal, escape or spill of Hazardous Substances on or about the Rigs or
other properties owned or operated by the Borrowers.
15.9 Environmental Notifications. The Borrowers shall notify the
Lender, in writing, within twenty (20) days of any of the following
events:
(a) Any written notification made by any Borrower to any
federal, state or local environmental agency required under any federal,
state or local environmental statute, regulation or ordinance relating to
a spill or unauthorized discharge or release of any Hazardous Substance
to the environment at, from, or as a result of any operations on, the
Rigs or other properties and operations owned or operated by the
Borrowers;
(b) Receipt of service by any Borrower of any complaint,
compliance order, compliance schedule, notice letter, notice of
violation, citation or other similar notice from any federal, state or
local environmental agency which involves actions on, or concerns the
operations on, the Rigs or other properties and operations owned or
operated by the Borrowers;
(c) Receipt of service by any Borrower of any complaint,
compliance order, compliance schedule, notice letter, notice of
violation, citation or other similar notice or any judicial demand by any
federal, state or local environmental agency, or third person, alleging
(i) any spill, unauthorized discharge or release of any Hazardous
Substance to the environment from, or as a result of the operations on,
the Rigs or other properties and operations owned or operated by the
Borrowers or (ii) violations of applicable laws, regulations or permits
regarding the generation, storage, handling, treatment, transportation,
recycling, release or disposal of Hazardous Substances on or as a result
of operations on the Rigs or other properties and operations owned or
operated by the Borrowers.
(d) It is understood by the parties hereto that the
aforementioned notice is solely for the Lender's information, may not
otherwise be required by any federal, state or local environmental laws,
regulations or ordinances, and is to be considered confidential
information by the Lender; provided the Lender is advised of such
confidentiality and no waivers of such confidentiality have been made by
the parties hereto. Failure by the Borrowers to give timely notice shall
constitute an Event of Default under Section 17.1(b) hereof; provided,
however, that upon notice of such default to the Borrowers by the Lender
such Event of Default may be cured by provision by the Borrowers of the
required notice within 15 days of notice of such Event of Default.
(e) The term "environmental agency" as used herein shall
include, but not be limited to, the United States Environmental
Protection Agency, the United States Coast Guard, the United States
Minerals Management Service, the United States Department of
Transportation (in its administration of the Hazardous Materials
Transportation Act, 49 U.S.C. Sec. 1801, et seq.) and other analogous or
similar Governmental Agencies regulating or administering statutes,
regulations or ordinances relating to or imposing liability or standards
of conduct concerning the generation, storage, use, production,
transportation, handling, treatment, recycling, release or disposal of
any Hazardous Substance.
15.10 Environmental Indemnification. (a) The Borrowers hereby
jointly and severally agree to indemnify and hold the Lender and the
Trustee jointly and severally harmless from and against any and all
claims, losses, liability, damages and injuries of any kind whatsoever
asserted against the Lender or the Trustee with respect to or as a direct
result of the presence, escape, seepage, spillage, release, leaking,
discharge or migration from any Rig or other properties owned or operated
by the Borrowers of any Hazardous Substance, including without
limitation, any claims asserted or arising under any applicable
environmental, health and safety laws, codes and ordinances, and all
rules and regulations promulgated thereunder of all Governmental
Agencies, regardless of whether or not caused by or within the control of
the Borrowers.
(b) It is the parties' understanding that the Lender and the
Trustee do not now, have never and do not intend in the future to
exercise any operational control or maintenance over the Rigs or any
other properties and operations owned or operated by the Borrowers, nor
have they in the past, presently, or intend in the future to, maintain an
ownership interest in the Rigs or any other properties owned or operated
by the Borrowers. Should, however, the Lender or the Trustee hereafter
exercise any ownership interest in or operational control over the Rigs
or any other properties owned or operated by the Borrowers, e.g.,
including but not limited to, through foreclosure, then the above stated
indemnity and hold harmless shall no longer apply with respect to any
actions or failures to act by the Lender or the Trustee subsequent to
exercising such interest or operational control, if such action or
inaction by the Lender or the Trustee is admitted by the Lender or the
Trustee or is found by a court of competent jurisdiction to have caused
or made worse any condition for which liability is asserted, including
but not limited to, the presence, escape, seepage, spillage, leaking,
discharge or migration on or from the Rigs or other properties owned or
operated by the Borrowers of any Hazardous Substance.
(c) The indemnity and hold harmless contained in this Section
15.10 shall not extend to the Lender or the Trustee in its capacity as an
equity investor in the Borrowers or as an owner of any property or
interest as to which the Borrowers are also owners but to its capacity as
a lender, a holder of security interests, a beneficiary of security
interests or as an owner following foreclosure or enforcement (whether by
judicial or non-judicial means) of such security interests.
15.11 Charter Parties. The Borrowers will comply with the
provisions of Article I, Section 14 of the Mortgages concerning charters
and will furnish to the Lender upon execution, copies of all charter
parties and sub-charter parties pertaining to the Rigs.
Section 16. Negative Covenants of Borrowers.
Until the payment in full of all amounts due under this Agreement
and the Notes by the Borrowers and the expiration of all Letters of
Credit, without the prior written consent of the Lender (which consent
shall not be unreasonably withheld), the Borrowers agree they will not:
16.1 Liens. Create, incur, assume or suffer to exist any lien
(including any encumbrance or security interest) of any kind upon the
Rigs or any of their other material assets, revenues or right to receive
revenue whether now owned or hereafter acquired, except:
(a) liens for taxes, assessments or other governmental charges
or levies not at the time delinquent or thereafter payable without
penalty or being contested in good faith, provided provision is made to
the reasonable satisfaction of the Lender for the eventual payment
thereof in the event it is found that such are payable by the Borrowers;
(b) liens of carriers, warehousemen, mechanics, materialmen,
landlords, operators of, and participants in, any oil, gas or mineral
properties of any of the Borrowers and maritime liens incurred in the
ordinary course of business for sums not overdue or being contested in
good faith, provided provision is made to the reasonable satisfaction of
the Lender for the eventual payment thereof in the event it is found that
such sums are payable by the Borrowers;
(c) liens incurred in the ordinary course of business in
connection with workmen's compensation, unemployment insurance or other
forms of governmental insurance or benefits, or to secure performance of
tenders and statutory obligations entered into in the ordinary course of
business or to secure obligations on surety or appeal bonds in an
aggregate amount not exceeding (i) USD 2,500,000 at any one time, (ii)
USD 5,000,000 in any calendar year and (iii) USD 10,000,000 during the
term of this Agreement;
(d) judgment liens in existence less than 30 days after the
entry thereof or with respect to which execution has been stayed or the
payment of which is covered in full by insurance;
(e) liens required by the terms of this Agreement; and
(f) liens existing as of the date of this Agreement and
disclosed in writing to the Lender.
Notwithstanding anything in this Section 16.1 to the contrary, in no
event shall the liens, encumbrances and security interests permitted by
this Section 16.1 materially impair (in the opinion of the Lender) the
business or financial condition of the Borrowers or the value of the
properties of the Borrowers taken as a whole.
16.2 Dividends. Permit RBC to declare or make any dividend
payments, loans or distributions to its shareholders in any one year in
excess of 50% of its cumulative net income since the first Drawdown Date
(other than dividend payments from time to time on RBC's $1.625
Convertible Preferred Stock, and on RBC's Class A (Cumulative
Convertible) Capital Stock, which shall not be subject to such
limitation) or to redeem any of RBC's $1.625 Convertible Preferred Stock
shares.
16.3 Consolidation, Merger, Etc. Consolidate with or merge with,
or sell (whether in one transaction or in a series of transactions) all
or substantially all of their assets to any Person or acquire (whether in
one transaction in a series of transactions) all or substantially all of
the assets of any Person.
16.4 Modification of Agreements. Amend, modify or otherwise change
any of the Loan Documents.
16.5 Indebtedness. Incur any indebtedness for borrowed money,
except:
(a) the Advances;
(b) the Guarantee Payments;
(c) accounts payable incurred in the ordinary course of
business;
(d) unsecured subordinated debt acceptable to the Lender in its
sole discretion; and
(e) in the event that Facility C is terminated or expires, a
working capital facility similar in amount, terms and conditions to
Facility C.
16.6 Reportable Event. Cause or allow to occur a Reportable Event.
16.7 Change of Legal Structure. Cause or allow to occur any
material change in the present legal structure of the Borrowers.
16.8 Change of Place of Business. Make any change in the address
of their principal place of business or their chief executive office
without prior written notice to the Lender.
16.9 Management of Rigs. Change the flag, class, ownership or
control of the Rigs without the prior written consent of the Trustee.
16.10 Subsidiaries. Create or acquire any new subsidiaries.
16.11 Prepayment of Debt. Prepay any Indebtedness to any Person
other than the Lender.
16.12 Sale of Rigs, Etc. Sell, transfer or assign any of the Rigs,
any right to receive the revenue from the Rigs or any other material
asset.
16.13 Consolidated Tangible Net Worth. Permit Consolidated
Tangible Net Worth to be less than USD 225,000,000 by December 31, 1993
and USD 250,000,000 thereafter.
16.14 Current Ratio. Permit the ratio of Current Assets to Current
Liabilities to be less than 1.5:1.
16.15 Fixed Charge Coverage Ratio. Permit the Fixed Charge
Coverage Ratio to be less than 2.0 to 1.
16.16 Funded Debt. Permit total Funded Debt to be greater at any
time than 50% of the sum of total Funded Debt plus Consolidated Tangible
Net Worth.
16.17 Standstill Agreement. Amend the Standstill Agreement or
enter into any new agreements or understandings with Sonat Offshore
Drilling, Inc. concerning the shares of Arcade Drilling.
Section 17. Events of Default.
17.1 Events of Default. If one or more of the following described
events shall occur and is continuing ("Event of Default"):
(a) Any Borrower shall fail to pay any amount due hereunder on
the due date and such failure shall continue for a period of four (4)
Business Days; or
(b) Any Borrower shall fail to perform or observe any covenant
or other provision of this Agreement, the Notes, the Letters of Credit,
the Pledges, the Mortgages, the Assignments, the Pledge of Earnings
Accounts or the Pledge of Arcade Drilling Shares and such failure shall
continue for 10 days after notice to the Borrowers of such failure; or
(c) Any representation or warranty made in writing by or on
behalf of the Borrowers herein or pursuant hereto, or otherwise in
connection with the transactions contemplated hereby or any report,
certificate, financial or other instrument furnished in connection with
this Agreement, shall prove to have been false or incorrect in any
material respect, or omits to state a material fact required to be stated
therein in order to make the statements contained therein, in the light
of the circumstances under which they were made, not misleading, on the
date as of which made; or
(d) Any Borrower shall cause or suffer to exist a default, as
defined in any evidence of Indebtedness of such Borrower or under any
indenture, agreement or other instrument under which the same may be
issued, and such default shall continue for thirty (30) days; other than
those disclosed to the Lender on or before the date of this Agreement and
those which are being contested in good faith and as to which adequate
reserves (determined in accordance with generally accepted accounting
principles) have been provided; or
(e) Any of the following events shall occur:
(i) Any Borrower commences a voluntary case under Title 11
of the United States Code as now or hereafter in effect, or any successor
thereto (the "Bankruptcy Code"); or
(ii) an involuntary case is commenced against any Borrower
under the Bankruptcy Code and relief is ordered against such Borrower or
the petition is controverted but is not dismissed within 90 days after
the commencement of the case; or
(iii) a custodian (as defined in the Bankruptcy Code) is
appointed for, or takes charge of, all or substantially all of the
property of any Borrower; or
(iv) any Borrower commences any other proceeding under any
reorganization, arrangement, readjustment of debt, relief of debtors,
dissolution, insolvency, liquidation or similar law of any jurisdiction
relating to such Borrower (whether now or hereafter in effect), or there
is commenced against any Borrower any such proceeding which remains
undismissed for a period of 90 days or any Borrower is adjudicated
insolvent or bankrupt; or any Borrower fails to controvert in a timely
manner any such case under the Bankruptcy Code or any such proceeding, or
any order of relief or other order approving any such case or proceeding
is entered; or
(v) any Borrower by any act or failure to act indicates its
consent to, approval of or acquiescence in any such case or proceeding or
in the appointment of any custodian of or for it or any substantial part
of its property or suffers any such appointment to continue undischarged
or unstayed for a period of 90 days; or
(vi) any Borrower makes a general assignment for the benefit
of creditors; or
(vii) any corporate action is taken by any Borrower for the
purpose of effecting any of the foregoing.
(f) There shall have occurred a material adverse change in the
financial or business condition of any of the Borrowers.
(g) Arcade Drilling shall cause or suffer to exist a payment
event of default under any indenture, agreement or other instrument for
the borrowing of money and such default shall continue for ten (10)
Business Days.
THEN, or at any time thereafter:
The Lender may terminate the Commitment to make Advances and issue
Letters of Credit and/or declare the entire outstanding unpaid principal
amount of the Notes and the Charter Payment Guaranty, all interest
accrued and unpaid thereon and all other amounts payable hereunder and
thereunder to be forthwith due and payable, whereupon the same shall
become immediately due and payable, without presentment, demand, protest
or further notice of any kind, all of which are hereby expressly waived
by the Borrowers and also demand that the Borrowers cooperate with it in
order to permit any outstanding Letters of Credit to be terminated, or if
such termination cannot be accomplished, the relevant Borrowers shall
deposit with the Lender an amount equal to the aggregate amounts of any
outstanding Letters of Credit which deposit shall be held by the Lender
as security until the Letters of Credit are terminated or expire. The
Lender may immediately and without expiration of any additional period of
grace, enforce payment of all obligations of the Borrowers under this
Agreement and under the Notes. In addition, the Lender may exercise any
or all of such remedies as may be available to it under applicable law or
granted pursuant to the Loan Documents.
Any declaration made pursuant to this Section 17.1 is subject to the
condition that, if at any time after the outstanding principal of any of
the Notes shall have become due and payable, and before any foreclosure
action has been taken by the Lender or the Trustee under any of the Loan
Documents to realize upon the security provided by such documents, all
arrears of interest upon the Notes and all other obligations owed to the
Lender (except that principal of the Notes which by such declaration
shall have become payable) shall have been duly paid, and every other
default and Event of Default shall have been made good, waived or cured,
then and in the case of the first such Event of Default, the Lender
shall, and in the case of any succeeding Events of Default, the Lender
may, by written notice to the Borrowers, rescind and annul such
declaration and its consequences; but no such rescission or annulment
shall extend to or affect any subsequent default or Event of Default or
impair any right consequent thereon.
Section 18. Evaluation and Additional Security.
18.1 Evaluation. Upon each annual anniversary of this Agreement,
the Borrowers will promptly obtain at the Borrowers' expense an
evaluation of the Rigs by a reputable independent offshore drilling rig
broker selected by the Borrowers but acceptable to the Lender. Apart
from this annual evaluation, the Lender has the right to reasonably
request additional evaluations of the Rigs by a reputable offshore
drilling rig broker selected by the Borrowers but acceptable to the
Lender. In the event that any of the evaluations establishes that the
fair market value of the Rigs is less than the aggregate of 150% of the
amount of the Credit Facility, the Borrowers shall at the request of the
Lender (but at the Borrowers' option) either:
(a) provide additional security acceptable to the Lender to
insure that the fair market value of the Rigs and such additional
security is equal to at least 150% of the amount of the Credit Facility;
or
(b) (i) reduce the amounts then outstanding under the Notes by a
prepayment in the manner provided for in Section 10.3 hereof except
that a prepayment under this Section 18.1 shall be applied pro rata to
all amounts outstanding under this Agreement and shall reduce by the
amount of such prepayment the ability of the Borrowers to draw under
Facility C or (ii) obtain the agreement of the beneficiaries of Letters
of Credit to their termination in an amount as is necessary to insure
that the fair market value of the Rigs is at least 150% of the amount of
the Credit Facility after such reductions and terminations have been
made.
18.2 Expenses of Evaluations. The Borrowers jointly and severally
agree to pay for the evaluations referred to in Section 18.1 above up to
and including a total amount of USD 25,000 per year.
Section 19. Miscellaneous.
19.1 Entire Agreement. This Agreement with its Schedules and
Exhibits embodies the entire agreement and understanding between the
parties hereto and supersedes all prior agreements and understandings
relating to the subject matter hereof.
19.2 No Waiver. No failure to exercise, and no delay in exercising
any right, power or remedy hereunder or under any document delivered
pursuant hereto shall impair any right, power or remedy which the Lender
may have, nor shall any such delay be construed to be a waiver of any of
such rights, powers or remedies, or an acquiescence in any breach or
default under this Agreement or any document delivered pursuant hereto,
nor shall any waiver of any breach or default of the Borrowers hereunder
be deemed a waiver of any default or breach subsequently occurring. The
rights and remedies herein specified are cumulative and not exclusive of
any rights or remedies which the Lender would otherwise have.
19.3 Survival. All representations, warranties and agreements
herein contained on the part of the Borrowers shall survive the making of
the Advances and the issuance of the Letters of Credit hereunder and all
such representations, warranties, and agreements shall be effective as
long as any amount arising pursuant to the terms of this Agreement or the
Notes remains unpaid.
19.4 Notices. All notices, requests, consents, demands, and other
communications provided for or permitted hereunder shall be effective
when duly deposited in the mails, certified, return receipt requested, or
delivered to Federal Express or similar courier company or transmitted by
telefax, addressed to the respective party at the address set forth
below.
Borrowers: Reading & Bates Corporation
901 Threadneedle, Suite 200
Houston, Texas 77079
Telefax No. (713) 496-0285
Telex No. 762305
Attention: Chief Executive Officer
Lender: Internationale Nederlanden Bank N.V.
De Amsterdamse Poort HH 01 03
1102 MG Amsterdam Zuidoost
The Netherlands
Telefax No. 011 31 20 5 672199
Telex No. 13646 ING B
Attention: Annerie M. Vreugdenhil,
Senior Account Manager
Corporate Banking
Any of the parties hereto may change their respective addresses by notice
in writing given to the other parties to this Agreement.
19.5 Termination. This Agreement shall terminate when all
obligations of the Borrowers incurred hereunder shall have been
discharged in full and all of the Commitment shall have terminated.
19.6 Severability of Provisions. In case any one or more of the
provisions contained in this Agreement should be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability
of the remaining provisions contained herein shall not in any way be
affected or impaired thereby.
19.7 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the Borrowers, the Lender and their
respective successors and assigns; provided, however, that the Borrowers
may not transfer their rights to borrow under this Agreement without the
prior written consent of the Lender.
19.8 Assignment and Participation. (a) Subject to paragraph (b)
below, the Lender shall have the right to sell, assign, transfer,
negotiate or grant assignments or participations in all or part of the
obligations of the Borrowers outstanding under this Agreement or the
Notes evidencing such obligations to an affiliate of the Lender or to any
first class international bank upon prior written notice to the
Borrowers.
(b) Any assignment by the Lender of the obligations of the
Borrowers under this Agreement and the Notes to entities which are not
either affiliates of the Lender or first class international banks or any
assignment by the Lender to entities other than affiliates of the Lender
which leaves the Lender holding less than fifty percent (50%) of the
obligations of the Borrowers under this Agreement and the Notes shall be
subject to the prior written approval of the Borrowers, which consent
shall not be unreasonably withheld.
(c) The Borrowers hereby acknowledge and agree that after any
assignment such assignee shall for all purposes, where relevant, hereof
be considered to be a Lender. The Borrowers hereby authorize the Lender
and each assignee or participant in case of default by the Borrowers
hereunder to proceed directly by right of set-off, banker's lien or
otherwise against any assets of the Borrowers which may at the time of
such default be in the hands of such Lender or such assignee or
participant to the full extent of its interest in the Obligations.
19.9 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement,
and either party hereto may execute this Agreement by signing any such
counterpart.
19.10 Jurisdiction. All actions or proceedings with respect to
this Agreement and the Notes may be instituted in the courts of the State
of New York or the United States District Court for the Southern District
of New York. By execution and delivery of this Agreement the Lender and
the Borrowers irrevocably and unconditionally submit to the jurisdiction
of each such court, and irrevocably and unconditionally waive (i) any
objection the Borrowers or the Lender may now or hereafter have to the
laying of venue in any of the courts, and (ii) any claims that any action
or proceeding brought in any of such courts has been brought in an
inconvenient forum. Provided, however, that nothing in this Section
19.10 shall limit or restrict the right of the Trustee to bring suit
against the Borrowers, the Rigs or any earnings or revenues of the Rigs
anywhere in the world to enforce the security provided in the Mortgages
and the Assignments.
19.11 CHOICE OF LAW. THIS AGREEMENT AND THE NOTES ISSUED HEREUNDER
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS
OF THE STATE OF NEW YORK, EXCEPT THAT WITH RESPECT TO THE PROVISIONS OF
THIS AGREEMENT AND THE NOTES WHICH PROVIDE FOR OR RELATE TO THE PAYMENT
OF INTEREST, PROVISIONS OF APPLICABLE FEDERAL LAW WHICH PERMIT THE LENDER
TO CHARGE THE HIGHER OF THE RATE PERMITTED BY SUCH APPLICABLE LAW OR BY
THE LAWS OF THE STATE IN WHICH THE LENDER IS LOCATED SHALL BE DEEMED
GOVERNING AND CONTROLLING.
19.12 Amendment and Waiver. No provision of any of the Loan
Documents may be amended, modified, supplemented, changed, waived,
discharged or terminated, unless all parties hereto consent in writing.
19.13 Agent for Borrowers.
(a) The Borrowers agree that RBC shall be the true and lawful
agent and attorney-in-fact of the Borrowers hereunder in connection with
all of the rights, powers and duties of the Borrowers hereunder,
including, without limitation, the giving or withholding and the receipt
of consents and notices.
(b) The Lender shall be entitled to and agrees to treat any
notice given or action taken by RBC, acting as its capacity as agent, as
a notice from or an action by the Borrowers.
19.14 No Oral Agreements. THIS WRITTEN LOAN AGREEMENT REPRESENTS
THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES.
19.15 Headings, Etc. The table of contents of this Agreement and
the headings of various sections and subsections herein are for
convenience of reference only and shall not modify, define, expand or
limit any of the terms or provisions hereof. References to sections or
subsections without reference to the document in which they are contained
are references to this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed, as a deed, as of the day and year first above written.
READING & BATES CORPORATION
By: ______________________________
Name: T. W. Nagle
Title: Vice President and
Chief Financial Officer
READING & BATES DRILLING CO.
By: ______________________________
Name: T. W. Nagle
Title: Vice President and Treasurer
READING & BATES EXPLORATION CO.
By: ______________________________
Name: T. W. Nagle
Title: Vice President and Treasurer
READING AND BATES, INC.
By: ______________________________
Name: T. W. Nagle
Title: Vice President and Treasurer
READING AND BATES BORNEO DRILLING CO. LTD.
By: _______________________________
Name: T. W. Nagle
Title: Vice President and Treasurer
THE COMMON SEAL OF READING & BATES (A) PTY. LTD.
READING & BATES (A)
PTY. LTD. was hereunto By: _______________________________
affixed by authority of Name: T. W. Nagle
the Board of Directors Title: Director
in the presence of:
__________________________
T. W. Nagle, Director
__________________________
W. K. Hillin, Secretary
INTERNATIONALE NEDERLANDEN BANK N.V.
By: ______________________________
Name: David Jungman
Title: Attorney-in-Fact
<PAGE>
Schedule 1
List of Rigs
<TABLE>
<CAPTION>
Name Official No. Flag Owner
<S> <C> <C> <C>
RON TAPPMEYER ______ Australian Reading & Bates
(A) Pty. Ltd.
D.R. STEWART 626904 U.S. Reading & Bates
Exploration Co.
D.K. McINTOSH 591662 U.S. Reading & Bates
Exploration Co.
W.D. KENT 583169 U.S. Reading & Bates
Exploration Co.
CHARLEY GRAVES 6618-76-B Panamanian Reading and Bates
Borneo Drilling Co.,
Ltd.
M.G. HULME JR. 651644 U.S. Reading and Bates,
Inc.
RANDOLPH YOST 601699 U.S. Reading & Bates
Drilling Co.
ROGER W. MOWELL 645360 U.S. Reading & Bates
Drilling Co.
J.T. ANGEL 651645 U.S. Reading & Bates
Drilling Co.
JIM CUNNINGHAM 651643 U.S. Reading & Bates
Drilling Co.
JACK BATES 906283 U.S. Reading & Bates
Drilling Co.
</TABLE>
EXHIBIT A-1
TO AMENDED AND RESTATED
CREDIT FACILITY AGREEMENT
READING & BATES CORPORATION
READING & BATES DRILLING CO.
READING & BATES EXPLORATION CO.
READING AND BATES, INC.
READING AND BATES BORNEO DRILLING CO., LTD.
READING & BATES (A) PTY. LTD.
AMENDED AND RESTATED FACILITY A PROMISSORY NOTE
USD 15,000,000 April 27, 1995
FOR VALUE RECEIVED, READING & BATES CORPORATION, READING & BATES DRILLING
CO., READING & BATES EXPLORATION CO., READING AND BATES, INC., READING
AND BATES BORNEO DRILLING CO., LTD. and READING & BATES (A) PTY. LTD.
(the "Facility A Borrowers") hereby jointly and severally promise to pay
to INTERNATIONALE NEDERLANDEN BANK, N.V. (the "Payee"), or order, on or
before December 31, 1996 in installments, or otherwise, as hereinafter
provided, FIFTEEN MILLION DOLLARS OF THE UNITED STATES OF AMERICA (USD
15,000,000 and to pay interest on the unpaid portion of said principal
sum outstanding from time to time, as hereinafter provided.
PRINCIPAL AND INTEREST
1.1 (a) Interest on this Note shall be payable at the times and the
rates as provided in Section 9 of the Amended and Restated Credit
Facility Agreement (the "Credit Agreement") dated as of April 27, 1995,
among the Facility A Borrowers and the Payee.
(b) In case any payment of principal or interest is not paid when
due, additional interest at the rate determined as provided in Section
9.3 of the Credit Agreement shall be payable on all overdue principal
and, to the extent that the same may be lawful, on all overdue interest.
1.2 Interest shall be calculated as provided in Section 9.1 of the
Credit Agreement.
1.3 The principal of this Note shall be payable in installments as
provided in Section 10.2(a) of the Credit Agreement. All principal
payments shall be made to the Lender at its Amsterdam Branch Office in
Amsterdam South East, The Netherlands as provided in Section 10.5 of the
Credit Agreement.
1.4 Notwithstanding any provision of this Note to the contrary it is
the intent of the Facility A Borrowers and the Payee that, in no event
shall the aggregate amount of consideration which constitutes interest
under any applicable law which is contracted for, charged or received
hereunder or under this Note ("Interest") exceed the maximum amount of
nonusurious interest allowed by law, and any excess shall be credited on
this Note (or if all obligations under this Note shall have been paid in
full, refunded to the Facility A Borrowers). For purposes of the
foregoing, the maximum amount of interest allowed by law shall be
calculated by determining the amount of interest that could be contracted
for, charged or received during the term hereof at the maximum rate of
nonusurious interest allowed from time to time by applicable law as is
now or, to the extent allowed by law, as may hereafter be in effect (the
"maximum nonusurious interest rate") and, if at any time the rate of
Interest to accrue would exceed the maximum nonusurious interest rate,
the rate of Interest to accrue under this Note shall be limited to the
maximum nonusurious interest rate, but any subsequent reductions in LIBOR
shall not reduce the rate of Interest to accrue on this Note below the
maximum nonusurious interest rate until the total amount of Interest
accrued and paid on this Note equals the amount of Interest which would
have accrued if a rate per annum equal to LIBOR plus 1-1/2% or the
interest rate charged pursuant to Section 9.3 of the Credit Agreement,
whichever is applicable, had at all times been in effect. It is further
agreed that, without limitation of the foregoing, all calculations of the
rate of Interest that are made for the purpose of determining whether
such rate exceeds the maximum nonusurious interest rate applicable to the
Payee, shall be made to the extent possible permitted by usury laws
applicable to the Payee (now or hereafter enacted) by amortizing,
prorating and spreading all Interest in equal parts during the period of
the full stated term of the obligations evidenced by this Note.
SECURITY
2.1 This Note is one of the promissory notes issued under and pursuant
to the Credit Agreement and is secured by, among other things, U.S.
Preferred Mortgages dated March 29, 1991, as amended, on nine U.S. flag
drilling rigs, a Panamanian First Naval Mortgage dated April 27, 1995, on
one Panamanian flag drilling rig and one Australian First Registered Ship
Mortgage dated April 27, 1995 on one Australian flag drilling rig, all in
favor of Bank One, Texas, N.A., as Trustee for the Payee (the
"Mortgages"). Reference is hereby made to the Mortgages for a
description of the property thereby mortgaged, the nature and extent of
the security afforded thereby and the rights of the Facility A Borrowers
and the Payee with respect to such security as provided in the Mortgages.
Payment of this Note may be demanded by the holder hereof prior to the
maturity of this Note under certain circumstances and conditions, in the
manner, and with the effect, provided in the Mortgages or the Credit
Agreement. A true and complete copy of the form of the Credit Agreement
is attached to the Mortgages and made a part thereof.
2.2 This Note evidences the Advance made by the Payee under Facility A
of the Credit Agreement.
MISCELLANEOUS
3.1 All parties hereto, including endorsers hereof, hereby waive
presentment for payment, demand, protest and notice of protest and non-
payment hereof and hereby consent that any and all securities or other
property, if any, held by or for the holders hereof at any time as
security for this Note may be exchanged, released or surrendered and that
the time of payment of this Note may be extended, all in the sole
discretion of the holders hereof and without notice and without affecting
in any manner the liability of the parties hereto.
3.2 No course of dealing between the Facility A Borrowers and the Payee
in exercising any rights hereunder shall operate as a waiver of any right
of any holders except to the extent expressly waived in writing by such
holder.
3.3 Whenever any payment to be made hereunder shall be due on a day
which is not a Business Day, such payments shall be made on the next
Business Day; provided, however, that if such next succeeding Business
Day is in a new month, then the payment required under the Credit
Agreement or this Note shall be made on the first Business Day preceding
the original date on which payment was due.
3.4 Any notice to be given pursuant to this Note shall be given in
accordance with Section 19.4 of the Credit Agreement.
3.5 This Note shall be governed by and construed in accordance with the
internal laws of the State of New York except that with respect to the
provisions of this Note which provide for or relate to the payment of
interest, any provisions of applicable federal law which permit the Payee
to charge the higher of the rate permitted by such applicable law or by
the laws of the state in which the Payee is located shall be deemed
governing and controlling.
3.6 Capitalized terms used in this Note but not defined herein shall
have the meanings given to them in the Credit Agreement.
IN WITNESS WHEREOF, the Facility A Borrowers have caused this
Amended and Restated Facility A Promissory Note to be duly executed the
day and year first above written.
READING & BATES CORPORATION
By: ___________________________
Name: T. W. Nagle
Title: Vice President and
Chief Financial Officer
READING & BATES DRILLING CO.
By: ___________________________
Name: T. W. Nagle
Title: Vice President and
Treasurer
READING & BATES EXPLORATION CO.
By: ______________________________
Name: T. W. Nagle
Title: Vice President and
Treasurer
READING AND BATES, INC.
By: ______________________________
Name: T. W. Nagle
Title: Vice President and
Treasurer
READING AND BATES BORNEO
DRILLING CO., LTD.
By: ______________________________
Name: T. W. Nagle
Title: Vice President and
Treasurer
THE COMMON SEAL OF READING AND BATES (A) PTY. LTD.
READING & BATES (A)
PTY. LTD. was hereunto By: ______________________________
affixed by authority of Name: T. W. Nagle
the Board of Directors Title: Director
in the presence of:
_________________________
T. W. Nagle, Director
________________________
W. K. Hillin, Secretary
<PAGE>
EXHIBIT A-2
TO AMENDED AND RESTATED
CREDIT FACILITY AGREEMENT
READING & BATES CORPORATION
READING & BATES DRILLING CO.
READING & BATES EXPLORATION CO.
READING AND BATES, INC.
READING AND BATES BORNEO DRILLING CO., LTD.
READING & BATES (A) PTY. LTD.
AMENDED AND RESTATED FACILITY C PROMISSORY NOTE
USD 15,000,000.00 April 27, 1995
FOR VALUE RECEIVED, READING & BATES CORPORATION, READING & BATES DRILLING
CO., READING & BATES EXPLORATION CO., READING AND BATES, INC., READING
AND BATES BORNEO DRILLING CO., LTD. and READING & BATES (A) PTY. LTD.
(the "Facility C Borrowers") hereby jointly and severally promise to pay
to INTERNATIONALE NEDERLANDEN BANK, N.V. (the "Payee"), or order, on or
before August 1, 1995 as hereinafter provided, FIFTEEN MILLION DOLLARS OF
THE UNITED STATES OF AMERICA (USD 15,000,000.00) and to pay interest on
the unpaid portion of said principal sum outstanding from time to time,
as hereinafter provided.
PRINCIPAL AND INTEREST
1.1 (a) Interest on this Note shall be payable at the times and the
rates as provided in Section 9 of the Amended and Restated Credit
Facility Agreement (the "Credit Agreement") dated as of April 27, 1995,
among the Facility C Borrowers and the Payee.
(b) In case any payment of principal or interest is not paid when
due, additional interest at the rate determined as provided in Section
9.3 of the Credit Agreement shall be payable on all overdue principal
and, to the extent that the same may be lawful, on all overdue interest.
1.2 Interest shall be calculated as provided in Section 9.1 of the
Credit Agreement.
1.3 The principal of this Note shall be payable in one installment on
the Facility C Maturity Date. All principal payments shall be made to
the Lender at its Amsterdam Branch Office in Amsterdam South East, The
Netherlands as provided in Section 10.5 of the Credit Agreement.
1.4 The final maturity date of this Note may be extended pursuant to
Section 4.2 of the Credit Agreement.
1.5 Notwithstanding any provision of this Note to the contrary it is
the intent of the Facility C Borrowers and the Payee that, in no event
shall the aggregate amount of consideration which constitutes interest
under any applicable law which is contracted for, charged or received
hereunder or under this Note ("Interest") exceed the maximum amount of
nonusurious interest allowed by law, and any excess shall be credited on
this Note (or if all obligations under this Note shall have been paid in
full, refunded to the Facility C Borrowers). For purposes of the
foregoing, the maximum amount of interest allowed by law shall be
calculated by determining the amount of interest that could be contracted
for, charged or received during the term hereof at the maximum rate of
nonusurious interest allowed from time to time by applicable law as is
now or, to the extent allowed by law, as may hereafter be in effect (the
"maximum nonusurious interest rate") and, if at any time the rate of
Interest to accrue would exceed the maximum nonusurious interest rate,
the rate of Interest to accrue under this Note shall be limited to the
maximum nonusurious interest rate, but any subsequent reductions in the
Prime Rate shall not reduce the rate of Interest to accrue on this Note
below the maximum nonusurious interest rate until the total amount of
Interest accrued and paid on this Note equals the amount of Interest
which would have accrued if a rate per annum equal to the Prime Rate plus
1-1/4% or the interest rate charged pursuant to Section 9.3 of the Credit
Agreement, whichever is applicable, had at all times been in effect. It
is further agreed that, without limitation of the foregoing, all
calculations of the rate of Interest that are made for the purpose of
determining whether such rate exceeds the maximum nonusurious interest
rate applicable to the Payee, shall be made to the extent possible
permitted by usury laws applicable to the Payee (now or hereafter
enacted) by amortizing, prorating and spreading all Interest in equal
parts during the period of the full stated term of the obligations
evidenced by this Note.
SECURITY
2.1 This Note is one of the promissory notes issued under and pursuant
to the Credit Agreement and is secured by, among other things, U.S.
Preferred Mortgages dated March 29, 1991, as amended, on nine U.S. flag
drilling rigs, a Panamanian First Naval Mortgage dated April , 1995, on
one Panamanian flag drilling rig and one Australian First Registered Ship
Mortgage dated April 27, 1995 on one Australian flag drilling rig, all in
favor of Bank One, Texas, N.A., as Trustee for the Payee (the
"Mortgages"). Reference is hereby made to the Mortgages for a
description of the property thereby mortgaged, the nature and extent of
the security afforded thereby and the rights of the Facility C Borrowers
and the Payee with respect to such security as provided in the Mortgages.
Payment of this Note may be demanded by the holder hereof prior to the
maturity of this Note under certain circumstances and conditions, in the
manner, and with the effect, provided in the Mortgages or the Credit
Agreement. A true and complete copy of the form of the Credit Agreement
is attached to the Mortgages and made a part thereof.
2.2 This Note evidences the Advances made or to be made by the Payee
under Facility C of the Credit Agreement.
MISCELLANEOUS
3.1 All parties hereto, including endorsers hereof, hereby waive
presentment for payment, demand, protest and notice of protest and non-
payment hereof and hereby consent that any and all securities or other
property, if any, held by or for the holders hereof at any time as
security for this Note may be exchanged, released or surrendered and that
the time of payment of this Note may be extended, all in the sole
discretion of the holders hereof and without notice and without affecting
in any manner the liability of the parties hereto.
3.2 No course of dealing between the Facility C Borrowers and the Payee
in exercising any rights hereunder shall operate as a waiver of any right
of any holders except to the extent expressly waived in writing by such
holder.
3.3 Whenever any payment to be made hereunder shall be due on a day
which is not a Business Day, such payments shall be made on the next
Business Day; provided, however, that if such next succeeding Business
Day is in a new month, then the payment required under the Credit
Agreement or this Note shall be made on the first Business Day preceding
the original date on which payment was due.
3.4 Any notice to be given pursuant to this Note shall be given in
accordance with Section 19.4 of the Credit Agreement.
3.5 This Note shall be governed by and construed in accordance with the
internal laws of the State of New York except that with respect to the
provisions of this Note which provide for or relate to the payment of
interest, any provisions of applicable federal law which permit the Payee
to charge the higher of the rate permitted by such applicable law or by
the laws of the state in which the Payee is located shall be deemed
governing and controlling.
3.6 Capitalized terms used in this Note but not defined herein shall
have the meanings given to them in the Credit Agreement.
IN WITNESS WHEREOF, the Facility C Borrowers have caused this
Amended and Restated Facility C Promissory Note to be duly executed the
day and year first above written.
READING & BATES CORPORATION
By: ___________________________
Name: T. W. Nagle
Title: Vice President and
Chief Financial Officer
READING & BATES DRILLING CO.
By: ___________________________
Name: T. W. Nagle
Title: Vice President and
Treasurer
READING & BATES EXPLORATION CO.
By: ______________________________
Name: T. W. Nagle
Title: Vice President and
Treasurer
READING AND BATES, INC.
By: ______________________________
Name: T. W. Nagle
Title: Vice President and
Treasurer
READING AND BATES BORNEO
DRILLING CO., LTD.
By: ______________________________
Name: T. W. Nagle
Title: Vice President and
Treasurer
THE COMMON SEAL OF READING & BATES (A) PTY. LTD.
READING & BATES (A)
PTY. LTD. was hereunto By: ______________________________
affixed by authority of Name: T. W. Nagle
the Board of Directors Title: Director
in the presence of:
__________________________
T. W. Nagle, Director
__________________________
W. K. Hillin, Secretary
<PAGE>
EXHIBIT A-3
TO AMENDED AND RESTATED
CREDIT FACILITY AGREEMENT
READING & BATES CORPORATION
READING & BATES DRILLING CO.
READING & BATES EXPLORATION CO.
READING AND BATES, INC.
READING AND BATES BORNEO DRILLING CO., LTD.
READING & BATES (A) PTY. LTD.
AMENDED AND RESTATED FACILITY D PROMISSORY NOTE
USD 5,000,000.00 April 27, 1995
FOR VALUE RECEIVED, READING & BATES CORPORATION, READING & BATES DRILLING
CO., READING & BATES EXPLORATION CO., READING AND BATES, INC., READING AND
BATES BORNEO DRILLING CO., LTD. and READING & BATES (A) PTY. LTD. (the
"Facility D Borrowers") hereby jointly and severally promise to pay to
INTERNATIONALE NEDERLANDEN BANK, N.V. (the "Payee"), or order, in the manner
provided below, FIVE MILLION DOLLARS OF THE UNITED STATES OF AMERICA (USD
5,000,000.00) and to pay interest on the unpaid portion of said principal
sum outstanding from time to time, as hereinafter provided.
PRINCIPAL AND INTEREST
1.1 (a) Interest on this Note shall be payable at the times and the
rates as provided in Section 9 of the Amended and Restated Credit Facility
Agreement (the "Credit Agreement") dated as of April 27, 1995, among the
Facility D Borrowers and the Payee.
(b) In case any payment of principal or interest is not paid when
due, additional interest at the rate determined as provided in Section 9.3
of the Credit Agreement shall be payable on all overdue principal and, to
the extent that the same may be lawful, on all overdue interest.
