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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________
FORM 10-K
(Mark One)
_X_ ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the fiscal year ended December 31, 1999
OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ___________ to ___________.
Commission File No. 333-79363
RBF FINANCE CO.
(Exact Name of Registrant as Specified in its Charter)
Delaware 76-0599699
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
901 Threadneedle, Houston, TX 77079
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (281) 496-5000
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None
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 ___
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [x]
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TABLE OF CONTENTS
-----------------
Page
----
PART I
------
Item 1. Business
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Submission of Matters to a Vote of Security Holders
PART II
-------
Item 5. Market for the Registrant's Common Stock and Related
Stockholder Matters
Item 6. Selected Financial Data
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 8. Financial Statements and Supplementary Data
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure
PART III
--------
Item 10. Directors and Executive Officers of the Registrant
Item 11. Executive and Director Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management
Item 13. Certain Relationships and Related Transactions
PART IV
-------
Item 14. Exhibits, Financial Statements and Reports on Form 8-K
Signatures
________________________________________
FORWARD LOOKING STATEMENTS AND ASSUMPTIONS
This Annual Report on Form 10-K 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 R&B Falcon'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 and gas prices, the exploration and
development programs of R&B Falcon's customers, the actions of R&B Falcon's
competitors and economic conditions generally.
PART I
Item 1. Business
RBF Finance Co. (the "Company") is a limited purpose Delaware
corporation organized on March 19, 1999 solely for the purpose of and
limited to issuing secured notes as full recourse obligations of the
Company and loaning the proceeds from the sale of the secured notes to R&B
Falcon Corporation ("R&B Falcon"). The Company is an affiliate of R&B
Falcon through common management, and all of the Company's shares are owned
by management of R&B Falcon.
On March 26, 1999, the Company issued two series of senior secured
notes with an aggregate principal amount of $800.0 million (the "Senior
Secured Notes"). The Senior Secured Notes consist of $400.0 million of 11%
senior secured notes due 2006 and $400.0 million of 11.375% senior secured
notes due 2009. The proceeds from the Senior Secured Notes were then loaned
to R&B Falcon. All of the Company's future cash flows and long-term
obligations are guaranteed by R&B Falcon. See Notes A, B and C of Notes to
Financial Statements.
Item 2. Properties
None.
Item 3. Legal Proceedings
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
PART II
Item 5. Market for the Registrant's Common Stock and Related Stockholder
Matters
There is no established public trading market for the Company's common
stock. There were five holders of record of the Company's common stock as
of March 15, 2000. The Company has not declared any dividends on its common
stock since its inception (March 19, 1999) and the Company does not intend
to declare any dividends in the foreseeable future.
Item 6. Selected Financial Data
RBF FINANCE CO.
(in thousands)
The selected financial data set forth below is derived from the
Company's financial statements as of December 31, 1999 and for the period
from inception (March 19, 1999) to December 31, 1999.
For the period
from inception
(March 19, 1999) to
December 31, 1999
-----------------
Revenues $ 68,661
---------
Expenses:
Interest expense 68,374
Other expense 29
---------
Total expenses 68,403
---------
Income before income tax expense 258
Income tax expense 90
---------
Net income $ 168
=========
Dividends on common stock $ -
=========
As of
December 31,
1999
---------
Total assets $ 826,612
=========
Long-term obligations $ 800,000
=========
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
General
RBF Finance Co. (the "Company") is a limited purpose Delaware
corporation organized on March 19, 1999 solely for the purpose of and
limited to issuing secured notes as full recourse obligations of the
Company and loaning the proceeds from the sale of the secured notes to R&B
Falcon Corporation ("R&B Falcon"). The Company is an affiliate of R&B
Falcon through common management, and all of the Company's shares are owned
by management of R&B Falcon.
On March 26, 1999, the Company issued two series of senior secured
notes with an aggregate principal amount of $800.0 million (the "Senior
Secured Notes"). The Senior Secured Notes consist of $400.0 million of 11%
senior secured notes due 2006 and $400.0 million of 11.375% senior secured
notes due 2009. The proceeds from the Senior Secured Notes were then loaned
to R&B Falcon. All of the Company's future cash flows and long-term
obligations are guaranteed by R&B Falcon. See Notes A, B and C of Notes to
Financial Statements.
Results of Operations
As the Company was organized on March 19, 1999 (see General above),
there are no comparable periods for the previous year. The Company's
results of operations for the period from inception (March 19, 1999) to
December 31, 1999 consists of interest and commitment fee revenues from the
loans to R&B Falcon offset by interest expense on the Senior Secured Notes.
Liquidity and Capital Resources
Cash Flows
Net cash used in investing activities was $800.0 million for the period
from inception (March 19, 1999) to December 31, 1999 and was the result of
loans to R&B Falcon.
Net cash provided by financing activities was $800.0 million for the
period from inception (March 19, 1999) to December 31, 1999 and was the
result of proceeds from the issuance of debt obligations. R&B Falcon paid
all expenses related to the issuance of such debt obligations.
Liquidity
All of the Company's future cash flows and long-term obligations are
guaranteed by R&B Falcon. The following is a description of R&B Falcon's
industry conditions and liquidity.
Activity in the contract drilling industry and related oil service
businesses has deteriorated significantly in the past year due primarily to
decreased worldwide demand for drilling rigs and related services resulting
from a substantial decline in crude oil prices experienced in 1998 through
the first quarter of 1999. In mid 1999, crude oil prices began to recover,
but there can be no assurance that demand for drilling rigs and related
services will recover proportionately. To date, demand for drilling rigs
has not recovered to the levels experienced in 1996-1998. Oil companies'
demand for offshore drilling services are a function of: 1) current and
projected oil and gas prices, 2) government taxation and concession/leasing
policies, 3) the oil company's lease inventory and existing drilling
commitments on leases held, 4) the oil company's free cash flow and general
funding availability, 5) the oil company's internal reserve replacement
requirements, and 6) geopolitical factors (e.g., the drive for national
hydrocarbons self sufficiency). The first factor is by far the most
important. In particular, the domestic shallow water market tends to be
primarily driven by the price of natural gas. Changes in demand for
exploration and production services can impact R&B Falcon's liquidity as
supply and demand factors directly affect utilization and dayrates, which
are the primary determinants of cash flow from R&B Falcon's operations. In
late 1998 and early 1999, lower crude oil prices reduced exploration and
production spending, which led to significantly lower dayrates and
utilization for offshore drilling companies, particularly in the U.S. Gulf
of Mexico. Management believes such decline in demand also contributed to
terminated or renegotiated contracts for certain of R&B Falcon's deepwater
rigs. Crude oil and natural gas prices have continued to fluctuate over the
last several years. If crude oil prices decline or a weakness in crude oil
prices continued for an extended period, there could be a further
deterioration in both rig utilization and dayrates which could have a
material adverse affect on R&B Falcon's liquidity, financial position and
results of operations.
During 1999, R&B Falcon received net proceeds of approximately $1.3
billion from the issuance of senior notes and preferred stock, and a
subsidiary of R&B Falcon received approximately $245.2 million in project
financing for the construction of the Deepwater Nautilus. The proceeds were
used to repay existing indebtedness of approximately $556.0 million with
the remainder being used to acquire, construct, repair and improve drilling
rigs and for general corporate purposes. Also, R&B Falcon is considering
certain asset sales, including the Seillean and Iolair, and under its
indenture covenants, R&B Falcon may enter into a revolving credit facility
up to approximately $180.0 million. As of December 31, 1999, R&B Falcon
had $717.0 million of cash, cash equivalents, short-term investments and
cash dedicated to capital projects.
R&B Falcon has substantially completed or is currently constructing or
significantly upgrading nine deepwater drilling rigs. R&B Falcon estimates
its capital expenditure commitments on these projects and its other routine
capital expenditures for 2000 to total approximately $540.0 million.
R&B Falcon has limited ability under its indenture covenants to incur
additional recourse indebtedness. However, management of R&B Falcon
believes its projected level of cash flows from operations, which assumes
an industry recovery in 2000, cash on hand, potential asset sales and/or
new financings will be sufficient to satisfy R&B Falcon's short-term and
long-term working capital needs, planned investments, capital expenditures,
debt, lease and other payment obligations. If R&B Falcon were to build
excess cash balances, it will most likely use a portion of the excess to
retire debt and/or preferred obligations.
The impact of general economic inflation on the Company's operations
has not been material.
Year 2000
The Company is dependent upon R&B Falcon for its Year 2000 ("Y2K")
compliance and the following is a summary of R&B Falcon's Y2K compliance
efforts. Y2K arose as a result of many computer systems being affected in
some way by the rollover of the two-digit year value to 00. R&B Falcon
undertook a Y2K compliance program to assess, test, implement and develop
contingency plans for those systems potentially affected by Y2K as well as
contacting third parties with which R&B Falcon has a substantial
relationship to assess their status. R&B Falcon completed its Y2K
compliance program and made certain modifications to its existing software
and systems and/or conversions to new software. As of the date of this
filing, R&B Falcon has not experienced any disruption of its operations due
to Y2K. The total cost of R&B Falcon's Y2K compliance program was
approximately $3.0 million, which consisted primarily of the replacement of
accounting software for one of R&B Falcon's wholly-owned subsidiaries. R&B
Falcon does not anticipate to incur any significant Y2K related costs in
2000.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
The Company is exposed to changes in interest rates with respect to its
debt obligations. The Company's debt obligations as of December 31, 1999
consist of $400.0 million at a fixed rate of 11% due March 2006 and $400.0
million at a fixed rate of 11.375% due March 2009. The estimated fair
value of both debt obligations at December 31, 1999 was $862.0 million.
Item 8. Financial Statements and Supplementary Data
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders of
RBF Finance Co.
We have audited the accompanying balance sheet of RBF Finance Co. (a
limited purpose Delaware corporation) as of December 31, 1999, and the
related statement of operations, cash flows and stockholders' equity for
the period from inception (March 19, 1999) to December 31, 1999. These
financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements
based on our audit.
We conducted our audit in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of RBF Finance Co.
as of December 31, 1999, and the results of its operations and cash flows
for the period from inception (March 19, 1999) to December 31, 1999, in
conformity with accounting principles generally accepted in the United
States.
/s/Arthur Andersen LLP
Houston, Texas
February 22, 2000
RBF FINANCE CO.
BALANCE SHEET
(in thousands except share amounts)
AS OF
DECEMBER 31,
1999
ASSETS ---------
- ------
CURRENT ASSETS:
Cash and cash equivalents $ 1
Interest receivable 26,151
---------
Total current assets 26,152
RECEIVABLE FROM R&B FALCON CORPORATION 460
LOANS TO R&B FALCON CORPORATION 800,000
---------
TOTAL ASSETS $ 826,612
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
Accrued interest expense $ 26,353
Accrued income taxes 90
---------
Total current liabilities 26,443
---------
LONG-TERM OBLIGATIONS 800,000
---------
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value, 1,000 shares
authorized and 250 shares issued and
outstanding at December 31, 1999 -
Capital in excess of par value 1
Retained earnings 168
---------
Total stockholders' equity 169
---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 826,612
=========
The accompanying notes are an integral part of the financial statements.
STATEMENT OF OPERATIONS
(in thousands)
FOR THE PERIOD
FROM INCEPTION
(MARCH 19, 1999) TO
DECEMBER 31, 1999
-----------------
REVENUES:
Interest income $ 66,915
Commitment fee 1,746
--------
Total revenues 68,661
EXPENSES:
Interest expense 68,374
Other expense 29
--------
Total expenses 68,403
--------
INCOME BEFORE INCOME TAX EXPENSE 258
INCOME TAX EXPENSE 90
--------
NET INCOME $ 168
========
The accompanying notes are an integral part of the financial statements.
STATEMENT OF CASH FLOWS
(in thousands)
FOR THE PERIOD
FROM INCEPTION
(MARCH 19, 1999) TO
DECEMBER 31, 1999
-----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 168
Adjustments to reconcile net income to net cash
provided by operating activities:
Changes in assets and liabilities:
Interest receivable (26,151)
Receivable from R&B Falcon Corporation (460)
Accrued interest expense 26,353
Accrued income taxes 90
---------
Net cash provided by operating activities -
CASH FLOWS FROM INVESTING ACTIVITIES:
Loans to R&B Falcon Corporation (800,000)
---------
Net cash used in investing activities (800,000)
---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term obligations 800,000
Issuance of common stock 1
---------
Net cash provided by financing activities 800,001
---------
NET INCREASE IN CASH AND CASH EQUIVALENTS 1
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD -
---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1
=========
The accompanying notes are an integral part of the financial statements.
STATEMENT OF STOCKHOLDERS' EQUITY
For the Period From Inception (March 19, 1999) to December 31, 1999
(in thousands except share amounts)
Common Stock Capital in
------------ Excess of Retained
Shares Amount Par Value Earnings
------ ------ --------- --------
Initial capital contribution 250 $ - $ 1 $ -
Net income - - - 168
---- ----- ----- -----
Balances at December 31, 1999 250 $ - $ 1 $ 168
==== ===== ===== =====
The accompanying notes are an integral part of the financial statements.
RBF FINANCE CO.
NOTES TO FINANCIAL STATEMENTS
A) BUSINESS, INDUSTRY CONDITIONS AND LIQUIDITY
RBF Finance Co. (the "Company") is a limited purpose Delaware
corporation organized on March 19, 1999 solely for the purpose of and
limited to issuing secured notes as full recourse obligations of the
Company and loaning the proceeds from the sale of the secured notes to
R&B Falcon Corporation ("R&B Falcon"). The Company is an affiliate of
R&B Falcon through common management, and all of the Company's shares
are owned by management of R&B Falcon. R&B Falcon provides for the
administrative costs of the Company. On March 26, 1999, the Company
issued two series of senior secured notes with an aggregate principal
amount of $800.0 million (the "Senior Secured Notes"). The Senior
Secured Notes consist of $400.0 million of 11% senior secured notes
due 2006 and $400.0 million of 11.375% senior secured notes due 2009.
The proceeds from the Senior Secured Notes were then loaned to R&B
Falcon.
All of the Company's future cash flows and long-term obligations
are guaranteed by R&B Falcon. The following is a description of R&B
Falcon's industry conditions and liquidity.
Activity in the contract drilling industry and related oil
service businesses has deteriorated significantly in the past year due
primarily to decreased worldwide demand for drilling rigs and related
services resulting from a substantial decline in crude oil prices
experienced in 1998 through the first quarter of 1999. In mid 1999,
crude oil prices began to recover, but there can be no assurance that
demand for drilling rigs and related services will recover
proportionately. To date, demand for drilling rigs has not recovered
to the levels experienced in 1996-1998. Oil companies' demand for
offshore drilling services are a function of: 1) current and
projected oil and gas prices, 2) government taxation and
concession/leasing policies, 3) the oil company's lease inventory and
existing drilling commitments on leases held, 4) the oil company's
free cash flow and general funding availability, 5) the oil company's
internal reserve replacement requirements, 6) geopolitical factors
(e.g., the drive for national hydrocarbons self sufficiency). The
first factor is by far the most important. In particular, the domestic
shallow water market tends to be primarily driven by the price of
natural gas. Changes in demand for exploration and production services
can impact R&B Falcon's liquidity as supply and demand factors
directly affect utilization and dayrates, which are the primary
determinants of cash flow from R&B Falcon's operations. In late 1998
and early 1999, lower crude oil prices reduced exploration and
production spending, which led to significantly lower dayrates and
utilization for offshore drilling companies, particularly in the U.S.
Gulf of Mexico. Management believes such decline in demand also
contributed to terminated or renegotiated contracts for certain of R&B
Falcon's deepwater rigs. Crude oil and natural gas prices have
continued to fluctuate over the last several years. If crude oil
prices decline or a weakness in crude oil prices continued for an
extended period, there could be a further deterioration in both rig
utilization and dayrates which could have a material adverse affect on
R&B Falcon's liquidity, financial position and results of operations.
During 1999, R&B Falcon received net proceeds of approximately
$1.3 billion from the issuance of senior notes and preferred stock,
and a subsidiary of R&B Falcon received approximately $245.2 million
in project financing for the construction of the Deepwater Nautilus.
The proceeds were used to repay existing indebtedness of approximately
$556.0 million with the remainder being used to acquire, construct,
repair and improve drilling rigs and for general corporate purposes.
Also, R&B Falcon is considering certain asset sales, including the
Seillean and Iolair, and under its indenture covenants, R&B Falcon may
enter into a revolving credit facility up to approximately $180.0
million. As of December 31, 1999, R&B Falcon had $717.0 million of
cash, cash equivalents, short-term investments and cash dedicated to
capital projects.
R&B Falcon has substantially completed or is currently
constructing or significantly upgrading nine deepwater drilling rigs.
R&B Falcon estimates its capital expenditure commitments on these
projects and its other routine capital expenditures for 2000 to total
approximately $540.0 million.
R&B Falcon has limited ability under its indenture covenants to
incur additional recourse indebtedness. However, management of R&B
Falcon believes its projected level of cash flows from operations,
which assumes an industry recovery in 2000, cash on hand, potential
asset sales and/or new financings will be
sufficient to satisfy R&B Falcon's short-term and long-term
working capital needs, planned investments, capital expenditures,
debt, lease and other payment obligations. If R&B Falcon were to build
excess cash balances, it will most likely use a portion of the excess
to retire debt and/or preferred obligations.
B) LOANS TO R&B FALCON
On March 26, 1999, the Company entered into ten Senior Secured
Loan Agreements with R&B Falcon each of which is secured by one of R&B
Falcon's drilling rigs (the "Loans to R&B Falcon"). Interest on the
Loans to R&B Falcon is receivable semiannually on March 15 and
September 15. Each loan is equally divided into a 7-year tranche and
a 10-year tranche. The 7-year tranche of the loans bear interest on
the unpaid principal amount thereof from the date funded through
maturity at a rate equal to 11% per annum plus two basis points per
annum. The 10-year tranche of the loans bear interest on the unpaid
principal amount thereof from the date funded through maturity at a
rate equal to 11.375% per annum plus two basis points per annum. In
addition, the Company charged R&B Falcon a commitment fee of 7% per
annum from March 26, 1999 to the date the loans were funded. The loan
agreements contained conditions that were to be met by R&B Falcon
before the loans were to be funded. R&B Falcon has met the conditions
on all of the ten loans.
Loans to R&B Falcon at December 31, 1999 consisted of the
following (in thousands):
7-year 10-year Total Collateral
--------- --------- --------- ----------
Loan to R&B Falcon $ 112,800 $ 112,800 $ 225,600 Deepwater Navigator
Loan to R&B Falcon 104,950 104,950 209,900 Deepwater Millennium
Loan to R&B Falcon 83,000 83,000 166,000 Deepwater Expedition
Loan to R&B Falcon 52,650 52,650 105,300 Falcon 100
Loan to R&B Falcon 14,250 14,250 28,500 Peregrine II
Loan to R&B Falcon 11,000 11,000 22,000 Deepwater Discovery
Loan to R&B Falcon 8,000 8,000 16,000 Peregrine I
Loan to R&B Falcon 5,950 5,950 11,900 W.D. Kent
Loan to R&B Falcon 5,400 5,400 10,800 Falrig 82
Loan to R&B Falcon 2,000 2,000 4,000 Harvey H. Ward
--------- --------- ---------
Total $ 400,000 $ 400,000 $ 800,000
========= ========= =========
C) LONG-TERM OBLIGATIONS
Long-term obligations at December 31, 1999 consisted of the
following (in thousands):
11% Senior Secured Notes due March 2006 $ 400,000
11.375% Senior Secured Notes due March 2009 400,000
---------
Long-term obligations $ 800,000
=========
In March 1999, the Company issued the Senior Secured Notes. As a
result, the Company received proceeds of approximately $800.0 million.
The Senior Secured Notes are secured by the Loans to R&B Falcon. R&B
Falcon also guaranteed the payment of the Senior Secured Notes by the
Company. Interest is payable semiannually on March 15 and September
15 on the Senior Secured Notes. R&B Falcon paid all expenses related
to the offering. The Company used the proceeds to loan $800.0 million
to R&B Falcon. The Senior Secured Notes have covenants, related to
R&B Falcon, which limit or prohibit R&B Falcon's ability to incur
additional indebtedness, create liens and sell assets.
As of December 31, 1999, the Company estimates the fair value of
its debt obligations to be $862.0 million.
D) INCOME TAXES
The Company provides for income taxes at the statutory rate of
35%. Income tax expense of $90,000 for the period from inception
(March 19, 1999) to December 31, 1999 consisted of current federal
taxes.
E) QUARTERLY FINANCIAL DATA (unaudited)
Quarterly financial data for the period from inception (March 19,
1999) to December 31, 1999 are as follows (in thousands):
Quarter
-------------------------------------------------
First (1) Second Third Fourth Total
-------- -------- -------- -------- --------
Revenues $ 1,316 $ 22,386 $ 22,534 $ 22,425 $ 68,661
Expenses:
Interest expense 1,226 22,392 22,375 22,381 68,374
Other expense - - 29 - 29
Total expenses 1,226 22,392 22,404 22,381 68,403
Income (loss) before
income tax expense 90 (6) 130 44 258
Income tax expense
(benefit) 32 (2) 46 14 90
------- ------- -------- -------- --------
Net income (loss) $ 58 $ (4) $ 84 $ 30 $ 168
======= ======= ======== ======== ========
----------------------
(1) The first quarter of 1999 is from inception (March 19, 1999) to
March 31, 1999.
The following are the audited consolidated financial statements of R&B
Falcon as of December 31, 1999 and 1998 and for the three years ending
December 31, 1999.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders
R&B Falcon Corporation
We have audited the accompanying consolidated balance sheets of R&B
Falcon Corporation (a Delaware corporation) and subsidiaries as of December
31, 1999 and 1998, and the related consolidated statements of operations,
cash flows and stockholders' equity for each of the three years in the
period ended December 31, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards in the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
R&B Falcon Corporation and subsidiaries as of December 31, 1999 and 1998,
and the consolidated results of their operations and their cash flows for
each of the three years in the period ended December 31, 1999, in
conformity with generally accepted accounting principles in the United
States.
Arthur Andersen LLP
Houston, Texas
February 22, 2000
R&B FALCON CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
December 31, 1999 and 1998
(in millions except share amounts)
1999 1998
--------- ---------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents, gross $ 415.5 $ 177.4
Less cash dedicated to capital projects (160.4) -
--------- ---------
Cash and cash equivalents, net 255.1 177.4
Short-term investments 301.5 -
Accounts receivable:
Trade, net 141.3 197.0
Other 86.0 73.5
Materials and supplies inventory 52.6 36.1
Drilling contracts in progress 16.7 29.5
Other current assets 13.9 25.0
--------- ---------
Total current assets 867.1 538.5
--------- ---------
INVESTMENTS IN AND ADVANCES TO
UNCONSOLIDATED INVESTEES 82.7 28.2
--------- ---------
PROPERTY AND EQUIPMENT:
Drilling 4,034.7 3,369.2
Other 262.5 181.1
--------- ---------
Total property and equipment 4,297.2 3,550.3
Accumulated depreciation (662.0) (519.4)
--------- ---------
Net property and equipment 3,635.2 3,030.9
--------- ---------
GOODWILL, NET OF ACCUMULATED AMORTIZATION 84.8 70.6
--------- ---------
DEFERRED CHARGES AND OTHER ASSETS 246.3 45.8
--------- ---------
TOTAL ASSETS $ 4,916.1 $ 3,714.0
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term obligations $ - $ 123.4
Long-term obligations due within one year 20.1 6.3
Accounts payable - trade 104.8 64.9
Accrued liabilities 227.9 158.6
--------- ---------
Total current liabilities 352.8 353.2
LONG-TERM OBLIGATIONS 2,933.4 1,866.2
OTHER NONCURRENT LIABILITIES 39.7 39.2
DEFERRED INCOME TAXES 53.2 142.4
--------- ---------
Total liabilities 3,379.1 2,401.0
--------- ---------
COMMITMENTS AND CONTINGENCIES
MINORITY INTEREST 56.6 62.8
--------- ---------
REDEEMABLE PREFERRED STOCK
322,250.188 shares issued and
outstanding at December 31, 1999 276.0 -
--------- ---------
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value, 550,000,000
shares authorized, 193,743,778 shares
and 193,399,910 shares issued and
outstanding at December 31, 1999 and
1998, respectively 1.9 1.9
Capital in excess of par value 1,113.4 1,061.5
Retained earnings 95.9 199.1
Other (6.8) (12.3)
--------- ---------
Total stockholders' equity 1,204.4 1,250.2
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 4,916.1 $ 3,714.0
========= =========
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)
Years Ended December 31,
----------------------------
1999 1998 1997
-------- -------- --------
OPERATING REVENUES:
Deepwater $ 354.9 $ 392.5 $ 349.3
Shallow water 198.9 382.9 333.2
Inland water 121.7 244.3 249.9
Engineering services and land operations 242.8 12.9 -
Development .5 - .6
-------- -------- --------
Total operating revenues 918.8 1,032.6 933.0
-------- -------- --------
COSTS AND EXPENSES:
Deepwater 174.1 186.1 140.2
Shallow water 152.6 161.5 158.7
Inland water 99.0 169.1 136.7
Engineering services and land operations 181.7 11.1 -
Development 3.7 19.5 130.2
Cancellation of conversion projects 34.7 118.3 -
Depreciation and amortization 158.0 98.0 84.7
General and administrative 69.9 61.2 55.7
Merger expenses - ( 8.0) 66.4
-------- -------- --------
Total costs and expenses 873.7 816.8 772.6
-------- -------- --------
OPERATING INCOME 45.1 215.8 160.4
-------- -------- --------
OTHER INCOME (EXPENSE):
Interest expense, net of
capitalized interest (169.8) (63.9) (41.6)
Interest income 35.3 9.6 6.1
Income (loss) from equity investees
plus related income 3.5 (.2) -
Other, net (1.2) (.1) (1.0)
-------- -------- --------
Total other income (expense) (132.2) (54.6) (36.5)
-------- -------- --------
INCOME (LOSS) FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES, MINORITY INTEREST
AND EXTRAORDINARY LOSS (87.1) 161.2 123.9
-------- -------- --------
INCOME TAX EXPENSE (BENEFIT):
Current 48.3 38.5 39.3
Deferred (79.9) 20.4 45.4
-------- -------- --------
Total income tax expense (benefit) (31.6) 58.9 84.7
-------- -------- --------
MINORITY INTEREST (12.3) (11.3) (9.4)
-------- -------- --------
INCOME (LOSS) FROM CONTINUING OPERATIONS
BEFORE EXTRAORDINARY LOSS (67.8) 91.0 29.8
INCOME (LOSS) FROM DISCONTINUED OPERATIONS - 36.0 (36.0)
EXTRAORDINARY LOSS, NET OF TAX BENEFIT (1.7) (24.2) -
-------- -------- --------
NET INCOME (LOSS) (69.5) 102.8 (6.2)
DIVIDENDS AND ACCRETION ON PREFERRED STOCK 33.7 - -
-------- -------- --------
NET INCOME (LOSS) APPLICABLE TO COMMON
STOCKHOLDERS $ (103.2) $ 102.8 $ (6.2)
======== ======== ========
NET INCOME (LOSS) PER COMMON SHARE:
Basic:
Continuing operations
after preferred stock dividends $ (.53) $ .54 $ .18
Discontinued operations - .21 (.22)
Extraordinary loss (.01) (.14) -
-------- -------- --------
Net income (loss) $ (.54) $ .61 $ (.04)
======== ======== ========
Diluted:
Continuing operations
after preferred stock dividends $ (.53) $ .54 $ .18
Discontinued operations - .21 (.22)
Extraordinary loss (.01) (.14) -
-------- -------- --------
Net income (loss) $ (.54) $ .61 $ (.04)
======== ======== ========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic 192.7 167.5 164.1
======== ======== ========
Diluted 192.7 168.8 166.2
======== ======== ========
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)
Years Ended December 31,
----------------------------
1999 1998 1997
-------- -------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (69.5) $ 102.8 $ (6.2)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization 158.0 98.0 84.7
Gain on dispositions of property
and equipment (19.2) (9.0) (6.9)
Cancellation of conversion projects 34.7 118.3 -
Deferred income taxes (80.6) 20.4 47.4
Recognition of deferred expenses 15.6 12.2 7.1
Deferred compensation 5.0 1.1 17.8
Loss (income) from equity investees
plus related income (3.5) .2 -
Minority interest in income of
consolidated subsidiaries 12.3 11.3 9.4
Dryhole and exploration expenses
relating to oil and gas properties - 23.2 114.9
Loss (income) from discontinued operations - (36.0) 36.0
Extraordinary loss from extinguishment of
debt, net of tax benefit 1.7 24.2 -
Changes in assets and liabilities:
Accounts receivable, net 50.9 (28.1) (53.9)
Materials and supplies inventory (17.6) (9.9) (.8)
Drilling contracts in progress 13.5 (6.2) -
Deferred charges and other assets 12.0 (22.0) (17.3)
Accounts payable - trade 34.2 (17.9) 8.4
Accrued interest 33.9 (5.9) 7.1
Accrued liabilities 6.3 (21.8) 58.9
Income taxes 9.8 (4.4) 25.9
Other, net 1.1 (2.6) (2.4)
-------- -------- --------
Net cash provided by
operating activities 198.6 247.9 330.1
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Dispositions of property and equipment 28.1 43.0 10.4
Purchases of property and equipment,
exclusive of noncash items (830.4) (1,152.8) (682.3)
Increase in cash dedicated
to capital projects (160.4) - -
Purchase of Cliffs Drilling Company,
net of cash acquired - 28.0 -
Sale (purchase) of short-term investments (301.5) 45.4 (29.1)
Increase in investments in and advances to
unconsolidated investees (51.1) (25.2) (2.6)
-------- -------- --------
Net cash used in investing activities (1,315.3) (1,061.6) (703.6)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from (payments on) short-term
obligations (123.4) 123.4 -
Net proceeds from (payments on) revolving
credit facilities (150.0) (332.0) 316.0
Proceeds from long-term obligations 1,215.8 1,494.0 38.0
Principal payments on long-term obligations (19.9) (323.2) (49.6)
Premium paid on debt extinguishment - (23.9) -
Net proceeds from issuance of preferred stock 288.8 - -
Distribution to minority shareholders of
consolidated subsidiaries,
net of contributions (18.6) (4.0) -
Other 1.7 1.3 (3.2)
-------- -------- --------
Net cash provided by financing activities 1,194.4 935.6 301.2
-------- -------- --------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 77.7 121.9 (72.3)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 177.4 55.5 127.8
-------- -------- --------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 255.1 $ 177.4 $ 55.5
======== ======== ========
Supplemental Cash Flow Disclosures:
Interest paid, net of capitalized interest $ 127.4 $ 105.6 $ 36.5
Income taxes paid $ 41.0 $ 36.5 $ 13.9
Noncash investing activities:
Purchase of Cliffs Drilling Company
in exchange for equity $ - $ 391.5 $ -
Other purchases of property and equipment
in exchange for equity, debt or other
noncurrent liabilities $ 9.3 $ 35.5 $ 8.0
The accompanying notes are an integral part of the consolidated financial
statements.
R&B FALCON CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
For the Three Years Ended December 31, 1999
(in millions)
Capital in Retained
Common Stock Excess of Earnings
Shares Amount(1) Par Value (Deficit) Other
------ --------- --------- --------- -------
Balances at December 31, 1996 163.4 $ 1.6 $ 630.8 $ 102.5 $ (18.2)
Net loss (6.2)
Activity in Company stock plans 1.2 8.9
Amortization of restricted
stock award .9 6.8
Acceleration of stock award (.3) (9.3) 10.1
Other .1
------ ------- -------- ------- -------
Balances at December 31, 1997 164.3 1.6 631.4 96.3 (1.3)
Net income 102.8
Purchase of assets 27.9 .3 416.4
Activity in Company stock plans .2 1.3
Restricted stock award, net of
amortization .9 12.3 (11.0)
Other .1 .1
------ ------- --------- ------- -------
Balances at December 31, 1998 193.4 1.9 1,061.5 199.1 (12.3)
Net loss (69.5)
Dividends and accretion on
preferred stock (33.7)
Purchase of assets .2 4.1
Contribution to employee
savings plans .1 1.1
Issuance of subsidiary stock to
employees .8
Activity in Company stock plans .8
Amortization of restricted
stock award (1.2) 5.5
Issuance of warrants 46.4
Other (.1)
------ ------ --------- ------- -------
Balances at December 31, 1999 193.7 $ 1.9 $ 1,113.4 $ 95.9 $ (6.8)
====== ====== ========= ======= =======
____________________
(1) Amounts less than one-tenth of a million are not shown.
The accompanying notes are an intregral part of the consolidated financial
statements.
R&B FALCON CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
______________
(A) INDUSTRY CONDITIONS, LIQUIDITY AND SIGNIFICANT ACCOUNTING POLICIES
CONSOLIDATION - The consolidated financial statements include the
accounts of R&B Falcon Corporation ("R&B Falcon") and its subsidiaries
(collectively, the "Company"), including R&B Falcon (International &
Deepwater) Inc., formerly Reading & Bates Corporation ("R&B"); R&B Falcon
Holdings, Inc., formerly Falcon Drilling Company, Inc. ("Falcon"); Cliffs
Drilling Company ("Cliffs Drilling") effective December 1, 1998 and its
majority-owned subsidiaries Arcade Drilling AS ("Arcade") (approximately
74.4%) and Reading & Bates Development Company ("Devco") (approximately
86.1%). All significant intercompany balances and transactions have been
eliminated. The Company uses the equity method to account for
unconsolidated investees (see Note C).
INDUSTRY CONDITIONS/LIQUIDITY - Activity in the contract drilling
industry and related oil service businesses has deteriorated significantly
in the past year due primarily to decreased worldwide demand for drilling
rigs and related services resulting from a substantial decline in crude oil
prices experienced in 1998 through the first quarter of 1999. In mid 1999,
crude oil prices began to recover, but there can be no assurance that
demand for drilling rigs and related services will recover proportionately.
To date, demand for drilling rigs has not recovered to the levels
experienced in 1996-1998. Oil companies' demand for offshore drilling
services are a function of: 1) current and projected oil and gas prices,
2) government taxation and concession/leasing policies, 3) the oil
company's lease inventory and existing drilling commitments on leases held,
4) the oil company's free cash flow and general funding availability, 5)
the oil company's internal reserve replacement requirements, and 6)
geopolitical factors (e.g., the drive for national hydrocarbons self
sufficiency). The first factor is by far the most important. In
particular, the domestic shallow water market tends to be primarily driven
by the price of natural gas. Changes in demand for exploration and
production services can 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. In late 1998 and
early 1999, lower crude oil prices reduced exploration and production
spending, which led to significantly lower dayrates and utilization for
offshore drilling companies, particularly in the U.S. Gulf of Mexico.
Management believes such decline in demand also contributed to terminated
or renegotiated contracts for certain of the Company's deepwater rigs.
Crude oil and natural gas prices have continued to fluctuate over the last
several years. If crude oil prices decline or a weakness in crude oil
prices continued for an extended period, there could be a further
deterioration in both rig utilization and dayrates which could have a
material adverse affect on the Company's liquidity, financial position and
results of operations.
During 1999, the Company received net proceeds of approximately $1.3
billion from the issuance of senior notes and preferred stock, and a
subsidiary of the Company received approximately $245.2 million in project
financing for the construction of the Deepwater Nautilus. The proceeds were
used to repay existing indebtedness of approximately $556.0 million with
the remainder being used to acquire, construct, repair and improve drilling
rigs and for general corporate purposes. Also, the Company is considering
certain asset sales, including the Seillean and Iolair, and under the
Company's indenture covenants, the Company may enter into a revolving
credit facility up to approximately $180.0 million. As of December 31,
1999, the Company had $717.0 million of cash, cash equivalents, short-term
investments and cash dedicated to capital projects.
The Company has substantially completed or is currently constructing or
significantly upgrading nine deepwater drilling rigs. The Company estimates
its capital expenditure commitments on these projects and its other routine
capital expenditures for 2000 to total approximately $540.0 million.
The Company has limited ability under its indenture covenants to incur
additional recourse indebtedness. However, the Company believes its
projected level of cash flows from operations, which assumes an industry
recovery in 2000, cash on hand, potential asset sales and/or new financings
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. If the Company were to build excess
cash balances, it will most likely use a portion of the excess to retire
debt and/or preferred obligations.
CASH AND CASH EQUIVALENTS - The Company considers all highly liquid
cash investments purchased with an original maturity of three months or
less to be cash equivalents. Arcade's cash and cash equivalents balance is
available to Arcade for all purposes subject to restrictions under the
Standstill Agreement dated as of August 31, 1991 among Arcade, Transocean
Offshore Inc. and R&B which restrictions preclude R&B from borrowing any
cash from Arcade unless (i) Transocean is offered a pro-rata loan (based on
stock ownership in Arcade) on similar terms and (ii) any such loan(s)
otherwise comply with applicable laws. At December 31, 1999, $36.9 million
of the cash and cash equivalents balance related to Arcade. Arcade
declared distributions of approximately $110.0 million in 1999, of which
the Company received approximately $78.8 million, net of applicable
withholding taxes and approximately $15.8 million in 1998, of which the
Company received approximately $11.8 million.
In the third quarter of 1999, the project financings for the Deepwater
Nautilus (see Note E) and the Deepwater Frontier (see Note C and E) were
completed and as a result $160.4 million of the Company's cash at December
31, 1999 was restricted as to use. Such amount consists of $110.4 million
related to the financing of the Deepwater Nautilus and will be used for
capital expenditures and certain principal and interest payments. The
remaining $50.0 million relates to the financing for the construction of
the Deepwater Frontier which collateralizes a five-year standby letter of
credit that the Company was required to secure for the limited liability
company to obtain such financing. As a result of the above, the cash
dedicated to these capital projects has been classified as Other Assets.
SHORT-TERM INVESTMENTS - Short-term investments consist of interest-
bearing deposits with a commercial bank with an original maturity greater
than three months but less than one year from the date of the investment.
MATERIALS AND SUPPLIES INVENTORY - Materials and supplies are stated at
the lower of average cost or market.
PROPERTY AND EQUIPMENT - Property and equipment are stated at cost or
market at the date of acquisition with respect to purchased property and
equipment. Drilling units and marine equipment are depreciated under the
straight-line method. Gain (loss) on disposal of properties is credited
(charged) to income. Estimated useful lives range from three to thirty
years. 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 an
approximate $20.7 million reduction in depreciation expense for the year
ended December 31, 1998.
Costs incurred for construction and significant upgrades of marine
equipment are accumulated in construction in progress with no depreciation
being recorded on such amounts until the construction or upgrade is
completed and the equipment is placed into service. The amount of
construction in progress included in drilling equipment at December 31,
1999 and 1998 was $1,609.8 million and $1,222.3 million, respectively.
Certain marine equipment is being held in non-operating status pending
modification and decisions regarding its deployment. Management believes
its market value approximates its net book value of $62.7 million at
December 31, 1999.
The Company's management periodically evaluates the carrying value of
its property and equipment based upon the estimated undiscounted future net
cash flows of the related asset compared to the carrying amount of that
asset.
GAIN ON DRILLING BARGE CASUALTY - In June 1999, one of the Company's
inland drilling barges was declared a total loss as a result of a blowout
and fire at a location in inland waters approximately two miles southeast
of Amelia, Louisiana. No injuries of personnel were sustained. The
Company's physical damage insurance covered the loss of the barge and as a
result the Company recorded a gain of approximately $16.1 million in the
third quarter of 1999. Such gain has been credited to operating expenses
in the inland water segment.
OIL AND GAS ACCOUNTING - The successful efforts method of accounting is
used for oil and gas exploration and production activities. Under this
method, acquisition costs for proved and unproved properties are
capitalized when incurred. Exploration costs, including geological and
geophysical costs and costs of carrying and retaining unproved properties,
are charged to expense as incurred. The costs of drilling exploratory
wells are capitalized pending determination of whether each well had
discovered proved reserves. If proved reserves are not discovered, such
drilling costs are charged to expense. Costs incurred to drill and equip
development wells, including unsuccessful development wells, are
capitalized. See Note P.
GOODWILL - Goodwill from the purchase of Cliffs Drilling (see Note B)
is amortized on a straight-line basis over 40 years. The Company's
management periodically evaluates recorded goodwill balances, net of
accumulated amortization, for impairment based on the undiscounted cash
flows associated with the asset compared to the carrying amount of that
asset. Management believes that there have been no events or circumstances
which warrant revision to the remaining useful life or affect the
recoverability of its recorded goodwill.
DEFERRED CHARGES AND OTHER ASSETS - Deferred charges and other assets
include cash dedicated to capital projects (see CASH AND CASH EQUIVALENTS
above), deferred financing costs and deferred rig mobilization and
preparation costs. Deferred charge amounts are stated net of accumulated
amortization costs and at net realizable value.
INCOME TAXES - Deferred income taxes are recognized for revenues and
expenses reported in different years for financial statement purposes and
income tax purposes.
REVENUE RECOGNITION - Revenues are recognized as they are earned.
Proceeds associated with the early termination of a contract are recorded
as deferred income and recognized as contract revenues over the remaining
term of the cancelled contract or until such time as the mobile offshore
unit begins a new contract. In the first quarter of 1999, a customer
terminated a drilling contract for one of the Company's third-generation
semisubmersibles and the Company received an early termination fee of $7.2
million. The semisubmersible was immediately contracted to another customer
and as a result the Company recognized the early termination fee as revenue
in the first quarter of 1999. There were no such amounts deferred at
December 31, 1999. In addition, when a unit's mobilization revenue exceeds
the cost of the mobilization by a significant amount, the Company
recognizes the excess as contract revenue during the contract preparation
and mobilization period on a dayrate basis. If there is revenue that has
not been recognized by the time the unit has arrived on location, the
remaining amount is recognized over the primary term of the contract.
Revenues and expenses related to turnkey drilling contracts are
recognized when all terms and conditions of the contract have been
fulfilled. Consequently, the costs related to in-progress turnkey drilling
contracts are deferred as drilling contracts in progress until the contract
is completed and revenue is realized. The amount of drilling contracts in
progress is dependent on the volume of contracts, the duration of the
contract at the end of the reporting period and the contract amount.
Provision for losses on incomplete contracts is made when such losses are
probable and estimable.
CAPITALIZED INTEREST - The Company capitalizes interest applicable to
the construction and significant upgrades of its marine equipment as a cost
of such assets. Interest capitalized for the years ended December 31,
1999, 1998 and 1997 was $74.1 million, $39.1 million and $13.7 million,
respectively and is included as a reduction of interest expense in the
Consolidated Statement of Operations.
FOREIGN CURRENCY TRANSACTIONS - The net gains and losses resulting from
foreign currency transactions included in determining net income (loss)
amounted to a net loss of $2.3 million in 1999, a net gain of $.2 million
in 1998 and a net loss of $.4 million in 1997. The loss in 1999 was
primarily due to the Company's operations in Venezuela. The Company may
enter into forward exchange contracts to hedge specific commitments and
anticipated transactions but not for speculative or trading purposes. At
December 31, 1999, the Company did not have any outstanding forward
exchange contracts.
MINORITY INTEREST - Minority interest relates primarily to the results
of Arcade and effective in the third quarter of 1999, the majority-owned
(90%) floating production vessel Seillean. The ownership percentage of
Arcade, which owns the drilling units Henry Goodrich and Paul B. Loyd, Jr.,
attributable to stockholders other than the Company was 25.6% for each of
the years ending December 31, 1999, 1998 and 1997. Arcade reported income
in 1999, 1998 and 1997 of $46.9 million, $44.2 million and $36.9 million,
respectively. The 10% minority ownership of the Seillean is the result of
Nissho Iwai Europe PLC ("NIC") exercising, in the third quarter of 1999,
its option to purchase up to 10% of the vessel (see Note E).
EXTRAORDINARY LOSSES - In the first quarter of 1999, the Company
incurred an extraordinary loss of $1.7 million, net of a tax benefit of $.9
million. In the second quarter of 1998, the Company incurred an
extraordinary loss of $22.0 million, net of a tax benefit of $11.9 million
and in the fourth quarter of 1998, the Company incurred an extraordinary
loss of $2.2 million, net of a tax benefit of $1.1 million. Such losses
were due to the early extinguishment of debt obligations and consisted of
premium payments and the write-off of unamortized debt issuance costs. See
Note E.
COMPREHENSIVE INCOME - For the years ended December 31, 1999, 1998 and
1997, the Company did not have any non-owner changes in equity.
CONCENTRATION OF CREDIT RISK - The Company maintains cash balances and
short-term investments with commercial banks throughout the world. The
Company's cash equivalents and short-term investments generally consist of
commercial paper, money-market mutual funds and interest-bearing deposits
with strong credit rated financial institutions, therefore, bearing minimal
risk. No losses were incurred during 1999, 1998 and 1997.
The Company's revenues were generated primarily from its drilling rigs.
Revenues can be generated from a relatively small number of customers,
which are primarily major and independent foreign and domestic oil and gas
companies, as well as foreign state-owned oil and gas companies. The
Company performs ongoing credit evaluations of its customers' financial
conditions and generally requires no collateral from its customers. The
Company's allowance for doubtful accounts at December 31, 1999 and 1998 was
$21.5 million and $11.9 million, respectively.
NEWLY ISSUED ACCOUNTING STANDARDS - In June 1998, Statement of
Financial Accounting Standards No. 133, Accounting for Derivative
Instruments and Hedging Activities ("SFAS 133") was issued. SFAS 133
establishes accounting and reporting standards requiring that every
derivative instrument be measured at its fair value, recorded in the
balance sheet as either an asset or liability and that changes in the
derivative's fair value be recognized currently in earnings. SFAS 133, as
amended, is effective for fiscal quarters of fiscal years beginning after
June 15, 2000. The Company has not yet quantified the impacts of adopting
SFAS 133 on its financial statements. The Company did not early adopt SFAS
133, therefore it will be adopted in 2001.
In November 1999, SEC Staff Accounting Bulletin: No. 100 - Restructuring
and Impairment Charges ("SAB 100") was issued. SAB 100 expresses views of
the staff regarding the accounting for and disclosure of certain expenses
commonly reported in connection with exit activities and business
combinations. The Company's accounting practices are consistent with this
rule.
In December 1999, SEC Staff Accounting Bulletin: No. 101 - Revenue
Recognition in Financial Statements ("SAB 101") was issued. SAB 101
summarizes certain of the staff's views in applying generally accepted
accounting principles to revenue recognition in financial statements. The
Company believes its accounting practices are consistent with this rule but
will complete its evaluation in the first quarter of 2000.
USE OF ESTIMATES - The preparation of the consolidated financial
statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the consolidated financial statements
and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
RECLASSIFICATION - Certain prior period amounts in the consolidated
financial statements have been reclassified for comparative purposes. Such
reclassifications had no effect on the net income (loss) or the overall
financial condition of the Company.
(B) BUSINESS COMBINATIONS
On December 31, 1997, R&B and Falcon completed a business combination
(merger) whereby each outstanding share of common stock of Falcon was
converted into one share of R&B Falcon common stock and each outstanding
share of common stock of R&B was converted into 1.18 shares of R&B Falcon
common stock. The merger qualified as a tax-free exchange and has been
accounted for as a pooling of interests and, accordingly, the consolidated
financial statements for 1997 have been restated to include the accounts of
R&B and Falcon.
The results of operations for the separate companies and the combined
amounts presented in the consolidated financial statements for the year
ended December 31, 1997 is follows (in millions):
1997
-------
Operating revenues
R&B $ 424.2
Falcon 508.8
-------
Combined $ 933.0
=======
Net income (loss)
R&B $ (73.5)
Falcon 67.3
-------
Combined $ (6.2)
=======
In connection with the merger, the Company recorded $66.4 million of
expenses in the fourth quarter of 1997. Such expenses consist primarily of
employment contract termination fees associated with executives of R&B, the
acceleration of unearned compensation of certain stock grants previously
awarded to certain R&B employees, fees for investment bankers, attorneys,
and accountants, and printing and other related costs. In 1998, the
Company reversed $8.0 million of merger expenses primarily due to an
Internal Revenue Service ruling received relating to taxes on executive
termination fees.
On December 1, 1998, R&B Falcon acquired all of the outstanding stock
of Cliffs Drilling. Cliffs Drilling is a provider of daywork and turnkey
drilling services, mobile offshore production units and well engineering
and management services. Cliffs Drilling's fleet consisted of 16 jack-up
rigs, three self-contained platform rigs, four mobile offshore production
units and 11 land rigs. The acquisition was effected pursuant to an
Agreement and Plan of Merger dated August 21, 1998, whereby each share of
Cliffs Drilling's common stock was converted into 1.7 shares of R&B Falcon
common stock and cash in lieu of fractional shares. Total consideration for
Cliffs Drilling was approximately $405.1 million. The Company issued
approximately 27.1 million shares of its common stock valued at
approximately $385.3 million. This valuation was based upon a price of
$14.2125 per share of R&B Falcon common stock, which was the average
closing price per share of R&B Falcon's common stock during the period in
which the principal terms of the merger were agreed upon and the merger was
announced. In addition, the Company assumed Cliffs Drilling's outstanding
stock options valued at approximately $6.2 million and the Company paid
approximately $13.6 million in acquisition costs. The acquisition of Cliffs
Drilling was recorded using the purchase method of accounting, accordingly
Cliffs Drilling's results of operations are included with the Company's
results of operations since the acquisition date. The excess of the
purchase price over the estimated fair value of net assets acquired
amounted to approximately $86.8 million, which has been accounted for as
goodwill and is being amortized over 40 years using the straight-line
method. Goodwill has increased $16.1 million since December 31, 1998. Such
increase represents revisions to the estimate in the initial purchase price
allocation, primarily related to various contingencies, offset by $1.9
million of 1999 amortization.
Pro forma consolidated operating results of the Company and Cliffs
Drilling for the years ended December 31, 1998 and 1997, assuming the
Cliffs Drilling transaction occurred at the beginning of the respective
periods, are as follows:
Years Ended December 31,
------------------------
1998 1997
--------- ---------
(unaudited)
(in millions except
per share amounts)
Operating revenues $ 1,349.0 $ 1,218.2
Income from continuing operations
before extraordinary loss 138.5 71.0
Net income 150.3 35.0
Net income per common share:
Basic .78 .18
Diluted .78 .18
(C) UNCONSOLIDATED INVESTEES
Unconsolidated investees are accounted for using the equity method.
Investments in and advances to unconsolidated investees at December 31,
1999 and 1998 were as follows:
December 31,
---------------
Unconsolidated Investee 1999 1998
------ ------
(in millions)
Navis ASA $ 62.6 $ 20.0
Deepwater Drilling L.L.C. 8.3 .1
Deepwater Drilling II L.L.C. 3.6 -
Other 8.2 8.1
------ ------
$ 82.7 $ 28.2
====== ======
Income (loss) from equity investees plus related income for the years
ended December 31, 1999, 1998 and 1997 consisted of the following (in
millions):
Unconsolidated Investee 1999 1998 1997
------ ------ ------
Deepwater Drilling L.L.C. $ 4.6 $ (.2) $ -
Deepwater Drilling II L.L.C. (.2) - -
Navis ASA .5 - -
Other (1.4) - -
------ ------ ------
$ 3.5 $ (.2) $ -
====== ====== ======
Deepwater Drilling L.L.C. ("DDI") is owned 50% by the Company and 50%
by Conoco. DDI leases and operates the Deepwater Pathfinder which commenced
operations in the first quarter of 1999. See Note L.
Deepwater Drilling II L.L.C. ("DDII") is owned 60% by the Company and
40% by Conoco. DDII leases and operates the Deepwater Frontier which
commenced operations in the second quarter of 1999. See Note L.
Navis ASA ("Navis") is owned 38.6% by the Company. In September 1998,
the Company and Navis, a Norwegian public company which is constructing a
dynamically positioned drillship (the Navis Explorer I), entered into an
agreement pursuant to which the Company agreed to make a capital
contribution to Navis of $50.0 million in exchange for stock in Navis. The
Navis Explorer I is designed to drill in 10,000 feet of water and is being
constructed at Samsung Heavy Industries Co. Ltd. at an estimated cost of
$310.0 million, with a scheduled delivery in the second quarter of 2000. As
of December 31, 1999, the Company had contributed $45.2 million in cash and
$17.7 million of equipment and equipment purchase orders. Most of the
equipment and equipment purchase orders that were or will be contributed by
the Company were acquired by the Company in connection with the Peregrine
VI and Peregrine VIII projects and are no longer required for such projects
in light of their cancellation (see Note H). Navis and the Company have
entered into an agreement pursuant to which the Company will supervise
construction of the drillship and manage it following its delivery.
(D) SHORT-TERM OBLIGATIONS
In 1998, the Company entered into a $125.0 million short-term credit
facility for the construction of the Deepwater Millennium. The facility
bore interest at the London Interbank Offered Rate ("LIBOR") plus 1.25% and
was due on June 30, 1999. In March 1999, this credit facility which had
been fully drawn was terminated and repaid from proceeds from the issuance
of senior notes (see Note E).
(E) LONG-TERM OBLIGATIONS
Long-term obligations at December 31, 1999 and 1998 consisted of the
following (in millions):
1999 1998
-------- --------
9.75% Senior Notes, due January 2001
("9.75% Notes") (1)(10) $ 5.2 $ 5.2
6.5% Senior Notes, due April 2003 (2) 249.4 249.2
8.875% Senior Notes, due March 2003
("8.875% Notes") (3)(10) .4 .4
9.125% Senior Notes, due December 2003 (4) 100.0 100.0
10.25% Senior Notes, due May 2003 ("10.25% Notes") (5) 201.9 202.9
6.75% Senior Notes, due April 2005 (2) 348.4 348.1
11% Senior Secured Notes, due March 2006 (6) 400.0 -
12.25% Senior Notes, due March 2006 (6) 200.0 -
6.95% Senior Notes, due April 2008 (2) 249.3 249.2
9.5% Senior Notes, due December 2008 (4) 300.0 300.0
11.375% Senior Secured Notes, due March 2009 (6) 400.0 -
7.375% Senior Notes, due April 2018 (2) 248.1 248.0
Project financing (7) 250.0 -
Revolving credit facilities (8) - 150.0
NIC (9) - 18.7
Other debt obligations .8 .8
Total 2,953.5 1,872.5
Less long-term obligations due within one year (20.1) (6.3)
-------- --------
Long-term obligations $2,933.4 $1,866.2
======== ========
__________________________
(1) The 9.75% Notes were issued by Falcon pursuant to an offering in
January 1994 and originally consisted of a principal amount of
$110.0 million (see Note (10) below). Interest is payable
semiannually on January 15 and July 15. Certain of the Company's
subsidiaries guarantee the 9.75% Notes. The 9.75% Notes are
unsecured obligations of Falcon, ranking pari passu in right of
payment with all other senior indebtedness of Falcon, but are
effectively subordinated to any secured indebtedness of Falcon to
the extent of the collateral securing such secured indebtedness.
(2) In April 1998, the Company issued four series of senior notes with
an aggregate principal amount of $1.1 billion. As a result, the
Company received net proceeds of approximately $1,082.9 million
after deducting estimated offering related expenses. Interest on
these notes is payable semiannually on April 15 and October 15.
These 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
was used for planned capital expenditures, working capital and other
general corporate purposes. As a result of the repayment of existing
indebtedness, the Company incurred an extraordinary loss of $22.0
million, net of tax, in the second quarter of 1998. These notes were
issued at a discount of approximately $6.0 million which is being
amortized as interest expense over the term of the notes. The amount
of unamortized discount at December 31, 1999 was approximately $4.8
million and the amount of amortized discount for the years ended
December 31, 1999 and 1998 was approximately $.7 million and $.5
million, respectively.
(3) The 8.875% Notes were issued by Falcon pursuant to an offering in
March 1996 and originally consisted of a principal amount of $120.0
million (see Note (10) below). Interest is payable semiannually on
March 15 and September 15. The 8.875% Notes are unsecured
obligations of Falcon, ranking pari passu in right of payment with
all other senior indebtedness of Falcon. The 8.875% Notes are not
guaranteed by any of Falcon's subsidiaries, and thus are
structurally subordinated to the 9.75% Notes (described above) and
other indebtedness of the subsidiaries. Further, they are
effectively subordinated to any secured indebtedness of Falcon to
the extent of the collateral securing such secured indebtedness.
(4) In December 1998, the Company issued two series of senior notes with
an aggregate principal amount of $400.0 million. As a result, the
Company received net proceeds of approximately $392.3 million after
deducting estimated offering related expenses. Interest on these
notes is payable semiannually on June 15 and December 15. These
notes are unsecured obligations of the Company, ranking pari passu
in right of payment with all other existing and future senior
indebtedness of the Company. The Company used the proceeds to reduce
borrowings under an existing revolving credit facility. As a result
of such reduction, the Company incurred an extraordinary loss of
$2.2 million, net of tax, in the fourth quarter of 1998.
(5) The 10.25% Notes were issued by Cliffs Drilling pursuant to
offerings in 1996 and 1997. The 10.25% Notes originally consisted
of a principal amount of $200.0 million and interest is payable
semiannually on May 15 and November 15. These notes are senior
unsecured obligations of Cliffs Drilling, ranking pari passu in
right of payment with all other senior indebtedness and senior to
all subordinated indebtedness. These notes are unconditionally
guaranteed on a senior unsecured basis by certain subsidiaries of
Cliffs Drilling (the "Cliffs Drilling Subsidiary Guarantors"), which
guarantees rank pari passu in right of payment with all senior
indebtedness of the Cliffs Drilling Subsidiary Guarantors and senior
to all subordinated indebtedness of the Cliffs Drilling Subsidiary
Guarantors. The 10.25% Notes are publicly traded and are not
guaranteed by R&B Falcon or any other subsidiary of the Company,
accordingly, separate financial statements of Cliffs Drilling
Subsidiary Guarantors are not required to be included in these
financial statements.
On or after May 15, 2000, the 10.25% Notes are redeemable at the
option of Cliffs Drilling, in whole or in part, at a price of 105% of
principal if redeemed during the twelve months beginning May 15,
2000, at a price of 102.5% of principal if redeemed during the
twelve months beginning May 15, 2001, or at a price of 100% of
principal if redeemed after May 15, 2002, in each case together with
interest accrued to the redemption date.
The indenture under which the 10.25% Notes are issued imposes
significant operating and financial restrictions on Cliffs Drilling.
Such restrictions affect, and in many respects limit or prohibit,
among other things, the ability of Cliffs Drilling to incur
additional indebtedness, make capital expenditures, create liens
and sell assets.
As a result of the Company acquiring Cliffs Drilling, Cliffs Drilling
was required to offer to purchase for cash all of the outstanding
10.25% Notes at a purchase price equal to 101% of the principal
amount of each senior note, plus accrued and unpaid interest, to the
change of control payment date. On January 28, 1999, Cliffs Drilling
repurchased approximately $.3 million principal amount of the 10.25%
Notes that were tendered pursuant to this offer.
(6) In March 1999, the Company issued $200.0 million of 12.25% Senior
Notes due 2006 (the "12.25% Notes"). Also in March 1999, RBF Finance
Co., a limited purpose finance company and a consolidated affiliate
of the Company, issued $400.0 million of 11% Senior Secured Notes
due 2006 and $400.0 million of 11.375% Senior Secured Notes due 2009
(collectively the "Secured Notes"). The Company borrowed the
proceeds from the Secured Notes from RBF Finance Co. pursuant to ten
separate loan agreements, each of which is secured by one of the
Company's drilling rigs. The Company also guaranteed the payment of
the Secured Notes issued by RBF Finance Co. Interest is payable
semiannually on March 15 and September 15 on both the 12.25% Notes
and Secured Notes. As a result, the Company received net proceeds of
approximately $970.6 million after deducting offering expenses. The
Company used the proceeds to repay existing indebtedness of $350.0
million of long-term obligations, $125.0 million of short-term
obligations (see Note D) and the Company's portion ($81.0 million)
of an interim facility for the construction of the Deepwater
Frontier. Remaining proceeds 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
incurred an extraordinary loss of $1.7 million, net of tax, in the
first quarter of 1999 which consisted of the write-off of
unamortized debt issuance costs. The indentures under which the
12.25% Notes and the Secured Notes are issued impose certain
restrictions on the Company. Such restrictions include but are not
limited to, the ability of the Company to incur additional
indebtedness, pay dividends, repurchase stock, make payments on
subordinated indebtedness, sell assets, create liens, make
investments and merge or consolidate with other companies.
(7) In August 1999, a subsidiary of the Company completed a $250.0
million project financing for the construction the Deepwater
Nautilus in which such subsidiary received net proceeds of
approximately $245.2 million. The financing consists of two five-
year notes. The first note is for $200.0 million and bears interest
at 7.31%, with monthly interest payments, which commenced in
September 1999, and monthly principal payments commencing in June
2000. The second note is for $50.0 million and bears interest at
9.41%, with monthly interest payments, which commenced in September
1999, and a balloon principal payment which is due at maturity of
the loan in May 2005. Both notes are collateralized by the Deepwater
Nautilus and drilling contract revenues from such rig and are
without recourse to the Company.
(8) At December 31, 1998, the Company had two revolving credit
facilities outstanding which were subsequently terminated and
repaid.
The first was a $350.0 million revolving credit facility expiring on
January 24, 2002. At December 31, 1998, interest was accruing under
this revolving credit facility at LIBOR plus .75% for borrowings up
to $100.0 million and at LIBOR plus 1.375% for borrowings in excess
of $100.0 million. In addition, a commitment fee of .35% per annum
was paid on the total amount of the facility. The first $100.0
million of borrowing under this revolving credit facility was
secured by a pledge of the stock of one of the Company's three major
operating subsidiaries. The facility contained covenants which
required the Company to meet certain ratios and in many respects
limit or prohibit, among other things, the ability of the Company to
incur additional indebtedness, create liens and sell assets. At
December 31, 1998, $200.0 million was available under this facility.
In March 1999, this credit facility which had been fully drawn was
terminated and repaid from proceeds from the 12.25% Notes and
Secured Notes (see Note (6) above).
The second was a $35.0 million revolving credit facility expiring on
May 31, 2000. Interest accrued under this facility at .25% plus the
greater of the prevailing Federal Funds Rate plus .5% or a
referenced average prime; or at the adjusted LIBOR rate plus 2%. In
addition, a fee of 2% per annum was paid on outstanding letters of
credit and a commitment fee of .5% per annum was paid on the unused
portion of the facility. This facility was secured by accounts
receivable, certain rig inventory and equipment, certain oil and gas
properties and the stock of certain subsidiaries of Cliffs Drilling.
At December 31, 1998, $.4 million in letters of credit were
outstanding, thereby leaving $34.6 million available under this
facility. At December 31, 1999, there were no amounts outstanding
and on January 3, 2000 such facility was terminated by the Company.
(9) In April 1997, a wholly-owned subsidiary of the Company entered into
a five-year $38.0 million loan agreement with NIC. The loan was
collateralized by a vessel mortgage on the Seillean without recourse
to the Company and bore interest at LIBOR plus 2%. Principal
repayments were monthly based on the greater of the excess cash flow
of the Seillean or the outstanding principal balance divided by the
remaining monthly periods of the loan. In addition, NIC had the
option to purchase up to 10% of the ownership in the Seillean, any
time prior to April 25, 2000, at a minimum price of $4.2 million.
In the third quarter of 1999, NIC exercised its option and purchased
10% of the Seillean for $7.7 million. The $7.7 million was applied
to the outstanding balance of the loan and in the fourth quarter of
1999 the remaining balance was paid in full.
(10) The indentures pursuant to which the 8.875% Notes and 9.75% Notes
("Falcon Notes") were issued (i) provide that Falcon may redeem such
obligations at a premium at certain times prior to maturity, (ii)
require Falcon to offer to redeem such obligations at a premium if
there is a change of control of Falcon (see below), and (iii) impose
restrictions on certain actions by Falcon, including payment of
dividends, incurrence of debt, pledging of assets, sale of assets,
and making investments.
As a result of the merger between R&B and Falcon, Falcon was
required to offer to purchase for cash all of the Falcon Notes. On
January 28, 1998, Falcon made a purchase offer to each note holder
at a price equal to 101% of the aggregate principal amount
outstanding plus accrued interest. As a result, none of the notes
were tendered for redemption.
On March 23, 1998, the Company offered to redeem the Falcon Notes.
The aggregate principal amount of the outstanding Falcon Notes was
$230.0 million and on April 20, 1998, $224.4 million in principal
amount of Falcon Notes was repaid from proceeds from the sale of
senior notes (see Note (2) above).
As of December 31, 1999, the Company estimates the fair value of its
debt obligations to be $2,891.9 million compared to a book value of
$2,953.5 million.
Aggregate annual maturities of long-term obligations, (including the
current portion) for the next five years and thereafter are as follows (in
millions):
2000 $ 20.1
2001 41.5
2002 38.6
2003 591.6
2004 44.6
Thereafter 2,219.7
---------
2,956.1
Less the unamortized discount
and premium on senior notes (2.6)
---------
Total long-term obligations and long-
term obligations due within one year
at December 31, 1999 $ 2,953.5
=========
(F) COMMITMENTS AND CONTINGENCIES
GENERAL - In April 1998, Cliffs Drilling was awarded a contract from
PDVSA Exploration and Production ("PDVSA") to drill 60 turnkey wells in
Venezuela. The drilling program commenced in March 1998 and the program was
expected to extend over approximately three and one-half years and was
expected to utilize seven of the Company's land drilling rigs in Venezuela.
However, during the first quarter of 1999, in response to the downturn in
the market, PDVSA and the Company renegotiated prices for the next 14 wells
to be drilled under this program. In the fourth quarter of 1999,
negotiations were completed for the following seven wells to be drilled
under this program at further reduced margins. As of December 31, 1999, the
Company had completed 29 wells with six wells remaining to be completed.
Such remaining wells are expected to be completed by the end of the first
quarter in 2000. In regards to the remaining 25 of the original 60 wells,
a contractual commitment no longer exists and no assurance can be given
that such wells will ultimately be drilled.
The Deepwater Expedition, Falcon 100 and Deepwater Navigator were or
will be completed later than the required commencement dates under the
drilling contracts for such rigs and at costs significantly in excess of
original estimates. The customers for the Falcon 100 and Deepwater
Navigator have cancelled the drilling contracts for such rigs based on the
rigs not being delivered on time. The Company is currently marketing the
Falcon 100 for work and the Company has received a letter of intent from
Petrobras for the use of the Deepwater Navigator for a three-year drilling
contract offshore Brazil. The customer for the Deepwater Expedition did not
cancel its drilling contract and as of the date of this filing no late
penalties had been claimed. However, if late penalties are legally imposed
on the Deepwater Expedition, such amounts will be capitalized and amortized
over the term of the initial drilling contract, subject to a determination
of realizability.
The Company's construction and upgrade projects are subject to the risks
of delay and cost overruns inherent in any large construction project,
including shortages of equipment, unforeseen engineering problems, work
stoppages, weather interference, unanticipated cost increases and shortages
of materials or skilled labor. Significant cost overruns or delays would
adversely affect the Company's liquidity, financial condition and results
of operations. Delays could also result in penalties under, or the
termination of, the long-term contracts under which the Company plans to
operate these rigs.
CAPITAL EXPENDITURES - In 2000, the Company expects to spend
approximately $540.0 million to expand and upgrade its operating rig fleet,
primarily its deepwater rig fleet.
In September 1998, the Company and Navis ASA ("Navis"), a Norwegian
public company which is constructing a dynamically positioned drillship
(the Navis Explorer I), entered into an agreement pursuant to which the
Company agreed to make a capital contribution to Navis of $50.0 million in
exchange for stock in Navis. The Navis Explorer I is designed to drill in
10,000 feet of water and is being constructed at Samsung Heavy Industries
Co. Ltd. at an estimated cost of $310.0 million, with a scheduled delivery
in the second quarter of 2000. As of December 31, 1999, the Company had
contributed $45.2 million in cash and $17.7 million of equipment and
equipment purchase orders. As a result of such contributions, the Company's
ownership in Navis approximated 38.6%. Most of the equipment and equipment
purchase orders that were or will be contributed by the Company were
acquired by the Company in connection with the Peregrine VI and Peregrine
VIII projects and are no longer required for such projects in light of
their cancellation. Navis and the Company have entered into an agreement
pursuant to which the Company will supervise construction of the drillship
and manage it following its delivery.
EMPLOYMENT CONTRACTS - The Company has entered into employment
contracts with seven employees. Such employment contracts include certain
provisions which call for termination payments to the employee upon the
occurrence of certain events including change of control, which if incurred
at December 31, 1999 would have been approximately $13.2 million.
OPERATING LEASES - The Company has operating leases covering premises
and equipment. Certain operating leases contain renewal options and have
options to purchase the asset at fair market value at the end of the lease
term. Lease expense amounted to $45.3 million (1999), $44.5 million (1998)
and $42.0 million (1997). As of December 31, 1999, future minimum rental
payments relating to operating leases were as follows (in millions):
2000 2001 2002 2003 2004 Thereafter
------ ------ ------ ------ ------ ----------
Drilling units $ 16.4 $ 13.8 $ 13.0 $ 13.0 $ 13.0 $ 24.9
Other 2.9 1.8 1.5 .8 .6 .3
------ ------ ------ ------ ------ ------
Total $ 19.3 $ 15.6 $ 14.5 $ 13.8 $ 13.6 $ 25.2
====== ====== ====== ====== ====== ======
In November 1995, the Company entered into a sale/lease-back of the M.
G. Hulme, Jr. and agreed to lease the drilling unit for ten years. The
lease-back is accounted for as an operating lease and a deferred gain of
$7.4 million was recorded and is being amortized over the life of the lease
(see Note G).
LITIGATION - In November 1988, a lawsuit was filed in the U.S. District
Court for the Southern District of West Virginia against Reading & Bates
Coal Co., a wholly owned subsidiary of the Company, by SCW Associates, Inc.
claiming breach of an alleged agreement to purchase the stock of Belva Coal
Company, a wholly owned subsidiary of Reading & Bates Coal Co. with coal
properties in West Virginia. When those coal properties were sold in July
1989 as part of the disposition of the Company's coal operations, the
purchasing joint venture indemnified Reading & Bates Coal Co. and the
Company against any liability Reading & Bates Coal Co. might incur as the
result of this litigation. A judgment for the plaintiff of $32,000 entered
in February 1991 was satisfied and Reading & Bates Coal Co. was indemnified
by the purchasing joint venture. On October 31, 1990, SCW Associates,
Inc., the plaintiff in the above-referenced action, filed a separate
ancillary action in the Circuit Court, Kanawha County, West Virginia
against the Company, Caymen Coal, Inc. (former owner of the Company's West
Virginia coal properties), as well as the joint venture, Mr. William B.
Sturgill personally (former President of Reading & Bates Coal Co.), three
other companies in which the Company believes Mr. Sturgill holds an equity
interest, two employees of the joint venture, First National Bank of
Chicago and First Capital Corporation. The lawsuit seeks to recover
compensatory damages of $50.0 million and punitive damages of $50.0 million
for alleged tortious interference with the contractual rights of the
plaintiff and to impose a constructive trust on the proceeds of the use
and/or sale of the assets of Caymen Coal, Inc. as they existed on
October 15, 1988. The Company intends to defend its interests vigorously
and believes the damages alleged by the plaintiff in this action are highly
exaggerated. In any event, the Company believes that it has valid defenses
and that it will prevail in this litigation.
In December 1998, Mobil North Sea Limited ("Mobil") purportedly
terminated its contract for use of the Company's Jack Bates semisubmersible
rig based on failure of two mooring lines while anchor recovery operations
at a Mobil well location had been suspended during heavy weather. The
contract provided for Mobil's use of the rig at a dayrate of approximately
$115,000 for the primary term through January 1999 and approximately
$200,000 for the extension term from February 1999 through December 2000.
The Company does not believe that Mobil had the right to terminate this
contract. The Company recontracted the Jack Bates to Mobil in 1999 for one
well at a dayrate of $156,000 and for another well at a dayrate of $69,000.
These contracts are without prejudice to either party's rights in the
dispute over the termination of the original contract. The Company has
filed a request for arbitration with the London Court of International
Arbitration and the arbitration proceedings are continuing.
In May 1999, Petrobras cancelled the drilling contract for the Falcon
100 based on its interpretation of the cancellation provisions of the
contract. The Company does not believe that Petrobras has the right to
cancel such contract. The Company has engaged Brazilian counsel to pursue
the Company's rights under the contract. The Company is currently marketing
this rig for work.
In March 1997, an action was filed by Mobil Exploration and Producing
U.S. Inc. and affiliates, St. Mary Land & Exploration Company and
affiliates and Samuel Geary and Associates, Inc. against Cliffs Drilling,
its underwriters and insurance broker in the 16th Judicial District Court
of St. Mary Parish, Louisiana. The plaintiffs alleged damages amounting to
in excess of $50.0 million in connection with the drilling of a turnkey
well in 1995 and 1996. The case was tried before a jury in January and
February 2000, and the jury returned a verdict of approximately $30.0
million in favor of the plaintiffs for excess drilling costs, loss of
insurance proceeds, loss of hydrocarbons and interest. However, the trial
court has not entered a judgment on the verdict, as there are a number of
matters to be ruled upon before doing so. If a judgment is entered on such
verdict, Cliffs Drilling intends to appeal and believes its efforts to do
so will be successful. The Company believes all but the portion of the
verdict representing excess drilling costs of approximately $4.7 million is
covered by relevant primary and excess liability insurance policies of
Cliffs Drilling; however, one insurer has denied coverage and the others
have reserved their rights. If necessary, Cliffs Drilling and the Company
intend to take appropriate legal action to enforce Cliffs Drilling's rights
with respect to such policies. At this time Cliffs Drilling and the
Company believe adequate reserves have been established to protect the
interests of Cliffs Drilling and the Company in this matter.
The Company is involved in various other legal actions arising in the
normal course of business. A substantial number of these actions involve
claims arising out of injuries to employees of the Company who work on the
Company's rigs and power vessels. After taking into consideration the
evaluation of such actions by counsel for the Company and the Company's
insurance coverage, management is of the opinion that the outcome of all
known and potential claims and litigation will not have a material adverse
effect on the Company's consolidated financial position or results of
operations.
SELF INSURANCE - The Company is self-insured for the deductible portion
of its insurance coverage. In the opinion of management, adequate accruals
have been made based on known and estimated exposures up to the deductible
portion of the Company's insurance coverages. Management believes that
claims and liabilities in excess of the amounts accrued are adequately
insured.
LETTERS OF CREDIT - At December 31, 1999, the Company had letters of
credit outstanding and unused totaling $5.4 million and $4.6 million,
respectively.
