Exhibit 10.118
SECURITY AGREEMENT
SECURITY AGREEMENT (as amended, modified or supplemented from time
to time, this "Agreement"), dated as of November 13, 1996, between Reading &
Xxxxx Drilling Co. (the "Borrower"), Reading & Xxxxx Exploration Co., Reading
& Xxxxx Offshore, Limited, HRB Rig Corporation, Reading & Xxxxx (A) Pty. Ltd.
and Reading and Xxxxx Borneo Drilling Co., Ltd. (collectively the "Subsidiary
Guarantors" and, together with the Borrower, the "Assignors"), and Christiania
Bank og Kreditkasse, New York Branch, as Collateral Agent (the "Collateral
Agent"), for the benefit of the Banks, the Letter of Credit Issuer, and the
Administrative Agent under, and as defined in, the Credit Agreement
hereinafter referred to (such Banks, Letter of Credit Issuer and
Administrative Agent are hereinafter called the "Secured Creditors"). Except
as otherwise defined herein, capitalized terms used herein and defined in the
Credit Agreement shall be used herein as so defined.
W I T N E S S E T H :
WHEREAS, Reading & Xxxxx Corporation, the Borrower, the financial
institutions from time to time party thereto, Banque Indosuez and Credit
Lyonnais New York Branch, as Documentation Agents, and Christiania Bank og
Kreditkasse, New York Branch, as Administrative Agent have entered into a
Credit Agreement, dated as of November 13, 1996 (as modified, supplemented or
amended from time to time, the "Credit Agreement"), providing for the making
of Loans and the issuance of, and participation in, Letters of Credit as
contemplated therein;
WHEREAS, the Subsidiary Guarantors have executed the Subsidiary
Guaranty and thereby guaranteed the obligations of the Borrower under the
Credit Agreement and the other Credit Documents;
WHEREAS, the Borrower desires to incur Loans and to have Letters
of Credit issued for its account under the Credit Agreement;
WHEREAS, Reading & Xxxxx Drilling Co., an Oklahoma corporation, is
the sole owner of the United States registered offshore drilling rigs Xxxx
Xxxxx (official No. 906283), Xxxxxxxx Xxxx (official no. 601699), X.X. Xxxxx
(official no. 651645), and Xxxxx X. Xxxxxx (official no. 645360);
WHEREAS, Reading & Xxxxx Exploration Co., an Oklahoma corporation,
is the sole owner of the United States registered offshore drilling rigs X.X.
Xxxx (official no. 583169) and X.X. Xxxxxxx (official no. 626904);
WHEREAS, Reading & Xxxxx Offshore, Limited, an Oklahoma
corporation, is the sole owner of the United States registered offshore
drilling rigs X.X. XxXxxxxxx (official no. 562059) and Xxxxxx X. Xxxxxxxx
(official no. 651646);
WHEREAS, HRB Rig Corporation, an Oklahoma corporation, is the sole
owner of the United States registered offshore drilling rig Xxxxxx X. Xxxx
(official no. 642693);
WHEREAS, Reading & Xxxxx Borneo Drilling Co., Ltd., an Oklahoma
corporation, is the sole owner of the Panamanian registered offshore drilling
rig Xxxxxxx Xxxxxx (official no. 6618-76-CH);
WHEREAS, Reading & Xxxxx Drilling Co., an Oklahoma corporation, is
the sole owner of the Panamanian registered offshore drilling rigs Rig 41
(provisional official no. 23630-PEXT-1) and X.X. XxXxxx (official no. 25384-
PEXT);
WHEREAS, Reading & Xxxxx (A) Pty. Ltd., a company organized and
existing under the laws of the State of Western Australia and the Commonwealth
of Australia, is the sole owner of the Australian registered offshore drilling
rig Xxx Xxxxxxxxx (official no. 855213) (all of the aforementioned vessels
being herein collectively referred to as the "Rigs");
WHEREAS, it is a condition precedent to the making of Loans and
the issuance of Letters of Credit under the Credit Agreement and to the
occurrence of the Effective Date that the Assignors shall have executed and
delivered to the Collateral Agent this Agreement; and
WHEREAS, the Assignors desire to execute this Agreement to satisfy
the conditions described in the preceding paragraph;
NOW, THEREFORE, in consideration of the benefits accruing to the
Assignors, the receipt and sufficiency of which are hereby acknowledged, the
Assignors hereby make the following representations and warranties to the
Collateral Agent and hereby covenant and agree with the Collateral Agent as
follows:
SECTION 1. Obligations Secured.