1.2 Interest shall be calculated as provided in Section 9.1 of the Credit
Agreement.
1.3 The principal of this Note outstanding from time to time shall be
payable as provided in Section 5.2 of the Credit Agreement. All principal
payments shall be made to the Lender at its Amsterdam Branch Office in
Amsterdam South East, The Netherlands as provided in Section 10.5 of the
Credit Agreement.
1.4 Notwithstanding any provision of this Note to the contrary it is the
intent of the Facility D Borrowers and the Payee that, in no event shall the
aggregate amount of consideration which constitutes interest under any
applicable law which is contracted for, charged or received hereunder or
under this Note ("Interest") exceed the maximum amount of nonusurious
interest allowed by law, and any excess shall be credited on this Note (or
if all obligations under this Note shall have been paid in full, refunded to
the Facility D Borrowers). For purposes of the foregoing, the maximum
amount of interest allowed by law shall be calculated by determining the
amount of interest that could be contracted for, charged or received during
the term hereof at the maximum rate of nonusurious interest allowed from
time to time by applicable law as is now or, to the extent allowed by law,
as may hereafter be in effect (the "maximum nonusurious interest rate") and,
if at any time the rate of Interest to accrue would exceed the maximum
nonusurious interest rate, the rate of Interest to accrue under this Note
shall be limited to the maximum nonusurious interest rate, but any
subsequent reductions in the Prime Rate shall not reduce the rate of
Interest to accrue on this Note below the maximum nonusurious interest rate
until the total amount of Interest accrued and paid on this Note equals the
amount of Interest which would have accrued if a rate per annum equal to the
Prime Rate plus 1-1/4% or the interest rate charged pursuant to Section 9.3
of the Credit Agreement, whichever is applicable, had at all times been in
effect. It is further agreed that, without limitation of the foregoing, all
calculations of the rate of Interest that are made for the purpose of
determining whether such rate exceeds the maximum nonusurious interest rate
applicable to the Payee, shall be made to the extent possible permitted by
usury laws applicable to the Payee (now or hereafter enacted) by amortizing,
prorating and spreading all Interest in equal parts during the period of the
full stated term of the obligations evidenced by this Note.
SECURITY
2.1 This Note is one of the promissory notes issued under and pursuant to
the Credit Agreement and is secured by, among other things, U.S. Preferred
Mortgages dated March 29, 1991, as amended, on nine U.S. flag drilling rigs,
a Panamanian First Naval Mortgage dated April 27, 1995, on one Panamanian
flag drilling rig and one Australian First Registered Ship Mortgage dated
April 27, 1995 on one Australian flag drilling rig, all in favor of Bank
One, Texas, N.A., as Trustee for the Payee (the "Mortgages"). Reference is
hereby made to the Mortgages for a description of the property thereby
mortgaged, the nature and extent of the security afforded thereby and the
rights of the Facility D Borrowers and the Payee with respect to such
security as provided in the Mortgages. Payment of this Note may be demanded
by the holder hereof prior to the maturity of this Note under certain
circumstances and conditions, in the manner, and with the effect, provided
in the Mortgages or the Credit Agreement. A true and complete copy of the
form of the Credit Agreement is attached to the Mortgages and made a part
thereof.
2.2 This Note evidences the obligation of the Facility D Borrowers to
reimburse the Payee for any Facility D Guarantee Payment and to make
Security Deposits in connection with Facility D. This Note is payable only
if such a Facility D Guarantee Payment is not reimbursed or such a Security
Deposit is not made; all as required by the terms of the Credit Agreement.
MISCELLANEOUS
3.1 All parties hereto, including endorsers hereof, hereby waive
presentment for payment, demand, protest and notice of protest and non-
payment hereof and hereby consent that any and all securities or other
property, if any, held by or for the holders hereof at any time as security
for this Note may be exchanged, released or surrendered and that the time of
payment of this Note may be extended, all in the sole discretion of the
holders hereof and without notice and without affecting in any manner the
liability of the parties hereto.
3.2 No course of dealing between the Facility D Borrowers and the Payee in
exercising any rights hereunder shall operate as a waiver of any right of
any holders except to the extent expressly waived in writing by such holder.
3.3 Whenever any payment to be made hereunder shall be due on a day which
is not a Business Day, such payments shall be made on the next Business Day;
provided, however, that if such next succeeding Business Day is in a new
month, then the payment required under the Credit Agreement or this Note
shall be made on the first Business Day preceding the original date on which
payment was due.
3.4 Any notice to be given pursuant to this Note shall be given in
accordance with Section 19.4 of the Credit Agreement.
3.5 This Note shall be governed by and construed in accordance with the
internal laws of the State of New York except that with respect to the
provisions of this Note which provide for or relate to the payment of
interest, any provisions of applicable federal law which permit the Payee to
charge the higher of the rate permitted by such applicable law or by the
laws of the state in which the Payee is located shall be deemed governing
and controlling.
3.6 Capitalized terms used in this Note but not defined herein shall have
the meanings given to them in the Credit Agreement.
IN WITNESS WHEREOF, the Facility D Borrowers have caused this
Amended and Restated Facility D Promissory Note to be duly executed the day
and year first above written.
READING & BATES CORPORATION
By: ___________________________
Name: T. W. Nagle
Title: Vice President and
Chief Financial Officer
READING & BATES DRILLING CO.
By: ___________________________
Name: T. W. Nagle
Title: Vice President and
Treasurer
READING & BATES EXPLORATION CO.
By: ______________________________
Name: T. W. Nagle
Title: Vice President and
Treasurer
READING AND BATES, INC.
By: ______________________________
Name: T. W. Nagle
Title: Vice President and
Treasurer
READING AND BATES BORNEO
DRILLING CO., LTD.
By: ______________________________
Name: T. W. Nagle
Title: Vice President and
Treasurer
THE COMMON SEAL OF READING & BATES (A) PTY. LTD.
READING & BATES (A)
PTY. LTD. was hereunto By: ______________________________
affixed by authority of Name: T. W. Nagle
the Board of Directors Title: Director
in the presence of:
_________________________
T. W. Nagle, Director
_________________________
W. K. Hillin, Secretary
<PAGE>
EXHIBIT A-4
TO AMENDED AND RESTATED
CREDIT FACILITY AGREEMENT
READING & BATES CORPORATION
READING & BATES DRILLING CO.
READING & BATES EXPLORATION CO.
READING AND BATES, INC.
READING AND BATES BORNEO DRILLING CO., LTD.
READING & BATES (A) PTY. LTD.
AMENDED AND RESTATED FACILITY E PROMISSORY NOTE
USD 15,000,000.00 April 27, 1995
FOR VALUE RECEIVED, READING & BATES CORPORATION, READING & BATES DRILLING
CO., READING & BATES EXPLORATION CO., READING AND BATES, INC., READING
AND BATES BORNEO DRILLING CO., LTD. and READING & BATES (A) PTY. LTD.
(the "Facility E Borrowers") hereby jointly and severally promise to pay
to INTERNATIONALE NEDERLANDEN BANK, N.V. (the "Payee"), or order, in the
manner provided below, FIFTEEN MILLION DOLLARS OF THE UNITED STATES OF
AMERICA (USD 15,000,000.00) and to pay interest on the unpaid portion of
said principal sum outstanding from time to time, as hereinafter
provided.
PRINCIPAL AND INTEREST
1.1 (a) Interest on this Note shall be payable at the times and the
rates as provided in Section 9 of the Amended and Restated Credit
Facility Agreement (the "Credit Agreement") dated as of April 27, 1995,
among the Facility E Borrowers and the Payee.
(b) In case any payment of principal or interest is not paid when
due, additional interest at the rate determined as provided in Section
9.3 of the Credit Agreement shall be payable on all overdue principal
and, to the extent that the same may be lawful, on all overdue interest.
1.2 Interest shall be calculated as provided in Section 9.1 of the
Credit Agreement.
1.3 The principal of this Note outstanding from time to time shall be
payable as provided in Section 6.2 of the Credit Agreement. All
principal payments shall be made to the Lender at its Amsterdam Branch
Office in Amsterdam South East, The Netherlands as provided in Section
10.5 of the Credit Agreement.
1.4 Notwithstanding any provision of this Note to the contrary it is
the intent of the Facility E Borrowers and the Payee that, in no event
shall the aggregate amount of consideration which constitutes interest
under any applicable law which is contracted for, charged or received
hereunder or under this Note ("Interest") exceed the maximum amount of
nonusurious interest allowed by law, and any excess shall be credited on
this Note (or if all obligations under this Note shall have been paid in
full, refunded to the Facility E Borrowers). For purposes of the
foregoing, the maximum amount of interest allowed by law shall be
calculated by determining the amount of interest that could be contracted
for, charged or received during the term hereof at the maximum rate of
nonusurious interest allowed from time to time by applicable law as is
now or, to the extent allowed by law, as may hereafter be in effect (the
"maximum nonusurious interest rate") and, if at any time the rate of
Interest to accrue would exceed the maximum nonusurious interest rate,
the rate of Interest to accrue under this Note shall be limited to the
maximum nonusurious interest rate, but any subsequent reductions in the
Prime Rate shall not reduce the rate of Interest to accrue on this Note
below the maximum nonusurious interest rate until the total amount of
Interest accrued and paid on this Note equals the amount of Interest
which would have accrued if a rate per annum equal to the Prime Rate plus
1-1/4% or the interest rate charged pursuant to Section 9.3 of the Credit
Agreement, whichever is applicable, had at all times been in effect. It
is further agreed that, without limitation of the foregoing, all
calculations of the rate of Interest that are made for the purpose of
determining whether such rate exceeds the maximum nonusurious interest
rate applicable to the Payee, shall be made to the extent possible
permitted by usury laws applicable to the Payee (now or hereafter
enacted) by amortizing, prorating and spreading all Interest in equal
parts during the period of the full stated term of the obligations
evidenced by this Note.
SECURITY
2.1 This Note is one of the promissory notes issued under and pursuant
to the Credit Agreement and is secured by, among other things, U.S.
Preferred Mortgages dated March 29, 1991, as amended, on nine U.S. flag
drilling rigs, a Panamanian First Naval Mortgage dated April 27, 1995, on
one Panamanian flag drilling rig and one Australian First Registered Ship
Mortgage dated April 27, 1995 on one Australian flag drilling rig, all in
favor of Bank One, Texas, N.A., as Trustee for the Payee (the
"Mortgages"). Reference is hereby made to the Mortgages for a
description of the property thereby mortgaged, the nature and extent of
the security afforded thereby and the rights of the Facility E Borrowers
and the Payee with respect to such security as provided in the Mortgages.
Payment of this Note may be demanded by the holder hereof prior to the
maturity of this Note under certain circumstances and conditions, in the
manner, and with the effect, provided in the Mortgages or the Credit
Agreement. A true and complete copy of the form of the Credit Agreement
is attached to the Mortgages and made a part thereof.
2.2 This Note evidences the obligation of the Facility E Borrowers to
reimburse the Payee for any Facility E Guarantee Payment and to make
Security Deposits in connection with Facility E. This Note is payable
only if such a Facility E Guarantee Payment is not reimbursed or such a
Security Deposit is not made; all as required by the terms of the Credit
Agreement.
MISCELLANEOUS
3.1 All parties hereto, including endorsers hereof, hereby waive
presentment for payment, demand, protest and notice of protest and non-
payment hereof and hereby consent that any and all securities or other
property, if any, held by or for the holders hereof at any time as
security for this Note may be exchanged, released or surrendered and that
the time of payment of this Note may be extended, all in the sole
discretion of the holders hereof and without notice and without affecting
in any manner the liability of the parties hereto.
3.2 No course of dealing between the Facility E Borrowers and the Payee
in exercising any rights hereunder shall operate as a waiver of any right
of any holders except to the extent expressly waived in writing by such
holder.
3.3 Whenever any payment to be made hereunder shall be due on a day
which is not a Business Day, such payments shall be made on the next
Business Day; provided, however, that if such next succeeding Business
Day is in a new month, then the payment required under the Credit
Agreement or this Note shall be made on the first Business Day preceding
the original date on which payment was due.
3.4 Any notice to be given pursuant to this Note shall be given in
accordance with Section 19.4 of the Credit Agreement.
3.5 This Note shall be governed by and construed in accordance with the
internal laws of the State of New York except that with respect to the
provisions of this Note which provide for or relate to the payment of
interest, any provisions of applicable federal law which permit the Payee
to charge the higher of the rate permitted by such applicable law or by
the laws of the state in which the Payee is located shall be deemed
governing and controlling.
3.6 Capitalized terms used in this Note but not defined herein shall
have the meanings given to them in the Credit Agreement.
IN WITNESS WHEREOF, the Facility E Borrowers have caused this
Amended and Restated Facility E Promissory Note to be duly executed the
day and year first above written.
READING & BATES CORPORATION
By: ___________________________
Name: T. W. Nagle
Title: Vice President and
Chief Financial Officer
READING & BATES DRILLING CO.
By: ___________________________
Name: T. W. Nagle
Title: Vice President and
Treasurer
READING & BATES EXPLORATION CO.
By: ______________________________
Name: T. W. Nagle
Title: Vice President and
Treasurer
READING AND BATES, INC.
By: ______________________________
Name: T. W. Nagle
Title: Vice President and
Treasurer
READING AND BATES BORNEO
DRILLING CO., LTD.
By: ______________________________
Name: T. W. Nagle
Title: Vice President and
Treasurer
THE COMMON SEAL OF READING & BATES (A) PTY. LTD.
READING & BATES (A)
PTY. LTD. was hereunto By: ______________________________
affixed by authority of Name: T. W. Nagle
the Board of Directors Title: Director
in the presence of
_________________________
T. W. Nagle, Director
_________________________
W. K. Hillin, Secretary
<PAGE>
EXHIBIT A-5
TO AMENDED AND RESTATED
CREDIT FACILITY AGREEMENT
READING & BATES CORPORATION
READING & BATES DRILLING CO.
READING & BATES EXPLORATION CO.
READING AND BATES, INC.
READING AND BATES BORNEO DRILLING CO., LTD.
READING & BATES (A) PTY. LTD.
AMENDED AND RESTATED FACILITY F PROMISSORY NOTE
USD 15,000,000.00 April 27, 1995
FOR VALUE RECEIVED, READING & BATES CORPORATION, READING & BATES DRILLING
CO., READING & BATES EXPLORATION CO., READING AND BATES, INC., READING
AND BATES BORNEO DRILLING CO., LTD. and READING & BATES (A) PTY. LTD.
(the "Facility F Borrowers") hereby jointly and severally promise to pay
to INTERNATIONALE NEDERLANDEN BANK, N.V. (the "Payee"), or order, in the
manner provided below, FIFTEEN MILLION DOLLARS OF THE UNITED STATES OF
AMERICA (USD 15,000,000.00) and to pay interest on the unpaid portion of
said principal sum outstanding from time to time, as hereinafter
provided.
PRINCIPAL AND INTEREST
1.1 (a) Interest on this Note shall be payable at the times and the
rates as provided in Section 9 of the Amended and Restated Credit
Facility Agreement (the "Credit Agreement") dated as of April 27, 1995,
among the Facility F Borrowers and the Payee.
(b) In case any payment of principal or interest is not paid when
due, additional interest at the rate determined as provided in Section
9.3 of the Credit Agreement shall be payable on all overdue principal
and, to the extent that the same may be lawful, on all overdue interest.
1.2 Interest shall be calculated as provided in Section 9.1 of the
Credit Agreement.
1.3 The principal of this Note outstanding from time to time shall be
payable as provided in Section 7.2 of the Credit Agreement. All
principal payments shall be made to the Lender at its Amsterdam Branch
Office in Amsterdam South East, The Netherlands as provided in Section
10.5 of the Credit Agreement.
1.4 Notwithstanding any provision of this Note to the contrary it is
the intent of the Facility F Borrowers and the Payee that, in no event
shall the aggregate amount of consideration which constitutes interest
under any applicable law which is contracted for, charged or received
hereunder or under this Note ("Interest") exceed the maximum amount of
nonusurious interest allowed by law, and any excess shall be credited on
this Note (or if all obligations under this Note shall have been paid in
full, refunded to the Facility F Borrowers). For purposes of the
foregoing, the maximum amount of interest allowed by law shall be
calculated by determining the amount of interest that could be contracted
for, charged or received during the term hereof at the maximum rate of
nonusurious interest allowed from time to time by applicable law as is
now or, to the extent allowed by law, as may hereafter be in effect (the
"maximum nonusurious interest rate") and, if at any time the rate of
Interest to accrue would exceed the maximum nonusurious interest rate,
the rate of Interest to accrue under this Note shall be limited to the
maximum nonusurious interest rate, but any subsequent reductions in the
Prime Rate shall not reduce the rate of Interest to accrue on this Note
below the maximum nonusurious interest rate until the total amount of
Interest accrued and paid on this Note equals the amount of Interest
which would have accrued if a rate per annum equal to the Prime Rate plus
1-1/4% or the interest rate charged pursuant to Section 9.3 of the Credit
Agreement, whichever is applicable, had at all times been in effect. It
is further agreed that, without limitation of the foregoing, all
calculations of the rate of Interest that are made for the purpose of
determining whether such rate exceeds the maximum nonusurious interest
rate applicable to the Payee, shall be made to the extent possible
permitted by usury laws applicable to the Payee (now or hereafter
enacted) by amortizing, prorating and spreading all Interest in equal
parts during the period of the full stated term of the obligations
evidenced by this Note.
SECURITY
2.1 This Note is one of the promissory notes issued under and pursuant
to the Credit Agreement and is secured by, among other things, U.S.
Preferred Mortgages dated March 29, 1991, as amended, on nine U.S. flag
drilling rigs, a Panamanian First Naval Mortgage dated April 27, 1995, on
one Panamanian flag drilling rig and one Australian First Registered Ship
Mortgage dated April 27, 1995 on one Australian flag drilling rig, all in
favor of Bank One, Texas, N.A., as Trustee for the Payee (the
"Mortgages"). Reference is hereby made to the Mortgages for a
description of the property thereby mortgaged, the nature and extent of
the security afforded thereby and the rights of the Facility F Borrowers
and the Payee with respect to such security as provided in the Mortgages.
Payment of this Note may be demanded by the holder hereof prior to the
maturity of this Note under certain circumstances and conditions, in the
manner, and with the effect, provided in the Mortgages or the Credit
Agreement. A true and complete copy of the form of the Credit Agreement
is attached to the Mortgages and made a part thereof.
2.2 This Note evidences the obligation of the Facility F Borrowers to
reimburse the Payee for any Facility F Guarantee Payment and to make
Security Deposits in connection with Facility F. This Note is payable
only if such a Facility F Guarantee Payment is not reimbursed or such a
Security Deposit is not made; all as required by the terms of the Credit
Agreement.
MISCELLANEOUS
3.1 All parties hereto, including endorsers hereof, hereby waive
presentment for payment, demand, protest and notice of protest and non-
payment hereof and hereby consent that any and all securities or other
property, if any, held by or for the holders hereof at any time as
security for this Note may be exchanged, released or surrendered and that
the time of payment of this Note may be extended, all in the sole
discretion of the holders hereof and without notice and without affecting
in any manner the liability of the parties hereto.
3.2 No course of dealing between the Facility F Borrowers and the Payee
in exercising any rights hereunder shall operate as a waiver of any right
of any holders except to the extent expressly waived in writing by such
holder.
3.3 Whenever any payment to be made hereunder shall be due on a day
which is not a Business Day, such payments shall be made on the next
Business Day; provided, however, that if such next succeeding Business
Day is in a new month, then the payment required under the Credit
Agreement or this Note shall be made on the first Business Day preceding
the original date on which payment was due.
3.4 Any notice to be given pursuant to this Note shall be given in
accordance with Section 19.4 of the Credit Agreement.
3.5 This Note shall be governed by and construed in accordance with the
internal laws of the State of New York except that with respect to the
provisions of this Note which provide for or relate to the payment of
interest, any provisions of applicable federal law which permit the Payee
to charge the higher of the rate permitted by such applicable law or by
the laws of the state in which the Payee is located shall be deemed
governing and controlling.
3.6 Capitalized terms used in this Note but not defined herein shall
have the meanings given to them in the Credit Agreement.
IN WITNESS WHEREOF, the Facility F Borrowers have caused this
Amended and Restated Facility F Promissory Note to be duly executed the
day and year first above written.
READING & BATES CORPORATION
By: ___________________________
Name: T. W. Nagle
Title: Vice President and
Chief Financial Officer
READING & BATES DRILLING CO.
By: ___________________________
Name: T. W. Nagle
Title: Vice President and
Treasurer
READING & BATES EXPLORATION CO.
By: ______________________________
Name: T. W. Nagle
Title: Vice President and
Treasurer
READING AND BATES, INC.
By: ______________________________
Name: T. W. Nagle
Title: Vice President and
Treasurer
READING AND BATES BORNEO
DRILLING CO., LTD.
By: ______________________________
Name: T. W. Nagle
Title: Vice President and
Treasurer
THE COMMON SEAL OF READING & BATES (A) PTY. LTD.
READING & BATES (A)
PTY. LTD. was hereunto By: ______________________________
affixed by authority of Name: T. W. Nagle
the Board of Directors Title: Director
in the presence of:
_________________________
T. W. Nagle, Director
_________________________
W. K. Hillin, Secretary
<PAGE>
EXHIBIT B
TO AMENDED AND RESTATED
CREDIT FACILITY AGREEMENT
__________________, 1995
Internationale Nederlanden Bank N.V.
De Amsterdamse Poort HH 0103
1102 MG Amsterdam Zuidoost
The Netherlands
Attention: Ms. Annerie Vreugdenhil Test Key:_______________________
NOTICE OF DRAWDOWN
Dear Ms. Vreugdenhil:
Pursuant to Section 8.1(c)(ii) of the Amended and Restated Credit
Facility Agreement dated as of April , 1995 (the "Credit Agreement")
between you as Lender and the Borrowers named therein, we hereby
irrevocably request that you pay:
1. USD_________________ to ___________________ at its account
no. ________________ at _____________________.
2. (Same specification if more than one transfer is to be
made).
All capitalized terms used in this Notice of Drawdown and not
defined herein shall have the meanings given to them in the Credit
Agreement.
Very truly yours,
READING & BATES CORPORATION,
as Agent for the Borrowers
By: __________________________
Name:
Title:
EXHIBIT C
TO AMENDED AND RESTATED
CREDIT FACILITY AGREEMENT
, 1995
Internationale Nederlanden Bank N.V.
De Amsterdamse Poort HH 0103
1102 MG Amsterdam Zuidoost
The Netherlands
Attention: Ms. Annerie Vreugdenhil
Test Key: ____________
Request for Letter of Credit
Dear Ms. Vreugdenhil:
Pursuant to Section 8.1(c)(i) of the Amended and Restated Credit
Facility Agreement dated as of ________ __, 1995 (the "Credit Agreement")
between you as Lender and the Borrowers named therein, we hereby
irrevocably request that a Standby Letter of Credit in the amount of USD
____________ be issued in favor of _______________________ for the
account of ___________________________ to secure the obligations of
____________________ under ______________________ with such letter of
credit having an expiration date of _________ and with the following
special provisions: _____________________ in accordance with the terms
of the Credit Agreement.
If the issuance of the above mentioned Letter of Credit fails to
take place or is delayed because any of the conditions precedent
specified in Section 12 of the Credit Agreement have not been satisfied,
the Borrowers hereby jointly and severally agree to indemnify the Lender
against any loss incurred as a result of the giving of this Request for
Letter of Credit including without limitation, any loss resulting from
actions taken by the Lender to fund the requested Letter of Credit. We
further agree that a certificate from you as the Lender stating in
reasonable detail the amount of, and basis for, as to the amount of any
such loss incurred by you shall be conclusive as to such loss, absent
manifest error.
All capitalized terms used in this Request for Letter of Credit and
not defined herein shall have the meanings given to them in the Credit
Agreement.
Very truly yours,
READING & BATES CORPORATION,
as Agent for the Borrowers
By:
Name:
Title:
<PAGE>
EXHIBIT D-1
TO AMENDED AND RESTATED
CREDIT FACILITY AGREEMENT
PLEDGE AGREEMENT
AND
IRREVOCABLE PROXY
PLEDGE AGREEMENT AND IRREVOCABLE PROXY, dated April __, 1995,
between READING & BATES CORPORATION, a corporation organized and existing
under the laws of the State of Oklahoma (the "Pledgor"), and BANK ONE,
TEXAS, N.A., as Trustee, its successors and assigns, (the "Pledgee").
W I T N E S S E T H:
WHEREAS, the Pledgor owns of record and beneficially all of the
issued and outstanding shares of Reading & Bates Drilling Co. (the
"Company") (the Company and the Pledgor are hereinafter collectively
referred to as the "Obligors").
WHEREAS, the Obligors have entered into an Amended and Restated
Credit Facility Agreement dated as of April __, 1995 (the "Credit
Agreement") with INTERNATIONALE NEDERLANDEN BANK N.V. (the "Bank"), which
Credit Agreement provides for advances and the issuance of letters of
credit by the Bank to or for the account of the Obligors of up to USD
65,000,000 (the "Commitment") to be used for the purposes of refinancing
certain indebtedness of the Obligors and providing working capital and
credit for operations; and
WHEREAS, pursuant to the Trust Indenture dated March 29, 1991
between the Trustee and the Obligors as amended by Amendment No. 1 to the
Trust Indenture dated as of February 25, 1993 and as further amended by
Assignment, Assumption and Amendment No. 2 to Trust Indenture dated the
date hereof, the Pledgee has agreed to act as trustee for the Bank in
connection with the security provided by the Obligors for the advances
made and letters of credit issued pursuant to the Credit Agreement; and
WHEREAS, it is a condition to the Bank entering into the Credit
Agreement and making the Commitment that the Pledgor pledge to the
Pledgee all of the issued and outstanding shares of the Company.
NOW, THEREFORE, in order to induce the Bank to enter into the
Credit Agreement and make the Commitment and in consideration of the
premises and other good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
1. Pledge of Securities. The Pledgor has delivered to the
Pledgee in trust, subject to the terms and conditions of the Trust
Indenture, certificates representing all of the issued and outstanding
shares of the Company as described in Schedule 1 (the "Pledged
Securities") with duly endorsed blank stock powers attached. The Pledgor
does hereby pledge, mortgage, assign, transfer, deposit, set over, grant
a security interest in, and confirm the Pledged Securities unto the
Pledgee, its successors and assigns, in trust, for the Pledgee's and for
its successors' and assigns' own proper use and benefit as security for
the obligations referred to in Section 2 hereof. If the Pledgor acquires
any additional shares of any class or any other securities convertible
into such shares of the Company by purchase, stock dividend, distribution
of capital or otherwise, the Pledgor shall forthwith pledge such shares
or other securities to the Pledgee under this Pledge Agreement, and any
such additional shares or securities shall be included in the term
"Pledged Securities". Without the Pledgee's prior written consent, the
Pledgor will not sell, assign, transfer or otherwise dispose of, grant
any option with respect to, or pledge, mortgage or otherwise encumber any
of the Pledged Securities or any interest therein.
2. Obligations Secured. This Pledge Agreement is made and
delivered as security for the obligation of the Obligors to pay any and
all amounts due to the Bank under the Credit Agreement and any
instrument, agreement or document referred to therein (the
"Obligations"). The Pledgor expressly consents and agrees that the
Pledgee shall have a security interest in the Pledged Securities and
proceeds as security for the Obligations.
3. Representations, Warranties and Covenants of the Pledgor.
(a) The Pledgor represents and warrants that the Pledged
Securities constitute all of the issued and outstanding
shares of the Company, are owned beneficially and of record
by the Pledgor and such shares are duly authorized and
issued, fully paid and nonassessable. The Pledgor represents
and warrants that it owns of record and beneficially the
Pledged Securities free and clear of all liens, charges and
encumbrances. The Pledgor covenants that it will warrant and
defend title to the Pledged Securities and the lien conveyed
to the Pledgee by this Pledge Agreement against all claims of
all persons and will maintain and preserve such lien.
(b) The Pledgor further represents and warrants that (i)
this Pledge Agreement constitutes its legal, valid and
binding obligation, enforceable against it in accordance with
its terms, subject to laws affecting creditors' rights
generally and applicable equitable principles, and (ii) upon
delivery of the Pledged Securities to the Pledgee, the
Pledgee will have a perfected security interest in and pledge
of the Pledged Securities having first priority.
4. Irrevocable Proxy.
(a) The Pledgor agrees to execute an irrevocable proxy in
the form attached as Exhibit A hereto. This proxy shall be
valid so long as any portion of the Obligations are due and
payable.
(b) The Pledgee hereby agrees that until an Event of
Default (as defined in Section 7 hereof) shall have occurred
and be continuing, the Pledgee shall not exercise its proxy
and the Pledgor shall be entitled to
(i) vote any and all of the Pledged Securities;
(ii) give consents, waivers and ratifications in
respect thereof, provided, however, that no vote shall
be cast or consent, waiver or ratification given or
taken, which would be inconsistent with any of the
provisions of the Credit Agreement or any agreement
referred to therein; and
(iii) receive all dividends paid on the Pledged
Securities.
(c) All such rights of the Pledgor to vote and to give
consent, waivers and ratifications shall cease automatically
in case an Event of Default shall occur and be continuing.
5. Remedies.
(a) So long as an Event of Default shall have occurred and
be continuing the Pledgee may:
(i) transfer into its name or into the name of its
nominee any or all of the Pledged Securities;
(ii) receive and retain all cash dividends paid in
respect of the Pledged Securities;
(iii) vote any and all of the Pledged Securities and
give all consents, waivers and ratifications in respect
thereof; and
(iv) otherwise act with respect to the Pledged
Securities as though it were the outright owner. In
this connection, the Pledgor hereby irrevocably
constitutes and appoints the Pledgee its proxy and
attorney-in-fact, with full power of substitution, to
accomplish any and all acts necessary to permit the
Pledgee to transfer the Pledged Securities, receive and
retain dividends, vote the Pledged Securities and give
all consents and to act as the outright owner of the
Pledged Securities.
(b) So long as an Event of Default shall have occurred and
be continuing, the Pledgee may sell, assign and deliver the
whole or, from time to time, any part of the Pledged
Securities or any interest therein or any part thereof, at
any private sale or at public auction, with or without
demand, advertisement or notice of the time or place of sale
or adjournment or otherwise which may be for cash, on credit
or for other property, for immediate or future delivery, and
for such price or prices and on such terms as the Pledgee in
its sole discretion may determine. The Pledgor hereby
assigns any and all right or equity of redemption whether
before or after sale hereunder. At any such sale the Pledgee
may bid for and purchase for its account the whole of any
such right of redemption or the Pledged Securities
themselves. The proceeds of any such sale of the Pledged
Securities shall be applied by the Pledgee to meet the
Pledgor's and the Company's obligations under the Credit
Agreement. Any property or money remaining after such
application in respect of the Pledged Securities shall be
delivered to the Pledgor without any liability on the part of
the Pledgee as to any other interest of the Pledgor therein.
Neither failure nor delay on the Pledgee's part shall
preclude any other or further exercise thereof or the
exercise of any right, remedy, power or privilege.
(c) So long as an Event of Default shall have occurred and
be continuing and upon the Pledgee's written demand, the
Pledgor
(i) will do any and all acts and things which may be
necessary or advisable to enable the Pledgee to
consummate any proposed sale or other disposition of
any of the Pledged Securities pursuant to this Pledge
Agreement; and
(ii) will pay to the Pledgee all reasonable costs and
expenses of enforcing the remedies provided in this
Section 5, including reasonable attorneys fees, and
will reimburse the Pledgee with interest at the highest
interest rate allowed by law if the Pledgee shall incur
any costs and expenses in enforcing the remedies
provided in this Section 5.
(d) Notwithstanding anything contained herein to the
contrary, the Pledgee will not exercise any remedies
hereunder in a manner which would violate any applicable
maritime law or regulation of the United States, it being
understood and agreed that so long as any Obligor owns a
vessel which is documented under the laws of the United
States, that the Pledgee will not sell, assign or deliver any
part of the Pledged Securities that would represent a
controlling interest in that Obligor to any person which is
not a citizen of the United States as defined in Section 2 of
the Shipping Act, 1916, as amended without any approval
required by Section 9(c) of that Act.
6. The Pledgor's Obligations Not Affected. The obligations of
the Pledgor under this Pledge Agreement shall remain in full force and
effect without regard to, and shall not be impaired or affected by:
(a) any amendment or modification or addition or supplement
to the Credit Agreement or any instrument, agreement or
document referred to therein or any assignment of transfer
thereof;
(b) any exercise or non-exercise by the Pledgee of any
right, remedy, power or privilege under or in respect of this
Pledge Agreement, the Credit Agreement or any instrument,
agreement or document referred to herein or therein, or any
assignment or transfer of any thereof, or any waiver of any
such right, remedy, power or privilege;
(c) any waiver, consent, extension, indulgence or other
action or inaction in respect of this Pledge Agreement, the
Credit Agreement or any instrument, agreement or document
referred to herein or therein, or any assignment or transfer
of any thereof; or
(d) any bankruptcy, insolvency, reorganization,
arrangement, readjustment, composition, liquidation, or the
like, of any of the Company, the Pledgor, or any other
person, firm or corporation; whether or not the Pledgor shall
have notice or knowledge of any of the foregoing.
7. Event of Default. Event of Default as used herein shall mean
the occurrence and continuance of one or both of the following described
events:
(a) An Event of Default shall occur and continue pursuant
to Section 17.1 of the Credit Agreement; or
(b) The Pledgor shall fail to perform or observe any
provision of this Pledge Agreement and such failure shall
continue for ten (10) Business Days after notice is given by
the Pledgee to the Pledgor of such failure.
8. The Pledgor's Release of the Pledgee. Under no circumstances
shall the Pledgee be deemed to assume any responsibility for or
obligation or duty with respect to any part or all of the Pledged
Securities of any nature or kind or any matter or proceeding arising out
of or related thereto, but the same shall be at the Pledgor's sole risk
at all times. The Pledgee shall not be required to take any action of
any kind to collect, preserve or protect its or the Pledgor's rights in
the Pledged Securities, or against other parties thereto. The Pledgor
hereby releases the Pledgee from any claims, causes of action and demands
at any time arising out of or with respect to this Pledge Agreement, the
Obligations, the use of the Pledged Securities or any actions taken or
omitted to be taken by the Pledgee with respect thereto, and the Pledgor
hereby agrees to hold the Pledgee harmless from and with respect to any
and all such claims, causes of action and demands. Nevertheless, the
Pledgee agrees to exercise reasonable care in the physical preservation
of the Pledged Securities.
9. Termination. Upon the payment in full to the Bank and the
Pledgee of all of the Obligations, this Pledge Agreement shall terminate,
and such of the Pledged Securities which have not theretofore been sold
together with any dividends previously received which have not been
otherwise applied pursuant to the terms of this Pledge Agreement shall be
delivered to the Pledgor or as the Pledgor may direct in writing.
10. Notices. All notices, requests, demands, directions,
consents or waivers, statements, reports and other communications
hereunder shall be made in writing by telex or telefax, confirmed by
mail, to the parties at their addresses appearing below:
The Pledgee - Bank One, Texas, N.A.,
as Trustee
910 Travis, 6th Floor
Houston, Texas 77002
Telefax No. (713) 751-6806
Attention: Corporate Trust Department
with a copy to:
Internationale Nederlanden Bank N.V.
De Amsterdamse Poort
1102 MG Amsterdam Zuidoost
The Netherlands
Telefax No. 011-31-2-05-67-21-99
Attention: Ms. Annerie Vreugdenhil
The Pledgor - Reading & Bates Corporation
901 Threadneedle, Suite 200
Houston, Texas 77079
Telefax No. (713) 496-2298
Attention: President
11. General. This Pledge Agreement shall bind and inure to the
benefit of the respective successors and assigns of the parties. This
Pledge Agreement and the rights of the parties and of any subsequent
holder shall be construed in accordance with and governed by the internal
laws of the State of New York, and may not be changed orally, but only by
an instrument in writing signed by the person against whom enforcement of
such change, modification or discharge is sought.
12. Severability. If any word, phrase, sentence, paragraph,
provision or section of this Pledge Agreement shall be held invalid or
unenforceable for any reason by any court of competent jurisdiction,
governmental authority, statute, or otherwise, such holding, declaration,
pronouncement or rendering shall not adversely affect any other word,
phrase, sentence, paragraph, provision or section of this Pledge
Agreement, which shall otherwise remain in full force and effect and be
enforced in accordance with its terms.
13. Counterparts. This Pledge Agreement may be executed in any
number of counterparts, each of which for all purposes shall be deemed to
be an original.
IN WITNESS WHEREOF, the parties have caused this Pledge Agreement
to be executed the day and year first above written.
READING & BATES CORPORATION
By: ______________________________
Name: _______________________
Title: _______________________
BANK ONE, TEXAS, N.A.
as Trustee
By: ______________________________
Name: _______________________
Title: _______________________
Schedule 1
READING & BATES CORPORATION
Registered Owner
Company Certificate Date of Number of
Number Issue Shares of
Stock
Reading & Bates Drilling Co.
EXHIBIT A
IRREVOCABLE PROXY
The undersigned hereby constitutes and appoints Bank One, Texas,
N.A., as Trustee (the "Pledgee") its attorney and proxy to appear, vote
and otherwise act, all in the name, place and stead of the undersigned in
the same way that the undersigned might do and with the same powers, with
respect to all of the shares of stock in Reading & Bates Drilling Co.
which are owned or hereafter acquired by the undersigned, at any and all
meetings, questions and resolutions that may come before such meetings,
including, but not limited to, the election of directors, or at any
adjournment or adjournments thereof, or to consent on behalf of the
undersigned in the absence of a meeting to anything that might have been
voted on at such a meeting.
The power of attorney is coupled with an interest, is given to the
Pledgee pursuant to the Pledge Agreement dated April __, 1995, and is
irrevocable. It shall continue in effect so long as the Obligations (as
defined in the Pledge Agreement) remain unpaid.
The Pledgee, the attorney and proxy, is hereby given full power of
substitution and revocation and may act through such agents, nominees or
substitute attorneys as it may from time to time appoint.
The powers of such attorney and proxy shall include (without
limiting their general powers hereunder), the power to receive and waive
any notice of any meeting on behalf of the undersigned.
And the undersigned hereby ratifies and confirms all that the
Pledgee as the attorney and proxy or its substitutes duly appointed shall
do in the name, place and stead of the undersigned pursuant hereto.
READING & BATES CORPORATION
By: ______________________________
Name: _______________________
Title: _______________________
<PAGE>
EXHIBIT D-2
TO AMENDED AND RESTATED
CREDIT FACILITY AGREEMENT
PLEDGE AGREEMENT
AND
IRREVOCABLE PROXY
PLEDGE AGREEMENT AND IRREVOCABLE PROXY, dated April__,
1995, between READING & BATES DRILLING CO., a corporation
organized and existing under the laws of the State of
Oklahoma (the "Pledgor"), and Bank One, Texas, N.A., as
Trustee, its successors and assigns, (the "Pledgee").
W I T N E S S E T H:
WHEREAS, the Pledgor owns of record and beneficially all
of the issued and outstanding shares of Reading and Bates
Borneo Drilling Co., Ltd., Reading & Bates Exploration Co.
and Reading and Bates, Inc., (collectively, the "Companies")
(the Companies, the Pledgor and Reading & Bates Corporation)
are hereinafter collectively referred to as the "Obligors").
WHEREAS, the Obligors have entered into an Amended and
Restated Credit Facility Agreement dated as of April __, 1995
(the "Credit Agreement") with INTERNATIONALE NEDERLANDEN BANK
N.V. (the "Bank"), which Credit Agreement provides for
advances and the issuance of letters of credit by the Bank to
or for the account of the Obligors of up to USD 65,000,000
(the "Commitment") to be used for the purposes of refinancing
certain of the indebtedness of the Obligors and providing
working capital and credit for operations; and
WHEREAS, pursuant to the Trust Indenture dated March 29,
1991 between the Trustee and the Obligors, as amended by
Amendment No. 1 to Trust Indenture dated as of February 25,
1993 and as further amended by Assignment, Assumption and
Amendment No. 2 to Trust Indenture dated the date hereof, the
Pledgee has agreed to act as trustee for the Bank in
connection with the security provided by the Obligors for the
advances made and letters of credit issued pursuant to the
Credit Agreement; and
WHEREAS, it is a condition to the Bank entering into the
Credit Agreement and making the Commitment that the Pledgor
pledge to the Pledgee all of the issued and outstanding
shares of the Companies.