(G) ACCRUED LIABILITIES AND OTHER NONCURRENT LIABILITIES
The components of "Accrued liabilities" at December 31, 1999 and 1998
were as follows (in millions):
1999 1998
------- -------
Expenses - general $ 112.0 $ 86.1
Taxes 33.0 23.7
Interest expense 54.3 20.3
Worker compensation claims 13.5 14.8
Payroll 10.1 9.5
Employee benefits 5.0 4.2
------- -------
Total $ 227.9 $ 158.6
======= =======
The components of "OTHER NONCURRENT LIABILITIES" at December 31, 1999
and 1998 were as follows (in millions):
1999 1998
------ ------
Postretirement benefit obligations $ 14.4 $ 14.9
Foreign income taxes 6.1 6.1
Pension obligations 4.2 3.5
Deferred gain on sale of
drilling unit (see Note F) 2.1 2.0
Other 12.9 12.7
------ ------
Total $ 39.7 $ 39.2
====== ======
(H) CANCELLATION OF CONVERSION PROJECTS
In the third quarter of 1998, the Company cancelled the Peregrine VI
and the Peregrine VIII drillship conversion projects due to continuing
uncertainty as to final cost and expected delivery dates. As a result, the
drilling contract on the Peregrine VIII was terminated on September 24,
1998, and the drilling contract on the Peregrine VI was terminated on
January 1, 1999. Both terminations were without prejudice to the rights of
the oil companies. The Company believes that, based on provisions of the
contracts that preclude recovery of indirect or consequential damages and
projected rig availability in the offshore drilling industry, the Company
will not have any material liability under these drilling contracts as a
result of the termination thereof. The contracts with the shipyard for
conversion of the Peregrine VI and the Peregrine VIII were also cancelled.
In addition, in the fourth quarter of 1998, the Company cancelled two
additional drillship conversion projects (Peregrine IX and Peregrine X)
that were in the preliminary phases. As a result of the termination of
these four drillship conversion projects, the Company expensed $118.3
million in related costs in 1998.
In connection with the drillship conversion projects, the Company
purchased or committed to purchase drilling equipment with an aggregate
cost of approximately $285.0 million. The Company expected to use some of
the surplus equipment on other construction and/or upgrade projects and to
maintain the balance as inventory. A majority of the equipment originally
ordered was directed to other construction projects. However, the Company
determined that a portion of such surplus equipment was not usable for
other projects or as spare parts and as a result the Company expensed $25.6
million in the third quarter of 1999 to write-down such inventory to net
realizable value. As of December 31, 1999, the Company had approximately
$59.0 million remaining of such surplus drilling equipment. The Company is
continually reviewing the value and utility of such equipment and if in the
future it is determined the Company cannot realize the recorded value of
the surplus equipment, the Company could incur additional write-offs or
write-downs of such equipment.
Also in the third quarter of 1999, the Company sold the Peregrine X
(with the hull being the primary remaining asset) for approximately $5.8
million. As a result of the sale, the Company recorded a loss of $6.1
million that has been included in the cancellation of conversion projects
in the Consolidated Statement of Operations.
In the fourth quarter of 1999, the Company expensed $3.0 million in
connection with the final settlement with the shipyard and the write-down
of the Peregrine VI and Peregrine VIII hulls to estimated scrap value.
(I) INCOME TAXES
Income tax expense (benefit) for the years ended December 31, 1999,
1998 and 1997 consisted of the following (in millions):
1999 1998 1997
------ ------ ------
Current:
Foreign $ 48.8 $ 28.1 $ 9.4
Federal (.8) 3.3 26.9
State .3 7.1 3.0
------ ------ ------
Total current 48.3 38.5 39.3
------ ------ ------
Deferred:
Foreign (.8) 4.9 17.9
Federal (82.9) 13.7 26.6
State 3.8 1.8 .9
------ ------ ------
Total deferred (79.9) 20.4 45.4
------ ------ ------
Total $(31.6) $ 58.9 $ 84.7
====== ====== ======
The domestic and foreign components of income (loss) from continuing
operations before income taxes, minority interest and extraordinary loss
for the years ended December 31, 1999, 1998 and 1997 were as follows (in
millions):
1999 1998 1997
------- ------- -------
Domestic $(294.9) $ (26.2) $ (95.0)
Foreign 207.8 187.4 218.9
------- ------- -------
Total $ (87.1) $ 161.2 $ 123.9
======= ======= =======
The effective tax rate, as computed on income (loss) from continuing
operations before income taxes, minority interest and extraordinary loss
differs from the statutory U.S. income tax rate for the years ended
December 31, 1999, 1998 and 1997 due to the following:
1999 1998 1997
------ ------ ------
Statutory tax rate (35)% 35% 35%
Use of previously reserved tax benefits (6) - -
Limitation on recognition of tax benefits - 2 10
Foreign tax expense (net of federal benefit) (1) (3) 2
State tax expense (net of federal benefit) 5 3 2
Non-deductible merger expenses - (2) 17
Other 1 2 2
------ ------ ------
Effective tax rate (36)% 37% 68%
====== ====== ======
Deferred income taxes result from those transactions which affect
financial and taxable income in different years. The nature of these
transactions (all of which were long-term) and the income tax effect of
each as of December 31, 1999 and 1998 were as follows (in millions):
1999 1998
------- -------
Deferred tax liabilities:
Depreciation $ 363.0 $ 214.4
Undistributed earnings 13.6 7.4
------- -------
Total deferred tax liabilities 376.6 221.8
------- -------
Deferred tax assets:
Postretirement benefits (5.3) (5.4)
Tax benefit carryforwards (352.0) (139.4)
Discontinued operations, net (2.2) (2.2)
Accrued expenses (4.6) (5.7)
Valuation allowance 52.0 75.7
Other (11.3) (2.4)
------- -------
Total deferred tax assets (323.4) (79.4)
------- -------
Net deferred tax liability $ 53.2 $ 142.4
======= =======
Valuation allowance reflects the possible expiration of tax benefits
(primarily foreign tax credit carryforwards) prior to their utilization.
In 1999, valuation allowance related to tax net operating loss
carryforwards were reversed as the Company foresees the ability to use
these loss carryforwards coupled with the recent change in tax law whereby
the carryforward period was increased from 15 years to 20 years. Also,
valuation allowances related to certain capital losses incurred in the past
were reversed as the Company has generated capital gains in excess of such
capital losses.
Recapitalizations of R&B in 1989 and 1991 resulted in ownership changes
for federal income tax purposes. As a result of these ownership changes,
the amount of tax benefit carryforwards generated prior to the ownership
changes which may be utilized to offset federal taxable income is limited
by the Internal Revenue Code to approximately $1.4 million annually plus
certain built-in gains that existed as of the date of such changes. United
States net tax operating loss carryforwards (NOL) not subject to the
ownership change limitation consist of the following (in millions):
Year U.S.
NOL NOL NOL
Year Expires Not Limited
---- ------- -----------
Pre-1991 2005 $ 6.8
1991 2006 2.1
1992 2007 3.7
1993 2008 12.5
1994 2009 14.0
1995 2010 -
1996 2011 11.6
1997 2017 75.1
1998 2018 37.6
1999 2019 388.3
-------
Totals $ 551.7
=======
(J) CAPITAL SHARES
RIGHTS - On December 31, 1997, the effective date of the merger between
R&B and Falcon (see Note B), each share of the Company's common stock
received one preferred share purchase right (a "Right"). Each Right
entitles the registered holder to purchase from the Company one one-
hundredth of a share of Series A Junior Participating Preferred Stock, (the
"Preferred Shares") of the Company at a price of $150, subject to
adjustment. The Rights will not become exercisable until 10 days after a
public announcement that a person or group has acquired 15% or more of the
Company's common stock (thereby becoming an "Acquiring Person") or the
commencement of a tender or exchange offer upon consummation of which such
person or group would own 15% or more of the Company's common stock (the
earlier of such dates being called the "Distribution Date"). Until the
Distribution Date, the Rights will be evidenced by the certificates
representing the Company's common stock and will be transferable only with
the Company's common stock. In the event that any person or group becomes
an Acquiring Person, each Right, other than Rights beneficially owned by
the Acquiring Person (which will thereafter be void), will thereafter
entitle its holder to purchase shares of the Company's common stock having
a market value of two times the exercise price of the Right. If after a
person or group has become an Acquiring Person, the Company is acquired in
a merger or other business combination transaction or 50% or more of its
assets or earning power are sold, each Right will entitle its holder to
purchase, at the Right's then current exercise price, that number of shares
of common stock of the acquiring company which at the time of such
transaction will have a market value of two times the exercise price of the
Right. The board of directors of the Company may redeem the Rights in
whole, but not in part, at a price of $.01 per Right at any time prior to
ten business days following a public announcement that a person or group
becomes an Acquiring Person. The Rights expire on November 1, 2007.
Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to a preferential
quarterly dividend payment equal to the greater of $1 per share or 100
times the dividend declared per common share. Liquidation preference will
be equal to 100 times the par value per share plus an amount equal to
accrued and unpaid dividends and distributions to the date of such payment.
Each Preferred Share will have 100 votes, voting together with the common
stock, and certain rights to elect two directors during certain periods of
default in the payment of dividends on the Preferred Shares.
PREFERRED STOCK - On April 22, 1999, the Company issued 300,000 shares
of 13.875% Senior Cumulative Redeemable Preferred Stock (the "Preferred
Stock") and warrants to purchase 10,500,000 shares of the Company's common
stock at an exercise price of $9.50 per share (the "Warrants"). The Company
received net proceeds of approximately $288.8 million from the issuance of
the Preferred Stock and Warrants. Each share of Preferred Stock has a
liquidation preference of $1,000 per share and one Warrant to purchase 35
shares of the Company's common stock. The Warrants became exercisable on
July 7, 1999. The Warrants expire and the Preferred Stock is mandatorily
redeemable at its face value on May 1, 2009.
Dividends are paid quarterly which commenced on August 1, 1999 and at
the Company's option may be paid in cash or, on or before May 1, 2004, in
additional shares of Preferred Stock. Dividends paid through December 31,
1999 were $22.3 million and were paid by the issuance of additional shares
of Preferred Stock. Dividends accrued at December 31, 1999 were $7.4
million and are included in the recorded amount of the Preferred Stock. The
Warrants' initial fair value of $159.95 per Warrant, or approximately $48.0
million in total, was recorded as a discount to the Preferred Stock and an
addition to capital in excess of par. The Warrants' initial fair value and
Preferred Stock offering expenses of $9.7 million are being amortized on a
straight line basis over the Warrants' ten year term. Amortization for the
year ended December 31, 1999 was $4.0 million. Preferred Stock dividends
and the amortization of the Warrants' initial value and Preferred Stock
offering expenses are deducted from net income to arrive at net income
applicable to common stockholders.
The Company may redeem the Preferred Stock beginning May 1, 2004. The
initial redemption price is 106.938% of the liquidation preference,
declining thereafter to 100% on or after May 1, 2007, in each case plus
accrued and unpaid dividends to the redemption date. In addition, on or
before May 1, 2002, the Company may redeem shares of the Preferred Stock
having an aggregate liquidation preference of up to $105.0 million at a
price equal to 113.875% of its liquidation preference, plus accrued and
unpaid dividends to the redemption date, with proceeds from one or more
public equity offerings.
COMMON STOCK - During 1998 in a series of transactions, the Company
issued 763,680 shares of its common stock in partial consideration for the
acquisition of 25 tugs, five ocean going barges and six workover rigs.
On December 1, 1998, the Company issued approximately 27.1 million
shares of its common stock for the acquisition of Cliffs Drilling (see Note
B).
In 1999, the Company issued 206,250 shares of its common stock for the
acquisition of two tugs and 93,606 shares of its common stock for its
matching contribution to the employee savings plans.
As of December 31, 1999, 17,869,611 shares of authorized, unissued
shares of common stock were reserved for issuance under the Company's stock
plans (net of forfeitures), 11,278,756 shares of authorized, unissued
shares of common stock were reserved for issuance for the exercise of
Warrants and 296,000 shares of authorized, unissued shares of common stock
were reserved for issuance for contingent obligations relating to asset
purchases.
(K) EMPLOYEE BENEFIT PLANS
PENSION AND POSTRETIREMENT BENEFITS - The Company has three
noncontributory pension plans. Substantially all of the R&B Falcon
employees paid from a U.S. payroll are covered by one or more of these
plans. Effective January 1, 1998, substantially all of the Falcon
employees paid from a U.S. payroll began accruing benefit service although
they were not eligible to participate in the plans until January 1, 1999.
Effective April 1, 1999, substantially all of the Cliffs Drilling employees
paid from a U.S. payroll became eligible to participate. Plan benefits
are primarily based on years of service and average high 60-month average
compensation (changed from average high thirty-six months effective January
1, 1999).
The R&B Falcon U.S. Pension Plan (the "U.S. Pension Plan") is qualified
under the Employee Retirement Income Security Act (ERISA). It is the
Company's policy to fund this plan not less than the minimum required by
ERISA. It is the Company's policy to contribute to the R&B Falcon Non-U.S.
Pension Plan (the "Non-U.S. Pension Plan") an amount equal to the normal
cost plus amounts sufficient to amortize the initial unfunded actuarial
liability and subsequent unfunded liability caused by plan or assumption
changes over thirty years. The unfunded liability arising from actuarial
gains and losses is funded over fifteen years. The Non-U.S. Pension Plan
is a nonqualified plan and is not subject to ERISA funding requirements.
The U.S. and Non-U.S. Pension Plans invest in cash equivalents, fixed
income and equity securities.
The R&B Falcon Retirement Benefit Replacement Plan (the "Replacement
Plan") is a self-administered unfunded excess benefit plan. All members of
the U.S. Pension Plan and the Non-U.S. Pension Plan are potential
participants in the Replacement Plan.
Effective July 1, 1999, all three of the Company's noncontributory
pension plans were suspended. The suspension was designed to control
costs, but did not terminate the plans. The Company can elect to terminate
the plans or reactivate the plans at any point in the future. The
suspension impacts the participants as follows:
- - Vesting service will continue to accrue;
- - Benefit service will not accrue (suspended);
- - No compensation is accrued during the suspension, thus all compensation
determinations in calculating benefits will be based on periods prior
to July 1, 1999;
- - New participants will not be allowed to enter the plans during the
suspension;
- - All funding of the plans required by ERISA continues;
- - Benefits that have already accrued by active employees or deferred
vested participants continue to be payable upon request (in accordance
with normal plan provisions - generally as early as age 55);
- - Current retiree benefit payments continue unchanged;
- - Required audits, valuations and other plan administration will continue;
In addition to providing pension benefits, R&B Falcon provides certain
life and health care insurance benefits for its retired employees.
Effective January 1, 1999, the Company no longer provides a Retiree Life
Insurance plan to its current employees. Only those former employees who
retired prior to May 1, 1986 were eligible to retain their retiree life
insurance. Retiree life insurance benefits are provided through an
insurance company whose premiums are based on benefits paid during the
year. Retiree health coverage was also significantly restricted effective
January 1, 1999. As of this date, only those employees who had 10 or more
years of prior service with R&B, accumulate at least 25 years of service
(15 years prior to January 1, 1996) as of their retirement date and
continue to work for the Company until at least age 55 will qualify for
retiree health care coverage. Health care costs are paid as they are
incurred.
The following table includes the aggregate of the Company's three
pension plans and the Company's postretirement benefits plan. Only the
Replacement Plan has a projected benefit obligation in excess of plan
assets. Only the Replacement Plan has an accumulated benefit obligation in
excess of plan assets, and such accumulated benefit obligation was $5.2
million and $3.8 million as of December 31, 1999 and 1998, respectively.
There are no assets held in the Replacement Plan.
Pension Postretirement
--------------- ---------------
1999 1998 1999 1998
------ ------ ------ ------
(dollars in millions) (dollars in millions)
Change in projected benefit
obligation:
Projected benefit obligation
at beginning of year $ 91.5 $ 77.5 $ 12.5 $ 10.5
Service cost 3.5 2.0 .1 .1
Interest cost 5.7 5.5 .8 .8
Participant contributions - - .1 .1
Plan amendments 1.0 (2.1) (1.4) -
Curtailment (15.0) - - -
Actuarial (gain) loss 1.0 13.3 1.5 1.8
Benefits paid (4.8) (4.7) (.8) (.8)
------ ------ ------ ------
Projected benefit obligation
at end of year 82.9 91.5 12.8 12.5
------ ------ ------ ------
Change in plan assets:
Plan assets at fair value
at beginning of year 79.8 69.8 - -
Actual return on plan assets 15.4 8.6 - -
Employer contributions 6.8 6.1 .7 .7
Participant contributions - - .1 .1
Benefits paid (4.8) (4.7) (.8) (.8)
------ ------ ------ ------
Plan assets at fair value
at end of year 97.2 79.8 - -
------ ------ ------ ------
Funded status of plan 14.3 (11.7) (12.8) (12.5)
Unrecognized net (gain) loss 1.2 22.2 (.1) (1.6)
Unrecognized prior service cost (2.2) (3.8) (2.0) (1.3)
Unrecognized net
transition obligation (.7) .9 - -
------ ------ ------ ------
Prepaid (accrued) pension cost $ 12.6 $ 7.6 $(14.9) $(15.4)
====== ====== ====== ======
Weighted-average assumptions:
Discount rate 7.50% 6.75% 7.50% 6.75%
Long-term rate of return 10.00% 10.00% - -
Salary scale - 6.90% - 4.50%
Net benefit costs for the years ended December 31, 1999, 1998 and 1997
included the following (in millions):
Pension Postretirement
------------------- -------------------
1999 1998 1997 1999 1998 1997
----- ----- ----- ----- ----- -----
Service cost $ 3.5 $ 1.9 $ 1.6 $ .1 $ .2 $ .1
Interest cost 5.7 5.5 4.9 .8 .8 .7
Expected return on plan assets (7.8) (6.9) (10.2) - - -
Amortization of:
Unrecognized transition
obligation (.2) (.1) (.1) - - -
Unrecognized prior service cost (.4) (.3) (.3) (.3) (.4) (1.0)
Unrecognized actuarial
(gain)/loss .6 .4 .1 (.1) (.1) (.1)
Loss due to change in
attribution period - - - .2 .2
Curtailment (gain)/loss .6 - - (.3) - -
Deferral of asset gain - - 4.4 - - -
----- ----- ----- ----- ----- -----
Net benefit costs $ 2.0 $ .5 $ .4 $ .2 $ .7 $ (.1)
===== ===== ===== ===== ===== =====
The health care cost trend rates used to measure the expected cost in
2000 for medical, dental and vision benefits were 9%, 5.5% and 5.5%,
respectively, each graded down to an ultimate trend rate of 5%, 4.5% and
4.5%, respectively, to be achieved in the year 2021.
A one-percentage-point change in assumed health care cost trend rates
would have the following effects (in millions):
1-Percentage- 1-Percentage-
Point Increase Point Decrease
-------------- --------------
Effect on total of service and
interest cost components $ .1 $ (.1)
Effect on postretirement
benefit obligation $ 1.4 $ (1.2)
SAVINGS PLANS - The Company has two savings plans, which allow an
employee to contribute up to 15% of their base salary (subject to certain
limitations). Effective January 1, 1999 the Reading & Bates Savings Plan
and the Falcon Drilling Company, Inc. Savings & Investment Plan were
merged, amended and restated to become the R&B Falcon U.S. Savings Plan
("U.S. Savings Plan"). In addition, the Reading & Bates Offshore Savings
Plan and the Falcon Drilling Company International Plan were merged,
amended and restated to become the R&B Falcon Non-U.S. Savings Plan ("Non-
U.S. Savings Plan"). The U.S. Savings Plan was subsequently amended
effective April 1, 1999 to allow the merger of the Cliffs Drilling Company
Savings Plan into the U.S. Savings Plan. Cliffs Drilling did not have a
non-U.S. savings plan.
Effective January 1, 1999, the U.S. Savings Plan was also restructured
to meet IRS Safe Harbor requirements. Accordingly, there is no longer a
vesting schedule for Company matching contributions, all contributions are
immediately 100% vested. The Company's Safe Harbor matching contributions
equal 100% on the 1st 3% of contributions and 50% on the 4th and 5th
percent of contributions. During 1999, the Company provided an additional
discretionary match of 50% on the 4th and 5th percent and 100% on the 6 th
percent of contributions, for a total matching contribution in 1999 of 6%
on the 1st 6% of contributions. Effective July 1, 1999, the Company began
making its matching contributions in the form of issuing shares of R&B
Falcon common stock (see Note J). Employees may direct the investment of
their contributions into various plan investment options.
The Non-U.S. Savings Plan follows the same design structure with regard
to contributions, vesting and Company matching contributions as the U.S.
Savings Plan. Compensation costs under the plans amounted to $6.7 million
in 1999, $4.6 million in 1998 and $2.7 million in 1997.
STOCK PLANS - The Company has 16 stock plans which are intended to
provide an incentive that will allow the Company to retain persons of the
training, experience and ability necessary for the development and
financial success of the Company. Such plans provide for grants of stock
options, stock appreciation rights, stock awards and cash awards, which may
be granted singly, in combination or in tandem. All stock options awarded
under these plans expire ten years from the date of their grant and were
granted at the market price on the date of grant unless otherwise noted.
Four of these plans were originally adopted by Falcon, five by R&B, two by
Cliffs Drilling and five by the Company. As a result of the business
combination between R&B and Falcon, and R&B Falcon and Cliffs Drilling, all
of the R&B, Falcon and Cliffs Drilling plans were assumed by the Company,
and the options outstanding thereunder were converted to options to acquire
common stock of R&B Falcon (with appropriate adjustments to reflect the
exchange ratios).
The Company's Reading & Bates Corporation 1990 Stock Option Plan
authorized options with respect to approximately 2.3 million shares of
common stock to be granted to certain employees of R&B at an adjusted
option price of $6.25 per share. In 1991, options with respect to all 2.3
million shares were granted and vested over a four-year period. Such
grant's option price was less than the market price on the date of grant
and the difference was recorded as compensation expense during the vesting
period.
The Company's Reading & Bates Corporation 1992 Long-Term Incentive Plan
(the "1992 Incentive Plan") authorized 1,180,000 shares of common stock to
be available for awards. In 1992, restricted stock awards with respect to
354,000 shares were granted to certain officers of R&B. Such shares
awarded were restricted as to transfer until vested pursuant to a schedule
whereby 1/24th of the total number of shares vested per calendar quarter
from June 30, 1992 through March 31, 1998 (subject to certain conditions).
The market value at the date of grant of the common stock granted was
recorded as unearned compensation and was amortized to expense over the
periods during which the restrictions lapse or shares vested. In 1995,
stock options with respect to the remaining 826,000 shares were granted to
certain officers and employees of R&B at adjusted option prices ranging
from $7.627 to $11.759 per share. Such options become exercisable either
over a one or four year period from the date of grant. All stock awards
under the 1992 Incentive Plan vested on December 31, 1997 as a result of
the merger of R&B and Falcon (see Note B).
The Company's Reading & Bates Corporation 1995 Director Stock Option
Plan authorized 236,000 shares of common stock to be available for awards
of stock options to non-employee members of the board of directors. In
1995, R&B granted 141,600 options at an adjusted option price of $6.25 per
share. In 1999, stock options with respect to 94,400 shares were granted
at $7.031 per share. Such options become exercisable over a two year
period from the date of grant.
The Company's Reading & Bates Corporation 1995 Long-Term Incentive Plan
("1995 Incentive Plan") authorized 2,950,000 shares of common stock to be
available for awards. In 1995, stock options with respect to 708,000 shares
were granted to an officer of R&B at an adjusted option price of $11.759
per share. Such options became exercisable one year from the date of grant.
Also in 1995, restricted stock awards with respect to 642,156 shares were
granted to certain employees of R&B. Such shares awarded were restricted
as to transfer until fully vested three years from the date of grant. The
market value at the date of grant of the common stock granted was recorded
as unearned compensation and was amortized to expense over the period
during which the shares vested. In 1996, stock options with respect to
177,000 shares were granted to an officer of R&B at an adjusted option
price of $23.729 per share. Such options became exercisable over a three-
year period from the date of grant. Also in 1996, restricted stock awards
with respect to 489,228 shares were granted to certain employees of R&B.
Such shares awarded were restricted as to transfer until fully vested three
years from the date of grant. The market value at the date of grant of the
common stock granted was recorded as unearned compensation and was
amortized to expense over the period during which the shares vested. In
1997, stock options with respect to 902,582 shares were granted to officers
of R&B at an adjusted option price of $20.127 per share and in August 1997
R&B rescinded such option grants. Under the 1995 Incentive Plan, stock
options and restricted stock awards with respect to 868,700 shares vested
on December 31, 1997 as a result of the merger of R&B and Falcon (See Note
B). In 1999, stock options with respect to 889,118 shares were granted to
officers of the Company at option prices ranging from $6.25 to $7.031 per
share. Such options become exercisable either in six months or over a two
year period from the date of grant.
The Company's Reading & Bates Corporation 1997 Long-Term Incentive Plan
(the "1997 Incentive Plan") authorized 2,950,000 shares of common stock to
be available for awards. In 1997, restricted stock awards with respect to
33,866 shares were granted to certain employees of R&B. Such shares
awarded were restricted as to transfer until fully vested three years from
the date of grant. The market value at the date of grant of the common
stock granted was recorded as unearned compensation and was amortized to
expense over the period during which the shares vested. Also in 1997,
stock options with respect to 6,018 shares were granted to an officer of
R&B at an adjusted option price of $20.127 per share and in August 1997 R&B
rescinded such option grants. Under the 1997 Incentive Plan, restricted
stock awards with respect to 33,866 shares vested on December 31, 1997 as a
result of the merger of R&B and Falcon (see Note B). In 1999, stock
options with respect to 2,892,020 shares were granted to officers of the
Company at an option price of $7.031 per share. Such options become
exercisable over a two year period from the date of grant.
The Company's Falcon Drilling Company, Inc. 1992 Stock Option Plan
authorized options with respect to 1.0 million shares of common stock to be
granted to certain employees and directors of Falcon. In 1992, options with
respect to all 1.0 million shares were granted at adjusted option prices
ranging from $1.665 to $1.85 per share and vested immediately. No
compensation expense was recorded as a result of the option price being the
estimated market price of Falcon's common stock on the date of grant.
The Company's Falcon Drilling Company, Inc. 1994 Stock Option Plan
authorized options with respect to 570,000 shares of common stock to be
granted to certain employees and directors of Falcon. In 1994, options
with respect to all 570,000 shares were granted at an adjusted option price
of $5.00 per share, vesting ratably over three years. No compensation
expense was recorded as a result of the option price being the estimated
market price of Falcon's common stock on the date of grant.
The Company's Falcon Drilling Company, Inc. 1995 Stock Option Plan
authorized options with respect to 1.0 million shares of common stock to be
granted to certain employees and directors of Falcon. In 1995, options with
respect to 250,000 shares were granted at an adjusted option price of $5.00
per share, vesting ratably over three years. In 1996, options with respect
to 280,000 shares were granted at an adjusted option price of $6.065 per
share, vesting over two years and options with respect to 150,000 shares
were granted at an adjusted option price of $9.72 per share, vesting
ratably over five years. In February 1997, options with respect to 258,000
shares were granted at an adjusted option price of $12.50 per share and in
November 1997 Falcon rescinded such option grants. No compensation expense
was recorded as a result of the option price being the estimated market
price of Falcon's common stock on the date of grant.
The Company's Falcon Drilling Company, Inc. 1997 Stock Option Plan
authorized options with respect to 1.2 million shares of common stock to be
granted to certain employees and directors of Falcon. In July 1997, options
with respect to 3,000 shares were granted at an option price of $12.50 per
share and in November 1997 Falcon rescinded such option grants. In July
1997, options for 40,000 shares were granted at an option price of $29.00
per share, vesting ratably over three years. No compensation expense was
recorded as a result of the option price being the estimated market price
of Falcon's common stock on the date of grant.
The Company's Cliffs Drilling Company 1988 Incentive Equity Plan and
Cliffs Drilling Company 1998 Incentive Equity Plan were both assumed by the
Company on December 1, 1998 as a result of the purchase of Cliffs Drilling
(see Note B). Under these plans, the Company assumed outstanding options to
purchase 1,052,300 shares of common stock at adjusted option prices ranging
from $3.79 to $40.89 per share and expiring at dates ranging from 2000 to
2008. All such options vested on December 1, 1998 as a result of the
Company's purchase of Cliffs Drilling.
The Company's 1998 Employee Long-Term Incentive Plan authorized 3.2
million shares of common stock to be available for awards. In 1998, stock
options with respect to 100,000 shares were granted to an employee of the
Company at an option price of $22.375 per share and stock options with
respect to 1,830,500 shares were granted to certain employees of the
Company at an option price of $12.9375 per share. Such options become
exercisable over a three year period. Also in 1998, restricted stock
awards with respect to 941,500 shares were granted to certain employees
of the Company. Such shares awarded are restricted as to transfer until
fully vested three years from the date of grant. The market value at the
date of grant of the common stock granted was recorded as unearned
compensation and will be amortized to expense over the period during which
the shares vest. In 1999, stock options with respect to 396,568 shares
were granted to officers of the Company at an option price of $6.25
per share. Such options became exercisable six months from the date of
grant. Also in 1999, stock options with respect to 145,000 shares were
granted to four employees of the Company at an option price of $6.15625
per share and which vest equally over three years. Such options were not
granted from any of the Company's stock option plans but were granted
under the terms of the 1998 Employee Long-Term Incentive Plan.
The Company's 1998 Director Long-Term Incentive Plan authorized 250,000
shares of common stock to be available for awards to non-employee members
of the board of directors. In 1999, stock options with respect to 249,600
shares were granted an option price of $7.031 per share. Such options
become exercisable over a two year period from the date of grant.
The Company's 1998 Acquisition Option Plan authorized options with
respect to 1.0 million shares of common stock to be granted to certain
employees of Cliffs Drilling. On December 1, 1998, options with respect to
all 1.0 million shares were granted at an option price of $9.125 per share
and vest over a three year period.
The Company's 1999 Employee Long-Term Incentive Plan authorized 6.5
million shares of common stock to be available for awards. In 1999, stock
options with respect to 3,508,760 shares were granted to certain employees
of the Company at option prices ranging from $9.75 to $13.4688 per share.
Such options become exercisable over a three year period.
The Company's 1999 Director Long-Term Incentive Plan authorized .3
million shares of common stock to be available for awards. In 1999, stock
options with respect to 136,000 shares were granted at an option price of
$10.0625 per share. Such options become exercisable over a two year period.
Unearned compensation relating to the Company's restricted stock awards
is shown as a reduction of stockholders' equity. Compensation recognized
for the years ending December 31, 1999, 1998 and 1997 totaled approximately
$5.9 million, $1.1 million and $17.8 million, respectively.
Stock option transactions under the plans were as follows:
1999 1998 1997
------------------ ------------------ ------------------
Weighted Weighted Weighted
Number Average Number Average Number Average
of Options Price of Options Price of Options Price
---------- ----- ---------- ----- ---------- -----
Outstanding
at beginning of year 6,550,354 $12.61 2,794,101 $ 9.83 3,836,159 $ 8.20
Granted 8,311,466 8.29 2,930,500 11.96 40,000 29.00
Assumed from
Cliffs Drilling - - 1,052,300 20.41 - -
Exercised (113,260) 7.03 (226,547) 6.03 (1,073,562) 4.75
Forfeited (335,110) 15.21 - - (8,496) 7.63
---------- --------- ---------
Outstanding
at end of year 14,413,450 10.10 6,550,354 12.61 2,794,101 9.83
========== ========= =========
Exercisable at
end of year 8,216,401 10.22 3,503,187 12.69 2,377,433 9.98
Available for grant
at end of year 3,456,161 - 4,516,604 - 5,415,772 -
The Company accounts for these plans under APB Opinion No. 25, under
which no compensation cost has been recognized. Had compensation cost for
these plans been determined consistent with SFAS 123, the Company's net
income and earnings per share would have been reduced to the following pro
forma amounts (in millions except per share amounts):
1999 1998 1997
-------- ------- --------
Net income (loss) applicable
to common stockholders:
As reported $ (103.2) $ 102.8 $ (6.2)
Pro forma $ (121.5) $ 101.3 $ (10.0)
Basic EPS:
As reported $ (.54) $ .61 $ (.04)
Pro forma $ (.63) $ .60 $ (.06)
Diluted EPS:
As reported $ (.54) $ .61 $ (.04)
Pro forma $ (.63) $ .60 $ (.06)
The fair value of each grant since January 1, 1995 was estimated as of
the date of the grant using the Black-Scholes option pricing model. The
following weighted-average assumptions were used for the options granted
in 1999: risk-free interest rate of 5.9%, an expected life of 10 years and
expected volatility of 69.6%. The resulting fair value of such options
granted was $6.44.
Because the SFAS 123 method of accounting has not been applied to
options granted prior to January 1, 1995, the resulting pro forma
compensation cost may not be representative of that to be expected in
future years.
SUBSIDIARY STOCK AWARD - On April 1, 1999, Devco, a previously wholly-
owned indirect subsidiary of the Company made awards of restricted stock of
Devco to certain directors, officers and employees of the Company, as well
as awards of restricted stock to certain former directors of R&B who served
in such capacity prior to completion of the merger with Falcon in December
1997. Such award comprised of 1,650,000 shares of Devco's common stock or
approximately 13.9% of the outstanding common stock of Devco. The awards
vested upon issuance, but were subject to restrictions on sale or transfer
for a period of six months following the date of the award. As a result,
the Company incurred $1.5 million of expense in the second quarter of 1999
which has been included in general and administrative expenses.
(L) RELATED PARTY TRANSACTIONS
In 1999, the Company entered into rig management agreements with DDI
and DDII for the management of the Deepwater Pathfinder and Deepwater
Frontier, respectively. DDI and DDII are unconsolidated investees accounted
for on the equity method (see Note C). For the year ended December 31,
1999, DDI and DDII paid to the Company $1.4 million and $1.1 million,
respectively, for such management services. Such revenue amounts are
included in "Income (loss) from equity investees plus related income" in
the Consolidated Statement of Operations. At December 31, 1999, the Company
had receivables from DDI and DDII of $6.3 million and $1.8 million,
respectively, which are included in "Accounts Receivable: Other".
In 1999, the Company entered into an agreement pursuant to which the
Company will supervise the construction of the drillship Navis Explorer I
and manage it following its delivery (see Note C). For the year ended
December 31, 1999, Navis paid to the Company $.7 million for such services.
At December 31, 1999, the Company had a receivable from Navis of $.8
million.
The former owners of a company acquired by the Company in 1992, who
currently are employees of the Company and were officers of Falcon, lease
crewboats, tugboats and supply barges and other vessels to Falcon at a
contracted bareboat rate of $100 per day for crewboats and tugboats and $60
per day for other vessels, with Falcon responsible for drydocking, painting
and repairs. The former owners received revenues of $1.1 million, $.9
million and $.9 million for the years ended December 31, 1999, 1998 and
1997, respectively.
William R. Ziegler, a Director and stockholder of the Company, is a
partner in a law firm which provided legal services to the Company and
certain of its affiliated entities. Fees paid by the Company to this law
firm were $.1 million and $.2 million for the years ended December 31,
1998, and 1997, respectively.
Michael E. Porter, a Director and stockholder of the Company, who
provided consulting services to the Company, received $.4 million in the
year ended December 31, 1998.
Steven A. Webster, a Director and stockholder of the Company, who
provided consulting services to the Company, received $.2 million in the
year ended December 31, 1999.
In June 1994, the Company entered into an agreement with Eilert-Olsen
Investments, Inc. (Eilert-Olsen), to buy the equity interest in Eilert-
Olsen for a nominal purchase price. In June 1994, Eilert-Olsen acquired
three barge drilling rigs for a cost of approximately $2.8 million
consisting of cash of approximately $.9 million and the assumption of debt
of approximately $1.9 million secured by the three barge drilling rigs.
The Company advanced $.9 million to Eilert-Olsen in June 1994 and has
subsequently advanced approximately $.2 million, $.5 million and $.5
million for the years ended December 31, 1999, 1998, and 1997,
respectively, to pay principal and interest due on this debt. Due to the
Company's affiliation with Eilert-Olsen, the financial statements of Eilert-
Olsen and the option to purchase Eilert-Olsen from inception have been
consolidated with the financial statements of the Company and, accordingly,
the accounts and transactions between the Company and Eilert-Olsen have
been eliminated in consolidation.
In 1997, the Company paid $.4 million to Bantam Services, Inc. under a
contract pursuant to which Bantam is to supply, at cost, groceries and
supplies to be used on certain of the Company's rigs. Bantam is entitled
under the contract to bill third parties for meals and lodging supplied to
their personnel on such rigs. In the absence of such contract, the Company
would be entitled to bill the third parties for the food and lodging
provided. Bantam is owned by an officer of Falcon Workover Company, Inc.,
a wholly-owned subsidiary of the Company.
(M) SEGMENT INFORMATION
The Company's revenues are generated primarily from its marine drilling
rigs. The Company's management has organized these rigs by general
equipment types based on water depth capability. Any rig capable of
drilling in water depths greater than 400 feet is considered deepwater. In
addition, as a result of the purchase of Cliffs Drilling, the Company
provides turnkey drilling services and land drilling operations both of
which are included in the engineering services and land operations segment.
The Company's development segment primarily consists of the Company's oil
and gas operations (see Note P).
Operating revenues and income by segment for the years ended December
31, 1999, 1998 and 1997 is as follows (in millions):
1999 1998 1997
------- ------- -------
Operating revenues by segment:
Deepwater $ 359.4 $ 392.5 $ 349.3
Shallow water 202.9 382.9 333.2
Inland water 122.5 244.9 249.9
Engineering services and
land operations 260.8 12.9 -
Development .5 - .6
Intersegment (27.3) (.6) -
------- ------- -------
Operating revenues 918.8 1,032.6 933.0
------- ------- -------
Operating income (loss) by
segment:
Deepwater 87.8 42.3 170.4
Shallow water (10.4) 194.4 145.6
Inland water (6.5) 52.4 96.5
Engineering services and
land operations 56.6 1.3 -
Development (3.6) (20.2) (129.6)
Profit elimination (4.5) (.2) -
------- ------- -------
119.4 270.0 282.9
Unallocated depreciation
and amortization (4.4) (1.0) (.4)
Unallocated general
and administrative (69.9) (61.2) (55.7)
Unallocated merger expenses - 8.0 (66.4)
------- ------- -------
Operating income $ 45.1 $ 215.8 $ 160.4
======= ======= =======
Total assets by segment at December 31, 1999, 1998 and 1997 were as
follows (in millions):
1999 1998 1997
--------- --------- ---------
Deepwater $ 2,942.5 $ 2,101.7 $ 1,256.1
Shallow water 1,263.5 1,038.5 445.2
Inland water 227.7 251.2 228.0
Engineering services
and land operations 166.7 159.3 -
Development 49.5 11.6 71.4
Corporate 266.2 151.7 10.7
--------- --------- ---------
Total $ 4,916.1 $ 3,714.0 $ 2,011.4
========= ========= =========
Geographic information about the Company's operations for the three
years ended December 31, 1999 is as follows (in millions):
1999 1998 1997
--------- --------- ---------
Operating revenues: (1)
United States $ 276.8 $ 453.0 $ 451.2
Europe 198.8 251.9 247.3
West Africa 80.8 126.5 69.9
Southeast Asia 60.2 83.4 82.4
South America 279.2 75.2 50.9
Australia 14.9 26.2 23.4
Mediterranean-
Middle East 8.1 16.4 7.9
Corporate - - -
--------- --------- ---------
Total $ 918.8 $ 1,032.6 $ 933.0
========= ========= =========
Identifiable assets:
United States $ 2,012.6 $ 1,133.3 $ 933.3
Europe 781.2 922.4 535.2
Southeast Asia 992.8 659.3 92.7
South America 566.1 499.1 175.1
West Africa 227.1 247.9 190.3
Mediterranean-
Middle East 51.5 76.3 52.2
Australia 18.6 24.0 21.9
Corporate 266.2 151.7 10.7
--------- --------- ---------
Total $ 4,916.1 $ 3,714.0 $ 2,011.4
========= ========= =========
_____________
(1) Revenues are shown by countries in which the Company's marine and
drilling units operated.
For the year ended December 31, 1999, revenues from PDVSA Exploration
and Production of approximately $175.1 million ($160.1 million reported in
the engineering services and land operations segment and $15.0 million
reported in the shallow water segment) accounted for 19.0% of the Company's
total operating revenues and revenues from British Petroleum and affiliates
of approximately $119.5 million ($113.8 million reported in the deepwater
segment and $5.7 million reported in the shallow water segment) accounted
for 13.0% of the Company's total operating revenues. For the year ended
December 31, 1998, revenues from British Petroleum and affiliates of
approximately $116.1 million, reported in the deepwater segment, accounted
for 11.2% of the Company's total operating revenues. For the year ended
December 31, 1997, there were no customers that individually accounted for
10.0% or more of the Company's total operating revenues.
(N) EARNINGS PER SHARE
Basic net income (loss) per common share is computed by dividing net
income (loss), after deducting the preferred stock dividend, by the
weighted average number of common shares outstanding during the period.
Diluted net income (loss) per common share is the same as basic and assumes
the exercise of outstanding stock options and the issuance of restricted
stock both computed using the treasury stock method.
The following table reconciles the numerators and denominators of the
basic and diluted per common share computations for income (loss) from
continuing operations before extraordinary loss for the three years ended
December 31, 1999, 1998 and 1997 as follows (in millions except per share
amounts):
1999 1998 1997
-------- ------- --------
Numerator:
Income (loss) from continuing operations
before extraordinary loss $ (67.8) $ 91.0 $ 29.8
Dividends and accretion on
preferred stock 33.7 - -
-------- ------- --------
Income (loss) from continuing operations
before extraordinary loss
- basic and diluted $ (101.5) $ 91.0 $ 29.8
======== ======= ========
Denominator:
Weighted average common shares
outstanding - basic 192.7 167.5 164.1
Outstanding stock options and
restricted stock - 1.3 2.1
-------- ------- --------
Weighted average common shares
outstanding and assumed
conversions - diluted 192.7 168.8 166.2
======== ======= =======
Earnings per share:
Income (loss) from continuing operations
before extraordinary loss:
Basic $ (.53) $ .54 $ .18
Diluted $ (.53) $ .54 $ .18
(O) DISCONTINUED OPERATIONS
In March 1998, the Company decided to divest its oil and gas segment,
and in the Company's financial statements previously filed with the SEC for
the three years ended December 31, 1997, 1996 and 1995 and the first three
quarters of 1998, the segment was accounted for as a discontinued
operation. However in March 1999, the Company had not been able to divest
this segment on terms it found acceptable and in accordance with generally
accepted accounting principles the Company reclassified its financial
statements as if this segment had not been discontinued. In 1997, a $36.0
million reserve for estimated losses from operations until disposal had
been recorded and in 1998 it was reversed in accordance with the Company
reclassifying the oil and gas segment as if it had not been discontinued.
(P) OIL AND GAS OPERATIONS
The Company, primarily through its majority-owned subsidiary Devco and,
to an insignificant extent through its wholly-owned subsidiaries Raptor
Exploration Company, Inc. and Cliffs Oil and Gas Company, engages in oil
and gas exploration activities. Devco engages primarily in the acquisition
of working interests in offshore oil and gas properties pursuant to which
it shares in reservoir and oil and gas price risks and thus profits and
losses from such properties.
In 1998, Devco incurred dryhole costs of $11.7 million and asset
impairment charges of $11.3 million. In 1997, Devco incurred dryhole costs
of $65.1 million and asset impairment charges of $42.8 million. The
Company's oil and gas operations are not significant; therefore, applicable
disclosures are not required at December 31, 1999 and 1998 or for the years
ended December 31, 1999, 1998 and 1997.
(Q) RESTRUCTURING EXPENSES
On April 7, 1999, the Company announced that Mr. Steven Webster, the
Company's President and Chief Executive Officer, had agreed to resign from
these officer positions effective May 31, 1999. On May 19, 1999, Mr. Paul
B. Loyd, Jr., the Company's Chairman of the Board, was elected as the
Company's Chief Executive Officer, and Mr. Andrew Bakonyi was elected as
President and Chief Operating Officer. Mr. Webster remains a Director of
the Company.
As a result of Mr. Webster's resignation and the termination of certain
other executive officers, the Company incurred $6.6 million of expense in
the second quarter of 1999. Such expense is reported as general and
administrative expense in the Company's Consolidated Statement of
Operations.
As a result of the termination of Mr. Douglas E. Swanson as President
and Chief Executive Officer of Cliffs Drilling, the Company entered into a
termination agreement and a non-competition agreement contract with Mr.
Swanson. The related termination contract expense of $2.6 million will be
amortized over three years. Amortization for 1999 amounted to $.4 million
and is included in "Other, net" per the Consolidated Statement of
Operations. Mr. Swanson remains a Director of the Company.
(R) QUARTERLY FINANCIAL DATA (unaudited)
Summarized quarterly financial data for the two years ended December
31, 1999, are as follows (in millions except for per share amounts):
Quarter
-------------------------------------------
First Second Third Fourth Total
------- ------- ------- ------- -------
1999:
Operating revenues $ 243.8 $ 226.5 $ 214.2 $ 234.3 $ 918.8
Gross income (1) $ 48.2 $ 34.2 $ 49.0 $ 17.1 $ 148.5
Income (loss) from continuing
operations before
extraordinary loss (2) $ 3.3 $ (14.2) $ (22.4) $ (34.5) $ (67.8)
Extraordinary loss (3) $ (1.7) $ - $ - $ - $ (1.7)
Net income (loss) $ 1.6 $ (14.2) $ (22.4) $ (34.5) $ (69.5)
Net income (loss) per
common share:
Basic:
Income (loss) from
operations $ .02 $ (.12) $ (.18) $ (.24) $ (.53)
Extraordinary loss (.01) - - - (.01)
------- ------- ------- ------- --------
Net income (loss) $ .01 $ (.12) $ (.18) $ (.24) $ (.54)
======= ======= ======= ======= ========
Diluted:
Income (loss) from
operations $ .02 $ (.12) $ (.18) $ (.24) $ (.53)
Extraordinary loss (.01) - - - (.01)
------- ------- ------- ------- --------
Net income (loss) $ .01 $ (.12) $ (.18) $ (.24) $ (.54)
======= ======= ======= ======= ========
1998(4):
Operating revenues $ 279.3 $ 281.1 $ 243.5 $ 228.7 $1,032.6
Gross income (1) $ 130.0 $ 126.4 $ 77.3 $ 53.5 $ 387.2
Income (loss) from continuing
operations before
extraordinary loss (2) $ 61.5 $ 59.9 $ (28.2) $ (2.2) $ 91.0
Income from discontinued
operations $ 8.3 $ .5 $ 7.7 $ 19.5 $ 36.0
Extraordinary loss (3) $ - $ (22.0) $ - $ (2.2) $ (24.2)
Net income (loss) $ 69.8 $ 38.4 $ (20.5) $ 15.1 $ 102.8
Net income (loss)
per common share:
Basic:
Continuing operations $ .37 $ .36 $ (.17) $ (.01) $ .54
Discontinued operations .05 .01 .05 .11 .21
Extraordinary loss - (.13) - (.01) (.14)
------- ------- ------- ------- --------
Net income (loss) $ .42 $ .24 $ (.12) $ .09 $ .61
======= ======= ======= ======= ========
Diluted:
Continuing operations $ .37 $ .36 $ (.17) $ (.01) $ .54
Discontinued operations .05 - .05 .11 .21
Extraordinary loss - (.13) - (.01) (.14)
------- ------- ------- ------- --------
Net income (loss) $ .42 $ .23 $ (.12) $ .09 $ .61
======= ======= ======= ======= ========
________________________
(1) Gross income represents operating revenues less operating expenses,
depreciation and amortization, and other, net.
(2) Cancellation of conversion project expense is included in the following
quarters: $31.7 million in the third quarter of 1999, $3.0 million in
the fourth quarter of 1999, $85.8 million in the third quarter of 1998
and $32.5 million in the fourth quarter of 1998.
(3) The extraordinary losses incurred in the first quarter of 1999 and the
second and fourth quarters of 1998 are shown net of a tax benefit of $.9
million, $11.9 million and $1.1 million, respectively.
(4) The quarterly financial data for 1998 has been adjusted to reflect the
recontinuance of the Company's oil and gas operations (see Note O).
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
The following table sets forth certain information regarding the
Company's officers and directors:
Name Age Position
---- --- --------
Paul B. Loyd, Jr. 53 Director and President
Steven A. Webster 48 Director
Tim W. Nagle 49 Vice President and Treasurer
Wayne K. Hillin 58 Secretary
Roger L. Abel 56 Director
Paul B. Loyd, Jr. has been a director of R&B Falcon since July 1997,
Chairman of the Board of R&B Falcon since January 6, 1998, and Chief
Executive Officer of R&B Falcon since May 19, 1999. Mr. Loyd was Chief
Executive Officer and Chairman of the Board of Reading & Bates Corporation
from 1991 until December 31, 1997, when Reading & Bates Corporation merged
with Falcon Drilling Company to form R&B Falcon. Mr. Loyd has been a
director of the Company since March 1999.
Steven A. Webster was Chief Executive Officer of R&B Falcon from its
organization in July 1997 until May 19, 1999. Mr. Webster has been a
director of R&B Falcon since its organization in July 1997. Mr. Webster
served as Chief Executive Officer and Chairman of the Board of Falcon
Drilling Company from its formation in 1991 until May 19, 1999. Mr.
Webster has been a director of the Company since March 1999.
Tim W. Nagle has been Executive Vice President of R&B Falcon since
January 1998, and on May 19, 1999 he was also made Chief Financial Officer
of R&B Falcon. Mr. Nagle was Chief Financial Officer of Reading &Bates
Corporation for more than five years prior to that. Mr. Nagle has been a
Vice President of the Company since March 1999.
Wayne K. Hillin has been Senior Vice President of R&B Falcon since
January 1998, and on May 19, 1999 was also made General Counsel of R&B
Falcon. Mr. Hillin was Senior Vice President and General Counsel of
Reading &Bates Corporation for more than five years prior to that. Mr.
Hillin has been Secretary of the Company since March 1999.
Roger L. Abel was Executive Vice President of Occidental Petroleum
Corporation and President and Chief Operating Officer of Occidental Oil and
Gas Corporation from 1997 until his retirement in early 1999. For more
than five years prior to that, Mr. Abel served in various management
positions with Conoco, Inc., including manager of Engineering and Research
from 1988 to 1990, Vice President and General Manager of Engineering and
Research from 1990 to 1991, Vice President of Conoco Russia from 1991 to
1993, and Chairman of Conoco Exploration Production Europe from 1993 to
1997. Mr. Abel has been a director of the Company since March 1999.
Item 11. Executive and Director Compensation
The Company pays its independent director, Mr. Abel, a directors fee
of $25,000 per year. The Company does not compensate any of its other
directors or officers, although all of its other directors and officers are
employees and/or directors of R&B Falcon and are compensated by R&B Falcon.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth the number of shares of the Company's
common stock beneficially owned by (1) each person or group known as the
Company to own beneficially more than 5% of the outstanding shares of
common stock, (2) each of the Company's directors, (3) each of the
Company's executive officers, and (4) all of the Company's directors and
executive officers as a group. Except as otherwise indicated, each of the
persons or groups named below has sole voting power and investment power
with respect to the Company's common stock.
Common Stock
---------------
Name of Beneficial Owner or Group Shares Percent
--------------------------------- ------ -------
Paul B. Loyd, Jr. 50 20.0%
Steven A. Webster 50 20.0%
Tim W. Nagle 50 20.0%
Andrew Bakonyi 50 20.0%
Wayne K. Hillin 50 20.0%
All directors and executive
officers as a group (5 persons) 200 80.0%
Item 13. Certain Relationships and Related Transactions
The Company's officers and directors other than Mr. Abel are also
officers and/or directors of R&B Falcon. The Company loaned $800.0 million
to R&B Falcon pursuant to ten separate loans, each of which is secured by a
mortgage on a drilling rig.
PART IV
Item 14. Exhibits, Financial Statements and Reports on Form 8-K
(a)Financial Statements and Exhibits
1. Financial Statements:
Report of Independent Public Accountants
Balance Sheet as of December 31, 1999
Statement of Operations for the period from inception (March 19,
1999) to December 31, 1999
Statement of Cash Flows for the period from inception (March 19,
1999) to December 31, 1999
Statement of Stockholders' Equity for the period from inception
(March 19, 1999) to December 31, 1999
Notes to Consolidated Financial Statements
2. Exhibits:
4.1 Indenture dated as of March 26, 1999, between RBF Finance
Co., as Issuer, and United States Trust Company of New
York, as Trustee, with respect to $400,000,000 11% Senior
Secured Notes due 2006 and $400,000,000 11 3/8% Senior
Secured Notes due 2009. (Filed as Exhibit 4.1 to the
Company's Registration Statement No. 333-79363 on Form S-4
dated May 26, 1999 and incorporated herein by reference.)
4.2 Registration Rights Agreement dated March 26, 1999 among
RBF Finance Co., R&B Falcon Corporation and Donaldson,
Lufkin & Jenrette Securities Corporation. (Filed as
Exhibit 4.2 to the Company's Registration Statement No.
333-79363 on Form S-4 dated May 26, 1999 and incorporated
herein by reference.)
10.1 Senior Secured Loan Agreement, Harvey Ward, dated March
26, 1999 between R&B Falcon Corporation, as Borrower, and
RBF Finance Co., as Lender.
10.2 Senior Secured Loan Agreement, Peregrine II, dated March
26, 1999 between R&B Falcon Corporation, as Borrower, and
RBF Finance Co., as Lender.
10.3 Senior Secured Loan Agreement, Peregrine I, dated March
26, 1999 between R&B Falcon Corporation, as Borrower, and
RBF Finance Co., as Lender.
10.4 Senior Secured Loan Agreement, Deepwater IV, dated March
26, 1999 between R&B Falcon Corporation, as Borrower, and
RBF Finance Co., as Lender.
10.5 Senior Secured Loan Agreement, Falrig 82, dated March 26,
1999 between R&B Falcon Corporation, as Borrower, and RBF
Finance Co., as Lender.
10.6 Senior Secured Loan Agreement, Peregrine IV, dated March
26, 1999 between R&B Falcon Corporation, as Borrower, and
RBF Finance Co., as Lender.
10.7 Senior Secured Loan Agreement, Peregrine VII, dated March
26, 1999 between R&B Falcon Corporation, as Borrower, and
RBF Finance Co., as Lender.
10.8 Senior Secured Loan Agreement, Falcon 100, dated March 26,
1999 between R&B Falcon Corporation, as Borrower, and RBF
Finance Co., as Lender.
10.9 Senior Secured Loan Agreement, W.D. Kent, dated March 26,
1999 between R&B Falcon Corporation, as Borrower, and RBF
Finance Co., as Lender.
10.10 Senior Secured Loan Agreement, Deepwater Millennium, dated
March 26, 1999 between R&B Falcon Corporation, as
Borrower, and RBF Finance Co., as Lender.
10.11 Issuer Loan Escrow Agreement dated March 26, 1999 among
United States Trust Company of New York, R&B Falcon
Corporation and RBF Finance Co. (Filed as Exhibit 10.2 to
the Company's Registration Statement No. 333-79363 on Form
S-4 dated May 26, 1999 and incorporated herein by
reference.)
10.12 Senior Secured Note Escrow Agreement dated March 26, 1999
among United States Trust Company of New York and RBF
Finance Co. (Filed as Exhibit 10.3 to the Company's
Registration Statement No. 333-79363 on Form S-4 dated May
26, 1999 and incorporated herein by reference.)
10.13 Security Agreement dated as of March 26, 1999 from R&B
Falcon Corporation to RBF Finance Co. (Deepwater
Millenium). (Filed as Exhibit 10.14 to the Company's
Registration Statement No. 333-79363 on Form S-4 dated May
26, 1999 and incorporated herein by reference.)
10.14 Security Agreement dated as of March 26, 1999 from R&B
Falcon Corporation to RBF Finance Co. (Deepwater IV).
(Filed as Exhibit 10.15 to the Company's Registration
Statement No. 333-79363 on Form S-4 dated May 26, 1999 and
incorporated herein by reference.)
10.15 Senior Secured Note Security and Pledge Agreement dated as
of March 26, 1999 by RBF Finance Co. in favor of United
States Trust Company. (Filed as Exhibit 10.16 to the
Company's Registration Statement No. 333-79363 on Form S-4
dated May 26, 1999 and incorporated herein by reference.)
10.16 First Preferred Ship Mortgage made March 26, 1999 by R&B
Falcon Corporation and RBF Finance Co. (Peregrine IV).
(Filed as Exhibit 10.17 to the Company's Registration
Statement No. 333-79363 on Form S-4 dated May 26, 1999 and
incorporated herein by reference.)
10.17 First Preferred Ship Mortgage made March 26, 1999 by R&B
Falcon Corporation and RBF Finance Co. (Peregrine VII).
(Filed as Exhibit 10.18 to the Company's Registration
Statement No. 333-79363 on Form S-4 dated May 26, 1999 and
incorporated herein by reference.)
10.18 First Preferred Ship Mortgage made March 26, 1999 by R&B
Falcon Corporation and RBF Finance Co. (Falcon 100).
(Filed as Exhibit 10.19 to the Company's Registration
Statement No. 333-79363 on Form S-4 dated May 26, 1999 and
incorporated herein by reference.)
10.19 Deed of Covenants dated March 26, 1999 by and between R&B
Falcon Corporation and R&B Finance Co. (Peregrine I).
(Filed as Exhibit 10.20 to the Company's Registration
Statement No. 333-79363 on Form S-4 dated May 26, 1999 and
incorporated herein by reference.)
10.20 Deed of Covenants dated March 26, 1999 by and between R&B
Falcon Corporation and R&B Finance Co. (Peregrine II).
(Filed as Exhibit 10.21 to the Company's Registration
Statement No. 333-79363 on Form S-4 dated May 26, 1999 and
incorporated herein by reference.)
10.21 First Naval Mortgage dated April 12, 1999 by R&B Falcon
Corporation to R&B Finance Co. (Harvey Ward). (Filed as
Exhibit 10.22 to the Company's Registration Statement No.
333-79363 on Form S-4 dated May 26, 1999 and incorporated
herein by reference.)
10.22 First Naval Mortgage dated April 12, 1999 by R&B Falcon
Corporation to R&B Finance Co. (W.D. Kent). (Filed as
Exhibit 10.23 to the Company's Registration Statement No.
333-79363 on Form S-4 dated May 26, 1999 and incorporated
herein by reference.)
10.23 First Preferred Ship Mortgage made March 26, 1999 by R&B
Falcon Corporation and R&B Finance Co. (Falrig 82). (Filed
as Exhibit 10.24 to the Company's Registration Statement
No. 333-79363 on Form S-4 dated May 26, 1999 and
incorporated herein by reference.)
27 Financial Data Schedule. (Exhibit 27 is being submitted
as an exhibit only in the electronic format of this Annual
Report on Form 10-K being submitted to the Securities and
Exchange Commission.)
(b) Reports on Form 8-K
There were no Current Reports on Form 8-K filed during the three
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 on March
28, 2000.
RBF FINANCE CO.
By /s/ Paul B. Loyd, Jr.
------------------------
Paul B. Loyd, Jr.
President and Director
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant in the capacities indicated on March 28, 2000.
By /s/ Paul B. Loyd, Jr. By /s/ Tim W. Nagle
------------------------ -----------------------
Paul B. Loyd, Jr. Tim W. Nagle
President and Director Vice President and Treasurer
Principal Accounting and
Financial Officer)
By By /s/ Steven A. Webster
------------------------ -----------------------
Roger L. Abel Steven A. Webster
Director Director
EXHIBIT 10.1
[HARVEY WARD]
=========================================================================
SENIOR SECURED LOAN AGREEMENT
Dated as of
March 26, 1999
between
R&B FALCON CORPORATION,
as Borrower
and
RBF FINANCE CO.,
as Lender
=========================================================================
TABLE OF CONTENTS
Page
SECTION 1.DEFINITIONS 1
1.1.Certain Defined Terms 1
1.2.Other Defined Terms 5
1.3.Accounting Terms 5
1.4.Other Definitional Provisions 5
SECTION 2.LOAN COMMITMENT AND LOAN 5
2.1.Termination of Loan Commitment 6
2.2.Termination of Loan Commitment 7
2.3.Interest on the Loans 7
2.4.Redemptions 8
2.5.Excess Proceeds Offers 10
2.6.Use of Proceeds 11
2.7.Commitment Fee 11
SECTION 3.CONDITIONS 12
3.1.Conditions to Initial Advances on the Loan 12
3.2.Conditions to Subsequent Advance on the Loan 13
SECTION 4.REPRESENTATIONS AND WARRANTIES 14
4.1.Organization and Good Standing; Capitalization 14
4.2.Authorization and Power 14
4.3.No Conflicts or Consents 14
4.4.Enforceable Obligations 15
4.5.Properties; Liens 15
4.6.No Default 15
4.7.Use of Proceeds; Margin Stock, etc 15
4.8.Survival of Representations and Warranties 16
SECTION 5.COVENANTS 16
5.1.Indenture Covenants 16
5.2.Reports of Defaults, Etc 16
5.3.Payments in U.S. Dollars 16
5.4.Performance and Enforcement Under the Loan Documents 16
5.5.Liens 16
5.6.Transfer of Mortgage Rig to a Restricted Subsidiary 17
SECTION 6.EVENTS OF DEFAULT 17
6.1.Failure To Make Payments When Due 17
6.2.Default Under The Indenture 17
6.3.Other Loan Agreement 17
6.4.Breach of Certain Covenants 17
6.5.Breach of Warranty 17
6.6.Other Defaults Under Agreement or Loan Documents 17
6.7.Involuntary Bankruptcy; Appointment of Custodian, etc 17
6.8.Voluntary Bankruptcy; Appointment of a Custodian; etc 18
SECTION 7.MISCELLANEOUS 19
7.1.Pledges and Assignments of Loan and Note 19
7.2.Expenses 19
7.3.Indemnity 19
7.4.Additional Amounts 20
7.5.Taxes and Other Taxes 21
7.6.Amendments and Waivers 22
7.7.Independence of Covenants 22
7.8.Notices 23
7.9.Survival of Warranties and Certain Agreements 23
7.10.Failure or Indulgence Not Waiver; Remedies Cumulative 23
7.11.Severability 23
7.12.Headings 23
7.13.Applicable Law 23
7.14.Successors and Assigns; Subsequent Holders of Notes 23
7.15.Counterparts; Effectiveness 24
7.16.Consent to Jurisdiction; Venue; Waiver of Jury Trial 24
7.17.Waiver of Stay, Extension or Usury Laws 24
7.18.Usury Savings Clause 25
EXHIBITS
I FORM OF NOTE
II FORM OF NOTICE OF BORROWING
III FORM OF OPINION OF GARDERE & WYNNE - SPECIAL COUNSEL FOR THE BORROWER
IV FORM OF MORTGAGE
- ---------------------------------------------------------------------------
This Senior Secured Loan Agreement is dated as of March 26, 1999,
and entered into by and among R&B Falcon, Inc., a Delaware corporation
(the "Company") and RBF Finance Co., a Delaware corporation (the
"Lender").
RECITALS
WHEREAS, the Lender has entered into an Indenture of even date
herewith (as the same may be amended, or supplemented or otherwise
modified from time to time, the "Indenture") with United States
Trust Company of New York as Trustee (the "Trustee"), pursuant to
which the Lender will issue in two series up to $400,000,000
aggregate principal amount of its 11% Senior Secured Notes due 2006
(the "7-year Secured Notes") and up to $400,000,000 aggregate
principal amount of its 11 3/8% Senior Secured Notes due 2009 (the
"10-year Secured Notes;" the 7-year Secured Notes and the 10-year
Secured Notes being hereinafter collectively called the "Secured
Notes"); and
WHEREAS, the Indenture provides that the Lender may utilize
the proceeds of the Secured Notes to make loans to the Company,
each for the purpose of either (i) financing all or a portion of
the cost of acquiring, constructing, altering, improving or
repairing a drilling rig or drillship (a "Rig") or improvements
used or to be used in connection with such a Rig, or (ii) financing
all or any part of the purchase price of the Rig or improvements
used or to be used in connection with such Rig, which indebtedness
is incurred prior to or within one year after the date of the
completion of construction, alteration, improvement or repair or
the commencement of commercial operations thereof; and
WHEREAS, the Company desires that the Lender extend senior
secured credit facilities to the Company for such purposes herein;
and
WHEREAS, the Indenture provides that the Lender will enter
into a Senior Secured Note Security and Pledge Agreement of even
date herewith (the "Issuer Security Agreement") between the Lender,
the Trustee and United States Trust Company of New York as
Collateral Agent (in such capacity, the "Collateral Agent"),
pursuant to which the Lender will pledge and grant a security in
the loans made with the proceeds of the Secured Notes which are or
will be secured by Rigs;
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, the parties
hereby agree as follows:
SECTION 1 DEFINITIONS
1.1 Certain Defined Terms. The following terms used in this Agreement
shall have the following meanings:
"Agreement" means this Senior Secured Loan Agreement dated as
of March 26, 1999, as it may be amended, supplemented or otherwise
modified from time to time in accordance with the terms hereof.
"Board of Directors" means, with respect to any Person, the
Board of Directors of such Person or any duly authorized committee
of that Board.
"Board Resolution" means a duly adopted resolution of the
Board of Directors of the Company in full force and effect at the
time of determination and certified as such by the Secretary or
Assistant Secretary of the Company.
"Business Day" means any day excluding Saturday, Sunday and
any day which is a legal holiday under the laws of New York, New
York or is a day on which banking institutions therein located are
authorized or required by law or other governmental action to
close.
"Cash Equivalents" means (i) U.S. Governmental Obligations
with a maturity of four years or less; (ii) commercial paper issued
by any corporation if such commercial paper has credit ratings of
at least "A-1" from S&P or at least "P-1" by Moody's;
(iii) certificates of deposit, bankers' acceptances, time deposits,
Eurocurrency Deposits and similar types of Investments routinely
offered by commercial banks with final maturities of one year or
less issued by commercial banks having combined capital and surplus
in excess of $100,000,000; and (iv) shares in money market mutual
or similar funds having assets in excess of $100,000,000.
"Closing Date" means the date on or before March 26, 1999 on
which the initial advance of the Loan is made and the conditions
set forth in Section 3.1 are satisfied or waived in accordance with
Section 7.7.
"Collateral" means the Mortgaged Rig and any other property
subject to the Lien created under a Mortgage or a Loan Document.
"Commission" means the Securities and Exchange Commission.
"Company" has the meaning ascribed to such term in the
introduction to this Agreement.
"Collateral Agent" has the meaning assigned to such term in
the recitals to this Agreement.
"Contractual Obligation," as applied to any Person, means any
provision of any Security issued by that Person or of any
indenture, mortgage, deed of trust, contract, undertaking,
agreement or other instrument to which that Person is a party or by
which it or any of its properties is bound or to which it or any of
its properties is subject.
"Dollars" or the sign "$" means the lawful money of the United
States of America.
"Event of Default" means each of the events set forth in
Section 6.
"indemnified liabilities" has the meaning ascribed to such
term in Section 7.3.
"Indemnitees" has the meaning ascribed to such term in
Section 7.3.
"Indenture" has the meaning ascribed to such term in the
recitals of this Agreement.
"Laws" means all applicable statutes, laws, ordinances,
regulations, rules, orders, judgments, writs, injunctions or
decrees of any state, commonwealth, nation, territory, possession,
province, county, parish, town, township, village, municipality or
Tribunal, and "Law" means each of the foregoing.
"Lender" has the meaning ascribed to that term in the
introduction of this Agreement and shall include any assignee of
the Loan or the Note or Loan Commitment to the extent of such
assignment.
"Lien" means any lien, mortgage, pledge, assignment, security
interest, charge or encumbrance of any kind (including any
conditional sale or other title retention agreement, any lease in
the nature thereof, and any agreement to give any security
interest) and any option, trust or other preferential arrangement
having the practical effect of any of the foregoing.
"Loan" means, collectively, the loans made by the Lender
pursuant to Section 2.1.
"Loan Documents" means this Agreement, the Note and the
Mortgage.
"Margin Stock" has the meaning assigned to that term in
Regulation U of the Board of Governors of the Federal Reserve
System as in effect from time to time.
"Material Adverse Effect" means (i) a material adverse effect
upon the business, property, assets, nature of assets, liabilities
condition (financial or otherwise), results of operation or
prospects of the Company and its Restricted Subsidiaries, taken as
a whole, or (ii) the impairment of the ability of the Company or
any of its Restricted Subsidiaries to perform, or the impairment of
the ability of Lender to enforce, any material right or remedy
under the Obligations.
"Maturity" means the date on which the principal of the Loan,
whether the 7-year Tranche or 10-year Tranche or both, becomes due
and payable as provided in this Agreement whether at Stated
Maturity, upon redemption, by declaration of acceleration or
otherwise.
"Mortgage" means a mortgage substantially in the form of
Exhibit IV covering the Mortgaged Rig.
"Mortgaged Rig" means the Harvey Ward.
"Notes" has the meaning ascribed to such term in Section 2.1C.
"Notice of Borrowing" means a notice substantially in the form
of Exhibit II annexed hereto with respect to a proposed borrowing.
"Obligations" means all obligations of every nature of the
Company from time to time owed to the Lender under the Loan
Documents, whether for principal, reimbursements, interest
(including post-petition interest), fees, expenses, indemnities or
otherwise, and whether primary, secondary, direct, indirect,
contingent, fixed or otherwise (including obligations of
performance).
"Officer" means the Chairman of the Board, the Chief Executive
Officer, the Chief Operating Officer, the President, any Vice
President, the Chief Financial Officer, the Controller, the Chief
Accounting Officer, any Vice President, the Treasurer or the
Secretary of the Company.
"Officers' Certificate" means, as applied to any corporation,
a certificate executed on behalf of such corporation by two
officers; provided, however, that every Officers' Certificate with
respect to the compliance with a condition precedent to the making
of the Loans hereunder shall include (i) a statement that the
officer or officers making or giving such Officers' Certificate
have read such condition and any definitions or other provisions
contained in this Agreement relating thereto, (ii) a statement
that, in the opinion of the signers, they have made or have caused
to be made such examination or investigation as is necessary to
enable them to express an informed opinion as to whether or not
such condition has been complied with, and (iii) a statement as to
whether, in the opinion of the signers, such condition has been
complied with.
"Other Loan" means a loan made pursuant to an Other Loan
Agreement by the Lender with the proceeds of the Secured Notes
which is secured by a Mortgaged Rig.
"Other Loan Agreement" means a loan agreement among the
Lender, the Company and the Trustee pursuant to which the Lender
will utilize the proceeds of the Secured Notes to make an Other
Loan for the purposes specified in the second recital of this
Agreement
"Other Mortgaged Rig" means a Rig which has been mortgaged to
secure an Other Loan or which is the subject of a construction
contract which has been pledged to secure an Other Loan.
"Other Taxes" has the meaning ascribed to such term in
Section 7.6.
"Payment Office" shall mean the office of United States Trust
Company of New York located at 114 West 47th Street, 25th Floor,
New York, New York 10036 or such other office in the State of New
York as the Lender may designate to the Company and the Trustee
from time to time.
"Potential Event of Default" means a condition or event which,
after notice or lapse of time or both, would constitute an Event of
Default if that condition or event were not cured or removed within
any applicable grace or cure period.
"Purchase Agreement" means the Purchase Agreement dated
March 19, 1999 among the Lender, the Company and the Initial
Purchaser relating to the Secured Notes.
"Securities" means any stock, shares, partnership interests,
voting trust certificates, certificates of interest or
participation in any profit sharing agreement or arrangement,
bonds, debentures, options, warrants, notes, or other evidences of
indebtedness, secured or unsecured, convertible, subordinated or
otherwise, or in general any instruments commonly known as
"securities" or any certificates of interest, shares or
participations in temporary or interim certificates for the
purchase or acquisition of, or any right to subscribe to, purchase
or acquire, any of the foregoing.
"7-year Tranche" means advances on the Loan aggregating up to
$2,000,000 and having a final Loan Maturity of March 15, 2006.
"Taxes" means all taxes, assessments, fees, levies, imposts,
duties, penalties, deductions, liabilities, withholdings or other
charges of any nature whatsoever, including interest penalties,
from time to time or at any time imposed by any Law or any
Tribunal.
"10-year Tranche" means advances on the Loan aggregating up to
$2,000,000 and having a final Maturity of March 15, 2009.
"Transaction Costs" means the fees, costs and expenses payable
by the Company pursuant hereto and other fees, costs and expenses
payable by the Company in connection with the Transactions.
"Transactions" shall mean, collectively, (i) the issuances and
sale of the Secured Notes, (ii) the incurrence of the Loan
hereunder on the Closing Date, (iii) the incurrence of the Other
Loans under the Other Loan Agreements, (iv) any other transaction
on the Closing Date contemplated in relation to the foregoing and
(v) the payment of fees and expenses in connection with the
foregoing.
"Tranches" means collectively the 7-year Tranche and the
10-year Tranche.
"Tribunal" means any governmental, any arbitration panel, any
court or any governmental department, commission, board, bureau,
agency, authority or instrumentality of the United States or any
state, province, commonwealth, nation, territory, possession,
county, parish, town, township, village or municipality, whether
now or hereafter constituted and/or existing.
"Trustee" has the meaning ascribed to such term in the
introduction of this Agreement and shall include any successor
Trustee appointed pursuant to terms of the Indenture.
"U.S. Legal Tender" means such coin or currency of the United
States of America as at the time of payment shall be legal tender
for the payment of public and private debts.
1.2 Other Defined Terms. Any capitalized term used in this Agreement
and not defined herein shall have the meaning assigned to such term in
the Indenture.
1.3 Accounting Terms. For the purposes of this Agreement, all
accounting terms to otherwise defined herein shall have the meanings
assigned to them in conformity with GAAP.
1.4 Other Definitional Provisions. Any of the terms defined in
Section 1.1 may, unless the context otherwise requires, be used in the
singular or the plural depending on the reference.
SECTION 2 LOAN COMMITMENT AND LOAN
2.1 The Loan and Notes.
A. Loan Commitment. Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties of
the Company herein set forth, the Lender hereby agrees to lend to the
Company on the Closing Date and thereafter up to $4,000,000 in the
aggregate (the "Loan") consisting of $2,000,000 of 7-year Tranche
advances and $2,000,000 of 10-year Tranche advances. The Lender's
commitment to make the Loan to the Company pursuant to this
Section 2.1 is herein called the "Loan Commitment."
B. Notice of Borrowing. When the Company desires to borrow under
this Agreement, it shall deliver to the Collateral Agent a Notice of
Borrowing no later than 11:00 a.m. (New York time), at least one
Business Day in advance of the Closing Date or such other date as
shall be agreed to by the Lender and the Trustee. The Notice of
Borrowing shall specify the amount of each Tranche and the applicable
date of borrowing (which shall be a Business Day).
C. Disbursement of Funds. No later than 3:00 p.m. (New York time)
on the Closing Date, the Lender promptly will make available to the
Company by depositing to its account at the Payment Office the
aggregate of the amount of the Loan to be made on such Closing Date.
D. Notes. The Company shall execute and deliver to the Lender on the
Closing Date two Notes dated the Closing Date, one substantially in
the form of Exhibit I annexed hereto with appropriate insertions to
evidence the maximum amount of the 7-year Tranche of Loan which may be
made hereunder by the Lender and the other substantially in the form
of Exhibit I annexed hereto with appropriate insertions to evidence
the maximum amount of 10-year Tranche of the Loan which may be made by
the Lender hereunder.
