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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 March 31, 1998
or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 1-13729
R&B FALCON CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 76-0544217
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
901 Threadneedle, Houston, Texas 77079
(Address of principal executive offices)(Zip Code)
(281) 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 MAY 1, 1998 : 165,174,358
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Company or Group of Companies for Which Report is Filed:
R&B Falcon Corporation and Subsidiaries
The financial statements for the three months ended March 31, 1998 and
1997, 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 months ended March 31, 1998 included herein
have been reviewed in accordance with standards established by the American
Institute of Certified Public Accountants by Arthur Andersen LLP, the
registrant's independent public accountants, whose report is included
herein. Results of operations for the three months ended March 31, 1998
are not necessarily indicative of results of operations which will be
realized for the year ending December 31, 1998. The financial statements
should be read in conjunction with the Company's Form 10-K for the year
ended December 31, 1997.
R&B FALCON CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(in millions)
MARCH 31, DECEMBER 31,
1998 1997
--------- -----------
(unaudited)
ASSETS
------
CURRENT ASSETS:
Cash and cash equivalents $ 68.6 $ 55.5
Short-term investments 49.5 45.4
Accounts receivable:
Trade, net 210.0 165.1
Other 25.7 22.3
Materials and supplies inventory 17.3 15.1
Other current assets 15.8 13.1
--------- ---------
Total current assets 386.9 316.5
--------- ---------
PROPERTY AND EQUIPMENT:
Drilling 2,128.2 1,925.9
Other 115.1 81.1
--------- ---------
Total property and equipment 2,243.3 2,007.0
Accumulated depreciation (445.9) (426.3)
--------- ---------
Net property and equipment 1,797.4 1,580.7
--------- ---------
DEFERRED CHARGES AND OTHER ASSETS 32.0 31.2
--------- ---------
NET ASSETS OF DISCONTINUED OPERATIONS 9.8 -
--------- ---------
TOTAL ASSETS $ 2,226.1 $ 1,928.4
========= =========
The accompanying notes are an integral part of the consolidated financial
statements.
R&B FALCON CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(in millions)
MARCH 31, DECEMBER 31,
1998 1997
---------- -----------
(unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Short-term obligations $ 84.5 $ -
Long-term obligations due within one year 38.2 135.2
Accounts payable - trade 52.7 51.5
Accrued liabilities 114.9 144.7
--------- ---------
Total current liabilities 290.3 331.4
LONG-TERM OBLIGATIONS 915.8 692.2
OTHER NONCURRENT LIABILITIES 38.0 38.6
DEFERRED INCOME TAXES 106.0 76.8
NET LIABILITIES OF DISCONTINUED OPERATIONS - 5.8
--------- ---------
Total liabilities 1,350.1 1,144.8
--------- ---------
COMMITMENTS AND CONTINGENCIES
MINORITY INTEREST 53.8 55.6
--------- ---------
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value 1.7 1.6
Capital in excess of par value 655.5 631.4
Retained earnings 166.1 96.3
Other (1.1) (1.3)
--------- ---------
Total stockholders' equity 822.2 728.0
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,226.1 $ 1,928.4
========= =========
The accompanying notes are an integral part of the consolidated financial
statements.
R&B FALCON CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(in millions except per share amounts)
(unaudited)
THREE MONTHS ENDED
MARCH 31,
------------------
1998 1997
------- -------
OPERATING REVENUES $ 279.4 $ 203.1
------- -------
COSTS AND EXPENSES:
Operating expenses 120.0 103.5
Depreciation 20.9 18.5
General and administrative 13.5 11.3
Merger expenses (1.0) -
------- -------
Total costs and expenses 153.4 133.3
------- -------
OPERATING INCOME 126.0 69.8
------- -------
OTHER INCOME (EXPENSE):
Interest expense, net of capitalized interest (13.9) (10.1)
Interest income 1.5 1.6
Other, net (.1) (.3)
------- -------
Total other income (expense) (12.5) (8.8)
------- -------
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME
TAX EXPENSE AND MINORITY INTEREST 113.5 61.0
------- -------
INCOME TAX EXPENSE:
Current 6.8 8.3
Deferred 34.6 4.7
------- -------
Total income tax expense 41.4 13.0
------- -------
MINORITY INTEREST (2.3) (3.3)
------- -------
INCOME FROM CONTINUING OPERATIONS 69.8 44.7
LOSS FROM DISCONTINUED OPERATIONS - (5.8)
------- -------
NET INCOME $ 69.8 $ 38.9
======= =======
NET INCOME PER COMMON SHARE:
Basic:
Continuing operations $ .42 $ .27
Discontinued operations - (.03)
-------- --------
Net income $ .42 $ .24
======== ========
Diluted:
Continuing operations $ .42 $ .27
Discontinued operations - (.04)
-------- --------
Net income $ .42 $ .23
======== ========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic 164.9 163.6
======== ========
Diluted 166.4 165.9
======== ========
The accompanying notes are an integral part of the consolidated financial
statements.
R&B FALCON CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions)
(unaudited)
THREE MONTHS ENDED
MARCH 31,
------------------
1998 1997
------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 69.8 $ 38.9
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 20.9 18.5
Deferred income taxes 29.1 11.0
Loss (gain) on dispositions of property
and equipment (2.2) 1.2
Recognition of deferred expenses 2.8 2.4
Deferred compensation .2 1.9
Minority interest in income of
consolidated subsidiaries 2.3 3.3
Loss from discontinued operations - 5.8
Changes in assets and liabilities:
Accounts receivable, net (46.9) (13.7)
Materials and supplies inventory (2.9) (.2)
Deferred charges and other assets (5.9) (5.4)
Accounts payable - trade (.9) (7.2)
Accrued liabilities (26.7) 1.6
Accrued interest (4.4) (5.6)
Other, net 1.3 1.4
------- -------
Net cash provided by operating activities 36.5 53.9
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Dispositions of property and equipment 2.6 .7
Purchases of property and equipment (201.9) (64.6)
Purchase of short-term investments (4.1) (14.4)
Increase in investments in and advances to
unconsolidated investees - (7.8)
------- -------
Net cash used in investing activities (203.4) (86.1)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from revolving credit facilities 118.0 15.0
Increase in short-term borrowings 84.5 -
Principal payments on long-term obligations (3.5) (7.2)
Distribution to minority shareholders of
consolidated subsidiaries (4.0) -
Other .6 1.6
------- -------
Net cash provided by financing activities 195.6 9.4
------- -------
CASH USED IN DISCONTINUED OPERATIONS (15.6) (23.5)
------- -------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 13.1 (46.3)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 55.5 127.8
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 68.6 $ 81.5
======= =======
Supplemental Cash Flow Disclosures:
Interest paid $ 23.8 $ 17.2
Income taxes paid $ 5.0 $ 1.3
Noncash investing activities:
Purchase of property and equipment in
exchange for debt $ 35.5 $ 4.5
The accompanying notes are an integral part of the consolidated financial
statements.
R&B FALCON CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
A) SIGNIFICANT ACCOUNTING POLICIES
PROPERTY AND EQUIPMENT - In the first quarter of 1998, the
Company had an independent appraiser evaluate the expected useful
lives of its marine units and, based on such appraisal, the Company
extended the useful lives of its marine units effective January 1,
1998. Such change in estimate resulted in a $5.2 million reduction in
depreciation expense for the three months ended March 31, 1998.
NEWLY ISSUED ACCOUNTING STANDARD - In June 1997, Statement of
Financial Accounting Standards No. 130, Reporting Comprehensive Income
("SFAS 130") was issued. SFAS 130 establishes standards for reporting
and display of comprehensive income and its components in a full set
of general purpose financial statements. Comprehensive income is the
total of net income and all other non-owner changes in equity. The
Company had no non-owner changes in equity during the three months
ended March 31, 1998 and 1997 and therefore, no reporting and display
of comprehensive income was required.
B) SHORT-TERM OBLIGATIONS
In February 1998, the Company entered into a $150.0 million short-
term credit facility for the construction of Drillship III. The
facility bears interest at the London Interbank Offered Rate ("LIBOR")
plus .6% and is due in December 1998.
C) LONG-TERM OBLIGATIONS
On March 23, 1998, the Company offered to redeem its 9 3/4 %
Senior Notes due 2001, its 8 7/8 % Senior Notes due 2003 and its 12
1/2 % Subordinated Notes due 2005 (collectively the "Old Notes"). The
aggregate principal amount of the outstanding Old Notes was $280.0
million and on April 20, 1998, $274.4 million in principal amount of
Old Notes was repaid from proceeds from the sale of the New Senior
Notes (see Note F).
As a result of the debt offering in April 1998 (see Note F) the
repayment of $190.0 million of long-term obligations due within a year
did not require the use of working capital and, accordingly, the
Company's consolidated financial statements at March 31, 1998, reflect
the reclassification of $190.0 million from current to long-term debt.
D) DISCONTINUED OPERATIONS
In March 1998, the Company decided to divest its oil and gas
segment, and expects such divestiture to occur by March 1999. The
Company's oil and gas segment has been accounted for as a discontinued
operation.
Oil and gas assets held for sale at March 31, 1998 were $89.2
million and related liabilities totaled $79.4 million, including a
$70.5 million reserve for losses on ultimate disposal and operations
until disposal. There were no revenues from the discontinued
operations during the three months ended March 31, 1998 and 1997.
Expenses incurred from the discontinued operations during the three
months ended March 31, 1998 and 1997 were $8.3 million and $5.8
million, respectively. Such expenses for 1998 were reserved for at
December 31, 1997.
In the first quarter of 1998, the Company entered into a letter
of intent to perform development operations to earn an interest in oil
and gas properties owned by a third party. The cost of such
development operations is estimated at $29.0 million.
E) NET INCOME PER SHARE
Basic net income per share is computed by dividing net income by
the weighted average number of common shares outstanding during the
period. Diluted net income per share is the same as basic and assumes
the exercise of outstanding stock options as computed using the
treasury stock method.
The following table reconciles weighted average common shares
outstanding from basic to diluted for the three months ended March 31,
1998 and 1997 as follows (in millions):
Three Months
Ended March 31,
---------------
1998 1997
------ ------
Weighted average common shares outstanding - basic 164.9 163.6
Outstanding stock options 1.5 2.3
------ ------
Weighted average common shares outstanding - diluted 166.4 165.9
====== ======
F) SUBSEQUENT EVENTS
DEBT OFFERING - In April 1998, the Company issued four series of
senior notes with an aggregate principal amount of $1.1 billion (the
"New Senior Notes"). As a result, the Company received net proceeds of
approximately $1,082.0 million after deducting estimated offering
related expenses. The New Senior Notes bear interest at varying rates
from 6.5% to 7.375%, are payable semiannually on April 15 and October
15, and mature at varying times from 2003 to 2018. The New Senior
Notes are unsecured obligations of the Company, ranking pari passu in
right of payment with all other existing and future senior unsecured
indebtedness of the Company. The Company used the proceeds to repay
existing indebtedness of $874.4 million and the remainder will be used
for planned capital expenditures, working capital and other general
corporate purposes. As a result of the repayment of existing
indebtedness, the Company will incur an extraordinary loss of
approximately $25.1 million, net of tax, in the second quarter of
1998.
CREDIT FACILITY - In April 1998, the Company retired two existing
bank group credit facilities aggregating $615.0 million (of which
$600.0 million had been drawn), and entered into a new $500.0 million
unsecured revolving credit facility agreement with a syndicate of
banks. The new facility matures April 24, 2002, bears interest at
LIBOR plus .75%, and ranks pari passu in right of payment with the New
Senior Notes.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders
R&B Falcon Corporation
We have reviewed the accompanying consolidated balance sheet of R&B
Falcon Corporation (a Delaware corporation) and Subsidiaries as of March
31, 1998, and the related consolidated statements of operations and cash
flow for the three months ended March 31, 1998 and 1997. 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.
/s/Arthur Andersen LLP
Houston, Texas
April 28, 1998
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Changes In Financial Condition
The Company incurred capital expenditures of $201.9 million in the
first three months of 1998. The most significant expenditures were as
follows:
1) The Company incurred $137.8 million of capital expenditures related to
its significant construction projects, equipment acquisitions and
capital upgrades to the fleet to fulfill obligations under existing
contracts or to improve the marketability of certain of the Company's
marine units.
2) The Company issued 204,900 shares of its common stock in partial
consideration for the acquisition of all of the outstanding shares of
stock of a corporation owning six workover rigs.
3) The Company paid $1.5 million in cash and issued 517,184 shares of its
common stock in partial consideration for the acquisition of all of the
outstanding shares of stock of three corporations owning eight tugs and
five ocean going barges.
The Company has from time to time in the past engaged in, and
currently continues 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. The Company also continues to consider the selective
construction, acquisition and/or upgrade of marine units.
Results of Operations
THREE MONTHS ENDED MARCH 31, 1998 COMPARED
TO THREE MONTHS ENDED MARCH 31, 1997
The Company's net income for the three months ended March 31, 1998 was
$69.8 million ($.42 per diluted share) compared with net income of $38.9
million ($.23 per diluted share) for the same period of 1997. Included in
the results for the three months ended March 31, 1997 were losses related
to discontinued operations of $5.8 million.
Three Months
Ended March 31,
-----------------
Operating Revenues (in millions) 1998 1997
------- -------
Deepwater $ 99.6 $ 79.7
Shallow water 105.4 64.0
Inland water 74.4 59.4
------- -------
Total $ 279.4 $ 203.1
======= =======
Operating revenues are primarily a function of dayrates and
utilization. The $76.3 million increase in operating revenues for the three
months ended March 31, 1998 over the same period in 1997 is primarily due
to (i) increased dayrates fleetwide, with the shallow water fleet
accounting for the largest part of the increase, and (ii) an increase in
the number of offshore and inland marine vessels available for service,
which increase resulted from acquisitions, reactivations or conversions.
Three Months
Ended March 31,
------------------
Operating Expenses (in millions) 1998 1997
------- -------
Deepwater $ 41.7 $ 33.8
Shallow water 38.1 33.2
Inland water 40.2 36.5
------- -------
$ 120.0 $ 103.5
======= =======
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 units are stacked. It is only
during prolonged stacked periods that the Company is able to significantly
reduce labor costs and equipment maintenance expense. Additionally, labor
costs fluctuate due to the geographic diversification of the Company's
units and the mix of labor between expatriates and nationals as stipulated
in the 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 unit is performing and the age and
condition of the equipment. Scheduled maintenance of equipment and
overhauls are performed on the basis of number of hours operated in
accordance with the Company's preventive maintenance program. Operating
expenses for a unit are typically deferred or capitalized as appropriate
during periods of mobilization, contract preparation, major upgrades or
conversions unless corresponding revenue is recognized, in which case such
operating expenses are expensed as incurred.
The $16.5 million increase in operating expenses for the three months
ended March 31, 1998 as compared to the same period in 1997 is primarily
due to an increase in the number of offshore and inland marine vessels
available for service, which increase resulted from acquisitions,
reactivations or conversions.
Depreciation expense increased for the three months ended March 31,
1998 as compared to the same period in 1997 despite the $5.2 million
reduction in depreciation expense in 1998 due to the extension of the
expected useful lives of the Company's marine units effective January 1,
1998. Such increase is primarily due to the purchase and/or significant
upgrades of offshore and inland marine vessels during 1997.
General & administrative expense increased for the three months ended
March 31, 1998 as compared to the same period in 1997 primarily due to
increases in payroll and related expenses associated with increased
staffing.
Interest expense increased for the three months ended March 31, 1998
as compared to the same period in 1997 primarily due to an increased
average debt balance outstanding, partially offset by increased capitalized
interest related to significant upgrade and new build projects.
Income tax expense increased for the three months ended March 31, 1998
as compared to the same period in 1997 due to the increase in the Company's
pretax income and the Company providing for taxes at the full statutory
rate.
Loss from discontinued operations decreased for the three months ended
March 31, 1998 as compared to the same period in 1997 as the losses for
1998 were reserved for at December 31, 1997 (see Note D of Notes to
Consolidated Financial Statements).
Liquidity And Capital Resources
General. Net cash provided by operating activities was $36.5 million
for the three months ended March 31, 1998, compared to $53.9 million for
the same period in 1997. This represents a decrease of $17.4 million
despite the improved operating results from continuing operations. The
decrease is primarily due to the change in the components of working
capital, mainly accounts receivable and accrued liabilities.
Net cash used in investing activities was $203.4 million for the three
months ended March 31, 1998 compared to $86.1 million for the same period
in 1997. The increase is due to increasing levels of capital expenditures,
primarily related to the significant capital projects involving the
construction or upgrade of marine units.
Net cash provided by financing activities was $195.6 million for the
three months ended March 31, 1998 compared to $9.4 million for the same
period in 1997. The increase in net cash provided by financing activities
is due to increased borrowings under the Company's revolving credit
facilities and short-term borrowings related to the construction of
Drillship III.
The Company has numerous projects under way involving the construction
or upgrade of marine units. Significant delays in the completion of one or
more of these projects would have a material negative impact on the
Company's liquidity.
Liquidity of the Company should also be considered in light of the
significant fluctuations in demand that may be experienced by drilling
contractors as changes in oil and gas producers' expectations and budgets
occur, primarily in response to declines in prices for oil and gas. 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. While
declines in oil and gas prices experienced during the fourth quarter of
1997 and the first quarter of 1998 did not have an effect on the Company's
results of operations for the first quarter of 1998, any prolonged
depression in oil and gas prices could have a material adverse effect on
the Company.
The Company's management currently expects that its cash flow from
operations, in combination with cash on hand and funds available under its
existing credit facility will be sufficient to satisfy the Company's short-
term and long-term working capital needs, planned investments, capital
expenditures, debt, lease and other payment obligations.
Tender Offer. On March 23, 1998, the Company offered to redeem its 9
3/4 % Senior Notes due 2001, its 8 7/8 % Senior Notes due 2003 and its 12
1/2 % Subordinated Notes due 2005 (collectively the "Old Notes"). The
aggregate principal amount of the outstanding Old Notes was $280.0 million
and on April 20, 1998, $274.4 million in principal amount of Old Notes was
repaid from proceeds from the sale of the New Senior Notes (see below).
Debt Offering. In April 1998, the Company issued four series of senior
notes with an aggregate principal amount of $1.1 billion (the "New Senior
Notes"). As a result, the Company received net proceeds of $1,082.0 million
after deducting estimated offering related expenses. The New Senior Notes
bear interest at varying rates from 6.5% to 7.375%, are payable
semiannually on April 15 and October 15, and mature at varying times from
2003 to 2018. The New Senior Notes are unsecured obligations of the
Company, ranking pari passu in right of payment with all other existing
and future senior unsecured indebtedness of the Company. The Company used
the proceeds to repay existing indebtedness of $874.4 million and the
remainder will be used for planned capital expenditures, working capital
and other general corporate purposes. As a result of the repayment of
existing indebtedness, the Company will incur an extraordinary loss of
approximately $25.1 million, net of tax, in the second quarter of 1998.
Credit Facility. In April 1998, the Company retired two existing bank
group credit facilities aggregating $615.0 million (of which $600.0 million
had been drawn), and entered into a new $500.0 million unsecured revolving
credit facility agreement with a syndicate of banks. The new facility
matures April 24, 2002, bears interest at LIBOR plus .75%, and ranks pari
passu in right of payment with the New Senior Notes.
Forward-Looking Statements and Assumptions
This Quarterly Report on Form 10-Q may contain or incorporate by
reference certain forward-looking statements, including by way of
illustration and not of limitation, statements relating to liquidity,
revenues, expenses, margins and contract rates and terms. The Company
strongly encourages readers to note that some or all of the assumptions,
upon which such forward-looking statements are based, are beyond the
Company's ability to control or estimate precisely, and may in some cases
be subject to rapid and material changes. Such assumptions include the
contract status of the Company's offshore units, general market conditions
prevailing in the marine drilling industry (including daily rates and
utilization) and various other trends affecting the marine drilling
industry, including world oil prices, the exploration and development
programs of the Company's customers, the actions of the Company's
competitors and economic conditions generally.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company is involved in various 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
outcome of all known and potential claims and litigation will not have a
material adverse effect on the Company's business or consolidated financial
position or results of operations.
Item 2. Change in Securities
During the first quarter of 1998, the Company issued shares of its
common stock that were not registered under the Securities Act of 1933, as
amended (the "Act").
On January 13, 1998, the Company issued 517,184 shares of common stock
to Wiley J. Falgout and a trust affiliated with Mr. Falgout (the "Trust")
as partial consideration for all the issued and outstanding stock of four
corporations (the "Falgout Companies"), the primary assets of which were
eight tugs and five ocean going barges. The agreed price for the shares
issued to Mr. Falgout and the Trust was $32.175 per share. The Company
relied upon Section 4(2) of the Act for exemption from registration. The
shares were issued pursuant to a negotiated transaction wherein the Company
agreed to buy, and Mr. Falgout and the Trust agreed to sell, all of the
outstanding shares of the Falgout Companies.
On February 11, 1998, pursuant to a statutory subsidiary merger, the
Company issued 204,900 shares of common stock to nine persons as partial
consideration for the acquisition by the Company of all the issued and
outstanding stock of BSI Workover & Drilling, Inc. ("BSI"). The agreed
price for the shares issued was $33.5673 per share. The Company relied
upon Section 4(2) of the Act for exemption from registration. The shares
were issued pursuant to a negotiated transaction between the Company and
the holders of a majority of the outstanding shares of stock of BSI.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 4.1 - Registration Rights Agreement dated January 1, 1998
among the Company and the Stockholders of BSI
Workover and Drilling, Inc.
Exhibit 10.1 - Dealer Manager and Solicitation Agent Agreement dated
March 23, 1998 between the Company and Credit Suisse
First Boston Corporation.
Exhibit 10.2 - 1998 Employee Long-Term Incentive Plan of R&B Falcon
Corporation. (Filed as Exhibit 99.A to the Company's
Proxy Statement dated April 23,1998 and incorporated
by reference.)
Exhibit 10.3 - 1998 Director Long-Term Incentive Plan of R&B Falcon
Corporation. (Filed as Exhibit 99.B to the Company's
Proxy Statement dated April 23,1998 and incorporated
by reference.)
Exhibit 10.4 - Employment Agreement dated March 25, 1998 between the
Company and Paul B. Loyd, Jr.
Exhibit 10.5 - Employment Agreement dated March 25, 1998 between the
Company and Steve A. Webster.
Exhibit 10.6 - Employment Agreement dated March 25, 1998 between the
Company and Andrew Bakonyi.
Exhibit 10.7 - Employment Agreement dated March 25, 1998 between the
Company and Bernie Stewart.
Exhibit 10.8 - Employment Agreement dated March 25, 1998 between the
Company and Robert F. Fulton.
Exhibit 10.9 - Employment Agreement dated March 25, 1998 between the
Company and Tim W. Nagle.
Exhibit 10.10 - Employment Agreement dated March 25, 1998 between the
Company and Wayne K. Hillin.
Exhibit 10.11 - Employment Agreement dated March 25, 1998 between the
Company and Leighton E. Moss.
Exhibit 10.12 - Employment Agreement dated March 25, 1998 between the
Company and Charles R. Ofner.
Exhibit 10.13 - Credit Agreement dated as of November 10, 1997 among
Deepwater Drilling II L.L.C., Bank of America
National Trust and Savings Association, as
Administrative Agent, National Westminster Bank Plc,
New York Branch, as Documentation Agent and other
financial institutions.
Exhibit 10.14 - Guaranty Agreement dated November 10,1997 by Reading
& Bates Corporation, Reading & Bates Drilling Co.,
Reading & Bates Exploration Co., Reading & Bates (A)
Pty. Ltd., Reading & Bates Borneo Drilling Co., Ltd.,
Reading & Bates Offshore, Limited and RB Rig
Corporation in favor of Bank of America National
Trust and Savings Association.
Exhibit 10.15 - First Amendment and Release of Guaranty dated April
24, 1998 to Credit Agreement dated as of November 10,
1997 among Deepwater Drilling II L.L.C., Bank of
America National Trust and Savings Association,
National Westminster Bank Plc, and other financial
institutions.
Exhibit 10.16 - Guaranty Agreement dated April 24, 1998 by R&B Falcon
Corporation in favor of Bank of America National
Trust and Savings Association.
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.)
(b) Reports on Form 8-K
There was one Current Report on Form 8-K filed during the three
months ended March 31, 1998. A Current Report on Form 8-K dated March
23, 1998 was filed March 25, 1998 disclosing that the Company
announced an unregistered $1 billion debt offering.
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.
R&B FALCON CORPORATION
Date: May 15, 1998 By /s/T. W. Nagle
----------------------
T. W. Nagle
Executive Vice President
(Chief Accounting Officer)
Exhibit 4.1
REGISTRATION RIGHTS AGREEMENT
By and Between
R&B FALCON CORPORATION
AND
BSI STOCKHOLDERS
Dated as of January 1, 1998
TABLE OF CONTENTS
1. Registration Under Securities Act
1.1 Registration on Request
1.2 Registration Procedures
1.3 Preparation: Reasonable Investigation
1.4 Qualification to Obligations under Registration Covenants
1.5 Indemnification
2. Definitions
3. Amendments and Waivers
4. Notices
5. Remedies
6. Severability
7. Entire Agreement
8. Descriptive Headings
9. Governing Law
10. Counterparts
This REGISTRATION RIGHTS AGREEMENT, dated as of January 1, 1998, is
entered by and between R&B Falcon Corporation, a Delaware corporation (the
"Company"), and the Stockholders of BSI Workover and Drilling, Inc.,
Aransas Drilling and Workover, Inc., J. Storey Charbonnet, Jack Christopher
McClanahan, Elizabeth Diane McClanahan, Morgan S. Nulty, Kelly McClanahan
O'Rourke, John Regard, J. Keith Short and Paul T. Westervelt, Jr.
(collectively referred to as the "McClanahan Group").
This Agreement is being entered into in connection with an agreement
of merger (the "Merger Agreement") of even date herewith among the Company;
BSI Workover and Drilling, Inc., a Louisiana corporation ("BSI"), and BSI
Drilling and Workover, Inc., a Louisiana corporation and wholly owned
subsidiary of BSI, ("BSI Subsidiary") and the McClanahan Group, pursuant to
which BSI will merged with and in to Falcon Workover Company Inc. d/b/a
Blake Workover and Drilling Company ("Falcon Workover"), a Delaware
corporation and wholly subsidiary of company and the common stock of the
BSI Subsidiary, all of which is owned by BSI, will be converted into common
stock of the company. Capitalized terms used herein but not otherwise
defined shall have the meanings given to them in Section 2 hereof.
1. Registration Under Securities Act.
1.1 Registration on Request.
(a) Request. At any time after the execution and Closing
of the Merger Agreement, upon the written request of one or more holders
(the "Initiating Holders") of Registrable Securities representing not less
than 60% of the Registrable Securities that the Company effect registration
the Securities Act of all or part of such Initiating Holders Registrable
Securities, the Company promptly will give written notice of such requested
registration to all registered holders of Registrable Securities, and
thereupon the Company will use its best efforts to effect, at the earliest
possible date, the registration under the Securities Act of (i) Registrable
Securities which the Company which has been so requested to register by
such Initiating Holders, and (ii) all other Registrable Securities which
the Company has been requested to register by the holders thereof (such
holders together with the Initiating Holders hereinafter are referred as to
the "Selling Holders") by written request given to the Company within
thirty (30) days after giving of such written notice by the Company, all to
the extent requisite to permit the disposition of the Registrable
Securities so to be registered.
(b) Registration Statement Form. Registrations under this
Section 1.1 shall be on such appropriate registration form of the
Commission as shall be reasonably selected by the Company.
(c) Effective Registration. A registration requested
pursuant to Section 1.1 shall not be deemed to have been effected unless a
registration statement with respect thereto has become effective and
remained effective in compliance with the provisions of the Securities Act
with respect to the disposition of all Registrable Securities covered by
such registration statement for a period of at least 120 days or until the
distribution of all of the Registrable Securities so registered.
(d) Limitations on Registration on Request. Notwithstanding
anything in this Section 1.1 to the contrary, the Company shall not be
required to take any action to file a registration statement pursuant to
this Section 1.1: (i) after the Company has effected one such
registration; or (ii) in the event that Company does not receive a written
a request from the Initiating Holders to effect a registration hereunder
within one (1) calendar year of the execution of the Merger Agreement, this
Registration Rights Agreement shall terminate and the Initiating Holders
shall have no rights or remedies under this Agreement.
(e) Expenses. The Company will pay all Registration
Expenses in connection with any registration requested pursuant to this
Section 1.1.
1.2 Registration Procedures. If and whenever the Company is required
to effect the registration of any Registrable Securities under the
Securities Act as provided in Section 1.1 the Company will, as
expeditiously as possible, use its best efforts to:
(i) prepare and (within 30 days after the end of the period
within which requests for registration may be given to the Company or in
any event as soon thereafter as practical) file with the Commission the
requisite registration statement to effect such registration and thereafter
use its best efforts to cause such registration statement to become
effective;
(ii) prepare and file with the Commission such amendments
and supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the Securities Act
with respect to the disposition of all Registrable Securities covered by
such registration statement for a period of at least 120 days;
(iii) furnish to each seller of Registrable Securities
covered by such registration statement such number of conformed copies of
such registration statement and of each such amendment and supplement
thereto (in each case including all exhibits), such number of copies of the
prospectus contained in such registration statement (including each
preliminary prospectus and any summary prospectus) and any other prospectus
filed under Rule 424 under the Securities Act, in conformity with the
requirements of the Securities Act, and such other documents, as such
seller may reasonably request;
(iv) register or qualify all Registrable Securities and other
securities covered by such registration statement under such other
securities or blue sky laws of such States of the United States of America
where an exemption is not available and as the sellers of Registrable
Securities covered by such registration statement shall reasonably request;
keep such registration or qualification in effect for so long as such
registration statement remains in effect; and take any other action which
may be reasonably necessary or advisable to enable such sellers to
consummate the disposition in such jurisdictions of the securities to be
sold by such sellers, except that the Company shall not for any such
purpose be required to qualify generally to do business as a foreign
corporation in any jurisdiction wherein it would not but for the
requirements of this subdivision (iv) be obligated to be so qualified or to
consent to general service of process in any such jurisdiction;
(v) cause all Registrable Securities covered by such
registration statement to be registered with or approved by such other
federal or state governmental agencies or authorities as may be necessary
in the opinion of counsel to the Company and counsel to the seller or
sellers of Registrable Securities to enable seller or sellers thereof to
consummate the disposition of such Registrable Securities;
(vi) notify each seller of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, upon discovery that, or
upon the happening of any event as a result of which, the prospectus
included in such registration statement, as then in effect, includes an
untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading, in the light of the circumstances under which they were
made, and at the request of any such seller promptly prepare and furnish to
it a reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of fact or omit to state a material fact required to be stated
thereof or necessary to make the statements therein not misleading in the
light of the circumstances under which they were made;
(vii) otherwise comply with all applicable rules and
regulations of the Commission, and promptly furnish to each such seller of
Registrable Securities a copy of any amendment or supplement to such
registration statement or prospectus;
(viii) keep each Selling Holder advised in writing as to the
initiation and progress of any registration under Section 1.1;
(ix) provide and cause to be maintained a transfer agent and
registrar (which, in each case, may be the Company) for all Registrable
Securities covered by such registration statement from and after a date not
later than the effective date of such registration; and
(x) list all Registrable Securities covered by such registration
statement on any national securities exchange on which Registrable
Securities of the same class and, if applicable, series, covered by such
registration statement are then listed or on the New York Stock Exchange if
the Registrable Securities are reported thereon.
The Company may require each Seller of Registrable Securities as to which
any registration is being effected to furnish the Company such information
regarding such seller and the distribution of such securities as is
required by law or the Commission to be included within the registration
statement or as the Company may from time to time reasonably request in
writing.
Each holder of Registrable Securities agrees by acquisition of
such Registrable Securities that, upon receipt of any notice from the
Company of the happening of any event of the kind described in subdivision
(vi) of this Section 1.2, such holder will forthwith discontinue such
holder's disposition of Registrable Securities pursuant to the registration
statement relating to such Registrable Securities until such holder's
receipt of the copies of the supplemented or amended prospectus
contemplated by subdivision (vi) of this Section 1.2 and, if so directed by
the Company, will deliver to the Company (at the Company's expense) all
copies, other than permanent file copies, then in such holder's possession
of the prospectus relating to such Registrable Securities current at the
time of receipt of such notice.
1.3 Preparation: Reasonable Investigation. In connection with
the preparation and filing of any registration statement under the
Securities Act pursuant to this Agreement, the Company (i) shall give the
holders of Registrable Securities registered under such registration
statement, their underwriters, if any, and their respective counsel and
accountants the reasonable opportunity to participate in the preparation of
such registration statement, each prospectus included therein or filed with
the Commission, and each amendment thereof or supplement thereto, (ii)
shall give each of them such reasonable access to its books and records and
such opportunities to discuss the business of the Company with its officers
and the independent public accountants who have certified its financial
statements as shall be necessary, in the opinion of such holders' and such
underwriters' respective counsel, to conduct a reasonable investigation
within the meaning of the Securities Act and (iii) shall promptly notify
the registered holder of the Registrable Securities and their counsel of
any stop order issued or threatened by the Commission and take all
reasonable actions required to prevent the entry of such stop order or to
remove it if entered.
1.4 Qualification to Obligations under Registration Covenants.
The Company shall be entitled to postpone for a reasonable period of time
(but not exceeding 60 days) the filing of any registration statement
otherwise required to be prepared and filed by it pursuant to Section 1.1
if the Company determines, in its reasonable judgment that such
registration and offering would interfere with any financing, acquisition,
corporate reorganization or other material transaction involving the
Company or any of its affiliates and promptly give the holders of
Registrable Securities requesting registration thereof pursuant to Section
1.1 written notice of such postponement, containing a general statement of
the reasons for such postponement and an approximation of the anticipated
delay. If the Company shall so postpone the filing of a registration
statement, holders of Registrable Securities requesting registration
thereof pursuant to Section 1.1 and representing not less than 60% of the
initiating holders shall have the right to withdraw the request for
registration by giving written notice to this Company within 30 days after
receipt of the notice of postponement, and in the event of such withdrawal,
such request shall not be counted for purposes of the request for
registration to which holders of the Registrable Securities are entitled
pursuant to Section 1.1 hereof.
1.5 Indemnification.
(a) Indemnification by the Company. The Company will, and
hereby does indemnify and hold harmless, in the case of any registration
statement filed pursuant to Section 1.1, each seller of any Registrable
Securities covered by such registration statement and each other Person, if
any, who controls such seller within the meaning of the Securities Act, and
their respective directors, officers, partners, employees and affiliates
against any losses, claims, damages or liabilities, joint or several, to
which such seller or any such director, officer, partner, employee,
affiliate or controlling person may become subject under the Securities Act
or otherwise, including, without limitation, the reasonable fees and
expenses of legal counsel, insofar as such losses, claims, damages or
liabilities (or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in any registration
statement under which such securities were registered under the Securities
Act, any preliminary prospectus, final prospectus or summary prospectus
contained therein, or any amendment or supplement thereto, or any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein in light of the
circumstances in which they were made not misleading, and the Company will
reimburse such seller and each such director, officer, partner, employee,
affiliate and controlling Person for any legal or any other expenses
reasonably incurred by them in connection with investigating or defending
any such loss, claim, liability, action or proceeding; provided, that the
Company shall not be liable in any such case to the extent that any such
loss, claim, damage, liability (or action or proceeding in respect thereof)
or expense arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in such registration
statement, any such preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement in reliance upon and in conformity with
information furnished to the Company by or on behalf of such seller for use
in the preparation thereof. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of such seller
or any such director, officer, employee, affiliate, partner or controlling
Person and shall survive the transfer of such securities by such seller.
(b) Indemnification by the Sellers. As a condition to including
any Registrable Securities in any registration statement, the Company shall
have received an undertaking satisfactory to it from the prospective seller
of such Registrable Securities, to indemnify and hold harmless (in the same
manner and to the same extent as set forth in subdivision (a) of this
Section 1.5) the Company, and each manager or director of the Company, each
officer of the Company and each other Person who controls the Company
within the meaning of the Securities Act, with respect to any statement or
alleged statement in or omission or alleged omission from such registration
statement, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, if
such statement or alleged statement or omission or alleged omission was
made in reliance upon and in conformity with information furnished to the
Company by such seller for use in the preparation of such registration
statement, preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement. Such indemnity shall remain in full force and
effect, regardless of any investigation made by or on behalf of the Company
or any such director, officer or controlling person and shall survive the
transfer of such securities by such seller.
(c) Notices of Claims, etc. Promptly after receipt by an
indemnified party of notice of the commencement of any action or proceeding
involving a claim referred to in the preceding subdivisions of this Section
1.5, such indemnified party will, if a claim in respect thereof is to be
made against an indemnifying party, give written notice to the latter of
the commencement of such action; provided, however, that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding subdivisions of
this Section 1.5, except to the extent that the indemnifying party is
actually prejudiced by such failure to give notice. In case any such
action is brought against an indemnified party, the indemnifying party
shall be entitled to participate in and to assume the defense thereof,
jointly with any other indemnifying party similarly notified, to the extent
that it may wish, with counsel reasonably satisfactory to such indemnified
party, and after notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof, the indemnifying
party shall not be liable to such indemnified party for any legal or other
expenses subsequently incurred by the latter in connection with the defense
thereof other than reasonable costs of investigation, provided, however,
that if the indemnified party reasonably believes it is advisable for it to
be represented by separate counsel because there exists a conflict of
interest between its interests and those of the indemnified party which may
not be available to the indemnifying party, or if the indemnifying party
shall fail to assume responsibility for such defense, the indemnified party
may retain counsel satisfactory to it and the indemnifying party shall pay
all reasonable fees and expenses of such counsel. No indemnifying party
shall be liable for any settlement of any action or proceeding effected
without its written consent. No indemnifying party shall, without the
consent of the indemnified party, consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term thereof
the giving by the claimant or plaintiff to such indemnified party of a
release from all liability in respect to such claim or litigation or which
requires action other than the payment of money by the indemnifying party.
(d) Contribution. If the indemnification provided for in this
Section 1.5 shall for any reason be held by a court to be unavailable to an
indemnified party under subparagraph (a) or (b) hereof in respect of any
loss, claim, damage or liability, or any action in respect thereof, then,
in lieu of the amount paid or payable under subparagraph (a) or (b) hereof,
the indemnified party and the indemnifying party under subparagraph (a) or
(b) hereof shall contribute to the aggregate losses, claims, damages and
liabilities (including legal or other expenses reasonably incurred in
connection with investigating the same), (i) in such proportion as is
appropriate to reflect the relative fault of the Company and the
prospective sellers of Registrable Securities covered by the registration
statement which resulted in such loss, claim, damage or liability, or
action in respect thereof, with respect to the statements or omissions
which resulted in such loss, claim, damage or liability, or action in
respect thereof, as well as any other relevant equitable considerations or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as shall be appropriate to reflect the
relative benefits received by the Company and such prospective sellers from
the offering of the securities covered by such registration statement. No
Person guilty of fraudulent misrepresentations (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation. Such
prospective sellers' obligations to contribute as provided in this
subparagraph (d) are several in proportion to the relative value of their
respective Registrable Securities covered by such registration statement
and not joint. In addition, no Person shall be obligated to contribute
hereunder any amounts in payment for any settlement of any action or claim
effected without such Person's consent, which consent shall not be
unreasonably withheld or delayed.
(e) Other Indemnification. Indemnification and contribution
similar to that specified in the preceding subdivisions of this Section 1.5
(with appropriate modifications) shall be given by the Company and each
seller of Registrable Securities with respect to any required registration
or other qualification of securities under any federal or state law or
regulation of any governmental authority other than the Securities Act.
(f) Indemnification Payments. The indemnification and
contribution required by this Section 1.6 shall be made by periodic
payments of the amount thereof during the course of the investigation or
defense, as and when bills are received or expense, loss, damage or
liability is incurred.
2. Definitions. As used herein, unless the context otherwise
requires, the following terms have the following respective meanings:
"Commission" means the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of
the Commission thereunder, all as the same shall be in effect at the time.
Reference to a particular section of the Securities Exchange Act of 1934,
as amended, shall include a reference to the comparable section, if any, of
any such similar Federal statute.
"Initiating Holder" is defined in Section 1.1.
"Person" means any individual, corporation, limited liability
company, partnership, trust, incorporated or unincorporated association,
joint venture, joint stock company, government (or an agency or political
subdivision thereof) or other entity of any kind.
"Registrable Securities" means (i) 204,900 shares of the Common
Stock of the Company issued to the McClanahan Group pursuant to the Merger
Agreement and (ii) any related Registrable Securities. As to any
particular Registrable Securities, once issued such securities shall cease
to be Registrable Securities when (a) a registration statement with respect
to the sale of such securities shall have become effective under the
Securities Act and such securities shall have been disposed of in
accordance with such registration statement, (b) they shall have been
distributed to the public pursuant to Rule 144 (or any successor
provision) under the Securities Act, (c) they shall have been otherwise
transferred, new certificates for them not bearing a legend restricting
further transfer shall have been delivered by the Company and subsequent
public distribution of them shall not require registration of them under
the Securities Act, or (d) they shall have ceased to be outstanding.
"Related Registrable Securities" means any securities of the
Company issued or issuable with respect to the Registrable Securities to
the McClanahan Group by way of the Merger Agreement or by way of a dividend
or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization or
otherwise.
"Securities Act" means the Securities Act of 1933, or any similar
Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time. References to
a particular section of the Securities Act of 1933 shall include a
reference to the comparable section, if any, of any such similar statute.
"Selling Holder" is defined in Section 1.1.
3. Amendments and Waivers. This Agreement may be amended with the
written consent of the Company and the Company may take any action herein
prohibited, or omit to perform any act herein required to be performed by
it, only if the Company shall have obtained the written consent to such
amendment, action or omission to act of the holder or holders of at least
60% of the Registrable Securities at the time or thereafter outstanding
shall be bound by any consent authorized by this Section 3, whether or not
such Registrable Securities shall have been marked to indicate such
consent.
4. Notices. All notices, demands and other communications provided
for or permitted hereunder shall be made in writing and shall be by
registered or certified first-class mail, return receipt requested, telex,
telegram, telecopier, reputable courier service or personal delivery:
(a) if to McClanahan Group, addressed to J. Chris McClanahan in
the manner set forth in the Merger Agreement, or at such other address as
he shall furnish to the Company in writing;
(b) if to any other holder of Registrable Securities, at the
address that such holder shall have furnished to the Company in writing,
or, until any such other holder so furnishes to the Company and address,
then and to at the address of the last holder of such Registrable
Securities who has furnished an address to the Company; or
(c) if to the Company, addressed to it in the manner set forth
in the Merger Agreement, or at such other address as the Company shall have
furnished to each holder of Registrable Securities at the time outstanding.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; one business day
after being sent by reputable courier service; three business days after
being deposited in the mail, postage prepaid, if mailed; when answered
back, if telexed; and when receipt is acknowledged, if telecopied.
5. Remedies. Each holder of Registrable Securities, is entitled to
exercise all rights granted by law, including recovery of damages; such
rights not to extend to incidental or consequential damages.
6. Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any
circumstances, is held invalid, illegal or unenforceable in any respect for
any reason, the validity, legality and enforceability of any such provision
in every other respect and of the remaining provisions contained herein
shall not be in any way impaired thereby.
7. Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties
hereto in respect of the subject matter contained herein. There are no
restrictions, promises, warranties or undertakings, other than those set
forth or referred to herein and therein. This Agreement supersedes all
prior agreements and understandings between the parties with respect to
such subject matter.
8. Descriptive Headings. The descriptive headings of the several
sections and paragraphs of this Agreement are inserted for reference only
and shall not limit or otherwise affect the meaning hereof.
9. Governing Law. This Agreement shall be construed and enforced
in accordance with, and the rights of the parties shall be governed by, the
laws of the State of Delaware applicable to agreements made and to be
performed entirely within such State.
10. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their respective officers thereunto duly
authorized as of the date first above written.
R&B FALCON CORPORATION
BY: _____________________________
NAME: _____________________________
TITLE: _____________________________
THE McCLANAHAN GROUP
ARANSAS DRILLING & WORKOVER, INC.
BY: ______________________________
NAME: ______________________________
TITLE: ______________________________
______________________________________
J. STOREY CHARBONNET
______________________________________
JACK CHRISTOPHER McCLANAHAN
______________________________________
ELIZABETH DIANE McCLANAHAN
______________________________________
MORGAN S. NALTY
______________________________________
KELLY McCLANAHAN O'ROURKE
______________________________________
JOHN RAGARD
______________________________________
J. KEITH SHORT
______________________________________
PAUL T. WESTERVELT, JR.
EXHIBIT 10.1
DEALER MANAGER AND SOLICITATION AGENT AGREEMENT
March 23, 1998
Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, NY 10010-3629
Dear Sirs:
1. The Tender Offer. Falcon Drilling Company, Inc., a Delaware
corporation ("Purchaser"), is making tender offers (hereinafter referred
to, together with any amendments, supplements or extensions thereof, as the
"Tender Offers") to purchase for cash any and all of its outstanding (i) 9
1/2% Series B Senior Notes due 2001, (ii) 12 1/2% Series B Senior
Subordinated Notes due 2005 and (iii) 8 7/8% Series B Senior Notes due 2003
(collectively, the "Notes"). Purchaser is also soliciting (the
"Solicitations") consents (the "Consents") of the holders of the Notes to
certain amendments to (i) the indenture dated as of January 15, 1994
between Purchaser, and certain subsidiaries of Purchaser (the "Falcon
Guarantors") and Texas Commerce Bank National Association, as Trustee (the
"1994 Trustee"), (ii) the indenture dated as of March 15, 1995 between
Purchaser and Texas Commerce Bank National Association, as Trustee (the
"1995 Trustee"), and (iii) the indenture dated as of March 1, 1996 between
Purchaser and Bank One, Texas, N.A., as Trustee (the "1996 Trustee"), each
of the 1994 Trustee, the 1995 Trustee and the 1996 Trustee, a "Trustee"),
pursuant to which the Notes were issued (together, the "Indentures").
Subject to the consummation of the applicable Tender Offers and Consent
Solicitations, Purchaser will execute supplemental indentures to the
Indentures (the "Supplemental Indentures") which will give effect to the
amendments as provided in the Tender Offer and Consent Solicitation
Material (as defined herein). Each of the Tender Offers and the
Solicitations will be on the terms and subject to the conditions set forth
in the Offer to Purchase and Consent Solicitation Statement (the "Offer to
Purchase") and the Consent and Letter of Transmittal (the "Consent and
Letter of Transmittal") attached hereto as Exhibits A and B, respectively.
2. Appointment as Dealer Manager. Purchaser hereby appoints you as
Dealer Manager and Solicitation Agent (the "Dealer Manager and Solicitation
Agent") and authorizes you to act as such in connection with the Tender
Offers. As Dealer Manager and Solicitation Agent, you agree, in accordance
with your customary practice, to perform those services in connection with
the Tender Offers and Solicitations as are customarily performed by
investment banks in connection with tender offers and consent solicitations
of a like nature, including, but not limited to, using reasonable efforts
to solicit tenders of Notes and delivery of Consents pursuant to the Tender
Offers and Solicitations and communicating generally regarding the Tender
Offers and Solicitations with brokers, dealers, commercial banks and trust
companies and other holders of Notes. In such capacity, you shall act as
an independent contractor, and each of your duties arising out of your
engagement pursuant to this Agreement shall be owed solely to Purchaser.
Purchaser further authorizes you to communicate with Chase Bank of
Texas, National Association, in its capacity as depositary (the
"Depositary"), and with MacKenzie Partners, Inc., in its capacity as
information agent (the "Information Agent"), with respect to matters
relating to the Tender Offers and Solicitations. Purchaser has
instructed the Depositary to advise you at least daily as to the
number of Notes which have been tendered pursuant to the Tender
Offers, the number of Consents which have been delivered pursuant to
the Solicitations and as to such other matters in connection with
the Tender Offers and Solicitations as you may request.
3. No Liability for Acts of Dealers, Banks and Trust Companies. You
shall have no liability to Purchaser or any other person for any losses,
claims, damages, liabilities and expenses (each a "Loss" and collectively,
the "Losses") arising from any act or omission on the part of any broker or
dealer in securities (a "Dealer") (other than you, to the extent set forth
herein), bank or trust company, or any other person, and neither you nor
any of your affiliates shall be liable for any Losses arising from your own
acts or omissions in performing your obligations as Dealer Manager and
Solicitation Agent or as a Dealer hereunder or otherwise in connection with
the Tender Offers and the Solicitations, except to the extent any such
Losses are finally judicially determined to have resulted from your bad
faith, willful misconduct or gross negligence. In soliciting or obtaining
tenders of Notes and delivery of Consents, no Dealer, bank or trust company
is to be deemed to be acting as your agent or the agent of Purchaser or any
of its affiliates, and you, as Dealer Manager and Solicitation Agent, are
not to be deemed the agent of any Dealer, bank or trust company or the
agent or fiduciary of Purchaser or any of its affiliates, equity holders,
creditors or of any other person. In soliciting or obtaining tenders of
Notes and delivery of Consents, you shall not be and shall not be deemed
for any purpose to act as a partner or joint venturer of or a member of a
syndicate or group with Purchaser or any of its affiliates in connection
with the Tender Offers and the Solicitation, any purchase of the Notes, any
payment for Consents, or otherwise, and neither Purchaser nor any of its
affiliates shall be deemed to act as your agent. Purchaser shall have sole
authority for the acceptance or rejection of any and all tenders of Notes
or Consents.
4. The Tender Offer and Consent Solicitation Material. Purchaser
agrees to furnish you, at its expense, with as many copies as you may
reasonably request of the Offer to Purchase, the Consent and Letter of
Transmittal, all statements and other documents filed or to be filed with
the Securities and Exchange Commission (the "Commission") or any other
federal, state, local or foreign governmental or regulatory authorities or
any court (each an "Other Agency" and collectively, the "Other Agencies")
and any amendments or supplements to any such statements and documents (the
definitive forms of all of the foregoing materials are hereinafter
collectively referred to as the "Tender Offer and Consent Solicitation
Material") to be used by Purchaser in connection with the Tender Offers and
Solicitations, and you are authorized to use copies of the Tender Offer and
Consent Solicitation Material in connection with the Tender Offers and
Solicitations. The Tender Offer and Consent Solicitation Material has been
or will be prepared and approved by, and is the sole responsibility of,
Purchaser.
You hereby agree, as Dealer Manager and Solicitation Agent, that you
will not disseminate any written material for or in connection with
the solicitation of tenders of Notes and delivery of Consents
pursuant to the Tender Offers and Solicitations other than the
Tender Offer and Consent Solicitation Material, and you agree that
you will not make any statements in connection with such
solicitation, other than the statements that are set forth in the
Tender Offer and Consent Solicitation Material or as otherwise
authorized by Purchaser.
Purchaser agrees that no Tender Offer and Consent Solicitation
Material will be used in connection with the Tender Offers and
Solicitations or filed with the Commission or any Other Agency with
respect to the Tender Offers and Solicitations without first
submitting copies thereof to you, giving you reasonable opportunity
to comment thereon and giving reasonable consideration to your
comments, if any, with respect thereto. In the event that Purchaser
uses or permits the use of any Tender Offer and Consent Solicitation
Material in connection with the Tender Offers and Solicitations or
files any such material with the Commission or any Other Agency
without your prior approval, which shall not be unreasonably
withheld, then you shall be entitled to withdraw as Dealer Manager
and Solicitation Agent in connection with the Tender Offers and
Solicitations without any liability or penalty to you or any
Indemnified Person (as hereinafter defined), and you shall remain
entitled to the indemnification provided in Section 12 hereof and to
receive the payment of all fees and expenses payable under this
Agreement which have accrued to the date of such withdrawal or would
otherwise be due to you on such date. If you withdraw as Dealer
Manager and Solicitation Agent, as a result of the foregoing, the
fees accrued and reimbursement for your expenses through the date of
such withdrawal shall be paid to you promptly after such date. If
you withdraw, prior to the consent date, as Dealer Manager and
Solicitation Agent for any reason other than those described above,
you will be entitled to reimbursement for your expenses through the
date of such withdrawal or termination, but shall not be entitled to
receive any fee for services performed hereunder.
5. Compensation. Purchaser agrees to pay you, as compensation for
your services as Dealer Manager and Solicitation Agent in connection with
the Tender Offers and Solicitations, a fee of $3.125 for each $1,000
principal amount of Notes validly tendered pursuant to the Tender Offers
and Solicitations whether or not any Notes are purchased by Purchaser upon
the expiration or termination of the Tender Offer.
6. Expenses of Dealer Manager and Solicitation Agent and Others. In
addition to your compensation for your services hereunder pursuant to
Section 5 hereof, Purchaser agrees to pay directly, or reimburse you, as
the case may be, for (i) all reasonable expenses incurred by you relating
to the preparation, printing, filing, mailing and publishing of all Tender
Offer and Consent Solicitation Material, (ii) all fees and expenses of the
Depositary and Information Agent referred to in the Offer to Purchase,
(iii) all advertising charges in connection with the Tender Offers and
Solicitations, including those of any public relations firm or other person
or entity rendering services in connection therewith, (iv) all fees, if
any, payable to Dealers (including you), and banks and trust companies as
reimbursement for their customary mailing and handling expenses incurred in
forwarding the Tender Offer and Consent Solicitation Material to their
customers and (v) all other reasonable fees and expenses incurred by you in
connection with the Tender Offers and Solicitations or otherwise in
connection with the performance of your services hereunder (including fees
and disbursements of your legal counsel). All payments to be made by
Purchaser pursuant to this Section 6 shall be made promptly against deliv
ery to Purchaser of statements therefor which are itemized in reasonable
detail. Purchaser shall be liable for the foregoing payments whether or
not the Tender Offers and Solicitations are commenced, withdrawn,
terminated or canceled prior to the purchase of any Notes and the payment
for any Consents or whether Purchaser or any of its affiliates acquires any
Notes or Consents pursuant to the Tender Offers and Solicitations or
whether you withdraw pursuant to Section 4 hereof. The provisions of this
Section 6 are intended to govern the payment of expenses and fees described
in this Section 6 and Purchaser's obligation to indemnify an Indemnified
Person (as defined herein) are set forth in Section 12 hereof.
7. Securityholder Lists. Purchaser will cause you to be provided
with cards or lists or other records in such form as you may reasonably
request showing the names and addresses of, and the number of Notes held
by, the holders of Notes as of a recent date, and will cause you to be
advised from day to day during the period of the Tender Offers and
Solicitations as to any transfers of record of Notes.
8. Sufficient Funds. Subject to the execution of a definitive
purchase agreement relating to the sale of senior notes of R & B Falcon
Corporation, a Delaware Corporation and the parent corporation of Purchaser
("R & B Falcon") among R & B Falcon, you, Chase Securities, Inc., Morgan
Stanley & Co., Incorporated and Donaldson, Lufkin & Jenrette Securities
Corporation,] Purchaser represents and warrants to you that it has or, at
the time Purchaser becomes obligated to purchase Notes under the Tender
Offers and pay for Consents under the Solicitations, will have, sufficient
funds to enable Purchaser to pay, and Purchaser hereby agrees that it will
pay promptly, in accordance with the terms and conditions of the Tender
Offers and Solicitations and Sections 5 and 6 hereof, the consideration
(and related costs) for Notes and Consents which Purchaser has offered, and
which Purchaser may be required, to pay under the Tender Offers and
Solicitations, and the fees and expenses payable hereunder.
9. Additional Representations and Warranties of Purchaser. Purchaser
represents and warrants to you that:
(1) Purchaser is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation and
is duly qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its businesses or the ownership or
leasing of property requires such qualification, except to the extent that
the failure to be so qualified or to be in good standing, considering all
such cases in the aggregate, would not have a material adverse effect on
the business, properties, financial position or results of operations of
Purchaser and all of its subsidiaries and affiliates taken as a whole.
(2) Each of Purchaser and, as applicable, the Falcon Guarantors that
is incorporated in one of the United States of America, has full corporate
power and authority to take and has duly taken all necessary corporate
action to authorize (i) the Tender Offers and Solicitations, (ii) the
purchase by Purchaser of Notes pursuant to the Tender Offers and the
payment by Purchaser for Consents pursuant to the Solicitations and (iii)
the execution, delivery and performance of each of the Supplemental
Indentures and this Agreement has been, and when executed and delivered by
Purchaser and the Falcon Guarantors, if applicable, and the relevant
Trustee, each of the Supplemental Indentures will be, duly executed and
delivered on behalf of Purchaser and, if applicable, the Falcon Guarantors,
and, assuming due authorization, execution and delivery of each of the
Indentures, the Supplemental Indentures and this Agreement by each of the
other parties thereto is, or in the case of the Supplemental Indentures
will be, a legal, valid and binding obligation of Purchaser and, if
applicable, Falcon Guarantors, enforceable against Purchaser and, if
applicable, the Falcon Guarantors, in accordance with its terms, except
that the enforceability hereof may be limited by (x) bankruptcy,
insolvency, reorganization, moratorium and other laws now or hereafter in
effect relating to creditors' rights generally and (y) general principles
of equity. As of the Consent Date (as defined in the offer to Purchase), R
& B Falcon will have full corporate power and authority to take and will
have duly taken all necessary corporate action to authorize any borrowings
or financings related to the Tender Offers and Solicitations.
(3) The Tender Offer and Consent Solicitation Material complies or
will comply in all material respects with the applicable provisions of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated by the Commission thereunder (collectively, the "Exchange Act").
The Tender Offer and Consent Solicitation Material does not and will not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they are made, not mis-
leading; provided, however, that no representation is made with respect to
any statements contained in, or any matter omitted from the Tender Offer
and Consent Solicitation Material in reliance upon and in conformity with
information furnished or confirmed in writing by you to Purchaser expressly
for use therein. In connection with the Tender Offers and Solicitations,
Purchaser has complied, and will continue to comply, with the applicable
provisions of the Exchange Act, including without limitation, Sections 10
and 14 and Rules 10b-5, 14e-1 and 14e-3 thereunder.
(4) Purchaser will file, if required, any and all necessary
amendments or supplements to the documents, if any, filed with the
Commission or Other Agency relating to the Tender Offers and Solicitations
and will promptly furnish to you true and complete copies of each such
amendment and supplement upon the filing thereof.
(5) The Tender Offers and Solicitations (including any related
borrowings or financings by Purchaser or any of its subsidiaries or
affiliates), the purchase by Purchaser of Notes pursuant to the Tender
Offers, the payment for Consents pursuant to the Solicitations, and the
execution, delivery and performance of each of the Supplemental Indentures
and this Agreement by Purchaser, and, if applicable, the Falcon Guarantors,
comply and will comply in all material respects with all applicable
requirements of federal, state, local and foreign law, including, without
limitation, any applicable regulations of the Commission and Other
Agencies, and all applicable judgments, orders or decrees; and no consent,
authorization, approval, order, exemption, registration, qualification or
other action of, or filing with or notice to, the Commission or any Other
Agency is required in connection with the execution, delivery and
performance of each of the Supplemental Indentures and this Agreement by
Purchaser and, if applicable, the Falcon Guarantors, the making or
consummation by Purchaser of the Tender Offers and Solicitations or the
consummation of the other transactions contemplated by this Agreement or
the Offer to Purchase, except where the failure to obtain or make such
consent, authorization, approval, order, exemption, registration,
qualification or other action or filing or notification would not
materially adversely affect the ability of Purchaser and, if applicable,
the Falcon Guarantors, to execute, deliver and perform each of the
Supplemental Indentures and this Agreement or to commence and consummate
the Tender Offers and Solicitations in accordance with their terms. All
such required consents, authorizations, approvals, orders, exemptions,
registrations, qualifications and other actions of and filings with and
notices to the Commission and the Other Agencies will have been obtained,
taken or made, as the case may be, and all statutory or regulatory waiting
periods will have elapsed, prior to the purchase of the Notes pursuant to
the Tender Offers and the payment for Consents pursuant to the
Solicitations.
(6) The Tender Offers and Solicitations (including any related
borrowings or financings by Purchaser or any of its subsidiaries or
affiliates), the purchase of Notes by Purchaser pursuant to the Tender
Offers and the payment for Consents pursuant to the Solicitations, and the
execution, delivery and performance of each of the Supplemental Indentures
and this Agreement by Purchaser, and, if applicable, the Falcon Guarantors,
do not and will not (i) conflict with or result in a violation of any of
the provisions of the certificate of incorporation or by-laws (or similar
organizational documents) of Purchaser and the Falcon Guarantors, (ii)
conflict with or violate in any material respect any law, rule, regulation,
order, judgment or decree applicable to Purchaser or any of its
subsidiaries or by which any property or asset of Purchaser or any of its
subsidiaries is or may be bound or (iii) result in a breach of any of the
material terms or provisions of, or constitute a default (with or without
due notice and/or lapse of time) under, any loan or credit agreement,
indenture, mortgage, note or other agreement or instrument to which
Purchaser or any of its subsidiaries is a party or by which any of them or
any of their respective properties or assets is or may be bound.
(7) Except as expressly disclosed in the Tender Offer and Consent
Solicitation Material, no stop order, restraining order or denial of an
application for approval has been issued and no investigation, proceeding
or litigation has been commenced or, to the best of Purchaser's knowledge,
threatened before the Commission or any Other Agency with respect to the
making or consummation of the Tender Offers and Solicitations (including
the obtaining or use of funds to purchase Notes or to pay for Consents
pursuant thereto) or the consummation of the other transactions
contemplated by this Agreement or the Offer to Purchase or with respect to
the ownership of Notes by Purchaser or any of its subsidiaries or
affiliates.
(8) Purchaser has no knowledge of any material fact or information
concerning Purchaser or any of its subsidiaries, or the operations, assets,
condition (financial or otherwise) or prospects of Purchaser or any of its
subsidiaries, which is required to be made generally available to the
public and which has not been, or is not being, or will not be, made
generally available to the public through the Tender Offer and Consent
Solicitation Material or otherwise.
(9) Purchaser is not, nor will it be as a result of the purchase by
Purchaser of Notes that it may become obligated to purchase pursuant to the
terms of the Tender Offers, an "investment company" under the Investment
Company Act of 1940, as amended, and the rules and regulations promulgated
by the Commission thereunder.
(10) Each of the representations and warranties set forth in this
Agreement will be true and correct on and as of the date on which the
Tender Offers and Solicitations are commenced on and as of the date any
Tender Offer and Consent Solicitation Material is first distributed to
holders of Notes and on and as of the date on which any Notes are purchased
and payments for Consents are made pursuant to the Tender Offers and
Solicitations.
10. Opinions of Purchaser's Counsel. Purchaser shall deliver to you
addressed to you and dated the date hereof opinions of Leighton Moss, Esq.,
Co-Counsel of Purchaser, and Gardere & Wynne, L.L.P., special counsel to
Purchaser, with respect to the matters set forth in Exhibits C-1 and C-2,
respectively.
11. Notification of Certain Events. Purchaser shall advise you
promptly of (i) the occurrence of any event which could cause Purchaser
to withdraw, rescind or terminate the Tender Offers and Solicitations or
would permit Purchaser to exercise any right not to purchase Notes or pay
for Consents tendered or obtained under the Tender Offers and Solicitations,
(ii) the occurrence of any event, or the discovery of any fact, the
occurrence or existence of which it believes would require the making of
any change in any of the Tender Offer and Consent Solicitation Material
then being used or would cause any representation or warranty contained in
this Agreement to be untrue or inaccurate in any material respect, (iii)
any proposal or requirement to make, amend or supplement any filing
required by the Exchange Act in connection with the Tender Offers and
Solicitations or to make any filing in connection with the Tender Offers
and Solicitations pursuant to any other applicable law, rule or regulation,
(iv) the issuance by the Commission or any Other Agency of any comment or
order or the taking of any other action concerning the Tender Offers and
Solicitations (and, if in writing, will furnish you with a copy thereof),
(v) any material developments in connection with the Tender Offers and
Solicitations or the financing thereof, including, without limitation, the
commencement of any lawsuit concerning the Tender Offers and Solicitations
and (vi) any other information relating to the Tender Offers and
Solicitations, the Tender Offer and Consent Solicitation Material or this
Agreement which you may from time to time reasonably request.