1.01 Obligations Secured. The Agreement is made for the benefit
of the Secured Creditors to secure (i) the full and prompt payment when due of
(x) the principal of and interest on the Notes issued, and Loans made, under
the Credit Agreement, and all reimbursement obligations and Unpaid Drawings
with respect to the Letters of Credit issued under the Credit Agreement and
(y) all other obligations and indebtedness (including, without limitation,
indemnities, Fees and interest thereon) of the Borrower to the Secured
Creditors, whether now existing or hereafter incurred under, arising out of or
in connection with the Credit Agreement and the other Credit Documents and the
due performance and compliance by the Borrower with all of the terms,
conditions and agreements contained in the Credit Agreement and the other
Credit Documents; (ii) any and all sums advanced by the Collateral Agent in
order to preserve the Collateral (as hereinafter defined) or preserve its
security interest in the Collateral; (iii) in the event of any proceeding for
the collection or enforcement of any indebtedness, obligations, or liabilities
of the Borrower referred to in clause (i) above, after an Event of Default
shall have occurred and be continuing, the reasonable expenses of the
Collateral Agent of re-taking, holding, preparing for sale or lease, selling
or otherwise disposing of or realizing on the Collateral, or of any exercise
by the Collateral Agent of its rights hereunder, together with reasonable
attorneys' fees of counsel to the Collateral Agent and court costs; and (iv)
all amounts paid by any Indemnitee as to which such Indemnitee has the right
to reimbursement under Section 11 of this Agreement (all such obligations,
liabilities, sums and expenses referred to in clauses (i) through (iv) above
being collectively referred to as the "Obligations"). It is acknowledged and
agreed that the "Obligations" shall include extensions of credit of the types
described above, whether outstanding on the date of this Agreement or extended
from time to time after the date of this Agreement.
SECTION 2. ASSIGNMENT OF EARNINGS.
2.01 The Assignors, as legal and beneficial owners, hereby
assign, transfer and set over unto the Collateral Agent for the benefit of the
Secured Creditors and their successors and assigns, and hereby grant the
Collateral Agent a security interest in, all of their respective right, title
and interest in and to (collectively, the "Earnings Collateral"): (i) the
earnings of the Rigs from any source; (ii) all moneys or other compensation
payable by reason of requisition of title or for hire or other compulsory
acquisition of the Rigs; and (iii) all proceeds of the foregoing. As used
herein, "earnings" in (i) means:
(a) all rent, charterhire and other moneys and rights and
claims to moneys other than the local currency portion
necessary to cover direct operating expenses relating
to the relevant contract (the "Local Currency
Portion");
(b) all the Assignor's right, title and interest to and in
any moneys whatsoever payable to the Assignor under
any bareboat or time charter, drilling contract, or
other contract for the use or employment of the Rigs,
and all other rights and benefits whatsoever accruing
to the Assignor thereunder, including (but without
prejudice to the generality of the foregoing) all
claims for damages for any breach by any charterer or
other party thereto of any such bareboat or time
charter, drilling contract, or other contract for the
use or employment of the Rigs; and
(c) all freights (if any), passage moneys (if any), hire
moneys (if any), compensation (if any) payable to the
Assignor in the event of the requisition of the Rigs
for hire, remuneration for salvage and towage services
(if any), demurrage and detention moneys (if any), and
any other earnings whatsoever due or to become due to
the Assignor.
2.02 Subject to the provisions of Section 2.03 of this Agreement,
the Collateral Agent's security interest in all accounts receivable included
in, or representing proceeds of, the Earnings Collateral shall automatically
be and be deemed released, without the need for any action on the part of the
Collateral Agent, from time to time as such accounts receivable arise or are
created, or as funds representing payments of such Collateral (or part
thereof) are collected by the applicable Assignor.
2.03 Upon the occurrence of an Event of Default pursuant to
Section 9.05 of the Credit Agreement (a "Bankruptcy Default") and without any
further act or notice, or upon the giving by the Collateral Agent of a written
notice (a "Release Termination Notice") to any Assignor after the occurrence
and during the continuance of an Event of Default, the automatic release set
forth in Section 2.02 of this Agreement shall terminate.