NOW, THEREFORE, in order to induce the Bank to enter
into the Credit Agreement and make the Commitment and in
consideration of the premises and other good and valuable
consideration the receipt and sufficiency of which is hereby
acknowledged, the parties hereby agree as follows:
1. Pledge of Securities. The Pledgor has delivered to
the Pledgee in trust, subject to the terms and conditions of
the Trust Indenture, certificates representing all of the
issued and outstanding shares of the Companies as described
in Schedule 1 (the "Pledged Securities") with duly endorsed
blank stock powers attached. The Pledgor does hereby pledge,
mortgage, assign, transfer, deposit, set over, grant a
security interest in, and confirm the Pledged Securities unto
the Pledgee, its successors and assigns, in trust, for the
Pledgee's and for its successors' and assigns' own proper use
and benefit as security for the obligations referred to in
Section 2 hereof. If the Pledgor acquires any additional
shares of any class or any other securities convertible into
such shares of the Companies by purchase, stock dividend,
distribution of capital or otherwise, the Pledgor shall
forthwith pledge such shares or other securities to the
Pledgee under this Pledge Agreement, and any such additional
shares or securities shall be included in the term "Pledged
Securities". Without the Pledgee's prior written consent,
the Pledgor will not sell, assign, transfer or otherwise
dispose of, grant any option with respect to, or pledge,
mortgage or otherwise encumber any of the Pledged Securities
or any interest therein.
2. Obligations Secured. This Pledge Agreement is made
and delivered as security for the obligation of the Obligors
to pay any and all amounts due to the Bank under the Credit
Agreement and any instrument, agreement or document referred
to therein (the "Obligations"). The Pledgor expressly
consents and agrees that the Pledgee shall have a security
interest in the Pledged Securities and proceeds as security
for the Obligations.
3. Representations, Warranties and Covenants of the
Pledgor.
(a) The Pledgor represents and warrants that the
Pledged Securities constitute all of the issued and
outstanding shares of the Companies, are owned
beneficially and of record by the Pledgor and such
shares are duly authorized and issued, fully paid
and nonassessable. The Pledgor represents and
warrants that it owns of record and beneficially
the Pledged Securities free and clear of all liens,
charges and encumbrances. The Pledgor covenants
that it will warrant and defend title to the
Pledged Securities and the lien conveyed to the
Pledgee by this Pledge Agreement against all claims
of all persons and will maintain and preserve such
lien.
(b) The Pledgor further represents and warrants
that (i) this Pledge Agreement constitutes its
legal, valid and binding obligation, enforceable
against it in accordance with its terms, subject to
laws affecting creditors' rights generally and
applicable equitable principles, and (ii) upon
delivery of the Pledged Securities to the Pledgee,
the Pledgee will have a perfected security interest
in and pledge of the Pledged Securities having
first priority.
4. Irrevocable Proxy.
(a) The Pledgor agrees to execute an irrevocable
proxy in the form attached as Exhibit A hereto.
This proxy shall be valid so long as any portion of
the Obligations are due and payable.
(b) The Pledgee hereby agrees that until an Event
of Default (as defined in Section 7 hereof) shall
have occurred and be continuing, the Pledgee shall
not exercise its proxy and the Pledgor shall be
entitled to
(i) vote any and all of the Pledged
Securities;
(ii) give consents, waivers and ratifications
in respect thereof, provided, however, that no
vote shall be cast or consent, waiver or
ratification given or taken, which would be
inconsistent with any of the provisions of the
Credit Agreement or any agreement referred to
therein; and
(iii) receive all dividends paid on the
Pledged Securities.
(c) All such rights of the Pledgor to vote and to
give consent, waivers and ratifications shall cease
automatically in case an Event of Default shall
occur and be continuing.
5. Remedies.
(a) So long as an Event of Default shall have
occurred and be continuing the Pledgee may:
(i) transfer into its name or into the name
of its nominee any or all of the Pledged
Securities;
(ii) receive and retain all cash dividends
paid in respect of the Pledged Securities;
(iii) vote any and all of the Pledged
Securities and give all consents, waivers and
ratifications in respect thereof; and
(iv) otherwise act with respect to the Pledged
Securities as though it were the outright
owner. In this connection, the Pledgor hereby
irrevocably constitutes and appoints the
Pledgee its proxy and attorney-in-fact, with
full power of substitution, to accomplish any
and all acts necessary to permit the Pledgee
to transfer the Pledged Securities, receive
and retain dividends, vote the Pledged
Securities and give all consents and to act as
the outright owner of the Pledged Securities.
(b) So long as an Event of Default shall have
occurred and be continuing, the Pledgee may sell,
assign and deliver the whole or, from time to time,
any part of the Pledged Securities or any interest
therein or any part thereof, at any private sale or
at public auction, with or without demand,
advertisement or notice of the time or place of
sale or adjournment or otherwise which may be for
cash, on credit or for other property, for
immediate or future delivery, and for such price or
prices and on such terms as the Pledgee in its sole
discretion may determine. The Pledgor hereby
assigns any and all right or equity of redemption
whether before or after sale hereunder. At any
such sale the Pledgee may bid for and purchase for
its account the whole of any such right of
redemption or the Pledged Securities themselves.
The proceeds of any such sale of the Pledged
Securities shall be applied by the Pledgee to meet
the Pledgor's and the Companies' obligations under
the Credit Agreement. Any property or money
remaining after such application in respect of the
Pledged Securities shall be delivered to the
Pledgor without any liability on the part of the
Pledgee as to any other interest of the Pledgor
therein. Neither failure nor delay on the
Pledgee's part shall preclude any other or further
exercise thereof or the exercise of any right,
remedy, power or privilege.
(c) So long as an Event of Default shall have
occurred and be continuing and upon the Pledgee's
written demand, the Pledgor
(i) will do any and all acts and things which
may be necessary or advisable to enable the
Pledgee to consummate any proposed sale or
other disposition of any of the Pledged
Securitiespursuant tothis PledgeAgreement; and
(ii) will pay to the Pledgee all reasonable
costs and expenses of enforcing the remedies
provided in this Section 5, including
reasonable attorneys fees, and will reimburse
the Pledgee with interest at the highest
interest rate allowed by law if the Pledgee
shall incur any costs and expenses in
enforcing the remedies provided in this
Section 5.
(d) Notwithstanding anything contained herein to
the contrary, the Pledgee will not exercise any
remedies hereunder in a manner which would violate
any applicable maritime law or regulation of the
United States, it being understood and agreed that
so long as any Obligor owns a vessel which is
documented under the laws of the United States,
that the Pledgee will not sell, assign or deliver
any part of the Pledged Securities that would
represent a controlling interest in that Obligor to
any person which is not a citizen of the United
States as defined in Section 2 of the Shipping Act,
1916, as amended without any approval required by
Section 9(c) of that Act.
6. The Pledgor's Obligations Not Affected. The
obligations of the Pledgor under this Pledge Agreement shall
remain in full force and effect without regard to, and shall
not be impaired or affected by:
(a) any amendment or modification or addition or
supplement to the Credit Agreement or any
instrument, agreement or document referred to
therein or any assignment of transfer thereof;
(b) any exercise or non-exercise by the Pledgee of
any right, remedy, power or privilege under or in
respect of this Pledge Agreement, the Credit
Agreement or any instrument, agreement or document
referred to herein or therein, or any assignment or
transfer of any thereof, or any waiver of any such
right, remedy, power or privilege;
(c) any waiver, consent, extension, indulgence or
other action or inaction in respect of this Pledge
Agreement, the Credit Agreement or any instrument,
agreement or document referred to herein or
therein, or any assignment or transfer of any
thereof; or
(d) any bankruptcy, insolvency, reorganization,
arrangement, readjustment, composition,
liquidation, or the like, of any of the Companies,
the Pledgor, or any other person, firm or
corporation; whether or not the Pledgor shall have
notice or knowledge of any of the foregoing.
7. Event of Default. Event of Default as used herein
shall mean the occurrence and continuance of one or both of
the following described events:
(a) An Event of Default shall occur and continue
pursuant to Section 17.1 of the Credit Agreement;
or
(b) The Pledgor shall fail to perform or observe
any provision of this Pledge Agreement and such
failure shall continue for ten (10) Business Days
after notice is given by the Pledgee to the Pledgor
of such failure.
8. The Pledgor's Release of the Pledgee. Under no
circumstances shall the Pledgee be deemed to assume any
responsibility for or obligation or duty with respect to any
part or all of the Pledged Securities of any nature or kind
or any matter or proceeding arising out of or related
thereto, but the same shall be at the Pledgor's sole risk at
all times. The Pledgee shall not be required to take any
action of any kind to collect, preserve or protect its or the
Pledgor's rights in the Pledged Securities, or against other
parties thereto. The Pledgor hereby releases the Pledgee
from any claims, causes of action and demands at any time
arising out of or with respect to this Pledge Agreement, the
Obligations, the use of the Pledged Securities or any actions
taken or omitted to be taken by the Pledgee with respect
thereto, and the Pledgor hereby agrees to hold the Pledgee
harmless from and with respect to any and all such claims,
causes of action and demands. Nevertheless, the Pledgee
agrees to exercise reasonable care in the physical
preservation of the Pledged Securities.
9. Termination. Upon the payment in full to the Bank
and the Pledgee of all of the Obligations, this Pledge
Agreement shall terminate, and such of the Pledged Securities
which have not theretofore been sold together with any
dividends previously received which have not been otherwise
applied pursuant to the terms of this Pledge Agreement shall
be delivered to the Pledgor or as the Pledgor may direct in
writing.
10. Notices. All notices, requests, demands,
directions, consents or waivers, statements, reports and
other communications hereunder shall be made in writing by
telex or telefax, confirmed by mail, to the parties at their
addresses appearing below:
The Pledgee - Bank One, Texas, N.A.
as Trustee
910 Travis, 6th Floor
Houston, Texas 77002
Telefax No. (713) 751-6806
Attention: Corporate Trust Department
with a copy to:
Internationale Nederlanden Bank N.V.
De Amsterdamse Poort
1102 MG Amsterdam Zuidoost
The Netherlands
Telefax No. 011-31-2-05-67-21-99
Attention: Ms. Annerie Vreugdenhil
The Pledgor - Reading & Bates Drilling Co.
901 Threadneedle, Suite 200
Houston, Texas 77079
Telefax No. (713) 496-2298
Attention: President
11. General. This Pledge Agreement shall bind and
inure to the benefit of the respective successors and assigns
of the parties. This Pledge Agreement and the rights of the
parties and of any subsequent holder shall be construed in
accordance with and governed by the internal laws of the
State of New York, and may not be changed orally, but only by
an instrument in writing signed by the person against whom
enforcement of such change, modification or discharge is
sought.
12. Severability. If any word, phrase, sentence,
paragraph, provision or section of this Pledge Agreement
shall be held invalid or unenforceable for any reason by any
court of competent jurisdiction, governmental authority,
statute, or otherwise, such holding, declaration,
pronouncement or rendering shall not adversely affect any
other word, phrase, sentence, paragraph, provision or section
of this Pledge Agreement, which shall otherwise remain in
full force and effect and be enforced in accordance with its
terms.
13. Counterparts. This Pledge Agreement may be
executed in any number of counterparts, each of which for all
purposes shall be deemed to be an original.
IN WITNESS WHEREOF, the parties have caused this Pledge
Agreement to be executed the day and year first above
written.
READING & BATES DRILLING CO.
By:
Name: _______________________
Title: _______________________
BANK ONE, TEXAS, N. A.
as Trustee
By:
Name: _______________________
Title: _______________________
<PAGE>
Schedule 1
READING & BATES DRILLING CO.
Registered Owner
Company Certificate Date of Number of
Number Issue Shares of
Stock
Reading and Bates Borneo
Drilling Co., Ltd.
Reading & Bates
Exploration Co.
Reading and Bates,
Inc. <PAGE>
EXHIBIT A
IRREVOCABLE PROXY
The undersigned hereby constitutes and appoints Bank
One, Texas, N.A., as Trustee (the "Pledgee") its attorney and
proxy to appear, vote and otherwise act, all in the name,
place and stead of the undersigned in the same way that the
undersigned might do and with the same powers, with respect
to all of the shares of stock in Reading and Bates Borneo
Drilling Co., Ltd., Reading & Bates Exploration Co., and
Reading and Bates, Inc. which are owned or hereafter acquired
by the undersigned, at any and all meetings, questions and
resolutions that may come before such meetings, including,
but not limited to, the election of directors, or at any
adjournment or adjournments thereof, or to consent on behalf
of the undersigned in the absence of a meeting to anything
that might have been voted on at such a meeting.
The power of attorney is coupled with an interest, is
given to the Pledgee pursuant to the Pledge Agreement dated
April __, 1995, and is irrevocable. It shall continue in
effect so long as the Obligations (as defined in the Pledge
Agreement) remain unpaid.
The Pledgee, the attorney and proxy, is hereby given
full power of substitution and revocation and may act through
such agents, nominees or substitute attorneys as it may from
time to time appoint.
The powers of such attorney and proxy shall include
(without limiting their general powers hereunder), the power
to receive and waive any notice of any meeting on behalf of
the undersigned.
And the undersigned hereby ratifies and confirms all
that the Pledgee as the attorney and proxy or its substitutes
duly appointed shall do in the name, place and stead of the
undersigned pursuant hereto.
READING & BATES DRILLING CO.
By:
Name: _______________________
Title: _______________________
<PAGE>
EXHIBIT D-3
TO AMENDED AND RESTATED
CREDIT FACILITY AGREEMENT
PLEDGE AGREEMENT
AND
IRREVOCABLE PROXY
PLEDGE AGREEMENT AND IRREVOCABLE PROXY, dated April 27,
1995, between READING & BATES EXPLORATION CO. a corporation
organized and existing under the laws of the State of
Oklahoma (the "Pledgor"), and BANK ONE, TEXAS, N.A., as
Trustee, its successors and assigns, (the "Pledgee").
W I T N E S S E T H:
WHEREAS, the Pledgor owns of record and beneficially all
of the issued and outstanding shares of Reading & Bates (A)
Pty. Ltd. (the "Company") (the Company and the Pledgor are
hereinafter collectively referred to as the "Obligors").
WHEREAS, the Obligors have entered into an Amended and
Restated Credit Facility Agreement dated as of April 27, 1995
(the "Credit Agreement") with INTERNATIONALE NEDERLANDEN BANK
N.V. (the "Bank"), which Credit Agreement provides for
advances and the issuance of letters of credit by the Bank to
or for the account of the Obligors of up to USD 65,000,000
(the "Commitment") to be used for the purposes of refinancing
certain indebtedness of the Obligors and providing working
capital and credit for operations; and
WHEREAS, pursuant to the Trust Indenture dated March 29,
1991 between the Trustee and the Obligors as amended by
Amendment No. 1 to the Trust Indenture dated as of February
25, 1993 and as further amended by Assignment, Assumption and
Amendment No. 2 to Trust Indenture dated the date hereof, the
Pledgee has agreed to act as trustee for the Bank in
connection with the security provided by the Obligors for the
advances made and letters of credit issued pursuant to the
Credit Agreement; and
WHEREAS, it is a condition to the Bank entering into the
Credit Agreement and making the Commitment that the Pledgor
pledge to the Pledgee all of the issued and outstanding
shares of the Company.
NOW, THEREFORE, in order to induce the Bank to enter
into the Credit Agreement and make the Commitment and in
consideration of the premises and other good and valuable
consideration the receipt and sufficiency of which is hereby
acknowledged, the parties hereby agree as follows:
1. Pledge of Securities. The Pledgor has delivered to
the Pledgee in trust, subject to the terms and conditions of
the Trust Indenture, certificates representing all of the
issued and outstanding shares of the Company as described in
Schedule 1 (the "Pledged Securities") with duly endorsed
blank stock powers attached. The Pledgor does hereby pledge,
mortgage, assign, transfer, deposit, set over, grant a
security interest in, and confirm the Pledged Securities unto
the Pledgee, its successors and assigns, in trust, for the
Pledgee's and for its successors' and assigns' own proper use
and benefit as security for the obligations referred to in
Section 2 hereof. If the Pledgor acquires any additional
shares of any class or any other securities convertible into
such shares of the Company by purchase, stock dividend,
distribution of capital or otherwise, the Pledgor shall
forthwith pledge such shares or other securities to the
Pledgee under this Pledge Agreement, and any such additional
shares or securities shall be included in the term "Pledged
Securities". Without the Pledgee's prior written consent,
the Pledgor will not sell, assign, transfer or otherwise
dispose of, grant any option with respect to, or pledge,
mortgage or otherwise encumber any of the Pledged Securities
or any interest therein.
2. Obligations Secured. This Pledge Agreement is made
and delivered as security for the obligation of the Obligors
to pay any and all amounts due to the Bank under the Credit
Agreement and any instrument, agreement or document referred
to therein (the "Obligations"). The Pledgor expressly
consents and agrees that the Pledgee shall have a security
interest in the Pledged Securities and proceeds as security
for the Obligations.
3. Representations, Warranties and Covenants of the
Pledgor.
(a) The Pledgor represents and warrants that the
Pledged Securities constitute all of the issued and
outstanding shares of the Company, are owned
beneficially and of record by the Pledgor and such
shares are duly authorized and issued, fully paid
and nonassessable. The Pledgor represents and
warrants that it owns of record and beneficially
the Pledged Securities free and clear of all liens,
charges and encumbrances. The Pledgor covenants
that it will warrant and defend title to the
Pledged Securities and the lien conveyed to the
Pledgee by this Pledge Agreement against all claims
of all persons and will maintain and preserve such
lien.
(b) The Pledgor further represents and warrants
that (i) this Pledge Agreement constitutes its
legal, valid and binding obligation, enforceable
against it in accordance with its terms, subject to
laws affecting creditors' rights generally and
applicable equitable principles, and (ii) upon
delivery of the Pledged Securities to the Pledgee,
the Pledgee will have a perfected security interest
in and pledge of the Pledged Securities having
first priority.
4. Irrevocable Proxy.
(a) The Pledgor agrees to execute an irrevocable
proxy in the form attached as Exhibit A hereto.
This proxy shall be valid so long as any portion of
the Obligations are due and payable.
(b) The Pledgee hereby agrees that until an Event
of Default (as defined in Section 7 hereof) shall
have occurred and be continuing, the Pledgee shall
not exercise its proxy and the Pledgor shall be
entitled to
(i) vote any and all of the Pledged
Securities;
(ii) give consents, waivers and ratifications
in respect thereof, provided, however, that no
vote shall be cast or consent, waiver or
ratification given or taken, which would be
inconsistent with any of the provisions of the
Credit Agreement or any agreement referred to
therein; and
(iii) receive all dividends paid on the
Pledged Securities.
(c) All such rights of the Pledgor to vote and to
give consent, waivers and ratifications shall cease
automatically in case an Event of Default shall
occur and be continuing.
5. Remedies.
(a) So long as an Event of Default shall have
occurred and be continuing the Pledgee may:
(i) transfer into its name or into the name
ofits nomineeanyor allofthe PledgedSecurities;
(ii) receive and retain all cash dividends
paid in respect of the Pledged Securities;
(iii) vote any and all of the Pledged
Securities and give all consents, waivers and
ratifications in respect thereof; and
(iv) otherwise act with respect to the Pledged
Securities as though it were the outright
owner. In this connection, the Pledgor hereby
irrevocably constitutes and appoints the
Pledgee its proxy and attorney-in-fact, with
full power of substitution, to accomplish any
and all acts necessary to permit the Pledgee
to transfer the Pledged Securities, receive
and retain dividends, vote the Pledged
Securities and give all consents and to act as
the outright owner of the Pledged Securities.
(b) So long as an Event of Default shall have
occurred and be continuing, the Pledgee may sell,
assign and deliver the whole or, from time to time,
any part of the Pledged Securities or any interest
therein or any part thereof, at any private sale or
at public auction, with or without demand,
advertisement or notice of the time or place of
sale or adjournment or otherwise which may be for
cash, on credit or for other property, for
immediate or future delivery, and for such price or
prices and on such terms as the Pledgee in its sole
discretion may determine. The Pledgor hereby
assigns any and all right or equity of redemption
whether before or after sale hereunder. At any
such sale the Pledgee may bid for and purchase for
its account the whole of any such right of
redemption or the Pledged Securities themselves.
The proceeds of any such sale of the Pledged
Securities shall be applied by the Pledgee to meet
the Pledgor's and the Company's obligations under
the Credit Agreement. Any property or money
remaining after such application in respect of the
Pledged Securities shall be delivered to the
Pledgor without any liability on the part of the
Pledgee as to any other interest of the Pledgor
therein. Neither failure nor delay on the
Pledgee's part shall preclude any other or further
exercise thereof or the exercise of any right,
remedy, power or privilege.
(c) So long as an Event of Default shall have
occurred and be continuing and upon the Pledgee's
written demand, the Pledgor
(i) will do any and all acts and things which
may be necessary or advisable to enable the
Pledgee to consummate any proposed sale or
other disposition of any of the Pledged
Securities pursuant to this Pledge Agreement;
and
(ii) will pay to the Pledgee all reasonable
costs and expenses of enforcing the remedies
provided in this Section 5, including
reasonable attorneys fees, and will reimburse
the Pledgee with interest at the highest
interest rate allowed by law if the Pledgee
shall incur any costs and expenses in
enforcing the remedies provided in this
Section 5.
(d) Notwithstanding anything contained herein to
the contrary, the Pledgee will not exercise any
remedies hereunder in a manner which would violate
any applicable maritime law or regulation of the
United States, it being understood and agreed that
so long as any Obligor owns a vessel which is
documented under the laws of the United States,
that the Pledgee will not sell, assign or deliver
any part of the Pledged Securities that would
represent a controlling interest in that Obligor to
any person which is not a citizen of the United
States as defined in Section 2 of the Shipping Act,
1916, as amended without any approval required by
Section 9(c) of that Act.
6. The Pledgor's Obligations Not Affected. The
obligations of the Pledgor under this Pledge Agreement shall
remain in full force and effect without regard to, and shall
not be impaired or affected by:
(a) any amendment or modification or addition or
supplement to the Credit Agreement or any
instrument, agreement or document referred to
therein or any assignment of transfer thereof;
(b) any exercise or non-exercise by the Pledgee of
any right, remedy, power or privilege under or in
respect of this Pledge Agreement, the Credit
Agreement or any instrument, agreement or document
referred to herein or therein, or any assignment or
transfer of any thereof, or any waiver of any such
right, remedy, power or privilege;
(c) any waiver, consent, extension, indulgence or
other action or inaction in respect of this Pledge
Agreement, the Credit Agreement or any instrument,
agreement or document referred to herein or
therein, or any assignment or transfer of any
thereof; or
(d) any bankruptcy, insolvency, reorganization,
arrangement, readjustment, composition,
liquidation, or the like, of any of the Company,
the Pledgor, or any other person, firm or
corporation; whether or not the Pledgor shall have
notice or knowledge of any of the foregoing.
7. Event of Default. Event of Default as used herein
shall mean the occurrence and continuance of one or both of
the following described events:
(a) An Event of Default shall occur and continue
pursuant to Section 17.1 of the Credit Agreement;
or
(b) The Pledgor shall fail to perform or observe
any provision of this Pledge Agreement and such
failure shall continue for ten (10) Business Days
after notice is given by the Pledgee to the Pledgor
of such failure.
8. The Pledgor's Release of the Pledgee. Under no
circumstances shall the Pledgee be deemed to assume any
responsibility for or obligation or duty with respect to any
part or all of the Pledged Securities of any nature or kind
or any matter or proceeding arising out of or related
thereto, but the same shall be at the Pledgor's sole risk at
all times. The Pledgee shall not be required to take any
action of any kind to collect, preserve or protect its or the
Pledgor's rights in the Pledged Securities, or against other
parties thereto. The Pledgor hereby releases the Pledgee
from any claims, causes of action and demands at any time
arising out of or with respect to this Pledge Agreement, the
Obligations, the use of the Pledged Securities or any actions
taken or omitted to be taken by the Pledgee with respect
thereto, and the Pledgor hereby agrees to hold the Pledgee
harmless from and with respect to any and all such claims,
causes of action and demands. Nevertheless, the Pledgee
agrees to exercise reasonable care in the physical
preservation of the Pledged Securities.
9. Termination. Upon the payment in full to the Bank
and the Pledgee of all of the Obligations, this Pledge
Agreement shall terminate, and such of the Pledged Securities
which have not theretofore been sold together with any
dividends previously received which have not been otherwise
applied pursuant to the terms of this Pledge Agreement shall
be delivered to the Pledgor or as the Pledgor may direct in
writing.
10. Notices. All notices, requests, demands,
directions, consents or waivers, statements, reports and
other communications hereunder shall be made in writing by
telex or telefax, confirmed by mail, to the parties at their
addresses appearing below:
The Pledgee - Bank One, Texas, N.A.,
as Trustee
910 Travis, 6th Floor
Houston, Texas 77002
Telefax No. (713) 751-6806
Attention: Corporate Trust Department
with a copy to:
Internationale Nederlanden Bank N.V.
De Amsterdamse Poort
1102 MG Amsterdam Zuidoost
The Netherlands
Telefax No. 011-31-2-05-67-21-99
Attention: Ms. Annerie Vreugdenhil
The Pledgor - Reading & Bates Exploration Co.
901 Threadneedle, Suite 200
Houston, Texas 77079
Telefax No. (713) 496-2298
Attention: President
11. General. This Pledge Agreement shall bind and
inure to the benefit of the respective successors and assigns
of the parties. This Pledge Agreement and the rights of the
parties and of any subsequent holder shall be construed in
accordance with and governed by the internal laws of the
Commonwealth of Australia, and may not be changed orally, but
only by an instrument in writing signed by the person against
whom enforcement of such change, modification or discharge is
sought.
12. Severability. If any word, phrase, sentence,
paragraph, provision or section of this Pledge Agreement
shall be held invalid or unenforceable for any reason by any
court of competent jurisdiction, governmental authority,
statute, or otherwise, such holding, declaration,
pronouncement or rendering shall not adversely affect any
other word, phrase, sentence, paragraph, provision or section
of this Pledge Agreement, which shall otherwise remain in
full force and effect and be enforced in accordance with its
terms.
13. Counterparts. This Pledge Agreement may be
executed in any number of counterparts, each of which for all
purposes shall be deemed to be an original.
14. In accordance with the Corporations Law of the
State of Western Australia, Commonwealth of Australia, the
Assignor agrees that the maximum prospective liability
secured by this Assignment is seven million four hundred
twenty five thousand Australian dollars, provided however
that this Section 14 shall not limit the amount secured by or
recoverable under this Assignment or any other Loan Document
referred to in the Restated Credit Agreement.
IN WITNESS WHEREOF, the parties have caused this Pledge
Agreement to be executed the day and year first above
written.
READING & BATES EXPLORATION CO.
By:
Name: _______________________
Title: _______________________
BANK ONE, TEXAS, N.A.
as Trustee
By:
Name: _______________________
Title: _______________________
Schedule 1
READING & BATES EXPLORATION CO.
Registered Owner
Company Certificate Date of Number of
Number Issue Shares of
Stock
Reading & Bates 3 6/22/94 1
(A) Pty. Ltd.
Reading & Bates 4* 6/22/94 1
(A) Pty. Ltd.
*Registered in the name of Wayne K. Hillin in trust for
Reading & Bates Exploration Co.
EXHIBIT A
IRREVOCABLE PROXY
The undersigned hereby constitutes and appoints Bank
One, Texas, N.A., as Trustee (the "Pledgee") its attorney and
proxy to appear, vote and otherwise act, all in the name,
place and stead of the undersigned in the same way that the
undersigned might do and with the same powers, with respect
to all of the shares of stock in Reading & Bates (A) Pty.
Ltd. which are owned or hereafter acquired by the
undersigned, at any and all meetings, questions and
resolutions that may come before such meetings, including,
but not limited to, the election of directors, or at any
adjournment or adjournments thereof, or to consent on behalf
of the undersigned in the absence of a meeting to anything
that might have been voted on at such a meeting.
The power of attorney is coupled with an interest, is
given to the Pledgee pursuant to the Pledge Agreement dated
April __, 1995, and is irrevocable. It shall continue in
effect so long as the Obligations (as defined in the Pledge
Agreement) remain unpaid.
The Pledgee, the attorney and proxy, is hereby given
full power of substitution and revocation and may act through
such agents, nominees or substitute attorneys as it may from
time to time appoint.
The powers of such attorney and proxy shall include
(without limiting their general powers hereunder), the power
to receive and waive any notice of any meeting on behalf of
the undersigned.
And the undersigned hereby ratifies and confirms all
that the Pledgee as the attorney and proxy or its substitutes
duly appointed shall do in the name, place and stead of the
undersigned pursuant hereto.
READING & BATES EXPLORATION CO.
By:
Name: _______________________
Title: _______________________
<PAGE>
EXHIBIT E-1
TO AMENDED AND RESTATED
CREDIT FACILITY AGREEMENT
Assignment, Assumption and Amendment No. 6
to First Preferred Fleet Mortgage
Assignment, Assumption and Amendment No. 6 dated April __, 1995 to
the First Preferred Fleet Mortgage dated March 29, 1991 (the "Mortgage"),
as amended among READING & BATES DRILLING CO., a corporation organized
and existing under the laws of the State of Oklahoma, with its principal
place of business at 901 Threadneedle, Suite 200, Houston, Texas 77079,
(the "Shipowner"), to TEXAS COMMERCE BANK NATIONAL ASSOCIATION, as
Trustee (Holder-Transferee from the Receiver of New First City, Texas-
Houston, N.A., the successor in interest to First City, Texas-Houston,
N.A.), a national banking association, with its principal place of
business at 600 Travis, Houston, Texas 77002, (the "Assignor"), which
entity is executing this document solely for the purposes of and with
respect to the assignments and assumptions being made hereunder and not
with respect to any amendment or other matter hereunder, and Bank One,
Texas, N.A., a national banking association, as Trustee, with its
principal place of business at 910 Travis, Houston, Texas 77002 (the
"Trustee").
WHEREAS, the Shipowner is the owner of 100% of the U.S. flag
drilling rigs RANDOLPH YOST, Official No. 601699, and JACK BATES,
Official No. 906283 (the "Vessels"), which Vessels have been duly
registered in the name of the Shipowner in accordance with the laws of
the United States of America; and
WHEREAS, the Mortgage, as amended, mortgaged one hundred percent
(100%) of the Vessels, together with all of their boilers, engines,
machinery, masts, spars, sails, rigging, boats, anchors, chains, tackle,
apparel, furniture, fittings, equipment, drilling equipment, pumps, drill
pipes, collars, racking, housing, spare parts and supporting inventory,
vehicles and living quarters (excluding equipment aboard the Vessels
which is not owned by the Shipowner) and all other appurtenances to the
Vessels appertaining or belonging, whether now owned or hereafter
acquired, whether on board or not, and all additions, improvements and
replacements made in or to such Vessels; and
WHEREAS, the Mortgage was originally received for record at 2:01
p.m. on March 29, 1991, at the U.S. Coast Guard Vessel Documentation
Office at the Port of Houston, Texas and was recorded in Book No. PM-243
at Inst. No. 44; and
WHEREAS, the Mortgage was granted by the Shipowner to the Assignor
for the purpose of securing the obligation of the Shipowner to pay to NMB
Postbank Groep N.V. (now known as Internationale Nederlanden Bank N.V.,
the "Lender") all amounts due and payable under that certain Credit
Facility Agreement dated as of March 27, 1991 among the Shipowner, the
other Borrowers named therein and the Lender (the "Credit Agreement");
and
WHEREAS, a true and accurate copy of the Credit Agreement is
attached to the Original Mortgage as Exhibit A and forms a part thereof;
and
WHEREAS, pursuant to Amendment No. 1 to Credit Facility Agreement
dated as of May 24, 1991 among the Shipowner, the other Borrowers and the
Lender ("Amendment No. 1"), certain terms of the Credit Agreement were
amended; and
WHEREAS, the Shipowner and the Assignor amended the Mortgage in
order to reflect the changes made to the Credit Agreement by Amendment
No. 1; and
WHEREAS, Amendment No. 1 to the Mortgage dated May 31, 1991 was
received for record at 12:30 p.m. on June 5, 1991 at the U.S. Coast Guard
Vessel Documentation Office at the Port of Houston, Texas and was
recorded in Book No. PM-247 at Inst. No. 228; and
WHEREAS, pursuant to Amendment No. 2 to Credit Facility Agreement
dated as of June 28, 1991 among the Shipowner, the other Borrowers and
the Lender ("Amendment No. 2"), certain terms of the Credit Agreement
were amended; and
WHEREAS, the Shipowner and the Assignor amended the Mortgage in
order to reflect the changes made to the Credit Agreement by Amendment
No. 2; and
WHEREAS, Amendment No. 2 to the Mortgage dated June 28, 1991 was
received for record at 1:10 p.m. on August 7, 1991 at the U.S. Coast
Guard Vessel Documentation Office, Port of Houston, Texas and recorded at
Book No. PM-250, I-6; and
WHEREAS, pursuant to Amendment No. 3 to Credit Facility Agreement
dated August 30, 1991, among the Shipowner, the other Borrowers and the
Lender ("Amendment No. 3"), certain terms of the Credit Agreement were
amended; and
WHEREAS, the Shipowner and the Assignor amended the Mortgage to
reflect the changes made to the Credit Agreement by Amendment No. 3; and
WHEREAS, Amendment No. 3 to the Mortgage dated August 30, 1991 was
received for record at 9:27 a.m. on September 5, 1991 at the U.S. Coast
Guard Vessel Documentation Office, Port of Houston, Texas and was
recorded at Book PM-251, I-97; and
WHEREAS, pursuant to Amendment No. 4 to Credit Facility Agreement
dated as of June 30, 1992 among the Shipowner, the other Borrowers and
the Lender ("Amendment No. 4"), certain terms of the Credit Agreement
were amended; and
WHEREAS, Shipowner and the Assignor amended the Mortgage to reflect
the changes made to the Credit Agreement by Amendment No. 4; and
WHEREAS, Amendment No. 4 to the Mortgage dated September 11, 1992
was received for record at 10:19 a.m. on September 14, 1992 at the U.S.
Coast Guard Vessel Documentation Office, Port of Houston, Texas and was
recorded at Book PM-263, Instrument 101; and
WHEREAS, pursuant to the terms of Amendment No. 5 to Credit
Facility Agreement dated as of February 25, 1993, among the Shipowner,
the other Borrowers and the Lender ("Amendment No. 5"), certain terms of
the Credit Agreement were amended; and
WHEREAS, the Shipowner and the Assignor amended the Mortgage in
order to reflect the changes made to the Credit Agreement by Amendment
No. 5; and
WHEREAS, Amendment No. 5 to the Mortgage dated February 25, 1993
was received for record on March 1, 1993 at 1:19 p.m. in the United
States Coast Guard Vessel Documentation Office for the Port of Houston
and was recorded at Book PM-269, Instrument 94; and
WHEREAS, pursuant to the terms of the Amended and Restated Credit
Facility Agreement dated the date hereof (the "Restated Agreement") among
the Shipowner, the Borrowers listed therein and the Lender, the Credit
Agreement was restated and certain of its provisions were amended; and
WHEREAS, the Lender desires that the Trustee act on its behalf in
respect of, among other things, the security granted by the Mortgage; and
WHEREAS, the Assignor has agreed to assign its rights and
obligations under the Mortgage to the Trustee, and the Trustee has agreed
to assume such rights and obligations; and
WHEREAS, the Shipowner and the Trustee wish to amend the Mortgage
to reflect the changes to the Credit Agreement made by the Restated
Agreement.
NOW THEREFORE, THIS AMENDMENT NO. 6 WITNESSETH:
Assignment and Assumption
The Assignor agrees to assign and the Trustee hereby agrees to
assume the Mortgage, and the Shipowner hereby consents to such assignment
and assumption as follows:
1. The Assignor hereby sells, transfers, assigns and grants
absolutely and not by way of security, all of its right, title and
interest and responsibilities, powers, duties, liabilities and
obligations in, to and under the Mortgage to the Trustee.
In connection with this Assignment, Assumption and Amendment,
the Shipowner represents and warrants to the Trustee that the Mortgage is
in full force and effect and there are no events which would constitute a
default by the Shipowner under the terms of the Mortgage or events which
would, with the passage of time or the giving of notice, constitute such
an Event of Default.
2. The Trustee hereby acknowledges receipt of the Mortgage and
expressly agrees to accept the position of trustee under, and be bound
by, all of the terms and provisions of the Mortgage, as amended hereby.
3. The Trustee hereby agrees to perform and comply with all of
the terms and conditions of, and hereby assumes all of the right, title
and interest, responsibilities, powers, duties, liabilities and
obligations of the Assignor under, the Mortgage from and after the date
hereof.
4. The Assignor is hereby released and discharged from its
responsibilities, powers, duties, liabilities and obligations under the
Mortgage.
5. The Assignor agrees that at any time and from time to time,
upon the written request of the Trustee, the Assignor will promptly and
duly execute and deliver any and all such further instruments and
documents as may be reasonably necessary to effect the transfers
expressly made by Assignor under this Assignment, Assumption and
Amendment, including, without limitation, assignments of financing
statements, and assignments and releases of vessel mortgages.
6. The Trustee shall be for all purposes under the Mortgage and
the other Loan Documents the Trustee without any further acts or
instruments on the part of any Person.
Amendment No. 6 to Mortgage
The Shipowner and the Trustee hereby agree to amend the Mortgage as
follows:
A. Exhibit A to the Mortgage is hereby replaced with the
Restated Agreement in the form of Exhibit A attached hereto.
B. Hereinafter each reference in the Mortgage, as amended, to
the Credit Agreement shall refer to the Restated Agreement.
C. Hereinafter each reference in the Mortgage, as amended, to
the Trustee shall mean Bank One, Texas, N.A., a national banking
association with its principal place of business at 910 Travis, Houston,
Texas 77002.
D. For purposes of recording this Amendment No. 6 to First
Preferred Fleet Mortgage pursuant to 46 U.S.C. 31321, it amends mortgage
covenants. The total amount of the Mortgage is reduced to USD 65,000,000
plus interest and performance of mortgage covenants.
E. Except as specifically amended herein, the Mortgage shall
remain in full force and effect.
All capitalized terms used herein but not defined herein shall have
the meanings given to them in the Mortgage.
THIS ASSIGNMENT, ASSUMPTION AND AMENDMENT NO. 6 TO FIRST PREFERRED
FLEET MORTGAGE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE UNITED STATES OF AMERICA AND, TO THE EXTENT THEY DO NOT
APPLY, TO THE INTERNAL LAWS OF THE STATE OF NEW YORK.
IN WITNESS HEREOF, the parties hereto have duly executed this
Amendment No. 6 to First Preferred Fleet Mortgage on the date first
written above.
READING & BATES DRILLING CO.
By: ______________________________
Name: _______________________
Title: _______________________
The Assignor executes and delivers this
Assignment, Assumption and Amendment No. 6
to First Preferred Fleet Mortgage solely
for the purposes of and with respect to the
assignments and assumptions being made
hereunder and not with respect to any
amendment or other matter hereunder.
TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
as Trustee (Holder-Transferee from the
Receiver of NEW FIRST CITY, TEXAS-HOUSTON,
N.A., successor in interest to FIRST CITY,
TEXAS-HOUSTON, N.A.)
By: ______________________________
Name: _______________________
Title: _______________________
BANK ONE, TEXAS, N.A.
By: ________________________________
Name: _________________________
Title: _________________________
ACKNOWLEDGEMENT
STATE OF TEXAS (
(
COUNTY OF HARRIS (
BEFORE ME, _______________________________, a notary public in and
for said county and state, on this day personally appeared
________________________________, known to me to be the person whose name
is subscribed to the foregoing instrument and known to me to be the
___________________________ of Reading & Bates Drilling Co., a
corporation organized under the laws of Oklahoma, and acknowledged to me
that he executed said instrument for the purposes and consideration
therein expressed, and as the act of said corporation.
Given under my hand and seal of office this _____ day of ________,
1995.
____________________________
Notary Public
ACKNOWLEDGEMENT
STATE OF TEXAS
COUNTY OF HARRIS
BEFORE ME, _______________________________, a notary public in and
for said county and state, on this day personally appeared
_______________________, known to me to be the person whose name is
subscribed to the foregoing instrument and known to me to be the
______________________ of Texas Commerce Bank National Association, a
national banking association and acknowledged to me that he executed said
instrument for the purposes and consideration therein expressed, and as
the act of said association.
Given under my hand and seal of office this _____ day of ________,
1995.
____________________________
Notary Public
ACKNOWLEDGEMENT
STATE OF TEXAS
COUNTY OF HARRIS
BEFORE ME, _______________________________, a notary public in and
for said county and state, on this day personally appeared
_______________________, known to me to be the person whose name is
subscribed to the foregoing instrument and known to me to be the
______________________ of Bank One, Texas, N.A., a national banking
association and acknowledged to me that he executed said instrument for
the purposes and consideration therein expressed, and as the act of said
association.
Given under my hand and seal of office this _____ day of ________,
1995.