12. Indemnification. (a) Purchaser agrees to hold harmless and
indemnify you (including any affiliated companies) and any officer,
director, partner, employee or agent of you or any of such affiliated
companies and any entity or person controlling (within the meaning of
Section 20(a) of the Exchange Act) you, including any affiliated companies
(collectively, the "Indemnified Persons"), from and against any and all
Losses whatsoever (including, but not limited to, any and all expenses
incurred in investigating, preparing or defending against any litigation or
proceeding, commenced or threatened, or any claims whatsoever whether or
not resulting in any liability) (i) arising out of or based upon any untrue
statement or alleged untrue statement of a material fact contained in the
Tender Offer and Consent Solicitation Material or in any other material
used by Purchaser, or authorized by Purchaser for use in connection with
the Tender Offers and Solicitations or the transactions contemplated
thereby, or arising out of or based upon the omission or alleged omission
to state in any such document a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading (other than statements or
omissions made in reliance upon information furnished by you to Purchaser
expressly for use therein), (ii) arising out of or based upon any
withdrawal by Purchaser of, or failure by Purchaser to make or consummate,
the Tender Offers and Solicitations or the transactions contemplated
thereby or any other failure to comply with the terms and conditions
specified in the Tender Offer and Consent Solicitation Material, (iii)
arising out of the breach or alleged breach by Purchaser of any
representation, warranty or covenant set forth in this Agreement or (iv)
arising out of, relating to or in connection with any other action taken or
omitted to be taken by an Indemnified Person in connection with the Tender
Offers and Solicitations or (v) otherwise arising out of, relating to or in
connection with the Tender Offers and Solicitations, the other transactions
described in the Tender Offer and Consent Solicitation Material or your
services as Dealer Manager and Solicitation Agent hereunder. Purchaser
shall not, however, be responsible for any Loss pursuant to clauses (iv) or
(v) of the preceding sentence of this Section 12 which has been finally
judicially determined to have resulted from the bad faith, willful
misconduct or gross negligence on the part of any Indemnified Person, other
than any Loss arising out of or resulting from actions performed at the
specific request of, with the specific consent of, or in conformity in all
material respects with actions taken or omitted to be taken by, Purchaser.
(1) Purchaser and you agree that if any indemnification sought by any
Indemnified Person pursuant to this Section 12 is unavailable for any
reason or insufficient to hold you harmless, then Purchaser and you shall
contribute to the Losses for which such indemnification is held unavailable
or insufficient in such proportion as is appropriate to reflect the
relative benefits received (or anticipated to be received) by Purchaser, on
the one hand, and actually received by you, on the other hand, in
connection with the transactions contemplated by this Agreement or, if such
allocation is not permitted by applicable law, not only such relative
benefits but also the relative faults of Purchaser, on the one hand, and
you, on the other hand, as well as any other equitable considerations,
subject to the limitation that in any event the aggregate contribution by
you to all Losses with respect to which contribution is available hereunder
shall not exceed the fees actually received by you in connection with your
engagement hereunder. It is hereby agreed that the relative benefits to
Purchaser, on the one hand, and you, on the other hand, with respect to the
Tender Offers and Solicitations and the transactions contemplated thereby
shall be deemed to be in the same proportion as (i) the total value paid or
proposed to be paid to holders of Notes pursuant to the Tender Offers and
Solicitations (whether or not the Tender Offers and Solicitations or such
transactions are consummated) bears to (ii) the fees actually received by
you from Purchaser in connection with your engagement hereunder.
(2) The foregoing rights to indemnity and contribution shall be in
addition to any other right which you and the other Indemnified Persons may
have against Purchaser at common law or otherwise. If any litigation or
proceeding is brought against any Indemnified Person in respect of which
indemnification may be sought against Purchaser pursuant to this Section
12, such Indemnified Person shall promptly notify Purchaser in writing of
the commencement of such litigation or proceeding, but the failure so to
notify Purchaser shall relieve Purchaser from any liability which it may
have hereunder only if, and to the extent that, such failure results in the
forfeiture by Purchaser of substantial rights and defenses, and will not in
any event relieve Purchaser from any other obligation or liability that it
may have to any Indemnified Person other than under this Agreement. In
case any such litigation or proceeding shall be brought against any
Indemnified Person and such Indemnified Person shall notify Purchaser in
writing of the commencement of such litigation or proceeding, Purchaser
shall be entitled to participate in such litigation or proceeding, and,
after written notice from Purchaser to such Indemnified Person, to assume
the defense of such litigation or proceeding with counsel of its choice at
its expense; provided, however, that such counsel shall be satisfactory to
the Indemnified Person in the exercise of its reasonable judgment.
Notwithstanding the election of Purchaser to assume the defense of such
litigation or proceeding, such Indemnified Person shall have the right to
employ separate counsel and to participate in the defense of such litiga
tion or proceeding, and Purchaser shall bear the reasonable fees, costs and
expenses of such separate counsel and shall pay such fees, costs and
expenses at least quarterly (provided that with respect to any single
litigation or proceeding or with respect to several litigations or
proceedings involving substantially similar legal claims, Purchaser shall
not be required to bear the fees, costs and expenses of more than one such
counsel) if (i) in the reasonable judgment of such Indemnified Person the
use of counsel chosen by Purchaser to represent such Indemnified Person
would present such counsel with a conflict of interest, (ii) the defendants
in, or targets of, any such litigation or proceeding include both an
Indemnified Person and Purchaser, and such Indemnified Person shall have
reasonably concluded that there may be legal defenses available to it or to
other Indemnified Persons which are different from or additional to those
available to Purchaser (in which case Purchaser shall not have the right to
direct the defense of such action on behalf of the Indemnified Person),
(iii) Purchaser shall not have employed counsel satisfactory to such
Indemnified Person, in the exercise of the Indemnified Person's reasonable
judgment, to represent such Indemnified Person within a reasonable time
after notice of the institution of such litigation or proceeding or (iv)
Purchaser shall authorize in writing such Indemnified Person to employ
separate counsel at the expense of Purchaser. In any action or proceeding
the defense of which Purchaser assumes, the Indemnified Person shall have
the right to participate in such litigation and retain its own counsel at
such Indemnified Person's own expense. Purchaser and you agree to notify
the other promptly of the assertion of any claim against it, any of its
officers or directors or any entity or person who controls it within the
meaning of Section 20(a) of the Exchange Act in connection with the Tender
Offers and Solicitations. The foregoing indemnification commitments shall
apply whether or not the Indemnified Person is a formal party to such
litigation or proceeding.
(3) Purchaser also agrees to reimburse each Indemnified Person for
all reasonable expenses (including fees and disbursements of counsel) as
they are incurred by such Indemnified Person in connection with
investigating, preparing for, defending or providing evidence (including
appearing as a witness) with respect to any action, claim, investigation,
inquiry, arbitration or other proceeding referred to in this Section 12 or
enforcing this Agreement, whether or not in connection with pending or
threatened litigation in which any Indemnified Person is a party.
(4) Purchaser shall not be liable for any settlement, compromise or
consent to the entry of any judgement without its prior written consent,
which consent shall not be unreasonably withheld. Purchaser agrees that it
will not, without your prior written consent (which will not be
unreasonably withheld) settle, compromise or consent to the entry of any
judgment in any pending or threatened claim, action or proceeding in
respect of which indemnification may be sought hereunder (whether or not
you, any other Indemnified Person or Purchaser is an actual or potential
party), unless such settlement, compromise or consent includes an
unconditional release of each Indemnified Person from all liability arising
out of such claim, action or proceeding.
13. Conditions to Obligations of the Dealer Manager. Your obligations
hereunder shall at all times be subject to the conditions that (a) all
representations, warranties and other statements of Purchaser contained
herein are now, and at all times during the period of the Tender Offers and
Solicitations shall be, true and correct in all material respects and (b)
Purchaser at all times shall have performed in all material respects all of
its obligations hereunder theretofore to be performed.
14. Termination. This Agreement shall terminate upon the expiration,
termination or withdrawal of the Tender Offers and Solicitations or upon
withdrawal by you as Dealer Manager and Solicitation Agent pursuant to
Section 4 hereof, it being understood that Sections 3, 5, 6, 8, 9, 12, 14,
15, 16, 17, 20, 21, 22 and 23 hereof shall survive any termination of this
Agreement.
15. Notices. All notices and other communications required or
permitted to be given under this Agreement shall be in writing and shall be
given (and shall be deemed to have been given upon receipt) by delivery in
person, by cable, by telecopy, by telegram, by telex or by registered or
certified mail (postage prepaid, return receipt requested) to the
applicable party at the addresses indicated below:
(1) if to you:
Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, NY 10010-3629
Telecopy No.: (212) 325-8278
Attention:Transaction Advisory Group
with a copy to:
Allan D. Reiss, Esq.
Andrews & Kurth L.L.P.
425 Lexington Avenue
New York, NY 10017
Telecopy No.: (212) 850-2929
(b) if to Purchaser:
R&B Falcon Corporation
901 Threadneedle, Suite 200
Houston, TX 77079
Telecopy No.: (281) 496-0285
Attention: Leighton Moss
with a copy to:
C. Robert Butterfield, Esq.
Gardere & Wynne, L.L.P.
3000 Thanksgiving Tower
1601 Elm Street
Dallas, Texas 75201
Telecopy No.: (214) 999-3534
16. Consent to Jurisdiction; Service of Process. Purchaser hereby (a)
submits to the jurisdiction of any New York State or Federal court sitting
in the City of New York with respect to any actions and proceedings arising
out of or relating to this Agreement, (b) agrees that all claims with
respect to such actions or proceedings may be heard and determined in such
New York State or Federal court, (c) waives the defense of an inconvenient
forum, (d) agrees not to commence any action or proceeding relating to this
Agreement other than in a New York State or Federal court sitting in the
City of New York and (e) agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions
by suit on the judgment or in any other manner provided by law.
17. Joint and Several Obligations, Etc. In the event that Purchaser
makes the Tender Offers and Solicitations through one or more of its
affiliates, each reference in this Agreement to Purchaser shall be deemed
to be a reference to Purchaser and any such affiliates, and the
representations, warranties, covenants and agreements of Purchaser and any
such affiliates hereunder shall be joint and several.
18. Entire Agreement. This Agreement constitutes the entire
agreement among the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements and undertakings, both written
and oral, among the parties, or any of them, with respect to the subject
matter hereof.
19. Amendment. This Agreement may not be amended except in writing
signed by each party to be bound thereby.
20. Governing Law. The validity and interpretation of this Agreement
shall be governed by, and construed and enforced in accordance with, the
laws of the State of New York, without regard to conflicts of law
principles thereof.
21. Waiver of Jury Trial. PURCHASER HEREBY AGREES ON ITS OWN BEHALF
AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ON BEHALF OF ITS SECURITY
HOLDERS, TO WAIVE ANY RIGHT TO A TRIAL BY JURY WITH RESPECT TO ANY CLAIM,
COUNTER-CLAIM OR ACTION ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY (INCLUDING, WITHOUT LIMITATION, THE
TENDER OFFERS AND SOLICITATIONS).
22. Counterparts; Severability. This Agreement may be executed in two
or more separate counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.
Any term or provision of this Agreement which is invalid or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this Agreement or
affecting the validity or enforceability of any of the terms or provisions
of this Agreement in any other jurisdiction.
23. Parties in Interest. This Agreement, including rights to
indemnity and contribution hereunder, shall be binding upon and inure
solely to the benefit of each party hereto, the Indemnified Persons and
their respective successors, heirs and assigns, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any
other person any right, benefit or remedy of any nature whatsoever under or
by reason of this Agreement.
Please indicate your willingness to act as Dealer Manager and
Solicitation Agent and your acceptance of the foregoing by providing
to us a copy of this Agreement so signed, whereupon this Agreement and
your acceptance shall constitute a binding agreement between us.
FALCON DRILLING COMPANY, INC.
By:
Name:
Title:
Accepted as of the
date first above written:
CREDIT SUISSE FIRST BOSTON CORPORATION
By:
Name:
Title:
Exhibit A
Offer to Purchase
Exhibit B
Consent and Letter of Transmittal
Exhibit C-1
Matters to be Addressed in the Opinion of Leighton Moss, Esq.
(1) Purchaser is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its
incorporation and is duly qualified (to the best of such counsel's
knowledge with respect to certain foreign operations) to transact
business and is in good standing in each jurisdiction in which the
conduct of its businesses or the ownership or leasing of property
requires such qualification, except to the extent that the failure
to be so qualified or to be in good standing, considering all such
cases in the aggregate, would not have a material adverse effect
on the business, properties, financial position or results of
operations of Purchaser and all of its subsidiaries and
affiliates, taken as a whole.
(2) Each of Purchaser and, as applicable, the Falcon Guarantors, has
full corporate power and authority to take and has duly taken all
necessary corporate action to authorize (i) the Tender Offers and
Solicitations (including any related borrowings or financings by
Purchaser or any of its subsidiaries or affiliates), (ii) the
purchase by Purchaser of Notes and the payment for Consents
pursuant to the Tender Offers and Solicitations and (iii) the
execution, delivery and performance of each of the Supplemental
Indentures and this Agreement, and each of the Indentures and this
Agreement has been, and, when executed and delivered by Purchaser,
and, as applicable, the Falcon Guarantors and the relevant
Trustee, each of the Supplemental Indentures will be, duly
executed and delivered on behalf of Purchaser and, if applicable,
the Falcon Guarantors and, assuming due authorization, execution
and delivery of this Agreement by Credit Suisse First Boston
Corporation and each of the Supplemental Indentures by the
relevant Trustee, is a legal, valid and binding obligation of
Purchaser and, if applicable, the Falcon Guarantors enforceable
against Purchaser and, if applicable, the Falcon Guarantors in
accordance with its terms, except that the enforceability thereof
may be limited by (x) bankruptcy, insolvency, reorganization,
moratorium and other laws now or hereafter in effect relating to
creditors' rights generally and (y) general principles of equity.
(3) The Tender Offers and Solicitations (including any related
borrowings or financings by Purchaser or any of its subsidiaries
or affiliates), the purchase of Notes by Purchaser and the payment
for Consents pursuant to the Tender Offers and Solicitations, and
the execution, delivery and performance of each of this Agreement,
and the Supplemental Indentures by Purchaser and, if applicable,
the Falcon Guarantors, do not and will not (i) conflict with or
result in a violation of any of the provisions of the certificate
of incorporation or by-laws (or similar organizational documents)
of Purchaser or the Falcon Guarantors, (ii) conflict with or
violate in any material respect any law, rule, regulation, order,
judgment or decree applicable to Purchaser or any of its
subsidiaries or by which any property or asset of Purchaser or any
of its subsidiaries is or may be bound or (iii) to the best of
such counsel's knowledge, result in a breach of any of the
material terms or provisions of, or constitute a default (with or
without due notice and/or lapse of time) under, any loan or credit
agreement, indenture, mortgage, note or other agreement or
instrument to which Purchaser or any of its subsidiaries is a
party or by which any of them or any of its properties or assets
is or may be bound.
(4) No consent, authorization, approval, order, exemption,
registration, qualification or other action of, or filing with or
notice to, the Commission or any Other Agency is required in
connection with the execution, delivery and performance of each of
the Supplemental Indentures and this Agreement by Purchaser and,
if applicable, the Falcon Guarantors, the making or consummation
by Purchaser of the Tender Offers and Solicitations or the
consummation of the other transactions contemplated by this
Agreement or the Offer to Purchase, except where the failure to
obtain or make such consent, authorization, approval, order,
exemption, registration, qualification or other action or filing
or notification would not materially adversely affect the ability
of Purchaser and, if applicable, the Falcon Guarantors, to
execute, deliver and perform each of the Supplemental Indentures
and this Agreement or to commence and consummate the Tender Offers
and Solicitations in accordance with their terms.
(5) Except as expressly disclosed in the Offer to Purchase, to the
best of such counsel's knowledge, no stop order, restraining order
or denial of an application for approval has been issued and no
investigation, proceeding or litigation has been commenced or
threatened before the Commission or any Other Agency with respect
to the making or consummation of the Tender Offers and
Solicitations (including the obtaining or use of funds to purchase
Notes or pay for Consents pursuant thereto) or the consummation of
the other transactions contemplated by this Agreement or the Offer
to Purchase or with respect to the ownership of the Notes by
Purchaser.
(6) To the best of such counsel's knowledge, Purchaser has no
knowledge of any material fact or information concerning Purchaser
or any of its subsidiaries, or the operations, assets, condition
(financial or otherwise) or prospects of Purchaser or any of its
subsidiaries, which is required to be made generally available to
the public and which has not been, or is not being, or will not
be, made generally available to the public through the Tender
Offer and Consent Solicitation Material or otherwise.
Such counsel shall also advise that no facts have come to its
attention which has caused him to believe that the Offer to Purchase
(apart from the financial and market data and statistical information
contained or incorporated by reference therein, as to which such
counsel need express no opinion) contains any untrue statement of a
material fact or omits to state a material fact required to be stated
therein or necessary to make the statements made therein, in light of
the circumstances under which they were made, not misleading.
Exhibit C-2
Matters to be Addressed in the Opinion of Gardere & Wynne, L.L.P.
(a) The Tender Offers and Solicitations (including any related
borrowings or financings by Purchaser or any of its subsidiaries or
affiliates), the purchase by Purchaser of Notes and the payment for
Consents pursuant to the Tender Offers and Solicitations, and the
execution, delivery and performance of each of the Supplemental
Indentures and this Agreement by Purchaser and, if applicable, the
Falcon Guarantors, comply and will comply in all material respects
with all applicable requirements of applicable law, including,
without limitation, any applicable regulations of the Commission and
Other Agencies, and all applicable judgments, orders or decrees of
which such counsel has knowledge, and no consent, authorization,
approval, order, exemption, registration, qualification or other
action of, or filing with, the Commission or any Other Agency is
required in connection with the execution, delivery and performance
of each of the Supplemental Indentures and this Agreement by
Purchaser and, if applicable, the Falcon Guarantors, the making or
consummation by Purchaser of the Tender Offers and Solicitations or
the consummation of the other transactions contemplated by this
Agreement or the Offer to Purchase, except where the failure to
obtain or make such consent, authorization, approval, order,
exemption, registration, qualification or other action or filing or
notification would not materially adversely affect the ability of
Purchaser and, if applicable, the Falcon Guarantors, to execute,
deliver and perform each of the Supplemental Indentures and this
Agreement or to commence and consummate the Tender Offers and
Solicitations in accordance with their terms.
(b) Except as expressly disclosed in the Offer to Purchase, to the best
of such counsel's knowledge, no stop order, restraining order or
denial of an application for approval has been issued and no
investigation, proceeding or litigation has been commenced or
threatened before the Commission or any Other Agency with respect to
the making or consummation of the Tender Offers and Solicitations
(including the obtaining or use of funds to purchase Notes and to
pay for Consents pursuant thereto) or the consummation of the other
transactions contemplated by this Agreement or the Offer to Purchase
or with respect to the ownership of the Notes by Purchaser.
(c) Purchaser is not, nor will be as a result of the purchase by
Purchaser of Notes that it may become obligated to purchase pursuant
to the terms of the Tender Offers, an "investment company" under the
Investment Company Act of 1940, as amended, and the rules and
regulations promulgated by the Commission thereunder.
Such counsel shall also advise that no facts have come to its attention
which has caused it to believe that the Offer to Purchase (apart from the
financial and market data and statistical information contained or
incorporated by reference therein, as to which such counsel need express no
opinion) contains any untrue statement of a material fact or omits to state
a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they
were made, not misleading.
Exhibit 10.4
EMPLOYMENT AGREEMENT
This Agreement is entered into between R&B Falcon Corporation, a
Delaware corporation (the "Company"), and Paul B. Loyd, Jr. (the
"Executive") on the 25th day of March, 1998.
The Company has determined that it is in its best interests and
those of its shareholders to assure that the Company will have the services
of the Executive and to provide the Executive with compensation and benefit
arrangements which are competitive with those of other corporations.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS;
1. Employment Period. The Company hereby agrees to employ the
Executive, and the Executive hereby agrees to be employed by the Company,
in accordance with the terms and provisions of this Agreement, for the
period commencing on the date hereof (the "the Effective Date") and ending
on the third anniversary of such date (the "Employment Period"). The
Employment Period shall be extended cumulatively, from time to time, one
year for each year following the Effective Date that Employee remains
employed by the Company or one of its direct or indirect subsidiaries.
2. Terms of Employment. (a) Position and Duties. (i) During
the Employment Period, (A) the Executive's position, authority, duties and
responsibilities shall be at least commensurate in all material respects
with and include status as Chairman of the Company, and (B) the Executive's
services shall be performed at the location where the Executive was
employed immediately preceding the Effective Date or any office of the
Company located in Houston, Texas which is the principal office of the
Company.
(ii) During the Employment Period, and excluding any periods
of vacation and sick leave to which the Executive is entitled, the
Executive agrees to devote substantially full attention and time during
normal business hours to the business and affairs of the Company and, to
the extent necessary to discharge the responsibilities assigned to the
Executive hereunder, to use the Executive's best efforts to perform
faithfully and efficiently such responsibilities. During the Employment
Period it shall not be a violation of this Agreement for the Executive to
(A) serve on corporate, civic or charitable boards or committees,
(B) deliver lectures, fulfill speaking engagements or teach at educational
institutions and (C) manage personal investments, so long as such
activities do not materially interfere with the performance of the
Executive's responsibilities as an employee of the Company in accordance
with this Agreement. It is expressly understood and agreed that to the
extent that any such activities have been conducted by the Executive prior
to the Effective Date under his prior employment with Reading & Bates
Corporation, the continued conduct of such activities (or the conduct of
activities similar in nature and scope thereto) subsequent to the Effective
Date shall not thereafter be deemed to interfere with the performance of
the Executive's responsibilities to the Company.
(b) Compensation. (i) Base Salary. During the Employment
Period, the Executive shall receive an annual base salary of not less than
$520,000 ("Annual Base Salary"), which shall be paid on a monthly basis.
During the Employment Period, the Annual Base Salary shall be reviewed at
least annually and shall be increased at any time and from time to time as
may be determined by the Board, based on the Executive's performance of his
position and responsibilities (to be measured in a fair and objective
manner). It may also be decreased by the Board as a part of Company wide
salary reduction program applicable to all executives and employees
generally as a result of financial losses experienced by the Company. Any
increase in Annual Base Salary shall not serve to limit or reduce any other
obligation to the Executive under this Agreement. Annual Base Salary shall
not be reduced after any such increase (except as provided in this Section
2(b)(i)), and the term Annual Base Salary as utilized in this Agreement
shall refer to Annual Base Salary as so increased or decreased. As used in
this Agreement, the term "affiliated companies" shall include any company
controlled by, controlling or under common control with the Company.
(iii) Incentive, Savings and Retirement Plans. During
the Employment Period, the Executive shall be entitled to participate in
all incentive, savings and retirement plans that are tax qualified under
Section 401(a) of the Internal Revenue Code of 1986, as amended ("Code"),
applicable generally to other executives of the Company and its affiliated
companies.
(iv) Welfare Benefit Plans. During the Employment Period,
the Executive and/or the Executive's family, as the case may be, shall be
eligible for participation in and shall receive all benefits under welfare
benefit plans, practices, policies and programs provided by the Company and
its affiliated companies (including, without limitation, medical,
prescription, dental, vision, disability, salary continuance, group life
and supplemental group life, accidental death and travel accident insurance
plans and programs) to the extent applicable generally to other executives
of the Company and its affiliated companies.
(v) Expenses. During the Employment Period, the Executive
shall be entitled to receive prompt reimbursement for all reasonable
expenses incurred by the Executive in accordance with the policies,
practices and procedures of the Company and its affiliated companies.
(vi) Vacation. During the Employment Period, the Executive
shall be entitled to paid vacation in accordance with the plans, policies,
programs and practices of the Company and its affiliated companies.
3. Termination of Employment. (a) Death or Disability. The
Executive's employment shall terminate automatically upon the Executive's
death during the Employment Period. If the Company determines in good
faith that the Disability of the Executive has occurred during the
Employment Period (pursuant to the definition of Disability set forth
below), it may give to the Executive written notice in accordance with
Section 11(b) of this Agreement of its intention to terminate the
Executive's employment. In such event, the Executive's employment with the
Company shall terminate effective on the 30th day after receipt of such
notice by the Executive (the "Disability Effective Date"), provided that,
within the 30 days after such receipt, the Executive shall not have
returned to full-time performance of the Executive's duties. For purposes
of this Agreement, "Disability" shall mean the absence of the Executive
from the Executive's duties with the Company on a full-time basis for 180
consecutive business days as a result of incapacity due to mental or
physical illness which is determined to be total and permanent by a
physician selected by the Company or its insurers and acceptable to the
Executive or the Executive's legal representative (such agreement as to
acceptability not to be withheld unreasonably).
(b) Cause. The Company may terminate the Executive's employment
during the Employment Period for Cause. For purposes of this Agreement,
"Cause" shall mean:
(i) chronic alcoholism or controlled substance abuse, as
determined by a doctor mutually acceptable to the Company
and the Executive, and continuing failure by the Executive
to commence and pursue with due diligence appropriate
treatment for same in accordance with such doctor's
recommendations;
(ii) a deliberate act of proven fraud on the part of the
Executive having a material adverse impact on the business
or consolidated financial condition or results of operations
of the Company and its subsidiaries;
(iii) a deliberate and continuing failure by the Executive to
comply with the applicable laws and regulations having a
material adverse impact on the business or consolidated
financial condition or results of operations of the Company
and its subsidiaries; or
(iv) conviction of the Executive of a criminal offense
constituting a felony.
(c) Good Reason; Window Period. The Executive's employment may
be terminated during the Employment Period by the Executive for Good Reason
or during a Window Period by the Executive without any reason. For
purposes of this Agreement, "Window Period" shall mean the period
commencing with the date of any Change of Control as defined in Section 9
of this Agreement and expiring 180 days immediately following any Change of
Control as defined in Section 9 of this Agreement. For purposes of this
Agreement, "Good Reason" shall mean
(i) the assignment to the Executive of any duties
materially inconsistent in any respect with the Executive's,
authority, duties or responsibilities as contemplated by Section 2 of
this Agreement, or any other action by the Company which results in a
diminution in such authority, duties or responsibilities (excluding
for this purpose an isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied by the Company promptly after
receipt of notice thereof given by the Executive);
(ii) any failure by the Company to comply with any of the
provisions of Section 2(b) of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and
which is remedied by the Company promptly after receipt of notice
thereof given by the Executive;
(iii) the Company's requiring the Executive to be based
at any office or location other than that described in
Section 2(a)(i)(B) hereof;
(iv) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by this
Agreement; or
(v) any failure by the Company to comply with and satisfy
Section 10 of this Agreement, provided that such successor has
received, at least ten days prior to the giving of Notice of
Termination by the Executive, written notice from the Company or the
Executive of the requirements of Section 10 of the Agreement.
For purposes of this Section 3(c), any good faith determination of "Good
Reason" made by the Executive shall be conclusive.
(d) Notice of Termination. Any termination by the Company for
Cause, or by the Executive for Good Reason or without any reason during a
Window Period, shall be communicated by Notice of Termination to the other
party hereto given in accordance with Section 11(b) of this Agreement. For
purposes of this Agreement, a "Notice of Termination" means a written
notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in
reasonable detail the facts and circumstances claimed to provide a basis
for termination of the Executive's employment under the provision so
indicated and (iii) if the Date of Termination (as defined below) is other
than the date of receipt of such notice, specifies the termination date
(which date shall be not more than fifteen days after the giving of such
notice). The failure by the Executive or the Company to set forth in the
Notice of Termination any fact or circumstance which contributes to a
showing of Good Reason or Cause shall not waive any right of the Executive
or the Company hereunder or preclude the Executive or the Company from
asserting such fact or circumstance in enforcing the Executive's or the
Company's right hereunder.
(e) Date of Termination. "Date of Termination" means (i) if the
Executive's employment is terminated by the Company for Cause, or by the
Executive during a Window Period or for Good Reason, the date of receipt of
the Notice of Termination or any later date specified therein, as the case
may be, (ii) if the Executive's employment is terminated by the Company
other than for Cause or Disability, the Date of Termination shall be the
date on which the Company notifies the Executive of such termination and
(iii) if the Executive's employment is terminated by reason of death or
Disability, the Date of Termination shall be the date of death of the
Executive or the Disability Effective Date, as the case may be.
4. Obligations of the Company upon Termination.
(a) Good Reason or during a Window Period; Other than for
Cause, Death or Disability. If, during the Employment Period, the Company
shall terminate the Executive's employment other than for Cause or
Disability or the Executive shall terminate employment either for Good
Reason or without any reason during a Window Period:
(i) the Company shall pay or provide to or in respect of the
Executive the aggregate of the following amounts and benefits:
A. in a lump sum in cash within 30 days after the Date of
Termination the sum of (1) the Executive's Annual Base Salary
through the Date of Termination to the extent not theretofore
paid, (2) the product of (x) the highest annual bonus paid or
accrued for the benefit of Executive during the three year period
preceding the Date of Termination and (y) a fraction, the
numerator of which is the number of days since the date of the
last bonus payment through the Date of Termination, and the
denominator of which is 365 and (3) any compensation previously
deferred or earned by the Executive (together with any accrued
interest or earnings thereon), any unreimbursed expenses and any
accrued vacation pay, in each case to the extent not theretofore
paid (the sum of the amounts described in clauses (1), (2) and
(3) shall be hereinafter referred to as the "Accrued
Obligation"); and
B. in a lump sum in cash within 30 days after the Date of
Termination the product of multiplying the factor of 5 times the
sum of the highest Annual Base Salary and the highest annual
bonus which has been payable to the Executive within the past
three years (including such salary and bonus paid by a previous
employer which is a direct subsidiary of the Company as of the
date of this Agreement) for one year's service.
(ii) for the remainder of the Employment Period, or such longer
period as any plan, program, practice or policy may provide, the
Company shall continue benefits to the Executive and/or the
Executive's family at least equal to those which would have been
provided to them in accordance with the plans, programs, practices and
policies described in Section 2(b)(iii) of this Agreement if the
Executive's employment had not been terminated in accordance with the
most favorable plans, practices, programs or policies of the Company
and its affiliated companies as in effect and applicable generally to
other executives and their families on the Effective Date or, if more
favorable to the Executive, as in effect generally at any time
thereafter with respect to other executives of the Company and its
affiliated companies and their families (such continuation of such
benefits for the applicable period herein set forth shall be
hereinafter referred to as "Welfare Benefit Continuation"). [For
purposes of determining eligibility of the Executive for retiree
benefits pursuant to such plans, practices, programs and policies and
for purposes of determining Vesting Service (as defined in the Reading
& Bates Pension Plan) under the Reading & Bates Pension Plan and the
Reading & Bates Benefits Replacement Plan, the Executive shall be
considered to have remained employed until the end of the Employment
Period and to have retired on the last day of such period.]
(b) Death or Disability.
If Executive's employment is terminated by reason of Executive's death
or Disability during the Employment Period such termination shall be
treated as a termination for Good Reason and the Company shall pay to
Executive, his estate or designated beneficiary (x) the lump sum amount and
the benefits set forth in Section 4(a) hereof plus (y) any death benefits
to which Executive is otherwise entitled pursuant to the terms of any
Welfare Benefit Plan described in Section 2(b)(iii) hereof.
(c) Cause; Other than for Good Reason. If the Executive's
employment shall be terminated for Cause during the Employment Period, this
Agreement shall terminate without further obligations to the Executive
other than for Accrued Obligations and the timely payment of reimbursement
of expenses incurred by Executive under Section 2(b)(v). If the Executive
terminates employment during the Employment Period, excluding a termination
either for Good Reason or without any reason during a Window Period, this
Agreement shall terminate without further obligations to the Executive,
other than for Accrued Obligations and the timely payment of reimbursement
of expenses incurred by Executive under Section 2(b)(v). In such case, all
Accrued Obligations and reimbursement of expenses shall be paid to the
Executive in a lump sum in cash within 30 days of the Date of Termination.
5. Non-exclusivity of Rights. Except as provided in Section 4
of this Agreement, nothing in this Agreement shall prevent or limit the
Executive's continuing or future participation in any plan, program, policy
or practice provided by the Company or any of its affiliated companies and
for which the Executive may qualify, nor shall anything herein limit or
otherwise affect such rights as the Executive may have under any contract
or agreement with the Company or any of its affiliated companies. Amounts
which are vested benefits or which the Executive is otherwise entitled to
receive under any plan, policy, practice or program of or any contract or
agreement with the Company or any of its affiliated companies at or
subsequent to the Date of Termination shall be payable in accordance with
such plan, policy, practice or program or contract or agreement except as
explicitly modified by this Agreement.
6. Full Settlement; Resolution of Disputes. (a) The Company's
obligation to make payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action which the
Company may have against the Executive or others. The Company agrees to
pay promptly as incurred, to the full extent permitted by law, all legal
fees and expenses which the Executive may reasonably incur as a result of
any contest (regardless of the outcome thereof) by the Company, the
Executive or others of the validity or enforceability of, or liability
under, any provision of this Agreement or any guarantee of performance
thereof (including as a result of any contest by the Executive about the
amount of any payment pursuant to this Agreement), plus in each case
interest on any delayed payment at the Applicable Federal Rate provided for
in Section 7872(f)(2)(A) of the Code.
(b) If there shall be any dispute between the Company and the
Executive concerning (i) in the event of any termination of the Executive's
employment by the Company, whether such termination was for Cause, or
(ii) in the event of any termination of employment by the Executive,
whether Good Reason existed or whether such termination occurred during a
Window Period, then, unless and until there is a final, nonappealable
judgment by a court of competent jurisdiction declaring that such
termination was for Cause or that the determination by the Executive of the
existence of Good Reason was not made in good faith or that the termination
by the Executive did not occur during a Window Period, the Company shall
pay all amounts, and provide all benefits, to the Executive and/or the
Executive's family or other beneficiaries, as the case may be, that the
Company would be required to pay or provide pursuant to Section 4(a) hereof
as though such termination were by the Company without Cause or by the
Executive with Good Reason or during a Window Period; provided, however,
that the Company shall not be required to pay any disputed amounts pursuant
to this paragraph except upon receipt of an undertaking by or on behalf of
the Executive to repay all such amounts to which the Executive is
ultimately adjudged by such court not to be entitled.
7. Certain Additional Payments by the Company. (a) Anything in
this Agreement to the contrary notwithstanding, in the event it shall be
determined that any payment or distribution by the Company to or for the
benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this
Section 7) (a "Payment") would be subject to the excise tax imposed by
Section 4999 of the Code or any interest or penalties are incurred by the
Executive with respect to such excise tax (such excise tax, together with
any such interest and penalties, are hereinafter collectively referred to
as the "Excise Tax"), then the Executive shall be entitled to receive an
additional payment (a "Gross-Up Payment") in an amount such that after
payment by the Executive of all taxes (including any interest or penalties
imposed with respect to such taxes), including, without limitation, any
income taxes (and any interest and penalties imposed with respect thereto)
and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.
(b) Subject to the provisions of Section 7(c), all
determinations required to be made under this Section 7, including whether
and when Gross-Up Payment is required and the amount of such Gross-Up
Payment and the assumptions to be utilized in arriving at such
determination, shall be made by Arthur Andersen & Co. (the "Accounting
Firm") which shall provide detailed supporting calculations both to the
Company and the Executive within 15 business days of the receipt of notice
from the Executive that there has been a Payment, or such earlier time as
is requested by the Company. In the event that the Accounting Firm is
serving as accountant or auditor for the individual, entity or group
effecting the Change of Control, the Executive shall appoint another
nationally recognized accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting Firm
shall be borne solely by the Company. Any Gross-Up Payment, as determined
pursuant to this Section 7, shall be paid by the Company to the Executive
within five days of the receipt of the Accounting Firm's determination. If
the Accounting Firm determines that no Excise Tax is payable by the
Executive, it shall furnish the Executive with a written opinion that
failure to report the Excise Tax on the Executive's applicable federal
income tax return would not result in the imposition of a negligence or
similar penalty. Any determination by the Accounting Firm shall be binding
upon the Company and the Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Company should have
been made ("Underpayment"), consistent with the calculations required to be
made hereunder. In the event that the Company exhausts its remedies
pursuant to Section 7(c) and the Executive thereafter is required to make a
payment of any Excise Tax, the Accounting Firm shall determine the amount
of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Executive.
(c) The Executive shall notify the Company in writing of any
claims by the Internal Revenue Service that, if successful, would require
the payment by the Company of the Gross-Up Payment. Such notification
shall be given as soon as practicable but no later than thirty days after
the Executive actually receives notice in writing of such claim and shall
apprise the Company of the nature of such claim and the date on which such
claim is requested to be paid. The Executive shall not pay such claim
prior to the expiration of the 30-day period following the date on which he
gives such notice to the Company (or such shorter period ending on the date
that any payment of taxes with respect to such claim is due). If the
Company notifies the Executive in writing prior to the expiration of such
period that it desires to contest such claim, the Executive shall:
(i) give the Company any information reasonably requested by the
Company relating to such claim,
(ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the
Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect thereto) imposed as a result
of such representation and payment of costs and expenses. Without
limitation on the foregoing provisions of this Section 7(c), the Company
shall control all proceedings taken in connection with such contest and, at
its sole option, may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect
of such claim and may, at its sole option, either direct the Executive to
pay the tax claimed and sue for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to
pay such claim and sue for a refund, the Company shall advance the amount
of such payment to the Executive, on an interest-free basis and shall
indemnify and hold the Executive harmless, on an after-tax basis, from any
Excise Tax or income tax (including interest or penalties with respect
thereto) imposed with respect to such advance or with respect to any
imputed income with respect to such advance; and further provided that any
extension of the statute of limitations relating to payment of taxes for
the taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder
and the Executive shall be entitled to settle or contest, as the case may
be, any other issue raised by the Internal Revenue Service or any other
taxing authority.
(d) If, after the receipt by the Executive of an amount advanced
by the Company pursuant to Section (c), the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall (subject
to the Company's complying with the requirements of Section 7(c)) promptly
pay to the Company the amount of such refund (together with any interest
paid or credited thereon after taxes applicable thereto). If, after the
receipt by the Executive of an amount advanced by the Company pursuant to
Section 7(c), a determination is made that the Executive shall not be
entitled to any refund with respect to such claim and the Company does not
notify the Executive in writing of its intent to contest such denial of
refund prior to the expiration of 30 days after such determination, then
such advance shall be forgiven and shall not be required to be repaid and
the amount of such advance shall offset, to the extent thereof, the amount
of Gross-Up Payment required to be paid.
8. Confidential Information. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to the Company or any
of its affiliated companies, and their respective businesses, which shall
have been obtained by the Executive during the Executive's employment by
the Company or any of its affiliated companies and which shall not be or
become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement). After
termination of the Executive's employment with the Company, the Executive
shall not, without the prior written consent of the Company or as may
otherwise be required by law or legal process, communicate or divulge any
such information, knowledge or data to anyone other than the Company and
those designated by it. In no event shall an asserted violation of the
provisions of this Section 8 constitute a basis for deferring or
withholding any amounts otherwise payable to the Executive under this
Agreement.
9. Change of Control. For the purpose of this Agreement, a
"Change of Control" shall be deemed to occur: (a) if any "Person", as
such term is used in Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") (other than (i) the Executive,
(ii) the Company or any of its subsidiaries or Affiliates (as that term is
defined in the Exchange Act), (iii) any Person subject, as of the date of
this Agreement or at any prior time, to the reporting or filing
requirements of Section 13(d) of the Exchange Act with respect to the
securities of the Company or any Affiliate, (iv) any trustee or other
fiduciary holding or owning securities under an employee benefit plan of
the Company, (v) any underwriter temporarily holding or owning securities
of the Company, or (vi) any corporation owned directly or indirectly by the
current stockholders of the Company in substantially the same proportion as
their then ownership of stock of the Company) becomes, after the date of
this Agreement, the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company
representing forty percent (40%) or more of the combined voting power of
the Company's then outstanding securities; or (b) if at any time a majority
of the members of the board of directors of the Company is comprised of
other than Continuing Directors (and for this purpose "Continuing
Directors" shall mean members of the board of directors of the Company who
were directors as of the date of this Agreement, or who were nominated by a
majority of the members of the board of directors of the Company and such
majority was comprised only of Continuing Directors at the time of such
nomination).
10. Successors. (a) This Agreement is personal to the Executive
and without the prior written consent of the Company shall not be
assignable by the Executive otherwise than by will or the laws of descent
and distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such
succession had taken place. As used in this Agreement, "Company" shall
mean the Company as hereinbefore defined and any successor to its business
and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise.
11. Miscellaneous. (a) This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas, without
reference to principles of conflict of laws. The captions of this
Agreement are not part of the provisions hereof and shall have no force or
effect. This Agreement may not be amended or modified otherwise than by a
written agreement executed by the parties hereto or their respective
successors and legal representatives.
(b) All notices and other communications hereunder shall be in
writing and shall be given if by the Executive to the Company by telecopy
or facsimile transmission at the telecommunications number set forth below
and if by either the Company or the Executive either by hand delivery to
the other party or by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Executive:
Mr. Paul B. Loyd, Jr.
418 Pineneedle
Houston, Texas 77024
If to the Company:
901 Threadneedle, Suite 200
Houston, Texas 77079
Attention: Chief Executive Officer
Telecommunications Number: (281) 496-0285
or to such other address as either party shall have furnished to the other
in writing in accordance herewith. Notice and communications shall be
effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state or local taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon
strict compliance with any provision hereof or any other provision of this
Agreement or the failure to assert any right the Executive or the Company
may have hereunder, including, without limitation, the right of the
Executive to terminate employment for Good Reason pursuant to Section 3(c)
of this Agreement, shall not be deemed to be a waiver of such provision or
right or any other provision or right of this Agreement.
(f) This Agreement may be superseded by another written
agreement entered into between the Executive and Company on mutually
agreeable terms, provided such agreement expressly by its terms supersedes
this Agreement. However, an offer by the Company to enter into any such
agreement with the Executive shall not constitute an independent basis for
the Executive to terminate this Agreement for Good Reason.
IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization from its Board of
Directors, the Company has caused these presents to be executed in its name
on its behalf, all as of the day and year first above written.
____________________________________
Paul B. Loyd, Jr.
R&B FALCON CORPORATION
By _________________________________
Name: S. A. Webster
Title: President and Chief Executive
Officer
Exhibit 10.5
EMPLOYMENT AGREEMENT
This Agreement is entered into between R&B Falcon Corporation, a
Delaware corporation (the "Company"), and Steve A. Webster (the
"Executive") on the 25th day of March, 1998.
The Company has determined that it is in its best interests and
those of its shareholders to assure that the Company will have the services
of the Executive and to provide the Executive with compensation and benefit
arrangements which are competitive with those of other corporations.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS;
1. Employment Period. The Company hereby agrees to employ the
Executive, and the Executive hereby agrees to be employed by the Company,
in accordance with the terms and provisions of this Agreement, for the
period commencing on the date hereof (the "the Effective Date") and ending
on the third anniversary of such date (the "Employment Period"). The
Employment Period shall be extended cumulatively, from time to time, one
year for each year following the Effective Date that Employee remains
employed by the Company or one of its direct or indirect subsidiaries.
2. Terms of Employment. (a) Position and Duties. (i) During
the Employment Period, (A) the Executive's position, authority, duties and
responsibilities shall be at least commensurate in all material respects
with and include status as President and Chief Executive Officer of the
Company, and (B) the Executive's services shall be performed at the
location where the Executive was employed immediately preceding the
Effective Date or any office of the Company located in Houston, Texas which
is the principal office of the Company.
(ii) During the Employment Period, and excluding any periods
of vacation and sick leave to which the Executive is entitled, the
Executive agrees to devote substantially full attention and time during
normal business hours to the business and affairs of the Company and, to
the extent necessary to discharge the responsibilities assigned to the
Executive hereunder, to use the Executive's best efforts to perform
faithfully and efficiently such responsibilities. During the Employment
Period it shall not be a violation of this Agreement for the Executive to
(A) serve on corporate, civic or charitable boards or committees,
(B) deliver lectures, fulfill speaking engagements or teach at educational
institutions and (C) manage personal investments, so long as such
activities do not materially interfere with the performance of the
Executive's responsibilities as an employee of the Company in accordance
with this Agreement. It is expressly understood and agreed that to the
extent that any such activities have been conducted by the Executive prior
to the Effective Date under his prior employment with Reading & Bates
Corporation, the continued conduct of such activities (or the conduct of
activities similar in nature and scope thereto) subsequent to the Effective
Date shall not thereafter be deemed to interfere with the performance of
the Executive's responsibilities to the Company.
(b) Compensation. (i) Base Salary. During the Employment
Period, the Executive shall receive an annual base salary of not less than
$600,000 ("Annual Base Salary"), which shall be paid on a monthly basis.
During the Employment Period, the Annual Base Salary shall be reviewed at
least annually and shall be increased at any time and from time to time as
may be determined by the Board, based on the Executive's performance of his
position and responsibilities (to be measured in a fair and objective
manner). It may also be decreased by the Board as a part of Company wide
salary reduction program applicable to all executives and employees
generally as a result of financial losses experienced by the Company. Any
increase in Annual Base Salary shall not serve to limit or reduce any other
obligation to the Executive under this Agreement. Annual Base Salary shall
not be reduced after any such increase (except as provided in this Section
2(b)(i)), and the term Annual Base Salary as utilized in this Agreement
shall refer to Annual Base Salary as so increased or decreased. As used in
this Agreement, the term "affiliated companies" shall include any company
controlled by, controlling or under common control with the Company.
(iii) Incentive, Savings and Retirement Plans. During
the Employment Period, the Executive shall be entitled to participate in
all incentive, savings and retirement plans that are tax qualified under
Section 401(a) of the Internal Revenue Code of 1986, as amended ("Code"),
applicable generally to other executives of the Company and its affiliated
companies.
(iv) Welfare Benefit Plans. During the Employment Period,
the Executive and/or the Executive's family, as the case may be, shall be
eligible for participation in and shall receive all benefits under welfare
benefit plans, practices, policies and programs provided by the Company and
its affiliated companies (including, without limitation, medical,
prescription, dental, vision, disability, salary continuance, group life
and supplemental group life, accidental death and travel accident insurance
plans and programs) to the extent applicable generally to other executives
of the Company and its affiliated companies.
(v) Expenses. During the Employment Period, the Executive
shall be entitled to receive prompt reimbursement for all reasonable
expenses incurred by the Executive in accordance with the policies,
practices and procedures of the Company and its affiliated companies.
(vi) Vacation. During the Employment Period, the Executive
shall be entitled to paid vacation in accordance with the plans, policies,
programs and practices of the Company and its affiliated companies.
3. Termination of Employment. (a) Death or Disability. The
Executive's employment shall terminate automatically upon the Executive's
death during the Employment Period. If the Company determines in good
faith that the Disability of the Executive has occurred during the
Employment Period (pursuant to the definition of Disability set forth
below), it may give to the Executive written notice in accordance with
Section 11(b) of this Agreement of its intention to terminate the
Executive's employment. In such event, the Executive's employment with the
Company shall terminate effective on the 30th day after receipt of such
notice by the Executive (the "Disability Effective Date"), provided that,
within the 30 days after such receipt, the Executive shall not have
returned to full-time performance of the Executive's duties. For purposes
of this Agreement, "Disability" shall mean the absence of the Executive
from the Executive's duties with the Company on a full-time basis for 180
consecutive business days as a result of incapacity due to mental or
physical illness which is determined to be total and permanent by a
physician selected by the Company or its insurers and acceptable to the
Executive or the Executive's legal representative (such agreement as to
acceptability not to be withheld unreasonably).
(b) Cause. The Company may terminate the Executive's employment
during the Employment Period for Cause. For purposes of this Agreement,
"Cause" shall mean:
(i) chronic alcoholism or controlled substance abuse, as
determined by a doctor mutually acceptable to the Company
and the Executive, and continuing failure by the Executive
to commence and pursue with due diligence appropriate
treatment for same in accordance with such doctor's
recommendations;
(ii) a deliberate act of proven fraud on the part of the
Executive having a material adverse impact on the business
or consolidated financial condition or results of operations
of the Company and its subsidiaries;
(iii) a deliberate and continuing failure by the Executive to
comply with the applicable laws and regulations having a
material adverse impact on the business or consolidated
financial condition or results of operations of the Company
and its subsidiaries; or
(iv) conviction of the Executive of a criminal offense
constituting a felony.
(c) Good Reason; Window Period. The Executive's employment may
be terminated during the Employment Period by the Executive for Good Reason
or during a Window Period by the Executive without any reason. For
purposes of this Agreement, "Window Period" shall mean the period
commencing with the date of any Change of Control as defined in Section 9
of this Agreement and expiring 180 days immediately following any Change of
Control as defined in Section 9 of this Agreement. For purposes of this
Agreement, "Good Reason" shall mean
(i) the assignment to the Executive of any duties
materially inconsistent in any respect with the Executive's,
authority, duties or responsibilities as contemplated by Section 2 of
this Agreement, or any other action by the Company which results in a
diminution in such authority, duties or responsibilities (excluding
for this purpose an isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied by the Company promptly after
receipt of notice thereof given by the Executive);
(ii) any failure by the Company to comply with any of the
provisions of Section 2(b) of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and
which is remedied by the Company promptly after receipt of notice
thereof given by the Executive;
(iii) the Company's requiring the Executive to be based at
any office or location other than that described in Section 2(a)(i)(B)
hereof;
(iv) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by this
Agreement; or
(v) any failure by the Company to comply with and satisfy
Section 10 of this Agreement, provided that such successor has
received, at least ten days prior to the giving of Notice of
Termination by the Executive, written notice from the Company or the
Executive of the requirements of Section 10 of the Agreement.
For purposes of this Section 3(c), any good faith determination of "Good
Reason" made by the Executive shall be conclusive.
(d) Notice of Termination. Any termination by the Company for
Cause, or by the Executive for Good Reason or without any reason during a
Window Period, shall be communicated by Notice of Termination to the other
party hereto given in accordance with Section 11(b) of this Agreement. For
purposes of this Agreement, a "Notice of Termination" means a written
notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in
reasonable detail the facts and circumstances claimed to provide a basis
for termination of the Executive's employment under the provision so
indicated and (iii) if the Date of Termination (as defined below) is other
than the date of receipt of such notice, specifies the termination date
(which date shall be not more than fifteen days after the giving of such
notice). The failure by the Executive or the Company to set forth in the
Notice of Termination any fact or circumstance which contributes to a
showing of Good Reason or Cause shall not waive any right of the Executive
or the Company hereunder or preclude the Executive or the Company from
asserting such fact or circumstance in enforcing the Executive's or the
Company's right hereunder.
(e) Date of Termination. "Date of Termination" means (i) if the
Executive's employment is terminated by the Company for Cause, or by the
Executive during a Window Period or for Good Reason, the date of receipt of
the Notice of Termination or any later date specified therein, as the case
may be, (ii) if the Executive's employment is terminated by the Company
other than for Cause or Disability, the Date of Termination shall be the
date on which the Company notifies the Executive of such termination and
(iii) if the Executive's employment is terminated by reason of death or
Disability, the Date of Termination shall be the date of death of the
Executive or the Disability Effective Date, as the case may be.
4. Obligations of the Company upon Termination.
(a) Good Reason or during a Window Period; Other than for
Cause, Death or Disability. If, during the Employment Period, the Company
shall terminate the Executive's employment other than for Cause or
Disability or the Executive shall terminate employment either for Good
Reason or without any reason during a Window Period:
(i) the Company shall pay or provide to or in respect of the
Executive the aggregate of the following amounts and benefits:
A. in a lump sum in cash within 30 days after the Date of
Termination the sum of (1) the Executive's Annual Base Salary
through the Date of Termination to the extent not theretofore
paid, (2) the product of (x) the highest annual bonus paid or
accrued for the benefit of Executive during the three year period
preceding the Date of Termination and (y) a fraction, the
numerator of which is the number of days since the date of the
last bonus payment through the Date of Termination, and the
denominator of which is 365 and (3) any compensation previously
deferred or earned by the Executive (together with any accrued
interest or earnings thereon), any unreimbursed expenses and any
accrued vacation pay, in each case to the extent not theretofore
paid (the sum of the amounts described in clauses (1), (2) and
(3) shall be hereinafter referred to as the "Accrued
Obligation"); and
B. in a lump sum in cash within 30 days after the Date of
Termination the product of multiplying the factor of 6 times the
sum of the highest Annual Base Salary and the highest annual
bonus which has been payable to the Executive within the past
three years (including such salary and bonus paid by a previous
employer which is a direct subsidiary of the Company as of the
date of this Agreement) for one year's service.
(ii) for the remainder of the Employment Period, or such longer
period as any plan, program, practice or policy may provide, the
Company shall continue benefits to the Executive and/or the
Executive's family at least equal to those which would have been
provided to them in accordance with the plans, programs, practices and
policies described in Section 2(b)(iii) of this Agreement if the
Executive's employment had not been terminated in accordance with the
most favorable plans, practices, programs or policies of the Company
and its affiliated companies as in effect and applicable generally to
other executives and their families on the Effective Date or, if more
favorable to the Executive, as in effect generally at any time
thereafter with respect to other executives of the Company and its
affiliated companies and their families (such continuation of such
benefits for the applicable period herein set forth shall be
hereinafter referred to as "Welfare Benefit Continuation"). [For
purposes of determining eligibility of the Executive for retiree
benefits pursuant to such plans, practices, programs and policies and
for purposes of determining Vesting Service (as defined in the Reading
& Bates Pension Plan) under the Reading & Bates Pension Plan and the
Reading & Bates Benefits Replacement Plan, the Executive shall be
considered to have remained employed until the end of the Employment
Period and to have retired on the last day of such period.]
(b) Death or Disability.
If Executive's employment is terminated by reason of Executive's death
or Disability during the Employment Period such termination shall be
treated as a termination for Good Reason and the Company shall pay to
Executive, his estate or designated beneficiary (x) the lump sum amount and
the benefits set forth in Section 4(a) hereof plus (y) any death benefits
to which Executive is otherwise entitled pursuant to the terms of any
Welfare Benefit Plan described in Section 2(b)(iii) hereof.
(c) Cause; Other than for Good Reason. If the Executive's
employment shall be terminated for Cause during the Employment Period, this
Agreement shall terminate without further obligations to the Executive
other than for Accrued Obligations and the timely payment of reimbursement
of expenses incurred by Executive under Section 2(b)(v). If the Executive
terminates employment during the Employment Period, excluding a termination
either for Good Reason or without any reason during a Window Period, this
Agreement shall terminate without further obligations to the Executive,
other than for Accrued Obligations and the timely payment of reimbursement
of expenses incurred by Executive under Section 2(b)(v). In such case, all
Accrued Obligations and reimbursement of expenses shall be paid to the
Executive in a lump sum in cash within 30 days of the Date of Termination.
5. Non-exclusivity of Rights. Except as provided in Section 4
of this Agreement, nothing in this Agreement shall prevent or limit the
Executive's continuing or future participation in any plan, program, policy
or practice provided by the Company or any of its affiliated companies and
for which the Executive may qualify, nor shall anything herein limit or
otherwise affect such rights as the Executive may have under any contract
or agreement with the Company or any of its affiliated companies. Amounts
which are vested benefits or which the Executive is otherwise entitled to
receive under any plan, policy, practice or program of or any contract or
agreement with the Company or any of its affiliated companies at or
subsequent to the Date of Termination shall be payable in accordance with
such plan, policy, practice or program or contract or agreement except as
explicitly modified by this Agreement.
6. Full Settlement; Resolution of Disputes. (a) The Company's
obligation to make payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action which the
Company may have against the Executive or others. The Company agrees to
pay promptly as incurred, to the full extent permitted by law, all legal
fees and expenses which the Executive may reasonably incur as a result of
any contest (regardless of the outcome thereof) by the Company, the
Executive or others of the validity or enforceability of, or liability
under, any provision of this Agreement or any guarantee of performance
thereof (including as a result of any contest by the Executive about the
amount of any payment pursuant to this Agreement), plus in each case
interest on any delayed payment at the Applicable Federal Rate provided for
in Section 7872(f)(2)(A) of the Code.
(b) If there shall be any dispute between the Company and the
Executive concerning (i) in the event of any termination of the Executive's
employment by the Company, whether such termination was for Cause, or
(ii) in the event of any termination of employment by the Executive,
whether Good Reason existed or whether such termination occurred during a
Window Period, then, unless and until there is a final, nonappealable
judgment by a court of competent jurisdiction declaring that such
termination was for Cause or that the determination by the Executive of the
existence of Good Reason was not made in good faith or that the termination
by the Executive did not occur during a Window Period, the Company shall
pay all amounts, and provide all benefits, to the Executive and/or the
Executive's family or other beneficiaries, as the case may be, that the
Company would be required to pay or provide pursuant to Section 4(a) hereof
as though such termination were by the Company without Cause or by the
Executive with Good Reason or during a Window Period; provided, however,
that the Company shall not be required to pay any disputed amounts pursuant
to this paragraph except upon receipt of an undertaking by or on behalf of
the Executive to repay all such amounts to which the Executive is
ultimately adjudged by such court not to be entitled.
7. Certain Additional Payments by the Company. (a) Anything in
this Agreement to the contrary notwithstanding, in the event it shall be
determined that any payment or distribution by the Company to or for the
benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this
Section 7) (a "Payment") would be subject to the excise tax imposed by
Section 4999 of the Code or any interest or penalties are incurred by the
Executive with respect to such excise tax (such excise tax, together with
any such interest and penalties, are hereinafter collectively referred to
as the "Excise Tax"), then the Executive shall be entitled to receive an
additional payment (a "Gross-Up Payment") in an amount such that after
payment by the Executive of all taxes (including any interest or penalties
imposed with respect to such taxes), including, without limitation, any
income taxes (and any interest and penalties imposed with respect thereto)
and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.
(b) Subject to the provisions of Section 7(c), all
determinations required to be made under this Section 7, including whether
and when Gross-Up Payment is required and the amount of such Gross-Up
Payment and the assumptions to be utilized in arriving at such
determination, shall be made by Arthur Andersen & Co. (the "Accounting
Firm") which shall provide detailed supporting calculations both to the
Company and the Executive within 15 business days of the receipt of notice
from the Executive that there has been a Payment, or such earlier time as
is requested by the Company. In the event that the Accounting Firm is
serving as accountant or auditor for the individual, entity or group
effecting the Change of Control, the Executive shall appoint another
nationally recognized accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting Firm
shall be borne solely by the Company. Any Gross-Up Payment, as determined
pursuant to this Section 7, shall be paid by the Company to the Executive
within five days of the receipt of the Accounting Firm's determination. If
the Accounting Firm determines that no Excise Tax is payable by the
Executive, it shall furnish the Executive with a written opinion that
failure to report the Excise Tax on the Executive's applicable federal
income tax return would not result in the imposition of a negligence or
similar penalty. Any determination by the Accounting Firm shall be binding
upon the Company and the Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Company should have
been made ("Underpayment"), consistent with the calculations required to be
made hereunder. In the event that the Company exhausts its remedies
pursuant to Section 7(c) and the Executive thereafter is required to make a
payment of any Excise Tax, the Accounting Firm shall determine the amount
of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Executive.
(c) The Executive shall notify the Company in writing of any
claims by the Internal Revenue Service that, if successful, would require
the payment by the Company of the Gross-Up Payment. Such notification
shall be given as soon as practicable but no later than thirty days after
the Executive actually receives notice in writing of such claim and shall
apprise the Company of the nature of such claim and the date on which such
claim is requested to be paid. The Executive shall not pay such claim
prior to the expiration of the 30-day period following the date on which he
gives such notice to the Company (or such shorter period ending on the date
that any payment of taxes with respect to such claim is due). If the
Company notifies the Executive in writing prior to the expiration of such
period that it desires to contest such claim, the Executive shall:
(i) give the Company any information reasonably requested by the
Company relating to such claim,
(ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the
Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect thereto) imposed as a result
of such representation and payment of costs and expenses. Without
limitation on the foregoing provisions of this Section 7(c), the Company
shall control all proceedings taken in connection with such contest and, at
its sole option, may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect
of such claim and may, at its sole option, either direct the Executive to
pay the tax claimed and sue for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to
pay such claim and sue for a refund, the Company shall advance the amount
of such payment to the Executive, on an interest-free basis and shall
indemnify and hold the Executive harmless, on an after-tax basis, from any
Excise Tax or income tax (including interest or penalties with respect
thereto) imposed with respect to such advance or with respect to any
imputed income with respect to such advance; and further provided that any
extension of the statute of limitations relating to payment of taxes for
the taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder
and the Executive shall be entitled to settle or contest, as the case may
be, any other issue raised by the Internal Revenue Service or any other
taxing authority.
(d) If, after the receipt by the Executive of an amount advanced
by the Company pursuant to Section (c), the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall (subject
to the Company's complying with the requirements of Section 7(c)) promptly
pay to the Company the amount of such refund (together with any interest
paid or credited thereon after taxes applicable thereto). If, after the
receipt by the Executive of an amount advanced by the Company pursuant to
Section 7(c), a determination is made that the Executive shall not be
entitled to any refund with respect to such claim and the Company does not
notify the Executive in writing of its intent to contest such denial of
refund prior to the expiration of 30 days after such determination, then
such advance shall be forgiven and shall not be required to be repaid and
the amount of such advance shall offset, to the extent thereof, the amount
of Gross-Up Payment required to be paid.
8. Confidential Information. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to the Company or any
of its affiliated companies, and their respective businesses, which shall
have been obtained by the Executive during the Executive's employment by
the Company or any of its affiliated companies and which shall not be or
become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement). After
termination of the Executive's employment with the Company, the Executive
shall not, without the prior written consent of the Company or as may
otherwise be required by law or legal process, communicate or divulge any
such information, knowledge or data to anyone other than the Company and
those designated by it. In no event shall an asserted violation of the
provisions of this Section 8 constitute a basis for deferring or
withholding any amounts otherwise payable to the Executive under this
Agreement.
9. Change of Control. For the purpose of this Agreement, a
"Change of Control" shall be deemed to occur: (a) if any "Person", as
such term is used in Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") (other than (i) the Executive,
(ii) the Company or any of its subsidiaries or Affiliates (as that term is
defined in the Exchange Act), (iii) any Person subject, as of the date of
this Agreement or at any prior time, to the reporting or filing
requirements of Section 13(d) of the Exchange Act with respect to the
securities of the Company or any Affiliate, (iv) any trustee or other
fiduciary holding or owning securities under an employee benefit plan of
the Company, (v) any underwriter temporarily holding or owning securities
of the Company, or (vi) any corporation owned directly or indirectly by the
current stockholders of the Company in substantially the same proportion as
their then ownership of stock of the Company) becomes, after the date of
this Agreement, the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company
representing forty percent (40%) or more of the combined voting power of
the Company's then outstanding securities; or (b) if at any time a majority
of the members of the board of directors of the Company is comprised of
other than Continuing Directors (and for this purpose "Continuing
Directors" shall mean members of the board of directors of the Company who
were directors as of the date of this Agreement, or who were nominated by a
majority of the members of the board of directors of the Company and such
majority was comprised only of Continuing Directors at the time of such
nomination).
10. Successors. (a) This Agreement is personal to the Executive
and without the prior written consent of the Company shall not be
assignable by the Executive otherwise than by will or the laws of descent
and distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such
succession had taken place. As used in this Agreement, "Company" shall
mean the Company as hereinbefore defined and any successor to its business
and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise.
11. Miscellaneous. (a) This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas, without
reference to principles of conflict of laws. The captions of this
Agreement are not part of the provisions hereof and shall have no force or
effect. This Agreement may not be amended or modified otherwise than by a
written agreement executed by the parties hereto or their respective
successors and legal representatives.