2.04 Upon the occurrence of an Event of Default, the Assignors
hereby represent, warrant and undertake that:
(a) notice of this Agreement in the form attached hereto
as Exhibit 1 will be promptly delivered to any
charterers of the Rigs; and
(b) it will use its good faith efforts to cause any
charterer to execute a Consent and Agreement to this
Agreement in the form attached hereto as Exhibit 2 and
deliver such Consent and Agreement to the Collateral
Agent.
2.05 Upon the occurrence of an Event of Default, the Collateral
Agent shall be entitled to receive all payments of earnings of the Rigs
payable to the Assignors and assigned hereby. Such payment shall be made to
the account of the Collateral Agent, and the Assignors shall cause all sums so
payable to the Assignors and assigned hereby to be paid directly into such
account.
2.06 It is hereby expressly agreed that, anything contained
herein to the contrary notwithstanding, the Assignors shall remain liable
under all charters and contracts pertaining to the Rigs to perform the
obligations assumed by it thereunder, and the Collateral Agent shall have no
obligation or liability of any nature whatsoever under any such charter or
contract by reason of, or arising out of, this Agreement, nor shall the
Collateral Agent be required to assume or be obligated in any manner to
perform or fulfill any obligation of the Assignors under or pursuant to any
such charter or contract or to make any payment or make any inquiry as to the
nature or sufficiency of any payment received by the Collateral Agent, or,
unless and until indemnified to its satisfaction, 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 or
pursuant hereto at any time or times.
2.07 The respective Assignor shall promptly notify the Collateral
Agent in writing of the commencement and termination of any period during
which any of the Rigs owned by it is requisitioned.
2.08 Upon the occurrence of an Event of Default, the Collateral
Agent has the right to give notice of this Agreement to all account debtors.
2.09 The Collateral Agent shall not be required to make any
inquiry as to the nature or sufficiency of any payment received by the
Collateral Agent, or, unless and until indemnified to its satisfaction, 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 or pursuant hereto at any time or times.
SECTION 3. COLLATERAL ASSIGNMENT OF INSURANCE
3.01 The Assignors hereby sell, assign, transfer, set over and
grant a security interest unto the Collateral Agent as collateral security for
the Obligations, in and to the following (all of the following, collectively,
the "Insurance Collateral" and, together with the Earnings Collateral, the
"Collateral"): (i) all insurances (including, without limitation, all
certificates of entry in protection and indemnity and war risks associations
or clubs) in respect of such Rigs, whether heretofore, now or hereafter
effected, and all renewals of or replacements for the same, (ii) except as
hereinafter provided, all claims, returns of premium and other moneys and
claims for moneys due and to become due under or in respect of said
insurances, (iii) all other rights of the Assignors under or in respect of
said insurances and (iv) any proceeds of any of the foregoing.
3.02 It is expressly agreed that anything herein contained to the
contrary notwithstanding, the Assignors shall remain liable under said
insurances to perform all of the obligations assumed by it thereunder and the
Collateral Agent shall have no obligation or liability (including, without
limitation, any obligation or liability with respect to the payment of
premiums, calls or assessments) under said insurances by reason of or arising
out of this instrument of assignment nor shall the Collateral Agent be
required or obligated in any manner to perform or fulfill any obligations of
the Assignors under or pursuant to said 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 or may have been assigned to it or to
which it may be entitled hereunder at any time or times.
3.03 The Assignors hereby covenant and agree to deliver notice of
this Assignment, in the form of Annex I hereto, to all underwriters and that
where the consent of any underwriter is required pursuant to any of the
insurances assigned hereby, the Assignor shall use its good faith efforts to
obtain such consent in the form of Annex II hereto, and evidence thereof shall
be given to the Collateral Agent, and 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 insurances assigned hereby such
clauses as to additional named assured or loss payees as the Collateral Agent
may reasonably request. In all cases, unless otherwise agreed in writing by
the Collateral Agent, such slips, cover notes, notices, certificates of entry
or other instruments shall show the Collateral Agent and the Banks as
additional named assured and shall provide that there will be no recourse
against the Collateral Agent for payment of premiums, calls or assessments.