____________________________
Notary Public
<PAGE>
EXHIBIT E-2
TO AMENDED AND RESTATED
CREDIT FACILITY AGREEMENT
Assignment, Assumption and Amendment No. 6
to First Preferred Fleet Mortgage
Assignment, Assumption and Amendment No. 6 dated April
__, 1995 to theFirst Preferred Fleet Mortgage datedMarch 29,
1991 (the "Original Mortgage"), as amended (hereinafter the
Original Mortgage as amended being referred to as the
"Mortgage") among READING & BATES EXPLORATION CO., a
corporation organized and existingunder the laws ofthe State
of Oklahoma, with its principal place of business at 901
Threadneedle, Suite 200, Houston, Texas 77079, (the
"Shipowner"),to Texas Commerce Bank National Association, as
Trustee (Holder-Transferee from the Receiver of New First
City, Texas, N.A., the successor in interest to First City,
Texas-Houston,N.A.), a nationalbanking association, with its
principal place of business at 600 Travis, Houston, Texas
77002, (the "Assignor"), which entity is executing this
document solely for the purposes of and with respect to the
assignments and assumptions being madehereunder and not with
respect to any amendment or other matter hereunder,and Bank
One, Texas, N.A., a nationalbanking association, as Trustee,
with its principal place of business at 910 Travis, Houston,
Texas 77002 (the "Trustee").
WHEREAS, the Shipowner is the owner of 100% of the
following U.S. flag drilling rigs (the "Vessels"):
Place of
Name Off. No. Build Home Port
D.R. STEWART 626904 Singapore Houston, Texas
D.K. MCINTOSH 591662 Singapore Houston, Texas
W.D. KENT 583169 Brownsville,Tx. Houston, Texas
which Vessels have been duly registered in the name of the
Shipowner inaccordance with the laws of the United States of
America; and
WHEREAS, the OriginalMortgage was received forrecord at
2:45 p.m. on March 29, 1991 at the U.S. Coast Guard Vessel
Documentation Office at the Port of Houston, Texas and was
recorded in Book No. PM-244 at Inst. No. 2; and
WHEREAS, the Original Mortgage mortgaged one hundred
percent (100%) of the Vessels, together with all of their
boilers, engines, machinery, masts, spars, sails, rigging,
boats, anchors, chains, tackle,apparel, furniture, fittings,
equipment, drilling equipment, pumps, drill pipes, collars,
racking, housing, spare parts and supporting inventory,
vehicles and living quarters (excluding equipment aboard the
Vessels which is not owned by the Shipowner) and all other
appurtenances to the Vessels appertaining or belonging,
whether now owned or hereafter acquired, whether on board or
not, and all additions, improvementsand replacements made in
or to such Vessels; and
WHEREAS, the Original Mortgage was granted by the
Shipowner to the Assignor for the purpose of securing the
obligation ofthe Shipowner to pay to NMB Postbank Groep N.V.
(now known as Internationale Nederlanden Bank N.V.) (the
"Lender") all amounts due and payable under that certain
Credit Facility Agreement datedas of March 27, 1991among the
Shipowner, the other Borrowers named therein and the Lender
(the "Credit Agreement"); and
WHEREAS,a true and accuratecopy of the Credit Agreement
is attached to the Mortgage as Exhibit A and forms a part
thereof; and
WHEREAS, pursuant to Amendment No. 1 to Credit Facility
Agreement dated as of May 24, 1991 among the Shipowner, the
other Borrowers and the Lender ("Amendment No. 1"), certain
terms of the Credit Agreement were amended; and
WHEREAS, the Shipowner and the Assignor amended the
Original Mortgagein order to reflect the changes made to the
Credit Agreement by Amendment No. 1; and
WHEREAS, Amendment No. 1 to the Mortgage dated May 31,
1991 was received for record at 1:00 p.m. on June 5, 1991 at
the U.S. Coast Guard Vessel Documentation Office at the Port
of Houston, Texasand was recorded in BookNo. PM-248 at Inst.
No. 1; and
WHEREAS, pursuant to Amendment No. 2 to Credit Facility
Agreement dated as of June 28, 1991 among the Shipowner, the
other Borrowers and the Lender ("Amendment No. 2"), certain
terms of the Credit Agreement were amended; and
WHEREAS, the Shipowner and the Assignor amended the
Mortgage in order to reflect the changes made to the Credit
Agreement by Amendment No. 2; and
WHEREAS, Amendment No. 2 to the Mortgage dated June 28,
1991 was received for record on August 7, 1991 at the U.S.
Coast Guard Vessel Documentation Office, Port of Houston,
Texas at 11:26 a.m. and was recorded at BookNo. PM-250, I-5;
and
WHEREAS, pursuant to Amendment No. 3 to Credit Facility
Agreement dated June 30, 1991 among the Shipowner, the other
Borrowers and theLender ("Amendment No. 3"), certainterms of
the Credit Agreement were amended; and
WHEREAS, the Shipowner and the Assignor amended the
Mortgage to reflect the changes made to the Credit Agreement
by Amendment No. 3; and
WHEREAS, Amendment No.3 to the Mortgagedated August 30,
1991was received for record at8:58 a.m. on September 6, 1991
at the U.S. Coast Guard Vessel Documentation Office, Port of
Houston, Texas and was recorded at Book PM-252, I-18; and
WHEREAS, pursuant to Amendment No. 4 to Credit Facility
Agreement dated as of June 30, 1992 among the Shipowner, the
other Borrowers and the Lender ("Amendment No. 4"), certain
terms of the Credit Agreement were amended; and
WHEREAS, the Shipowner and the Assignor amended the
Mortgage to reflect the changes made to the Credit Agreement
by Amendment No. 4; and
WHEREAS, Amendment No. 4 to Mortgage dated September 9,
1992 was received for record on September 11, 1992 at 7:20
a.m. in the U.S. CoastGuard Vessel Documentation Office, for
the Port of Houston, Texas and was recorded at Book PM-263,
Instrument 83; and
WHEREAS, pursuant to the terms of Amendment No. 5 to
Credit Facility Agreement datedas of February 25, 1993,among
the Shipowner, the other Borrowersand the Lender ("Amendment
No. 5"), certain terms of the Credit Agreement were amended;
and
WHEREAS, the Shipowner and the Assignor amended the
Mortgage to reflect the changes made to the Credit Agreement
by Amendment No. 5; and
WHEREAS, Amendment No. 5 to the Mortgage dated February
25, 1993 was receivedfor record on March 1, 1993at 2:52 p.m.
in the U.S. Coast Guard Vessel Documentation Office for the
Port of Houston, Texas and was recorded at Book PM-269,
Instrument 97; and
WHEREAS, pursuant to the terms of the Amended and
Restated Credit Facility Agreement datedthe date hereof (the
"Restated Agreement") among the Shipowner, the Borrowers
listed therein and the Lender, the Credit Agreement was
restated and certain of its terms were amended; and
WHEREAS, the Lender desires that the Trustee act on its
behalf in respect of, amongother things, the securitygranted
by the Mortgage; and
WHEREAS, theAssignor has agreed toassign its rights and
obligations under the Mortgageto the Trustee, andthe Trustee
has agreed to assume such rights and obligations; and
WHEREAS, the Shipowner and the Trustee wishto amend the
Mortgage to reflect the changes made by the Restated
Agreement.
NOW, THEREFORE, in consideration of the above recitals,
and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties
hereto agree to amend the Mortgage as follows:
Assignment and Assumption
The Assignor agrees to assign and the Trustee hereby
agrees to assume the Mortgage, and the Shipowner hereby
consents to such assignment and assumption as follows:
1. The Assignor hereby sells, transfers, assigns and
grants absolutely and not by way of security, all of its
right, title and interest and responsibilities, powers,
duties, liabilities and obligations in, to and under the
Mortgage to the Trustee.
2. In connection with this Assignment, Assumption and
Amendment, the Shipowner represents and warrants to the
Trustee that the Mortgage is in full force and effect and
there are no events which would constitute a default by the
Shipowner under the terms of the Mortgage or events which
would, with the passage of time or the giving of notice,
constitute such an Event of Default.
3. The Trustee hereby acknowledges receipt of the
Mortgage and expressly agrees to accept the position of
trustee under, and be bound by, all of the terms and
provisions of the Mortgage, as amended hereby.
4. The Trustee herebyagrees to perform andcomply with
all of the terms and conditions of, and hereby assumesall of
the right, title and interest, responsibilities, powers,
duties, liabilities andobligations of the Assignorunder, the
Mortgage from and after the date hereof.
5. The Assignor is hereby released anddischarged from
its responsibilities, powers, duties, liabilities and
obligations under the Mortgage.
6. The Assignor agrees that at any time and from time
to time, upon thewritten request of the Trustee,the Assignor
will promptly and duly execute and deliver any and all such
further instruments and documents as may be reasonably
necessary to effect the transfers expressly made by Assignor
under this Assignment, Assumption and Amendment, including,
without limitation, assignments of financing statements, and
assignments and releases of vessel mortgages.
7. The Trustee shall be for all purposes under the
Mortgage andthe other Loan Documents the Trustee without any
further acts or instruments on the part of any Person.
Amendment No. 6 to Mortgage
The Shipowner and the Trustee hereby agree to amend the
Mortgage as follows:
A. Exhibit A to the Mortgage is hereby replaced with
the Restated Agreement in the form of Exhibit A attached
hereto.
B. Hereinafter each reference in the Mortgage, as
amended, to the Credit Agreement shall refer to the Restated
Agreement.
C. Hereinafter each reference in the Mortgage, as
amended, to the Trustee shall mean Bank One, Texas, N.A., a
national banking association with its principal place of
business at 910 Travis, Houston, Texas 77002.
D. For purposes of recording this Amendment No. 6 to
First Preferred Fleet Mortgage pursuant to 46 U.S.C. 31321,
it amends mortgage covenants. The total amount of the
Mortgage is reduced to USD 65,000,000 plus interest and
performance of mortgage covenants.
E. Except as specifically amendedherein, the Mortgage
shall remain in full force and effect.
All capitalized terms used hereinbut not defined herein
shall have the meanings given to them in the Mortgage.
THIS ASSIGNMENT, ASSUMPTION AND AMENDMENTNO. 6 TO FIRST
PREFERRED FLEET MORTGAGE SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE UNITED STATES OF AMERICA
AND, TO THE EXTENT THEY DO NOTAPPLY, TO THE INTERNAL LAWS OF
THE STATE OF NEW YORK.
IN WITNESS HEREOF, the partieshereto have duly executed
this Assignment, Assumption and Amendment No. 6 to First
Preferred Fleet Mortgage on the date first written above.
READING & BATES EXPLORATION CO.
By:________________________________
Name: T. W. Nagle
Title: Vice President and
Treasurer
The Assignor executes and delivers
this Assignment, Assumption and
Amendment No. 6 to First Preferred
Fleet Mortgage solely for the
purposes of and with respect to the
assignments and assumptions being
made hereunder and not with respect
to any amendment or other matter
hereunder.
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, as Trustee (Holder-
Transferee from the Receiver of NEW
FIRST CITY, TEXAS-HOUSTON, N.A.,
successor in interest toFIRST CITY,
TEXAS-HOUSTON, N.A.)
By: ________________________________
Name: _________________________
Title: _________________________
BANK ONE, TEXAS, N.A.
By: ________________________________
Name: Roark Ashie
Title: Vice President
ACKNOWLEDGMENT
STATE OF TEXAS
COUNTY OF HARRIS
BEFORE ME, __________________, a notary public in and
for said county and state, on this day personally appeared
T. W. Nagle, known to me to be the person whose name is
subscribed to the foregoing instrument and known to me to be
the Vice President and Treasurer of Reading & Bates
Exploration Co., a corporation organized under the laws of
Oklahoma, and acknowledged to me that he executed said
instrument for the purposes and consideration therein
expressed, and as the act of said corporation.
Given under my hand and seal of office this ___ day of
________, 1995.
_______________________________
Notary Public
<PAGE>
ACKNOWLEDGMENT
STATE OF TEXAS
COUNTY OF HARRIS
BEFORE ME, ______________________________, a notary
public in and for said county and state, on this day
personally appearedMauri Cowen, known to me to be the person
whose name issubscribed to the foregoing instrumentand known
to me to be the Assistant Vice President and Corporate Trust
Officer of TEXAS COMMERCE BANK NATIONAL ASSOCIATION, a
national banking association and acknowledged to me that he
executed said instrument for the purposes and consideration
therein expressed, and as the act of said association.
Given under my hand and seal of office this ___ day of
________, 1995.
_______________________________
Notary Public
ACKNOWLEDGMENT
STATE OF TEXAS
COUNTY OF HARRIS
BEFORE ME, ______________________________, a notary
public in and for said county and state, on this day
personally appearedRoark Ashie, known to me to be the person
whose name is subscribed tothe foregoing instrument andknown
to me to be the Vice President of BANK ONE, TEXAS, N.A., a
national banking association and acknowledged to me that he
executed said instrument for the purposes and consideration
therein expressed, and as the act of said association.
Given under my hand and seal of office this ___ day of
________, 1995.
_______________________________
Notary Public
<PAGE>
EXHIBIT E-3
TO AMENDED AND RESTATED
CREDIT FACILITY AGREEMENT
Assignment, Assumption and Amendment No. 6
to Preferred Fleet Mortgage
Assignment, Assumption and Amendment No. 6 dated April __, 1995 to
the Preferred Fleet Mortgage dated March 29, 1991 (the "Original
Mortgage"), as amended (hereinafter the Original Mortgage as amended
being referred to as the "Mortgage") among READING & BATES DRILLING CO.,
a corporation organized and existing under the laws of the State of
Oklahoma, with its principal place of business at 901 Threadneedle, Suite
200, Houston, Texas 77079, (the "Shipowner"), TEXAS COMMERCE BANK
NATIONAL ASSOCIATION, as Trustee (Holder-Transferee from the Receiver of
New First City, Texas-Houston, N.A., the successor in interest to First
City, Texas-Houston, N.A.), a national banking association, with its
principal place of business at 600 Travis, Houston, Texas 77002, (the
"Assignor"), which entity is executing this document solely for the
purposes of and with respect to the assignments and assumptions being
made hereunder and not with respect to any amendment or other matter
hereunder, and Bank One, Texas, N.A., a national banking association, as
Trustee, with its principal place of business at 910 Travis, Houston,
Texas 77002 (the "Trustee").
WHEREAS, the Shipowner is the owner of 100% of the following U.S.
flag drilling rigs (the "Vessels"):
Name Official No.
ROGER W. MOWELL 645360
J.T. ANGEL 651645
JIM CUNNINGHAM 651643
which Vessels have been duly registered in the name of the Shipowner in
accordance with the laws of the United States of America; and
WHEREAS, the Original Mortgage was received for record at 2:35 p.m.
on March 29, 1991 at the U.S. Coast Guard Vessel Documentation Office at
the Port of Houston, Texas and was recorded in Book No. PM-244 at Inst.
No. 1; and
WHEREAS, the Original Mortgage mortgaged one hundred percent (100%)
of the Vessels, together with all of their boilers, engines, machinery,
masts, spars, sails, rigging, boats, anchors, chains, tackle, apparel,
furniture, fittings, equipment, drilling equipment, pumps, drill pipes,
collars, racking, housing, spare parts and supporting inventory, vehicles
and living quarters (excluding equipment aboard the Vessels which is not
owned by the Shipowner) and all other appurtenances to the Vessels
appertaining or belonging, whether now owned or hereafter acquired,
whether on board or not, and all additions, improvements and replacements
made in or to such Vessels; and
WHEREAS, the Original Mortgage was granted by the Shipowner to the
Assignor for the purpose of securing the obligation of the Shipowner to
pay to NMB Postbank Groep N.V. (now known as Internationale Nederlanden
Bank N.V.) (the "Lender") all amounts due and payable under that certain
Credit Facility Agreement dated as of March 27, 1991 among the Shipowner,
the other Borrowers named therein and the Lender (the "Credit
Agreement"); and
WHEREAS, a true and accurate copy of the Credit Agreement is
attached to the Mortgage as Exhibit A and forms a part thereof; and
WHEREAS, pursuant to Amendment No. 1 to Credit Facility Agreement
dated as of May 24, 1991 among the Shipowner, the other Borrowers and the
Lender ("Amendment No. 1"), certain terms of the Credit Agreement were
amended; and
WHEREAS, the Shipowner and the Assignor amended the Original
Mortgage in order to reflect the changes made to the Credit Agreement by
Amendment No. 1; and
WHEREAS, Amendment No. 1 to the Mortgage dated May 31, 1991 was
received for record at 2:00 p.m. on June 5, 1991 at the U.S. Coast Guard
Vessel Documentation Office at the Port of Houston, Texas and was
recorded in Book No. PM-248 at Inst. No. 2; and
WHEREAS, pursuant to Amendment No. 2 to Credit Facility Agreement
dated June 28, 1991 among the Shipowner, the other Borrowers and the
Lender ("Amendment No. 2"), certain terms of the Credit Agreement were
amended; and
WHEREAS, the Shipowner and the Assignor amended the Mortgage,
pursuant to the terms of Amendment No. 2 to the Mortgage, in order to
reflect the changes made to the Credit Agreement by Amendment No. 2; and
WHEREAS, Amendment No. 2 to the Mortgage dated June 28, 1991, was
received for record at 1:31 p.m. on August 6, 1991 at the U.S. Coast
Guard Vessel Documentation Office, Port of Houston, Texas and was
recorded at Book PM-250, I-3; and
WHEREAS, pursuant to Amendment No. 3 to Credit Facility Agreement
dated August 30, 1991 among the Shipowner, the other Borrowers and the
Lender ("Amendment No. 3"), certain terms of the Credit Agreement were
amended; and
WHEREAS, the Shipowner and the Assignor amended the Mortgage to
reflect the changes made to the Credit Agreement by Amendment No. 3; and
WHEREAS, Amendment No. 3 to the Mortgage dated August 30, 1991 was
received for record at 8:07 a.m. on September 6, 1991 at the U.S. Coast
Guard Vessel Documentation Office, Port of Houston, Texas and was
recorded at Book PM-252, I-17; and
WHEREAS, pursuant to Amendment No. 4 to Credit Facility Agreement
dated as of June 30, 1992 among the Shipowner, the other Borrowers and
the Lender ("Amendment No. 4"), certain terms of the Credit Agreement
were amended; and
WHEREAS, the Shipowner and the Assignor amended the Mortgage to
reflect the changes made to the Credit Agreement by Amendment No. 4; and
WHEREAS, Amendment No. 4 to the Mortgage dated September 9, 1992
was received for record at the U.S. Coast Guard Vessel Documentation
Office for the Port of Houston, Texas on September 10, 1992 at 1:05 p.m.
and recorded at Book PM-263, Instrument 82; and
WHEREAS, pursuant to the terms of Amendment No. 6 to Credit
Facility Agreement dated as of February 25, 1993, among the Shipowner,
the other Borrowers and the Lender ("Amendment No. 5"), certain terms of
the Credit Agreement were amended; and
WHEREAS, the Shipowner and the Assignor amended the Mortgage in
order to reflect the changes made to the Credit Agreement by Amendment
No. 5; and
WHEREAS, Amendment No. 5 to Mortgage dated February 25, 1993 was
received for record at 10:32 a.m. in the United States Coast Guard Vessel
Documentation Office for the Port of Houston, and was recorded at Book
PM-269, Instrument 93; and
WHEREAS, pursuant to the Amended and Restated Credit Facility
Agreement dated the date hereof (the "Restated Agreement") among the
Shipowner, the Borrowers listed therein and the Lender, the Credit
Agreement was restated and certain of its terms were amended; and
WHEREAS, the Lender desires that the Trustee act on its behalf in
respect of, among other things, the security granted by the Mortgage; and
WHEREAS, the Assignor has agreed to assign its rights and
obligations under the Mortgage to the Trustee, and the Trustee has agreed
to assume such rights and obligations; and
WHEREAS, the Shipowner and the Trustee wish to amend the Mortgage
to reflect the changes made by the Restated Agreement.
NOW, THEREFORE, in consideration of the above recitals, and other
good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree to assign, assume and amend
the Mortgage as follows:
Assignment and Assumption
The Assignor agrees to assign and the Trustee hereby agrees to
assume the Mortgage, and the Shipowner hereby consents to such assignment
and assumption as follows:
1. The Assignor hereby sells, transfers, assigns and grants
absolutely and not by way of security, all of its right, title and
interest and responsibilities, powers, duties, liabilities and
obligations in, to and under the Mortgage to the Trustee.
2. In connection with this Assignment, Assumption and Amendment,
the Shipowner represents and warrants to the Trustee that the Mortgage is
in full force and effect and there are no events which would constitute a
default by the Shipowner under the terms of the Mortgage or events which
would, with the passage of time or the giving of notice, constitute such
an Event of Default.
3. The Trustee hereby acknowledges receipt of the Mortgage and
expressly agrees to accept the position of trustee under, and be bound
by, all of the terms and provisions of the Mortgage, as amended hereby.
4. The Trustee hereby agrees to perform and comply with all of
the terms and conditions of, and hereby assumes all of the right, title
and interest, responsibilities, powers, duties, liabilities and
obligations of the Assignor under, the Mortgage from and after the date
hereof.
5. The Assignor is hereby released and discharged from its
responsibilities, powers, duties, liabilities and obligations under the
Mortgage.
6. The Assignor agrees that at any time and from time to time,
upon the written request of the Trustee, the Assignor will promptly and
duly execute and deliver any and all such further instruments and
documents as may be reasonably necessary to effect transfers expressly
made by Assignor under this Assignment, Assumption and Amendment,
including, without limitation, assignments of financing statements, and
assignments and releases of vessel mortgages.
7. The Trustee shall be for all purposes under the Mortgage and
the other Loan Documents the Trustee without any further acts or
instruments on the part of any Person.
Amendment No. 6 to Mortgage
The Shipowner and the Trustee hereby agree to amend the Mortgage as
follows:
A. Exhibit A to the Mortgage is hereby replaced with the
Restated Agreement in the form of Exhibit A attached hereto.
B. Hereinafter each reference in the Mortgage, as amended, to
the Credit Agreement shall refer to the Restated Agreement.
C. Hereinafter each reference in the Mortgage, as amended, to
the Trustee shall mean Bank One, Texas, N.A., a national banking
association with its principal place of business at 910 Travis, Houston,
Texas 77002.
D. For purposes of recording this Amendment No. 6 to Preferred
Fleet Mortgage pursuant to 46 U.S.C. 31321, it amends mortgage
covenants. The total amount of the Mortgage is reduced to USD 65,000,000
plus interest and performance of mortgage covenants.
E. Except as specifically amended herein, the Mortgage shall
remain in full force and effect.
All capitalized terms used herein but not defined herein shall have
the meanings given to them in the Mortgage.
THIS ASSIGNMENT, ASSUMPTION AND AMENDMENT NO. 6 TO PREFERRED FLEET
MORTGAGE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE UNITED STATES OF AMERICA AND, TO THE EXTENT THEY DO NOT APPLY, TO
THE INTERNAL LAWS OF THE STATE OF NEW YORK.
IN WITNESS HEREOF, the parties hereto have duly executed this
Assignment, Assumption and Amendment No. 6 to Preferred Fleet Mortgage on
the date first written above.
READING & BATES DRILLING CO.
By: ________________________________
Name: T. W. Nagle
Title: Vice President and
Treasurer
The Assignor executes and delivers this Assignment,
Assumption and Amendment No. 6 to Preferred Fleet
Mortgage solely for the purposes of and with respect to
the assignments and assumptions being made hereunder
and not with respect to any amendment or other matter
hereunder.
TEXAS COMMERCE BANK NATIONAL ASSOCIATION, as Trustee
Holder-Transferee from the Receiver of NEW FIRST
CITY, TEXAS-HOUSTON, N.A., successor in interest to
FIRST CITY, TEXAS-HOUSTON, N.A.
By: ________________________________
Name: Mauri Cowen
Title: Assistant Vice President
and Corporate Trust Office
BANK ONE, TEXAS, N.A., as Trustee
By: _________________________________
Name: Roark Ashie
Title: Vice President
ACKNOWLEDGMENT
STATE OF TEXAS
COUNTY OF HARRIS
BEFORE ME, ______________________________, a notary public in and
for said county and state, on this day personally appeared
T. W. Nagle, known to me to be the person whose name is subscribed to the
foregoing instrument and known to me to be the Vice President and
Treasurer of Reading & Bates Drilling Co., a corporation organized under
the laws of Oklahoma, and acknowledged to me that he executed said
instrument for the purposes and consideration therein expressed, and as
the act of said corporation.
Given under my hand and seal of office this ___ day of ________,
1995.
_______________________________
Notary Public
ACKNOWLEDGMENT
STATE OF TEXAS
COUNTY OF HARRIS
BEFORE ME, ______________________________, a notary public in and
for said county and state, on this day personally appeared Mauri Cowen,
known to me to be the person whose name is subscribed to the foregoing
instrument and known to me to be the Assistant Vice President and
Corporate Trust Officer of Texas Commerce Bank National Association, a
national banking association and acknowledged to me that he executed said
instrument for the purposes and consideration therein expressed, and as
the act of said association.
Given under my hand and seal of office this ___ day of _________,
1995.
_______________________________
Notary Public
ACKNOWLEDGMENT
STATE OF TEXAS
COUNTY OF HARRIS
BEFORE ME, ______________________________, a notary public in and
for said county and state, on this day personally appeared Roark Ashie,
known to me to be the person whose name is subscribed to the foregoing
instrument and known to me to be the Vice President of Bank One, Texas,
N.A., a national banking association and acknowledged to me that he
executed said instrument for the purposes and consideration therein
expressed, and as the act of said association.
Given under my hand and seal of office this ___ day of _________,
1995.
_______________________________
Notary Public
EXHIBIT E-4
TO AMENDED AND RESTATED
CREDIT FACILITY AGREEMENT
Assignment, Assumption and Amendment No. 6
to First Preferred Ship Mortgage
Assignment, Assumption and Amendment No. 6 dated April
__, 1995 to the First Preferred Ship Mortgage dated March 29,
1991 (the "Original Mortgage"), as amended (hereinafter the
Original Mortgage as amended being referred to as the
"Mortgage") among READING AND BATES, INC., a corporation
organized and existing under the laws of the State of
Oklahoma, with its principal place of business at 901
Threadneedle, Suite 200, Houston, Texas 77079, (the
"Shipowner"), TEXAS COMMERCE BANK NATIONAL ASSOCIATION, as
Trustee (Holder-Transferee for the Receiver of New First
City, Texas-Houston, N.A., the successor in interest to First
City Texas-Houston, N.A.), a national banking association,
with its principal place of business at 600 Travis, Houston,
Texas 77002, (the "Assignor"), which entity is executing this
document solely for the purposes of and with respect to the
assignments and assumptions being made hereunder and not with
respect to any amendment or other matter hereunder, and Bank
One, Texas, N.A., a national banking association, with its
principal place of business at 910 Travis, Houston, Texas
77002 (the "Trustee").
WHEREAS, the Shipowner is the owner of 100% of the U.S.
flag drilling rig M. G. HULME, JR., Official No. 651644 (the
"Vessel"), which Vessel has been duly registered in the name
of the Shipowner in accordance with the laws of the United
States of America; and
WHEREAS, the Original Mortgage was received for record
at 2:17 p.m. on March 29, 1991, at the U.S. Coast Guard
Vessel Documentation Office at the Port of Houston, Texas and
was recorded in Book No. PM-243 at Inst. No. 45; and
WHEREAS, the Original Mortgage mortgaged one hundred
percent (100%) of the Vessel, together with all of its
boilers, engines, machinery, masts, spars, sails, rigging,
boats, anchors, chains, tackle, apparel, furniture, fittings,
equipment, drilling equipment, pumps, drill pipes, collars,
racking, housing, spare parts and supporting inventory,
vehicles and living quarters (excluding equipment aboard the
Vessel which is not owned by the Shipowner) and all other
appurtenances to the Vessel appertaining or belonging,
whether now owned or hereafter acquired, whether on board or
not, and all additions, improvements and replacements made in
or to such Vessel; and
WHEREAS, the Original Mortgage was granted by the
Shipowner to the Assignor for the purpose of securing the
obligation of the Shipowner to pay to NMB Postbank Groep N.V.
(now known as Internationale Nederlanden Bank N.V.) (the
"Lender") all amounts due and payable under that certain
Credit Facility Agreement dated as of March 27, 1991 among
the Shipowner, the other Borrowers named therein and the
Lender (the "Credit Agreement"); and
WHEREAS, a true and accurate copy of the Credit
Agreement is attached to the Mortgage as Exhibit A and forms
a part thereof; and
WHEREAS, pursuant to Amendment No. 1 to Credit Facility
Agreement dated as of May 24, 1991 among the Shipowner, the
other Borrowers and the Lender ("Amendment No. 1"), certain
terms of the Credit Agreement were amended; and
WHEREAS, the Shipowner and the Assignor amended the
Original Mortgage in order to reflect the changes made to the
Credit Agreement by Amendment No. 1; and
WHEREAS, Amendment No. 1 to the Mortgage dated May 31,
1991 was received for record at 10:00 a.m. on June 5, 1991 at
the U.S. Coast Guard Vessel Documentation Office at the Port
of Houston, Texas and was recorded in Book No. PM-247 at
Inst. No. 224; and
WHEREAS, pursuant to Amendment No. 2 to Credit Facility
Agreement dated as of June 28, 1991 among the Shipowner, the
other Borrowers and the Lender ("Amendment No. 2"), certain
terms of the Credit Agreement were amended; and
WHEREAS, the Shipowner and the Assignor amended the
Mortgage in order to reflect the changes made to the Credit
Agreement by Amendment No. 2; and
WHEREAS, Amendment No. 2 to the Mortgage dated June 28,
1991 was received for record at the U.S. Coast Guard Vessel
Documentation Office, Port of Houston, Texas on August 5,
1991, at 9:30 a.m. and was recorded at Book No. PM-249, I-
231; and
WHEREAS, pursuant to Amendment No. 3 to Credit Facility
Agreement dated August 30, 1991, among the Shipowner, the
other Borrowers and the Lender ("Amendment No. 3"), certain
terms of the Credit Agreement were amended; and
WHEREAS, the Shipowner and the Assignor amended the
Mortgage to reflect the changes made to the Credit Agreement
by Amendment No. 3; and
WHEREAS, Amendment No. 3 to the Mortgage dated August
30, 1991 was received for record at 7:05 a.m. on September 5,
1991 at the U.S. Coast Guard Vessel Documentation Office,
Port of Houston, Texas and was recorded at Book PM-252, I-1;
and
WHEREAS, pursuant to Amendment No. 4 to Credit Facility
Agreement dated as of June 30, 1992 among the Shipowner, the
other Borrowers and the Lender ("Amendment No. 4"), certain
terms of the Credit Agreement were amended; and
WHEREAS, the Shipowner and the Assignor amended the
Mortgage to reflect the changes made to the Credit Agreement
by Amendment No. 4; and
WHEREAS, Amendment No. 4 to the Mortgage dated
September 9, 1992 was received for record on September 10,
1992 at 12:35 p.m. at the U.S. Coast Guard Vessel
Documentation Office for the Port of Houston, Texas and
recorded at Book PM-263, Instrument 81; and
WHEREAS, pursuant to the terms of Amendment No. 5 to
Credit Facility Agreement dated as of February 25, 1993,
among the Shipowner, the other Borrowers and the Lender
("Amendment No. 5"), certain terms of the Credit Agreement
were amended; and
WHEREAS, the Shipowner and the Assignor amended the
Mortgage to reflect the changes made to the Credit Agreement
by Amendment No. 5.
WHEREAS, Amendment No. 5 to Mortgage dated February 25,
1993 was received for record at 2:20 p.m. in the United
States Coast Guard Vessel Documentation Office for the Port
of Houston, and was recorded at Book PM-269, Instrument 96;
and
WHEREAS, pursuant to the Amended and Restated Credit
Facility Agreement dated the date hereof (the "Restated
Agreement") among the Shipowner, the Borrowers listed therein
and the Lender, the Credit Agreement was restated and certain
of its terms were amended; and
WHEREAS, the Lender desires that the Trustee act on its
behalf in respect of, among other things, the security
granted by the Mortgage; and
WHEREAS, the Assignor has agreed to assign its rights
and obligations under the Mortgage to the Trustee, and the
Trustee has agreed to assume such rights and obligations; and
WHEREAS, the Shipowner and the Trustee wish to amend the
Mortgage to reflect the changes made by the Restated
Agreement.
NOW, THEREFORE, in consideration of the above recitals,
and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties
hereto agree to amend the Mortgage as follows:
Assignment and Assumption
The Assignor agrees to assign and the Trustee hereby
agrees to assume the Mortgage, and the Shipowner hereby
consents to such assignment and assumption as follows:
The Assignor hereby sells, transfers, assigns and grants
absolutely and not by way of security, all of its right,
title and interest and responsibilities, powers, duties,
liabilities and obligations in, to and under the Mortgage to
the Trustee.
In connection with this Assignment, Assumption and
Amendment, the Shipowner represents and warrants to the
Trustee that the Mortgage is in full force and effect and
there are no events which would constitute a default by the
Shipowner under the terms of the Mortgage or events which
would, with the passage of time or the giving of notice,
constitute such an Event of Default.
The Trustee hereby acknowledges receipt of the Mortgage
and expressly agrees to accept the position of trustee under,
and be bound by, all of the terms and provisions of the
Mortgage, as amended hereby.
The Trustee hereby agrees to perform and comply with all
of the terms and conditions of, and hereby assumes all of the
right, title and interest, responsibilities, powers, duties,
liabilities and obligations of the Assignor under, the
Mortgage from and after the date hereof.
The Assignor is hereby released and discharged from its
responsibilities, powers, duties, liabilities and obligations
under the Mortgage.
The Assignor agrees that at any time and from time to
time, upon the written request of the Trustee, the Assignor
will promptly and duly execute and deliver any and all such
further instruments and documents as may be reasonably
necessary to effect the transfers expressly made by Assignor
under this Assignment, Assumption and Amendment, including,
without limitation, assignments of financing statements, and
assignments and releases of vessel mortgages.
The Trustee shall be for all purposes under the Mortgage
and the other Loan Documents the Trustee without any further
acts or instruments on the part of any Person.
Amendment No. 6 to Mortgage
The Shipowner and the Trustee hereby agree to amend the
Mortgage as follows:
Exhibit A to the Mortgage is hereby replaced with the
Restated Agreement in the form of Exhibit A attached hereto.
Hereinafter each reference in the Mortgage, as amended,
to the Credit Agreement shall refer to the Restated
Agreement.
Hereinafter each reference in the Mortgage, as amended,
to the Trustee shall mean Bank One, Texas, N.A., a national
banking association with its principal place of business at
910 Travis, Houston, Texas 77002.
For purposes of recording this Amendment No. 6 to First
Preferred Ship Mortgage pursuant to 46 U.S.C. 31321, it
amends mortgage covenants. The total amount of the Mortgage
is reduced to USD 65,000,000 plus interest and performance of
mortgage covenants.
Except as specifically amended herein, the Mortgage
shall remain in full force and effect.
All capitalized terms used herein but not defined herein
shall have the meanings given to them in the Mortgage.
THIS ASSIGNMENT, ASSUMPTION AND AMENDMENT NO. 6 TO FIRST
PREFERRED SHIP MORTGAGE SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE UNITED STATES OF AMERICA
AND, TO THE EXTENT THEY DO NOT APPLY, TO THE INTERNAL LAWS OF
THE STATE OF NEW YORK.
IN WITNESS HEREOF, the parties hereto have duly executed
this Assignment, Assumption and Amendment No. 6 to First
Preferred Ship Mortgage on the date first written above.
READING AND BATES, INC.
By: ______________________________
Name: _______________________
Title: _______________________
The Assignor executes and delivers this
Assignment, Assumption and Amendment No. 6 to
First Preferred Ship Mortgage solely for the
purposes of and with respect to the
assignments and assumptions being made
hereunder and not with respect to any
amendment or other matter hereunder.
TEXAS COMMERCE BANK NATIONAL ASSOCIATION, as
Trustee Holder-Transferee from the Receiver of
NEW FIRST CITY, TEXAS-HOUSTON, N.A., successor
in interest to FIRST CITY, TEXAS-HOUSTON, N.A.
By: _____________________________
Name: ___________________________
Title: ___________________________
BANK ONE, TEXAS, N.A.
By: _____________________________
Name: ___________________________
Title: ___________________________
ACKNOWLEDGEMENT
STATE OF TEXAS
COUNTY OF HARRIS
BEFORE ME, _______________________________, a notary
public in and for said county and state, on this day
personally appeared ____________________________________,
known to me to be the person whose name is subscribed to the
foregoing instrument and known to me to be the
____________________________ of Reading and Bates, Inc., a
corporation organized under the laws of Oklahoma, and
acknowledged to me that he executed said instrument for the
purposes and consideration therein expressed, and as the act
of said corporation.
Given under my hand and seal of office this _____ day of
________, 1995.
____________________________
Notary Public
<PAGE>
ACKNOWLEDGEMENT
STATE OF TEXAS
COUNTY OF HARRIS
BEFORE ME, _______________________________, a notary
public in and for said county and state, on this day
personally appeared ______________, known to me to be the
person whose name is subscribed to the foregoing instrument
and known to me to be the ______________________________ of
Texas Commerce Bank National Association, a national banking
association and acknowledged to me that he executed said
instrument for the purposes and consideration therein
expressed, and as the act of said association.
Given under my hand and seal of office this _____ day of
________, 1995.
____________________________
Notary Public
ACKNOWLEDGMENT
STATE OF TEXAS
COUNTY OF HARRIS
BEFORE ME, ______________________________, a notary
public in and for said county and state, on this day
personally appeared ___________________, known to me to be
the person whose name is subscribed to the foregoing
instrument and known to me to be the
_________________________________ of BANK ONE, TEXAS, N.A., a
national banking association and acknowledged to me that he
executed said instrument for the purposes and consideration
therein expressed, and as the act of said association.
Given under my hand and seal of office this ___ day of
________, 1995.
_______________________________
Notary Public
<PAGE>
EXHIBIT F-1
TO AMENDED AND RESTATED
CREDIT FACILITY AGREEMENT
ASSIGNMENT OF INSURANCES
1. READING AND BATES BORNEO DRILLING CO., LTD., a corporation
organized and existing under the laws of the State of Oklahoma (referred
to herein as the "Assignor"), in consideration of Ten Dollars (USD 10.00)
lawful money of the United States of America, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, as owner or agent of the Panamanian flag drilling barge
CHARLEY GRAVES, Official No. 6618-76-B (the "Vessel"), has granted, sold,
assigned, transferred and set over and by this instrument does grant,
sell, assign, transfer and set over unto BANK ONE, TEXAS, N.A., its
successors, and assigns (collectively, the "Assignee"), as trustee for
INTERNATIONALE NEDERLANDEN BANK, N.V. (the "Lender"), to the Assignee's
own proper use and benefit, a security interest as security for all
amounts due and owing under the Amended and Restated Credit Facility
Agreement dated as of April __, 1995, (the "Restated Credit Agreement")
among Assignor, the other Borrowers named therein and the Lender, in all
right, title and interest of the Assignor under, in and to (i) all
insurances in respect of the Vessel whether now or hereafter to be
effected (excluding employers' liabilities, workman's compensation,
protection and indemnity, general and excess liabilities and similar
insurances), and all renewals of or replacements for the same, (ii) all
claims, returns of premium and other moneys and claims for moneys due and
to become due under said insurances or in respect of said insurances,
(iii) all other rights of the Assignor under or in respect of said
insurances and (iv) any proceeds of any of the foregoing (collectively,
the "Insurances").
2. It is expressly agreed that anything herein contained to the
contrary notwithstanding, the Assignor shall remain liable under the
Insurances to perform all of the respective obligations assumed by it
thereunder and the Assignee shall have no obligation or liability under
the Insurances by reason of or arising out of this Assignment nor shall
the Assignee be required or obligated in any manner to perform or fulfill
any obligations of the Assignor under or pursuant to the Insurances or to
make any payment or to make any inquiry as to the nature or sufficiency
of any payment received by it or to present or file any claim, or to take
any other action to collect or enforce the payment of any amounts which
may have been assigned to it or to which it may be entitled hereunder at
any time or times.
3. The Assignor does hereby constitute the Assignee, its
successors and assigns, the Assignor's true and lawful attorney,
irrevocably, with full power to ask, require, demand, receive compound
and give acquittance for any and all moneys and claims for moneys due and
to become due under or arising out of the Insurances, to endorse any
checks or other instruments or orders in connection therewith and to file
any claims or to take any action or institute any proceedings which the
Assignee may deem to be necessary or advisable in the premises.