E. Scheduled Payments of Loan. The Company shall pay on or before
10:00 a.m. on the date of the final Maturity of the 7-year Tranche of
the Loan all of the principal amount of the 7-year Tranche remaining
outstanding, which amount will be $2,000,000 principal amount of the
Loan, reduced by any previous prepayments of principal made on the
7-year Tranche of the Loan to the extent that such payments have been
allocated pursuant to the provisions of Section 2.3 hereof and the
Indenture to the 7-year Secured Notes, together with accrued and
unpaid interest, fees and a pro rata portion of the amount of the
Special Interest and Additional Amounts, if any, due on the 7-year
Secured Notes. The Company shall pay on or before 10:00 a.m. on the
date of the final Maturity of the 10-year Tranche all of the principal
amount of the 10-year Tranche then remaining outstanding, reduced by
any previous prepayments of principal made on the 10-year Tranche of
the Loan to the extent that such payments have been allocated pursuant
to the provisions of Section 2.3 hereof and the Indenture to the 10-
year Secured Notes, together with accrued and unpaid interest fees and
a pro rata portion of the amount of the Special Interest and
Additional Amounts, if any, due on the 10-year Secured Notes. Such
payments shall be made directly to the Trustee for deposit in the
Issuer Escrow Account established pursuant to the Issuer Escrow
Agreement.
F. Termination of Loan Commitment. The Loan Commitment hereunder
shall terminate on the earlier (i) the Stated Maturity (whether by
acceleration, redemption, purchase or otherwise) of the Secured Notes
pursuant to the terms of the Indenture or (ii) May 14, 1999, if no
portion of the Loan has been made on or before such date (other than
as a result of failure of the Lender to fulfill its obligations
hereunder).
G. Satisfaction by Payments on the Guarantee. Pursuant to the
Indenture, the Company will guarantee the due and punctual payment of
the principal of, premium, if any, and interest on, and all other
amounts payable under, the Secured Notes (including any Additional
Amounts payable upon redemption, in respect thereof) when and as the
same shall become due and payable, whether at Stated Maturity, by
declaration of acceleration or otherwise. To the extent that the
Company makes a payment on the Guarantee, it will be deemed to have
made a payment on the Issuer Loans then outstanding, such payments to
be allocated pro rata to each of Tranches of the Loan and pro rata to
the Loan and the Other Loans.
2.2 Interest on the Loans.
A. Rate of Interest. The 7-year Tranche of the Loan shall bear
interest on the unpaid principal amount thereof from the date made
through Maturity for the 7-year Tranche (whether by prepayment,
acceleration or otherwise) at a rate equal to 11% per annum plus 2
basis points per annum and the 10-year Tranche of the Loan shall
bear interest on the unpaid principal amount thereof from the date
made through Maturity for the 10-year Tranche (whether by prepayment,
acceleration or otherwise) at a rate equal to 11 3/8% per annum plus
2 basis points per annum.
B. Special Interest. The Lender and the Company have entered into
a Registration Rights Agreement (the "Registration Rights Agreement")
dated March 26, 1999 with Donaldson, Lufkin & Jenrette Securities
Corporation for the benefit of the Holders of the Secured Notes, in
which the Lender and the Company have agreed to: (A) file a
registration statement within 60 days after the closing date of the
offering of Secured Notes for an offer to exchange Secured Notes of
each series for debt securities of that series with identical terms
(except for transfer restrictions); (B) use their best efforts to
cause the registration statement to become effective within 150 days
after the closing date of the offering of the Secured Notes; and
(C) complete the registered exchange offer within 180 days after the
closing date of the offering of the Secured Notes. Under certain
circumstances, the Lender and the Company may be required to file a
shelf registration statement for the Secured Notes registering the
resale of the Secured Notes. If the Lender and the Company do not
comply with their obligations under the Registration Rights Agreement,
the Lender will be required to pay additional interest ("Special
Interest") specified in Section 5 of the Registration Rights
Agreement. The Company will pay on each date that the Lender pays
Special Interest to the Holders of the Secured Notes as Special
Interest on the Loan an amount equal to the percentage of Special
Interest, if any, which the Lender owes to the Holders of the Secured
Notes that the principal amount of the Loan bears to the total
aggregate principal amount of the Loan and all Other Loans then
outstanding. Such payment shall be paid directly to the Trustee for
deposit into the Issuer Escrow Account.
Notwithstanding any provisions of this Section 2.2 or any
other provision herein, in no event will the combined sum of
interest (cash or otherwise) on the Loan exceed the maximum amount
permitted by applicable law.
C. Interest Payments. Interest (including Special Interest, if any,
and Additional Amounts, if any) shall be payable semi-annually on
March 15 and September 15 of each year, commencing September 15, 1999
but in no event to exceed the maximum permitted by applicable law.
All payments of interest on the Loan shall be made on or before 10:00
a.m. (New York time) on the date of payment and shall be paid directly
to the Trustee for deposit into the Issuer Escrow Account.
D. Post-Maturity Interest. Any principal payments on the Loan not paid
when due and, to the extent permitted by applicable law, any interest
payment on the Loan not paid when due, in each case whether at Stated
Maturity, by notice of prepayment, by acceleration or otherwise, shall
thereafter bear interest payable upon demand at a rate of interest
otherwise payable under this Agreement for the Loan but in no event to
exceed the maximum interest rate permitted by applicable law.
E. Computation of Interest. Interest on the Loan shall be computed on
the basis of a 360-day year of twelve 30-day months.
2.3 Redemptions.
A. Redemption upon Loss of the Mortgaged Rig. If an Event of Loss
occurs at any time with respect to the Mortgaged Rig attributable to
the Loan, the Company shall apply funds in an amount (the "Loss
Redemption Amount") equal to the principal amount of the Loan
outstanding on the date (the "Loss Date") on which such Event of Loss
was deemed to have occurred, together with all accrued and unpaid
interest (including Special Interest, if any, and Additional Amounts,
if any) thereon, to the prepayment of the Loan. If an Event of Loss
occurs at any time with respect to any Other Mortgaged Rig, the
Indenture and the applicable Other Loan Agreement require that the
Company shall apply funds to the principal amount of the applicable
Other Loan secured by the Other Mortgaged Rig outstanding on the Loss
Date for such other Mortgaged Rig, together with all accrued and
unpaid interest (including Special Interest, if any, and Additional
Amounts, if any) thereon, to the payment of such Other Loan. If a
Default under the Indenture shall have occurred and be continuing at
the time of the receipt of the Event of Loss Proceeds with respect to
such Other Mortgaged Rig, the Indenture requires, and the Company
hereby agrees, that it shall prepay the Loan and the remaining Other
Loans on a pro rata basis in an aggregate amount equal to the excess
of the Net Event of Loss Proceeds over the Loss Redemption Amount, if
any, together with all accrued and unpaid interest (including Special
Interest, if any, and Additional Amounts, if any) thereon for the
Other Loan which is secured by such Other Mortgaged Rig. All payments
on the Loan shall be allocated on a pro rata basis between the
Tranches and shall be made directly to the Trustee for deposit into
the Issuer Escrow Account.
B. Redemption upon Sale of the Mortgaged Rig. If the Mortgaged Rig
or the Capital Stock of a Subsidiary Guarantor then owning the Mortgaged
Rig is sold in compliance with the terms of the Indenture, the Company
shall apply funds in an amount (the "Sale Redemption Amount") equal to
the principal amount of the Loan secured by the Mortgaged Rig on the
date of such sale (the "Sale Date"), together with all accrued and
unpaid interest (including Special Interest, if any, and Additional
Amounts, if any thereon, plus any additional amounts required by the
Lender to redeem the Secured Notes to the extent required by
Section 3.9 of the Indenture, to the prepayment of the Loan. If any
Other Mortgaged Rig or the Capital Stock of a Subsidiary Guarantor
then owning an Other Mortgaged Rig is sold in compliance with the
terms of the Indenture, the Company shall apply funds equal to the
applicable Other Loan secured by the Other Mortgaged Rig outstanding
on the Sale Date for such Other Mortgaged Rig, together with all
accrued and unsecured interest (including Special Interest, if any,
and Additional Amounts, if any) thereon, to the payment of such Other
Loan. If a Default under the Indenture shall have occurred and be
continuing at the time of receipt of the cash consideration with
respect to such Other Mortgaged Rig or Capital Stock of the Subsidiary
Guarantor owning such Other Mortgaged Rig, the Indenture requires, and
the Company hereby agrees, that it shall also be required to prepay
the Loan and the remaining Other Loans on a pro rata basis in an
aggregate amount equal to the excess of such Net Available Cash
attributable to such Sold Mortgaged Rig over such Sale Redemption
Amount. Such payments on the Loan and the Other Loans pursuant hereto
shall be respectively allocated between the Tranches of the Loan and
the Other Loans on a pro rata basis and shall be made directly to the
Trustee for deposit into the Issuer Escrow Account.
C. Other Redemptions.
(i) Redemptions to Fund Optional Redemptions of the 10-year Secured
Notes. Under the terms of the Indenture, on or after March 15, 2004,
the 10-year Secured Notes will be redeemable, at the Lender's option,
in whole or in part, at any time or from time to time, upon not less
than 30 nor more than 60 days' prior notice to the Holders of the 10-
year Secured Notes, at the following Redemption Prices (expressed in
percentages of principal amount), plus accrued and unpaid interest
(including Special Interest, if any, and Additional Amounts, if any)
to the Redemption Date, if redeemed during the 12-month period
commencing on March 15 of the years set forth below.
Redemption
Period Price
2004 105.6875%
2005 103.7917
2006 101.8958
2007 and thereafter 100.0000
The Company shall prepay the 10-year Tranche of the Loan and
of the Other Loans, in whole or in part, to provide funds for
such redemption. Any prepayments by the Company on the Loan
and the Other Loans required to be made to provide funds for
the Lender to make such a redemption shall be made on this
Loan and the Other Loans on a pro rata basis. All payments on
the Loan and the Other Loans pursuant hereto shall be made
directly to the Trustee for deposit into the Issuer Escrow
Account.
(ii) Redemptions to Fund Optional Redemptions of the 7-year Secured
Notes. Under the terms of the Indenture, the 7-year Secured Notes
will be redeemable, at the Lender's option at any time in whole or
from time to time in part upon not less than 30 and not more than
60 days' prior notice mailed by first class mail to the Holders of the
7-year Secured Notes, on any date prior to Maturity at a price equal
to 100% of the principal amount thereof plus accrued and unpaid
interest (including Special Interest, if any, and Additional Amounts,
if any) to the Redemption Date plus the Make-Whole Premium applicable
to the 7-year Secured Notes determined in the manner provided for in
Section 3.7 of the Indenture. The Company shall prepay the 7-year
Tranche of the Loan and of the Other Loans in whole or in part to
provide funds for such redemption. Any prepayments by the Company on
the Loan and the Other Loans required to be made to provide funds for
the Lender to make such a redemption shall be made on the Loan and the
Other Loans on a pro rata basis. All payments on the Loan and the
Other Loans pursuant hereto shall be made directly to the Trustee for
deposit into the Issuer Escrow Account.
D. Excess Proceeds Offers. The Indenture provides in Section 3.10
thereof that if, as of the first day of any calendar month, the
aggregate amount of Sale Excess Proceeds and Loss Excess Proceeds
exceeds 10% of consolidated total assets of the Company, and if the
aggregate amount of Sale Excess Proceeds and Loss Excess Proceeds in
excess of 10% of consolidated total assets of the Company that has not
theretofore been subject to an Excess Proceeds Offer (as defined
below) (the "Excess Proceeds Offer Amount"), totals at least $10
million, the Lender must, not later than the fifteenth Business Day of
such month, make an offer ( an "Excess Proceeds Offer") to purchase
from the Holders of the Secured Notes, pursuant to and subject to the
conditions contained in the Indenture, and from Holders of the New
Senior Notes, pursuant to provisions of the New Senior Note Indenture,
Secured Notes at a purchase price equal to 100% of their principal
amount, plus any accrued interest (including Additional Amounts and
Special Interest, if any) to the date of purchase and New Senior Notes
at a purchase price equal to 100% of their principal amount, plus any
accrued interest (including Special Interest, if any) to the date of
purchase in an aggregate principal amount equal to the Excess Proceeds
Offer Amount (an "Excess Proceeds Payment"). If the Lender is ever
required pursuant to Section 3.10 of the Indenture to make an Excess
Proceeds Offer to the Holders of the Secured Notes to purchase from
such Holders their Secured Notes, and to the Holders of Senior Notes
to purchase from such Holders their New Senior Notes, the Indenture
provides, and the Company agrees, that the Company will prepay the
Loan and the Other Loans on a pro rata basis to permit the Lender to
purchase any Secured Notes validly tendered pursuant to an Excess
Proceeds Offer. All payments on the Loan shall be allocated between
the appropriate Tranches of the Loan; and all payments on the Loan and
the Other Loans pursuant hereto shall be made directly to the Trustee
for deposit into the Issuer Escrow Account.
E. Change of Control. If the Lender is ever required to make pursuant
to the provisions of Section 4.8 of the Indenture a Change of Control
Offer to the Holders of the Secured Notes at a purchase price in cash
equal to 101% of the principal amount thereof plus accrued and unpaid
interest (including Additional Amounts and Special Interest, if any)
thereon, the Indenture provides, and Company agrees, that the Company
will prepay the Loan and the Other Loans on a pro rata basis at a
redemption price equal to 101% of the principal amount hereof being
repaid, plus accrued and unpaid interest, Special Interest, if any,
and Additional Amounts, if any, thereon, in order to provide funds
sufficient to permit the Lender to purchase any Secured Notes validly
tendered pursuant to the foregoing offer to purchase Secured Notes
upon a Change of Control. All payments on the Loan shall be allocated
between the appropriate Tranches of the Loans and all payments on the
Loan and the Other Loans pursuant hereto shall be made directly to the
Trustee for deposit into the Issuer Escrow Account.
F. Notice. The Company shall notify the Lender and the Trustee of
any prepayment to be made pursuant to this Section 2.3 at least two
Business Days prior to such prepayment date.
G. Determination of Amounts of the Tranches Subject to Such
Redemptions. The Lender will submit a written determination to the
Trustee for its approval of the amount (including the pro rata
allocations between the Tranches of the Loan and between the Loan and
the Other Loans) with respect to any such redemption. The Trustee
shall approve or disapprove such allocations in its sole discretion
and such decision shall be conclusive, absent manifest error. A
certificate of the Lender setting forth such determination, with the
written approval of the Trustee thereon, shall be delivered to the
Company at least one Business Day prior to the payment date.
H. Company's Mandatory Prepayment Obligation; Application of
Prepayments. All prepayments shall include payment of accrued
interest (including Special Interest and Additional Amounts, if
applicable) on the principal amount so prepaid and shall be applied to
payment of interest before application to principal.
I. Manner and Time of Payment. Unless otherwise expressly set forth
herein, all payments of principal and interest hereunder and under the
Notes by the Company shall be made without defense, set-off or
counterclaim and in same-day funds and delivered to the Trustee for
deposit into the Issuer Escrow Account, unless otherwise specified,
not later than 10:00 a.m. (New York time) on the date due at the
Payment Office; funds received by the Trustee after that time shall be
deemed to have been paid by the Company on the next succeeding
Business Day.
J. Payments on Non-Business Days. Whenever any payment to be made
hereunder or under the Notes shall be stated to be due on a day which
is not a Business Day, the payment shall be made on the next
succeeding Business Day and such extension of time shall be included
in the computation of the payment of interest hereunder or under the
Loan.
2.4 Use of Proceeds.
A. Loan. The proceeds of the Loan may be applied by the Company to
finance certain costs of acquiring, constructing, repairing and
improving the Mortgaged Rig and, to the extent that such costs have
already been paid, for general corporate purposes.
B. Margin Regulations. No portion of the proceeds of any borrowing
under this Agreement shall be used by the Company in any manner which
might cause the borrowing or the application of such proceeds to
violate the applicable requirements of Regulation U, Regulation T or
Regulation X of the Board of Governors of the Federal Reserve System
or any other regulation of the Board or to violate the Exchange Act,
in each case as in effect on the date or dates of such borrowing and
such use of proceeds.
2.5 Commitment Fee. The Company agrees to pay a commitment fee for the
period from and including the Closing Date to and including the date
of termination specified in Section 2.1.F. on the undrawn portion of
the Loan equal to the average of the daily excess of the Loan
Commitment over the aggregate principal amount of the Loan outstanding
multiplied by 7% per annum, such commitment fee to be calculated on
the basis of a 360-day year consisting of twelve 30-day months and to
be payable semi-annually in arrears on each March 15 and September 15,
commencing September 15, 1999.
SECTION 3 CONDITIONS
3.1 Conditions to Initial Advances on the Loan. The obligation of the
Lender to make the initial advance on the Loan is subject to prior or
concurrent satisfaction of each of the following conditions:
A. On or before the Closing Date, all corporate and other proceedings
taken or to be taken in connection with the transactions contemplated
hereby and all documents incidental thereto not previously found
acceptable by the Lender and the Trustee shall be reasonably
satisfactory in form and substance to the Lender and the Trustee, and
the Lender and the Trustee shall have received the following items,
each of which shall be in form and substance satisfactory to the
Lender and the Trustee and, unless otherwise noted, dated the Closing
Date:
(i) a certified copy of the Company's charter, together with a
certificate of status, compliance, good standing or like certificate
with respect to the Company issued by the appropriate government
officials of the jurisdiction of its incorporation and of each
jurisdiction in which it owns any material assets or carries on any
material business, each to be dated a recent date prior to the Closing
Date;
(ii) a copy of the Company's bylaws, certified as of the Closing
Date by its Secretary or one of its Assistant Secretaries;
(iii) resolutions of the Company's Board of Directors approving and
authorizing the execution, delivery and performance of this Agreement,
the Notes, the Mortgage, each of the other Loan Documents, the
Indenture and any other documents, instruments and certificates
required to be executed by the Company in connection herewith and
therewith and approving and authorizing the execution, delivery and
payment of the Loan, each certified as of the Closing Date by its
Secretary or one of its Assistant Secretaries as being in full force
and effect without modification or amendment;
(iv) signature and incumbency certificates of the Company's officers
executing this Agreement, the Other Loan Documents and the Notes;
(v) executed copies of this Agreement and the Notes substantially in
the form of Exhibit I annexed hereto executed in accordance with
Section 2.1C drawn to the order of the Lender and with appropriate
insertions;
(vi) an originally executed Notice of Borrowing substantially in the
form of Exhibit II annexed hereto, signed by the President or a Vice
President of the Company on behalf of the Company and delivered to the
Lender; and
(vii) originally executed copies of one or more favorable written
opinions of Gardere & Wynne, special counsel for the Company,
substantially in the form of the Exhibit III hereto and addressed to
the Lender, the Trustee and the Initial Purchaser, and such other
opinions of counsel and such certificates or opinions of accountants,
appraisers or other professionals as the Lender, the Trustee or the
Initial Purchaser shall have reasonably requested.
B. The Lender shall have received a fully executed Mortgage in
the form of Exhibit IV hereto, which has been filed in all appropriate
jurisdictions.
C. On or before the Closing Date, all authorizations, consents and
approvals necessary in connection with the Transactions shall have
been obtained and remain in full force and effect and all applicable
waiting periods, if any, under law applicable to the Transactions
shall have expired without any action being taken by any competent
authority (including without limitation, any Tribunal) which
restrains, prevents or imposes materially adverse conditions upon the
completion of the Transactions or the financing thereof and evidence
of the receipt of such authorizations, consents and approvals
satisfactory to the Lender and the Trustee shall have been delivered
to the Lender and the Trustee.
D. On or before the Closing Date, the Indenture and the Purchase
Agreement shall have been executed and delivered by all parties
thereto. No default or event of default shall have occurred under the
Indenture and the Purchase Agreement, all conditions to the execution
delivery and authentication of the Secured Notes thereunder shall have
been satisfied under the Indenture, and all conditions to the purchase
of the Secured Notes by the Initial Purchaser under the Purchase
Agreement have been satisfied or waived by the Initial Purchaser.
E. Simultaneously with the making of the Loan by the Lender, the
Company shall have delivered to the Lender and the Trustee an
Officers' Certificate from the Company in form and substance
satisfactory to the Lender and the Trustee to the effect that (i) the
representations ad warranties of the Company in Section 4 are true,
correct and complete in all material respects on and as of the Closing
Date to the same extent as though made on and as of that date, and
(ii) on or prior to the Closing Date, the Company has performed and
complied with in all material respects all covenants and conditions to
be performed and observed by the Company on or prior to the Closing
Date and
F. No event shall have occurred and be continuing or would result from
the consummation of the borrowing contemplated by the Notice of
Borrowing which would constitute and Event of Default, a Potential
Event of Default or a Default.
G. No order, judgment or decree of any court, arbitrator or
governmental authority shall purport to enjoin or restrain the Lender
from making the Loan.
H. The making of the Loan in the manner contemplated in this Agreement
shall not violate the applicable provisions of Regulation T, U or X of
the Board of Governors of the Federal Reserve Board or any other
regulation of the Board.
3.2 Conditions to Subsequent Advance on the Loan. The obligation of
the Lender to make a subsequent advance on the Loan is subject to the
prior or concurrent satisfaction of each of the following conditions:
A. The Lender and the Trustee shall have received in form and substance
satisfactory to the Lender and the Trustee and dated the date of such
advance an originally executed Notice of Borrowing substantially in
the form of Exhibit II annexed hereto, signed by the President or a
Vice President of the Company on behalf of the Company and delivered
to the Lender.
B. No event shall have occurred and be continuing or would result from
the consummation of the borrowing contemplated by the Notice of
Borrowing which would constitute an Event of Default, a Potential
Event of Default or a Default.
C. No order, judgment or decree of any court, arbitrator or
governmental authority shall purport to enjoin or restrain the Lender
from making the Loan.
D. The making of the Loan in the manner contemplated in this Agreement
shall not violate the applicable provisions of Regulation T, U or X of
the Board of Governors of the Federal Reserve Board or any other
regulation of the Board.
E. Simultaneously with the making of the advance on the Loan by the
Lender, the Company shall have delivered to the Lender and the Trustee
an Officers' Certificate from the Company in form and substance
satisfactory to the Lender and the Trustee to the effect that (i) the
representations and warranties of the Company in Section 4 are true,
correct and complete in all material respects on and as of the date of
such advance to the same extent as though made on and as of that date,
and (ii) on or prior to the date of such advance, the Company has
performed and complied with in all material respects all covenants and
conditions to be performed and observed by the Company on or prior to
the date of such advance.
SECTION 4 REPRESENTATIONS AND WARRANTIES
In order to induce the Lender to enter into this Agreement and
to make the Loan, the Company represents and warrants to the Lender
that, at the time of execution hereof and after consummation of the
making of the Loan and the Transactions, the following statements
are true, correct and complete:
4.1 Organization and Good Standing; Capitalization. The Company is
a corporation duly organized and existing and in good standing under the
laws of its jurisdiction of incorporation. The Company has the
corporate power and authority to own and operate its properties and to
carry on its business as now conducted and as proposed to be conducted
and is duly qualified as a foreign corporation and in good standing in
all jurisdictions in which it is doing business, except where failure
to be so qualified or in good standing, singly or in the aggregated,
has not had and will not have a Material Adverse Effect.
4.2 Authorization and Power. The Company has the corporate power
and requisite authority, and has taken all corporate action necessary,
to consummate the Transactions and to execute, deliver and perform its
obligations under this Agreement, the Mortgage, the other the Loan
Documents, Indenture and each other document and instrument to be
delivered in connection with the Transactions executed or to be
executed by it and to issue the Notes.
4.3 No Conflicts or Consents.
(A) The execution and delivery of the Loan Agreement, the
Notes, the Mortgage, the other Loan Documents and each other
document to be executed and delivered in connection with the
Transactions, the consummation of each of the transactions herein
or therein contemplated, the compliance with each of the terms and
previsions hereof or thereof, and the issuance, delivery and
performance of the Notes, this Agreement, the Mortgage and the
Indenture, do not and will not (i) violate any provision of any law
or any governmental rule or regulation applicable to the Company,
its Certificate of Incorporation or Bylaws or any order, judgment
or decree of any court or other agency of government binding on it,
(ii) conflict with, result in a breach of or constitute (with due
notice or lapse of time or both) a default under any Contractual
Obligation of the Company which could reasonably be expected to
result in a Material Adverse Effect, (iii) result in or require the
creation or imposition of any Lien upon any of the properties or
assets of the Company (other than any Liens created under this
Agreement and the Other Loan Agreements), (iv) require any approval
of stockholders or any approval or consent of any Person under any
Contractual Obligation of the Company except for such approvals or
consents which will be obtained on or before the Closing Date and
disclosed in writing to Lender, the Trustee and the Initial
Purchaser or such approvals or consents the failure to obtain which
could not reasonably be expected to singly or in the aggregate
result in a Material Adverse Effect.
(B) No consent, approval, authorization or order of any
Tribunal or other Person is required in connection with the
execution and delivery by the Company of this Agreement, the Loan
Documents or any other document or instrument to be delivered in
connection with the Transactions or the consummation of the
transactions contemplated hereby or thereby, other than any such
consent, approval, authorization or order which has been obtained
and remains in full force and effect or which has been waived in
writing by the Lender or the failure of which to obtain would not,
singly or in the aggregated, have a Material Adverse Effect.
4.4 Enforceable Obligations. Each of this Agreement, the Notes,
the Mortgage, the other Loan Documents, and each other document or
instrument to be delivered in connection therewith has been duly
authorized; each of this Agreement, the Notes, the Mortgage, the Other
Loan Documents and each other document or instrument to be delivered
in connection therewith to be executed and delivered on or prior to
the Closing Date has been duly executed and delivered by the Company
and each of this Agreement, the Notes, the Mortgage, the Other Loan
Documents and each other document or instrument to be delivered in
connection therewith to be executed and delivered on or prior to the
Closing Date is, and each of this Agreement, the Notes, the Mortgage
and the other Loan Documents to be executed and delivered after the
Closing Date will be, upon such execution and delivery, the legal,
valid and binding obligations of the Company, enforceable in
accordance with their respective terms, except to the extent that the
enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization or similar laws affecting the enforcement
of creditors' rights generally or by general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law)
4.5 Properties; Liens. The Company has good and marketable title
to the Mortgaged Rig and the Other Mortgaged Rigs to the extent specified
in the Other Loan Agreements. Except as permitted by this Agreement,
the Mortgaged Rig is so owned free and clear of Liens.
4.6 No Default. No event has occurred and is continuing which
constitutes a Default, a Potential Event of Default or an Event of
Default.
4.7 Use of Proceeds; Margin Stock, etc. The proceeds of the Loan
will be used solely for the purposes specified herein. None of such
proceeds will be used for the purpose of purchasing or carrying any
Margin Stock within the meaning of the applicable provisions of
Regulation T, U or X, or for the purpose of reducing or retiring any
Indebtedness which was originally incurred to purchase or carry a
Margin Stock or for any other purpose which might constitute this
transaction a "purpose credit" within the meaning of the applicable
provisions of Regulation T, U or X. The Company has not taken nor
will it take any action which might cause any of the Loan Documents to
violate the applicable provisions of Regulation T, U or X, or any
other regulation of the Board of Governors of the Federal Reserve
System.
4.8 Survival of Representations and Warranties. All representations
and warranties in the Loan Documents shall survive delivery of the
Notes and the making of the Loan and shall continue until one year
after repayment of the Notes and the Obligations, and any
investigation at any time made by or on behalf of the Lender shall not
diminish the Lender's right to rely thereon.
SECTION 5 COVENANTS
5.1 Indenture Covenants. Each of the covenants conferred in the
Indenture applicable to the Company and its Restricted Subsidiaries
are incorporated herein by reference. The Company covenants and
agrees that, until the Loan and the Notes and all other amounts due
under this Agreement have been indefeasibly paid in full it shall
perform all covenants applied to it or any of its Restricted
Subsidiaries which are contained in the Indenture.
5.2 Reports of Defaults, Etc. The Company will deliver to each Lender
and the Trustee promptly upon, but in no event more than five (5)
Business Days after, any Officer's obtaining knowledge of any
condition or event which constitutes a Default, an Event of Default or
a Potential Event of Default, an Officer's Certificate specifying the
nature and period of existence of any such condition or event, or
specifying the notice given or the claim of Default, Event of Default,
Potential Event of Default, or the event or condition, and what action
the Company has taken, is taking and proposes to take with respect
thereto;
5.3 Payments in U.S. Dollars. All payments of any Obligations to be
made hereunder or under the Note by the Company or any other obligor
with respect thereto shall be made solely in U.S. Dollars or such
other currency as is then legal tender for public and private debts in
the United States of America.
5.4 Performance and Enforcement Under the Loan Documents. The Company
shall promptly perform all of its obligations under the Loan Documents
and each document and instrument related thereto or delivered in
connection with any thereof, in each case, to the extent within its
control. The Company shall (A) diligently and in good faith promptly
pursue the performance of each other party to each such document, and
(B) diligently seek the enforcement of all rights and remedies under
each such document.
5.5 Liens. The Company shall not, nor shall it cause or permit any of
its Restricted Subsidiaries to, directly or indirectly, create, incur,
assume or permit to exist, any Lien on or with respect to any property
or asset (including the Mortgaged Rig) of the Company or of any of its
Restricted Subsidiaries, whether now owned or hereafter acquired, or
assign or otherwise convey any right to receive any income or profits
therefrom, or file or permit the filing of, or permit to remain in
effect, any financing statement or other similar notice of any Lien
with respect to any such property, asset, income or profits under the
Uniform Commercial Code of any State or under any similar recording or
notice statute, except Liens permitted by the Indenture and Liens
permitted by the Loan Documents.
5.6 Transfer of Mortgage Rig to a Restricted Subsidiary. The Company
shall not, nor shall the Company cause or permit any of its Restricted
Subsidiaries to, directly or indirectly, transfer the Mortgaged Rig to
any Subsidiary of the Company unless (i) such Subsidiary guarantees
all Obligations of the Company under this Agreement and executes a
Mortgage, (ii) the Liens of the Subsidiary's Mortgage and Security
Agreement are perfected and enforceable, and (iii) such Subsidiary
executes a Subsidiary Guarantee pursuant to the Indenture.
SECTION 6 EVENTS OF DEFAULT
If any of the following conditions of events ("Events of
Default") shall occur and be continuing:
6.1 Failure To Make Payments When Due. Failure to pay any installment
of principal including Premium of the Loan when due, whether at stated
maturity, by acceleration, by notice of prepayment or otherwise; or
failure to pay any interest (including Special Interest and Additional
Amounts) on the Loan or any other amount due under this Agreement
continued for 30 days; or
6.2 Default Under The Indenture. An Event of Default occurs and is
continuing under the Indenture; or
6.3 Other Loan Agreement. An Event of Default (as defined in an other
Loan Agreement) occurs and is continuing under such Other Loan
Agreement; or
6.4 Breach of Certain Covenants. Failure of the Company to perform or
comply with any covenant, term or condition contained in Sections 5.2
through 5.6 and Sections 7.3 through 7.5 of this Agreement; or
6.5 Breach of Warranty. Any representation, warranty or certification
made by the Company in any Loan Document or in any statement or
certificate at any time given by the Company in writing pursuant
hereto or thereto or in connection herewith or therewith shall be
false or incorrect in any material respect on the date as of which
made or deemed made; or
6.6 Other Defaults Under Agreement or Loan Documents. The Company
shall default in the performance of or compliance with any covenant,
term or condition contained in this Agreement or the other Loan
Documents (other than those covered by Sections 5.2 through 5.7 and
such default shall not have been remedied or waived in accordance with
Section 7.6 of this Agreement within 30 days after the date of written
notice of such default from the Lender, the Collateral Agent, the
Trustee or the Holder or Holders of not less than 25% in aggregate
principal amount of the Secured Notes then outstanding; or
6.7 Involuntary Bankruptcy; Appointment of Custodian, etc. The entry
by a court having jurisdiction in the premises of (i) a decree or
order for relief in respect of the Company or any Significant
Subsidiary in an involuntary case or proceeding under U.S. bankruptcy
laws, as now or hereafter constituted, or any other applicable
Federal, state, or foreign bankruptcy, insolvency, or other similar
law or (ii) a decree or order adjudging the Company or any Significant
Subsidiary a bankruptcy or insolvent, or approving as properly filed a
petition seeking reorganization, arrangement, adjustment or
composition of or in respect of the Company or any Significant
Subsidiary under U.S. bankruptcy laws, as now or hereafter
constituted, or any other applicable Federal, state or foreign
bankruptcy, insolvency, or similar law, or appointing a custodian,
liquidator, assignee, trustee, sequestrator or other similar official
of the Company or any Significant Subsidiary or of any substantial
part of the Property or assets of the Company or any Significant
Subsidiary, or ordering the winding up or liquidation of the affairs
of the Company or any Significant Subsidiary, and the continuance of
any such decree or order for relief or any such other decree or order
unstayed and in effect for a period of 60 consecutive days; or
6.8 Voluntary Bankruptcy; Appointment of a Custodian, etc. The
commencement by the Company or any Significant Subsidiary of a
voluntary case or proceeding under the U.S. bankruptcy laws, as now or
hereafter constituted, or any other applicable Federal, state or
foreign bankruptcy, insolvency or other similar law or of any other
case or proceeding to be adjudicated a bankrupt or insolvent; or
(ii) the consent by the Company or any Significant Subsidiary to the
entry of a decree or order for relief in respect of the Company or any
Significant Subsidiary in an involuntary case or proceeding under U.S.
bankruptcy laws, as now or hereafter constituted, or any other
applicable Federal, state, or foreign bankruptcy, insolvency or other
similar law or to the commencement of any bankruptcy or insolvency
case or proceeding against the Company or any Significant Subsidiary;
or (iii) the filing by the Company or any Significant Subsidiary of a
petition or answer or consent seeking reorganization or relief under
U.S. bankruptcy laws, as now or hereafter constituted, or any other
applicable Federal, state or foreign bankruptcy, insolvency or other
similar law; or (iv) the consent by the Company or any Significant
Subsidiary to the filing of such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator, assignee,
trustee, sequestrator or similar official of the Company or any
Significant Subsidiary or of any substantial part of the property or
assets of the Company or any Significant Subsidiary, or the making by
the Company or any Significant Subsidiary of an assignment for the
benefit of creditors; or (v) the admission by the Company or any
Significant Subsidiary in writing of its inability to pay its debts
generally as they become due; or (vi) the taking of corporate action
by the Company or any Significant Subsidiary in furtherance of such
action;
THEN (i) upon the occurrence of any Event of Default described
in the foregoing Section 6.7 or 6.8, all of the unpaid principal
amount of and accrued interest on the Loan and all other
outstanding Obligations shall automatically become immediately due
and payable, without presentment, demand, protest, waiver of notice
of intent to accelerate and waiver of notice of such acceleration
or notice of any other kind or other requirements of any kind, all
of which are hereby expressly waived by the Company, and
Obligations and the Loan Commitment of the Lender hereunder shall
thereupon terminate, and (ii) upon the occurrence of any other
Event of Default, the Lender shall, upon written notice of the
Lender, to the Company, upon written notice of the Trustee or the
Collateral Agent to the Company and the Lender, or upon written
notice of a Holder or Holders of the Secured Note or Notes, to the
Company, the Lender, the Collateral Agent and the Trustee, declare
all of the unpaid principal amount of and accrued interest on the
Loan and all other outstanding Obligations to be, and the same
shall forthwith become, due and payable, and the obligations and
Loan Commitments of the Lender hereunder shall thereupon terminate;
provided, however, that upon the occurrence of an Event of Default
described in Section 6.4 of this Agreement or an "event of default"
under Section 6.4 of any Other Loan Agreement, the Lender shall not
declare the Obligations hereunder to be due and payable for a
period of 60 days after notice of the occurrence of such Event of
Default or "event of default." Nevertheless, if at any time after
acceleration of the Maturity of the Loan, the Company shall pay all
arrears of interest and all payments on account of the principal
thereof which shall have become due otherwise than by acceleration
(with interest on principal and, to the extent permitted by law, on
overdue interest, at the rates specified in this Agreement or the
Notes) and all Events of Default and Potential Events of Default
(other than non-payment of principal of and accrued interest on the
Loan and the Notes due and payable solely by virtue of
acceleration) shall be remedied or waived pursuant to Section 7.6,
then the Lender shall, upon receipt of the written notice from the
Collateral Agent and the Trustee of such remedy or waiver, by
written notice to the Company rescind and annul the acceleration
and its consequences; but such action shall not affect any
subsequent Default, Event of Default or Potential Event of Default
or impair any right consequent thereon.
SECTION 7 MISCELLANEOUS
7.1 Pledges and Assignments of Loan and Note. The Lender shall have
the right at any time to sell, pledge, assign, transfer or negotiate
all or any portion of the Note or its Loan Commitment. The Company
acknowledges that the Lender will pledge its rights under this
Agreement, the Notes, the Mortgage and the Other Loan Documents to the
Collateral Agent pursuant to the Issuer Security Agreement to secure
the Lender's obligations under the Indenture and the Secured Notes.
7.2 Expenses. Whether or not the transactions contemplated hereby
shall be consummated, the Company, its successors and assigns agrees
to promptly pay (i) all the actual costs and expenses of preparation
of the Loan Documents and all the costs of furnishing all opinions by
counsel for the Company (including without limitation any opinions
requested by the Lender as to any legal matters arising hereunder),
and of the Company's performance of and compliance with all agreements
and conditions contained herein on its part to be performed or
complied with; (ii) the reasonable fees, expenses and disbursements of
counsel to the Lender and the Trustee and the Collateral Agent, their
successors and assigns (including allocated costs of internal counsel)
in connection with the negotiation, preparation, execution and
administration of the Loan Documents and the Loan hereunder, and any
amendments, modifications and waivers hereto or thereto and consents
to departures from the terms hereof and thereof; and (iii) after the
occurrence of an Event of Default, all costs and expenses (including
reasonable attorneys fees, including allocated costs of internal
counsel, and costs of settlement) incurred by the Lender, its
successors and assigns in enforcing any Obligations of or in
collecting any payments due from the Company hereunder or under the
Notes by reason of such Event of Default or in connection with any
refinancing or restructuring of the credit arrangements provided under
this Agreement in the nature of a "work-out" or of any insolvency or
bankruptcy proceedings.
7.3 Indemnity. In addition to the payment of expenses pursuant to
Section 7.2, whether or not the transactions contemplated hereby shall
be consummated, the Company agrees to indemnify, pay and hold the
Lender, the Collateral Agent, the Trustee and any Holder of the
Secured Notes and holder of the Notes, and each of their officers,
directors, employees, and agents, (collectively called the
"Indemnitees"), harmless from and against any all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits,
claims, costs, expenses and disbursements of any kind or nature
whatsoever (including, without limitation, the fees and disbursements
of counsel for such Indemnitees in connection with any investigative,
administrative or judicial proceeding commenced or threatened, whether
or not such Indemnitee shall be designated as a party thereto), which
may be suffered by imposed on, incurred by, or asserted against that
Indemnitee, in any manner resulting from, connected with, in respect
of, relating to or arising out of this Agreement, the Notes, the
Mortgage, the Lender's agreement to make the Loan or the use or
intended use of any of the proceeds of the Loan hereunder or the
Transactions (the "indemnified liabilities"); provided, however, that
the Company shall have no obligation to an Indemnitee hereunder with
respect to indemnified liabilities (i) to the extent such is finally
judicially determined to have resulted solely from (A) the gross
negligence or willful misconduct of that Indemnitee or (B) the failure
of such Indemnitee to perform its obligations under any Loan Document
or (C) such Indemnitee's violation of law or (ii) in connection with
the obligations of any Indemnitee under any Loan Document. To the
extend that the undertaking to indemnify, pay and hold harmless set
forth in the preceding sentence may be unenforceable because it is
violative of any law or public policy, the Company shall contribute
the maximum portion which it is permitted to pay and satisfy under
applicable law to the payment and satisfaction of all indemnified
liabilities incurred by the Indemnitees or any of them.
7.4 Additional Amounts. Except to the extent required by any applicable
law, regulation law, regulation or governmental policy, any and all
payments of, or in respect of the Loan, this Agreement, the Notes, any
Loan Document or any Secured Note shall be made free and clear of and
without deduction for or on account of any and all present or future
taxes, levies, imposts, deduction, charges or withholdings and all
liabilities with respect thereto imposed by Panama, The Bahamas, The
Marshall Islands or any other jurisdiction with which the Company or
any Subsidiary has some connection (including any jurisdiction (other
than the United States of America) from or through which payments
under this Agreement, the Notes, any Loan Document, the Guarantee or
the Secured Notes are made) or any political subdivision of or any
taxing authority in any such jurisdiction ("Panamanian Taxes,"
"Bahamian Taxes," "MI Taxes," or "Other Taxes," respectively). If the
Lender, the Company or any Subsidiary Guarantor shall be required by
law to withhold or deduct any Panamanian Taxes, Bahamian Taxes, MI
Taxes, or Other Taxes from or in respect of any sum payable under this
Agreement, the Notes, any Loan Document, the Guarantee or the Secured
Notes, the sum payable by the Company or such Subsidiary Guarantor, as
the case may be, thereunder shall be increased by the amount
("Additional Amounts") necessary so that after making all required
withholdings and deductions, Lender or any Holder or beneficial owner
of Secured Notes shall receive an amount equal to the sum that it
would have received had not such withholdings and deductions been
made; provided that any such sum shall not be paid in respect of any
Panamanian Taxes, Bahamian Taxes, MI Taxes or Other Taxes to a Holder
(an "Excluded Holder") (i) resulting from the beneficial owner of such
Secured Note carrying on business or being deemed to carry on business
in or through a permanent establishment or fixed base in the relevant
taxing jurisdiction or having any other connection with the relevant
taxing jurisdiction or any political subdivision thereof or any taxing
authority therein other than the mere holding or owning of such
Secured Note, being a beneficiary of the Guarantee or any applicable
Subsidiary Guarantee, the receipt of any income or payments in respect
of such Secured Note, the Loan, the Guarantee or any applicable
Subsidiary Guarantee or the enforcement of such Secured Note, the
Loan, the Guarantee or any applicable Subsidiary Guarantee, or (ii)
that would not have been imposed but for the presentation (where
presentation is required) of such Secured Note for payment more than
180 days after the date such payment became due and payable or was
duly provided for, whichever occurs later. The Lender, the Company or
the Subsidiary Guarantors, as applicable, will also (i) make such
withholding or deduction and (ii) remit the full amount deducted or
withheld to the relevant authority in accordance with applicable law,
and, in any such case, the Lender is required to furnish under the
Indenture to each Holder on whose behalf an amount was so remitted,
within 30 calendar days after the date the payment of any Panamanian
Taxes, Bahamian Taxes, MI Taxes or Other Taxes is due pursuant to
applicable law, certified copies of tax receipts evidencing such
payment by the Lender, the Company or the Subsidiary Guarantors, as
applicable. The Company will, upon written request of each Holder
(other than an Excluded Holder), reimburse each such holder for the
amount of (i) any Panamanian Taxes, Bahamian Taxes, MI Taxes or Other
Taxes so levied or imposed and paid by such Holder as a result of
payments made under or with respect to any Secured Notes, and (ii) any
Panamanian Taxes, Bahamian Taxes, MI Taxes or Other Taxes so levied or
imposed with respect to any reimbursement under the foregoing clause
(i) so that the net amount received by such Holder (net of payments
made under or with respect to such Secured Notes, the Loan, the
Guarantee or the applicable Subsidiary Guarantees) after such
reimbursement will not be less than the net amount the Holder would
have received if Panamanian Taxes, Bahamian Taxes, MI Taxes or Other
Taxes on such reimbursement had not been imposed.
At least 30 calendar days prior to each date on which any
payment under or with respect to the Secured Notes is due and
payable, if the Lender, the Company or the Subsidiary Guarantors,
as applicable, will be obligated to pay Additional Amounts with
respect to such payment, the Lender, the Company or the Subsidiary
Guarantors, as applicable, will deliver to the Trustee an officer's
certificate stating the fact that such Additional Amounts will be
payable and the amounts will be payable and the amounts so payable
and will set forth such other information necessary to enable the
Trustee to pay such Additional Amounts to Holders on the payment
date.
7.5 Taxes and Other Taxes.
A. Any and all payments by the Company hereunder or under any of the
other Loan Documents shall be made free and clear of and without
deduction or withholding for any and all present or future Taxes,
unless such Taxes are required by law or the administration thereof to
be deducted or withheld and excluding (a) in the case of each Lender,
Taxes imposed on its net income and franchise taxes or taxes on gross
receipts and capital imposed on it by the jurisdiction under the laws
of the United States or any political subdivision thereof (all such
nonexcluded Taxes being hereinafter referred to as "Covered Taxes").
If the Company shall be required by Law or the administration thereof
to deduct or withhold any Covered Taxes from or in respect of any sum
payable hereunder or under any other Loan Documents, the sum payable
shall be increased as may be necessary so that after making all
required deductions or withholdings (including deductions or
withholdings applicable to additional amounts paid under this
paragraph), the Lender receives an amount equal to the sum it would
have received if no such deduction or withholding had been made;
(b) the Company shall make such deductions or withholdings; and
(c) the Company forthwith shall pay the full amount deducted or
withheld to the relevant taxation or other authority in accordance
with applicable Law.
B. The Company agrees to pay forthwith any present or future stamp
documentary taxes or any other excise or property taxes charges or
similar levies (all such taxes, charges and levies being herein
referred to as "Other Taxes") imposed by any jurisdiction (or any
political subdivision or taxing authority thereof or therein) which
arise from any payment made by the Company hereunder or under any of
the other Loan Documents or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement or any
of the other Loan Documents.
C. The Company agrees to indemnify the Lender for the full amount of
Covered Taxes or Other Taxes not deducted or withheld and paid by the
Company in accordance with Section 7.5(A) and (B) to the relevant
taxation or other authority and any Taxes other than Covered Taxes or
Other Taxes imposed by any jurisdiction on amounts payable by the
Company under this Section 7.5 paid by the Lender and any liability
(including penalties, interest and expenses) arising therefrom or with
respect thereto, whether or not any such Taxes or Other Taxes were
correctly or legally asserted. Payment under this indemnification
shall be made within 30 days from the date the Lender makes written
demand therefor. A certificate as to the amount of such Taxes or
Other Taxes and evidence of payment thereof submitted to the Company
shall be prima facie evidence, absent manifest error, of the amount
due from the Company to the Lender.
D. The Company shall furnish to the Lender the original or a certified
copy of a receipt evidencing any payment of Taxes or Other Taxes made
by the Company as soon as such receipt becomes available.
E. The provisions of this Section 7.5 shall survive the termination
of the Agreement and repayment of all Obligations.
7.6 Amendments and Waivers. No amendment, modification, termination
or waiver of any term or provision of this Agreement, of the Note, the
Mortgage or any Other Loan Document or consent to any departure by the
Company therefrom, shall in any event be effective without the prior
written concurrence of the Company, the Lender, the Collateral Agent
and the Trustee, and, upon the request of the Lender, the Collateral
Agent or the Trustee, the receipt of a written opinion of counsel of
the Company addressed to the Lender, the Collateral Agent and the
Trustee to the effect that such amendment, modification, termination,
waiver or consent does not violate or conflict with any of the terms
and provisions of the Indenture or any Contractual Obligations of the
Company.
7.7 Independence of Covenants. All covenants hereunder shall be
given independent effect so that if a particular action or condition is
not permitted by any of such covenants, the fact that it would be
permitted by an exception to, or be otherwise within the limitation
of, another covenant shall not avoid the occurrence of an Event of
Default or Potential Event of Default if such action is taken or
condition exists.
7.8 Notices. Unless otherwise provided herein, any notice or other
communications herein required or permitted to be given shall be in
writing and may be personally served, telecopied or sent by mail and
shall be deemed to have been given when delivered in person, upon
receipt of telecopy against receipt of answer back or four Business
Days after depositing it in the mail, registered or certified, with
postage prepaid and properly addressed; provided, however, that
notices shall not be effective until received. For the purposes
hereof, the addresses of the parties hereto (unless notice of a change
thereof is delivered as provided in this Section 7.8) shall be set
forth under each party's name on the signature pages hereto.
7.9 Survival of Warranties and Certain Agreements. All agreements,
representations and warranties made herein and in the other Loan
Documents shall survive the execution and delivery of this Agreement
and in the other Loan Documents, the making of the Loan hereunder and
the execution and delivery of the Notes or the Loan Documents and,
notwithstanding the making of the Loan, the execution and delivery of
the Notes and the other Loan Documents or any investigation made by or
on behalf of any party, shall continue in full force and effect. The
closing of the transactions herein contemplated shall not prejudice
any right of one party against any other party in respect of anything
done or omitted hereunder or in respect of any right to damages or
other remedies.
7.10 Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of the Lender or the holder of the Notes
or the Trustee in the exercise of any power, right or privilege or be
construed to be a waiver of any default or acquiescence therein, nor
shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or of any other
right, power or privilege. All rights and remedies existing under
this Agreement, the Notes or any other Loan Document are cumulative to
and not exclusive of any rights or remedies otherwise available.
7.11 Severability. In case any provision in or obligation under this
Agreement, under a Guarantee or the Notes shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any
way be affected or impaired thereby.
7.12 Headings. Section and Section headings in this Agreement are
included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given
any substantive effect.
7.13 Applicable Law. THIS AGREEMENT, EACH LOAN DOCUMENT OTHER
THAN THE MORTGAGE AND THE NOTES SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW.
7.14 Successors and Assigns; Subsequent Holders of Notes. This
Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of
the parties hereto and the successors and assigns of the Lenders. The
terms and provisions of this Agreement and each Loan Document shall
inure to the benefit of any assignee or transferee of the Notes
pursuant to Section 7.1, and in the event of such transfer or
assignment, the rights and privileges herein conferred upon the Lender
shall automatically extend to and be vested in such transferee or
assignee, all subject to the terms and conditions hereof. The
Company's rights or any interest therein hereunder may not be assigned
without the prior express written consent of the Lender and the
Trustee.
7.15 Counterparts; Effectiveness. This Agreement and any amendments,
waivers, consents or supplements may be executed in any number of
counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one
and the same instrument. This Agreement shall become effective upon
the execution of a counterpart hereof by each of the parties hereto.
7.16 Consent to Jurisdiction; Venue; Waiver of Jury Trial.
A. Any legal action or proceeding with respect to this Agreement, any
Note or any 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
parties to this Agreement hereby irrevocably accepts for itself and in
respect of its respective property, generally and unconditionally, the
jurisdiction of the aforesaid courts. Each of the parties to this
Agreement hereby further irrevocably waives any claim that any such
courts lack jurisdiction over itself, and agrees not to plead or
claim, in any legal action or proceeding with respect to this
Agreement, the Notes or Loan Documents brought in any of the aforesaid
courts, that any such court lacks jurisdiction over such party. Each
of the parties to this Agreement irrevocably consents to the service
of process in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to such
party, at its respective address for notices pursuant to Section 7.8,
such service to become effective 30 days after such mailing. To the
extent permitted by law, each of the parties to this Agreement hereby
irrevocably waives any objection to such service of process and
further irrevocably waives and agrees not to plead or claim in any
action or proceeding commenced hereunder or under the Notes or any
Loan Document that service of process was in any way invalid or
ineffective. Nothing herein shall affect the right of any party to
this Agreement to serve process in any other manner permitted by law
or to commence legal proceedings or otherwise proceed against any
party in any other jurisdiction.
B. Each of the parties to this Agreement hereby irrevocably waives any
objection which it may now or hereafter have to the laying of venue of
any of the aforesaid any of actions or proceedings arising out of or
in connection with this Agreement, the Notes or any of the Loan
Documents brought in the courts referred to in clause A above and
hereby further irrevocably waives and agrees not to plead or claim in
any such court that any such action or proceeding brought in any such
court has been brought in an inconvenient forum.
C. Each of the parties to this Agreement hereby irrevocably waives all
right to a trial by jury in any action, proceeding or counterclaim
arising out of or relating to this Agreement, the Notes or the Loan
Documents or the transactions contemplated hereby or thereby.
7.17 Waiver of Stay, Extension or Usury Laws. The Company covenants
(to the extent that it may lawfully do so) that it will not at any
time insist upon, plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law or any usury law or
other law that would prohibit or forgive the Company from paying all
or any portion of the principal of or interest on the Loan as
contemplated herein, wherever enacted, now or at the time hereafter in
force, or which may affect the covenants or the performance of this
Agreement and (to the extent that it may lawfully do so), the Company
hereby expressly waives all benefit or advantage of any such law, and
covenants that it will not hinder, delay or impede the execution of
any power herein granted to the Lender, but will suffer and permit the
execution of every such power as though no such law had been enacted.
7.18 Usury Savings Clause. It is the intention of the parties hereto
to comply with applicable usury laws (now or hereafter enacted);
accordingly, notwithstanding any provision to the contrary in this
Agreement, any Note, any of the other Loan Documents or any other
document related hereto or thereto, in no event shall this Agreement
or any such other document require the payment or permit the
collection of interest in excess of the maximum amount permitted by
such laws. If from any circumstances whatsoever, fulfillment of any
provision of this Agreement, any Note, any of the other Loan Documents
or of any other document pertaining hereto or thereto, shall involve
transcending the limit of validity prescribed by applicable law for
the collection or charging of interest, then, ipso facto, the
obligation to be fulfilled shall be reduced to the limit of such
validity, and if from any such circumstances the Lender shall ever
receive anything of value as interest or deemed interest by applicable
law under this Agreement, any Note, any of the other Loan Documents or
any other document pertaining hereto or otherwise an amount that would
exceed the highest lawful rate, such amount that would be excessive
interest shall be applied to the reduction of the principal amount
owing under the Loan or on account of any other indebtedness of the
Company, and not to the payment of interest, or if such excessive
interest exceeds the unpaid balance of principal of such indebtedness,
such excess shall be refunded to the Company. In determining whether
or not the interest paid or payable with respect to any indebtedness
of the Company to Lender under any specified contingency, exceeds the
highest lawful rate, the Company and the Lender shall, to the maximum
extent permitted by applicable law, (a) characterize any non-principal
payment as an expense, fee or premium rather than as interest,
(b) exclude voluntary prepayments and the effects thereof,
(c) amortize, prorate, allocate and spread the total amount of
interest thereon does not exceed the maximum amount permitted by
applicable laws, and/or (d) allocate interest throughout the full term
of such indebtedness so that interest between portions of such
indebtedness, to the end that no such portion shall bear interest at a
rate greater than that permitted by applicable law.
WITNESS the due execution hereof by the respective duly
authorized officers of the undersigned as of the date first written
above.
COMPANY:
R&B FALCON CORPORATION
By:
Name: Robert Fulton
Title: Executive Vice President
Notice Address:
901 Threadneedle
Houston, TX 77079-2982
Telephone: (281) 496-5000
Telecopy: (281) 496-0285
LENDER:
RBF FINANCE CO.
By:
Name: Leighton Moss
Title: Vice President
Notice Address:
901 Threadneedle
Houston, TX 77079-2982
Telephone: (281) 496-5000
Telecopy: (281) 597-7556
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Exhibit I
R&B FALCON CORPORATION
SENIOR SECURED ___- YEAR TRANCHE PROMISSORY NOTE
New York, New York
$______________ March 26, 1999
FOR VALUE RECEIVED, R&B FALCON CORPORATION (the "Company"),
promises to pay to the order of RBF FINANCE CO. ("Payee"), the
principal amount of _________________________ Dollars ($_____________)
(or such lesser amount as shall equal the aggregate unpaid principal
amount of the __-year Tranche advances of the Loan) at the times
specified by the provisions of the Senior Secured Credit Agreement
dated as of March 26, 1999, as the same may at any time be amended,
modified or supplemented and in effect (the "Loan Agreement") between
the Company and the Lender.
The Company also promises to pay interest on the unpaid principal
amount hereof from the date hereof until paid in full at the rates and
at the times which shall be determined in accordance with the
provisions of the Loan Agreement.
This Note is issued pursuant to and entitled to the benefits of
the Loan Agreement, to which reference is hereby made for a more
complete statement of the terms and conditions under which the Loan
evidenced hereby was made and is to be repaid. Capitalized terms used
herein without definition shall have the meanings set forth in the
Loan Agreement.
The Senior Secured Credit Agreement dated as of March 26, 1999,
as the same may at any time be amended, modified or supplemented and
in effect (the "Loan Agreement") between the Company, the Lender named
therein, and United States Trust Company of New York, as Trustee.
All payments of principal and interest in respect of this Note
shall be made in lawful money of the United States of America in same
day funds to Payee at the office of United States Trust Company of New
York located at 114 West 47th Street, 25th Floor, New York, New York,
or at such other place in the State of New York as shall be designated
in writing for such purpose in accordance with the terms of the Loan
Agreement. Each of Payee and any subsequent holder of this Note
agrees, by its acceptance hereof, that before disposing of this Note
or any part hereof it will make a notation hereon of all principal
payments previously made hereunder and of the date to which interest
hereon has been paid; provided, however, that the failure to make a
notation of any payment made on this Note shall not limit or otherwise
affect the obligation of the Company hereunder with respect to
payments of principal or interest on this Note.
Whenever any payment on this Note shall be stated to be due on a
day which is not a Business Day, such payment shall be made on the
next succeeding Business Day and such extension of time shall be
included in the computation of the payment of interest on this Note.
This Note is subject to mandatory prepayment as provided in the
Loan Agreement and prepayment at the option of the Company as provided
in the Loan Agreement.
THE LOAN AGREEMENT AND THIS NOTE SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK WITHOUT REGARD TO THE PRINCIPALS OF CONFLICTS OF LAWS.
Upon the occurrence of an Event of Default, the unpaid balance of
the principal amount of this Note, together with all accrued but
unpaid interest thereon, may become, or may be declared to be, due and
payable in the manner, upon the conditions and with the effect
provided in the Loan Agreement.
The terms of this Note are subject to amendment only in the
manner provided in the Loan Agreement.
No reference herein to the Loan Agreement and no provision of
this Note or the Loan Agreement shall alter or impair the obligation
of the Company, which is absolute and unconditional, to pay the
principal of and interest on this Note at the place, at the respective
times, and in the currency herein prescribed.
The Company promises to pay all costs and expenses, including all
attorneys' fees, all as provided in Section 7.2 of the Loan Agreement,
incurred in the collection and enforcement of this Note. The Company
and endorsers of this Note hereby consent to renewals and extensions
of time at or after the maturity hereof, without notice, and hereby
waive diligence, presentment, protest, demand and notice of every kind
and, to the full extent permitted by law, the right to plead any
statute of limitations as a defense to any demand hereunder.
IN WITNESS WHEREOF, the Company has caused this Note to be
executed and delivered by its duly authorized officer, as of the day
and year and at the place first above written.
R&B FALCON CORPORATION
By:
Title:
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EXHIBIT II
NOTICE OF BORROWING
The undersigned hereby certifies that he is the __________________
of R&B Falcon Corporation, a Delaware corporation ( the "Company"),
and that as such he is authorized to execute this Notice of
Borrowing on behalf of the Company. With reference to that certain
Loan Agreement dated as of _______________, 1999 (as same may be
amended, modified, increased, supplemented and/or restated from time
to time, the "Agreement") entered into by and between the Company
and RBF Finance Co., and any other future holder of any Note issued
pursuant to the Agreement ("Lender"), the undersigned further
certifies, represents and warrants on behalf of the Company that all
of the foregoing statements are true and correct (each capitalized
term used herein having the same meaning given to it in the
Agreement unless otherwise specified):
(a)The Company requests that the Lender make an advance to the Company
on the 7-year Tranche of the Loan in the aggregate principal amount of
$_________________ and an advance to the Company on the 10-year
Tranche of the Loan in the aggregate principal amount of $__________
by no later than _______________. Immediately following such advance,
the aggregate outstanding balance of advances made on the 7-year
Tranche and the 10-year Tranche Loan shall equal $_______________ and
$___________, respectively.
(b)As of the date hereof, and as a result of the making of the
requested advance, no event shall have occurred and be continuing or
would result from the consummation of the borrowing contemplated by
the Notice of Borrowing which would constitute an Event of Default, a
Potential Event of Default or a Default.
(c)Borrower has performed and complied with all agreements and
conditions contained in the Agreement which are required to be
performed or complied with by Borrower before or on the date hereof
and, except as waived in writing or otherwise agreed to in writing by
the Lender, all of the conditions precedent set forth in Section 3.1
or 3.2, as applicable, of the Agreement under Conditions to Loan have
been satisfied.
(d)The representations and warranties of the Company contained in
Section 4 of the Agreement are true, correct and complete in all
material respects on and as of the date hereof to the same extent as
though made on and as of that date, and (ii) on or prior to the date
hereof, the Company has performed and complied with in all material
respects all covenants and conditions to be performed and observed by
the Company on or prior to the date hereof.
EXECUTED AND DELIVERED this _______ day of _____________, _____.
R&B FALCON CORPORATION
By:
Name:
Title:
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EXHIBIT III
FORM OF LEGAL OPINION
Opinions of Counsel that (i) the Company has duly authorized,
executed and delivered the Mortgage; (ii) the Mortgage constitutes a
legally binding obligation of the Company enforceable against the
Company in accordance with its terms (except as (i) the enforceability
thereof may be limited bankruptcy, insolvency or other similar laws
affecting creditors' rights, generally, and (ii) the enforceability
thereof may be limited by right of acceleration and the availability
of enforceable remedies may be limited by equitable principles of
general applicability, and subject to such other exceptions,
limitations or qualifications that are usual and customary for such
opinions) and (iii) the Mortgage constitutes a valid and perfected
first mortgage lien on the Mortgaged Rig.
EXHIBIT 10.2
[PEREGRINE II]
=========================================================================
SENIOR SECURED LOAN AGREEMENT
Dated as of
March 26, 1999
between
R&B FALCON CORPORATION,
as Borrower
and
RBF FINANCE CO.,
as Lender
=========================================================================
TABLE OF CONTENTS
Page
SECTION 1.DEFINITIONS
1.1.Certain Defined Terms
1.2.Other Defined Terms
1.3.Accounting Terms
1.4.Other Definitional Provisions
SECTION 2.LOAN COMMITMENT AND LOAN
2.1.Termination of Loan Commitment
2.2.Termination of Loan Commitment
2.3.Interest on the Loans
2.4.Redemptions
2.5.Excess Proceeds Offers
2.6.Use of Proceeds
2.7.Commitment Fee
SECTION 3.CONDITIONS
3.1.Conditions to Initial Advances on the Loan
3.2.Conditions to Subsequent Advance on the Loan
SECTION 4.REPRESENTATIONS AND WARRANTIES
4.1.Organization and Good Standing; Capitalization
4.2.Authorization and Power
4.3.No Conflicts or Consents
4.4.Enforceable Obligations
4.5.Properties; Liens
4.6.No Default
4.7.Use of Proceeds; Margin Stock, etc
4.8.Survival of Representations and Warranties
SECTION 5.COVENANTS
5.1.Indenture Covenants
5.2.Reports of Defaults, Etc
5.3.Payments in U.S. Dollars
5.4.Performance and Enforcement Under the Loan Documents
5.5.Liens
5.6.Transfer of Mortgage Rig to a Restricted Subsidiary
SECTION 6.EVENTS OF DEFAULT
6.1.Failure To Make Payments When Due
6.2.Default Under The Indenture
6.3.Other Loan Agreement
6.4.Breach of Certain Covenants
6.5.Breach of Warranty
6.6.Other Defaults Under Agreement or Loan Documents
6.7.Involuntary Bankruptcy; Appointment of Custodian, etc
6.8.Voluntary Bankruptcy; Appointment of a Custodian; etc
SECTION 7.MISCELLANEOUS
7.1.Pledges and Assignments of Loan and Note
7.2.Expenses
7.3.Indemnity
7.4.Additional Amounts
7.5.Taxes and Other Taxes
7.6.Amendments and Waivers
7.7.Independence of Covenants
7.8.Notices
7.9.Survival of Warranties and Certain Agreements
7.10.Failure or Indulgence Not Waiver; Remedies Cumulative
7.11.Severability
7.12.Headings
7.13.Applicable Law
7.14.Successors and Assigns; Subsequent Holders of Notes
7.15.Counterparts; Effectiveness
7.16.Consent to Jurisdiction; Venue; Waiver of Jury Trial
7.17.Waiver of Stay, Extension or Usury Laws
7.18.Usury Savings Clause
EXHIBITS
I FORM OF NOTE
II FORM OF NOTICE OF BORROWING
III FORM OF OPINION OF GARDERE & WYNNE - SPECIAL COUNSEL FOR THE
BORROWER
IV FORM OF MORTGAGE
- -------------------------------------------------------------------------
This Senior Secured Loan Agreement is dated as of March 26, 1999,
and entered into by and among R&B Falcon, Inc., a Delaware corporation
(the "Company") and RBF Finance Co., a Delaware corporation (the
"Lender").
RECITALS
WHEREAS, the Lender has entered into an Indenture of even date
herewith (as the same may be amended, or supplemented or otherwise
modified from time to time, the "Indenture") with United States Trust
Company of New York as Trustee (the "Trustee"), pursuant to which the
Lender will issue in two series up to $400,000,000 aggregate principal
amount of its 11% Senior Secured Notes due 2006 (the "7-year Secured
Notes") and up to $400,000,000 aggregate principal amount of its
11 3/8% Senior Secured Notes due 2009 (the "10-year Secured Notes;" the
7-year Secured Notes and the 10-year Secured Notes being hereinafter
collectively called the "Secured Notes"); and
WHEREAS, the Indenture provides that the Lender may utilize the
proceeds of the Secured Notes to make loans to the Company, each for
the purpose of either (i) financing all or a portion of the cost of
acquiring, constructing, altering, improving or repairing a drilling
rig or drillship (a "Rig") or improvements used or to be used in
connection with such a Rig, or (ii) financing all or any part of the
purchase price of the Rig or improvements used or to be used in
connection with such Rig, which indebtedness is incurred prior to or
within one year after the date of the completion of construction,
alteration, improvement or repair or the commencement of commercial
operations thereof; and
WHEREAS, the Company desires that the Lender extend senior
secured credit facilities to the Company for such purposes herein; and
WHEREAS, the Indenture provides that the Lender will enter into a
Senior Secured Note Security and Pledge Agreement of even date
herewith (the "Issuer Security Agreement") between the Lender, the
Trustee and United States Trust Company of New York as Collateral
Agent (in such capacity, the "Collateral Agent"), pursuant to which
the Lender will pledge and grant a security in the loans made with the
proceeds of the Secured Notes which are or will be secured by Rigs;
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, the parties
hereby agree as follows:
SECTION 1 DEFINITIONS
1.1 Certain Defined Terms. The following terms used in this Agreement
shall have the following meanings:
"Agreement" means this Senior Secured Loan Agreement dated as of
March 26, 1999, as it may be amended, supplemented or otherwise
modified from time to time in accordance with the terms hereof.
"Board of Directors" means, with respect to any Person, the Board
of Directors of such Person or any duly authorized committee of that
Board.
"Board Resolution" means a duly adopted resolution of the Board
of Directors of the Company in full force and effect at the time of
determination and certified as such by the Secretary or Assistant
Secretary of the Company.
"Business Day" means any day excluding Saturday, Sunday and any
day which is a legal holiday under the laws of New York, New York or
is a day on which banking institutions therein located are authorized
or required by law or other governmental action to close.
"Cash Equivalents" means (i) U.S. Governmental Obligations with a
maturity of four years or less; (ii) commercial paper issued by any
corporation if such commercial paper has credit ratings of at least "A-
1" from S&P or at least "P-1" by Moody's; (iii) certificates of
deposit, bankers' acceptances, time deposits, Eurocurrency Deposits
and similar types of Investments routinely offered by commercial banks
with final maturities of one year or less issued by commercial banks
having combined capital and surplus in excess of $100,000,000; and
(iv) shares in money market mutual or similar funds having assets in
excess of $100,000,000.
"Closing Date" means the date on or before March 26, 1999 on
which the initial advance of the Loan is made and the conditions set
forth in Section 3.1 are satisfied or waived in accordance with
Section 7.7.
"Collateral" means the Mortgaged Rig and any other property
subject to the Lien created under a Mortgage or a Loan Document.
"Commission" means the Securities and Exchange Commission.
"Company" has the meaning ascribed to such term in the
introduction to this Agreement.
"Collateral Agent" has the meaning assigned to such term in the
recitals to this Agreement.
"Contractual Obligation," as applied to any Person, means any
provision of any Security issued by that Person or of any indenture,
mortgage, deed of trust, contract, undertaking, agreement or other
instrument to which that Person is a party or by which it or any of
its properties is bound or to which it or any of its properties is
subject.
"Dollars" or the sign "$" means the lawful money of the United
States of America.
"Event of Default" means each of the events set forth in
Section 6.
"indemnified liabilities" has the meaning ascribed to such term
in Section 7.3.
"Indemnitees" has the meaning ascribed to such term in
Section 7.3.
"Indenture" has the meaning ascribed to such term in the recitals
of this Agreement.
"Laws" means all applicable statutes, laws, ordinances,
regulations, rules, orders, judgments, writs, injunctions or decrees
of any state, commonwealth, nation, territory, possession, province,
county, parish, town, township, village, municipality or Tribunal, and
"Law" means each of the foregoing.
"Lender" has the meaning ascribed to that term in the
introduction of this Agreement and shall include any assignee of the
Loan or the Note or Loan Commitment to the extent of such assignment.
"Lien" means any lien, mortgage, pledge, assignment, security
interest, charge or encumbrance of any kind (including any conditional
sale or other title retention agreement, any lease in the nature
thereof, and any agreement to give any security interest) and any
option, trust or other preferential arrangement having the practical
effect of any of the foregoing.
"Loan" means, collectively, the loans made by the Lender pursuant
to Section 2.1.
"Loan Documents" means this Agreement, the Note and the Mortgage.
"Margin Stock" has the meaning assigned to that term in
Regulation U of the Board of Governors of the Federal Reserve System
as in effect from time to time.
"Material Adverse Effect" means (i) a material adverse effect
upon the business, property, assets, nature of assets, liabilities
condition (financial or otherwise), results of operation or prospects
of the Company and its Restricted Subsidiaries, taken as a whole, or
(ii) the impairment of the ability of the Company or any of its
Restricted Subsidiaries to perform, or the impairment of the ability
of Lender to enforce, any material right or remedy under the
Obligations.
"Maturity" means the date on which the principal of the Loan,
whether the 7-year Tranche or 10-year Tranche or both, becomes due and
payable as provided in this Agreement whether at Stated Maturity, upon
redemption, by declaration of acceleration or otherwise.
"Mortgage" means a mortgage substantially in the form of Exhibit
IV covering the Mortgaged Rig.
"Mortgaged Rig" means the Peregrine II.
"Notes" has the meaning ascribed to such term in Section 2.1C.
"Notice of Borrowing" means a notice substantially in the form of
Exhibit II annexed hereto with respect to a proposed borrowing.
"Obligations" means all obligations of every nature of the
Company from time to time owed to the Lender under the Loan Documents,
whether for principal, reimbursements, interest (including
post-petition interest), fees, expenses, indemnities or otherwise, and
whether primary, secondary, direct, indirect, contingent, fixed or
otherwise (including obligations of performance).
"Officer" means the Chairman of the Board, the Chief Executive
Officer, the Chief Operating Officer, the President, any Vice
President, the Chief Financial Officer, the Controller, the Chief
Accounting Officer, any Vice President, the Treasurer or the Secretary
of the Company.
"Officers' Certificate" means, as applied to any corporation, a
certificate executed on behalf of such corporation by two officers;
provided, however, that every Officers' Certificate with respect to
the compliance with a condition precedent to the making of the Loans
hereunder shall include (i) a statement that the officer or officers
making or giving such Officers' Certificate have read such condition
and any definitions or other provisions contained in this Agreement
relating thereto, (ii) a statement that, in the opinion of the
signers, they have made or have caused to be made such examination or
investigation as is necessary to enable them to express an informed
opinion as to whether or not such condition has been complied with,
and (iii) a statement as to whether, in the opinion of the signers,
such condition has been complied with.
"Other Loan" means a loan made pursuant to an Other Loan
Agreement by the Lender with the proceeds of the Secured Notes which
is secured by a Mortgaged Rig.
"Other Loan Agreement" means a loan agreement among the Lender,
the Company and the Trustee pursuant to which the Lender will utilize
the proceeds of the Secured Notes to make an Other Loan for the
purposes specified in the second recital of this Agreement
"Other Mortgaged Rig" means a Rig which has been mortgaged to
secure an Other Loan or which is the subject of a construction
contract which has been pledged to secure an Other Loan.
"Other Taxes" has the meaning ascribed to such term in
Section 7.6.
"Payment Office" shall mean the office of United States Trust
Company of New York located at 114 West 47th Street, 25th Floor, New
York, New York 10036 or such other office in the State of New York as
the Lender may designate to the Company and the Trustee from time to
time.
"Potential Event of Default" means a condition or event which,
after notice or lapse of time or both, would constitute an Event of
Default if that condition or event were not cured or removed within
any applicable grace or cure period.
"Purchase Agreement" means the Purchase Agreement dated March 19,
1999 among the Lender, the Company and the Initial Purchaser relating
to the Secured Notes.
"Securities" means any stock, shares, partnership interests,
voting trust certificates, certificates of interest or participation
in any profit sharing agreement or arrangement, bonds, debentures,
options, warrants, notes, or other evidences of indebtedness, secured
or unsecured, convertible, subordinated or otherwise, or in general
any instruments commonly known as "securities" or any certificates of
interest, shares or participations in temporary or interim
certificates for the purchase or acquisition of, or any right to
subscribe to, purchase or acquire, any of the foregoing.
"7-year Tranche" means advances on the Loan aggregating up to
$14,250,000 and having a final Loan Maturity of March 15, 2006.
"Taxes" means all taxes, assessments, fees, levies, imposts,
duties, penalties, deductions, liabilities, withholdings or other
charges of any nature whatsoever, including interest penalties, from
time to time or at any time imposed by any Law or any Tribunal.
"10-year Tranche" means advances on the Loan aggregating up to
$14,250,000 and having a final Maturity of March 15, 2009.
"Transaction Costs" means the fees, costs and expenses payable by
the Company pursuant hereto and other fees, costs and expenses payable
by the Company in connection with the Transactions.
"Transactions" shall mean, collectively, (i) the issuances and
sale of the Secured Notes, (ii) the incurrence of the Loan hereunder
on the Closing Date, (iii) the incurrence of the Other Loans under the
Other Loan Agreements, (iv) any other transaction on the Closing Date
contemplated in relation to the foregoing and (v) the payment of fees
and expenses in connection with the foregoing.
"Tranches" means collectively the 7-year Tranche and the 10-year
Tranche.
"Tribunal" means any governmental, any arbitration panel, any
court or any governmental department, commission, board, bureau,
agency, authority or instrumentality of the United States or any
state, province, commonwealth, nation, territory, possession, county,
parish, town, township, village or municipality, whether now or
hereafter constituted and/or existing.
"Trustee" has the meaning ascribed to such term in the
introduction of this Agreement and shall include any successor Trustee
appointed pursuant to terms of the Indenture.
"U.S. Legal Tender" means such coin or currency of the United
States of America as at the time of payment shall be legal tender for
the payment of public and private debts.
1.2 Other Defined Terms. Any capitalized term used in this Agreement
and not defined herein shall have the meaning assigned to such term in
the Indenture.
1.3 Accounting Terms. For the purposes of this Agreement, all
accounting terms to otherwise defined herein shall have the meanings
assigned to them in conformity with GAAP.
1.4 Other Definitional Provisions. Any of the terms defined in
Section 1.1 may, unless the context otherwise requires, be used in the
singular or the plural depending on the reference.