3.04 In the event that the Insurance Collateral or any portion
thereof is sold in connection with a sale permitted by Section 8.02 of the
Credit Agreement or is otherwise released at the direction of the Required
Banks (or all the Banks, to the extent required by Section 12.12 of the Credit
Agreement), the Collateral Agent, at the request and expense of the Assignors,
will duly assign, transfer and deliver to the Assignors (without recourse and
without any representation or warranty) such of the Insurance Collateral (and
releases therefor) as is then being (or has been) so sold or released and as
may be in the possession of the Collateral Agent and has not theretofore been
released pursuant to this Agreement. At any time the Assignors desire that
the Insurance Collateral or a portion thereof be released as provided in this
section, the Assignors shall deliver to the Collateral Agent a certificate
signed by an Authorized Officer (as defined in the Credit Agreement) stating
that the release of the Insurance Collateral or portion thereof is permitted
pursuant to this section.
3.05 The Assignors hereby authorize the Collateral Agent to
execute and file Financing Statements (Form UCC-1) and amendments thereto as
provided in Article 9 of the Uniform Commercial Code.
SECTION 4. FURTHER ASSURANCES.
The Assignors will, at any time and from time to time, at their
own expense, promptly execute and deliver all further agreements, instruments
and other documents and take all further action that may be necessary or that
the Collateral Agent may reasonably request in order to perfect and protect
the security interest purported to be created hereby or otherwise to enable
the Collateral Agent to exercise and enforce its rights and remedies
hereunder.
SECTION 5. TRANSFERS AND OTHER LIENS.
The Assignors will not, without the written consent of the
Collateral Agent, (i) sell, assign (by operation of law or otherwise) or
otherwise dispose of any interest in the Collateral or (ii) create or suffer
to exist any Lien, security interest or other charge or encumbrance upon or
with respect to any Collateral except for the security interest purported to
be created hereby.
SECTION 6. ATTORNEY-IN-FACT.
The Assignors hereby appoint the Collateral Agent as the
Assignors' attorney-in-fact, with full authority only after the occurrence of
and during the continuance of an Event of Default, in the place and stead of
the Assignors and in the name of the Assignors or otherwise, from time to time
in the Collateral Agent's discretion to execute any instrument and to take any
other action which the Collateral Agent may in good faith reasonably deem
necessary or advisable to accomplish the purposes of this Agreement or to
facilitate the assignment or other transfer by the Collateral Agent of any or
all of its rights hereunder, including, without limitation, (i) to receive,
endorse and collect all instruments made payable to the Assignors and
representing any interest payment or other distribution in respect of the
Collateral and to give full discharge for the same and (ii) to execute and
deliver any and all instruments and other documents that the Collateral Agent
may request in connection with the exercise by the Collateral Agent of any or
all of its rights hereunder. Such appointment of the Collateral Agent as
attorney-in-fact is irrevocable and coupled with an interest.
SECTION 7. PERFORMANCE BY THE COLLATERAL AGENT.
If the Assignors fail to perform any agreement or obligation
contained herein, the Collateral Agent itself may perform or cause performance
of such agreement or obligation, and the reasonable expenses of the Collateral
Agent (or Collateral Trustee, as the case may be) incurred in connection
therewith shall be payable to the Collateral Agent (or Collateral Trustee, as
the case may be) by the Assignors.
SECTION 8. RESPONSIBILITY OF THE COLLATERAL AGENT.
Other than the exercise of reasonable care to assure the safe
custody of the Collateral while held hereunder, the Collateral Agent shall
have no duty or liability to preserve rights pertaining thereto and shall be
relieved of all responsibility for the Collateral upon surrendering it or
tendering surrender of it to the Assignors. The Collateral Agent shall be
deemed to have exercised reasonable care in the custody and preservation of
the Collateral in its possession if the Collateral is accorded treatment
substantially equal to that which the Collateral Agent accords its own
property. Without limiting the generality of the foregoing, neither the
Collateral Agent nor any of its directors, officers, agents or employees shall
be liable (i) for any failure to invest or reinvest any cash in accordance
herewith in the absence of its or their own gross negligence or willful
misconduct or for any losses incurred by reason of investments made by the
Collateral Agent pursuant to Section 2.03 or (ii) for any action taken or
omitted to be taken by the Collateral Agent (x) in good faith in accordance
with the advice of counsel with respect to any question as to the construction
of any provision hereof or any action to be taken by the Collateral Agent
hereunder or (y) in accordance with any instructions or other notice which the
Collateral Agent believes in good faith to be properly given by the Assignors
hereunder. This Section 8 shall have no application to Christiania Bank og
Kreditkasse except in its capacity as Collateral Agent.