(b) All notices and other communications hereunder shall be in
writing and shall be given if by the Executive to the Company by telecopy
or facsimile transmission at the telecommunications number set forth below
and if by either the Company or the Executive either by hand delivery to
the other party or by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Executive:
Mr. Steve A. Webster
3662 Piping Rock
Houston, Texas 77027
If to the Company:
901 Threadneedle, Suite 200
Houston, Texas 77079
Attention: Chief Executive Officer
Telecommunications Number: (281) 496-0285
or to such other address as either party shall have furnished to the other
in writing in accordance herewith. Notice and communications shall be
effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state or local taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon
strict compliance with any provision hereof or any other provision of this
Agreement or the failure to assert any right the Executive or the Company
may have hereunder, including, without limitation, the right of the
Executive to terminate employment for Good Reason pursuant to Section 3(c)
of this Agreement, shall not be deemed to be a waiver of such provision or
right or any other provision or right of this Agreement.
(f) This Agreement may be superseded by another written
agreement entered into between the Executive and Company on mutually
agreeable terms, provided such agreement expressly by its terms supersedes
this Agreement. However, an offer by the Company to enter into any such
agreement with the Executive shall not constitute an independent basis for
the Executive to terminate this Agreement for Good Reason.
IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization from its Board of
Directors, the Company has caused these presents to be executed in its name
on its behalf, all as of the day and year first above written.
____________________________________
Steve A. Webster
R&B FALCON CORPORATION
By _________________________________
Name: Paul B. Loyd, Jr.
Title: Chairman
Exhibit 10.6
EMPLOYMENT AGREEMENT
This Agreement is entered into between R&B Falcon Corporation, a
Delaware corporation (the "Company"), and Andrew Bakonyi (the "Executive")
on the 25th day of March, 1998.
The Company has determined that it is in its best interests and
those of its shareholders to assure that the Company will have the services
of the Executive and to provide the Executive with compensation and benefit
arrangements which are competitive with those of other corporations.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS;
1. Employment Period. The Company hereby agrees to employ the
Executive, and the Executive hereby agrees to be employed by the Company,
in accordance with the terms and provisions of this Agreement, for the
period commencing on the date hereof (the "the Effective Date") and ending
on the third anniversary of such date (the "Employment Period"). The
Employment Period shall be extended cumulatively, from time to time, one
year for each year following the Effective Date that Employee remains
employed by the Company or one of its direct or indirect subsidiaries.
2. Terms of Employment. (a) Position and Duties. (i) During
the Employment Period, (A) the Executive's position, authority, duties and
responsibilities shall be at least commensurate in all material respects
with and include status as President of R&B Falcon (International &
Deepwater) Inc., and (B) the Executive's services shall be performed at the
location where the Executive was employed immediately preceding the
Effective Date or any office of the Company located in Houston, Texas which
is the principal office of the Company.
(ii) During the Employment Period, and excluding any periods
of vacation and sick leave to which the Executive is entitled, the
Executive agrees to devote substantially full attention and time during
normal business hours to the business and affairs of the Company and, to
the extent necessary to discharge the responsibilities assigned to the
Executive hereunder, to use the Executive's best efforts to perform
faithfully and efficiently such responsibilities. During the Employment
Period it shall not be a violation of this Agreement for the Executive to
(A) serve on corporate, civic or charitable boards or committees,
(B) deliver lectures, fulfill speaking engagements or teach at educational
institutions and (C) manage personal investments, so long as such
activities do not materially interfere with the performance of the
Executive's responsibilities as an employee of the Company in accordance
with this Agreement. It is expressly understood and agreed that to the
extent that any such activities have been conducted by the Executive prior
to the Effective Date under his prior employment with Reading & Bates
Corporation, the continued conduct of such activities (or the conduct of
activities similar in nature and scope thereto) subsequent to the Effective
Date shall not thereafter be deemed to interfere with the performance of
the Executive's responsibilities to the Company.
(b) Compensation. (i) Base Salary. During the Employment
Period, the Executive shall receive an annual base salary of not less than
$240,000 ("Annual Base Salary"), which shall be paid on a monthly basis.
During the Employment Period, the Annual Base Salary shall be reviewed at
least annually and shall be increased at any time and from time to time as
may be determined by the Board, based on the Executive's performance of his
position and responsibilities (to be measured in a fair and objective
manner). It may also be decreased by the Board as a part of Company wide
salary reduction program applicable to all executives and employees
generally as a result of financial losses experienced by the Company. Any
increase in Annual Base Salary shall not serve to limit or reduce any other
obligation to the Executive under this Agreement. Annual Base Salary shall
not be reduced after any such increase (except as provided in this Section
2(b)(i)), and the term Annual Base Salary as utilized in this Agreement
shall refer to Annual Base Salary as so increased or decreased. As used in
this Agreement, the term "affiliated companies" shall include any company
controlled by, controlling or under common control with the Company.
(iii) Incentive, Savings and Retirement Plans. During
the Employment Period, the Executive shall be entitled to participate in
all incentive, savings and retirement plans that are tax qualified under
Section 401(a) of the Internal Revenue Code of 1986, as amended ("Code"),
applicable generally to other executives of the Company and its affiliated
companies.
(iv) Welfare Benefit Plans. During the Employment Period,
the Executive and/or the Executive's family, as the case may be, shall be
eligible for participation in and shall receive all benefits under welfare
benefit plans, practices, policies and programs provided by the Company and
its affiliated companies (including, without limitation, medical,
prescription, dental, vision, disability, salary continuance, group life
and supplemental group life, accidental death and travel accident insurance
plans and programs) to the extent applicable generally to other executives
of the Company and its affiliated companies.
(v) Expenses. During the Employment Period, the Executive
shall be entitled to receive prompt reimbursement for all reasonable
expenses incurred by the Executive in accordance with the policies,
practices and procedures of the Company and its affiliated companies.
(vi) Vacation. During the Employment Period, the Executive
shall be entitled to paid vacation in accordance with the plans, policies,
programs and practices of the Company and its affiliated companies.
3. Termination of Employment. (a) Death or Disability. The
Executive's employment shall terminate automatically upon the Executive's
death during the Employment Period. If the Company determines in good
faith that the Disability of the Executive has occurred during the
Employment Period (pursuant to the definition of Disability set forth
below), it may give to the Executive written notice in accordance with
Section 11(b) of this Agreement of its intention to terminate the
Executive's employment. In such event, the Executive's employment with the
Company shall terminate effective on the 30th day after receipt of such
notice by the Executive (the "Disability Effective Date"), provided that,
within the 30 days after such receipt, the Executive shall not have
returned to full-time performance of the Executive's duties. For purposes
of this Agreement, "Disability" shall mean the absence of the Executive
from the Executive's duties with the Company on a full-time basis for 180
consecutive business days as a result of incapacity due to mental or
physical illness which is determined to be total and permanent by a
physician selected by the Company or its insurers and acceptable to the
Executive or the Executive's legal representative (such agreement as to
acceptability not to be withheld unreasonably).
(b) Cause. The Company may terminate the Executive's employment
during the Employment Period for Cause. For purposes of this Agreement,
"Cause" shall mean:
(i) chronic alcoholism or controlled substance abuse, as
determined by a doctor mutually acceptable to the Company
and the Executive, and continuing failure by the Executive
to commence and pursue with due diligence appropriate
treatment for same in accordance with such doctor's
recommendations;
(ii) a deliberate act of proven fraud on the part of the
Executive having a material adverse impact on the business
or consolidated financial condition or results of operations
of the Company and its subsidiaries;
(iii) a deliberate and continuing failure by the Executive to
comply with the applicable laws and regulations having a
material adverse impact on the business or consolidated
financial condition or results of operations of the Company
and its subsidiaries; or
(iv) conviction of the Executive of a criminal offense
constituting a felony.
(c) Good Reason; Window Period. The Executive's employment may
be terminated during the Employment Period by the Executive for Good Reason
or during a Window Period by the Executive without any reason. For
purposes of this Agreement, "Window Period" shall mean the period
commencing with the date of any Change of Control as defined in Section 9
of this Agreement and expiring 180 days immediately following any Change of
Control as defined in Section 9 of this Agreement. For purposes of this
Agreement, "Good Reason" shall mean
(i) the assignment to the Executive of any duties
materially inconsistent in any respect with the Executive's,
authority, duties or responsibilities as contemplated by Section 2 of
this Agreement, or any other action by the Company which results in a
diminution in such authority, duties or responsibilities (excluding
for this purpose an isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied by the Company promptly after
receipt of notice thereof given by the Executive);
(ii) any failure by the Company to comply with any of the
provisions of Section 2(b) of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and
which is remedied by the Company promptly after receipt of notice
thereof given by the Executive;
(iii) the Company's requiring the Executive to be based
at any office or location other than that described in
Section 2(a)(i)(B) hereof;
(iv) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by this
Agreement; or
(v) any failure by the Company to comply with and satisfy
Section 10 of this Agreement, provided that such successor has
received, at least ten days prior to the giving of Notice of
Termination by the Executive, written notice from the Company or the
Executive of the requirements of Section 10 of the Agreement.
For purposes of this Section 3(c), any good faith determination of "Good
Reason" made by the Executive shall be conclusive.
(d) Notice of Termination. Any termination by the Company for
Cause, or by the Executive for Good Reason or without any reason during a
Window Period, shall be communicated by Notice of Termination to the other
party hereto given in accordance with Section 11(b) of this Agreement. For
purposes of this Agreement, a "Notice of Termination" means a written
notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in
reasonable detail the facts and circumstances claimed to provide a basis
for termination of the Executive's employment under the provision so
indicated and (iii) if the Date of Termination (as defined below) is other
than the date of receipt of such notice, specifies the termination date
(which date shall be not more than fifteen days after the giving of such
notice). The failure by the Executive or the Company to set forth in the
Notice of Termination any fact or circumstance which contributes to a
showing of Good Reason or Cause shall not waive any right of the Executive
or the Company hereunder or preclude the Executive or the Company from
asserting such fact or circumstance in enforcing the Executive's or the
Company's right hereunder.
(e) Date of Termination. "Date of Termination" means (i) if the
Executive's employment is terminated by the Company for Cause, or by the
Executive during a Window Period or for Good Reason, the date of receipt of
the Notice of Termination or any later date specified therein, as the case
may be, (ii) if the Executive's employment is terminated by the Company
other than for Cause or Disability, the Date of Termination shall be the
date on which the Company notifies the Executive of such termination and
(iii) if the Executive's employment is terminated by reason of death or
Disability, the Date of Termination shall be the date of death of the
Executive or the Disability Effective Date, as the case may be.
4. Obligations of the Company upon Termination.
(a) Good Reason or during a Window Period; Other than for
Cause, Death or Disability. If, during the Employment Period, the Company
shall terminate the Executive's employment other than for Cause or
Disability or the Executive shall terminate employment either for Good
Reason or without any reason during a Window Period:
(i) the Company shall pay or provide to or in respect of the
Executive the aggregate of the following amounts and benefits:
A. in a lump sum in cash within 30 days after the Date of
Termination the sum of (1) the Executive's Annual Base Salary
through the Date of Termination to the extent not theretofore
paid, (2) the product of (x) the highest annual bonus paid or
accrued for the benefit of Executive during the three year period
preceding the Date of Termination and (y) a fraction, the
numerator of which is the number of days since the date of the
last bonus payment through the Date of Termination, and the
denominator of which is 365 and (3) any compensation previously
deferred or earned by the Executive (together with any accrued
interest or earnings thereon), any unreimbursed expenses and any
accrued vacation pay, in each case to the extent not theretofore
paid (the sum of the amounts described in clauses (1), (2) and
(3) shall be hereinafter referred to as the "Accrued
Obligation"); and
B. in a lump sum in cash within 30 days after the Date of
Termination the product of multiplying the factor of 3.75 times
the sum of the highest Annual Base Salary and the highest annual
bonus which has been payable to the Executive within the past
three years (including such salary and bonus paid by a previous
employer which is a direct subsidiary of the Company as of the
date of this Agreement) for one year's service.
(ii) for the remainder of the Employment Period, or such longer
period as any plan, program, practice or policy may provide, the
Company shall continue benefits to the Executive and/or the
Executive's family at least equal to those which would have been
provided to them in accordance with the plans, programs, practices and
policies described in Section 2(b)(iii) of this Agreement if the
Executive's employment had not been terminated in accordance with the
most favorable plans, practices, programs or policies of the Company
and its affiliated companies as in effect and applicable generally to
other executives and their families on the Effective Date or, if more
favorable to the Executive, as in effect generally at any time
thereafter with respect to other executives of the Company and its
affiliated companies and their families (such continuation of such
benefits for the applicable period herein set forth shall be
hereinafter referred to as "Welfare Benefit Continuation"). [For
purposes of determining eligibility of the Executive for retiree
benefits pursuant to such plans, practices, programs and policies and
for purposes of determining Vesting Service (as defined in the Reading
& Bates Pension Plan) under the Reading & Bates Pension Plan and the
Reading & Bates Benefits Replacement Plan, the Executive shall be
considered to have remained employed until the end of the Employment
Period and to have retired on the last day of such period.]
(b) Death or Disability.
If Executive's employment is terminated by reason of Executive's death
or Disability during the Employment Period such termination shall be
treated as a termination for Good Reason and the Company shall pay to
Executive, his estate or designated beneficiary (x) the lump sum amount and
the benefits set forth in Section 4(a) hereof plus (y) any death benefits
to which Executive is otherwise entitled pursuant to the terms of any
Welfare Benefit Plan described in Section 2(b)(iii) hereof.
(c) Cause; Other than for Good Reason. If the Executive's
employment shall be terminated for Cause during the Employment Period, this
Agreement shall terminate without further obligations to the Executive
other than for Accrued Obligations and the timely payment of reimbursement
of expenses incurred by Executive under Section 2(b)(v). If the Executive
terminates employment during the Employment Period, excluding a termination
either for Good Reason or without any reason during a Window Period, this
Agreement shall terminate without further obligations to the Executive,
other than for Accrued Obligations and the timely payment of reimbursement
of expenses incurred by Executive under Section 2(b)(v). In such case, all
Accrued Obligations and reimbursement of expenses shall be paid to the
Executive in a lump sum in cash within 30 days of the Date of Termination.
5. Non-exclusivity of Rights. Except as provided in Section 4
of this Agreement, nothing in this Agreement shall prevent or limit the
Executive's continuing or future participation in any plan, program, policy
or practice provided by the Company or any of its affiliated companies and
for which the Executive may qualify, nor shall anything herein limit or
otherwise affect such rights as the Executive may have under any contract
or agreement with the Company or any of its affiliated companies. Amounts
which are vested benefits or which the Executive is otherwise entitled to
receive under any plan, policy, practice or program of or any contract or
agreement with the Company or any of its affiliated companies at or
subsequent to the Date of Termination shall be payable in accordance with
such plan, policy, practice or program or contract or agreement except as
explicitly modified by this Agreement.
6. Full Settlement; Resolution of Disputes. (a) The Company's
obligation to make payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action which the
Company may have against the Executive or others. The Company agrees to
pay promptly as incurred, to the full extent permitted by law, all legal
fees and expenses which the Executive may reasonably incur as a result of
any contest (regardless of the outcome thereof) by the Company, the
Executive or others of the validity or enforceability of, or liability
under, any provision of this Agreement or any guarantee of performance
thereof (including as a result of any contest by the Executive about the
amount of any payment pursuant to this Agreement), plus in each case
interest on any delayed payment at the Applicable Federal Rate provided for
in Section 7872(f)(2)(A) of the Code.
(b) If there shall be any dispute between the Company and the
Executive concerning (i) in the event of any termination of the Executive's
employment by the Company, whether such termination was for Cause, or
(ii) in the event of any termination of employment by the Executive,
whether Good Reason existed or whether such termination occurred during a
Window Period, then, unless and until there is a final, nonappealable
judgment by a court of competent jurisdiction declaring that such
termination was for Cause or that the determination by the Executive of the
existence of Good Reason was not made in good faith or that the termination
by the Executive did not occur during a Window Period, the Company shall
pay all amounts, and provide all benefits, to the Executive and/or the
Executive's family or other beneficiaries, as the case may be, that the
Company would be required to pay or provide pursuant to Section 4(a) hereof
as though such termination were by the Company without Cause or by the
Executive with Good Reason or during a Window Period; provided, however,
that the Company shall not be required to pay any disputed amounts pursuant
to this paragraph except upon receipt of an undertaking by or on behalf of
the Executive to repay all such amounts to which the Executive is
ultimately adjudged by such court not to be entitled.
7. Certain Additional Payments by the Company. (a) Anything in
this Agreement to the contrary notwithstanding, in the event it shall be
determined that any payment or distribution by the Company to or for the
benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this
Section 7) (a "Payment") would be subject to the excise tax imposed by
Section 4999 of the Code or any interest or penalties are incurred by the
Executive with respect to such excise tax (such excise tax, together with
any such interest and penalties, are hereinafter collectively referred to
as the "Excise Tax"), then the Executive shall be entitled to receive an
additional payment (a "Gross-Up Payment") in an amount such that after
payment by the Executive of all taxes (including any interest or penalties
imposed with respect to such taxes), including, without limitation, any
income taxes (and any interest and penalties imposed with respect thereto)
and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.
(b) Subject to the provisions of Section 7(c), all
determinations required to be made under this Section 7, including whether
and when Gross-Up Payment is required and the amount of such Gross-Up
Payment and the assumptions to be utilized in arriving at such
determination, shall be made by Arthur Andersen & Co. (the "Accounting
Firm") which shall provide detailed supporting calculations both to the
Company and the Executive within 15 business days of the receipt of notice
from the Executive that there has been a Payment, or such earlier time as
is requested by the Company. In the event that the Accounting Firm is
serving as accountant or auditor for the individual, entity or group
effecting the Change of Control, the Executive shall appoint another
nationally recognized accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting Firm
shall be borne solely by the Company. Any Gross-Up Payment, as determined
pursuant to this Section 7, shall be paid by the Company to the Executive
within five days of the receipt of the Accounting Firm's determination. If
the Accounting Firm determines that no Excise Tax is payable by the
Executive, it shall furnish the Executive with a written opinion that
failure to report the Excise Tax on the Executive's applicable federal
income tax return would not result in the imposition of a negligence or
similar penalty. Any determination by the Accounting Firm shall be binding
upon the Company and the Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Company should have
been made ("Underpayment"), consistent with the calculations required to be
made hereunder. In the event that the Company exhausts its remedies
pursuant to Section 7(c) and the Executive thereafter is required to make a
payment of any Excise Tax, the Accounting Firm shall determine the amount
of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Executive.
(c) The Executive shall notify the Company in writing of any
claims by the Internal Revenue Service that, if successful, would require
the payment by the Company of the Gross-Up Payment. Such notification
shall be given as soon as practicable but no later than thirty days after
the Executive actually receives notice in writing of such claim and shall
apprise the Company of the nature of such claim and the date on which such
claim is requested to be paid. The Executive shall not pay such claim
prior to the expiration of the 30-day period following the date on which he
gives such notice to the Company (or such shorter period ending on the date
that any payment of taxes with respect to such claim is due). If the
Company notifies the Executive in writing prior to the expiration of such
period that it desires to contest such claim, the Executive shall:
(i) give the Company any information reasonably requested by the
Company relating to such claim,
(ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the
Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect thereto) imposed as a result
of such representation and payment of costs and expenses. Without
limitation on the foregoing provisions of this Section 7(c), the Company
shall control all proceedings taken in connection with such contest and, at
its sole option, may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect
of such claim and may, at its sole option, either direct the Executive to
pay the tax claimed and sue for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to
pay such claim and sue for a refund, the Company shall advance the amount
of such payment to the Executive, on an interest-free basis and shall
indemnify and hold the Executive harmless, on an after-tax basis, from any
Excise Tax or income tax (including interest or penalties with respect
thereto) imposed with respect to such advance or with respect to any
imputed income with respect to such advance; and further provided that any
extension of the statute of limitations relating to payment of taxes for
the taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder
and the Executive shall be entitled to settle or contest, as the case may
be, any other issue raised by the Internal Revenue Service or any other
taxing authority.
(d) If, after the receipt by the Executive of an amount advanced
by the Company pursuant to Section (c), the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall (subject
to the Company's complying with the requirements of Section 7(c)) promptly
pay to the Company the amount of such refund (together with any interest
paid or credited thereon after taxes applicable thereto). If, after the
receipt by the Executive of an amount advanced by the Company pursuant to
Section 7(c), a determination is made that the Executive shall not be
entitled to any refund with respect to such claim and the Company does not
notify the Executive in writing of its intent to contest such denial of
refund prior to the expiration of 30 days after such determination, then
such advance shall be forgiven and shall not be required to be repaid and
the amount of such advance shall offset, to the extent thereof, the amount
of Gross-Up Payment required to be paid.
8. Confidential Information. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to the Company or any
of its affiliated companies, and their respective businesses, which shall
have been obtained by the Executive during the Executive's employment by
the Company or any of its affiliated companies and which shall not be or
become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement). After
termination of the Executive's employment with the Company, the Executive
shall not, without the prior written consent of the Company or as may
otherwise be required by law or legal process, communicate or divulge any
such information, knowledge or data to anyone other than the Company and
those designated by it. In no event shall an asserted violation of the
provisions of this Section 8 constitute a basis for deferring or
withholding any amounts otherwise payable to the Executive under this
Agreement.
9. Change of Control. For the purpose of this Agreement, a
"Change of Control" shall be deemed to occur: (a) if any "Person", as
such term is used in Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") (other than (i) the Executive,
(ii) the Company or any of its subsidiaries or Affiliates (as that term is
defined in the Exchange Act), (iii) any Person subject, as of the date of
this Agreement or at any prior time, to the reporting or filing
requirements of Section 13(d) of the Exchange Act with respect to the
securities of the Company or any Affiliate, (iv) any trustee or other
fiduciary holding or owning securities under an employee benefit plan of
the Company, (v) any underwriter temporarily holding or owning securities
of the Company, or (vi) any corporation owned directly or indirectly by the
current stockholders of the Company in substantially the same proportion as
their then ownership of stock of the Company) becomes, after the date of
this Agreement, the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company
representing forty percent (40%) or more of the combined voting power of
the Company's then outstanding securities; or (b) if at any time a majority
of the members of the board of directors of the Company is comprised of
other than Continuing Directors (and for this purpose "Continuing
Directors" shall mean members of the board of directors of the Company who
were directors as of the date of this Agreement, or who were nominated by a
majority of the members of the board of directors of the Company and such
majority was comprised only of Continuing Directors at the time of such
nomination).
10. Successors. (a) This Agreement is personal to the Executive
and without the prior written consent of the Company shall not be
assignable by the Executive otherwise than by will or the laws of descent
and distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such
succession had taken place. As used in this Agreement, "Company" shall
mean the Company as hereinbefore defined and any successor to its business
and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise.
11. Miscellaneous. (a) This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas, without
reference to principles of conflict of laws. The captions of this
Agreement are not part of the provisions hereof and shall have no force or
effect. This Agreement may not be amended or modified otherwise than by a
written agreement executed by the parties hereto or their respective
successors and legal representatives.
(b) All notices and other communications hereunder shall be in
writing and shall be given if by the Executive to the Company by telecopy
or facsimile transmission at the telecommunications number set forth below
and if by either the Company or the Executive either by hand delivery to
the other party or by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Executive:
Mr. Andrew Bakonyi
38 Sandalwood Drive
Katy, Texas 77024
If to the Company:
901 Threadneedle, Suite 200
Houston, Texas 77079
Attention: Chief Executive Officer
Telecommunications Number: (281) 496-0285
or to such other address as either party shall have furnished to the other
in writing in accordance herewith. Notice and communications shall be
effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state or local taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon
strict compliance with any provision hereof or any other provision of this
Agreement or the failure to assert any right the Executive or the Company
may have hereunder, including, without limitation, the right of the
Executive to terminate employment for Good Reason pursuant to Section 3(c)
of this Agreement, shall not be deemed to be a waiver of such provision or
right or any other provision or right of this Agreement.
(f) This Agreement may be superseded by another written
agreement entered into between the Executive and Company on mutually
agreeable terms, provided such agreement expressly by its terms supersedes
this Agreement. However, an offer by the Company to enter into any such
agreement with the Executive shall not constitute an independent basis for
the Executive to terminate this Agreement for Good Reason.
IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization from its Board of
Directors, the Company has caused these presents to be executed in its name
on its behalf, all as of the day and year first above written.
____________________________________
Andrew Bakonyi
R&B FALCON CORPORATION
By ____________________________________
Name: S. A. Webster
Title: President and Chief Executive
Officer
Exhibit 10.7
EMPLOYMENT AGREEMENT
This Agreement is entered into between R&B Falcon Corporation, a
Delaware corporation (the "Company"), and Bernie Stewart (the "Executive")
on the 25th day of March, 1998.
The Company has determined that it is in its best interests and
those of its shareholders to assure that the Company will have the services
of the Executive and to provide the Executive with compensation and benefit
arrangements which are competitive with those of other corporations.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS;
1. Employment Period. The Company hereby agrees to employ the
Executive, and the Executive hereby agrees to be employed by the Company,
in accordance with the terms and provisions of this Agreement, for the
period commencing on the date hereof (the "the Effective Date") and ending
on the third anniversary of such date (the "Employment Period"). The
Employment Period shall be extended cumulatively, from time to time, one
year for each year following the Effective Date that Employee remains
employed by the Company or one of its direct or indirect subsidiaries.
2. Terms of Employment. (a) Position and Duties. (i) During
the Employment Period, (A) the Executive's position, authority, duties and
responsibilities shall be at least commensurate in all material respects
with and include status as President of Falcon Drilling Company, Inc., and
(B) the Executive's services shall be performed at the location where the
Executive was employed immediately preceding the Effective Date or any
office of the Company located in Houston, Texas which is the principal
office of the Company.
(ii) During the Employment Period, and excluding any periods
of vacation and sick leave to which the Executive is entitled, the
Executive agrees to devote substantially full attention and time during
normal business hours to the business and affairs of the Company and, to
the extent necessary to discharge the responsibilities assigned to the
Executive hereunder, to use the Executive's best efforts to perform
faithfully and efficiently such responsibilities. During the Employment
Period it shall not be a violation of this Agreement for the Executive to
(A) serve on corporate, civic or charitable boards or committees,
(B) deliver lectures, fulfill speaking engagements or teach at educational
institutions and (C) manage personal investments, so long as such
activities do not materially interfere with the performance of the
Executive's responsibilities as an employee of the Company in accordance
with this Agreement. It is expressly understood and agreed that to the
extent that any such activities have been conducted by the Executive prior
to the Effective Date under his prior employment with Reading & Bates
Corporation, the continued conduct of such activities (or the conduct of
activities similar in nature and scope thereto) subsequent to the Effective
Date shall not thereafter be deemed to interfere with the performance of
the Executive's responsibilities to the Company.
(b) Compensation. (i) Base Salary. During the Employment
Period, the Executive shall receive an annual base salary of not less than
$240,000 ("Annual Base Salary"), which shall be paid on a monthly basis.
During the Employment Period, the Annual Base Salary shall be reviewed at
least annually and shall be increased at any time and from time to time as
may be determined by the Board, based on the Executive's performance of his
position and responsibilities (to be measured in a fair and objective
manner). It may also be decreased by the Board as a part of Company wide
salary reduction program applicable to all executives and employees
generally as a result of financial losses experienced by the Company. Any
increase in Annual Base Salary shall not serve to limit or reduce any other
obligation to the Executive under this Agreement. Annual Base Salary shall
not be reduced after any such increase (except as provided in this Section
2(b)(i)), and the term Annual Base Salary as utilized in this Agreement
shall refer to Annual Base Salary as so increased or decreased. As used in
this Agreement, the term "affiliated companies" shall include any company
controlled by, controlling or under common control with the Company.
(iii) Incentive, Savings and Retirement Plans. During
the Employment Period, the Executive shall be entitled to participate in
all incentive, savings and retirement plans that are tax qualified under
Section 401(a) of the Internal Revenue Code of 1986, as amended ("Code"),
applicable generally to other executives of the Company and its affiliated
companies.
(iv) Welfare Benefit Plans. During the Employment Period,
the Executive and/or the Executive's family, as the case may be, shall be
eligible for participation in and shall receive all benefits under welfare
benefit plans, practices, policies and programs provided by the Company and
its affiliated companies (including, without limitation, medical,
prescription, dental, vision, disability, salary continuance, group life
and supplemental group life, accidental death and travel accident insurance
plans and programs) to the extent applicable generally to other executives
of the Company and its affiliated companies.
(v) Expenses. During the Employment Period, the Executive
shall be entitled to receive prompt reimbursement for all reasonable
expenses incurred by the Executive in accordance with the policies,
practices and procedures of the Company and its affiliated companies.
(vi) Vacation. During the Employment Period, the Executive
shall be entitled to paid vacation in accordance with the plans, policies,
programs and practices of the Company and its affiliated companies.
3. Termination of Employment. (a) Death or Disability. The
Executive's employment shall terminate automatically upon the Executive's
death during the Employment Period. If the Company determines in good
faith that the Disability of the Executive has occurred during the
Employment Period (pursuant to the definition of Disability set forth
below), it may give to the Executive written notice in accordance with
Section 11(b) of this Agreement of its intention to terminate the
Executive's employment. In such event, the Executive's employment with the
Company shall terminate effective on the 30th day after receipt of such
notice by the Executive (the "Disability Effective Date"), provided that,
within the 30 days after such receipt, the Executive shall not have
returned to full-time performance of the Executive's duties. For purposes
of this Agreement, "Disability" shall mean the absence of the Executive
from the Executive's duties with the Company on a full-time basis for 180
consecutive business days as a result of incapacity due to mental or
physical illness which is determined to be total and permanent by a
physician selected by the Company or its insurers and acceptable to the
Executive or the Executive's legal representative (such agreement as to
acceptability not to be withheld unreasonably).
(b) Cause. The Company may terminate the Executive's employment
during the Employment Period for Cause. For purposes of this Agreement,
"Cause" shall mean:
(i) chronic alcoholism or controlled substance abuse, as
determined by a doctor mutually acceptable to the Company
and the Executive, and continuing failure by the Executive
to commence and pursue with due diligence appropriate
treatment for same in accordance with such doctor's
recommendations;
(ii) a deliberate act of proven fraud on the part of the
Executive having a material adverse impact on the business
or consolidated financial condition or results of operations
of the Company and its subsidiaries;
(iii) a deliberate and continuing failure by the Executive to
comply with the applicable laws and regulations having a
material adverse impact on the business or consolidated
financial condition or results of operations of the Company
and its subsidiaries; or
(iv) conviction of the Executive of a criminal offense
constituting a felony.
(c) Good Reason; Window Period. The Executive's employment may
be terminated during the Employment Period by the Executive for Good Reason
or during a Window Period by the Executive without any reason. For
purposes of this Agreement, "Window Period" shall mean the period
commencing with the date of any Change of Control as defined in Section 9
of this Agreement and expiring 180 days immediately following any Change of
Control as defined in Section 9 of this Agreement. For purposes of this
Agreement, "Good Reason" shall mean
(i) the assignment to the Executive of any duties
materially inconsistent in any respect with the Executive's,
authority, duties or responsibilities as contemplated by Section 2 of
this Agreement, or any other action by the Company which results in a
diminution in such authority, duties or responsibilities (excluding
for this purpose an isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied by the Company promptly after
receipt of notice thereof given by the Executive);
(ii) any failure by the Company to comply with any of the
provisions of Section 2(b) of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and
which is remedied by the Company promptly after receipt of notice
thereof given by the Executive;
(iii) the Company's requiring the Executive to be based
at any office or location other than that described in
Section 2(a)(i)(B) hereof;
(iv) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by this
Agreement; or
(v) any failure by the Company to comply with and satisfy
Section 10 of this Agreement, provided that such successor has
received, at least ten days prior to the giving of Notice of
Termination by the Executive, written notice from the Company or the
Executive of the requirements of Section 10 of the Agreement.
For purposes of this Section 3(c), any good faith determination of "Good
Reason" made by the Executive shall be conclusive.
(d) Notice of Termination. Any termination by the Company for
Cause, or by the Executive for Good Reason or without any reason during a
Window Period, shall be communicated by Notice of Termination to the other
party hereto given in accordance with Section 11(b) of this Agreement. For
purposes of this Agreement, a "Notice of Termination" means a written
notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in
reasonable detail the facts and circumstances claimed to provide a basis
for termination of the Executive's employment under the provision so
indicated and (iii) if the Date of Termination (as defined below) is other
than the date of receipt of such notice, specifies the termination date
(which date shall be not more than fifteen days after the giving of such
notice). The failure by the Executive or the Company to set forth in the
Notice of Termination any fact or circumstance which contributes to a
showing of Good Reason or Cause shall not waive any right of the Executive
or the Company hereunder or preclude the Executive or the Company from
asserting such fact or circumstance in enforcing the Executive's or the
Company's right hereunder.
(e) Date of Termination. "Date of Termination" means (i) if the
Executive's employment is terminated by the Company for Cause, or by the
Executive during a Window Period or for Good Reason, the date of receipt of
the Notice of Termination or any later date specified therein, as the case
may be, (ii) if the Executive's employment is terminated by the Company
other than for Cause or Disability, the Date of Termination shall be the
date on which the Company notifies the Executive of such termination and
(iii) if the Executive's employment is terminated by reason of death or
Disability, the Date of Termination shall be the date of death of the
Executive or the Disability Effective Date, as the case may be.
4. Obligations of the Company upon Termination.
(a) Good Reason or during a Window Period; Other than for
Cause, Death or Disability. If, during the Employment Period, the Company
shall terminate the Executive's employment other than for Cause or
Disability or the Executive shall terminate employment either for Good
Reason or without any reason during a Window Period:
(i) the Company shall pay or provide to or in respect of the
Executive the aggregate of the following amounts and benefits:
A. in a lump sum in cash within 30 days after the Date of
Termination the sum of (1) the Executive's Annual Base Salary
through the Date of Termination to the extent not theretofore
paid, (2) the product of (x) the highest annual bonus paid or
accrued for the benefit of Executive during the three year period
preceding the Date of Termination and (y) a fraction, the
numerator of which is the number of days since the date of the
last bonus payment through the Date of Termination, and the
denominator of which is 365 and (3) any compensation previously
deferred or earned by the Executive (together with any accrued
interest or earnings thereon), any unreimbursed expenses and any
accrued vacation pay, in each case to the extent not theretofore
paid (the sum of the amounts described in clauses (1), (2) and
(3) shall be hereinafter referred to as the "Accrued
Obligation"); and
B. in a lump sum in cash within 30 days after the Date of
Termination the product of multiplying the factor of 3.75 times
the sum of the highest Annual Base Salary and the highest annual
bonus which has been payable to the Executive within the past
three years (including such salary and bonus paid by a previous
employer which is a direct subsidiary of the Company as of the
date of this Agreement) for one year's service.
(ii) for the remainder of the Employment Period, or such longer
period as any plan, program, practice or policy may provide, the
Company shall continue benefits to the Executive and/or the
Executive's family at least equal to those which would have been
provided to them in accordance with the plans, programs, practices and
policies described in Section 2(b)(iii) of this Agreement if the
Executive's employment had not been terminated in accordance with the
most favorable plans, practices, programs or policies of the Company
and its affiliated companies as in effect and applicable generally to
other executives and their families on the Effective Date or, if more
favorable to the Executive, as in effect generally at any time
thereafter with respect to other executives of the Company and its
affiliated companies and their families (such continuation of such
benefits for the applicable period herein set forth shall be
hereinafter referred to as "Welfare Benefit Continuation"). [For
purposes of determining eligibility of the Executive for retiree
benefits pursuant to such plans, practices, programs and policies and
for purposes of determining Vesting Service (as defined in the Reading
& Bates Pension Plan) under the Reading & Bates Pension Plan and the
Reading & Bates Benefits Replacement Plan, the Executive shall be
considered to have remained employed until the end of the Employment
Period and to have retired on the last day of such period.]
(b) Death or Disability.
If Executive's employment is terminated by reason of Executive's death
or Disability during the Employment Period such termination shall be
treated as a termination for Good Reason and the Company shall pay to
Executive, his estate or designated beneficiary (x) the lump sum amount and
the benefits set forth in Section 4(a) hereof plus (y) any death benefits
to which Executive is otherwise entitled pursuant to the terms of any
Welfare Benefit Plan described in Section 2(b)(iii) hereof.
(c) Cause; Other than for Good Reason. If the Executive's
employment shall be terminated for Cause during the Employment Period, this
Agreement shall terminate without further obligations to the Executive
other than for Accrued Obligations and the timely payment of reimbursement
of expenses incurred by Executive under Section 2(b)(v). If the Executive
terminates employment during the Employment Period, excluding a termination
either for Good Reason or without any reason during a Window Period, this
Agreement shall terminate without further obligations to the Executive,
other than for Accrued Obligations and the timely payment of reimbursement
of expenses incurred by Executive under Section 2(b)(v). In such case, all
Accrued Obligations and reimbursement of expenses shall be paid to the
Executive in a lump sum in cash within 30 days of the Date of Termination.
5. Non-exclusivity of Rights. Except as provided in Section 4
of this Agreement, nothing in this Agreement shall prevent or limit the
Executive's continuing or future participation in any plan, program, policy
or practice provided by the Company or any of its affiliated companies and
for which the Executive may qualify, nor shall anything herein limit or
otherwise affect such rights as the Executive may have under any contract
or agreement with the Company or any of its affiliated companies. Amounts
which are vested benefits or which the Executive is otherwise entitled to
receive under any plan, policy, practice or program of or any contract or
agreement with the Company or any of its affiliated companies at or
subsequent to the Date of Termination shall be payable in accordance with
such plan, policy, practice or program or contract or agreement except as
explicitly modified by this Agreement.
6. Full Settlement; Resolution of Disputes. (a) The Company's
obligation to make payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action which the
Company may have against the Executive or others. The Company agrees to
pay promptly as incurred, to the full extent permitted by law, all legal
fees and expenses which the Executive may reasonably incur as a result of
any contest (regardless of the outcome thereof) by the Company, the
Executive or others of the validity or enforceability of, or liability
under, any provision of this Agreement or any guarantee of performance
thereof (including as a result of any contest by the Executive about the
amount of any payment pursuant to this Agreement), plus in each case
interest on any delayed payment at the Applicable Federal Rate provided for
in Section 7872(f)(2)(A) of the Code.
(b) If there shall be any dispute between the Company and the
Executive concerning (i) in the event of any termination of the Executive's
employment by the Company, whether such termination was for Cause, or
(ii) in the event of any termination of employment by the Executive,
whether Good Reason existed or whether such termination occurred during a
Window Period, then, unless and until there is a final, nonappealable
judgment by a court of competent jurisdiction declaring that such
termination was for Cause or that the determination by the Executive of the
existence of Good Reason was not made in good faith or that the termination
by the Executive did not occur during a Window Period, the Company shall
pay all amounts, and provide all benefits, to the Executive and/or the
Executive's family or other beneficiaries, as the case may be, that the
Company would be required to pay or provide pursuant to Section 4(a) hereof
as though such termination were by the Company without Cause or by the
Executive with Good Reason or during a Window Period; provided, however,
that the Company shall not be required to pay any disputed amounts pursuant
to this paragraph except upon receipt of an undertaking by or on behalf of
the Executive to repay all such amounts to which the Executive is
ultimately adjudged by such court not to be entitled.
7. Certain Additional Payments by the Company. (a) Anything in
this Agreement to the contrary notwithstanding, in the event it shall be
determined that any payment or distribution by the Company to or for the
benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this
Section 7) (a "Payment") would be subject to the excise tax imposed by
Section 4999 of the Code or any interest or penalties are incurred by the
Executive with respect to such excise tax (such excise tax, together with
any such interest and penalties, are hereinafter collectively referred to
as the "Excise Tax"), then the Executive shall be entitled to receive an
additional payment (a "Gross-Up Payment") in an amount such that after
payment by the Executive of all taxes (including any interest or penalties
imposed with respect to such taxes), including, without limitation, any
income taxes (and any interest and penalties imposed with respect thereto)
and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.
(b) Subject to the provisions of Section 7(c), all
determinations required to be made under this Section 7, including whether
and when Gross-Up Payment is required and the amount of such Gross-Up
Payment and the assumptions to be utilized in arriving at such
determination, shall be made by Arthur Andersen & Co. (the "Accounting
Firm") which shall provide detailed supporting calculations both to the
Company and the Executive within 15 business days of the receipt of notice
from the Executive that there has been a Payment, or such earlier time as
is requested by the Company. In the event that the Accounting Firm is
serving as accountant or auditor for the individual, entity or group
effecting the Change of Control, the Executive shall appoint another
nationally recognized accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting Firm
shall be borne solely by the Company. Any Gross-Up Payment, as determined
pursuant to this Section 7, shall be paid by the Company to the Executive
within five days of the receipt of the Accounting Firm's determination. If
the Accounting Firm determines that no Excise Tax is payable by the
Executive, it shall furnish the Executive with a written opinion that
failure to report the Excise Tax on the Executive's applicable federal
income tax return would not result in the imposition of a negligence or
similar penalty. Any determination by the Accounting Firm shall be binding
upon the Company and the Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Company should have
been made ("Underpayment"), consistent with the calculations required to be
made hereunder. In the event that the Company exhausts its remedies
pursuant to Section 7(c) and the Executive thereafter is required to make a
payment of any Excise Tax, the Accounting Firm shall determine the amount
of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Executive.
(c) The Executive shall notify the Company in writing of any
claims by the Internal Revenue Service that, if successful, would require
the payment by the Company of the Gross-Up Payment. Such notification
shall be given as soon as practicable but no later than thirty days after
the Executive actually receives notice in writing of such claim and shall
apprise the Company of the nature of such claim and the date on which such
claim is requested to be paid. The Executive shall not pay such claim
prior to the expiration of the 30-day period following the date on which he
gives such notice to the Company (or such shorter period ending on the date
that any payment of taxes with respect to such claim is due). If the
Company notifies the Executive in writing prior to the expiration of such
period that it desires to contest such claim, the Executive shall:
(i) give the Company any information reasonably requested by the
Company relating to such claim,
(ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the
Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect thereto) imposed as a result
of such representation and payment of costs and expenses. Without
limitation on the foregoing provisions of this Section 7(c), the Company
shall control all proceedings taken in connection with such contest and, at
its sole option, may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect
of such claim and may, at its sole option, either direct the Executive to
pay the tax claimed and sue for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to
pay such claim and sue for a refund, the Company shall advance the amount
of such payment to the Executive, on an interest-free basis and shall
indemnify and hold the Executive harmless, on an after-tax basis, from any
Excise Tax or income tax (including interest or penalties with respect
thereto) imposed with respect to such advance or with respect to any
imputed income with respect to such advance; and further provided that any
extension of the statute of limitations relating to payment of taxes for
the taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder
and the Executive shall be entitled to settle or contest, as the case may
be, any other issue raised by the Internal Revenue Service or any other
taxing authority.
(d) If, after the receipt by the Executive of an amount advanced
by the Company pursuant to Section (c), the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall (subject
to the Company's complying with the requirements of Section 7(c)) promptly
pay to the Company the amount of such refund (together with any interest
paid or credited thereon after taxes applicable thereto). If, after the
receipt by the Executive of an amount advanced by the Company pursuant to
Section 7(c), a determination is made that the Executive shall not be
entitled to any refund with respect to such claim and the Company does not
notify the Executive in writing of its intent to contest such denial of
refund prior to the expiration of 30 days after such determination, then
such advance shall be forgiven and shall not be required to be repaid and
the amount of such advance shall offset, to the extent thereof, the amount
of Gross-Up Payment required to be paid.
8. Confidential Information. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to the Company or any
of its affiliated companies, and their respective businesses, which shall
have been obtained by the Executive during the Executive's employment by
the Company or any of its affiliated companies and which shall not be or
become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement). After
termination of the Executive's employment with the Company, the Executive
shall not, without the prior written consent of the Company or as may
otherwise be required by law or legal process, communicate or divulge any
such information, knowledge or data to anyone other than the Company and
those designated by it. In no event shall an asserted violation of the
provisions of this Section 8 constitute a basis for deferring or
withholding any amounts otherwise payable to the Executive under this
Agreement.
9. Change of Control. For the purpose of this Agreement, a
"Change of Control" shall be deemed to occur: (a) if any "Person", as
such term is used in Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") (other than (i) the Executive,
(ii) the Company or any of its subsidiaries or Affiliates (as that term is
defined in the Exchange Act), (iii) any Person subject, as of the date of
this Agreement or at any prior time, to the reporting or filing
requirements of Section 13(d) of the Exchange Act with respect to the
securities of the Company or any Affiliate, (iv) any trustee or other
fiduciary holding or owning securities under an employee benefit plan of
the Company, (v) any underwriter temporarily holding or owning securities
of the Company, or (vi) any corporation owned directly or indirectly by the
current stockholders of the Company in substantially the same proportion as
their then ownership of stock of the Company) becomes, after the date of
this Agreement, the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company
representing forty percent (40%) or more of the combined voting power of
the Company's then outstanding securities; or (b) if at any time a majority
of the members of the board of directors of the Company is comprised of
other than Continuing Directors (and for this purpose "Continuing
Directors" shall mean members of the board of directors of the Company who
were directors as of the date of this Agreement, or who were nominated by a
majority of the members of the board of directors of the Company and such
majority was comprised only of Continuing Directors at the time of such
nomination).
10. Successors. (a) This Agreement is personal to the Executive
and without the prior written consent of the Company shall not be
assignable by the Executive otherwise than by will or the laws of descent
and distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such
succession had taken place. As used in this Agreement, "Company" shall
mean the Company as hereinbefore defined and any successor to its business
and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise.
11. Miscellaneous. (a) This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas, without
reference to principles of conflict of laws. The captions of this
Agreement are not part of the provisions hereof and shall have no force or
effect. This Agreement may not be amended or modified otherwise than by a
written agreement executed by the parties hereto or their respective
successors and legal representatives.
(b) All notices and other communications hereunder shall be in
writing and shall be given if by the Executive to the Company by telecopy
or facsimile transmission at the telecommunications number set forth below
and if by either the Company or the Executive either by hand delivery to
the other party or by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Executive:
Mr. Bernie Stewart
20610 Castlemills Court
Katy, Texas 77450
If to the Company:
901 Threadneedle, Suite 200
Houston, Texas 77079
Attention: Chief Executive Officer
Telecommunications Number: (281) 496-0285
or to such other address as either party shall have furnished to the other
in writing in accordance herewith. Notice and communications shall be
effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state or local taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon
strict compliance with any provision hereof or any other provision of this
Agreement or the failure to assert any right the Executive or the Company
may have hereunder, including, without limitation, the right of the
Executive to terminate employment for Good Reason pursuant to Section 3(c)
of this Agreement, shall not be deemed to be a waiver of such provision or
right or any other provision or right of this Agreement.
(f) This Agreement may be superseded by another written
agreement entered into between the Executive and Company on mutually
agreeable terms, provided such agreement expressly by its terms supersedes
this Agreement. However, an offer by the Company to enter into any such
agreement with the Executive shall not constitute an independent basis for
the Executive to terminate this Agreement for Good Reason.
IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization from its Board of
Directors, the Company has caused these presents to be executed in its name
on its behalf, all as of the day and year first above written.
____________________________________
Bernie Stewart
R&B FALCON CORPORATION
By ____________________________________
Name: S. A. Webster
Title: President and Chief Executive
Officer
Exhibit 10.8
EMPLOYMENT AGREEMENT
This Agreement is entered into between R&B Falcon Corporation, a
Delaware corporation (the "Company"), and Robert F. Fulton (the
"Executive") on the 25th day of March, 1998.
The Company has determined that it is in its best interests and
those of its shareholders to assure that the Company will have the services
of the Executive and to provide the Executive with compensation and benefit
arrangements which are competitive with those of other corporations.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS;
1. Employment Period. The Company hereby agrees to employ the
Executive, and the Executive hereby agrees to be employed by the Company,
in accordance with the terms and provisions of this Agreement, for the
period commencing on the date hereof (the "the Effective Date") and ending
on the third anniversary of such date (the "Employment Period"). The
Employment Period shall be extended cumulatively, from time to time, one
year for each year following the Effective Date that Employee remains
employed by the Company or one of its direct or indirect subsidiaries.
2. Terms of Employment. (a) Position and Duties. (i) During
the Employment Period, (A) the Executive's position, authority, duties and
responsibilities shall be at least commensurate in all material respects
with and include status as Executive Vice President of the Company, and
(B) the Executive's services shall be performed at the location where the
Executive was employed immediately preceding the Effective Date or any
office of the Company located in Houston, Texas which is the principal
office of the Company.
(ii) During the Employment Period, and excluding any periods
of vacation and sick leave to which the Executive is entitled, the
Executive agrees to devote substantially full attention and time during
normal business hours to the business and affairs of the Company and, to
the extent necessary to discharge the responsibilities assigned to the
Executive hereunder, to use the Executive's best efforts to perform
faithfully and efficiently such responsibilities. During the Employment
Period it shall not be a violation of this Agreement for the Executive to
(A) serve on corporate, civic or charitable boards or committees,
(B) deliver lectures, fulfill speaking engagements or teach at educational
institutions and (C) manage personal investments, so long as such
activities do not materially interfere with the performance of the
Executive's responsibilities as an employee of the Company in accordance
with this Agreement. It is expressly understood and agreed that to the
extent that any such activities have been conducted by the Executive prior
to the Effective Date under his prior employment with Reading & Bates
Corporation, the continued conduct of such activities (or the conduct of
activities similar in nature and scope thereto) subsequent to the Effective
Date shall not thereafter be deemed to interfere with the performance of
the Executive's responsibilities to the Company.
(b) Compensation. (i) Base Salary. During the Employment
Period, the Executive shall receive an annual base salary of not less than
$240,000 ("Annual Base Salary"), which shall be paid on a monthly basis.
During the Employment Period, the Annual Base Salary shall be reviewed at
least annually and shall be increased at any time and from time to time as
may be determined by the Board, based on the Executive's performance of his
position and responsibilities (to be measured in a fair and objective
manner). It may also be decreased by the Board as a part of Company wide
salary reduction program applicable to all executives and employees
generally as a result of financial losses experienced by the Company. Any
increase in Annual Base Salary shall not serve to limit or reduce any other
obligation to the Executive under this Agreement. Annual Base Salary shall
not be reduced after any such increase (except as provided in this Section
2(b)(i)), and the term Annual Base Salary as utilized in this Agreement
shall refer to Annual Base Salary as so increased or decreased. As used in
this Agreement, the term "affiliated companies" shall include any company
controlled by, controlling or under common control with the Company.
(iii) Incentive, Savings and Retirement Plans. During
the Employment Period, the Executive shall be entitled to participate in
all incentive, savings and retirement plans that are tax qualified under
Section 401(a) of the Internal Revenue Code of 1986, as amended ("Code"),
applicable generally to other executives of the Company and its affiliated
companies.
(iv) Welfare Benefit Plans. During the Employment Period,
the Executive and/or the Executive's family, as the case may be, shall be
eligible for participation in and shall receive all benefits under welfare
benefit plans, practices, policies and programs provided by the Company and
its affiliated companies (including, without limitation, medical,
prescription, dental, vision, disability, salary continuance, group life
and supplemental group life, accidental death and travel accident insurance
plans and programs) to the extent applicable generally to other executives
of the Company and its affiliated companies.
(v) Expenses. During the Employment Period, the Executive
shall be entitled to receive prompt reimbursement for all reasonable
expenses incurred by the Executive in accordance with the policies,
practices and procedures of the Company and its affiliated companies.
(vi) Vacation. During the Employment Period, the Executive
shall be entitled to paid vacation in accordance with the plans, policies,
programs and practices of the Company and its affiliated companies.
3. Termination of Employment. (a) Death or Disability. The
Executive's employment shall terminate automatically upon the Executive's
death during the Employment Period. If the Company determines in good
faith that the Disability of the Executive has occurred during the
Employment Period (pursuant to the definition of Disability set forth
below), it may give to the Executive written notice in accordance with
Section 11(b) of this Agreement of its intention to terminate the
Executive's employment. In such event, the Executive's employment with the
Company shall terminate effective on the 30th day after receipt of such
notice by the Executive (the "Disability Effective Date"), provided that,
within the 30 days after such receipt, the Executive shall not have
returned to full-time performance of the Executive's duties. For purposes
of this Agreement, "Disability" shall mean the absence of the Executive
from the Executive's duties with the Company on a full-time basis for 180
consecutive business days as a result of incapacity due to mental or
physical illness which is determined to be total and permanent by a
physician selected by the Company or its insurers and acceptable to the
Executive or the Executive's legal representative (such agreement as to
acceptability not to be withheld unreasonably).
(b) Cause. The Company may terminate the Executive's employment
during the Employment Period for Cause. For purposes of this Agreement,
"Cause" shall mean:
(i) chronic alcoholism or controlled substance abuse, as
determined by a doctor mutually acceptable to the Company
and the Executive, and continuing failure by the Executive
to commence and pursue with due diligence appropriate
treatment for same in accordance with such doctor's
recommendations;
(ii) a deliberate act of proven fraud on the part of the
Executive having a material adverse impact on the business
or consolidated financial condition or results of operations
of the Company and its subsidiaries;
(iii) a deliberate and continuing failure by the Executive to
comply with the applicable laws and regulations having a
material adverse impact on the business or consolidated
financial condition or results of operations of the Company
and its subsidiaries; or
(iv) conviction of the Executive of a criminal offense
constituting a felony.
(c) Good Reason; Window Period. The Executive's employment may
be terminated during the Employment Period by the Executive for Good Reason
or during a Window Period by the Executive without any reason. For
purposes of this Agreement, "Window Period" shall mean the period
commencing with the date of any Change of Control as defined in Section 9
of this Agreement and expiring 180 days immediately following any Change of
Control as defined in Section 9 of this Agreement. For purposes of this
Agreement, "Good Reason" shall mean
(i) the assignment to the Executive of any duties
materially inconsistent in any respect with the Executive's,
authority, duties or responsibilities as contemplated by Section 2 of
this Agreement, or any other action by the Company which results in a
diminution in such authority, duties or responsibilities (excluding
for this purpose an isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied by the Company promptly after
receipt of notice thereof given by the Executive);
(ii) any failure by the Company to comply with any of the
provisions of Section 2(b) of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and
which is remedied by the Company promptly after receipt of notice
thereof given by the Executive;
(iii) the Company's requiring the Executive to be based
at any office or location other than that described in
Section 2(a)(i)(B) hereof;
(iv) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by this
Agreement; or
(v) any failure by the Company to comply with and satisfy
Section 10 of this Agreement, provided that such successor has
received, at least ten days prior to the giving of Notice of
Termination by the Executive, written notice from the Company or the
Executive of the requirements of Section 10 of the Agreement.
For purposes of this Section 3(c), any good faith determination of "Good
Reason" made by the Executive shall be conclusive.
(d) Notice of Termination. Any termination by the Company for
Cause, or by the Executive for Good Reason or without any reason during a
Window Period, shall be communicated by Notice of Termination to the other
party hereto given in accordance with Section 11(b) of this Agreement. For
purposes of this Agreement, a "Notice of Termination" means a written
notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in
reasonable detail the facts and circumstances claimed to provide a basis
for termination of the Executive's employment under the provision so
indicated and (iii) if the Date of Termination (as defined below) is other
than the date of receipt of such notice, specifies the termination date
(which date shall be not more than fifteen days after the giving of such
notice). The failure by the Executive or the Company to set forth in the
Notice of Termination any fact or circumstance which contributes to a
showing of Good Reason or Cause shall not waive any right of the Executive
or the Company hereunder or preclude the Executive or the Company from
asserting such fact or circumstance in enforcing the Executive's or the
Company's right hereunder.
(e) Date of Termination. "Date of Termination" means (i) if the
Executive's employment is terminated by the Company for Cause, or by the
Executive during a Window Period or for Good Reason, the date of receipt of
the Notice of Termination or any later date specified therein, as the case
may be, (ii) if the Executive's employment is terminated by the Company
other than for Cause or Disability, the Date of Termination shall be the
date on which the Company notifies the Executive of such termination and
(iii) if the Executive's employment is terminated by reason of death or
Disability, the Date of Termination shall be the date of death of the
Executive or the Disability Effective Date, as the case may be.
4. Obligations of the Company upon Termination.
(a) Good Reason or during a Window Period; Other than for
Cause, Death or Disability. If, during the Employment Period, the Company
shall terminate the Executive's employment other than for Cause or
Disability or the Executive shall terminate employment either for Good
Reason or without any reason during a Window Period:
(i) the Company shall pay or provide to or in respect of the
Executive the aggregate of the following amounts and benefits:
A. in a lump sum in cash within 30 days after the Date of
Termination the sum of (1) the Executive's Annual Base Salary
through the Date of Termination to the extent not theretofore
paid, (2) the product of (x) the highest annual bonus paid or
accrued for the benefit of Executive during the three year period
preceding the Date of Termination and (y) a fraction, the
numerator of which is the number of days since the date of the
last bonus payment through the Date of Termination, and the
denominator of which is 365 and (3) any compensation previously
deferred or earned by the Executive (together with any accrued
interest or earnings thereon), any unreimbursed expenses and any
accrued vacation pay, in each case to the extent not theretofore
paid (the sum of the amounts described in clauses (1), (2) and
(3) shall be hereinafter referred to as the "Accrued
Obligation"); and
B. in a lump sum in cash within 30 days after the Date of
Termination the product of multiplying the factor of 3.75 times
the sum of the highest Annual Base Salary and the highest annual
bonus which has been payable to the Executive within the past
three years (including such salary and bonus paid by a previous
employer which is a direct subsidiary of the Company as of the
date of this Agreement) for one year's service.
(ii) for the remainder of the Employment Period, or such longer
period as any plan, program, practice or policy may provide, the
Company shall continue benefits to the Executive and/or the
Executive's family at least equal to those which would have been
provided to them in accordance with the plans, programs, practices and
policies described in Section 2(b)(iii) of this Agreement if the
Executive's employment had not been terminated in accordance with the
most favorable plans, practices, programs or policies of the Company
and its affiliated companies as in effect and applicable generally to
other executives and their families on the Effective Date or, if more
favorable to the Executive, as in effect generally at any time
thereafter with respect to other executives of the Company and its
affiliated companies and their families (such continuation of such
benefits for the applicable period herein set forth shall be
hereinafter referred to as "Welfare Benefit Continuation"). [For
purposes of determining eligibility of the Executive for retiree
benefits pursuant to such plans, practices, programs and policies and
for purposes of determining Vesting Service (as defined in the Reading
& Bates Pension Plan) under the Reading & Bates Pension Plan and the
Reading & Bates Benefits Replacement Plan, the Executive shall be
considered to have remained employed until the end of the Employment
Period and to have retired on the last day of such period.]
(b) Death or Disability.
If Executive's employment is terminated by reason of Executive's death
or Disability during the Employment Period such termination shall be
treated as a termination for Good Reason and the Company shall pay to
Executive, his estate or designated beneficiary (x) the lump sum amount and
the benefits set forth in Section 4(a) hereof plus (y) any death benefits
to which Executive is otherwise entitled pursuant to the terms of any
Welfare Benefit Plan described in Section 2(b)(iii) hereof.
(c) Cause; Other than for Good Reason. If the Executive's
employment shall be terminated for Cause during the Employment Period, this
Agreement shall terminate without further obligations to the Executive
other than for Accrued Obligations and the timely payment of reimbursement
of expenses incurred by Executive under Section 2(b)(v). If the Executive
terminates employment during the Employment Period, excluding a termination
either for Good Reason or without any reason during a Window Period, this
Agreement shall terminate without further obligations to the Executive,
other than for Accrued Obligations and the timely payment of reimbursement
of expenses incurred by Executive under Section 2(b)(v). In such case, all
Accrued Obligations and reimbursement of expenses shall be paid to the
Executive in a lump sum in cash within 30 days of the Date of Termination.
5. Non-exclusivity of Rights. Except as provided in Section 4
of this Agreement, nothing in this Agreement shall prevent or limit the
Executive's continuing or future participation in any plan, program, policy
or practice provided by the Company or any of its affiliated companies and
for which the Executive may qualify, nor shall anything herein limit or
otherwise affect such rights as the Executive may have under any contract
or agreement with the Company or any of its affiliated companies. Amounts
which are vested benefits or which the Executive is otherwise entitled to
receive under any plan, policy, practice or program of or any contract or
agreement with the Company or any of its affiliated companies at or
subsequent to the Date of Termination shall be payable in accordance with
such plan, policy, practice or program or contract or agreement except as
explicitly modified by this Agreement.
6. Full Settlement; Resolution of Disputes. (a) The Company's
obligation to make payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action which the
Company may have against the Executive or others. The Company agrees to
pay promptly as incurred, to the full extent permitted by law, all legal
fees and expenses which the Executive may reasonably incur as a result of
any contest (regardless of the outcome thereof) by the Company, the
Executive or others of the validity or enforceability of, or liability
under, any provision of this Agreement or any guarantee of performance
thereof (including as a result of any contest by the Executive about the
amount of any payment pursuant to this Agreement), plus in each case
interest on any delayed payment at the Applicable Federal Rate provided for
in Section 7872(f)(2)(A) of the Code.
(b) If there shall be any dispute between the Company and the
Executive concerning (i) in the event of any termination of the Executive's
employment by the Company, whether such termination was for Cause, or
(ii) in the event of any termination of employment by the Executive,
whether Good Reason existed or whether such termination occurred during a
Window Period, then, unless and until there is a final, nonappealable
judgment by a court of competent jurisdiction declaring that such
termination was for Cause or that the determination by the Executive of the
existence of Good Reason was not made in good faith or that the termination
by the Executive did not occur during a Window Period, the Company shall
pay all amounts, and provide all benefits, to the Executive and/or the
Executive's family or other beneficiaries, as the case may be, that the
Company would be required to pay or provide pursuant to Section 4(a) hereof
as though such termination were by the Company without Cause or by the
Executive with Good Reason or during a Window Period; provided, however,
that the Company shall not be required to pay any disputed amounts pursuant
to this paragraph except upon receipt of an undertaking by or on behalf of
the Executive to repay all such amounts to which the Executive is
ultimately adjudged by such court not to be entitled.
7. Certain Additional Payments by the Company. (a) Anything in
this Agreement to the contrary notwithstanding, in the event it shall be
determined that any payment or distribution by the Company to or for the
benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this
Section 7) (a "Payment") would be subject to the excise tax imposed by
Section 4999 of the Code or any interest or penalties are incurred by the
Executive with respect to such excise tax (such excise tax, together with
any such interest and penalties, are hereinafter collectively referred to
as the "Excise Tax"), then the Executive shall be entitled to receive an
additional payment (a "Gross-Up Payment") in an amount such that after
payment by the Executive of all taxes (including any interest or penalties
imposed with respect to such taxes), including, without limitation, any
income taxes (and any interest and penalties imposed with respect thereto)
and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.
(b) Subject to the provisions of Section 7(c), all
determinations required to be made under this Section 7, including whether
and when Gross-Up Payment is required and the amount of such Gross-Up
Payment and the assumptions to be utilized in arriving at such
determination, shall be made by Arthur Andersen & Co. (the "Accounting
Firm") which shall provide detailed supporting calculations both to the
Company and the Executive within 15 business days of the receipt of notice
from the Executive that there has been a Payment, or such earlier time as
is requested by the Company. In the event that the Accounting Firm is
serving as accountant or auditor for the individual, entity or group
effecting the Change of Control, the Executive shall appoint another
nationally recognized accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting Firm
shall be borne solely by the Company. Any Gross-Up Payment, as determined
pursuant to this Section 7, shall be paid by the Company to the Executive
within five days of the receipt of the Accounting Firm's determination. If
the Accounting Firm determines that no Excise Tax is payable by the
Executive, it shall furnish the Executive with a written opinion that
failure to report the Excise Tax on the Executive's applicable federal
income tax return would not result in the imposition of a negligence or
similar penalty. Any determination by the Accounting Firm shall be binding
upon the Company and the Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Company should have
been made ("Underpayment"), consistent with the calculations required to be
made hereunder. In the event that the Company exhausts its remedies
pursuant to Section 7(c) and the Executive thereafter is required to make a
payment of any Excise Tax, the Accounting Firm shall determine the amount
of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Executive.