4. The Assignor hereby covenants and agrees to procure that
notice of this Assignment shall be duly given to all underwriters and
that where the consent of any underwriter is required pursuant to any of
the Insurances that it shall be obtained and evidence thereof shall be
given to the Assignee, or, in the alternative, that in the case of
protection and indemnity coverage the Assignee shall obtain a letter of
undertaking by the underwriters, and that there shall be duly endorsed
upon all slips, cover notes, policies, certificates of entry or other
instruments issued or to be issued in connection with the Insurance
assigned hereby such clauses as to named assured or loss payee as the
Assignee may require or approve. In all cases, unless otherwise agreed
in writing by the Assignee, such slips, cover notes, notices,
certificates of entry or other instruments shall show the Assignee as a
named assured and a loss payee and shall provide that there will be no
recourse against the Assignee for payment of premiums, calls or
assessments.
5. The powers and authority granted to the Assignee herein have
been given for a valuable consideration and are hereby declared to be
irrevocable, until all amounts due under the Restated Credit Agreement
are paid in full.
6. The Assignor agrees that at any time and from time to time,
upon the written request of the Assignee, the Assignor will promptly and
duly execute and deliver any and all such further instruments and
documents as the Assignee may reasonably deem desirable in obtaining the
full benefits of this Assignment and of the rights and powers herein
granted.
7. The Assignor does hereby warrant and represent that it has
not assigned or pledged, and hereby covenants that, without the prior
written consent thereto of the Assignee, so long as this Assignment shall
remain in effect, it will not assign or pledge the whole or any part of
the right, title and interest hereby assigned to anyone other than the
Assignee, it successors or assigns, and it will not take or omit to take
any action, the taking or omission of which might result in an alteration
or impairment of the Insurances, of this Assignment or of any of the
rights created by the Insurances or this Assignment.
8. All notices or other communications which are required to be
made to the Assignee hereunder shall be made by postage prepaid letter or
by telefax, confirmed by letter to:
Bank One, Texas, N.A.
as Trustee
910 Travis, 6th Floor
Houston, Texas 77002
Attention: Roark Ashie
Telefax No. (713) 751-6806
or at such other address as may have been furnished in writing by the
Assignee.
9. Any payments made pursuant to the terms hereof shall be made
to the Assignee to such account or accounts as may, from time to time be
designated by the Assignee.
10. THIS ASSIGNMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, AND MAY NOT
BE AMENDED OR CHANGED EXCEPT BY AN INSTRUMENT IN WRITING.
IN WITNESS WHEREOF, the Assignor has caused this Assignment to be
duly executed this day of April __, 1995.
READING AND BATES BORNEO DRILLING
CO., LTD.
By:
Name: T. W. Nagle
Title: Vice President and
Treasurer
<PAGE>
EXHIBIT F-2
TO AMENDED AND RESTATED
CREDIT FACILITY AGREEMENT
ASSIGNMENT OF INSURANCES
1. READING & BATES (A) PTY., LTD., a corporation organized and
existing under the laws of Australia (referred to herein as the
"Assignor"), in consideration of Ten Dollars (USD 10.00) lawful money of
the United States of America, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, as owner or
agent of the Australian flag drilling barge RON TAPPMEYER, ex. Official
No. 597497 (the "Vessel"), has granted, sold, assigned, transferred and
set over and by this instrument does grant, sell, assign, transfer and
set over unto BANK ONE, TEXAS, N.A., its successors, and assigns
(collectively, the "Assignee"), as trustee for INTERNATIONALE NEDERLANDEN
BANK, N.V. (the "Lender"), to the Assignee's own proper use and benefit,
a security interest as security for all amounts due and owing under the
Amended and Restated Credit Facility Agreement dated as of April __,
1995, (the "Restated Credit Agreement") among Assignor, the other
Borrowers named therein and the Lender, in all right, title and interest
of the Assignor under, in and to (i) all insurances in respect of the
Vessel whether now or hereafter to be effected (excluding employers'
liabilities, workman's compensation, protection and indemnity, general
and excess liabilities and similar insurances), and all renewals of or
replacements for the same, (ii) all claims, returns of premium and other
moneys and claims for moneys due and to become due under said insurances
or in respect of said insurances, (iii) all other rights of the Assignor
under or in respect of said insurances and (iv) any proceeds of any of
the foregoing (collectively, the "Insurances").
2. It is expressly agreed that anything herein contained to the
contrary notwithstanding, the Assignor shall remain liable under the
Insurances to perform all of the respective obligations assumed by it
thereunder and the Assignee shall have no obligation or liability under
the Insurances by reason of or arising out of this Assignment nor shall
the Assignee be required or obligated in any manner to perform or fulfill
any obligations of the Assignor under or pursuant to the Insurances or to
make any payment or to make any inquiry as to the nature or sufficiency
of any payment received by it or to present or file any claim, or to take
any other action to collect or enforce the payment of any amounts which
may have been assigned to it or to which it may be entitled hereunder at
any time or times.
3. The Assignor does hereby constitute the Assignee, its
successors and assigns, the Assignor's true and lawful attorney,
irrevocably, with full power to ask, require, demand, receive compound
and give acquittance for any and all moneys and claims for moneys due and
to become due under or arising out of the Insurances, to endorse any
checks or other instruments or orders in connection therewith and to file
any claims or to take any action or institute any proceedings which the
Assignee may deem to be necessary or advisable in the premises.
4. The Assignor hereby covenants and agrees to procure that
notice of this Assignment shall be duly given to all underwriters and
that where the consent of any underwriter is required pursuant to any of
the Insurances that it shall be obtained and evidence thereof shall be
given to the Assignee, or, in the alternative, that in the case of
protection and indemnity coverage the Assignee shall obtain a letter of
undertaking by the underwriters, and that there shall be duly endorsed
upon all slips, cover notes, policies, certificates of entry or other
instruments issued or to be issued in connection with the Insurance
assigned hereby such clauses as to named assured or loss payee as the
Assignee may require or approve. In all cases, unless otherwise agreed
in writing by the Assignee, such slips, cover notes, notices,
certificates of entry or other instruments shall show the Assignee as a
named assured and a loss payee and shall provide that there will be no
recourse against the Assignee for payment of premiums, calls or
assessments.
5. The powers and authority granted to the Assignee herein have
been given for a valuable consideration and are hereby declared to be
irrevocable, until all amounts due under the Restated Credit Agreement
are paid in full.
6. The Assignor agrees that at any time and from time to time,
upon the written request of the Assignee, the Assignor will promptly and
duly execute and deliver any and all such further instruments and
documents as the Assignee may reasonably deem desirable in obtaining the
full benefits of this Assignment and of the rights and powers herein
granted.
7. The Assignor does hereby warrant and represent that it has
not assigned or pledged, and hereby covenants that, without the prior
written consent thereto of the Assignee, so long as this Assignment shall
remain in effect, it will not assign or pledge the whole or any part of
the right, title and interest hereby assigned to anyone other than the
Assignee, it successors or assigns, and it will not take or omit to take
any action, the taking or omission of which might result in an alteration
or impairment of the Insurances, of this Assignment or of any of the
rights created by the Insurances or this Assignment.
8. All notices or other communications which are required to be
made to the Assignee hereunder shall be made by postage prepaid letter or
by telefax, confirmed by letter to:
Bank One, Texas, N.A.
as Trustee
910 Travis, 6th Floor
Houston, Texas 77002
Attention: Roark Ashie
Telefax No. (713) 751-6806
or at such other address as may have been furnished in writing by the
Assignee.
9. Any payments made pursuant to the terms hereof shall be made
to the Assignee to such account or accounts as may, from time to time be
designated by the Assignee.
10. THIS ASSIGNMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, AND MAY NOT
BE AMENDED OR CHANGED EXCEPT BY AN INSTRUMENT IN WRITING.
IN WITNESS WHEREOF, the Assignor has caused this Assignment to be
duly executed this day of April, 1995.
THE COMMON SEAL OF
READING & BATES (A)
PTY. LTD. was hereunto
affixed by authority of
the Board of Directors
in the presence of:
_________________________
T. W. Nagle, Director
_________________________
W. K. Hillin, Secretary
<PAGE>
EXHIBIT G-1
TO AMENDED AND RESTATED
CREDIT FACILITY AGREEMENT
ASSIGNMENT OF DRILLING CONTRACT REVENUES AND EARNINGS
1. READING AND BATES BORNEO DRILLING CO., LTD., a corporation
organized and existing under the laws of the State of Oklahoma (hereinafter
called the "Assignor"), in consideration of Ten Dollars (USD 10.00) lawful
money of the United States of America, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
has granted, sold, assigned, transferred and set over and by this instrument
does grant, sell, assign, transfer and set over unto Bank One, Texas, N.A.
its successors, and assigns (collectively the "Assignee"), as trustee for
INTERNATIONALE NEDERLANDEN BANK, N.V. (the "Lender"), to the Assignee's own
proper use and benefit, and does hereby grant the Assignee a security
interest as security for all amounts due and owing under the Amended and
Restated Credit Facility Agreement dated as of April __, 1995 (the "Restated
Credit Agreement") among the Assignor, the other Borrowers listed therein
and the Lender, in all of the Assignor's right, title and interest in and to
(i) all day rate payments, freights, charter hire and any other moneys earned
and to be earned, due or to become due or paid or payable to, or for the
account of the Assignor, of whatsoever nature, arising out of any drilling
contracts or as a result of the ownership, chartering and other operations of
any kind whatsoever by the Assignor or its agent of the Panamanian flag
drilling barge CHARLEY GRAVES, Official No. 6618-76-B (the "Vessel"), (ii)
all moneys and claims for moneys due and to become due to the Assignor and
all claims for damages arising out of the breach of any and all present
or future drilling contracts, charter parties, and operations of every kind
whatsoever of the Vessel and in and to any and all claims and causes of
action for money, loss or damages that may accrue or belong to the Assignor,
its successors, or assigns, arising out of or in any way connected with any
and all present and future requisitions, drilling contracts, charter parties,
and other operations of the Vessel of any kind whatsoever, (iii) all moneys
and claims for moneys due and to become due to the Assignor, and all claims
for damages in respect of the actual or constructive total loss of or
requisition of use of or title to any Vessel and (iv) any proceeds of any of
the foregoing.
2. The Assignor covenants that it will have all day rate payments,
charter hire, earnings and other moneys described in Section 1(i)-(iv) above
hereby assigned paid promptly to an account in Assignor's name to the
Lender's South East Branch office in Amsterdam, The Netherlands pursuant to
the written instructions of the Assignee. After an Event of Default as
defined in the Restated Credit Agreement occurs and is continuing, the
Assignor will, upon the request of the Assignee, write letters to the
Assignor's agents and representatives into whose hands or control may come
any earnings and moneys and other security hereby assigned, informing each
such addressee of this Assignment and instructing such addressee to remit
promptly to the Assignee or as designated by the Assignee, all day rate
payments, charter hire, earnings and moneys and other security hereby
assigned which may come into the addressee's hands or control and to
continue to make such remittances until such time as the addressee may
receive written notice or instructions to the contrary direct from the
Assignee. The Assignor further covenants that it will instruct each such
addressee to acknowledge directly to the Assignee receipt of each Assignor's
letter of notification and the instructions. Any sum in respect of moneys
assigned hereunder which is in the hands of any Assignor's agents and
representatives referred to above, after an Event of Default as defined in
the Restated Credit Agreement occurs and is continuing, shall be deemed to
have been received by them for the use and on behalf of the Lender.
3. Any sums recoverable hereunder after an Event of Default as
defined in the Restated Credit Agreement occurs and is continuing shall be
payable in accordance with Article II, Section 11 of the Mortgage on the
Vessel described in the Restated Credit Agreement (the "Mortgage") and any
moneys received by the Assignee hereunder shall be held by the Assignee in
trust to be applied in accordance with Section 11 of Article II of the
Mortgage.
4. It is expressly agreed that anything herein contained to the
contrary notwithstanding, the Assignee shall have no obligation or liability
under any drilling contract or charter party by reason of or arising out of
this Assignment nor shall the Assignee be required or obligated in any
manner to perform or fulfill any obligations of the Assignor under or
pursuant to any drilling contract or charter party or to make any payment or
to make any inquiry as to the nature or sufficiency of any payment received
by it or to present or file any claim, or to take any other action to
collect or enforce the payment of any amounts which may have been assigned
to it or to which it may be entitled to hereunder at any time or times.
5. The Assignor hereby covenants with the Assignee for the benefit
of the Lender that it will pay to the Assignee on demand all moneys
whatsoever which the Assignee or the Lender shall or may expend, be put to
or become liable for, in or about the protection, maintenance or enforcement
of the security created by this Assignment or in or about the exercise by
the Assignee or the Lender of any of the powers vested in it or them under
the Mortgage or hereunder together with interest thereon at the rate
provided for in Section 9.3 of the Restated Credit Agreement from the date
when such moneys were expended by the Assignee or the Lender until the date
of actual receipt, whether before or after any relevant judgment.
6. The Assignor does hereby constitute the Assignee, its successors
and assigns, the Assignor's true and lawful attorney, irrevocably, with full
power (in the name of the Assignor or otherwise) to ask, require, demand,
receive, compound and give acquittance for any and all moneys, claims,
property and rights hereby assigned, to endorse any checks or other
instruments or orders in connection therewith and to file any claims or to
take any action or institute any proceedings which the Assignee may deem to
be necessary or advisable in the premises.
7. The powers and authority granted to the Assignee herein have
been given for a valuable consideration and are hereby declared to be
irrevocable, until all amounts due under the Restated Credit Agreement are
paid in full.
8. The Assignor agrees that at any time and from time to time, upon
the written request of the Assignee, the Assignor will promptly and duly
execute and deliver any and all such further instruments and documents as
the Assignee may reasonably deem desirable in obtaining the full benefits of
this Assignment and of the rights and powers herein granted.
9. The Assignor does hereby warrant and represent that it has not
assigned or pledged, and hereby covenants that, without the prior written
consent thereto of the Assignee, so long as this Assignment shall remain in
effect, it will not assign or pledge the whole or any part of the right,
title and interest hereby assigned to anyone other than the Assignee, its
successors or assigns, and it will not take or omit to take any action, the
taking or omission of which might result in an alteration or impairment of
said right or this Assignment.
10. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK AND MAY NOT BE AMENDED OR
CHANGED EXCEPT BY AN INSTRUMENT IN WRITING.
11. All notices or other communications which are required to be
made to the Assignee hereunder shall be made by postage prepaid letter or by
telefax, confirmed by letter, to:
BANK ONE, TEXAS, N.A.
AS TRUSTEE
910 Travis, 6th Floor
Houston, Texas 77002
Attention: Roark Ashie
Telefax No.: (713) 751-6806
or at such other address as may have been furnished in writing by the
Assignee.
12. The Assignor agrees that the Assignee may execute and file any
financing statements or papers or similar purpose or effect relating to this
Assignment.
IN WITNESS WHEREOF, the Assignor has caused this Assignment to be duly
executed this day of April, 1995.
READING AND BATES BORNEO DRILLING
CO., LTD.
By: ______________________________
Name: T. W. Nagle
Title: Vice President and
Treasurer
<PAGE>
EXHIBIT G-2
TO AMENDED AND RESTATED
CREDIT FACILITY AGREEMENT
ASSIGNMENT OF DRILLING CONTRACT REVENUES AND EARNINGS
1. READING & BATES (A) PTY., LTD., a corporation organized
and existing under the laws of Australia (hereinafter called the
"Assignor"), in consideration of Ten Dollars (USD 10.00) lawful money of
the United States of America, and other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, has granted,
sold, assigned, transferred and set over and by this instrument does
grant, sell, assign, transfer and set over unto Bank One, Texas, N.A. its
successors, and assigns (collectively the "Assignee"), as trustee for
INTERNATIONALE NEDERLANDEN BANK, N.V. (the "Lender"), to the Assignee's
own proper use and benefit, and does hereby grant the Assignee a security
interest as security for all amounts due and owing under the Amended and
Restated Credit Facility Agreement dated as of April 27, 1995 (the
"Restated Credit Agreement") among the Assignor, the other Borrowers
listed therein and the Lender, in all of the Assignor's right, title and
interest in and to (i) all day rate payments, freights, charter hire and
any other moneys earned and to be earned, due or to become due or paid or
payable to, or for the account of the Assignor, of whatsoever nature,
arising out of any drilling contracts or as a result of the ownership,
chartering and other operations of any kind whatsoever by the Assignor or
its agent of the Australian flag drilling barge RON TAPPMEYER, ex.
Official No. 597497 (the "Vessel"), (ii) all moneys and claims for moneys
due and to become due to the Assignor and all claims for damages arising
out of the breach of any and all present or future drilling contracts,
charter parties, and operations of every kind whatsoever of the Vessel
and in and to any and all claims and causes of action for money, loss or
damages that may accrue or belong to the Assignor, its successors, or
assigns, arising out of or in any way connected with any and all present
and future requisitions, drilling contracts, charter parties, and other
operations of the Vessel of any kind whatsoever, (iii) all moneys and
claims for moneys due and to become due to the Assignor, and all claims
for damages in respect of the actual or constructive total loss of or
requisition of use of or title to any Vessel and (iv) any proceeds of any
of the foregoing.
2. The Assignor covenants that it will have all day rate
payments, charter hire, earnings and other moneys described in Section
1(i)-(iv) above hereby assigned paid promptly to an account in Assignor's
name to the Lender's South East Branch office in Amsterdam, The
Netherlands pursuant to the written instructions of the Assignee. After
an Event of Default as defined in the Restated Credit Agreement occurs
and is continuing, the Assignor will, upon the request of the Assignee,
write letters to the Assignor's agents and representatives into whose
hands or control may come any earnings and moneys and other security
hereby assigned, informing each such addressee of this Assignment and
instructing such addressee to remit promptly to the Assignee or as
designated by the Assignee, all day rate payments, charter hire, earnings
and moneys and other security hereby assigned which may come into the
addressee's hands or control and to continue to make such remittances
until such time as the addressee may receive written notice or
instructions to the contrary direct from the Assignee. The Assignor
further covenants that it will instruct each such addressee to
acknowledge directly to the Assignee receipt of each Assignor's letter of
notification and the instructions. Any sum in respect of moneys assigned
hereunder which is in the hands of any Assignor's agents and
representatives referred to above, after an Event of Default as defined
in the Restated Credit Agreement occurs and is continuing, shall be
deemed to have been received by them for the use and on behalf of the
Lender.
3. Any sums recoverable hereunder after an Event of Default as
defined in the Restated Credit Agreement occurs and is continuing shall
be payable in accordance with Article II, Section 11 of the Mortgage on
the Vessel described in the Restated Credit Agreement (the "Mortgage")
and any moneys received by the Assignee hereunder shall be held by the
Assignee in trust to be applied in accordance with Section 11 of Article
II of the Mortgage.
4. It is expressly agreed that anything herein contained to the
contrary notwithstanding, the Assignee shall have no obligation or
liability under any drilling contract or charter party by reason of or
arising out of this Assignment nor shall the Assignee be required or
obligated in any manner to perform or fulfill any obligations of the
Assignor under or pursuant to any drilling contract or charter party or
to make any payment or to make any inquiry as to the nature or
sufficiency of any payment received by it or to present or file any
claim, or to take any other action to collect or enforce the payment of
any amounts which may have been assigned to it or to which it may be
entitled to hereunder at any time or times.
5. The Assignor hereby covenants with the Assignee for the
benefit of the Lender that it will pay to the Assignee on demand all
moneys whatsoever which the Assignee or the Lender shall or may expend,
be put to or become liable for, in or about the protection, maintenance
or enforcement of the security created by this Assignment or in or about
the exercise by the Assignee or the Lender of any of the powers vested in
it or them under the Mortgage or hereunder together with interest thereon
at the rate provided for in Section 9.3 of the Restated Credit Agreement
from the date when such moneys were expended by the Assignee or the
Lender until the date of actual receipt, whether before or after any
relevant judgment.
6. The Assignor does hereby constitute the Assignee, its
successors and assigns, the Assignor's true and lawful attorney,
irrevocably, with full power (in the name of the Assignor or otherwise)
to ask, require, demand, receive, compound and give acquittance for any
and all moneys, claims, property and rights hereby assigned, to endorse
any checks or other instruments or orders in connection therewith and to
file any claims or to take any action or institute any proceedings which
the Assignee may deem to be necessary or advisable in the premises.
7. The powers and authority granted to the Assignee herein have
been given for a valuable consideration and are hereby declared to be
irrevocable, until all amounts due under the Restated Credit Agreement
are paid in full.
8. The Assignor agrees that at any time and from time to time,
upon the written request of the Assignee, the Assignor will promptly and
duly execute and deliver any and all such further instruments and
documents as the Assignee may reasonably deem desirable in obtaining the
full benefits of this Assignment and of the rights and powers herein
granted.
9. The Assignor does hereby warrant and represent that it has
not assigned or pledged, and hereby covenants that, without the prior
written consent thereto of the Assignee, so long as this Assignment shall
remain in effect, it will not assign or pledge the whole or any part of
the right, title and interest hereby assigned to anyone other than the
Assignee, its successors or assigns, and it will not take or omit to take
any action, the taking or omission of which might result in an alteration
or impairment of said right or this Assignment.
10. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK AND MAY NOT BE
AMENDED OR CHANGED EXCEPT BY AN INSTRUMENT IN WRITING.
11. All notices or other communications which are required to be
made to the Assignee hereunder shall be made by postage prepaid letter or
by telefax, confirmed by letter, to:
BANK ONE, TEXAS, N.A.
AS TRUSTEE
910 Travis, 6th Floor
Houston, Texas 77002
Attention: Roark Ashie
Telefax No.: (713) 751-6806
or at such other address as may have been furnished in writing by the
Assignee.
12. The Assignor agrees that the Assignee may execute and file
any financing statements or papers or similar purpose or effect relating
to this Assignment.
13. In accordance with the Corporations Law of the State of
Western Australia, Commonwealth of Australia, the Assignor agrees that
the maximum prospective liability secured by this Assignment is seven
million four hundred twenty five thousand Australian dollars, provided
however that this Section 13 shall not limit the amount secured by or
recoverable under this Assignment or any other Loan Document referred to
in the Restated Credit Agreement.
IN WITNESS WHEREOF, the Assignor has caused this Assignment to be
duly executed this day of April, 1995.
READING & BATES (A) PTY., LTD.
By:
Name:
Title:
EXHIBIT H-1
TO AMENDED AND RESTATED
CREDIT FACILITY AGREEMENT
NMB BANK Letterhead
--------------------------------------------------------------------------
NMB-Bank Documentary Trade Dept.
P. O. Box 1441 1000 Bk. Amsterdam Irrevocable
Loc: HE.04.01 Swift, NMBANL2A Documentary Credit
Telex: 11402 Fax: (31)205635818
Date: 28.MAR.91
Our Ref.: IA4154620
--------------------------------------------------------------------------
ADVISING BANK: APPLICANT:
NMB Bank New York Reading & Bates Drilling Co.
Paying and Receiving Division C/O NMB Bank
125 East 57th Street Amsterdam Zuib Oost.Branch
New York - N. Y. 10022-2101 U.S.A. -081-
--------------------------------------------------------------------------
BENEFICIARY:
Den Norkse Bank AS AMOUNT: USD 5,000,000.00
600 Fifth Avenue Expiry-Date: 30.APR.96
New York, New York 10020 BY PAYMENT
USA IN: Amsterdam
--------------------------------------------------------------------------
ATTN. L/C DEPT - Marc Marciano - One of the Famous Four
--------------------------------------------------------------------------
TO: Den Norske Bank AS
600 Fifth Avenue
New York, New York 10020
Dear Sirs,
We, NMB Postbank Groep NV, hereby issue this irrevocable standby Letter
of Credit No. IA4154620 in Favour of Den Norske Bank AS (you or the
Beneficiary) by order of and for the account of our customer, Reading
and Bates Corporation (RBC) in an amount not to exceed USD 5,000,000.00
(the credit amount). This standby Letter of Credit is being issued to
you in connection with the term loan agreement dated as of June 20, 1990
between you and HRB Rig Corporation (HRB) (as amended, modified or
supplumented hereafter, the agreement).
You are hereby irrevocably authorized to draw from time to time hereunder
an amount not exceeding the credit amount to satisfy amounts then due and
payable by HRB to you under the terms of the agreement.
This standby Letter of Credit is effective immediately and expires on
the expiration date (as hereinafter defined).
You may demand payment of all or a portion of the credit amount by
presentation at our counters of your duly tested telex/swift certificate,
in the form of Annex A to this credit.
Which forms an integral part of NMB-Bank Letter of Credit Number:IA4154620
Partial drawings are premitted, but drawings hereunder honored by us shall
not, in the aggregate, exceed the credit amount.
Certificates must be presented to us on or before April 30, 1996 (the
expiration date) or, if such day is not a business day, the next
succeeding business day.
Any drawing hereunder shall be made by duly tested telex of swift
addressed to NMB Postbank Group NV, Attention Documentary Trade Department,
Amsterdam, The Netherlands, Telex No. 11402, Swift NMB ANL 2A, our Ref. No.
IA4154620.
We hereby agree that all drawings strictly in compliance with the terms
and conditions of this Standby Letter of Credit will by duly honored if
drawn and presented at our counters on or before its expiration, as
provided above.
This Standby Letter of Credit shall be subject to the terms and provisions
of the uniform customs and practice for documentary credits (ICC
Publication 400, 1983 Revision) of the International Chamber of Commerce.
<PAGE>
**********************************************************
ANNEX A
TO STANDBY LETTER OF CREDIT
NO. IA4154620
STANDBY LETTER OF CREDIT DRAWDOWN CERTIFICATE
NMB Postbank Groep NV
Amsterdam
The Netherlands
Attention: Documentary Trade Department
Your Standby Letter of Credit No. IA4154620
We, Den Norske Bank AS, hereby certify to NMB Postbank Groep NV (NMB) with
reference to the above mentioned Standby Letter of Credit issued by NMB in
favour of the undersigned for the account of Reading and Bates Corporation,
that as of the date of this certificate, there is due and payable to
ourselves under the term loan agreement dated as of June 20, 1990 between
Den Norske Bank TAS and HRB after any required demand and after any
applicable grace period of periods which remains.
You are hereby instructed to remit the proceeds of this drawing as follows:
IN WITNESS WHEREOF, THIS CERTIFICATE HAS BEEN EXECUTED THIS _______________
DAY OF______________________, 19__.
DEN NORSKE BANK AS
BY: ____________________
NAME________________
TITLE_______________
Except so far as otherwise expressly stated this Letter of Credit is
subject to "Uniform Customs and Practice for Documentary Credits" (I.C.C.
PUBL. NO. 400 - 1983 REVISION). This is the operative Credit Instrument.
Yours Faithfully,
<PAGE>
EXHIBIT H-2
TO AMENDED AND RESTATED
CREDIT FACILITY AGREEMENT
ING BANK Letterhead
-------------------------------------------------------------------------
INB Bank DOCUMENTARY TRADE DEPT
LOC: FP.03.13 SWIFT: INGBNL2A IMANEP
TELEX: 11402 FAX: (31)205635818 KO66
P. O. BOX 1441 1000 BK AMSTERDAM
----------------------------------------- AMSTERDAM , 14.JUN.93
READING + BATES CORPORATION PHONE: 020-563 5862/5855
901 THREADNEEDLE SUITE 200 OUR REF. NO.: IA4357654
0000 00 HOUSTON TEXAS 77079 YOUR REF.NO.:
----------------------------------------- IMPORT LETTERS OF CREDIT (IA)
AMOUNT EXPIRY DATE IN
USD 2.000.000,00 18.MAY.95 AMSTERDAM
BY PAYMENT
DEAR SIRS,
WE HERE WITH CONFIRM HAVING OPENED AN IRREVOCABLE DOCUMENTARY CREDIT
UNDER NO. : IA4357654
IN ACCORDANCE WITH YOUR "APPLICATION FOR THE OPENING OF A DOCUMENTARY
CREDIT" DATED : 08.JUN.93
ATTACHED PLEASE FIND A COPY OF THE COMPLETE TEXT OF THE LETTER OF
CREDIT.
UNLESS OTHERWISE STIPULATED IN THE CONDITIONS OF THE CREDIT WE WILL IN
DUE TIME SETTLE WITH YOU OR CHARGES AND COMMISSIONS RELATED TO THIS
OPENING.
FOR GOOD ORDER'S SAKE PLEASE NOTE THAT (COPIES OF) PRO-FORMA INVOICES,
SALE-, PURCHASE- AND/OR OTHER AGREEMENTS OR CONTRACTS, WHICH YOU MAY
HAVE SENT TO US FOR INFORMATION, DO NOT FORM PART OF THE LETTER OF
CREDIT, IRRESPECTIVE OF THE FACT WHETHER OR NOT REFERENCE IS MADE TO
SAME IN THE LETTER OF CREDIT.
THIS CREDIT IS SUBJECT TO THE 'UNIFORM CUSTOMS AND PRACTICE FOR
DOCUMENTARY CREDITS' (PUBL.NO.400 - 1983 REVISION), PUBLISHED BY THE
INTERNATIONAL CHAMBER OF COMMERCE IN PARIS.
YOURS FAITHFULLY,
INB Bank
<PAGE>
ING BANK Letterhead
------------------------------------------------------------------------
P. O. Box 1441 Documentary Trade Department
1000 BK Amsterdam Swiftadress INGBNL2A
The Netherlands Telex 11402
Date Our reference
14 JUN 93 IA4357654
--------------------------------------- --------------------------------
Advising bank Applicant
READING & BATES CORP.
901 THREADNEEDLE, SUITE 200
HOUSTON, TEXAS 77079-2902
U.S.A.
--------------------------------------- --------------------------------
Beneficiary Amount
AMOCO ORIENT PETROLEUM COMPANY USD.2.000.000, -
C/O AMOCO PRODUCTION COMPANY Expiry-date
501 WESTLAKE PARK BOULEVARD 18.05.95 BY PAYMENT
P. O. BOX 3092, HOUSTON, TX 77253 USA In AMSTERDAM
------------------------------------------------------------------------
WE HEREBY OPEN OUR IRREVOCABLE STAND-BY LETTER OF CREDIT NO. IA4357654
AVAILABLE FOR PAYMENT AT SIGHT AGAINST PRESENTATION OF THE FOLLOWING
DRAFT(S) AND DOCUMENTS: (SEE BELOW)
COVERING: THE FLOATING PRODUCTION SYSTEM GENERAL CONTRACTOR AGREEMENT
DATED AS OF JUNE 4, 1993, BETWEEN YOU AND APPLICANT ("RDB")
(AS AMENDED, THE "AGREEMENT")
DOCUMENTS:
A) YOUR DRAFT DRAWN ON ISSUING BANK AND STATING :DRAWN UNDER STAND-BY
LETTER OF CREDIT NO.IA4357654
ACCOMPANIED BY:
B) YOUR SIGNED CERTIFICATE AS PER EXHIBIT ATTACHED.
PARTIAL DRAWINGS ARE PERMITTED
UPON RECEIPT OF CREDIT CONFORM DOCUMENTS AT OUR COUNTERS WE SHALL REMIT
PROCEEDS AS PER YOUR INSTRUCTIONS.
THIS STAND-BY LETTER OF CREDIT IS SUBJECT TO THE UNIFORM RULES AND
USANCES FOR DOCUMENTARY CREDIT I.C.C. PUBL.NO.400 (1983 REVISION)
ATTACHED: EXHIBIT - CERTIFICATE.
<PAGE>
CERTIFICATE
Internationale Nederlanden Bank N.V.
Amsterdam - The Netherlands
Attn: Documentary Trade Dept.
your Standby Letter of Credit No.____________________
We, Amoco Orient Petroleum Company ("Amoco"), hereby certify to
Internationale Nederlanden Bank N.V. ("ING") with reference to the Above
mentioned Standby Letter of Credit issued by ING in favor of ourselves
for the account of Reading & Bates Corporation, that:
1) As of the date of this certificate, there is due and payable to
ourselves under the Floating Production System General Contractor
Agreement (as amended, from time to time, the "Agreement") between Amoco
and Reading & Bates Development Co. ("RBD") the sum of USD $____________
payable by RBD as a result of a default by RBD under the terms of the
Agreement.
2) You are hereby instructed to remit the proceeds of this
drawing as follows: __________________________________________________
In witness whereof, this certificate has been executed this_____________
day of _________________, 199__.
Amoco Orient Petroleum Company
By:
Name:_____________________________
Title:____________________________
<PAGE>
EXHIBIT H-3
TO AMENDED AND RESTATED
CREDIT FACILITY AGREEMENT
ING BANK Letterhead
Jakarta, November 7, 1994
UNOCAL INDONESIA Ltd.
5th Floor Ratu Plaza
Jl. Jend. Sudirman Senayan
JAKARTA 10002
BANK GUARANTEE (BANK GARANSI)
No. BG 034.030/156
ING BANK Amsterdam counter guarantee 940247066/44581/TB
We, Internationale Nederlanden Bank (Indonesia) located at New
Summitmas Tower 14th floor Jl. Jend. Sudirman Kav 61-62, Jakarta
Indonesia, hereinafter designated as the bank, upon the request of
Reading and Bates Exploration Co. domiciled at 901 Threadneedle, Suite
200, Houston, Texas 77079, hereinafter designated as the guaranteed
party for the benefit of Unocal Indonesia Ltd., domiciled at 5th floor,
Ratu Plaza, Jl. Jend. Sudirman, Senayan, Jakarta 10002, hereinafter
designated as the obligee, state hereby:
In conjunction with the importation of group II of operational goods
into the Indonesian customs territory by using the facility of
Pertamina and/or obligee relating to the implementation of contract:
tender assisted platform drilling RIG No. 291/00172/JS90.0008
hereinafter designated as contract,
By the guaranteed party, in accordance with the following:
<TABLE>
<CAPTION>
INVOICE NO + DATE P.I.U.D. NO. + DATE
<S> <C>
UBN-0431/91 November 22, 1991 007/570/0271 November 30, 1991
UBN-0199/92 August 19, 1992 007/570/0432 September 15, 1992
UBN-0208/92 August 12, 1992 007/570/0432 September 15, 1992
UBN-0273/92 October 14, 1992 007/570/0470 October 27, 1992
UBN-0309/92 November 12, 1992 007/570/0490 December 8, 1992
UBN-0317/92 November 16, 1992 007/570/0497 December 8, 1992
UBN-0322/92 November 18, 1992 007/570/0501 December 9, 1992
UBN-0329/92 December 10, 1992 007/570/0513 December 31, 1992
UBN-0330/92 December 10, 1992 007/570/0512 December 31, 1992
UBN-0344/92 December 16, 1992 007/570/0511 December 11, 1992
</TABLE>
ING BANK Letterhead
Therefore bank, upon first request in writing from obligee will pay to
obligee an amount up to Rp.3.375.970.148.-(rupiah : three billion three
hundred seventy five million nine hundred seventy thousand one hundred
forty eight and no/00) which will be utilized to settle the import and
customs duty liable upon the said goods of group II, whenever :
1. The contract between the guaranteed party and the obligee expired
and is not being extended or renewed, and/or
2. Have not been granted the approval for permit or its extension
for the utility of the said goods of Group II by the Dir Gen
Migas of the Dept Mining and Energy and/or other authorized
party, where the guaranteed party :
1. Fails in carrying out his obligation to be re-export the
said goods of Group II, and/or
2. Unable to provide the evidence/supportive documents as to
state the guaranteed party had already re-exported the
Group II goods out of Indonesian customs territory.
Referring to article 1832 of the Indonesian Civil Code, bank expressly
releases its privilege to claim for confiscation and sale of the
properties belonged to the guaranteed party, to settle the debt as
stipulated under the article 1831 of the Indonesian civil code.
This guarantee shall remain valid until 30 days after the contract
between the guaranteed party and the obligee expired, or until December
13, 1995 at the latest.
Claim upon this bank guarantee by obligee shall be made in writing
addressed to the bank after the guanteed party failed to comply with
the terms and conditions of said contract and shall be submitted in no
later than 14 days at the maximum after the expiration of this bank
guarantee.
This guarantee shall waive whenever :
1. The guaranteed party has fulfilled his obligation to re-export
all the guaranteed goods out of the country and able to provide
the related supporting documents although the
validity of this bank guarantee has not been expired.
2. The claim period expired without any claim being filed by
obligee.
3. Statement of the waiver of the bank guarantee or statement of the
settlement of the bank guarantee prior to the expiry date of the
bank guarantee, jointly signed by the obligee and the guaranteed
party in a document which bears sufficient stamp duty. Whenever
the bank guarantee is fulfilled and/no longer valid, this bank
guarantee shall be returned to the bank.
For the issuance of this bank guarantee and all the consequences
arising thereof, the guarantor has chosen a permanent judicvial
domicile at Kantor Panitera Pengadilan Negeri (office of the registrar
of the state court) in Jakarta Selatan.
Yours truly,
ING BANK Letterhead
Jakarta, April 17, 1995
UNOCAL INDONESIA Ltd.
5th Floor Ratu Plaza
Jl. Jend. Sudirman Senayan
JAKARTA 10002
AMENDMENT BANK GUARANTEE (BANK GARANSI)
No. BG 034.030/0156
ING BANK Amsterdam counter guarantee 940247066/44581/TB
We amend the above mentioned guarantee as follow :
- the amount of the bank guarantee is increased up to the new maximum
of IDR 3,403,274,637.- (in words : three billion four hundred three
million two hundred seventy four thousand six hundred thirty seven
rupiah)
- add the following invoice and PIUD number date to the existing :
UBN-0193/94 dated June 22, 1994 007/570/1032 dated June 28, 1994
All other terms and conditions remain unchanged.
Yours truly,
EXHIBIT I
TO AMENDED AND RESTATED
CREDIT FACILITY AGREEMENT
FIRST NAVAL MORTGAGE
on the Vessel
CHARLEY GRAVES
executed by
Reading and Bates Borneo Drilling Co., Ltd.
as Shipowner
to
Bank One, Texas, N.A. as Trustee
as Mortgagee
FIRST NAVAL MORTGAGE dated April __, 1995 by Reading and Bates
Borneo Drilling Co., Ltd., a corporation organized and existing under the
laws of the State of Oklahoma (the "Shipowner") to Bank One, Texas, N.A.
a national banking association organized under the laws of the United
States, as Trustee, (the "Mortgagee").
FIRST: The Shipowner represents, warrants and covenants that:
A. The Shipowner is the sole owner of the whole of the vessel
CHARLEY GRAVES, duly documented in the name of the Shipowner under the
laws and flag of the Republic of Panama Patente No. 6618-76-B, bearing
international call letters HP-3275, of 5716 gross tonnage, 4291 net
tonnage, 300 feet in length, 70 feet in width and 154 feet in height (the
"Vessel").
B. The Shipowner and the other Borrowers named in the Credit
Facility Agreement have entered into an Amended and Restated Credit
Facility Agreement (the "Credit Facility Agreement") dated April __, 1995
with Internationale Nederlanden Bank, N.V. (formerly known as NMB
Postbank Groep N.V.), a corporation organized under the laws of the
Netherlands, (the "Lender") providing for Advances to, and the issuance
of letters of credit for the accounts of, the Shipowner and the other
Borrowers named in the Credit Facility Agreement up to an aggregate
amount of USD 65,000,000 (the "Commitment"). The form of the Credit
Facility Agreement is set forth below.
Pursuant to the Credit Facility Agreement, the Shipowner and
the Borrowers have executed and delivered to the Lender their promissory
notes in the aggregate amount of USD 65,000,000 (the "Notes") and are
justly indebted to the Mortgagee therefor.
The Notes, in the form of Exhibits A-1 through A-5 of the
Credit Facility Agreement evidence the obligation of the Shipowner and
the other Borrowers under the Credit Facility Agreement.
C. By Assignment, Assumption and Amendment No. 2 of Trust
Indenture dated April __, 1995 (the "Assignment of Trust"), among the
Shipowner, the other Borrowers and the Mortgagee, the Mortgagee has among
other things assumed the rights and obligations of Texas Commerce Bank
National Association ("TCB") under the terms of the Trust Indenture dated
March 29, 1991, as amended (as amended by Amendment No. 1 to Trust
Indenture and by the Assignment of Trust, the "Trust Indenture"), and has
thereby agreed to act as Trustee on behalf of the holder of the Notes
with respect to this Mortgage.
D. The Shipowner has heretofore agreed to execute and deliver
this First Naval Mortgage (the "Mortgage") on the Vessel to secure the
Shipowner's indebtedness pursuant to the Credit Facility Agreement in the
original principal amount of USD 65,000,000 and interest thereon and all
other amounts payable hereunder and to secure as well the performance and
observance of all agreements, covenants and conditions combined herein
and contained in the Credit Facility Agreement, Trust Indenture and the
Notes.