SECTION 9. APPLICATION OF PROCEEDS.
(a) Subject to the applicability of Section 6.01(b) of the US
Mortgages and Panamanian Mortgages, or Section 5(A)(ii) of the Australian
Mortgage, all moneys collected by the Collateral Agent upon any sale or other
disposition of any Collateral, together with all other moneys received by the
Collateral Agent hereunder or under any of the other Security Documents, shall
be applied as follows:
(i) first, to the payment of all amounts owing the Collateral Agent of
the type described in clauses (ii) and (iii) of Section 1.01;
(ii) second, to the extent moneys remain after the application pursuant
to the preceding clause (i), an amount equal to the outstanding
Obligations shall be paid to the Secured Creditors as provided in
Section 9(c), with each Secured Creditor receiving an amount equal to
such Obligations held by it or, if the proceeds are insufficient to pay
in full all such Obligations, its Pro Rata Share (as defined below) of
the amount remaining to be distributed; and
(iii) third, to the extent moneys remain after the application pursuant
to the preceding clauses (i) and (ii), and following the termination of
this Agreement pursuant to Section 12, any surplus then remaining shall
be paid to the Assignors, subject, however, to the rights of the holder
of any then existing Lien of which the Collateral Agent has actual
notice (without investigation).
(b) For purposes of this Agreement "Pro Rata Share" shall mean,
when calculating a Secured Creditor's portion of any distribution or amount in
respect of any Obligations, the amount (expressed as a percentage) equal to a
fraction the numerator of which is the then unpaid amount of such Obligations
owing to or held by such Secured Creditor and the denominator of which is the
then outstanding amount of all such Obligations. For purposes of determining
the amount payable to each Secured Creditor, the Collateral Agent shall be
entitled to request each Secured Creditor to furnish it with written notice of
the amount of Obligations then owed to it and shall be entitled to rely upon
the amounts stated therein in making such distributions.
(c) All payments required to be made to Secured Creditors
hereunder shall be made to the Collateral Agent for the account of the Secured
Creditors.
(d) For purposes of applying payments received in accordance
with this Section 9, the Collateral Agent shall be entitled to rely upon (i)
the Administrative Agent under the Credit Agreement and (ii) the Secured
Creditors for a determination (which the Administrative Agent and each Secured
Creditor, by their acceptance of the benefits of this Agreement shall be
obligated to provide upon request of the Collateral Agent) of the outstanding
Obligations owed to the Secured Creditors. Unless it has actual knowledge
(including by way of written notice from a Secured Creditor) to the contrary,
the Administrative Agent under the Credit Agreement, in furnishing information
pursuant to the preceding sentence, and the Collateral Agent, in acting
hereunder, shall be entitled to assume that (x) no obligations other than
principal, interest and regularly accruing fees are owing to any Secured
Creditor.
SECTION 10. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
ASSIGNORS.
The Assignors hereby warrant and represent that they have not
assigned or pledged, and hereby covenant that, without the prior written
consent thereof of the Collateral Agent, so long as this Agreement 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 Collateral
Agent, its successors or assigns, and that they will not take or omit to take
any action, the taking or omission of which might result in an alteration or
impairment of the Collateral or this Agreement, or of any of the rights
created in the Collateral by this Agreement.
SECTION 11. INDEMNITY.