(c) The Executive shall notify the Company in writing of any
claims by the Internal Revenue Service that, if successful, would require
the payment by the Company of the Gross-Up Payment. Such notification
shall be given as soon as practicable but no later than thirty days after
the Executive actually receives notice in writing of such claim and shall
apprise the Company of the nature of such claim and the date on which such
claim is requested to be paid. The Executive shall not pay such claim
prior to the expiration of the 30-day period following the date on which he
gives such notice to the Company (or such shorter period ending on the date
that any payment of taxes with respect to such claim is due). If the
Company notifies the Executive in writing prior to the expiration of such
period that it desires to contest such claim, the Executive shall:
(i) give the Company any information reasonably requested by the
Company relating to such claim,
(ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the
Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect thereto) imposed as a result
of such representation and payment of costs and expenses. Without
limitation on the foregoing provisions of this Section 7(c), the Company
shall control all proceedings taken in connection with such contest and, at
its sole option, may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect
of such claim and may, at its sole option, either direct the Executive to
pay the tax claimed and sue for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to
pay such claim and sue for a refund, the Company shall advance the amount
of such payment to the Executive, on an interest-free basis and shall
indemnify and hold the Executive harmless, on an after-tax basis, from any
Excise Tax or income tax (including interest or penalties with respect
thereto) imposed with respect to such advance or with respect to any
imputed income with respect to such advance; and further provided that any
extension of the statute of limitations relating to payment of taxes for
the taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder
and the Executive shall be entitled to settle or contest, as the case may
be, any other issue raised by the Internal Revenue Service or any other
taxing authority.
(d) If, after the receipt by the Executive of an amount advanced
by the Company pursuant to Section (c), the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall (subject
to the Company's complying with the requirements of Section 7(c)) promptly
pay to the Company the amount of such refund (together with any interest
paid or credited thereon after taxes applicable thereto). If, after the
receipt by the Executive of an amount advanced by the Company pursuant to
Section 7(c), a determination is made that the Executive shall not be
entitled to any refund with respect to such claim and the Company does not
notify the Executive in writing of its intent to contest such denial of
refund prior to the expiration of 30 days after such determination, then
such advance shall be forgiven and shall not be required to be repaid and
the amount of such advance shall offset, to the extent thereof, the amount
of Gross-Up Payment required to be paid.
8. Confidential Information. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to the Company or any
of its affiliated companies, and their respective businesses, which shall
have been obtained by the Executive during the Executive's employment by
the Company or any of its affiliated companies and which shall not be or
become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement). After
termination of the Executive's employment with the Company, the Executive
shall not, without the prior written consent of the Company or as may
otherwise be required by law or legal process, communicate or divulge any
such information, knowledge or data to anyone other than the Company and
those designated by it. In no event shall an asserted violation of the
provisions of this Section 8 constitute a basis for deferring or
withholding any amounts otherwise payable to the Executive under this
Agreement.
9. Change of Control. For the purpose of this Agreement, a
"Change of Control" shall be deemed to occur: (a) if any "Person", as
such term is used in Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") (other than (i) the Executive,
(ii) the Company or any of its subsidiaries or Affiliates (as that term is
defined in the Exchange Act), (iii) any Person subject, as of the date of
this Agreement or at any prior time, to the reporting or filing
requirements of Section 13(d) of the Exchange Act with respect to the
securities of the Company or any Affiliate, (iv) any trustee or other
fiduciary holding or owning securities under an employee benefit plan of
the Company, (v) any underwriter temporarily holding or owning securities
of the Company, or (vi) any corporation owned directly or indirectly by the
current stockholders of the Company in substantially the same proportion as
their then ownership of stock of the Company) becomes, after the date of
this Agreement, the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company
representing forty percent (40%) or more of the combined voting power of
the Company's then outstanding securities; or (b) if at any time a majority
of the members of the board of directors of the Company is comprised of
other than Continuing Directors (and for this purpose "Continuing
Directors" shall mean members of the board of directors of the Company who
were directors as of the date of this Agreement, or who were nominated by a
majority of the members of the board of directors of the Company and such
majority was comprised only of Continuing Directors at the time of such
nomination).
10. Successors. (a) This Agreement is personal to the Executive
and without the prior written consent of the Company shall not be
assignable by the Executive otherwise than by will or the laws of descent
and distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such
succession had taken place. As used in this Agreement, "Company" shall
mean the Company as hereinbefore defined and any successor to its business
and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise.
11. Miscellaneous. (a) This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas, without
reference to principles of conflict of laws. The captions of this
Agreement are not part of the provisions hereof and shall have no force or
effect. This Agreement may not be amended or modified otherwise than by a
written agreement executed by the parties hereto or their respective
successors and legal representatives.
(b) All notices and other communications hereunder shall be in
writing and shall be given if by the Executive to the Company by telecopy
or facsimile transmission at the telecommunications number set forth below
and if by either the Company or the Executive either by hand delivery to
the other party or by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Executive:
Mr. Robert F. Fulton
5618 Beaver Lodge Drive
Kingwood, Texas 77345
If to the Company:
901 Threadneedle, Suite 200
Houston, Texas 77079
Attention: Chief Executive Officer
Telecommunications Number: (281) 496-0285
or to such other address as either party shall have furnished to the other
in writing in accordance herewith. Notice and communications shall be
effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state or local taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon
strict compliance with any provision hereof or any other provision of this
Agreement or the failure to assert any right the Executive or the Company
may have hereunder, including, without limitation, the right of the
Executive to terminate employment for Good Reason pursuant to Section 3(c)
of this Agreement, shall not be deemed to be a waiver of such provision or
right or any other provision or right of this Agreement.
(f) This Agreement may be superseded by another written
agreement entered into between the Executive and Company on mutually
agreeable terms, provided such agreement expressly by its terms supersedes
this Agreement. However, an offer by the Company to enter into any such
agreement with the Executive shall not constitute an independent basis for
the Executive to terminate this Agreement for Good Reason.
IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization from its Board of
Directors, the Company has caused these presents to be executed in its name
on its behalf, all as of the day and year first above written.
____________________________________
Robert F. Fulton
R&B FALCON CORPORATION
By _________________________________
Name: S. A. Webster
Title: President and Chief Executive
Officer
Exhibit 10.9
EMPLOYMENT AGREEMENT
This Agreement is entered into between R&B Falcon Corporation, a
Delaware corporation (the "Company"), and Tim W. Nagle (the "Executive") on
the 25th day of March, 1998.
The Company has determined that it is in its best interests and
those of its shareholders to assure that the Company will have the services
of the Executive and to provide the Executive with compensation and benefit
arrangements which are competitive with those of other corporations.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS;
1. Employment Period. The Company hereby agrees to employ the
Executive, and the Executive hereby agrees to be employed by the Company,
in accordance with the terms and provisions of this Agreement, for the
period commencing on the date hereof (the "the Effective Date") and ending
on the third anniversary of such date (the "Employment Period"). The
Employment Period shall be extended cumulatively, from time to time, one
year for each year following the Effective Date that Employee remains
employed by the Company or one of its direct or indirect subsidiaries.
2. Terms of Employment. (a) Position and Duties. (i) During
the Employment Period, (A) the Executive's position, authority, duties and
responsibilities shall be at least commensurate in all material respects
with and include status as Executive Vice President of the Company, and
(B) the Executive's services shall be performed at the location where the
Executive was employed immediately preceding the Effective Date or any
office of the Company located in Houston, Texas which is the principal
office of the Company.
(ii) During the Employment Period, and excluding any periods
of vacation and sick leave to which the Executive is entitled, the
Executive agrees to devote substantially full attention and time during
normal business hours to the business and affairs of the Company and, to
the extent necessary to discharge the responsibilities assigned to the
Executive hereunder, to use the Executive's best efforts to perform
faithfully and efficiently such responsibilities. During the Employment
Period it shall not be a violation of this Agreement for the Executive to
(A) serve on corporate, civic or charitable boards or committees,
(B) deliver lectures, fulfill speaking engagements or teach at educational
institutions and (C) manage personal investments, so long as such
activities do not materially interfere with the performance of the
Executive's responsibilities as an employee of the Company in accordance
with this Agreement. It is expressly understood and agreed that to the
extent that any such activities have been conducted by the Executive prior
to the Effective Date under his prior employment with Reading & Bates
Corporation, the continued conduct of such activities (or the conduct of
activities similar in nature and scope thereto) subsequent to the Effective
Date shall not thereafter be deemed to interfere with the performance of
the Executive's responsibilities to the Company.
(b) Compensation. (i) Base Salary. During the Employment
Period, the Executive shall receive an annual base salary of not less than
$275,000 ("Annual Base Salary"), which shall be paid on a monthly basis.
During the Employment Period, the Annual Base Salary shall be reviewed at
least annually and shall be increased at any time and from time to time as
may be determined by the Board, based on the Executive's performance of his
position and responsibilities (to be measured in a fair and objective
manner). It may also be decreased by the Board as a part of Company wide
salary reduction program applicable to all executives and employees
generally as a result of financial losses experienced by the Company. Any
increase in Annual Base Salary shall not serve to limit or reduce any other
obligation to the Executive under this Agreement. Annual Base Salary shall
not be reduced after any such increase (except as provided in this Section
2(b)(i)), and the term Annual Base Salary as utilized in this Agreement
shall refer to Annual Base Salary as so increased or decreased. As used in
this Agreement, the term "affiliated companies" shall include any company
controlled by, controlling or under common control with the Company.
(iii) Incentive, Savings and Retirement Plans. During
the Employment Period, the Executive shall be entitled to participate in
all incentive, savings and retirement plans that are tax qualified under
Section 401(a) of the Internal Revenue Code of 1986, as amended ("Code"),
applicable generally to other executives of the Company and its affiliated
companies.
(iv) Welfare Benefit Plans. During the Employment Period,
the Executive and/or the Executive's family, as the case may be, shall be
eligible for participation in and shall receive all benefits under welfare
benefit plans, practices, policies and programs provided by the Company and
its affiliated companies (including, without limitation, medical,
prescription, dental, vision, disability, salary continuance, group life
and supplemental group life, accidental death and travel accident insurance
plans and programs) to the extent applicable generally to other executives
of the Company and its affiliated companies.
(v) Expenses. During the Employment Period, the Executive
shall be entitled to receive prompt reimbursement for all reasonable
expenses incurred by the Executive in accordance with the policies,
practices and procedures of the Company and its affiliated companies.
(vi) Vacation. During the Employment Period, the Executive
shall be entitled to paid vacation in accordance with the plans, policies,
programs and practices of the Company and its affiliated companies.
3. Termination of Employment. (a) Death or Disability. The
Executive's employment shall terminate automatically upon the Executive's
death during the Employment Period. If the Company determines in good
faith that the Disability of the Executive has occurred during the
Employment Period (pursuant to the definition of Disability set forth
below), it may give to the Executive written notice in accordance with
Section 11(b) of this Agreement of its intention to terminate the
Executive's employment. In such event, the Executive's employment with the
Company shall terminate effective on the 30th day after receipt of such
notice by the Executive (the "Disability Effective Date"), provided that,
within the 30 days after such receipt, the Executive shall not have
returned to full-time performance of the Executive's duties. For purposes
of this Agreement, "Disability" shall mean the absence of the Executive
from the Executive's duties with the Company on a full-time basis for 180
consecutive business days as a result of incapacity due to mental or
physical illness which is determined to be total and permanent by a
physician selected by the Company or its insurers and acceptable to the
Executive or the Executive's legal representative (such agreement as to
acceptability not to be withheld unreasonably).
(b) Cause. The Company may terminate the Executive's employment
during the Employment Period for Cause. For purposes of this Agreement,
"Cause" shall mean:
(i) chronic alcoholism or controlled substance abuse, as
determined by a doctor mutually acceptable to the Company
and the Executive, and continuing failure by the Executive
to commence and pursue with due diligence appropriate
treatment for same in accordance with such doctor's
recommendations;
(ii) a deliberate act of proven fraud on the part of the
Executive having a material adverse impact on the business
or consolidated financial condition or results of operations
of the Company and its subsidiaries;
(iii) a deliberate and continuing failure by the Executive to
comply with the applicable laws and regulations having a
material adverse impact on the business or consolidated
financial condition or results of operations of the Company
and its subsidiaries; or
(iv) conviction of the Executive of a criminal offense
constituting a felony.
(c) Good Reason; Window Period. The Executive's employment may
be terminated during the Employment Period by the Executive for Good Reason
or during a Window Period by the Executive without any reason. For
purposes of this Agreement, "Window Period" shall mean the period
commencing with the date of any Change of Control as defined in Section 9
of this Agreement and expiring 180 days immediately following any Change of
Control as defined in Section 9 of this Agreement. For purposes of this
Agreement, "Good Reason" shall mean
(i) the assignment to the Executive of any duties
materially inconsistent in any respect with the Executive's,
authority, duties or responsibilities as contemplated by Section 2 of
this Agreement, or any other action by the Company which results in a
diminution in such authority, duties or responsibilities (excluding
for this purpose an isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied by the Company promptly after
receipt of notice thereof given by the Executive);
(ii) any failure by the Company to comply with any of the
provisions of Section 2(b) of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and
which is remedied by the Company promptly after receipt of notice
thereof given by the Executive;
(iii) the Company's requiring the Executive to be based
at any office or location other than that described in
Section 2(a)(i)(B) hereof;
(iv) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by this
Agreement; or
(v) any failure by the Company to comply with and satisfy
Section 10 of this Agreement, provided that such successor has
received, at least ten days prior to the giving of Notice of
Termination by the Executive, written notice from the Company or the
Executive of the requirements of Section 10 of the Agreement.
For purposes of this Section 3(c), any good faith determination of "Good
Reason" made by the Executive shall be conclusive.
(d) Notice of Termination. Any termination by the Company for
Cause, or by the Executive for Good Reason or without any reason during a
Window Period, shall be communicated by Notice of Termination to the other
party hereto given in accordance with Section 11(b) of this Agreement. For
purposes of this Agreement, a "Notice of Termination" means a written
notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in
reasonable detail the facts and circumstances claimed to provide a basis
for termination of the Executive's employment under the provision so
indicated and (iii) if the Date of Termination (as defined below) is other
than the date of receipt of such notice, specifies the termination date
(which date shall be not more than fifteen days after the giving of such
notice). The failure by the Executive or the Company to set forth in the
Notice of Termination any fact or circumstance which contributes to a
showing of Good Reason or Cause shall not waive any right of the Executive
or the Company hereunder or preclude the Executive or the Company from
asserting such fact or circumstance in enforcing the Executive's or the
Company's right hereunder.
(e) Date of Termination. "Date of Termination" means (i) if the
Executive's employment is terminated by the Company for Cause, or by the
Executive during a Window Period or for Good Reason, the date of receipt of
the Notice of Termination or any later date specified therein, as the case
may be, (ii) if the Executive's employment is terminated by the Company
other than for Cause or Disability, the Date of Termination shall be the
date on which the Company notifies the Executive of such termination and
(iii) if the Executive's employment is terminated by reason of death or
Disability, the Date of Termination shall be the date of death of the
Executive or the Disability Effective Date, as the case may be.
4. Obligations of the Company upon Termination.
(a) Good Reason or during a Window Period; Other than for
Cause, Death or Disability. If, during the Employment Period, the Company
shall terminate the Executive's employment other than for Cause or
Disability or the Executive shall terminate employment either for Good
Reason or without any reason during a Window Period:
(i) the Company shall pay or provide to or in respect of the
Executive the aggregate of the following amounts and benefits:
A. in a lump sum in cash within 30 days after the Date of
Termination the sum of (1) the Executive's Annual Base Salary
through the Date of Termination to the extent not theretofore
paid, (2) the product of (x) the highest annual bonus paid or
accrued for the benefit of Executive during the three year period
preceding the Date of Termination and (y) a fraction, the
numerator of which is the number of days since the date of the
last bonus payment through the Date of Termination, and the
denominator of which is 365 and (3) any compensation previously
deferred or earned by the Executive (together with any accrued
interest or earnings thereon), any unreimbursed expenses and any
accrued vacation pay, in each case to the extent not theretofore
paid (the sum of the amounts described in clauses (1), (2) and
(3) shall be hereinafter referred to as the "Accrued
Obligation"); and
B. in a lump sum in cash within 30 days after the Date of
Termination the product of multiplying the factor of 3.75 times
the sum of the highest Annual Base Salary and the highest annual
bonus which has been payable to the Executive within the past
three years (including such salary and bonus paid by a previous
employer which is a direct subsidiary of the Company as of the
date of this Agreement) for one year's service.
(ii) for the remainder of the Employment Period, or such longer
period as any plan, program, practice or policy may provide, the
Company shall continue benefits to the Executive and/or the
Executive's family at least equal to those which would have been
provided to them in accordance with the plans, programs, practices and
policies described in Section 2(b)(iii) of this Agreement if the
Executive's employment had not been terminated in accordance with the
most favorable plans, practices, programs or policies of the Company
and its affiliated companies as in effect and applicable generally to
other executives and their families on the Effective Date or, if more
favorable to the Executive, as in effect generally at any time
thereafter with respect to other executives of the Company and its
affiliated companies and their families (such continuation of such
benefits for the applicable period herein set forth shall be
hereinafter referred to as "Welfare Benefit Continuation"). [For
purposes of determining eligibility of the Executive for retiree
benefits pursuant to such plans, practices, programs and policies and
for purposes of determining Vesting Service (as defined in the Reading
& Bates Pension Plan) under the Reading & Bates Pension Plan and the
Reading & Bates Benefits Replacement Plan, the Executive shall be
considered to have remained employed until the end of the Employment
Period and to have retired on the last day of such period.]
(b) Death or Disability.
If Executive's employment is terminated by reason of Executive's death
or Disability during the Employment Period such termination shall be
treated as a termination for Good Reason and the Company shall pay to
Executive, his estate or designated beneficiary (x) the lump sum amount and
the benefits set forth in Section 4(a) hereof plus (y) any death benefits
to which Executive is otherwise entitled pursuant to the terms of any
Welfare Benefit Plan described in Section 2(b)(iii) hereof.
(c) Cause; Other than for Good Reason. If the Executive's
employment shall be terminated for Cause during the Employment Period, this
Agreement shall terminate without further obligations to the Executive
other than for Accrued Obligations and the timely payment of reimbursement
of expenses incurred by Executive under Section 2(b)(v). If the Executive
terminates employment during the Employment Period, excluding a termination
either for Good Reason or without any reason during a Window Period, this
Agreement shall terminate without further obligations to the Executive,
other than for Accrued Obligations and the timely payment of reimbursement
of expenses incurred by Executive under Section 2(b)(v). In such case, all
Accrued Obligations and reimbursement of expenses shall be paid to the
Executive in a lump sum in cash within 30 days of the Date of Termination.
5. Non-exclusivity of Rights. Except as provided in Section 4
of this Agreement, nothing in this Agreement shall prevent or limit the
Executive's continuing or future participation in any plan, program, policy
or practice provided by the Company or any of its affiliated companies and
for which the Executive may qualify, nor shall anything herein limit or
otherwise affect such rights as the Executive may have under any contract
or agreement with the Company or any of its affiliated companies. Amounts
which are vested benefits or which the Executive is otherwise entitled to
receive under any plan, policy, practice or program of or any contract or
agreement with the Company or any of its affiliated companies at or
subsequent to the Date of Termination shall be payable in accordance with
such plan, policy, practice or program or contract or agreement except as
explicitly modified by this Agreement.
6. Full Settlement; Resolution of Disputes. (a) The Company's
obligation to make payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action which the
Company may have against the Executive or others. The Company agrees to
pay promptly as incurred, to the full extent permitted by law, all legal
fees and expenses which the Executive may reasonably incur as a result of
any contest (regardless of the outcome thereof) by the Company, the
Executive or others of the validity or enforceability of, or liability
under, any provision of this Agreement or any guarantee of performance
thereof (including as a result of any contest by the Executive about the
amount of any payment pursuant to this Agreement), plus in each case
interest on any delayed payment at the Applicable Federal Rate provided for
in Section 7872(f)(2)(A) of the Code.
(b) If there shall be any dispute between the Company and the
Executive concerning (i) in the event of any termination of the Executive's
employment by the Company, whether such termination was for Cause, or
(ii) in the event of any termination of employment by the Executive,
whether Good Reason existed or whether such termination occurred during a
Window Period, then, unless and until there is a final, nonappealable
judgment by a court of competent jurisdiction declaring that such
termination was for Cause or that the determination by the Executive of the
existence of Good Reason was not made in good faith or that the termination
by the Executive did not occur during a Window Period, the Company shall
pay all amounts, and provide all benefits, to the Executive and/or the
Executive's family or other beneficiaries, as the case may be, that the
Company would be required to pay or provide pursuant to Section 4(a) hereof
as though such termination were by the Company without Cause or by the
Executive with Good Reason or during a Window Period; provided, however,
that the Company shall not be required to pay any disputed amounts pursuant
to this paragraph except upon receipt of an undertaking by or on behalf of
the Executive to repay all such amounts to which the Executive is
ultimately adjudged by such court not to be entitled.
7. Certain Additional Payments by the Company. (a) Anything in
this Agreement to the contrary notwithstanding, in the event it shall be
determined that any payment or distribution by the Company to or for the
benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this
Section 7) (a "Payment") would be subject to the excise tax imposed by
Section 4999 of the Code or any interest or penalties are incurred by the
Executive with respect to such excise tax (such excise tax, together with
any such interest and penalties, are hereinafter collectively referred to
as the "Excise Tax"), then the Executive shall be entitled to receive an
additional payment (a "Gross-Up Payment") in an amount such that after
payment by the Executive of all taxes (including any interest or penalties
imposed with respect to such taxes), including, without limitation, any
income taxes (and any interest and penalties imposed with respect thereto)
and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.
(b) Subject to the provisions of Section 7(c), all
determinations required to be made under this Section 7, including whether
and when Gross-Up Payment is required and the amount of such Gross-Up
Payment and the assumptions to be utilized in arriving at such
determination, shall be made by Arthur Andersen & Co. (the "Accounting
Firm") which shall provide detailed supporting calculations both to the
Company and the Executive within 15 business days of the receipt of notice
from the Executive that there has been a Payment, or such earlier time as
is requested by the Company. In the event that the Accounting Firm is
serving as accountant or auditor for the individual, entity or group
effecting the Change of Control, the Executive shall appoint another
nationally recognized accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting Firm
shall be borne solely by the Company. Any Gross-Up Payment, as determined
pursuant to this Section 7, shall be paid by the Company to the Executive
within five days of the receipt of the Accounting Firm's determination. If
the Accounting Firm determines that no Excise Tax is payable by the
Executive, it shall furnish the Executive with a written opinion that
failure to report the Excise Tax on the Executive's applicable federal
income tax return would not result in the imposition of a negligence or
similar penalty. Any determination by the Accounting Firm shall be binding
upon the Company and the Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Company should have
been made ("Underpayment"), consistent with the calculations required to be
made hereunder. In the event that the Company exhausts its remedies
pursuant to Section 7(c) and the Executive thereafter is required to make a
payment of any Excise Tax, the Accounting Firm shall determine the amount
of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Executive.
(c) The Executive shall notify the Company in writing of any
claims by the Internal Revenue Service that, if successful, would require
the payment by the Company of the Gross-Up Payment. Such notification
shall be given as soon as practicable but no later than thirty days after
the Executive actually receives notice in writing of such claim and shall
apprise the Company of the nature of such claim and the date on which such
claim is requested to be paid. The Executive shall not pay such claim
prior to the expiration of the 30-day period following the date on which he
gives such notice to the Company (or such shorter period ending on the date
that any payment of taxes with respect to such claim is due). If the
Company notifies the Executive in writing prior to the expiration of such
period that it desires to contest such claim, the Executive shall:
(i) give the Company any information reasonably requested by the
Company relating to such claim,
(ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the
Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect thereto) imposed as a result
of such representation and payment of costs and expenses. Without
limitation on the foregoing provisions of this Section 7(c), the Company
shall control all proceedings taken in connection with such contest and, at
its sole option, may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect
of such claim and may, at its sole option, either direct the Executive to
pay the tax claimed and sue for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to
pay such claim and sue for a refund, the Company shall advance the amount
of such payment to the Executive, on an interest-free basis and shall
indemnify and hold the Executive harmless, on an after-tax basis, from any
Excise Tax or income tax (including interest or penalties with respect
thereto) imposed with respect to such advance or with respect to any
imputed income with respect to such advance; and further provided that any
extension of the statute of limitations relating to payment of taxes for
the taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder
and the Executive shall be entitled to settle or contest, as the case may
be, any other issue raised by the Internal Revenue Service or any other
taxing authority.
(d) If, after the receipt by the Executive of an amount advanced
by the Company pursuant to Section (c), the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall (subject
to the Company's complying with the requirements of Section 7(c)) promptly
pay to the Company the amount of such refund (together with any interest
paid or credited thereon after taxes applicable thereto). If, after the
receipt by the Executive of an amount advanced by the Company pursuant to
Section 7(c), a determination is made that the Executive shall not be
entitled to any refund with respect to such claim and the Company does not
notify the Executive in writing of its intent to contest such denial of
refund prior to the expiration of 30 days after such determination, then
such advance shall be forgiven and shall not be required to be repaid and
the amount of such advance shall offset, to the extent thereof, the amount
of Gross-Up Payment required to be paid.
8. Confidential Information. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to the Company or any
of its affiliated companies, and their respective businesses, which shall
have been obtained by the Executive during the Executive's employment by
the Company or any of its affiliated companies and which shall not be or
become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement). After
termination of the Executive's employment with the Company, the Executive
shall not, without the prior written consent of the Company or as may
otherwise be required by law or legal process, communicate or divulge any
such information, knowledge or data to anyone other than the Company and
those designated by it. In no event shall an asserted violation of the
provisions of this Section 8 constitute a basis for deferring or
withholding any amounts otherwise payable to the Executive under this
Agreement.
9. Change of Control. For the purpose of this Agreement, a
"Change of Control" shall be deemed to occur: (a) if any "Person", as
such term is used in Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") (other than (i) the Executive,
(ii) the Company or any of its subsidiaries or Affiliates (as that term is
defined in the Exchange Act), (iii) any Person subject, as of the date of
this Agreement or at any prior time, to the reporting or filing
requirements of Section 13(d) of the Exchange Act with respect to the
securities of the Company or any Affiliate, (iv) any trustee or other
fiduciary holding or owning securities under an employee benefit plan of
the Company, (v) any underwriter temporarily holding or owning securities
of the Company, or (vi) any corporation owned directly or indirectly by the
current stockholders of the Company in substantially the same proportion as
their then ownership of stock of the Company) becomes, after the date of
this Agreement, the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company
representing forty percent (40%) or more of the combined voting power of
the Company's then outstanding securities; or (b) if at any time a majority
of the members of the board of directors of the Company is comprised of
other than Continuing Directors (and for this purpose "Continuing
Directors" shall mean members of the board of directors of the Company who
were directors as of the date of this Agreement, or who were nominated by a
majority of the members of the board of directors of the Company and such
majority was comprised only of Continuing Directors at the time of such
nomination).
10. Successors. (a) This Agreement is personal to the Executive
and without the prior written consent of the Company shall not be
assignable by the Executive otherwise than by will or the laws of descent
and distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such
succession had taken place. As used in this Agreement, "Company" shall
mean the Company as hereinbefore defined and any successor to its business
and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise.
11. Miscellaneous. (a) This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas, without
reference to principles of conflict of laws. The captions of this
Agreement are not part of the provisions hereof and shall have no force or
effect. This Agreement may not be amended or modified otherwise than by a
written agreement executed by the parties hereto or their respective
successors and legal representatives.
(b) All notices and other communications hereunder shall be in
writing and shall be given if by the Executive to the Company by telecopy
or facsimile transmission at the telecommunications number set forth below
and if by either the Company or the Executive either by hand delivery to
the other party or by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Executive:
Mr. Tim W. Nagle
2100 Bering #535
Houston, Texas 77057
If to the Company:
901 Threadneedle, Suite 200
Houston, Texas 77079
Attention: Chief Executive Officer
Telecommunications Number: (281) 496-0285
or to such other address as either party shall have furnished to the other
in writing in accordance herewith. Notice and communications shall be
effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state or local taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon
strict compliance with any provision hereof or any other provision of this
Agreement or the failure to assert any right the Executive or the Company
may have hereunder, including, without limitation, the right of the
Executive to terminate employment for Good Reason pursuant to Section 3(c)
of this Agreement, shall not be deemed to be a waiver of such provision or
right or any other provision or right of this Agreement.
(f) This Agreement may be superseded by another written
agreement entered into between the Executive and Company on mutually
agreeable terms, provided such agreement expressly by its terms supersedes
this Agreement. However, an offer by the Company to enter into any such
agreement with the Executive shall not constitute an independent basis for
the Executive to terminate this Agreement for Good Reason.
IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization from its Board of
Directors, the Company has caused these presents to be executed in its name
on its behalf, all as of the day and year first above written.
____________________________________
Tim W. Nagle
R&B FALCON CORPORATION
By _________________________________
Name: S. A. Webster
Title: President and Chief Executive
Officer
Exhibit 10.10
EMPLOYMENT AGREEMENT
This Agreement is entered into between R&B Falcon Corporation, a
Delaware corporation (the "Company"), and Wayne K. Hillin (the "Executive")
on the 25th day of March, 1998.
The Company has determined that it is in its best interests and
those of its shareholders to assure that the Company will have the services
of the Executive and to provide the Executive with compensation and benefit
arrangements which are competitive with those of other corporations.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS;
1. Employment Period. The Company hereby agrees to employ the
Executive, and the Executive hereby agrees to be employed by the Company,
in accordance with the terms and provisions of this Agreement, for the
period commencing on the date hereof (the "the Effective Date") and ending
on the third anniversary of such date (the "Employment Period"). The
Employment Period shall be extended cumulatively, from time to time, one
year for each year following the Effective Date that Employee remains
employed by the Company or one of its direct or indirect subsidiaries.
2. Terms of Employment. (a) Position and Duties. (i) During
the Employment Period, (A) the Executive's position, authority, duties and
responsibilities shall be at least commensurate in all material respects
with and include status as Senior Vice President and Co-Counsel of the
Company, and (B) the Executive's services shall be performed at the
location where the Executive was employed immediately preceding the
Effective Date or any office of the Company located in Houston, Texas which
is the principal office of the Company.
(ii) During the Employment Period, and excluding any periods
of vacation and sick leave to which the Executive is entitled, the
Executive agrees to devote substantially full attention and time during
normal business hours to the business and affairs of the Company and, to
the extent necessary to discharge the responsibilities assigned to the
Executive hereunder, to use the Executive's best efforts to perform
faithfully and efficiently such responsibilities. During the Employment
Period it shall not be a violation of this Agreement for the Executive to
(A) serve on corporate, civic or charitable boards or committees,
(B) deliver lectures, fulfill speaking engagements or teach at educational
institutions and (C) manage personal investments, so long as such
activities do not materially interfere with the performance of the
Executive's responsibilities as an employee of the Company in accordance
with this Agreement. It is expressly understood and agreed that to the
extent that any such activities have been conducted by the Executive prior
to the Effective Date under his prior employment with Reading & Bates
Corporation, the continued conduct of such activities (or the conduct of
activities similar in nature and scope thereto) subsequent to the Effective
Date shall not thereafter be deemed to interfere with the performance of
the Executive's responsibilities to the Company.
(b) Compensation. (i) Base Salary. During the Employment
Period, the Executive shall receive an annual base salary of not less than
$225,000 ("Annual Base Salary"), which shall be paid on a monthly basis.
During the Employment Period, the Annual Base Salary shall be reviewed at
least annually and shall be increased at any time and from time to time as
may be determined by the Board, based on the Executive's performance of his
position and responsibilities (to be measured in a fair and objective
manner). It may also be decreased by the Board as a part of Company wide
salary reduction program applicable to all executives and employees
generally as a result of financial losses experienced by the Company. Any
increase in Annual Base Salary shall not serve to limit or reduce any other
obligation to the Executive under this Agreement. Annual Base Salary shall
not be reduced after any such increase (except as provided in this Section
2(b)(i)), and the term Annual Base Salary as utilized in this Agreement
shall refer to Annual Base Salary as so increased or decreased. As used in
this Agreement, the term "affiliated companies" shall include any company
controlled by, controlling or under common control with the Company.
(iii) Incentive, Savings and Retirement Plans. During
the Employment Period, the Executive shall be entitled to participate in
all incentive, savings and retirement plans that are tax qualified under
Section 401(a) of the Internal Revenue Code of 1986, as amended ("Code"),
applicable generally to other executives of the Company and its affiliated
companies.
(iv) Welfare Benefit Plans. During the Employment Period,
the Executive and/or the Executive's family, as the case may be, shall be
eligible for participation in and shall receive all benefits under welfare
benefit plans, practices, policies and programs provided by the Company and
its affiliated companies (including, without limitation, medical,
prescription, dental, vision, disability, salary continuance, group life
and supplemental group life, accidental death and travel accident insurance
plans and programs) to the extent applicable generally to other executives
of the Company and its affiliated companies.
(v) Expenses. During the Employment Period, the Executive
shall be entitled to receive prompt reimbursement for all reasonable
expenses incurred by the Executive in accordance with the policies,
practices and procedures of the Company and its affiliated companies.
(vi) Vacation. During the Employment Period, the Executive
shall be entitled to paid vacation in accordance with the plans, policies,
programs and practices of the Company and its affiliated companies.
3. Termination of Employment. (a) Death or Disability. The
Executive's employment shall terminate automatically upon the Executive's
death during the Employment Period. If the Company determines in good
faith that the Disability of the Executive has occurred during the
Employment Period (pursuant to the definition of Disability set forth
below), it may give to the Executive written notice in accordance with
Section 11(b) of this Agreement of its intention to terminate the
Executive's employment. In such event, the Executive's employment with the
Company shall terminate effective on the 30th day after receipt of such
notice by the Executive (the "Disability Effective Date"), provided that,
within the 30 days after such receipt, the Executive shall not have
returned to full-time performance of the Executive's duties. For purposes
of this Agreement, "Disability" shall mean the absence of the Executive
from the Executive's duties with the Company on a full-time basis for 180
consecutive business days as a result of incapacity due to mental or
physical illness which is determined to be total and permanent by a
physician selected by the Company or its insurers and acceptable to the
Executive or the Executive's legal representative (such agreement as to
acceptability not to be withheld unreasonably).
(b) Cause. The Company may terminate the Executive's employment
during the Employment Period for Cause. For purposes of this Agreement,
"Cause" shall mean:
(i) chronic alcoholism or controlled substance abuse, as
determined by a doctor mutually acceptable to the Company
and the Executive, and continuing failure by the Executive
to commence and pursue with due diligence appropriate
treatment for same in accordance with such doctor's
recommendations;
(ii) a deliberate act of proven fraud on the part of the
Executive having a material adverse impact on the business
or consolidated financial condition or results of operations
of the Company and its subsidiaries;
(iii) a deliberate and continuing failure by the Executive to
comply with the applicable laws and regulations having a
material adverse impact on the business or consolidated
financial condition or results of operations of the Company
and its subsidiaries; or
(iv) conviction of the Executive of a criminal offense
constituting a felony.
(c) Good Reason; Window Period. The Executive's employment may
be terminated during the Employment Period by the Executive for Good Reason
or during a Window Period by the Executive without any reason. For
purposes of this Agreement, "Window Period" shall mean the period
commencing with the date of any Change of Control as defined in Section 9
of this Agreement and expiring 180 days immediately following any Change of
Control as defined in Section 9 of this Agreement. For purposes of this
Agreement, "Good Reason" shall mean
(i) the assignment to the Executive of any duties
materially inconsistent in any respect with the Executive's,
authority, duties or responsibilities as contemplated by Section 2 of
this Agreement, or any other action by the Company which results in a
diminution in such authority, duties or responsibilities (excluding
for this purpose an isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied by the Company promptly after
receipt of notice thereof given by the Executive);
(ii) any failure by the Company to comply with any of the
provisions of Section 2(b) of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and
which is remedied by the Company promptly after receipt of notice
thereof given by the Executive;
(iii) the Company's requiring the Executive to be based at
any office or location other than that described in Section 2(a)(i)(B)
hereof;
(iv) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by this
Agreement; or
(v) any failure by the Company to comply with and satisfy
Section 10 of this Agreement, provided that such successor has
received, at least ten days prior to the giving of Notice of
Termination by the Executive, written notice from the Company or the
Executive of the requirements of Section 10 of the Agreement.
For purposes of this Section 3(c), any good faith determination of "Good
Reason" made by the Executive shall be conclusive.
(d) Notice of Termination. Any termination by the Company for
Cause, or by the Executive for Good Reason or without any reason during a
Window Period, shall be communicated by Notice of Termination to the other
party hereto given in accordance with Section 11(b) of this Agreement. For
purposes of this Agreement, a "Notice of Termination" means a written
notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in
reasonable detail the facts and circumstances claimed to provide a basis
for termination of the Executive's employment under the provision so
indicated and (iii) if the Date of Termination (as defined below) is other
than the date of receipt of such notice, specifies the termination date
(which date shall be not more than fifteen days after the giving of such
notice). The failure by the Executive or the Company to set forth in the
Notice of Termination any fact or circumstance which contributes to a
showing of Good Reason or Cause shall not waive any right of the Executive
or the Company hereunder or preclude the Executive or the Company from
asserting such fact or circumstance in enforcing the Executive's or the
Company's right hereunder.
(e) Date of Termination. "Date of Termination" means (i) if the
Executive's employment is terminated by the Company for Cause, or by the
Executive during a Window Period or for Good Reason, the date of receipt of
the Notice of Termination or any later date specified therein, as the case
may be, (ii) if the Executive's employment is terminated by the Company
other than for Cause or Disability, the Date of Termination shall be the
date on which the Company notifies the Executive of such termination and
(iii) if the Executive's employment is terminated by reason of death or
Disability, the Date of Termination shall be the date of death of the
Executive or the Disability Effective Date, as the case may be.
4. Obligations of the Company upon Termination.
(a) Good Reason or during a Window Period; Other than for
Cause, Death or Disability. If, during the Employment Period, the Company
shall terminate the Executive's employment other than for Cause or
Disability or the Executive shall terminate employment either for Good
Reason or without any reason during a Window Period:
(i) the Company shall pay or provide to or in respect of the
Executive the aggregate of the following amounts and benefits:
A. in a lump sum in cash within 30 days after the Date of
Termination the sum of (1) the Executive's Annual Base Salary
through the Date of Termination to the extent not theretofore
paid, (2) the product of (x) the highest annual bonus paid or
accrued for the benefit of Executive during the three year period
preceding the Date of Termination and (y) a fraction, the
numerator of which is the number of days since the date of the
last bonus payment through the Date of Termination, and the
denominator of which is 365 and (3) any compensation previously
deferred or earned by the Executive (together with any accrued
interest or earnings thereon), any unreimbursed expenses and any
accrued vacation pay, in each case to the extent not theretofore
paid (the sum of the amounts described in clauses (1), (2) and
(3) shall be hereinafter referred to as the "Accrued
Obligation"); and
B. in a lump sum in cash within 30 days after the Date of
Termination the product of multiplying the factor of 3.75 times
the sum of the highest Annual Base Salary and the highest annual
bonus which has been payable to the Executive within the past
three years (including such salary and bonus paid by a previous
employer which is a direct subsidiary of the Company as of the
date of this Agreement) for one year's service.
(ii) for the remainder of the Employment Period, or such longer
period as any plan, program, practice or policy may provide, the
Company shall continue benefits to the Executive and/or the
Executive's family at least equal to those which would have been
provided to them in accordance with the plans, programs, practices and
policies described in Section 2(b)(iii) of this Agreement if the
Executive's employment had not been terminated in accordance with the
most favorable plans, practices, programs or policies of the Company
and its affiliated companies as in effect and applicable generally to
other executives and their families on the Effective Date or, if more
favorable to the Executive, as in effect generally at any time
thereafter with respect to other executives of the Company and its
affiliated companies and their families (such continuation of such
benefits for the applicable period herein set forth shall be
hereinafter referred to as "Welfare Benefit Continuation"). [For
purposes of determining eligibility of the Executive for retiree
benefits pursuant to such plans, practices, programs and policies and
for purposes of determining Vesting Service (as defined in the Reading
& Bates Pension Plan) under the Reading & Bates Pension Plan and the
Reading & Bates Benefits Replacement Plan, the Executive shall be
considered to have remained employed until the end of the Employment
Period and to have retired on the last day of such period.]
(b) Death or Disability.
If Executive's employment is terminated by reason of Executive's death
or Disability during the Employment Period such termination shall be
treated as a termination for Good Reason and the Company shall pay to
Executive, his estate or designated beneficiary (x) the lump sum amount and
the benefits set forth in Section 4(a) hereof plus (y) any death benefits
to which Executive is otherwise entitled pursuant to the terms of any
Welfare Benefit Plan described in Section 2(b)(iii) hereof.
(c) Cause; Other than for Good Reason. If the Executive's
employment shall be terminated for Cause during the Employment Period, this
Agreement shall terminate without further obligations to the Executive
other than for Accrued Obligations and the timely payment of reimbursement
of expenses incurred by Executive under Section 2(b)(v). If the Executive
terminates employment during the Employment Period, excluding a termination
either for Good Reason or without any reason during a Window Period, this
Agreement shall terminate without further obligations to the Executive,
other than for Accrued Obligations and the timely payment of reimbursement
of expenses incurred by Executive under Section 2(b)(v). In such case, all
Accrued Obligations and reimbursement of expenses shall be paid to the
Executive in a lump sum in cash within 30 days of the Date of Termination.
5. Non-exclusivity of Rights. Except as provided in Section 4
of this Agreement, nothing in this Agreement shall prevent or limit the
Executive's continuing or future participation in any plan, program, policy
or practice provided by the Company or any of its affiliated companies and
for which the Executive may qualify, nor shall anything herein limit or
otherwise affect such rights as the Executive may have under any contract
or agreement with the Company or any of its affiliated companies. Amounts
which are vested benefits or which the Executive is otherwise entitled to
receive under any plan, policy, practice or program of or any contract or
agreement with the Company or any of its affiliated companies at or
subsequent to the Date of Termination shall be payable in accordance with
such plan, policy, practice or program or contract or agreement except as
explicitly modified by this Agreement.
6. Full Settlement; Resolution of Disputes. (a) The Company's
obligation to make payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action which the
Company may have against the Executive or others. The Company agrees to
pay promptly as incurred, to the full extent permitted by law, all legal
fees and expenses which the Executive may reasonably incur as a result of
any contest (regardless of the outcome thereof) by the Company, the
Executive or others of the validity or enforceability of, or liability
under, any provision of this Agreement or any guarantee of performance
thereof (including as a result of any contest by the Executive about the
amount of any payment pursuant to this Agreement), plus in each case
interest on any delayed payment at the Applicable Federal Rate provided for
in Section 7872(f)(2)(A) of the Code.
(b) If there shall be any dispute between the Company and the
Executive concerning (i) in the event of any termination of the Executive's
employment by the Company, whether such termination was for Cause, or
(ii) in the event of any termination of employment by the Executive,
whether Good Reason existed or whether such termination occurred during a
Window Period, then, unless and until there is a final, nonappealable
judgment by a court of competent jurisdiction declaring that such
termination was for Cause or that the determination by the Executive of the
existence of Good Reason was not made in good faith or that the termination
by the Executive did not occur during a Window Period, the Company shall
pay all amounts, and provide all benefits, to the Executive and/or the
Executive's family or other beneficiaries, as the case may be, that the
Company would be required to pay or provide pursuant to Section 4(a) hereof
as though such termination were by the Company without Cause or by the
Executive with Good Reason or during a Window Period; provided, however,
that the Company shall not be required to pay any disputed amounts pursuant
to this paragraph except upon receipt of an undertaking by or on behalf of
the Executive to repay all such amounts to which the Executive is
ultimately adjudged by such court not to be entitled.
7. Certain Additional Payments by the Company. (a) Anything in
this Agreement to the contrary notwithstanding, in the event it shall be
determined that any payment or distribution by the Company to or for the
benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this
Section 7) (a "Payment") would be subject to the excise tax imposed by
Section 4999 of the Code or any interest or penalties are incurred by the
Executive with respect to such excise tax (such excise tax, together with
any such interest and penalties, are hereinafter collectively referred to
as the "Excise Tax"), then the Executive shall be entitled to receive an
additional payment (a "Gross-Up Payment") in an amount such that after
payment by the Executive of all taxes (including any interest or penalties
imposed with respect to such taxes), including, without limitation, any
income taxes (and any interest and penalties imposed with respect thereto)
and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.
(b) Subject to the provisions of Section 7(c), all
determinations required to be made under this Section 7, including whether
and when Gross-Up Payment is required and the amount of such Gross-Up
Payment and the assumptions to be utilized in arriving at such
determination, shall be made by Arthur Andersen & Co. (the "Accounting
Firm") which shall provide detailed supporting calculations both to the
Company and the Executive within 15 business days of the receipt of notice
from the Executive that there has been a Payment, or such earlier time as
is requested by the Company. In the event that the Accounting Firm is
serving as accountant or auditor for the individual, entity or group
effecting the Change of Control, the Executive shall appoint another
nationally recognized accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting Firm
shall be borne solely by the Company. Any Gross-Up Payment, as determined
pursuant to this Section 7, shall be paid by the Company to the Executive
within five days of the receipt of the Accounting Firm's determination. If
the Accounting Firm determines that no Excise Tax is payable by the
Executive, it shall furnish the Executive with a written opinion that
failure to report the Excise Tax on the Executive's applicable federal
income tax return would not result in the imposition of a negligence or
similar penalty. Any determination by the Accounting Firm shall be binding
upon the Company and the Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Company should have
been made ("Underpayment"), consistent with the calculations required to be
made hereunder. In the event that the Company exhausts its remedies
pursuant to Section 7(c) and the Executive thereafter is required to make a
payment of any Excise Tax, the Accounting Firm shall determine the amount
of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Executive.
(c) The Executive shall notify the Company in writing of any
claims by the Internal Revenue Service that, if successful, would require
the payment by the Company of the Gross-Up Payment. Such notification
shall be given as soon as practicable but no later than thirty days after
the Executive actually receives notice in writing of such claim and shall
apprise the Company of the nature of such claim and the date on which such
claim is requested to be paid. The Executive shall not pay such claim
prior to the expiration of the 30-day period following the date on which he
gives such notice to the Company (or such shorter period ending on the date
that any payment of taxes with respect to such claim is due). If the
Company notifies the Executive in writing prior to the expiration of such
period that it desires to contest such claim, the Executive shall:
(i) give the Company any information reasonably requested by the
Company relating to such claim,
(ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the
Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect thereto) imposed as a result
of such representation and payment of costs and expenses. Without
limitation on the foregoing provisions of this Section 7(c), the Company
shall control all proceedings taken in connection with such contest and, at
its sole option, may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect
of such claim and may, at its sole option, either direct the Executive to
pay the tax claimed and sue for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to
pay such claim and sue for a refund, the Company shall advance the amount
of such payment to the Executive, on an interest-free basis and shall
indemnify and hold the Executive harmless, on an after-tax basis, from any
Excise Tax or income tax (including interest or penalties with respect
thereto) imposed with respect to such advance or with respect to any
imputed income with respect to such advance; and further provided that any
extension of the statute of limitations relating to payment of taxes for
the taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder
and the Executive shall be entitled to settle or contest, as the case may
be, any other issue raised by the Internal Revenue Service or any other
taxing authority.
(d) If, after the receipt by the Executive of an amount advanced
by the Company pursuant to Section (c), the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall (subject
to the Company's complying with the requirements of Section 7(c)) promptly
pay to the Company the amount of such refund (together with any interest
paid or credited thereon after taxes applicable thereto). If, after the
receipt by the Executive of an amount advanced by the Company pursuant to
Section 7(c), a determination is made that the Executive shall not be
entitled to any refund with respect to such claim and the Company does not
notify the Executive in writing of its intent to contest such denial of
refund prior to the expiration of 30 days after such determination, then
such advance shall be forgiven and shall not be required to be repaid and
the amount of such advance shall offset, to the extent thereof, the amount
of Gross-Up Payment required to be paid.
8. Confidential Information. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to the Company or any
of its affiliated companies, and their respective businesses, which shall
have been obtained by the Executive during the Executive's employment by
the Company or any of its affiliated companies and which shall not be or
become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement). After
termination of the Executive's employment with the Company, the Executive
shall not, without the prior written consent of the Company or as may
otherwise be required by law or legal process, communicate or divulge any
such information, knowledge or data to anyone other than the Company and
those designated by it. In no event shall an asserted violation of the
provisions of this Section 8 constitute a basis for deferring or
withholding any amounts otherwise payable to the Executive under this
Agreement.
9. Change of Control. For the purpose of this Agreement, a
"Change of Control" shall be deemed to occur: (a) if any "Person", as
such term is used in Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") (other than (i) the Executive,
(ii) the Company or any of its subsidiaries or Affiliates (as that term is
defined in the Exchange Act), (iii) any Person subject, as of the date of
this Agreement or at any prior time, to the reporting or filing
requirements of Section 13(d) of the Exchange Act with respect to the
securities of the Company or any Affiliate, (iv) any trustee or other
fiduciary holding or owning securities under an employee benefit plan of
the Company, (v) any underwriter temporarily holding or owning securities
of the Company, or (vi) any corporation owned directly or indirectly by the
current stockholders of the Company in substantially the same proportion as
their then ownership of stock of the Company) becomes, after the date of
this Agreement, the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company
representing forty percent (40%) or more of the combined voting power of
the Company's then outstanding securities; or (b) if at any time a majority
of the members of the board of directors of the Company is comprised of
other than Continuing Directors (and for this purpose "Continuing
Directors" shall mean members of the board of directors of the Company who
were directors as of the date of this Agreement, or who were nominated by a
majority of the members of the board of directors of the Company and such
majority was comprised only of Continuing Directors at the time of such
nomination).
10. Successors. (a) This Agreement is personal to the Executive
and without the prior written consent of the Company shall not be
assignable by the Executive otherwise than by will or the laws of descent
and distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such
succession had taken place. As used in this Agreement, "Company" shall
mean the Company as hereinbefore defined and any successor to its business
and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise.
11. Miscellaneous. (a) This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas, without
reference to principles of conflict of laws. The captions of this
Agreement are not part of the provisions hereof and shall have no force or
effect. This Agreement may not be amended or modified otherwise than by a
written agreement executed by the parties hereto or their respective
successors and legal representatives.
(b) All notices and other communications hereunder shall be in
writing and shall be given if by the Executive to the Company by telecopy
or facsimile transmission at the telecommunications number set forth below
and if by either the Company or the Executive either by hand delivery to
the other party or by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Executive:
Mr. Wayne K. Hillin
13414 Sweet Surrender Court
Houston, Texas 77041
If to the Company:
901 Threadneedle, Suite 200
Houston, Texas 77079
Attention: Chief Executive Officer
Telecommunications Number: (281) 496-0285
or to such other address as either party shall have furnished to the other
in writing in accordance herewith. Notice and communications shall be
effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state or local taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon
strict compliance with any provision hereof or any other provision of this
Agreement or the failure to assert any right the Executive or the Company
may have hereunder, including, without limitation, the right of the
Executive to terminate employment for Good Reason pursuant to Section 3(c)
of this Agreement, shall not be deemed to be a waiver of such provision or
right or any other provision or right of this Agreement.
(f) This Agreement may be superseded by another written
agreement entered into between the Executive and Company on mutually
agreeable terms, provided such agreement expressly by its terms supersedes
this Agreement. However, an offer by the Company to enter into any such
agreement with the Executive shall not constitute an independent basis for
the Executive to terminate this Agreement for Good Reason.
IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization from its Board of
Directors, the Company has caused these presents to be executed in its name
on its behalf, all as of the day and year first above written.
____________________________________
Wayne K. Hillin
R&B FALCON CORPORATION
By ____________________________________
Name: S. A. Webster
Title: President and Chief Executive
Officer
Exhibit 10.11
EMPLOYMENT AGREEMENT
This Agreement is entered into between R&B Falcon Corporation, a
Delaware corporation (the "Company"), and Leighton E. Moss (the
"Executive") on the 25th day of March, 1998.
The Company has determined that it is in its best interests and
those of its shareholders to assure that the Company will have the services
of the Executive and to provide the Executive with compensation and benefit
arrangements which are competitive with those of other corporations.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS;
1. Employment Period. The Company hereby agrees to employ the
Executive, and the Executive hereby agrees to be employed by the Company,
in accordance with the terms and provisions of this Agreement, for the
period commencing on the date hereof (the "the Effective Date") and ending
on the third anniversary of such date (the "Employment Period"). The
Employment Period shall be extended cumulatively, from time to time, one
year for each year following the Effective Date that Employee remains
employed by the Company or one of its direct or indirect subsidiaries.
2. Terms of Employment. (a) Position and Duties. (i) During
the Employment Period, (A) the Executive's position, authority, duties and
responsibilities shall be at least commensurate in all material respects
with and include status as Senior Vice President and Co-Counsel of the
Company, and (B) the Executive's services shall be performed at the
location where the Executive was employed immediately preceding the
Effective Date or any office of the Company located in Houston, Texas which
is the principal office of the Company.
(ii) During the Employment Period, and excluding any periods
of vacation and sick leave to which the Executive is entitled, the
Executive agrees to devote substantially full attention and time during
normal business hours to the business and affairs of the Company and, to
the extent necessary to discharge the responsibilities assigned to the
Executive hereunder, to use the Executive's best efforts to perform
faithfully and efficiently such responsibilities. During the Employment
Period it shall not be a violation of this Agreement for the Executive to
(A) serve on corporate, civic or charitable boards or committees,
(B) deliver lectures, fulfill speaking engagements or teach at educational
institutions and (C) manage personal investments, so long as such
activities do not materially interfere with the performance of the
Executive's responsibilities as an employee of the Company in accordance
with this Agreement. It is expressly understood and agreed that to the
extent that any such activities have been conducted by the Executive prior
to the Effective Date under his prior employment with Reading & Bates
Corporation, the continued conduct of such activities (or the conduct of
activities similar in nature and scope thereto) subsequent to the Effective
Date shall not thereafter be deemed to interfere with the performance of
the Executive's responsibilities to the Company.
(b) Compensation. (i) Base Salary. During the Employment
Period, the Executive shall receive an annual base salary of not less than
$180,000 ("Annual Base Salary"), which shall be paid on a monthly basis.
During the Employment Period, the Annual Base Salary shall be reviewed at
least annually and shall be increased at any time and from time to time as
may be determined by the Board, based on the Executive's performance of his
position and responsibilities (to be measured in a fair and objective
manner). It may also be decreased by the Board as a part of Company wide
salary reduction program applicable to all executives and employees
generally as a result of financial losses experienced by the Company. Any
increase in Annual Base Salary shall not serve to limit or reduce any other
obligation to the Executive under this Agreement. Annual Base Salary shall
not be reduced after any such increase (except as provided in this Section
2(b)(i)), and the term Annual Base Salary as utilized in this Agreement
shall refer to Annual Base Salary as so increased or decreased. As used in
this Agreement, the term "affiliated companies" shall include any company
controlled by, controlling or under common control with the Company.
(iii) Incentive, Savings and Retirement Plans. During
the Employment Period, the Executive shall be entitled to participate in
all incentive, savings and retirement plans that are tax qualified under
Section 401(a) of the Internal Revenue Code of 1986, as amended ("Code"),
applicable generally to other executives of the Company and its affiliated
companies.
(iv) Welfare Benefit Plans. During the Employment Period,
the Executive and/or the Executive's family, as the case may be, shall be
eligible for participation in and shall receive all benefits under welfare
benefit plans, practices, policies and programs provided by the Company and
its affiliated companies (including, without limitation, medical,
prescription, dental, vision, disability, salary continuance, group life
and supplemental group life, accidental death and travel accident insurance
plans and programs) to the extent applicable generally to other executives
of the Company and its affiliated companies.
(v) Expenses. During the Employment Period, the Executive
shall be entitled to receive prompt reimbursement for all reasonable
expenses incurred by the Executive in accordance with the policies,
practices and procedures of the Company and its affiliated companies.
(vi) Vacation. During the Employment Period, the Executive
shall be entitled to paid vacation in accordance with the plans, policies,
programs and practices of the Company and its affiliated companies.
3. Termination of Employment. (a) Death or Disability. The
Executive's employment shall terminate automatically upon the Executive's
death during the Employment Period. If the Company determines in good
faith that the Disability of the Executive has occurred during the
Employment Period (pursuant to the definition of Disability set forth
below), it may give to the Executive written notice in accordance with
Section 11(b) of this Agreement of its intention to terminate the
Executive's employment. In such event, the Executive's employment with the
Company shall terminate effective on the 30th day after receipt of such
notice by the Executive (the "Disability Effective Date"), provided that,
within the 30 days after such receipt, the Executive shall not have
returned to full-time performance of the Executive's duties. For purposes
of this Agreement, "Disability" shall mean the absence of the Executive
from the Executive's duties with the Company on a full-time basis for 180
consecutive business days as a result of incapacity due to mental or
physical illness which is determined to be total and permanent by a
physician selected by the Company or its insurers and acceptable to the
Executive or the Executive's legal representative (such agreement as to
acceptability not to be withheld unreasonably).
(b) Cause. The Company may terminate the Executive's employment
during the Employment Period for Cause. For purposes of this Agreement,
"Cause" shall mean:
(i) chronic alcoholism or controlled substance abuse, as
determined by a doctor mutually acceptable to the Company
and the Executive, and continuing failure by the Executive
to commence and pursue with due diligence appropriate
treatment for same in accordance with such doctor's
recommendations;
(ii) a deliberate act of proven fraud on the part of the
Executive having a material adverse impact on the business
or consolidated financial condition or results of operations
of the Company and its subsidiaries;
(iii) a deliberate and continuing failure by the Executive to
comply with the applicable laws and regulations having a
material adverse impact on the business or consolidated
financial condition or results of operations of the Company
and its subsidiaries; or
(iv) conviction of the Executive of a criminal offense
constituting a felony.
(c) Good Reason; Window Period. The Executive's employment may
be terminated during the Employment Period by the Executive for Good Reason
or during a Window Period by the Executive without any reason. For
purposes of this Agreement, "Window Period" shall mean the period
commencing with the date of any Change of Control as defined in Section 9
of this Agreement and expiring 180 days immediately following any Change of
Control as defined in Section 9 of this Agreement. For purposes of this
Agreement, "Good Reason" shall mean
(i) the assignment to the Executive of any duties
materially inconsistent in any respect with the Executive's,
authority, duties or responsibilities as contemplated by Section 2 of
this Agreement, or any other action by the Company which results in a
diminution in such authority, duties or responsibilities (excluding
for this purpose an isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied by the Company promptly after
receipt of notice thereof given by the Executive);
(ii) any failure by the Company to comply with any of the
provisions of Section 2(b) of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and
which is remedied by the Company promptly after receipt of notice
thereof given by the Executive;
(iii) the Company's requiring the Executive to be based
at any office or location other than that described in
Section 2(a)(i)(B) hereof;
(iv) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by this
Agreement; or
(v) any failure by the Company to comply with and satisfy
Section 10 of this Agreement, provided that such successor has
received, at least ten days prior to the giving of Notice of
Termination by the Executive, written notice from the Company or the
Executive of the requirements of Section 10 of the Agreement.
For purposes of this Section 3(c), any good faith determination of "Good
Reason" made by the Executive shall be conclusive.
(d) Notice of Termination. Any termination by the Company for
Cause, or by the Executive for Good Reason or without any reason during a
Window Period, shall be communicated by Notice of Termination to the other
party hereto given in accordance with Section 11(b) of this Agreement. For
purposes of this Agreement, a "Notice of Termination" means a written
notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in
reasonable detail the facts and circumstances claimed to provide a basis
for termination of the Executive's employment under the provision so
indicated and (iii) if the Date of Termination (as defined below) is other
than the date of receipt of such notice, specifies the termination date
(which date shall be not more than fifteen days after the giving of such
notice). The failure by the Executive or the Company to set forth in the
Notice of Termination any fact or circumstance which contributes to a
showing of Good Reason or Cause shall not waive any right of the Executive
or the Company hereunder or preclude the Executive or the Company from
asserting such fact or circumstance in enforcing the Executive's or the
Company's right hereunder.
(e) Date of Termination. "Date of Termination" means (i) if the
Executive's employment is terminated by the Company for Cause, or by the
Executive during a Window Period or for Good Reason, the date of receipt of
the Notice of Termination or any later date specified therein, as the case
may be, (ii) if the Executive's employment is terminated by the Company
other than for Cause or Disability, the Date of Termination shall be the
date on which the Company notifies the Executive of such termination and
(iii) if the Executive's employment is terminated by reason of death or
Disability, the Date of Termination shall be the date of death of the
Executive or the Disability Effective Date, as the case may be.
4. Obligations of the Company upon Termination.
(a) Good Reason or during a Window Period; Other than for
Cause, Death or Disability. If, during the Employment Period, the Company
shall terminate the Executive's employment other than for Cause or
Disability or the Executive shall terminate employment either for Good
Reason or without any reason during a Window Period:
(i) the Company shall pay or provide to or in respect of the
Executive the aggregate of the following amounts and benefits:
A. in a lump sum in cash within 30 days after the Date of
Termination the sum of (1) the Executive's Annual Base Salary
through the Date of Termination to the extent not theretofore
paid, (2) the product of (x) the highest annual bonus paid or
accrued for the benefit of Executive during the three year period
preceding the Date of Termination and (y) a fraction, the
numerator of which is the number of days since the date of the
last bonus payment through the Date of Termination, and the
denominator of which is 365 and (3) any compensation previously
deferred or earned by the Executive (together with any accrued
interest or earnings thereon), any unreimbursed expenses and any
accrued vacation pay, in each case to the extent not theretofore
paid (the sum of the amounts described in clauses (1), (2) and
(3) shall be hereinafter referred to as the "Accrued
Obligation"); and
B. in a lump sum in cash within 30 days after the Date of
Termination the product of multiplying the factor of 3.75 times
the sum of the highest Annual Base Salary and the highest annual
bonus which has been payable to the Executive within the past
three years (including such salary and bonus paid by a previous
employer which is a direct subsidiary of the Company as of the
date of this Agreement) for one year's service.
(ii) for the remainder of the Employment Period, or such longer
period as any plan, program, practice or policy may provide, the
Company shall continue benefits to the Executive and/or the
Executive's family at least equal to those which would have been
provided to them in accordance with the plans, programs, practices and
policies described in Section 2(b)(iii) of this Agreement if the
Executive's employment had not been terminated in accordance with the
most favorable plans, practices, programs or policies of the Company
and its affiliated companies as in effect and applicable generally to
other executives and their families on the Effective Date or, if more
favorable to the Executive, as in effect generally at any time
thereafter with respect to other executives of the Company and its
affiliated companies and their families (such continuation of such
benefits for the applicable period herein set forth shall be
hereinafter referred to as "Welfare Benefit Continuation"). [For
purposes of determining eligibility of the Executive for retiree
benefits pursuant to such plans, practices, programs and policies and
for purposes of determining Vesting Service (as defined in the Reading
& Bates Pension Plan) under the Reading & Bates Pension Plan and the
Reading & Bates Benefits Replacement Plan, the Executive shall be
considered to have remained employed until the end of the Employment
Period and to have retired on the last day of such period.]
(b) Death or Disability.
If Executive's employment is terminated by reason of Executive's death
or Disability during the Employment Period such termination shall be
treated as a termination for Good Reason and the Company shall pay to
Executive, his estate or designated beneficiary (x) the lump sum amount and
the benefits set forth in Section 4(a) hereof plus (y) any death benefits
to which Executive is otherwise entitled pursuant to the terms of any
Welfare Benefit Plan described in Section 2(b)(iii) hereof.