SECTION 2 LOAN COMMITMENT AND LOAN
2.1 The Loan and Notes.
A. Loan Commitment. Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties of
the Company herein set forth, the Lender hereby agrees to lend to the
Company on the Closing Date and thereafter up to $28,500,000 in the
aggregate (the "Loan") consisting of $14,250,000 of 7-year Tranche
advances and $14,250,000 of 10-year Tranche advances. The Lender's
commitment to make the Loan to the Company pursuant to this
Section 2.1 is herein called the "Loan Commitment."
B. Notice of Borrowing. When the Company desires to borrow under
this Agreement, it shall deliver to the Collateral Agent a Notice of
Borrowing no later than 11:00 a.m. (New York time), at least one
Business Day in advance of the Closing Date or such other date as
shall be agreed to by the Lender and the Trustee. The Notice of
Borrowing shall specify the amount of each Tranche and the applicable
date of borrowing (which shall be a Business Day).
C. Disbursement of Funds. No later than 3:00 p.m. (New York time)
on the Closing Date, the Lender promptly will make available to the
Company by depositing to its account at the Payment Office the
aggregate of the amount of the Loan to be made on such Closing Date.
D. Notes. The Company shall execute and deliver to the Lender on the
Closing Date two Notes dated the Closing Date, one substantially in
the form of Exhibit I annexed hereto with appropriate insertions to
evidence the maximum amount of the 7-year Tranche of Loan which may be
made hereunder by the Lender and the other substantially in the form
of Exhibit I annexed hereto with appropriate insertions to evidence
the maximum amount of 10-year Tranche of the Loan which may be made by
the Lender hereunder.
E. Scheduled Payments of Loan. The Company shall pay on or before 10:00
a.m. on the date of the final Maturity of the 7-year Tranche of the
Loan all of the principal amount of the 7-year Tranche remaining
outstanding, which amount will be $14,250,000 principal amount of the
Loan, reduced by any previous prepayments of principal made on the
7-year Tranche of the Loan to the extent that such payments have been
allocated pursuant to the provisions of Section 2.3 hereof and the
Indenture to the 7-year Secured Notes, together with accrued and
unpaid interest, fees and a pro rata portion of the amount of the
Special Interest and Additional Amounts, if any, due on the 7-year
Secured Notes. The Company shall pay on or before 10:00 a.m. on the
date of the final Maturity of the 10-year Tranche all of the principal
amount of the 10-year Tranche then remaining outstanding, reduced by
any previous prepayments of principal made on the 10-year Tranche of
the Loan to the extent that such payments have been allocated pursuant
to the provisions of Section 2.3 hereof and the Indenture to the 10-
year Secured Notes, together with accrued and unpaid interest fees and
a pro rata portion of the amount of the Special Interest and
Additional Amounts, if any, due on the 10-year Secured Notes. Such
payments shall be made directly to the Trustee for deposit in the
Issuer Escrow Account established pursuant to the Issuer Escrow
Agreement.
F. Termination of Loan Commitment. The Loan Commitment hereunder
shall terminate on the earlier (i) the Stated Maturity (whether by
acceleration, redemption, purchase or otherwise) of the Secured Notes
pursuant to the terms of the Indenture or (ii) May 14, 1999, if no
portion of the Loan has been made on or before such date (other than
as a result of failure of the Lender to fulfill its obligations
hereunder).
G. Satisfaction by Payments on the Guarantee. Pursuant to the
Indenture, the Company will guarantee the due and punctual payment of
the principal of, premium, if any, and interest on, and all other
amounts payable under, the Secured Notes (including any Additional
Amounts payable upon redemption, in respect thereof) when and as the
same shall become due and payable, whether at Stated Maturity, by
declaration of acceleration or otherwise. To the extent that the
Company makes a payment on the Guarantee, it will be deemed to have
made a payment on the Issuer Loans then outstanding, such payments to
be allocated pro rata to each of Tranches of the Loan and pro rata to
the Loan and the Other Loans.
2.2 Interest on the Loans.
A. Rate of Interest. The 7-year Tranche of the Loan shall bear interest
on the unpaid principal amount thereof from the date made through
Maturity for the 7-year Tranche (whether by prepayment, acceleration
or otherwise) at a rate equal to 11% per annum plus 2 basis points per
annum and the 10-year Tranche of the Loan shall bear interest on the
unpaid principal amount thereof from the date made through Maturity
for the 10-year Tranche (whether by prepayment, acceleration or
otherwise) at a rate equal to 11 3/8% per annum plus 2 basis points per
annum.
B. Special Interest. The Lender and the Company have entered into a
Registration Rights Agreement (the "Registration Rights Agreement")
dated March 26, 1999 with Donaldson, Lufkin & Jenrette Securities
Corporation for the benefit of the Holders of the Secured Notes, in
which the Lender and the Company have agreed to: (A) file a
registration statement within 60 days after the closing date of the
offering of Secured Notes for an offer to exchange Secured Notes of
each series for debt securities of that series with identical terms
(except for transfer restrictions); (B) use their best efforts to
cause the registration statement to become effective within 150 days
after the closing date of the offering of the Secured Notes; and
(C) complete the registered exchange offer within 180 days after the
closing date of the offering of the Secured Notes. Under certain
circumstances, the Lender and the Company may be required to file a
shelf registration statement for the Secured Notes registering the
resale of the Secured Notes. If the Lender and the Company do not
comply with their obligations under the Registration Rights Agreement,
the Lender will be required to pay additional interest ("Special
Interest") specified in Section 5 of the Registration Rights
Agreement. The Company will pay on each date that the Lender pays
Special Interest to the Holders of the Secured Notes as Special
Interest on the Loan an amount equal to the percentage of Special
Interest, if any, which the Lender owes to the Holders of the Secured
Notes that the principal amount of the Loan bears to the total
aggregate principal amount of the Loan and all Other Loans then
outstanding. Such payment shall be paid directly to the Trustee for
deposit into the Issuer Escrow Account.
Notwithstanding any provisions of this Section 2.2 or any other
provision herein, in no event will the combined sum of interest (cash
or otherwise) on the Loan exceed the maximum amount permitted by
applicable law.
C. Interest Payments. Interest (including Special Interest, if any,
and Additional Amounts, if any) shall be payable semi-annually on
March 15 and September 15 of each year, commencing September 15, 1999
but in no event to exceed the maximum permitted by applicable law.
All payments of interest on the Loan shall be made on or before 10:00
a.m. (New York time) on the date of payment and shall be paid directly
to the Trustee for deposit into the Issuer Escrow Account.
D. Post-Maturity Interest. Any principal payments on the Loan not paid
when due and, to the extent permitted by applicable law, any interest
payment on the Loan not paid when due, in each case whether at Stated
Maturity, by notice of prepayment, by acceleration or otherwise, shall
thereafter bear interest payable upon demand at a rate of interest
otherwise payable under this Agreement for the Loan but in no event to
exceed the maximum interest rate permitted by applicable law.
E. Computation of Interest. Interest on the Loan shall be computed on
the basis of a 360-day year of twelve 30-day months.
2.3 Redemptions.
A. Redemption upon Loss of the Mortgaged Rig. If an Event of Loss
occurs at any time with respect to the Mortgaged Rig attributable to
the Loan, the Company shall apply funds in an amount (the "Loss
Redemption Amount") equal to the principal amount of the Loan
outstanding on the date (the "Loss Date") on which such Event of Loss
was deemed to have occurred, together with all accrued and unpaid
interest (including Special Interest, if any, and Additional Amounts,
if any) thereon, to the prepayment of the Loan. If an Event of Loss
occurs at any time with respect to any Other Mortgaged Rig, the
Indenture and the applicable Other Loan Agreement require that the
Company shall apply funds to the principal amount of the applicable
Other Loan secured by the Other Mortgaged Rig outstanding on the Loss
Date for such other Mortgaged Rig, together with all accrued and
unpaid interest (including Special Interest, if any, and Additional
Amounts, if any) thereon, to the payment of such Other Loan. If a
Default under the Indenture shall have occurred and be continuing at
the time of the receipt of the Event of Loss Proceeds with respect to
such Other Mortgaged Rig, the Indenture requires, and the Company
hereby agrees, that it shall prepay the Loan and the remaining Other
Loans on a pro rata basis in an aggregate amount equal to the excess
of the Net Event of Loss Proceeds over the Loss Redemption Amount, if
any, together with all accrued and unpaid interest (including Special
Interest, if any, and Additional Amounts, if any) thereon for the
Other Loan which is secured by such Other Mortgaged Rig. All payments
on the Loan shall be allocated on a pro rata basis between the
Tranches and shall be made directly to the Trustee for deposit into
the Issuer Escrow Account.
B. Redemption upon Sale of the Mortgaged Rig. If the Mortgaged Rig
or the Capital Stock of a Subsidiary Guarantor then owning the Mortgaged
Rig is sold in compliance with the terms of the Indenture, the Company
shall apply funds in an amount (the "Sale Redemption Amount") equal to
the principal amount of the Loan secured by the Mortgaged Rig on the
date of such sale (the "Sale Date"), together with all accrued and
unpaid interest (including Special Interest, if any, and Additional
Amounts, if any thereon, plus any additional amounts required by the
Lender to redeem the Secured Notes to the extent required by
Section 3.9 of the Indenture, to the prepayment of the Loan. If any
Other Mortgaged Rig or the Capital Stock of a Subsidiary Guarantor
then owning an Other Mortgaged Rig is sold in compliance with the
terms of the Indenture, the Company shall apply funds equal to the
applicable Other Loan secured by the Other Mortgaged Rig outstanding
on the Sale Date for such Other Mortgaged Rig, together with all
accrued and unsecured interest (including Special Interest, if any,
and Additional Amounts, if any) thereon, to the payment of such Other
Loan. If a Default under the Indenture shall have occurred and be
continuing at the time of receipt of the cash consideration with
respect to such Other Mortgaged Rig or Capital Stock of the Subsidiary
Guarantor owning such Other Mortgaged Rig, the Indenture requires, and
the Company hereby agrees, that it shall also be required to prepay
the Loan and the remaining Other Loans on a pro rata basis in an
aggregate amount equal to the excess of such Net Available Cash
attributable to such Sold Mortgaged Rig over such Sale Redemption
Amount. Such payments on the Loan and the Other Loans pursuant hereto
shall be respectively allocated between the Tranches of the Loan and
the Other Loans on a pro rata basis and shall be made directly to the
Trustee for deposit into the Issuer Escrow Account.
C. Other Redemptions.
(i)Redemptions to Fund Optional Redemptions of the 10-year Secured
Notes. Under the terms of the Indenture, on or after March 15, 2004,
the 10-year Secured Notes will be redeemable, at the Lender's option,
in whole or in part, at any time or from time to time, upon not less
than 30 nor more than 60 days' prior notice to the Holders of the 10-
year Secured Notes, at the following Redemption Prices (expressed in
percentages of principal amount), plus accrued and unpaid interest
(including Special Interest, if any, and Additional Amounts, if any)
to the Redemption Date, if redeemed during the 12-month period
commencing on March 15 of the years set forth below.
Redemption
Period Price
2004 105.6875%
2005 103.7917
2006 101.8958
2007 and thereafter 100.0000
The Company shall prepay the 10-year Tranche of the Loan and of
the Other Loans, in whole or in part, to provide funds for such
redemption. Any prepayments by the Company on the Loan and the
Other Loans required to be made to provide funds for the Lender
to make such a redemption shall be made on this Loan and the
Other Loans on a pro rata basis. All payments on the Loan and
the Other Loans pursuant hereto shall be made directly to the
Trustee for deposit into the Issuer Escrow Account.
(ii)Redemptions to Fund Optional Redemptions of the 7-year Secured
Notes. Under the terms of the Indenture, the 7-year Secured Notes
will be redeemable, at the Lender's option at any time in whole or
from time to time in part upon not less than 30 and not more than
60 days' prior notice mailed by first class mail to the Holders of the
7-year Secured Notes, on any date prior to Maturity at a price equal
to 100% of the principal amount thereof plus accrued and unpaid
interest (including Special Interest, if any, and Additional Amounts,
if any) to the Redemption Date plus the Make-Whole Premium applicable
to the 7-year Secured Notes determined in the manner provided for in
Section 3.7 of the Indenture. The Company shall prepay the 7-year
Tranche of the Loan and of the Other Loans in whole or in part to
provide funds for such redemption. Any prepayments by the Company on
the Loan and the Other Loans required to be made to provide funds for
the Lender to make such a redemption shall be made on the Loan and the
Other Loans on a pro rata basis. All payments on the Loan and the
Other Loans pursuant hereto shall be made directly to the Trustee for
deposit into the Issuer Escrow Account.
D. Excess Proceeds Offers. The Indenture provides in Section
3.10 thereof that if, as of the first day of any calendar month, the
aggregate amount of Sale Excess Proceeds and Loss Excess Proceeds
exceeds 10% of consolidated total assets of the Company, and if the
aggregate amount of Sale Excess Proceeds and Loss Excess Proceeds in
excess of 10% of consolidated total assets of the Company that has not
theretofore been subject to an Excess Proceeds Offer (as defined
below) (the "Excess Proceeds Offer Amount"), totals at least $10
million, the Lender must, not later than the fifteenth Business Day of
such month, make an offer ( an "Excess Proceeds Offer") to purchase
from the Holders of the Secured Notes, pursuant to and subject to the
conditions contained in the Indenture, and from Holders of the New
Senior Notes, pursuant to provisions of the New Senior Note Indenture,
Secured Notes at a purchase price equal to 100% of their principal
amount, plus any accrued interest (including Additional Amounts and
Special Interest, if any) to the date of purchase and New Senior Notes
at a purchase price equal to 100% of their principal amount, plus any
accrued interest (including Special Interest, if any) to the date of
purchase in an aggregate principal amount equal to the Excess Proceeds
Offer Amount (an "Excess Proceeds Payment"). If the Lender is ever
required pursuant to Section 3.10 of the Indenture to make an Excess
Proceeds Offer to the Holders of the Secured Notes to purchase from
such Holders their Secured Notes, and to the Holders of Senior Notes
to purchase from such Holders their New Senior Notes, the Indenture
provides, and the Company agrees, that the Company will prepay the
Loan and the Other Loans on a pro rata basis to permit the Lender to
purchase any Secured Notes validly tendered pursuant to an Excess
Proceeds Offer. All payments on the Loan shall be allocated between
the appropriate Tranches of the Loan; and all payments on the Loan and
the Other Loans pursuant hereto shall be made directly to the Trustee
for deposit into the Issuer Escrow Account.
E. Change of Control. If the Lender is ever required to make pursuant
to the provisions of Section 4.8 of the Indenture a Change of Control
Offer to the Holders of the Secured Notes at a purchase price in cash
equal to 101% of the principal amount thereof plus accrued and unpaid
interest (including Additional Amounts and Special Interest, if any)
thereon, the Indenture provides, and Company agrees, that the Company
will prepay the Loan and the Other Loans on a pro rata basis at a
redemption price equal to 101% of the principal amount hereof being
repaid, plus accrued and unpaid interest, Special Interest, if any,
and Additional Amounts, if any, thereon, in order to provide funds
sufficient to permit the Lender to purchase any Secured Notes validly
tendered pursuant to the foregoing offer to purchase Secured Notes
upon a Change of Control. All payments on the Loan shall be allocated
between the appropriate Tranches of the Loans and all payments on the
Loan and the Other Loans pursuant hereto shall be made directly to the
Trustee for deposit into the Issuer Escrow Account.
F. Notice. The Company shall notify the Lender and the Trustee of
any prepayment to be made pursuant to this Section 2.3 at least two
Business Days prior to such prepayment date.
G. Determination of Amounts of the Tranches Subject to Such
Redemptions. The Lender will submit a written determination to the
Trustee for its approval of the amount (including the pro rata
allocations between the Tranches of the Loan and between the Loan and
the Other Loans) with respect to any such redemption. The Trustee
shall approve or disapprove such allocations in its sole discretion
and such decision shall be conclusive, absent manifest error. A
certificate of the Lender setting forth such determination, with the
written approval of the Trustee thereon, shall be delivered to the
Company at least one Business Day prior to the payment date.
H. Company's Mandatory Prepayment Obligation; Application of
Prepayments. All prepayments shall include payment of accrued
interest (including Special Interest and Additional Amounts, if
applicable) on the principal amount so prepaid and shall be applied to
payment of interest before application to principal.
I. Manner and Time of Payment. Unless otherwise expressly set forth
herein, all payments of principal and interest hereunder and under the
Notes by the Company shall be made without defense, set-off or
counterclaim and in same-day funds and delivered to the Trustee for
deposit into the Issuer Escrow Account, unless otherwise specified,
not later than 10:00 a.m. (New York time) on the date due at the
Payment Office; funds received by the Trustee after that time shall be
deemed to have been paid by the Company on the next succeeding
Business Day.
J. Payments on Non-Business Days. Whenever any payment to be made
hereunder or under the Notes shall be stated to be due on a day which
is not a Business Day, the payment shall be made on the next
succeeding Business Day and such extension of time shall be included
in the computation of the payment of interest hereunder or under the
Loan.
2.4 Use of Proceeds.
A. Loan. The proceeds of the Loan may be applied by the Company to
finance certain costs of acquiring, constructing, repairing and
improving the Mortgaged Rig and, to the extent that such costs have
already been paid, for general corporate purposes.
B. Margin Regulations. No portion of the proceeds of any borrowing
under this Agreement shall be used by the Company in any manner which
might cause the borrowing or the application of such proceeds to
violate the applicable requirements of Regulation U, Regulation T or
Regulation X of the Board of Governors of the Federal Reserve System
or any other regulation of the Board or to violate the Exchange Act,
in each case as in effect on the date or dates of such borrowing and
such use of proceeds.
2.5 Commitment Fee. The Company agrees to pay a commitment fee for the
period from and including the Closing Date to and including the date
of termination specified in Section 2.1.F. on the undrawn portion of
the Loan equal to the average of the daily excess of the Loan
Commitment over the aggregate principal amount of the Loan outstanding
multiplied by 7% per annum, such commitment fee to be calculated on
the basis of a 360-day year consisting of twelve 30-day months and to
be payable semi-annually in arrears on each March 15 and September 15,
commencing September 15, 1999.
SECTION 3 CONDITIONS
3.1 Conditions to Initial Advances on the Loan. The obligation of the
Lender to make the initial advance on the Loan is subject to prior or
concurrent satisfaction of each of the following conditions:
A. On or before the Closing Date, all corporate and other proceedings
taken or to be taken in connection with the transactions contemplated
hereby and all documents incidental thereto not previously found
acceptable by the Lender and the Trustee shall be reasonably
satisfactory in form and substance to the Lender and the Trustee, and
the Lender and the Trustee shall have received the following items,
each of which shall be in form and substance satisfactory to the
Lender and the Trustee and, unless otherwise noted, dated the Closing
Date:
(i) a certified copy of the Company's charter, together with a
certificate of status, compliance, good standing or like certificate
with respect to the Company issued by the appropriate government
officials of the jurisdiction of its incorporation and of each
jurisdiction in which it owns any material assets or carries on any
material business, each to be dated a recent date prior to the Closing
Date;
(ii) a copy of the Company's bylaws, certified as of the Closing Date
by its Secretary or one of its Assistant Secretaries;
(iii) resolutions of the Company's Board of Directors approving and
authorizing the execution, delivery and performance of this Agreement,
the Notes, the Mortgage, each of the other Loan Documents, the
Indenture and any other documents, instruments and certificates
required to be executed by the Company in connection herewith and
therewith and approving and authorizing the execution, delivery and
payment of the Loan, each certified as of the Closing Date by its
Secretary or one of its Assistant Secretaries as being in full force
and effect without modification or amendment;
(iv)signature and incumbency certificates of the Company's officers
executing this Agreement, the Other Loan Documents and the Notes;
(v)executed copies of this Agreement and the Notes substantially in
the form of Exhibit I annexed hereto executed in accordance with
Section 2.1C drawn to the order of the Lender and with appropriate
insertions;
(vi)an originally executed Notice of Borrowing substantially in the
form of Exhibit II annexed hereto, signed by the President or a Vice
President of the Company on behalf of the Company and delivered to the
Lender; and
(vii) originally executed copies of one or more favorable written
opinions of Gardere & Wynne, special counsel for the Company,
substantially in the form of the Exhibit III hereto and addressed to
the Lender, the Trustee and the Initial Purchaser, and such other
opinions of counsel and such certificates or opinions of accountants,
appraisers or other professionals as the Lender, the Trustee or the
Initial Purchaser shall have reasonably requested.
B. The Lender shall have received a fully executed Mortgage in the
form of Exhibit IV hereto, which has been filed in all appropriate
jurisdictions.
C. On or before the Closing Date, all authorizations, consents and
approvals necessary in connection with the Transactions shall have
been obtained and remain in full force and effect and all applicable
waiting periods, if any, under law applicable to the Transactions
shall have expired without any action being taken by any competent
authority (including without limitation, any Tribunal) which
restrains, prevents or imposes materially adverse conditions upon the
completion of the Transactions or the financing thereof and evidence
of the receipt of such authorizations, consents and approvals
satisfactory to the Lender and the Trustee shall have been delivered
to the Lender and the Trustee.
D. On or before the Closing Date, the Indenture and the Purchase
Agreement shall have been executed and delivered by all parties
thereto. No default or event of default shall have occurred under the
Indenture and the Purchase Agreement, all conditions to the execution
delivery and authentication of the Secured Notes thereunder shall have
been satisfied under the Indenture, and all conditions to the purchase
of the Secured Notes by the Initial Purchaser under the Purchase
Agreement have been satisfied or waived by the Initial Purchaser.
E. Simultaneously with the making of the Loan by the Lender, the
Company shall have delivered to the Lender and the Trustee an
Officers' Certificate from the Company in form and substance
satisfactory to the Lender and the Trustee to the effect that (i) the
representations ad warranties of the Company in Section 4 are true,
correct and complete in all material respects on and as of the Closing
Date to the same extent as though made on and as of that date, and
(ii) on or prior to the Closing Date, the Company has performed and
complied with in all material respects all covenants and conditions to
be performed and observed by the Company on or prior to the Closing
Date and
F. No event shall have occurred and be continuing or would result from
the consummation of the borrowing contemplated by the Notice of
Borrowing which would constitute and Event of Default, a Potential
Event of Default or a Default.
G. No order, judgment or decree of any court, arbitrator or
governmental authority shall purport to enjoin or restrain the Lender
from making the Loan.
H. The making of the Loan in the manner contemplated in this Agreement
shall not violate the applicable provisions of Regulation T, U or X of
the Board of Governors of the Federal Reserve Board or any other
regulation of the Board.
3.2 Conditions to Subsequent Advance on the Loan. The obligation of
the Lender to make a subsequent advance on the Loan is subject to the
prior or concurrent satisfaction of each of the following conditions:
A. The Lender and the Trustee shall have received in form and substance
satisfactory to the Lender and the Trustee and dated the date of such
advance an originally executed Notice of Borrowing substantially in
the form of Exhibit II annexed hereto, signed by the President or a
Vice President of the Company on behalf of the Company and delivered
to the Lender.
B. No event shall have occurred and be continuing or would result from
the consummation of the borrowing contemplated by the Notice of
Borrowing which would constitute an Event of Default, a Potential
Event of Default or a Default.
C. No order, judgment or decree of any court, arbitrator or
governmental authority shall purport to enjoin or restrain the Lender
from making the Loan.
D. The making of the Loan in the manner contemplated in this Agreement
shall not violate the applicable provisions of Regulation T, U or X of
the Board of Governors of the Federal Reserve Board or any other
regulation of the Board.
E. Simultaneously with the making of the advance on the Loan by the
Lender, the Company shall have delivered to the Lender and the Trustee
an Officers' Certificate from the Company in form and substance
satisfactory to the Lender and the Trustee to the effect that (i) the
representations and warranties of the Company in Section 4 are true,
correct and complete in all material respects on and as of the date of
such advance to the same extent as though made on and as of that date,
and (ii) on or prior to the date of such advance, the Company has
performed and complied with in all material respects all covenants and
conditions to be performed and observed by the Company on or prior to
the date of such advance.
SECTION 4 REPRESENTATIONS AND WARRANTIES
In order to induce the Lender to enter into this Agreement and to
make the Loan, the Company represents and warrants to the Lender that,
at the time of execution hereof and after consummation of the making
of the Loan and the Transactions, the following statements are true,
correct and complete:
4.1 Organization and Good Standing; Capitalization. The Company is a
corporation duly organized and existing and in good standing under the
laws of its jurisdiction of incorporation. The Company has the
corporate power and authority to own and operate its properties and to
carry on its business as now conducted and as proposed to be conducted
and is duly qualified as a foreign corporation and in good standing in
all jurisdictions in which it is doing business, except where failure
to be so qualified or in good standing, singly or in the aggregated,
has not had and will not have a Material Adverse Effect.
4.2 Authorization and Power. The Company has the corporate power and
requisite authority, and has taken all corporate action necessary, to
consummate the Transactions and to execute, deliver and perform its
obligations under this Agreement, the Mortgage, the other the Loan
Documents, Indenture and each other document and instrument to be
delivered in connection with the Transactions executed or to be
executed by it and to issue the Notes.
4.3 No Conflicts or Consents.
A. The execution and delivery of the Loan Agreement, the Notes, the
Mortgage, the other Loan Documents and each other document to be
executed and delivered in connection with the Transactions, the
consummation of each of the transactions herein or therein
contemplated, the compliance with each of the terms and previsions
hereof or thereof, and the issuance, delivery and performance of the
Notes, this Agreement, the Mortgage and the Indenture, do not and will
not (i) violate any provision of any law or any governmental rule or
regulation applicable to the Company, its Certificate of Incorporation
or Bylaws or any order, judgment or decree of any court or other
agency of government binding on it, (ii) conflict with, result in a
breach of or constitute (with due notice or lapse of time or both) a
default under any Contractual Obligation of the Company which could
reasonably be expected to result in a Material Adverse Effect, (iii)
result in or require the creation or imposition of any Lien upon any
of the properties or assets of the Company (other than any Liens
created under this Agreement and the Other Loan Agreements), (iv)
require any approval of stockholders or any approval or consent of any
Person under any Contractual Obligation of the Company except for such
approvals or consents which will be obtained on or before the Closing
Date and disclosed in writing to Lender, the Trustee and the Initial
Purchaser or such approvals or consents the failure to obtain which
could not reasonably be expected to singly or in the aggregate result
in a Material Adverse Effect.
B. No consent, approval, authorization or order of any Tribunal or
other Person is required in connection with the execution and delivery
by the Company of this Agreement, the Loan Documents or any other
document or instrument to be delivered in connection with the
Transactions or the consummation of the transactions contemplated
hereby or thereby, other than any such consent, approval,
authorization or order which has been obtained and remains in full
force and effect or which has been waived in writing by the Lender or
the failure of which to obtain would not, singly or in the aggregated,
have a Material Adverse Effect.
4.4 Enforceable Obligations. Each of this Agreement, the Notes, the
Mortgage, the other Loan Documents, and each other document or
instrument to be delivered in connection therewith has been duly
authorized; each of this Agreement, the Notes, the Mortgage, the Other
Loan Documents and each other document or instrument to be delivered
in connection therewith to be executed and delivered on or prior to
the Closing Date has been duly executed and delivered by the Company
and each of this Agreement, the Notes, the Mortgage, the Other Loan
Documents and each other document or instrument to be delivered in
connection therewith to be executed and delivered on or prior to the
Closing Date is, and each of this Agreement, the Notes, the Mortgage
and the other Loan Documents to be executed and delivered after the
Closing Date will be, upon such execution and delivery, the legal,
valid and binding obligations of the Company, enforceable in
accordance with their respective terms, except to the extent that the
enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization or similar laws affecting the enforcement
of creditors' rights generally or by general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law)
4.5 Properties; Liens. The Company has good and marketable title to
the Mortgaged Rig and the Other Mortgaged Rigs to the extent specified
in the Other Loan Agreements. Except as permitted by this Agreement,
the Mortgaged Rig is so owned free and clear of Liens.
4.6 No Default. No event has occurred and is continuing which
constitutes a Default, a Potential Event of Default or an Event of
Default.
4.7 Use of Proceeds; Margin Stock, etc. The proceeds of the Loan will
be used solely for the purposes specified herein. None of such
proceeds will be used for the purpose of purchasing or carrying any
Margin Stock within the meaning of the applicable provisions of
Regulation T, U or X, or for the purpose of reducing or retiring any
Indebtedness which was originally incurred to purchase or carry a
Margin Stock or for any other purpose which might constitute this
transaction a "purpose credit" within the meaning of the applicable
provisions of Regulation T, U or X. The Company has not taken nor
will it take any action which might cause any of the Loan Documents to
violate the applicable provisions of Regulation T, U or X, or any
other regulation of the Board of Governors of the Federal Reserve
System.
4.8 Survival of Representations and Warranties. All representations
and warranties in the Loan Documents shall survive delivery of the
Notes and the making of the Loan and shall continue until one year
after repayment of the Notes and the Obligations, and any
investigation at any time made by or on behalf of the Lender shall not
diminish the Lender's right to rely thereon.
SECTION 5 COVENANTS
5.1 Indenture Covenants. Each of the covenants conferred in the
Indenture applicable to the Company and its Restricted Subsidiaries
are incorporated herein by reference. The Company covenants and
agrees that, until the Loan and the Notes and all other amounts due
under this Agreement have been indefeasibly paid in full it shall
perform all covenants applied to it or any of its Restricted
Subsidiaries which are contained in the Indenture.
5.2 Reports of Defaults, Etc. The Company will deliver to each Lender
and the Trustee promptly upon, but in no event more than five (5)
Business Days after, any Officer's obtaining knowledge of any
condition or event which constitutes a Default, an Event of Default or
a Potential Event of Default, an Officer's Certificate specifying the
nature and period of existence of any such condition or event, or
specifying the notice given or the claim of Default, Event of Default,
Potential Event of Default, or the event or condition, and what action
the Company has taken, is taking and proposes to take with respect
thereto;
5.3 Payments in U.S. Dollars. All payments of any Obligations to be
made hereunder or under the Note by the Company or any other obligor
with respect thereto shall be made solely in U.S. Dollars or such
other currency as is then legal tender for public and private debts in
the United States of America.
5.4 Performance and Enforcement Under the Loan Documents. The Company
shall promptly perform all of its obligations under the Loan Documents
and each document and instrument related thereto or delivered in
connection with any thereof, in each case, to the extent within its
control. The Company shall (A) diligently and in good faith promptly
pursue the performance of each other party to each such document, and
(B) diligently seek the enforcement of all rights and remedies under
each such document.
5.5 Liens. The Company shall not, nor shall it cause or permit any of
its Restricted Subsidiaries to, directly or indirectly, create, incur,
assume or permit to exist, any Lien on or with respect to any property
or asset (including the Mortgaged Rig) of the Company or of any of its
Restricted Subsidiaries, whether now owned or hereafter acquired, or
assign or otherwise convey any right to receive any income or profits
therefrom, or file or permit the filing of, or permit to remain in
effect, any financing statement or other similar notice of any Lien
with respect to any such property, asset, income or profits under the
Uniform Commercial Code of any State or under any similar recording or
notice statute, except Liens permitted by the Indenture and Liens
permitted by the Loan Documents.
5.6 Transfer of Mortgage Rig to a Restricted Subsidiary. The Company
shall not, nor shall the Company cause or permit any of its Restricted
Subsidiaries to, directly or indirectly, transfer the Mortgaged Rig to
any Subsidiary of the Company unless (i) such Subsidiary guarantees
all Obligations of the Company under this Agreement and executes a
Mortgage, (ii) the Liens of the Subsidiary's Mortgage and Security
Agreement are perfected and enforceable, and (iii) such Subsidiary
executes a Subsidiary Guarantee pursuant to the Indenture.
SECTION 6 EVENTS OF DEFAULT
If any of the following conditions of events ("Events of
Default") shall occur and be continuing:
6.1 Failure To Make Payments When Due. Failure to pay any installment
of principal including Premium of the Loan when due, whether at stated
maturity, by acceleration, by notice of prepayment or otherwise; or
failure to pay any interest (including Special Interest and Additional
Amounts) on the Loan or any other amount due under this Agreement
continued for 30 days; or
6.2 Default Under The Indenture. An Event of Default occurs and is
continuing under the Indenture; or
6.3 Other Loan Agreement. An Event of Default (as defined in an other
Loan Agreement) occurs and is continuing under such Other Loan
Agreement; or
6.4 Breach of Certain Covenants. Failure of the Company to perform or
comply with any covenant, term or condition contained in Sections 5.2
through 5.6 and Sections 7.3 through 7.5 of this Agreement; or
6.5 Breach of Warranty. Any representation, warranty or certification
made by the Company in any Loan Document or in any statement or
certificate at any time given by the Company in writing pursuant
hereto or thereto or in connection herewith or therewith shall be
false or incorrect in any material respect on the date as of which
made or deemed made; or
6.6 Other Defaults Under Agreement or Loan Documents. The Company
shall default in the performance of or compliance with any covenant,
term or condition contained in this Agreement or the other Loan
Documents (other than those covered by Sections 5.2 through 5.7 and
such default shall not have been remedied or waived in accordance with
Section 7.6 of this Agreement within 30 days after the date of written
notice of such default from the Lender, the Collateral Agent, the
Trustee or the Holder or Holders of not less than 25% in aggregate
principal amount of the Secured Notes then outstanding; or
6.7 Involuntary Bankruptcy; Appointment of Custodian, etc. The entry
by a court having jurisdiction in the premises of (i) a decree or
order for relief in respect of the Company or any Significant
Subsidiary in an involuntary case or proceeding under U.S. bankruptcy
laws, as now or hereafter constituted, or any other applicable
Federal, state, or foreign bankruptcy, insolvency, or other similar
law or (ii) a decree or order adjudging the Company or any Significant
Subsidiary a bankruptcy or insolvent, or approving as properly filed a
petition seeking reorganization, arrangement, adjustment or
composition of or in respect of the Company or any Significant
Subsidiary under U.S. bankruptcy laws, as now or hereafter
constituted, or any other applicable Federal, state or foreign
bankruptcy, insolvency, or similar law, or appointing a custodian,
liquidator, assignee, trustee, sequestrator or other similar official
of the Company or any Significant Subsidiary or of any substantial
part of the Property or assets of the Company or any Significant
Subsidiary, or ordering the winding up or liquidation of the affairs
of the Company or any Significant Subsidiary, and the continuance of
any such decree or order for relief or any such other decree or order
unstayed and in effect for a period of 60 consecutive days; or
6.8 Voluntary Bankruptcy; Appointment of a Custodian, etc. The
commencement by the Company or any Significant Subsidiary of a
voluntary case or proceeding under the U.S. bankruptcy laws, as now or
hereafter constituted, or any other applicable Federal, state or
foreign bankruptcy, insolvency or other similar law or of any other
case or proceeding to be adjudicated a bankrupt or insolvent; or
(ii) the consent by the Company or any Significant Subsidiary to the
entry of a decree or order for relief in respect of the Company or any
Significant Subsidiary in an involuntary case or proceeding under U.S.
bankruptcy laws, as now or hereafter constituted, or any other
applicable Federal, state, or foreign bankruptcy, insolvency or other
similar law or to the commencement of any bankruptcy or insolvency
case or proceeding against the Company or any Significant Subsidiary;
or (iii) the filing by the Company or any Significant Subsidiary of a
petition or answer or consent seeking reorganization or relief under
U.S. bankruptcy laws, as now or hereafter constituted, or any other
applicable Federal, state or foreign bankruptcy, insolvency or other
similar law; or (iv) the consent by the Company or any Significant
Subsidiary to the filing of such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator, assignee,
trustee, sequestrator or similar official of the Company or any
Significant Subsidiary or of any substantial part of the property or
assets of the Company or any Significant Subsidiary, or the making by
the Company or any Significant Subsidiary of an assignment for the
benefit of creditors; or (v) the admission by the Company or any
Significant Subsidiary in writing of its inability to pay its debts
generally as they become due; or (vi) the taking of corporate action
by the Company or any Significant Subsidiary in furtherance of such
action;
THEN (i) upon the occurrence of any Event of Default described in
the foregoing Section 6.7 or 6.8, all of the unpaid principal amount
of and accrued interest on the Loan and all other outstanding
Obligations shall automatically become immediately due and payable,
without presentment, demand, protest, waiver of notice of intent to
accelerate and waiver of notice of such acceleration or notice of any
other kind or other requirements of any kind, all of which are hereby
expressly waived by the Company, and Obligations and the Loan
Commitment of the Lender hereunder shall thereupon terminate, and
(ii) upon the occurrence of any other Event of Default, the Lender
shall, upon written notice of the Lender, to the Company, upon written
notice of the Trustee or the Collateral Agent to the Company and the
Lender, or upon written notice of a Holder or Holders of the Secured
Note or Notes, to the Company, the Lender, the Collateral Agent and
the Trustee, declare all of the unpaid principal amount of and accrued
interest on the Loan and all other outstanding Obligations to be, and
the same shall forthwith become, due and payable, and the obligations
and Loan Commitments of the Lender hereunder shall thereupon
terminate; provided, however, that upon the occurrence of an Event of
Default described in Section 6.4 of this Agreement or an "event of
default" under Section 6.4 of any Other Loan Agreement, the Lender
shall not declare the Obligations hereunder to be due and payable for
a period of 60 days after notice of the occurrence of such Event of
Default or "event of default." Nevertheless, if at any time after
acceleration of the Maturity of the Loan, the Company shall pay all
arrears of interest and all payments on account of the principal
thereof which shall have become due otherwise than by acceleration
(with interest on principal and, to the extent permitted by law, on
overdue interest, at the rates specified in this Agreement or the
Notes) and all Events of Default and Potential Events of Default
(other than non-payment of principal of and accrued interest on the
Loan and the Notes due and payable solely by virtue of acceleration)
shall be remedied or waived pursuant to Section 7.6, then the Lender
shall, upon receipt of the written notice from the Collateral Agent
and the Trustee of such remedy or waiver, by written notice to the
Company rescind and annul the acceleration and its consequences; but
such action shall not affect any subsequent Default, Event of Default
or Potential Event of Default or impair any right consequent thereon.
SECTION 7 MISCELLANEOUS
7.1 Pledges and Assignments of Loan and Note. The Lender shall have
the right at any time to sell, pledge, assign, transfer or negotiate
all or any portion of the Note or its Loan Commitment. The Company
acknowledges that the Lender will pledge its rights under this
Agreement, the Notes, the Mortgage and the Other Loan Documents to the
Collateral Agent pursuant to the Issuer Security Agreement to secure
the Lender's obligations under the Indenture and the Secured Notes.
7.2 Expenses. Whether or not the transactions contemplated hereby
shall be consummated, the Company, its successors and assigns agrees
to promptly pay (i) all the actual costs and expenses of preparation
of the Loan Documents and all the costs of furnishing all opinions by
counsel for the Company (including without limitation any opinions
requested by the Lender as to any legal matters arising hereunder),
and of the Company's performance of and compliance with all agreements
and conditions contained herein on its part to be performed or
complied with; (ii) the reasonable fees, expenses and disbursements of
counsel to the Lender and the Trustee and the Collateral Agent, their
successors and assigns (including allocated costs of internal counsel)
in connection with the negotiation, preparation, execution and
administration of the Loan Documents and the Loan hereunder, and any
amendments, modifications and waivers hereto or thereto and consents
to departures from the terms hereof and thereof; and (iii) after the
occurrence of an Event of Default, all costs and expenses (including
reasonable attorneys fees, including allocated costs of internal
counsel, and costs of settlement) incurred by the Lender, its
successors and assigns in enforcing any Obligations of or in
collecting any payments due from the Company hereunder or under the
Notes by reason of such Event of Default or in connection with any
refinancing or restructuring of the credit arrangements provided under
this Agreement in the nature of a "work-out" or of any insolvency or
bankruptcy proceedings.
7.3 Indemnity. In addition to the payment of expenses pursuant to
Section 7.2, whether or not the transactions contemplated hereby shall
be consummated, the Company agrees to indemnify, pay and hold the
Lender, the Collateral Agent, the Trustee and any Holder of the
Secured Notes and holder of the Notes, and each of their officers,
directors, employees, and agents, (collectively called the
"Indemnitees"), harmless from and against any all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits,
claims, costs, expenses and disbursements of any kind or nature
whatsoever (including, without limitation, the fees and disbursements
of counsel for such Indemnitees in connection with any investigative,
administrative or judicial proceeding commenced or threatened, whether
or not such Indemnitee shall be designated as a party thereto), which
may be suffered by imposed on, incurred by, or asserted against that
Indemnitee, in any manner resulting from, connected with, in respect
of, relating to or arising out of this Agreement, the Notes, the
Mortgage, the Lender's agreement to make the Loan or the use or
intended use of any of the proceeds of the Loan hereunder or the
Transactions (the "indemnified liabilities"); provided, however, that
the Company shall have no obligation to an Indemnitee hereunder with
respect to indemnified liabilities (i) to the extent such is finally
judicially determined to have resulted solely from (A) the gross
negligence or willful misconduct of that Indemnitee or (B) the failure
of such Indemnitee to perform its obligations under any Loan Document
or (C) such Indemnitee's violation of law or (ii) in connection with
the obligations of any Indemnitee under any Loan Document. To the
extend that the undertaking to indemnify, pay and hold harmless set
forth in the preceding sentence may be unenforceable because it is
violative of any law or public policy, the Company shall contribute
the maximum portion which it is permitted to pay and satisfy under
applicable law to the payment and satisfaction of all indemnified
liabilities incurred by the Indemnitees or any of them.
7.4 Additional Amounts. Except to the extent required by any applicable
law, regulation law, regulation or governmental policy, any and all
payments of, or in respect of the Loan, this Agreement, the Notes, any
Loan Document or any Secured Note shall be made free and clear of and
without deduction for or on account of any and all present or future
taxes, levies, imposts, deduction, charges or withholdings and all
liabilities with respect thereto imposed by Panama, The Bahamas, The
Marshall Islands or any other jurisdiction with which the Company or
any Subsidiary has some connection (including any jurisdiction (other
than the United States of America) from or through which payments
under this Agreement, the Notes, any Loan Document, the Guarantee or
the Secured Notes are made) or any political subdivision of or any
taxing authority in any such jurisdiction ("Panamanian Taxes,"
"Bahamian Taxes," "MI Taxes," or "Other Taxes," respectively). If the
Lender, the Company or any Subsidiary Guarantor shall be required by
law to withhold or deduct any Panamanian Taxes, Bahamian Taxes, MI
Taxes, or Other Taxes from or in respect of any sum payable under this
Agreement, the Notes, any Loan Document, the Guarantee or the Secured
Notes, the sum payable by the Company or such Subsidiary Guarantor, as
the case may be, thereunder shall be increased by the amount
("Additional Amounts") necessary so that after making all required
withholdings and deductions, Lender or any Holder or beneficial owner
of Secured Notes shall receive an amount equal to the sum that it
would have received had not such withholdings and deductions been
made; provided that any such sum shall not be paid in respect of any
Panamanian Taxes, Bahamian Taxes, MI Taxes or Other Taxes to a Holder
(an "Excluded Holder") (i) resulting from the beneficial owner of such
Secured Note carrying on business or being deemed to carry on business
in or through a permanent establishment or fixed base in the relevant
taxing jurisdiction or having any other connection with the relevant
taxing jurisdiction or any political subdivision thereof or any taxing
authority therein other than the mere holding or owning of such
Secured Note, being a beneficiary of the Guarantee or any applicable
Subsidiary Guarantee, the receipt of any income or payments in respect
of such Secured Note, the Loan, the Guarantee or any applicable
Subsidiary Guarantee or the enforcement of such Secured Note, the
Loan, the Guarantee or any applicable Subsidiary Guarantee, or (ii)
that would not have been imposed but for the presentation (where
presentation is required) of such Secured Note for payment more than
180 days after the date such payment became due and payable or was
duly provided for, whichever occurs later. The Lender, the Company or
the Subsidiary Guarantors, as applicable, will also (i) make such
withholding or deduction and (ii) remit the full amount deducted or
withheld to the relevant authority in accordance with applicable law,
and, in any such case, the Lender is required to furnish under the
Indenture to each Holder on whose behalf an amount was so remitted,
within 30 calendar days after the date the payment of any Panamanian
Taxes, Bahamian Taxes, MI Taxes or Other Taxes is due pursuant to
applicable law, certified copies of tax receipts evidencing such
payment by the Lender, the Company or the Subsidiary Guarantors, as
applicable. The Company will, upon written request of each Holder
(other than an Excluded Holder), reimburse each such holder for the
amount of (i) any Panamanian Taxes, Bahamian Taxes, MI Taxes or Other
Taxes so levied or imposed and paid by such Holder as a result of
payments made under or with respect to any Secured Notes, and (ii) any
Panamanian Taxes, Bahamian Taxes, MI Taxes or Other Taxes so levied or
imposed with respect to any reimbursement under the foregoing clause
(i) so that the net amount received by such Holder (net of payments
made under or with respect to such Secured Notes, the Loan, the
Guarantee or the applicable Subsidiary Guarantees) after such
reimbursement will not be less than the net amount the Holder would
have received if Panamanian Taxes, Bahamian Taxes, MI Taxes or Other
Taxes on such reimbursement had not been imposed.
At least 30 calendar days prior to each date on which any payment
under or with respect to the Secured Notes is due and payable, if the
Lender, the Company or the Subsidiary Guarantors, as applicable, will
be obligated to pay Additional Amounts with respect to such payment,
the Lender, the Company or the Subsidiary Guarantors, as applicable,
will deliver to the Trustee an officer's certificate stating the fact
that such Additional Amounts will be payable and the amounts will be
payable and the amounts so payable and will set forth such other
information necessary to enable the Trustee to pay such Additional
Amounts to Holders on the payment date.
7.5 Taxes and Other Taxes.
A. Any and all payments by the Company hereunder or under any of the
other Loan Documents shall be made free and clear of and without
deduction or withholding for any and all present or future Taxes,
unless such Taxes are required by law or the administration thereof to
be deducted or withheld and excluding (a) in the case of each Lender,
Taxes imposed on its net income and franchise taxes or taxes on gross
receipts and capital imposed on it by the jurisdiction under the laws
of the United States or any political subdivision thereof (all such
nonexcluded Taxes being hereinafter referred to as "Covered Taxes").
If the Company shall be required by Law or the administration thereof
to deduct or withhold any Covered Taxes from or in respect of any sum
payable hereunder or under any other Loan Documents, the sum payable
shall be increased as may be necessary so that after making all
required deductions or withholdings (including deductions or
withholdings applicable to additional amounts paid under this
paragraph), the Lender receives an amount equal to the sum it would
have received if no such deduction or withholding had been made;
(b) the Company shall make such deductions or withholdings; and
(c) the Company forthwith shall pay the full amount deducted or
withheld to the relevant taxation or other authority in accordance
with applicable Law.
B. The Company agrees to pay forthwith any present or future stamp
documentary taxes or any other excise or property taxes charges or
similar levies (all such taxes, charges and levies being herein
referred to as "Other Taxes") imposed by any jurisdiction (or any
political subdivision or taxing authority thereof or therein) which
arise from any payment made by the Company hereunder or under any of
the other Loan Documents or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement or any
of the other Loan Documents.
C. The Company agrees to indemnify the Lender for the full amount of
Covered Taxes or Other Taxes not deducted or withheld and paid by the
Company in accordance with Section 7.5(A) and (B) to the relevant
taxation or other authority and any Taxes other than Covered Taxes or
Other Taxes imposed by any jurisdiction on amounts payable by the
Company under this Section 7.5 paid by the Lender and any liability
(including penalties, interest and expenses) arising therefrom or with
respect thereto, whether or not any such Taxes or Other Taxes were
correctly or legally asserted. Payment under this indemnification
shall be made within 30 days from the date the Lender makes written
demand therefor. A certificate as to the amount of such Taxes or
Other Taxes and evidence of payment thereof submitted to the Company
shall be prima facie evidence, absent manifest error, of the amount
due from the Company to the Lender.
D. The Company shall furnish to the Lender the original or a certified
copy of a receipt evidencing any payment of Taxes or Other Taxes made
by the Company as soon as such receipt becomes available.
E. The provisions of this Section 7.5 shall survive the termination of
the Agreement and repayment of all Obligations.
7.6 Amendments and Waivers. No amendment, modification, termination or
waiver of any term or provision of this Agreement, of the Note, the
Mortgage or any Other Loan Document or consent to any departure by the
Company therefrom, shall in any event be effective without the prior
written concurrence of the Company, the Lender, the Collateral Agent
and the Trustee, and, upon the request of the Lender, the Collateral
Agent or the Trustee, the receipt of a written opinion of counsel of
the Company addressed to the Lender, the Collateral Agent and the
Trustee to the effect that such amendment, modification, termination,
waiver or consent does not violate or conflict with any of the terms
and provisions of the Indenture or any Contractual Obligations of the
Company.
7.7 Independence of Covenants. All covenants hereunder shall be given
independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be
permitted by an exception to, or be otherwise within the limitation
of, another covenant shall not avoid the occurrence of an Event of
Default or Potential Event of Default if such action is taken or
condition exists.
7.8 Notices. Unless otherwise provided herein, any notice or other
communications herein required or permitted to be given shall be in
writing and may be personally served, telecopied or sent by mail and
shall be deemed to have been given when delivered in person, upon
receipt of telecopy against receipt of answer back or four Business
Days after depositing it in the mail, registered or certified, with
postage prepaid and properly addressed; provided, however, that
notices shall not be effective until received. For the purposes
hereof, the addresses of the parties hereto (unless notice of a change
thereof is delivered as provided in this Section 7.8) shall be set
forth under each party's name on the signature pages hereto.
7.9 Survival of Warranties and Certain Agreements. All agreements,
representations and warranties made herein and in the other Loan
Documents shall survive the execution and delivery of this Agreement
and in the other Loan Documents, the making of the Loan hereunder and
the execution and delivery of the Notes or the Loan Documents and,
notwithstanding the making of the Loan, the execution and delivery of
the Notes and the other Loan Documents or any investigation made by or
on behalf of any party, shall continue in full force and effect. The
closing of the transactions herein contemplated shall not prejudice
any right of one party against any other party in respect of anything
done or omitted hereunder or in respect of any right to damages or
other remedies.
7.10 Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of the Lender or the holder of the Notes
or the Trustee in the exercise of any power, right or privilege or be
construed to be a waiver of any default or acquiescence therein, nor
shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or of any other
right, power or privilege. All rights and remedies existing under
this Agreement, the Notes or any other Loan Document are cumulative to
and not exclusive of any rights or remedies otherwise available.
7.11Severability. In case any provision in or obligation under this
Agreement, under a Guarantee or the Notes shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any
way be affected or impaired thereby.
7.12 Headings. Section and Section headings in this Agreement are
included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given
any substantive effect.
7.13 Applicable Law. THIS AGREEMENT, EACH LOAN DOCUMENT OTHER THAN THE
MORTGAGE AND THE NOTES SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW.
7.14 Successors and Assigns; Subsequent Holders of Notes. This
Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of
the parties hereto and the successors and assigns of the Lenders. The
terms and provisions of this Agreement and each Loan Document shall
inure to the benefit of any assignee or transferee of the Notes
pursuant to Section 7.1, and in the event of such transfer or
assignment, the rights and privileges herein conferred upon the Lender
shall automatically extend to and be vested in such transferee or
assignee, all subject to the terms and conditions hereof. The
Company's rights or any interest therein hereunder may not be assigned
without the prior express written consent of the Lender and the
Trustee.
7.15 Counterparts; Effectiveness. This Agreement and any amendments,
waivers, consents or supplements may be executed in any number of
counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one
and the same instrument. This Agreement shall become effective upon
the execution of a counterpart hereof by each of the parties hereto.
7.16 Consent to Jurisdiction; Venue; Waiver of Jury Trial.
A. Any legal action or proceeding with respect to this Agreement, any
Note or any 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
parties to this Agreement hereby irrevocably accepts for itself and in
respect of its respective property, generally and unconditionally, the
jurisdiction of the aforesaid courts. Each of the parties to this
Agreement hereby further irrevocably waives any claim that any such
courts lack jurisdiction over itself, and agrees not to plead or
claim, in any legal action or proceeding with respect to this
Agreement, the Notes or Loan Documents brought in any of the aforesaid
courts, that any such court lacks jurisdiction over such party. Each
of the parties to this Agreement irrevocably consents to the service
of process in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to such
party, at its respective address for notices pursuant to Section 7.8
such service to become effective 30 days after such mailing. To the
extent permitted by law, each of the parties to this Agreement hereby
irrevocably waives any objection to such service of process and
further irrevocably waives and agrees not to plead or claim in any
action or proceeding commenced hereunder or under the Notes or any
Loan Document that service of process was in any way invalid or
ineffective. Nothing herein shall affect the right of any party to
this Agreement to serve process in any other manner permitted by law
or to commence legal proceedings or otherwise proceed against any
party in any other jurisdiction.
B. Each of the parties to this Agreement hereby irrevocably waives any
objection which it may now or hereafter have to the laying of venue of
any of the aforesaid any of actions or proceedings arising out of or
in connection with this Agreement, the Notes or any of the Loan
Documents brought in the courts referred to in clause A above and
hereby further irrevocably waives and agrees not to plead or claim in
any such court that any such action or proceeding brought in any such
court has been brought in an inconvenient forum.
C. Each of the parties to this Agreement hereby irrevocably waives all
right to a trial by jury in any action, proceeding or counterclaim
arising out of or relating to this Agreement, the Notes or the Loan
Documents or the transactions contemplated hereby or thereby.
7.17 Waiver of Stay, Extension or Usury Laws. The Company covenants
(to the extent that it may lawfully do so) that it will not at any
time insist upon, plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law or any usury law or
other law that would prohibit or forgive the Company from paying all
or any portion of the principal of or interest on the Loan as
contemplated herein, wherever enacted, now or at the time hereafter in
force, or which may affect the covenants or the performance of this
Agreement and (to the extent that it may lawfully do so), the Company
hereby expressly waives all benefit or advantage of any such law, and
covenants that it will not hinder, delay or impede the execution of
any power herein granted to the Lender, but will suffer and permit the
execution of every such power as though no such law had been enacted.
7.18 Usury Savings Clause. It is the intention of the parties hereto
to comply with applicable usury laws (now or hereafter enacted);
accordingly, notwithstanding any provision to the contrary in this
Agreement, any Note, any of the other Loan Documents or any other
document related hereto or thereto, in no event shall this Agreement
or any such other document require the payment or permit the
collection of interest in excess of the maximum amount permitted by
such laws. If from any circumstances whatsoever, fulfillment of any
provision of this Agreement, any Note, any of the other Loan Documents
or of any other document pertaining hereto or thereto, shall involve
transcending the limit of validity prescribed by applicable law for
the collection or charging of interest, then, ipso facto, the
obligation to be fulfilled shall be reduced to the limit of such
validity, and if from any such circumstances the Lender shall ever
receive anything of value as interest or deemed interest by applicable
law under this Agreement, any Note, any of the other Loan Documents or
any other document pertaining hereto or otherwise an amount that would
exceed the highest lawful rate, such amount that would be excessive
interest shall be applied to the reduction of the principal amount
owing under the Loan or on account of any other indebtedness of the
Company, and not to the payment of interest, or if such excessive
interest exceeds the unpaid balance of principal of such indebtedness,
such excess shall be refunded to the Company. In determining whether
or not the interest paid or payable with respect to any indebtedness
of the Company to Lender under any specified contingency, exceeds the
highest lawful rate, the Company and the Lender shall, to the maximum
extent permitted by applicable law, (a) characterize any non-principal
payment as an expense, fee or premium rather than as interest,
(b) exclude voluntary prepayments and the effects thereof,
(c) amortize, prorate, allocate and spread the total amount of
interest thereon does not exceed the maximum amount permitted by
applicable laws, and/or (d) allocate interest throughout the full term
of such indebtedness so that interest between portions of such
indebtedness, to the end that no such portion shall bear interest at a
rate greater than that permitted by applicable law.
WITNESS the due execution hereof by the respective duly
authorized officers of the undersigned as of the date first written
above.
COMPANY:
R&B FALCON CORPORATION
By:
Name: Robert Fulton
Title: Executive Vice President
Notice Address:
901 Threadneedle
Houston, TX 77079-2982
Telephone: (281) 496-5000
Telecopy: (281) 496-0285
LENDER:
RBF FINANCE CO.
By:
Name: Leighton Moss
Title: Vice President
Notice Address:
901 Threadneedle
Houston, TX 77079-2982
Telephone: (281) 496-5000
Telecopy: (281) 597-7556
- ------------------------------------------------------------------------
Exhibit I
R&B FALCON CORPORATION
SENIOR SECURED ___- YEAR TRANCHE PROMISSORY NOTE
New York, New York
$______________ March 26, 1999
FOR VALUE RECEIVED, R&B FALCON CORPORATION (the "Company"),
promises to pay to the order of RBF FINANCE CO. ("Payee"), the
principal amount of _________________________ Dollars ($_____________)
(or such lesser amount as shall equal the aggregate unpaid principal
amount of the __-year Tranche advances of the Loan) at the times
specified by the provisions of the Senior Secured Credit Agreement
dated as of March 26, 1999, as the same may at any time be amended,
modified or supplemented and in effect (the "Loan Agreement") between
the Company and the Lender.
The Company also promises to pay interest on the unpaid principal
amount hereof from the date hereof until paid in full at the rates and
at the times which shall be determined in accordance with the
provisions of the Loan Agreement.
This Note is issued pursuant to and entitled to the benefits of
the Loan Agreement, to which reference is hereby made for a more
complete statement of the terms and conditions under which the Loan
evidenced hereby was made and is to be repaid. Capitalized terms used
herein without definition shall have the meanings set forth in the
Loan Agreement.
The Senior Secured Credit Agreement dated as of March 26, 1999,
as the same may at any time be amended, modified or supplemented and
in effect (the "Loan Agreement") between the Company, the Lender named
therein, and United States Trust Company of New York, as Trustee.
All payments of principal and interest in respect of this Note
shall be made in lawful money of the United States of America in same
day funds to Payee at the office of United States Trust Company of New
York located at 114 West 47th Street, 25th Floor, New York, New York,
or at such other place in the State of New York as shall be designated
in writing for such purpose in accordance with the terms of the Loan
Agreement. Each of Payee and any subsequent holder of this Note
agrees, by its acceptance hereof, that before disposing of this Note
or any part hereof it will make a notation hereon of all principal
payments previously made hereunder and of the date to which interest
hereon has been paid; provided, however, that the failure to make a
notation of any payment made on this Note shall not limit or otherwise
affect the obligation of the Company hereunder with respect to
payments of principal or interest on this Note.
Whenever any payment on this Note shall be stated to be due on a
day which is not a Business Day, such payment shall be made on the
next succeeding Business Day and such extension of time shall be
included in the computation of the payment of interest on this Note.
This Note is subject to mandatory prepayment as provided in the
Loan Agreement and prepayment at the option of the Company as provided
in the Loan Agreement.
THE LOAN AGREEMENT AND THIS NOTE SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK WITHOUT REGARD TO THE PRINCIPALS OF CONFLICTS OF LAWS.
Upon the occurrence of an Event of Default, the unpaid balance of
the principal amount of this Note, together with all accrued but
unpaid interest thereon, may become, or may be declared to be, due and
payable in the manner, upon the conditions and with the effect
provided in the Loan Agreement.
The terms of this Note are subject to amendment only in the
manner provided in the Loan Agreement.
No reference herein to the Loan Agreement and no provision of
this Note or the Loan Agreement shall alter or impair the obligation
of the Company, which is absolute and unconditional, to pay the
principal of and interest on this Note at the place, at the respective
times, and in the currency herein prescribed.
The Company promises to pay all costs and expenses, including all
attorneys' fees, all as provided in Section 7.2 of the Loan Agreement,
incurred in the collection and enforcement of this Note. The Company
and endorsers of this Note hereby consent to renewals and extensions
of time at or after the maturity hereof, without notice, and hereby
waive diligence, presentment, protest, demand and notice of every kind
and, to the full extent permitted by law, the right to plead any
statute of limitations as a defense to any demand hereunder.
IN WITNESS WHEREOF, the Company has caused this Note to be
executed and delivered by its duly authorized officer, as of the day
and year and at the place first above written.
R&B FALCON CORPORATION
By:
Title:
- -------------------------------------------------------------------------
EXHIBIT II
NOTICE OF BORROWING
The undersigned hereby certifies that he is the __________________
of R&B Falcon Corporation, a Delaware corporation ( the "Company"),
and that as such he is authorized to execute this Notice of Borrowing
on behalf of the Company. With reference to that certain Loan
Agreement dated as of _______________, 1999 (as same may be amended,
modified, increased, supplemented and/or restated from time to time,
the "Agreement") entered into by and between the Company and RBF
Finance Co., and any other future holder of any Note issued pursuant
to the Agreement ("Lender"), the undersigned further certifies,
represents and warrants on behalf of the Company that all of the
foregoing statements are true and correct (each capitalized term used
herein having the same meaning given to it in the Agreement unless
otherwise specified):
(a)The Company requests that the Lender make an advance to the Company
on the 7-year Tranche of the Loan in the aggregate principal amount of
$_________________ and an advance to the Company on the 10-year
Tranche of the Loan in the aggregate principal amount of $__________
by no later than _______________. Immediately following such advance,
the aggregate outstanding balance of advances made on the 7-year
Tranche and the 10-year Tranche Loan shall equal $_______________ and
$___________, respectively.
(b)As of the date hereof, and as a result of the making of the
requested advance, no event shall have occurred and be continuing or
would result from the consummation of the borrowing contemplated by
the Notice of Borrowing which would constitute an Event of Default, a
Potential Event of Default or a Default.
(c)Borrower has performed and complied with all agreements and
conditions contained in the Agreement which are required to be
performed or complied with by Borrower before or on the date hereof
and, except as waived in writing or otherwise agreed to in writing by
the Lender, all of the conditions precedent set forth in Section 3.1
or 3.2, as applicable, of the Agreement under Conditions to Loan have
been satisfied.
(d)The representations and warranties of the Company contained in
Section 4 of the Agreement are true, correct and complete in all
material respects on and as of the date hereof to the same extent as
though made on and as of that date, and (ii) on or prior to the date
hereof, the Company has performed and complied with in all material
respects all covenants and conditions to be performed and observed by
the Company on or prior to the date hereof.
EXECUTED AND DELIVERED this _______ day of _____________, _____.
R&B FALCON CORPORATION
By:
Name:
Title:
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EXHIBIT III
FORM OF LEGAL OPINION
Opinions of Counsel that (i) the Company has duly
authorized, executed and delivered the Mortgage; (ii) the Mortgage
constitutes a legally binding obligation of the Company enforceable
against the Company in accordance with its terms (except as (i) the
enforceability thereof may be limited bankruptcy, insolvency or other
similar laws affecting creditors' rights, generally, and (ii) the
enforceability thereof may be limited by right of acceleration and the
availability of enforceable remedies may be limited by equitable
principles of general applicability, and subject to such other
exceptions, limitations or qualifications that are usual and customary
for such opinions) and (iii) the Mortgage constitutes a valid and
perfected first mortgage lien on the Mortgaged Rig.
EXHIBIT 10.3
[PEREGRINE I]
=========================================================================
SENIOR SECURED LOAN AGREEMENT
Dated as of
March 26, 1999
between
R&B FALCON CORPORATION,
as Borrower
and
RBF FINANCE CO.,
as Lender
=========================================================================
TABLE OF CONTENTS
Page
SECTION 1.DEFINITIONS
1.1.Certain Defined Terms
1.2.Other Defined Terms
1.3.Accounting Terms
1.4.Other Definitional Provisions
SECTION 2.LOAN COMMITMENT AND LOAN
2.1.Termination of Loan Commitment
2.2.Termination of Loan Commitment
2.3.Interest on the Loans
2.4.Redemptions
2.5.Excess Proceeds Offers
2.6.Use of Proceeds
2.7.Commitment Fee
SECTION 3.CONDITIONS
3.1.Conditions to Initial Advances on the Loan
3.2.Conditions to Subsequent Advance on the Loan
SECTION 4.REPRESENTATIONS AND WARRANTIES
4.1.Organization and Good Standing; Capitalization
4.2.Authorization and Power
4.3.No Conflicts or Consents
4.4.Enforceable Obligations
4.5.Properties; Liens
4.6.No Default
4.7.Use of Proceeds; Margin Stock, etc
4.8.Survival of Representations and Warranties
SECTION 5.COVENANTS
5.1.Indenture Covenants
5.2.Reports of Defaults, Etc
5.3.Payments in U.S. Dollars
5.4.Performance and Enforcement Under the Loan Documents
5.5.Liens
5.6.Transfer of Mortgage Rig to a Restricted Subsidiary
SECTION 6.EVENTS OF DEFAULT
6.1.Failure To Make Payments When Due
6.2.Default Under The Indenture
6.3.Other Loan Agreement
6.4.Breach of Certain Covenants
6.5.Breach of Warranty
6.6.Other Defaults Under Agreement or Loan Documents
6.7.Involuntary Bankruptcy; Appointment of Custodian, etc
6.8.Voluntary Bankruptcy; Appointment of a Custodian; etc
SECTION 7.MISCELLANEOUS
7.1.Pledges and Assignments of Loan and Note
7.2.Expenses
7.3.Indemnity
7.4.Additional Amounts
7.5.Taxes and Other Taxes
7.6.Amendments and Waivers
7.7.Independence of Covenants
7.8.Notices
7.9.Survival of Warranties and Certain Agreements
7.10.Failure or Indulgence Not Waiver; Remedies Cumulative
7.11.Severability
7.12.Headings
7.13.Applicable Law
7.14.Successors and Assigns; Subsequent Holders of Notes
7.15.Counterparts; Effectiveness
7.16.Consent to Jurisdiction; Venue; Waiver of Jury Trial
7.17.Waiver of Stay, Extension or Usury Laws
7.18.Usury Savings Clause
EXHIBITS
I FORM OF NOTE
II FORM OF NOTICE OF BORROWING
III FORM OF OPINION OF GARDERE & WYNNE - SPECIAL COUNSEL FOR THE BORROWER
IV FORM OF MORTGAGE
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This Senior Secured Loan Agreement is dated as of March 26, 1999,
and entered into by and among R&B Falcon, Inc., a Delaware corporation
(the "Company") and RBF Finance Co., a Delaware corporation (the
"Lender").
RECITALS
WHEREAS, the Lender has entered into an Indenture of even date
herewith (as the same may be amended, or supplemented or otherwise
modified from time to time, the "Indenture") with United States Trust
Company of New York as Trustee (the "Trustee"), pursuant to which the
Lender will issue in two series up to $400,000,000 aggregate principal
amount of its 11% Senior Secured Notes due 2006 (the "7-year Secured
Notes") and up to $400,000,000 aggregate principal amount of its
11 3/8% Senior Secured Notes due 2009 (the "10-year Secured Notes;" the
7-year Secured Notes and the 10-year Secured Notes being hereinafter
collectively called the "Secured Notes"); and
WHEREAS, the Indenture provides that the Lender may utilize the
proceeds of the Secured Notes to make loans to the Company, each for
the purpose of either (i) financing all or a portion of the cost of
acquiring, constructing, altering, improving or repairing a drilling
rig or drillship (a "Rig") or improvements used or to be used in
connection with such a Rig, or (ii) financing all or any part of the
purchase price of the Rig or improvements used or to be used in
connection with such Rig, which indebtedness is incurred prior to or
within one year after the date of the completion of construction,
alteration, improvement or repair or the commencement of commercial
operations thereof; and
WHEREAS, the Company desires that the Lender extend senior secured
credit facilities to the Company for such purposes herein; and
WHEREAS, the Indenture provides that the Lender will enter into a
Senior Secured Note Security and Pledge Agreement of even date
herewith (the "Issuer Security Agreement") between the Lender, the
Trustee and United States Trust Company of New York as Collateral
Agent (in such capacity, the "Collateral Agent"), pursuant to which
the Lender will pledge and grant a security in the loans made with the
proceeds of the Secured Notes which are or will be secured by Rigs;
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, the parties
hereby agree as follows:
SECTION 1 DEFINITIONS
1.1 Certain Defined Terms. The following terms used in this Agreement
shall have the following meanings:
"Agreement" means this Senior Secured Loan Agreement dated as of
March 26, 1999, as it may be amended, supplemented or otherwise
modified from time to time in accordance with the terms hereof.
"Board of Directors" means, with respect to any Person, the Board
of Directors of such Person or any duly authorized committee of that
Board.
"Board Resolution" means a duly adopted resolution of the Board of
Directors of the Company in full force and effect at the time of
determination and certified as such by the Secretary or Assistant
Secretary of the Company.
"Business Day" means any day excluding Saturday, Sunday and any
day which is a legal holiday under the laws of New York, New York or
is a day on which banking institutions therein located are authorized
or required by law or other governmental action to close.
"Cash Equivalents" means (i) U.S. Governmental Obligations with a
maturity of four years or less; (ii) commercial paper issued by any
corporation if such commercial paper has credit ratings of at least "A-
1" from S&P or at least "P-1" by Moody's; (iii) certificates of
deposit, bankers' acceptances, time deposits, Eurocurrency Deposits
and similar types of Investments routinely offered by commercial banks
with final maturities of one year or less issued by commercial banks
having combined capital and surplus in excess of $100,000,000; and
(iv) shares in money market mutual or similar funds having assets in
excess of $100,000,000.
"Closing Date" means the date on or before March 26, 1999 on which
the initial advance of the Loan is made and the conditions set forth
in Section 3.1 are satisfied or waived in accordance with Section 7.7.
"Collateral" means the Mortgaged Rig and any other property
subject to the Lien created under a Mortgage or a Loan Document.
"Commission" means the Securities and Exchange Commission.
"Company" has the meaning ascribed to such term in the
introduction to this Agreement.
"Collateral Agent" has the meaning assigned to such term in the
recitals to this Agreement.
"Contractual Obligation," as applied to any Person, means any
provision of any Security issued by that Person or of any indenture,
mortgage, deed of trust, contract, undertaking, agreement or other
instrument to which that Person is a party or by which it or any of
its properties is bound or to which it or any of its properties is
subject.
"Dollars" or the sign "$" means the lawful money of the United
States of America.
"Event of Default" means each of the events set forth in
Section 6.
"indemnified liabilities" has the meaning ascribed to such term in
Section 7.3.
"Indemnitees" has the meaning ascribed to such term in
Section 7.3.
"Indenture" has the meaning ascribed to such term in the recitals
of this Agreement.
"Laws" means all applicable statutes, laws, ordinances,
regulations, rules, orders, judgments, writs, injunctions or decrees
of any state, commonwealth, nation, territory, possession, province,
county, parish, town, township, village, municipality or Tribunal, and
"Law" means each of the foregoing.
"Lender" has the meaning ascribed to that term in the introduction
of this Agreement and shall include any assignee of the Loan or the
Note or Loan Commitment to the extent of such assignment.
"Lien" means any lien, mortgage, pledge, assignment, security
interest, charge or encumbrance of any kind (including any conditional
sale or other title retention agreement, any lease in the nature
thereof, and any agreement to give any security interest) and any
option, trust or other preferential arrangement having the practical
effect of any of the foregoing.
"Loan" means, collectively, the loans made by the Lender pursuant
to Section 2.1.
"Loan Documents" means this Agreement, the Note and the Mortgage.
"Margin Stock" has the meaning assigned to that term in
Regulation U of the Board of Governors of the Federal Reserve System
as in effect from time to time.
"Material Adverse Effect" means (i) a material adverse effect upon
the business, property, assets, nature of assets, liabilities
condition (financial or otherwise), results of operation or prospects
of the Company and its Restricted Subsidiaries, taken as a whole, or
(ii) the impairment of the ability of the Company or any of its
Restricted Subsidiaries to perform, or the impairment of the ability
of Lender to enforce, any material right or remedy under the
Obligations.
"Maturity" means the date on which the principal of the Loan,
whether the 7-year Tranche or 10-year Tranche or both, becomes due and
payable as provided in this Agreement whether at Stated Maturity, upon
redemption, by declaration of acceleration or otherwise.
"Mortgage" means a mortgage substantially in the form of Exhibit
IV covering the Mortgaged Rig.
"Mortgaged Rig" means the Peregrine I
"Notes" has the meaning ascribed to such term in Section 2.1C.
"Notice of Borrowing" means a notice substantially in the form of
Exhibit II annexed hereto with respect to a proposed borrowing.
"Obligations" means all obligations of every nature of the Company
from time to time owed to the Lender under the Loan Documents, whether
for principal, reimbursements, interest (including post-petition
interest), fees, expenses, indemnities or otherwise, and whether
primary, secondary, direct, indirect, contingent, fixed or otherwise
(including obligations of performance).
"Officer" means the Chairman of the Board, the Chief Executive
Officer, the Chief Operating Officer, the President, any Vice
President, the Chief Financial Officer, the Controller, the Chief
Accounting Officer, any Vice President, the Treasurer or the Secretary
of the Company.
"Officers' Certificate" means, as applied to any corporation, a
certificate executed on behalf of such corporation by two officers;
provided, however, that every Officers' Certificate with respect to
the compliance with a condition precedent to the making of the Loans
hereunder shall include (i) a statement that the officer or officers
making or giving such Officers' Certificate have read such condition
and any definitions or other provisions contained in this Agreement
relating thereto, (ii) a statement that, in the opinion of the
signers, they have made or have caused to be made such examination or
investigation as is necessary to enable them to express an informed
opinion as to whether or not such condition has been complied with,
and (iii) a statement as to whether, in the opinion of the signers,
such condition has been complied with.
"Other Loan" means a loan made pursuant to an Other Loan Agreement
by the Lender with the proceeds of the Secured Notes which is secured
by a Mortgaged Rig.
"Other Loan Agreement" means a loan agreement among the Lender,
the Company and the Trustee pursuant to which the Lender will utilize
the proceeds of the Secured Notes to make an Other Loan for the
purposes specified in the second recital of this Agreement
"Other Mortgaged Rig" means a Rig which has been mortgaged to
secure an Other Loan or which is the subject of a construction
contract which has been pledged to secure an Other Loan.
"Other Taxes" has the meaning ascribed to such term in
Section 7.6.
"Payment Office" shall mean the office of United States Trust
Company of New York located at 114 West 47th Street, 25th Floor, New
York, New York 10036 or such other office in the State of New York as
the Lender may designate to the Company and the Trustee from time to
time.
"Potential Event of Default" means a condition or event which,
after notice or lapse of time or both, would constitute an Event of
Default if that condition or event were not cured or removed within
any applicable grace or cure period.
"Purchase Agreement" means the Purchase Agreement dated March 19,
1999 among the Lender, the Company and the Initial Purchaser relating
to the Secured Notes.
"Securities" means any stock, shares, partnership interests,
voting trust certificates, certificates of interest or participation
in any profit sharing agreement or arrangement, bonds, debentures,
options, warrants, notes, or other evidences of indebtedness, secured
or unsecured, convertible, subordinated or otherwise, or in general
any instruments commonly known as "securities" or any certificates of
interest, shares or participations in temporary or interim
certificates for the purchase or acquisition of, or any right to
subscribe to, purchase or acquire, any of the foregoing.
"7-year Tranche" means advances on the Loan aggregating up to
$8,000,000 and having a final Loan Maturity of March 15, 2006.
"Taxes" means all taxes, assessments, fees, levies, imposts,
duties, penalties, deductions, liabilities, withholdings or other
charges of any nature whatsoever, including interest penalties, from
time to time or at any time imposed by any Law or any Tribunal.