11.01 Indemnity. (a) The Assignors agree to indemnify,
reimburse and hold the Collateral Agent, each Secured Creditor and their
respective successors, assigns, employees, agents and servants (hereinafter in
this Section 11.01 referred to individually as "Indemnitee," and collectively
as "Indemnitees") harmless from any and all liabilities, obligations, damages,
injuries, penalties, claims, demands, actions, suits, judgments and any and
all costs and expenses (including reasonable attorneys' fees and expenses)
(for the purposes of this Section 11.01 the foregoing are collectively called
"expenses") of whatsoever kind and nature imposed on, asserted against or
incurred by any of the Indemnitees in any way relating to or arising out of
this Agreement, the Credit Agreement, any other Credit Document or the
documents executed in connection herewith and therewith or in any other way
connected with the administration of the transactions contemplated hereby and
thereby or the enforcement of any of the terms of, or the preservation of any
rights under any such Credit Document or other document, or in any way
relating to or arising out of the manufacture, ownership, ordering, purchase,
delivery, control, acceptance, lease, financing, possession, operation,
condition, sale, return or other disposition, or use of the Collateral
(including, without limitation, latent or other defects, whether or not
discoverable), the violation of the laws of any country, state or other
governmental body or unit, any tort (including, without limitation, claims
arising or imposed under the doctrine of strict liability, or for or on
account of injury to or the death of any Person (including any Indemnitee), or
property damage), or contract claim; provided that no Indemnitee shall be
indemnified pursuant to this Section 11.01(a) for losses, damages or
liabilities to the extent caused by the gross negligence or wilful misconduct
of such Indemnitee. The Assignors agree that upon written notice by any
Indemnitee of the assertion of such a liability, obligation, damage, injury,
penalty, claim, demand, action, judgment or suit, the Assignors shall assume
full responsibility for the defense thereof. Each Indemnitee agrees to use
its best efforts to promptly notify the Assignors of any such assertion of
which such Indemnitee has knowledge.
(b) Without limiting the application of Section 11.01(a), the
Assignors agree to pay, or reimburse the Collateral Agent for any and all
fees, costs and expenses of whatever kind or nature incurred in connection
with the creation, preservation or protection of the Collateral Agent's Liens
on, and security interest in, the Collateral, including, without limitation,
all fees and taxes in connection with the recording or filing of instruments
and documents in public offices, payment or discharge of any taxes or Liens
upon or in respect of the Collateral, premiums for insurance with respect to
the Collateral and all other fees, costs and expenses in connection with
protecting, maintaining or preserving the Collateral and the Collateral
Agent's interest therein, whether through judicial proceedings or otherwise,
or in defending or prosecuting any actions, suits or proceedings arising out
of or relating to the Collateral.
(c) Without limiting the application of Section 11.01(a) or (b),
the Assignors agree to pay, indemnify and hold each Indemnitee harmless from
and against any loss, costs, damages and expenses which such Indemnitee may
suffer, expend or incur in consequence of or growing out of any
misrepresentation by the Assignors in this Agreement, the Credit Agreement or
any other Credit Document or in any statement or writing contemplated by or
made or delivered pursuant to or in connection with this Agreement, the Credit
Agreement or any other Credit Document.
(d) If and to the extent that the obligations of the Assignors
under this Section 11.01 are unenforceable for any reason, the Assignors
hereby agree to make the maximum contribution to the payment and satisfaction
of such obligations which is permissible under applicable law.
11.02 Indemnity Obligations Secured by Collateral; Survival. Any
amounts paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement shall constitute Obligations secured by the Collateral. The
indemnity obligations of the Assignors contained in this Section 11 shall
continue in full force and effect notwithstanding the full payment of all the
Notes issued under the Credit Agreement and all of the other Obligations and
notwithstanding the discharge thereof.
SECTION 12. TERMINATION; RELEASE; PARTIAL RELEASE.
(a) On the date on which the Credit Agreement and all Letters of
Credit shall have been terminated, when no Note remains outstanding and all
Obligations shall have been irrevocably paid in full, this Agreement shall
terminate, and the Collateral Agent, at the request and expense of the
Assignors, will execute and deliver to the Assignors a proper instrument or
instruments acknowledging the satisfaction and termination of this Agreement,
and will duly assign, transfer and deliver to the Assignors (without recourse
and without any representation or warranty) such of the Collateral as may
remain in the possession of the Collateral Agent together with any moneys at
the time held by the Collateral Agent hereunder.
SECTION 13. NOTICES, ETC.
Except as otherwise expressly provided herein, all notices and
other communications provided for hereunder shall be delivered and become
effective in accordance with Section 12.03 of the Credit Agreement.
SECTION 14. MISCELLANEOUS.
14.01 This Agreement shall be binding upon the Assignors and
their successors and assigns (although the Assignors may not assign their
rights or obligations under this Agreement) and shall inure to the benefit of
and be enforceable by the Collateral Agent and its successors and assigns.