(c) Cause; Other than for Good Reason. If the Executive's
employment shall be terminated for Cause during the Employment Period, this
Agreement shall terminate without further obligations to the Executive
other than for Accrued Obligations and the timely payment of reimbursement
of expenses incurred by Executive under Section 2(b)(v). If the Executive
terminates employment during the Employment Period, excluding a termination
either for Good Reason or without any reason during a Window Period, this
Agreement shall terminate without further obligations to the Executive,
other than for Accrued Obligations and the timely payment of reimbursement
of expenses incurred by Executive under Section 2(b)(v). In such case, all
Accrued Obligations and reimbursement of expenses shall be paid to the
Executive in a lump sum in cash within 30 days of the Date of Termination.
5. Non-exclusivity of Rights. Except as provided in Section 4
of this Agreement, nothing in this Agreement shall prevent or limit the
Executive's continuing or future participation in any plan, program, policy
or practice provided by the Company or any of its affiliated companies and
for which the Executive may qualify, nor shall anything herein limit or
otherwise affect such rights as the Executive may have under any contract
or agreement with the Company or any of its affiliated companies. Amounts
which are vested benefits or which the Executive is otherwise entitled to
receive under any plan, policy, practice or program of or any contract or
agreement with the Company or any of its affiliated companies at or
subsequent to the Date of Termination shall be payable in accordance with
such plan, policy, practice or program or contract or agreement except as
explicitly modified by this Agreement.
6. Full Settlement; Resolution of Disputes. (a) The Company's
obligation to make payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action which the
Company may have against the Executive or others. The Company agrees to
pay promptly as incurred, to the full extent permitted by law, all legal
fees and expenses which the Executive may reasonably incur as a result of
any contest (regardless of the outcome thereof) by the Company, the
Executive or others of the validity or enforceability of, or liability
under, any provision of this Agreement or any guarantee of performance
thereof (including as a result of any contest by the Executive about the
amount of any payment pursuant to this Agreement), plus in each case
interest on any delayed payment at the Applicable Federal Rate provided for
in Section 7872(f)(2)(A) of the Code.
(b) If there shall be any dispute between the Company and the
Executive concerning (i) in the event of any termination of the Executive's
employment by the Company, whether such termination was for Cause, or
(ii) in the event of any termination of employment by the Executive,
whether Good Reason existed or whether such termination occurred during a
Window Period, then, unless and until there is a final, nonappealable
judgment by a court of competent jurisdiction declaring that such
termination was for Cause or that the determination by the Executive of the
existence of Good Reason was not made in good faith or that the termination
by the Executive did not occur during a Window Period, the Company shall
pay all amounts, and provide all benefits, to the Executive and/or the
Executive's family or other beneficiaries, as the case may be, that the
Company would be required to pay or provide pursuant to Section 4(a) hereof
as though such termination were by the Company without Cause or by the
Executive with Good Reason or during a Window Period; provided, however,
that the Company shall not be required to pay any disputed amounts pursuant
to this paragraph except upon receipt of an undertaking by or on behalf of
the Executive to repay all such amounts to which the Executive is
ultimately adjudged by such court not to be entitled.
7. Certain Additional Payments by the Company. (a) Anything in
this Agreement to the contrary notwithstanding, in the event it shall be
determined that any payment or distribution by the Company to or for the
benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this
Section 7) (a "Payment") would be subject to the excise tax imposed by
Section 4999 of the Code or any interest or penalties are incurred by the
Executive with respect to such excise tax (such excise tax, together with
any such interest and penalties, are hereinafter collectively referred to
as the "Excise Tax"), then the Executive shall be entitled to receive an
additional payment (a "Gross-Up Payment") in an amount such that after
payment by the Executive of all taxes (including any interest or penalties
imposed with respect to such taxes), including, without limitation, any
income taxes (and any interest and penalties imposed with respect thereto)
and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.
(b) Subject to the provisions of Section 7(c), all
determinations required to be made under this Section 7, including whether
and when Gross-Up Payment is required and the amount of such Gross-Up
Payment and the assumptions to be utilized in arriving at such
determination, shall be made by Arthur Andersen & Co. (the "Accounting
Firm") which shall provide detailed supporting calculations both to the
Company and the Executive within 15 business days of the receipt of notice
from the Executive that there has been a Payment, or such earlier time as
is requested by the Company. In the event that the Accounting Firm is
serving as accountant or auditor for the individual, entity or group
effecting the Change of Control, the Executive shall appoint another
nationally recognized accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting Firm
shall be borne solely by the Company. Any Gross-Up Payment, as determined
pursuant to this Section 7, shall be paid by the Company to the Executive
within five days of the receipt of the Accounting Firm's determination. If
the Accounting Firm determines that no Excise Tax is payable by the
Executive, it shall furnish the Executive with a written opinion that
failure to report the Excise Tax on the Executive's applicable federal
income tax return would not result in the imposition of a negligence or
similar penalty. Any determination by the Accounting Firm shall be binding
upon the Company and the Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Company should have
been made ("Underpayment"), consistent with the calculations required to be
made hereunder. In the event that the Company exhausts its remedies
pursuant to Section 7(c) and the Executive thereafter is required to make a
payment of any Excise Tax, the Accounting Firm shall determine the amount
of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Executive.
(c) The Executive shall notify the Company in writing of any
claims by the Internal Revenue Service that, if successful, would require
the payment by the Company of the Gross-Up Payment. Such notification
shall be given as soon as practicable but no later than thirty days after
the Executive actually receives notice in writing of such claim and shall
apprise the Company of the nature of such claim and the date on which such
claim is requested to be paid. The Executive shall not pay such claim
prior to the expiration of the 30-day period following the date on which he
gives such notice to the Company (or such shorter period ending on the date
that any payment of taxes with respect to such claim is due). If the
Company notifies the Executive in writing prior to the expiration of such
period that it desires to contest such claim, the Executive shall:
(i) give the Company any information reasonably requested by the
Company relating to such claim,
(ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the
Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect thereto) imposed as a result
of such representation and payment of costs and expenses. Without
limitation on the foregoing provisions of this Section 7(c), the Company
shall control all proceedings taken in connection with such contest and, at
its sole option, may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect
of such claim and may, at its sole option, either direct the Executive to
pay the tax claimed and sue for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to
pay such claim and sue for a refund, the Company shall advance the amount
of such payment to the Executive, on an interest-free basis and shall
indemnify and hold the Executive harmless, on an after-tax basis, from any
Excise Tax or income tax (including interest or penalties with respect
thereto) imposed with respect to such advance or with respect to any
imputed income with respect to such advance; and further provided that any
extension of the statute of limitations relating to payment of taxes for
the taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder
and the Executive shall be entitled to settle or contest, as the case may
be, any other issue raised by the Internal Revenue Service or any other
taxing authority.
(d) If, after the receipt by the Executive of an amount advanced
by the Company pursuant to Section (c), the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall (subject
to the Company's complying with the requirements of Section 7(c)) promptly
pay to the Company the amount of such refund (together with any interest
paid or credited thereon after taxes applicable thereto). If, after the
receipt by the Executive of an amount advanced by the Company pursuant to
Section 7(c), a determination is made that the Executive shall not be
entitled to any refund with respect to such claim and the Company does not
notify the Executive in writing of its intent to contest such denial of
refund prior to the expiration of 30 days after such determination, then
such advance shall be forgiven and shall not be required to be repaid and
the amount of such advance shall offset, to the extent thereof, the amount
of Gross-Up Payment required to be paid.
8. Confidential Information. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to the Company or any
of its affiliated companies, and their respective businesses, which shall
have been obtained by the Executive during the Executive's employment by
the Company or any of its affiliated companies and which shall not be or
become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement). After
termination of the Executive's employment with the Company, the Executive
shall not, without the prior written consent of the Company or as may
otherwise be required by law or legal process, communicate or divulge any
such information, knowledge or data to anyone other than the Company and
those designated by it. In no event shall an asserted violation of the
provisions of this Section 8 constitute a basis for deferring or
withholding any amounts otherwise payable to the Executive under this
Agreement.
9. Change of Control. For the purpose of this Agreement, a
"Change of Control" shall be deemed to occur: (a) if any "Person", as
such term is used in Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") (other than (i) the Executive,
(ii) the Company or any of its subsidiaries or Affiliates (as that term is
defined in the Exchange Act), (iii) any Person subject, as of the date of
this Agreement or at any prior time, to the reporting or filing
requirements of Section 13(d) of the Exchange Act with respect to the
securities of the Company or any Affiliate, (iv) any trustee or other
fiduciary holding or owning securities under an employee benefit plan of
the Company, (v) any underwriter temporarily holding or owning securities
of the Company, or (vi) any corporation owned directly or indirectly by the
current stockholders of the Company in substantially the same proportion as
their then ownership of stock of the Company) becomes, after the date of
this Agreement, the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company
representing forty percent (40%) or more of the combined voting power of
the Company's then outstanding securities; or (b) if at any time a majority
of the members of the board of directors of the Company is comprised of
other than Continuing Directors (and for this purpose "Continuing
Directors" shall mean members of the board of directors of the Company who
were directors as of the date of this Agreement, or who were nominated by a
majority of the members of the board of directors of the Company and such
majority was comprised only of Continuing Directors at the time of such
nomination).
10. Successors. (a) This Agreement is personal to the Executive
and without the prior written consent of the Company shall not be
assignable by the Executive otherwise than by will or the laws of descent
and distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such
succession had taken place. As used in this Agreement, "Company" shall
mean the Company as hereinbefore defined and any successor to its business
and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise.
11. Miscellaneous. (a) This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas, without
reference to principles of conflict of laws. The captions of this
Agreement are not part of the provisions hereof and shall have no force or
effect. This Agreement may not be amended or modified otherwise than by a
written agreement executed by the parties hereto or their respective
successors and legal representatives.
(b) All notices and other communications hereunder shall be in
writing and shall be given if by the Executive to the Company by telecopy
or facsimile transmission at the telecommunications number set forth below
and if by either the Company or the Executive either by hand delivery to
the other party or by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Executive:
Mr. Leighton E. Moss
5000 Montrose Blvd. #15-A
Houston, Texas 77006
If to the Company:
901 Threadneedle, Suite 200
Houston, Texas 77079
Attention: Chief Executive Officer
Telecommunications Number: (281) 496-0285
or to such other address as either party shall have furnished to the other
in writing in accordance herewith. Notice and communications shall be
effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state or local taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon
strict compliance with any provision hereof or any other provision of this
Agreement or the failure to assert any right the Executive or the Company
may have hereunder, including, without limitation, the right of the
Executive to terminate employment for Good Reason pursuant to Section 3(c)
of this Agreement, shall not be deemed to be a waiver of such provision or
right or any other provision or right of this Agreement.
(f) This Agreement may be superseded by another written
agreement entered into between the Executive and Company on mutually
agreeable terms, provided such agreement expressly by its terms supersedes
this Agreement. However, an offer by the Company to enter into any such
agreement with the Executive shall not constitute an independent basis for
the Executive to terminate this Agreement for Good Reason.
IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization from its Board of
Directors, the Company has caused these presents to be executed in its name
on its behalf, all as of the day and year first above written.
____________________________________
Leighton E. Moss
R&B FALCON CORPORATION
By ____________________________________
Name: S. A. Webster
Title: President and Chief Executive
Officer
Exhibit 10.12
EMPLOYMENT AGREEMENT
This Agreement is entered into between R&B Falcon Corporation, a
Delaware corporation (the "Company"), and Charles R. Ofner (the
"Executive") on the 25th day of March, 1998.
The Company has determined that it is in its best interests and
those of its shareholders to assure that the Company will have the services
of the Executive and to provide the Executive with compensation and benefit
arrangements which are competitive with those of other corporations.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS;
1. Employment Period. The Company hereby agrees to employ the
Executive, and the Executive hereby agrees to be employed by the Company,
in accordance with the terms and provisions of this Agreement, for the
period commencing on the date hereof (the "the Effective Date") and ending
on the third anniversary of such date (the "Employment Period"). The
Employment Period shall be extended cumulatively, from time to time, one
year for each year following the Effective Date that Employee remains
employed by the Company or one of its direct or indirect subsidiaries.
2. Terms of Employment. (a) Position and Duties. (i) During
the Employment Period, (A) the Executive's position, authority, duties and
responsibilities shall be at least commensurate in all material respects
with and include status as Vice President of the Company, and (B) the
Executive's services shall be performed at the location where the Executive
was employed immediately preceding the Effective Date or any office of the
Company located in Houston, Texas which is the principal office of the
Company.
(ii) During the Employment Period, and excluding any periods
of vacation and sick leave to which the Executive is entitled, the
Executive agrees to devote substantially full attention and time during
normal business hours to the business and affairs of the Company and, to
the extent necessary to discharge the responsibilities assigned to the
Executive hereunder, to use the Executive's best efforts to perform
faithfully and efficiently such responsibilities. During the Employment
Period it shall not be a violation of this Agreement for the Executive to
(A) serve on corporate, civic or charitable boards or committees,
(B) deliver lectures, fulfill speaking engagements or teach at educational
institutions and (C) manage personal investments, so long as such
activities do not materially interfere with the performance of the
Executive's responsibilities as an employee of the Company in accordance
with this Agreement. It is expressly understood and agreed that to the
extent that any such activities have been conducted by the Executive prior
to the Effective Date under his prior employment with Reading & Bates
Corporation, the continued conduct of such activities (or the conduct of
activities similar in nature and scope thereto) subsequent to the Effective
Date shall not thereafter be deemed to interfere with the performance of
the Executive's responsibilities to the Company.
(b) Compensation. (i) Base Salary. During the Employment
Period, the Executive shall receive an annual base salary of not less than
$212,000 ("Annual Base Salary"), which shall be paid on a monthly basis.
During the Employment Period, the Annual Base Salary shall be reviewed at
least annually and shall be increased at any time and from time to time as
may be determined by the Board, based on the Executive's performance of his
position and responsibilities (to be measured in a fair and objective
manner). It may also be decreased by the Board as a part of Company wide
salary reduction program applicable to all executives and employees
generally as a result of financial losses experienced by the Company. Any
increase in Annual Base Salary shall not serve to limit or reduce any other
obligation to the Executive under this Agreement. Annual Base Salary shall
not be reduced after any such increase (except as provided in this Section
2(b)(i)), and the term Annual Base Salary as utilized in this Agreement
shall refer to Annual Base Salary as so increased or decreased. As used in
this Agreement, the term "affiliated companies" shall include any company
controlled by, controlling or under common control with the Company.
(iii) Incentive, Savings and Retirement Plans. During
the Employment Period, the Executive shall be entitled to participate in
all incentive, savings and retirement plans that are tax qualified under
Section 401(a) of the Internal Revenue Code of 1986, as amended ("Code"),
applicable generally to other executives of the Company and its affiliated
companies.
(iv) Welfare Benefit Plans. During the Employment Period,
the Executive and/or the Executive's family, as the case may be, shall be
eligible for participation in and shall receive all benefits under welfare
benefit plans, practices, policies and programs provided by the Company and
its affiliated companies (including, without limitation, medical,
prescription, dental, vision, disability, salary continuance, group life
and supplemental group life, accidental death and travel accident insurance
plans and programs) to the extent applicable generally to other executives
of the Company and its affiliated companies.
(v) Expenses. During the Employment Period, the Executive
shall be entitled to receive prompt reimbursement for all reasonable
expenses incurred by the Executive in accordance with the policies,
practices and procedures of the Company and its affiliated companies.
(vi) Vacation. During the Employment Period, the Executive
shall be entitled to paid vacation in accordance with the plans, policies,
programs and practices of the Company and its affiliated companies.
3. Termination of Employment. (a) Death or Disability. The
Executive's employment shall terminate automatically upon the Executive's
death during the Employment Period. If the Company determines in good
faith that the Disability of the Executive has occurred during the
Employment Period (pursuant to the definition of Disability set forth
below), it may give to the Executive written notice in accordance with
Section 11(b) of this Agreement of its intention to terminate the
Executive's employment. In such event, the Executive's employment with the
Company shall terminate effective on the 30th day after receipt of such
notice by the Executive (the "Disability Effective Date"), provided that,
within the 30 days after such receipt, the Executive shall not have
returned to full-time performance of the Executive's duties. For purposes
of this Agreement, "Disability" shall mean the absence of the Executive
from the Executive's duties with the Company on a full-time basis for 180
consecutive business days as a result of incapacity due to mental or
physical illness which is determined to be total and permanent by a
physician selected by the Company or its insurers and acceptable to the
Executive or the Executive's legal representative (such agreement as to
acceptability not to be withheld unreasonably).
(b) Cause. The Company may terminate the Executive's employment
during the Employment Period for Cause. For purposes of this Agreement,
"Cause" shall mean:
(i) chronic alcoholism or controlled substance abuse, as
determined by a doctor mutually acceptable to the Company
and the Executive, and continuing failure by the Executive
to commence and pursue with due diligence appropriate
treatment for same in accordance with such doctor's
recommendations;
(ii) a deliberate act of proven fraud on the part of the
Executive having a material adverse impact on the business
or consolidated financial condition or results of operations
of the Company and its subsidiaries;
(iii) a deliberate and continuing failure by the Executive to
comply with the applicable laws and regulations having a
material adverse impact on the business or consolidated
financial condition or results of operations of the Company
and its subsidiaries; or
(iv) conviction of the Executive of a criminal offense
constituting a felony.
(c) Good Reason; Window Period. The Executive's employment may
be terminated during the Employment Period by the Executive for Good Reason
or during a Window Period by the Executive without any reason. For
purposes of this Agreement, "Window Period" shall mean the period
commencing with the date of any Change of Control as defined in Section 9
of this Agreement and expiring 180 days immediately following any Change of
Control as defined in Section 9 of this Agreement. For purposes of this
Agreement, "Good Reason" shall mean
(i) the assignment to the Executive of any duties
materially inconsistent in any respect with the Executive's,
authority, duties or responsibilities as contemplated by Section 2 of
this Agreement, or any other action by the Company which results in a
diminution in such authority, duties or responsibilities (excluding
for this purpose an isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied by the Company promptly after
receipt of notice thereof given by the Executive);
(ii) any failure by the Company to comply with any of the
provisions of Section 2(b) of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and
which is remedied by the Company promptly after receipt of notice
thereof given by the Executive;
(iii) the Company's requiring the Executive to be based
at any office or location other than that described in
Section 2(a)(i)(B) hereof;
(iv) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by this
Agreement; or
(v) any failure by the Company to comply with and satisfy
Section 10 of this Agreement, provided that such successor has
received, at least ten days prior to the giving of Notice of
Termination by the Executive, written notice from the Company or the
Executive of the requirements of Section 10 of the Agreement.
For purposes of this Section 3(c), any good faith determination of "Good
Reason" made by the Executive shall be conclusive.
(d) Notice of Termination. Any termination by the Company for
Cause, or by the Executive for Good Reason or without any reason during a
Window Period, shall be communicated by Notice of Termination to the other
party hereto given in accordance with Section 11(b) of this Agreement. For
purposes of this Agreement, a "Notice of Termination" means a written
notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in
reasonable detail the facts and circumstances claimed to provide a basis
for termination of the Executive's employment under the provision so
indicated and (iii) if the Date of Termination (as defined below) is other
than the date of receipt of such notice, specifies the termination date
(which date shall be not more than fifteen days after the giving of such
notice). The failure by the Executive or the Company to set forth in the
Notice of Termination any fact or circumstance which contributes to a
showing of Good Reason or Cause shall not waive any right of the Executive
or the Company hereunder or preclude the Executive or the Company from
asserting such fact or circumstance in enforcing the Executive's or the
Company's right hereunder.
(e) Date of Termination. "Date of Termination" means (i) if the
Executive's employment is terminated by the Company for Cause, or by the
Executive during a Window Period or for Good Reason, the date of receipt of
the Notice of Termination or any later date specified therein, as the case
may be, (ii) if the Executive's employment is terminated by the Company
other than for Cause or Disability, the Date of Termination shall be the
date on which the Company notifies the Executive of such termination and
(iii) if the Executive's employment is terminated by reason of death or
Disability, the Date of Termination shall be the date of death of the
Executive or the Disability Effective Date, as the case may be.
4. Obligations of the Company upon Termination.
(a) Good Reason or during a Window Period; Other than for
Cause, Death or Disability. If, during the Employment Period, the Company
shall terminate the Executive's employment other than for Cause or
Disability or the Executive shall terminate employment either for Good
Reason or without any reason during a Window Period:
(i) the Company shall pay or provide to or in respect of the
Executive the aggregate of the following amounts and benefits:
A. in a lump sum in cash within 30 days after the Date of
Termination the sum of (1) the Executive's Annual Base Salary
through the Date of Termination to the extent not theretofore
paid, (2) the product of (x) the highest annual bonus paid or
accrued for the benefit of Executive during the three year period
preceding the Date of Termination and (y) a fraction, the
numerator of which is the number of days since the date of the
last bonus payment through the Date of Termination, and the
denominator of which is 365 and (3) any compensation previously
deferred or earned by the Executive (together with any accrued
interest or earnings thereon), any unreimbursed expenses and any
accrued vacation pay, in each case to the extent not theretofore
paid (the sum of the amounts described in clauses (1), (2) and
(3) shall be hereinafter referred to as the "Accrued
Obligation"); and
B. in a lump sum in cash within 30 days after the Date of
Termination the product of multiplying the factor of 3.75 times
the sum of the highest Annual Base Salary and the highest annual
bonus which has been payable to the Executive within the past
three years (including such salary and bonus paid by a previous
employer which is a direct subsidiary of the Company as of the
date of this Agreement) for one year's service.
(ii) for the remainder of the Employment Period, or such longer
period as any plan, program, practice or policy may provide, the
Company shall continue benefits to the Executive and/or the
Executive's family at least equal to those which would have been
provided to them in accordance with the plans, programs, practices and
policies described in Section 2(b)(iii) of this Agreement if the
Executive's employment had not been terminated in accordance with the
most favorable plans, practices, programs or policies of the Company
and its affiliated companies as in effect and applicable generally to
other executives and their families on the Effective Date or, if more
favorable to the Executive, as in effect generally at any time
thereafter with respect to other executives of the Company and its
affiliated companies and their families (such continuation of such
benefits for the applicable period herein set forth shall be
hereinafter referred to as "Welfare Benefit Continuation"). [For
purposes of determining eligibility of the Executive for retiree
benefits pursuant to such plans, practices, programs and policies and
for purposes of determining Vesting Service (as defined in the Reading
& Bates Pension Plan) under the Reading & Bates Pension Plan and the
Reading & Bates Benefits Replacement Plan, the Executive shall be
considered to have remained employed until the end of the Employment
Period and to have retired on the last day of such period.]
(b) Death or Disability.
If Executive's employment is terminated by reason of Executive's death
or Disability during the Employment Period such termination shall be
treated as a termination for Good Reason and the Company shall pay to
Executive, his estate or designated beneficiary (x) the lump sum amount and
the benefits set forth in Section 4(a) hereof plus (y) any death benefits
to which Executive is otherwise entitled pursuant to the terms of any
Welfare Benefit Plan described in Section 2(b)(iii) hereof.
(c) Cause; Other than for Good Reason. If the Executive's
employment shall be terminated for Cause during the Employment Period, this
Agreement shall terminate without further obligations to the Executive
other than for Accrued Obligations and the timely payment of reimbursement
of expenses incurred by Executive under Section 2(b)(v). If the Executive
terminates employment during the Employment Period, excluding a termination
either for Good Reason or without any reason during a Window Period, this
Agreement shall terminate without further obligations to the Executive,
other than for Accrued Obligations and the timely payment of reimbursement
of expenses incurred by Executive under Section 2(b)(v). In such case, all
Accrued Obligations and reimbursement of expenses shall be paid to the
Executive in a lump sum in cash within 30 days of the Date of Termination.
5. Non-exclusivity of Rights. Except as provided in Section 4
of this Agreement, nothing in this Agreement shall prevent or limit the
Executive's continuing or future participation in any plan, program, policy
or practice provided by the Company or any of its affiliated companies and
for which the Executive may qualify, nor shall anything herein limit or
otherwise affect such rights as the Executive may have under any contract
or agreement with the Company or any of its affiliated companies. Amounts
which are vested benefits or which the Executive is otherwise entitled to
receive under any plan, policy, practice or program of or any contract or
agreement with the Company or any of its affiliated companies at or
subsequent to the Date of Termination shall be payable in accordance with
such plan, policy, practice or program or contract or agreement except as
explicitly modified by this Agreement.
6. Full Settlement; Resolution of Disputes. (a) The Company's
obligation to make payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action which the
Company may have against the Executive or others. The Company agrees to
pay promptly as incurred, to the full extent permitted by law, all legal
fees and expenses which the Executive may reasonably incur as a result of
any contest (regardless of the outcome thereof) by the Company, the
Executive or others of the validity or enforceability of, or liability
under, any provision of this Agreement or any guarantee of performance
thereof (including as a result of any contest by the Executive about the
amount of any payment pursuant to this Agreement), plus in each case
interest on any delayed payment at the Applicable Federal Rate provided for
in Section 7872(f)(2)(A) of the Code.
(b) If there shall be any dispute between the Company and the
Executive concerning (i) in the event of any termination of the Executive's
employment by the Company, whether such termination was for Cause, or
(ii) in the event of any termination of employment by the Executive,
whether Good Reason existed or whether such termination occurred during a
Window Period, then, unless and until there is a final, nonappealable
judgment by a court of competent jurisdiction declaring that such
termination was for Cause or that the determination by the Executive of the
existence of Good Reason was not made in good faith or that the termination
by the Executive did not occur during a Window Period, the Company shall
pay all amounts, and provide all benefits, to the Executive and/or the
Executive's family or other beneficiaries, as the case may be, that the
Company would be required to pay or provide pursuant to Section 4(a) hereof
as though such termination were by the Company without Cause or by the
Executive with Good Reason or during a Window Period; provided, however,
that the Company shall not be required to pay any disputed amounts pursuant
to this paragraph except upon receipt of an undertaking by or on behalf of
the Executive to repay all such amounts to which the Executive is
ultimately adjudged by such court not to be entitled.
7. Certain Additional Payments by the Company. (a) Anything in
this Agreement to the contrary notwithstanding, in the event it shall be
determined that any payment or distribution by the Company to or for the
benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this
Section 7) (a "Payment") would be subject to the excise tax imposed by
Section 4999 of the Code or any interest or penalties are incurred by the
Executive with respect to such excise tax (such excise tax, together with
any such interest and penalties, are hereinafter collectively referred to
as the "Excise Tax"), then the Executive shall be entitled to receive an
additional payment (a "Gross-Up Payment") in an amount such that after
payment by the Executive of all taxes (including any interest or penalties
imposed with respect to such taxes), including, without limitation, any
income taxes (and any interest and penalties imposed with respect thereto)
and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.
(b) Subject to the provisions of Section 7(c), all
determinations required to be made under this Section 7, including whether
and when Gross-Up Payment is required and the amount of such Gross-Up
Payment and the assumptions to be utilized in arriving at such
determination, shall be made by Arthur Andersen & Co. (the "Accounting
Firm") which shall provide detailed supporting calculations both to the
Company and the Executive within 15 business days of the receipt of notice
from the Executive that there has been a Payment, or such earlier time as
is requested by the Company. In the event that the Accounting Firm is
serving as accountant or auditor for the individual, entity or group
effecting the Change of Control, the Executive shall appoint another
nationally recognized accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting Firm
shall be borne solely by the Company. Any Gross-Up Payment, as determined
pursuant to this Section 7, shall be paid by the Company to the Executive
within five days of the receipt of the Accounting Firm's determination. If
the Accounting Firm determines that no Excise Tax is payable by the
Executive, it shall furnish the Executive with a written opinion that
failure to report the Excise Tax on the Executive's applicable federal
income tax return would not result in the imposition of a negligence or
similar penalty. Any determination by the Accounting Firm shall be binding
upon the Company and the Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Company should have
been made ("Underpayment"), consistent with the calculations required to be
made hereunder. In the event that the Company exhausts its remedies
pursuant to Section 7(c) and the Executive thereafter is required to make a
payment of any Excise Tax, the Accounting Firm shall determine the amount
of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Executive.
(c) The Executive shall notify the Company in writing of any
claims by the Internal Revenue Service that, if successful, would require
the payment by the Company of the Gross-Up Payment. Such notification
shall be given as soon as practicable but no later than thirty days after
the Executive actually receives notice in writing of such claim and shall
apprise the Company of the nature of such claim and the date on which such
claim is requested to be paid. The Executive shall not pay such claim
prior to the expiration of the 30-day period following the date on which he
gives such notice to the Company (or such shorter period ending on the date
that any payment of taxes with respect to such claim is due). If the
Company notifies the Executive in writing prior to the expiration of such
period that it desires to contest such claim, the Executive shall:
(i) give the Company any information reasonably requested by the
Company relating to such claim,
(ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the
Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect thereto) imposed as a result
of such representation and payment of costs and expenses. Without
limitation on the foregoing provisions of this Section 7(c), the Company
shall control all proceedings taken in connection with such contest and, at
its sole option, may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect
of such claim and may, at its sole option, either direct the Executive to
pay the tax claimed and sue for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to
pay such claim and sue for a refund, the Company shall advance the amount
of such payment to the Executive, on an interest-free basis and shall
indemnify and hold the Executive harmless, on an after-tax basis, from any
Excise Tax or income tax (including interest or penalties with respect
thereto) imposed with respect to such advance or with respect to any
imputed income with respect to such advance; and further provided that any
extension of the statute of limitations relating to payment of taxes for
the taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder
and the Executive shall be entitled to settle or contest, as the case may
be, any other issue raised by the Internal Revenue Service or any other
taxing authority.
(d) If, after the receipt by the Executive of an amount advanced
by the Company pursuant to Section (c), the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall (subject
to the Company's complying with the requirements of Section 7(c)) promptly
pay to the Company the amount of such refund (together with any interest
paid or credited thereon after taxes applicable thereto). If, after the
receipt by the Executive of an amount advanced by the Company pursuant to
Section 7(c), a determination is made that the Executive shall not be
entitled to any refund with respect to such claim and the Company does not
notify the Executive in writing of its intent to contest such denial of
refund prior to the expiration of 30 days after such determination, then
such advance shall be forgiven and shall not be required to be repaid and
the amount of such advance shall offset, to the extent thereof, the amount
of Gross-Up Payment required to be paid.
8. Confidential Information. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to the Company or any
of its affiliated companies, and their respective businesses, which shall
have been obtained by the Executive during the Executive's employment by
the Company or any of its affiliated companies and which shall not be or
become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement). After
termination of the Executive's employment with the Company, the Executive
shall not, without the prior written consent of the Company or as may
otherwise be required by law or legal process, communicate or divulge any
such information, knowledge or data to anyone other than the Company and
those designated by it. In no event shall an asserted violation of the
provisions of this Section 8 constitute a basis for deferring or
withholding any amounts otherwise payable to the Executive under this
Agreement.
9. Change of Control. For the purpose of this Agreement, a
"Change of Control" shall be deemed to occur: (a) if any "Person", as
such term is used in Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") (other than (i) the Executive,
(ii) the Company or any of its subsidiaries or Affiliates (as that term is
defined in the Exchange Act), (iii) any Person subject, as of the date of
this Agreement or at any prior time, to the reporting or filing
requirements of Section 13(d) of the Exchange Act with respect to the
securities of the Company or any Affiliate, (iv) any trustee or other
fiduciary holding or owning securities under an employee benefit plan of
the Company, (v) any underwriter temporarily holding or owning securities
of the Company, or (vi) any corporation owned directly or indirectly by the
current stockholders of the Company in substantially the same proportion as
their then ownership of stock of the Company) becomes, after the date of
this Agreement, the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company
representing forty percent (40%) or more of the combined voting power of
the Company's then outstanding securities; or (b) if at any time a majority
of the members of the board of directors of the Company is comprised of
other than Continuing Directors (and for this purpose "Continuing
Directors" shall mean members of the board of directors of the Company who
were directors as of the date of this Agreement, or who were nominated by a
majority of the members of the board of directors of the Company and such
majority was comprised only of Continuing Directors at the time of such
nomination).
10. Successors. (a) This Agreement is personal to the Executive
and without the prior written consent of the Company shall not be
assignable by the Executive otherwise than by will or the laws of descent
and distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such
succession had taken place. As used in this Agreement, "Company" shall
mean the Company as hereinbefore defined and any successor to its business
and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise.
11. Miscellaneous. (a) This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas, without
reference to principles of conflict of laws. The captions of this
Agreement are not part of the provisions hereof and shall have no force or
effect. This Agreement may not be amended or modified otherwise than by a
written agreement executed by the parties hereto or their respective
successors and legal representatives.
(b) All notices and other communications hereunder shall be in
writing and shall be given if by the Executive to the Company by telecopy
or facsimile transmission at the telecommunications number set forth below
and if by either the Company or the Executive either by hand delivery to
the other party or by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Executive:
Mr. Charles R. Ofner
2187 Troon Road
Houston, Texas 77019
If to the Company:
901 Threadneedle, Suite 200
Houston, Texas 77079
Attention: Chief Executive Officer
Telecommunications Number: (281) 496-0285
or to such other address as either party shall have furnished to the other
in writing in accordance herewith. Notice and communications shall be
effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state or local taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon
strict compliance with any provision hereof or any other provision of this
Agreement or the failure to assert any right the Executive or the Company
may have hereunder, including, without limitation, the right of the
Executive to terminate employment for Good Reason pursuant to Section 3(c)
of this Agreement, shall not be deemed to be a waiver of such provision or
right or any other provision or right of this Agreement.
(f) This Agreement may be superseded by another written
agreement entered into between the Executive and Company on mutually
agreeable terms, provided such agreement expressly by its terms supersedes
this Agreement. However, an offer by the Company to enter into any such
agreement with the Executive shall not constitute an independent basis for
the Executive to terminate this Agreement for Good Reason.
IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization from its Board of
Directors, the Company has caused these presents to be executed in its name
on its behalf, all as of the day and year first above written.
____________________________________
Charles R. Ofner
R&B FALCON CORPORATION
By _________________________________
Name: S. A. Webster
Title: President and Chief Executive
Officer
Exhibit 10.13
===========================================================================
CREDIT AGREEMENT
Dated as of November 10, 1997
among
DEEPWATER DRILLING II L.L.C.,
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Administrative Agent,
NATIONAL WESTMINSTER BANK PLC, NEW YORK BRANCH,
as Documentation Agent
and
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
Arranged By
BANCAMERICA ROBERTSON STEPHENS
and
NATWEST MARKETS
============================================================================
TABLE OF CONTENTS
ARTICLE I DEFINITIONS
ARTICLE II THE CREDITS
2.01 Amounts and Terms of Commitments
2.02 Loan Accounts
2.03 Procedure for Borrowing
2.04 Conversion and Continuation Elections
2.05 Voluntary Termination or Reduction of Commitments
2.06 Optional Prepayments
2.07 Repayment; Mandatory Prepayment and Commitment Termination.
2.08 Interest
2.09 Fees
2.10 Computation of Fees and Interest
2.11 Payments by the Company
2.12 Payments by the Banks to the Administrative Agent
2.13 Sharing of Payments, Etc.
2.14 Guaranty
ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY
3.01 Taxes
3.02 Illegality
3.03 Increased Costs and Reduction of Return
3.04 Funding Losses
3.05 Inability to Determine Rates
3.06 Reserves on Offshore Rate Loans
3.07 Certificates of Banks
3.08 Substitution of Banks
3.09 Survival
ARTICLE IV CONDITIONS PRECEDENT
4.01 Conditions of Initial Loans
4.02 Conditions to All Borrowings
ARTICLE V REPRESENTATIONS AND WARRANTIES
5.01 Corporate Existence and Power
5.02 Corporate Authorization; No Contravention
5.03 Governmental Authorization
5.04 Binding Effect
5.05 Litigation
5.06 No Default
5.07 ERISA
5.08 Use of Proceeds; Margin Regulations
5.09 Title to Properties
5.10 Tax Status; Taxes
5.11 Financial Condition
5.12 Environmental Matters
5.13 Regulated Entities
5.14 No Burdensome Restrictions
5.15 Copyrights, Patents, Trademarks and Licenses, Etc.
5.16 Subsidiaries
5.17 Insurance
5.18 Solvency
5.19 Full Disclosure
ARTICLE VI AFFIRMATIVE COVENANTS
6.01 Financial Statements
6.02 Certificates; Other Information
6.03 Notices
6.04 Preservation of Existence, Etc.
6.05 Maintenance of Property
6.06 Insurance
6.07 Payment of Obligations
6.08 Compliance with Laws
6.09 ERISA
6.10 Inspection of Property and Books and Records
6.11 Environmental Laws
6.12 Use of Proceeds
6.13 Covenants Regarding R&B Subsidiary Guarantors
6.14 Further Assurances
ARTICLE VII NEGATIVE COVENANTS
7.01 Limitation on Liens
7.02 Disposition of Assets
7.03 Consolidations and Mergers
7.04 Loans and Investments
7.05 Limitation on Indebtedness
7.06 Transactions with Affiliates
7.07 Margin Stock, Etc.
7.08 Contingent Obligations
7.09 Joint Ventures
7.10 Restricted Payments
7.11 Change in Business
7.12 Accounting Changes
ARTICLE VIII EVENTS OF DEFAULT
8.01 Events of Default
8.02 Remedies
8.03 Rights Not Exclusive
ARTICLE IX THE AGENT
9.01 Appointment and Authorization; "Administrative Agent"
9.02 Delegation of Duties
9.03 Liability of Agent-Related Persons
9.04 Reliance by Administrative Agent
9.05 Notice of Default
9.06 Credit Decision
9.07 Indemnification of Agent-Related Persons
9.08 Agents in Individual Capacity
9.09 Successor Agent
9.10 Withholding Tax
9.11 Documentation Agent; Arrangers
ARTICLE X MISCELLANEOUS
10.01 Amendments and Waivers
10.02 Notices
10.03 No Waiver; Cumulative Remedies
10.04 Costs and Expenses
10.05 Company Indemnification
10.06 Marshalling; Payments Set Aside
10.07 Successors and Assigns
10.08 Assignments, Participations, Etc.
10.09 Confidentiality
10.10 Set-off
10.11 Interest
10.12 Notification of Addresses, Lending Offices, Etc.
10.13 Counterparts
10.14 Severability
10.15 No Third Parties Benefited
10.16 Governing Law and Jurisdiction
10.17 Waiver of Jury Trial
10.18 Entire Agreement
SCHEDULES
Schedule 1.01 Definitions
Schedule 2.01 Commitments
Schedule 5.16 Subsidiaries and Minority Interests
Schedule 7.01 Permitted Liens
Schedule 7.05 Permitted Indebtedness
Schedule 10.02 Lending Offices; Addresses for Notices
EXHIBITS
Exhibit A Form of Notice of Borrowing
Exhibit B Form of Notice of Conversion/Continuation
Exhibit C Form of Compliance Certificate
Exhibit D [Intentionally Left Blank]
Exhibit E Form of Assignment and Acceptance
Exhibit F Form of Promissory Note
Exhibit G-1 Form of Guaranty (Conoco)
Exhibit G-2 Form of Guaranty (R&B)
===========================================================================
CREDIT AGREEMENT
This CREDIT AGREEMENT is entered into as of November 10, 1997, among
DEEPWATER DRILLING II L.L.C., a Delaware limited liability company (the
"Company"), the several financial institutions from time to time party to
this Agreement (collectively, the "Banks"; individually, a "Bank"), Bank of
America National Trust and Savings Association, as administrative agent for
the Banks (the "Administrative Agent"), and National Westminster Bank Plc,
as documentation agent for the Banks (the "Documentation Agent", and,
together with the Administrative Agent, the "Agents").
WHEREAS, the Banks have agreed to make available to the Company a
revolving credit facility upon the terms and conditions set forth in this
Agreement;
NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
Capitalized terms shall have the meanings set forth in Schedule 1.01
attached hereto.
ARTICLE II
THE CREDITS
2.01 Amounts and Terms of Commitments. Each Bank severally agrees, on
the terms and conditions set forth herein, to make loans to the Company
(each such loan, a "Revolving Loan" or a "Loan") from time to time on any
Business Day during the period from the Closing Date to the Revolving
Termination Date, in an aggregate amount not to exceed at any time
outstanding the amount set forth on Schedule 2.01 (such amount, as the same
may be reduced under Section 2.05 or as a result of one or more assignments
under Section 10.08, the Bank's "Commitment"); provided, however, that,
after giving effect to any Borrowing, the aggregate principal amount of all
outstanding Loans shall not at any time exceed the combined Commitments.
Within the limits of each Bank's Commitment, and subject to the other terms
and conditions hereof, the Company may borrow under this Section 2.01,
prepay under Section 2.06 and reborrow under this Section 2.01.
2.02 Loan Accounts. (a) The Loans made by each Bank shall be
evidenced by one or more loan accounts or records maintained by such Bank
in the ordinary course of business. The loan accounts or records
maintained by the Administrative Agent and each Bank shall be conclusive
absent manifest error of the amount of the Loans made by the Banks to the
Company and the interest and payments thereon. Any failure to so record or
any error in doing so shall not, however, limit or otherwise affect the
obligation of the Company hereunder to pay any amount owing with respect to
the Loans.
(b) Upon the request of any Bank made through the Administrative
Agent, the Loans made by such Bank may be evidenced by one or more Notes,
instead of or in addition to loan accounts. Each such Bank shall endorse
on the schedules annexed to its Note(s) the date, amount and maturity of
each Loan made by it and the amount of each payment of principal made by
the Company with respect thereto. Each such Bank is irrevocably authorized
by the Company to endorse its Note(s) and each Bank's record shall be
conclusive absent manifest error; provided, however, that the failure of a
Bank to make, or a Bank's error in making, a notation thereon with respect
to any Loan shall not limit or otherwise affect the obligations of the
Company hereunder or under any such Note to such Bank.
2.03 Procedure for Borrowing. (a) Each Borrowing shall be made upon
the Company's irrevocable written notice delivered to the Administrative
Agent in the form of a Notice of Borrowing (which notice must be received
by the Administrative Agent prior to 11:00 a.m. (Houston time) (i) three
(3) Business Days prior to the requested Borrowing Date, in the case of
Offshore Rate Loans; and (ii) one (1) Business Day prior to the requested
Borrowing Date, in the case of Base Rate Loans), specifying: (A) the
amount of the Borrowing, which shall be in an aggregate minimum amount of
$5,000,000 or any multiple of $1,000,000 in excess thereof; (B) the
requested Borrowing Date, which shall be a Business Day; (C) the Type of
Loans comprising the Borrowing; and (D) the duration of the Interest Period
applicable to such Loans included in such notice. If the Notice of
Borrowing fails to specify the duration of the Interest Period for any
Borrowing comprised of Offshore Rate Loans, such Interest Period shall be
three months.
(b) The Administrative Agent will promptly notify each Bank of
its receipt of any Notice of Borrowing and of the amount of such Bank's Pro
Rata Share of that Borrowing.
(c) Each Bank will make the amount of its Pro Rata Share of each
Borrowing available to the Administrative Agent for the account of the
Company at the Administrative Agent's Payment Office by 1:00 p.m. (Houston
time) on the Borrowing Date requested by the Company in funds immediately
available to the Administrative Agent. The proceeds of all such Loans will
then be made available to the Company by the Administrative Agent by wire
transfer in accordance with written instructions provided to the
Administrative Agent by the Company of like funds as received by the
Administrative Agent.
(d) After giving effect to any Borrowing, unless the
Administrative Agent shall otherwise consent, there may not be more than
ten (10) different Interest Periods in effect.
2.04 Conversion and Continuation Elections. (a) The Company may,
upon irrevocable written notice to the Administrative Agent in accordance
with subsection 2.04(b): (i) elect, as of any Business Day, in the case of
Base Rate Loans, or as of the last day of the applicable Interest Period,
in the case of any other Type of Loans, to convert any such Loans (or any
part thereof in an amount not less than $5,000,000, or that is in an
integral multiple of $1,000,000 in excess thereof) into Loans of any other
Type; or (ii) elect, as of the last day of the applicable Interest Period,
to continue any Loans having Interest Periods expiring on such day (or any
part thereof in an amount not less than $5,000,000, or that is in an
integral multiple of $1,000,000 in excess thereof); provided, that, if at
any time the aggregate amount of Offshore Rate Loans in respect of any
Borrowing is reduced, by payment, prepayment, or conversion of part thereof
to be less than $5,000,000, such Offshore Rate Loans shall automatically
convert into Base Rate Loans, and on and after such date the right of the
Company to continue such Loans as, and convert such Loans into, Offshore
Rate Loans shall terminate.
(b) The Company shall deliver a Notice of
Conversion/Continuation to be received by the Administrative Agent not
later than 11:00 a.m. (Houston time) at least (i) three (3) Business Days
in advance of the Conversion/Continuation Date, if the Loans are to be
converted into or continued as Offshore Rate Loans; and (ii) one (1)
Business Day in advance of the Conversion/Continuation Date, if the Loans
are to be converted into Base Rate Loans, specifying: (A) the proposed
Conversion/Continuation Date; (B) the aggregate amount of Loans to be
converted or continued; (C) the Type of Loans resulting from the proposed
conversion or continuation; and (D) other than in the case of conversions
into Base Rate Loans, the duration of the requested Interest Period.
(c) If, upon the expiration of any Interest Period applicable to
Offshore Rate Loans, the Company has failed to select timely a new Interest
Period to be applicable to such Offshore Rate Loans, or, if any Default or
Event of Default then exists, the Company shall be deemed to have elected
to convert such Offshore Rate Loans into Base Rate Loans effective as of
the expiration date of such Interest Period.
(d) The Administrative Agent will promptly notify each Bank of
its receipt of a Notice of Conversion/Continuation, or, if no timely notice
is provided by the Company, the Administrative Agent will promptly notify
each Bank of the details of any automatic conversion. All conversions and
continuations shall be made ratably according to the respective outstanding
principal amounts of the Loans, with respect to which the notice was given,
held by each Bank.
(e) Unless the Majority Banks otherwise consent, during the
existence of a Default or Event of Default, the Company may not elect to
have a Loan converted into or continued as an Offshore Rate Loan.
(f) After giving effect to any conversion or continuation of
Loans, unless the Administrative Agent shall otherwise consent, there may
not be more than ten (10) different Interest Periods in effect.
2.05 Voluntary Termination or Reduction of Commitments. The Company
may, upon not less than five (5) Business Days' prior notice to the
Administrative Agent, terminate the Commitments, or permanently reduce the
Commitments by an aggregate minimum amount of $5,000,000, or any integral
multiple of $1,000,000 in excess thereof; unless, after giving effect
thereto and to any prepayments of Loans made on the effective date thereof,
the then-outstanding principal amount of the Loans would exceed the amount
of the combined Commitments then in effect. Once reduced in accordance
with this Section, the Commitments may not be increased. Any reduction of
the Commitments shall be applied to each Bank according to its Pro Rata
Share. All accrued commitment fees to, but not including, the effective
date of any reduction or termination of Commitments shall be paid on the
effective date of such reduction or termination.
2.06 Optional Prepayments. Subject to Section 3.04, the Company may,
at any time or from time to time, upon not less than five (5) Business
Days' irrevocable notice to the Administrative Agent, ratably prepay Loans
in whole or in part, in minimum amounts of $5,000,000, or any integral
multiple of $1,000,000 in excess thereof. Such notice of prepayment shall
specify the date and amount of such prepayment and the Type(s) of Loans to
be prepaid. The Administrative Agent will promptly notify each Bank of its
receipt of any such notice, and of such Bank's Pro Rata Share of such
prepayment. If such notice is given by the Company, the Company shall make
such prepayment and the payment amount specified in such notice shall be
due and payable on the date specified therein, together with accrued
interest to each such date on the amount prepaid and any amounts required
pursuant to Section 3.04.
2.07 Repayment; Mandatory Prepayment and Commitment Termination. (a)
The Company shall repay to the Banks on the Revolving Termination Date the
aggregate principal amount of Loans outstanding on such date.
(b) If a Change of Control Trigger Event (Conoco) shall occur,
then on the thirtieth (30th) day after such occurrence, unless otherwise
agreed in writing by all Banks prior to such thirtieth (30th) day, (a) the
Commitment of each Bank shall automatically terminate, and (b) the Company
shall, without notice or demand, repay the unpaid principal amount of all
Loans.
2.08 Interest. (a) Each Loan shall bear interest on the outstanding
principal amount thereof from the applicable Borrowing Date at a rate per
annum equal to the Offshore Rate or the Base Rate, as the case may be (and
subject to the Company's right to convert to other Types of Loans under
Section 2.04), plus the Applicable Margin.
(b) Interest on each Loan shall be paid in arrears on each
Interest Payment Date. Interest shall also be paid on the date of any
prepayment of Loans under Section 2.06 for the portion of the Loans so
prepaid and upon payment (including prepayment) in full thereof and, during
the existence of any Event of Default, interest shall be paid on demand of
the Administrative Agent at the request or with the consent of the Majority
Banks.
(c) Notwithstanding subsection (a) of this Section, while any
Event of Default exists or after acceleration, the Company shall pay
interest (after as well as before entry of judgment thereon to the extent
permitted by law) on the principal amount of all outstanding Loans and
other Obligations, at a rate per annum which is determined by adding 2% per
annum to the Applicable Margin then in effect for such Loans and, in the
case of Obligations not subject to an Applicable Margin, at a rate per
annum equal to the Base Rate plus 2%; provided, however, that, on and after
the expiration of any Interest Period applicable to any Offshore Rate Loan
outstanding on the date of occurrence of such Event of Default or
acceleration, the principal amount of such Loan shall, during the
continuation of such Event of Default or after acceleration, bear interest
at a rate per annum equal to the Base Rate plus 2%.
(d) Anything herein to the contrary notwithstanding, the
obligations of the Company to any Bank under this Section 2.08 shall be
subject to the limitation that payments of interest shall not be required
for any period for which interest is computed hereunder, to the extent (but
only to the extent) that contracting for or receiving such payment by such
Bank would be contrary to the provisions of any law applicable to such Bank
limiting the highest rate of interest that may be lawfully contracted for,
charged or received by such Bank, and in such event the Company shall pay
such Bank interest at the highest rate permitted by applicable law.
2.09 Fees. (a) Arrangement, Agency Fees. The Company shall pay an
arrangement fee to the Arrangers for the Arrangers' own account, and shall
pay an agency fee to the Administrative Agent for the Administrative
Agent's own account, as required by the fee letter agreement (herein called
the "Fee Letter") executed by the Company dated November 5, 1997.
(b) Commitment Fees. The Company shall pay to the
Administrative Agent for the account of each Bank a commitment fee on the
average daily unused portion of such Bank's Commitment, computed on a
quarterly basis in arrears on the last Business Day of each calendar
quarter based upon the daily utilization for that quarter as calculated by
the Administrative Agent, equal to one-tenth of one percent (0.10%) percent
per annum. Such commitment fee shall accrue from the date which is the
earlier of (x) November 14, 1997, or (y) the date of the Initial Borrowing
Date, through the Revolving Termination Date, and shall be due and payable
quarterly in arrears on the last Business Day of each quarter commencing on
December 31, 1997, through the Revolving Termination Date, with the final
payment to be made on the Revolving Termination Date; provided that, in
connection with any reduction or termination of Commitments under Section
2.05 or Section 2.07, the accrued commitment fee calculated for the period
ending on such date shall also be paid on the date of such reduction or
termination, with the following quarterly payment being calculated on the
basis of the period from such reduction or termination date to such
quarterly payment date. The commitment fees provided in this subsection
shall accrue at all times after the above-mentioned date, including at any
time during which one or more conditions in Article IV are not met.
2.10 Computation of Fees and Interest. (a) All computations of
interest for Base Rate Loans when the Base Rate is determined by BofA's
"reference rate" shall be made on the basis of a year of 365 or 366 days,
as the case may be, and actual days elapsed. All other computations of
fees and interest shall be made on the basis of a 360-day year and actual
days elapsed (which results in more interest being paid than if computed on
the basis of a 365-day year). Interest and fees shall accrue during each
period during which interest or such fees are computed from the first day
thereof to the last day thereof.
(b) Each determination of an interest rate by the Administrative
Agent shall be conclusive and binding on the Company and the Banks in the
absence of manifest error. The Administrative Agent will, at the request of
the Company or any Bank, deliver to the Company or the Bank, as the case
may be, a statement showing the quotations used by the Administrative Agent
in determining any interest rate and the resulting interest rate.
2.11 Payments by the Company. (a) All payments to be made by the
Company shall be made without set-off, recoupment or counterclaim. Except
as otherwise expressly provided herein, all payments by the Company shall
be made to the Administrative Agent for the account of the Banks at the
Administrative Agent's Payment Office, and shall be made in dollars and in
immediately available funds, no later than 1:00 p.m. (Houston time) on the
date specified herein. The Administrative Agent will promptly distribute
to each Bank its Pro Rata Share (or other applicable share as expressly
provided herein) of such payment in like funds as received. Any payment
received by the Administrative Agent later than 1:00 p.m. (Houston time)
shall be deemed to have been received on the following Business Day and any
applicable interest or fee shall continue to accrue.
(b) Subject to the provisions set forth in the definition of
"Interest Period" herein, whenever any payment is due on a day other than a
Business Day, such payment shall be made on the following Business Day, and
such extension of time shall in such case be included in the computation of
interest or fees, as the case may be.
(c) Unless the Administrative Agent receives notice from the
Company prior to the date on which any payment is due to the Banks that the
Company will not make such payment in full as and when required, the
Administrative Agent may assume that the Company has made such payment in
full to the Administrative Agent on such date in immediately available
funds and the Administrative Agent may (but shall not be so required), in
reliance upon such assumption, distribute to each Bank on such due date an
amount equal to the amount then due such Bank. If and to the extent the
Company has not made such payment in full to the Administrative Agent, each
Bank shall repay to the Administrative Agent on demand such amount
distributed to such Bank, together with interest thereon at the Federal
Funds Rate for each day from the date such amount is distributed to such
Bank until the date repaid.
2.12 Payments by the Banks to the Administrative Agent. (a) Unless
the Administrative Agent receives notice from a Bank on or prior to the
Closing Date or, with respect to any Borrowing after the Closing Date, at
least one (1) Business Day prior to the date of such Borrowing, that such
Bank will not make available as and when required hereunder to the
Administrative Agent for the account of the Company the amount of that
Bank's Pro Rata Share of the Borrowing, the Administrative Agent may assume
that each Bank has made such amount available to the Administrative Agent
in immediately available funds on the Borrowing Date and the Administrative
Agent may (but shall not be so required), in reliance upon such assumption,
make available to the Company on such date a corresponding amount. If and
to the extent any Bank shall not have made its full amount available to the
Administrative Agent in immediately available funds and the Administrative
Agent in such circumstances has made available to the Company such amount,
that Bank shall on the Business Day following such Borrowing Date make such
amount available to the Administrative Agent, together with interest at the
Federal Funds Rate for each day during such period. A notice of the
Administrative Agent submitted to any Bank with respect to amounts owing
under this subsection (a) shall be conclusive, absent manifest error. If
such amount is so made available, such payment to the Administrative Agent
shall constitute such Bank's Loan on the date of Borrowing for all purposes
of this Agreement. If such amount is not made available to the
Administrative Agent on the Business Day following the Borrowing Date, the
Administrative Agent will notify the Company of such failure to fund and,
upon demand by the Administrative Agent, the Company shall, within three
(3) Business Days, pay such amount to the Administrative Agent for the
Administrative Agent's account, together with interest thereon for each day
elapsed since the date of such Borrowing, at a rate per annum equal to the
interest rate applicable at the time to the Loans comprising such
Borrowing.
(b) The failure of any Bank to make any Loan on any Borrowing
Date shall not relieve any other Bank of any obligation hereunder to make a
Loan on such Borrowing Date, but no Bank shall be responsible for the
failure of any other Bank to make the Loan to be made by such other Bank on
any Borrowing Date.
2.13 Sharing of Payments, Etc. If, other than as expressly provided
elsewhere herein, any Bank shall obtain on account of the Loans made by it
any payment (whether voluntary, involuntary, through the exercise of any
right of set-off, or otherwise) in excess of its ratable share (or other
share contemplated hereunder), such Bank shall immediately (a) notify the
Administrative Agent of such fact, and (b) purchase from the other Banks
such participations in the Loans made by them as shall be necessary to
cause such purchasing Bank to share the excess payment pro rata with each
of them; provided, however, that if all or any portion of such excess
payment is thereafter recovered from the purchasing Bank, such purchase
shall to that extent be rescinded and each other Bank shall repay to the
purchasing Bank the purchase price paid therefor, together with an amount
equal to such paying Bank's ratable share (according to the proportion of
(i) the amount of such paying Bank's required repayment to (ii) the total
amount so recovered from the purchasing Bank) of any interest or other
amount paid or payable by the purchasing Bank in respect of the total
amount so recovered. The Company agrees that any Bank so purchasing a
participation from another Bank may, to the fullest extent permitted by
law, exercise all its rights of payment (including the right of set-off,
but subject to Section 10.10) with respect to such participation as fully
as if such Bank were the direct creditor of the Company in the amount of
such participation. The Administrative Agent will keep records (which
shall be conclusive and binding in the absence of manifest error) of
participations purchased under this Section and will in each case notify
the Banks following any such purchases or repayments.
2.14 Guaranty. The Obligations shall be unconditionally guaranteed by
each Guarantor pursuant to, and to the extent provided in, the Guaranty
executed by it.
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
3.01 Taxes. (a) Any and all payments by the Company to each Bank or
to either Agent under this Agreement and any other Loan Document shall be
made free and clear of, and without deduction or withholding for, any
Taxes. In addition, the Company shall pay all Other Taxes.
(b) If the Company shall be required by law to deduct or
withhold any Taxes, Other Taxes or Further Taxes from or in respect of any
sum payable hereunder to any Bank or Agent, then: (i) the sum payable shall
be increased as necessary so that, after making all required deductions and
withholdings (including deductions and withholdings applicable to
additional sums payable under this Section), such Bank or Agent, as the
case may be, receives and retains an amount equal to the sum it would have
received and retained had no such deductions or withholdings been made;
(ii) the Company shall make such deductions and withholdings; (iii) the
Company shall pay the full amount deducted or withheld to the relevant
taxing authority or other authority in accordance with applicable law; and
(iv) the Company shall also pay to each Bank, or the Administrative Agent
for the account of such Bank, at the time interest is paid, Further Taxes
in the amount that the respective Bank specifies as necessary to preserve
the after-tax yield the Bank would have received if such Taxes, Other Taxes
or Further Taxes had not been imposed.
(c) The Company agrees to indemnify and hold harmless each Bank
and Administrative Agent for the full amount of i) Taxes, ii) Other Taxes,
and iii) Further Taxes in the amount that the respective Bank specifies as
necessary to preserve the after-tax yield such Bank would have received if
such Taxes, Other Taxes or Further Taxes had not been imposed, and any
liability (including penalties, interest, additions to tax and expenses)
arising therefrom or with respect thereto, whether or not such Taxes, Other
Taxes or Further Taxes were correctly or legally asserted. Payment under
this indemnification shall be made within 30 days after the date the
applicable Bank or the Administrative Agent makes written demand therefor.
(d) Within 30 days after the date of any payment by the Company
of Taxes, Other Taxes or Further Taxes, the Company shall furnish to each
Bank or Administrative Agent the original or a certified copy of a receipt
evidencing payment thereof, or other evidence of payment satisfactory to
such Bank or the Administrative Agent.
(e) If the Company is required to pay any amount to any Bank or
Administrative Agent pursuant to subsection (b) or (c) of this Section,
then such Bank shall use reasonable efforts (consistent with legal and
regulatory restrictions) to change the jurisdiction of its Lending Office
so as to eliminate any such additional payment by the Company which may
thereafter accrue, if such change in the sole judgment of such Bank is not
otherwise disadvantageous to such Bank.
3.02 Illegality. (a) If any Bank determines that the introduction of
any Requirement of Law, or any change in any Requirement of Law, or in the
interpretation or administration of any Requirement of Law, has made it
unlawful, or that any central bank or other Governmental Authority has
asserted that it is unlawful, for any Bank or its applicable Lending Office
to make Offshore Rate Loans, then, on notice thereof by the Bank to the
Company through the Administrative Agent, any obligation of that Bank to
make Offshore Rate Loans shall be suspended until the Bank notifies the
Administrative Agent and the Company that the circumstances giving rise to
such determination no longer exist.
(b) If a Bank determines that it is unlawful to maintain any
Offshore Rate Loan, the Company shall, upon its receipt of notice of such
fact and demand from such Bank (with a copy to the Administrative Agent),
prepay in full such Offshore Rate Loans of that Bank then outstanding,
together with interest accrued thereon and amounts required under Section
3.04, either on the last day of the Interest Period thereof, if the Bank
may lawfully continue to maintain such Offshore Rate Loans to such day, or
immediately, if the Bank may not lawfully continue to maintain such
Offshore Rate Loan. If the Company is required to so prepay any Offshore
Rate Loan, then, concurrently with such prepayment, the Company may
(subject to Section 4.02) borrow from the affected Bank, in the amount of
such repayment, a Base Rate Loan.
(c) If the obligation of any Bank to make or maintain Offshore
Rate Loans has been so terminated or suspended, the Company may elect, by
giving notice to the Bank through the Administrative Agent that all Loans
which would otherwise be made by the Bank as Offshore Rate Loans shall be
instead Base Rate Loans.
(d) Before giving any notice to the Administrative Agent under
this Section, the affected Bank shall designate a different Lending Office
with respect to its Offshore Rate Loans if such designation will avoid the
need for giving such notice or making such demand and will not, in the
judgment of the Bank, be illegal or otherwise disadvantageous to the Bank.
3.03 Increased Costs and Reduction of Return. (a) If any Bank
determines that, due to either (i) the introduction of or any change in or
in the interpretation of any law or regulation or (ii) the compliance by
that Bank with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law), there
shall be any increase in the cost to such Bank of agreeing to make or
making, funding or maintaining any Offshore Rate Loans, then the Company
shall be liable for, and shall from time to time, upon demand (with a copy
of such demand to be sent to the Administrative Agent), pay to the
Administrative Agent for the account of such Bank, additional amounts as
are sufficient to compensate such Bank for such increased costs.
(b) If any Bank shall have determined that (i) the introduction
of any Capital Adequacy Regulation, (ii) any change in any Capital Adequacy
Regulation, (iii) any change in the interpretation or administration of any
Capital Adequacy Regulation by any central bank or other Governmental
Authority charged with the interpretation or administration thereof, or
(iv) compliance by the Bank (or its Lending Office) or any corporation
controlling the Bank with any Capital Adequacy Regulation, affects or would
affect the amount of capital required or expected to be maintained by the
Bank or any corporation controlling the Bank and (taking into consideration
such Bank's or such corporation's policies with respect to capital adequacy
and such Bank's desired return on capital) determines that the amount of
such capital is increased as a consequence of its Commitment, loans,
credits or obligations under this Agreement, then, upon demand of such Bank
to the Company through the Administrative Agent, the Company shall pay to
the Bank, from time to time as specified by the Bank, additional amounts
sufficient to compensate the Bank for such increase.
3.04 Funding Losses. The Company shall reimburse each Bank and hold
each Bank harmless from any loss or expense which the Bank may sustain or
incur as a consequence of: (a) the failure of the Company to make on a
timely basis any payment of principal of any Offshore Rate Loan; (b) the
failure of the Company to borrow, continue or convert a Loan after the
Company has given (or is deemed to have given) a Notice of Borrowing or a
Notice of Conversion/ Continuation; (c) the failure of the Company to make
any prepayment in accordance with any notice delivered under Section 2.06;
(d) the prepayment (including under Section 2.07) or other payment
(including after acceleration thereof) of an Offshore Rate Loan on a day
that is not the last day of the relevant Interest Period; or (e) the
automatic conversion under Section 2.04 of any Offshore Rate Loan to a Base
Rate Loan on a day that is not the last day of the relevant Interest
Period; including any such loss or expense arising from the liquidation or
reemployment of funds obtained by it to maintain its Offshore Rate Loans or
from fees payable to terminate the deposits from which such funds were
obtained. For purposes of calculating amounts payable by the Company to
the Banks under this Section and under subsection 3.03(a), each Offshore
Rate Loan made by a Bank (and each related reserve, special deposit or
similar requirement) shall be conclusively deemed to have been funded at
the LIBOR used in determining the Offshore Rate for such Offshore Rate Loan
by a matching deposit or other borrowing in the interbank eurodollar market
for a comparable amount and for a comparable period, whether or not such
Offshore Rate Loan is in fact so funded.