"10-year Tranche" means advances on the Loan aggregating up to
$8,000,000 and having a final Maturity of March 15, 2009.
"Transaction Costs" means the fees, costs and expenses payable by
the Company pursuant hereto and other fees, costs and expenses payable
by the Company in connection with the Transactions.
"Transactions" shall mean, collectively, (i) the issuances and
sale of the Secured Notes, (ii) the incurrence of the Loan hereunder
on the Closing Date, (iii) the incurrence of the Other Loans under the
Other Loan Agreements, (iv) any other transaction on the Closing Date
contemplated in relation to the foregoing and (v) the payment of fees
and expenses in connection with the foregoing.
"Tranches" means collectively the 7-year Tranche and the 10-year
Tranche.
"Tribunal" means any governmental, any arbitration panel, any
court or any governmental department, commission, board, bureau,
agency, authority or instrumentality of the United States or any
state, province, commonwealth, nation, territory, possession, county,
parish, town, township, village or municipality, whether now or
hereafter constituted and/or existing.
"Trustee" has the meaning ascribed to such term in the
introduction of this Agreement and shall include any successor Trustee
appointed pursuant to terms of the Indenture.
"U.S. Legal Tender" means such coin or currency of the United
States of America as at the time of payment shall be legal tender for
the payment of public and private debts.
1.2 Other Defined Terms. Any capitalized term used in this Agreement
and not defined herein shall have the meaning assigned to such term in
the Indenture.
1.3 Accounting Terms. For the purposes of this Agreement, all
accounting terms to otherwise defined herein shall have the meanings
assigned to them in conformity with GAAP.
1.4 Other Definitional Provisions. Any of the terms defined in
Section 1.1 may, unless the context otherwise requires, be used in the
singular or the plural depending on the reference.
SECTION 2 LOAN COMMITMENT AND LOAN
2.1 The Loan and Notes.
A. Loan Commitment. Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties of
the Company herein set forth, the Lender hereby agrees to lend to the
Company on the Closing Date and thereafter up to $16,000,000 in the
aggregate (the "Loan") consisting of $8,000,000 of 7-year Tranche
advances and $8,000,000 of 10-year Tranche advances. The Lender's
commitment to make the Loan to the Company pursuant to this
Section 2.1 is herein called the "Loan Commitment."
B. Notice of Borrowing. When the Company desires to borrow under this
Agreement, it shall deliver to the Collateral Agent a Notice of
Borrowing no later than 11:00 a.m. (New York time), at least one
Business Day in advance of the Closing Date or such other date as
shall be agreed to by the Lender and the Trustee. The Notice of
Borrowing shall specify the amount of each Tranche and the applicable
date of borrowing (which shall be a Business Day).
C. Disbursement of Funds. No later than 3:00 p.m. (New York time) on
the Closing Date, the Lender promptly will make available to the
Company by depositing to its account at the Payment Office the
aggregate of the amount of the Loan to be made on such Closing Date.
D. Notes. The Company shall execute and deliver to the Lender on the
Closing Date two Notes dated the Closing Date, one substantially in
the form of Exhibit I annexed hereto with appropriate insertions to
evidence the maximum amount of the 7-year Tranche of Loan which may be
made hereunder by the Lender and the other substantially in the form
of Exhibit I annexed hereto with appropriate insertions to evidence
the maximum amount of 10-year Tranche of the Loan which may be made by
the Lender hereunder.
E. Scheduled Payments of Loan. The Company shall pay on or before 10:00
a.m. on the date of the final Maturity of the 7-year Tranche of the
Loan all of the principal amount of the 7-year Tranche remaining
outstanding, which amount will be $8,000,000 principal amount of the
Loan, reduced by any previous prepayments of principal made on the
7-year Tranche of the Loan to the extent that such payments have been
allocated pursuant to the provisions of Section 2.3 hereof and the
Indenture to the 7-year Secured Notes, together with accrued and
unpaid interest, fees and a pro rata portion of the amount of the
Special Interest and Additional Amounts, if any, due on the 7-year
Secured Notes. The Company shall pay on or before 10:00 a.m. on the
date of the final Maturity of the 10-year Tranche all of the principal
amount of the 10-year Tranche then remaining outstanding, reduced by
any previous prepayments of principal made on the 10-year Tranche of
the Loan to the extent that such payments have been allocated pursuant
to the provisions of Section 2.3 hereof and the Indenture to the 10-
year Secured Notes, together with accrued and unpaid interest fees and
a pro rata portion of the amount of the Special Interest and
Additional Amounts, if any, due on the 10-year Secured Notes. Such
payments shall be made directly to the Trustee for deposit in the
Issuer Escrow Account established pursuant to the Issuer Escrow
Agreement.
F. Termination of Loan Commitment. The Loan Commitment hereunder shall
terminate on the earlier (i) the Stated Maturity (whether by
acceleration, redemption, purchase or otherwise) of the Secured Notes
pursuant to the terms of the Indenture or (ii) May 14, 1999, if no
portion of the Loan has been made on or before such date (other than
as a result of failure of the Lender to fulfill its obligations
hereunder).
G. Satisfaction by Payments on the Guarantee. Pursuant to the
Indenture, the Company will guarantee the due and punctual payment of
the principal of, premium, if any, and interest on, and all other
amounts payable under, the Secured Notes (including any Additional
Amounts payable upon redemption, in respect thereof) when and as the
same shall become due and payable, whether at Stated Maturity, by
declaration of acceleration or otherwise. To the extent that the
Company makes a payment on the Guarantee, it will be deemed to have
made a payment on the Issuer Loans then outstanding, such payments to
be allocated pro rata to each of Tranches of the Loan and pro rata to
the Loan and the Other Loans.
2.2 Interest on the Loans.
A. Rate of Interest. The 7-year Tranche of the Loan shall bear interest
on the unpaid principal amount thereof from the date made through
Maturity for the 7-year Tranche (whether by prepayment, acceleration
or otherwise) at a rate equal to 11% per annum plus 2 basis points per
annum and the 10-year Tranche of the Loan shall bear interest on the
unpaid principal amount thereof from the date made through Maturity
for the 10-year Tranche (whether by prepayment, acceleration or
otherwise) at a rate equal to 11 3/8% per annum plus 2 basis points per
annum.
B. Special Interest. The Lender and the Company have entered into a
Registration Rights Agreement (the "Registration Rights Agreement")
dated March 26, 1999 with Donaldson, Lufkin & Jenrette Securities
Corporation for the benefit of the Holders of the Secured Notes, in
which the Lender and the Company have agreed to: (A) file a
registration statement within 60 days after the closing date of the
offering of Secured Notes for an offer to exchange Secured Notes of
each series for debt securities of that series with identical terms
(except for transfer restrictions); (B) use their best efforts to
cause the registration statement to become effective within 150 days
after the closing date of the offering of the Secured Notes; and
(C) complete the registered exchange offer within 180 days after the
closing date of the offering of the Secured Notes. Under certain
circumstances, the Lender and the Company may be required to file a
shelf registration statement for the Secured Notes registering the
resale of the Secured Notes. If the Lender and the Company do not
comply with their obligations under the Registration Rights Agreement,
the Lender will be required to pay additional interest ("Special
Interest") specified in Section 5 of the Registration Rights
Agreement. The Company will pay on each date that the Lender pays
Special Interest to the Holders of the Secured Notes as Special
Interest on the Loan an amount equal to the percentage of Special
Interest, if any, which the Lender owes to the Holders of the Secured
Notes that the principal amount of the Loan bears to the total
aggregate principal amount of the Loan and all Other Loans then
outstanding. Such payment shall be paid directly to the Trustee for
deposit into the Issuer Escrow Account.
Notwithstanding any provisions of this Section 2.2 or any
other provision herein, in no event will the combined sum of interest
(cash or otherwise) on the Loan exceed the maximum amount permitted by
applicable law.
C. Interest Payments. Interest (including Special Interest, if any,
and Additional Amounts, if any) shall be payable semi-annually on
March 15 and September 15 of each year, commencing September 15, 1999
but in no event to exceed the maximum permitted by applicable law.
All payments of interest on the Loan shall be made on or before 10:00
a.m. (New York time) on the date of payment and shall be paid directly
to the Trustee for deposit into the Issuer Escrow Account.
D. Post-Maturity Interest. Any principal payments on the Loan not paid
when due and, to the extent permitted by applicable law, any interest
payment on the Loan not paid when due, in each case whether at Stated
Maturity, by notice of prepayment, by acceleration or otherwise, shall
thereafter bear interest payable upon demand at a rate of interest
otherwise payable under this Agreement for the Loan but in no event to
exceed the maximum interest rate permitted by applicable law.
E. Computation of Interest. Interest on the Loan shall be computed on
the basis of a 360-day year of twelve 30-day months.
2.3 Redemptions.
A. Redemption upon Loss of the Mortgaged Rig. If an Event of Loss
occurs at any time with respect to the Mortgaged Rig attributable to
the Loan, the Company shall apply funds in an amount (the "Loss
Redemption Amount") equal to the principal amount of the Loan
outstanding on the date (the "Loss Date") on which such Event of Loss
was deemed to have occurred, together with all accrued and unpaid
interest (including Special Interest, if any, and Additional Amounts,
if any) thereon, to the prepayment of the Loan. If an Event of Loss
occurs at any time with respect to any Other Mortgaged Rig, the
Indenture and the applicable Other Loan Agreement require that the
Company shall apply funds to the principal amount of the applicable
Other Loan secured by the Other Mortgaged Rig outstanding on the Loss
Date for such other Mortgaged Rig, together with all accrued and
unpaid interest (including Special Interest, if any, and Additional
Amounts, if any) thereon, to the payment of such Other Loan. If a
Default under the Indenture shall have occurred and be continuing at
the time of the receipt of the Event of Loss Proceeds with respect to
such Other Mortgaged Rig, the Indenture requires, and the Company
hereby agrees, that it shall prepay the Loan and the remaining Other
Loans on a pro rata basis in an aggregate amount equal to the excess
of the Net Event of Loss Proceeds over the Loss Redemption Amount, if
any, together with all accrued and unpaid interest (including Special
Interest, if any, and Additional Amounts, if any) thereon for the
Other Loan which is secured by such Other Mortgaged Rig. All payments
on the Loan shall be allocated on a pro rata basis between the
Tranches and shall be made directly to the Trustee for deposit into
the Issuer Escrow Account.
B. Redemption upon Sale of the Mortgaged Rig. If the Mortgaged Rig or
the Capital Stock of a Subsidiary Guarantor then owning the Mortgaged
Rig is sold in compliance with the terms of the Indenture, the Company
shall apply funds in an amount (the "Sale Redemption Amount") equal to
the principal amount of the Loan secured by the Mortgaged Rig on the
date of such sale (the "Sale Date"), together with all accrued and
unpaid interest (including Special Interest, if any, and Additional
Amounts, if any thereon, plus any additional amounts required by the
Lender to redeem the Secured Notes to the extent required by
Section 3.9 of the Indenture, to the prepayment of the Loan. If any
Other Mortgaged Rig or the Capital Stock of a Subsidiary Guarantor
then owning an Other Mortgaged Rig is sold in compliance with the
terms of the Indenture, the Company shall apply funds equal to the
applicable Other Loan secured by the Other Mortgaged Rig outstanding
on the Sale Date for such Other Mortgaged Rig, together with all
accrued and unsecured interest (including Special Interest, if any,
and Additional Amounts, if any) thereon, to the payment of such Other
Loan. If a Default under the Indenture shall have occurred and be
continuing at the time of receipt of the cash consideration with
respect to such Other Mortgaged Rig or Capital Stock of the Subsidiary
Guarantor owning such Other Mortgaged Rig, the Indenture requires, and
the Company hereby agrees, that it shall also be required to prepay
the Loan and the remaining Other Loans on a pro rata basis in an
aggregate amount equal to the excess of such Net Available Cash
attributable to such Sold Mortgaged Rig over such Sale Redemption
Amount. Such payments on the Loan and the Other Loans pursuant hereto
shall be respectively allocated between the Tranches of the Loan and
the Other Loans on a pro rata basis and shall be made directly to the
Trustee for deposit into the Issuer Escrow Account.
C. Other Redemptions.
(i)Redemptions to Fund Optional Redemptions of the 10-year Secured
Notes. Under the terms of the Indenture, on or after March 15, 2004,
the 10-year Secured Notes will be redeemable, at the Lender's option,
in whole or in part, at any time or from time to time, upon not less
than 30 nor more than 60 days' prior notice to the Holders of the 10-
year Secured Notes, at the following Redemption Prices (expressed in
percentages of principal amount), plus accrued and unpaid interest
(including Special Interest, if any, and Additional Amounts, if any)
to the Redemption Date, if redeemed during the 12-month period
commencing on March 15 of the years set forth below.
Redemption
Period Price
2004 105.6875%
2005 103.7917
2006 101.8958
2007 and thereafter 100.0000
The Company shall prepay the 10-year Tranche of the Loan and of
the Other Loans, in whole or in part, to provide funds for such
redemption. Any prepayments by the Company on the Loan and the
Other Loans required to be made to provide funds for the Lender
to make such a redemption shall be made on this Loan and the
Other Loans on a pro rata basis. All payments on the Loan and
the Other Loans pursuant hereto shall be made directly to the
Trustee for deposit into the Issuer Escrow Account.
(ii)Redemptions to Fund Optional Redemptions of the 7-year Secured
Notes. Under the terms of the Indenture, the 7-year Secured Notes
will be redeemable, at the Lender's option at any time in whole or
from time to time in part upon not less than 30 and not more than
60 days' prior notice mailed by first class mail to the Holders of the
7-year Secured Notes, on any date prior to Maturity at a price equal
to 100% of the principal amount thereof plus accrued and unpaid
interest (including Special Interest, if any, and Additional Amounts,
if any) to the Redemption Date plus the Make-Whole Premium applicable
to the 7-year Secured Notes determined in the manner provided for in
Section 3.7 of the Indenture. The Company shall prepay the 7-year
Tranche of the Loan and of the Other Loans in whole or in part to
provide funds for such redemption. Any prepayments by the Company on
the Loan and the Other Loans required to be made to provide funds for
the Lender to make such a redemption shall be made on the Loan and the
Other Loans on a pro rata basis. All payments on the Loan and the
Other Loans pursuant hereto shall be made directly to the Trustee for
deposit into the Issuer Escrow Account.
D. Excess Proceeds Offers. The Indenture provides in Section 3.10
thereof that if, as of the first day of any calendar month, the
aggregate amount of Sale Excess Proceeds and Loss Excess Proceeds
exceeds 10% of consolidated total assets of the Company, and if the
aggregate amount of Sale Excess Proceeds and Loss Excess Proceeds in
excess of 10% of consolidated total assets of the Company that has not
theretofore been subject to an Excess Proceeds Offer (as defined
below) (the "Excess Proceeds Offer Amount"), totals at least $10
million, the Lender must, not later than the fifteenth Business Day of
such month, make an offer ( an "Excess Proceeds Offer") to purchase
from the Holders of the Secured Notes, pursuant to and subject to the
conditions contained in the Indenture, and from Holders of the New
Senior Notes, pursuant to provisions of the New Senior Note Indenture,
Secured Notes at a purchase price equal to 100% of their principal
amount, plus any accrued interest (including Additional Amounts and
Special Interest, if any) to the date of purchase and New Senior Notes
at a purchase price equal to 100% of their principal amount, plus any
accrued interest (including Special Interest, if any) to the date of
purchase in an aggregate principal amount equal to the Excess Proceeds
Offer Amount (an "Excess Proceeds Payment"). If the Lender is ever
required pursuant to Section 3.10 of the Indenture to make an Excess
Proceeds Offer to the Holders of the Secured Notes to purchase from
such Holders their Secured Notes, and to the Holders of Senior Notes
to purchase from such Holders their New Senior Notes, the Indenture
provides, and the Company agrees, that the Company will prepay the
Loan and the Other Loans on a pro rata basis to permit the Lender to
purchase any Secured Notes validly tendered pursuant to an Excess
Proceeds Offer. All payments on the Loan shall be allocated between
the appropriate Tranches of the Loan; and all payments on the Loan and
the Other Loans pursuant hereto shall be made directly to the Trustee
for deposit into the Issuer Escrow Account.
E. Change of Control. If the Lender is ever required to make pursuant
to the provisions of Section 4.8 of the Indenture a Change of Control
Offer to the Holders of the Secured Notes at a purchase price in cash
equal to 101% of the principal amount thereof plus accrued and unpaid
interest (including Additional Amounts and Special Interest, if any)
thereon, the Indenture provides, and Company agrees, that the Company
will prepay the Loan and the Other Loans on a pro rata basis at a
redemption price equal to 101% of the principal amount hereof being
repaid, plus accrued and unpaid interest, Special Interest, if any,
and Additional Amounts, if any, thereon, in order to provide funds
sufficient to permit the Lender to purchase any Secured Notes validly
tendered pursuant to the foregoing offer to purchase Secured Notes
upon a Change of Control. All payments on the Loan shall be allocated
between the appropriate Tranches of the Loans and all payments on the
Loan and the Other Loans pursuant hereto shall be made directly to the
Trustee for deposit into the Issuer Escrow Account.
F. Notice. The Company shall notify the Lender and the Trustee of any
prepayment to be made pursuant to this Section 2.3 at least two
Business Days prior to such prepayment date.
G. Determination of Amounts of the Tranches Subject to Such
Redemptions. The Lender will submit a written determination to the
Trustee for its approval of the amount (including the pro rata
allocations between the Tranches of the Loan and between the Loan and
the Other Loans) with respect to any such redemption. The Trustee
shall approve or disapprove such allocations in its sole discretion
and such decision shall be conclusive, absent manifest error. A
certificate of the Lender setting forth such determination, with the
written approval of the Trustee thereon, shall be delivered to the
Company at least one Business Day prior to the payment date.
H. Company's Mandatory Prepayment Obligation; Application of
Prepayments. All prepayments shall include payment of accrued
interest (including Special Interest and Additional Amounts, if
applicable) on the principal amount so prepaid and shall be applied to
payment of interest before application to principal.
I. Manner and Time of Payment. Unless otherwise expressly set forth
herein, all payments of principal and interest hereunder and under the
Notes by the Company shall be made without defense, set-off or
counterclaim and in same-day funds and delivered to the Trustee for
deposit into the Issuer Escrow Account, unless otherwise specified,
not later than 10:00 a.m. (New York time) on the date due at the
Payment Office; funds received by the Trustee after that time shall be
deemed to have been paid by the Company on the next succeeding
Business Day.
J. Payments on Non-Business Days. Whenever any payment to be made
hereunder or under the Notes shall be stated to be due on a day which
is not a Business Day, the payment shall be made on the next
succeeding Business Day and such extension of time shall be included
in the computation of the payment of interest hereunder or under the
Loan.
2.4 Use of Proceeds.
A. Loan. The proceeds of the Loan may be applied by the Company to
finance certain costs of acquiring, constructing, repairing and
improving the Mortgaged Rig and, to the extent that such costs have
already been paid, for general corporate purposes.
B. Margin Regulations. No portion of the proceeds of any borrowing
under this Agreement shall be used by the Company in any manner which
might cause the borrowing or the application of such proceeds to
violate the applicable requirements of Regulation U, Regulation T or
Regulation X of the Board of Governors of the Federal Reserve System
or any other regulation of the Board or to violate the Exchange Act,
in each case as in effect on the date or dates of such borrowing and
such use of proceeds.
2.5 Commitment Fee. The Company agrees to pay a commitment fee for the
period from and including the Closing Date to and including the date
of termination specified in Section 2.1.F. on the undrawn portion of
the Loan equal to the average of the daily excess of the Loan
Commitment over the aggregate principal amount of the Loan outstanding
multiplied by 7% per annum, such commitment fee to be calculated on
the basis of a 360-day year consisting of twelve 30-day months and to
be payable semi-annually in arrears on each March 15 and September 15,
commencing September 15, 1999.
SECTION 3 CONDITIONS
3.1 Conditions to Initial Advances on the Loan. The obligation of the
Lender to make the initial advance on the Loan is subject to prior or
concurrent satisfaction of each of the following conditions:
A. On or before the Closing Date, all corporate and other proceedings
taken or to be taken in connection with the transactions contemplated
hereby and all documents incidental thereto not previously found
acceptable by the Lender and the Trustee shall be reasonably
satisfactory in form and substance to the Lender and the Trustee, and
the Lender and the Trustee shall have received the following items,
each of which shall be in form and substance satisfactory to the
Lender and the Trustee and, unless otherwise noted, dated the Closing
Date:
(i) a certified copy of the Company's charter, together with a
certificate of status, compliance, good standing or like certificate
with respect to the Company issued by the appropriate government
officials of the jurisdiction of its incorporation and of each
jurisdiction in which it owns any material assets or carries on any
material business, each to be dated a recent date prior to the Closing
Date;
(ii) a copy of the Company's bylaws, certified as of the Closing Date
by its Secretary or one of its Assistant Secretaries;
(iii) resolutions of the Company's Board of Directors approving and
authorizing the execution, delivery and performance of this Agreement,
the Notes, the Mortgage, each of the other Loan Documents, the
Indenture and any other documents, instruments and certificates
required to be executed by the Company in connection herewith and
therewith and approving and authorizing the execution, delivery and
payment of the Loan, each certified as of the Closing Date by its
Secretary or one of its Assistant Secretaries as being in full force
and effect without modification or amendment;
(iv)signature and incumbency certificates of the Company's officers
executing this Agreement, the Other Loan Documents and the Notes;
(v)executed copies of this Agreement and the Notes substantially in
the form of Exhibit I annexed hereto executed in accordance with
Section 2.1C drawn to the order of the Lender and with appropriate
insertions;
(vi)an originally executed Notice of Borrowing substantially in the
form of Exhibit II annexed hereto, signed by the President or a Vice
President of the Company on behalf of the Company and delivered to the
Lender; and
(vii)originally executed copies of one or more favorable written
opinions of Gardere & Wynne, special counsel for the Company,
substantially in the form of the Exhibit III hereto and addressed to
the Lender, the Trustee and the Initial Purchaser, and such other
opinions of counsel and such certificates or opinions of accountants,
appraisers or other professionals as the Lender, the Trustee or the
Initial Purchaser shall have reasonably requested.
B. The Lender shall have received a fully executed Mortgage in the form
of Exhibit IV hereto, which has been filed in all appropriate
jurisdictions.
C. On or before the Closing Date, all authorizations, consents and
approvals necessary in connection with the Transactions shall have
been obtained and remain in full force and effect and all applicable
waiting periods, if any, under law applicable to the Transactions
shall have expired without any action being taken by any competent
authority (including without limitation, any Tribunal) which
restrains, prevents or imposes materially adverse conditions upon the
completion of the Transactions or the financing thereof and evidence
of the receipt of such authorizations, consents and approvals
satisfactory to the Lender and the Trustee shall have been delivered
to the Lender and the Trustee.
D. On or before the Closing Date, the Indenture and the Purchase
Agreement shall have been executed and delivered by all parties
thereto. No default or event of default shall have occurred under the
Indenture and the Purchase Agreement, all conditions to the execution
delivery and authentication of the Secured Notes thereunder shall have
been satisfied under the Indenture, and all conditions to the purchase
of the Secured Notes by the Initial Purchaser under the Purchase
Agreement have been satisfied or waived by the Initial Purchaser.
E. Simultaneously with the making of the Loan by the Lender, the
Company shall have delivered to the Lender and the Trustee an
Officers' Certificate from the Company in form and substance
satisfactory to the Lender and the Trustee to the effect that (i) the
representations ad warranties of the Company in Section 4 are true,
correct and complete in all material respects on and as of the Closing
Date to the same extent as though made on and as of that date, and
(ii) on or prior to the Closing Date, the Company has performed and
complied with in all material respects all covenants and conditions to
be performed and observed by the Company on or prior to the Closing
Date and
F. No event shall have occurred and be continuing or would result from
the consummation of the borrowing contemplated by the Notice of
Borrowing which would constitute and Event of Default, a Potential
Event of Default or a Default.
G. No order, judgment or decree of any court, arbitrator or
governmental authority shall purport to enjoin or restrain the Lender
from making the Loan.
H.The making of the Loan in the manner contemplated in this Agreement
shall not violate the applicable provisions of Regulation T, U or X of
the Board of Governors of the Federal Reserve Board or any other
regulation of the Board.
3.2 Conditions to Subsequent Advance on the Loan. The obligation of
the Lender to make a subsequent advance on the Loan is subject to the
prior or concurrent satisfaction of each of the following conditions:
A.The Lender and the Trustee shall have received in form and substance
satisfactory to the Lender and the Trustee and dated the date of such
advance an originally executed Notice of Borrowing substantially in
the form of Exhibit II annexed hereto, signed by the President or a
Vice President of the Company on behalf of the Company and delivered
to the Lender.
B. No event shall have occurred and be continuing or would result from
the consummation of the borrowing contemplated by the Notice of
Borrowing which would constitute an Event of Default, a Potential
Event of Default or a Default.
C. No order, judgment or decree of any court, arbitrator or
governmental authority shall purport to enjoin or restrain the Lender
from making the Loan.
D. The making of the Loan in the manner contemplated in this Agreement
shall not violate the applicable provisions of Regulation T, U or X of
the Board of Governors of the Federal Reserve Board or any other
regulation of the Board.
E. Simultaneously with the making of the advance on the Loan by the
Lender, the Company shall have delivered to the Lender and the Trustee
an Officers' Certificate from the Company in form and substance
satisfactory to the Lender and the Trustee to the effect that (i) the
representations and warranties of the Company in Section 4 are true,
correct and complete in all material respects on and as of the date of
such advance to the same extent as though made on and as of that date,
and (ii) on or prior to the date of such advance, the Company has
performed and complied with in all material respects all covenants and
conditions to be performed and observed by the Company on or prior to
the date of such advance.
SECTION 4 REPRESENTATIONS AND WARRANTIES
In order to induce the Lender to enter into this Agreement and to
make the Loan, the Company represents and warrants to the Lender that,
at the time of execution hereof and after consummation of the making
of the Loan and the Transactions, the following statements are true,
correct and complete:
4.1 Organization and Good Standing; Capitalization. The Company is a
corporation duly organized and existing and in good standing under the
laws of its jurisdiction of incorporation. The Company has the
corporate power and authority to own and operate its properties and to
carry on its business as now conducted and as proposed to be conducted
and is duly qualified as a foreign corporation and in good standing in
all jurisdictions in which it is doing business, except where failure
to be so qualified or in good standing, singly or in the aggregated,
has not had and will not have a Material Adverse Effect.
4.2 Authorization and Power. The Company has the corporate power and
requisite authority, and has taken all corporate action necessary, to
consummate the Transactions and to execute, deliver and perform its
obligations under this Agreement, the Mortgage, the other the Loan
Documents, Indenture and each other document and instrument to be
delivered in connection with the Transactions executed or to be
executed by it and to issue the Notes.
4.3 No Conflicts or Consents.
(A) The execution and delivery of the Loan Agreement, the Notes,
the Mortgage, the other Loan Documents and each other document to be
executed and delivered in connection with the Transactions, the
consummation of each of the transactions herein or therein
contemplated, the compliance with each of the terms and previsions
hereof or thereof, and the issuance, delivery and performance of the
Notes, this Agreement, the Mortgage and the Indenture, do not and will
not (i) violate any provision of any law or any governmental rule or
regulation applicable to the Company, its Certificate of Incorporation
or Bylaws or any order, judgment or decree of any court or other
agency of government binding on it, (ii) conflict with, result in a
breach of or constitute (with due notice or lapse of time or both) a
default under any Contractual Obligation of the Company which could
reasonably be expected to result in a Material Adverse Effect, (iii)
result in or require the creation or imposition of any Lien upon any
of the properties or assets of the Company (other than any Liens
created under this Agreement and the Other Loan Agreements), (iv)
require any approval of stockholders or any approval or consent of any
Person under any Contractual Obligation of the Company except for such
approvals or consents which will be obtained on or before the Closing
Date and disclosed in writing to Lender, the Trustee and the Initial
Purchaser or such approvals or consents the failure to obtain which
could not reasonably be expected to singly or in the aggregate result
in a Material Adverse Effect.
(B) No consent, approval, authorization or order of any Tribunal
or other Person is required in connection with the execution and
delivery by the Company of this Agreement, the Loan Documents or any
other document or instrument to be delivered in connection with the
Transactions or the consummation of the transactions contemplated
hereby or thereby, other than any such consent, approval,
authorization or order which has been obtained and remains in full
force and effect or which has been waived in writing by the Lender or
the failure of which to obtain would not, singly or in the aggregated,
have a Material Adverse Effect.
4.4 Enforceable Obligations. Each of this Agreement, the Notes, the
Mortgage, the other Loan Documents, and each other document or
instrument to be delivered in connection therewith has been duly
authorized; each of this Agreement, the Notes, the Mortgage, the Other
Loan Documents and each other document or instrument to be delivered
in connection therewith to be executed and delivered on or prior to
the Closing Date has been duly executed and delivered by the Company
and each of this Agreement, the Notes, the Mortgage, the Other Loan
Documents and each other document or instrument to be delivered in
connection therewith to be executed and delivered on or prior to the
Closing Date is, and each of this Agreement, the Notes, the Mortgage
and the other Loan Documents to be executed and delivered after the
Closing Date will be, upon such execution and delivery, the legal,
valid and binding obligations of the Company, enforceable in
accordance with their respective terms, except to the extent that the
enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization or similar laws affecting the enforcement
of creditors' rights generally or by general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law)
4.5 Properties; Liens. The Company has good and marketable title to
the Mortgaged Rig and the Other Mortgaged Rigs to the extent specified
in the Other Loan Agreements. Except as permitted by this Agreement,
the Mortgaged Rig is so owned free and clear of Liens.
4.6 No Default. No event has occurred and is continuing which
constitutes a Default, a Potential Event of Default or an Event of
Default.
4.7 Use of Proceeds; Margin Stock, etc. The proceeds of the Loan will
be used solely for the purposes specified herein. None of such
proceeds will be used for the purpose of purchasing or carrying any
Margin Stock within the meaning of the applicable provisions of
Regulation T, U or X, or for the purpose of reducing or retiring any
Indebtedness which was originally incurred to purchase or carry a
Margin Stock or for any other purpose which might constitute this
transaction a "purpose credit" within the meaning of the applicable
provisions of Regulation T, U or X. The Company has not taken nor
will it take any action which might cause any of the Loan Documents to
violate the applicable provisions of Regulation T, U or X, or any
other regulation of the Board of Governors of the Federal Reserve
System.
4.8 Survival of Representations and Warranties. All representations
and warranties in the Loan Documents shall survive delivery of the
Notes and the making of the Loan and shall continue until one year
after repayment of the Notes and the Obligations, and any
investigation at any time made by or on behalf of the Lender shall not
diminish the Lender's right to rely thereon.
SECTION 5 COVENANTS
5.1 Indenture Covenants. Each of the covenants conferred in the
Indenture applicable to the Company and its Restricted Subsidiaries
are incorporated herein by reference. The Company covenants and
agrees that, until the Loan and the Notes and all other amounts due
under this Agreement have been indefeasibly paid in full it shall
perform all covenants applied to it or any of its Restricted
Subsidiaries which are contained in the Indenture.
5.2 Reports of Defaults, Etc. The Company will deliver to each Lender
and the Trustee promptly upon, but in no event more than five (5)
Business Days after, any Senior Officer's obtaining knowledge of any
condition or event which constitutes a Default, an Event of Default or
a Potential Event of Default, an Officer's Certificate specifying the
nature and period of existence of any such condition or event, or
specifying the notice given or the claim of Default, Event of Default,
Potential Event of Default, or the event or condition, and what action
the Company has taken, is taking and proposes to take with respect
thereto;
5.3 Payments in U.S. Dollars. All payments of any Obligations to be
made hereunder or under the Note by the Company or any other obligor
with respect thereto shall be made solely in U.S. Dollars or such
other currency as is then legal tender for public and private debts in
the United States of America.
5.4 Performance and Enforcement Under the Loan Documents. The Company
shall promptly perform all of its obligations under the Loan Documents
and each document and instrument related thereto or delivered in
connection with any thereof, in each case, to the extent within its
control. The Company shall (A) diligently and in good faith promptly
pursue the performance of each other party to each such document, and
(B) diligently seek the enforcement of all rights and remedies under
each such document.
5.5 Liens. The Company shall not, nor shall it cause or permit any of
its Restricted Subsidiaries to, directly or indirectly, create, incur,
assume or permit to exist, any Lien on or with respect to any property
or asset (including the Mortgaged Rig) of the Company or of any of its
Restricted Subsidiaries, whether now owned or hereafter acquired, or
assign or otherwise convey any right to receive any income or profits
therefrom, or file or permit the filing of, or permit to remain in
effect, any financing statement or other similar notice of any Lien
with respect to any such property, asset, income or profits under the
Uniform Commercial Code of any State or under any similar recording or
notice statute, except Liens permitted by the Indenture and Liens
permitted by the Loan Documents.
5.6 Transfer of Mortgage Rig to a Restricted Subsidiary. The Company
shall not, nor shall the Company cause or permit any of its Restricted
Subsidiaries to, directly or indirectly, transfer the Mortgaged Rig to
any Subsidiary of the Company unless (i) such Subsidiary guarantees
all Obligations of the Company under this Agreement and executes a
Mortgage, (ii) the Liens of the Subsidiary's Mortgage and Security
Agreement are perfected and enforceable, and (iii) such Subsidiary
executes a Subsidiary Guarantee pursuant to the Indenture.
SECTION 6 EVENTS OF DEFAULT
If any of the following conditions of events ("Events of Default")
shall occur and be continuing:
6.1 Failure To Make Payments When Due. Failure to pay any installment
of principal including Premium of the Loan when due, whether at stated
maturity, by acceleration, by notice of prepayment or otherwise; or
failure to pay any interest (including Special Interest and Additional
Amounts) on the Loan or any other amount due under this Agreement
continued for 30 days; or
6.2 Default Under The Indenture. An Event of Default occurs and is
continuing under the Indenture; or
6.3 Other Loan Agreement. An Event of Default (as defined in an other
Loan Agreement) occurs and is continuing under such Other Loan
Agreement; or
6.4 Breach of Certain Covenants. Failure of the Company to perform or
comply with any covenant, term or condition contained in Sections 5.2
through 5.6 and Sections 7.3 through 7.5 of this Agreement; or
6.5 Breach of Warranty. Any representation, warranty or certification
made by the Company in any Loan Document or in any statement or
certificate at any time given by the Company in writing pursuant
hereto or thereto or in connection herewith or therewith shall be
false or incorrect in any material respect on the date as of which
made or deemed made; or
6.6 Other Defaults Under Agreement or Loan Documents. The Company
shall default in the performance of or compliance with any covenant,
term or condition contained in this Agreement or the other Loan
Documents (other than those covered by Sections 5.2 through 5.7 and
such default shall not have been remedied or waived in accordance with
Section 7.6 of this Agreement within 30 days after the date of written
notice of such default from the Lender, the Collateral Agent, the
Trustee or the Holder or Holders of not less than 25% in aggregate
principal amount of the Secured Notes then outstanding; or
6.7 Involuntary Bankruptcy; Appointment of Custodian, etc. The entry
by a court having jurisdiction in the premises of (i) a decree or
order for relief in respect of the Company or any Significant
Subsidiary in an involuntary case or proceeding under U.S. bankruptcy
laws, as now or hereafter constituted, or any other applicable
Federal, state, or foreign bankruptcy, insolvency, or other similar
law or (ii) a decree or order adjudging the Company or any Significant
Subsidiary a bankruptcy or insolvent, or approving as properly filed a
petition seeking reorganization, arrangement, adjustment or
composition of or in respect of the Company or any Significant
Subsidiary under U.S. bankruptcy laws, as now or hereafter
constituted, or any other applicable Federal, state or foreign
bankruptcy, insolvency, or similar law, or appointing a custodian,
liquidator, assignee, trustee, sequestrator or other similar official
of the Company or any Significant Subsidiary or of any substantial
part of the Property or assets of the Company or any Significant
Subsidiary, or ordering the winding up or liquidation of the affairs
of the Company or any Significant Subsidiary, and the continuance of
any such decree or order for relief or any such other decree or order
unstayed and in effect for a period of 60 consecutive days; or
6.8 Voluntary Bankruptcy; Appointment of a Custodian, etc. The
commencement by the Company or any Significant Subsidiary of a
voluntary case or proceeding under the U.S. bankruptcy laws, as now or
hereafter constituted, or any other applicable Federal, state or
foreign bankruptcy, insolvency or other similar law or of any other
case or proceeding to be adjudicated a bankrupt or insolvent; or
(ii) the consent by the Company or any Significant Subsidiary to the
entry of a decree or order for relief in respect of the Company or any
Significant Subsidiary in an involuntary case or proceeding under U.S.
bankruptcy laws, as now or hereafter constituted, or any other
applicable Federal, state, or foreign bankruptcy, insolvency or other
similar law or to the commencement of any bankruptcy or insolvency
case or proceeding against the Company or any Significant Subsidiary;
or (iii) the filing by the Company or any Significant Subsidiary of a
petition or answer or consent seeking reorganization or relief under
U.S. bankruptcy laws, as now or hereafter constituted, or any other
applicable Federal, state or foreign bankruptcy, insolvency or other
similar law; or (iv) the consent by the Company or any Significant
Subsidiary to the filing of such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator, assignee,
trustee, sequestrator or similar official of the Company or any
Significant Subsidiary or of any substantial part of the property or
assets of the Company or any Significant Subsidiary, or the making by
the Company or any Significant Subsidiary of an assignment for the
benefit of creditors; or (v) the admission by the Company or any
Significant Subsidiary in writing of its inability to pay its debts
generally as they become due; or (vi) the taking of corporate action
by the Company or any Significant Subsidiary in furtherance of such
action;
THEN (i) upon the occurrence of any Event of Default described in
the foregoing Section 6.7 or 6.8, all of the unpaid principal amount
of and accrued interest on the Loan and all other outstanding
Obligations shall automatically become immediately due and payable,
without presentment, demand, protest, waiver of notice of intent to
accelerate and waiver of notice of such acceleration or notice of any
other kind or other requirements of any kind, all of which are hereby
expressly waived by the Company, and Obligations and the Loan
Commitment of the Lender hereunder shall thereupon terminate, and
(ii) upon the occurrence of any other Event of Default, the Lender
shall, upon written notice of the Lender, to the Company, upon written
notice of the Trustee or the Collateral Agent to the Company and the
Lender, or upon written notice of a Holder or Holders of the Secured
Note or Notes, to the Company, the Lender, the Collateral Agent and
the Trustee, declare all of the unpaid principal amount of and accrued
interest on the Loan and all other outstanding Obligations to be, and
the same shall forthwith become, due and payable, and the obligations
and Loan Commitments of the Lender hereunder shall thereupon
terminate; provided, however, that upon the occurrence of an Event of
Default described in Section 6.4 of this Agreement or an "event of
default" under Section 6.4 of any Other Loan Agreement, the Lender
shall not declare the Obligations hereunder to be due and payable for
a period of 60 days after notice of the occurrence of such Event of
Default or "event of default." Nevertheless, if at any time after
acceleration of the Maturity of the Loan, the Company shall pay all
arrears of interest and all payments on account of the principal
thereof which shall have become due otherwise than by acceleration
(with interest on principal and, to the extent permitted by law, on
overdue interest, at the rates specified in this Agreement or the
Notes) and all Events of Default and Potential Events of Default
(other than non-payment of principal of and accrued interest on the
Loan and the Notes due and payable solely by virtue of acceleration)
shall be remedied or waived pursuant to Section 7.6, then the Lender
shall, upon receipt of the written notice from the Collateral Agent
and the Trustee of such remedy or waiver, by written notice to the
Company rescind and annul the acceleration and its consequences; but
such action shall not affect any subsequent Default, Event of Default
or Potential Event of Default or impair any right consequent thereon.
SECTION 7 MISCELLANEOUS
7.1 Pledges and Assignments of Loan and Note. The Lender shall have
the right at any time to sell, pledge, assign, transfer or negotiate
all or any portion of the Note or its Loan Commitment. The Company
acknowledges that the Lender will pledge its rights under this
Agreement, the Notes, the Mortgage and the Other Loan Documents to the
Collateral Agent pursuant to the Issuer Security Agreement to secure
the Lender's obligations under the Indenture and the Secured Notes.
7.2 Expenses. Whether or not the transactions contemplated hereby
shall be consummated, the Company, its successors and assigns agrees
to promptly pay (i) all the actual costs and expenses of preparation
of the Loan Documents and all the costs of furnishing all opinions by
counsel for the Company (including without limitation any opinions
requested by the Lender as to any legal matters arising hereunder),
and of the Company's performance of and compliance with all agreements
and conditions contained herein on its part to be performed or
complied with; (ii) the reasonable fees, expenses and disbursements of
counsel to the Lender and the Trustee and the Collateral Agent, their
successors and assigns (including allocated costs of internal counsel)
in connection with the negotiation, preparation, execution and
administration of the Loan Documents and the Loan hereunder, and any
amendments, modifications and waivers hereto or thereto and consents
to departures from the terms hereof and thereof; and (iii) after the
occurrence of an Event of Default, all costs and expenses (including
reasonable attorneys fees, including allocated costs of internal
counsel, and costs of settlement) incurred by the Lender, its
successors and assigns in enforcing any Obligations of or in
collecting any payments due from the Company hereunder or under the
Notes by reason of such Event of Default or in connection with any
refinancing or restructuring of the credit arrangements provided under
this Agreement in the nature of a "work-out" or of any insolvency or
bankruptcy proceedings.
7.3 Indemnity. In addition to the payment of expenses pursuant to
Section 7.2, whether or not the transactions contemplated hereby shall
be consummated, the Company agrees to indemnify, pay and hold the
Lender, the Collateral Agent, the Trustee and any Holder of the
Secured Notes and holder of the Notes, and each of their officers,
directors, employees, and agents, (collectively called the
"Indemnitees"), harmless from and against any all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits,
claims, costs, expenses and disbursements of any kind or nature
whatsoever (including, without limitation, the fees and disbursements
of counsel for such Indemnitees in connection with any investigative,
administrative or judicial proceeding commenced or threatened, whether
or not such Indemnitee shall be designated as a party thereto), which
may be suffered by imposed on, incurred by, or asserted against that
Indemnitee, in any manner resulting from, connected with, in respect
of, relating to or arising out of this Agreement, the Notes, the
Mortgage, the Lender's agreement to make the Loan or the use or
intended use of any of the proceeds of the Loan hereunder or the
Transactions (the "indemnified liabilities"); provided, however, that
the Company shall have no obligation to an Indemnitee hereunder with
respect to indemnified liabilities (i) to the extent such is finally
judicially determined to have resulted solely from (A) the gross
negligence or willful misconduct of that Indemnitee or (B) the failure
of such Indemnitee to perform its obligations under any Loan Document
or (C) such Indemnitee's violation of law or (ii) in connection with
the obligations of any Indemnitee under any Loan Document. To the
extend that the undertaking to indemnify, pay and hold harmless set
forth in the preceding sentence may be unenforceable because it is
violative of any law or public policy, the Company shall contribute
the maximum portion which it is permitted to pay and satisfy under
applicable law to the payment and satisfaction of all indemnified
liabilities incurred by the Indemnitees or any of them.
7.4 Additional Amounts. Except to the extent required by any applicable
law, regulation law, regulation or governmental policy, any and all
payments of, or in respect of the Loan, this Agreement, the Notes, any
Loan Document or any Secured Note shall be made free and clear of and
without deduction for or on account of any and all present or future
taxes, levies, imposts, deduction, charges or withholdings and all
liabilities with respect thereto imposed by Panama, The Bahamas, The
Marshall Islands or any other jurisdiction with which the Company or
any Subsidiary has some connection (including any jurisdiction (other
than the United States of America) from or through which payments
under this Agreement, the Notes, any Loan Document, the Guarantee or
the Secured Notes are made) or any political subdivision of or any
taxing authority in any such jurisdiction ("Panamanian Taxes,"
"Bahamian Taxes," "MI Taxes," or "Other Taxes," respectively). If the
Lender, the Company or any Subsidiary Guarantor shall be required by
law to withhold or deduct any Panamanian Taxes, Bahamian Taxes, MI
Taxes, or Other Taxes from or in respect of any sum payable under this
Agreement, the Notes, any Loan Document, the Guarantee or the Secured
Notes, the sum payable by the Company or such Subsidiary Guarantor, as
the case may be, thereunder shall be increased by the amount
("Additional Amounts") necessary so that after making all required
withholdings and deductions, Lender or any Holder or beneficial owner
of Secured Notes shall receive an amount equal to the sum that it
would have received had not such withholdings and deductions been
made; provided that any such sum shall not be paid in respect of any
Panamanian Taxes, Bahamian Taxes, MI Taxes or Other Taxes to a Holder
(an "Excluded Holder") (i) resulting from the beneficial owner of such
Secured Note carrying on business or being deemed to carry on business
in or through a permanent establishment or fixed base in the relevant
taxing jurisdiction or having any other connection with the relevant
taxing jurisdiction or any political subdivision thereof or any taxing
authority therein other than the mere holding or owning of such
Secured Note, being a beneficiary of the Guarantee or any applicable
Subsidiary Guarantee, the receipt of any income or payments in respect
of such Secured Note, the Loan, the Guarantee or any applicable
Subsidiary Guarantee or the enforcement of such Secured Note, the
Loan, the Guarantee or any applicable Subsidiary Guarantee, or (ii)
that would not have been imposed but for the presentation (where
presentation is required) of such Secured Note for payment more than
180 days after the date such payment became due and payable or was
duly provided for, whichever occurs later. The Lender, the Company or
the Subsidiary Guarantors, as applicable, will also (i) make such
withholding or deduction and (ii) remit the full amount deducted or
withheld to the relevant authority in accordance with applicable law,
and, in any such case, the Lender is required to furnish under the
Indenture to each Holder on whose behalf an amount was so remitted,
within 30 calendar days after the date the payment of any Panamanian
Taxes, Bahamian Taxes, MI Taxes or Other Taxes is due pursuant to
applicable law, certified copies of tax receipts evidencing such
payment by the Lender, the Company or the Subsidiary Guarantors, as
applicable. The Company will, upon written request of each Holder
(other than an Excluded Holder), reimburse each such holder for the
amount of (i) any Panamanian Taxes, Bahamian Taxes, MI Taxes or Other
Taxes so levied or imposed and paid by such Holder as a result of
payments made under or with respect to any Secured Notes, and (ii) any
Panamanian Taxes, Bahamian Taxes, MI Taxes or Other Taxes so levied or
imposed with respect to any reimbursement under the foregoing clause
(i) so that the net amount received by such Holder (net of payments
made under or with respect to such Secured Notes, the Loan, the
Guarantee or the applicable Subsidiary Guarantees) after such
reimbursement will not be less than the net amount the Holder would
have received if Panamanian Taxes, Bahamian Taxes, MI Taxes or Other
Taxes on such reimbursement had not been imposed.
At least 30 calendar days prior to each date on which any payment
under or with respect to the Secured Notes is due and payable, if the
Lender, the Company or the Subsidiary Guarantors, as applicable, will
be obligated to pay Additional Amounts with respect to such payment,
the Lender, the Company or the Subsidiary Guarantors, as applicable,
will deliver to the Trustee an officer's certificate stating the fact
that such Additional Amounts will be payable and the amounts will be
payable and the amounts so payable and will set forth such other
information necessary to enable the Trustee to pay such Additional
Amounts to Holders on the payment date.
7.5 Taxes and Other Taxes.
A. Any and all payments by the Company hereunder or under any of the
other Loan Documents shall be made free and clear of and without
deduction or withholding for any and all present or future Taxes,
unless such Taxes are required by law or the administration thereof to
be deducted or withheld and excluding (a) in the case of each Lender,
Taxes imposed on its net income and franchise taxes or taxes on gross
receipts and capital imposed on it by the jurisdiction under the laws
of the United States or any political subdivision thereof (all such
nonexcluded Taxes being hereinafter referred to as "Covered Taxes").
If the Company shall be required by Law or the administration thereof
to deduct or withhold any Covered Taxes from or in respect of any sum
payable hereunder or under any other Loan Documents, the sum payable
shall be increased as may be necessary so that after making all
required deductions or withholdings (including deductions or
withholdings applicable to additional amounts paid under this
paragraph), the Lender receives an amount equal to the sum it would
have received if no such deduction or withholding had been made;
(b) the Company shall make such deductions or withholdings; and
(c) the Company forthwith shall pay the full amount deducted or
withheld to the relevant taxation or other authority in accordance
with applicable Law.
B. The Company agrees to pay forthwith any present or future stamp
documentary taxes or any other excise or property taxes charges or
similar levies (all such taxes, charges and levies being herein
referred to as "Other Taxes") imposed by any jurisdiction (or any
political subdivision or taxing authority thereof or therein) which
arise from any payment made by the Company hereunder or under any of
the other Loan Documents or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement or any
of the other Loan Documents.
C. The Company agrees to indemnify the Lender for the full amount of
Covered Taxes or Other Taxes not deducted or withheld and paid by the
Company in accordance with Section 7.5(A) and (B) to the relevant
taxation or other authority and any Taxes other than Covered Taxes or
Other Taxes imposed by any jurisdiction on amounts payable by the
Company under this Section 7.6 paid by the Lender and any liability
(including penalties, interest and expenses) arising therefrom or with
respect thereto, whether or not any such Taxes or Other Taxes were
correctly or legally asserted. Payment under this indemnification
shall be made within 30 days from the date the Lender makes written
demand therefor. A certificate as to the amount of such Taxes or
Other Taxes and evidence of payment thereof submitted to the Company
shall be prima facie evidence, absent manifest error, of the amount
due from the Company to the Lender.
D. The Company shall furnish to the Lender the original or a certified
copy of a receipt evidencing any payment of Taxes or Other Taxes made
by the Company as soon as such receipt becomes available.
E. The provisions of this Section 7.5 shall survive the termination of
the Agreement and repayment of all Obligations.
7.6 Amendments and Waivers. No amendment, modification, termination or
waiver of any term or provision of this Agreement, of the Note, the
Mortgage or any Other Loan Document or consent to any departure by the
Company therefrom, shall in any event be effective without the prior
written concurrence of the Company, the Lender, the Collateral Agent
and the Trustee, and, upon the request of the Lender, the Collateral
Agent or the Trustee, the receipt of a written opinion of counsel of
the Company addressed to the Lender, the Collateral Agent and the
Trustee to the effect that such amendment, modification, termination,
waiver or consent does not violate or conflict with any of the terms
and provisions of the Indenture or any Contractual Obligations of the
Company.
7.7 Independence of Covenants. All covenants hereunder shall be given
independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be
permitted by an exception to, or be otherwise within the limitation
of, another covenant shall not avoid the occurrence of an Event of
Default or Potential Event of Default if such action is taken or
condition exists.
7.8 Notices. Unless otherwise provided herein, any notice or other
communications herein required or permitted to be given shall be in
writing and may be personally served, telecopied, telexed or sent by
mail and shall be deemed to have been given when delivered in person,
upon receipt of telecopy or telex against receipt of answer back or
four Business Days after depositing it in the mail, registered or
certified, with postage prepaid and properly addressed; provided,
however, that notices shall not be effective until received. For the
purposes hereof, the addresses of the parties hereto (unless notice of
a change thereof is delivered as provided in this Section 7.8) shall
be set forth under each party's name on the signature pages hereto.
7.9 Survival of Warranties and Certain Agreements. All agreements,
representations and warranties made herein and in the other Loan
Documents shall survive the execution and delivery of this Agreement
and in the other Loan Documents, the making of the Loan hereunder and
the execution and delivery of the Notes or the Loan Documents and,
notwithstanding the making of the Loan, the execution and delivery of
the Notes and the other Loan Documents or any investigation made by or
on behalf of any party, shall continue in full force and effect. The
closing of the transactions herein contemplated shall not prejudice
any right of one party against any other party in respect of anything
done or omitted hereunder or in respect of any right to damages or
other remedies.
7.10 Failure or Indulgence Not Waiver; Remedies Cumulative. No failure
or delay on the part of the Lender or the holder of the Notes or the
Trustee in the exercise of any power, right or privilege or be
construed to be a waiver of any default or acquiescence therein, nor
shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or of any other
right, power or privilege. All rights and remedies existing under
this Agreement, the Notes or any other Loan Document are cumulative to
and not exclusive of any rights or remedies otherwise available.
7.11 Severability. In case any provision in or obligation under this
Agreement, under a Guarantee or the Notes shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any
way be affected or impaired thereby.
7.12 Headings. Section and Section headings in this Agreement are
included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given
any substantive effect.
7.13 Applicable Law. THIS AGREEMENT, EACH LOAN DOCUMENT OTHER THAN THE
MORTGAGE AND THE NOTES SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW.
7.14 Successors and Assigns; Subsequent Holders of Notes. This
Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of
the parties hereto and the successors and assigns of the Lenders. The
terms and provisions of this Agreement and each Loan Document shall
inure to the benefit of any assignee or transferee of the Notes
pursuant to Section 7.1, and in the event of such transfer or
assignment, the rights and privileges herein conferred upon the Lender
shall automatically extend to and be vested in such transferee or
assignee, all subject to the terms and conditions hereof. The
Company's rights or any interest therein hereunder may not be assigned
without the prior express written consent of the Lender and the
Trustee.
7.15 Counterparts; Effectiveness. This Agreement and any amendments,
waivers, consents or supplements may be executed in any number of
counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one
and the same instrument. This Agreement shall become effective upon
the execution of a counterpart hereof by each of the parties hereto.
7.16 Consent to Jurisdiction; Venue; Waiver of Jury Trial.
A. Any legal action or proceeding with respect to this Agreement, any
Note or any 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
parties to this Agreement hereby irrevocably accepts for itself and in
respect of its respective property, generally and unconditionally, the
jurisdiction of the aforesaid courts. Each of the parties to this
Agreement hereby further irrevocably waives any claim that any such
courts lack jurisdiction over itself, and agrees not to plead or
claim, in any legal action or proceeding with respect to this
Agreement, the Notes or Loan Documents brought in any of the aforesaid
courts, that any such court lacks jurisdiction over such party. Each
of the parties to this Agreement irrevocably consents to the service
of process in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to such
party, at its respective address for notices pursuant to Section 7.8,
such service to become effective 30 days after such mailing. To the
extent permitted by law, each of the parties to this Agreement hereby
irrevocably waives any objection to such service of process and
further irrevocably waives and agrees not to plead or claim in any
action or proceeding commenced hereunder or under the Notes or any
Loan Document that service of process was in any way invalid or
ineffective. Nothing herein shall affect the right of any party to
this Agreement to serve process in any other manner permitted by law
or to commence legal proceedings or otherwise proceed against any
party in any other jurisdiction.
B. Each of the parties to this Agreement hereby irrevocably waives any
objection which it may now or hereafter have to the laying of venue of
any of the aforesaid any of actions or proceedings arising out of or
in connection with this Agreement, the Notes or any of the Loan
Documents brought in the courts referred to in clause A above and
hereby further irrevocably waives and agrees not to plead or claim in
any such court that any such action or proceeding brought in any such
court has been brought in an inconvenient forum.
C. Each of the parties to this Agreement hereby irrevocably waives
all right to a trial by jury in any action, proceeding or counterclaim
arising out of or relating to this Agreement, the Notes or the Loan
Documents or the transactions contemplated hereby or thereby.
7.17 Waiver of Stay, Extension or Usury Laws. The Company covenants
(to the extent that it may lawfully do so) that it will not at any
time insist upon, plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law or any usury law or
other law that would prohibit or forgive the Company from paying all
or any portion of the principal of or interest on the Loan as
contemplated herein, wherever enacted, now or at the time hereafter in
force, or which may affect the covenants or the performance of this
Agreement and (to the extent that it may lawfully do so), the Company
hereby expressly waives all benefit or advantage of any such law, and
covenants that it will not hinder, delay or impede the execution of
any power herein granted to the Lender, but will suffer and permit the
execution of every such power as though no such law had been enacted.
7.18 Usury Savings Clause. It is the intention of the parties hereto
to comply with applicable usury laws (now or hereafter enacted);
accordingly, notwithstanding any provision to the contrary in this
Agreement, any Note, any of the other Loan Documents or any other
document related hereto or thereto, in no event shall this Agreement
or any such other document require the payment or permit the
collection of interest in excess of the maximum amount permitted by
such laws. If from any circumstances whatsoever, fulfillment of any
provision of this Agreement, any Note, any of the other Loan Documents
or of any other document pertaining hereto or thereto, shall involve
transcending the limit of validity prescribed by applicable law for
the collection or charging of interest, then, ipso facto, the
obligation to be fulfilled shall be reduced to the limit of such
validity, and if from any such circumstances the Lender shall ever
receive anything of value as interest or deemed interest by applicable
law under this Agreement, any Note, any of the other Loan Documents or
any other document pertaining hereto or otherwise an amount that would
exceed the highest lawful rate, such amount that would be excessive
interest shall be applied to the reduction of the principal amount
owing under the Loan or on account of any other indebtedness of the
Company, and not to the payment of interest, or if such excessive
interest exceeds the unpaid balance of principal of such indebtedness,
such excess shall be refunded to the Company. In determining whether
or not the interest paid or payable with respect to any indebtedness
of the Company to Lender under any specified contingency, exceeds the
highest lawful rate, the Company and the Lender shall, to the maximum
extent permitted by applicable law, (a) characterize any non-principal
payment as an expense, fee or premium rather than as interest,
(b) exclude voluntary prepayments and the effects thereof,
(c) amortize, prorate, allocate and spread the total amount of
interest thereon does not exceed the maximum amount permitted by
applicable laws, and/or (d) allocate interest throughout the full term
of such indebtedness so that interest between portions of such
indebtedness, to the end that no such portion shall bear interest at a
rate greater than that permitted by applicable law.
WITNESS the due execution hereof by the respective duly authorized
officers of the undersigned as of the date first written above.
COMPANY:
R&B FALCON CORPORATION
By:
Name: Robert Fulton
Title: Executive Vice President
Notice Address:
901 Threadneedle
Houston, TX 77079-2982
Telephone: (281) 496-5000
Telecopy: (281) 496-0285
LENDER:
RBF FINANCE CO.
By:
Name: Leighton Moss
Title: Vice President
Notice Address:
901 Threadneedle
Houston, TX 77079-2982
Telephone: (281) 496-5000
Telecopy: (281) 597-7556
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Exhibit I
R&B FALCON CORPORATION
SENIOR SECURED ___- YEAR TRANCHE PROMISSORY NOTE
New York, New York
$______________ March 26, 1999
FOR VALUE RECEIVED, R&B FALCON CORPORATION (the "Company"),
promises to pay to the order of RBF FINANCE CO. ("Payee"), the
principal amount of _________________________ Dollars ($_____________)
(or such lesser amount as shall equal the aggregate unpaid principal
amount of the __-year Tranche advances of the Loan) at the times
specified by the provisions of the Senior Secured Credit Agreement
dated as of March 26, 1999, as the same may at any time be amended,
modified or supplemented and in effect (the "Loan Agreement") between
the Company and the Lender.
The Company also promises to pay interest on the unpaid principal
amount hereof from the date hereof until paid in full at the rates and
at the times which shall be determined in accordance with the
provisions of the Loan Agreement.
This Note is issued pursuant to and entitled to the benefits of
the Loan Agreement, to which reference is hereby made for a more
complete statement of the terms and conditions under which the Loan
evidenced hereby was made and is to be repaid. Capitalized terms used
herein without definition shall have the meanings set forth in the
Loan Agreement.
The Senior Secured Credit Agreement dated as of March 26, 1999, as
the same may at any time be amended, modified or supplemented and in
effect (the "Loan Agreement") between the Company, the Lender named
therein, and United States Trust Company of New York, as Trustee.
All payments of principal and interest in respect of this Note
shall be made in lawful money of the United States of America in same
day funds to Payee at the office of United States Trust Company of New
York located at 114 West 47th Street, 25th Floor, New York, New York,
or at such other place in the State of New York as shall be designated
in writing for such purpose in accordance with the terms of the Loan
Agreement. Each of Payee and any subsequent holder of this Note
agrees, by its acceptance hereof, that before disposing of this Note
or any part hereof it will make a notation hereon of all principal
payments previously made hereunder and of the date to which interest
hereon has been paid; provided, however, that the failure to make a
notation of any payment made on this Note shall not limit or otherwise
affect the obligation of the Company hereunder with respect to
payments of principal or interest on this Note.
Whenever any payment on this Note shall be stated to be due on a
day which is not a Business Day, such payment shall be made on the
next succeeding Business Day and such extension of time shall be
included in the computation of the payment of interest on this Note.
This Note is subject to mandatory prepayment as provided in the
Loan Agreement and prepayment at the option of the Company as provided
in the Loan Agreement.
THE LOAN AGREEMENT AND THIS NOTE SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK WITHOUT REGARD TO THE PRINCIPALS OF CONFLICTS OF LAWS.
Upon the occurrence of an Event of Default, the unpaid balance of
the principal amount of this Note, together with all accrued but
unpaid interest thereon, may become, or may be declared to be, due and
payable in the manner, upon the conditions and with the effect
provided in the Loan Agreement.
The terms of this Note are subject to amendment only in the manner
provided in the Loan Agreement.
No reference herein to the Loan Agreement and no provision of this
Note or the Loan Agreement shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of
and interest on this Note at the place, at the respective times, and
in the currency herein prescribed.
The Company promises to pay all costs and expenses, including all
attorneys' fees, all as provided in Section 7.2 of the Loan Agreement,
incurred in the collection and enforcement of this Note. The Company
and endorsers of this Note hereby consent to renewals and extensions
of time at or after the maturity hereof, without notice, and hereby
waive diligence, presentment, protest, demand and notice of every kind
and, to the full extent permitted by law, the right to plead any
statute of limitations as a defense to any demand hereunder.
IN WITNESS WHEREOF, the Company has caused this Note to be
executed and delivered by its duly authorized officer, as of the day
and year and at the place first above written.
R&B FALCON CORPORATION
By:
Title:
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EXHIBIT II
NOTICE OF BORROWING
The undersigned hereby certifies that he is the ___________
__________________ of R&B Falcon Corporation, a Delaware corporation (
the "Company"), and that as such he is authorized to execute this
Notice of Borrowing on behalf of the Company. With reference to that
certain Loan Agreement dated as of _______________, 1999 (as same may
be amended, modified, increased, supplemented and/or restated from
time to time, the "Agreement") entered into by and between the Company
and RBF Finance Co., and any other future holder of any Note issued
pursuant to the Agreement ("Lender"), the undersigned further
certifies, represents and warrants on behalf of the Company that all
of the foregoing statements are true and correct (each capitalized
term used herein having the same meaning given to it in the Agreement
unless otherwise specified):
(a) The Company requests that the Lender make an advance to the Company
on the 7-year Tranche of the Loan in the aggregate principal amount of
$_________________ and an advance to the Company on the 10-year
Tranche of the Loan in the aggregate principal amount of $__________
by no later than _______________. Immediately following such advance,
the aggregate outstanding balance of advances made on the 7-year
Tranche and the 10-year Tranche Loan shall equal $_______________ and
$___________, respectively.
(b) As of the date hereof, and as a result of the making of the
requested advance, no event shall have occurred and be continuing or
would result from the consummation of the borrowing contemplated by
the Notice of Borrowing which would constitute an Event of Default, a
Potential Event of Default or a Default.
(c) Borrower has performed and complied with all agreements and
conditions contained in the Agreement which are required to be
performed or complied with by Borrower before or on the date hereof
and, except as waived in writing or otherwise agreed to in writing by
the Lender, all of the conditions precedent set forth in Section 3.1
or 3.2, as applicable, of the Agreement under Conditions to Loan have
been satisfied.
(d) The representations and warranties of the Company contained in
Section 4 of the Agreement are true, correct and complete in all
material respects on and as of the date hereof to the same extent as
though made on and as of that date, and (ii) on or prior to the date
hereof, the Company has performed and complied with in all material
respects all covenants and conditions to be performed and observed by
the Company on or prior to the date hereof.
EXECUTED AND DELIVERED this _______ day of _____________, _____.
R&B FALCON CORPORATION
By:
Name:
Title:
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EXHIBIT III
FORM OF LEGAL OPINION
Opinions of Counsel that (i) the Company has duly
authorized, executed and delivered the Mortgage; (ii) the Mortgage
constitutes a legally binding obligation of the Company enforceable
against the Company in accordance with its terms (except as (i) the
enforceability thereof may be limited bankruptcy, insolvency or other
similar laws affecting creditors' rights, generally, and (ii) the
enforceability thereof may be limited by right of acceleration and the
availability of enforceable remedies may be limited by equitable
principles of general applicability, and subject to such other
exceptions, limitations or qualifications that are usual and customary
for such opinions) and (iii) the Mortgage constitutes a valid and
perfected first mortgage lien on the Mortgaged Rig.
EXHIBIT 10.4
[DEEPWATER IV]
=========================================================================
SENIOR SECURED LOAN AGREEMENT
Dated as of
March 26, 1999
between
R&B FALCON CORPORATION,
as Borrower
and
RBF FINANCE CO.,
as Lender
=========================================================================
TABLE OF CONTENTS
Page
SECTION 1.DEFINITIONS 1
1.1.Certain Defined Terms 1
1.2.Other Defined Terms 5
1.3.Accounting Terms 5
1.4.Other Definitional Provisions 5
SECTION 2.LOAN COMMITMENT AND LOAN 6
2.1.Termination of Loan Commitment 7
2.2.Termination of Loan Commitment 7
2.3.Interest on the Loans 7
2.4.Redemptions 8
2.5.Excess Proceeds Offers 10
2.6.Use of Proceeds 11
2.7.Commitment Fee 12
SECTION 3.CONDITIONS 12
3.1.Conditions to Initial Advances on the Loan 12
3.2.Conditions to Subsequent Advance on the Loan 14
SECTION 4.REPRESENTATIONS AND WARRANTIES 14
4.1.Organization and Good Standing; Capitalization 14
4.2.Authorization and Power 15
4.3.No Conflicts or Consents 15
4.4.Enforceable Obligations 15
4.5.Properties; Liens 16
4.6.No Default 16
4.7.Use of Proceeds; Margin Stock, etc 16
4.8.Survival of Representations and Warranties 16
SECTION 5.COVENANTS 16
5.1.Indenture Covenants 16
5.2.Reports of Defaults, Etc 16
5.3.Payments in U.S. Dollars 17
5.4.Performance and Enforcement Under the Loan Documents 17
5.5.Liens 17
5.6.Transfer of Mortgage Rig to a Restricted Subsidiary 17
5.7.Filing of Mortgage 17
SECTION 6.EVENTS OF DEFAULT 17
6.1.Failure To Make Payments When Due 17
6.2.Default Under The Indenture 18
6.3.Other Loan Agreement 18
6.4.Breach of Certain Covenants 18
6.5.Breach of Warranty 18
6.6.Other Defaults Under Agreement or Loan Documents 18
6.7.Involuntary Bankruptcy; Appointment of Custodian, etc 18
6.8.Voluntary Bankruptcy; Appointment of a Custodian; etc 18
SECTION 7.MISCELLANEOUS 19
7.1.Pledges and Assignments of Loan and Note 19
7.2.Expenses 20
7.3.Indemnity 20
7.4.Additional Amounts 21
7.5.Taxes and Other Taxes 22
7.6.Amendments and Waivers 23
7.7.Independence of Covenants 23
7.8.Notices 23
7.9.Survival of Warranties and Certain Agreements 23
7.10.Failure or Indulgence Not Waiver; Remedies Cumulative 23
7.11.Severability 24
7.12.Headings 24
7.13.Applicable Law 24
7.14.Successors and Assigns; Subsequent Holders of Notes 24
7.15.Counterparts; Effectiveness 24
7.16.Consent to Jurisdiction; Venue; Waiver of Jury Trial 24
7.17.Waiver of Stay, Extension or Usury Laws 25
7.18.Usury Savings Clause 25
EXHIBITS
I FORM OF NOTE
II FORM OF NOTICE OF BORROWING
III FORM OF OPINION OF GARDERE & WYNNE - SPECIAL COUNSEL FOR THE BORROWER
IV FORM OF MORTGAGE
V FORM OF SECURITY AGREEMENT
- -------------------------------------------------------------------------
This Senior Secured Loan Agreement is dated as of March 26, 1999,
and entered into by and among R&B Falcon, Inc., a Delaware corporation
(the "Company") and RBF Finance Co., a Delaware corporation (the
"Lender").
RECITALS
WHEREAS, the Lender has entered into an Indenture of even date
herewith (as the same may be amended, or supplemented or otherwise
modified from time to time, the "Indenture") with United States Trust
Company of New York as Trustee (the "Trustee"), pursuant to which the
Lender will issue in two series up to $400,000,000 aggregate principal
amount of its 11% Senior Secured Notes due 2006 (the "7-year Secured
Notes") and up to $400,000,000 aggregate principal amount of its
11 3/8% Senior Secured Notes due 2009 (the "10-year Secured Notes;" the
7-year Secured Notes and the 10-year Secured Notes being hereinafter
collectively called the "Secured Notes"); and
WHEREAS, the Indenture provides that the Lender may utilize the
proceeds of the Secured Notes to make loans to the Company, each for
the purpose of either (i) financing all or a portion of the cost of
acquiring, constructing, altering, improving or repairing a drilling
rig or drillship (a "Rig") or improvements used or to be used in
connection with such a Rig, or (ii) financing all or any part of the
purchase price of the Rig or improvements used or to be used in
connection with such Rig, which indebtedness is incurred prior to or
within one year after the date of the completion of construction,
alteration, improvement or repair or the commencement of commercial
operations thereof; and
WHEREAS, the Company desires that the Lender extend senior secured
credit facilities to the Company for such purposes herein; and
WHEREAS, the Indenture provides that the Lender will enter into a
Senior Secured Note Security and Pledge Agreement of even date
herewith (the "Issuer Security Agreement") between the Lender, the
Trustee and United States Trust Company of New York as Collateral
Agent (in such capacity, the "Collateral Agent"), pursuant to which
the Lender will pledge and grant a security in the loans made with the
proceeds of the Secured Notes which are or will be secured by Rigs;
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, the parties
hereby agree as follows:
SECTION 1 DEFINITIONS
1.1 Certain Defined Terms. The following terms used in this Agreement
shall have the following meanings:
"Agreement" means this Senior Secured Loan Agreement dated as of
March 26, 1999, as it may be amended, supplemented or otherwise
modified from time to time in accordance with the terms hereof.
"Board of Directors" means, with respect to any Person, the Board
of Directors of such Person or any duly authorized committee of that
Board.
"Board Resolution" means a duly adopted resolution of the Board of
Directors of the Company in full force and effect at the time of
determination and certified as such by the Secretary or Assistant
Secretary of the Company.
"Business Day" means any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of New York, New York or is a
day on which banking institutions therein located are authorized or
required by law or other governmental action to close.
"Cash Equivalents" means (i) U.S. Governmental Obligations with a
maturity of four years or less; (ii) commercial paper issued by any
corporation if such commercial paper has credit ratings of at least "A-
1" from S&P or at least "P-1" by Moody's; (iii) certificates of
deposit, bankers' acceptances, time deposits, Eurocurrency Deposits
and similar types of Investments routinely offered by commercial banks
with final maturities of one year or less issued by commercial banks
having combined capital and surplus in excess of $100,000,000; and
(iv) shares in money market mutual or similar funds having assets in
excess of $100,000,000.
"Closing Date" means the date on or before March 26, 1999 on which
the initial advance of the Loan is made and the conditions set forth
in Section 3.1 are satisfied or waived in accordance with Section 7.7.
"Collateral" means all collateral described in and pledged under
the Security Agreement and the Mortgaged Rig and any other property
subject to the Lien created under a Mortgage or a Loan Document.
"Commission" means the Securities and Exchange Commission.
"Company" has the meaning ascribed to such term in the introduction
to this Agreement.
"Collateral Agent" has the meaning assigned to such term in the
recitals to this Agreement.
"Contractual Obligation," as applied to any Person, means any
provision of any Security issued by that Person or of any indenture,
mortgage, deed of trust, contract, undertaking, agreement or other
instrument to which that Person is a party or by which it or any of
its properties is bound or to which it or any of its properties is
subject.
"Dollars" or the sign "$" means the lawful money of the United
States of America.
"Event of Default" means each of the events set forth in Section 6.
"indemnified liabilities" has the meaning ascribed to such term in
Section 7.3.
"Indemnitees" has the meaning ascribed to such term in Section 7.3.
"Indenture" has the meaning ascribed to such term in the recitals
of this Agreement.
"Laws" means all applicable statutes, laws, ordinances,
regulations, rules, orders, judgments, writs, injunctions or decrees
of any state, commonwealth, nation, territory, possession, province,
county, parish, town, township, village, municipality or Tribunal, and
"Law" means each of the foregoing.
"Lender" has the meaning ascribed to that term in the introduction
of this Agreement and shall include any assignee of the Loan or the
Note or Loan Commitment to the extent of such assignment.
"Lien" means any lien, mortgage, pledge, assignment, security
interest, charge or encumbrance of any kind (including any conditional
sale or other title retention agreement, any lease in the nature
thereof, and any agreement to give any security interest) and any
option, trust or other preferential arrangement having the practical
effect of any of the foregoing.
"Loan" means, collectively, the loans made by the Lender pursuant
to Section 2.1.
"Loan Documents" means this Agreement, the Note, the Mortgage, and
the Security Agreement.
"Margin Stock" has the meaning assigned to that term in
Regulation U of the Board of Governors of the Federal Reserve System
as in effect from time to time.
"Material Adverse Effect" means (i) a material adverse effect upon
the business, property, assets, nature of assets, liabilities
condition (financial or otherwise), results of operation or prospects
of the Company and its Restricted Subsidiaries, taken as a whole, or
(ii) the impairment of the ability of the Company or any of its
Restricted Subsidiaries to perform, or the impairment of the ability
of Lender to enforce, any material right or remedy under the
Obligations.
"Maturity" means the date on which the principal of the Loan,
whether the 7-year Tranche or 10-year Tranche or both, becomes due and
payable as provided in this Agreement whether at Stated Maturity, upon
redemption, by declaration of acceleration or otherwise.
"Mortgage" means a mortgage substantially in the form of Exhibit IV
covering the Mortgaged Rig.
"Mortgaged Rig" means the Deepwater IV.
"Notes" has the meaning ascribed to such term in Section 2.1C.
"Notice of Borrowing" means a notice substantially in the form of
Exhibit II annexed hereto with respect to a proposed borrowing.
"Obligations" means all obligations of every nature of the Company
from time to time owed to the Lender under the Loan Documents, whether
for principal, reimbursements, interest (including post-petition
interest), fees, expenses, indemnities or otherwise, and whether
primary, secondary, direct, indirect, contingent, fixed or otherwise
(including obligations of performance).
"Officer" means the Chairman of the Board, the Chief Executive
Officer, the Chief Operating Officer, the President, any Vice
President, the Chief Financial Officer, the Controller, the Chief
Accounting Officer, any Vice President, the Treasurer or the Secretary
of the Company.
"Officers' Certificate" means, as applied to any corporation, a
certificate executed on behalf of such corporation by two officers;
provided, however, that every Officers' Certificate with respect to
the compliance with a condition precedent to the making of the Loans
hereunder shall include (i) a statement that the officer or officers
making or giving such Officers' Certificate have read such condition
and any definitions or other provisions contained in this Agreement
relating thereto, (ii) a statement that, in the opinion of the
signers, they have made or have caused to be made such examination or
investigation as is necessary to enable them to express an informed
opinion as to whether or not such condition has been complied with,
and (iii) a statement as to whether, in the opinion of the signers,
such condition has been complied with.