The headings in this Agreement are for purposes of reference only and shall
not limit or define the meaning hereof. This Agreement and the rights and
obligations of the parties hereunder shall be construed in accordance with and
be governed by the law of the State of New York. This Agreement may be
executed in any number of counterparts, each of which shall be an original,
but all of which shall constitute one instrument. This Agreement shall become
effective on the date on which each of the parties shall have executed and
delivered a copy hereof. In the event that any provision of this Agreement
shall at any time for any reason be declared or decided to be invalid, void or
otherwise inoperative by a court of competent jurisdiction, such declaration
or decision shall not affect the validity of any other provision or provisions
of this Agreement, or the validity of this Agreement as a whole. In the event
that by reason of any law or regulation in force or to become in force, or by
reason of a ruling of any court of competent jurisdiction, or by any other
reason whatsoever, this Agreement is rendered either wholly or partly
defective, the Assignors shall furnish the Collateral Agent with an
alternative assignment or security and do all such other acts as are
reasonably required in order to ensure and give effect to the full intent of
this Agreement.
14.02 It is declared and agreed that the security created by this
Agreement shall be held by the Collateral Agent as a continuing security for
the payment of all moneys which may at any time and from time to time be or
become payable by the Assignors under the Credit Agreement and the other
Credit Documents and that the security so created shall not be satisfied by
all intermediate payment or satisfaction of any part of the amount hereby
secured and that the security so created shall be in addition to and shall not
in any way be prejudiced or affected by any collateral or other security now
or hereafter held by the Collateral Agent for all or any part of the moneys
hereby secured.
14.03 Each and every right, power and remedy given herein or in
the Credit Agreement or in the other Credit Documents to the Collateral Agent
shall be cumulative and shall be in addition to every other right, power and
remedy of the Collateral Agent now or hereafter existing at law, in equity or
by statute, and each and every right, power and remedy, whether herein given
or otherwise existing, may be exercised from time to time, in whole or in
part, and as often and in such order as may be deemed expedient by the
Collateral Agent, and the exercise or the commencement 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 Collateral Agent in the exercise of any right or
power in the pursuance of any remedy accruing upon any breach or default by
the Assignors shall impair any such right, power or remedy or be construed to
be a waiver of any such right, power or remedy or to be an acquiescence
therein; nor shall the acceptance by the Collateral Agent of any security or
of any payment of or on account of any of the amounts due from the Assignors
to the Collateral Agent and maturing after any breach or default or of any
payment on account of any past breach or default be construed to be a waiver
of any right to take advantage of any future breach or default or of any past
breach or default not completely cured thereby.
SECTION 15. WAIVER; AMENDMENT.
None of the terms and conditions of this Agreement may be changed,
waived, modified or varied in any manner whatsoever unless in writing duly
signed by the Assignors and the Collateral Agent (with the consent of either
the Required Banks (as defined in the Credit Agreement) or, to the extent
required by Section 12.12 of the Credit Agreement, all of the Banks).
SECTION 16. SECURED CREDITOR ACKNOWLEDGMENT.
By accepting the benefits of this Agreement, each Secured Creditor
acknowledges and agrees that the rights and obligations of the Collateral
Agent shall be as set forth in Section 12 of the Credit Agreement.
IN WITNESS WHEREOF, the Assignors and the Collateral Agent have
caused this Agreement to be executed by their duly elected officers duly
authorized as of the date first above written.
ADDRESS: READING & XXXXX DRILLING CO.
000 Xxxxxxxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxx 00000 By________________________________
Attention: General Counsel Title:
Tel: (000) 000-0000
Fax: (000) 000-0000
READING & XXXXX EXPLORATION CO.
By_______________________________
Title:
READING & XXXXX (A) PTY. LTD.
By_______________________________
Title:
READING AND XXXXX BORNEO DRILLING
CO., LTD.