SECOND: 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 of the indebtedness pursuant to the Credit
Facility Agreement, Trust Indenture and the Notes according to the terms
thereof and the payment of all other sums that may hereafter be secured
by this Mortgage in accordance with the terms hereof (all such
indebtedness, interest and other sums being hereinafter sometimes
collectively called the "Indebtedness hereby secured") and to secure as
well the performance and observance of all agreements, covenants and
conditions contained herein and contained in the Trust Indenture, Credit
Facility Agreement, including the Notes contained therein, the Shipowner
hereby constitutes a first naval mortgage in accordance with the
provisions of Chapter V Title IV of Book Second of the Code of Commerce
and other pertinent legislation of the Republic of Panama in favor of the
Mortgagee, its successors and assigns, upon one hundred percent (100%) of
the Vessel, together with all of the boilers, engines, machinery, masts,
spars, boats, anchors, cables, chains, rigging, tackle, capstans, outfit
tools, pumps and pumping equipment, apparel, furniture equipment,
drilling equipment, drill pipes, collars, racking, housing, spare parts
and supporting inventory, vehicles and living quarters (excluding
equipment aboard the Vessel which is not owned by the Shipowner) and all
other appurtenances to said Vessel appertaining or belonging, whether now
owned or hereafter acquired, whether on board or not, and also any and
all additions, improvements and replacements in general effected
subsequently on or to the Vessel, or any part thereof, or appurtenance
thereto;
PROVIDED, HOWEVER, and these presents are upon the condition,
if the Shipowner or its successors or assigns shall pay or cause to be
paid to the Mortgagee the Indebtedness hereby secured, as and when the
same shall become due and payable in accordance with the terms of this
Mortgage, the Notes and of the Credit Facility Agreement, and shall duly
perform the agreements, covenants and conditions herein and in the Credit
Facility Agreement contained, then this Mortgage and the rights hereby
granted shall cease and be void, otherwise to remain in full force and
effect.
THIRD: The Shipowner certifies that a true form of the Credit
Facility Agreement (including the Notes) and the Trust Indenture are
attached to this Mortgage as Exhibits A and B, respectively and that the
terms of the Credit Facility Agreement, the Notes and the Trust Indenture
are incorporated by reference into this Mortgage and form a part hereof.
FOURTH: The Shipowner represents, warrants, covenants and
agrees with the Mortgagee as follows:
ARTICLE I
Covenants of the Shipowner
Section 1. The Shipowner agrees that it will promptly and
faithfully pay or cause to be paid the Indebtedness hereby secured and
that it will perform and observe all agreements, covenants and conditions
express or implied contained herein and in the Credit Facility Agreement.
Section 2. The Shipowner is duly organized and validly
existing as a corporation under the laws of the State of Oklahoma; it is
duly authorized to mortgage the Vessel; all corporate action necessary as
required by law for the execution and delivery of this Mortgage has been
duly and effectively taken; and the Mortgage and the Credit Facility
Agreement are and will be valid obligations of the Shipowner enforceable
in accordance with their terms.
Section 3. The Shipowner lawfully owns and is lawfully
possessed of the Vessel free from any lien or encumbrance whatsoever
(except for the lien of this Mortgage and any other lien in favor of the
Mortgagee, liens for current crew's wages, tort liens adequately covered
by insurance, and liens arising by operation of law as the result of the
furnishing of necessaries for the Vessel for which payment is not yet
overdue) and will warrant and defend the title and possession thereto and
to every part thereof for the benefit of the Mortgagee against the claims
and demands of all persons whomsoever.
Section 4. The Shipowner will comply with and satisfy all of
the provisions of applicable law of the Republic of Panama in order to
establish and maintain this Mortgage as a first naval mortgage thereunder
upon the Vessel and upon all renewals, replacements and improvements made
in or to the same.
Section 5. The Shipowner will not cause or permit the Vessel
to be operated in any manner contrary to applicable law and the Shipowner
will not engage in any unlawful trade or violate any applicable law or
carry any cargo that will unreasonably expose the Vessel to penalty,
forfeiture or capture and will not do, or suffer or permit to be done,
anything which can or may injuriously affect the registration of the
Vessel under the laws and regulations of Panama and will at all times
keep the Vessel duly documented thereunder.
Section 6. The Shipowner will pay and discharge when due and
payable, from time to time, all taxes, assessments, governmental charges,
fines and penalties lawfully imposed on the Vessel or any income
therefrom; provided, however, that the Shipowner shall not be required to
pay and discharge any such tax, assessment, governmental charge, fine or
penalty so long as the legality thereof shall be contested in good faith
and by appropriate proceedings or other acts and the Shipowner shall set
aside on its books adequate reserves with respect to any such tax,
assessment, charge, fine or penalty so contested, and the Vessel shall
not have been arrested or detained therefor.
Section 7. Neither the Shipowner, any charterer, the Master of
the Vessel nor any other person has or shall have any right, power or
authority to create, incur or permit to be placed or imposed upon the
Vessel, its freights, profits or hire, any lien whatsoever other than
this Mortgage, and liens for crew's wages and salvage.
Section 8. The Shipowner will place, and at all times and
places will retain, a properly certified copy of this Mortgage on board
the Vessel with her papers and will cause such certified copy and the
Vessel's marine document to be exhibited to any and all persons having
business therewith which might give rise to any lien thereon other than
liens for crew's wages and salvage, and to any representative of the
Mortgagee; and will place and keep prominently displayed in the chart
room and in the Master's cabin of the Vessel a framed printed notice in
plain type reading as follows:
"NOTICE OF MORTGAGE
This Vessel is owned by Reading and Bates Borneo Drilling Co.,
Ltd. ("Owner") and subject to a First Naval Mortgage ("Mortgage") in
favor of Bank One, Texas, N.A. as Trustee, Mortgagee. Under the terms of
said Mortgage neither the Owner, any Charterer, the Master of this Vessel
nor any other person has any right, power or authority to create, incur
or permit to be placed or imposed or continued upon this Vessel any lien
whatsoever other than said Mortgage and liens for crew's wages and
salvage."
Section 9. Except for the lien of this Mortgage, the Shipowner
will not suffer to be continued any lien, encumbrance or charge on the
Vessel, and in due course and in any event within thirty days after the
same becomes due and payable will pay or cause to be discharged or make
adequate provision for the satisfaction or discharge of all claims or
demands, or will cause the Vessel to be released or discharged from any
lien, encumbrance or charge therefor.
Section 10. If a libel or complaint be filed against the
Vessel or the Vessel be otherwise attached, levied upon or taken into
custody or sequestered by virtue of any legal proceeding in any court or
by a government or other authority, the Shipowner will promptly notify
the Mortgagee thereof by telex, cable or telegram, as appropriate,
confirmed by letter, at its office, and within thirty (30) days will
cause the Vessel to be released and all liens thereon (other than the
lien of this Mortgage) to be discharged and will promptly notify the
Mortgagee thereof in the manner aforesaid.
Section 11. (a) The Shipowner will at all times and without
cost or expense to the Mortgagee maintain and preserve, or cause to be
maintained and preserved, the Vessel in good running order and repair, so
that the Vessel shall be, insofar as due diligence can make her so,
tight, staunch, strong and well and sufficiently tackled, apparelled,
furnished, equipped and in every respect seaworthy and in good operating
condition; and will keep the Vessel, or cause her to be kept in such
condition as will entitle her to the highest classification and rating
for vessels of the same age, type and use with the American Bureau of
Shipping, or the equivalent rating of another classification society of
like standing acceptable to the Mortgagee, and will furnish to the
Mortgagee a certificate by such register or classification society that
such classification is maintained, promptly after the receipt thereof by
the Shipowner. The Vessel shall, and the Shipowner covenants that she
will, at all times comply with all applicable laws, treaties and
conventions and rules and regulations issued thereunder, and shall have
on board as and when required thereby valid certificates showing
compliance therewith. The Shipowner will not make, or permit to be made,
any substantial change in the structure, type or speed of the Vessel or
change in her rig, which causes a decrease in the value of the Vessel,
without first receiving the written approval thereof by the Mortgagee.
In case of such substantial changes of the foregoing nature, which do not
cause a decrease in the value of the Vessel, the Shipowner shall notify
the Mortgagee of the changes.
(b) The Shipowner hereby warrants and represents that the
Vessel is, on the date hereof, capable of economic operation without
major repairs.
(c) So long as any of the Indebtedness hereby secured is
outstanding, the Shipowner will cause the Vessel to be repaired and
overhauled in order to keep the Vessel well maintained and in seaworthy
condition.
(d) The Shipowner will give notice to the Mortgagee if the
Vessel is put into the possession of any yard for the purpose of repairs
in an amount exceeding or likely to exceed ten percent of the insured
total loss value at any time.
Section 12. The Shipowner will at all reasonable times afford
the Mortgagee or its authorized representatives full and complete access
to the Vessel during normal business hours for the purpose of inspecting
the Vessel and its cargoes and papers, and the Shipowner will deliver for
inspection copies of such contracts and documents relating to the Vessel,
whether on board or not, as the Mortgagee may reasonably request,
provided however, that (i) non-public information obtained by the
Mortgagee pursuant to any Loan Document concerning the Shipowner, the
Vessel, any other assets or the Shipowner's financial condition and
prospects shall be kept confidential by the Mortgagee subject, however,
to requests from the Lender, any applicable Governmental Agencies and to
disclosures of such information to assignees and participants (and
potential assignees and participants) pursuant to Section 19.8 of the
Credit Facility Agreement, unless such non-governmental parties shall
agree prior thereto to be bound by this Section 12 and (ii) any
inspection of the Vessel, its cargoes and papers shall be subject to the
requirements of any operators of the Vessel and any applicable
Governmental Agencies.
Section 13. The Shipowner will not transfer or change the
flag or port of documentation of the Vessel without the written consent
of the Mortgagee first had and obtained, such consent not to be
unreasonably withheld, 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.
Section 14. The Shipowner will not sell, mortgage, charter for
a period in excess of twelve (12) months or for a period reasonably
expected to exceed twelve (12) months, or transfer the Vessel, nor
assign, pledge or hypothecate the freights, hires and/or income thereof,
without the written consent of the Mortgagee first had and obtained, and
any such written consent to any one sale, mortgage, demise charter,
transfer, assignment, pledge or hypothecation shall not be construed to
be a waiver of this provision with respect to any subsequent proposed
sale, mortgage, demise charter, transfer, assignment, pledge or
hypothecation. Any such sale, mortgage, demise charter, or transfer of
the Vessel shall be subject to the provisions of this Mortgage and the
lien hereof.
SECTION 15. (a) The Shipowner will, at its own expense, when
and so long as this Mortgage shall be outstanding, insure or cause to be
insured the Vessel against the risks indicated below, in addition to such
other risks which should be covered by experienced, prudent, and
responsible companies engaged in the offshore contract drilling of
hydrocarbons in places and under conditions comparable to those in which
the Vessel is employed from time to time and possessing financial and
operating characteristics similar to the Borrowers ("Similar Companies")
in accordance with the usual and customary practices of Similar
Companies, and keep her insured, in lawful money of the United States,
for not less than the higher of (i) the full commercial value of such
Vessel and (ii) the amount of coverage that would be obtained by Similar
Companies on such Vessel. The 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 be on the basis of
"new for old" with no deduction for depreciation and 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 Vessel. Such insurance shall not include
a deductible or self-insured retention in excess of USD 250,000 per
occurrence. The Shipowner shall also obtain such workmen's compensation
or longshoremen's and harbor worker's insurance as shall be required by
applicable law, including endorsements for Outer Continental Shelf
operations, borrowed servant, voluntary compensation, and in rem claims.
In addition, the Shipowner shall, at its own expense, furnish to the
Mortgagee a mortgagee's single interest policy (or shall cause the hull
and machine insurance on the Vessel to be endorsed to afford breach of
warranty coverage for the benefit of the Mortgagee) providing coverage in
an amount equal to at least the full commercial value of the 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 Vessel through underwriters acceptable to the Mortgagee. The
Vessel shall not undertake any drilling operations, not carry any cargoes
or proceed into an area then excluded by trading warranties under its
marine or war risk policies (including protection and indemnity) without
obtaining all necessary additional coverage, satisfactory in form and
substance, and evidence of which shall be furnished, to the Mortgagee.
(b) The policy or policies of insurance shall be issued by
responsible underwriters acceptable to the Mortgagee, shall contain
conditions, terms, stipulations and insuring covenants reasonably
satisfactory to the Mortgagee and shall be kept in full force and effect
by the Shipowner so long as this Mortgage shall be outstanding. All such
policies, binders and other interim insurance contracts shall be executed
and issued in the name of the Shipowner and shall provide that loss be
payable to the Mortgagee for distribution by it to itself and the
Shipowner as their interests may appear. Copies of all such policies,
binders and other interim insurance contracts shall be deposited with the
Mortgagee. The Shipowner shall furnish to the Mortgagee annually, not
later than December 31st, a detailed report signed by a firm of marine
insurance brokers satisfactory to the Mortgagee as to the insurance
maintained in respect of the Vessel, as to their opinion as to the
adequacy thereof and as to compliance with the provisions of this Section
15.
(c) In addition, the Shipowner shall maintain or cause to be
maintained protection and indemnity insurance, including coverage for
contractual liability, contractual and legal wreck removal, crew
coverage, excess collision, salvage, general average, care, custody and
control coverage through underwriters or associations acceptable to the
Mortgagee in an amount equal to the higher of (i) the market value of the
Vessel and (ii) the amount of coverage that would be obtained by Similar
Companies on the 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. Such insurance shall not include a
deductible or self-insured retention in excess of USD 250,000 per
occurrence.
(d) Such insurance policies shall provide for at least ten
days' or, in the case of any policy covering war risk perils, seven days'
prior notice to be given to the Mortgagee by the underwriters or
association in the event of (i) cancellation or reduction in coverage
(except in the case of war risk insurance) or (ii) the failure of the
Shipowner to pay any premium or call which would suspend coverage under
the policy or the payment of a claim thereunder. A copy of such
insurance shall be furnished to the Mortgagee.
(e) Unless otherwise required by the Mortgagee by notice to
the underwriters, although the following insurance is payable to the
Mortgagee, (i) any loss under any insurance on the Vessel with respect to
protection and indemnity risks may be paid directly to the Shipowner to
reimburse it for any loss, damage or expense incurred by it and covered
by such insurance or to the person to whom any liability covered by such
insurance has been incurred, and (ii) in the case of any loss (other than
a loss covered by clause (i) above) under any insurance with respect to
the Vessel involving any damage to the Vessel, the underwriters may pay
direct for the repair, salvage or other charges involved or, if the
Shipowner shall have first fully repaired the damage or paid all of the
salvage or other charges, may pay the Shipowner as reimbursement
therefor; provided, however, that if such damage involves a loss in
excess of $500,000, the underwriters shall not make such payment without
first obtaining the written consent thereto of the Mortgagee. Any loss
covered by this paragraph which is paid to the Mortgagee but which might
have been paid, in accordance with the provisions of this paragraph,
directly to the Shipowner or others, shall be paid by the Mortgagee to,
or as directed by, the Shipowner and all other payments to the Mortgagee
of losses covered by this paragraph shall be paid by the Mortgagee to the
Lender for application pursuant to Section 10.4 of the Credit Facility
Agreement.
(f) In the event of an actual or constructive total loss or a
compromised constructive total loss or requisition of the Vessel, all
insurance payments therefor shall be paid to the Mortgagee. The
Shipowner shall not declare or agree with underwriters that the Vessel is
a constructive or compromised, agreed or arranged constructive total loss
without the prior written consent of the Mortgagee.
(g) In the event of an actual or constructive total loss of
the Vessel, the Mortgagee shall retain out of the insurance payments
received on account of such loss and held by the Mortgagee in accordance
with Section 305 of the Trust Indenture, any sum or sums that shall be or
become owing the Mortgagee under this Mortgage for the cost, if any, of
collecting the insurance, which sum or sums shall become the sole
property of the Mortgagee, and pay the balance to the Lender for
application pursuant to Section 10.4 of the Credit Facility Agreement.
(h) The Shipowner shall at all times during which the Vessel
is operating within the jurisdiction of the United States of America,
maintain or cause to be maintained insurance or post bond or maintain or
cause to be maintained approved evidence of financial responsibility with
respect to the Vessel to cover the actual cost of removal of discharged
oil for which the Shipowner or the Vessel may be held strictly liable (or
held liable due to the negligence of the Shipowner, any charterer or any
other Person) under the Clean Water Act of 1977, the Oil Pollution Act of
1990 or the Outer Continental Shelf Lands Act, or under any other federal
or state law which, in the future, may apply to the Vessel or to the
Shipowner; and the Shipowner shall maintain insurance covering similar
pollution risks or liabilities incident thereto under any law,
regulation, or judicial decision of any foreign jurisdiction or
jurisdictions or political subdivision thereof applicable to the
Shipowner, the Vessel, or its operations.
Section 16. The Shipowner will reimburse the Mortgagee
promptly with interest at the rate set forth in Section 9.3 of the Credit
Facility Agreement, for any and all expenditures which the Mortgagee may,
from time to time, make, lay out or expend in providing such protection
in respect of insurance, discharge or purchase of liens, taxes, dues,
assessments, governmental charges, fines and penalties lawfully imposed,
repairs, attorneys' fees, necessary translation fees for documents made
in a language other than English and other matters as the Shipowner is
obligated herein to provide, but fails to provide. Such obligation of
the Shipowner to reimburse the Mortgagee shall be an additional
indebtedness due from the Shipowner, secured by this Mortgage, and shall
be payable by the Shipowner on demand. The Mortgagee, though privileged
so to do, shall be under no obligation to the Shipowner to make any such
expenditures, nor shall the making thereof relieve the Shipowner of any
default in that respect.
Section 17. The Shipowner will fully perform any and all
Charter parties which are or may be entered into with respect to the
Vessel.
Section 18. The Shipowner further covenants and agrees, so
long as any part of the Indebtedness hereby secured remains unpaid, there
shall be no change in the ownership of the Vessel or any of the shares of
the Shipowner without the prior written consent of the Mortgagee.
Section 19. In the event of an actual or constructive or
arranged total loss or seizure or the requisition of title to the Vessel,
then and each such case, the Shipowner shall forthwith, on demand, prepay
the Indebtedness hereby secured in full to the extent of the Shipowner's
obligations contained in the Credit Facility Agreement, including accrued
interest to the date of such prepayment. Provided, however, if insurance
coverage for the event in question is in existence, the Shipowner's
obligation to pay under this section shall arise only to the extent that
said insurance does not pay for the actual or constructive or arranged
total loss, seizure or requisition of title to the Vessel within thirty
(30) days after said event or within thirty (30) days of the Mortgagee's
demand (whichever is earlier). In the event that payment pursuant to
this Section 19 is received on a day which is not the end of an Interest
Period, as defined in the Credit Facility Agreement, the Shipowner agrees
that its obligation will include interest on the amounts or amounts so
paid until the end of then current Interest Period.
Section 20. If at any time taxes should be levied anywhere
(except in the Netherlands) on the principal or the interest in respect
of or arising out of this Mortgage or any other instruments to be
effected thereunder or in any other manner whatsoever as a consequence of
or in connection with the indebtedness hereby secured, such taxes shall
be borne and paid by the Shipowner. If by the provisions of the relevant
law such an arrangement cannot be legally made, the Mortgagee may require
immediate payment of all sums secured under this Mortgage.
Section 21. In the event that this Mortgage or any provision
hereof shall be deemed invalidated in whole or in part by reason of any
present or future law or any decision of any authoritative court, or if
the documents at any time held by the Mortgagee shall be deemed by the
Mortgagee for any reason insufficient to carry out the true intent and
spirit of this Mortgage, then from time to time, the Shipowner will
execute, on its own behalf, such other and further assurances and
documents as in the opinion of the Mortgagee may be required more
effectively to subject the Vessel to the payment of the Indebtedness
hereby secured, as in this Mortgage provided, and the performance of the
terms and provisions of this Mortgage, the Notes and the Credit Facility
Agreement.
Section 22. From time to time on the request of the Mortgagee,
the Shipowner will furnish to the Mortgagee: (a) such favorable opinions
of counsel, including Panamanian and United States legal opinions,
satisfactory in form and substance to the Mortgagee and (b) such
instruments executed by the Shipowner or on its behalf or by any or all
officers, shareholders or directors of the Shipowner, in each case
relating to any of the transactions contemplated herein, including this
Mortgage, as the Mortgagee may reasonably request.
ARTICLE II
EVENTS OF DEFAULT AND REMEDIES
Section 1. If a petition in bankruptcy for arrangement or
reorganization or any similar petition be filed by or against the
Shipowner in any place, the Indebtedness hereby secured shall immediately
become due and payable in full without any notice or demand. In case any
one or more of the following events herein termed "Events of Default"
shall occur and be continuing:
(a) Failure by the Shipowner to pay any amount due under the
Notes when due, subject to the applicable grace periods; or
(b) Default in the due and punctual observance and performance
of any of the provisions of the Credit Facility Agreement or the Trust
Indenture and same shall continue unremedied for ten (10) days after
notice thereof; or
(c) Default in the due and punctual observance and performance
of any of the provisions of Sections 5, 6, 9, 10, 11, 12, 13, 14, 15, and
19 of Article I hereof; or
(d) Default in the due and punctual observance and performance
of any other provision of this Mortgage and the same shall continue
unremedied for ten (10) days.
(e) The Vessel is lost, disappears, is abandoned, condemned as
a prize, seized, requisitioned, embargoed, forfeited, put up for auction,
bottomried, loses its class or loses the right to fly the Panamanian
flag.
then, upon the occurrence and continuance of one or more Events of
Default, (and in each and every case), the Mortgagee shall have the right
to:
(1) Declare the then unpaid Indebtedness hereby secured to be
due and payable immediately, and upon such declaration, the same,
including interest to the date of declaration, shall become and be
immediately due and payable, (provided however, that no declaration
shall be required if an Event of Default shall have occurred under
Section 1(e) of this Article II).
(2) Exercise all of the rights and remedies in foreclosure
and otherwise given to mortgagees by the laws and regulations of
the Republic of Panama or of any country wherein the Vessel may be
found or of any other applicable jurisdiction.
(3) Bring suit at law, in equity or in admiralty, in any
court of any nation of the world, as it may be advised, to recover
judgment for the Indebtedness hereby secured, and collect the same
out of any and all of the properties of the Shipowner, whether
covered by this Mortgage or otherwise.
(4) Take and enter into possession of the Vessel, at any
time, wherever the same may be, without legal process and without
being responsible for loss or damage, and the Shipowner or other
person in possession forthwith upon demand of the Mortgagee shall
surrender to the Mortgagee possession of the Vessel.
(5) Without being responsible for loss or damage, the
Mortgagee may hold, lay up, lease, charter, operate or otherwise
use such Vessel for such time and upon such terms as it may deem to
be for its best advantage, and demand, collect and retain all hire,
freights, earnings, issues, revenues, income, profits, return
premiums, salvage awards or recoveries, recoveries in general
average, and all other sums due or to become due in respect of such
Vessel or in respect of any insurance thereon from any person
whomsoever, accounting only for the net profits, if any, arising
from such use of the Vessel and charging upon all receipts from the
use of the Vessel or from the sale thereof by court proceedings or
pursuant to subsection (6) next following, all costs, expenses,
charges, damages or losses by reason of such use; and if at any
time the Mortgagee shall avail itself of the right herein given it
to take the Vessel, the Mortgagee shall have the right to dock the
Vessel, for a reasonable time at any dock, pier or other premises
of the Shipowner without charge, or to dock her at any other place
at the cost and expense of the Shipowner.
(6) Sell the Vessel without judicial process and without
being responsible for any loss or damage arising therefrom, except
as may be directly and proximately caused by its willful
misconduct, recklessness or gross negligence, in such place, time
and manner as the Mortgagee may, in its sole judgment, deem fit.
In the event that the Vessel shall be offered for sale by private
sale, reasonable notice must be given to the Shipowner but need not
be more than 3 days before the private sale, and no newspaper
publication of notice shall be required, nor notice of adjournment
of sale; sale may be held at such place and at such time as the
Mortgagee by notice may have specified, or may be adjourned by the
Mortgagee from time to time by announcement at the time and place
appointed for such sale or for such adjourned sale, and without
further notice or publication the Mortgagee may make any such sale
at the time and place to which the same shall be so adjourned. At
the sale, the Mortgagee may acquire the Vessel in satisfaction of
the outstanding Indebtedness.
It is expressly stated that upon payment of the purchase price,
the purchaser shall acquire good and peaceful title to the Vessel at any
such non-judicial sale, and shall not be affected by any claim or
potential claim of the Mortgagor, whether or not such claim or potential
claim comes to the knowledge of the purchaser.
Any sale may be conducted without bringing the Vessel to the
place designated for such sale and in such manner as the Mortgagee may
deem to be for its best advantage.
Section 2. Any sale of the Vessel made in pursuance of this
Mortgage, whether under the power of sale hereby granted or any judicial
proceedings, shall operate to divest all right, title and interest of any
nature whatsoever of the Shipowner therein and thereto, and shall bar the
Shipowner, its successors and assigns, and all persons claiming by,
through or under them, from asserting any claim or right, title or
interest therein or thereto. No purchaser shall be bound to inquire
whether notice has been given, or whether any default has occurred, or as
to the propriety of the sale, or as to the application of the proceeds
thereof.
Section 3. The Mortgagee is hereby appointed attorney-in-fact
of the Shipowner to execute and deliver to any purchaser aforesaid, and
is hereby vested with full power and authority to make, in the name and
in behalf of the Shipowner, a good conveyance of the title to the Vessel
so sold. In the event of any sale of the Vessel, under any power herein
contained, the Shipowner will, if and when required by the Mortgagee,
execute such form of conveyance of the Vessel as the Mortgagee may direct
or approve.
Section 4. The Mortgagee is hereby appointed attorney-in-fact
of the Shipowner upon the happening of any Event of Default, in the name
of the Shipowner to demand, collect, receive, compromise and sue for, so
far as may be permitted by law, all freights, hire, earnings, issues,
revenues, income and profits of the Vessel and all amounts due from
underwriters under any insurance thereon as payment of losses or as
return premiums or otherwise, salvage awards and recoveries, recoveries
in general average or otherwise, and all other sums due or to become due
at the time of the happening of any Event of Default in respect of the
Vessel or in respect of any insurance thereon from any person whomsoever,
and to make, give and execute in the name of the Shipowner acquittances,
receipts, releases or other discharges for the same, whether under seal
or otherwise, all checks, notes, drafts, warrants, agreements and other
instruments in writing with respect to the foregoing.
Section 5. Whenever any right to enter and take possession of
the Vessel accrues to the Mortgagee, it may require the Shipowner to
deliver, and the Shipowner shall on demand, at its own cost and expense,
deliver to the Mortgagee the Vessel at the location designated by the
Mortgagee.
Section 6. The Shipowner authorizes and empowers the Mortgagee
or its appointees or any of them to appear in the name of the Shipowner,
its successors and assigns, in any court of any country or nation of the
world where a suit is pending against the Vessel because of or on account
of any alleged lien against the Vessel from which the Vessel has not been
released and to take such proceedings as to them or any of them may seem
proper towards the defense of such suit and the purchase or discharge of
such lien, and all expenditures made or incurred by them or any of them
for the purpose of such defense or purchase or discharge shall be a debt
due from the Shipowner, its successors and assigns, to the Mortgagee and
shall be secured by the lien of this Mortgage in like manner and extent
as if the amount and description thereof were written herein.
Section 7. The Shipowner covenants that upon the happening of
and continuance of any one or more of the Events of Default, upon written
demand of the Mortgagee, the Shipowner will pay to the Mortgagee the
whole amount due and payable on the Indebtedness hereby secured together
with any other amounts due hereunder or under the Credit Facility
Agreement; and in case the Shipowner shall fail to pay same forthwith
upon such demand, the Mortgagee shall be entitled to recover judgment for
the whole amount so due and unpaid, together with such further amounts as
shall be sufficient to cover the reasonable compensation to the
Mortgagee's agents, attorneys and counsel and any necessary advances,
expenses and liabilities made or incurred by it hereunder. All moneys
collected by the Mortgagee under this Section 7 shall be applied by the
Mortgagee in accordance with the provisions of Section 11.
Section 8. Each and every right, power and remedy herein given
to the Mortgagee shall be cumulative and shall be in addition to every
other right, power and remedy herein given or now or hereafter existing
at law, in equity, in admiralty or by statute, and each and every right,
power and remedy whether herein given or otherwise existing may be
exercised from time to time and as often and in such order as may be
deemed expedient by the Mortgagee, and the exercise or the beginning of
the exercise of any right, power or remedy shall not be construed to be a
waiver of the right to exercise at the same time or thereafter any other
right, power or remedy. No delay or omission by the Mortgagee or by the
holder of any of the Indebtedness hereby secured in the exercise of any
right or power or in the pursuance of any remedy accruing upon any Event
of Default shall impair any such right, power or remedy or be construed
to be a waiver of any such Event of Default or to be an acquiescence
therein; nor shall the acceptance by the Mortgagee of any security or of
any payment of or on account of the Indebtedness hereby secured maturing
after any Event of Default or of any payment on account of any past
default be construed to be a waiver of any right to take advantage of any
future Event of Default or of any past Event of Default not completely
cured thereby.
Section 9. If at any time after an Event of Default and prior
to any foreclosure action having been taken by the Mortgagee under any of
the Loan Documents to realize upon the security provided by such
documents, the Shipowner offers completely to cure all Events of Default
and to pay all expenses, advances and damages to the Mortgagee consequent
to such Events of Default, with interest at the rate provided for late
payments herein, then and in the case of the first such Event of Default,
the Mortgagee shall, and in the case of any succeeding Events of Default,
the Mortgagee may, but shall not be required to, accept such offer and
payment and restore the Shipowner to its former position, but such action
shall not affect any subsequent Event of Default or impair any rights
consequent thereon.
Section 10. In case the Mortgagee shall have proceeded to
enforce any right, power or remedy under this Mortgage by foreclosure,
entry or otherwise, and such proceedings shall have been discontinued or
abandoned for any reason or shall have been determined adversely to the
Mortgagee, then and in every such case the Shipowner and the Mortgagee
shall be restored to their former positions and rights hereunder with
respect to the property subject or intended to be subject to this
Mortgage, and all rights, remedies and powers of the Mortgagee shall
continue as if no such proceedings had been taken.
Section 11. The proceeds of any sale of the Vessel received by
the Mortgagee and the net earnings of any charter operation or other use
of the Vessel received by the Mortgagee under any of the rights, powers
or remedies herein specified and any and all other moneys received by the
Mortgagee pursuant to or under the terms of this Mortgage or in any
proceedings hereunder, the application of which has not elsewhere herein
been specifically provided for, shall be applied as follows:
FIRST: To the payment of all expenses and charges,
including the expenses of any sale, the expenses of any
retaking, attorney's fees, court costs, and any other
expenses or advances made or incurred by the Mortgagee in the
protection of its rights or the pursuance of its remedies
hereunder;
SECOND: To the payment of the Indebtedness hereby
secured pursuant to Section 10.4 of the Credit Facility
Agreement, whether due or not, including interest thereon to
the date of such payment;
THIRD: To the payment of any surplus thereafter
remaining to the Shipowner or to whomever may be entitled
thereto.
Section 12. Until one or more of the Events of Default shall
happen, the Shipowner (a) shall be suffered and permitted to retain
actual possession and use of the Vessel and (b) shall have the right,
from time to time, in its discretion, and without application to the
Mortgagee, and without obtaining a release thereof by the Mortgagee, to
dispose of, free from the lien hereof, any boilers, engines, machinery,
masts, spars, sails, rigging, boats, anchors, chains, tackle, apparel,
furniture, fittings or equipment, drilling equipment, pumps, drill pipes,
collars, racking, housing, spare parts and supporting inventory, vehicles
and living quarters or any other appurtenances of the Vessel that are no
longer useful, necessary, profitable or advantageous in the operation of
the Vessel, first or simultaneously having provided for the replacement
thereof by new boilers, engines, machinery, masts, spars, sails, rigging,
boats, anchors, chains, tackle, apparel, furniture, fittings, equipment,
drilling equipment, pumps, drill pipes, collars, racking, housing, spare
parts and supporting inventory, vehicles and living quarters or other
appurtenances of substantially equal value to the Shipowner, which shall
forthwith become subject to the lien of this Mortgage as a first naval
mortgage thereon.
Section 13. If the entire Indebtedness hereby secured be paid
as and when the same becomes due and payable, and if the Shipowner also
pays or causes to be paid all other sums payable by the Shipowner
hereunder and under the Credit Facility Agreement then this Mortgage and
the lien, rights and interest hereby granted shall cease, determine and
become null and void, and the Mortgagee shall, at the request of the
Shipowner, execute and deliver such instrument or instruments of
satisfaction as may be necessary to satisfy and discharge the lien
hereof; and forthwith the estate, right, title and interest of the
Mortgagee in and to all property subject to this Mortgage shall thereupon
cease, determine and become null and void.
ARTICLE III
Sundry Provisions.
Section 1. The names, surnames, civil status, occupation and
domicile of the creditor and debtor are as follows:
CREDITORS:
Name: Internationale Nederlanden Bank, N.V.
De Amsterdamse Poort
1102 MG Amsterdam Zuid-Oost
The Netherlands
Telefax No.: 011-31-2-05-67-21-99
Civil Status: Corporation organized under the laws
of the Netherlands
Occupation: Lending Institution
Domicile: c/o Bank One, Texas, N.A.,
as Trustee
910 Travis, 6th Floor
Houston, Texas 77002-5860
Telephone No.: (713) 751-6834
Telefax No.: (713) 751-6806
SHIPOWNER:
Name: Reading and Bates Borneo
Drilling Co., Ltd.
Civil Status: Corporation organized under the laws of
the State of Oklahoma
Occupation: Shipowner
Domicile: 901 Threadneedle, Suite 200
Houston, Texas 77079
Telefax No.: (713) 496-0285
Section 2. All of the covenants, promises, stipulations and
agreements of the Shipowner in this Mortgage contained shall bind the
Shipowner and its successors and assigns and shall inure to the benefit
of the Mortgagee and its successors and assigns. In the event of any
assignment of this Mortgage, the term "Mortgagee", as used in this
Mortgage, shall be deemed to mean any such assignee.
Section 3. Wherever and whenever herein any right, power or
authority is granted or given to the Mortgagee, such right, power or
authority may be exercised in all cases by the Mortgagee or such agent or
agents as it may appoint, and the act or acts of such agent or agents
when taken shall constitute the act of the Mortgagee hereunder.
Section 4. In the event that any provision of this Mortgage or
the Credit Facility Agreement shall be deemed invalid or unenforceable by
reason of any present or future law or any decision of any authoritative
court, the validity and enforceability of the other provisions hereof or
thereof shall not be affected thereby.
Section 5. The Shipowner agrees to pay all costs and expenses
in connection with the preparation, execution and delivery of the Credit
Facility Agreement, the Notes, the Trust Indenture, this Mortgage and any
other instrument contemplated thereby (including the reasonable fees and
out-of-pocket expenses of counsel to the holder of the Notes, the Credit
Facility Agreement and to the Mortgagee and of local counsel selected by
said counsel in any jurisdiction involved in the transactions
contemplated by the Credit Facility Agreement and this Mortgage) and
costs and expenses, including counsel fees, in connection with the
enforcement of the Credit Facility Agreement, the Notes, the Trust
Indenture, this Mortgage and any other instrument contemplated thereby,
as well as costs for translations and any and all stamp and other taxes
of every character, if any, now or hereafter in effect, whether foreign
or domestic, not including taxes imposed on the income of the holder
hereof by the Netherlands or any political subdivisions thereof, which
may be payable or determined to be payable in connection with the
execution, delivery, performance or enforcement of the Credit Facility
Agreement, the Notes, the Trust Indenture and this Mortgage, and any
other instrument contemplated thereby and the payments to be made
thereunder, whether any such tax be imposed upon the holder of the Credit
Facility Agreement, the Notes, the Trust Indenture or the Mortgage, and
to save any holder of the Credit Facility Agreement, the Notes, the Trust
Indenture and the Mortgagee harmless from any and all liabilities with
respect to or resulting from any delay or omission to pay such taxes.
Section 6. This Mortgage may be executed in any number of
counterparts, and all such counterparts executed and delivered each as an
original shall constitute but one and the same instrument. In case of
any discrepancy between an English counterpart and the Spanish and the
Notarial version thereof in Spanish, as between the parties hereto, the
English counterpart shall control.
Section 7. Any notice or other communication to be given
pursuant hereto shall be sent by hand or by postage prepaid letter or by
cable or telegram or telefax or telex confirmed by letter and addressed:
To the Shipowner:
Reading and Bates Borneo Drilling Co., Ltd.
901 Threadneedle, Suite 200
Houston, Texas 77079
Attention: President
Telephone No.: (713) 496-5000
Telefax No.: (713) 496-0285
Telex No.: 762305
To the Mortgagee:
Bank One, Texas, N.A.
910 Travis, 6th Floor
Houston, Texas 77002-6834
Attention: Mr. Roark Ashie
Telephone No.: (713) 751-6834
Telefax No.: (713) 751-6806
(b) Any notice of communication sent by postage prepaid letter
shall be deemed to be received three days after mailing. Any notice or
communication sent by telex or facsimile shall be deemed received at the
opening of business the day after transmission. Any notice or
communication sent by hand shall be deemed to be received on the day sent
if sent during normal business hours and otherwise at the opening of
business on day following delivery.
Section 8. No provision of or incorporated in this Mortgage or
the Credit Facility Agreement shall be deemed to constitute a waiver by
the Mortgagee of preferred status of this Mortgage given to foreign flag
vessels by Subsections K, L, M and N of the Ship Mortgage Act, 1920, as
amended, of the United States of America or comparable legislation of any
other jurisdiction where this Mortgage may be enforced, and any provision
of or incorporated in this Mortgage which would otherwise constitute such
a waiver shall to such extent be of no force or effect.
FIFTH: The Mortgagee hereby accepts all of the terms and
conditions set forth in this First Naval Mortgage and the First Naval
Mortgage granted hereby.
SIXTH: The Mortgagee and the Shipowner declare that they
hereby confer a special Power of Attorney on Messrs. Arias, Fabrega &
Fabrega, lawyers of Panama, Republic of Panama, empowering each of them
individually to take all necessary steps to file and register this First
Naval Mortgage in the appropriate registries of the Republic of Panama.
IN WITNESS WHEREOF, the parties hereto have executed this
Mortgage as of the day and year first above written.
Reading and Bates Borneo Drilling Co.. Ltd.
By: _________________________________
Attorney-in-Fact
Bank One, Texas, N.A., as Trustee
By: _________________________________
Attorney-in-Fact
<PAGE>
REPUBLIC OF PANAMA )
: ss.:
COUNTY OF _______ )
On the day of _________, 1995, before me personally
came , to me known and known to me to be the person
who executed the foregoing instrument, who being by me duly sworn did
depose and say that he resides at
; that he is attorney-in-fact of Reading &
Bates Borneo Drilling Co., Ltd., an Oklahoma corporation, the corporation
described in and which executed the foregoing instrument; that he signed
his name thereto by order of the Board of Directors of said corporation;
and that said instrument is the act and deed of the corporation.
And the said did further produce to
me sufficient proof that he is of said corporation and that he was duly
authorized by the said corporation to execute the foregoing mortgage, and
I the notary hereby certify that the signature of the said
on the foregoing mortgage is authentic.
______________________________
Notary Public
<PAGE>
REPUBLIC OF PANAMA )
: ss.:
STATE OF _______ )
On the day of ________, 1995, before me personally came
, to me known and known to me to be the person who
executed the foregoing instrument, who being by me duly sworn did depose
and say that he resides at
; that he is Attorney-in-Fact of Bank One,
Texas, N.A., a United States national banking association, the
association described in and which executed the foregoing instrument;
that he signed his name thereto by order of the Board of Directors of
said association; and that said instrument is the act and deed of the
association.
And the said did further produce to
me sufficient proof that he is of said association
and that he was duly authorized by the said association to execute the
foregoing mortgage, and I the notary hereby certify that the signature of
the said on the foregoing mortgage is authentic.
______________________________
Notary Public
EXHIBIT J
TO AMENDED AND RESTATED
CREDIT FACILITY AGREEMENT
AUSTRALIAN FIRST REGISTERED SHIP MORTGAGE
AUSTRALIAN FIRST REGISTERED SHIP MORTGAGE dated April 27, 1995 by
READING & BATES (A) Pty Ltd., a corporation organized under the laws of
the State of Western Australia, Commonwealth of Australia, with its
business address at 901 Threadneedle, Suite 200, Houston, Texas 77079,
(the "Shipowner") to BANK ONE, TEXAS, N.A., a national banking
association, as Trustee, with its business address at 910 Travis,
Houston, Texas 77002-5860, (the "Trustee").
This instrument, as supplemented or amended, is hereinafter
referred to as "this Mortgage".