"Other Loan" means a loan made pursuant to an Other Loan Agreement
by the Lender with the proceeds of the Secured Notes which is secured
by a Mortgaged Rig.
"Other Loan Agreement" means a loan agreement among the Lender, the
Company and the Trustee pursuant to which the Lender will utilize the
proceeds of the Secured Notes to make an Other Loan for the purposes
specified in the second recital of this Agreement
"Other Mortgaged Rig" means a Rig which has been mortgaged to
secure an Other Loan or which is the subject of a construction
contract which has been pledged to secure an Other Loan.
"Other Taxes" has the meaning ascribed to such term in Section 7.6.
"Payment Office" shall mean the office of United States Trust
Company of New York located at 114 West 47th Street, 25th Floor, New
York, New York 10036 or such other office in the State of New York as
the Lender may designate to the Company and the Trustee from time to
time.
"Potential Event of Default" means a condition or event which,
after notice or lapse of time or both, would constitute an Event of
Default if that condition or event were not cured or removed within
any applicable grace or cure period.
"Purchase Agreement" means the Purchase Agreement dated March 19,
1999 among the Lender, the Company and the Initial Purchaser relating
to the Secured Notes.
"Securities" means any stock, shares, partnership interests, voting
trust certificates, certificates of interest or participation in any
profit sharing agreement or arrangement, bonds, debentures, options,
warrants, notes, or other evidences of indebtedness, secured or
unsecured, convertible, subordinated or otherwise, or in general any
instruments commonly known as "securities" or any certificates of
interest, shares or participations in temporary or interim
certificates for the purchase or acquisition of, or any right to
subscribe to, purchase or acquire, any of the foregoing.
"Security Agreement" shall mean a Security Agreement substantially
in the form of Exhibit V among the Company, the Lender, and the
Collateral Agent, as the same may be amended, modified or supplemented
in accordance with the terms thereof and hereof.
"7-year Tranche" means advances on the Loan aggregating up to
$94,450,000 and having a final Loan Maturity of March 15, 2006.
"Taxes" means all taxes, assessments, fees, levies, imposts,
duties, penalties, deductions, liabilities, withholdings or other
charges of any nature whatsoever, including interest penalties, from
time to time or at any time imposed by any Law or any Tribunal.
"10-year Tranche" means advances on the Loan aggregating up to
$94,450,000 and having a final Maturity of March 15, 2009.
"Transaction Costs" means the fees, costs and expenses payable by
the Company pursuant hereto and other fees, costs and expenses payable
by the Company in connection with the Transactions.
"Transactions" shall mean, collectively, (i) the issuances and sale
of the Secured Notes, (ii) the incurrence of the Loan hereunder on the
Closing Date, (iii) the incurrence of the Other Loans under the Other
Loan Agreements, (iv) any other transaction on the Closing Date
contemplated in relation to the foregoing and (v) the payment of fees
and expenses in connection with the foregoing.
"Tranches" means collectively the 7-year Tranche and the 10-year
Tranche.
"Tribunal" means any governmental, any arbitration panel, any court
or any governmental department, commission, board, bureau, agency,
authority or instrumentality of the United States or any state,
province, commonwealth, nation, territory, possession, county, parish,
town, township, village or municipality, whether now or hereafter
constituted and/or existing.
"Trustee" has the meaning ascribed to such term in the introduction
of this Agreement and shall include any successor Trustee appointed
pursuant to terms of the Indenture.
"U.S. Legal Tender" means such coin or currency of the United
States of America as at the time of payment shall be legal tender for
the payment of public and private debts.
1.2 Other Defined Terms. Any capitalized term used in this Agreement
and not defined herein shall have the meaning assigned to such term in
the Indenture.
1.3 Accounting Terms. For the purposes of this Agreement, all
accounting terms to otherwise defined herein shall have the meanings
assigned to them in conformity with GAAP.
1.4 Other Definitional Provisions. Any of the terms defined in
Section 1.1 may, unless the context otherwise requires, be used in the
singular or the plural depending on the reference.
SECTION 2 LOAN COMMITMENT AND LOAN
2.1 The Loan and Notes.
A. Loan Commitment. Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties of
the Company herein set forth, the Lender hereby agrees to lend to the
Company on the Closing Date and thereafter up to $188,900,000 in the
aggregate (the "Loan") consisting of $94,450,000 of 7-year Tranche
advances and $94,450,000 of 10-year Tranche advances. The Lender's
commitment to make the Loan to the Company pursuant to this
Section 2.1 is herein called the "Loan Commitment."
B. Notice of Borrowing. When the Company desires to borrow under
this Agreement, it shall deliver to the Collateral Agent a Notice of
Borrowing no later than 11:00 a.m. (New York time), at least one
Business Day in advance of the Closing Date or such other date as
shall be agreed to by the Lender and the Trustee. The Notice of
Borrowing shall specify the amount of each Tranche and the applicable
date of borrowing (which shall be a Business Day).
C. Disbursement of Funds. No later than 3:00 p.m. (New York time)
on the Closing Date, the Lender promptly will make available to the
Company by depositing to its account at the Payment Office the
aggregate of the amount of the Loan to be made on such Closing Date.
D. Notes. The Company shall execute and deliver to the Lender on the
Closing Date two Notes dated the Closing Date, one substantially in
the form of Exhibit I annexed hereto with appropriate insertions to
evidence the maximum amount of the 7-year Tranche of Loan which may be
made hereunder by the Lender and the other substantially in the form
of Exhibit I annexed hereto with appropriate insertions to evidence
the maximum amount of 10-year Tranche of the Loan which may be made by
the Lender hereunder.
E. Scheduled Payments of Loan.
(i)Upon filing of the Mortgage for the Mortgaged Rig, the Company and
the Lender agree that aggregate additional advances of $166,900,000
will be made under this Agreement, consisting of $83,450,000 of the
7-year Tranche and $83,450,000 of the 10-year Tranche, by the exchange
of borrowings under the other Loan Agreements, relating to the
Mortgaged Rigs Deepwater Millennium, Peregrine IV, Peregrine VII,
Falcon 100 and Falrig 82.
(ii)The Company shall pay on or before 10:00 a.m. on the date of the
final Maturity of the 7-year Tranche of the Loan all of the principal
amount of the 7-year Tranche remaining outstanding, together with
accrued and unpaid interest, fees and a pro rata portion of the amount
of the Special Interest and Additional Amounts, if any, due on the
7-year Secured Notes. The Company shall pay on or before 10:00 a.m.
on the date of the final Maturity of the 10-year Tranche all of the
principal amount of the 10-year Tranche then remaining outstanding,
together with accrued and unpaid interest fees and a pro rata portion
of the amount of the Special Interest and Additional Amounts, if any,
due on the 10-year Secured Notes. Such payments shall be made
directly to the Trustee for deposit in the Issuer Escrow Account
established pursuant to the Issuer Escrow Agreement.
F. Termination of Loan Commitment. The Loan Commitment hereunder
shall terminate on the earlier (i) the Stated Maturity (whether by
acceleration, redemption, purchase or otherwise) of the Secured Notes
pursuant to the terms of the Indenture or (ii) March 31, 2001, if no
portion of the Loan has been made on or before such date (other than
as a result of failure of the Lender to fulfill its obligations
hereunder).
G. Satisfaction by Payments on the Guarantee. Pursuant to the
Indenture, the Company will guarantee the due and punctual payment of
the principal of, premium, if any, and interest on, and all other
amounts payable under, the Secured Notes (including any Additional
Amounts payable upon redemption, in respect thereof) when and as the
same shall become due and payable, whether at Stated Maturity, by
declaration of acceleration or otherwise. To the extent that the
Company makes a payment on the Guarantee, it will be deemed to have
made a payment on the Issuer Loans then outstanding, such payments to
be allocated pro rata to each of Tranches of the Loan and pro rata to
the Loan and the Other Loans.
2.2 Interest on the Loans.
A. Rate of Interest. The 7-year Tranche of the Loan shall bear interest
on the unpaid principal amount thereof from the date made through
Maturity for the 7-year Tranche (whether by prepayment, acceleration
or otherwise) at a rate equal to 11% per annum plus 2 basis points per
annum and the 10-year Tranche of the Loan shall bear interest on the
unpaid principal amount thereof from the date made through Maturity
for the 10-year Tranche (whether by prepayment, acceleration or
otherwise) at a rate equal to 11 3/8% per annum plus 2 basis points per
annum.
B. Special Interest. The Lender and the Company have entered into a
Registration Rights Agreement (the "Registration Rights Agreement")
dated March 26, 1999 with Donaldson, Lufkin & Jenrette Securities
Corporation for the benefit of the Holders of the Secured Notes, in
which the Lender and the Company have agreed to: (A) file a
registration statement within 60 days after the closing date of the
offering of Secured Notes for an offer to exchange Secured Notes of
each series for debt securities of that series with identical terms
(except for transfer restrictions); (B) use their best efforts to
cause the registration statement to become effective within 150 days
after the closing date of the offering of the Secured Notes; and
(C) complete the registered exchange offer within 180 days after the
closing date of the offering of the Secured Notes. Under certain
circumstances, the Lender and the Company may be required to file a
shelf registration statement for the Secured Notes registering the
resale of the Secured Notes. If the Lender and the Company do not
comply with their obligations under the Registration Rights Agreement,
the Lender will be required to pay additional interest ("Special
Interest") specified in Section 5 of the Registration Rights
Agreement. The Company will pay on each date that the Lender pays
Special Interest to the Holders of the Secured Notes as Special
Interest on the Loan an amount equal to the percentage of Special
Interest, if any, which the Lender owes to the Holders of the Secured
Notes that the principal amount of the Loan bears to the total
aggregate principal amount of the Loan and all Other Loans then
outstanding. Such payment shall be paid directly to the Trustee for
deposit into the Issuer Escrow Account.
Notwithstanding any provisions of this Section 2.2 or
any other provision herein, in no event will the combined sum of
interest (cash or otherwise) on the Loan exceed the maximum amount
permitted by applicable law.
C. Interest Payments. Interest (including Special Interest, if any,
and Additional Amounts, if any) shall be payable semi-annually on
March 15 and September 15 of each year, commencing September 15, 1999
but in no event to exceed the maximum permitted by applicable law.
All payments of interest on the Loan shall be made on or before 10:00
a.m. (New York time) on the date of payment and shall be paid directly
to the Trustee for deposit into the Issuer Escrow Account.
D. Post-Maturity Interest. Any principal payments on the Loan not paid
when due and, to the extent permitted by applicable law, any interest
payment on the Loan not paid when due, in each case whether at Stated
Maturity, by notice of prepayment, by acceleration or otherwise, shall
thereafter bear interest payable upon demand at a rate of interest
otherwise payable under this Agreement for the Loan but in no event to
exceed the maximum interest rate permitted by applicable law.
E. Computation of Interest. Interest on the Loan shall be computed on
the basis of a 360-day year of twelve 30-day months.
2.3 Redemptions.
A. Redemption upon Loss of the Mortgaged Rig. If an Event of Loss
occurs at any time with respect to the Mortgaged Rig attributable to
the Loan, the Company shall apply funds in an amount (the "Loss
Redemption Amount") equal to the principal amount of the Loan
outstanding on the date (the "Loss Date") on which such Event of Loss
was deemed to have occurred, together with all accrued and unpaid
interest (including Special Interest, if any, and Additional Amounts,
if any) thereon, to the prepayment of the Loan. If an Event of Loss
occurs at any time with respect to any Other Mortgaged Rig, the
Indenture and the applicable Other Loan Agreement require that the
Company shall apply funds to the principal amount of the applicable
Other Loan secured by the Other Mortgaged Rig outstanding on the Loss
Date for such other Mortgaged Rig, together with all accrued and
unpaid interest (including Special Interest, if any, and Additional
Amounts, if any) thereon, to the payment of such Other Loan. If a
Default under the Indenture shall have occurred and be continuing at
the time of the receipt of the Event of Loss Proceeds with respect to
such Other Mortgaged Rig, the Indenture requires, and the Company
hereby agrees, that it shall prepay the Loan and the remaining Other
Loans on a pro rata basis in an aggregate amount equal to the excess
of the Net Event of Loss Proceeds over the Loss Redemption Amount, if
any, together with all accrued and unpaid interest (including Special
Interest, if any, and Additional Amounts, if any) thereon for the
Other Loan which is secured by such Other Mortgaged Rig. All payments
on the Loan shall be allocated on a pro rata basis between the
Tranches and shall be made directly to the Trustee for deposit into
the Issuer Escrow Account.
B. Redemption upon Sale of the Mortgaged Rig. If the Mortgaged Rig
or the Capital Stock of a Subsidiary Guarantor then owning the Mortgaged
Rig is sold in compliance with the terms of the Indenture, the Company
shall apply funds in an amount (the "Sale Redemption Amount") equal to
the principal amount of the Loan secured by the Mortgaged Rig on the
date of such sale (the "Sale Date"), together with all accrued and
unpaid interest (including Special Interest, if any, and Additional
Amounts, if any thereon, plus any additional amounts required by the
Lender to redeem the Secured Notes to the extent required by
Section 3.9 of the Indenture, to the prepayment of the Loan. If any
Other Mortgaged Rig or the Capital Stock of a Subsidiary Guarantor
then owning an Other Mortgaged Rig is sold in compliance with the
terms of the Indenture, the Company shall apply funds equal to the
applicable Other Loan secured by the Other Mortgaged Rig outstanding
on the Sale Date for such Other Mortgaged Rig, together with all
accrued and unsecured interest (including Special Interest, if any,
and Additional Amounts, if any) thereon, to the payment of such Other
Loan. If a Default under the Indenture shall have occurred and be
continuing at the time of receipt of the cash consideration with
respect to such Other Mortgaged Rig or Capital Stock of the Subsidiary
Guarantor owning such Other Mortgaged Rig, the Indenture requires, and
the Company hereby agrees, that it shall also be required to prepay
the Loan and the remaining Other Loans on a pro rata basis in an
aggregate amount equal to the excess of such Net Available Cash
attributable to such Sold Mortgaged Rig over such Sale Redemption
Amount. Such payments on the Loan and the Other Loans pursuant hereto
shall be respectively allocated between the Tranches of the Loan and
the Other Loans on a pro rata basis and shall be made directly to the
Trustee for deposit into the Issuer Escrow Account.
C. Other Redemptions.
(i)Redemptions to Fund Optional Redemptions of the 10-year Secured
Notes. Under the terms of the Indenture, on or after March 15, 2004,
the 10-year Secured Notes will be redeemable, at the Lender's option,
in whole or in part, at any time or from time to time, upon not less
than 30 nor more than 60 days' prior notice to the Holders of the 10-
year Secured Notes, at the following Redemption Prices (expressed in
percentages of principal amount), plus accrued and unpaid interest
(including Special Interest, if any, and Additional Amounts, if any)
to the Redemption Date, if redeemed during the 12-month period
commencing on March 15 of the years set forth below.
Redemption
Period Price
2004 105.6875%
2005 103.7917
2006 101.8958
2007 and thereafter 100.0000
The Company shall prepay the 10-year Tranche of the Loan and
of the Other Loans, in whole or in part, to provide funds for
such redemption. Any prepayments by the Company on the Loan and
the Other Loans required to be made to provide funds for the
Lender to make such a redemption shall be made on this Loan and
the Other Loans on a pro rata basis. All payments on the Loan
and the Other Loans pursuant hereto shall be made directly to the
Trustee for deposit into the Issuer Escrow Account.
(ii)Redemptions to Fund Optional Redemptions of the 7-year Secured
Notes. Under the terms of the Indenture, the 7-year Secured Notes
will be redeemable, at the Lender's option at any time in whole or
from time to time in part upon not less than 30 and not more than
60 days' prior notice mailed by first class mail to the Holders of the
7-year Secured Notes, on any date prior to Maturity at a price equal
to 100% of the principal amount thereof plus accrued and unpaid
interest (including Special Interest, if any, and Additional Amounts,
if any) to the Redemption Date plus the Make-Whole Premium applicable
to the 7-year Secured Notes determined in the manner provided for in
Section 3.7 of the Indenture. The Company shall prepay the 7-year
Tranche of the Loan and of the Other Loans in whole or in part to
provide funds for such redemption. Any prepayments by the Company on
the Loan and the Other Loans required to be made to provide funds for
the Lender to make such a redemption shall be made on the Loan and the
Other Loans on a pro rata basis. All payments on the Loan and the
Other Loans pursuant hereto shall be made directly to the Trustee for
deposit into the Issuer Escrow Account.
D. Excess Proceeds Offers. The Indenture provides in Section 3.10
thereof that if, as of the first day of any calendar month, the
aggregate amount of Sale Excess Proceeds and Loss Excess Proceeds
exceeds 10% of consolidated total assets of the Company, and if the
aggregate amount of Sale Excess Proceeds and Loss Excess Proceeds in
excess of 10% of consolidated total assets of the Company that has not
theretofore been subject to an Excess Proceeds Offer (as defined
below) (the "Excess Proceeds Offer Amount"), totals at least $10
million, the Lender must, not later than the fifteenth Business Day of
such month, make an offer ( an "Excess Proceeds Offer") to purchase
from the Holders of the Secured Notes, pursuant to and subject to the
conditions contained in the Indenture, and from Holders of the New
Senior Notes, pursuant to provisions of the New Senior Note Indenture,
Secured Notes at a purchase price equal to 100% of their principal
amount, plus any accrued interest (including Additional Amounts and
Special Interest, if any) to the date of purchase and New Senior Notes
at a purchase price equal to 100% of their principal amount, plus any
accrued interest (including Special Interest, if any) to the date of
purchase in an aggregate principal amount equal to the Excess Proceeds
Offer Amount (an "Excess Proceeds Payment"). If the Lender is ever
required pursuant to Section 3.10 of the Indenture to make an Excess
Proceeds Offer to the Holders of the Secured Notes to purchase from
such Holders their Secured Notes, and to the Holders of Senior Notes
to purchase from such Holders their New Senior Notes, the Indenture
provides, and the Company agrees, that the Company will prepay the
Loan and the Other Loans on a pro rata basis to permit the Lender to
purchase any Secured Notes validly tendered pursuant to an Excess
Proceeds Offer. All payments on the Loan shall be allocated between
the appropriate Tranches of the Loan; and all payments on the Loan and
the Other Loans pursuant hereto shall be made directly to the Trustee
for deposit into the Issuer Escrow Account.
E. Change of Control. If the Lender is ever required to make pursuant
to the provisions of Section 4.8 of the Indenture a Change of Control
Offer to the Holders of the Secured Notes at a purchase price in cash
equal to 101% of the principal amount thereof plus accrued and unpaid
interest (including Additional Amounts and Special Interest, if any)
thereon, the Indenture provides, and Company agrees, that the Company
will prepay the Loan and the Other Loans on a pro rata basis at a
redemption price equal to 101% of the principal amount hereof being
repaid, plus accrued and unpaid interest, Special Interest, if any,
and Additional Amounts, if any, thereon, in order to provide funds
sufficient to permit the Lender to purchase any Secured Notes validly
tendered pursuant to the foregoing offer to purchase Secured Notes
upon a Change of Control. All payments on the Loan shall be allocated
between the appropriate Tranches of the Loans and all payments on the
Loan and the Other Loans pursuant hereto shall be made directly to the
Trustee for deposit into the Issuer Escrow Account.
F. Notice. The Company shall notify the Lender and the Trustee of any
prepayment to be made pursuant to this Section 2.3 at least two
Business Days prior to such prepayment date.
G. Determination of Amounts of the Tranches Subject to Such
Redemptions. The Lender will submit a written determination to the
Trustee for its approval of the amount (including the pro rata
allocations between the Tranches of the Loan and between the Loan and
the Other Loans) with respect to any such redemption. The Trustee
shall approve or disapprove such allocations in its sole discretion
and such decision shall be conclusive, absent manifest error. A
certificate of the Lender setting forth such determination, with the
written approval of the Trustee thereon, shall be delivered to the
Company at least one Business Day prior to the payment date.
H. Company's Mandatory Prepayment Obligation; Application of
Prepayments. All prepayments shall include payment of accrued
interest (including Special Interest and Additional Amounts, if
applicable) on the principal amount so prepaid and shall be applied to
payment of interest before application to principal.
I. Manner and Time of Payment. Unless otherwise expressly set forth
herein, all payments of principal and interest hereunder and under the
Notes by the Company shall be made without defense, set-off or
counterclaim and in same-day funds and delivered to the Trustee for
deposit into the Issuer Escrow Account, unless otherwise specified,
not later than 10:00 a.m. (New York time) on the date due at the
Payment Office; funds received by the Trustee after that time shall be
deemed to have been paid by the Company on the next succeeding
Business Day.
J. Payments on Non-Business Days. Whenever any payment to be made
hereunder or under the Notes shall be stated to be due on a day which
is not a Business Day, the payment shall be made on the next
succeeding Business Day and such extension of time shall be included
in the computation of the payment of interest hereunder or under the
Loan.
2.4 Use of Proceeds.
A. Loan. The proceeds of the Loan may be applied by the Company to
finance certain costs of acquiring, constructing, repairing and
improving the Mortgaged Rig and, to the extent that such costs have
already been paid, for general corporate purposes.
B. Margin Regulations. No portion of the proceeds of any borrowing
under this Agreement shall be used by the Company in any manner which
might cause the borrowing or the application of such proceeds to
violate the applicable requirements of Regulation U, Regulation T or
Regulation X of the Board of Governors of the Federal Reserve System
or any other regulation of the Board or to violate the Exchange Act,
in each case as in effect on the date or dates of such borrowing and
such use of proceeds.
2.5 Commitment Fee. The Company agrees to pay a commitment fee for the
period from and including the Closing Date to and including the date
of termination specified in Section 2.1.F. on the undrawn portion of
the Loan equal to the average of the daily excess of the Loan
Commitment over the aggregate principal amount of the Loan outstanding
multiplied by 7% per annum, such commitment fee to be calculated on
the basis of a 360-day year consisting of twelve 30-day months and to
be payable semi-annually in arrears on each March 15 and September 15,
commencing September 15, 1999.
SECTION 3 CONDITIONS
3.1 Conditions to Initial Advances on the Loan. The obligation of the
Lender to make the initial advance on the Loan is subject to prior or
concurrent satisfaction of each of the following conditions:
A. On or before the Closing Date, all corporate and other proceedings
taken or to be taken in connection with the transactions contemplated
hereby and all documents incidental thereto not previously found
acceptable by the Lender and the Trustee shall be reasonably
satisfactory in form and substance to the Lender and the Trustee, and
the Lender and the Trustee shall have received the following items,
each of which shall be in form and substance satisfactory to the
Lender and the Trustee and, unless otherwise noted, dated the Closing
Date:
(i) a certified copy of the Company's charter, together with a
certificate of status, compliance, good standing or like certificate
with respect to the Company issued by the appropriate government
officials of the jurisdiction of its incorporation and of each
jurisdiction in which it owns any material assets or carries on any
material business, each to be dated a recent date prior to the Closing
Date;
(ii) a copy of the Company's bylaws, certified as of the Closing Date
by its Secretary or one of its Assistant Secretaries;
(iii) resolutions of the Company's Board of Directors approving and
authorizing the execution, delivery and performance of this Agreement,
the Notes, the Security Agreements, the Mortgage, each of the other
Loan Documents, the Indenture and any other documents, instruments and
certificates required to be executed by the Company in connection
herewith and therewith and approving and authorizing the execution,
delivery and payment of the Loan, each certified as of the Closing
Date by its Secretary or one of its Assistant Secretaries as being in
full force and effect without modification or amendment;
(iv) signature and incumbency certificates of the Company's officers
executing this Agreement, the Other Loan Documents and the Notes;
(v) executed copies of this Agreement and the Notes substantially in
the form of Exhibit I annexed hereto executed in accordance with
Section 2.1C drawn to the order of the Lender and with appropriate
insertions;
(vi) an originally executed Notice of Borrowing substantially in the
form of Exhibit II annexed hereto, signed by the President or a Vice
President of the Company on behalf of the Company and delivered to the
Lender; and
(vii) originally executed copies of one or more favorable written
opinions of Gardere & Wynne, special counsel for the Company,
substantially in the form of the Exhibit III hereto and addressed to
the Lender, the Trustee and the Initial Purchaser, and such other
opinions of counsel and such certificates or opinions of accountants,
appraisers or other professionals as the Lender, the Trustee or the
Initial Purchaser shall have reasonably requested.
B. The Lender shall have received a fully executed Security
Agreement, in the form of Exhibit V hereto, the Lien of which has been
perfected in all appropriate jurisdictions; provided, however, that
Liens on equipment purchased by the Company for the Mortgaged Rig that
has not yet been Mortgaged do not have to be perfected until required
by the Trustee, but only after the later to occur of one year after
the date of this Agreement or the completion date for the Mortgaged
Rig as scheduled on the date of this Agreement.
C. On or before the Closing Date, all authorizations, consents and
approvals necessary in connection with the Transactions shall have
been obtained and remain in full force and effect and all applicable
waiting periods, if any, under law applicable to the Transactions
shall have expired without any action being taken by any competent
authority (including without limitation, any Tribunal) which
restrains, prevents or imposes materially adverse conditions upon the
completion of the Transactions or the financing thereof and evidence
of the receipt of such authorizations, consents and approvals
satisfactory to the Lender and the Trustee shall have been delivered
to the Lender and the Trustee.
D. On or before the Closing Date, the Indenture and the Purchase
Agreement shall have been executed and delivered by all parties
thereto. No default or event of default shall have occurred under the
Indenture and the Purchase Agreement, all conditions to the execution
delivery and authentication of the Secured Notes thereunder shall have
been satisfied under the Indenture, and all conditions to the purchase
of the Secured Notes by the Initial Purchaser under the Purchase
Agreement have been satisfied or waived by the Initial Purchaser.
E. Simultaneously with the making of the Loan by the Lender, the
Company shall have delivered to the Lender and the Trustee an
Officers' Certificate from the Company in form and substance
satisfactory to the Lender and the Trustee to the effect that (i) the
representations ad warranties of the Company in Section 4 are true,
correct and complete in all material respects on and as of the Closing
Date to the same extent as though made on and as of that date, and
(ii) on or prior to the Closing Date, the Company has performed and
complied with in all material respects all covenants and conditions to
be performed and observed by the Company on or prior to the Closing
Date and
F. No event shall have occurred and be continuing or would result from
the consummation of the borrowing contemplated by the Notice of
Borrowing which would constitute and Event of Default, a Potential
Event of Default or a Default.
G. No order, judgment or decree of any court, arbitrator or
governmental authority shall purport to enjoin or restrain the Lender
from making the Loan.
H. The making of the Loan in the manner contemplated in this Agreement
shall not violate the applicable provisions of Regulation T, U or X of
the Board of Governors of the Federal Reserve Board or any other
regulation of the Board.
3.2 Conditions to Subsequent Advance on the Loan. The obligation of
the Lender to make a subsequent advance on the Loan is subject to the
prior or concurrent satisfaction of each of the following conditions:
A. The Lender and the Trustee shall have received in form and substance
satisfactory to the Lender and the Trustee and dated the date of such
advance an originally executed Notice of Borrowing substantially in
the form of Exhibit II annexed hereto, signed by the President or a
Vice President of the Company on behalf of the Company and delivered
to the Lender.
B. No event shall have occurred and be continuing or would result from
the consummation of the borrowing contemplated by the Notice of
Borrowing which would constitute an Event of Default, a Potential
Event of Default or a Default.
C. No order, judgment or decree of any court, arbitrator or
governmental authority shall purport to enjoin or restrain the Lender
from making the Loan.
D. The making of the Loan in the manner contemplated in this Agreement
shall not violate the applicable provisions of Regulation T, U or X of
the Board of Governors of the Federal Reserve Board or any other
regulation of the Board.
E. Simultaneously with the making of the advance on the Loan by the
Lender, the Company shall have delivered to the Lender and the Trustee
an Officers' Certificate from the Company in form and substance
satisfactory to the Lender and the Trustee to the effect that (i) the
representations and warranties of the Company in Section 4 are true,
correct and complete in all material respects on and as of the date of
such advance to the same extent as though made on and as of that date,
and (ii) on or prior to the date of such advance, the Company has
performed and complied with in all material respects all covenants and
conditions to be performed and observed by the Company on or prior to
the date of such advance.
SECTION 4 REPRESENTATIONS AND WARRANTIES
In order to induce the Lender to enter into this Agreement and to
make the Loan, the Company represents and warrants to the Lender that,
at the time of execution hereof and after consummation of the making
of the Loan and the Transactions, the following statements are true,
correct and complete:
4.1 Organization and Good Standing; Capitalization. The Company is a
corporation duly organized and existing and in good standing under the
laws of its jurisdiction of incorporation. The Company has the
corporate power and authority to own and operate its properties and to
carry on its business as now conducted and as proposed to be conducted
and is duly qualified as a foreign corporation and in good standing in
all jurisdictions in which it is doing business, except where failure
to be so qualified or in good standing, singly or in the aggregated,
has not had and will not have a Material Adverse Effect.
4.2 Authorization and Power. The Company has the corporate power and
requisite authority, and has taken all corporate action necessary, to
consummate the Transactions and to execute, deliver and perform its
obligations under this Agreement, the Mortgage, the Security
Agreement, the other the Loan Documents, Indenture and each other
document and instrument to be delivered in connection with the
Transactions executed or to be executed by it and to issue the Notes.
4.3 No Conflicts or Consents.
A. The execution and delivery of the Loan Agreement, the Notes, the
Mortgage, the Security Agreement, the other Loan Documents and each
other document to be executed and delivered in connection with the
Transactions, the consummation of each of the transactions herein or
therein contemplated, the compliance with each of the terms and
previsions hereof or thereof, and the issuance, delivery and
performance of the Notes, this Agreement, the Mortgage, the Security
Agreement and the Indenture, do not and will not (i) violate any
provision of any law or any governmental rule or regulation applicable
to the Company, its Certificate of Incorporation or Bylaws or any
order, judgment or decree of any court or other agency of government
binding on it, (ii) conflict with, result in a breach of or constitute
(with due notice or lapse of time or both) a default under any
Contractual Obligation of the Company which could reasonably be
expected to result in a Material Adverse Effect, (iii) result in or
require the creation or imposition of any Lien upon any of the
properties or assets of the Company (other than any Liens created
under this Agreement and the Other Loan Agreements), (iv) require any
approval of stockholders or any approval or consent of any Person
under any Contractual Obligation of the Company except for such
approvals or consents which will be obtained on or before the Closing
Date and disclosed in writing to Lender, the Trustee and the Initial
Purchaser or such approvals or consents the failure to obtain which
could not reasonably be expected to singly or in the aggregate result
in a Material Adverse Effect.
B. No consent, approval, authorization or order of any Tribunal or
other Person is required in connection with the execution and delivery
by the Company of this Agreement, the Loan Documents or any other
document or instrument to be delivered in connection with the
Transactions or the consummation of the transactions contemplated
hereby or thereby, other than any such consent, approval,
authorization or order which has been obtained and remains in full
force and effect or which has been waived in writing by the Lender or
the failure of which to obtain would not, singly or in the aggregated,
have a Material Adverse Effect.
4.4 Enforceable Obligations. Each of this Agreement, the Notes, the
Mortgage, the Security Agreement, the other Loan Documents, and each
other document or instrument to be delivered in connection therewith
has been duly authorized; each of this Agreement, the Notes, the
Mortgage, the Security Agreement, the Other Loan Documents and each
other document or instrument to be delivered in connection therewith
to be executed and delivered on or prior to the Closing Date has been
duly executed and delivered by the Company and each of this Agreement,
the Notes, the Mortgage, the Security Agreement, the Other Loan
Documents and each other document or instrument to be delivered in
connection therewith to be executed and delivered on or prior to the
Closing Date is, and each of this Agreement, the Notes, the Mortgage,
the Security Agreement and the other Loan Documents to be executed and
delivered after the Closing Date will be, upon such execution and
delivery, the legal, valid and binding obligations of the Company,
enforceable in accordance with their respective terms, except to the
extent that the enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization or similar laws affecting the
enforcement of creditors' rights generally or by general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law)
4.5 Properties; Liens. The Company has good and marketable title to
the contract for the construction of the Mortgaged Rig and the
equipment purchased and paid for by the Company to be installed or
used thereon and the Other Mortgaged Rigs to the extent specified in
the Other Loan Agreements. Except as described in Schedule 4.5, the
Company owns, and such contract and equipment are owned, free and
clear of Liens.
4.6 No Default. No event has occurred and is continuing which
constitutes a Default, a Potential Event of Default or an Event of
Default.
4.7 Use of Proceeds; Margin Stock, etc. The proceeds of the Loan will
be used solely for the purposes specified herein. None of such
proceeds will be used for the purpose of purchasing or carrying any
Margin Stock within the meaning of the applicable provisions of
Regulation T, U or X, or for the purpose of reducing or retiring any
Indebtedness which was originally incurred to purchase or carry a
Margin Stock or for any other purpose which might constitute this
transaction a "purpose credit" within the meaning of the applicable
provisions of Regulation T, U or X. The Company has not taken nor
will it take any action which might cause any of the Loan Documents to
violate the applicable provisions of Regulation T, U or X, or any
other regulation of the Board of Governors of the Federal Reserve
System.
4.8 Survival of Representations and Warranties. All representations
and warranties in the Loan Documents shall survive delivery of the
Notes and the making of the Loan and shall continue until one year
after repayment of the Notes and the Obligations, and any
investigation at any time made by or on behalf of the Lender shall not
diminish the Lender's right to rely thereon.
SECTION 5 COVENANTS
5.1 Indenture Covenants. Each of the covenants conferred in the
Indenture applicable to the Company and its Restricted Subsidiaries
are incorporated herein by reference. The Company covenants and
agrees that, until the Loan and the Notes and all other amounts due
under this Agreement have been indefeasibly paid in full it shall
perform all covenants applied to it or any of its Restricted
Subsidiaries which are contained in the Indenture.
5.2 Reports of Defaults, Etc. The Company will deliver to each Lender
and the Trustee promptly upon, but in no event more than five (5)
Business Days after, any Officer's obtaining knowledge of any
condition or event which constitutes a Default, an Event of Default or
a Potential Event of Default, an Officer's Certificate specifying the
nature and period of existence of any such condition or event, or
specifying the notice given or the claim of Default, Event of Default,
Potential Event of Default, or the event or condition, and what action
the Company has taken, is taking and proposes to take with respect
thereto;
5.3 Payments in U.S. Dollars. All payments of any Obligations to be
made hereunder or under the Note by the Company or any other obligor
with respect thereto shall be made solely in U.S. Dollars or such
other currency as is then legal tender for public and private debts in
the United States of America.
5.4 Performance and Enforcement Under the Loan Documents. The Company
shall promptly perform all of its obligations under the Loan Documents
and each document and instrument related thereto or delivered in
connection with any thereof, in each case, to the extent within its
control. The Company shall (A) diligently and in good faith promptly
pursue the performance of each other party to each such document, and
(B) diligently seek the enforcement of all rights and remedies under
each such document.
5.5 Liens. The Company shall not, nor shall it cause or permit any of
its Restricted Subsidiaries to, directly or indirectly, create, incur,
assume or permit to exist, any Lien on or with respect to any property
or asset (including the Mortgaged Rig) of the Company or of any of its
Restricted Subsidiaries, whether now owned or hereafter acquired, or
assign or otherwise convey any right to receive any income or profits
therefrom, or file or permit the filing of, or permit to remain in
effect, any financing statement or other similar notice of any Lien
with respect to any such property, asset, income or profits under the
Uniform Commercial Code of any State or under any similar recording or
notice statute, except Liens permitted by the Indenture and Liens
permitted by the Loan Documents.
5.6 Transfer of Mortgage Rig to a Restricted Subsidiary. The Company
shall not, nor shall the Company cause or permit any of its Restricted
Subsidiaries to, directly or indirectly, transfer the Mortgaged Rig to
any Subsidiary of the Company unless (i) such Subsidiary guarantees
all Obligations of the Company under this Agreement and executes a
Mortgage and a Security Agreement, (ii) the Liens of the Subsidiary's
Mortgage and Security Agreement are perfected and enforceable, and
(iii) such Subsidiary executes a Subsidiary Guarantee pursuant to the
Indenture.
5.7 Filing of Mortgage. Promptly upon completion of the Mortgaged Rig,
the Company shall grant a valid and perfected first Lien on the
Mortgaged Rig pursuant to a Mortgage in the form of Exhibit IV
attached hereto.
SECTION 6 EVENTS OF DEFAULT
If any of the following conditions of events ("Events of Default")
shall occur and be continuing:
6.1 Failure To Make Payments When Due. Failure to pay any installment
of principal including Premium of the Loan when due, whether at stated
maturity, by acceleration, by notice of prepayment or otherwise; or
failure to pay any interest (including Special Interest and Additional
Amounts) on the Loan or any other amount due under this Agreement
continued for 30 days; or
6.2 Default Under The Indenture. An Event of Default occurs and is
continuing under the Indenture; or
6.3 Other Loan Agreement. An Event of Default (as defined in an other
Loan Agreement) occurs and is continuing under such Other Loan
Agreement; or
6.4 Breach of Certain Covenants. Failure of the Company to perform or
comply with any covenant, term or condition contained in Sections 5.2
through 5.7 and Sections 7.3 through 7.5 of this Agreement; or
6.5 Breach of Warranty. Any representation, warranty or certification
made by the Company in any Loan Document or in any statement or
certificate at any time given by the Company in writing pursuant
hereto or thereto or in connection herewith or therewith shall be
false or incorrect in any material respect on the date as of which
made or deemed made; or
6.6 Other Defaults Under Agreement or Loan Documents. The Company
shall default in the performance of or compliance with any covenant,
term or condition contained in this Agreement or the other Loan
Documents (other than those covered by Sections 5.2 through 5.7 and
such default shall not have been remedied or waived in accordance with
Section 7.6 of this Agreement within 30 days after the date of written
notice of such default from the Lender, the Collateral Agent, the
Trustee or the Holder or Holders of not less than 25% in aggregate
principal amount of the Secured Notes then outstanding; or
6.7 Involuntary Bankruptcy; Appointment of Custodian, etc. The entry
by a court having jurisdiction in the premises of (i) a decree or
order for relief in respect of the Company or any Significant
Subsidiary in an involuntary case or proceeding under U.S. bankruptcy
laws, as now or hereafter constituted, or any other applicable
Federal, state, or foreign bankruptcy, insolvency, or other similar
law or (ii) a decree or order adjudging the Company or any Significant
Subsidiary a bankruptcy or insolvent, or approving as properly filed a
petition seeking reorganization, arrangement, adjustment or
composition of or in respect of the Company or any Significant
Subsidiary under U.S. bankruptcy laws, as now or hereafter
constituted, or any other applicable Federal, state or foreign
bankruptcy, insolvency, or similar law, or appointing a custodian,
liquidator, assignee, trustee, sequestrator or other similar official
of the Company or any Significant Subsidiary or of any substantial
part of the Property or assets of the Company or any Significant
Subsidiary, or ordering the winding up or liquidation of the affairs
of the Company or any Significant Subsidiary, and the continuance of
any such decree or order for relief or any such other decree or order
unstayed and in effect for a period of 60 consecutive days; or
6.8 Voluntary Bankruptcy; Appointment of a Custodian, etc. The
commencement by the Company or any Significant Subsidiary of a
voluntary case or proceeding under the U.S. bankruptcy laws, as now or
hereafter constituted, or any other applicable Federal, state or
foreign bankruptcy, insolvency or other similar law or of any other
case or proceeding to be adjudicated a bankrupt or insolvent; or
(ii) the consent by the Company or any Significant Subsidiary to the
entry of a decree or order for relief in respect of the Company or any
Significant Subsidiary in an involuntary case or proceeding under U.S.
bankruptcy laws, as now or hereafter constituted, or any other
applicable Federal, state, or foreign bankruptcy, insolvency or other
similar law or to the commencement of any bankruptcy or insolvency
case or proceeding against the Company or any Significant Subsidiary;
or (iii) the filing by the Company or any Significant Subsidiary of a
petition or answer or consent seeking reorganization or relief under
U.S. bankruptcy laws, as now or hereafter constituted, or any other
applicable Federal, state or foreign bankruptcy, insolvency or other
similar law; or (iv) the consent by the Company or any Significant
Subsidiary to the filing of such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator, assignee,
trustee, sequestrator or similar official of the Company or any
Significant Subsidiary or of any substantial part of the property or
assets of the Company or any Significant Subsidiary, or the making by
the Company or any Significant Subsidiary of an assignment for the
benefit of creditors; or (v) the admission by the Company or any
Significant Subsidiary in writing of its inability to pay its debts
generally as they become due; or (vi) the taking of corporate action
by the Company or any Significant Subsidiary in furtherance of such
action;
THEN (i) upon the occurrence of any Event of Default described in
the foregoing Section 6.7 or 6.8, all of the unpaid principal amount
of and accrued interest on the Loan and all other outstanding
Obligations shall automatically become immediately due and payable,
without presentment, demand, protest, waiver of notice of intent to
accelerate and waiver of notice of such acceleration or notice of any
other kind or other requirements of any kind, all of which are hereby
expressly waived by the Company, and Obligations and the Loan
Commitment of the Lender hereunder shall thereupon terminate, and
(ii) upon the occurrence of any other Event of Default, the Lender
shall, upon written notice of the Lender, to the Company, upon written
notice of the Trustee or the Collateral Agent to the Company and the
Lender, or upon written notice of a Holder or Holders of the Secured
Note or Notes, to the Company, the Lender, the Collateral Agent and
the Trustee, declare all of the unpaid principal amount of and accrued
interest on the Loan and all other outstanding Obligations to be, and
the same shall forthwith become, due and payable, and the obligations
and Loan Commitments of the Lender hereunder shall thereupon
terminate; provided, however, that upon the occurrence of an Event of
Default described in Section 6.4 of this Agreement or an "event of
default" under Section 6.4 of any Other Loan Agreement, the Lender
shall not declare the Obligations hereunder to be due and payable for
a period of 60 days after notice of the occurrence of such Event of
Default or "event of default." Nevertheless, if at any time after
acceleration of the Maturity of the Loan, the Company shall pay all
arrears of interest and all payments on account of the principal
thereof which shall have become due otherwise than by acceleration
(with interest on principal and, to the extent permitted by law, on
overdue interest, at the rates specified in this Agreement or the
Notes) and all Events of Default and Potential Events of Default
(other than non-payment of principal of and accrued interest on the
Loan and the Notes due and payable solely by virtue of acceleration)
shall be remedied or waived pursuant to Section 7.6, then the Lender
shall, upon receipt of the written notice from the Collateral Agent
and the Trustee of such remedy or waiver, by written notice to the
Company rescind and annul the acceleration and its consequences; but
such action shall not affect any subsequent Default, Event of Default
or Potential Event of Default or impair any right consequent thereon.
SECTION 7 MISCELLANEOUS
7.1 Pledges and Assignments of Loan and Note. The Lender shall have
the right at any time to sell, pledge, assign, transfer or negotiate
all or any portion of the Note or its Loan Commitment. The Company
acknowledges that the Lender will pledge its rights under this
Agreement, the Notes, the Mortgage and the Other Loan Documents to the
Collateral Agent pursuant to the Issuer Security Agreement to secure
the Lender's obligations under the Indenture and the Secured Notes.
7.2 Expenses. Whether or not the transactions contemplated hereby
shall be consummated, the Company, its successors and assigns agrees
to promptly pay (i) all the actual costs and expenses of preparation
of the Loan Documents and all the costs of furnishing all opinions by
counsel for the Company (including without limitation any opinions
requested by the Lender as to any legal matters arising hereunder),
and of the Company's performance of and compliance with all agreements
and conditions contained herein on its part to be performed or
complied with; (ii) the reasonable fees, expenses and disbursements of
counsel to the Lender and the Trustee and the Collateral Agent, their
successors and assigns (including allocated costs of internal counsel)
in connection with the negotiation, preparation, execution and
administration of the Loan Documents and the Loan hereunder, and any
amendments, modifications and waivers hereto or thereto and consents
to departures from the terms hereof and thereof; and (iii) after the
occurrence of an Event of Default, all costs and expenses (including
reasonable attorneys fees, including allocated costs of internal
counsel, and costs of settlement) incurred by the Lender, its
successors and assigns in enforcing any Obligations of or in
collecting any payments due from the Company hereunder or under the
Notes by reason of such Event of Default or in connection with any
refinancing or restructuring of the credit arrangements provided under
this Agreement in the nature of a "work-out" or of any insolvency or
bankruptcy proceedings.
7.3 Indemnity. In addition to the payment of expenses pursuant to
Section 7.2, whether or not the transactions contemplated hereby shall
be consummated, the Company agrees to indemnify, pay and hold the
Lender, the Collateral Agent, the Trustee and any Holder of the
Secured Notes and holder of the Notes, and each of their officers,
directors, employees, and agents, (collectively called the
"Indemnitees"), harmless from and against any all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits,
claims, costs, expenses and disbursements of any kind or nature
whatsoever (including, without limitation, the fees and disbursements
of counsel for such Indemnitees in connection with any investigative,
administrative or judicial proceeding commenced or threatened, whether
or not such Indemnitee shall be designated as a party thereto), which
may be suffered by imposed on, incurred by, or asserted against that
Indemnitee, in any manner resulting from, connected with, in respect
of, relating to or arising out of this Agreement, the Notes, the
Mortgage, the Security Agreement, the Lender's agreement to make the
Loan or the use or intended use of any of the proceeds of the Loan
hereunder or the Transactions (the "indemnified liabilities");
provided, however, that the Company shall have no obligation to an
Indemnitee hereunder with respect to indemnified liabilities (i) to
the extent such is finally judicially determined to have resulted
solely from (A) the gross negligence or willful misconduct of that
Indemnitee or (B) the failure of such Indemnitee to perform its
obligations under any Loan Document or (C) such Indemnitee's violation
of law or (ii) in connection with the obligations of any Indemnitee
under any Loan Document. To the extend that the undertaking to
indemnify, pay and hold harmless set forth in the preceding sentence
may be unenforceable because it is violative of any law or public
policy, the Company shall contribute the maximum portion which it is
permitted to pay and satisfy under applicable law to the payment and
satisfaction of all indemnified liabilities incurred by the
Indemnitees or any of them.
7.4 Additional Amounts. Except to the extent required by any applicable
law, regulation law, regulation or governmental policy, any and all
payments of, or in respect of the Loan, this Agreement, the Notes, any
Loan Document or any Secured Note shall be made free and clear of and
without deduction for or on account of any and all present or future
taxes, levies, imposts, deduction, charges or withholdings and all
liabilities with respect thereto imposed by Panama, The Bahamas, The
Marshall Islands or any other jurisdiction with which the Company or
any Subsidiary has some connection (including any jurisdiction (other
than the United States of America) from or through which payments
under this Agreement, the Notes, any Loan Document, the Guarantee or
the Secured Notes are made) or any political subdivision of or any
taxing authority in any such jurisdiction ("Panamanian Taxes,"
"Bahamian Taxes," "MI Taxes," or "Other Taxes," respectively). If the
Lender, the Company or any Subsidiary Guarantor shall be required by
law to withhold or deduct any Panamanian Taxes, Bahamian Taxes, MI
Taxes, or Other Taxes from or in respect of any sum payable under this
Agreement, the Notes, any Loan Document, the Guarantee or the Secured
Notes, the sum payable by the Company or such Subsidiary Guarantor, as
the case may be, thereunder shall be increased by the amount
("Additional Amounts") necessary so that after making all required
withholdings and deductions, Lender or any Holder or beneficial owner
of Secured Notes shall receive an amount equal to the sum that it
would have received had not such withholdings and deductions been
made; provided that any such sum shall not be paid in respect of any
Panamanian Taxes, Bahamian Taxes, MI Taxes or Other Taxes to a Holder
(an "Excluded Holder") (i) resulting from the beneficial owner of such
Secured Note carrying on business or being deemed to carry on business
in or through a permanent establishment or fixed base in the relevant
taxing jurisdiction or having any other connection with the relevant
taxing jurisdiction or any political subdivision thereof or any taxing
authority therein other than the mere holding or owning of such
Secured Note, being a beneficiary of the Guarantee or any applicable
Subsidiary Guarantee, the receipt of any income or payments in respect
of such Secured Note, the Loan, the Guarantee or any applicable
Subsidiary Guarantee or the enforcement of such Secured Note, the
Loan, the Guarantee or any applicable Subsidiary Guarantee, or (ii)
that would not have been imposed but for the presentation (where
presentation is required) of such Secured Note for payment more than
180 days after the date such payment became due and payable or was
duly provided for, whichever occurs later. The Lender, the Company or
the Subsidiary Guarantors, as applicable, will also (i) make such
withholding or deduction and (ii) remit the full amount deducted or
withheld to the relevant authority in accordance with applicable law,
and, in any such case, the Lender is required to furnish under the
Indenture to each Holder on whose behalf an amount was so remitted,
within 30 calendar days after the date the payment of any Panamanian
Taxes, Bahamian Taxes, MI Taxes or Other Taxes is due pursuant to
applicable law, certified copies of tax receipts evidencing such
payment by the Lender, the Company or the Subsidiary Guarantors, as
applicable. The Company will, upon written request of each Holder
(other than an Excluded Holder), reimburse each such holder for the
amount of (i) any Panamanian Taxes, Bahamian Taxes, MI Taxes or Other
Taxes so levied or imposed and paid by such Holder as a result of
payments made under or with respect to any Secured Notes, and (ii) any
Panamanian Taxes, Bahamian Taxes, MI Taxes or Other Taxes so levied or
imposed with respect to any reimbursement under the foregoing clause
(i) so that the net amount received by such Holder (net of payments
made under or with respect to such Secured Notes, the Loan, the
Guarantee or the applicable Subsidiary Guarantees) after such
reimbursement will not be less than the net amount the Holder would
have received if Panamanian Taxes, Bahamian Taxes, MI Taxes or Other
Taxes on such reimbursement had not been imposed.
At least 30 calendar days prior to each date on which any payment
under or with respect to the Secured Notes is due and payable, if the
Lender, the Company or the Subsidiary Guarantors, as applicable, will
be obligated to pay Additional Amounts with respect to such payment,
the Lender, the Company or the Subsidiary Guarantors, as applicable,
will deliver to the Trustee an officer's certificate stating the fact
that such Additional Amounts will be payable and the amounts will be
payable and the amounts so payable and will set forth such other
information necessary to enable the Trustee to pay such Additional
Amounts to Holders on the payment date.
7.5 Taxes and Other Taxes.
A. Any and all payments by the Company hereunder or under any of the
other Loan Documents shall be made free and clear of and without
deduction or withholding for any and all present or future Taxes,
unless such Taxes are required by law or the administration thereof to
be deducted or withheld and excluding (a) in the case of each Lender,
Taxes imposed on its net income and franchise taxes or taxes on gross
receipts and capital imposed on it by the jurisdiction under the laws
of the United States or any political subdivision thereof (all such
nonexcluded Taxes being hereinafter referred to as "Covered Taxes").
If the Company shall be required by Law or the administration thereof
to deduct or withhold any Covered Taxes from or in respect of any sum
payable hereunder or under any other Loan Documents, the sum payable
shall be increased as may be necessary so that after making all
required deductions or withholdings (including deductions or
withholdings applicable to additional amounts paid under this
paragraph), the Lender receives an amount equal to the sum it would
have received if no such deduction or withholding had been made;
(b) the Company shall make such deductions or withholdings; and
(c) the Company forthwith shall pay the full amount deducted or
withheld to the relevant taxation or other authority in accordance
with applicable Law.
B. The Company agrees to pay forthwith any present or future stamp
documentary taxes or any other excise or property taxes charges or
similar levies (all such taxes, charges and levies being herein
referred to as "Other Taxes") imposed by any jurisdiction (or any
political subdivision or taxing authority thereof or therein) which
arise from any payment made by the Company hereunder or under any of
the other Loan Documents or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement or any
of the other Loan Documents.
C. The Company agrees to indemnify the Lender for the full amount of
Covered Taxes or Other Taxes not deducted or withheld and paid by the
Company in accordance with Section 7.5(A) and (B) to the relevant
taxation or other authority and any Taxes other than Covered Taxes or
Other Taxes imposed by any jurisdiction on amounts payable by the
Company under this Section 7.5 paid by the Lender and any liability
(including penalties, interest and expenses) arising therefrom or with
respect thereto, whether or not any such Taxes or Other Taxes were
correctly or legally asserted. Payment under this indemnification
shall be made within 30 days from the date the Lender makes written
demand therefor. A certificate as to the amount of such Taxes or
Other Taxes and evidence of payment thereof submitted to the Company
shall be prima facie evidence, absent manifest error, of the amount
due from the Company to the Lender.
D. The Company shall furnish to the Lender the original or a certified
copy of a receipt evidencing any payment of Taxes or Other Taxes made
by the Company as soon as such receipt becomes available.
E. The provisions of this Section 7.5 shall survive the termination of
the Agreement and repayment of all Obligations.
7.6 Amendments and Waivers. No amendment, modification, termination or
waiver of any term or provision of this Agreement, of the Note, the
Mortgage, the Security Agreement or any Other Loan Document or consent
to any departure by the Company therefrom, shall in any event be
effective without the prior written concurrence of the Company, the
Lender, the Collateral Agent and the Trustee, and, upon the request of
the Lender, the Collateral Agent or the Trustee, the receipt of a
written opinion of counsel of the Company addressed to the Lender, the
Collateral Agent and the Trustee to the effect that such amendment,
modification, termination, waiver or consent does not violate or
conflict with any of the terms and provisions of the Indenture or any
Contractual Obligations of the Company.
7.7 Independence of Covenants. All covenants hereunder shall be given
independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be
permitted by an exception to, or be otherwise within the limitation
of, another covenant shall not avoid the occurrence of an Event of
Default or Potential Event of Default if such action is taken or
condition exists.
7.8 Notices. Unless otherwise provided herein, any notice or other
communications herein required or permitted to be given shall be in
writing and may be personally served, telecopied or sent by mail and
shall be deemed to have been given when delivered in person, upon
receipt of telecopy against receipt of answer back or four Business
Days after depositing it in the mail, registered or certified, with
postage prepaid and properly addressed; provided, however, that
notices shall not be effective until received. For the purposes
hereof, the addresses of the parties hereto (unless notice of a change
thereof is delivered as provided in this Section 7.8) shall be set
forth under each party's name on the signature pages hereto.
7.9 Survival of Warranties and Certain Agreements. All agreements,
representations and warranties made herein and in the other Loan
Documents shall survive the execution and delivery of this Agreement
and in the other Loan Documents, the making of the Loan hereunder and
the execution and delivery of the Notes or the Loan Documents and,
notwithstanding the making of the Loan, the execution and delivery of
the Notes and the other Loan Documents or any investigation made by or
on behalf of any party, shall continue in full force and effect. The
closing of the transactions herein contemplated shall not prejudice
any right of one party against any other party in respect of anything
done or omitted hereunder or in respect of any right to damages or
other remedies.
7.10 Failure or Indulgence Not Waiver; Remedies Cumulative. No failure
or delay on the part of the Lender or the holder of the Notes or the
Trustee in the exercise of any power, right or privilege or be
construed to be a waiver of any default or acquiescence therein, nor
shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or of any other
right, power or privilege. All rights and remedies existing under
this Agreement, the Notes or any other Loan Document are cumulative to
and not exclusive of any rights or remedies otherwise available.
7.11 Severability. In case any provision in or obligation under this
Agreement, under a Guarantee or the Notes shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any
way be affected or impaired thereby.
7.12 Headings. Section and Section headings in this Agreement are
included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given
any substantive effect.
7.13 Applicable Law. THIS AGREEMENT, EACH LOAN DOCUMENT OTHER THAN THE
MORTGAGE AND THE NOTES SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW.
7.14 Successors and Assigns; Subsequent Holders of Notes. This
Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of
the parties hereto and the successors and assigns of the Lenders. The
terms and provisions of this Agreement and each Loan Document shall
inure to the benefit of any assignee or transferee of the Notes
pursuant to Section 7.1, and in the event of such transfer or
assignment, the rights and privileges herein conferred upon the Lender
shall automatically extend to and be vested in such transferee or
assignee, all subject to the terms and conditions hereof. The
Company's rights or any interest therein hereunder may not be assigned
without the prior express written consent of the Lender and the
Trustee.
7.15 Counterparts; Effectiveness. This Agreement and any amendments,
waivers, consents or supplements may be executed in any number of
counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one
and the same instrument. This Agreement shall become effective upon
the execution of a counterpart hereof by each of the parties hereto.
7.16 Consent to Jurisdiction; Venue; Waiver of Jury Trial.
A. Any legal action or proceeding with respect to this Agreement, any
Note or any 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
parties to this Agreement hereby irrevocably accepts for itself and in
respect of its respective property, generally and unconditionally, the
jurisdiction of the aforesaid courts. Each of the parties to this
Agreement hereby further irrevocably waives any claim that any such
courts lack jurisdiction over itself, and agrees not to plead or
claim, in any legal action or proceeding with respect to this
Agreement, the Notes or Loan Documents brought in any of the aforesaid
courts, that any such court lacks jurisdiction over such party. Each
of the parties to this Agreement irrevocably consents to the service
of process in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to such
party, at its respective address for notices pursuant to Section 7.8,
such service to become effective 30 days after such mailing. To the
extent permitted by law, each of the parties to this Agreement hereby
irrevocably waives any objection to such service of process and
further irrevocably waives and agrees not to plead or claim in any
action or proceeding commenced hereunder or under the Notes or any
Loan Document that service of process was in any way invalid or
ineffective. Nothing herein shall affect the right of any party to
this Agreement to serve process in any other manner permitted by law
or to commence legal proceedings or otherwise proceed against any
party in any other jurisdiction.
B. Each of the parties to this Agreement hereby irrevocably waives any
objection which it may now or hereafter have to the laying of venue of
any of the aforesaid any of actions or proceedings arising out of or
in connection with this Agreement, the Notes or any of the Loan
Documents brought in the courts referred to in clause A above and
hereby further irrevocably waives and agrees not to plead or claim in
any such court that any such action or proceeding brought in any such
court has been brought in an inconvenient forum.
C. Each of the parties to this Agreement hereby irrevocably waives all
right to a trial by jury in any action, proceeding or counterclaim
arising out of or relating to this Agreement, the Notes or the Loan
Documents or the transactions contemplated hereby or thereby.
7.17 Waiver of Stay, Extension or Usury Laws. The Company covenants
(to the extent that it may lawfully do so) that it will not at any
time insist upon, plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law or any usury law or
other law that would prohibit or forgive the Company from paying all
or any portion of the principal of or interest on the Loan as
contemplated herein, wherever enacted, now or at the time hereafter in
force, or which may affect the covenants or the performance of this
Agreement and (to the extent that it may lawfully do so), the Company
hereby expressly waives all benefit or advantage of any such law, and
covenants that it will not hinder, delay or impede the execution of
any power herein granted to the Lender, but will suffer and permit the
execution of every such power as though no such law had been enacted.
7.18 Usury Savings Clause. It is the intention of the parties hereto
to comply with applicable usury laws (now or hereafter enacted);
accordingly, notwithstanding any provision to the contrary in this
Agreement, any Note, any of the other Loan Documents or any other
document related hereto or thereto, in no event shall this Agreement
or any such other document require the payment or permit the
collection of interest in excess of the maximum amount permitted by
such laws. If from any circumstances whatsoever, fulfillment of any
provision of this Agreement, any Note, any of the other Loan Documents
or of any other document pertaining hereto or thereto, shall involve
transcending the limit of validity prescribed by applicable law for
the collection or charging of interest, then, ipso facto, the
obligation to be fulfilled shall be reduced to the limit of such
validity, and if from any such circumstances the Lender shall ever
receive anything of value as interest or deemed interest by applicable
law under this Agreement, any Note, any of the other Loan Documents or
any other document pertaining hereto or otherwise an amount that would
exceed the highest lawful rate, such amount that would be excessive
interest shall be applied to the reduction of the principal amount
owing under the Loan or on account of any other indebtedness of the
Company, and not to the payment of interest, or if such excessive
interest exceeds the unpaid balance of principal of such indebtedness,
such excess shall be refunded to the Company. In determining whether
or not the interest paid or payable with respect to any indebtedness
of the Company to Lender under any specified contingency, exceeds the
highest lawful rate, the Company and the Lender shall, to the maximum
extent permitted by applicable law, (a) characterize any non-principal
payment as an expense, fee or premium rather than as interest,
(b) exclude voluntary prepayments and the effects thereof,
(c) amortize, prorate, allocate and spread the total amount of
interest thereon does not exceed the maximum amount permitted by
applicable laws, and/or (d) allocate interest throughout the full term
of such indebtedness so that interest between portions of such
indebtedness, to the end that no such portion shall bear interest at a
rate greater than that permitted by applicable law.
WITNESS the due execution hereof by the respective duly authorized
officers of the undersigned as of the date first written above.
COMPANY:
R&B FALCON CORPORATION
By:
Name: Robert Fulton
Title: Executive Vice President
Notice Address:
901 Threadneedle
Houston, TX 77079-2982
Telephone: (281) 496-5000
Telecopy: (281) 496-0285
LENDER:
RBF FINANCE CO.
By:
Name: Leighton Moss
Title: Vice President
Notice Address:
901 Threadneedle
Houston, TX 77079-2982
Telephone: (281) 496-5000
Telecopy: (281) 597-7556
- -------------------------------------------------------------------------
Exhibit I
R&B FALCON CORPORATION
SENIOR SECURED ___- YEAR TRANCHE PROMISSORY NOTE
New York, New York
$______________ March 26, 1999
FOR VALUE RECEIVED, R&B FALCON CORPORATION (the "Company"),
promises to pay to the order of RBF FINANCE CO. ("Payee"), the
principal amount of _________________________ Dollars ($_____________)
(or such lesser amount as shall equal the aggregate unpaid principal
amount of the __-year Tranche advances of the Loan) at the times
specified by the provisions of the Senior Secured Credit Agreement
dated as of March 26, 1999, as the same may at any time be amended,
modified or supplemented and in effect (the "Loan Agreement") between
the Company and the Lender.
The Company also promises to pay interest on the unpaid principal
amount hereof from the date hereof until paid in full at the rates and
at the times which shall be determined in accordance with the
provisions of the Loan Agreement.
This Note is issued pursuant to and entitled to the benefits of the
Loan Agreement, to which reference is hereby made for a more complete
statement of the terms and conditions under which the Loan evidenced
hereby was made and is to be repaid. Capitalized terms used herein
without definition shall have the meanings set forth in the Loan
Agreement.
The Senior Secured Credit Agreement dated as of March 26, 1999, as
the same may at any time be amended, modified or supplemented and in
effect (the "Loan Agreement") between the Company, the Lender named
therein, and United States Trust Company of New York, as Trustee.
All payments of principal and interest in respect of this Note
shall be made in lawful money of the United States of America in same
day funds to Payee at the office of United States Trust Company of New
York located at 114 West 47th Street, 25th Floor, New York, New York,
or at such other place in the State of New York as shall be designated
in writing for such purpose in accordance with the terms of the Loan
Agreement. Each of Payee and any subsequent holder of this Note
agrees, by its acceptance hereof, that before disposing of this Note
or any part hereof it will make a notation hereon of all principal
payments previously made hereunder and of the date to which interest
hereon has been paid; provided, however, that the failure to make a
notation of any payment made on this Note shall not limit or otherwise
affect the obligation of the Company hereunder with respect to
payments of principal or interest on this Note.
Whenever any payment on this Note shall be stated to be due on a
day which is not a Business Day, such payment shall be made on the
next succeeding Business Day and such extension of time shall be
included in the computation of the payment of interest on this Note.
This Note is subject to mandatory prepayment as provided in the
Loan Agreement and prepayment at the option of the Company as provided
in the Loan Agreement.
THE LOAN AGREEMENT AND THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK WITHOUT REGARD TO THE PRINCIPALS OF CONFLICTS OF LAWS.
Upon the occurrence of an Event of Default, the unpaid balance of
the principal amount of this Note, together with all accrued but
unpaid interest thereon, may become, or may be declared to be, due and
payable in the manner, upon the conditions and with the effect
provided in the Loan Agreement.
The terms of this Note are subject to amendment only in the manner
provided in the Loan Agreement.
No reference herein to the Loan Agreement and no provision of this
Note or the Loan Agreement shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of
and interest on this Note at the place, at the respective times, and
in the currency herein prescribed.
The Company promises to pay all costs and expenses, including all
attorneys' fees, all as provided in Section 7.2 of the Loan Agreement,
incurred in the collection and enforcement of this Note. The Company
and endorsers of this Note hereby consent to renewals and extensions
of time at or after the maturity hereof, without notice, and hereby
waive diligence, presentment, protest, demand and notice of every kind
and, to the full extent permitted by law, the right to plead any
statute of limitations as a defense to any demand hereunder.
IN WITNESS WHEREOF, the Company has caused this Note to be executed
and delivered by its duly authorized officer, as of the day and year
and at the place first above written.
R&B FALCON CORPORATION
By:
Title:
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EXHIBIT II
NOTICE OF BORROWING
The undersigned hereby certifies that he is the ________
__________________ of R&B Falcon Corporation, a Delaware corporation (
the "Company"), and that as such he is authorized to execute this
Notice of Borrowing on behalf of the Company. With reference to that
certain Loan Agreement dated as of _______________, 1999 (as same may
be amended, modified, increased, supplemented and/or restated from
time to time, the "Agreement") entered into by and between the Company
and RBF Finance Co., and any other future holder of any Note issued
pursuant to the Agreement ("Lender"), the undersigned further
certifies, represents and warrants on behalf of the Company that all
of the foregoing statements are true and correct (each capitalized
term used herein having the same meaning given to it in the Agreement
unless otherwise specified):
(a)The Company requests that the Lender make an advance to the Company
on the 7-year Tranche of the Loan in the aggregate principal amount of
$_________________ and an advance to the Company on the 10-year
Tranche of the Loan in the aggregate principal amount of $__________
by no later than _______________. Immediately following such advance,
the aggregate outstanding balance of advances made on the 7-year
Tranche and the 10-year Tranche Loan shall equal $_______________ and
$___________, respectively.
(b)As of the date hereof, and as a result of the making of the
requested advance, no event shall have occurred and be continuing or
would result from the consummation of the borrowing contemplated by
the Notice of Borrowing which would constitute an Event of Default, a
Potential Event of Default or a Default.
(c)Borrower has performed and complied with all agreements and
conditions contained in the Agreement which are required to be
performed or complied with by Borrower before or on the date hereof
and, except as waived in writing or otherwise agreed to in writing by
the Lender, all of the conditions precedent set forth in Section 3.1
or 3.2, as applicable, of the Agreement under Conditions to Loan have
been satisfied.
(d)The representations and warranties of the Company contained in
Section 4 of the Agreement are true, correct and complete in all
material respects on and as of the date hereof to the same extent as
though made on and as of that date, and (ii) on or prior to the date
hereof, the Company has performed and complied with in all material
respects all covenants and conditions to be performed and observed by
the Company on or prior to the date hereof.
EXECUTED AND DELIVERED this _______ day of _____________, _____.
R&B FALCON CORPORATION
By:
Name:
Title:
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EXHIBIT III
FORM OF LEGAL OPINION
Opinions of Counsel that (i) the Company has duly
authorized, executed and delivered the Mortgage; (ii) the Mortgage
constitutes a legally binding obligation of the Company enforceable
against the Company in accordance with its terms (except as (i) the
enforceability thereof may be limited bankruptcy, insolvency or other
similar laws affecting creditors' rights, generally, and (ii) the
enforceability thereof may be limited by right of acceleration and the
availability of enforceable remedies may be limited by equitable
principles of general applicability, and subject to such other
exceptions, limitations or qualifications that are usual and customary
for such opinions) and (iii) the Mortgage constitutes a valid and
perfected first mortgage lien on the Mortgaged Rig.
- -------------------------------------------------------------------------
SCHEDULE 4.5
Title/Lien Exceptions
1.Statutory or inchoate liens for amounts not more than 30 days past
due or that are being contested in good faith.
EXHIBIT 10.5
[FALRIG 82]
=========================================================================
SENIOR SECURED LOAN AGREEMENT
Dated as of
March 26, 1999
between
R&B FALCON CORPORATION,
as Borrower
and
RBF FINANCE CO.,
as Lender
=========================================================================
TABLE OF CONTENTS
Page
SECTION 1.DEFINITIONS 1
1.1.Certain Defined Terms 1
1.2.Other Defined Terms 5
1.3.Accounting Terms 5
1.4.Other Definitional Provisions 5
SECTION 2.LOAN COMMITMENT AND LOAN 5
2.1.Termination of Loan Commitment 7
2.2.Termination of Loan Commitment 7
2.3.Interest on the Loans 7
2.4.Redemptions 8
2.5.Excess Proceeds Offers 10
2.6.Use of Proceeds 12
2.7.Commitment Fee 12
SECTION 3.CONDITIONS 12
3.1.Conditions to Initial Advances on the Loan 12
3.2.Conditions to Subsequent Advance on the Loan 14
SECTION 4.REPRESENTATIONS AND WARRANTIES 14
4.1.Organization and Good Standing; Capitalization 15
4.2.Authorization and Power 15
4.3.No Conflicts or Consents 15
4.4.Enforceable Obligations 15
4.5.Properties; Liens 16
4.6.No Default 16
4.7.Use of Proceeds; Margin Stock, etc 16
4.8.Survival of Representations and Warranties 16
SECTION 5.COVENANTS 16
5.1.Indenture Covenants 16
5.2.Reports of Defaults, Etc 16
5.3.Payments in U.S. Dollars 17
5.4.Performance and Enforcement Under the Loan Documents 17
5.5.Liens 17
5.6.Transfer of Mortgage Rig to a Restricted Subsidiary 17
SECTION 6.EVENTS OF DEFAULT 17
6.1.Failure To Make Payments When Due 17
6.2.Default Under The Indenture 17
6.3.Other Loan Agreement 17
6.4.Breach of Certain Covenants 18
6.5.Breach of Warranty 18
6.6.Other Defaults Under Agreement or Loan Documents 18
6.7.Involuntary Bankruptcy; Appointment of Custodian, etc 18
6.8.Voluntary Bankruptcy; Appointment of a Custodian; etc 18
SECTION 7.MISCELLANEOUS 19
7.1.Pledges and Assignments of Loan and Note 19
7.2.Expenses 20
7.3.Indemnity 20
7.4.Additional Amounts 20
7.5.Taxes and Other Taxes 22
7.6.Amendments and Waivers 23
7.7.Independence of Covenants 23
7.8.Notices 23
7.9.Survival of Warranties and Certain Agreements 23
7.10.Failure or Indulgence Not Waiver; Remedies Cumulative 23
7.11.Severability 24
7.12.Headings 24
7.13.Applicable Law 24
7.14.Successors and Assigns; Subsequent Holders of Notes 24
7.15.Counterparts; Effectiveness 24
7.16.Consent to Jurisdiction; Venue; Waiver of Jury Trial 24
7.17.Waiver of Stay, Extension or Usury Laws 25
7.18.Usury Savings Clause 25
EXHIBITS
I FORM OF NOTE
II FORM OF NOTICE OF BORROWING
III FORM OF OPINION OF GARDERE & WYNNE - SPECIAL COUNSEL FOR THE BORROWER
IV FORM OF MORTGAGE
- --------------------------------------------------------------------------
This Senior Secured Loan Agreement is dated as of March 26, 1999,
and entered into by and among R&B Falcon, Inc., a Delaware corporation
(the "Company") and RBF Finance Co., a Delaware corporation (the
"Lender").
RECITALS
WHEREAS, the Lender has entered into an Indenture of even date
herewith (as the same may be amended, or supplemented or otherwise
modified from time to time, the "Indenture") with United States Trust
Company of New York as Trustee (the "Trustee"), pursuant to which the
Lender will issue in two series up to $400,000,000 aggregate principal
amount of its 11% Senior Secured Notes due 2006 (the "7-year Secured
Notes") and up to $400,000,000 aggregate principal amount of its
11 3/8% Senior Secured Notes due 2009 (the "10-year Secured Notes;" the
7-year Secured Notes and the 10-year Secured Notes being hereinafter
collectively called the "Secured Notes"); and
WHEREAS, the Indenture provides that the Lender may utilize the
proceeds of the Secured Notes to make loans to the Company, each for
the purpose of either (i) financing all or a portion of the cost of
acquiring, constructing, altering, improving or repairing a drilling
rig or drillship (a "Rig") or improvements used or to be used in
connection with such a Rig, or (ii) financing all or any part of the
purchase price of the Rig or improvements used or to be used in
connection with such Rig, which indebtedness is incurred prior to or
within one year after the date of the completion of construction,
alteration, improvement or repair or the commencement of commercial
operations thereof; and
WHEREAS, the Company desires that the Lender extend senior secured
credit facilities to the Company for such purposes herein; and
WHEREAS, the Indenture provides that the Lender will enter into a
Senior Secured Note Security and Pledge Agreement of even date
herewith (the "Issuer Security Agreement") between the Lender, the
Trustee and United States Trust Company of New York as Collateral
Agent (in such capacity, the "Collateral Agent"), pursuant to which
the Lender will pledge and grant a security in the loans made with the
proceeds of the Secured Notes which are or will be secured by Rigs;
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, the parties
hereby agree as follows:
SECTION 1 DEFINITIONS
1.1 Certain Defined Terms. The following terms used in this Agreement
shall have the following meanings:
"Agreement" means this Senior Secured Loan Agreement dated as of
March 26, 1999, as it may be amended, supplemented or otherwise
modified from time to time in accordance with the terms hereof.
"Board of Directors" means, with respect to any Person, the Board
of Directors of such Person or any duly authorized committee of that
Board.
"Board Resolution" means a duly adopted resolution of the Board of
Directors of the Company in full force and effect at the time of
determination and certified as such by the Secretary or Assistant
Secretary of the Company.
"Business Day" means any day excluding Saturday, Sunday and any
day which is a legal holiday under the laws of New York, New York or
is a day on which banking institutions therein located are authorized
or required by law or other governmental action to close.
"Cash Equivalents" means (i) U.S. Governmental Obligations with a
maturity of four years or less; (ii) commercial paper issued by any
corporation if such commercial paper has credit ratings of at least "A-
1" from S&P or at least "P-1" by Moody's; (iii) certificates of
deposit, bankers' acceptances, time deposits, Eurocurrency Deposits
and similar types of Investments routinely offered by commercial banks
with final maturities of one year or less issued by commercial banks
having combined capital and surplus in excess of $100,000,000; and
(iv) shares in money market mutual or similar funds having assets in
excess of $100,000,000.
"Closing Date" means the date on or before March 26, 1999 on which
the initial advance of the Loan is made and the conditions set forth
in Section 3.1 are satisfied or waived in accordance with Section 7.7.
"Collateral" means the Mortgaged Rig and any other property
subject to the Lien created under a Mortgage or a Loan Document.
"Commission" means the Securities and Exchange Commission.
"Company" has the meaning ascribed to such term in the
introduction to this Agreement.
"Collateral Agent" has the meaning assigned to such term in the
recitals to this Agreement.