3.05 Inability to Determine Rates. If the Administrative Agent or the
Majority Banks determine that for any reason adequate and reasonable means
do not exist for determining the Offshore Rate for any requested Interest
Period with respect to a proposed Offshore Rate Loan by reason of any
changes arising after the date of this Agreement affecting the interbank
Eurodollar market, the Administrative Agent will promptly so notify the
Company and each Bank. Thereafter, the obligation of the Banks to make or
maintain Offshore Rate Loans hereunder shall be suspended until the
Administrative Agent, upon the instruction of the Majority Banks, revokes
such notice in writing. Upon receipt of such notice, the Company may
revoke any Notice of Borrowing or Notice of Conversion/Continuation then
submitted by it. If the Company does not revoke such Notice, the Banks
shall make, convert or continue the Loans, as proposed by the Company, in
the amount specified in the applicable notice submitted by the Company, but
such Loans shall be made, converted or continued as Base Rate Loans instead
of Offshore Rate Loans.
3.06 Reserves on Offshore Rate Loans. The Company shall pay to each
Bank, if after the date hereof such Bank shall be required under
regulations of the FRB to maintain reserves with respect to liabilities or
assets consisting of or including Eurocurrency funds or deposits (currently
known as "Eurocurrency liabilities"), additional costs on the unpaid
principal amount of each Offshore Rate Loan equal to the actual costs of
such reserves allocated to such Loan by the Bank (as determined by the Bank
in good faith, which determination shall be conclusive), payable on each
date on which interest is payable on such Loan, provided the Company shall
have received at least 15 days' prior written notice (with a copy to the
Administrative Agent) of such additional interest from the Bank. If a Bank
fails to give notice 15 days prior to the relevant Interest Payment Date,
such additional interest shall be payable 15 days from receipt of such
notice.
3.07 Certificates of Banks. Any Bank claiming reimbursement or
compensation under this Article III shall deliver to the Company (with a
copy to the Administrative Agent) a certificate setting forth in reasonable
detail the amount payable to the Bank hereunder and such certificate shall
be conclusive and binding on the Company in the absence of manifest error.
3.08 Substitution of Banks. Upon the receipt by the Company from any
Bank (an "Affected Bank") of a claim for compensation under Section 3.03,
the Company may: (i) request the Affected Bank to use its best efforts to
obtain a replacement bank or financial institution satisfactory to the
Company and to each Agent (a "Replacement Bank") to acquire and assume all
or a ratable part of all of such Affected Bank's Loans and Commitment;
(ii) request one more of the other Banks to acquire and assume all or part
of such Affected Bank's Loans and Commitment; or (iii) designate a
Replacement Bank. Any such designation of a Replacement Bank under clause
(i) or (iii) shall be subject to the prior written consent of each Agent.
3.09 Survival. The agreements and obligations of the Company in this
Article III shall survive the payment of all other Obligations.
ARTICLE IV
CONDITIONS PRECEDENT
4.01 Conditions of Initial Loans. The obligation of each Bank to make
its initial Loan hereunder is subject to the condition that the Agent shall
have received on or before the Initial Borrowing Date, all of the
following, in form and substance satisfactory to each Agent and each Bank,
and in sufficient copies for each Bank:
(a) Loan Documents. This Agreement and the Guaranty Agreements
executed by each party thereto;
(b) Resolutions; Incumbency.
(i) Copies of the resolutions adopted by the members
of the Company authorizing the transactions contemplated hereby,
certified as of the Closing Date by the members, and copies of
resolutions of the board of directors of each Guarantor
authorizing the transactions contemplated hereby certified as of
the Closing Date by the Secretary or an Assistant Secretary of
the applicable Guarantor; and
(ii) A certificate of the Secretary or Assistant
Secretary of Guarantor, and a certificate of the members of the
Company, certifying the names and true signatures of the
officers, manager and/or representatives authorized to execute,
deliver and perform, as applicable, this Agreement, and all other
Loan Documents to be delivered hereunder;
(c) Organization Documents; Good Standing. Each of the
following documents:
(i) limited liability company agreement of the
Company, certified by the members as of the Closing Date, and the
certificate of incorporation and the bylaws of each Guarantor as
in effect on the Closing Date, certified by the Secretary or
Assistant Secretary of such Guarantor, as of the Closing Date;
and
(ii) a good standing certificate for the Company and
each Guarantor from the Secretary of State (or similar,
applicable Governmental Authority) of its state of organization,
and from each state where the Company is qualified to do business
as a foreign company as of a recent date;
(d) Legal Opinions.
(i) an opinion of counsel (satisfactory to the Agents
and the Banks) to the Company, and addressed to the Agents and
the Banks, which opinion shall be in form and substance
satisfactory to the Agents and the Banks;
(ii) an opinion of Wayne K. Hillin, Esq., General
Counsel, Reading & Bates Corporation, addressed to the Agents and
the Banks, which opinion shall be in form and substance
satisfactory to the Agents and the Banks;
(iii) an opinion of Wayne Anderson, Esq., Conoco Inc.,
addressed to the Agents and the Banks, which opinion shall be in
form and substance satisfactory to the Agents and the Banks; and
(iv) a favorable opinion of Butler & Binion, L.L.P.,
special counsel to the Administrative Agent.
(e) Payment of Fees. Evidence of payment by the Company of all
accrued and unpaid fees, costs and expenses to the extent then due and
payable on the Closing Date, together with fees and expenses of counsel to
the Administrative Agent to the extent invoiced prior to or on the Closing
Date, plus such additional amounts of special counsel fees and expenses as
shall constitute the Administrative Agent's reasonable estimate incurred or
to be incurred by it through the closing proceedings (provided that such
estimate shall not thereafter preclude final settling of accounts between
the Company and the Administrative Agent); including any such costs, fees
and expenses arising under or referenced in Sections 2.09 and 10.04;
(f) Certificate. (i) A certificate signed by a Responsible
Officer, dated as of the Closing Date, stating that: (A) the
representations and warranties contained in Article V are true and correct
on and as of such date, as though made on and as of such date; (B) no
Default or Event of Default exists or would result from the initial
Borrowing; and (C) there has occurred since September 30, 1997, no event or
circumstance that has resulted or could reasonably be expected to result in
a Material Adverse Effect with respect to the Company; and (ii) a
certificate signed by an appropriate officer of each Guarantor, stating
that (A) the representations and warranties made by such Guarantor in the
Guaranty executed by it are true and correct on and as of such date, as
though made on and as of such date, and (B) since the date therein
specified in such certificate (which shall be June 30, 1997, for Conoco and
shall be September 30, 1997, for R&B), there has occurred no event or
circumstance that has resulted or could reasonably be expected to result in
a Material Adverse Effect with respect to such Guarantor or any of the
direct or indirect owners of equity interests in the Company; and
(g) Other Documents. Such other approvals, opinions, documents
or materials as the Administrative Agent or any Bank may request.
4.02 Conditions to All Borrowings. The obligation of each Bank to
make any Loan to be made by it (including its initial Loan) or to continue
or convert any Loan under Section 2.04 is subject to the satisfaction of
the following conditions precedent on the relevant Borrowing Date or
Conversion/Continuation Date:
(a) Notice of Borrowing or Conversion/Continuation. The
Administrative Agent shall have received (with, in the case of the initial
Loan only, a copy for each Bank) a Notice of Borrowing or a Notice of
Conversion/Continuation, as applicable;
(b) Continuation of Representations and Warranties. The
representations and warranties in Article V shall be true and correct on
and as of such Borrowing Date or Conversion/Continuation Date with the same
effect as if made on and as of such Borrowing Date or
Conversion/Continuation Date (except to the extent such representations and
warranties expressly refer to an earlier date, in which case they shall be
true and correct as of such earlier date);
(c) No Existing Default. No Default or Event of Default shall
exist or shall result from such Borrowing or continuation or conversion;
and
(d) No Change of Control Trigger Event (Conoco). No Change of
Control Trigger Event (Conoco) shall have occurred.
Each Notice of Borrowing and Notice of Conversion/Continuation submitted by
the Company hereunder shall constitute a representation and warranty by the
Company hereunder, as of the date of each such notice and as of each
Borrowing Date or Conversion/Continuation Date, as applicable that the
conditions in this Section 4.02 are satisfied.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to each of the Agents and Banks
that:
5.01 Corporate Existence and Power. The Company: (a) is a limited
liability company duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization; (b) has the power
and authority and all governmental licenses, authorizations, consents and
approvals to own its assets, carry on its business and to execute, deliver,
and perform its obligations under the Loan Documents; (c) is duly qualified
as a foreign limited liability company and is licensed and in good standing
under the laws of each jurisdiction where its ownership, lease or operation
of property or the conduct of its business requires such qualification or
license; and (d) is in compliance with all Requirements of Law; except, in
each case referred to in clause (c) or clause (d), to the extent that the
failure to do so could not reasonably be expected to have a Material
Adverse Effect.
5.02 Corporate Authorization; No Contravention. The execution,
delivery and performance by the Company of this Agreement and each other
Loan Document to which the Company is party, have been duly authorized by
all necessary action, and do not and will not: (a) contravene the terms of
any of the Company's Organization Documents; (b) conflict with or result in
any breach or contravention of, or the creation of any Lien under, any
document evidencing any Contractual Obligation to which the Company is a
party or any order, injunction, writ or decree of any Governmental
Authority to which the Company or its property is subject; or (c) violate
any Requirement of Law.
5.03 Governmental Authorization. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority is necessary or required in connection with the
execution, delivery or performance by, or enforcement against, the Company
of the Agreement or any other Loan Document.
5.04 Binding Effect. This Agreement and each other Loan Document to
which the Company is a party constitute the legal, valid and binding
obligations of the Company, enforceable against the Company in accordance
with their respective terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, or similar laws affecting the
enforcement of creditors' rights generally or by equitable principles
relating to enforceability.
5.05 Litigation. There are no actions, suits, proceedings, claims or
disputes pending, or to the best knowledge of the Company, threatened or
contemplated, at law, in equity, in arbitration or before any Governmental
Authority, against the Company, any of its Subsidiaries, any Guarantor or
any of their respective properties which: (a) purport to affect or pertain
to this Agreement or any other Loan Document, or any of the transactions
contemplated hereby or thereby; or (b) if determined adversely to the
Company or its Subsidiaries or any Guarantor, would reasonably be expected
to have a Material Adverse Effect. No injunction, writ, temporary
restraining order or any order of any nature has been issued by any court
or other Governmental Authority purporting to enjoin or restrain the
execution, delivery or performance of this Agreement or any other Loan
Document, or directing that the transactions provided for herein or therein
not be consummated as herein or therein provided.
5.06 No Default. No Default or Event of Default exists or would
result from the incurring of any Obligations by the Company. As of the
Closing Date, neither the Company nor any Subsidiary is in default under or
with respect to any Contractual Obligation in any respect which,
individually or together with all such defaults, could reasonably be
expected to have a Material Adverse Effect, or that would, if such default
had occurred after the Closing Date, create an Event of Default under
subsection 8.01(e).
5.07 ERISA. The Company does not (and did not at any time prior to
the date hereof) sponsor, maintain or make contributions to, any Pension
Plan, and the Company is not obligated to do so.
5.08 Use of Proceeds; Margin Regulations. The proceeds of the Loans
are to be used solely for the purposes set forth in and permitted by
Section 6.12 and Section 7.07. Neither the Company nor any Subsidiary is
generally engaged in the business of purchasing or selling Margin Stock or
extending credit for the purpose of purchasing or carrying Margin Stock.
Margin Stock does not constitute more than 25% of the value of the assets
of the Company, and the Company does not have any present intention that
Margin Stock will constitute more than 25% of the value of such assets.
5.09 Title to Properties. The Company and each Subsidiary have good
record and marketable title in fee simple to, or valid leasehold interests
in, all real property necessary or used in the ordinary conduct of their
respective businesses, except for such defects in title as could not,
individually or in the aggregate, have a Material Adverse Effect. As of
the Closing Date, the property of the Company and its Subsidiaries is
subject to no Liens, other than Permitted Liens.
5.10 Tax Status; Taxes. The Company is considered a partnership for
federal and state income purposes not an association taxable as a
corporation. The Company and its Subsidiaries have filed all Federal and
other material tax returns and reports required to be filed, and have paid
all Federal and other material taxes, assessments, fees and other
governmental charges levied or imposed upon them or their properties,
income or assets otherwise due and payable, except those which are being
contested in good faith by appropriate proceedings and for which adequate
reserves have been provided in accordance with GAAP. There is no proposed
tax assessment against the Company or any Subsidiary that would, if made,
have a Material Adverse Effect.
5.11 Financial Condition. (a) The unaudited consolidated balance
sheet of the Company and its Subsidiaries dated September 30, 1997: (i)
was prepared in accordance with GAAP consistently applied throughout the
period covered thereby, except as otherwise expressly noted therein,
subject to ordinary, good faith year-end audit adjustments; and (ii) fairly
presents the financial condition of the Company and its Subsidiaries as of
the date thereof.
(b) Since September 30, 1997, there has been no Material Adverse
Effect.
5.12 Environmental Matters. The Company conducts, in the ordinary
course of business, a review of the effect of existing Environmental Laws
and existing Environmental Claims on its and its Subsidiaries' business,
operations and properties, and as a result thereof the Company has
reasonably concluded that such Environmental Laws and Environmental Claims
could not, individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect.
5.13 Regulated Entities. None of the Company, any Person controlling
the Company, or any Subsidiary, is an "Investment Company" within the
meaning of the Investment Company Act of 1940. The Company is not subject
to regulation under the Public Utility Holding Company Act of 1935, the
Federal Power Act, the Interstate Commerce Act, any state public utilities
code, or any other Federal or state statute or regulation limiting its
ability to incur Indebtedness.
5.14 No Burdensome Restrictions. Neither the Company nor any
Subsidiary is a party to or bound by any Contractual Obligation, or subject
to any restriction in any Organization Document, or any Requirement of Law,
which could reasonably be expected to have a Material Adverse Effect.
5.15 Copyrights, Patents, Trademarks and Licenses, Etc. No claim or
litigation regarding any of the foregoing is pending or threatened, and no
patent, invention, device, application, principle or any statute, law,
rule, regulation, standard or code is pending or, to the knowledge of the
Company, proposed, which, in either case, could reasonably be expected to
have a Material Adverse Effect.
5.16 Subsidiaries. The Company has no Subsidiaries other than those
specifically disclosed in Schedule 5.16 hereto and has no equity
investments in any other corporation or entity other than those
specifically disclosed in Schedule 5.16.
5.17 Insurance. The properties and business of the Company and its
Subsidiaries are insured with financially sound and reputable insurance
companies not Affiliates of the Company, in such amounts, with such
deductibles and covering such risks as are customarily carried by companies
engaged in similar businesses and owning similar properties in localities
where the Company or such Subsidiary operates.
5.18 Solvency. The Company is Solvent.
5.19 Full Disclosure. None of the representations or warranties made
by the Company or any Subsidiary in the Loan Documents as of the date such
representations and warranties are made or deemed made, and none of the
statements contained in any exhibit, report, statement or certificate
furnished by or on behalf of the Company or any Subsidiary in connection
with the Loan Documents (including the offering and disclosure materials
delivered by or on behalf of the Company to the Banks prior to the Closing
Date), contains any untrue statement of a material fact or omits any
material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they are
made, not misleading as of the time when made or delivered.
ARTICLE VI
AFFIRMATIVE COVENANTS
So long as any Bank shall have any Commitment hereunder, or any Loan
or other Obligation shall remain unpaid or unsatisfied, unless the Majority
Banks waive compliance in writing:
6.01 Financial Statements. The Company shall deliver to the
Administrative Agent, in form and detail satisfactory to the Administrative
Agent and the Majority Banks, with sufficient copies for each Bank:
(a) as soon as available, but not later than 90 days after the
end of each fiscal year, a copy of the audited consolidated balance sheet
of the Company and its Subsidiaries as at the end of such year, setting
forth in comparative form the figures for the previous fiscal year, and
accompanied by the opinion of a nationally-recognized independent public
accounting firm ("Independent Auditor") which report shall state that such
consolidated financial statements present fairly the financial position for
the periods indicated in conformity with GAAP applied on a basis consistent
with prior years. Such opinion shall not be qualified or limited because
of a restricted or limited examination by the Independent Auditor of any
material portion of the Company's or any Subsidiary's records; and
(b) as soon as available, but not later than 45 days after the
end of each of the first three fiscal quarters of each fiscal year, a copy
of the unaudited consolidated balance sheet of the Company and its
Subsidiaries as of the end of such quarter for the period commencing on the
first day and ending on the last day of such quarter, and certified by a
Responsible Officer as fairly presenting, in accordance with GAAP (subject
to ordinary, good faith year-end audit adjustments), the financial position
of the Company and the Subsidiaries.
6.02 Certificates; Other Information. The Company shall furnish to
the Administrative Agent, with sufficient copies for each Bank: (a)
concurrently with the delivery of the financial statements referred to in
subsections 6.01(a) and (b), a Compliance Certificate executed by a
Responsible Officer; (b) promptly, copies of all financial statements and
reports that the Company sends to its members, and copies of all financial
statements and regular, periodical or special reports (including Forms 10K,
10Q and 8K), if any, that the Company or any Subsidiary may make to, or
file with, the SEC; and (c) promptly, such additional information regarding
the business, financial or corporate affairs of the Company or any
Subsidiary as the Administrative Agent, at the request of any Bank, may
from time to time request.
6.03 Notices. The Company shall promptly notify the Administrative
Agent and each Bank: (a) of the occurrence of any Default or Event of
Default, and of the occurrence or existence of any event or circumstance
that foreseeably will become a Default or Event of Default; (b) of (i) any
breach or non-performance of, or any default under, any Contractual
Obligation of the Company or any of its Subsidiaries which could reasonably
be expected to result in a Material Adverse Effect; and (ii) any dispute,
litigation, investigation, proceeding or suspension which may exist at any
time between the Company or any of its Subsidiaries and any Governmental
Authority which could reasonably be expected to result in a Material
Adverse Effect; (c) of the commencement of, or any material development in
(i) any litigation or proceeding affecting the Company or any Subsidiary in
which the amount of damages claimed is $1,000,000 (or its equivalent in
another currency or currencies) or more, or (ii) any litigation or
proceeding affecting the Company, a Subsidiary or a Guarantor and which, if
adversely determined, would reasonably be expected to have a Material
Adverse Effect, or in which the relief sought is an injunction or other
stay of the performance of this Agreement or any Loan Document; (d) upon,
but in no event later than 10 days after, becoming aware of (i) any and all
enforcement, cleanup, removal or other governmental or regulatory actions
instituted, completed or threatened against the Company or any Subsidiary
or any of their respective properties pursuant to any applicable
Environmental Laws, and (ii) all other Environmental Claims; (e) of any
other litigation or proceeding affecting the Company or any of its
Subsidiaries or any Guarantor which the Company or a Guarantor would be
required to report to the SEC pursuant to the Exchange Act, within four
days after the same is reported to the SEC; (f) of any material change in
accounting policies or financial reporting practices by the Company or any
of its consolidated Subsidiaries or any Guarantor; and (g) of any proposed
amendment (prior to adoption thereof) to the Limited Liability Company
Agreement (such notice to be accompanied by a copy of the proposed
amendment) and, after adoption thereof, a copy of the amendment shall be
delivered to the Administrative Agent.
Each notice under this Section shall be accompanied by a written
statement by a Responsible Officer setting forth details of the occurrence
referred to therein, and stating what action the Company or any affected
Subsidiary proposes to take with respect thereto and at what time. Each
notice under subsection 6.03(a) shall describe with particularity any and
all clauses or provisions of this Agreement or other Loan Document that
have been (or foreseeably will be) breached or violated.
6.04 Preservation of Existence, Etc. The Company shall, and shall
cause each Subsidiary to: (a) preserve and maintain in full force and
effect its existence and good standing under the laws of its state or
jurisdiction of incorporation; (b) preserve and maintain in full force and
effect all governmental rights, privileges, qualifications, permits,
licenses and franchises necessary or desirable in the normal conduct of its
business except in connection with transactions permitted by Section 7.03;
(c) use reasonable efforts, in the ordinary course of business, to preserve
its business organization and goodwill; and (d) preserve or renew all of
its registered patents, trademarks, trade names and service marks, the non-
preservation of which could reasonably be expected to have a Material
Adverse Effect.
6.05 Maintenance of Property. The Company shall maintain, and shall
cause each Subsidiary to maintain, and preserve all its property which is
used or useful in its business in good working order and condition,
ordinary wear and tear excepted, and make all necessary repairs thereto and
renewals and replacements thereof except where the failure to do so could
not reasonably be expected to have a Material Adverse Effect, except as
permitted by Section 7.02. The Company and each Subsidiary shall use the
standard of care typical in the industry in the operation and maintenance
of its facilities.
6.06 Insurance. The Company shall maintain, and shall cause each of
its Subsidiaries to maintain, with financially sound and reputable
independent insurers, insurance with respect to its properties and business
as may be required by law, and insurance against loss or damage of the
kinds customarily insured against by Persons engaged in the same or similar
business, of such types and in such amounts as are customarily carried
under similar circumstances by such other Persons. Upon request of the
Administrative Agent or any Bank, the Company shall furnish the
Administrative Agent, with sufficient copies for each Bank, at reasonable
intervals a certificate of a Responsible Officer of the Company (and, if
requested by the Administrative Agent, any insurance broker of the Company)
setting forth the nature and extent of all insurance maintained by or on
behalf of the Company and its Subsidiaries in accordance with this Section
(and which, in the case of a certificate of a broker, were placed through
such broker).
6.07 Payment of Obligations. The Company shall, and shall cause each
Subsidiary to, pay and discharge as the same shall become due and payable,
all their respective obligations and liabilities, including: (a) all tax
liabilities, assessments and governmental charges or levies upon it or its
properties or assets, unless the same are being contested in good faith by
appropriate proceedings and adequate reserves in accordance with GAAP are
being maintained by the Company or such Subsidiary; (b) all lawful claims
which, if unpaid, would by law become a Lien upon its property; and (c) all
indebtedness, as and when due and payable, but subject to any subordination
provisions contained in any instrument or agreement evidencing such
Indebtedness.
6.08 Compliance with Laws. The Company shall comply, and shall cause
each Subsidiary to comply, in all material respects with all Requirements
of Law of any Governmental Authority having jurisdiction over it or its
business, except such as may be contested in good faith or as to which a
bona fide dispute may exist.
6.09 ERISA. The Company shall not at any time be obligated to
sponsor, maintain or make contributions to any Pension Plan.
6.10 Inspection of Property and Books and Records. The Company shall
maintain and shall cause each Subsidiary to maintain proper books of record
and account, in which full, true and correct entries in conformity with
GAAP consistently applied shall be made of all financial transactions and
matters involving the assets and business of the Company and such
Subsidiary. The Company shall permit, and shall cause each Subsidiary to
permit, representatives and independent contractors of either Agent or any
Bank to visit and inspect any of their respective properties, to examine
their respective corporate, financial and operating records, and make
copies thereof or abstracts therefrom, and to discuss their respective
affairs, finances and accounts with their respective directors, officers,
and independent public accountants, all at the expense of the Company and
at such reasonable times during normal business hours and as often as may
be reasonably desired, upon reasonable advance notice to the Company;
provided, however, when an Event of Default exists, either Agent or any
Bank may do any of the foregoing at the expense of the Company at any time
during normal business hours and without advance notice.
6.11 Environmental Laws. The Company shall, and shall cause each
Subsidiary to, conduct its operations and keep and maintain its property in
compliance with all Environmental Laws.
6.12 Use of Proceeds. The Company shall use the proceeds of the Loans
to repay principal and interest on existing loans from members and to fund
ongoing interim construction costs in connection with construction of the
Drillship including, without limitation, progress payments to the shipyard,
payments for owner-furnished equipment ("OFE") and payments to service
providers (including affiliates of the Guarantors) and capitalized interest
costs.
6.13 Covenants Regarding R&B Subsidiary Guarantors. (a) The Company
agrees to use reasonable efforts to obtain, as soon as practicable after
Closing, an opinion of Australian counsel in form and substance
satisfactory to the Administrative Agent and the Majority Banks with
respect to the Guaranty executed by Reading & Bates (A) Pty Ltd.
(b) If, at any time there exists any subsidiary of Reading &
Bates that is an obligor (either a borrower or a guarantor) on all or any
portion of the R&B Credit Facility, the Company shall cause such subsidiary
to execute and deliver a Guaranty Agreement in substantially the form
attached hereto as Exhibit G-2, together with an opinion of counsel of such
subsidiary in form and substance satisfactory to the Administrative Agent
and the Majority Banks.
6.14 Further Assurances. The Company shall ensure that all written
information, exhibits and reports furnished to the Agents or the Banks do
not and will not contain any untrue statement of a material fact and do not
and will not omit to state any material fact or any fact necessary to make
the statements contained therein not misleading in light of the
circumstances in which made, and will promptly disclose to the Agents and
the Banks and correct any defect or error that may be discovered therein or
in any Loan Document or in the execution, acknowledgment or recordation
thereof.
ARTICLE VII
NEGATIVE COVENANTS
So long as any Bank shall have any Commitment hereunder, or any Loan
or other Obligation shall remain unpaid or unsatisfied, unless the Majority
Banks waive compliance in writing:
7.01 Limitation on Liens. The Company shall not, and shall not suffer
or permit any Subsidiary to, directly or indirectly, make, create, incur,
assume or suffer to exist any Lien upon or with respect to any part of its
property, whether now owned or hereafter acquired, other than the following
("Permitted Liens"): (a) any Lien existing on property of the Company or
any Subsidiary on the Closing Date and set forth in Schedule 7.01 securing
Indebtedness outstanding on such date; (b) any Lien created under any Loan
Document; (c) Liens for taxes, fees, assessments or other governmental
charges which are not delinquent or remain payable without penalty, or to
the extent that non-payment thereof is permitted by Section 6.07, provided
that no notice of lien has been filed or recorded under the Code; (d)
carriers', warehousemen's, mechanics', landlords', materialmen's,
repairmen's or other similar Liens arising in the ordinary course of
business which are not delinquent or remain payable without penalty or
which are being contested in good faith and by appropriate proceedings,
which proceedings have the effect of preventing the forfeiture or sale of
the property subject thereto; (e) Liens (other than any Lien imposed by
ERISA) consisting of pledges or deposits required in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other social security legislation; (f) Liens consisting of judgment or
judicial attachment liens, provided that the enforcement of such Liens is
effectively stayed and all such liens in the aggregate at any time
outstanding for the Company and its Subsidiaries do not exceed $1,000,000;
(g) easements, rights-of-way, restrictions and other similar encumbrances
incurred in the ordinary course of business which, in the aggregate, are
not substantial in amount, and which do not in any case materially detract
from the value of the property subject thereto or interfere with the
ordinary conduct of the businesses of the Company and its Subsidiaries; and
(h) Liens arising solely by virtue of any statutory or common law provision
relating to banker's liens, rights of set-off or similar rights and
remedies as to deposit accounts or other funds maintained with a creditor
depository institution; provided that (i) such deposit account is not a
dedicated cash collateral account and is not subject to restrictions
against access by the Company in excess of those set forth by regulations
promulgated by the FRB, and (ii) such deposit account is not intended by
the Company or any Subsidiary to provide collateral to the depository
institution.
7.02 Disposition of Assets. The Company shall not, and shall not
suffer or permit any Subsidiary to, directly or indirectly, sell, assign,
lease, convey, transfer or otherwise dispose of (whether in one or a series
of transactions) any property (including accounts and notes receivable,
with or without recourse) or enter into any agreement to do any of the
foregoing, except: (a) dispositions of inventory, or used, worn-out or
surplus equipment, all in the ordinary course of business; and (b) the sale
of equipment to the extent that such equipment is exchanged for credit
against the purchase price of similar replacement equipment, or the
proceeds of such sale are reasonably promptly applied to the purchase price
of such replacement equipment.
7.03 Consolidations and Mergers. The Company shall not, and shall not
suffer or permit any Subsidiary to, merge, consolidate with or into, or
convey, transfer, lease or otherwise dispose of (whether in one transaction
or in a series of transactions) all or substantially all of its assets
(whether now owned or hereafter acquired) to or in favor of any Person,
except: (a) any Subsidiary may merge with the Company, provided that the
Company shall be the continuing or surviving corporation, or with any one
or more Subsidiaries, provided that if any transaction shall be between a
Subsidiary and a Wholly-Owned Subsidiary, the Wholly-Owned Subsidiary shall
be the continuing or surviving corporation; and (b) any Subsidiary may sell
all or substantially all of its assets (upon voluntary liquidation or
otherwise), to the Company or another Wholly-Owned Subsidiary.
7.04 Loans and Investments. The Company shall not purchase or
acquire, or suffer or permit any Subsidiary to purchase or acquire, or make
any commitment therefor, any capital stock, equity interest, or any
obligations or other securities of, or any interest in, any Person, or make
or commit to make any advance, loan, extension of credit or capital
contribution to or any other investment in, any Person including any
Affiliate of the Company (together, "Investments"), except for: (a)
Investments held by the Company or Subsidiary in the form of cash
equivalents; (b) extensions of credit in the nature of accounts receivable
or notes receivable arising from the sale or lease of goods or services in
the ordinary course of business; and (c) extensions of credit by the
Company to any of its Wholly-Owned Subsidiaries or by any of its Wholly-
Owned Subsidiaries to another of its Wholly-Owned Subsidiaries.
7.05 Limitation on Indebtedness. The Company shall not, and shall not
suffer or permit any Subsidiary to, create, incur, assume, suffer to exist,
or otherwise become or remain directly or indirectly liable with respect
to, any Indebtedness, except: (a) Indebtedness incurred pursuant to this
Agreement; (b) Indebtedness consisting of Contingent Obligations permitted
pursuant to Section 7.08; and (c) Indebtedness existing on the Closing Date
and set forth in Schedule 7.05.
7.06 Transactions with Affiliates. The Company shall not, and shall
not suffer or permit any Subsidiary to, enter into any transaction with any
Affiliate of the Company, except upon fair and reasonable terms no less
favorable to the Company or such Subsidiary than would obtain in a
comparable arm's-length transaction with a Person not an Affiliate of the
Company or such Subsidiary.
7.07 Margin Stock; Etc.. (a) The Company shall not, and shall not
suffer or permit any Subsidiary to, use any portion of the Loan proceeds,
directly or indirectly, (i) to purchase or carry Margin Stock, (ii) to
repay or otherwise refinance indebtedness of the Company or others incurred
to purchase or carry Margin Stock, (iii) to extend credit for the purpose
of purchasing or carrying any Margin Stock, or (iv) to acquire any security
in any transaction that is subject to Section 13 or 14 of the Exchange Act.
(b) The Company shall not, directly or indirectly, use any
portion of the Loan proceeds (i) knowingly to purchase Ineligible
Securities from BRS during any period in which BRS makes a market in such
Ineligible Securities, (ii) knowingly to purchase during the underwriting
or placement period Ineligible Securities being underwritten or privately
placed by BRS, or (iii) to make payments of principal or interest on
Ineligible Securities underwritten or privately placed by BRS and issued by
or for the benefit of the Company or any Affiliate of the Company. BRS is
a registered broker-dealer and permitted to underwrite and deal in certain
Ineligible Securities; and "Ineligible Securities" means securities which
may not be underwritten or dealt in by member banks of the Federal Reserve
System under Section 16 of the Banking Act of 1933 (12 U.S.C. 24,
Seventh), as amended.
7.08 Contingent Obligations. The Company shall not, and shall not
suffer or permit any Subsidiary to, create, incur, assume or suffer to
exist any Contingent Obligations except: (a) endorsements for collection or
deposit in the ordinary course of business; (b) Permitted Swap Obligations;
and (c) Contingent Obligations deemed necessary by the Company in
connection with the construction, ownership and operation of the Drillship.
7.09 Joint Ventures. The Company shall not, and shall not suffer or
permit any Subsidiary to, enter into any Joint Venture.
7.10 Restricted Payments. The Company shall not, and shall not suffer
or permit any Subsidiary (other than a Wholly-Owned Subsidiary) to, declare
or make any payment or other distribution of assets, properties, cash,
rights, obligations or securities on account of any membership interests in
the Company, or purchase, redeem or otherwise acquire for value any such
membership interests, or any warrants, rights or options to acquire such
interests, now or hereafter outstanding.
7.11 Change in Business. The Company shall not, and shall not suffer
or permit any Subsidiary to, engage in any business other than
construction, ownership and operation of the Drillship.
7.12 Accounting Changes. The Company shall not, and shall not suffer
or permit any Subsidiary to, make any significant change in accounting
treatment or reporting practices, except as required by GAAP, or change the
fiscal year of the Company or of any Subsidiary.
ARTICLE VIII
EVENTS OF DEFAULT
8.01 Events of Default. Any of the following shall constitute an
"Event of Default":
(a) Non-Payment. The Company fails to make, (i) when and as
required to be made herein, payments of any amount of principal of any
Loan, or (ii) within five (5) Business Days after the same becomes due,
payment of any interest, fee or any other amount payable hereunder or under
any other Loan Document; or
(b) Representation or Warranty. Any representation or warranty
by the Company, any Subsidiary or any Guarantor made or deemed made herein,
in any other Loan Document, or which is contained in any certificate,
document or financial or other statement by the Company, any Subsidiary,
any Guarantor or any Responsible Officer, furnished at any time under this
Agreement, or in or under any other Loan Document, is incorrect in any
material respect on or as of the date made or deemed made; or
(c) Specific Defaults. The Company fails to perform or observe
any term, covenant or agreement contained in Section 6.03; or
(d) Other Defaults. The Company fails to perform or observe any
other term or covenant contained in this Agreement or any other Loan
Document; provided, however, if such default is capable of being cured or
remedied, then such default shall not constitute an Event of Default unless
it shall continue unremedied for a period of 20 days; or
(e) Cross-Default. The Company or any Subsidiary (A) fails to
make any payment in respect of any Indebtedness or Contingent Obligation
when due (whether by scheduled maturity, required prepayment, acceleration,
demand, or otherwise) and such failure continues after the applicable grace
or notice period, if any, specified in the relevant document on the date of
such failure; or (B) fails to perform or observe any other condition or
covenant, or any other event shall occur or condition exist, under any
agreement or instrument relating to any such Indebtedness or Contingent
Obligation, and such failure continues after the applicable grace or notice
period, if any, specified in the relevant document on the date of such
failure if the effect of such failure, event or condition is to cause, or
to permit the holder or holders of such Indebtedness or beneficiary or
beneficiaries of such Indebtedness (or a trustee or agent on behalf of such
holder or holders or beneficiary or beneficiaries) to cause, such
Indebtedness to be declared to be due and payable prior to its stated
maturity, or such Contingent Obligation to become payable or cash
collateral in respect thereof to be demanded; or
(f) Insolvency; Voluntary Proceedings. The Company or any
Subsidiary or any Guarantor (i) ceases or fails to be solvent, or generally
fails to pay, or admits in writing its inability to pay, its debts as they
become due, subject to applicable grace periods, if any, whether at stated
maturity or otherwise; (ii) voluntarily ceases to conduct its business in
the ordinary course; (iii) commences any Insolvency Proceeding with respect
to itself; or (iv) takes any action to effectuate or authorize any of the
foregoing; or
(g) Involuntary Proceedings. (i) Any involuntary Insolvency
Proceeding is commenced or filed against the Company or any Subsidiary or
any Guarantor, or any writ, judgment, warrant of attachment, execution or
similar process, is issued or levied against a substantial part of the
Company's or any Subsidiary's or any Guarantor's properties, and any such
proceeding or petition shall not be dismissed, or such writ, judgment,
warrant of attachment, execution or similar process shall not be released,
vacated or fully bonded within 60 days after commencement, filing or levy;
(ii) the Company or any Subsidiary or any Guarantor admits the material
allegations of a petition against it in any Insolvency Proceeding, or an
order for relief (or similar order under non-U.S. law) is ordered in any
Insolvency Proceeding; or (iii) the Company or any Subsidiary or any
Guarantor acquiesces in the appointment of a receiver, trustee, custodian,
conservator, liquidator, mortgagee in possession (or agent therefor), or
other similar Person for itself or a substantial portion of its property or
business; or
(h) Monetary Judgments. One or more non-interlocutory
judgments, non-interlocutory orders, decrees or arbitration awards is
entered against the Company or any Subsidiary involving in the aggregate a
liability (to the extent not covered by independent third-party insurance
as to which the insurer does not dispute coverage) as to any single or
related series of transactions, incidents or conditions, of $1,000,000 or
more, and the same shall remain unsatisfied, unvacated and unstayed pending
appeal for a period of 10 days after the entry thereof; or
(i) Non-Monetary Judgments. Any non-monetary judgment, order or
decree is entered against the Company or any Subsidiary which does or would
reasonably be expected to have a Material Adverse Effect, and there shall
be any period of 10 Business Days during which a stay of enforcement of
such judgment or order, by reason of a pending appeal or otherwise, shall
not be in effect; or
(j) Change of Control. There occurs a Change of Control
(Company); or
(k) LLC Agreement Amendment Event. There occurs an LLC
Agreement Amendment Event;
(l) Dissolution or Termination. There occurs any dissolution or
termination of the Company; or
(m) Guarantor Defaults. A Guarantor Event of Default occurs
under any Guaranty as defined in such Guaranty, or a Guaranty is for any
reason partially (including with respect to future advances) or wholly
revoked or invalidated, or otherwise ceases to be in full force and effect,
or a Guarantor or any other Person contests in any manner the validity or
enforceability thereof or denies that it has any further liability or
obligation thereunder; or any event described at subsections (f) or (g) of
this Section occurs with respect to a Guarantor.
8.02 Remedies. If any Event of Default occurs, the Administrative
Agent shall, at the request of, or may, with the consent of, the Majority
Banks, (a) declare the commitment of each Bank to make Loans to be
terminated, whereupon such commitments shall be terminated; (b) declare the
unpaid principal amount of all outstanding Loans, all interest accrued and
unpaid thereon, and all other amounts owing or payable hereunder or under
any other Loan Document to be immediately due and payable, without
presentment, demand, protest, notice of intent to accelerate, notice of
acceleration or other notice of any kind, all of which are hereby expressly
waived by the Company; and (c) exercise on behalf of itself and the Banks
all rights and remedies available to it and the Banks under the Loan
Documents or applicable law; provided, however, that upon the occurrence of
any event specified in subsection (f) or (g) of Section 8.01 (in the case
of clause (i) of subsection (g) upon the expiration of the 60-day period
mentioned therein), the obligation of each Bank to make Loans shall
automatically terminate and the unpaid principal amount of all outstanding
Loans and all interest and other amounts as aforesaid shall automatically
become due and payable without further act of the Administrative Agent or
any Bank.
8.03 Rights Not Exclusive. The rights provided for in this Agreement
and the other Loan Documents are cumulative and are not exclusive of any
other rights, powers, privileges or remedies provided by law or in equity,
or under any other instrument, document or agreement now existing or
hereafter arising.
ARTICLE IX
THE AGENT
9.01 Appointment and Authorization; "Administrative Agent". Each Bank
hereby irrevocably (subject to Section 9.09) appoints, designates and
authorizes the Administrative Agent to take such action on its behalf under
the provisions of this Agreement and each other Loan Document and to
exercise such powers and perform such duties as are expressly delegated to
it by the terms of this Agreement or any other Loan Document, together with
such powers as are reasonably incidental thereto. Notwithstanding any
provision to the contrary contained elsewhere in this Agreement or in any
other Loan Document, the Administrative Agent shall not have any duties or
responsibilities, except those expressly set forth herein, nor shall the
Administrative Agent have or be deemed to have any fiduciary relationship
with any Bank, and no implied covenants, functions, responsibilities,
duties, obligations or liabilities shall be read into this Agreement or any
other Loan Document or otherwise exist against the Administrative Agent.
Without limiting the generality of the foregoing sentence, the use of the
term "agent" in this Agreement with reference to the Agents is not intended
to connote any fiduciary or other implied (or express) obligations arising
under agency doctrine of any applicable law. Instead, such term is used
merely as a matter of market custom, and is intended to create or reflect
only an administrative relationship between independent contracting
parties.
9.02 Delegation of Duties. The Administrative Agent may execute any
of its duties under this Agreement or any other Loan Document by or through
agents, employees or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. The
Administrative Agent shall not be responsible for the negligence or
misconduct of any agent or attorney-in-fact that it selects with reasonable
care.
9.03 Liability of Agent-Related Persons. None of the Agent-Related
Persons shall (i) be liable for any action taken or omitted to be taken by
any of them under or in connection with this Agreement or any other Loan
Document or the transactions contemplated hereby (except for its own gross
negligence or willful misconduct), or (ii) be responsible in any manner to
any of the Banks for any recital, statement, representation or warranty
made by the Company or any Subsidiary or Affiliate of the Company, or any
officer thereof, contained in this Agreement or in any other Loan Document,
or in any certificate, report, statement or other document referred to or
provided for in, or received by the Agents under or in connection with,
this Agreement or any other Loan Document, or the validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other
Loan Document, or for any failure of the Company or any other party to any
Loan Document to perform its obligations hereunder or thereunder. No Agent-
Related Person shall be under any obligation to any Bank to ascertain or to
inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or any other Loan Document,
or to inspect the properties, books or records of the Company or any of the
Company's Subsidiaries or Affiliates.
9.04 Reliance by Administrative Agent. (a) The Administrative Agent
shall be entitled to rely, and shall be fully protected in relying, upon
any writing, resolution, notice, consent, certificate, affidavit, letter,
telegram, facsimile, telex or telephone message, statement or other
document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons, and upon
advice and statements of legal counsel (including counsel to the Company),
independent accountants and other experts selected by the Administrative
Agent. The Administrative Agent shall be fully justified in failing or
refusing to take any action under this Agreement or any other Loan Document
unless it shall first receive such advice or concurrence of the Majority
Banks as it deems appropriate and, if it so requests, it shall first be
indemnified to its satisfaction by the Banks against any and all liability
and expense which may be incurred by it by reason of taking or continuing
to take any such action. The Administrative Agent shall in all cases be
fully protected in acting, or in refraining from acting, under this
Agreement or any other Loan Document in accordance with a request or
consent of the Majority Banks and such request and any action taken or
failure to act pursuant thereto shall be binding upon all of the Banks.
(b) For purposes of determining compliance with the conditions
specified in Section 4.01, each Bank that has executed this Agreement shall
be deemed to have consented to, approved or accepted or to be satisfied
with, each document or other matter either sent by the Administrative Agent
to such Bank for consent, approval, acceptance or satisfaction, or required
thereunder to be consented to or approved by or acceptable or satisfactory
to the Bank.
9.05 Notice of Default. The Administrative Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Event of
Default, except with respect to defaults in the payment of principal,
interest and fees required to be paid to the Administrative Agent for the
account of the Banks, unless the Administrative Agent shall have received
written notice from a Bank or the Company referring to this Agreement,
describing such Default or Event of Default and stating that such notice is
a "notice of default." The Administrative Agent will notify the Banks of
its receipt of any such notice. The Administrative Agent shall take such
action with respect to such Default or Event of Default as may be requested
by the Majority Banks in accordance with Article VIII; provided, however,
that unless and until the Administrative Agent has received any such
request, the Administrative Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable or in the best
interest of the Banks.
9.06 Credit Decision. Each Bank acknowledges that none of the Agent-
Related Persons has made any representation or warranty to it, and that no
act by the Administrative Agent hereinafter taken, including any review of
the affairs of the Company and its Subsidiaries, shall be deemed to
constitute any representation or warranty by any Agent-Related Person to
any Bank. Each Bank represents to the Administrative Agent that it has,
independently and without reliance upon any Agent-Related Person and based
on such documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, prospects,
operations, property, financial and other condition and creditworthiness of
the Company and its Subsidiaries, and all applicable bank regulatory laws
relating to the transactions contemplated hereby, and made its own decision
to enter into this Agreement and to extend credit to the Company and its
Subsidiaries hereunder. Each Bank also represents that it will,
independently and without reliance upon any Agent-Related Person and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan
Documents, and to make such investigations as it deems necessary to inform
itself as to the business, prospects, operations, property, financial and
other condition and creditworthiness of the Company. Except for notices,
reports and other documents expressly herein required to be furnished to
the Banks by the Administrative Agent, the Agents shall not have any duty
or responsibility to provide any Bank with any credit or other information
concerning the business, prospects, operations, property, financial and
other condition or creditworthiness of the Company which may come into the
possession of any of the Agent-Related Persons.
9.07 Indemnification of Agent-Related Persons. Whether or not the
transactions contemplated hereby are consummated, the Banks shall indemnify
upon demand each of the Agent-Related Persons (to the extent not reimbursed
by or on behalf of the Company and without limiting the obligation of the
Company to do so), pro rata, from and against any and all Indemnified
Liabilities; provided, however, that no Bank shall be liable for the
payment to the Agent-Related Persons of any portion of such Indemnified
Liabilities resulting solely from such Person's gross negligence or willful
misconduct. Without limitation of the foregoing, each Bank shall reimburse
the Administrative Agent upon demand for its ratable share of any costs or
out-of-pocket expenses (including Attorney Costs) incurred by the
Administrative Agent in connection with the preparation, execution,
delivery, administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice
in respect of rights or responsibilities under, this Agreement, any other
Loan Document, or any document contemplated by or referred to herein, to
the extent that the Administrative Agent is not reimbursed for such
expenses by or on behalf of the Company. The undertaking in this Section
shall survive the payment of all Obligations hereunder and the resignation
or replacement of the Administrative Agent.
9.08 Agents in Individual Capacity. Each of the Agents and their
respective Affiliates may make loans to, issue letters of credit for the
account of, accept deposits from, acquire equity interests in and generally
engage in any kind of banking, trust, financial advisory, underwriting or
other business with the Company and its Subsidiaries and Affiliates as
though they were not the Agents hereunder and without notice to or consent
of the Banks. The Banks acknowledge that, pursuant to such activities, the
Agents and their respective Affiliates may receive information regarding
the Company or its Affiliates (including information that may be subject to
confidentiality obligations in favor of the Company or such Subsidiary) and
acknowledge that the Agents shall be under no obligation to provide such
information to them. With respect to its Loans, each Agent shall have the
same rights and powers under this Agreement as any other Bank and may
exercise the same as though it were not an Agent, and the terms "Bank" and
"Banks" include BofA and NatWest Bank in their individual capacities.
9.09 Successor Agent. The Administrative Agent may, and at the
request of the Majority Banks shall, resign as Administrative Agent upon 30
days' notice to the Banks. If the Administrative Agent resigns under this
Agreement, the Majority Banks shall appoint from among the Banks a
successor agent for the Banks which successor agent shall be approved by
the Company. If no successor agent is appointed prior to the effective
date of the resignation of the Administrative Agent, the Administrative
Agent may appoint, after consulting with the Banks and the Company, a
successor agent from among the Banks. Upon the acceptance of its
appointment as successor agent hereunder, such successor agent shall
succeed to all the rights, powers and duties of the retiring Administrative
Agent and the term "Administrative Agent" shall mean such successor agent
and the retiring Administrative Agent's appointment, powers and duties as
Administrative Agent shall be terminated. After any retiring Administrative
Agent's resignation hereunder as Administrative Agent, the provisions of
this Article IX and Sections 10.04 and 10.05 shall inure to its benefit as
to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement. If no successor agent has
accepted appointment as Administrative Agent by the date which is 30 days
following a retiring Administrative Agent's notice of resignation, the
retiring Administrative Agent's resignation shall nevertheless thereupon
become effective and the Banks shall perform all of the duties of the
Administrative Agent hereunder until such time, if any, as the Majority
Banks appoint a successor agent as provided for above.
9.10 Withholding Tax. (a) If any Bank is a "foreign corporation,
partnership or trust" within the meaning of the Code and such Bank claims
exemption from, or a reduction of, U.S. withholding tax under Sections 1441
or 1442 of the Code, such Bank agrees with and in favor of the
Administrative Agent, to deliver to the Administrative Agent: (i) if such
Bank claims an exemption from, or a reduction of, withholding tax under a
United States tax treaty, two properly completed and executed copies of IRS
Form 1001 before the payment of any interest in the first calendar year and
before the payment of any interest in each third succeeding calendar year
during which interest may be paid under this Agreement; (ii) if such Bank
claims that interest paid under this Agreement is exempt from United States
withholding tax because it is effectively connected with a United States
trade or business of such Bank, two properly completed and executed copies
of IRS Form 4224 before the payment of any interest is due in the first
taxable year of such Bank and in each succeeding taxable year of such Bank
during which interest may be paid under this Agreement; and (iii) such
other form or forms as may be required under the Code or other laws of the
United States as a condition to exemption from, or reduction of, United
States withholding tax.
Such Bank agrees to promptly notify the Administrative Agent of any change
in circumstances which would modify or render invalid any claimed exemption
or reduction.
(b) If any Bank claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form 1001
and such Bank sells, assigns, grants a participation in, or otherwise
transfers all or part of the Obligations of the Company to such Bank, such
Bank agrees to notify the Administrative Agent of the percentage amount in
which it is no longer the beneficial owner of Obligations of the Company to
such Bank. To the extent of such percentage amount, the Administrative
Agent will treat such Bank's IRS Form 1001 as no longer valid.
(c) If any Bank claiming exemption from United States
withholding tax by filing IRS Form 4224 with the Administrative Agent
sells, assigns, grants a participation in, or otherwise transfers all or
part of the Obligations of the Company to such Bank, such Bank agrees to
undertake sole responsibility for complying with the withholding tax
requirements imposed by Sections 1441 and 1442 of the Code.
(d) If any Bank is entitled to a reduction in the applicable
withholding tax, the Administrative Agent may withhold from any interest
payment to such Bank an amount equivalent to the applicable withholding tax
after taking into account such reduction. However, if the forms or other
documentation required by subsection (a) of this Section are not delivered
to the Administrative Agent, then the Administrative Agent may withhold
from any interest payment to such Bank not providing such forms or other
documentation an amount equivalent to the applicable withholding tax
imposed by Sections 1441 and 1442 of the Code, without reduction.
(e) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that the Administrative Agent
did not properly withhold tax from amounts paid to or for the account of
any Bank (because the appropriate form was not delivered or was not
properly executed, or because such Bank failed to notify the Administrative
Agent of a change in circumstances which rendered the exemption from, or
reduction of, withholding tax ineffective, or for any other reason) such
Bank shall indemnify the Administrative Agent fully for all amounts paid,
directly or indirectly, by the Administrative Agent as tax or otherwise,
including penalties and interest, and including any taxes imposed by any
jurisdiction on the amounts payable to the Administrative Agent under this
Section, together with all costs and expenses (including Attorney Costs).
The obligation of the Banks under this subsection shall survive the payment
of all Obligations and the resignation or replacement of the Administrative
Agent.
9.11 Documentation Agent; Arrangers. None of the entities identified
on the facing page, signature pages or otherwise herein of this Agreement
as "Documentation Agent" or "Arranger" shall have any right, power,
obligation, liability, responsibility or duty under this Agreement other
than, in the case of the Documentation Agent, those applicable to all
Banks. Without limiting the foregoing, none of the entities so identified
as a "Documentation Agent" or "Arranger" shall have or be deemed to have
any fiduciary relationship with any Bank. Each Bank acknowledges that it
has not relied, and will not rely, on any of the entities so identified in
deciding to enter into this Agreement or in taking or not taking action
hereunder.
ARTICLE X
MISCELLANEOUS
10.01 Amendments and Waivers. No amendment or waiver of any
provision of this Agreement or any other Loan Document, and no consent with
respect to any departure by the Company or any Guarantor therefrom, shall
be effective unless the same shall be in writing and signed by the Majority
Banks (or by the Administrative Agent at the written request of the
Majority Banks) and the Company and acknowledged by the Administrative
Agent, and then any such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided,
however, that no such waiver, amendment, or consent shall, unless in
writing and signed by all the Banks and the Company and acknowledged by the
Administrative Agent, do any of the following: (a) increase or extend the
Commitment of any Bank (or reinstate any Commitment terminated pursuant to
Section 2.07(b) or Section 8.02); (b) postpone or delay any date fixed by
this Agreement or any other Loan Document for any payment of principal,
interest, fees or other amounts due to the Banks (or any of them) hereunder
or under any other Loan Document; (c) reduce the principal of, or the rate
of interest specified herein on any Loan, or (subject to clause (ii) below)
any fees or other amounts payable hereunder or under any other Loan
Document; (d) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Loans which is required for the Banks or any
of them to take any action hereunder; or (e) amend this Section, or Section
2.14, or any provision herein providing for consent or other action by all
Banks; (f) discharge any Guarantor; (g) amend the definitions of "Change of
Control (Company)", "Change of Control (Conoco)" or "Change of Control
Trigger Event (Conoco)", or (h) waive or amend Section 8.01(j); and,
provided further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by the Administrative Agent in addition to the Majority
Banks or all the Banks, as the case may be, affect the rights or duties of
the Administrative Agent under this Agreement or any other Loan Document,
and (ii) the Fee Letter may be amended, or rights or privileges thereunder
waived, in a writing executed by the parties thereto.
10.02 Notices. (a) All notices, requests, consents, approvals,
waivers and other communications shall be in writing (including, unless the
context expressly otherwise provides, by facsimile transmission, provided
that any matter transmitted by the Company by facsimile (i) shall be
immediately confirmed by a telephone call to the recipient at the number
specified on Schedule 10.02, and (ii) shall be followed promptly by
delivery of a hard copy original thereof) and mailed, faxed or delivered,
to the address or facsimile number specified for notices on Schedule 10.02;
or, as directed to the Company or the Administrative Agent, to such other
address as shall be designated by such party in a written notice to the
other parties, and as directed to any other party, at such other address as
shall be designated by such party in a written notice to the Company and
the Administrative Agent.
(b) All such notices, requests and communications shall, when
transmitted by overnight delivery, or faxed, be effective when delivered
for overnight (next-day) delivery, or transmitted in legible form by
facsimile machine, respectively, or if mailed, upon the third Business Day
after the date deposited into the U.S. mail, or if delivered, upon
delivery; except that notices pursuant to Article II or IX to the
Administrative Agent shall not be effective until actually received by the
Administrative Agent.
(c) Any agreement of the Administrative Agent and the Banks
herein to receive certain notices by telephone or facsimile is solely for
the convenience and at the request of the Company. The Administrative
Agent and the Banks shall be entitled to rely on the authority of any
Person purporting to be a Person authorized by the Company to give such
notice and the Administrative Agent and the Banks shall not have any
liability to the Company or other Person on account of any action taken or
not taken by the Administrative Agent or the Banks in reliance upon such
telephonic or facsimile notice. The obligation of the Company to repay the
Loans shall not be affected in any way or to any extent by any failure by
the Administrative Agent and the Banks to receive written confirmation of
any telephonic or facsimile notice or the receipt by the Administrative
Agent and the Banks of a confirmation which is at variance with the terms
understood by the Administrative Agent and the Banks to be contained in the
telephonic or facsimile notice.
10.03 No Waiver; Cumulative Remedies. No failure to exercise and
no delay in exercising, on the part of the Administrative Agent or any
Bank, any right, remedy, power or privilege hereunder, shall operate as a
waiver thereof; nor shall any single or partial exercise of any right,
remedy, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, remedy, power or privilege.
10.04 Costs and Expenses. The Company shall:
(a) whether or not the transactions contemplated hereby are
consummated, pay or reimburse BofA (including in its capacity as
Administrative Agent) and NatWest (including in its capacity as
Documentation Agent) within five (5) Business Days after demand (subject to
subsection 4.01(e)) for all costs and expenses incurred by each of them in
connection with the development, preparation, delivery, administration,
syndication, and execution of, and any amendment, supplement, waiver or
modification to (in each case, whether or not consummated), this Agreement,
any Loan Document and any other documents prepared in connection herewith
or therewith, and the consummation of the transactions contemplated hereby
and thereby, including Attorney Costs (but not including any allocated cost
of internal counsel incurred in connection with preparation of this
Agreement or preparation for Closing) incurred by BofA (including in its
capacity as Administrative Agent) and NatWest (including in its capacity as
Documentation Agent) with respect thereto; and
(b) pay or reimburse each of the Agents, Arrangers and Banks
within five Business Days after demand (subject to subsection 4.01(e)) for
all costs and expenses (including Attorney Costs) incurred by them in
connection with the enforcement, attempted enforcement, or preservation of
any rights or remedies under this Agreement or any other Loan Document
during the existence of a Default or an Event of Default or after
acceleration of the Loans (including in connection with any "workout" or
restructuring regarding the Loans, and including in any Insolvency
Proceeding or appellate proceeding).
10.05 Company Indemnification. Whether or not the transactions
contemplated hereby are consummated, the Company shall indemnify, defend
and hold each of the Agent-Related Persons, and each Bank, and each of
their respective officers, directors, employees, counsel, agents and
attorneys-in-fact (each, an "Indemnified Person") harmless from and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, charges, expenses and disbursements (including
Attorney Costs) of any kind or nature whatsoever which may at any time
(including at any time following repayment of the Loans and the
termination, resignation or replacement of an Agent or replacement of any
Bank) be imposed on, incurred by or asserted against any such Person in
any way relating to or arising out of this Agreement or any document
contemplated by or referred to herein, or the transactions contemplated
hereby, or any action taken or omitted by any such Person under or in
connection with any of the foregoing, including with respect to any
investigation, litigation or proceeding (including any Insolvency
Proceeding or appellate proceeding) related to or arising out of this
Agreement or the Loans or the use of the proceeds thereof, whether or not
any Indemnified Person is a party thereto (all the foregoing, collectively,
the "Indemnified Liabilities"); provided, that the Company shall have no
obligation hereunder to any Indemnified Person with respect to Indemnified
Liabilities resulting solely from the gross negligence or willful
misconduct of such Indemnified Person. The agreements in this Section shall
survive payment of all other Obligations.
10.06 Marshalling; Payments Set Aside. Neither the Agents nor the
Banks shall be under any obligation to marshall any assets in favor of the
Company or any other Person or against or in payment of any or all of the
Obligations. To the extent that the Company makes a payment to the
Administrative Agent or the Banks, or the Agents or the Banks exercise
their right of set-off, and such payment or the proceeds of such set-off or
any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required (including pursuant to any settlement
entered into by such Agent or Bank in its discretion) to be repaid to a
trustee, receiver or any other party, in connection with any Insolvency
Proceeding or otherwise, then (a) to the extent of such recovery the
obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not
been made or such set-off had not occurred, and (b) each Bank severally
agrees to pay to the Administrative Agent upon demand its pro rata share of
any amount so recovered from or repaid by the Administrative Agent.
10.07 Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns, except that the Company may not
assign or transfer any of its rights or obligations under this Agreement
without the prior written consent of the Administrative Agent and each
Bank.
10.08 Assignments, Participations, Etc. (a) Any Bank may, with
the written consent of the Company (except that the consent of the Company
shall not be required during the existence of an Event of Default) and the
Administrative Agent, which consent of the Company shall not be
unreasonably withheld, at any time assign and delegate to one or more
Eligible Assignees (provided that no written consent of the Company or the
Administrative Agent shall be required in connection with any assignment
and delegation by a Bank to an Eligible Assignee that is an Affiliate of
such Bank) (each an "Assignee") all, or any ratable part of all, of the
Loans, the Commitments and the other rights and obligations of such Bank
hereunder; provided, however, that in the event a Bank assigns less than
all of its interests hereunder, it shall retain a Commitment of not less
than $10,000,000 after the consummation of such assignment; and provided
further that (i) the Company and the Agents may continue to deal solely and
directly with such Bank in connection with the interest so assigned to an
Assignee until (A) written notice of such assignment, together with payment
instructions, addresses and related information with respect to the
Assignee, shall have been given to the Company and the Administrative Agent
by such Bank and the Assignee; (B) such Bank and its Assignee shall have
delivered to the Company and the Administrative Agent an Assignment and
Acceptance in the form of Exhibit E ("Assignment and Acceptance") together
with any Note or Notes subject to such assignment; and (C) the assignor
Bank or Assignee has paid to the Administrative Agent a processing fee in
the amount of $3,500.00.
(b) From and after the date that the Administrative Agent
notifies the assignor Bank that it has received (and provided its consent
with respect to) an executed Assignment and Acceptance and payment of the
above-referenced processing fee, (i) the Assignee thereunder shall be a
party hereto and, to the extent that rights and obligations hereunder have
been assigned to it pursuant to such Assignment and Acceptance, shall have
the rights and obligations of a Bank under the Loan Documents, and (ii) the
assignor Bank shall, to the extent that rights and obligations hereunder
and under the other Loan Documents have been assigned by it pursuant to
such Assignment and Acceptance, relinquish its rights and be released from
its obligations under the Loan Documents.
(c) Within five Business Days after its receipt of notice by the
Administrative Agent that it has received an executed Assignment and
Acceptance and payment of the processing fee, (and provided that it
consents to such assignment in accordance with subsection 10.08(a)), the
Company shall, upon request, execute and deliver to the Administrative
Agent, new Notes evidencing such Assignee's assigned Loans and Commitment
and, if the assignor Bank has retained a portion of its Loans and its
Commitment, replacement Notes in the principal amount of the Loans retained
by the assignor Bank (such Notes to be in exchange for, but not in payment
of, the Notes held by such Bank). Upon the execution of such Notes by the
Company, the Assignee and the assignor Bank shall surrender to the Company
the old Notes in substitution of which the new Notes were executed.
Immediately upon each Assignee's making its processing fee payment under
the Assignment and Acceptance, this Agreement shall be deemed to be amended
to the extent, but only to the extent, necessary to reflect the addition of
the Assignee and the resulting adjustment of the Commitments arising
therefrom. The Commitment allocated to each Assignee shall reduce such
Commitments of the assigning Bank pro tanto.
(d) Any Bank may at any time sell to one or more commercial
banks or other Persons not Affiliates of the Company (a "Participant")
participating interests in any Loans, the Commitment of that Bank and the
other interests of that Bank (the "originating Bank") hereunder and under
the other Loan Documents; provided, however, that (i) the originating
Bank's obligations under this Agreement shall remain unchanged, (ii) the
originating Bank shall remain solely responsible for the performance of
such obligations, (iii) the Company and the Agent shall continue to deal
solely and directly with the originating Bank in connection with the
originating Bank's rights and obligations under this Agreement and the
other Loan Documents, and (iv) no Bank shall transfer or grant any
participating interest under which the Participant has rights to approve
any amendment to, or any consent or waiver with respect to, this Agreement
or any other Loan Document, except to the extent such amendment, consent or
waiver would require unanimous consent of the Banks as described in the
first proviso to Section 10.01. In the case of any such participation, the
Participant shall be entitled to the benefit of Sections 3.01, 3.03 and
10.05 as though it were also a Bank hereunder, and, if amounts outstanding
under this Agreement are due and unpaid, or shall have been declared or
shall have become due and payable upon the occurrence of an Event of
Default, each Participant shall be deemed to have the right of set-off in
respect of its participating interest in amounts owing under this Agreement
to the same extent as if the amount of its participating interest were
owing directly to it as a Bank under this Agreement.
(e) Notwithstanding any other provision in this Agreement, any
Bank may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement and the Note
held by it in favor of any Federal Reserve Bank in accordance with
Regulation A of the FRB or U.S. Treasury Regulation 31 CFR 203.14, and
such Federal Reserve Bank may enforce such pledge or security interest in
any manner permitted under applicable law.