RECITALS
WHEREAS:
1. The Shipowner is the owner of all sixty-four (64) shares in the
Australian flag drilling rig RON TAPPMEYER, Official No. ______, port of
documentation, _______, _____ built in Singapore (the "Vessel"), which
Vessel has been duly registered in the name of the Shipowner in
accordance with the laws of the Commonwealth of Australia.
2. By the Amended and Restated Credit Facility Agreement, dated as
of April 27, 1995 (the "Amended and Restated Agreement"), between the
Shipowner and the other Borrowers named in the Amended and Restated
Agreement and Internationale Nederlanden Bank, N.V., a corporation
organized under the laws of The Netherlands (such bank shall be referred
to herein as the "Lender"), providing for Advances to, and the issuance
of letters of credit for the accounts of, the Shipowner and the other
Borrowers named in the Amended and Restated Agreement up to an aggregate
amount of USD 65,000,000 (the "Commitment") for the purposes indicated in
the Amended and Restated Agreement. A copy of the form of the Amended
and Restated Agreement is attached hereto as Exhibit A. The obligations
of the Borrowers under the Amended and Restated Agreement are evidenced
by the Promissory Notes of the Shipowner and the other Borrowers (the
"Notes") in the form attached as Exhibit A-1 through A-5 to the Amended
and Restated Agreement.
3. The total amount secured by this Mortgage is USD 65,000,000
representing the total commitment of the Lender to make advances and
issue letters of credit under the Amended and Restated Agreement, plus
interest, all costs and other obligations and covenants under this
Mortgage.
4. By Assignment, Assumption and Amendment No. 2 to Trust
Indenture dated April 27, 1995 among the Shipowner, the other Borrowers
and the Trustee, the Trustee has among other things assumed the rights
and obligations of Texas Commerce Bank National Association in its
capacity as trustee under the Trust Indenture dated March 29, 1991, (as
assigned and as amended, the "Trust Indenture"), and has thereby agreed
to act on behalf of the holder of the Notes with respect to this
Mortgage. A copy of the form of the Trust Indenture is attached hereto
as Exhibit B.
5. The Shipowner, in order to secure the payment of all monies
owing or that may become owing from time to time by the Shipowner to the
Lender or the Trustee under this Mortgage, the Amended and Restated
Agreement or any other Loan Document, all of which amounts the Shipowner
undertakes to pay in accordance with the terms of this Mortgage the
Amended and Restated Agreement and the other Loan Documents (hereinafter
called the "Indebtedness") and to secure the performance and observance
of and compliance with all the covenants, terms and conditions in the
Amended and Restated Agreement, this Mortgage and the other Loan
Documents, has duly authorized the execution and delivery of this
Mortgage under and pursuant to all applicable laws binding on the
Shipowner.
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 of the Indebtedness, and to secure the
performance and observance of and compliance with the covenants, terms
and conditions herein and in the Notes, the Amended and Restated
Agreement and the Trust Indenture the Shipowner has granted, conveyed,
mortgaged, pledged, set over and confirmed and does by these presents,
grant, convey, mortgage, pledge, set over and confirm unto the Trustee,
its successors and assigns, one hundred percent (100%) of the Vessel,
that is, all sixty-four (64) shares of which the Shipowner is the owner
in the Vessel, together with all of the boilers, engines, machinery,
masts, spars, sails, rigging, boats, anchors, chains, tackle, apparel,
furniture, fittings, drilling equipment, pumps, drill pipes, collars,
racking, housing, spare parts and supporting inventory, vehicles and
living quarters (excluding equipment aboard the Vessel which is not owned
by the Shipowner) and all other appurtenances to the Vessel appertaining
or belonging, whether now owned or hereafter acquired, whether on board
or not, and all additions, improvements, and replacements hereafter made
in or to the Vessel.
TO HAVE AND TO HOLD ALL and singular and above mortgaged and
described property unto the Trustee, to its own use, benefit and behalf
forever.
PROVIDED, only, and the conditions of these presents are such, that
if the Shipowner, its successors or assigns, shall pay or cause to be
paid in full the Indebtedness as and when the same shall become due and
payable in accordance with the terms of this Mortgage, the Notes, the
Trust Indenture and the Amended and Restated Agreement and shall pay or
cause to be paid all other amounts which become due and payable in
accordance with the terms of this Mortgage, the Notes, the Trust
Indenture or the Amended and Restated Agreement, then these presents and
the rights hereunder shall cease, terminate and be void; otherwise to be
and remain in full force and effect.
The Shipowner hereby agrees with the Trustee that the Vessel now or
at any time subject to the lien of this Mortgage is to be held by the
Trustee subject to the further agreements and conditions hereinafter set
forth.
ARTICLE I
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SHIPOWNER
SECTION 1. To Pay the Indebtedness, etc. The Shipowner will pay
the Indebtedness and will observe, perform and comply with the covenants,
terms and conditions herein and in the Notes, the Amended and Restated
Agreement and the Trust Indenture, expressed or implied, on its part to
be observed, performed or complied with.
SECTION 2. Due Organization. The Shipowner is duly organized and
is now existing as a proprietary limited company under the Corporations
Law and will remain so during the term of this Mortgage; it is duly
authorized to mortgage the Vessel; all action necessary and required by
law for the execution and delivery of the Notes, the Amended and Restated
Agreement, the Trust Indenture and this Mortgage has been duly and
effectively taken; this Mortgage, the Amended and Restated Agreement, the
Trust Indenture and the Notes are and will be valid and enforceable
obligations of the Shipowner in accordance with their terms, subject, as
to enforcement, to bankruptcy, insolvency, reorganization and other laws
of general applicability relating to or affecting creditors rights and to
general equity principles. The Shipowner will, so long as the Notes are
outstanding, do all such acts and things as may be necessary or advisable
to maintain, without qualification, the correctness and accuracy of the
preceding sentence of this Section 2.
SECTION 3. Ownership of Vessel. The Shipowner lawfully owns and
is lawfully possessed of the Vessel free from any lien and encumbrance
whatsoever, other than this Mortgage, and the Shipowner will warrant and
defend the title and possession thereto and every part thereof for the
benefit of the Trustee against the claims and demands of all persons
whomsoever. The Shipowner agrees to warrant and defend the title and
possession of the Vessel and every part each against the claims and
demands of all persons whomsoever arising as the result of any such
liens, charges or encumbrances for the benefit of the Trustee.
SECTION 4. Recording. The Shipowner will cause this Mortgage to
be duly registered in the Register of Ships pursuant to Section 38 of the
Shipping Registration Act 1981 (Commonwealth), on the date hereof, and
will otherwise comply with and satisfy all of the provisions of the
Shipping Registration Act 1981 (Commonwealth) in order to establish and
maintain this Mortgage as a first registered mortgage thereunder upon the
Vessel and upon all renewals, replacements and improvements made in or to
the same.
SECTION 5. Operation and Documentation; Citizenship. The
Shipowner will not cause or permit the Vessel to be operated in any
manner contrary to law and the Shipowner will not engage in any unlawful
trade or violate any law or carry any cargo that may expose the Vessel to
penalty, forfeiture or capture or otherwise operate the Vessel in any way
which might jeopardize the Trustee's security in the Vessel. The
Shipowner will not do, or suffer or permit to be done, anything which can
or may injuriously affect the registration or enrollment of the Vessel
under the laws and regulations of the Commonwealth of Australia and will
at all times keep the Vessel duly documented thereunder. The Shipowner
will at all times remain an Australian national within the meaning set
out in Section 3(1) of the Shipping Registration Act 1981 (Commonwealth).
SECTION 6. Payment of Taxes. The Shipowner will from time to time
discharge or cause to be paid and discharged as they become due and
payable all taxes, assessments and governmental charges lawfully levied
or assessed or imposed on the Shipowner or upon the Vessel or upon any of
its properties or assets or in respect of its franchises or income;
provided, however, that the Shipowner shall have the right to contest or
cause to be contested in good faith and by appropriate proceedings, any
such tax, assessment or governmental charge, and, pending such contest,
may defer or cause to be deferred the payment thereof, so long as such
deferment and payment shall not subject the Vessel to forfeiture or loss,
and so long as there shall have been set up adequate reserves with
respect thereto.
SECTION 7. No Authority to Incur Liens. Neither the Shipowner,
any charterer, the Masters of the Vessel nor any other person has or
shall have any right, power or authority to create, incur or permit to be
placed or imposed or continued upon the Vessel any liens whatsoever other
than the lien of this Mortgage and Permitted Liens.
SECTION 8. Notice of Mortgage. The Shipowner will place, and at
all times and places will retain, a properly certified copy of this
Mortgage on board the Vessel with her papers and will cause such
certified copy and the Vessel's marine documents to be exhibited to any
and all persons having business with it which might give rise to any lien
thereon and to any representatives of the Trustee; and will place and
keep prominently displayed in the chart room and in the Master's cabin of
the Vessel a framed printed notice reading as follows:
"NOTICE OF MORTGAGE
This Vessel is covered by a First Registered Mortgage
in favor of Bank One, Texas, N.A., Trustee, Mortgagee, under
Section 38 of the Shipping Registration Act 1981
(Commonwealth). Under the terms of said Mortgage neither the
Owner, any Charterer, the Master of this Vessel nor any other
person has any right, power or authority to create, incur or
permit to be placed or imposed or continued upon this Vessel
any lien whatsoever other than said First Registered Mortgage
and liens for crew's wages, wages of stevedores and salvage."
SECTION 9. Discharge of Liens. Except for the lien of this
Mortgage and Permitted Liens, the Shipowner will not suffer to be
continued any lien, encumbrance or charge on the Vessel and in due
course, and in any event within ninety (90) days after the same becomes
due and payable, will pay or cause to be discharged, or make adequate
provision for the satisfaction or discharge of, all lawful claims or
demands, or will cause the Vessel to be released or discharged from any
lien, encumbrance or charge therefor.
SECTION 10. Notice of Libels and Damage. If any libel be filed
against the Vessel or any execution or other process of any court or
tribunal is issued against or levied upon the Vessel or if the Vessel is
otherwise attached, levied upon or taken into custody by virtue of any
legal proceeding in any court, tribunal or governmental authority (de
jure or de facto), or if the Vessel suffers damage in excess of
USD 1,000,000, the Shipowner will promptly notify the Trustee thereof by
telefax or telex, confirmed by letter, addressed to the Trustee at its
corporate trust office, and, in the case of any such libel, execution or
attachment, within thirty (30) days will cause said Vessel to be released
and all liens thereon to be discharged, and will promptly notify the
Trustee thereof in the manner aforesaid.
SECTION 11. Classification. The Shipowner will without cost or
expense to the Trustee, (a) maintain the Vessel and its machinery in such
condition and repair as will keep the Vessel entitled to the highest
classification in the American Bureau of Shipping, or other
classification society of like standing approved in writing by the
Trustee, for the Vessel , (b) keep the Vessel, its machinery, boilers,
appurtenances and spare parts in a good state of repair, wear and tear
and depreciation excepted, and in efficient operating condition in
accordance with good commercial maintenance practices, (c) keep the
Vessel tight, staunch, strong and in all respects seaworthy, in so far as
due diligence can make it (d) maintain the Vessel with full unexpired
classification and other required certificates and (e) furnish prior to
June 1 of each year to the Trustee, a written statement of the
classification society that the classification referred to in (a) above
is in effect. The Vessel shall, and the Shipowner covenants that it
will, at all times comply with all applicable laws, treaties and
conventions of the United States of America, or to which the United
States of America is a party, from time to time in effect, and rules and
regulations issued thereunder, and shall have on board as and when
required thereby valid certificates showing compliance therewith. The
Shipowner will not make, or permit to be made, any substantial change in
the structure, type, rig or speed of the Vessel which would alter the
essential character of the Vessel or materially impair its use for the
purpose for which such was designed without first receiving the written
approval thereof by the Trustee, which approval shall not be unreasonably
withheld.
SECTION 12. Right of Inspection. The Shipowner will at all
reasonable times afford the Trustee or its authorized representatives
full and complete access to the Vessel during normal business hours for
the purpose of inspecting the Vessel and its cargoes and papers, and the
Shipowner will deliver for inspection copies of such contracts and
documents relating to the Vessel, whether on board or not, as the Trustee
may reasonably request, provided however, that (i) non-public information
obtained by the Trustee pursuant to any Loan Document concerning the
Shipowner, the Vessel, any other assets or the Shipowner's financial
condition and prospects shall be kept confidential by the Trustee
subject, however, to requests from the Lender, any applicable
Governmental Agencies and to disclosures of such information to assignees
and participants (and potential assignees and participants) pursuant to
Section 18.8 of the Amended and Restated Agreement, unless such non-
governmental parties shall agree prior thereto to be bound by this
Section 12 and (ii) any inspection of the Vessel, its cargoes and papers
shall be subject to the requirements of any operators of the Vessel and
any applicable Governmental Agencies.
SECTION 13. Registry of Vessel. The Shipowner will not transfer
or change the flag or port of documentation of the Vessel without the
written consent of the Trustee first had and obtained, which such consent
shall not be unreasonably withheld, 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. Upon
request of the Shipowner, the Trustee will consent to a change of name of
the Vessel.
SECTION 14. Charters, Etc. The Shipowner will not sell, charter
for a period in excess of twelve (12) months or for a period reasonably
expected to exceed twelve (12) months, transfer or mortgage the Vessel
without the written consent of the Trustee, which consent shall not be
unreasonably withheld. Any such written consent to any one sale, demise
charter, time charter, mortgage or transfer shall not be construed to be
a waiver of this provision with respect to any subsequent proposed sale,
demise charter, time charter, mortgage or transfer. Any such sale,
demise charter, time charter, transfer or mortgage of the Vessel shall be
subject to the provisions of this Mortgage and the lien thereof, and
shall not affect the liabilities of the Shipowner hereunder.
SECTION 15. Insurance. (a) The Shipowner will, at its own
expense, when and so long as this Mortgage shall be outstanding, insure
or cause to be insured the Vessel against the risks indicated below, in
addition to such other risks which should be covered by experienced,
prudent, and responsible companies engaged in the offshore contract
drilling of hydrocarbons in places and under conditions comparable to
those in which the Vessel is employed from time to time and possessing
financial and operating characteristics similar to the Borrowers
("Similar Companies") in accordance with the usual and customary
practices of Similar Companies, and keep her insured, in lawful money of
the United States, for not less than the higher of (i) the full
commercial value of such Vessel and (ii) the amount of coverage that
would be obtained by Similar Companies on such Vessel. The 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 be on the basis of "new for old" with no deduction for depreciation
and 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 Vessel. Such
insurance shall not include a deductible or self-insured retention in
excess of USD 250,000 per occurrence. The Shipowner shall also obtain
such workmen's compensation or longshoremen's and harbor worker's
insurance as shall be required by applicable law, including endorsements
for Outer Continental Shelf operations, borrowed servant, voluntary
compensation, and in rem claims. In addition, the Shipowner shall, at
its own expense, furnish to the Trustee a mortgagee's single interest
policy (or shall cause the hull and machine insurance on the Vessel to be
endorsed to afford breach of warranty coverage for the benefit of the
Trustee) providing coverage in an amount equal to at least the full
commercial value of the 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 Vessel through
underwriters acceptable to the Trustee. The Vessel shall not undertake
any drilling operations, not carry any cargoes or proceed into an area
then excluded by trading warranties under its marine or war risk policies
(including protection and indemnity) without obtaining all necessary
additional coverage, satisfactory in form and substance, and evidence of
which shall be furnished, to the Trustee.
(b) The policy or policies of insurance shall be issued by
responsible underwriters acceptable to the Trustee, shall contain
conditions, terms, stipulations and insuring covenants reasonably
satisfactory to the Trustee and shall be kept in full force and effect by
the Shipowner so long as this Mortgage shall be outstanding. All such
policies, binders and other interim insurance contracts shall be executed
and issued in the name of the Shipowner and shall provide that loss be
payable to the Trustee for distribution by it to itself and the Shipowner
as their interests may appear. Copies of all such policies, binders and
other interim insurance contracts shall be deposited with the Trustee.
The Shipowner shall furnish to the Trustee annually, not later than
December 31st, a detailed report signed by a firm of marine insurance
brokers satisfactory to the Trustee as to the insurance maintained in
respect of the Vessel, as to their opinion as to the adequacy thereof and
as to compliance with the provisions of this Section 15.
(c) In addition, the Shipowner shall maintain or cause to be
maintained protection and indemnity insurance, including coverage for
contractual liability, contractual and legal wreck removal, crew
coverage, excess collision, salvage, general average, care, custody and
control coverage through underwriters or associations acceptable to the
Trustee in an amount equal to the higher of (i) the market value of the
Vessel and (ii) the amount of coverage that would be obtained by Similar
Companies on the 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. Such insurance shall not include a
deductible or self-insured retention in excess of USD 250,000 per
occurrence.
(d) Such insurance policies shall provide for at least ten days'
or, in the case of any policy covering war risk perils, seven days' prior
notice to be given to the Trustee by the underwriters or association in
the event of (i) cancellation or reduction in coverage (except in the
case of war risk insurance) or (ii) the failure of the Shipowner to pay
any premium or call which would suspend coverage under the policy or the
payment of a claim thereunder. A copy of such insurance shall be
furnished to the Trustee.
(e) Unless otherwise required by the Trustee by notice to the
underwriters, although the following insurance is payable to the Trustee,
(i) any loss under any insurance on the Vessel with respect to protection
and indemnity risks may be paid directly to the Shipowner to reimburse it
for any loss, damage or expense incurred by it and covered by such
insurance or to the person to whom any liability covered by such
insurance has been incurred, and (ii) in the case of any loss (other than
a loss covered by clause (i) above) under any insurance with respect to
the Vessel involving any damage to the Vessel, the underwriters may pay
direct for the repair, salvage or other charges involved or, if the
Shipowner shall have first fully repaired the damage or paid all of the
salvage or other charges, may pay the Shipowner as reimbursement
therefor; provided, however, that if such damage involves a loss in
excess of $500,000, the underwriters shall not make such payment without
first obtaining the written consent thereto of the Trustee. Any loss
covered by this paragraph which is paid to the Trustee but which might
have been paid, in accordance with the provisions of this paragraph,
directly to the Shipowner or others, shall be paid by the Trustee to, or
as directed by, the Shipowner and all other payments to the Trustee of
losses covered by this paragraph shall be paid by the Trustee to the
Lender for application pursuant to Section 9.4 of the Amended and
Restated Agreement.
(f) In the event of an actual or constructive total loss or a
compromised constructive total loss or requisition of the Vessel, all
insurance payments therefor shall be paid to the Trustee. The Shipowner
shall not declare or agree with underwriters that the Vessel is a
constructive or compromised, agreed or arranged constructive total loss
without the prior written consent of the Trustee.
(g) In the event of an actual or constructive total loss of the
Vessel, the Trustee shall retain out of the insurance payments received
on account of such loss and held by the Trustee in accordance with
Section 305 of the Trust Indenture, any sum or sums that shall be or
become owing the Trustee under this Mortgage for the cost, if any, of
collecting the insurance, which sum or sums shall become the sole
property of the Trustee, and pay the balance to the Lender for
application pursuant to Section 9.4 of the Amended and Restated
Agreement.
(h) The Shipowner shall at all times during which the Vessel is
operating within the jurisdiction of the United States of America or the
Commonwealth of Australia, maintain or cause to be maintained insurance
or post bond or maintain or cause to be maintained approved evidence of
financial responsibility with respect to the Vessel to cover the actual
cost of removal of discharged oil for which the Shipowner or the Vessel
may be held strictly liable (or held liable due to the negligence of the
Shipowner, any charterer or any other Person) under any legislation or
applicable laws including, without limitation, the Clean Water Act of
1977, the Oil Pollution Act of 1990 or the Outer Continental Shelf Lands
Act, or under any legislation or applicable laws which, in the future,
may apply to the Vessel or to the Shipowner; and the Shipowner shall
maintain insurance covering similar pollution risks or liabilities
incident thereto under any law, regulation, or judicial decision of any
foreign jurisdiction or jurisdictions or political subdivision thereof
applicable to the Shipowner, the Vessel, or its operations.
SECTION 16. Reimbursement of Expenses. The Shipowner will
reimburse the Trustee promptly, with interest at the rate provided for in
Section 8.3 of the Amended and Restated Agreement for any and all
expenditures which the Trustee may from time to time make, lay out or
expend in providing such protection in respect of insurance, discharge or
purchase of liens, taxes, dues, assessments, governmental charges, fines
and penalties lawfully imposed, repairs, attorney's fees and other
matters as the Shipowner is obligated herein to provide, but fails to
provide within the time required. Such obligation of the Shipowner to
reimburse the Trustee shall be an additional indebtedness due from the
Shipowner, secured by this Mortgage, and shall be payable by the
Shipowner on demand. The Trustee, though privileged to do so, shall be
under no obligation to make any such expenditures, nor shall the making
thereof relieve the Shipowner of any default in that respect.
SECTION 17. Office for Service of Process. The Shipowner
maintains an office at 901 Threadneedle, Suite 200, Houston, Texas 77079,
at which summons and/or other legal process in any suit based on rights
arising out of this Mortgage, the Amended and Restated Agreement or the
Notes may be served. The Shipowner agrees that it will continue to
maintain an office at such address, or at such other address as shall be
designated from time to time by notice to the Trustee. The Shipowner
agrees that any such process shall be deemed duly served if left at such
address (or if notice of a changed address shall have been given the
Trustee, at such changed address) whether or not the Shipowner shall in
fact maintain an office at such address at the time of such service or
shall in fact receive or have notice of such process.
SECTION 18. Requisition, Seizure or Forfeiture. The Shipowner
covenants and agrees that, in the event the Vessel is requisitioned,
seized or forfeited by any Government or by any group or body purporting
to act as such, and such requisition, seizure or forfeiture is not
reversed and the Vessel released therefrom within thirty (30) days, the
Shipowner, subject to the provision in the next following sentence, will
cause the Notes to be prepaid on a date not later than one hundred eighty
(180) days after such requisition, seizure or forfeiture. To the extent
that the Shipowner is able or entitled to do so, the Shipowner will cause
all payments made in respect of any such requisition, seizure or
forfeiture to be paid to the Trustee to be held and applied by the
Trustee for prepayment of the Notes in the manner set forth in Section 11
of Article II of this Mortgage; provided however, that if any such
requisition, seizure or forfeiture applies only to the use of the Vessel,
the provisions of this Section 18 shall not apply if and so long as the
Shipowner shall not be in default in respect of any of its obligations
under this Mortgage, the Amended and Restated Agreement or the Notes
secured hereby.
ARTICLE II
EVENTS OF DEFAULT AND REMEDIES
SECTION 1. Generally. In case any one or more of the following
events herein termed "Events of Default" shall occur and be continuing:
(a) Failure by the Shipowner to pay any amount due under
the Notes when due, subject to the applicable grace
period; or
(b) Default in the due and punctual observance and
performance of any of the provisions of the Amended and
Restated Agreement or the Trust Indenture and same
shall continue unremedied for ten (10) days after
notice thereof; or
(c) Default in the due and punctual observance and
performance of any of the provisions of Sections 5, 6,
9, 10, 11, 12, 13, 14, 15 and 18 of Article I hereof;
or
(d) Default in the due and punctual observance and
performance of any other provision of this Mortgage and
the same shall continue unremedied for ten (10) days
after notice to the Shipowner.
THEN, upon the occurrence and continuance of any Event of Default
after the applicable grace period, and in each and every such case, in
addition to the rights and powers conferred on it by law or in equity,
the Trustee shall have the right to:
(1) Declare the Notes, together with all other sums payable under
the Amended and Restated Agreement and this Mortgage, to be
due and payable immediately, and upon such declaration the
same shall become due and be immediately due and payable,
without the need to obtain a judgment or for any other
formality; any amount not paid when due shall bear interest
at the rate provided for in Section 8.3 of the Amended and
Restated Agreement;
(2) Exercise all the rights and remedies in foreclosure and
otherwise given to mortgagees by the laws and regulations of
the United States of America, the Commonwealth of Australia,
any of the States or Territories of Australia, or of the
countries wherein the Vessel shall then be found or of any
country wherein the Vessel may thereafter be found or of any
other applicable jurisdiction;
(3) Bring suit at law, in equity or in admiralty, as the Trustee
may be advised, to recover judgment for any and all amounts
due under the Notes, or otherwise hereunder, and collect the
same from the Shipowner or any other obligation on the Notes
and/or out of either the income from operations of the
Shipowner or from the proceeds from the disposition of the
Vessel.
(4) Take and enter into possession of the Vessel without legal
process wherever the same may be; and the Shipowner or other
person in possession, forthwith upon demand of the Trustee,
shall surrender to the Trustee possession of the Vessel and
the Trustee may, without being responsible for loss or
damage, hold, lay up, lease, charter, operate or otherwise
use the Vessel for such time and upon such terms as it may
deem to be for its best advantage, accounting only for the
net profits, if any, arising from such use of the Vessel and
charging upon all receipts from the use of the Vessel or from
the sale thereof by court proceedings or pursuant to clause
(5) next following, all costs, expenses, charges, damages or
losses by reason of such use; and if at any time the Trustee
shall avail itself of the right herein given it to take the
Vessel and shall take the Vessel, the Trustee shall have the
right to dock the Vessel for a reasonable time at any dock,
pier or other premises of the Shipowner without charge, or to
dock it any other place at the cost and expense of the
Shipowner;
(5) Without legal process and without being responsible for loss
or damage, sell the Vessel at such place and at such time as
the Trustee may specify and in such manner as the Trustee may
deem advisable free from any claim by the Shipowner in
admiralty, in equity, at law or by statute, after first
giving notice of the time and place of any such sale with a
general description of the property in the following manner:
(a) by publishing such notice for ten consecutive days in a
daily newspaper of general circulation published in
Houston, Texas;
(b) if the place of sale should not be Houston, Texas, then
also by publication of a similar notice in a daily
newspaper, if any, published at the place of sale; and
(c) by mailing a similar notice to the Shipowner on the day
of first publication.
The Trustee may adjourn any such sale from time to time by announcement
at the time and place appointed for such sale or for such adjourned sale,
and without further notice or publication the Trustee may make any such
sale at the time and place to which the same shall be so adjourned. Any
such sale may be conducted without bringing the Vessel to the place
designated for such sale and in such manner as the Trustee may deem to be
for its best advantage.
SECTION 2. Sale of Vessel. Any sale of the Vessel made in
pursuance of this Mortgage, whether under the power of sale hereby
granted or any judicial proceedings, shall operate to divest all right,
title and interest of any nature whatsoever of the Shipowner therein and
thereto, and shall bar the Shipowner, its successors and assigns, and all
persons claiming by, through or under them. At any such sale, the
Trustee may bid for and purchase the Vessel and upon compliance with the
terms of sale may hold, retain and dispense of the Vessel without further
accountability therefor. In case of any such sale, the Trustee shall be
entitled, for the purpose of making settlement or payment for the Vessel
purchased, to use and apply to the outstanding Notes the sums payable to
the Trustee out of the net proceeds of such sale after allowing for the
costs and expense of sale and other charges; and thereupon the Trustee
shall be credited, on account of such purchase price, with the net
proceeds that shall have been so credited upon the Notes. No purchaser
of the Vessel shall be bound to inquire whether notice has been given, or
whether any default has occurred, or as to the propriety of the sale or
as to the application of the proceeds thereof.
SECTION 3. Trustee as Attorney-in-Fact for Shipowner. The Trustee
is hereby appointed attorney-in-fact of the Shipowner to execute and
deliver to any purchaser aforesaid, and is hereby vested with full power
and authority to make, in the name and in behalf of the Shipowner, a good
conveyance of the title to the Vessel. In the event of the sale of the
Vessel, under any power herein contained, the Shipowner will, if and when
required by the Trustee, execute such form of conveyance of the Vessel as
the Trustee may direct or approve.
SECTION 4. Trustee Receipt of Moneys upon Certain Events.
The Trustee is hereby appointed attorney-in-fact of the Shipowner upon
the occurrence and continuance beyond any applicable period of grace of
any Event of Default, in the name of the Shipowner to demand, collect,
receive, compromise and sue for, so far as may be permitted by law, all
freights, hire, earnings, issues, revenues, income and profits of the
Vessel and all amounts due from underwriters under any insurance premiums
or otherwise, salvage awards and recoveries in general average or
otherwise, and all other sums, due or to become due at the time of the
happening of any Event of Default in respect of the Vessel, or in respect
of any insurance thereon from any person whomsoever, and to make, give,
and execute in the name of the Shipowner acquittances, receipts,
releases, or other discharges for the same, whether under seal or
otherwise, and to endorse and accept in the name of the Shipowner all
checks, notes, drafts, warrants, agreements and all other instruments in
writing with respect to the foregoing.
SECTION 5. Delivery of Vessel; Receiver. Whenever any right to
enter and take possession of the Vessel accrues to the Trustee, it may
require the Shipowner to deliver, and the Shipowner shall on demand, at
its own cost and expense deliver the Vessel to the Trustee at the
location designated by the Trustee. If any legal proceedings shall be
taken to enforce any right under this Mortgage, the Trustee shall be
entitled as a matter of right to the appointment of a receiver or manager
or receiver and manager (the "Receiver") of the Vessel and the freights,
hire, earnings, issues, revenues, income and profits due or to become due
and arising from the operation thereof. Any Receiver so appointed shall
be the agent of the Shipowner unless at any time otherwise specified by
the Trustee. The Shipowner shall be solely responsible for the
Receiver's renumeration, costs and expenses. The Trustee may at anytime
terminate the appointment of the Receiver. In addition to all the rights
and powers conferred in the Receiver at law and in equity, a Receiver
shall be entitled to exercise all of the powers and rights conferred upon
the Trustee under this Mortgage or any other Loan Document.
SECTION 6. Trustee Enforcement of Liens. The Shipowner authorizes
and empowers the Trustee or its appointee or any of them to appear in the
name of the Shipowner, its successors and assigns, in any court of any
country or nation of the world where a suit is pending against the Vessel
from which the Vessel has not been released and to take such proceedings
as to it may seem proper towards the defense of such suit and discharge
of such lien, in the event that the Shipowner shall not be taking
proceedings reasonably satisfactory to the Trustee, and in such case all
expenditures made or incurred by the Trustee or its appointee for the
purpose of such defense or discharge shall be a debt due from the
Shipowner, its successors and assigns, to the Trustee, and shall be
secured by the lien of this Mortgage in like manner and extent as if the
amount and description thereof were written herein.
SECTION 7. Acceleration of Notes. Upon declaration of
acceleration pursuant to clause (1) of Section 1 of this Article II,
then, upon written demand of the Trustee, the Shipowner will pay to the
Trustee the whole amount due and payable on the Notes and in case the
Shipowner shall fail to pay the same forthwith upon such demand, the
Trustee shall be entitled to recover judgment for the whole amount so due
and unpaid, together with such further amounts as shall be sufficient to
cover the reasonable costs and expenses of collection, including a
reasonable compensation to the Trustee and its agents, solicitors,
attorneys and counsel and any necessary advances, expenses and
liabilities made or incurred by them hereunder, including without
limitation, solicitors costs on a solicitors and own client basis. All
moneys collected by the Trustee under this Section 7 shall be applied by
the Trustee in accordance with the provisions of Section 11 of this
Article II.
SECTION 8. Powers of Trustee Cumulative. Each and every power and
remedy herein given to the Trustee shall be cumulative and shall be in
addition to every other power and remedy herein given. Each and every
power and remedy given herein may be exercised from time to time and as
often and in such order as may be deemed expedient by the Trustee, 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 given herein. No delay
or omission by the Trustee in the exercise of any right or power or in
the pursuance of any remedy accruing upon the occurrence of any Event of
Default as above defined shall impair any such right, power or remedy
given it or be construed to be a waiver of the right to exercise at the
same or thereafter any other stated power or remedy. No delay or
omission by the Trustee in the exercise of any given right or power or
remedy shall be or shall be construed to be a waiver of any such Event of
Default or to be any acquiescence therein; nor shall the acceptance by
the Trustee of any security or of any payment of or on account of the
Notes after any Event of Default or of any payment on account of any past
due default be construed to be a waiver of any right to take advantage of
any future Event of Default or of any past Event of Default not
completely cured thereby.
SECTION 9. Cure of Events of Default. If at any time after an
Event of Default and declaration of acceleration pursuant to clause (1)
of Section 1 of this Article II and prior to any foreclosure action
having been taken by the Trustee under any of the Loan Documents to
realize upon the security provided by such documents, the Shipowner
offers completely to cure all Events of Default and to pay all expenses,
advances and damages to the Trustee consequent to such Events of Default,
with interest at the rate provided for in Section 8.3 of the Amended and
Restated Agreement, then and in the case of the first such Event of
Default, the Trustee shall, and in the case of any succeeding Events of
Default, the Trustee may accept such offer and payment and restore the
Shipowner to its former position. However, such action shall not affect
any subsequent Event of Default or impair any rights consequent thereon.
SECTION 10. Abandonment. In case the Trustee shall have proceeded
to enforce any right, power or remedy under this Mortgage by foreclosure,
entry or otherwise, and such proceedings shall have been discontinued or
abandoned for any reason or shall have been determined adversely to the
Trustee then and in every such case the Shipowner and the Trustee shall
be restored to their former positions and rights hereunder with respect
to the property subject or intended to be subject to this Mortgage, and
all rights, remedies and powers of the Trustee shall continue as if no
such proceedings had been taken.
SECTION 11. Application of Proceeds from Sale or Use of Vessel.
The proceeds of any sale of the Vessel and the net earnings of any
charter, operation or other use of the Vessel by the Trustee under any of
the powers herein specified and any and all other money received by the
Trustee 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, shall be applied as follows:
FIRST: To the payment of all reasonable expenses of any sale,
retaking, solicitor's and attorney's fees, court costs, necessary
repairs and any other expenses or advances made or incurred by the
Trustee for the protection of its rights or the pursuance of its
remedies hereunder and reasonable compensation to the Trustee, its
agents, solicitors, attorneys and counsel, including without
limitation, solicitors costs on a solicitors and own client basis,
and to provide adequate indemnity against liens claiming priority
over or equality with the lien of this Mortgage;
SECOND: To the payment of the Indebtedness hereby secured pursuant
to Section 9.4 of the Amended and Restated Agreement, whether due
or not, including interest thereon to the date of such payment; and
THIRD: To the payment of any surplus thereafter remaining to the
Shipowner or to whomsoever may be entitled thereto.
SECTION 12. Rights of Shipowner. Until one or more of the Events
of Default herein above described shall happen, the Shipowner (a) shall
be suffered and permitted to retain actual possession and use of the
Vessel; (b) may at any time alter, repair, change or re-equip the Vessel,
subject, however, to the provisions of Section 11 of Article I hereof and
(c) shall have the right, from time to time in its discretion and without
application to the Trustee, and without obtaining a release thereof by
the Trustee, to dispose of, free from the lien hereof, any boilers,
engines, machinery, masts, spars, sails, rigging, boats, anchors, chains,
tackle, apparel, furniture, fittings, drilling equipment, pumps, drill
pipes, collars, racking, housing, spare parts and supporting inventory,
vehicles or living quarters or any other appurtenances of the Vessel,
first or simultaneously replacing the same by boilers, engines,
machinery, masts, spars, sails, rigging, boats, anchors, chains, tackle,
apparel, furniture, fittings, drilling equipment, pumps, drill pipes,
collars, racking, housing, spare parts and supporting inventory, vehicles
or living quarters or other appurtenance of substantially equal value to
the Shipowner, which shall forthwith become subject to the lien of this
Mortgage as a preferred mortgage thereon.
SECTION 13. Notice of Event of Default. Immediately upon the
occurrence of an Event of Default (as defined in Section 1, Article II,
hereof), or of any event which with notice or lapse of time or both would
constitute an Event of Default, the Shipowner shall notify the Trustee of
such occurrence in writing setting forth in reasonable detail the
circumstances surrounding such Event of Default or other event and what
action the Shipowner proposes to take with respect thereto.
SECTION 14. Severability. (a) If any provision of this Mortgage
should be deemed invalid or shall be deemed to affect adversely the
preferred status of this Mortgage under any applicable law, such
provision shall cease to be a part of and shall be severed from this
Mortgage without affecting the remaining provisions, which shall remain
in full force and effect.
(b) In the event that this Mortgage or any of the documents or
instruments which may from time to time be delivered hereunder or any
provision hereof shall be deemed invalidated by present or future law of
any nation or by decision of any court, this shall not affect the
validity and/or enforceability of all or any other parts of this Mortgage
and, in any such case, the Shipowner covenants and agrees, that, on
demand, it will execute and deliver such other and further agreements
and/or documents and/or instruments and do such things as the Trustee in
its sole discretion may deem to be necessary to carry out the true intent
of this Mortgage.
ARTICLE III
SUNDRY PROVISIONS
SECTION 1. Notices. Any notice to be given under this Mortgage
shall, except as otherwise expressly provided herein, be given by hand
delivering the same, or through registered United States mail (effective
upon receipt) or by telex or telefax, as follows:
(a) to the Trustee:
BANK ONE, TEXAS, NA
910 Travis, 6th Floor
Houston, Texas 77002-5860
Attention: Mr. Roark Ashie
Telephone No. (713) 751-6834
Telefax No. (713) 751-0285
(b) To the Shipowner:
READING & BATES (A) Pty Ltd.
c/o Reading & Bates Exploration Co.
901 Threadneedle, Suite 200
Houston, Texas 77079
Attention: President
Telephone No. (713) 496-5000
Telefax No. (713) 496-0285
Telex No. 762305
unless another address shall be furnished in writing by the party to
receive such notice to the party giving such notice.
SECTION 2. Execution in Counterparts. This Mortgage may be
executed in any number of counterparts and all such counterparts executed
and delivered each as an original shall constitute but one and the same
instrument.
SECTION 3. Interest of Shipowner. The interest of the Shipowner
in the Vessel and the interest mortgaged by this Mortgage is that of
absolute and sole ownership.
SECTION 4. Successors and Assigns. All the covenants, promises,
stipulations and agreements of the Shipowner in this Mortgage contained
shall bind the Shipowner and its successors and assigns and shall inure
to the benefit of the Trustee and its successors and assigns.
SECTION 5. Amendment and Supplements. This Mortgage may not be
modified, amended or supplemented in any respect, or any waiver or
consent given in regard to any of the provisions hereof, except with the
written consent of the Trustee, and then modified, amended or
supplemented only by an instrument in writing executed by the Shipowner
and Trustee.
SECTION 6. Certain Definitions. For all purposes of this
Mortgage, unless the context otherwise requires:
"Corporations Law" means the Corporations Law as set out in Section
82 of the Corporations Act of 1989, as amended, supplemented or replaced
from time to time, as applied in the State of Western Australia and,
where appropriate, the other states and territories of the Commonwealth
of Australia."
"Event of Default" has the meaning set forth in Section 1 of
Article II hereof.
"Insurance" shall mean the insurance and payments therefrom
referred to in Section 15 of Article I hereof.
"Permitted Liens" shall mean (a) liens for taxes, assessments or
other governmental charges or levies not at the time delinquent or
thereafter payable without penalty or being contested in good faith,
provided provision is made to the reasonable satisfaction of the Trustee
for the eventual payment thereof in the event it is found that such is
payable by the Shipowner;
(b) liens of carriers, warehousemen, mechanics, materialmen,
landlords, operators of, and participants in, any oil, gas or mineral
properties of the Shipowner and maritime liens incurred in the ordinary
course of business for sums not overdue or being contested in good faith,
provided provision is made to the reasonable satisfaction of the Trustee
for the eventual payment thereof in the event it is found that such sums
are payable by the Shipowner;
(c) liens incurred in the ordinary course of business in
connection with workmen's compensation, unemployment insurance or other
forms of governmental insurance or benefits, or to secure performance of
tenders and statutory obligations entered into in the ordinary course of
business or to secure obligations on surety or appeal bonds in an
aggregate amount not exceeding (i) USD 2,500,000 at any one time, (ii)
USD 5,000,000 in any calendar year and (iii) USD 10,000,000 during the
term of this Mortgage;
(d) judgment liens in existence less than 30 days after the
entry thereof or with respect to which execution has been stayed or the
payment of which is covered in full by insurance;
(e) liens required by the terms of the Amended and Restated
Agreement; and
(f) liens existing as of the date of this Mortgage and
disclosed in writing to the Trustee.
"Person" shall mean a corporation, association, partnership, trust,
estate, organization, individual, government, political subdivision or
government agency.
"U.S. Dollars" and the sign "USD" each shall mean the lawful
currency of the United States of America.
All capitalized terms used herein but not defined shall have the
meaning given to them in the Amended and Restated Agreement.
SECTION 7. Currency Indemnity.