"Contractual Obligation," as applied to any Person, means any
provision of any Security issued by that Person or of any indenture,
mortgage, deed of trust, contract, undertaking, agreement or other
instrument to which that Person is a party or by which it or any of
its properties is bound or to which it or any of its properties is
subject.
"Dollars" or the sign "$" means the lawful money of the United
States of America.
"Event of Default" means each of the events set forth in
Section 6.
"indemnified liabilities" has the meaning ascribed to such term in
Section 7.3.
"Indemnitees" has the meaning ascribed to such term in
Section 7.3.
"Indenture" has the meaning ascribed to such term in the recitals
of this Agreement.
"Laws" means all applicable statutes, laws, ordinances,
regulations, rules, orders, judgments, writs, injunctions or decrees
of any state, commonwealth, nation, territory, possession, province,
county, parish, town, township, village, municipality or Tribunal, and
"Law" means each of the foregoing.
"Lender" has the meaning ascribed to that term in the introduction
of this Agreement and shall include any assignee of the Loan or the
Note or Loan Commitment to the extent of such assignment.
"Lien" means any lien, mortgage, pledge, assignment, security
interest, charge or encumbrance of any kind (including any conditional
sale or other title retention agreement, any lease in the nature
thereof, and any agreement to give any security interest) and any
option, trust or other preferential arrangement having the practical
effect of any of the foregoing.
"Loan" means, collectively, the loans made by the Lender pursuant
to Section 2.1.
"Loan Documents" means this Agreement, the Note and the Mortgage.
"Margin Stock" has the meaning assigned to that term in
Regulation U of the Board of Governors of the Federal Reserve System
as in effect from time to time.
"Material Adverse Effect" means (i) a material adverse effect upon
the business, property, assets, nature of assets, liabilities
condition (financial or otherwise), results of operation or prospects
of the Company and its Restricted Subsidiaries, taken as a whole, or
(ii) the impairment of the ability of the Company or any of its
Restricted Subsidiaries to perform, or the impairment of the ability
of Lender to enforce, any material right or remedy under the
Obligations.
"Maturity" means the date on which the principal of the Loan,
whether the 7-year Tranche or 10-year Tranche or both, becomes due and
payable as provided in this Agreement whether at Stated Maturity, upon
redemption, by declaration of acceleration or otherwise.
"Mortgage" means a mortgage substantially in the form of Exhibit
IV covering the Mortgaged Rig.
"Mortgaged Rig" means the Falrig 82.
"Notes" has the meaning ascribed to such term in Section 2.1C.
"Notice of Borrowing" means a notice substantially in the form of
Exhibit II annexed hereto with respect to a proposed borrowing.
"Obligations" means all obligations of every nature of the Company
from time to time owed to the Lender under the Loan Documents, whether
for principal, reimbursements, interest (including post-petition
interest), fees, expenses, indemnities or otherwise, and whether
primary, secondary, direct, indirect, contingent, fixed or otherwise
(including obligations of performance).
"Officer" means the Chairman of the Board, the Chief Executive
Officer, the Chief Operating Officer, the President, any Vice
President, the Chief Financial Officer, the Controller, the Chief
Accounting Officer, any Vice President, the Treasurer or the Secretary
of the Company.
"Officers' Certificate" means, as applied to any corporation, a
certificate executed on behalf of such corporation by two officers;
provided, however, that every Officers' Certificate with respect to
the compliance with a condition precedent to the making of the Loans
hereunder shall include (i) a statement that the officer or officers
making or giving such Officers' Certificate have read such condition
and any definitions or other provisions contained in this Agreement
relating thereto, (ii) a statement that, in the opinion of the
signers, they have made or have caused to be made such examination or
investigation as is necessary to enable them to express an informed
opinion as to whether or not such condition has been complied with,
and (iii) a statement as to whether, in the opinion of the signers,
such condition has been complied with.
"Other Loan" means a loan made pursuant to an Other Loan Agreement
by the Lender with the proceeds of the Secured Notes which is secured
by a Mortgaged Rig.
"Other Loan Agreement" means a loan agreement among the Lender,
the Company and the Trustee pursuant to which the Lender will utilize
the proceeds of the Secured Notes to make an Other Loan for the
purposes specified in the second recital of this Agreement
"Other Mortgaged Rig" means a Rig which has been mortgaged to
secure an Other Loan or which is the subject of a construction
contract which has been pledged to secure an Other Loan.
"Other Taxes" has the meaning ascribed to such term in
Section 7.6.
"Payment Office" shall mean the office of United States Trust
Company of New York located at 114 West 47th Street, 25th Floor, New
York, New York 10036 or such other office in the State of New York as
the Lender may designate to the Company and the Trustee from time to
time.
"Potential Event of Default" means a condition or event which,
after notice or lapse of time or both, would constitute an Event of
Default if that condition or event were not cured or removed within
any applicable grace or cure period.
"Purchase Agreement" means the Purchase Agreement dated March 19,
1999 among the Lender, the Company and the Initial Purchaser relating
to the Secured Notes.
"Securities" means any stock, shares, partnership interests,
voting trust certificates, certificates of interest or participation
in any profit sharing agreement or arrangement, bonds, debentures,
options, warrants, notes, or other evidences of indebtedness, secured
or unsecured, convertible, subordinated or otherwise, or in general
any instruments commonly known as "securities" or any certificates of
interest, shares or participations in temporary or interim
certificates for the purchase or acquisition of, or any right to
subscribe to, purchase or acquire, any of the foregoing.
"7-year Tranche" means advances on the Loan aggregating up to
$5,400,000 and having a final Loan Maturity of March 15, 2006.
"Taxes" means all taxes, assessments, fees, levies, imposts,
duties, penalties, deductions, liabilities, withholdings or other
charges of any nature whatsoever, including interest penalties, from
time to time or at any time imposed by any Law or any Tribunal.
"10-year Tranche" means advances on the Loan aggregating up to
$5,400,000 and having a final Maturity of March 15, 2009.
"Transaction Costs" means the fees, costs and expenses payable by
the Company pursuant hereto and other fees, costs and expenses payable
by the Company in connection with the Transactions.
"Transactions" shall mean, collectively, (i) the issuances and
sale of the Secured Notes, (ii) the incurrence of the Loan hereunder
on the Closing Date, (iii) the incurrence of the Other Loans under the
Other Loan Agreements, (iv) any other transaction on the Closing Date
contemplated in relation to the foregoing and (v) the payment of fees
and expenses in connection with the foregoing.
"Tranches" means collectively the 7-year Tranche and the 10-year
Tranche.
"Tribunal" means any governmental, any arbitration panel, any
court or any governmental department, commission, board, bureau,
agency, authority or instrumentality of the United States or any
state, province, commonwealth, nation, territory, possession, county,
parish, town, township, village or municipality, whether now or
hereafter constituted and/or existing.
"Trustee" has the meaning ascribed to such term in the
introduction of this Agreement and shall include any successor Trustee
appointed pursuant to terms of the Indenture.
"U.S. Legal Tender" means such coin or currency of the United
States of America as at the time of payment shall be legal tender for
the payment of public and private debts.
1.2 Other Defined Terms. Any capitalized term used in this Agreement
and not defined herein shall have the meaning assigned to such term in
the Indenture.
1.3 Accounting Terms. For the purposes of this Agreement, all
accounting terms to otherwise defined herein shall have the meanings
assigned to them in conformity with GAAP.
1.4 Other Definitional Provisions. Any of the terms defined in
Section 1.1 may, unless the context otherwise requires, be used in the
singular or the plural depending on the reference.
SECTION 2 LOAN COMMITMENT AND LOAN
2.1 The Loan and Notes.
A. Loan Commitment. Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties of
the Company herein set forth, the Lender hereby agrees to lend to the
Company on the Closing Date and thereafter up to $10,800,000 in the
aggregate (the "Loan") consisting of $5,400,000 of 7-year Tranche
advances and $5,400,000 of 10-year Tranche advances. The Lender's
commitment to make the Loan to the Company pursuant to this
Section 2.1 is herein called the "Loan Commitment."
B. Notice of Borrowing. When the Company desires to borrow under
this Agreement, it shall deliver to the Collateral Agent a Notice of
Borrowing no later than 11:00 a.m. (New York time), at least one
Business Day in advance of the Closing Date or such other date as
shall be agreed to by the Lender and the Trustee. The Notice of
Borrowing shall specify the amount of each Tranche and the applicable
date of borrowing (which shall be a Business Day).
C. Disbursement of Funds. No later than 3:00 p.m. (New York time)
on the Closing Date, the Lender promptly will make available to the
Company by depositing to its account at the Payment Office the
aggregate of the amount of the Loan to be made on such Closing Date.
D. Notes. The Company shall execute and deliver to the Lender on
the Closing Date two Notes dated the Closing Date, one substantially in
the form of Exhibit I annexed hereto with appropriate insertions to
evidence the maximum amount of the 7-year Tranche of Loan which may be
made hereunder by the Lender and the other substantially in the form
of Exhibit I annexed hereto with appropriate insertions to evidence
the maximum amount of 10-year Tranche of the Loan which may be made by
the Lender hereunder.
E. Scheduled Payments of Loan.
(i) One of the Other Loan Agreements relates to the Mortgaged Rig
Deepwater IV, which Mortgaged Rig is presently under construction
pursuant to a construction contract and which has an expected
completion date during the third calendar quarter of 2000. Upon
completion of the Mortgaged Rig Deepwater IV, the Company is required
to grant a Lien on such Mortgaged Rig pursuant to a Mortgage. Upon
the filing of the Mortgage for the Mortgaged Rig Deepwater IV, the
Company and the Lender agree that $2,050,000 of the 7-year Tranche and
$2,050,000 of the 10-year Tranche will be exchanged for additional
advances under the Other Loan Agreement relating to the Mortgaged Rig
Deepwater IV in an aggregate principal amount of $4,100,000.
(ii) The Company shall pay on or before 10:00 a.m. on the date of the
final Maturity of the 7-year Tranche of the Loan all of the principal
amount of the 7-year Tranche remaining outstanding, which amount will
be $5,400,000 principal amount of the Loan, reduced by any previous
prepayments of principal made on the 7-year Tranche of the Loan to the
extent that such payments have been allocated pursuant to the
provisions of Section 2.3 hereof and the Indenture to the 7-year
Secured Notes, together with accrued and unpaid interest, fees and a
pro rata portion of the amount of the Special Interest and Additional
Amounts, if any, due on the 7-year Secured Notes. The Company shall
pay on or before 10:00 a.m. on the date of the final Maturity of the
10-year Tranche all of the principal amount of the 10-year Tranche
then remaining outstanding, reduced by any previous prepayments of
principal made on the 10-year Tranche of the Loan to the extent that
such payments have been allocated pursuant to the provisions of
Section 2.3 hereof and the Indenture to the 10-year Secured Notes,
together with accrued and unpaid interest fees and a pro rata portion
of the amount of the Special Interest and Additional Amounts, if any,
due on the 10-year Secured Notes. Such payments shall be made
directly to the Trustee for deposit in the Issuer Escrow Account
established pursuant to the Issuer Escrow Agreement.
F. Termination of Loan Commitment. The Loan Commitment hereunder
shall terminate on the earlier (i) the Stated Maturity (whether by
acceleration, redemption, purchase or otherwise) of the Secured Notes
pursuant to the terms of the Indenture or (ii) May 14, 1999, if no
portion of the Loan has been made on or before such date (other than
as a result of failure of the Lender to fulfill its obligations
hereunder).
G. Satisfaction by Payments on the Guarantee. Pursuant to the
Indenture, the Company will guarantee the due and punctual payment of
the principal of, premium, if any, and interest on, and all other
amounts payable under, the Secured Notes (including any Additional
Amounts payable upon redemption, in respect thereof) when and as the
same shall become due and payable, whether at Stated Maturity, by
declaration of acceleration or otherwise. To the extent that the
Company makes a payment on the Guarantee, it will be deemed to have
made a payment on the Issuer Loans then outstanding, such payments to
be allocated pro rata to each of Tranches of the Loan and pro rata to
the Loan and the Other Loans.
2.2 Interest on the Loans.
A. Rate of Interest. The 7-year Tranche of the Loan shall bear interest
on the unpaid principal amount thereof from the date made through
Maturity for the 7-year Tranche (whether by prepayment, acceleration
or otherwise) at a rate equal to 11% per annum plus 2 basis points per
annum and the 10-year Tranche of the Loan shall bear interest on the
unpaid principal amount thereof from the date made through Maturity
for the 10-year Tranche (whether by prepayment, acceleration or
otherwise) at a rate equal to 11 3/8% per annum plus 2 basis points per
annum.
B. Special Interest. The Lender and the Company have entered into a
Registration Rights Agreement (the "Registration Rights Agreement")
dated March 26, 1999 with Donaldson, Lufkin & Jenrette Securities
Corporation for the benefit of the Holders of the Secured Notes, in
which the Lender and the Company have agreed to: (A) file a
registration statement within 60 days after the closing date of the
offering of Secured Notes for an offer to exchange Secured Notes of
each series for debt securities of that series with identical terms
(except for transfer restrictions); (B) use their best efforts to
cause the registration statement to become effective within 150 days
after the closing date of the offering of the Secured Notes; and
(C) complete the registered exchange offer within 180 days after the
closing date of the offering of the Secured Notes. Under certain
circumstances, the Lender and the Company may be required to file a
shelf registration statement for the Secured Notes registering the
resale of the Secured Notes. If the Lender and the Company do not
comply with their obligations under the Registration Rights Agreement,
the Lender will be required to pay additional interest ("Special
Interest") specified in Section 5 of the Registration Rights
Agreement. The Company will pay on each date that the Lender pays
Special Interest to the Holders of the Secured Notes as Special
Interest on the Loan an amount equal to the percentage of Special
Interest, if any, which the Lender owes to the Holders of the Secured
Notes that the principal amount of the Loan bears to the total
aggregate principal amount of the Loan and all Other Loans then
outstanding. Such payment shall be paid directly to the Trustee for
deposit into the Issuer Escrow Account.
Notwithstanding any provisions of this Section 2.2 or any
other provision herein, in no event will the combined sum of interest
(cash or otherwise) on the Loan exceed the maximum amount permitted by
applicable law.
C. Interest Payments. Interest (including Special Interest, if any,
and Additional Amounts, if any) shall be payable semi-annually on
March 15 and September 15 of each year, commencing September 15, 1999
but in no event to exceed the maximum permitted by applicable law.
All payments of interest on the Loan shall be made on or before 10:00
a.m. (New York time) on the date of payment and shall be paid directly
to the Trustee for deposit into the Issuer Escrow Account.
D. Post-Maturity Interest. Any principal payments on the Loan not paid
when due and, to the extent permitted by applicable law, any interest
payment on the Loan not paid when due, in each case whether at Stated
Maturity, by notice of prepayment, by acceleration or otherwise, shall
thereafter bear interest payable upon demand at a rate of interest
otherwise payable under this Agreement for the Loan but in no event to
exceed the maximum interest rate permitted by applicable law.
E. Computation of Interest. Interest on the Loan shall be computed on
the basis of a 360-day year of twelve 30-day months.
2.3 Redemptions.
A. Redemption upon Loss of the Mortgaged Rig. If an Event of Loss
occurs at any time with respect to the Mortgaged Rig attributable to
the Loan, the Company shall apply funds in an amount (the "Loss
Redemption Amount") equal to the principal amount of the Loan
outstanding on the date (the "Loss Date") on which such Event of Loss
was deemed to have occurred, together with all accrued and unpaid
interest (including Special Interest, if any, and Additional Amounts,
if any) thereon, to the prepayment of the Loan. If an Event of Loss
occurs at any time with respect to any Other Mortgaged Rig, the
Indenture and the applicable Other Loan Agreement require that the
Company shall apply funds to the principal amount of the applicable
Other Loan secured by the Other Mortgaged Rig outstanding on the Loss
Date for such other Mortgaged Rig, together with all accrued and
unpaid interest (including Special Interest, if any, and Additional
Amounts, if any) thereon, to the payment of such Other Loan. If a
Default under the Indenture shall have occurred and be continuing at
the time of the receipt of the Event of Loss Proceeds with respect to
such Other Mortgaged Rig, the Indenture requires, and the Company
hereby agrees, that it shall prepay the Loan and the remaining Other
Loans on a pro rata basis in an aggregate amount equal to the excess
of the Net Event of Loss Proceeds over the Loss Redemption Amount, if
any, together with all accrued and unpaid interest (including Special
Interest, if any, and Additional Amounts, if any) thereon for the
Other Loan which is secured by such Other Mortgaged Rig. All payments
on the Loan shall be allocated on a pro rata basis between the
Tranches and shall be made directly to the Trustee for deposit into
the Issuer Escrow Account.
B. Redemption upon Sale of the Mortgaged Rig. If the Mortgaged Rig or
the Capital Stock of a Subsidiary Guarantor then owning the Mortgaged
Rig is sold in compliance with the terms of the Indenture, the Company
shall apply funds in an amount (the "Sale Redemption Amount") equal to
the principal amount of the Loan secured by the Mortgaged Rig on the
date of such sale (the "Sale Date"), together with all accrued and
unpaid interest (including Special Interest, if any, and Additional
Amounts, if any thereon, plus any additional amounts required by the
Lender to redeem the Secured Notes to the extent required by
Section 3.9 of the Indenture, to the prepayment of the Loan. If any
Other Mortgaged Rig or the Capital Stock of a Subsidiary Guarantor
then owning an Other Mortgaged Rig is sold in compliance with the
terms of the Indenture, the Company shall apply funds equal to the
applicable Other Loan secured by the Other Mortgaged Rig outstanding
on the Sale Date for such Other Mortgaged Rig, together with all
accrued and unsecured interest (including Special Interest, if any,
and Additional Amounts, if any) thereon, to the payment of such Other
Loan. If a Default under the Indenture shall have occurred and be
continuing at the time of receipt of the cash consideration with
respect to such Other Mortgaged Rig or Capital Stock of the Subsidiary
Guarantor owning such Other Mortgaged Rig, the Indenture requires, and
the Company hereby agrees, that it shall also be required to prepay
the Loan and the remaining Other Loans on a pro rata basis in an
aggregate amount equal to the excess of such Net Available Cash
attributable to such Sold Mortgaged Rig over such Sale Redemption
Amount. Such payments on the Loan and the Other Loans pursuant hereto
shall be respectively allocated between the Tranches of the Loan and
the Other Loans on a pro rata basis and shall be made directly to the
Trustee for deposit into the Issuer Escrow Account.
C. Other Redemptions.
(i)Redemptions to Fund Optional Redemptions of the 10-year Secured
Notes. Under the terms of the Indenture, on or after March 15, 2004,
the 10-year Secured Notes will be redeemable, at the Lender's option,
in whole or in part, at any time or from time to time, upon not less
than 30 nor more than 60 days' prior notice to the Holders of the 10-
year Secured Notes, at the following Redemption Prices (expressed in
percentages of principal amount), plus accrued and unpaid interest
(including Special Interest, if any, and Additional Amounts, if any)
to the Redemption Date, if redeemed during the 12-month period
commencing on March 15 of the years set forth below.
Redemption
Period Price
2004 105.6875%
2005 103.7917
2006 101.8958
2007 and thereafter 100.0000
The Company shall prepay the 10-year Tranche of the Loan and
of the Other Loans, in whole or in part, to provide funds for
such redemption. Any prepayments by the Company on the Loan and
the Other Loans required to be made to provide funds for the
Lender to make such a redemption shall be made on this Loan and
the Other Loans on a pro rata basis. All payments on the Loan
and the Other Loans pursuant hereto shall be made directly to the
Trustee for deposit into the Issuer Escrow Account.
(ii) Redemptions to Fund Optional Redemptions of the 7-year Secured
Notes. Under the terms of the Indenture, the 7-year Secured Notes
will be redeemable, at the Lender's option at any time in whole or
from time to time in part upon not less than 30 and not more than
60 days' prior notice mailed by first class mail to the Holders of the
7-year Secured Notes, on any date prior to Maturity at a price equal
to 100% of the principal amount thereof plus accrued and unpaid
interest (including Special Interest, if any, and Additional Amounts,
if any) to the Redemption Date plus the Make-Whole Premium applicable
to the 7-year Secured Notes determined in the manner provided for in
Section 3.7 of the Indenture. The Company shall prepay the 7-year
Tranche of the Loan and of the Other Loans in whole or in part to
provide funds for such redemption. Any prepayments by the Company on
the Loan and the Other Loans required to be made to provide funds for
the Lender to make such a redemption shall be made on the Loan and the
Other Loans on a pro rata basis. All payments on the Loan and the
Other Loans pursuant hereto shall be made directly to the Trustee for
deposit into the Issuer Escrow Account.
D. Excess Proceeds Offers. The Indenture provides in Section 3.10
thereof that if, as of the first day of any calendar month, the
aggregate amount of Sale Excess Proceeds and Loss Excess Proceeds
exceeds 10% of consolidated total assets of the Company, and if the
aggregate amount of Sale Excess Proceeds and Loss Excess Proceeds in
excess of 10% of consolidated total assets of the Company that has not
theretofore been subject to an Excess Proceeds Offer (as defined
below) (the "Excess Proceeds Offer Amount"), totals at least $10
million, the Lender must, not later than the fifteenth Business Day of
such month, make an offer (an "Excess Proceeds Offer") to purchase
from the Holders of the Secured Notes, pursuant to and subject to the
conditions contained in the Indenture, and from Holders of the New
Senior Notes, pursuant to provisions of the New Senior Note Indenture,
Secured Notes at a purchase price equal to 100% of their principal
amount, plus any accrued interest (including Additional Amounts and
Special Interest, if any) to the date of purchase and New Senior Notes
at a purchase price equal to 100% of their principal amount, plus any
accrued interest (including Special Interest, if any) to the date of
purchase in an aggregate principal amount equal to the Excess Proceeds
Offer Amount (an "Excess Proceeds Payment"). If the Lender is ever
required pursuant to Section 3.10 of the Indenture to make an Excess
Proceeds Offer to the Holders of the Secured Notes to purchase from
such Holders their Secured Notes, and to the Holders of Senior Notes
to purchase from such Holders their New Senior Notes, the Indenture
provides, and the Company agrees, that the Company will prepay the
Loan and the Other Loans on a pro rata basis to permit the Lender to
purchase any Secured Notes validly tendered pursuant to an Excess
Proceeds Offer. All payments on the Loan shall be allocated between
the appropriate Tranches of the Loan; and all payments on the Loan and
the Other Loans pursuant hereto shall be made directly to the Trustee
for deposit into the Issuer Escrow Account.
E. Change of Control. If the Lender is ever required to make pursuant
to the provisions of Section 4.8 of the Indenture a Change of Control
Offer to the Holders of the Secured Notes at a purchase price in cash
equal to 101% of the principal amount thereof plus accrued and unpaid
interest (including Additional Amounts and Special Interest, if any)
thereon, the Indenture provides, and Company agrees, that the Company
will prepay the Loan and the Other Loans on a pro rata basis at a
redemption price equal to 101% of the principal amount hereof being
repaid, plus accrued and unpaid interest, Special Interest, if any,
and Additional Amounts, if any, thereon, in order to provide funds
sufficient to permit the Lender to purchase any Secured Notes validly
tendered pursuant to the foregoing offer to purchase Secured Notes
upon a Change of Control. All payments on the Loan shall be allocated
between the appropriate Tranches of the Loans and all payments on the
Loan and the Other Loans pursuant hereto shall be made directly to the
Trustee for deposit into the Issuer Escrow Account.
F. Notice. The Company shall notify the Lender and the Trustee of
any prepayment to be made pursuant to this Section 2.3 at least two
Business Days prior to such prepayment date.
G. Determination of Amounts of the Tranches Subject to Such
Redemptions. The Lender will submit a written determination to the
Trustee for its approval of the amount (including the pro rata
allocations between the Tranches of the Loan and between the Loan and
the Other Loans) with respect to any such redemption. The Trustee
shall approve or disapprove such allocations in its sole discretion
and such decision shall be conclusive, absent manifest error. A
certificate of the Lender setting forth such determination, with the
written approval of the Trustee thereon, shall be delivered to the
Company at least one Business Day prior to the payment date.
H. Company's Mandatory Prepayment Obligation; Application of
Prepayments. All prepayments shall include payment of accrued
interest (including Special Interest and Additional Amounts, if
applicable) on the principal amount so prepaid and shall be applied to
payment of interest before application to principal.
I. Manner and Time of Payment. Unless otherwise expressly set forth
herein, all payments of principal and interest hereunder and under the
Notes by the Company shall be made without defense, set-off or
counterclaim and in same-day funds and delivered to the Trustee for
deposit into the Issuer Escrow Account, unless otherwise specified,
not later than 10:00 a.m. (New York time) on the date due at the
Payment Office; funds received by the Trustee after that time shall be
deemed to have been paid by the Company on the next succeeding
Business Day.
J. Payments on Non-Business Days. Whenever any payment to be made
hereunder or under the Notes shall be stated to be due on a day which
is not a Business Day, the payment shall be made on the next
succeeding Business Day and such extension of time shall be included
in the computation of the payment of interest hereunder or under the
Loan.
2.4 Use of Proceeds.
A.Loan. The proceeds of the Loan may be applied by the Company to
finance certain costs of acquiring, constructing, repairing and
improving the Mortgaged Rig and, to the extent that such costs have
already been paid, for general corporate purposes.
B.Margin Regulations. No portion of the proceeds of any borrowing
under this Agreement shall be used by the Company in any manner which
might cause the borrowing or the application of such proceeds to
violate the applicable requirements of Regulation U, Regulation T or
Regulation X of the Board of Governors of the Federal Reserve System
or any other regulation of the Board or to violate the Exchange Act,
in each case as in effect on the date or dates of such borrowing and
such use of proceeds.
2.5 Commitment Fee. The Company agrees to pay a commitment fee for the
period from and including the Closing Date to and including the date
of termination specified in Section 2.1.F. on the undrawn portion of
the Loan equal to the average of the daily excess of the Loan
Commitment over the aggregate principal amount of the Loan outstanding
multiplied by 7% per annum, such commitment fee to be calculated on
the basis of a 360-day year consisting of twelve 30-day months and to
be payable semi-annually in arrears on each March 15 and September 15,
commencing September 15, 1999.
SECTION 3 CONDITIONS
3.1 Conditions to Initial Advances on the Loan. The obligation of the
Lender to make the initial advance on the Loan is subject to prior or
concurrent satisfaction of each of the following conditions:
A. On or before the Closing Date, all corporate and other proceedings
taken or to be taken in connection with the transactions contemplated
hereby and all documents incidental thereto not previously found
acceptable by the Lender and the Trustee shall be reasonably
satisfactory in form and substance to the Lender and the Trustee, and
the Lender and the Trustee shall have received the following items,
each of which shall be in form and substance satisfactory to the
Lender and the Trustee and, unless otherwise noted, dated the Closing
Date:
(i) a certified copy of the Company's charter, together with a
certificate of status, compliance, good standing or like certificate
with respect to the Company issued by the appropriate government
officials of the jurisdiction of its incorporation and of each
jurisdiction in which it owns any material assets or carries on any
material business, each to be dated a recent date prior to the Closing
Date;
(ii) a copy of the Company's bylaws, certified as of the Closing Date
by its Secretary or one of its Assistant Secretaries;
(iii) resolutions of the Company's Board of Directors approving and
authorizing the execution, delivery and performance of this Agreement,
the Notes, the Mortgage, each of the other Loan Documents, the
Indenture and any other documents, instruments and certificates
required to be executed by the Company in connection herewith and
therewith and approving and authorizing the execution, delivery and
payment of the Loan, each certified as of the Closing Date by its
Secretary or one of its Assistant Secretaries as being in full force
and effect without modification or amendment;
(iv) signature and incumbency certificates of the Company's officers
executing this Agreement, the Other Loan Documents and the Notes;
(v) executed copies of this Agreement and the Notes substantially in
the form of Exhibit I annexed hereto executed in accordance with
Section 2.1C drawn to the order of the Lender and with appropriate
insertions;
(vi) an originally executed Notice of Borrowing substantially in the
form of Exhibit II annexed hereto, signed by the President or a Vice
President of the Company on behalf of the Company and delivered to the
Lender; and
(vii) originally executed copies of one or more favorable written
opinions of Gardere & Wynne, special counsel for the Company,
substantially in the form of the Exhibit III hereto and addressed to
the Lender, the Trustee and the Initial Purchaser, and such other
opinions of counsel and such certificates or opinions of accountants,
appraisers or other professionals as the Lender, the Trustee or the
Initial Purchaser shall have reasonably requested.
B. The Lender shall have received a fully executed Mortgage in
the form of Exhibit IV hereto, which has been filed in all appropriate
jurisdictions.
C. On or before the Closing Date, all authorizations, consents and
approvals necessary in connection with the Transactions shall have
been obtained and remain in full force and effect and all applicable
waiting periods, if any, under law applicable to the Transactions
shall have expired without any action being taken by any competent
authority (including without limitation, any Tribunal) which
restrains, prevents or imposes materially adverse conditions upon the
completion of the Transactions or the financing thereof and evidence
of the receipt of such authorizations, consents and approvals
satisfactory to the Lender and the Trustee shall have been delivered
to the Lender and the Trustee.
D. On or before the Closing Date, the Indenture and the Purchase
Agreement shall have been executed and delivered by all parties
thereto. No default or event of default shall have occurred under the
Indenture and the Purchase Agreement, all conditions to the execution
delivery and authentication of the Secured Notes thereunder shall have
been satisfied under the Indenture, and all conditions to the purchase
of the Secured Notes by the Initial Purchaser under the Purchase
Agreement have been satisfied or waived by the Initial Purchaser.
E. Simultaneously with the making of the Loan by the Lender, the
Company shall have delivered to the Lender and the Trustee an
Officers' Certificate from the Company in form and substance
satisfactory to the Lender and the Trustee to the effect that (i) the
representations ad warranties of the Company in Section 4 are true,
correct and complete in all material respects on and as of the Closing
Date to the same extent as though made on and as of that date, and
(ii) on or prior to the Closing Date, the Company has performed and
complied with in all material respects all covenants and conditions to
be performed and observed by the Company on or prior to the Closing
Date and
F. No event shall have occurred and be continuing or would result from
the consummation of the borrowing contemplated by the Notice of
Borrowing which would constitute and Event of Default, a Potential
Event of Default or a Default.
G. No order, judgment or decree of any court, arbitrator or
governmental authority shall purport to enjoin or restrain the Lender
from making the Loan.
H. The making of the Loan in the manner contemplated in this Agreement
shall not violate the applicable provisions of Regulation T, U or X of
the Board of Governors of the Federal Reserve Board or any other
regulation of the Board.
3.2 Conditions to Subsequent Advance on the Loan. The obligation of
the Lender to make a subsequent advance on the Loan is subject to the
prior or concurrent satisfaction of each of the following conditions:
A. The Lender and the Trustee shall have received in form and substance
satisfactory to the Lender and the Trustee and dated the date of such
advance an originally executed Notice of Borrowing substantially in
the form of Exhibit II annexed hereto, signed by the President or a
Vice President of the Company on behalf of the Company and delivered
to the Lender.
B. No event shall have occurred and be continuing or would result from
the consummation of the borrowing contemplated by the Notice of
Borrowing which would constitute an Event of Default, a Potential
Event of Default or a Default.
C. No order, judgment or decree of any court, arbitrator or
governmental authority shall purport to enjoin or restrain the Lender
from making the Loan.
D. The making of the Loan in the manner contemplated in this Agreement
shall not violate the applicable provisions of Regulation T, U or X of
the Board of Governors of the Federal Reserve Board or any other
regulation of the Board.
E. Simultaneously with the making of the advance on the Loan by the
Lender, the Company shall have delivered to the Lender and the Trustee
an Officers' Certificate from the Company in form and substance
satisfactory to the Lender and the Trustee to the effect that (i) the
representations and warranties of the Company in Section 4 are true,
correct and complete in all material respects on and as of the date of
such advance to the same extent as though made on and as of that date,
and (ii) on or prior to the date of such advance, the Company has
performed and complied with in all material respects all covenants and
conditions to be performed and observed by the Company on or prior to
the date of such advance.
SECTION 4 REPRESENTATIONS AND WARRANTIES
In order to induce the Lender to enter into this Agreement and to
make the Loan, the Company represents and warrants to the Lender that,
at the time of execution hereof and after consummation of the making
of the Loan and the Transactions, the following statements are true,
correct and complete:
4.1 Organization and Good Standing; Capitalization. The Company is a
corporation duly organized and existing and in good standing under the
laws of its jurisdiction of incorporation. The Company has the
corporate power and authority to own and operate its properties and to
carry on its business as now conducted and as proposed to be conducted
and is duly qualified as a foreign corporation and in good standing in
all jurisdictions in which it is doing business, except where failure
to be so qualified or in good standing, singly or in the aggregated,
has not had and will not have a Material Adverse Effect.
4.2 Authorization and Power. The Company has the corporate power and
requisite authority, and has taken all corporate action necessary, to
consummate the Transactions and to execute, deliver and perform its
obligations under this Agreement, the Mortgage, the other the Loan
Documents, Indenture and each other document and instrument to be
delivered in connection with the Transactions executed or to be
executed by it and to issue the Notes.
4.3 No Conflicts or Consents.
A. The execution and delivery of the Loan Agreement, the Notes,
the Mortgage, the other Loan Documents and each other document to be
executed and delivered in connection with the Transactions, the
consummation of each of the transactions herein or therein
contemplated, the compliance with each of the terms and previsions
hereof or thereof, and the issuance, delivery and performance of the
Notes, this Agreement, the Mortgage and the Indenture, do not and will
not (i) violate any provision of any law or any governmental rule or
regulation applicable to the Company, its Certificate of Incorporation
or Bylaws or any order, judgment or decree of any court or other
agency of government binding on it, (ii) conflict with, result in a
breach of or constitute (with due notice or lapse of time or both) a
default under any Contractual Obligation of the Company which could
reasonably be expected to result in a Material Adverse Effect, (iii)
result in or require the creation or imposition of any Lien upon any
of the properties or assets of the Company (other than any Liens
created under this Agreement and the Other Loan Agreements), (iv)
require any approval of stockholders or any approval or consent of any
Person under any Contractual Obligation of the Company except for such
approvals or consents which will be obtained on or before the Closing
Date and disclosed in writing to Lender, the Trustee and the Initial
Purchaser or such approvals or consents the failure to obtain which
could not reasonably be expected to singly or in the aggregate result
in a Material Adverse Effect.
B. No consent, approval, authorization or order of any Tribunal or
other Person is required in connection with the execution and delivery
by the Company of this Agreement, the Loan Documents or any other
document or instrument to be delivered in connection with the
Transactions or the consummation of the transactions contemplated
hereby or thereby, other than any such consent, approval,
authorization or order which has been obtained and remains in full
force and effect or which has been waived in writing by the Lender or
the failure of which to obtain would not, singly or in the aggregated,
have a Material Adverse Effect.
4.4 Enforceable Obligations. Each of this Agreement, the Notes, the
Mortgage, the other Loan Documents, and each other document or
instrument to be delivered in connection therewith has been duly
authorized; each of this Agreement, the Notes, the Mortgage, the Other
Loan Documents and each other document or instrument to be delivered
in connection therewith to be executed and delivered on or prior to
the Closing Date has been duly executed and delivered by the Company
and each of this Agreement, the Notes, the Mortgage, the Other Loan
Documents and each other document or instrument to be delivered in
connection therewith to be executed and delivered on or prior to the
Closing Date is, and each of this Agreement, the Notes, the Mortgage
and the other Loan Documents to be executed and delivered after the
Closing Date will be, upon such execution and delivery, the legal,
valid and binding obligations of the Company, enforceable in
accordance with their respective terms, except to the extent that the
enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization or similar laws affecting the enforcement
of creditors' rights generally or by general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law)
4.5 Properties; Liens. The Company has good and marketable title to
the Mortgaged Rig and the Other Mortgaged Rigs to the extent specified
in such Other Loan Agreements. Except as permitted by this Agreement,
the Mortgaged Rig is so owned free and clear of Liens.
4.6 No Default. No event has occurred and is continuing which
constitutes a Default, a Potential Event of Default or an Event of
Default.
4.7 Use of Proceeds; Margin Stock, etc. The proceeds of the Loan will
be used solely for the purposes specified herein. None of such
proceeds will be used for the purpose of purchasing or carrying any
Margin Stock within the meaning of the applicable provisions of
Regulation T, U or X, or for the purpose of reducing or retiring any
Indebtedness which was originally incurred to purchase or carry a
Margin Stock or for any other purpose which might constitute this
transaction a "purpose credit" within the meaning of the applicable
provisions of Regulation T, U or X. The Company has not taken nor
will it take any action which might cause any of the Loan Documents to
violate the applicable provisions of Regulation T, U or X, or any
other regulation of the Board of Governors of the Federal Reserve
System.
4.8 Survival of Representations and Warranties. All representations
and warranties in the Loan Documents shall survive delivery of the
Notes and the making of the Loan and shall continue until one year
after repayment of the Notes and the Obligations, and any
investigation at any time made by or on behalf of the Lender shall not
diminish the Lender's right to rely thereon.
SECTION 5 COVENANTS
5.1 Indenture Covenants. Each of the covenants conferred in the
Indenture applicable to the Company and its Restricted Subsidiaries
are incorporated herein by reference. The Company covenants and
agrees that, until the Loan and the Notes and all other amounts due
under this Agreement have been indefeasibly paid in full it shall
perform all covenants applied to it or any of its Restricted
Subsidiaries which are contained in the Indenture.
5.2 Reports of Defaults, Etc. The Company will deliver to each Lender
and the Trustee promptly upon, but in no event more than five (5)
Business Days after, any Officer's obtaining knowledge of any
condition or event which constitutes a Default, an Event of Default or
a Potential Event of Default, an Officer's Certificate specifying the
nature and period of existence of any such condition or event, or
specifying the notice given or the claim of Default, Event of Default,
Potential Event of Default, or the event or condition, and what action
the Company has taken, is taking and proposes to take with respect
thereto;
5.3 Payments in U.S. Dollars. All payments of any Obligations to be
made hereunder or under the Note by the Company or any other obligor
with respect thereto shall be made solely in U.S. Dollars or such
other currency as is then legal tender for public and private debts in
the United States of America.
5.4 Performance and Enforcement Under the Loan Documents. The Company
shall promptly perform all of its obligations under the Loan Documents
and each document and instrument related thereto or delivered in
connection with any thereof, in each case, to the extent within its
control. The Company shall (A) diligently and in good faith promptly
pursue the performance of each other party to each such document, and
(B) diligently seek the enforcement of all rights and remedies under
each such document.
5.5 Liens. The Company shall not, nor shall it cause or permit any of
its Restricted Subsidiaries to, directly or indirectly, create, incur,
assume or permit to exist, any Lien on or with respect to any property
or asset (including the Mortgaged Rig) of the Company or of any of its
Restricted Subsidiaries, whether now owned or hereafter acquired, or
assign or otherwise convey any right to receive any income or profits
therefrom, or file or permit the filing of, or permit to remain in
effect, any financing statement or other similar notice of any Lien
with respect to any such property, asset, income or profits under the
Uniform Commercial Code of any State or under any similar recording or
notice statute, except Liens permitted by the Indenture and Liens
permitted by the Loan Documents.
5.6 Transfer of Mortgage Rig to a Restricted Subsidiary. The Company
shall not, nor shall the Company cause or permit any of its Restricted
Subsidiaries to, directly or indirectly, transfer the Mortgaged Rig to
any Subsidiary of the Company unless (i) such Subsidiary guarantees
all Obligations of the Company under this Agreement and executes a
Mortgage, (ii) the Liens of the Subsidiary's Mortgage and Security
Agreement are perfected and enforceable, and (iii) such Subsidiary
executes a Subsidiary Guarantee pursuant to the Indenture.
SECTION 6 EVENTS OF DEFAULT
If any of the following conditions of events ("Events of Default")
shall occur and be continuing:
6.1 Failure To Make Payments When Due. Failure to pay any installment
of principal including Premium of the Loan when due, whether at stated
maturity, by acceleration, by notice of prepayment or otherwise; or
failure to pay any interest (including Special Interest and Additional
Amounts) on the Loan or any other amount due under this Agreement
continued for 30 days; or
6.2 Default Under The Indenture. An Event of Default occurs and is
continuing under the Indenture; or
6.3 Other Loan Agreement. An Event of Default (as defined in an other
Loan Agreement) occurs and is continuing under such Other Loan
Agreement; or
6.4 Breach of Certain Covenants. Failure of the Company to perform or
comply with any covenant, term or condition contained in Sections 5.2
through 5.6 and Sections 7.3 through 7.5 of this Agreement; or
6.5 Breach of Warranty. Any representation, warranty or certification
made by the Company in any Loan Document or in any statement or
certificate at any time given by the Company in writing pursuant
hereto or thereto or in connection herewith or therewith shall be
false or incorrect in any material respect on the date as of which
made or deemed made; or
6.6 Other Defaults Under Agreement or Loan Documents. The Company
shall default in the performance of or compliance with any covenant,
term or condition contained in this Agreement or the other Loan
Documents (other than those covered by Sections 5.2 through 5.7 and
such default shall not have been remedied or waived in accordance with
Section 7.6 of this Agreement within 30 days after the date of written
notice of such default from the Lender, the Collateral Agent, the
Trustee or the Holder or Holders of not less than 25% in aggregate
principal amount of the Secured Notes then outstanding; or
6.7 Involuntary Bankruptcy; Appointment of Custodian, etc. The entry
by a court having jurisdiction in the premises of (i) a decree or
order for relief in respect of the Company or any Significant
Subsidiary in an involuntary case or proceeding under U.S. bankruptcy
laws, as now or hereafter constituted, or any other applicable
Federal, state, or foreign bankruptcy, insolvency, or other similar
law or (ii) a decree or order adjudging the Company or any Significant
Subsidiary a bankruptcy or insolvent, or approving as properly filed a
petition seeking reorganization, arrangement, adjustment or
composition of or in respect of the Company or any Significant
Subsidiary under U.S. bankruptcy laws, as now or hereafter
constituted, or any other applicable Federal, state or foreign
bankruptcy, insolvency, or similar law, or appointing a custodian,
liquidator, assignee, trustee, sequestrator or other similar official
of the Company or any Significant Subsidiary or of any substantial
part of the Property or assets of the Company or any Significant
Subsidiary, or ordering the winding up or liquidation of the affairs
of the Company or any Significant Subsidiary, and the continuance of
any such decree or order for relief or any such other decree or order
unstayed and in effect for a period of 60 consecutive days; or
6.8 Voluntary Bankruptcy; Appointment of a Custodian, etc. The
commencement by the Company or any Significant Subsidiary of a
voluntary case or proceeding under the U.S. bankruptcy laws, as now or
hereafter constituted, or any other applicable Federal, state or
foreign bankruptcy, insolvency or other similar law or of any other
case or proceeding to be adjudicated a bankrupt or insolvent; or
(ii) the consent by the Company or any Significant Subsidiary to the
entry of a decree or order for relief in respect of the Company or any
Significant Subsidiary in an involuntary case or proceeding under U.S.
bankruptcy laws, as now or hereafter constituted, or any other
applicable Federal, state, or foreign bankruptcy, insolvency or other
similar law or to the commencement of any bankruptcy or insolvency
case or proceeding against the Company or any Significant Subsidiary;
or (iii) the filing by the Company or any Significant Subsidiary of a
petition or answer or consent seeking reorganization or relief under
U.S. bankruptcy laws, as now or hereafter constituted, or any other
applicable Federal, state or foreign bankruptcy, insolvency or other
similar law; or (iv) the consent by the Company or any Significant
Subsidiary to the filing of such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator, assignee,
trustee, sequestrator or similar official of the Company or any
Significant Subsidiary or of any substantial part of the property or
assets of the Company or any Significant Subsidiary, or the making by
the Company or any Significant Subsidiary of an assignment for the
benefit of creditors; or (v) the admission by the Company or any
Significant Subsidiary in writing of its inability to pay its debts
generally as they become due; or (vi) the taking of corporate action
by the Company or any Significant Subsidiary in furtherance of such
action;
THEN (i) upon the occurrence of any Event of Default described in
the foregoing Section 6.7 or 6.8, all of the unpaid principal amount
of and accrued interest on the Loan and all other outstanding
Obligations shall automatically become immediately due and payable,
without presentment, demand, protest, waiver of notice of intent to
accelerate and waiver of notice of such acceleration or notice of any
other kind or other requirements of any kind, all of which are hereby
expressly waived by the Company, and Obligations and the Loan
Commitment of the Lender hereunder shall thereupon terminate, and
(ii) upon the occurrence of any other Event of Default, the Lender
shall, upon written notice of the Lender, to the Company, upon written
notice of the Trustee or the Collateral Agent to the Company and the
Lender, or upon written notice of a Holder or Holders of the Secured
Note or Notes, to the Company, the Lender, the Collateral Agent and
the Trustee, declare all of the unpaid principal amount of and accrued
interest on the Loan and all other outstanding Obligations to be, and
the same shall forthwith become, due and payable, and the obligations
and Loan Commitments of the Lender hereunder shall thereupon
terminate; provided, however, that upon the occurrence of an Event of
Default described in Section 6.4 of this Agreement or an "event of
default" under Section 6.4 of any Other Loan Agreement, the Lender
shall not declare the Obligations hereunder to be due and payable for
a period of 60 days after notice of the occurrence of such Event of
Default or "event of default." Nevertheless, if at any time after
acceleration of the Maturity of the Loan, the Company shall pay all
arrears of interest and all payments on account of the principal
thereof which shall have become due otherwise than by acceleration
(with interest on principal and, to the extent permitted by law, on
overdue interest, at the rates specified in this Agreement or the
Notes) and all Events of Default and Potential Events of Default
(other than non-payment of principal of and accrued interest on the
Loan and the Notes due and payable solely by virtue of acceleration)
shall be remedied or waived pursuant to Section 7.6, then the Lender
shall, upon receipt of the written notice from the Collateral Agent
and the Trustee of such remedy or waiver, by written notice to the
Company rescind and annul the acceleration and its consequences; but
such action shall not affect any subsequent Default, Event of Default
or Potential Event of Default or impair any right consequent thereon.
SECTION 7 MISCELLANEOUS
7.1 Pledges and Assignments of Loan and Note. The Lender shall have
the right at any time to sell, pledge, assign, transfer or negotiate
all or any portion of the Note or its Loan Commitment. The Company
acknowledges that the Lender will pledge its rights under this
Agreement, the Notes, the Mortgage and the Other Loan Documents to the
Collateral Agent pursuant to the Issuer Security Agreement to secure
the Lender's obligations under the Indenture and the Secured Notes.
7.2 Expenses. Whether or not the transactions contemplated hereby
shall be consummated, the Company, its successors and assigns agrees
to promptly pay (i) all the actual costs and expenses of preparation
of the Loan Documents and all the costs of furnishing all opinions by
counsel for the Company (including without limitation any opinions
requested by the Lender as to any legal matters arising hereunder),
and of the Company's performance of and compliance with all agreements
and conditions contained herein on its part to be performed or
complied with; (ii) the reasonable fees, expenses and disbursements of
counsel to the Lender and the Trustee and the Collateral Agent, their
successors and assigns (including allocated costs of internal counsel)
in connection with the negotiation, preparation, execution and
administration of the Loan Documents and the Loan hereunder, and any
amendments, modifications and waivers hereto or thereto and consents
to departures from the terms hereof and thereof; and (iii) after the
occurrence of an Event of Default, all costs and expenses (including
reasonable attorneys fees, including allocated costs of internal
counsel, and costs of settlement) incurred by the Lender, its
successors and assigns in enforcing any Obligations of or in
collecting any payments due from the Company hereunder or under the
Notes by reason of such Event of Default or in connection with any
refinancing or restructuring of the credit arrangements provided under
this Agreement in the nature of a "work-out" or of any insolvency or
bankruptcy proceedings.
7.3 Indemnity. In addition to the payment of expenses pursuant to
Section 7.2, whether or not the transactions contemplated hereby shall
be consummated, the Company agrees to indemnify, pay and hold the
Lender, the Collateral Agent, the Trustee and any Holder of the
Secured Notes and holder of the Notes, and each of their officers,
directors, employees, and agents, (collectively called the
"Indemnitees"), harmless from and against any all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits,
claims, costs, expenses and disbursements of any kind or nature
whatsoever (including, without limitation, the fees and disbursements
of counsel for such Indemnitees in connection with any investigative,
administrative or judicial proceeding commenced or threatened, whether
or not such Indemnitee shall be designated as a party thereto), which
may be suffered by imposed on, incurred by, or asserted against that
Indemnitee, in any manner resulting from, connected with, in respect
of, relating to or arising out of this Agreement, the Notes, the
Mortgage, the Lender's agreement to make the Loan or the use or
intended use of any of the proceeds of the Loan hereunder or the
Transactions (the "indemnified liabilities"); provided, however, that
the Company shall have no obligation to an Indemnitee hereunder with
respect to indemnified liabilities (i) to the extent such is finally
judicially determined to have resulted solely from (A) the gross
negligence or willful misconduct of that Indemnitee or (B) the failure
of such Indemnitee to perform its obligations under any Loan Document
or (C) such Indemnitee's violation of law or (ii) in connection with
the obligations of any Indemnitee under any Loan Document. To the
extend that the undertaking to indemnify, pay and hold harmless set
forth in the preceding sentence may be unenforceable because it is
violative of any law or public policy, the Company shall contribute
the maximum portion which it is permitted to pay and satisfy under
applicable law to the payment and satisfaction of all indemnified
liabilities incurred by the Indemnitees or any of them.
7.4 Additional Amounts. Except to the extent required by any applicable
law, regulation law, regulation or governmental policy, any and all
payments of, or in respect of the Loan, this Agreement, the Notes, any
Loan Document or any Secured Note shall be made free and clear of and
without deduction for or on account of any and all present or future
taxes, levies, imposts, deduction, charges or withholdings and all
liabilities with respect thereto imposed by Panama, The Bahamas, The
Marshall Islands or any other jurisdiction with which the Company or
any Subsidiary has some connection (including any jurisdiction (other
than the United States of America) from or through which payments
under this Agreement, the Notes, any Loan Document, the Guarantee or
the Secured Notes are made) or any political subdivision of or any
taxing authority in any such jurisdiction ("Panamanian Taxes,"
"Bahamian Taxes," "MI Taxes," or "Other Taxes," respectively). If the
Lender, the Company or any Subsidiary Guarantor shall be required by
law to withhold or deduct any Panamanian Taxes, Bahamian Taxes, MI
Taxes, or Other Taxes from or in respect of any sum payable under this
Agreement, the Notes, any Loan Document, the Guarantee or the Secured
Notes, the sum payable by the Company or such Subsidiary Guarantor, as
the case may be, thereunder shall be increased by the amount
("Additional Amounts") necessary so that after making all required
withholdings and deductions, Lender or any Holder or beneficial owner
of Secured Notes shall receive an amount equal to the sum that it
would have received had not such withholdings and deductions been
made; provided that any such sum shall not be paid in respect of any
Panamanian Taxes, Bahamian Taxes, MI Taxes or Other Taxes to a Holder
(an "Excluded Holder") (i) resulting from the beneficial owner of such
Secured Note carrying on business or being deemed to carry on business
in or through a permanent establishment or fixed base in the relevant
taxing jurisdiction or having any other connection with the relevant
taxing jurisdiction or any political subdivision thereof or any taxing
authority therein other than the mere holding or owning of such
Secured Note, being a beneficiary of the Guarantee or any applicable
Subsidiary Guarantee, the receipt of any income or payments in respect
of such Secured Note, the Loan, the Guarantee or any applicable
Subsidiary Guarantee or the enforcement of such Secured Note, the
Loan, the Guarantee or any applicable Subsidiary Guarantee, or (ii)
that would not have been imposed but for the presentation (where
presentation is required) of such Secured Note for payment more than
180 days after the date such payment became due and payable or was
duly provided for, whichever occurs later. The Lender, the Company or
the Subsidiary Guarantors, as applicable, will also (i) make such
withholding or deduction and (ii) remit the full amount deducted or
withheld to the relevant authority in accordance with applicable law,
and, in any such case, the Lender is required to furnish under the
Indenture to each Holder on whose behalf an amount was so remitted,
within 30 calendar days after the date the payment of any Panamanian
Taxes, Bahamian Taxes, MI Taxes or Other Taxes is due pursuant to
applicable law, certified copies of tax receipts evidencing such
payment by the Lender, the Company or the Subsidiary Guarantors, as
applicable. The Company will, upon written request of each Holder
(other than an Excluded Holder), reimburse each such holder for the
amount of (i) any Panamanian Taxes, Bahamian Taxes, MI Taxes or Other
Taxes so levied or imposed and paid by such Holder as a result of
payments made under or with respect to any Secured Notes, and (ii) any
Panamanian Taxes, Bahamian Taxes, MI Taxes or Other Taxes so levied or
imposed with respect to any reimbursement under the foregoing clause
(i) so that the net amount received by such Holder (net of payments
made under or with respect to such Secured Notes, the Loan, the
Guarantee or the applicable Subsidiary Guarantees) after such
reimbursement will not be less than the net amount the Holder would
have received if Panamanian Taxes, Bahamian Taxes, MI Taxes or Other
Taxes on such reimbursement had not been imposed.
At least 30 calendar days prior to each date on which any payment
under or with respect to the Secured Notes is due and payable, if the
Lender, the Company or the Subsidiary Guarantors, as applicable, will
be obligated to pay Additional Amounts with respect to such payment,
the Lender, the Company or the Subsidiary Guarantors, as applicable,
will deliver to the Trustee an officer's certificate stating the fact
that such Additional Amounts will be payable and the amounts will be
payable and the amounts so payable and will set forth such other
information necessary to enable the Trustee to pay such Additional
Amounts to Holders on the payment date.
7.5 Taxes and Other Taxes.
A. Any and all payments by the Company hereunder or under any of the
other Loan Documents shall be made free and clear of and without
deduction or withholding for any and all present or future Taxes,
unless such Taxes are required by law or the administration thereof to
be deducted or withheld and excluding (a) in the case of each Lender,
Taxes imposed on its net income and franchise taxes or taxes on gross
receipts and capital imposed on it by the jurisdiction under the laws
of the United States or any political subdivision thereof (all such
nonexcluded Taxes being hereinafter referred to as "Covered Taxes").
If the Company shall be required by Law or the administration thereof
to deduct or withhold any Covered Taxes from or in respect of any sum
payable hereunder or under any other Loan Documents, the sum payable
shall be increased as may be necessary so that after making all
required deductions or withholdings (including deductions or
withholdings applicable to additional amounts paid under this
paragraph), the Lender receives an amount equal to the sum it would
have received if no such deduction or withholding had been made;
(b) the Company shall make such deductions or withholdings; and
(c) the Company forthwith shall pay the full amount deducted or
withheld to the relevant taxation or other authority in accordance
with applicable Law.
B. The Company agrees to pay forthwith any present or future stamp
documentary taxes or any other excise or property taxes charges or
similar levies (all such taxes, charges and levies being herein
referred to as "Other Taxes") imposed by any jurisdiction (or any
political subdivision or taxing authority thereof or therein) which
arise from any payment made by the Company hereunder or under any of
the other Loan Documents or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement or any
of the other Loan Documents.
C. The Company agrees to indemnify the Lender for the full amount of
Covered Taxes or Other Taxes not deducted or withheld and paid by the
Company in accordance with Section 7.5(A) and (B) to the relevant
taxation or other authority and any Taxes other than Covered Taxes or
Other Taxes imposed by any jurisdiction on amounts payable by the
Company under this Section 7.5 paid by the Lender and any liability
(including penalties, interest and expenses) arising therefrom or with
respect thereto, whether or not any such Taxes or Other Taxes were
correctly or legally asserted. Payment under this indemnification
shall be made within 30 days from the date the Lender makes written
demand therefor. A certificate as to the amount of such Taxes or
Other Taxes and evidence of payment thereof submitted to the Company
shall be prima facie evidence, absent manifest error, of the amount
due from the Company to the Lender.
D. The Company shall furnish to the Lender the original or a certified
copy of a receipt evidencing any payment of Taxes or Other Taxes made
by the Company as soon as such receipt becomes available.
E. The provisions of this Section 7.5 shall survive the termination of
the Agreement and repayment of all Obligations.
7.6 Amendments and Waivers. No amendment, modification, termination or
waiver of any term or provision of this Agreement, of the Note, the
Mortgage or any Other Loan Document or consent to any departure by the
Company therefrom, shall in any event be effective without the prior
written concurrence of the Company, the Lender, the Collateral Agent
and the Trustee, and, upon the request of the Lender, the Collateral
Agent or the Trustee, the receipt of a written opinion of counsel of
the Company addressed to the Lender, the Collateral Agent and the
Trustee to the effect that such amendment, modification, termination,
waiver or consent does not violate or conflict with any of the terms
and provisions of the Indenture or any Contractual Obligations of the
Company.
7.7 Independence of Covenants. All covenants hereunder shall be given
independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be
permitted by an exception to, or be otherwise within the limitation
of, another covenant shall not avoid the occurrence of an Event of
Default or Potential Event of Default if such action is taken or
condition exists.
7.8 Notices. Unless otherwise provided herein, any notice or other
communications herein required or permitted to be given shall be in
writing and may be personally served, telecopied or sent by mail and
shall be deemed to have been given when delivered in person, upon
receipt of telecopy against receipt of answer back or four Business
Days after depositing it in the mail, registered or certified, with
postage prepaid and properly addressed; provided, however, that
notices shall not be effective until received. For the purposes
hereof, the addresses of the parties hereto (unless notice of a change
thereof is delivered as provided in this Section 7.8) shall be set
forth under each party's name on the signature pages hereto.
7.9 Survival of Warranties and Certain Agreements. All agreements,
representations and warranties made herein and in the other Loan
Documents shall survive the execution and delivery of this Agreement
and in the other Loan Documents, the making of the Loan hereunder and
the execution and delivery of the Notes or the Loan Documents and,
notwithstanding the making of the Loan, the execution and delivery of
the Notes and the other Loan Documents or any investigation made by or
on behalf of any party, shall continue in full force and effect. The
closing of the transactions herein contemplated shall not prejudice
any right of one party against any other party in respect of anything
done or omitted hereunder or in respect of any right to damages or
other remedies.
7.10 Failure or Indulgence Not Waiver; Remedies Cumulative. No failure
or delay on the part of the Lender or the holder of the Notes or the
Trustee in the exercise of any power, right or privilege or be
construed to be a waiver of any default or acquiescence therein, nor
shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or of any other
right, power or privilege. All rights and remedies existing under
this Agreement, the Notes or any other Loan Document are cumulative to
and not exclusive of any rights or remedies otherwise available.
7.11 Severability. In case any provision in or obligation under this
Agreement, under a Guarantee or the Notes shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any
way be affected or impaired thereby.
7.12 Headings. Section and Section headings in this Agreement are
included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given
any substantive effect.
7.13 Applicable Law. THIS AGREEMENT, EACH LOAN DOCUMENT OTHER THAN THE
MORTGAGE AND THE NOTES SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW.
7.14 Successors and Assigns; Subsequent Holders of Notes. This
Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of
the parties hereto and the successors and assigns of the Lenders. The
terms and provisions of this Agreement and each Loan Document shall
inure to the benefit of any assignee or transferee of the Notes
pursuant to Section 7.1, and in the event of such transfer or
assignment, the rights and privileges herein conferred upon the Lender
shall automatically extend to and be vested in such transferee or
assignee, all subject to the terms and conditions hereof. The
Company's rights or any interest therein hereunder may not be assigned
without the prior express written consent of the Lender and the
Trustee.
7.15 Counterparts; Effectiveness. This Agreement and any amendments,
waivers, consents or supplements may be executed in any number of
counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one
and the same instrument. This Agreement shall become effective upon
the execution of a counterpart hereof by each of the parties hereto.
7.16 Consent to Jurisdiction; Venue; Waiver of Jury Trial.
A. Any legal action or proceeding with respect to this Agreement, any
Note or any 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
parties to this Agreement hereby irrevocably accepts for itself and in
respect of its respective property, generally and unconditionally, the
jurisdiction of the aforesaid courts. Each of the parties to this
Agreement hereby further irrevocably waives any claim that any such
courts lack jurisdiction over itself, and agrees not to plead or
claim, in any legal action or proceeding with respect to this
Agreement, the Notes or Loan Documents brought in any of the aforesaid
courts, that any such court lacks jurisdiction over such party. Each
of the parties to this Agreement irrevocably consents to the service
of process in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to such
party, at its respective address for notices pursuant to Section 7.8,
such service to become effective 30 days after such mailing. To the
extent permitted by law, each of the parties to this Agreement hereby
irrevocably waives any objection to such service of process and
further irrevocably waives and agrees not to plead or claim in any
action or proceeding commenced hereunder or under the Notes or any
Loan Document that service of process was in any way invalid or
ineffective. Nothing herein shall affect the right of any party to
this Agreement to serve process in any other manner permitted by law
or to commence legal proceedings or otherwise proceed against any
party in any other jurisdiction.
B. Each of the parties to this Agreement hereby irrevocably waives any
objection which it may now or hereafter have to the laying of venue of
any of the aforesaid any of actions or proceedings arising out of or
in connection with this Agreement, the Notes or any of the Loan
Documents brought in the courts referred to in clause A above and
hereby further irrevocably waives and agrees not to plead or claim in
any such court that any such action or proceeding brought in any such
court has been brought in an inconvenient forum.
C. Each of the parties to this Agreement hereby irrevocably waives all
right to a trial by jury in any action, proceeding or counterclaim
arising out of or relating to this Agreement, the Notes or the Loan
Documents or the transactions contemplated hereby or thereby.
7.17 Waiver of Stay, Extension or Usury Laws. The Company covenants
(to the extent that it may lawfully do so) that it will not at any
time insist upon, plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law or any usury law or
other law that would prohibit or forgive the Company from paying all
or any portion of the principal of or interest on the Loan as
contemplated herein, wherever enacted, now or at the time hereafter in
force, or which may affect the covenants or the performance of this
Agreement and (to the extent that it may lawfully do so), the Company
hereby expressly waives all benefit or advantage of any such law, and
covenants that it will not hinder, delay or impede the execution of
any power herein granted to the Lender, but will suffer and permit the
execution of every such power as though no such law had been enacted.
7.18 Usury Savings Clause. It is the intention of the parties hereto
to comply with applicable usury laws (now or hereafter enacted);
accordingly, notwithstanding any provision to the contrary in this
Agreement, any Note, any of the other Loan Documents or any other
document related hereto or thereto, in no event shall this Agreement
or any such other document require the payment or permit the
collection of interest in excess of the maximum amount permitted by
such laws. If from any circumstances whatsoever, fulfillment of any
provision of this Agreement, any Note, any of the other Loan Documents
or of any other document pertaining hereto or thereto, shall involve
transcending the limit of validity prescribed by applicable law for
the collection or charging of interest, then, ipso facto, the
obligation to be fulfilled shall be reduced to the limit of such
validity, and if from any such circumstances the Lender shall ever
receive anything of value as interest or deemed interest by applicable
law under this Agreement, any Note, any of the other Loan Documents or
any other document pertaining hereto or otherwise an amount that would
exceed the highest lawful rate, such amount that would be excessive
interest shall be applied to the reduction of the principal amount
owing under the Loan or on account of any other indebtedness of the
Company, and not to the payment of interest, or if such excessive
interest exceeds the unpaid balance of principal of such indebtedness,
such excess shall be refunded to the Company. In determining whether
or not the interest paid or payable with respect to any indebtedness
of the Company to Lender under any specified contingency, exceeds the
highest lawful rate, the Company and the Lender shall, to the maximum
extent permitted by applicable law, (a) characterize any non-principal
payment as an expense, fee or premium rather than as interest,
(b) exclude voluntary prepayments and the effects thereof,
(c) amortize, prorate, allocate and spread the total amount of
interest thereon does not exceed the maximum amount permitted by
applicable laws, and/or (d) allocate interest throughout the full term
of such indebtedness so that interest between portions of such
indebtedness, to the end that no such portion shall bear interest at a
rate greater than that permitted by applicable law.
WITNESS the due execution hereof by the respective duly authorized
officers of the undersigned as of the date first written above.
COMPANY:
R&B FALCON CORPORATION
By:
Name: Robert Fulton
Title: Executive Vice President
Notice Address:
901 Threadneedle
Houston, TX 77079-2982
Telephone: (281) 496-5000
Telecopy: (281) 496-0285
LENDER:
RBF FINANCE CO.
By:
Name: Leighton Moss
Title: Vice President
Notice Address:
901 Threadneedle
Houston, TX 77079-2982
Telephone: (281) 496-5000
Telecopy: (281) 597-7556
- ------------------------------------------------------------------------
Exhibit I
R&B FALCON CORPORATION
SENIOR SECURED ___- YEAR TRANCHE PROMISSORY NOTE
New York, New York
$______________ March 26, 1999
FOR VALUE RECEIVED, R&B FALCON CORPORATION (the "Company"),
promises to pay to the order of RBF FINANCE CO. ("Payee"), the
principal amount of _________________________ Dollars ($_____________)
(or such lesser amount as shall equal the aggregate unpaid principal
amount of the __-year Tranche advances of the Loan) at the times
specified by the provisions of the Senior Secured Credit Agreement
dated as of March 26, 1999, as the same may at any time be amended,
modified or supplemented and in effect (the "Loan Agreement") between
the Company and the Lender.
The Company also promises to pay interest on the unpaid principal
amount hereof from the date hereof until paid in full at the rates and
at the times which shall be determined in accordance with the
provisions of the Loan Agreement.
This Note is issued pursuant to and entitled to the benefits of
the Loan Agreement, to which reference is hereby made for a more
complete statement of the terms and conditions under which the Loan
evidenced hereby was made and is to be repaid. Capitalized terms used
herein without definition shall have the meanings set forth in the
Loan Agreement.
The Senior Secured Credit Agreement dated as of March 26, 1999, as
the same may at any time be amended, modified or supplemented and in
effect (the "Loan Agreement") between the Company, the Lender named
therein, and United States Trust Company of New York, as Trustee.
All payments of principal and interest in respect of this Note
shall be made in lawful money of the United States of America in same
day funds to Payee at the office of United States Trust Company of New
York located at 114 West 47th Street, 25th Floor, New York, New York,
or at such other place in the State of New York as shall be designated
in writing for such purpose in accordance with the terms of the Loan
Agreement. Each of Payee and any subsequent holder of this Note
agrees, by its acceptance hereof, that before disposing of this Note
or any part hereof it will make a notation hereon of all principal
payments previously made hereunder and of the date to which interest
hereon has been paid; provided, however, that the failure to make a
notation of any payment made on this Note shall not limit or otherwise
affect the obligation of the Company hereunder with respect to
payments of principal or interest on this Note.
Whenever any payment on this Note shall be stated to be due on a
day which is not a Business Day, such payment shall be made on the
next succeeding Business Day and such extension of time shall be
included in the computation of the payment of interest on this Note.
This Note is subject to mandatory prepayment as provided in the
Loan Agreement and prepayment at the option of the Company as provided
in the Loan Agreement.
THE LOAN AGREEMENT AND THIS NOTE SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK WITHOUT REGARD TO THE PRINCIPALS OF CONFLICTS OF LAWS.
Upon the occurrence of an Event of Default, the unpaid balance of
the principal amount of this Note, together with all accrued but
unpaid interest thereon, may become, or may be declared to be, due and
payable in the manner, upon the conditions and with the effect
provided in the Loan Agreement.
The terms of this Note are subject to amendment only in the manner
provided in the Loan Agreement.
No reference herein to the Loan Agreement and no provision of this
Note or the Loan Agreement shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of
and interest on this Note at the place, at the respective times, and
in the currency herein prescribed.
The Company promises to pay all costs and expenses, including all
attorneys' fees, all as provided in Section 7.2 of the Loan Agreement,
incurred in the collection and enforcement of this Note. The Company
and endorsers of this Note hereby consent to renewals and extensions
of time at or after the maturity hereof, without notice, and hereby
waive diligence, presentment, protest, demand and notice of every kind
and, to the full extent permitted by law, the right to plead any
statute of limitations as a defense to any demand hereunder.
IN WITNESS WHEREOF, the Company has caused this Note to be
executed and delivered by its duly authorized officer, as of the day
and year and at the place first above written.
R&B FALCON CORPORATION
By:
Title:
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EXHIBIT II
NOTICE OF BORROWING
The undersigned hereby certifies that he is the ___________
__________________ of R&B Falcon Corporation, a Delaware corporation
(the "Company"), and that as such he is authorized to execute this
Notice of Borrowing on behalf of the Company. With reference to that
certain Loan Agreement dated as of _______________, 1999 (as same may
be amended, modified, increased, supplemented and/or restated from
time to time, the "Agreement") entered into by and between the Company
and RBF Finance Co., and any other future holder of any Note issued
pursuant to the Agreement ("Lender"), the undersigned further
certifies, represents and warrants on behalf of the Company that all
of the foregoing statements are true and correct (each capitalized
term used herein having the same meaning given to it in the Agreement
unless otherwise specified):
(a)The Company requests that the Lender make an advance to the Company
on the 7-year Tranche of the Loan in the aggregate principal amount of
$_________________ and an advance to the Company on the 10-year
Tranche of the Loan in the aggregate principal amount of $__________
by no later than _______________. Immediately following such advance,
the aggregate outstanding balance of advances made on the 7-year
Tranche and the 10-year Tranche Loan shall equal $_______________ and
$___________, respectively.
(b)As of the date hereof, and as a result of the making of the
requested advance, no event shall have occurred and be continuing or
would result from the consummation of the borrowing contemplated by
the Notice of Borrowing which would constitute an Event of Default, a
Potential Event of Default or a Default.
(c)Borrower has performed and complied with all agreements and
conditions contained in the Agreement which are required to be
performed or complied with by Borrower before or on the date hereof
and, except as waived in writing or otherwise agreed to in writing by
the Lender, all of the conditions precedent set forth in Section 3.1
or 3.2, as applicable, of the Agreement under Conditions to Loan have
been satisfied.
(d)The representations and warranties of the Company contained in
Section 4 of the Agreement are true, correct and complete in all
material respects on and as of the date hereof to the same extent as
though made on and as of that date, and (ii) on or prior to the date
hereof, the Company has performed and complied with in all material
respects all covenants and conditions to be performed and observed by
the Company on or prior to the date hereof.
EXECUTED AND DELIVERED this _______ day of _____________, _____.
R&B FALCON CORPORATION
By:
Name:
Title:
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EXHIBIT III
FORM OF LEGAL OPINION
Opinions of Counsel that (i) the Company has duly
authorized, executed and delivered the Mortgage; (ii) the Mortgage
constitutes a legally binding obligation of the Company enforceable
against the Company in accordance with its terms (except as (i) the
enforceability thereof may be limited bankruptcy, insolvency or other
similar laws affecting creditors' rights, generally, and (ii) the
enforceability thereof may be limited by right of acceleration and the
availability of enforceable remedies may be limited by equitable
principles of general applicability, and subject to such other
exceptions, limitations or qualifications that are usual and customary
for such opinions) and (iii) the Mortgage constitutes a valid and
perfected first mortgage lien on the Mortgaged Rig.
EXHIBIT 10.6
[PEREGRINE IV]
====================================================================
SENIOR SECURED LOAN AGREEMENT
Dated as of
March 26, 1999
between
R&B FALCON CORPORATION,
as Borrower
and
RBF FINANCE CO.,
as Lender
====================================================================
TABLE OF CONTENTS
Page
SECTION 1.DEFINITIONS
1.1.Certain Defined Terms
1.2.Other Defined Terms
1.3.Accounting Terms
1.4.Other Definitional Provisions
SECTION 2.LOAN COMMITMENT AND LOAN
2.1.Termination of Loan Commitment
2.2.Termination of Loan Commitment
2.3.Interest on the Loans
2.4.Redemptions
2.5.Excess Proceeds Offers
2.6.Use of Proceeds
2.7.Commitment Fee
SECTION 3.CONDITIONS
3.1.Conditions to Initial Advances on the Loan
3.2.Conditions to Subsequent Advance on the Loan
SECTION 4.REPRESENTATIONS AND WARRANTIES
4.1.Organization and Good Standing; Capitalization
4.2.Authorization and Power
4.3.No Conflicts or Consents
4.4.Enforceable Obligations
4.5.Properties; Liens
4.6.No Default
4.7.Use of Proceeds; Margin Stock, etc
4.8.Survival of Representations and Warranties
SECTION 5.COVENANTS
5.1.Indenture Covenants
5.2.Reports of Defaults, Etc
5.3.Payments in U.S. Dollars
5.4.Performance and Enforcement Under the Loan Documents
5.5.Liens
5.6.Transfer of Mortgage Rig to a Restricted Subsidiary
5.7.Security Interest and Lien on Equipment
SECTION 6.EVENTS OF DEFAULT
6.1.Failure To Make Payments When Due
6.2.Default Under The Indenture
6.3.Other Loan Agreement
6.4.Breach of Certain Covenants
6.5.Breach of Warranty
6.6.Other Defaults Under Agreement or Loan Documents
6.7.Involuntary Bankruptcy; Appointment of Custodian, etc
6.8.Voluntary Bankruptcy; Appointment of a Custodian; etc
SECTION 7.MISCELLANEOUS
7.1.Pledges and Assignments of Loan and Note
7.2.Expenses
7.3.Indemnity
7.4.Additional Amounts
7.5.Taxes and Other Taxes
7.6.Amendments and Waivers
7.7.Independence of Covenants
7.8.Notices
7.9.Survival of Warranties and Certain Agreements
7.10.Failure or Indulgence Not Waiver; Remedies Cumulative
7.11.Severability
7.12.Headings
7.13.Applicable Law
7.14.Successors and Assigns; Subsequent Holders of Notes
7.15.Counterparts; Effectiveness
7.16.Consent to Jurisdiction; Venue; Waiver of Jury Trial
7.17.Waiver of Stay, Extension or Usury Laws
7.18.Usury Savings Clause
EXHIBITS
I FORM OF NOTE
II FORM OF NOTICE OF BORROWING
III FORM OF OPINION OF GARDERE & WYNNE - SPECIAL COUNSEL FOR THE BORROWER
IV FORM OF MORTGAGE
V SCHEDULE OF EQUIPMENT
- -------------------------------------------------------------------
This Senior Secured Loan Agreement is dated as of March 26, 1999,
and entered into by and among R&B Falcon, Inc., a Delaware corporation
(the "Company") and RBF Finance Co., a Delaware corporation (the
"Lender").