By_______________________________
Title:
READING & XXXXX OFFSHORE LIMITED
By_______________________________
Title:
HRB RIG CORPORATION
By_______________________________
Title:
00 Xxxx 00xx Xxxxxx CHRISTIANIA BANK og KREDITKASSE,
Xxx Xxxx, Xxx Xxxx 00000 NEW YORK BRANCH, as Collateral Agent
Attention: Hans Chr. Kjelsrud
Tel: (000) 000-0000
Fax: (000) 000-0000
By________________________________
Title:
By________________________________
Title:
EXHIBIT 1
to
Security Agreement
NOTICE OF ASSIGNMENT
TO:
TAKE NOTICE THAT:
By a Security Agreement, dated the __ day of November, 1996 made by us
to Christiania Bank og Kreditkasse, as agent (the "Assignee"), and
relating to the [United States] [Panamanian] [Australian] flag vessel
________ (the "Rig"), we have assigned to the Assignee as from the date
hereof all our right, title and interest in and to any moneys whatsoever
payable to us under that certain [Charter Contract] dated as of
________, ____ as at any time amended (the "Contract") between
yourselves and the undersigned concerning the Rig, as the Contract may
at any time be amended or supplemented, and all other rights and
benefits whatsoever accruing to us which arise or may arise from the
operation of the Rig under the Contract including (but without prejudice
to the generality of the foregoing) all claims for damages for any
breach of the Contract by you.
DATED THIS day of , ____.
[ ]
By ___________________
Its:
EXHIBIT 2
to
Security Agreement
CONSENT AND AGREEMENT
The undersigned, [ ], a party to the Contract to which the
Notice of Assignment delivered pursuant to the foregoing Security Agreement
refers (terms defined in the Security Agreement are used herein with the same
meaning), in consideration of the sum of one dollar ($1.00) lawful money of
the United States of America and other good and valuable consideration, paid
by Christiania Bank og Kreditkasse, as agent (the "Assignee"), the receipt of
which is hereby acknowledged, hereby acknowledges notice of and consents and
agrees to the foregoing collateral assignment of earnings and to all of the
terms thereof and agrees that: (1) it will make payment directly to the
account advised by the Assignee, of all moneys due and to become due from it
under the Contract until receipt of written notice from the Assignee that all
obligations to the Banks secured by said Security Agreement have been paid in
full; and (2) any such payment shall be final and the undersigned will not
seek to recover from the Assignee for any reason whatsoever any moneys paid by
the undersigned to the Assignee by virtue of the foregoing Security Agreement
and this Consent and Agreement but this shall not prevent the set off or
credit against or deduction from any moneys payable to the Assignee by virtue
of said Security Agreement of amounts owing to the undersigned by the Assignor
under the Contract.
[ ], as charterer, confirms and agrees that the Contract is in full
force and effect and is enforceable in accordance with its terms and the
Assignor is not in default thereunder.
This Consent and Agreement shall be governed by and construed in accordance
with the internal laws of the State of New York, without reference to
principles of conflicts of law.
Dated: ___________, ____
[ ]
By _________________
ANNEX I
to
Security Agreement
NOTICE OF ASSIGNMENT
(the "Owner"), the
owner of the [United States] [Panamanian] [Australian] flag offshore
drilling rig (the "Rig"), HEREBY GIVES NOTICE that by a
Security Agreement dated November __, 1996 and made between the Owner
and Christiania Bank og Kreditkasse, New York Branch, as Collateral
Agent (the "Assignee") for itself and certain other Banks, the Owner
assigned to the Assignee all of the Owner's right, title and interest
in and to all insurances and the benefit of all insurances now or
hereafter taken out in respect of the Rig. This Notice of Assignment
and loss payable clauses acceptable to the Assignee are to be indorsed
on all policies and certificates of entry evidencing such insurance.
[OWNER]
By
Its:
ANNEX II
to
Security Agreement
CONSENT AND AGREEMENT
The undersigned, [ ], a party to the Contract to which
the Notice of Assignment delivered pursuant to the foregoing Security
Agreement refers (terms defined in the Security Agreement are used
herein with the same meaning), hereby acknowledges notice of and
consents and agrees to the foregoing collateral assignment of
insurance and to all of the terms thereof and agrees that it will make
payment directly to the account advised by the Christiania Bank og
Kreditkasse, New York Branch (the "Assignee"), of all moneys due and
to become due from it under the Contract until receipt of written
notice from the Assignee that all obligations to the Banks secured by
said Security Agreement have been paid in full.
This Consent and Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York, without
reference to principles of conflicts of law.
Dated: ___________, ____
[ ]
By _________________