10.09 Confidentiality. Each Bank agrees to take and to cause its
Affiliates to take normal and reasonable precautions and exercise due care
to maintain the confidentiality of all information identified as
"confidential" or "secret" by the Company and provided to it by the
Company or any Subsidiary, or by the Administrative Agent on the Company's
or such Subsidiary's behalf, under this Agreement or any other Loan
Document, and neither it nor any of its Affiliates shall use any such
information other than in connection with or in enforcement of this
Agreement and the other Loan Documents or in connection with other business
now or hereafter existing or contemplated with the Company or any
Subsidiary; except to the extent such information (i) was or becomes
generally available to the public other than as a result of disclosure by
the Bank, or (ii) was or becomes available on a non-confidential basis
from a source other than the Company, provided that such source is not
bound by a confidentiality agreement with the Company known to the Bank;
provided, however, that any Bank may disclose such information (A) at the
request or pursuant to any requirement of any Governmental Authority to
which the Bank is subject or in connection with an examination of such Bank
by any such authority; (B) pursuant to subpoena or other court process;
(C) when required to do so in accordance with the provisions of any
applicable Requirement of Law; (D) to the extent reasonably required in
connection with any litigation or proceeding to which either Agent, any
Bank or their respective Affiliates may be party; (E) to the extent
reasonably required in connection with the exercise of any remedy hereunder
or under any other Loan Document; (F) to such Bank's independent auditors
and other professional advisors; (G) to any Participant or Assignee, actual
or potential, provided that such Person agrees in writing to keep such
information confidential to the same extent required of the Banks
hereunder; (H) as to any Bank or its Affiliate, as expressly permitted
under the terms of any other document or agreement regarding
confidentiality to which the Company or any Subsidiary is party or is
deemed party with such Bank or such Affiliate; and (I) to its Affiliates.
10.10 Set-off. In addition to any rights and remedies of the
Banks provided by law, if an Event of Default exists or the Loans have been
accelerated, each Bank is authorized at any time and from time to time,
without prior notice to the Company, any such notice being waived by the
Company to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final)
at any time held by, and other indebtedness at any time owing by, such Bank
to or for the credit or the account of the Company against any and all
Obligations owing to such Bank, now or hereafter existing, irrespective of
whether or not the Administrative Agent or such Bank shall have made demand
under this Agreement or any Loan Document and although such Obligations may
be contingent or unmatured. Each Bank agrees promptly to notify the
Company and the Administrative Agent after any such set-off and application
made by such Bank; provided, however, that the failure to give such notice
shall not affect the validity of such set-off and application.
10.11 Interest. It is the intention of the parties hereto to
comply strictly with applicable usury laws, if any; accordingly,
notwithstanding any provision to the contrary in this Agreement, the Notes
or in any of the other Loan Documents securing the payment hereof or
otherwise relating hereto, in no event shall this Agreement, the Notes or
such other Loan Documents require or permit the payment, charging, taking,
reserving, or receiving of any sums constituting interest under applicable
laws which exceed the maximum nonusurious amount permitted by such laws.
If any such excess interest is contracted for, charged, taken, reserved, or
received in connection with the Loans or in any of the Loan Documents
securing the payment hereof or otherwise relating hereto, or in any
communication by the Agents or the Banks or any other person to the Company
or any other person, or in the event all or part of the principal or
interest thereof shall be prepaid or accelerated, so that under any of such
circumstances or under any other circumstance whatsoever the amount of
interest contracted for, charged, taken, reserved, or received on the
amount of principal actually outstanding from time to time under the Notes
shall exceed the maximum nonusurious amount of interest permitted by
applicable usury laws, then in any such event it is agreed as follows: (i)
the provisions of this paragraph shall govern and control, (ii) neither the
Company nor any other person or entity now or hereafter liable for payment
of the Obligations shall be obligated to pay the amount of such interest to
the extent such interest is in excess of the maximum amount of interest
permitted by applicable usury laws, (iii) any such excess which is or has
been received notwithstanding this paragraph shall be credited against the
then unpaid principal balance of the Loans, or, if no principal balance is
then outstanding, refunded to the Company, and (iv) the provisions of this
Agreement and the other Loan Documents, and any communication to the
Company shall immediately be deemed reformed and such excess interest
reduced, without the necessity of executing any other document, to the
maximum lawful rate allowed under applicable laws as now or hereafter
construed by courts having jurisdiction hereof or thereof. Without
limiting the foregoing, all calculations of the rate of interest contracted
for, charged, taken, reserved, or received in connection with this
Agreement which are made for the purpose of determining whether such rate
exceeds the maximum nonusurious rate shall be made by amortizing,
prorating, allocating and spreading during the period of the full term of
the Loans, including all prior and subsequent renewals and extensions, all
interest at any time contracted for, charged, taken, reserved, or received.
The terms of this paragraph shall be deemed to be incorporated in every
document and communication relating to the Loans or any other Loan
Document.
10.12 Notification of Addresses, Lending Offices, Etc. Each Bank
shall notify the Administrative Agent in writing of any changes in the
address to which notices to the Bank should be directed, of addresses of
any Lending Office, of payment instructions in respect of all payments to
be made to it hereunder and of such other administrative information as the
Administrative Agent shall reasonably request.
10.13 Counterparts. This Agreement may be executed in any number
of separate counterparts, each of which, when so executed, shall be deemed
an original, and all of said counterparts taken together shall be deemed to
constitute but one and the same instrument.
10.14 Severability. The illegality or unenforceability of any
provision of this Agreement or any instrument or agreement required
hereunder shall not in any way affect or impair the legality or
enforceability of the remaining provisions of this Agreement or any
instrument or agreement required hereunder.
10.15 No Third Parties Benefited. This Agreement is made and
entered into for the sole protection and legal benefit of the Company, the
Banks, the Agents and the Agent-Related Persons, and their permitted
successors and assigns, and no other Person shall be a direct or indirect
legal beneficiary of, or have any direct or indirect cause of action or
claim in connection with, this Agreement or any of the other Loan
Documents.
10.16 Governing Law and Jurisdiction. (a) THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK; PROVIDED THAT THE AGENT AND THE
BANKS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE
STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW
YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE COMPANY,
THE AGENTS AND THE BANKS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE
COMPANY, THE AGENTS AND THE BANKS IRREVOCABLY WAIVES ANY OBJECTION,
INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF
FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF
ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT
OR ANY DOCUMENT RELATED HERETO. THE COMPANY HEREBY IRREVOCABLY DESIGNATES,
APPOINTS AND EMPOWERS CT CORPORATION WITH OFFICES ON THE DATE HEREOF AT
1633 BROADWAY, NEW YORK, NEW YORK 10019, AS ITS DESIGNEE, APPOINTEE AND
AGENT TO RECEIVE, ACCEPT AND ACKNOWLEDGE FOR AND ON ITS BEHALF, AND IN
RESPECT OF ITS PROPERTY, SERVICE OF ANY AND ALL LEGAL PROCESS, SUMMONS,
NOTICES AND DOCUMENTS WHICH MAY BE SERVED IN ANY SUCH ACTION OR PROCEEDING.
IF FOR ANY REASON SUCH DESIGNEE, APPOINTEE AND AGENT SHALL CEASE TO BE
AVAILABLE TO ACT AS SUCH, THE COMPANY AGREES TO DESIGNATE A NEW DESIGNEE,
APPOINTEE AND AGENT IN NEW YORK ON THE TERMS AND FOR THE PURPOSES OF THIS
PROVISION SATISFACTORY TO THE ADMINISTRATIVE AGENT. TO THE EXTENT
PERMITTED BY APPLICABLE LAW, THE COMPANY FURTHER IRREVOCABLY CONSENTS TO
THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH
ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, TO IT AT ITS ADDRESS SET FORTH IN SCHEDULE
10.02, SUCH SERVICE TO BECOME EFFECTIVE TEN DAYS AFTER SUCH MAILING.
NOTHING HEREIN SHALL AFFECT THE RIGHT OF EITHER AGENT OR ANY BANK TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR TO OTHERWISE PROCEED AGAINST THE COMPANY IN ANY OTHER
JURISDICTION. THE COMPANY, THE AGENTS AND THE BANKS EACH WAIVE PERSONAL
SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY
ANY OTHER MEANS PERMITTED BY NEW YORK LAW.
10.17 Waiver of Jury Trial. THE COMPANY, THE BANKS AND THE AGENTS
EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE
OF ACTION
BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN
DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY
ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE
PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR
ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR
OTHERWISE. THE COMPANY, THE BANKS AND THE AGENTS EACH AGREE THAT ANY SUCH
CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY.
WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR
RESPECTIVE
RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY
ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART,
TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER
LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY
TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
10.18 Entire Agreement. This Agreement, together with the other
Loan Documents, embodies the entire agreement and understanding among the
Company, the Banks and the Agents, and supersedes all prior or
contemporaneous agreements and understandings of such Persons, verbal or
written, relating to the subject matter hereof and thereof.
THIS WRITTEN LOAN AGREEMENT, TOGETHER WITH THE OTHER LOAN DOCUMENTS,
REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers
as of the day and year first above written.
DEEPWATER DRILLING II L.L.C.
By:
Name:
Title:
[SIGNATURES CONTINUED ON NEXT PAGE]
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as
Administrative Agent
By:
Claire Liu
Managing Director
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as a
Bank
By:
Claire Liu
Managing Director
[SIGNATURES CONTINUED ON NEXT PAGE]
NATIONAL WESTMINSTER BANK PLC
NEW YORK BRANCH, as
Documentation Agent and as a
Bank
By:
Name:
Title:
NATIONAL WESTMINSTER BANK PLC
NASSAU BRANCH, as a Bank
By:
Name:
Title:
SCHEDULE 1.01
DEFINITIONS
1. As used in this Credit Agreement, the following terms have the
following meanings:
"Affiliate" means, as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under
common control with, such Person. A Person shall be deemed to control
another Person if the controlling Person possesses, directly or indirectly,
the power to direct or cause the direction of the management and policies
of the other Person, whether through the ownership of voting securities,
membership interests, by contract, or otherwise.
"Administrative Agent" means BofA in its capacity as agent for
the Banks hereunder, and any successor agent arising under Section 9.09.
"Agent-Related Persons" means BofA, NatWest Bank and any
successor agent arising under Section 9.09, together with their respective
Affiliates (including the Arrangers), and the officers, directors,
employees, agents and attorneys-in-fact of such Persons and Affiliates.
"Administrative Agent's Payment Office" means the address for
payments set forth on Schedule 10.02 or such other address as the
Administrative Agent may from time to time specify.
"Agreement" means this Credit Agreement.
"Applicable Margin" means (i) with respect to Base Rate Loans,
0.00%; and (ii) with respect to Offshore Rate Loans, 0.35%.
"Arrangers" means BancAmerica ROBERTSON STEPHENS, and NatWest
Markets (each an "Arranger").
"Assignee" has the meaning specified in subsection 10.08(a).
"Attorney Costs" means and includes all fees and disbursements of
any law firm or other external counsel, the allocated cost of internal
legal services and all disbursements of internal counsel.
"Bank" means the institutions specified in the introductory
clause hereto.
"Bankruptcy Code" means the Federal Bankruptcy Reform Act of 1978
(11 U.S.C. 101, et seq.).
"Base Rate" means, for any day, the higher of: (a) 0.50% per
annum above the latest Federal Funds Rate; and (b) the rate of interest in
effect for such day as publicly announced from time to time by BofA in San
Francisco, California, as its "reference rate." (The "reference rate" is a
rate set by BofA based upon various factors including BofA's costs and
desired return, general economic conditions and other factors, and is used
as a reference point for pricing some loans, which may be priced at, above,
or below such announced rate.) Any change in the reference rate announced
by BofA shall take effect at the opening of business on the day specified
in the public announcement of such change.
"Base Rate Loan" means a Loan that bears interest based on the
Base Rate.
"BofA" means Bank of America National Trust and Savings
Association, a national banking association.
"Borrowing" means a borrowing hereunder consisting of Loans of
the same Type made to the Company on the same day by the Banks under
Article II, and, other than in the case of Base Rate Loans, having the same
Interest Period.
"Borrowing Date" means any date on which a Borrowing occurs under
Section 2.03.
"BRS" means BancAmerica ROBERTSON STEPHENS.
"Business Day" means any day other than a Saturday, Sunday or
other day on which commercial banks in New York City or San Francisco are
authorized or required by law to close and, if the applicable Business Day
relates to any Offshore Rate Loan, means such a day on which dealings are
carried on in the applicable offshore dollar interbank market.
"Capital Adequacy Regulation" means any guideline, request or
directive of any central bank or other Governmental Authority, or any other
law, rule or regulation, whether or not having the force of law, in each
case, regarding capital adequacy of any bank or of any corporation
controlling a bank.
"Change of Control (Company)" means the date upon which (i)
Conoco Development II Inc. ("CDII") shall cease to own, free and clear of
all Liens (other than Liens granted to the Company and RB Deepwater
Exploration II ("RBII") pursuant to Section 5.6 of the Limited Liability
Company Agreement), at least 40% of the equity in the Company, or (ii) RB
Deepwater Exploration II ("RBII") shall cease to own, free and clear of all
Liens (other than Liens granted to the Company and CDII pursuant to Section
5.6 of the Limited Liability Company Agreement), all the equity interest in
the Company not owned by Conoco; or (iii) R&B shall cease to own, free and
clear of all Liens, directly or indirectly, all of the equity interests in
RBII, or (iv) CDII shall cease to be an Affiliate of Conoco; or (v) CDII
shall cease to have at least fifty percent (50%) management control of the
Company.
"Change of Control (Conoco)" means (a) such time as E. I. du Pont
de Nemours and Company ("DuPont") shall not own directly or indirectly more
than fifty percent (50%) of the beneficial ownership interests in, and the
voting stock of, Conoco, or (b) a sale of all or substantially all of the
assets of Conoco and its Subsidiaries taken as a whole to any "person" or
"group" within the meaning of Section 13(d)(3) and Section 14(d)(2) of the
Securities and Exchange Act of 1934; or (c) the liquidation or dissolution
of Conoco.
"Change of Control Trigger Event (Conoco)" means the occurrence
of a Change of Control (Conoco) unless (a) the Rating of Conoco (or its
Parent Company as defined in this paragraph) is not less than A2 from
Moody's Investors Service, Inc. ("Moody's") and not less than A from
Standard & Poor's Corporation ("S&P"), or (b) in the event that Conoco is
merged into another corporation organized under the laws of a state in the
United States (a "Domestic Corporation") or a Domestic Corporation acquires
all or substantially all of the assets of Conoco, and such Domestic
Corporation ("acquiror") has a Rating of not less than A2 from Moody's and
not less than A from S&P, provided that the acquiror assumes Conoco's
obligations under the Guaranty Agreement executed by it pursuant to an
assumption agreement reasonably satisfactory to the Majority Banks and
delivers an opinion of counsel in form reasonably satisfactory to the
Majority Banks in connection therewith. As used in this definition,
"Parent Company" means a Domestic Corporation that owns more than fifty
percent (50%) or more of the beneficial interests in, and the voting stock
of, Conoco.
"Closing Date" means the date on which all conditions precedent
set forth in Section 4.01 are satisfied or waived by all Banks (or, in the
case of subsection 4.01(e), waived by the Person entitled to receive such
payment).
"Code" means the Internal Revenue Code of 1986, and regulations
promulgated thereunder.
"Commitment", as to each Bank, has the meaning specified in
Section 2.01.
"Compliance Certificate" means a certificate substantially in the
form of Exhibit C.
"Conoco" means Conoco Inc., its successors and assigns.
"Contingent Obligation" means, as to any Person, any direct or
indirect liability of that Person, whether or not contingent, with or
without recourse, (a) with respect to any Indebtedness, lease, dividend,
letter of credit or other obligation (the "primary obligations") of another
Person (the "primary obligor"), including any obligation of that Person
(i) to purchase, repurchase or otherwise acquire such primary obligations
or any security therefor, (ii) to advance or provide funds for the payment
or discharge of any such primary obligation, or to maintain working capital
or equity capital of the primary obligor or otherwise to maintain the net
worth or solvency or any balance sheet item, level of income or financial
condition of the primary obligor, (iii) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such
primary obligation of the ability of the primary obligor to make payment of
such primary obligation, or (iv) otherwise to assure or hold harmless the
holder of any such primary obligation against loss in respect thereof
(each, a "Guaranty Obligation"); (b) with respect to any Surety Instrument
issued for the account of that Person or as to which that Person is
otherwise liable for reimbursement of drawings or payments; (c) to purchase
any materials, supplies or other property from, or to obtain the services
of, another Person if the relevant contract or other related document or
obligation requires that payment for such materials, supplies or other
property, or for such services, shall be made regardless of whether
delivery of such materials, supplies or other property is ever made or
tendered, or such services are ever performed or tendered, or (d) in
respect of any Swap Contract. The amount of any Contingent Obligation
shall, in the case of Guaranty Obligations, be deemed equal to the stated
or determinable amount of the primary obligation in respect of which such
Guaranty Obligation is made or, if not stated or if indeterminable, the
maximum reasonably anticipated liability in respect thereof, and in the
case of other Contingent Obligations other than in respect of Swap
Contracts, shall be equal to the maximum reasonably anticipated liability
in respect thereof and, in the case of Contingent Obligations in respect of
Swap Contracts, shall be equal to the Swap Termination Value.
"Contractual Obligation" means, as to any Person, any provision
of any security issued by such Person or of any agreement, undertaking,
contract, indenture, mortgage, deed of trust or other instrument, document
or agreement to which such Person is a party or by which it or any of its
property is bound.
"Conversion/Continuation Date" means any date on which, under
Section 2.04, the Company (a) converts Loans of one Type to another Type,
or (b) continues as Loans of the same Type, but with a new Interest Period,
Loans having Interest Periods expiring on such date.
"Default" means any event or circumstance which, with the giving
of notice, the lapse of time, or both, would (if not cured or otherwise
remedied during such time) constitute an Event of Default.
"Dollars", "dollars" and "$" each mean lawful money of the United
States.
"Drillship" means that certain double-hulled 721-foot long
deepwater drillship under construction (as of the Closing Date) for the
Company by Samsung Heavy Industries Co., Ltd.
"Eligible Assignee" means (a) a commercial bank organized under
the laws of the United States, or any state thereof, and having a combined
capital and surplus of at least $100,000,000; (b) a commercial bank
organized under the laws of any other country which is a member of the
Organization for Economic Cooperation and Development (the "OECD"), or a
political subdivision of any such country, and having a combined capital
and surplus of at least $100,000,000, provided that such bank is acting
through a branch or agency located in the United States; and (c) a Person
that is primarily engaged in the business of commercial banking and that is
(i) a Subsidiary of a Bank, (ii) a Subsidiary of a Person of which a Bank
is a Subsidiary, or (iii) a Person of which a Bank is a Subsidiary.
"Environmental Claims" means all claims, however asserted, by any
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for release or
injury to the environment or threat to public health, personal injury
(including sickness, disease or death), property damage, natural resources
damage, or otherwise alleging liability or responsibility for damages
(punitive or otherwise), cleanup, removal, remedial or response costs,
restitution, civil or criminal penalties, injunctive relief, or other type
of relief, resulting from or based upon the presence, placement, discharge,
emission or release (including intentional and unintentional, negligent and
non-negligent, sudden or non-sudden, accidental or non-accidental,
placement, spills, leaks, discharges, emissions or releases) of any
Hazardous Material at, in, or from property, whether or not owned by the
Company.
"Environmental Laws" means all federal, state or local laws,
statutes, common law duties, rules, regulations, ordinances and codes,
together with all administrative orders, directed duties, requests,
licenses, authorizations and permits of, and agreements with, any
Governmental Authorities, in each case relating to environmental, health,
safety and land use matters.
"ERISA" means the Employee Retirement Income Security Act of
1974, and regulations promulgated thereunder.
"Event of Default" means any of the events or circumstances
specified in Section 8.01.
"Exchange Act" means the Securities Exchange Act of 1934, and
regulations promulgated thereunder.
"FDIC" means the Federal Deposit Insurance Corporation, and any
Governmental Authority succeeding to any of its principal functions.
"Federal Funds Rate" means, for any day, the rate set forth in
the weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Bank of New York (including
any such successor, "H.15(519)") on the preceding Business Day opposite the
caption "Federal Funds (Effective)"; or, if for any relevant day such rate
is not so published on any such preceding Business Day, the rate for such
day will be the arithmetic mean as determined by the Agent of the rates for
the last transaction in overnight Federal funds arranged prior to 9:00 a.m.
(New York City time) on that day by each of three leading brokers of
Federal funds transactions in New York City selected by the Agent.
"Fee Letter" has the meaning specified in subsection 2.09(a).
"FRB" means the Board of Governors of the Federal Reserve System,
and any Governmental Authority succeeding to any of its principal
functions.
"Further Taxes" means any and all present or future taxes,
levies, assessments, imposts, duties, deductions, fees, withholdings or
similar charges (including, without limitation, net income taxes and
franchise taxes), and all liabilities with respect thereto, imposed by any
jurisdiction on account of amounts payable or paid pursuant to Section
3.01.
"GAAP" means generally accepted accounting principles set forth
from time to time in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants
and statements and pronouncements of the Financial Accounting Standards
Board (or agencies with similar functions of comparable stature and
authority within the U.S. accounting profession), which are applicable to
the circumstances as of the date of determination.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof, any central bank (or similar
monetary or regulatory authority) thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.
"Guarantor" means each of Reading & Bates Corporation, Conoco
Inc., and the R&B Subsidiary Guarantors.
.
"Guaranty Agreement" means each Guaranty Agreement substantially
in the form of Exhibit G-1 or Exhibit G-2 hereto, executed by a Guarantor
in favor of the Agents and the Banks, as the same may be amended,
supplemented, or otherwise modified from time to time.
"Guaranty Obligation" has the meaning specified in the definition
of "Contingent Obligation."
"Hazardous Materials" means all those substances that are
regulated by, or which may form the basis of liability under, any
Environmental Law, including any substance identified under any
Environmental Law as a pollutant, contaminant, hazardous waste, hazardous
constituent, special waste, hazardous substance, hazardous material, or
toxic substance, or petroleum or petroleum derived substance or waste.
"Indebtedness" of any Person means, without duplication, (a) all
indebtedness for borrowed money; (b) all obligations issued, undertaken or
assumed as the deferred purchase price of property or services (other than
trade payables entered into in the ordinary course of business on ordinary
terms); (c) all reimbursement or payment obligations with respect to Surety
Instruments; (d) all obligations evidenced by notes, bonds, debentures or
similar instruments, including obligations so evidenced incurred in
connection with the acquisition of property, assets or businesses; (e) all
indebtedness created or arising under any conditional sale or other title
retention agreement, or incurred as financing, in either case with respect
to property acquired by the Person (even though the rights and remedies of
the seller or bank under such agreement in the event of default are limited
to repossession or sale of such property); (f) all obligations with respect
to capital leases; (g) all net obligations with respect to Swap Contracts,
(h) all indebtedness referred to in clauses (a) through (g) above secured
by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien upon or in property
(including accounts and contracts rights) owned by such Person, even though
such Person has not assumed or become liable for the payment of such
Indebtedness; and (i) all Guaranty Obligations in respect of indebtedness
or obligations of others of the kinds referred to in clauses (a) through
(h) above. For all purposes of this Agreement, the Indebtedness of any
Person shall include all recourse Indebtedness of any partnership or joint
venture or limited liability company in which such Person is a general
partner or a joint venturer or a member.
"Indemnified Liabilities" has the meaning specified in Section
10.05.
"Indemnified Person" has the meaning specified in Section 10.05.
"Independent Auditor" has the meaning specified in subsection
6.01(a).
"Initial Borrowing Date" means the date of the initial Borrowing
hereunder.
"Insolvency Proceeding" means, with respect to any Person,
(a) any case, action or proceeding with respect to such Person before any
court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution, winding-
up or relief of debtors, or (b) any general assignment for the benefit of
creditors, composition, marshalling of assets for creditors, or other,
similar arrangement in respect of its creditors generally or any
substantial portion of its creditors; undertaken under U.S. Federal, state
or foreign law, including the Bankruptcy Code.
"Interest Payment Date" means, as to any Loan other than a Base
Rate Loan, the last day of each Interest Period applicable to such Loan
and, as to any Base Rate Loan, the last Business Day of each calendar
quarter and each date such Loan is converted into another Type of Loan,
provided, however, that, if any Interest Period for an Offshore Rate Loan
exceeds three months, the date that falls three months after the beginning
of such Interest Period and after each Interest Payment Date thereafter is
also an Interest Payment Date.
"Interest Period" means, as to any Offshore Rate Loan, the period
commencing on the Borrowing Date of such Loan or on the
Conversion/Continuation Date on which the Loan is converted into or
continued as an Offshore Rate Loan, and ending on the date one, two, three
or six months thereafter as selected by the Company in its Notice of
Borrowing or Notice of Conversion/Continuation; provided that: (i) if any
Interest Period would otherwise end on a day that is not a Business Day,
that Interest Period shall be extended to the following Business Day
unless, in the case of an Offshore Rate Loan, the result of such extension
would be to carry such Interest Period into another calendar month, in
which event such Interest Period shall end on the preceding Business Day;
(ii) any Interest Period pertaining to an Offshore Rate Loan that begins on
the last Business Day of a calendar month (or on a day for which there is
no numerically corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Business Day of the calendar month
at the end of such Interest Period; and (iii) no Interest Period for any
Revolving Loan shall extend beyond the Revolving Termination Date.
"IRS" means the Internal Revenue Service, and any Governmental
Authority succeeding to any of its principal functions under the Code.
"Joint Venture" means a single-purpose corporation, partnership,
limited liability company, joint venture or other similar legal arrangement
(whether created by contract or conducted through a separate legal entity)
now or hereafter formed by the Company or any of its Subsidiaries with
another Person in order to conduct a common venture or enterprise with such
Person.
"Lending Office" means, as to any Bank, the office or offices of
such Bank specified as its "Lending Office" or "Domestic Lending Office" or
"Offshore Lending Office", as the case may be, on Schedule 10.02, or such
other office or offices as the Bank may from time to time notify the
Company and the Administrative Agent.
"Lien" means any security interest, mortgage, deed of trust,
pledge, hypothecation, assignment, charge or deposit arrangement,
encumbrance, lien (statutory or other) or preferential arrangement of any
kind or nature whatsoever in respect of any property (including those
created by, arising under or evidenced by any conditional sale or other
title retention agreement, the interest of a lessor under a capital lease,
any financing lease having substantially the same economic effect as any of
the foregoing, or the filing of any financing statement naming the owner of
the asset to which such lien relates as debtor, under the Uniform
Commercial Code or any comparable law) and any contingent or other
agreement to provide any of the foregoing, but not including the interest
of a lessor under an operating lease.
"Limited Liability Company Agreement" means the Limited Liability
Company Agreement pursuant to which the Company was created, between Conoco
Development II Inc. and RB Deepwater Exploration II Inc. dated April 30,
1997, as the same may be amended from time to time; provided, however, that
the consent of the Majority Banks shall be required prior to the making of
any amendment that, in the opinion of the Majority Banks, could be
construed to have a material adverse effect on the Banks.
"LLC Agreement Amendment Event" means the Limited Liability
Company Agreement is amended without the prior written consent of the
Administrative Agent (acting upon direction of the Majority Banks) if, in
the opinion of the Majority Banks, such amendment could be construed to
have a material adverse effect on the Banks.
"Loan" means an extension of credit by a Bank to the Company
under Article II, and may be a Base Rate Loan or an Offshore Rate Loan
(each, a "Type" of Loan).
"Loan Documents" means this Agreement, any Notes, the Fee Letter,
and all other documents delivered to either Agent or any Bank in connection
with the transactions contemplated by this Agreement.
"Majority Banks" means at any time Banks then holding at least
51% of the then aggregate unpaid principal amount of the Loans, or, if no
such principal amount is then outstanding, Banks then having at least 51%
of the Commitments.
"Margin Stock" means "margin stock" as such term is defined in
Regulation G, T, U or X of the FRB.
"Material Adverse Effect" means (a) a material adverse change in,
or a material adverse effect upon, the operations, business, properties,
condition (financial or otherwise) or prospects of (x) the Company, (y)
Conoco or (z) R&B and its subsidiaries taken as a whole; (b) a material
impairment of the ability of the Company or any Guarantor to perform under
any Loan Document and to avoid any Event of Default; or (c) a material
adverse effect upon the legality, validity, binding effect or
enforceability against the Company or any Guarantor of any Loan Document.
"NatWest Bank" means National Westminster Bank Plc.
"Note" means a promissory note executed by the Company in favor
of a Bank pursuant to subsection 2.02(b), in substantially the form of
Exhibit F.
"Notice of Borrowing" means a notice in substantially the form of
Exhibit A.
"Notice of Conversion/Continuation" means a notice in
substantially the form of Exhibit B.
"Obligations" means all advances, debts, liabilities,
obligations, covenants and duties arising under any Loan Document owing by
the Company to any Bank, either Agent, or any Indemnified Person, whether
direct or indirect (including those acquired by assignment), absolute or
contingent, due or to become due, now existing or hereafter arising.
"Offshore Rate" means, for any Interest Period, with respect to
Offshore Rate Loans comprising part of the same Borrowing, the rate of
interest per annum determined by the Administrative Agent to be the offered
rate per annum at which deposits in Dollars appear on the Telerate Page
3750 (or any successor page) as of 11:00 a.m. (London time), two (2)
Business Days prior to (and for value on) the commencement of such Interest
Period in an amount approximately equal to the amount of the Offshore Rate
Loans of the Banks during such Interest Period and for a period of time
comparable to such Interest Period, or in the event such offered rate is
not available from the Telerate Page, then the Offshore Rate shall be equal
to the rate per annum determined by the Administrative Agent to be the
average (rounded upwards to the next higher 1/16 of 1%) of the respective
rates per annum shown on Reuter's Monitor Money Rates Service "LIBO" page
at which deposits in dollars are offered in the London Interbank
Eurocurrency Market at or about 11:00 a.m. (London time), two (2) Business
Days prior to (and for value on) the commencement of an Interest Period in
an amount approximately equal to the amount of the Offshore Rate Loans of
the Banks during such Interest Period and for a period of time comparable
to such Interest Period, and in the event neither such Telerate nor such
Reuter's rate is available from such Telerate Page or such Reuter's
Service, then the Offshore Rate shall be equal to the rate of interest per
annum determined by the Administrative Agent to be the rate at which dollar
deposits for such Interest Period and in an amount approximately equal to
the amount of the Offshore Rate Loan of BofA during such Interest Period
would be offered by BofA's applicable Lending Office to major banks in the
London eurodollar market at or about 11:00 a.m. (London time) two Business
Days prior to the commencement of such Interest Period.
"Offshore Rate Loan" means a Loan that bears interest based on
the Offshore Rate.
"Organization Documents" means, for any corporation, the
certificate or articles of incorporation, the bylaws, any certificate of
determination or instrument relating to the rights of preferred
shareholders of such corporation, any shareholder rights agreement, and all
applicable resolutions of the board of directors (or any committee thereof)
of such corporation.
"Other Taxes" means any present or future stamp, court or
documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or from the execution,
delivery, performance, enforcement or registration of, or otherwise with
respect to, this Agreement or any other Loan Documents.
"Participant" has the meaning specified in subsection 10.08(d).
"Pension Plan" means a pension plan (as defined in Section 3(2)
of ERISA) subject to Title IV of ERISA which the Company sponsors,
maintains, or to which it makes, is making, or is obligated to make
contributions, or in the case of a multiple employer plan (as described in
Section 4064(a) of ERISA) has made contributions at any time during the
immediately preceding five (5) plan years.
"Permitted Liens" has the meaning specified in Section 7.01.
"Permitted Swap Obligations" means an agreement providing for an
interest rate swap. .
"Person" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust,
unincorporated association, joint venture or Governmental Authority.
"Plan" means an employee benefit plan (as defined in Section 3(3)
of ERISA) which the Company sponsors or maintains or to which the Company
makes, is making, or is obligated to make contributions and includes any
Pension Plan.
"Pro Rata Share" means, as to any Bank at any time, the
percentage equivalent (expressed as a decimal, rounded to the ninth decimal
place) at such time of such Bank's Commitment divided by the combined
Commitments of all Banks.
"Rating" means the rating assigned by the applicable rating
agency to senior unsecured (non-credit enhanced) long-term debt.
"R&B" means Reading & Bates Corporation, its successors and
assigns.
"R&B Credit Facility means (a) the credit arrangements evidenced
by the Amended and Restated Credit Agreement dated as of July 3, 1997 among
Reading & Bates Corporation, Reading & Bates Drilling Co. and the
Documentation Agents, and the Administrative Agent, Arranger and Security
Trustee therein named, as may be further amended with the consent of the
Majority Banks (if such consent is required pursuant to the terms of the
Guaranty Agreement executed by R&B and the R&B Subsidiary Guarantors), and
(b) any credit arrangement or Indebtedness entered into or incurred in
renewal, extension, replacement or restatement thereof.
"R&B Subsidiary Guarantors" means Reading & Bates Drilling Co.,
Reading & Bates Exploration Co., Reading & Bates (A) Pty. Ltd., Reading and
Bates Borneo Drilling Co., Ltd., Reading & Bates Offshore, Limited and RB
Rig Corporation and each other direct and indirect subsidiaries of R&B that
delivers a Guaranty Agreement pursuant to this Agreement.
"Replacement Bank" has the meaning specified in Section 3.08.
"Requirement of Law" means, as to any Person, any law (statutory
or common), treaty, rule or regulation or determination of an arbitrator or
of a Governmental Authority, in each case applicable to or binding upon the
Person or any of its property or to which the Person or any of its property
is subject.
"Responsible Officer" means (i) with respect to the Company, the
manager of the Company or a Representative (as defined in the Limited
Liability Company Agreement); (ii) with respect to Conoco, Conoco's
assistant treasurer or vice president - finance; or (iii) with respect to
R&B and the R&B Subsidiary Guarantors, the chief financial officer of R&B
or the controller of R&B.
"Revolving Loan" has the meaning specified in Section 2.01.
"Revolving Termination Date" means the earlier to occur of: (a)
November 9, 1998; and (b) the date on which the Commitments terminate in
accordance with the provisions of this Agreement.
"SEC" means the Securities and Exchange Commission, or any
Governmental Authority succeeding to any of its principal functions.
"Solvent" means, as to any Person at any time, that (a) the fair
value of the property of such Person is greater than or equal to the amount
of such Person's liabilities (including disputed, contingent and
unliquidated liabilities) as such value is established and liabilities
evaluated for purposes of Section 101(32) of the Bankruptcy Code and, in
the alternative, for purposes of the New York Uniform Fraudulent Transfer
Act; (b) the present fair saleable value of the property of such Person is
not less than the amount that will be required to pay the probable
liability of such Person on its debts as they become absolute and matured;
(c) such Person is able to realize upon its property and pay its debts and
other liabilities (including disputed, contingent and unliquidated
liabilities) as they mature in the normal course of business; (d) such
Person does not intend to, and does not believe that it will, incur debts
or liabilities beyond such Person's ability to pay as such debts and
liabilities mature; and (e) such Person is not engaged in business or a
transaction, and is not about to engage in business or a transaction, for
which such Person's property would constitute unreasonably small capital.
"Subsidiary" or "subsidiary" of a Person means any corporation,
association, partnership, limited liability company, joint venture or other
business entity of which more than 50% of the voting stock, membership
interests or other equity interests (in the case of Persons other than
corporations), is owned or controlled directly or indirectly by the Person,
or one or more of the Subsidiaries of the Person, or a combination thereof.
Unless the context otherwise clearly requires, references herein to a
"Subsidiary" refer to a Subsidiary of the Company. The Company shall not
be considered a "Subsidiary" or "subsidiary" of R&B or Conoco for purposes
of this Agreement or the other Loan Documents.
"Surety Instruments" means all letters of credit (including
standby and commercial), banker's acceptances, bank guaranties, shipside
bonds, surety bonds and similar instruments.
"Swap Contract" means any agreement, whether or not in writing,
relating to any transaction that is a rate swap, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity index swap
or option, bond, note or bill option, interest rate option, forward foreign
exchange transaction, cap, collar or floor transaction, currency swap,
cross-currency rate swap, swaption, currency option or any other, similar
transaction (including any option to enter into any of the foregoing) or
any combination of the foregoing, and, unless the context otherwise clearly
requires, any master agreement relating to or governing any or all of the
foregoing.
"Swap Termination Value" means, in respect of any one or more
Swap Contracts, after taking into account the effect of any legally
enforceable netting agreement relating to such Swap Contracts, (a) for any
date on or after the date such Swap Contracts have been closed out and
termination value(s) determined in accordance therewith, such termination
value(s), and (b) for any date prior to the date referenced in clause (a)
the amount(s) determined as the mark-to-market value(s) for such Swap
Contracts, as determined based upon one or more mid-market or other readily
available quotations provided by any recognized dealer in such Swap
Contracts (which may include any Bank.)
"Taxes" means any and all present or future taxes, levies,
assessments, imposts, duties, deductions, fees, withholdings or similar
charges, and all liabilities with respect thereto, excluding, in the case
of each Bank and the Agent, respectively, taxes imposed on or measured by
its net income or net profits by the jurisdiction (or any political
subdivision thereof) under the laws of which such Bank or the Agent, as the
case may be, is organized or maintains a Lending Office.
"Type" has the meaning specified in the definition of "Loan."
"United States" and "U.S." each means the United States of
America.
"Wholly-Owned Subsidiary" means any corporation in which (other
than directors' qualifying shares required by law) 100% of the capital
stock of each class having ordinary voting power, and 100% of the capital
stock of every other class, in each case, at the time as of which any
determination is being made, is owned, beneficially and of record, by the
Company, or by one or more of the other Wholly-Owned Subsidiaries, or both.
2. Other Interpretive Provisions. (a) The meanings of defined terms
are equally applicable to the singular and plural forms of the defined
terms.
(b) The words "hereof", "herein", "hereunder" and similar words
refer to this Agreement as a whole and not to any particular provision of
this Agreement; and subsection, Section, Schedule and Exhibit references
are to this Agreement unless otherwise specified.
(c) (i) the term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other
writings, however evidenced; (ii) the term "including" is not limiting and
means "including without limitation"; (iii) In the computation of periods
of time from a specified date to a later specified date, the word "from"
means "from and including"; the words "to" and "until" each mean "to but
excluding", and the word "through" means "to and including"; and (iv) the
term "property" includes any kind of property or asset, real, personal or
mixed, tangible or intangible.
(d) Unless otherwise expressly provided herein, (i) references
to agreements (including this Agreement) and other contractual instruments
shall be deemed to include all subsequent amendments and other
modifications thereto, but only to the extent such amendments and other
modifications are not prohibited by the terms of any Loan Document, and
(ii) references to any statute or regulation are to be construed as
including all statutory and regulatory provisions consolidating, amending,
replacing, supplementing or interpreting the statute or regulation.
(e) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation of
this Agreement.
(f) This Agreement and other Loan Documents may use several
different limitations, tests or measurements to regulate the same or
similar matters. All such limitations, tests and measurements are
cumulative and shall each be performed in accordance with their terms.
Unless otherwise expressly provided, any reference to any action of the
Agents or the Banks by way of consent, approval or waiver shall be deemed
modified by the phrase "in its/their sole discretion."
(g) This Agreement and the other Loan Documents are the result
of negotiations among and have been reviewed by counsel to the Agents, the
Company and the other parties, and are the products of all parties.
Accordingly, they shall not be construed against the Banks or the Agents
merely because of the Agents' or Banks' involvement in their preparation.
3. Accounting Principles. (a) Unless the context otherwise clearly
requires, all accounting terms not expressly defined herein shall be
construed, and all financial computations required under this Agreement
shall be made, in accordance with GAAP, consistently applied.
(b) References herein to "fiscal year" and "fiscal quarter"
refer to such fiscal periods of the Company.
SCHEDULE 2.01
COMMITMENTS
AND PRO RATA SHARES
Pro Rata
Bank Commitment Share
Bank of America $87,500,000 50%
National
Trust and Savings
Association
National Westminster $87,500,000 50%
Bank Plc
TOTAL $175,000,000 100%
SCHEDULE 5.16
SUBSIDIARIES AND MINORITY INTERESTS
None
SCHEDULE 7.01
LIENS
None
SCHEDULE 7.05
INDEBTEDNESS
Indebtedness to RBII and CDII in the aggregate amount of $77,250,900 as of
September 30, 1997. Such Indebtedness shall be repaid with the proceeds of
the Initial Borrowing.
SCHEDULE 10.02
OFFSHORE AND DOMESTIC LENDING OFFICES
ADDRESSES FOR NOTICES
COMPANY
Address for Notices:
Deepwater Drilling II L.L.C.
901 Threadneedle, Suite 200
Houston, Texas 77079-2902
Attn: Mr. Tim W. Nagle
With a copy to:
Mr. Robert Heinrich
Conoco Inc.
600 N. Dairy Ashford, Suite ML3066
Houston, Texas 77079-6651
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Administrative Agent
Address for Notices (including
Notice of Borrowing):
Bank of America National Trust
and Savings Association
Agency Administration Services #5596
1850 Gateway Blvd., 5th Floor
Concord, California 94520
Attn: Andrew Hui
Telephone: (510) 675-8365
Facsimile: (510) 675-8500
With a copy to:
Bank of America National Trust
and Savings Association
Three Allen Center
Suite 4550
Houston, TX 77002
Attn: Claire Liu
Telephone: (713) 651-4855
Facsimile: (713) 651-4807
Administrative Agent's Payment
Office:
Bank of America National Trust
and Savings Association
Agency Administration Services #5596
1850 Gateway Blvd., 5th Floor
Concord, California 94520
Attn: Andrew Hui
Telephone: (510) 675-8365
Facsimile: (510) 675-8500
ABA No.: 121000358
Ref: Deepwater Drilling
Acct. No.: 12331-15905
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as a Bank
Address of Domestic and
Offshore Lending Office:
Bank of America National Trust
and Savings Association
231 South LaSalle Street
Chicago, IL 60697
Attn: Ida Rubens
Telephone: (312) 828-5239
Facsimile: (312) 974-9626
Address for Notices:
Bank of America National Trust
and Savings Association
Three Allen Center
Suite 4550
Houston, TX 77002
Attn: Claire Liu
Telephone: (713) 651-4855
Facsimile: (713) 651-4807
NATIONAL WESTMINSTER BANK PLC,
as a Bank
Address of Domestic and
Offshore Lending
Office and Address for Notices:
National Westminster Bank Plc
New York Branch
175 Water Street, Floor 19
New York, New York 10038
Attn: Mr. Paul Carter
Vice President & Manager
Telephone: (212) 602-4249
Facsimile: (212) 602-4118
With a copy to:
NatWest Markets
North American Energy
600 Travis Street, Suite 6070
Houston, Texas 77002
Attn: Inga Laughlin Smith
Telephone: (713) 221-2416
Facsimile: (713) 221-2431
Exhibit 10.14
GUARANTY AGREEMENT
(Reading & Bates)
THIS GUARANTY AGREEMENT (this "Guaranty") is dated as of November 10,
1997 and is by READING & BATES CORPORATION ("R&B Corp."), a Delaware
corporation, READING & BATES DRILLING CO. ("R&B Drilling"), an Oklahoma
corporation, READING & BATES EXPLORATION CO. ("R&B Exploration"), an
Oklahoma corporation, READING & BATES (A) PTY. LTD. ("R&B (A) Pty"), a
Western Australian corporation, READING AND BATES BORNEO DRILLING CO., LTD.
("RB Borneo"), an Oklahoma corporation, READING & BATES OFFSHORE, LIMITED
("R&B Offshore"), an Oklahoma corporation, and RB RIG CORPORATION ("RB"),
an Oklahoma corporation (each, a "Guarantor" and collectively, the
"Guarantors"), is in favor of BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, as administrative agent (in such capacity, the "Administrative
Agent") for its benefit and for the ratable benefit of the Documentation
Agent and the financial institutions (the "Banks") now or hereafter party
to that certain Credit Agreement dated as of November 10, 1997 (as the same
may be amended, modified or restated from time to time and at any time, the
"Credit Agreement"), among DEEPWATER DRILLING II L.L.C (the "Borrower"),
the Banks, the Administrative Agent, and NATIONAL WESTMINSTER BANK Plc, as
Documentation Agent.
W I T N E S S E T H:
WHEREAS, pursuant to the terms of the Credit Agreement, the Banks have
agreed to extend credit to the Borrower;
WHEREAS, the obligation of the Banks to extend credit is conditioned
upon, among other things, the execution and delivery by the Guarantors of
this Guaranty;
WHEREAS, R&B Corp., through its wholly-owned indirect subsidiary, RB
Deepwater Exploration II Inc. ("R&BII"), owns a sixty percent (60%) equity
interest in the Borrower, and the other Guarantors parties hereto are
wholly-owned subsidiaries of R&B Corp.;
WHEREAS, the Guarantors are members of the same consolidated group of
companies; and
WHEREAS, the Borrower was formed for the purposes of constructing and
operating the Drillship (and for the other incidental purposes set forth in
the Limited Liability Company Agreement pursuant to which the Borrower was
formed), and it is intended that the Drillship will be used in part in
connection with the exploration or development activities of R&B Corp. and
its subsidiaries, and therefore, the Guarantors will derive substantial
direct and indirect economic benefit from the extensions of credit pursuant
to the Credit Agreement;
NOW, THEREFORE, (i) in consideration of the premises and to induce the
Banks to enter into the Credit Agreement and to extend credit, (ii) at the
special insistence and request of the Administrative Agent and the Banks,
and (iii) for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each Guarantor, for the
benefit of the Administrative Agent, the Documentation Agent and the Banks,
hereby agrees as follows:
Section 1. Defined Terms.
(a) Unless otherwise defined herein, terms defined in the Credit
Agreement are used herein as therein defined.
(b) The following terms used herein shall have the meanings set
forth below:
"Consolidated Capital Expenditures" shall mean, for any period,
the aggregate of all expenditures (whether paid in cash or accrued as
liabilities and including in all events all amounts expended or
capitalized under Capital Leases) by R&B Corp. and its subsidiaries
during that period that, in conformity with GAAP, are or are required
to be included in the property, plant or equipment reflected in the
consolidated balance sheet of R&B Corp. and its subsidiaries; provided
that Consolidated Capital Expenditures shall in any event include the
purchase price paid in connection with the acquisition of any Person
(including through the purchase of all of the capital stock or other
ownership interests of such Person or through merger or consolidation)
to the extent allocable to "drilling and other property and equipment;
provided further, that Consolidated Capital Expenditures shall only
include the amount thereof actually paid in cash during such period.
As used in this definition, "Capital Lease" means any lease of any
property by a Person, which, in conformity with GAAP, is accounted for
as a capital lease on the balance sheet of such Person.
"Guarantor Default" means any event or circumstance which, with
the giving of notice, the lapse of time, or both, would (if not cured
or remedied during such time) constitute a Guarantor Event of Default.
"R&B Credit Amendment" means any amendment, modification,
replacement, termination (a "change") of any terms of any documents
governing the R&B Credit Facility if, in the opinion of the
Administrative Agent (acting upon direction of the Majority Banks),
such change could be construed to have a material adverse effect on
the Majority Banks.
"R&B Credit Facility" means (a) the credit arrangements evidenced
by the Amended and Restated Credit Agreement dated as of July 3, 1997
among Reading & Bates Corporation, Reading & Bates Drilling Co. and
the Documentation Agents, and the Administrative Agent, Arranger and
Security Trustee therein named, as the same may be further amended
(with the consent of the Majority Banks, if such consent is required
pursuant to Section 7(b) of this Guaranty), and (b) any credit
arrangement or Indebtedness entered into or incurred in renewal,
extension, replacement or restatement thereof.
"Subsidiary Guarantors" means R&B Drilling, R&B Exploration, R&B
(A) Pty., RB Borneo, R&B Offshore, and RB, and each other direct and
indirect subsidiary of R&B Corp. that becomes a party to this Guaranty
Agreement.
Section 2. Guaranty.
(a) Each Guarantor hereby, jointly and severally,
unconditionally and irrevocably, guarantees the prompt performance and
payment in full in Dollars when due (whether at stated maturity, by
acceleration or otherwise) of the Obligations, and each Guarantor further
agrees to pay all costs, fees and expenses (including, without limitation,
counsel fees of outside counsel, and the allocated cost of in-house
counsel) incurred by the Administrative Agent or any Bank in enforcing any
rights under this Guaranty.
(b) Notwithstanding anything herein or in any other Loan
Document to the contrary, the maximum aggregate liability of the Guarantors
under this Guaranty at any time shall not exceed an amount equal to sixty
percent (60%) of the dollar amount of the Obligations then outstanding.
Such amount shall be calculated without giving effect to payments made by
any guarantor of any part of the Obligations other than payments by
Guarantors who are parties to this Guaranty.
Section 3. Guaranty Absolute.
(a) The obligations of the Guarantors hereunder are those of a
primary obligor, and not merely a surety, and are independent of the
Obligations. A separate action or actions may be brought against one or
more Guarantors whether or not an action is brought against the Borrower,
any other guarantor or other obligor in respect of the Obligations or
whether the Borrower, any other guarantor or any other obligor in respect
of the Obligations are joined in any such action or actions.
(b) Subject to the limitation set forth in Section 2(b) above,
each Guarantor guarantees that the Obligations will be paid and performed
strictly in accordance with the terms of the Credit Agreement and the other
Loan Documents regardless of any law, regulation or order now or hereafter
in effect in any jurisdiction affecting any of such terms or the rights of
the Administrative Agent or the Banks with respect thereto. Each Guarantor
agrees that its guarantee constitutes a guarantee of payment when due and
not of collection. The liability of each Guarantor under this Guaranty
shall be absolute and unconditional irrespective of:
(i) any lack of genuineness, validity, legality or
enforceability of the Credit Agreement, any other Loan Document
or any other document, agreement or instrument relating thereto
or any assignment or transfer of any thereof;
(ii) any change in the time, manner or place of payment
of, or in any other term of, all or any of the Obligations
(including, without limitation, the possible extension of the
Revolving Termination Date and increase of the amount of the
Commitments all on the terms and conditions set forth in the
Credit Agreement), or any waiver, indulgence, compromise,
renewal, extension, amendment, modification of, or addition,
consent, supplement to, or consent to departure from, or any
other action or inaction under or in respect of, the Credit
Agreement or any other Loan Document or any document, instrument
or agreement relating to the Obligations or any other instrument
or agreement referred to therein or any assignment or transfer of
any thereof;
(iii) any release or partial release of any other
guarantor or other obligor in respect of the Obligations;
(iv) any exchange, release or non-perfection of any
collateral for all or any of the Obligations, or any release, or
amendment or waiver of, or consent to departure from, any
guaranty or security, for all or any of the Obligations;
(v) any furnishing of any security for any of the
Obligations;
(vi) the liquidation, bankruptcy, insolvency or
reorganization of the Borrower, any other guarantor or other
obligor in respect of the Obligations or any action taken with
respect to this Guaranty by any trustee or receiver, or by any
court, in any such proceeding;
(vii) any modification or termination of any
intercreditor or subordination agreement pursuant to which the
claims of other creditors of the Borrower or the Guarantors are
subordinated to those of the Banks; or
(viii) any other circumstance which might otherwise
constitute a defense available to, or a legal or equitable
discharge of, the Borrower or any Guarantor.
(c) This Guaranty shall continue to be effective or be
reinstated, as the case may be, if at any time payment or performance of
the Obligations, or any part thereof, is, upon the insolvency, bankruptcy
or reorganization of the Borrower or any Guarantor or otherwise pursuant to
applicable law, rescinded or reduced in amount or must otherwise be
restored or returned by the Administrative Agent or any Bank, all as though
such payment or performance had not been made.
(d) If an event permitting the acceleration of any of the
Obligations shall at any time have occurred and be continuing and such
acceleration shall at such time be prevented by reason of the pendency
against the Borrower of a case or proceeding under any bankruptcy or
insolvency law, each Guarantor agrees that, for purposes of this Guaranty
and its obligations hereunder, the Obligations shall be deemed to have been
accelerated and, subject to the limitation set forth in Section 2(b) above,
the Guarantors, jointly and severally, agree to forthwith pay such
Obligations (including, without limitation, interest which but for the
filing of a petition in bankruptcy with respect to the Borrower, would
accrue on such Obligations), and the other obligations hereunder, without
any further notice or demand.
Section 4. Waivers. Each Guarantor hereby waives promptness,
diligence, notice of intention to accelerate, notice of acceleration,
notice of acceptance and any and all other notices with respect to any of
the Obligations and this Guaranty and any requirement that the
Administrative Agent or any Bank protect, secure, perfect or insure any
security interest in or any Lien on any property subject thereto or exhaust
any right or take any action against the Borrower, any other guarantor or
any other Person or any collateral or security or to any balance of any
deposit accounts or credit on the books of any Bank in favor of the
Borrower or any Guarantor.
Section 5. Subrogation. Each Guarantor agrees that it will not
exercise any rights of subrogation, reimbursement or contribution,
contractual statutory or otherwise which it may acquire by way of
subrogation under this Guaranty, by any payment hereunder or otherwise,
until all of the Obligations have been paid in full in cash and all
Commitments have terminated.
Section 6. Representations and Warranties. The following
representations and warranties are hereby made to the Administrative Agent
and the Banks:
(a) R&B Corp. represents and warrants that it is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. Each Subsidiary Guarantor (other than R&B (A) Pty)
represents and warrants that it is a corporation duly organized, validly
existing and in good standing under the laws of the State of Oklahoma. R&B
(A) Pty represents and warrants that it is a company duly incorporated and
existing under the laws of the State of Western Australia and the
Commonwealth of Australia, and that its registered office is located at 66
Kings Park Road, West Penn, Western Australia.
(b) Each Guarantor represents and warrants that it: (i) is duly
qualified as a foreign corporation and in good standing under the laws of
each jurisdiction where qualification or licensing is required by the
nature of its business except where the absence of such qualification has
no reasonable likelihood of having a Material Adverse Effect on the
business, properties, assets or conditions (financial or otherwise) of such
Guarantor; (ii) has all requisite corporate power and authority and the
legal right to own, pledge, mortgage and operate its properties, and to
conduct its business as now or currently proposed to be conducted; (iii) is
in compliance with its certificate of incorporation and bylaws; (iv) is not
in default under any material agreement; and (v) is in compliance with all
applicable law except if such noncompliance has no reasonable likelihood of
having a Material Adverse Effect on the business, operations, properties,
assets or conditions (financial or otherwise) of such Guarantor or on its
ability to perform its obligations under this Guaranty.
(c) Each Guarantor represents and warrants that the execution,
delivery, and performance by such Guarantor of this Guaranty (i) are within
such Guarantor's corporate powers; (ii) have been duly authorized by all
necessary corporate action; (iii) do not contravene such Guarantor's
certificate of incorporation or bylaws; and (iv) do not result in or
require the creation of any Lien upon or with respect to any of its
properties.
(d) Each Guarantor represents and warrants that no authorization
or approval or other action by, and no notice to or filing with, any
Governmental Authority is required for the due execution, delivery and
performance by such Guarantor of this Guaranty.
(e) Each Guarantor represents and warrants that this Guaranty is
a legal, valid and binding obligation of such Guarantor enforceable against
such Guarantor in accordance with its terms, except as enforcement may be
limited by applicable bankruptcy, insolvency or similar laws relating to
creditors' rights generally, as such laws would apply in the event of
bankruptcy, insolvency or other similar occurrence with respect to such
Guarantor, and except as may be limited by equitable principles (whether
enforcement is sought in equity or law).
(f) Each Guarantor represents and warrants that there is no
pending or threatened action or proceeding affecting such Guarantor before
any Governmental Authority which has any reasonable likelihood of having a
Material Adverse Effect on the business, operations, properties, assets or
conditions (financial or otherwise) of such Guarantor, the Liens created by
any Loan Document or the ability of such Guarantor to perform its
obligations under this Guaranty.
(g) R&B Corp. represents and warrants that: (i) the
consolidated financial statements of R&B Corp. and its subsidiaries dated
December 31, 1996, and the related consolidated statements of income or
operations, shareholders' equity and cash flows for the fiscal year ended
on that date, and its unaudited financial statements dated September 30,
1997: (A) were prepared in accordance with GAAP consistently applied
throughout the period covered thereby, except as otherwise expressly noted
therein, subject to ordinary, good faith year-end audit adjustments; and
(B) fairly present the financial condition of R&B Corp. and its
subsidiaries as of the date thereof and results of operations for the
period covered thereby; and (ii) since September 30, 1997, there has been
no Material Adverse Effect with respect to R&B Corp.
Section 7. Certain Covenants.
(a) Information Covenants. R&B Corp. shall deliver to the
Administrative Agent, in form and detail satisfactory to the Administrative
Agent and the Majority Banks, with sufficient copies for each Bank:
(i) Annual Financial Statements. As soon as
available, but not later than 90 days after the end of each
fiscal year, a copy of the consolidated balance sheet of R&B
Corp. and its subsidiaries as at the end of such year and the
related consolidated statements of operations and of cash flows
for such year, including the amount of Consolidated Capital
Expenditures made during such fiscal year, setting forth
comparative consolidated figures for the previous fiscal year,
and accompanied by the opinion of a nationally-recognized
independent public accounting firm ("Independent Auditor") which
report shall state that such consolidated financial statements
present fairly the financial position for the periods indicated
in conformity with GAAP applied on a basis consistent with prior
years. Such opinion shall not be qualified or limited because of
a restricted or limited examination by the Independent Auditor of
any material portion of the subject companies;
(ii) Quarterly Financial Statements. As soon as
available, but not later than 45 days after the end of each of
the first three fiscal quarters of each fiscal year, a copy of
the unaudited consolidated balance sheet of R&B Corp. and its
subsidiaries as of the end of such quarter and the related
consolidated statements of operations and of cash flows for the
period and for the elapsed portion of the fiscal year ended with
the last day of such quarterly period, including the amount of
Consolidated Capital Expenditures made during such quarter, and
in each case setting forth the comparative consolidated figures
for the related period in the prior fiscal year, and certified by
the chief financial officer or controller of R&B Corp. as fairly
presenting, in accordance with GAAP, subject to changes resulting
from audit and normal year-end audit adjustments;
(iii) Rig Status Report. As soon as available and
in any event within 60 days after the end of each of the first
three fiscal quarters of R&B Corp., and within 90 days after the
end of the fourth fiscal quarter, a report (in the same form as
provided to the lenders pursuant to the documents governing the
R&B Credit Facility) detailing (i)(A) the then current location
of each of the offshore drilling rigs owned or leased by R&B
Corp. and its Subsidiaries, (B) the then current term of and
parties to any contract of any such offshore drilling rig, and
(C) the then current day rate with respect to any such contract,
and (ii) for the previous fiscal quarter, the average day rates
and utilization for each such offshore drilling rig;
(iv) Forecast; etc. Not more than 60 days after the
commencement of each fiscal year of R&B Corp., a forecast which
includes an income statement, balance sheet and cash flow
statement of R&B Corp. for each of the four fiscal quarters of
such fiscal year, including a breakdown of revenues, operating
expenses, utilizations and Consolidated Capital Expenditure
assumptions for each offshore drilling rig owned or leased by R&B
Corp. and its subsidiaries;
(v) Compliance Certificate. At the time of the
delivery of the financial statements provided for in Sections
7(a)(i) and (ii), a certificate signed by a Responsible Officer
of R&B Corp., stating that (A) the financial statements being
delivered present fairly the financial position of R&B Corp. as
of the date thereof, (B) as of the date of such certificate, no
Guarantor Default or Guarantor Event of Default exists (or if it
does exist, an explanation of same and of the action R&B Corp.
intends to take to remedy same), (C) the representations and
warranties of the Guarantors set forth in this Guaranty are true
and correct in all material respects as of the date of such
certificate except those which relate solely to an earlier date,
(D) as of the date of such certificate, no actions, suits or
proceedings are pending or, to the best knowledge of R&B Corp.
threatened, at law, in equity, in arbitration or before any
Government Authority, against any Guarantor or any of their
respective properties which: (x) purport to or do restrain the
performance by a Guarantor under this Guaranty, or (y)
individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect with respect to R&B Corp. and its
subsidiaries taken as a whole, and (E) since the date of the
financial statements being delivered, there has been no Material
Adverse Effect with respect to R&B Corp. and its subsidiaries
taken as a whole;
(vi) SEC Reports. Promptly upon transmission thereof,
copies of any material filings and registration with, and reports
to, the SEC by R&B Corp. or its subsidiaries and copies of all
financial statements, proxy statements, notices and reports as
R&B Corp. or any of its subsidiaries shall generally send to
analysts or all holders of their capital stock in their capacity
as such holders (in each case to the extent not theretofore
delivered to the Banks pursuant to this Guaranty); and
(vii) Additional Information. Promptly, such
additional information regarding the business, financial or
corporate affairs of any Guarantor or any subsidiary of any
Guarantor as any Bank, acting through the Administrative Agent,
may from time to time reasonably request.
(b) Amendments to R&B Credit Agreement. Prior to agreeing to
any R&B Credit Amendment, R&B Corp. and R&B Drilling Co. agree to deliver a
copy thereof to the Administrative Agent. R&B Corp. and R&B Drilling agree
not to consent to or permit any R&B Credit Amendment without the prior
written consent of the Majority Banks acting through the Administrative
Agent.
Section 8. Further Assurances. Each Guarantor agrees that at any
time and from time to time, at the expense of such Guarantor, such
Guarantor will promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or desirable,
as the Administrative Agent may reasonably request, to enable the
Administrative Agent to protect and to exercise and enforce its rights and
remedies hereunder.
Section 9. Application of Payments. Any payment received by the
Administrative Agent from a Guarantor (or from any Bank pursuant to Section
14 below), shall be applied by the Administrative Agent as follows:
First, to the payment of costs and expenses of
collection and all expenses (including without limitation
Attorney Costs), liabilities and advances made or incurred by the
Administrative Agent in connection therewith;
Next, to the Banks pro rata, based on the then
outstanding amount of the Obligations owed to each in payment in
full of the Obligations; and
Finally, after payment in full of all Obligations and
the termination of the Commitments, the payment to the
Guarantors, or their successors and assigns, or to whomsoever may
be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct, of any surplus then remaining
from such proceeds;
provided, however, that nothing contained in this Section 9 shall expand or
modify the limitation on the Guarantor's liability set forth in Section
2(b) of this Guaranty.
Section 10. Decisions Relating to Exercise of Remedies.
Notwithstanding anything in this Guaranty to the contrary, the
Administrative Agent may exercise, and at the request of the Majority Banks
shall exercise or refrain from exercising, all rights and remedies provided
for herein and provided by law.
Section 11. No Waiver. No failure on the part of the
Administrative Agent or any Bank 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. Amendments, Etc. No amendment or waiver of any
provision of this Guaranty, nor consent to any departure by any Guarantor
herefrom, shall in any event be effective unless the same shall be in
writing and signed, in the case of amendments, by the Guarantors and by the
Administrative Agent (acting with the consent of the Majority Banks or all
the Banks, as may be required pursuant to Section 10.01 of the Credit
Agreement) and, in the case of consent or waiver, by the Administrative
Agent (acting with the consent of the Majority Banks or all the Banks, as
may be required pursuant to Section 10.01 of the Credit Agreement) and then
such amendment, waiver or consent shall be effective only in the specific
instance and for the specific purpose for which made or given.
Section 13. Notices. All notices, requests and other
communications provided for hereunder shall be in writing and given as
provided in Section 10.02 of the Credit Agreement. The address for notices
to Guarantors shall be the address set forth below its signature to this
Guaranty, or such other address as shall be designated by Guarantor(s) in a
written notice to the Administrative Agent.
Section 14. Right to Set-off.