(a) If any payment is made by the Shipowner or if the Lender
or Trustee receives or recovers any money under or
pursuant to this Mortgage in a currency other than the
currency in which the Indebtedness is due, the Shipowner
shall as a separate and additional liability pay such
additional amount (which shall also be deemed to comprise
part of the moneys secured by this Mortgage) as may be
necessary so that after conversion of all moneys paid
under or pursuant to this Mortgage or the Notes, the
Amended and Restated Agreement or the Trust Indenture into
the currency in which the obligation or liability is so
due and after the payment of all commission and expenses
(whether of like form or not) the Lender or Trustee shall
received net in its hand an amount in that currency equal
to the amount due and owing.
(b) Notwithstanding anything elsewhere contained in this
Mortgage the Shipowner covenants that in the event that
any action whatsoever by the Lender or Trustee against the
Shipowner to recover any of the moneys secured by this
Mortgage or owing under the Notes, Amended and Restated
Agreement or Trust Indenture, which results in a judgment
or recovery or payment of money denominated in a currency
other than the currency in which the obligation or
liability of the Shipowner is due against the Shipowner
and such judgment, recovery or payment does not take into
account any change adverse to the Lender or Trustee in the
rate of exchange between the currency of such obligation
or liability of the Shipowner and the currency of any such
judgment, recovery or payment at any time before the
Shipowner's liability for the moneys secured by this
Mortgage or owing under the Notes, Amended and Restated
Agreement or Trust Indenture, shall be fully discharged,
then the Shipowner's liability shall be extinguished by
such judgment recovery or payment to the extent only of
any amount recovered and shall continue in respect of any
sum by which the amount recovered falls short of the
moneys secured by this Mortgage or owing under the Notes,
Amended and Restated Agreement or Trust Indenture.
(c) For the purposes of this Section 7 the Lender or Trustee
shall convert an amount received into the currency in
which the obligation to pay is due ("due currency") at the
spot rate at which the Lender or Trustee is able to
purchase the due currency with the amount received at the
time of its receipt but if the time of receipt is not on a
Business Day at the time the transaction is dealt with on
the next following Business Day. The Shipowner satisfies
its obligation to pay in the due currency only to the
extent of the amount of the due currency purchased by the
Lender or Trustee with the amount received and after
deducting the costs of the conversion.
SECTION 8. No Waiver of Preferred Status. No provision of this
Mortgage shall be deemed to constitute a waiver by the Trustee of the
preferred status hereof given by Section 39 of the Shipping Registration
Act 1981 (Commonwealth), and any provision of this Mortgage which would
otherwise constitute such a waiver shall to such extent be of no force or
effect.
SECTION 9. Governing Law. THIS MORTGAGE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF WESTERN AUSTRALIA AND WHERE
APPLICABLE THE LAWS OF THE COMMONWEALTH OF AUSTRALIA.
IN WITNESS WHEREOF, this Mortgage has been executed by the
Shipowner, as a deed, on the day and year first above written.
READING & BATES (A) PTY LTD.
By: ____________________________
Name: _____________________
Title: _____________________
THE COMMON SEAL OF )
READING & BATES (A) )
PTY. LTD. was hereunto )
affixed by authority )
of the Board of Directors )
in the presence of: )
________________________
Director
________________________
Director/Secretary
<PAGE>
ACKNOWLEDGEMENT
STATE OF TEXAS
: s.s.
COUNTY OF HARRIS
On this 27th day of April, 1995, before me personally appeared T.
W. Nagle known to me to be a director of Reading & Bates (A) Pty. Ltd., a
proprietary limited company organized under the Corporations Laws
(Western Australia) 1990, the party described in and that executed the
foregoing instrument on behalf of said corporation acknowledged to me
that he signed his name thereto by authority of the Board of Directors of
said company and as the free act and deed of such company.
_____________________________
Notary Public
<PAGE>
EXHIBIT K
TO AMENDED AND RESTATED
CREDIT FACILITY AGREEMENT
ASSIGNMENT, ASSUMPTION AND AMENDMENT NO. 2 TO TRUST INDENTURE
THIS ASSIGNMENT, ASSUMPTION AND AMENDMENT NO. 2 TO TRUST INDENTURE
dated as of April __, 1995, among Reading & Bates Corporation, a
corporation organized and existing under the laws of the State of
Delaware ("RBC"), Reading & Bates Drilling Co., a corporation organized
and existing under the laws of the State of Oklahoma ("RBD"), Reading &
Bates Exploration Co., a corporation organized and existing under the
laws of the State of Oklahoma ("RBX"), Reading and Bates, Inc., a
corporation organized and existing under the laws of the State of
Oklahoma ("RBI"), Reading and Bates Borneo Drilling Co., Ltd., a
corporation organized and existing under the laws of the State of
Oklahoma ("RBB"), Reading & Bates (A) Pty. Ltd., a corporation organized
and existing under the laws of Australia ("RBA") (RBC, RBD, RBX, RBI, RBB
and RBA being referred to collectively as the "Borrowers" and
individually as a "Borrower"), Texas Commerce Bank National Association,
as Trustee, (Holder-Transferee from the Receiver of New First City,
Texas-Houston, N.A., successor in interest to First City Texas-Houston,
N.A.), a national banking association, as Trustee (the "Assignor"), which
entity is executing this document solely for the purposes of and with
respect to the assignments and assumptions being made hereunder and not
with respect to any amendment or other matter hereunder,and Bank One,
Texas, N.A., a national banking association, as Trustee (the "Assignee").
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Facility Agreement dated as
of March 27, 1991, as amended May 24, 1991, June 28, 1991, August 30,
1991, June 30, 1992 and February 25, 1993 (as so amended, the "Original
Credit Agreement"), Internationale Nederlanden Bank (formerly known as
NMB Postbank Groep, the "Lender") agreed to provide funding to certain of
the Borrowers in the aggregate principal amount of up to USD 112,000,000;
and
WHEREAS, the Borrowers and the Lender have restated the
Original Credit Agreement in order to add RBB and RBA as Borrowers,
increase the amount of Facility E, add a new letter of credit facility
and amend certain terms and covenants (the "Restated Credit Agreement");
and
WHEREAS, the Assignor, by operation of merger, succeeded to
all of the rights and obligations of New First City, Texas-Houston, N.A.,
the trustee under that certain Trust Indenture dated March 29, 1991 (the
"Indenture") among the Borrowers and New First City, pursuant to which
the Assignor agreed to act on behalf of the Lender with respect to
certain security interests granted by the Borrowers to secure their
obligations under the Original Credit Agreement; and
WHEREAS, the Indenture was amended pursuant to Amendment No.
1 to Trust Indenture dated February 25, 1993 to, among other things, add
the JACK BATES, Official No. 906283 as a Vessel thereto; and
WHEREAS, the Assignee meets all of the criteria contained in
Section 307 of the Indenture and wishes to act as Trustee under the
Indenture; and
WHEREAS, the Lender and the Borrowers desire that the
Assignee assume the rights and obligations of the Assignor under the
terms of the Indenture, as amended herein; and
WHEREAS, the Lenders, the Borrowers and the Assignee wish to
further amend the terms of the Indenture in order to reflect the terms
and conditions of the Restated Credit Agreement.
NOW THEREFORE, in consideration of the above recitals and for
other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties agree to assign, assume and
amend the Indenture effective as of the date hereof as follows:
Assignment and Assumption
1. The Assignor hereby sells, transfers, assigns and grants
absolutely and not by way of security, all of its right, title and
interest and responsibilities, powers, duties, liabilities and
obligations in, to and under the Indenture to the Assignee.
2. In connection with this Assignment, Assumption and Amendment,
the Borrowers represent and warrant to the Assignee that the Indenture is
in full force and effect and there are no events which would constitute a
default by the Borrowers under the terms of the Indenture or events which
would, with the passage of time or the giving of notice, constitute such
an Event of Default.
3. The Assignee hereby acknowledges receipt of the Indenture and
expressly agrees to accept the position of trustee under, to become a
party to, and be bound by, all of the terms and provisions of the
Indenture, as amended hereby.
4. The Assignee hereby agrees to perform and comply with all of
the terms and conditions of, and hereby assumes all of the right, title
and interest, responsibilities, powers, duties, liabilities and
obligations of the Assignor under, the Indenture from and after the date
hereof.
5. The Assignor is hereby released and discharged from its
responsibilities, powers, duties, liabilities and obligations under the
Indenture.
6. The Assignor agrees that at any time and from time to time,
upon the written request of the Assignee, the Assignor will promptly and
duly execute and deliver any and all such further instruments and
documents as may be reasonably necessary to effect the transfers
expressly made by Assignor under this Assignment, Assumption and
Amendment, including, without limitation, assignments of financing
statements, and assignments and releases of vessel mortgages.
7. The Assignee shall hereinafter, for all purposes under the
Indenture and the other Loan Documents be deemed the Trustee without any
further acts or instruments on the part of any Person.
Amendments to Indenture
The Borrowers and the Assignee hereby agree that the Indenture
shall be amended as follows:
A. All references in the Indenture to the Trustee shall mean
Bank One, Texas, N.A., a national banking association with its principal
place of business at 910 Travis, Houston, Texas 77002.
B. The definition of "Mortgages" in the Indenture is hereby
amended to read as follows:
"Mortgages" means the First Preferred Fleet Mortgage
granted by RBX to the Trustee, the Australian First
Registered Ship Mortgage granted by RBA to the Trustee, the
First Preferred Ship Mortgage granted by RBI to the Trustee,
the First Preferred Ship Mortgage granted by RBD to the
Trustee, the Panamanian First Naval Mortgage granted by RBB
to the Trustee, and the Preferred Fleet Mortgage granted by
RBD to the Trustee, all as amended from time to time and
executed or to be executed in respect of the Vessels as
security for all amounts due and payable under the Credit
Agreement.
C. The definition of Pledges in the Indenture is hereby amended
to read as follows:
"Pledges" means the pledge of all of the issued and
outstanding shares of RBD by RBC, the pledge of all of the issued
and outstanding shares of RBI, RBX and RBB by RBD, and the pledge
of all of the issued and outstanding shares of RBA by RBX, all in
favor of the Trustee as of the date hereof (with all renewals,
extensions and amendments thereof) as security for the Borrowers'
obligations under the Loan Documents.
D. The definition of "Vessels" in the Indenture is hereby
amended to read as follows:
"Vessels" means the Australian flag rig RON TAPPMEYER,
Official No. ______, the United States flag rigs D.R. STEWART,
Official No. 626904, D.K. MCINTOSH, Official No. 591662, W.D. KENT,
Official No. 583169, M.G. HULME JR., Official No. 651644, RANDOLPH
YOST, Official No. 601699, ROGER W. MOWELL, Official No. 645360,
J.T. ANGEL, Official No. 651645, JIM CUNNINGHAM, Official No.
651643, JACK BATES, Official No. 906283 and the Panamanian flag rig
CHARLEY GRAVES, Permanent Patente No. 6618-76-B.
E. All references in the Indenture to the Original Credit
Facility Agreement shall mean the Restated Credit Agreement.
F. Except as specifically amended by this Assignment, Assumption
and Amendment, all of the terms and provisions of the Indenture shall
remain in full force and effect.
All capitalized terms used herein but not defined herein shall have
the meanings given to them in the Indenture.
THIS ASSIGNMENT, ASSUMPTION AND AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF TEXAS.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Assignment, Assumption and Amendment on the date first written above.
READING & BATES CORPORATION
By: _______________________________
Name: _________________________
Title: ________________________
READING & BATES DRILLING CO.
By: ______________________________
Name: _______________________
Title: _______________________
READING & BATES EXPLORATION CO.
By: _______________________________
Name: ________________________
Title: ________________________
READING AND BATES, INC.
By: _______________________________
Name: ________________________
Title: ________________________
READING AND BATES BORNEO DRILLING CO., LTD.
By: ________________________________
Name: _________________________
Title: _________________________
READING & BATES (A) PTY. LTD.
By: ________________________________
Name: _________________________
Title: _________________________
The Assignor executes and delivers this
Assignment, Assumption and Amendment No. 2
to Trust Indenture solely for the purposes
of and with respect to the assignments and
assumptions being made hereunder and not
with respect to any amendment or other
matter hereunder.
TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
as Trustee (Holder-Transferee from the
Receiver of NEW FIRST CITY, TEXAS-HOUSTON,
N.A., successor in interest to FIRST CITY,
TEXAS-HOUSTON, N.A.)
By: ________________________________
Name: _________________________
Title: Assistant Vice President &
Corporate Trust Officer
BANK ONE, TEXAS, N.A., as Trustee
By: _________________________________
Name: __________________________
Title: __________________________
ACKNOWLEDGMENT
STATE OF TEXAS
COUNTY OF HARRIS
BEFORE ME, ______________________________, a notary public in and
for said county and state, on this day personally appeared
_______________________, known to me to be the person whose name is
subscribed to the foregoing instrument and known to me to be the
____________________ of Reading & Bates Corporation, a corporation
organized under the laws of Delaware, and acknowledged to me that he
executed said instrument for the purposes and consideration therein
expressed, and as the act of said corporation.
Given under my hand and seal of office this ___ day of ______,
1995.
_______________________________
Notary Public
ACKNOWLEDGMENT
STATE OF TEXAS
COUNTY OF HARRIS
BEFORE ME, ______________________________, a notary public in and
for said county and state, on this day personally appeared
_______________________, known to me to be the person whose name is
subscribed to the foregoing instrument and known to me to be the
____________________ of Reading & Bates Drilling Co., a corporation
organized under the laws of Oklahoma, and acknowledged to me that he
executed said instrument for the purposes and consideration therein
expressed, and as the act of said corporation.
Given under my hand and seal of office this ___ day of ________,
1995.
_______________________________
Notary Public
ACKNOWLEDGMENT
STATE OF TEXAS
COUNTY OF HARRIS
BEFORE ME, ______________________________, a notary public in and
for said county and state, on this day personally appeared
_______________________, known to me to be the person whose name is
subscribed to the foregoing instrument and known to me to be the
____________________ of Reading & Bates Exploration Co., a corporation
organized under the laws of Oklahoma, and acknowledged to me that he
executed said instrument for the purposes and consideration therein
expressed, and as the act of said corporation.
Given under my hand and seal of office this ___ day of ________,
1995.
_______________________________
Notary Public
ACKNOWLEDGMENT
STATE OF TEXAS
COUNTY OF HARRIS
BEFORE ME, ______________________________, a notary public in and
for said county and state, on this day personally appeared
_______________________, known to me to be the person whose name is
subscribed to the foregoing instrument and known to me to be the
____________________ of Reading and Bates, Inc., a corporation organized
under the laws of Oklahoma, and acknowledged to me that he executed said
instrument for the purposes and consideration therein expressed, and as
the act of said corporation.
Given under my hand and seal of office this ___ day of ________,
1995.
_______________________________
Notary Public
ACKNOWLEDGMENT
STATE OF TEXAS
COUNTY OF HARRIS
BEFORE ME, ______________________________, a notary public in and
for said county and state, on this day personally appeared
_______________________, known to me to be the person whose name is
subscribed to the foregoing instrument and known to me to be the
____________________ of Reading and Bates Borneo Drilling Co., Ltd., a
corporation organized under the laws of Oklahoma, and acknowledged to me
that he executed said instrument for the purposes and consideration
therein expressed, and as the act of said corporation.
Given under my hand and seal of office this ___ day of _________,
1995.
_______________________________
Notary Public
ACKNOWLEDGMENT
STATE OF TEXAS
COUNTY OF HARRIS
BEFORE ME, ______________________________, a notary public in and
for said county and state, on this day personally appeared
_______________________, known to me to be the person whose name is
subscribed to the foregoing instrument and known to me to be the
____________________ of Reading & Bates (A) Pty. Ltd., a corporation
organized under the laws of _________, and acknowledged to me that he
executed said instrument for the purposes and consideration therein
expressed, and as the act of said corporation.
Given under my hand and seal of office this ___ day of _________,
1995.
_______________________________
Notary Public
ACKNOWLEDGMENT
STATE OF TEXAS
COUNTY OF HARRIS
BEFORE ME, ______________________________, a notary public in and
for said county and state, on this day personally appeared
______________, known to me to be the person whose name is subscribed to
the foregoing instrument and known to me to be the Assistant Vice
President and Corporate Trust Officer of Texas Commerce Bank National
Association, as Trustee, a national banking association, and acknowledged
to me that he executed said instrument for the purposes and consideration
therein expressed, and as the act of said association.
Given under my hand and seal of office this ___ day of ________,
1995.
_______________________________
Notary Public
ACKNOWLEDGMENT
STATE OF TEXAS
COUNTY OF HARRIS
BEFORE ME, ______________________________, a notary public in and
for said county and state, on this day personally appeared Roark Ashie,
known to me to be the person whose name is subscribed to the foregoing
instrument and known to me to be the Vice President of Bank One, Texas,
N.A., a national banking association, organized under the laws of
_________, and acknowledged to me that he executed said instrument for
the purposes and consideration therein expressed, and as the act of said
corporation.
Given under my hand and seal of office this ___ day of _________,
1995.
_______________________________
Notary Public
<PAGE>
EXHIBIT L
TO AMENDED AND RESTATED
CREDIT AGREEMENT
AMENDMENT NO. 1 TO GUARANTY
Amendment No. 1 to Guaranty ("Amendment No. 1") dated as of April
__, 1995 among READING & BATES DRILLING CO., a corporation organized and
existing under the laws of the State of Oklahoma ("RBD"), READING & BATES
EXPLORATION CO., a corporation organized and existing under the laws of
the State of Oklahoma ("RBX"), READING AND BATES, INC., a corporation
organized and existing under the laws of the State of Oklahoma ("RBI"),
READING & BATES CORPORATION, a corporation organized and existing under
the laws of the State of Delaware ("RBC"), READING AND BATES BORNEO
DRILLING CO., LTD., a corporation organized and existing under the laws
of the State of Oklahoma ("RBB") and Reading & Bates (A) Pty. Ltd., a
corporation organized and existing under the laws of Australia ("RBA"),
(RBD, RBX, RBI, RBC, RBB and RBA being referred to collectively as the
"Guarantors" and individually as a "Guarantor"), in favor of
INTERNATIONALE NEDERLANDEN BANK N.V. (the "Lender").
W I T N E S S E T H:
WHEREAS, the Lender and RBD, RBX, RBI and RBC entered into that
certain guaranty agreement (the "Guaranty") dated as of June 28, 1991
respecting the Charters; and
WHEREAS, the Guarantors have entered into an Amended and Restated
Credit Facility Agreement (the "Amended and Restated Agreement") dated as
of the date hereof which provides, among other things, that the
obligations of the Guarantors under the Guaranty, as amended by this
Amendment No. 1, shall be secured by the other Loan Documents (as defined
in the Amended and Restated Agreement); and
WHEREAS, the Lender and the Guarantors wish to amend the Guaranty
in order to reflect the addition of RBB and RBA as Guarantors; and
WHEREAS, the Guaranty by RBB will be secured by, among other
things, a Panamanian First Naval Mortgage on the Rig owned by RBB and the
Guaranty by RBA will be secured by, among other things, an Australian
First Preferred Mortgage on the Rig owned by RBA; and
WHEREAS, it is a condition to the Lender entering into the Amended
and Restated Credit Facility Agreement that the Guarantors execute and
deliver to the Lender this Amendment No. 1 to the Guaranty.
NOW, THEREFORE, in consideration of the above recitals and for
other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties agree to amend the Guaranty
effective as of the date hereof, as follows:
1. RBB and RBA shall, as of and after the date hereof, be added
as Guarantors and shall bound by all terms and conditions of the
Guaranty, as amended by Amendment No. 1.
2. Each Guarantor hereby ratifies and confirms that the
liability of each of the Guarantors under the Guaranty, as amended by
Amendment No. 1, is absolute, unconditional, irrevocable and enforceable.
3. Each Guarantor hereby represents and warrants that the
Representations and Warranties contained in Section 7 of the Guaranty are
true and valid as of the date hereof.
4. Section 10 of the Guaranty is hereby amended to read as
follows:
"Security. The obligations of the Guarantors under this
Guaranty shall be secured by the Loan Documents as defined in
the Amended and Restated Agreement including the Mortgages on
the Rigs. In order to perfect such security, the Guarantors
agree to execute, deliver and record amendments to the
Mortgages and the other Loan Documents reflecting their
obligations under this Guaranty and their mortgaging of the
Rigs and other assets owned by them to secure such
obligations."
5. Except as modified and amended herein, all terms and conditions
of the Guaranty remain in full force and effect.
6. All capitalized terms used in this Amendment No. 1 to Guaranty
which are not defined herein shall have the meaning given to them in the
Amended and Restated Agreement.
THIS AMENDMENT NO. 1 TO GUARANTY SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the Guarantors have duly executed and delivered
this Amendment No. 1 to Guaranty as of the date first written above.
READING & BATES CORPORATION
By: __________________________
Name: ___________________
Title: ___________________
READING & BATES DRILLING CO.
By: __________________________
Name: ___________________
Title: ___________________
READING & BATES EXPLORATION CO.
By: __________________________
Name: ___________________
Title: ___________________
READING AND BATES, INC.
By: __________________________
Name: ___________________
Title: ___________________
READING AND BATES BORNEO DRILLING CO.,
LTD.
By: __________________________
Name: ___________________
Title: ___________________
READING & BATES (A) PTY. LTD.
By: __________________________
Name: ___________________
Title: ___________________
ACCEPTED:
INTERNATIONALE NEDERLANDEN BANK N.V.
By: __________________________
Name: ___________________
Title: ___________________
<PAGE>
EXHIBIT M
TO AMENDED AND RESTATED
CREDIT FACILITY AGREEMENT
ASSIGNMENT, ASSUMPTION AND AMENDMENT NO. 2 TO
ASSIGNMENT OF INSURANCES
THIS ASSIGNMENT, ASSUMPTION AND AMENDMENT NO. 2 TO ASSIGNMENT OF
INSURANCES dated as of April __, 1995, among Reading & Bates Corporation,
a corporation organized and existing under the laws of the State of
Delaware ("RBC"), Reading & Bates Drilling Co., a corporation organized
and existing under the laws of the State of Oklahoma ("RBD"), Reading &
Bates Exploration Co., a corporation organized and existing under the
laws of the State of Oklahoma ("RBX"), Reading and Bates, Inc., a
corporation organized and existing under the laws of the State of
Oklahoma ("RBI"), (RBC, RBD, RBX and RBI being referred to collectively
as the "Original Borrowers"), Texas Commerce Bank National Association,
as Trustee, (Holder-Transferee from the Receiver of New First City,
Texas-Houston, N.A., successor in interest to First City Texas-Houston,
N.A., a national banking association) (the "Assignor"), which entity is
executing this document solely for the purposes of and with respect to
the assignments and assumptions being made hereunder and not with respect
to any amendment or other matter hereunder, and Bank One, Texas, N.A., a
national banking association, as Trustee (the "Assignee").
W I T N E S E T H:
WHEREAS, pursuant to the Credit Facility Agreement dated as
of March 27, 1991, as amended May 24, 1991, June 28, 1991, August 30,
1991, June 30, 1992 and February 23, 1993 (as so amended, the "Original
Credit Agreement"), Internationale Nederlanden Bank (formerly known as
NMB Postbank Groep, the "Lender") agreed to provide funding to certain of
the Original Borrowers in the aggregate principal amount of up to USD
112,000,000; and
WHEREAS, Reading & Bates Borneo Drilling Co., Ltd., a
corporation organized and existing under the laws of the State of
Oklahoma ("RBB") and Reading & Bates (A) Pty. Ltd., a corporation
organized and existing under the laws of Australia ("RBA"), the Original
Borrowers and the Lender have restated the Original Credit Agreement in
order to add RBB and RBA as Borrowers (the Original Borrowers, RBB and
RBA being referred to hereafter collectively as the "Borrowers"),
increase the amount of Facility E, add a new letter of credit facility
and amend certain terms and covenants (the "Restated Credit Agreement");
and
WHEREAS, the Assignor, by operation of merger, succeeded to
all of the rights and obligations of New First City, Texas-Houston, N.A.,
the successor trustee under that certain Trust Indenture dated March 29,
1991 (the "Indenture") among the Original Borrowers and First City Texas-
Houston, N.A., as trustee, pursuant to which the Assignor agreed to act
on behalf of the Lender with respect to certain security interests
granted by the Original Borrowers to secure their obligations under the
Original Credit Agreement; and
WHEREAS, the Assignor has assigned and the Assignee has
assumed the rights and obligations of the Assignor under the terms of the
Indenture pursuant to Assignment, Assumption and Amendment No. 2 to Trust
Indenture dated as of the date hereof (the "Assignment of Indenture");
and
WHEREAS, the Original Borrowers, pursuant to that certain
Assignment of Insurances dated March 29, 1991, assigned certain
insurances in respect of the Vessels to First City Texas-Houston, N.A.,
as Trustee, the terms of which were amended by Amendment No. 1 dated as
of February 25, 1993 (as amended, the "Assignment of Insurances") among
the Original Borrowers and Assignor; and
WHEREAS, in order to reflect the terms and conditions of the
Assignment of Indenture and the Restated Credit Agreement,
the Assignor and the Original Borrowers wish to assign and the Assignee
wishes to assume all of Assignor's rights and obligations under the
Assignment of Insurances, and the Assignee and the Original Borrowers
wish to amend the Assignment of Insurances as hereinafter follows.
NOW THEREFORE, in consideration of the above recitals and for
other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties agree to assign and assume the
Assignment of Insurances effective as of the date hereof as follows:
Assignment and Assumption
1. The Assignor hereby sells, transfers, assigns and grants
absolutely and not by way of security, all of its right, title and
interest and responsibilities, powers, duties, liabilities and
obligations in, to and under the Assignment of Insurances to the
Assignee.
2. In connection with this Assignment, Assumption and Amendment,
the Original Borrowers represent and warrant to the Assignee that the
Assignment of Insurances is in full force and effect and there are no
events which would constitute a default by the Original Borrowers under
the terms of the Assignment of Insurances or events which would, with the
passage of time or the giving of notice, constitute such an Event of
Default (as defined in the Original Credit Agreement).
3. The Assignee hereby acknowledges receipt of the Assignment of
Insurances and expressly agrees accept the position of trustee under, and
be bound by, all of the terms and provisions of the Assignment of
Insurances, as amended hereby.
4. The Assignee hereby agrees to perform and comply with all of
the terms and conditions of, and hereby assumes all of the right, title
and interest, responsibilities, powers, duties, liabilities and
obligations of the Assignor under, the Assignment of Insurances from and
after the date hereof.
5. The Assignor is hereby released and discharged from its
responsibilities, powers, duties, liabilities and obligations under the
Assignment of Insurances.
6. The Assignor agrees that at any time and from time to time,
upon the written request of the Assignee, the Assignor will promptly and
duly execute and deliver any and all such further instruments and
documents as may be reasonably necessary to effect the transfers
expressly made by Assignor under this Assignment, Assumption and
Amendment, including, without limitation, assignments of financing
statements.
Amendments to Assignment of Insurances
The Original Borrowers and the Assignee hereby agree that the
Assignment of Insurances shall be amended as follows:
A. All references in the Assignment of Insurances to the Trustee
shall mean Bank One, Texas, N.A., a national banking association with its
principal place of business at 910 Travis, Houston, Texas 77002.
B. Schedule 1 to the Assignment of Insurances is hereby amended
to delete the reference to:
"RON TAPPMEYER 597497 U.S. Reading & Bates Exploration Co."
C. All references in the Assignment of Insurances to the
Original Credit Facility Agreement shall mean the Restated Credit
Agreement.
D. Except as specifically amended by this Assignment, Assumption
and Amendment, all of the terms and provisions of the Assignment of
Insurances shall remain in full force and effect.
All capitalized terms used herein but not defined herein shall have
the meanings given to them in the Assignment of Insurances.
THIS ASSIGNMENT, ASSUMPTION AND AMENDMENT NO. 2 TO ASSIGNMENT OF
INSURANCES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF NEW YORK AND MAY NOT BE AMENDED OR CHANGED
EXCEPT BY AN INSTRUMENT IN WRITING.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Assignment, Assumption and Amendment No. 2 to Assignment of Insurances on
the date first written above.
READING & BATES CORPORATION
By: _______________________________
Name: _________________________
Title: ________________________
READING & BATES DRILLING CO.
By: ______________________________
Name: _______________________
Title: _______________________
READING & BATES EXPLORATION CO.
By: _______________________________
Name: ________________________
Title: ________________________
READING AND BATES, INC.
By: _______________________________
Name: ________________________
Title: ________________________
The Assignor executes and delivers this
Assignment, Assumption and Amendment of
Assignment of Insurances solely for the
purposes of and with respect to the
assignments and assumptions being made
hereunder and not with respect to any
amendment or other matter hereunder.
TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
as Trustee (Holder-Transferee from the
Receiver of NEW FIRST CITY, TEXAS-HOUSTON,
N.A., successor in interest to FIRST CITY,
TEXAS-HOUSTON, N.A.)
By: ________________________________
Name: _________________________
Title: Assistant Vice President &
Corporate Trust Officer
BANK ONE, TEXAS, N.A., as Trustee
By: _________________________________
Name: __________________________
Title: __________________________
<PAGE>
EXHIBIT N
TO AMENDED AND RESTATED
CREDIT FACILITY AGREEMENT
ASSIGNMENT, ASSUMPTION AND AMENDMENT NO. 2 TO
ASSIGNMENT OF DRILLING CONTRACT REVENUES AND EARNINGS
THIS ASSIGNMENT, ASSUMPTION AND AMENDMENT NO. 2 TO ASSIGNMENT OF
DRILLING CONTRACT REVENUES AND EARNINGS dated as of April __, 1995, among
Reading & Bates Corporation, a corporation organized and existing under
the laws of the State of Delaware ("RBC"), Reading & Bates Drilling Co.,
a corporation organized and existing under the laws of the State of
Oklahoma ("RBD"), Reading & Bates Exploration Co., a corporation
organized and existing under the laws of the State of Oklahoma ("RBX"),
Reading and Bates, Inc., a corporation organized and existing under the
laws of the State of Oklahoma ("RBI"), (RBC, RBD, RBX and RBI being
referred to hereafter collectively as the "Original Borrowers"), Texas
Commerce Bank National Association, as Trustee, (Holder-Transferee from
the Receiver of New First City, Texas-Houston, N.A., successor in
interest to First City Texas-Houston, N.A., a national banking
association) (the "Assignor"), which entity is executing this document
solely for the purposes of and with respect to the assignments and
assumptions being made hereunder and not with respect to any amendment or
other matter hereunder,and Bank One, Texas, N.A., a national banking
association, as Trustee (the "Assignee").
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Facility Agreement dated as
of March 27, 1991, as amended May 24, 1991, June 28, 1991, August 30,
1991, June 30, 1992 and February 23, 1993 (as so amended, the "Original
Credit Agreement"), Internationale Nederlanden Bank (formerly known as
NMB Postbank Groep, the "Lender") agreed to provide funding to certain of
the Original Borrowers in the aggregate principal amount of up to USD
112,000,000; and
WHEREAS, Reading & Bates Borneo Drilling Co., Ltd., a
corporation organized and existing under the laws of the State of
Oklahoma ("RBB") and Reading & Bates (A) Pty. Ltd., a corporation
organized and existing under the laws of Australia ("RBA"), the Original
Borrowers and the Lender have restated the Original Credit Agreement in
order to add RBB and RBA as Borrowers (the Original Borrowers, RBB and
RBA being referred to collectively as the "Borrowers"), increase the
amount of Facility E, add a new letter of credit facility and amend
certain terms and covenants (the "Restated Credit Agreement"); and
WHEREAS, the Assignor, by operation of merger, succeeded to
all of the rights and obligations of New First City, Texas-Houston, N.A.,
the successor trustee under that certain Trust Indenture dated March 29,
1991 (the "Indenture") among the Original Borrowers and First City Texas-
Houston, N.A., as trustee, pursuant to which the Assignor agreed to act
on behalf of the Lender with respect to certain security interests
granted by the Original Borrowers to secure their obligations under the
Original Credit Agreement; and
WHEREAS, the Assignor has assigned and the Assignee has
assumed the rights and obligations of the Assignor under the terms of the
Indenture pursuant to Assignment, Assumption and Amendment No. 2 to Trust
Indenture dated as of the date hereof (the "Assignment of Indenture");
and
WHEREAS, the Original Borrowers, pursuant to that certain
Assignment of Drilling Contract Revenues and Earnings dated March 29,
1991, assigned certain earnings in respect of the Vessels to First City
Texas-Houston, N.A., as Trustee, the terms of which were amended by
Amendment No. 1 dated as of February 25, 1993 (as amended, the
"Assignment of Earnings") among the Original Borrowers and Assignor; and
WHEREAS, in order to reflect the terms and conditions of the
Assignment of Indenture and the Restated Credit Agreement, the Assignor
and the Original Borrowers wish to assign and the Assignee wishes to
assume all of Assignor's rights and obligations under the Assignment of
Earnings, and the Assignee and the Original Borrowers wish to amend the
Assignment of Earnings as hereinafter follows.
NOW THEREFORE, in consideration of the above recitals and for
other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties agree to assign and assume the
Assignment of Earnings effective as of the date hereof as follows:
Assignment and Assumption
1. The Assignor hereby sells, transfers, assigns and grants
absolutely and not by way of security, all of its right, title and
interest and responsibilities, powers, duties, liabilities and
obligations in, to and under the Assignment of Earnings to the Assignee.
2. In connection with this Assignment, Assumption and Amendment,
the Original Borrowers represent and warrant to the Assignee that the
Assignment of Earnings is in full force and effect and there are no
events which would constitute a default by the Original Borrowers under
the terms of the Assignment of Earnings or events which would, with the
passage of time or the giving of notice, constitute such an Event of
Default (as defined in the Original Credit Agreement).
3. The Assignee hereby acknowledges receipt of the Assignment of
Earnings and expressly agrees to accept the position of trustee under,
and be bound by, all of the terms and provisions of the Assignment of
Earnings, as amended hereby.
4. The Assignee hereby agrees to perform and comply with all of
the terms and conditions of, and hereby assumes all of the right, title
and interest, responsibilities, powers, duties, liabilities and
obligations of the Assignor under, the Assignment of Earnings from and
after the date hereof.
5. The Assignor is hereby released and discharged from its
responsibilities, powers, duties, liabilities and obligations under the
Assignment of Earnings.
6. The Assignor agrees that at any time and from time to time,
upon the written request of the Assignee, the Assignor will promptly and
duly execute and deliver any and all such further instruments and
documents as may be reasonably necessary to effect the transfers
expressly made by Assignor under this Assignment, Assumption and
Amendment including, without limitation, assignments of financing
statements.
Amendments to Assignment of Earnings
The Borrowers and the Assignee hereby agree that the Assignment of
Earnings shall be amended as follows:
A. All references in the Assignment of Earnings to the Trustee
shall mean Bank One, Texas, N.A., a national banking association with its
principal place of business at 901 Travis, Houston, Texas 77002.
B. Schedule 1 to the Assignment of Earnings is hereby amended to
delete the reference to:
"RON TAPPMEYER 597497 U.S. Reading & Bates Exploration Co."
C. All references in the Assignment of Earnings to the Original
Credit Facility Agreement shall mean the Restated Credit Agreement.
D. Except as specifically amended by this Assignment, Assumption
and Amendment, all of the terms and provisions of the Assignment of
Earnings shall remain in full force and effect.
All capitalized terms used herein but not defined herein shall have
the meanings given to them in the Assignment of Earnings.
THIS ASSIGNMENT, ASSUMPTION AND AMENDMENT NO. 2 TO ASSIGNMENT OF
DRILLING CONTRACT REVENUES AND EARNINGS SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK
AND MAY NOT BE AMENDED OR CHANGED EXCEPT BY AN INSTRUMENT IN WRITING.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Assignment, Assumption and Amendment No. 2 to Assignment of Drilling
Contract Revenues and Earnings on the date first written above.
READING & BATES CORPORATION
By: _______________________________
Name: _________________________
Title: ________________________
READING & BATES DRILLING CO.
By: ______________________________
Name: _______________________
Title: _______________________
READING & BATES EXPLORATION CO.
By: _______________________________
Name: ________________________
Title: ________________________
READING AND BATES, INC.
By: _______________________________
Name: ________________________
Title: ________________________
The Assignor executes and delivers this
Assignment, Assumption and Amendment of
Assignment of Drilling Contract Revenues
and Earnings solely for the purposes of and
with respect to the assignments and
assumptions being made hereunder and not
with respect to any amendment or other
matter hereunder.
TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
as Trustee (Holder-Transferee from the
Receiver of NEW FIRST CITY, TEXAS-HOUSTON,
N.A., successor in interest to FIRST CITY,
TEXAS-HOUSTON, N.A.)
By: ________________________________
Name: _________________________
Title: Assistant Vice President &
Corporate Trust Officer
BANK ONE, TEXAS, N.A., as Trustee
By: _________________________________
Name: __________________________
Title: __________________________
<PAGE>
Exhibit 11
READING & BATES CORPORATION
AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE, PRIMARY AND FULLY DILUTED
(in thousands except share and per share amounts)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------- ----------------------
1995 1994 1995 1994
---------- ---------- ---------- ----------
PRIMARY EARNINGS PER SHARE:
<S> <C> <C> <C> <C>
Weighted average number of
common shares outstanding 59,737,170 55,486,915 59,725,307 55,487,738
========== ========== ========== ==========
Net income (loss) $ 2,432 $ (6,038) $ 2,063 $ (7,529)
Less dividends paid on
$1.625 Convertible
Preferred Stock (1,215) (1,215) (2,430) (2,430)
---------- ---------- ---------- ----------
Adjusted net income (loss)
applicable to common shares
outstanding - assuming no
dilution $ 1,217 $ (7,253) $ (367) $ (9,959)
========== ========== ========== ==========
Net income (loss) per common
share - assuming no dilution $ .02 $ (.13) $ (.01) $ (.18)
========== ========== ========== ==========
FULLY DILUTED EARNINGS PER SHARE:
Weighted average number
of common shares
outstanding 59,737,170 55,486,915 59,725,307 55,487,738
Assume conversion of securities:
$1.625 Convertible Preferred
Stock 8,668,010 8,668,010 8,668,010 8,668,010
8% Senior Subordinated
Convertible Debentures 783,686 743,457 783,686 743,457
8% Convertible Subordinated
Debentures 16,661 16,661 16,661 16,661
---------- ---------- ---------- ----------
Adjusted common shares
outstanding - fully
diluted 69,205,527 64,915,043 69,193,664 64,915,866
========== ========== ========== ==========
Adjusted net income (loss)
applicable to common shares
outstanding - assuming no
dilution $ 1,217 $ (7,253) $ (367) $ (9,959)
Adjustments:
Interest on 8% Senior
Subordinated Convertible
Debentures 775 667 1,514 1,303
Interest on 8% Convertible
Subordinated Debentures 557 521 1,093 1,023
Dividends paid on $1.625
Convertible Preferred
Stock 1,215 1,215 2,430 2,430
---------- ---------- ---------- ----------
Adjusted net income (loss)
applicable to common
shares outstanding
- assuming full dilution $ 3,764 $ (4,850) $ 4,670 $ (5,203)
========== ========== ========== ==========
Net income (loss) per common
share - assuming full
dilution (antidiluive) $ .05 $ (.07) $ .07 $ (.08)
========== ========== ========== ==========
</TABLE>
Exhibit 15
Reading & Bates Corporation
We are aware that Reading & Bates Corporation has incorporated by
reference in its Registration Statements No. 33-44237, No. 33-50828 , No.
33-50565 and No. 33-56029 its Form 10-Q for the quarter ended June 30,
1995, which includes our report dated July 18, 1995 covering the
unaudited interim financial information contained therein. Pursuant to
Regulation C of the Securities Act of 1933, that report is not considered
a part of the registration statement prepared or certified by our firm or
a report prepared or certified by our firm within the meaning of Sections
7 and 11 of the Act.
Arthur Andersen LLP
Houston, Texas
July 18, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements of Reading & Bates Corporation for the six months ended
June 30, 1995 and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 40,386
<SECURITIES> 0
<RECEIVABLES> 45,602
<ALLOWANCES> 623
<INVENTORY> 9,516
<CURRENT-ASSETS> 96,895
<PP&E> 793,734
<DEPRECIATION> 302,864
<TOTAL-ASSETS> 591,681
<CURRENT-LIABILITIES> 96,926
<BONDS> 0
<COMMON> 2,988
2,990
0
<OTHER-SE> 316,360
<TOTAL-LIABILITY-AND-EQUITY> 591,681
<SALES> 0
<TOTAL-REVENUES> 98,357
<CGS> 0
<TOTAL-COSTS> 63,145
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 250
<INTEREST-EXPENSE> 7,753
<INCOME-PRETAX> 4,434
<INCOME-TAX> 1,732
<INCOME-CONTINUING> 2,063
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,063
<EPS-PRIMARY> (.01)
<EPS-DILUTED> .07
</TABLE>