(a) Upon the occurrence and during the continuance of any Event
of Default under the Credit Agreement, each Bank is hereby authorized at
any time and from time to time, to the fullest extent permitted by law, to
set-off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time
owing by such Bank to or for the credit or the account of any Guarantor
against any and all of the Obligations (subject to the limitation set forth
in Section 2(b) above), irrespective of whether or not such Bank shall have
made any demand under this Guaranty and although such Obligations may be
contingent and unmatured. Each Bank which sets-off pursuant to this
Section 14(a) shall give prompt notice to the applicable Guarantor and the
Administrative Agent following the occurrence thereof; provided that the
failure to give such notice shall not affect the validity of the set-off.
(b) Any payment obtained pursuant to Section 14(a) above (or in
any other manner directly from any Guarantor) by any Bank shall be remitted
to the Administrative Agent and distributed among the Banks in accordance
with the provisions of Section 9 above.
Section 15. Continuing Guaranty. This Guaranty is a continuing
guaranty and shall (a) remain in full force and effect until the
indefeasible payment (after the termination of the Commitments) in full
(subject to Section 2(b) above) of the Obligations and all other amounts
payable under this Guaranty; (b) be binding upon each Guarantor, its
successors and assigns; and (c) inure to the benefit of the Administrative
Agent, the Banks and their respective successors, transferees and assigns.
Without limiting the generality of the foregoing clause (c), any Bank may
assign or otherwise transfer its rights and obligations under the Credit
Agreement to any other Person or entity, and such other Person or entity
shall thereupon become vested with all the benefits in respect thereof
granted to the Bank herein or otherwise, all as provided in, and to the
extent set forth in, Sections 10.07 and 10.08 of the Credit Agreement.
Section 16. Subordination of the Credit Parties' Obligations to the
Guarantor. Each Guarantor hereby expressly covenants and agrees for the
benefit of the Administrative Agent and the Banks that all obligations and
liabilities of the Borrower and all obligations and liabilities of all
other guarantors of the Obligations (or any part thereof) ("Other
Guarantors"), to such Guarantor ("Such Guarantor") of whatsoever
description (including, without limitation, all rights of contribution)
(the "Subordinated Obligations") shall be subordinated and junior in right
of payment to the Obligations. In the case of any Insolvency Proceeding
wherein the obligor of Subordinated Obligations (an "Obligor") is debtor,
the Obligor and any assignee, trustee in bankruptcy, receiver or other
similar Person, debtor in possession or other Person(s) in charge are
hereby directed to pay to the Administrative Agent (for the benefit of the
Banks) the full amount of the Obligations (including interest to date of
payment and including without limitation interest accrued after the filing
of a petition initiating an Insolvency Proceeding) before making any
payment in respect of the Subordinated Obligations to Such Guarantor, and
insofar as may be necessary for that purpose, Such Guarantor hereby assigns
and transfers to the Administrative Agent all rights to such payments.
Notwithstanding the foregoing provisions of this Section 16:
(a) with respect to obligations and liabilities of the Borrower to
Such Guarantor ("Borrower/Guarantor Obligations"), Such Guarantor
may receive payments in respect of Borrower/Guarantor Obligations
so long as there has not occurred a Default or Event of Default;
(b) with respect to obligations and liabilities of one more of the
Guarantors hereunder to Such Guarantor ("R&B Intra-Company
Obligations"), Such Guarantor may receive payments in respect of
R&B Intra-Company Obligations so long as there has not occurred
an Event of Default and there is not pending any Insolvency
Proceeding involving as debtor the Obligor of the R&B Intra-
Company Obligations;
(c) with respect to obligations and liabilities of one or more of the
Other Guarantors who are not signatories to this Guaranty
("Unrelated Guarantors") which obligations or liabilities are
related to the Borrower, the Drillship, or R&BII's interest in
the Borrower ("Drillship-Related R&B/Conoco Obligations"), Such
Guarantor may receive payments in respect of Drillship-Related
R&B/Conoco Obligations so long as there has been no acceleration
of the Obligations under the Credit Agreement and there is not
pending any Insolvency Proceeding involving as debtor the
Borrower or the Obligor of the Drillship-Related R&B Conoco
Obligations; and
(d) obligations and liabilities of Unrelated Guarantors to Such
Guarantor, if such obligations and liabilities are unrelated to
the Borrower and the Drillship ("Unrelated R&B/Conoco
Obligations"), shall not be subject to the provisions of this
Section 16.
If Such Guarantor shall receive any payment in respect of the Subordinated
Obligations in contravention of the terms of this Section, such payments
shall be collected and received by Such Guarantor as trustee for the
Administrative Agent and the Banks and paid over to the Administrative
Agent and the Banks on account of the Obligations.
Section 17. Severability; Entire Agreement.
(a) If for any reason any provision or provisions hereof are
determined to be invalid and contrary to any existing or future law, such
invalidity shall not impair the operation of or affect those portions of
this Guaranty which are valid.
(b) This Guaranty, together with the other Loan Documents,
embodies the entire agreement and understanding among the Guarantor and the
other parties to the Loan Documents, and supersedes all prior or
contemporaneous agreements and understandings of such Persons, verbal or
written, relating to the subject matter hereof and thereof.
Section 18. Taxes.
(a) Any and all payments by a Guarantor to each Bank or the
Administrative Agent under this Guaranty and any other Loan Document shall
be made free and clear of, and without deduction or withholding for, any
Taxes. In addition, each Guarantor shall pay all Other Taxes with respect
to amounts owed by it.
(b) If a Guarantor shall be required by law to deduct or
withhold any Taxes, Other Taxes or Further Taxes from or in respect of any
sum payable hereunder to any Bank or the Administrative Agent, then: (i)
the sum payable shall be increased as necessary so that after making all
required deductions and withholdings (including deductions and withholdings
applicable to additional sums payable under this Section) such Bank or the
Administrative Agent, as the case may be, receives an amount equal to the
sum it would have received had no such deductions or withholdings been
made; (ii) such Guarantor shall make such deductions and withholdings;
(iii) such Guarantor shall pay the full amount deducted or withheld to the
relevant taxing authority or other authority in accordance with applicable
law; and (iv) such Guarantor shall also pay to each Bank or the
Administrative Agent for the account of such Bank, at the time interest is
paid, all additional reasonable amounts which the respective Bank
specifies, in a Certificate Regarding Taxes (as defined in Section 18(e)
below) as necessary to preserve the after-tax yield the Bank would have
received if such Taxes, Other Taxes or Further Taxes had not been imposed.
(c) Each Guarantor agrees to indemnify and hold harmless each
Bank and the Administrative Agent for the full amount of Taxes, Other Taxes
and Further Taxes in the amount that the respective Bank specifies, in a
Certificate Regarding Taxes (as defined in Section 18(e) below) as
necessary to preserve the after-tax yield the Bank would have received if
such Taxes, Other Taxes or Further Taxes had not been imposed, and any
liability (including penalties, interest, additions to tax and expenses)
arising therefrom or with respect thereto, whether or not such Taxes, Other
Taxes or Further Taxes were correctly or legally asserted. Payment under
this indemnification shall be made within 30 days after the date the Bank
or the Administrative Agent makes written demand therefor.
(d) Within 30 days after the date of any payment by a Guarantor
of Taxes, Other Taxes or Further Taxes, such Guarantor shall furnish to the
Administrative Agent and each Bank the original or a certified copy of a
receipt evidencing payment thereof, or other evidence of payment reasonably
satisfactory to the Administrative Agent.
(e) As used in this Section 18, a "Certificate Regarding Taxes"
means a Certificate executed on behalf of the applicable Bank setting forth
in reasonable detail the amount payable to such Bank hereunder. Such
certificate shall be conclusive and binding on the Guarantor in the absence
of manifest error.
Section 19. Contribution.
(a) At any time a payment in respect of the guaranteed
Obligations is made under this Guaranty, the right of contribution, if any,
of each Guarantor against any other Guarantor required to make any payment
to such Guarantor pursuant to this Section 19 (a "Contributor") shall be
determined as provided in the immediately following sentence, with the
right of contribution of each Guarantor to be revised and restated as of
each date on which a payment (a "Relevant Payment") is made on the
guaranteed Obligations under this Guaranty. At any time that a Relevant
Payment is made by a Guarantor that results in the aggregate payments made
by such Guarantor in respect of the guaranteed Obligations to and including
the date of the Relevant Payment exceeding such Guarantor's Contribution
Percentage (as hereinafter defined) of the aggregate payments made by all
Guarantors in respect of the guaranteed Obligations to and including the
date of the Relevant Payment (such excess, the "Aggregate Excess Amount"),
each such Guarantor shall have a right of contribution against each
Contributor who has made payments in respect of the guaranteed Obligations
to and including the date of the Relevant Payment in an aggregate amount
less than such Contributor's Contribution Percentage of the aggregate
payments made to and including the date of the Relevant Payment by all
Guarantors in respect to the guaranteed Obligations (the aggregate amount
of such deficit, the "Aggregate Deficit Amount") in an amount equal to (x)
a fraction the numerator of which is the Aggregate Excess Amount of such
Guarantor and the denominator of which is the Aggregate Excess Amount of
all Guarantors multiplied by (y) the Aggregate Deficit Amount of such
Contributor. A Guarantor's right of contribution, if any, pursuant to the
preceding sentences shall arise at the time of each computation, subject to
adjustment to the time of any subsequent computation; provided, that no
Guarantor may take any action to enforce such right until the guaranteed
Obligations have been paid in full and all Commitments have been
terminated, it being expressly recognized and agreed by all parties hereto
that any Guarantor's right of contribution arising pursuant to this Section
19 against any Contributor shall be expressly junior and subordinate to
such Contributor's obligations and liabilities in respect of the guaranteed
Obligations and any other obligations owing under this Guaranty. As used
in this Agreement, (i) each Contributor's "Contribution Percentage" shall
mean the percentage obtained by dividing (x) the Adjusted Net Worth of such
Contributor by (y) the aggregate Adjusted Net Worth of all Guarantors; (ii)
the "Adjusted Net Worth" of each Guarantor shall mean the greater of (x)
the Net Worth of such Guarantor or (y) zero; and (iii) the "Net Worth" of
each Guarantor shall mean the amount by which the fair salable value of
such Guarantor's assets on the initial Borrowing Date exceeds its existing
debts and other liabilities (including contingent liabilities, but without
giving effect to any Guaranteed Obligations arising under this Guaranty),
in each case after giving effect to all transactions occurring on the
initial Borrowing Date.
(b) Each Guarantor recognizes and agrees that, except for any
right of contribution arising pursuant to this Section 19, until the
guaranteed Obligations have been paid in full, each Guarantor who makes any
payment in respect of the guaranteed Obligations shall have no right of
contribution or subrogation against any other Guarantor in respect of such
payment, any such right of contribution or subrogation arising under law or
otherwise being expressly waived by all Guarantors until the guaranteed
Obligations have been paid in full.
(c) Each Guarantor recognizes and acknowledges that the rights
to contribution arising hereunder shall constitute an asset in favor of the
party entitled to such contribution. In this connection, each Guarantor
has the right to waive its contribution right against any other Guarantor
to the extent that after giving effect to such waiver such Guarantor would
remain Solvent, in the determination of the Majority Banks.
Section 20. Event of Default. As used in this Guaranty and in the
other Loan Documents, a "Guarantor Event of Default" shall mean the
occurrence of any of the following events:
(a) the Guarantor shall fail to observe or perform any term or
covenant contained in this Guaranty; provided, however if such default is
capable of being cured or remedied, then such default shall not constitute
a Guarantor Event of Default unless it shall continue unremedied for a
period of twenty (20) days; or
(b) R&B Corp. or a Subsidiary Guarantor (A) fails to make any
payment in respect of any Indebtedness or Contingent Obligation having an
aggregate principal amount (including undrawn committed or available
amounts and including amounts owing to all creditors under any combined or
syndicated credit arrangement) of more than $5,000,000 when due (whether by
scheduled maturity, required prepayment, acceleration, demand, or
otherwise) and such failure continues after the applicable grace or notice
period, if any, specified in the relevant document on the date of such
failure, or (B) fails to perform or observe any other condition or
covenant, or any other event shall occur or condition exist, under any
agreement or instrument relating to any such Indebtedness or Contingent
Obligation, and such failure continues after the applicable grace or notice
period, if any, specified in the relevant document on the date of such
failure, if the effect of such failure, event or condition is to result in
acceleration of all or any part of such Indebtedness or renegotiation of
the material payment terms of any such Indebtedness to become due prior to
its scheduled maturity, or to result in such Contingent Obligation
becoming payable or cash collateral in respect thereof being demanded; or
(c) An R&B Credit Amendment shall be made or done without the
prior written consent of the Administrative Agent (acting upon direction of
the Majority Banks).
SECTION 21. GOVERNING LAW AND JURISDICTION.
(a) THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK (WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS); PROVIDED THAT THE ADMINISTRATIVE AGENT
AND THE BANKS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY
OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW
YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY
EXECUTION AND DELIVERY OF THIS GUARANTY, EACH GUARANTOR CONSENTS, FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF
THOSE COURTS. EACH GUARANTOR HEREBY IRREVOCABLY DESIGNATES, APPOINTS
PRENTICE-HALL CORPORATION, WITH OFFICES ON THE DATE HEREOF AT 80 STATE
STREET, ALBANY, NEW YORK, 12207, AS ITS DESIGNEE, APPOINTEE AND
ADMINISTRATIVE AGENT TO RECEIVE, ACCEPT AND ACKNOWLEDGE FOR AND ON ITS
BEHALF, AND IN RESPECT OF ITS PROPERTY, SERVICE OF ANY AND ALL LEGAL
PROCESS, SUMMONS, NOTICES AND DOCUMENTS WHICH MAY BE SERVED IN ANY SUCH
ACTION OR PROCEEDING. IF FOR ANY REASON SUCH DESIGNEE, APPOINTEE AND
ADMINISTRATIVE AGENT SHALL CEASE TO BE AVAILABLE TO ACT AS SUCH, THE
GUARANTOR AGREES TO DESIGNATE A NEW DESIGNEE, APPOINTEE AND ADMINISTRATIVE
AGENT IN NEW YORK ON THE TERMS AND FOR THE PURPOSES OF THIS PROVISION
SATISFACTORY TO THE ADMINISTRATIVE AGENT. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, EACH GUARANTOR FURTHER IRREVOCABLY CONSENTS TO THE SERVICE
OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR
PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED
MAIL, POSTAGE PREPAID, TO IT AT ITS ADDRESS SET FORTH BELOW ITS SIGNATURE
TO THIS GUARANTY AGREEMENT, SUCH SERVICE TO BECOME EFFECTIVE TEN DAYS AFTER
MAILING SUCH AGREEMENT. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE
ADMINISTRATIVE AGENT OR ANY BANK TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED
AGAINST THE GUARANTOR IN ANY OTHER JURISDICTION. EACH GUARANTOR WAIVES
PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE
MADE BY ANY OTHER MEANS PERMITTED BY NEW YORK LAW.
(c) EACH GUARANTOR IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING
ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY
ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS GUARANTY OR
ANY DOCUMENT RELATED HERETO.
SECTION 22. WAIVER OF JURY TRIAL. EACH GUARANTOR WAIVES ITS RIGHTS
TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OF OR RELATED TO THIS GUARANTY, THE OTHER LOAN DOCUMENTS, OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR
OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY
OTHER PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER
WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. EACH GUARANTOR
AGREES THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT
TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, EACH GUARANTOR
FURTHER AGREES THAT ITS RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF
THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH
SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF
THIS GUARANTY OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR
THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS GUARANTY AND THE OTHER LOAN DOCUMENTS.
[SIGNATURES BEGIN ON FOLLOWING PAGE]
SECTION 23. ENTIRE AGREEMENT. THIS WRITTEN GUARANTY AND OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the Guarantors have caused this Guaranty to be
duly executed and delivered by its officer thereunto duly authorized as of
the date first above written.
READING & BATES CORPORATION
By
Name:
Title:
Address for Notices:
Reading & Bates Corporation
901 Threadneedle, Suite 200
Houston, Texas 77079-2902
Attn: Mr. Tim W. Nagle
Chief Financial Officer
Tel: (281) 496-5000
Fax: (281) 496-2298
With a copy to:
Wayne K. Hillin, Esq .
General Counsel
Reading & Bates Corporation
901 Threadneedle, Suite 200
Houston, Texas 77079-2902
Tel: (281) 496-5000
Fax: (281) 496-0285
READING & BATES DRILLING CO.
By
Name:
Title:
Address for Notices:
c/o Reading & Bates Corporation
901 Threadneedle, Suite 200
Houston, Texas 77079-2902
Attn: Mr. Tim W. Nagle
Chief Financial Officer
Tel: (281) 496-5000
Fax: (281) 496-2298
With a copy to:
Wayne K. Hillin, Esq.
General Counsel
Reading & Bates Corporation
901 Threadneedle, Suite 200
Houston, Texas 77079-2902
Tel: (281) 496-5000
Fax: (281) 496-0285
READING & BATES EXPLORATION CO.
By
Name:
Title:
Address for Notices:
c/o Reading & Bates Corporation
901 Threadneedle, Suite 200
Houston, Texas 77079-2902
Attn: Mr. Tim W. Nagle
Chief Financial Officer
Tel: (281) 496-5000
Fax: (281) 496-2298
With a copy to:
Wayne K. Hillin, Esq.
General Counsel
Reading & Bates Corporation
901 Threadneedle, Suite 200
Houston, Texas 77079-2902
Tel: (281) 496-5000
Fax: (281) 496-0285
READING & BATES (A) PTY. LTD.
By
Name:
Title:
Address for Notices:
c/o Reading & Bates Corporation
901 Threadneedle, Suite 200
Houston, Texas 77079-2902
Attn: Mr. Tim W. Nagle
Chief Financial Officer
Tel: (281) 496-5000
Fax: (281) 496-2298
With a copy to:
Wayne K. Hillin, Esq.
General Counsel
Reading & Bates Corporation
901 Threadneedle, Suite 200
Houston, Texas 77079-2902
Tel: (281) 496-5000
Fax: (281) 496-0285
READING AND BATES BORNEO
DRILLING CO., LTD.
By
Name:
Title:
Address for Notices:
c/o Reading & Bates Corporation
901 Threadneedle, Suite 200
Houston, Texas 77079-2902
Attn: Mr. Tim W. Nagle
Chief Financial Officer
Tel: (281) 496-5000
Fax: (281) 496-2298
With a copy to:
Wayne K. Hillin, Esq.
General Counsel
Reading & Bates Corporation
901 Threadneedle, Suite 200
Houston, Texas 77079-2902
Tel: (281) 496-5000
Fax: (281) 496-0285
READING & BATES OFFSHORE,
LIMITED
By
Name:
Title:
Address for Notices:
c/o Reading & Bates Corporation
901 Threadneedle, Suite 200
Houston, Texas 77079-2902
Attn: Mr. Tim W. Nagle
Chief Financial Officer
Tel: (281) 496-5000
Fax: (281) 496-2298
With a copy to:
Wayne K. Hillin, Esq.
General Counsel
Reading & Bates Corporation
901 Threadneedle, Suite 200
Houston, Texas 77079-2902
Tel: (281) 496-5000
Fax: (281) 496-0285
RB RIG CORPORATION
By
Name:
Title:
Address for Notices:
c/o Reading & Bates Corporation
901 Threadneedle, Suite 200
Houston, Texas 77079-2902
Attn: Mr. Tim W. Nagle
Chief Financial Officer
Tel: (281) 496-5000
Fax: (281) 496-2298
With a copy to:
Wayne K. Hillin, Esq.
General Counsel
Reading & Bates Corporation
901 Threadneedle, Suite 200
Houston, Texas 77079-2902
Tel: (281) 496-5000
Fax: (281) 496-0285
Exhibit 10.15
FIRST AMENDMENT TO CREDIT AGREEMENT
AND RELEASE OF GUARANTY
This FIRST AMENDMENT TO CREDIT AGREEMENT AND RELEASE OF GUARANTY (this
"First Amendment") is entered into as of April 24, 1998, among DEEPWATER
DRILLING II L.L.C., a Delaware limited liability company (the "Company"),
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Administrative
Agent (the "Administrative Agent") for the Banks, and NATIONAL WESTMINSTER
BANK PLC, as Documentation Agent (the "Documentation Agent", and together
with the Administrative Agent, the "Agents") and the several financial
institutions party to this First Amendment (collectively, the "Banks";
individually, a "Bank"). Capitalized terms which are used herein without
definition and which are defined in the Credit Agreement referred to below
shall have the meanings ascribed to them in the Credit Agreement.
WHEREAS, the Company, the Banks, the Administrative Agent and the
Documentation Agent are parties to a certain Credit Agreement dated as of
November 10, 1997 (as at any time amended, modified or supplemented and in
effect from time to time, the "Credit Agreement"); and
WHEREAS, pursuant to the Credit Agreement, two Guaranty Agreements
have been delivered, including the Guaranty Agreement executed by Reading &
Bates Corporation (now known as R&B Falcon Drilling (International &
Deepwater) Inc.) (herein referred to as "Reading & Bates Corporation") and
the R&B Subsidiary Guarantors (the "R&B Guaranty"); and
WHEREAS, effective December 31, 1997 Reading & Bates Corporation
became a wholly-owned subsidiary of R&B Falcon Corporation ("R&B Falcon"),
a Delaware corporation; and
WHEREAS, R&B Falcon proposes to enter into a new credit agreement
establishing a new credit facility which will replace the existing R&B
Credit Facility, and pursuant to Section 7(b) of the R&B Guaranty, Reading
& Bates Corporation has requested the Banks' consent thereto;
WHEREAS the new R&B Falcon credit facility will not be guaranteed by
R&B Falcon's subsidiaries and therefore, Reading & Bates Corporation and
R&B Falcon have requested that the Banks consent to the release of the
existing R&B Guaranty, and R&B Falcon has agreed to execute and deliver its
Guaranty simultaneously with the execution of this First Amendment;
WHEREAS, subject to the terms and conditions herein contained, the
Banks are willing to consent to the above-described requests by executing
this First Amendment;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby
agree as follows:
SECTION 1. Amendments to Schedule 1.01 of the Credit Agreement
(Definitions). The following amendments to Schedule 1.01 are hereby made:
(a) The definition of "Guarantor" is hereby amended to read as
follows:
"Guarantor" means each of R&B Falcon
Corporation and Conoco Inc.
(b) The definition of "R&B" is hereby amended to read as
follows:
"R&B" and "Reading & Bates" means R&B Falcon
Corporation, its successors and assigns.
(c) The definition of "R&B Credit Facility" is hereby amended to
read as follows:
"R&B Credit Facility" means (a) the credit
arrangements evidenced by the Credit Agreement dated as
of April 24, 1998 among R&B Falcon Corporation, the
Administrative Agent therein named and the Banks
therein named, as may be further amended with the
consent of the Majority Banks (if such consent is
required pursuant to the terms of the Guaranty
Agreement executed by R&B Falcon Corporation), and (b)
any credit arrangement or Indebtedness entered into or
incurred in renewal, extension, replacement or
restatement thereof.
(d) The definition of "R&B Subsidiary Guarantors" is hereby
deleted.
SECTION 2. Consent to Execution of New R&B Credit Facility. The
Agent and the Banks hereby consent to the execution by R&B Falcon of the
Credit Agreement dated as of even date herewith among R&B Falcon
Corporation, The Chase Manhattan Bank as Administrative Agent and the Banks
therein named (the "April 1998 R&B Falcon Credit Agreement").
SECTION 3. Release of Certain Guarantors. The Agents and the
Banks do hereby release each of Reading & Bates Corporation and each R&B
Subsidiary Guarantor from all obligations under the Guaranty Agreement
dated as of November 10, 1997 signed by them (the "R&B Guaranty
Agreement"). The Agents, the Banks and the Company agree that the R&B
Guaranty Agreement is hereby terminated; provided, however, that such
termination shall not in any way impair, diminish or otherwise affect the
Company's obligations under the Credit Agreement and all other Loan
Documents or Conoco Inc.'s obligations under the Guaranty Agreement
executed by it.
SECTION 4. Representations and Warranties of the Company. The
Company represents and warrants to the Agents and to each of the Banks
that:
(a) This First Amendment has been duly authorized, executed and
delivered by the Company and the Credit Agreement as amended hereby
constitutes the legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with its terms, except
as enforceability may be limited by applicable bankruptcy, insolvency
or similar laws affecting the enforcement of creditors' rights
generally or by equitable principles relating to enforceability.
(b) The representations and warranties set forth in Article V of
the Credit Agreement are true and correct in all material respects
before and after giving effect to this First Amendment with the same
effect as if made on the date hereof, except to the extent such
representations and warranties expressly related to an earlier date,
in which case they were true and correct in all material respects on
and as of such earlier date.
(c) As of the date hereof, at the time of and immediately after
giving effect to this First Amendment, no Default or Event of Default
has occurred and is continuing.
SECTION 5. R&B Falcon Credit Facility. By its signature to the
Consent of Guarantor attached hereto, R&B Falcon confirms to the Agents and
to the Banks that (a) the term sheet attached hereto as Exhibit A sets
forth a summary of the material terms of the April 1998 R&B Falcon Credit
Agreement, and (b) the obligations under the April 1998 R&B Falcon Credit
Agreement are unsecured and no collateral or Subsidiary guarantees have
been given in support of the obligations under said credit agreement.
SECTION 6. Conditions of Effectiveness. This First Amendment
shall be effective on the date (the "Effective Date") of the delivery by
the Company and R&B Falcon to the Administrative Agent of the following:
(a) This First Amendment, signed by the Company, the Agents, and
each of the Banks, together with each Consent of Guarantor attached
hereto, executed by R&B Falcon and by Conoco;
(b) A copy of the April 1998 R&B Falcon Credit Agreement;
(c) A Guaranty Agreement executed by R&B Falcon in the form
attached hereto as Exhibit B;
(d) Copies of resolutions of the board of directors of R&B
Falcon authorizing the Guaranty Agreement to be executed by it,
certified as of the Effective Date by the Secretary or an Assistant
Secretary of R&B Falcon;
(e) A certificate of the Secretary or Assistant Secretary of R&B
Falcon, certifying the names and true signatures of the officers
authorized to execute, deliver and perform the Guaranty Agreement
delivered by it pursuant hereto;
(f) The certificate of incorporation and the bylaws of R&B
Falcon as in effect on the Effective Date, certified by the Secretary
or Assistant Secretary of R&B Falcon;
(g) A good standing certificate for R&B Falcon from the
Secretary of State of its state of organization;
(h) A letter or other evidence confirming that Capitol Services,
Inc. has accepted appointment by R&B Falcon as its agent for service
of process in New York;
(i) An opinion of Wayne Hillin, counsel to R&B Falcon,
substantially in the form attached hereto as Exhibit C; and
(j) Such other evidence as the Agent or the Majority Banks may
request to establish the consummation of the transactions contemplated
hereby or the compliance with the conditions set forth herein.
SECTION 7. Effect of Amendment. This First Amendment (i) except
as expressly provided herein, shall not be deemed to be a consent to the
modification or waiver of any other term or condition of the Credit
Agreement or of any of the instruments or agreements referred to therein
and (ii) shall not prejudice any right or rights which the Administrative
Agent or the Banks may now have under or in connection with the Credit
Agreement, as amended by this First Amendment. Except as otherwise
expressly provided by this First Amendment, all of the terms, conditions
and provisions of the Credit Agreement shall remain the same. It is
declared and agreed by each of the parties hereto that the Credit
Agreement, as amended hereby, shall continue in full force and effect, and
that this First Amendment and such Credit Agreement shall be read and
construed as one instrument.
SECTION 8. Miscellaneous This First Amendment shall for all
purposes be construed in accordance with and governed by the laws of the
State of New York. The captions in this First Amendment are for
convenience of reference only and shall not define or limit the provisions
hereof. This First Amendment may be executed in separate counterparts,
each of which when so executed and delivered shall be an original, but all
of which together shall constitute one instrument. In proving this First
Amendment, it shall not be necessary to produce or account for more than
one such counterpart.
NO ORAL AGREEMENTS. THE CREDIT AGREEMENT (AS AMENDED BY THIS FIRST
AMENDMENT) AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
[SIGNATURES BEGIN ON FOLLOWING PAGE]
IN WITNESS WHEREOF, the parties hereto have caused this First
Amendment to be duly executed and delivered by their proper and duly
authorized representatives or officers as of the date and year first above
written.
DEEPWATER DRILLING II L.L.C.
By:
Name:
Title:
[THIS IS A SIGNATURE PAGE TO THE FIRST AMENDMENT TO CREDIT AGREEMENT AND
RELEASE OF GUARANTY]
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as
Administrative Agent and as a
Bank
By
Name: Claire M. Liu
Title: Managing Director
[THIS IS A SIGNATURE PAGE TO THE FIRST AMENDMENT TO CREDIT AGREEMENT AND
RELEASE OF GUARANTY]
NATIONAL WESTMINSTER BANK PLC
NEW YORK BRANCH, as a Bank
By
Name:
Title:
NATIONAL WESTMINSTER BANK PLC
NASSAU BRANCH, as a Bank
By
Name:
Title:
[THIS IS A SIGNATURE PAGE TO THE FIRST AMENDMENT TO CREDIT AGREEMENT AND
RELEASE OF GUARANTY]
BANCA POPOLARE DI MILANO,
NEW YORK BRANCH
By
Name:
Title:
By
Name:
Title:
[THIS IS A SIGNATURE PAGE TO THE FIRST AMENDMENT TO CREDIT AGREEMENT AND
RELEASE OF GUARANTY]
BAYERISCHE VEREINSBANK AG,
NEW YORK BRANCH
By
Name:
Title:
By
Name:
Title:
[THIS IS A SIGNATURE PAGE TO THE FIRST AMENDMENT TO CREDIT AGREEMENT AND
RELEASE OF GUARANTY]
CREDITO ITALIANO
By
Name:
Title:
By
Name:
Title:
[THIS IS A SIGNATURE PAGE TO THE FIRST AMENDMENT TO CREDIT AGREEMENT AND
RELEASE OF GUARANTY]
GREAT-WEST LIFE & ANNUITY
INSURANCE COMPANY
By
Name:
Title:
By
Name:
Title:
[THIS IS A SIGNATURE PAGE TO THE FIRST AMENDMENT TO CREDIT AGREEMENT AND
RELEASE OF GUARANTY]
BANCA MONTE DEI PASCHI DI SIENA
S. P. A.
By
Name:
Title:
By
Name:
Title:
[THIS IS A SIGNATURE PAGE TO THE FIRST AMENDMENT TO CREDIT AGREEMENT AND
RELEASE OF GUARANTY]
- ----------------------------------------------------------------------------
CONSENT OF GUARANTOR
The undersigned Guarantor hereby consents to the provisions of the
foregoing First Amendment and Release of Guaranty, and confirms that the
Guaranty Agreement dated as of November 10, 1997 executed by it remains in
full force and effect in accordance with its terms.
CONOCO INC.
By
Name:
Title:
[THIS IS A SIGNATURE PAGE TO THE FIRST AMENDMENT TO CREDIT AGREEMENT AND
RELEASE OF GUARANTY]
- ----------------------------------------------------------------------------
CONSENT OF GUARANTOR
The undersigned Guarantor hereby consents to the provisions of the
foregoing First Amendment to Credit Agreement and Release of Guaranty, and
confirms the representations set forth in Section 5 thereof. The
undersigned confirms that the Guaranty Agreement dated as of even date with
said First Amendment is in full force and effect in accordance with its
terms.
R&B FALCON CORPORATION
By
Name:
Title:
[THIS IS A SIGNATURE PAGE TO THE FIRST AMENDMENT TO CREDIT AGREEMENT AND
RELEASE OF GUARANTY]
Exhibit 10.16
GUARANTY AGREEMENT
(R&B Falcon)
THIS GUARANTY AGREEMENT (this "Guaranty") is dated as of April 24,
1998 and is by R&B FALCON CORPORATION, a Delaware corporation (the
"Guarantor"), in favor of BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, as administrative agent (in such capacity, the "Administrative
Agent") for its benefit and for the ratable benefit of the Documentation
Agent and the financial institutions (the "Banks") now or hereafter party
to that certain Credit Agreement dated as of November 10, 1997, as amended
by First Amendment dated as of even date herewith (as the same may be
further amended, modified or restated from time to time and at any time,
the "Credit Agreement"), among DEEPWATER DRILLING II L.L.C (the
"Borrower"), the Banks, the Administrative Agent, and NATIONAL WESTMINSTER
BANK Plc, as Documentation Agent.
W I T N E S S E T H:
WHEREAS, pursuant to the terms of the Credit Agreement, the Banks have
agreed to extend credit to the Borrower;
WHEREAS, the obligation of the Banks to extend credit is conditioned
upon, among other things, the execution and delivery by the Guarantor of
this Guaranty;
WHEREAS, the Guarantor, through its wholly-owned indirect subsidiary,
RB Deepwater Exploration II Inc. ("R&BII"), owns a sixty percent (60%)
equity interest in the Borrower;
WHEREAS, the Borrower was formed for the purposes of constructing and
operating the Drillship (and for the other incidental purposes set forth in
the Limited Liability Company Agreement pursuant to which the Borrower was
formed), and it is intended that the Drillship will be used in part in
connection with the exploration or development activities of the Guarantor
and its subsidiaries, and therefore, the Guarantor will derive substantial
direct and indirect economic benefit from the extensions of credit pursuant
to the Credit Agreement;
NOW, THEREFORE, (i) in consideration of the premises and to induce the
Banks to enter into the Credit Agreement and to extend credit, (ii) at the
special insistence and request of the Administrative Agent and the Banks,
and (iii) for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Guarantor, for the
benefit of the Administrative Agent, the Documentation Agent and the Banks,
hereby agree as follows:
Section 1. Defined Terms.
(a) Unless otherwise defined herein, terms defined in the Credit
Agreement are used herein as therein defined.
(b) The following terms used herein shall have the meanings set
forth below:
"Guarantor Default" means any event or circumstance which, with
the giving of notice, the lapse of time, or both, would (if not cured
or remedied during such time) constitute a Guarantor Event of Default.
"R&B Credit Amendment" means any amendment, modification,
replacement, termination (a "change") of any terms of any documents
governing the R&B Credit Facility if, in the opinion of the
Administrative Agent (acting upon direction of the Majority Banks),
such change could be construed to have a material adverse effect on
the Majority Banks.
"R&B Credit Facility" means (a) the credit arrangements evidenced
by the Credit Agreement dated as of April 24, 1998 among the Guarantor
as borrower thereunder, The Chase Manhattan Bank as Administrative
Agent, and the other agents and banks parties thereto, as the same may
be further amended (with the consent of the Majority Banks, if such
consent is required pursuant to Section 7(b) of this Guaranty), and
(b) any credit arrangement or Indebtedness entered into or incurred in
renewal, extension, replacement or restatement thereof.
Section 2. Guaranty.
(a) The Guarantor hereby, unconditionally and irrevocably,
guarantees the prompt performance and payment in full in Dollars when due
(whether at stated maturity, by acceleration or otherwise) of the
Obligations heretofore or hereafter incurred by the Borrower, and the
Guarantor further agrees to pay all costs, fees and expenses (including,
without limitation, counsel fees of outside counsel, and the allocated cost
of in-house counsel) incurred by the Administrative Agent or any Bank in
enforcing any rights under this Guaranty.
(b) Notwithstanding anything herein or in any other Loan
Document to the contrary, the maximum aggregate liability of the Guarantor
under this Guaranty at any time shall not exceed an amount equal to sixty
percent (60%) of the dollar amount of the Obligations then outstanding.
Such amount shall be calculated without giving effect to payments made by
any guarantor of any part of the Obligations other than payments by the
Guarantor.
Section 3. Guaranty Absolute.
(a) The obligations of the Guarantor hereunder are those of a
primary obligor, and not merely a surety, and are independent of the
Obligations. A separate action or actions may be brought against the
Guarantor whether or not an action is brought against the Borrower, any
other guarantor or other obligor in respect of the Obligations or whether
the Borrower, any other guarantor or any other obligor in respect of the
Obligations are joined in any such action or actions.
(b) Subject to the limitation set forth in Section 2(b) above,
the Guarantor guarantees that the Obligations will be paid and performed
strictly in accordance with the terms of the Credit Agreement and the other
Loan Documents regardless of any law, regulation or order now or hereafter
in effect in any jurisdiction affecting any of such terms or the rights of
the Administrative Agent or the Banks with respect thereto. The Guarantor
agrees that its guarantee constitutes a guarantee of payment when due and
not of collection. The liability of the Guarantor under this Guaranty
shall be absolute and unconditional irrespective of:
(i) any lack of genuineness, validity, legality or
enforceability of the Credit Agreement, any other Loan Document
or any other document, agreement or instrument relating thereto
or any assignment or transfer of any thereof;
(ii) any change in the time, manner or place of payment
of, or in any other term of, all or any of the Obligations
(including, without limitation, the possible extension of the
Revolving Termination Date and increase of the amount of the
Commitments all on the terms and conditions set forth in the
Credit Agreement), or any waiver, indulgence, compromise,
renewal, extension, amendment, modification of, or addition,
consent, supplement to, or consent to departure from, or any
other action or inaction under or in respect of, the Credit
Agreement or any other Loan Document or any document, instrument
or agreement relating to the Obligations or any other instrument
or agreement referred to therein or any assignment or transfer of
any thereof;
(iii) any release or partial release of any other
guarantor or other obligor in respect of the Obligations;
(iv) any exchange, release or non-perfection of any
collateral for all or any of the Obligations, or any release, or
amendment or waiver of, or consent to departure from, any
guaranty or security, for all or any of the Obligations;
(v) any furnishing of any security for any of the
Obligations;
(vi) the liquidation, bankruptcy, insolvency or
reorganization of the Borrower, any other guarantor or other
obligor in respect of the Obligations or any action taken with
respect to this Guaranty by any trustee or receiver, or by any
court, in any such proceeding;
(vii) any modification or termination of any
intercreditor or subordination agreement pursuant to which the
claims of other creditors of the Borrower or the Guarantor are
subordinated to those of the Banks; or
(viii) any other circumstance which might otherwise
constitute a defense available to, or a legal or equitable
discharge of, the Borrower or the Guarantor.
(c) This Guaranty shall continue to be effective or be
reinstated, as the case may be, if at any time payment or performance of
the Obligations, or any part thereof, is, upon the insolvency, bankruptcy
or reorganization of the Borrower or the Guarantor or otherwise pursuant to
applicable law, rescinded or reduced in amount or must otherwise be
restored or returned by the Administrative Agent or any Bank, all as though
such payment or performance had not been made.
(d) If an event permitting the acceleration of any of the
Obligations shall at any time have occurred and be continuing and such
acceleration shall at such time be prevented by reason of the pendency
against the Borrower of a case or proceeding under any bankruptcy or
insolvency law, the Guarantor agrees that, for purposes of this Guaranty
and its obligations hereunder, the Obligations shall be deemed to have been
accelerated and, subject to the limitation set forth in Section 2(b) above,
the Guarantor agrees to forthwith pay such Obligations (including, without
limitation, interest which but for the filing of a petition in bankruptcy
with respect to the Borrower, would accrue on such Obligations), and the
other obligations hereunder, without any further notice or demand.
Section 4. Waivers. The Guarantor hereby waives promptness,
diligence, notice of intention to accelerate, notice of acceleration,
notice of acceptance and any and all other notices with respect to any of
the Obligations and this Guaranty and any requirement that the
Administrative Agent or any Bank protect, secure, perfect or insure any
security interest in or any Lien on any property subject thereto or exhaust
any right or take any action against the Borrower, any other guarantor or
any other Person or any collateral or security or to any balance of any
deposit accounts or credit on the books of any Bank in favor of the
Borrower or the Guarantor.
Section 5. Subrogation. The Guarantor agrees that it will not
exercise any rights of subrogation, reimbursement or contribution,
contractual, statutory or otherwise which it may acquire by way of
subrogation under this Guaranty, by any payment hereunder or otherwise,
until all of the Obligations have been paid in full in cash and all
Commitments have terminated.
Section 6. Representations and Warranties. The following
representations and warranties are hereby made to the Administrative Agent
and the Banks:
(a) The Guarantor represents and warrants that it is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware.
(b) The Guarantor represents and warrants that it: (i) is duly
qualified as a foreign corporation and in good standing under the laws of
each jurisdiction where qualification or licensing is required by the
nature of its business except where the absence of such qualification has
no reasonable likelihood of having a Material Adverse Effect on the
business, properties, assets or conditions (financial or otherwise) of the
Guarantor; (ii) has all requisite corporate power and authority and the
legal right to own, pledge, mortgage and operate its properties, and to
conduct its business as now or currently proposed to be conducted; (iii) is
in compliance with its certificate of incorporation and bylaws; (iv) is not
in default under any material agreement; and (v) is in compliance with all
applicable law except if such noncompliance has no reasonable likelihood of
having a Material Adverse Effect on the business, operations, properties,
assets or conditions (financial or otherwise) of the Guarantor or on its
ability to perform its obligations under this Guaranty.
(c) The Guarantor represents and warrants that the execution,
delivery, and performance by the Guarantor of this Guaranty (i) are within
the Guarantor's corporate powers; (ii) have been duly authorized by all
necessary corporate action; (iii) do not contravene the Guarantor's
certificate of incorporation or bylaws; and (iv) do not result in or
require the creation of any Lien upon or with respect to any of its
properties.
(d) The Guarantor represents and warrants that no authorization
or approval or other action by, and no notice to or filing with, any
Governmental Authority is required for the due execution, delivery and
performance by the Guarantor of this Guaranty.
(e) The Guarantor represents and warrants that this Guaranty is
a legal, valid and binding obligation of the Guarantor enforceable against
the Guarantor in accordance with its terms, except as enforcement may be
limited by applicable bankruptcy, insolvency or similar laws relating to
creditors' rights generally, as such laws would apply in the event of
bankruptcy, insolvency or other similar occurrence with respect to the
Guarantor, and except as may be limited by equitable principles (whether
enforcement is sought in equity or law).
(f) The Guarantor represents and warrants that there is no
pending or threatened action or proceeding affecting the Guarantor before
any Governmental Authority which has any reasonable likelihood of having a
Material Adverse Effect on the business, operations, properties, assets or
conditions (financial or otherwise) of the Guarantor, the Liens created by
any Loan Document or the ability of the Guarantor to perform its
obligations under this Guaranty.
(g) The Guarantor represents and warrants that: (i) the
consolidated financial statements of the Guarantor and its subsidiaries
dated December 31, 1997, and the related consolidated statements of income
or operations, shareholders' equity and cash flows for the fiscal year
ended on that date, (A) were prepared in accordance with GAAP consistently
applied throughout the period covered thereby, except as otherwise
expressly noted therein, subject to ordinary, good faith year-end audit
adjustments; and (B) fairly present the financial condition of the
Guarantor and its subsidiaries as of the date thereof and results of
operations for the period covered thereby; and (ii) since December 31,
1997, there has been no Material Adverse Effect with respect to the
Guarantor.
Section 7. Certain Covenants.
(a) Information Covenants. The Guarantor shall deliver to the
Administrative Agent, in form and detail satisfactory to the Administrative
Agent and the Majority Banks, with sufficient copies for each Bank:
(i) Annual Financial Statements. As soon as
available, but not later than 90 days after the end of each
fiscal year, a copy of the consolidated balance sheet of the
Guarantor and its subsidiaries as at the end of such year and the
related consolidated statements of operations and of cash flows
for such year, setting forth comparative consolidated figures for
the previous fiscal year, and accompanied by the opinion of a
nationally-recognized independent public accounting firm
("Independent Auditor") which report shall state that such
consolidated financial statements present fairly the financial
position for the periods indicated in conformity with GAAP
applied on a basis consistent with prior years. Such opinion
shall not be qualified or limited because of a restricted or
limited examination by the Independent Auditor of any material
portion of the subject companies;
(ii) Quarterly Financial Statements. As soon as
available, but not later than 45 days after the end of each of
the first three fiscal quarters of each fiscal year, a copy of
the unaudited consolidated balance sheet of the Guarantor and its
subsidiaries as of the end of such quarter and the related
consolidated statements of operations and of cash flows for the
period and for the elapsed portion of the fiscal year ended with
the last day of such quarterly period, and in each case setting
forth the comparative consolidated figures for the related period
in the prior fiscal year, and certified by the chief financial
officer or controller of the Guarantor as fairly presenting, in
accordance with GAAP, subject to changes resulting from audit and
normal year-end audit adjustments, the financial position and the
results of operations of the Guarantor and its subsidiaries;
(iii) Compliance Certificate. At the time of the
delivery of the financial statements provided for in Sections
7(a)(i) and (ii), a certificate signed by a Responsible Officer
of the Guarantor, stating that (A) the financial statements being
delivered present fairly the financial position of the Guarantor
as of the date thereof, (B) as of the date of such certificate,
no Guarantor Default or Guarantor Event of Default exists (or if
it does exist, an explanation of same and of the action the
Guarantor intends to take to remedy same), (C) the
representations and warranties of the Guarantor set forth in this
Guaranty are true and correct in all material respects as of the
date of such certificate except those which relate solely to an
earlier date, (D) as of the date of such certificate, no
actions, suits or proceedings are pending or, to the best
knowledge of the Guarantor threatened, at law, in equity, in
arbitration or before any Government Authority, against the
Guarantor or any of its properties which: (x) purport to or do
restrain the performance by the Guarantor under this Guaranty, or
(y) individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect with respect to the
Guarantor and its subsidiaries taken as a whole, and (E) since
the date of the financial statements being delivered, there has
been no Material Adverse Effect with respect to the Guarantor and
its subsidiaries taken as a whole;
(iv) Information Provided to Lenders. Promptly upon
transmission thereof, copies of all other information concerning
the Guarantor and its Subsidiaries which is delivered to the
agent and/or financial institutions pursuant to the R&B Credit
Facility;
(v) SEC Reports. Promptly upon transmission thereof,
copies of any material filings and registration with, and reports
to, the SEC by the Guarantor or its subsidiaries and copies of
all financial statements, proxy statements, notices and reports
as the Guarantor or any of its subsidiaries shall generally send
to analysts or all holders of their capital stock in their
capacity as such holders (in each case to the extent not
theretofore delivered to the Banks pursuant to this Guaranty);
and
(vi) Additional Information. Promptly, such additional
information regarding the business, financial or corporate
affairs of the Guarantor or any subsidiary of the Guarantor as
any Bank, acting through the Administrative Agent, may from time
to time reasonably request.
(b) Amendments to R&B Credit Agreement. (i) Prior to agreeing
to any R&B Credit Amendment, the Guarantor agrees to deliver a copy thereof
to the Administrative Agent. The Guarantor agrees not to consent to or
permit any R&B Credit Amendment without the prior written consent of the
Majority Banks acting through the Administrative Agent.
(ii) No Subsidiary of the Guarantor shall guarantee or otherwise
become liable for repayment of, nor shall the Guarantor or any of its
Subsidiaries give any security for, all or any part of Indebtedness under
the R&B Credit Facility, unless simultaneously therewith a guarantee (or
security agreement(s), as applicable) is executed in favor of the
Administrative Agent and the Banks, such guarantee (or security
agreement(s), as applicable) to be upon substantially the same terms as
granted to such other creditors and otherwise in form and substance
satisfactory to the Administrative Agent acting upon the direction of the
Majority Banks.
(c) Other Indebtedness and Permitted Liens. The Guarantor will
not, and will not permit any of its Subsidiaries to (i) create, incur
assume or permit to exist any Indebtedness (as defined in the Credit
Agreement governing the R&B Credit Facility (the "R&B Falcon Credit
Agreement")) except as permitted by the R&B Falcon Credit Agreement, or
(ii) create, incur, assume or permit to exist any Lien (as defined in the
R&B Falcon Credit Agreement) on any property or asset now owned or
hereafter acquired by it, or assign or sell any income or revenues
(including accounts receivable) or rights in respect of any thereof, except
as permitted by the R&B Falcon Credit Agreement.
Section 8. Further Assurances. The Guarantor agrees that at any
time and from time to time, at the expense of the Guarantor, the Guarantor
will promptly execute and deliver all further instruments and documents,
and take all further action, that may be necessary or desirable, as the
Administrative Agent may reasonably request, to enable the Administrative
Agent to protect and to exercise and enforce its rights and remedies
hereunder.
Section 9. Application of Payments. Any payment received by the
Administrative Agent from the Guarantor (or from any Bank pursuant to
Section 14 below), shall be applied by the Administrative Agent as follows:
First, to the payment of costs and expenses of
collection and all expenses (including without limitation
Attorney Costs), liabilities and advances made or incurred by the
Administrative Agent in connection therewith;
Next, to the Banks pro rata, based on the then
outstanding amount of the Obligations owed to each in payment in
full of the Obligations; and
Finally, after payment in full of all Obligations and
the termination of the Commitments, the payment to the Guarantor,
or its successors and assigns, or to whomsoever may be lawfully
entitled to receive the same or as a court of competent
jurisdiction may direct, of any surplus then remaining from such
proceeds;
provided, however, that nothing contained in this Section 9 shall expand or
modify the limitation on the Guarantor's liability set forth in Section
2(b) of this Guaranty.
Section 10. Decisions Relating to Exercise of Remedies.
Notwithstanding anything in this Guaranty to the contrary, the
Administrative Agent may exercise, and at the request of the Majority Banks
shall exercise or refrain from exercising, all rights and remedies provided
for herein and provided by law.
Section 11. No Waiver. No failure on the part of the
Administrative Agent or any Bank 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. Amendments, Etc. No amendment or waiver of any
provision of this Guaranty, nor consent to any departure by the Guarantor
herefrom, shall in any event be effective unless the same shall be in
writing and signed, in the case of amendments, by the Guarantor and by the
Administrative Agent (acting with the consent of the Majority Banks or all
the Banks, as may be required pursuant to Section 10.01 of the Credit
Agreement) and, in the case of consent or waiver, by the Administrative
Agent (acting with the consent of the Majority Banks or all the Banks, as
may be required pursuant to Section 10.01 of the Credit Agreement) and then
such amendment, waiver or consent shall be effective only in the specific
instance and for the specific purpose for which made or given.
Section 13. Notices. All notices, requests and other
communications provided for hereunder shall be in writing and given as
provided in Section 10.02 of the Credit Agreement. The address for notices
to the Guarantor shall be the address set forth below its signature to this
Guaranty, or such other address as shall be designated by the Guarantor in
a written notice to the Administrative Agent.
Section 14. Right to Set-off.
(a) Upon the occurrence and during the continuance of any Event
of Default under the Credit Agreement, each Bank is hereby authorized at
any time and from time to time, to the fullest extent permitted by law, to
set-off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time
owing by such Bank to or for the credit or the account of the Guarantor
against any and all of the Obligations (subject to the limitation set forth
in Section 2(b) above), irrespective of whether or not such Bank shall have
made any demand under this Guaranty and although such Obligations may be
contingent and unmatured. Each Bank which sets-off pursuant to this
Section 14(a) shall give prompt notice to the Guarantor and the
Administrative Agent following the occurrence thereof; provided that the
failure to give such notice shall not affect the validity of the set-off.
(b) Any payment obtained pursuant to Section 14(a) above (or in
any other manner directly from the Guarantor) by any Bank shall be remitted
to the Administrative Agent and distributed among the Banks in accordance
with the provisions of Section 9 above.
Section 15. Continuing Guaranty. This Guaranty is a continuing
guaranty and shall (a) remain in full force and effect until the
indefeasible payment (after the termination of the Commitments) in full
(subject to Section 2(b) above) of the Obligations and all other amounts
payable under this Guaranty; (b) be binding upon the Guarantor, its
successors and assigns; and (c) inure to the benefit of the Administrative
Agent, the Banks and their respective successors, transferees and assigns.
Without limiting the generality of the foregoing clause (c), any Bank may
assign or otherwise transfer its rights and obligations under the Credit
Agreement to any other Person or entity, and such other Person or entity
shall thereupon become vested with all the benefits in respect thereof
granted to the Bank herein or otherwise, all as provided in, and to the
extent set forth in, Sections 10.07 and 10.08 of the Credit Agreement.
Section 16. Subordination of the Credit Parties' Obligations to the
Guarantor. The Guarantor hereby expressly covenants and agrees for the
benefit of the Administrative Agent and the Banks that all obligations and
liabilities of the Borrower and all obligations and liabilities of all
other guarantors of the Obligations (or any part thereof) ("Other
Guarantors"), to the Guarantor of whatsoever description (including,
without limitation, all rights of contribution) (the "Subordinated
Obligations") shall be subordinated and junior in right of payment to the
Obligations. In the case of any Insolvency Proceeding wherein the obligor
of Subordinated Obligations (an "Obligor") is debtor, the Obligor and any
assignee, trustee in bankruptcy, receiver or other similar Person, debtor
in possession or other Person(s) in charge are hereby directed to pay to
the Administrative Agent (for the benefit of the Banks) the full amount of
the Obligations (including interest to date of payment and including
without limitation interest accrued after the filing of a petition
initiating an Insolvency Proceeding) before making any payment in respect
of the Subordinated Obligations to the Guarantor, and insofar as may be
necessary for that purpose, the Guarantor hereby assigns and transfers to
the Administrative Agent all rights to such payments. Notwithstanding the
foregoing provisions of this Section 16:
(a) with respect to obligations and liabilities of the Borrower to
the Guarantor ("Borrower/Guarantor Obligations"), the Guarantor
may receive payments in respect of Borrower/Guarantor Obligations
so long as there has not occurred a Default or Event of Default;
(b) with respect to obligations and liabilities of one or more of the
Other Guarantors who are not signatories to this Guaranty
("Unrelated Guarantors") which obligations or liabilities are
related to the Borrower, the Drillship, or R&BII's interest in
the Borrower ("Drillship-Related R&B/Conoco Obligations"), the
Guarantor may receive payments in respect of Drillship-Related
R&B/Conoco Obligations so long as there has been no acceleration
of the Obligations under the Credit Agreement and there is not
pending any Insolvency Proceeding involving as debtor the
Borrower or the Obligor of the Drillship-Related R&B Conoco
Obligations; and
(c) obligations and liabilities of Unrelated Guarantors to the
Guarantor, if such obligations and liabilities are unrelated to
the Borrower and the Drillship ("Unrelated R&B/Conoco
Obligations"), shall not be subject to the provisions of this
Section 16.
If the Guarantor shall receive any payment in respect of the Subordinated
Obligations in contravention of the terms of this Section, such payments
shall be collected and received by the Guarantor as trustee for the
Administrative Agent and the Banks and paid over to the Administrative
Agent and the Banks on account of the Obligations.
Section 17. Severability; Entire Agreement.
(a) If for any reason any provision or provisions hereof are
determined to be invalid and contrary to any existing or future law, such
invalidity shall not impair the operation of or affect those portions of
this Guaranty which are valid.
(b) This Guaranty, together with the other Loan Documents,
embodies the entire agreement and understanding among the Guarantor and the
other parties to the Loan Documents, and supersedes all prior or
contemporaneous agreements and understandings of such Persons, verbal or
written, relating to the subject matter hereof and thereof.
Section 18. Taxes.
(a) Any and all payments by the Guarantor to each Bank or the
Administrative Agent under this Guaranty and any other Loan Document shall
be made free and clear of, and without deduction or withholding for, any
Taxes. In addition, the Guarantor shall pay all Other Taxes with respect
to amounts owed by it.
(b) If the Guarantor shall be required by law to deduct or
withhold any Taxes, Other Taxes or Further Taxes from or in respect of any
sum payable hereunder to any Bank or the Administrative Agent, then: (i)
the sum payable shall be increased as necessary so that after making all
required deductions and withholdings (including deductions and withholdings
applicable to additional sums payable under this Section) such Bank or the
Administrative Agent, as the case may be, receives an amount equal to the
sum it would have received had no such deductions or withholdings been
made; (ii) the Guarantor shall make such deductions and withholdings; (iii)
the Guarantor shall pay the full amount deducted or withheld to the
relevant taxing authority or other authority in accordance with applicable
law; and (iv) the Guarantor shall also pay to each Bank or the
Administrative Agent for the account of such Bank, at the time interest is
paid, all additional reasonable amounts which the respective Bank
specifies, in a Certificate Regarding Taxes (as defined in Section 18(e)
below) as necessary to preserve the after-tax yield the Bank would have
received if such Taxes, Other Taxes or Further Taxes had not been imposed.
(c) The Guarantor agrees to indemnify and hold harmless each
Bank and the Administrative Agent for the full amount of Taxes, Other Taxes
and Further Taxes in the amount that the respective Bank specifies, in a
Certificate Regarding Taxes (as defined in Section 18(e) below) as
necessary to preserve the after-tax yield the Bank would have received if
such Taxes, Other Taxes or Further Taxes had not been imposed, and any
liability (including penalties, interest, additions to tax and expenses)
arising therefrom or with respect thereto, whether or not such Taxes, Other
Taxes or Further Taxes were correctly or legally asserted. Payment under
this indemnification shall be made within 30 days after the date the Bank
or the Administrative Agent makes written demand therefor.
(d) Within 30 days after the date of any payment by the
Guarantor of Taxes, Other Taxes or Further Taxes, the Guarantor shall
furnish to the Administrative Agent and each Bank the original or a
certified copy of a receipt evidencing payment thereof, or other evidence
of payment reasonably satisfactory to the Administrative Agent.
(e) As used in this Section 18, a "Certificate Regarding Taxes"
means a Certificate executed on behalf of the applicable Bank setting forth
in reasonable detail the amount payable to such Bank hereunder. Such
certificate shall be conclusive and binding on the Guarantor in the absence
of manifest error.
Section 19. Event of Default. As used in this Guaranty and in the
other Loan Documents, a "Guarantor Event of Default" shall mean the
occurrence of any of the following events:
(a) the Guarantor fails to observe any covenant in Section 7(b)
or 7(c) of this Guaranty; or
(b) the Guarantor shall fail to observe or perform any other
term or covenant contained in this Guaranty; provided, however if such
default is capable of being cured or remedied, then such default shall not
constitute a Guarantor Event of Default unless it shall continue unremedied
for a period of twenty (20) days; or
(c) the Guarantor (A) fails to make any payment in respect of
any Indebtedness or Contingent Obligation having an aggregate principal
amount (including undrawn committed or available amounts and including
amounts owing to all creditors under any combined or syndicated credit
arrangement) of more than $5,000,000 when due (whether by scheduled
maturity, required prepayment, acceleration, demand, or otherwise) and such
failure continues after the applicable grace or notice period, if any,
specified in the relevant document on the date of such failure, or (B)
fails to perform or observe any other condition or covenant, or any other
event shall occur or condition exist, under any agreement or instrument
relating to any such Indebtedness or Contingent Obligation, and such
failure continues after the applicable grace or notice period, if any,
specified in the relevant document on the date of such failure, if the
effect of such failure, event or condition is to result in acceleration of
all or any part of such Indebtedness or renegotiation of the material
payment terms of any such Indebtedness to become due prior to its scheduled
maturity, or to result in such Contingent Obligation becoming payable or
cash collateral in respect thereof being demanded; or
(d) An R&B Credit Amendment shall be made or done without the
prior written consent of the Administrative Agent (acting upon direction of
the Majority Banks).
SECTION 20. GOVERNING LAW AND JURISDICTION.
(a) THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK (WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS); PROVIDED THAT THE ADMINISTRATIVE AGENT
AND THE BANKS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY
OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW
YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY
EXECUTION AND DELIVERY OF THIS GUARANTY, THE GUARANTOR CONSENTS, FOR ITSELF
AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE
COURTS. THE GUARANTOR HEREBY IRREVOCABLY DESIGNATES AND APPOINTS CAPITOL
SERVICES, INC., WITH OFFICES ON THE DATE HEREOF AT 40 COLVIN AVE., SUITE
200, ALBANY, NEW YORK, 12206, AS ITS DESIGNEE, APPOINTEE AND ADMINISTRATIVE
AGENT TO RECEIVE, ACCEPT AND ACKNOWLEDGE FOR AND ON ITS BEHALF, AND IN
RESPECT OF ITS PROPERTY, SERVICE OF ANY AND ALL LEGAL PROCESS, SUMMONS,
NOTICES AND DOCUMENTS WHICH MAY BE SERVED IN ANY SUCH ACTION OR PROCEEDING.
IF FOR ANY REASON SUCH DESIGNEE, APPOINTEE AND ADMINISTRATIVE AGENT SHALL
CEASE TO BE AVAILABLE TO ACT AS SUCH, THE GUARANTOR AGREES TO DESIGNATE A
NEW DESIGNEE, APPOINTEE AND ADMINISTRATIVE AGENT IN NEW YORK ON THE TERMS
AND FOR THE PURPOSES OF THIS PROVISION SATISFACTORY TO THE ADMINISTRATIVE
AGENT. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE GUARANTOR FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF
COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO IT AT
ITS ADDRESS SET FORTH BELOW ITS SIGNATURE TO THIS GUARANTY AGREEMENT, SUCH
SERVICE TO BECOME EFFECTIVE TEN DAYS AFTER MAILING SUCH AGREEMENT. NOTHING
HEREIN SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT OR ANY BANK TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE GUARANTOR IN ANY OTHER
JURISDICTION. THE GUARANTOR WAIVES PERSONAL SERVICE OF ANY SUMMONS,
COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED
BY NEW YORK LAW.
(c) THE GUARANTOR IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING
ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY
ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS GUARANTY OR
ANY DOCUMENT RELATED HERETO.
SECTION 21. WAIVER OF JURY TRIAL. THE GUARANTOR WAIVES ITS RIGHTS
TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OF OR RELATED TO THIS GUARANTY, THE OTHER LOAN DOCUMENTS, OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR
OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY
OTHER PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER
WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE GUARANTOR
AGREES THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT
TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE GUARANTOR
FURTHER AGREES THAT ITS RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF
THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH
SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF
THIS GUARANTY OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR
THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS GUARANTY AND THE OTHER LOAN DOCUMENTS.
[SIGNATURE IS ON FOLLOWING PAGE]
ENTIRE AGREEMENT. THIS WRITTEN GUARANTY AND OTHER LOAN DOCUMENTS
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the
date first above written.
R&B FALCON CORPORATION
By
Name:
Title:
Address for Notices:
R&B Falcon Corporation
901 Threadneedle, Suite 200
Houston, Texas 77079-2902
Attn: Mr. Tim W. Nagle
Tel: (281) 496-5000
Fax: (281) 496-4440
With a copy to:
Wayne K. Hillin, Esq .
Co-Counsel
R&B Falcon Corporation
901 Threadneedle, Suite 200
Houston, Texas 77079-2902
Tel: (281) 496-5000
Fax: (281) 496-0285
Exhibit 15
R&B Falcon Corporation
We are aware that R&B Falcon Corporation has incorporated by reference
in its Registration Statement No. 333-43475 its Form 10-Q for the quarter
ended March 31, 1998, which includes our report dated April 28, 1998
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.
/s/Arthur Andersen LLP
Houston, Texas
May 15, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements of R&B Falcon Corporation for the quarters ended March 31,
1998 and 1997 as restated to reflect the completion of a pooling of interests
between Reading & Bates Corporation and Falcon Drilling Company, Inc. and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000,000
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1997
<PERIOD-START> JAN-01-1998 JAN-01-1997
<PERIOD-END> MAR-31-1998 MAR-31-1997
<CASH> 118 112
<SECURITIES> 0 0
<RECEIVABLES> 244 159
<ALLOWANCES> 8 3
<INVENTORY> 17 15
<CURRENT-ASSETS> 387 291
<PP&E> 2,243 1,494
<DEPRECIATION> 446 373
<TOTAL-ASSETS> 2,226 1,515
<CURRENT-LIABILITIES> 290 107
<BONDS> 0 0
0 0
0 0
<COMMON> 2 1
<OTHER-SE> 820 759
<TOTAL-LIABILITY-AND-EQUITY> 2,226 1,515
<SALES> 0 0
<TOTAL-REVENUES> 279 203
<CGS> 0 0
<TOTAL-COSTS> 153 133
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 14 10
<INCOME-PRETAX> 113 61
<INCOME-TAX> 41 13
<INCOME-CONTINUING> 70 45
<DISCONTINUED> 0 (6)
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 70 39
<EPS-PRIMARY> .42 .24
<EPS-DILUTED> .42 .23
</TABLE>