RECITALS
WHEREAS, the Lender has entered into an Indenture of even date
herewith (as the same may be amended, or supplemented or otherwise
modified from time to time, the "Indenture") with United States Trust
Company of New York as Trustee (the "Trustee"), pursuant to which the
Lender will issue in two series up to $400,000,000 aggregate principal
amount of its 11% Senior Secured Notes due 2006 (the "7-year Secured
Notes") and up to $400,000,000 aggregate principal amount of its
11 3/8% Senior Secured Notes due 2009 (the "10-year Secured Notes; the
7-year Secured Notes and the 10-year Secured Notes being hereinafter
collectively called the "Secured Notes"); and
WHEREAS, the Indenture provides that the Lender may utilize the
proceeds of the Secured Notes to make loans to the Company, each for
the purpose of either (i) financing all or a portion of the cost of
acquiring, constructing, altering, improving or repairing a drilling
rig or drillship (a "Rig") or improvements used or to be used in
connection with such a Rig, or (ii) financing all or any part of the
purchase price of the Rig or improvements used or to be used in
connection with such Rig, which indebtedness is incurred prior to or
within one year after the date of the completion of construction,
alteration, improvement or repair or the commencement of commercial
operations thereof; and
WHEREAS, the Company desires that the Lender extend senior secured
credit facilities to the Company for such purposes herein; and
WHEREAS, the Indenture provides that the Lender will enter into a
Senior Secured Note Security and Pledge Agreement of even date
herewith (the "Issuer Security Agreement") between the Lender, the
Trustee and United States Trust Company of New York as Collateral
Agent (in such capacity, the "Collateral Agent"), pursuant to which
the Lender will pledge and grant a security in the loans made with the
proceeds of the Secured Notes which are or will be secured by Rigs;
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, the parties
hereby agree as follows:
SECTION 1 DEFINITIONS
1.1 Certain Defined Terms. The following terms used in this Agreement
shall have the following meanings:
"Agreement" means this Senior Secured Loan Agreement dated as of
March 26, 1999, as it may be amended, supplemented or otherwise
modified from time to time in accordance with the terms hereof.
"Board of Directors" means, with respect to any Person, the Board
of Directors of such Person or any duly authorized committee of that
Board.
"Board Resolution" means a duly adopted resolution of the Board of
Directors of the Company in full force and effect at the time of
determination and certified as such by the Secretary or Assistant
Secretary of the Company.
"Business Day" means any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of New York, New York or is a
day on which banking institutions therein located are authorized or
required by law or other governmental action to close.
"Cash Equivalents" means (i) U.S. Governmental Obligations with a
maturity of four years or less; (ii) commercial paper issued by any
corporation if such commercial paper has credit ratings of at least "A-
1" from S&P or at least "P-1" by Moody's; (iii) certificates of
deposit, bankers' acceptances, time deposits, Eurocurrency Deposits
and similar types of Investments routinely offered by commercial banks
with final maturities of one year or less issued by commercial banks
having combined capital and surplus in excess of $100,000,000; and
(iv) shares in money market mutual or similar funds having assets in
excess of $100,000,000.
"Closing Date" means the date on or before March 26, 1999 on which
the initial advance of the Loan is made and the conditions set forth
in Section 3.1 are satisfied or waived in accordance with Section 7.7.
"Collateral" means the Mortgaged Rig and any other property subject
to the Lien created under a Mortgage or a Loan Document.
"Commission" means the Securities and Exchange Commission.
"Company" has the meaning ascribed to such term in the introduction
to this Agreement.
"Collateral Agent" has the meaning assigned to such term in the
recitals to this Agreement.
"Contractual Obligation," as applied to any Person, means any
provision of any Security issued by that Person or of any indenture,
mortgage, deed of trust, contract, undertaking, agreement or other
instrument to which that Person is a party or by which it or any of
its properties is bound or to which it or any of its properties is
subject.
"Dollars" or the sign "$" means the lawful money of the United
States of America.
"Equipment" means all items of equipment of the Borrower used in
connection with the Mortgaged Rig, whether currently owned or
hereafter acquired, and whether on board the Mortgaged Rig or not,
including but not limited to the items set forth on Schedule V
attached hereto.
"Event of Default" means each of the events set forth in Section 6.
"indemnified liabilities" has the meaning ascribed to such term in
Section 7.3.
"Indemnitees" has the meaning ascribed to such term in Section 7.3.
"Indenture" has the meaning ascribed to such term in the recitals
of this Agreement.
"Laws" means all applicable statutes, laws, ordinances,
regulations, rules, orders, judgments, writs, injunctions or decrees
of any state, commonwealth, nation, territory, possession, province,
county, parish, town, township, village, municipality or Tribunal, and
"Law" means each of the foregoing.
"Lender" has the meaning ascribed to that term in the introduction
of this Agreement and shall include any assignee of the Loan or the
Note or Loan Commitment to the extent of such assignment.
"Lien" means any lien, mortgage, pledge, assignment, security
interest, charge or encumbrance of any kind (including any conditional
sale or other title retention agreement, any lease in the nature
thereof, and any agreement to give any security interest) and any
option, trust or other preferential arrangement having the practical
effect of any of the foregoing.
"Loan" means, collectively, the loans made by the Lender pursuant
to Section 2.1.
"Loan Documents" means this Agreement, the Note and the Mortgage.
"Margin Stock" has the meaning assigned to that term in
Regulation U of the Board of Governors of the Federal Reserve System
as in effect from time to time.
"Material Adverse Effect" means (i) a material adverse effect upon
the business, property, assets, nature of assets, liabilities
condition (financial or otherwise), results of operation or prospects
of the Company and its Restricted Subsidiaries, taken as a whole, or
(ii) the impairment of the ability of the Company or any of its
Restricted Subsidiaries to perform, or the impairment of the ability
of Lender to enforce, any material right or remedy under the
Obligations.
"Maturity" means the date on which the principal of the Loan,
whether the 7-year Tranche or 10-year Tranche or both, becomes due and
payable as provided in this Agreement whether at Stated Maturity, upon
redemption, by declaration of acceleration or otherwise.
"Mortgage" means a mortgage substantially in the form of Exhibit IV
covering the Mortgaged Rig.
"Mortgaged Rig" means the Peregrine IV.
"Notes" has the meaning ascribed to such term in Section 2.1C.
"Notice of Borrowing" means a notice substantially in the form of
Exhibit II annexed hereto with respect to a proposed borrowing.
"Obligations" means all obligations of every nature of the Company
from time to time owed to the Lender under the Loan Documents, whether
for principal, reimbursements, interest (including post-petition
interest), fees, expenses, indemnities or otherwise, and whether
primary, secondary, direct, indirect, contingent, fixed or otherwise
(including obligations of performance).
"Officer" means the Chairman of the Board, the Chief Executive
Officer, the Chief Operating Officer, the President, any Vice
President, the Chief Financial Officer, the Controller, the Chief
Accounting Officer, any Vice President, the Treasurer or the Secretary
of the Company.
"Officers' Certificate" means, as applied to any corporation, a
certificate executed on behalf of such corporation by two officers;
provided, however, that every Officers' Certificate with respect to
the compliance with a condition precedent to the making of the Loans
hereunder shall include (i) a statement that the officer or officers
making or giving such Officers' Certificate have read such condition
and any definitions or other provisions contained in this Agreement
relating thereto, (ii) a statement that, in the opinion of the
signers, they have made or have caused to be made such examination or
investigation as is necessary to enable them to express an informed
opinion as to whether or not such condition has been complied with,
and (iii) a statement as to whether, in the opinion of the signers,
such condition has been complied with.
"Other Loan" means a loan made pursuant to an Other Loan Agreement
by the Lender with the proceeds of the Secured Notes which is secured
by a Mortgaged Rig.
"Other Loan Agreement" means a loan agreement among the Lender, the
Company and the Trustee pursuant to which the Lender will utilize the
proceeds of the Secured Notes to make an Other Loan for the purposes
specified in the second recital of this Agreement
"Other Mortgaged Rig" means a Rig which has been mortgaged to
secure an Other Loan or which is the subject of a construction
contract which has been pledged to secure an Other Loan.
"Other Taxes" has the meaning ascribed to such term in Section 7.6.
"Payment Office" shall mean the office of United States Trust
Company of New York located at 114 West 47th Street, 25th Floor, New
York, New York 10036 or such other office in the State of New York as
the Lender may designate to the Company and the Trustee from time to
time.
"Potential Event of Default" means a condition or event which,
after notice or lapse of time or both, would constitute an Event of
Default if that condition or event were not cured or removed within
any applicable grace or cure period.
"Purchase Agreement" means the Purchase Agreement dated March 19,
1999 among the Lender, the Company and the Initial Purchaser relating
to the Secured Notes.
"Securities" means any stock, shares, partnership interests, voting
trust certificates, certificates of interest or participation in any
profit sharing agreement or arrangement, bonds, debentures, options,
warrants, notes, or other evidences of indebtedness, secured or
unsecured, convertible, subordinated or otherwise, or in general any
instruments commonly known as "securities" or any certificates of
interest, shares or participations in temporary or interim
certificates for the purchase or acquisition of, or any right to
subscribe to, purchase or acquire, any of the foregoing.
"7-year Tranche" means advances on the Loan aggregating up to
$83,000,000 and having a final Loan Maturity of March 15, 2006.
"Taxes" means all taxes, assessments, fees, levies, imposts,
duties, penalties, deductions, liabilities, withholdings or other
charges of any nature whatsoever, including interest penalties, from
time to time or at any time imposed by any Law or any Tribunal.
"10-year Tranche" means advances on the Loan aggregating up to
$83,000,000 and having a final Maturity of March 15, 2009.
"Transaction Costs" means the fees, costs and expenses payable by
the Company pursuant hereto and other fees, costs and expenses payable
by the Company in connection with the Transactions.
"Transactions" shall mean, collectively, (i) the issuances and sale
of the Secured Notes, (ii) the incurrence of the Loan hereunder on the
Closing Date, (iii) the incurrence of the Other Loans under the Other
Loan Agreements, (iv) any other transaction on the Closing Date
contemplated in relation to the foregoing and (v) the payment of fees
and expenses in connection with the foregoing.
"Tranches" means collectively the 7-year Tranche and the 10-year
Tranche.
"Tribunal" means any governmental, any arbitration panel, any court
or any governmental department, commission, board, bureau, agency,
authority or instrumentality of the United States or any state,
province, commonwealth, nation, territory, possession, county, parish,
town, township, village or municipality, whether now or hereafter
constituted and/or existing.
"Trustee" has the meaning ascribed to such term in the introduction
of this Agreement and shall include any successor Trustee appointed
pursuant to terms of the Indenture.
"U.S. Legal Tender" means such coin or currency of the United
States of America as at the time of payment shall be legal tender for
the payment of public and private debts.
1.2 Other Defined Terms. Any capitalized term used in this Agreement
and not defined herein shall have the meaning assigned to such term in
the Indenture.
1.3 Accounting Terms. For the purposes of this Agreement, all
accounting terms to otherwise defined herein shall have the meanings
assigned to them in conformity with GAAP.
1.4 Other Definitional Provisions. Any of the terms defined in
Section 1.1 may, unless the context otherwise requires, be used in the
singular or the plural depending on the reference.
SECTION 2 LOAN COMMITMENT AND LOAN
2.1 The Loan and Notes.
A. Loan Commitment. Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties of
the Company herein set forth, the Lender hereby agrees to lend to the
Company on the Closing Date and thereafter up to $166,000,000 in the
aggregate (the "Loan") consisting of $83,000,000 of 7-year Tranche
advances and $83,000,000 of 10-year Tranche advances. The Lender's
commitment to make the Loan to the Company pursuant to this
Section 2.1 is herein called the "Loan Commitment."
B. Notice of Borrowing. When the Company desires to borrow under
this Agreement, it shall deliver to the Collateral Agent a Notice of
Borrowing no later than 11:00 a.m. (New York time), at least one
Business Day in advance of the Closing Date or such other date as
shall be agreed to by the Lender and the Trustee. The Notice of
Borrowing shall specify the amount of each Tranche and the applicable
date of borrowing (which shall be a Business Day).
C. Disbursement of Funds. No later than 3:00 p.m. (New York time) on
the Closing Date, the Lender promptly will make available to the
Company by depositing to its account at the Payment Office the
aggregate of the amount of the Loan to be made on such Closing Date.
D. Notes. The Company shall execute and deliver to the Lender on the
Closing Date two Notes dated the Closing Date, one substantially in
the form of Exhibit I annexed hereto with appropriate insertions to
evidence the maximum amount of the 7-year Tranche of Loan which may be
made hereunder by the Lender and the other substantially in the form
of Exhibit I annexed hereto with appropriate insertions to evidence
the maximum amount of 10-year Tranche of the Loan which may be made by
the Lender hereunder.
E. Scheduled Payments of Loan.
(i) One of the Other Loan Agreements relates to the Mortgaged Rig
Deepwater IV, which Mortgaged Rig is presently under construction
pursuant to a construction contract and which has an expected
completion date during the third calendar quarter of 2000. Upon
completion of the Mortgaged Rig Deepwater IV, the Company is required
to grant a Lien on such Mortgaged Rig pursuant to a Mortgage. Upon
the filing of the Mortgage for the Mortgaged Rig Deepwater IV, the
Company and the Lender agree that the $14,850,000 of the 7-year
Tranche and $14,850,000 of the 10-year Tranche will be exchanged for
additional advances under the Other Loan Agreement relating to the
Mortgaged Rig Deepwater IV in an aggregate principal amount of
$29,700,000.
(ii) The Company shall pay on or before 10:00 a.m. on the date of the
final Maturity of the 7-year Tranche of the Loan all of the principal
amount of the 7-year Tranche remaining outstanding, which amount will
be $83,000,000 principal amount of the Loan, reduced by any previous
prepayments of principal made on the 7-year Tranche of the Loan to the
extent that such payments have been allocated pursuant to the
provisions of Section 2.3 hereof and the Indenture to the 7-year
Secured Notes, together with accrued and unpaid interest, fees and a
pro rata portion of the amount of the Special Interest and Additional
Amounts, if any, due on the 7-year Secured Notes. The Company shall
pay on or before 10:00 a.m. on the date of the final Maturity of the
10-year Tranche all of the principal amount of the 10-year Tranche
then remaining outstanding, reduced by any previous prepayments of
principal made on the 10-year Tranche of the Loan to the extent that
such payments have been allocated pursuant to the provisions of
Section 2.3 hereof and the Indenture to the 10-year Secured Notes,
together with accrued and unpaid interest fees and a pro rata portion
of the amount of the Special Interest and Additional Amounts, if any,
due on the 10-year Secured Notes. Such payments shall be made
directly to the Trustee for deposit in the Issuer Escrow Account
established pursuant to the Issuer Escrow Agreement.
F. Termination of Loan Commitment. The Loan Commitment hereunder shall
terminate on the earlier (i) the Stated Maturity (whether by
acceleration, redemption, purchase or otherwise) of the Secured Notes
pursuant to the terms of the Indenture or (ii) May 14, 1999, if no
portion of the Loan has been made on or before such date (other than
as a result of failure of the Lender to fulfill its obligations
hereunder).
G. Satisfaction by Payments on the Guarantee. Pursuant to the
Indenture, the Company will guarantee the due and punctual payment of
the principal of, premium, if any, and interest on, and all other
amounts payable under, the Secured Notes (including any Additional
Amounts payable upon redemption, in respect thereof) when and as the
same shall become due and payable, whether at Stated Maturity, by
declaration of acceleration or otherwise. To the extent that the
Company makes a payment on the Guarantee, it will be deemed to have
made a payment on the Issuer Loans then outstanding, such payments to
be allocated pro rata to each of Tranches of the Loan and pro rata to
the Loan and the Other Loans.
2.2 Interest on the Loans.
A. Rate of Interest. The 7-year Tranche of the Loan shall bear interest
on the unpaid principal amount thereof from the date made through
Maturity for the 7-year Tranche (whether by prepayment, acceleration
or otherwise) at a rate equal to 11% per annum plus 2 basis points per
annum and the 10-year Tranche of the Loan shall bear interest on the
unpaid principal amount thereof from the date made through Maturity
for the 10-year Tranche (whether by prepayment, acceleration or
otherwise) at a rate equal to 11 3/8% per annum plus 2 basis points per
annum.
B. Special Interest. The Lender and the Company have entered into a
Registration Rights Agreement (the "Registration Rights Agreement")
dated March 26, 1999 with Donaldson, Lufkin & Jenrette Securities
Corporation for the benefit of the Holders of the Secured Notes, in
which the Lender and the Company have agreed to: (A) file a
registration statement within 60 days after the closing date of the
offering of Secured Notes for an offer to exchange Secured Notes of
each series for debt securities of that series with identical terms
(except for transfer restrictions); (B) use their best efforts to
cause the registration statement to become effective within 150 days
after the closing date of the offering of the Secured Notes; and
(C) complete the registered exchange offer within 180 days after the
closing date of the offering of the Secured Notes. Under certain
circumstances, the Lender and the Company may be required to file a
shelf registration statement for the Secured Notes registering the
resale of the Secured Notes. If the Lender and the Company do not
comply with their obligations under the Registration Rights Agreement,
the Lender will be required to pay additional interest ("Special
Interest") specified in Section 5 of the Registration Rights
Agreement. The Company will pay on each date that the Lender pays
Special Interest to the Holders of the Secured Notes as Special
Interest on the Loan an amount equal to the percentage of Special
Interest, if any, which the Lender owes to the Holders of the Secured
Notes that the principal amount of the Loan bears to the total
aggregate principal amount of the Loan and all Other Loans then
outstanding. Such payment shall be paid directly to the Trustee for
deposit into the Issuer Escrow Account.
Notwithstanding any provisions of this Section 2.2 or any other
provision herein, in no event will the combined sum of interest (cash
or otherwise) on the Loan exceed the maximum amount permitted by
applicable law.
C. Interest Payments. Interest (including Special Interest, if any,
and Additional Amounts, if any) shall be payable semi-annually on
March 15 and September 15 of each year, commencing September 15, 1999
but in no event to exceed the maximum permitted by applicable law.
All payments of interest on the Loan shall be made on or before 10:00
a.m. (New York time) on the date of payment and shall be paid directly
to the Trustee for deposit into the Issuer Escrow Account.
D. Post-Maturity Interest. Any principal payments on the Loan not paid
when due and, to the extent permitted by applicable law, any interest
payment on the Loan not paid when due, in each case whether at Stated
Maturity, by notice of prepayment, by acceleration or otherwise, shall
thereafter bear interest payable upon demand at a rate of interest
otherwise payable under this Agreement for the Loan but in no event to
exceed the maximum interest rate permitted by applicable law.
E. Computation of Interest. Interest on the Loan shall be computed on
the basis of a 360-day year of twelve 30-day months.
2.3 Redemptions.
A. Redemption upon Loss of the Mortgaged Rig. If an Event of Loss
occurs at any time with respect to the Mortgaged Rig attributable to
the Loan, the Company shall apply funds in an amount (the "Loss
Redemption Amount") equal to the principal amount of the Loan
outstanding on the date (the "Loss Date") on which such Event of Loss
was deemed to have occurred, together with all accrued and unpaid
interest (including Special Interest, if any, and Additional Amounts,
if any) thereon, to the prepayment of the Loan. If an Event of Loss
occurs at any time with respect to any Other Mortgaged Rig, the
Indenture and the applicable Other Loan Agreement require that the
Company shall apply funds to the principal amount of the applicable
Other Loan secured by the Other Mortgaged Rig outstanding on the Loss
Date for such other Mortgaged Rig, together with all accrued and
unpaid interest (including Special Interest, if any, and Additional
Amounts, if any) thereon, to the payment of such Other Loan. If a
Default under the Indenture shall have occurred and be continuing at
the time of the receipt of the Event of Loss Proceeds with respect to
such Other Mortgaged Rig, the Indenture requires, and the Company
hereby agrees, that it shall prepay the Loan and the remaining Other
Loans on a pro rata basis in an aggregate amount equal to the excess
of the Net Event of Loss Proceeds over the Loss Redemption Amount, if
any, together with all accrued and unpaid interest (including Special
Interest, if any, and Additional Amounts, if any) thereon for the
Other Loan which is secured by such Other Mortgaged Rig. All payments
on the Loan shall be allocated on a pro rata basis between the
Tranches and shall be made directly to the Trustee for deposit into
the Issuer Escrow Account.
B. Redemption upon Sale of the Mortgaged Rig. If the Mortgaged Rig or
the Capital Stock of a Subsidiary Guarantor then owning the Mortgaged
Rig is sold in compliance with the terms of the Indenture, the Company
shall apply funds in an amount (the "Sale Redemption Amount") equal to
the principal amount of the Loan secured by the Mortgaged Rig on the
date of such sale (the "Sale Date"), together with all accrued and
unpaid interest (including Special Interest, if any, and Additional
Amounts, if any thereon, plus any additional amounts required by the
Lender to redeem the Secured Notes to the extent required by
Section 3.9 of the Indenture, to the prepayment of the Loan. If any
Other Mortgaged Rig or the Capital Stock of a Subsidiary Guarantor
then owning an Other Mortgaged Rig is sold in compliance with the
terms of the Indenture, the Company shall apply funds equal to the
applicable Other Loan secured by the Other Mortgaged Rig outstanding
on the Sale Date for such Other Mortgaged Rig, together with all
accrued and unsecured interest (including Special Interest, if any,
and Additional Amounts, if any) thereon, to the payment of such Other
Loan. If a Default under the Indenture shall have occurred and be
continuing at the time of receipt of the cash consideration with
respect to such Other Mortgaged Rig or Capital Stock of the Subsidiary
Guarantor owning such Other Mortgaged Rig, the Indenture requires, and
the Company hereby agrees, that it shall also be required to prepay
the Loan and the remaining Other Loans on a pro rata basis in an
aggregate amount equal to the excess of such Net Available Cash
attributable to such Sold Mortgaged Rig over such Sale Redemption
Amount. Such payments on the Loan and the Other Loans pursuant hereto
shall be respectively allocated between the Tranches of the Loan and
the Other Loans on a pro rata basis and shall be made directly to the
Trustee for deposit into the Issuer Escrow Account.
C. Other Redemptions.
(i) Redemptions to Fund Optional Redemptions of the 10-year Secured
Notes. Under the terms of the Indenture, on or after March 15, 2004,
the 10-year Secured Notes will be redeemable, at the Lender's option,
in whole or in part, at any time or from time to time, upon not less
than 30 nor more than 60 days' prior notice to the Holders of the 10-
year Secured Notes, at the following Redemption Prices (expressed in
percentages of principal amount), plus accrued and unpaid interest
(including Special Interest, if any, and Additional Amounts, if any)
to the Redemption Date, if redeemed during the 12-month period
commencing on March 15 of the years set forth below.
Redemption
Period Price
2004 105.6875%
2005 103.7917
2006 101.8958
2007 and thereafter 100.0000
The Company shall prepay the 10-year Tranche of the Loan and
of the Other Loans, in whole or in part, to provide funds for
such redemption. Any prepayments by the Company on the Loan and
the Other Loans required to be made to provide funds for the
Lender to make such a redemption shall be made on this Loan and
the Other Loans on a pro rata basis. All payments on the Loan
and the Other Loans pursuant hereto shall be made directly to the
Trustee for deposit into the Issuer Escrow Account.
(ii) Redemptions to Fund Optional Redemptions of the 7-year Secured
Notes. Under the terms of the Indenture, the 7-year Secured Notes
will be redeemable, at the Lender's option at any time in whole or
from time to time in part upon not less than 30 and not more than
60 days' prior notice mailed by first class mail to the Holders of the
7-year Secured Notes, on any date prior to Maturity at a price equal
to 100% of the principal amount thereof plus accrued and unpaid
interest (including Special Interest, if any, and Additional Amounts,
if any) to the Redemption Date plus the Make-Whole Premium applicable
to the 7-year Secured Notes determined in the manner provided for in
Section 3.7 of the Indenture. The Company shall prepay the 7-year
Tranche of the Loan and of the Other Loans in whole or in part to
provide funds for such redemption. Any prepayments by the Company on
the Loan and the Other Loans required to be made to provide funds for
the Lender to make such a redemption shall be made on the Loan and the
Other Loans on a pro rata basis. All payments on the Loan and the
Other Loans pursuant hereto shall be made directly to the Trustee for
deposit into the Issuer Escrow Account.
D. Excess Proceeds Offers. The Indenture provides in Section 3.10
thereof that if, as of the first day of any calendar month, the
aggregate amount of Sale Excess Proceeds and Loss Excess Proceeds
exceeds 10% of consolidated total assets of the Company, and if the
aggregate amount of Sale Excess Proceeds and Loss Excess Proceeds in
excess of 10% of consolidated total assets of the Company that has not
theretofore been subject to an Excess Proceeds Offer (as defined
below) (the "Excess Proceeds Offer Amount"), totals at least $10
million, the Lender must, not later than the fifteenth Business Day of
such month, make an offer ( an "Excess Proceeds Offer") to purchase
from the Holders of the Secured Notes, pursuant to and subject to the
conditions contained in the Indenture, and from Holders of the New
Senior Notes, pursuant to provisions of the New Senior Note Indenture,
Secured Notes at a purchase price equal to 100% of their principal
amount, plus any accrued interest (including Additional Amounts and
Special Interest, if any) to the date of purchase and New Senior Notes
at a purchase price equal to 100% of their principal amount, plus any
accrued interest (including Special Interest, if any) to the date of
purchase in an aggregate principal amount equal to the Excess Proceeds
Offer Amount (an "Excess Proceeds Payment"). If the Lender is ever
required pursuant to Section 3.10 of the Indenture to make an Excess
Proceeds Offer to the Holders of the Secured Notes to purchase from
such Holders their Secured Notes, and to the Holders of Senior Notes
to purchase from such Holders their New Senior Notes, the Indenture
provides, and the Company agrees, that the Company will prepay the
Loan and the Other Loans on a pro rata basis to permit the Lender to
purchase any Secured Notes validly tendered pursuant to an Excess
Proceeds Offer. All payments on the Loan shall be allocated between
the appropriate Tranches of the Loan; and all payments on the Loan and
the Other Loans pursuant hereto shall be made directly to the Trustee
for deposit into the Issuer Escrow Account.
E. Change of Control. If the Lender is ever required to make pursuant
to the provisions of Section 4.8 of the Indenture a Change of Control
Offer to the Holders of the Secured Notes at a purchase price in cash
equal to 101% of the principal amount thereof plus accrued and unpaid
interest (including Additional Amounts and Special Interest, if any)
thereon, the Indenture provides, and Company agrees, that the Company
will prepay the Loan and the Other Loans on a pro rata basis at a
redemption price equal to 101% of the principal amount hereof being
repaid, plus accrued and unpaid interest, Special Interest, if any,
and Additional Amounts, if any, thereon, in order to provide funds
sufficient to permit the Lender to purchase any Secured Notes validly
tendered pursuant to the foregoing offer to purchase Secured Notes
upon a Change of Control. All payments on the Loan shall be allocated
between the appropriate Tranches of the Loans and all payments on the
Loan and the Other Loans pursuant hereto shall be made directly to the
Trustee for deposit into the Issuer Escrow Account.
F. Notice. The Company shall notify the Lender and the Trustee of any
prepayment to be made pursuant to this Section 2.3 at least two
Business Days prior to such prepayment date.
G. Determination of Amounts of the Tranches Subject to Such
Redemptions. The Lender will submit a written determination to the
Trustee for its approval of the amount (including the pro rata
allocations between the Tranches of the Loan and between the Loan and
the Other Loans) with respect to any such redemption. The Trustee
shall approve or disapprove such allocations in its sole discretion
and such decision shall be conclusive, absent manifest error. A
certificate of the Lender setting forth such determination, with the
written approval of the Trustee thereon, shall be delivered to the
Company at least one Business Day prior to the payment date.
H. Company's Mandatory Prepayment Obligation; Application of
Prepayments. All prepayments shall include payment of accrued
interest (including Special Interest and Additional Amounts, if
applicable) on the principal amount so prepaid and shall be applied to
payment of interest before application to principal.
I. Manner and Time of Payment. Unless otherwise expressly set forth
herein, all payments of principal and interest hereunder and under the
Notes by the Company shall be made without defense, set-off or
counterclaim and in same-day funds and delivered to the Trustee for
deposit into the Issuer Escrow Account, unless otherwise specified,
not later than 10:00 a.m. (New York time) on the date due at the
Payment Office; funds received by the Trustee after that time shall be
deemed to have been paid by the Company on the next succeeding
Business Day.
J. Payments on Non-Business Days. Whenever any payment to be made
hereunder or under the Notes shall be stated to be due on a day which
is not a Business Day, the payment shall be made on the next
succeeding Business Day and such extension of time shall be included
in the computation of the payment of interest hereunder or under the
Loan.
2.4 Use of Proceeds.
A. Loan. The proceeds of the Loan may be applied by the Company to
finance certain costs of acquiring, constructing, repairing and
improving the Mortgaged Rig and, to the extent that such costs have
already been paid, for general corporate purposes.
B. Margin Regulations. No portion of the proceeds of any borrowing
under this Agreement shall be used by the Company in any manner which
might cause the borrowing or the application of such proceeds to
violate the applicable requirements of Regulation U, Regulation T or
Regulation X of the Board of Governors of the Federal Reserve System
or any other regulation of the Board or to violate the Exchange Act,
in each case as in effect on the date or dates of such borrowing and
such use of proceeds.
2.5 Commitment Fee. The Company agrees to pay a commitment fee for the
period from and including the Closing Date to and including the date
of termination specified in Section 2.1.F. on the undrawn portion of
the Loan equal to the average of the daily excess of the Loan
Commitment over the aggregate principal amount of the Loan outstanding
multiplied by 7% per annum, such commitment fee to be calculated on
the basis of a 360-day year consisting of twelve 30-day months and to
be payable semi-annually in arrears on each March 15 and September 15,
commencing September 15, 1999.
SECTION 3 CONDITIONS
3.1 Conditions to Initial Advances on the Loan. The obligation of the
Lender to make the initial advance on the Loan is subject to prior or
concurrent satisfaction of each of the following conditions:
A. On or before the Closing Date, all corporate and other proceedings
taken or to be taken in connection with the transactions contemplated
hereby and all documents incidental thereto not previously found
acceptable by the Lender and the Trustee shall be reasonably
satisfactory in form and substance to the Lender and the Trustee, and
the Lender and the Trustee shall have received the following items,
each of which shall be in form and substance satisfactory to the
Lender and the Trustee and, unless otherwise noted, dated the Closing
Date:
(i) a certified copy of the Company's charter, together with a
certificate of status, compliance, good standing or like certificate
with respect to the Company issued by the appropriate government
officials of the jurisdiction of its incorporation and of each
jurisdiction in which it owns any material assets or carries on any
material business, each to be dated a recent date prior to the Closing
Date;
(ii) a copy of the Company's bylaws, certified as of the Closing Date
by its Secretary or one of its Assistant Secretaries;
(iii) resolutions of the Company's Board of Directors approving and
authorizing the execution, delivery and performance of this Agreement,
the Notes, the Mortgage, each of the other Loan Documents, the
Indenture and any other documents, instruments and certificates
required to be executed by the Company in connection herewith and
therewith and approving and authorizing the execution, delivery and
payment of the Loan, each certified as of the Closing Date by its
Secretary or one of its Assistant Secretaries as being in full force
and effect without modification or amendment;
(iv) signature and incumbency certificates of the Company's officers
executing this Agreement, the Other Loan Documents and the Notes;
(v) executed copies of this Agreement and the Notes substantially in
the form of Exhibit I annexed hereto executed in accordance with
Section 2.1C drawn to the order of the Lender and with appropriate
insertions;
(vi) an originally executed Notice of Borrowing substantially in the
form of Exhibit II annexed hereto, signed by the President or a Vice
President of the Company on behalf of the Company and delivered to the
Lender; and
(vii) originally executed copies of one or more favorable written
opinions of Gardere & Wynne, special counsel for the Company,
substantially in the form of the Exhibit III hereto and addressed to
the Lender, the Trustee and the Initial Purchaser, and such other
opinions of counsel and such certificates or opinions of accountants,
appraisers or other professionals as the Lender, the Trustee or the
Initial Purchaser shall have reasonably requested.
B. The Lender shall have received a fully executed Mortgage in the
form of Exhibit IV hereto, which has been filed in all appropriate
jurisdictions and the Lien provided in Section 5.7 shall have been
perfected in all appropriate United States jurisdictions.
C. On or before the Closing Date, all authorizations, consents and
approvals necessary in connection with the Transactions shall have
been obtained and remain in full force and effect and all applicable
waiting periods, if any, under law applicable to the Transactions
shall have expired without any action being taken by any competent
authority (including without limitation, any Tribunal) which
restrains, prevents or imposes materially adverse conditions upon the
completion of the Transactions or the financing thereof and evidence
of the receipt of such authorizations, consents and approvals
satisfactory to the Lender and the Trustee shall have been delivered
to the Lender and the Trustee.
D. On or before the Closing Date, the Indenture and the Purchase
Agreement shall have been executed and delivered by all parties
thereto. No default or event of default shall have occurred under the
Indenture and the Purchase Agreement, all conditions to the execution
delivery and authentication of the Secured Notes thereunder shall have
been satisfied under the Indenture, and all conditions to the purchase
of the Secured Notes by the Initial Purchaser under the Purchase
Agreement have been satisfied or waived by the Initial Purchaser.
E. Simultaneously with the making of the Loan by the Lender, the
Company shall have delivered to the Lender and the Trustee an
Officers' Certificate from the Company in form and substance
satisfactory to the Lender and the Trustee to the effect that (i) the
representations ad warranties of the Company in Section 4 are true,
correct and complete in all material respects on and as of the Closing
Date to the same extent as though made on and as of that date, and
(ii) on or prior to the Closing Date, the Company has performed and
complied with in all material respects all covenants and conditions to
be performed and observed by the Company on or prior to the Closing
Date and
F. No event shall have occurred and be continuing or would result from
the consummation of the borrowing contemplated by the Notice of
Borrowing which would constitute and Event of Default, a Potential
Event of Default or a Default.
G. No order, judgment or decree of any court, arbitrator or
governmental authority shall purport to enjoin or restrain the Lender
from making the Loan.
H. The making of the Loan in the manner contemplated in this Agreement
shall not violate the applicable provisions of Regulation T, U or X of
the Board of Governors of the Federal Reserve Board or any other
regulation of the Board.
3.2 Conditions to Subsequent Advance on the Loan. The obligation of
the Lender to make a subsequent advance on the Loan is subject to the
prior or concurrent satisfaction of each of the following conditions:
A. The Lender and the Trustee shall have received in form and substance
satisfactory to the Lender and the Trustee and dated the date of such
advance an originally executed Notice of Borrowing substantially in
the form of Exhibit II annexed hereto, signed by the President or a
Vice President of the Company on behalf of the Company and delivered
to the Lender.
B. No event shall have occurred and be continuing or would result from
the consummation of the borrowing contemplated by the Notice of
Borrowing which would constitute an Event of Default, a Potential
Event of Default or a Default.
C. No order, judgment or decree of any court, arbitrator or
governmental authority shall purport to enjoin or restrain the Lender
from making the Loan.
D. The making of the Loan in the manner contemplated in this Agreement
shall not violate the applicable provisions of Regulation T, U or X of
the Board of Governors of the Federal Reserve Board or any other
regulation of the Board.
E. Simultaneously with the making of the advance on the Loan by the
Lender, the Company shall have delivered to the Lender and the Trustee
an Officers' Certificate from the Company in form and substance
satisfactory to the Lender and the Trustee to the effect that (i) the
representations and warranties of the Company in Section 4 are true,
correct and complete in all material respects on and as of the date of
such advance to the same extent as though made on and as of that date,
and (ii) on or prior to the date of such advance, the Company has
performed and complied with in all material respects all covenants and
conditions to be performed and observed by the Company on or prior to
the date of such advance.
SECTION 4 REPRESENTATIONS AND WARRANTIES
In order to induce the Lender to enter into this Agreement and to
make the Loan, the Company represents and warrants to the Lender that,
at the time of execution hereof and after consummation of the making
of the Loan and the Transactions, the following statements are true,
correct and complete:
4.1 Organization and Good Standing; Capitalization. The Company is a
corporation duly organized and existing and in good standing under the
laws of its jurisdiction of incorporation. The Company has the
corporate power and authority to own and operate its properties and to
carry on its business as now conducted and as proposed to be conducted
and is duly qualified as a foreign corporation and in good standing in
all jurisdictions in which it is doing business, except where failure
to be so qualified or in good standing, singly or in the aggregated,
has not had and will not have a Material Adverse Effect.
4.2 Authorization and Power. The Company has the corporate power and
requisite authority, and has taken all corporate action necessary, to
consummate the Transactions and to execute, deliver and perform its
obligations under this Agreement, the Mortgage, the other the Loan
Documents, Indenture and each other document and instrument to be
delivered in connection with the Transactions executed or to be
executed by it and to issue the Notes.
4.3 No Conflicts or Consents.
A. The execution and delivery of the Loan Agreement, the Notes, the
Mortgage, the other Loan Documents and each other document to be
executed and delivered in connection with the Transactions, the
consummation of each of the transactions herein or therein
contemplated, the compliance with each of the terms and previsions
hereof or thereof, and the issuance, delivery and performance of the
Notes, this Agreement, the Mortgage and the Indenture, do not and will
not (i) violate any provision of any law or any governmental rule or
regulation applicable to the Company, its Certificate of Incorporation
or Bylaws or any order, judgment or decree of any court or other
agency of government binding on it, (ii) conflict with, result in a
breach of or constitute (with due notice or lapse of time or both) a
default under any Contractual Obligation of the Company which could
reasonably be expected to result in a Material Adverse Effect, (iii)
result in or require the creation or imposition of any Lien upon any
of the properties or assets of the Company (other than any Liens
created under this Agreement and the Other Loan Agreements), (iv)
require any approval of stockholders or any approval or consent of any
Person under any Contractual Obligation of the Company except for such
approvals or consents which will be obtained on or before the Closing
Date and disclosed in writing to Lender, the Trustee and the Initial
Purchaser or such approvals or consents the failure to obtain which
could not reasonably be expected to singly or in the aggregate result
in a Material Adverse Effect.
B. No consent, approval, authorization or order of any Tribunal or
other Person is required in connection with the execution and delivery
by the Company of this Agreement, the Loan Documents or any other
document or instrument to be delivered in connection with the
Transactions or the consummation of the transactions contemplated
hereby or thereby, other than any such consent, approval,
authorization or order which has been obtained and remains in full
force and effect or which has been waived in writing by the Lender or
the failure of which to obtain would not, singly or in the aggregated,
have a Material Adverse Effect.
4.4 Enforceable Obligations. Each of this Agreement, the Notes, the
Mortgage, the other Loan Documents, and each other document or
instrument to be delivered in connection therewith has been duly
authorized; each of this Agreement, the Notes, the Mortgage, the Other
Loan Documents and each other document or instrument to be delivered
in connection therewith to be executed and delivered on or prior to
the Closing Date has been duly executed and delivered by the Company
and each of this Agreement, the Notes, the Mortgage, the Other Loan
Documents and each other document or instrument to be delivered in
connection therewith to be executed and delivered on or prior to the
Closing Date is, and each of this Agreement, the Notes, the Mortgage
and the other Loan Documents to be executed and delivered after the
Closing Date will be, upon such execution and delivery, the legal,
valid and binding obligations of the Company, enforceable in
accordance with their respective terms, except to the extent that the
enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization or similar laws affecting the enforcement
of creditors' rights generally or by general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law)
4.5 Properties; Liens. The Company has good and marketable title to
the Mortgaged Rig, the equipment purchased and paid for by the Company
to be installed or used thereon and the Other Mortgaged Rigs to the
extent specified in the Other Loan Agreements. Except as specified in
Schedule 4.5 or as permitted by this Agreement, the Mortgaged Rig and
such equipment are so owned free and clear of Liens.
4.6 No Default. No event has occurred and is continuing which
constitutes a Default, a Potential Event of Default or an Event of
Default.
4.7 Use of Proceeds; Margin Stock, etc. The proceeds of the Loan will
be used solely for the purposes specified herein. None of such
proceeds will be used for the purpose of purchasing or carrying any
Margin Stock within the meaning of the applicable provisions of
Regulation T, U or X, or for the purpose of reducing or retiring any
Indebtedness which was originally incurred to purchase or carry a
Margin Stock or for any other purpose which might constitute this
transaction a "purpose credit" within the meaning of the applicable
provisions of Regulation T, U or X. The Company has not taken nor
will it take any action which might cause any of the Loan Documents to
violate the applicable provisions of Regulation T, U or X, or any
other regulation of the Board of Governors of the Federal Reserve
System.
4.8 Survival of Representations and Warranties. All representations
and warranties in the Loan Documents shall survive delivery of the
Notes and the making of the Loan and shall continue until one year
after repayment of the Notes and the Obligations, and any
investigation at any time made by or on behalf of the Lender shall not
diminish the Lender's right to rely thereon.
SECTION 5 COVENANTS
5.1 Indenture Covenants. Each of the covenants conferred in the
Indenture applicable to the Company and its Restricted Subsidiaries
are incorporated herein by reference. The Company covenants and
agrees that, until the Loan and the Notes and all other amounts due
under this Agreement have been indefeasibly paid in full it shall
perform all covenants applied to it or any of its Restricted
Subsidiaries which are contained in the Indenture.
5.2 Reports of Defaults, Etc. The Company will deliver to each Lender
and the Trustee promptly upon, but in no event more than five (5)
Business Days after, any Officer's obtaining knowledge of any
condition or event which constitutes a Default, an Event of Default or
a Potential Event of Default, an Officer's Certificate specifying the
nature and period of existence of any such condition or event, or
specifying the notice given or the claim of Default, Event of Default,
Potential Event of Default, or the event or condition, and what action
the Company has taken, is taking and proposes to take with respect
thereto;
5.3 Payments in U.S. Dollars. All payments of any Obligations to be
made hereunder or under the Note by the Company or any other obligor
with respect thereto shall be made solely in U.S. Dollars or such
other currency as is then legal tender for public and private debts in
the United States of America.
5.4 Performance and Enforcement Under the Loan Documents. The Company
shall promptly perform all of its obligations under the Loan Documents
and each document and instrument related thereto or delivered in
connection with any thereof, in each case, to the extent within its
control. The Company shall (A) diligently and in good faith promptly
pursue the performance of each other party to each such document, and
(B) diligently seek the enforcement of all rights and remedies under
each such document.
5.5 Liens. The Company shall not, nor shall it cause or permit any of
its Restricted Subsidiaries to, directly or indirectly, create, incur,
assume or permit to exist, any Lien on or with respect to any property
or asset (including the Mortgaged Rig) of the Company or of any of its
Restricted Subsidiaries, whether now owned or hereafter acquired, or
assign or otherwise convey any right to receive any income or profits
therefrom, or file or permit the filing of, or permit to remain in
effect, any financing statement or other similar notice of any Lien
with respect to any such property, asset, income or profits under the
Uniform Commercial Code of any State or under any similar recording or
notice statute, except Liens permitted by the Indenture and Liens
permitted by the Loan Documents.
5.6 Transfer of Mortgage Rig to a Restricted Subsidiary. The Company
shall not, nor shall the Company cause or permit any of its Restricted
Subsidiaries to, directly or indirectly, transfer the Mortgaged Rig to
any Subsidiary of the Company unless (i) such Subsidiary guarantees
all Obligations of the Company under this Agreement and executes a
Mortgage, (ii) the Liens of the Subsidiary's Mortgage are perfected
and enforceable, and (iii) such Subsidiary executes a Subsidiary
Guarantee pursuant to the Indenture.
5.7 Security Interest and Lien on Equipment. The Borrower hereby
grants a security interest and Lien in favor of the Lender and unto
the Lender's successors and assigns for the benefit of the Lender's
own proper use and benefit, as security for the Obligations now or in
the future, in and to the Equipment and the Mortgaged Rig.
SECTION 6 EVENTS OF DEFAULT
If any of the following conditions of events ("Events of Default")
shall occur and be continuing:
6.1 Failure To Make Payments When Due. Failure to pay any installment
of principal including Premium of the Loan when due, whether at stated
maturity, by acceleration, by notice of prepayment or otherwise; or
failure to pay any interest (including Special Interest and Additional
Amounts) on the Loan or any other amount due under this Agreement
continued for 30 days; or
6.2 Default Under The Indenture. An Event of Default occurs and is
continuing under the Indenture; or
6.3 Other Loan Agreement. An Event of Default (as defined in an other
Loan Agreement) occurs and is continuing under such Other Loan
Agreement; or
6.4 Breach of Certain Covenants. Failure of the Company to perform or
comply with any covenant, term or condition contained in Sections 5.2
through 5.7 and Sections 7.3 through 7.5 of this Agreement; or
6.5 Breach of Warranty. Any representation, warranty or certification
made by the Company in any Loan Document or in any statement or
certificate at any time given by the Company in writing pursuant
hereto or thereto or in connection herewith or therewith shall be
false or incorrect in any material respect on the date as of which
made or deemed made; or
6.6 Other Defaults Under Agreement or Loan Documents. The Company
shall default in the performance of or compliance with any covenant,
term or condition contained in this Agreement or the other Loan
Documents (other than those covered by Sections 5.2 through 5.7 and
such default shall not have been remedied or waived in accordance with
Section 7.6 of this Agreement within 30 days after the date of written
notice of such default from the Lender, the Collateral Agent, the
Trustee or the Holder or Holders of not less than 25% in aggregate
principal amount of the Secured Notes then outstanding; or
6.7 Involuntary Bankruptcy; Appointment of Custodian, etc. The entry
by a court having jurisdiction in the premises of (i) a decree or
order for relief in respect of the Company or any Significant
Subsidiary in an involuntary case or proceeding under U.S. bankruptcy
laws, as now or hereafter constituted, or any other applicable
Federal, state, or foreign bankruptcy, insolvency, or other similar
law or (ii) a decree or order adjudging the Company or any Significant
Subsidiary a bankruptcy or insolvent, or approving as properly filed a
petition seeking reorganization, arrangement, adjustment or
composition of or in respect of the Company or any Significant
Subsidiary under U.S. bankruptcy laws, as now or hereafter
constituted, or any other applicable Federal, state or foreign
bankruptcy, insolvency, or similar law, or appointing a custodian,
liquidator, assignee, trustee, sequestrator or other similar official
of the Company or any Significant Subsidiary or of any substantial
part of the Property or assets of the Company or any Significant
Subsidiary, or ordering the winding up or liquidation of the affairs
of the Company or any Significant Subsidiary, and the continuance of
any such decree or order for relief or any such other decree or order
unstayed and in effect for a period of 60 consecutive days; or
6.8 Voluntary Bankruptcy; Appointment of a Custodian, etc. The
commencement by the Company or any Significant Subsidiary of a
voluntary case or proceeding under the U.S. bankruptcy laws, as now or
hereafter constituted, or any other applicable Federal, state or
foreign bankruptcy, insolvency or other similar law or of any other
case or proceeding to be adjudicated a bankrupt or insolvent; or
(ii) the consent by the Company or any Significant Subsidiary to the
entry of a decree or order for relief in respect of the Company or any
Significant Subsidiary in an involuntary case or proceeding under U.S.
bankruptcy laws, as now or hereafter constituted, or any other
applicable Federal, state, or foreign bankruptcy, insolvency or other
similar law or to the commencement of any bankruptcy or insolvency
case or proceeding against the Company or any Significant Subsidiary;
or (iii) the filing by the Company or any Significant Subsidiary of a
petition or answer or consent seeking reorganization or relief under
U.S. bankruptcy laws, as now or hereafter constituted, or any other
applicable Federal, state or foreign bankruptcy, insolvency or other
similar law; or (iv) the consent by the Company or any Significant
Subsidiary to the filing of such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator, assignee,
trustee, sequestrator or similar official of the Company or any
Significant Subsidiary or of any substantial part of the property or
assets of the Company or any Significant Subsidiary, or the making by
the Company or any Significant Subsidiary of an assignment for the
benefit of creditors; or (v) the admission by the Company or any
Significant Subsidiary in writing of its inability to pay its debts
generally as they become due; or (vi) the taking of corporate action
by the Company or any Significant Subsidiary in furtherance of such
action;
THEN (i) upon the occurrence of any Event of Default described in
the foregoing Section 6.7 or 6.8, all of the unpaid principal amount
of and accrued interest on the Loan and all other outstanding
Obligations shall automatically become immediately due and payable,
without presentment, demand, protest, waiver of notice of intent to
accelerate and waiver of notice of such acceleration or notice of any
other kind or other requirements of any kind, all of which are hereby
expressly waived by the Company, and Obligations and the Loan
Commitment of the Lender hereunder shall thereupon terminate, and
(ii) upon the occurrence of any other Event of Default, the Lender
shall, upon written notice of the Lender, to the Company, upon written
notice of the Trustee or the Collateral Agent to the Company and the
Lender, or upon written notice of a Holder or Holders of the Secured
Note or Notes, to the Company, the Lender, the Collateral Agent and
the Trustee, declare all of the unpaid principal amount of and accrued
interest on the Loan and all other outstanding Obligations to be, and
the same shall forthwith become, due and payable, and the obligations
and Loan Commitments of the Lender hereunder shall thereupon
terminate; provided, however, that upon the occurrence of an Event of
Default described in Section 6.4 of this Agreement or an "event of
default" under Section 6.4 of any Other Loan Agreement, the Lender
shall not declare the Obligations hereunder to be due and payable for
a period of 60 days after notice of the occurrence of such Event of
Default or "event of default." Nevertheless, if at any time after
acceleration of the Maturity of the Loan, the Company shall pay all
arrears of interest and all payments on account of the principal
thereof which shall have become due otherwise than by acceleration
(with interest on principal and, to the extent permitted by law, on
overdue interest, at the rates specified in this Agreement or the
Notes) and all Events of Default and Potential Events of Default
(other than non-payment of principal of and accrued interest on the
Loan and the Notes due and payable solely by virtue of acceleration)
shall be remedied or waived pursuant to Section 7.6, then the Lender
shall, upon receipt of the written notice from the Collateral Agent
and the Trustee of such remedy or waiver, by written notice to the
Company rescind and annul the acceleration and its consequences; but
such action shall not affect any subsequent Default, Event of Default
or Potential Event of Default or impair any right consequent thereon.
SECTION 7 MISCELLANEOUS
7.1 Pledges and Assignments of Loan and Note. The Lender shall have
the right at any time to sell, pledge, assign, transfer or negotiate
all or any portion of the Note or its Loan Commitment. The Company
acknowledges that the Lender will pledge its rights under this
Agreement, the Notes, the Mortgage and the Other Loan Documents to the
Collateral Agent pursuant to the Issuer Security Agreement to secure
the Lender's obligations under the Indenture and the Secured Notes.
7.2 Expenses. Whether or not the transactions contemplated hereby
shall be consummated, the Company, its successors and assigns agrees
to promptly pay (i) all the actual costs and expenses of preparation
of the Loan Documents and all the costs of furnishing all opinions by
counsel for the Company (including without limitation any opinions
requested by the Lender as to any legal matters arising hereunder),
and of the Company's performance of and compliance with all agreements
and conditions contained herein on its part to be performed or
complied with; (ii) the reasonable fees, expenses and disbursements of
counsel to the Lender and the Trustee and the Collateral Agent, their
successors and assigns (including allocated costs of internal counsel)
in connection with the negotiation, preparation, execution and
administration of the Loan Documents and the Loan hereunder, and any
amendments, modifications and waivers hereto or thereto and consents
to departures from the terms hereof and thereof; and (iii) after the
occurrence of an Event of Default, all costs and expenses (including
reasonable attorneys fees, including allocated costs of internal
counsel, and costs of settlement) incurred by the Lender, its
successors and assigns in enforcing any Obligations of or in
collecting any payments due from the Company hereunder or under the
Notes by reason of such Event of Default or in connection with any
refinancing or restructuring of the credit arrangements provided under
this Agreement in the nature of a "work-out" or of any insolvency or
bankruptcy proceedings.
7.3 Indemnity. In addition to the payment of expenses pursuant to
Section 7.2, whether or not the transactions contemplated hereby shall
be consummated, the Company agrees to indemnify, pay and hold the
Lender, the Collateral Agent, the Trustee and any Holder of the
Secured Notes and holder of the Notes, and each of their officers,
directors, employees, and agents, (collectively called the
"Indemnitees"), harmless from and against any all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits,
claims, costs, expenses and disbursements of any kind or nature
whatsoever (including, without limitation, the fees and disbursements
of counsel for such Indemnitees in connection with any investigative,
administrative or judicial proceeding commenced or threatened, whether
or not such Indemnitee shall be designated as a party thereto), which
may be suffered by imposed on, incurred by, or asserted against that
Indemnitee, in any manner resulting from, connected with, in respect
of, relating to or arising out of this Agreement, the Notes, the
Mortgage, the Lender's agreement to make the Loan or the use or
intended use of any of the proceeds of the Loan hereunder or the
Transactions (the "indemnified liabilities"); provided, however, that
the Company shall have no obligation to an Indemnitee hereunder with
respect to indemnified liabilities (i) to the extent such is finally
judicially determined to have resulted solely from (A) the gross
negligence or willful misconduct of that Indemnitee or (B) the failure
of such Indemnitee to perform its obligations under any Loan Document
or (C) such Indemnitee's violation of law or (ii) in connection with
the obligations of any Indemnitee under any Loan Document. To the
extend that the undertaking to indemnify, pay and hold harmless set
forth in the preceding sentence may be unenforceable because it is
violative of any law or public policy, the Company shall contribute
the maximum portion which it is permitted to pay and satisfy under
applicable law to the payment and satisfaction of all indemnified
liabilities incurred by the Indemnitees or any of them.
7.4 Additional Amounts. Except to the extent required by any applicable
law, regulation law, regulation or governmental policy, any and all
payments of, or in respect of the Loan, this Agreement, the Notes, any
Loan Document or any Secured Note shall be made free and clear of and
without deduction for or on account of any and all present or future
taxes, levies, imposts, deduction, charges or withholdings and all
liabilities with respect thereto imposed by Panama, The Bahamas, The
Marshall Islands or any other jurisdiction with which the Company or
any Subsidiary has some connection (including any jurisdiction (other
than the United States of America) from or through which payments
under this Agreement, the Notes, any Loan Document, the Guarantee or
the Secured Notes are made) or any political subdivision of or any
taxing authority in any such jurisdiction ("Panamanian Taxes,"
"Bahamian Taxes," "MI Taxes," or "Other Taxes," respectively). If the
Lender, the Company or any Subsidiary Guarantor shall be required by
law to withhold or deduct any Panamanian Taxes, Bahamian Taxes, MI
Taxes, or Other Taxes from or in respect of any sum payable under this
Agreement, the Notes, any Loan Document, the Guarantee or the Secured
Notes, the sum payable by the Company or such Subsidiary Guarantor, as
the case may be, thereunder shall be increased by the amount
("Additional Amounts") necessary so that after making all required
withholdings and deductions, Lender or any Holder or beneficial owner
of Secured Notes shall receive an amount equal to the sum that it
would have received had not such withholdings and deductions been
made; provided that any such sum shall not be paid in respect of any
Panamanian Taxes, Bahamian Taxes, MI Taxes or Other Taxes to a Holder
(an "Excluded Holder") (i) resulting from the beneficial owner of such
Secured Note carrying on business or being deemed to carry on business
in or through a permanent establishment or fixed base in the relevant
taxing jurisdiction or having any other connection with the relevant
taxing jurisdiction or any political subdivision thereof or any taxing
authority therein other than the mere holding or owning of such
Secured Note, being a beneficiary of the Guarantee or any applicable
Subsidiary Guarantee, the receipt of any income or payments in respect
of such Secured Note, the Loan, the Guarantee or any applicable
Subsidiary Guarantee or the enforcement of such Secured Note, the
Loan, the Guarantee or any applicable Subsidiary Guarantee, or (ii)
that would not have been imposed but for the presentation (where
presentation is required) of such Secured Note for payment more than
180 days after the date such payment became due and payable or was
duly provided for, whichever occurs later. The Lender, the Company or
the Subsidiary Guarantors, as applicable, will also (i) make such
withholding or deduction and (ii) remit the full amount deducted or
withheld to the relevant authority in accordance with applicable law,
and, in any such case, the Lender is required to furnish under the
Indenture to each Holder on whose behalf an amount was so remitted,
within 30 calendar days after the date the payment of any Panamanian
Taxes, Bahamian Taxes, MI Taxes or Other Taxes is due pursuant to
applicable law, certified copies of tax receipts evidencing such
payment by the Lender, the Company or the Subsidiary Guarantors, as
applicable. The Company will, upon written request of each Holder
(other than an Excluded Holder), reimburse each such holder for the
amount of (i) any Panamanian Taxes, Bahamian Taxes, MI Taxes or Other
Taxes so levied or imposed and paid by such Holder as a result of
payments made under or with respect to any Secured Notes, and (ii) any
Panamanian Taxes, Bahamian Taxes, MI Taxes or Other Taxes so levied or
imposed with respect to any reimbursement under the foregoing clause
(i) so that the net amount received by such Holder (net of payments
made under or with respect to such Secured Notes, the Loan, the
Guarantee or the applicable Subsidiary Guarantees) after such
reimbursement will not be less than the net amount the Holder would
have received if Panamanian Taxes, Bahamian Taxes, MI Taxes or Other
Taxes on such reimbursement had not been imposed.
At least 30 calendar days prior to each date on which any payment
under or with respect to the Secured Notes is due and payable, if the
Lender, the Company or the Subsidiary Guarantors, as applicable, will
be obligated to pay Additional Amounts with respect to such payment,
the Lender, the Company or the Subsidiary Guarantors, as applicable,
will deliver to the Trustee an officer's certificate stating the fact
that such Additional Amounts will be payable and the amounts will be
payable and the amounts so payable and will set forth such other
information necessary to enable the Trustee to pay such Additional
Amounts to Holders on the payment date.
7.5 Taxes and Other Taxes.
A. Any and all payments by the Company hereunder or under any of the
other Loan Documents shall be made free and clear of and without
deduction or withholding for any and all present or future Taxes,
unless such Taxes are required by law or the administration thereof to
be deducted or withheld and excluding (a) in the case of each Lender,
Taxes imposed on its net income and franchise taxes or taxes on gross
receipts and capital imposed on it by the jurisdiction under the laws
of the United States or any political subdivision thereof (all such
nonexcluded Taxes being hereinafter referred to as "Covered Taxes").
If the Company shall be required by Law or the administration thereof
to deduct or withhold any Covered Taxes from or in respect of any sum
payable hereunder or under any other Loan Documents, the sum payable
shall be increased as may be necessary so that after making all
required deductions or withholdings (including deductions or
withholdings applicable to additional amounts paid under this
paragraph), the Lender receives an amount equal to the sum it would
have received if no such deduction or withholding had been made;
(b) the Company shall make such deductions or withholdings; and
(c) the Company forthwith shall pay the full amount deducted or
withheld to the relevant taxation or other authority in accordance
with applicable Law.
B. The Company agrees to pay forthwith any present or future stamp
documentary taxes or any other excise or property taxes charges or
similar levies (all such taxes, charges and levies being herein
referred to as "Other Taxes") imposed by any jurisdiction (or any
political subdivision or taxing authority thereof or therein) which
arise from any payment made by the Company hereunder or under any of
the other Loan Documents or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement or any
of the other Loan Documents.
C. The Company agrees to indemnify the Lender for the full amount of
Covered Taxes or Other Taxes not deducted or withheld and paid by the
Company in accordance with Section 7.5(A) and (B) to the relevant
taxation or other authority and any Taxes other than Covered Taxes or
Other Taxes imposed by any jurisdiction on amounts payable by the
Company under this Section 7.6 paid by the Lender and any liability
(including penalties, interest and expenses) arising therefrom or with
respect thereto, whether or not any such Taxes or Other Taxes were
correctly or legally asserted. Payment under this indemnification
shall be made within 30 days from the date the Lender makes written
demand therefor. A certificate as to the amount of such Taxes or
Other Taxes and evidence of payment thereof submitted to the Company
shall be prima facie evidence, absent manifest error, of the amount
due from the Company to the Lender.
D. The Company shall furnish to the Lender the original or a certified
copy of a receipt evidencing any payment of Taxes or Other Taxes made
by the Company as soon as such receipt becomes available.
E. The provisions of this Section 7.5 shall survive the termination of
the Agreement and repayment of all Obligations.
7.6 Amendments and Waivers. No amendment, modification, termination or
waiver of any term or provision of this Agreement, of the Note, the
Mortgage or any Other Loan Document or consent to any departure by the
Company therefrom, shall in any event be effective without the prior
written concurrence of the Company, the Lender, the Collateral Agent
and the Trustee, and, upon the request of the Lender, the Collateral
Agent or the Trustee, the receipt of a written opinion of counsel of
the Company addressed to the Lender, the Collateral Agent and the
Trustee to the effect that such amendment, modification, termination,
waiver or consent does not violate or conflict with any of the terms
and provisions of the Indenture or any Contractual Obligations of the
Company.
7.7 Independence of Covenants. All covenants hereunder shall be given
independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be
permitted by an exception to, or be otherwise within the limitation
of, another covenant shall not avoid the occurrence of an Event of
Default or Potential Event of Default if such action is taken or
condition exists.
7.8 Notices. Unless otherwise provided herein, any notice or other
communications herein required or permitted to be given shall be in
writing and may be personally served, telecopied or sent by mail and
shall be deemed to have been given when delivered in person, upon
receipt of telecopy against receipt of answer back or four Business
Days after depositing it in the mail, registered or certified, with
postage prepaid and properly addressed; provided, however, that
notices shall not be effective until received. For the purposes
hereof, the addresses of the parties hereto (unless notice of a change
thereof is delivered as provided in this Section 7.8) shall be set
forth under each party's name on the signature pages hereto.
7.9 Survival of Warranties and Certain Agreements. All agreements,
representations and warranties made herein and in the other Loan
Documents shall survive the execution and delivery of this Agreement
and in the other Loan Documents, the making of the Loan hereunder and
the execution and delivery of the Notes or the Loan Documents and,
notwithstanding the making of the Loan, the execution and delivery of
the Notes and the other Loan Documents or any investigation made by or
on behalf of any party, shall continue in full force and effect. The
closing of the transactions herein contemplated shall not prejudice
any right of one party against any other party in respect of anything
done or omitted hereunder or in respect of any right to damages or
other remedies.
7.10 Failure or Indulgence Not Waiver; Remedies Cumulative. No failure
or delay on the part of the Lender or the holder of the Notes or the
Trustee in the exercise of any power, right or privilege or be
construed to be a waiver of any default or acquiescence therein, nor
shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or of any other
right, power or privilege. All rights and remedies existing under
this Agreement, the Notes or any other Loan Document are cumulative to
and not exclusive of any rights or remedies otherwise available.
7.11 Severability. In case any provision in or obligation under this
Agreement, under a Guarantee or the Notes shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any
way be affected or impaired thereby.
7.12 Headings. Section and Section headings in this Agreement are
included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given
any substantive effect.
7.13 Applicable Law. THIS AGREEMENT, EACH LOAN DOCUMENT OTHER THAN THE
MORTGAGE AND THE NOTES SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW.
7.14 Successors and Assigns; Subsequent Holders of Notes. This
Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of
the parties hereto and the successors and assigns of the Lenders. The
terms and provisions of this Agreement and each Loan Document shall
inure to the benefit of any assignee or transferee of the Notes
pursuant to Section 7.1, and in the event of such transfer or
assignment, the rights and privileges herein conferred upon the Lender
shall automatically extend to and be vested in such transferee or
assignee, all subject to the terms and conditions hereof. The
Company's rights or any interest therein hereunder may not be assigned
without the prior express written consent of the Lender and the
Trustee.
7.15 Counterparts; Effectiveness. This Agreement and any amendments,
waivers, consents or supplements may be executed in any number of
counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one
and the same instrument. This Agreement shall become effective upon
the execution of a counterpart hereof by each of the parties hereto.
7.16 Consent to Jurisdiction; Venue; Waiver of Jury Trial.
A. Any legal action or proceeding with respect to this Agreement, any
Note or any 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
parties to this Agreement hereby irrevocably accepts for itself and in
respect of its respective property, generally and unconditionally, the
jurisdiction of the aforesaid courts. Each of the parties to this
Agreement hereby further irrevocably waives any claim that any such
courts lack jurisdiction over itself, and agrees not to plead or
claim, in any legal action or proceeding with respect to this
Agreement, the Notes or Loan Documents brought in any of the aforesaid
courts, that any such court lacks jurisdiction over such party. Each
of the parties to this Agreement irrevocably consents to the service
of process in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to such
party, at its respective address for notices pursuant to Section 7.8,
such service to become effective 30 days after such mailing. To the
extent permitted by law, each of the parties to this Agreement hereby
irrevocably waives any objection to such service of process and
further irrevocably waives and agrees not to plead or claim in any
action or proceeding commenced hereunder or under the Notes or any
Loan Document that service of process was in any way invalid or
ineffective. Nothing herein shall affect the right of any party to
this Agreement to serve process in any other manner permitted by law
or to commence legal proceedings or otherwise proceed against any
party in any other jurisdiction.
B. Each of the parties to this Agreement hereby irrevocably waives any
objection which it may now or hereafter have to the laying of venue of
any of the aforesaid any of actions or proceedings arising out of or
in connection with this Agreement, the Notes or any of the Loan
Documents brought in the courts referred to in clause A above and
hereby further irrevocably waives and agrees not to plead or claim in
any such court that any such action or proceeding brought in any such
court has been brought in an inconvenient forum.
C. Each of the parties to this Agreement hereby irrevocably waives
all right to a trial by jury in any action, proceeding or counterclaim
arising out of or relating to this Agreement, the Notes or the Loan
Documents or the transactions contemplated hereby or thereby.
7.17 Waiver of Stay, Extension or Usury Laws. The Company covenants
(to the extent that it may lawfully do so) that it will not at any
time insist upon, plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law or any usury law or
other law that would prohibit or forgive the Company from paying all
or any portion of the principal of or interest on the Loan as
contemplated herein, wherever enacted, now or at the time hereafter in
force, or which may affect the covenants or the performance of this
Agreement and (to the extent that it may lawfully do so), the Company
hereby expressly waives all benefit or advantage of any such law, and
covenants that it will not hinder, delay or impede the execution of
any power herein granted to the Lender, but will suffer and permit the
execution of every such power as though no such law had been enacted.
7.18 Usury Savings Clause. It is the intention of the parties hereto
to comply with applicable usury laws (now or hereafter enacted);
accordingly, notwithstanding any provision to the contrary in this
Agreement, any Note, any of the other Loan Documents or any other
document related hereto or thereto, in no event shall this Agreement
or any such other document require the payment or permit the
collection of interest in excess of the maximum amount permitted by
such laws. If from any circumstances whatsoever, fulfillment of any
provision of this Agreement, any Note, any of the other Loan Documents
or of any other document pertaining hereto or thereto, shall involve
transcending the limit of validity prescribed by applicable law for
the collection or charging of interest, then, ipso facto, the
obligation to be fulfilled shall be reduced to the limit of such
validity, and if from any such circumstances the Lender shall ever
receive anything of value as interest or deemed interest by applicable
law under this Agreement, any Note, any of the other Loan Documents or
any other document pertaining hereto or otherwise an amount that would
exceed the highest lawful rate, such amount that would be excessive
interest shall be applied to the reduction of the principal amount
owing under the Loan or on account of any other indebtedness of the
Company, and not to the payment of interest, or if such excessive
interest exceeds the unpaid balance of principal of such indebtedness,
such excess shall be refunded to the Company. In determining whether
or not the interest paid or payable with respect to any indebtedness
of the Company to Lender under any specified contingency, exceeds the
highest lawful rate, the Company and the Lender shall, to the maximum
extent permitted by applicable law, (a) characterize any non-principal
payment as an expense, fee or premium rather than as interest,
(b) exclude voluntary prepayments and the effects thereof,
(c) amortize, prorate, allocate and spread the total amount of
interest thereon does not exceed the maximum amount permitted by
applicable laws, and/or (d) allocate interest throughout the full term
of such indebtedness so that interest between portions of such
indebtedness, to the end that no such portion shall bear interest at a
rate greater than that permitted by applicable law.
WITNESS the due execution hereof by the respective duly authorized
officers of the undersigned as of the date first written above.
COMPANY:
R&B FALCON CORPORATION
By:
Name: Robert Fulton
Title:Executive Vice President
Notice Address:
901 Threadneedle
Houston, TX 77079-2982
Telephone: (281) 496-5000
Telecopy: (281) 496-0285
LENDER:
RBF FINANCE CO.
By:
Name: Leighton Moss
Title: Vice President
Notice Address:
901 Threadneedle
Houston, TX 77079-2982
Telephone: (281) 496-5000
Telecopy: (281) 597-7556
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Exhibit I
R&B FALCON CORPORATION
SENIOR SECURED ___- YEAR TRANCHE PROMISSORY NOTE
New York, New York
$______________ March 26, 1999
FOR VALUE RECEIVED, R&B FALCON CORPORATION (the "Company"),
promises to pay to the order of RBF FINANCE CO. ("Payee"), the
principal amount of _________________________ Dollars ($_____________)
(or such lesser amount as shall equal the aggregate unpaid principal
amount of the __-year Tranche advances of the Loan) at the times
specified by the provisions of the Senior Secured Credit Agreement
dated as of March 26, 1999, as the same may at any time be amended,
modified or supplemented and in effect (the "Loan Agreement") between
the Company and the Lender.
The Company also promises to pay interest on the unpaid principal
amount hereof from the date hereof until paid in full at the rates and
at the times which shall be determined in accordance with the
provisions of the Loan Agreement.
This Note is issued pursuant to and entitled to the benefits of the
Loan Agreement, to which reference is hereby made for a more complete
statement of the terms and conditions under which the Loan evidenced
hereby was made and is to be repaid. Capitalized terms used herein
without definition shall have the meanings set forth in the Loan
Agreement.
The Senior Secured Credit Agreement dated as of March 26, 1999, as
the same may at any time be amended, modified or supplemented and in
effect (the "Loan Agreement") between the Company, the Lender named
therein, and United States Trust Company of New York, as Trustee.
All payments of principal and interest in respect of this Note
shall be made in lawful money of the United States of America in same
day funds to Payee at the office of United States Trust Company of New
York located at 114 West 47th Street, 25th Floor, New York, New York,
or at such other place in the State of New York as shall be designated
in writing for such purpose in accordance with the terms of the Loan
Agreement. Each of Payee and any subsequent holder of this Note
agrees, by its acceptance hereof, that before disposing of this Note
or any part hereof it will make a notation hereon of all principal
payments previously made hereunder and of the date to which interest
hereon has been paid; provided, however, that the failure to make a
notation of any payment made on this Note shall not limit or otherwise
affect the obligation of the Company hereunder with respect to
payments of principal or interest on this Note.
Whenever any payment on this Note shall be stated to be due on a
day which is not a Business Day, such payment shall be made on the
next succeeding Business Day and such extension of time shall be
included in the computation of the payment of interest on this Note.
This Note is subject to mandatory prepayment as provided in the
Loan Agreement and prepayment at the option of the Company as provided
in the Loan Agreement.
THE LOAN AGREEMENT AND THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK WITHOUT REGARD TO THE PRINCIPALS OF CONFLICTS OF LAWS.
Upon the occurrence of an Event of Default, the unpaid balance of
the principal amount of this Note, together with all accrued but
unpaid interest thereon, may become, or may be declared to be, due and
payable in the manner, upon the conditions and with the effect
provided in the Loan Agreement.
The terms of this Note are subject to amendment only in the manner
provided in the Loan Agreement.
No reference herein to the Loan Agreement and no provision of this
Note or the Loan Agreement shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of
and interest on this Note at the place, at the respective times, and
in the currency herein prescribed.
The Company promises to pay all costs and expenses, including all
attorneys' fees, all as provided in Section 7.2 of the Loan Agreement,
incurred in the collection and enforcement of this Note. The Company
and endorsers of this Note hereby consent to renewals and extensions
of time at or after the maturity hereof, without notice, and hereby
waive diligence, presentment, protest, demand and notice of every kind
and, to the full extent permitted by law, the right to plead any
statute of limitations as a defense to any demand hereunder.
IN WITNESS WHEREOF, the Company has caused this Note to be executed
and delivered by its duly authorized officer, as of the day and year
and at the place first above written.
R&B FALCON CORPORATION
By:
Name:
Title:
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EXHIBIT II
NOTICE OF BORROWING
The undersigned hereby certifies that he is the ________________
__________________ of R&B Falcon Corporation, a Delaware corporation (
the "Company"), and that as such he is authorized to execute this
Notice of Borrowing on behalf of the Company. With reference to that
certain Loan Agreement dated as of _______________, 1999 (as same may
be amended, modified, increased, supplemented and/or restated from
time to time, the "Agreement") entered into by and between the Company
and RBF Finance Co., and any other future holder of any Note issued
pursuant to the Agreement ("Lender"), the undersigned further
certifies, represents and warrants on behalf of the Company that all
of the foregoing statements are true and correct (each capitalized
term used herein having the same meaning given to it in the Agreement
unless otherwise specified):
(a)The Company requests that the Lender make an advance to the Company
on the 7-year Tranche of the Loan in the aggregate principal amount of
$_________________ and an advance to the Company on the 10-year
Tranche of the Loan in the aggregate principal amount of $__________
by no later than _______________. Immediately following such advance,
the aggregate outstanding balance of advances made on the 7-year
Tranche and the 10-year Tranche Loan shall equal $_______________ and
$___________, respectively.
(b)As of the date hereof, and as a result of the making of the
requested advance, no event shall have occurred and be continuing or
would result from the consummation of the borrowing contemplated by
the Notice of Borrowing which would constitute an Event of Default, a
Potential Event of Default or a Default.
(c)Borrower has performed and complied with all agreements and
conditions contained in the Agreement which are required to be
performed or complied with by Borrower before or on the date hereof
and, except as waived in writing or otherwise agreed to in writing by
the Lender, all of the conditions precedent set forth in Section 3.1
or 3.2, as applicable, of the Agreement under Conditions to Loan have
been satisfied.
(d)The representations and warranties of the Company contained in
Section 4 of the Agreement are true, correct and complete in all
material respects on and as of the date hereof to the same extent as
though made on and as of that date, and (ii) on or prior to the date
hereof, the Company has performed and complied with in all material
respects all covenants and conditions to be performed and observed by
the Company on or prior to the date hereof.
EXECUTED AND DELIVERED this _______ day of _____________, _____.
R&B FALCON CORPORATION
By:
Name:
Title:
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EXHIBIT III
FORM OF LEGAL OPINION
Opinions of Counsel that (i) the Company has duly
authorized, executed and delivered the Mortgage; (ii) the Mortgage
constitutes a legally binding obligation of the Company enforceable
against the Company in accordance with its terms (except as (i) the
enforceability thereof may be limited bankruptcy, insolvency or other
similar laws affecting creditors' rights, generally, and (ii) the
enforceability thereof may be limited by right of acceleration and the
availability of enforceable remedies may be limited by equitable
principles of general applicability, and subject to such other
exceptions, limitations or qualifications that are usual and customary
for such opinions) and (iii) the Mortgage constitutes a valid and
perfected first mortgage lien on the Mortgaged Rig.
- ----------------------------------------------------------------------
SCHEDULE 4.5
Title/Lien Exceptions
1. Statutory or inchoate liens for amounts not more than 30 days past
due or that are being contested in good faith.
EXHIBIT 10.7
[PEREGRINE VII]
====================================================================
SENIOR SECURED LOAN AGREEMENT
Dated as of
March 26, 1999
between
R&B FALCON CORPORATION,
as Borrower
and
RBF FINANCE CO.,
as Lender
=====================================================================
TABLE OF CONTENTS
Page
SECTION 1.DEFINITIONS 1
1.1.Certain Defined Terms 1
1.2.Other Defined Terms 5
1.3.Accounting Terms 5
1.4.Other Definitional Provisions 5
SECTION 2.LOAN COMMITMENT AND LOAN 5
2.1.Termination of Loan Commitment 7
2.2.Termination of Loan Commitment 7
2.3.Interest on the Loans 7
2.4.Redemptions 8
2.5.Excess Proceeds Offers 10
2.6.Use of Proceeds 12
2.7.Commitment Fee 12
SECTION 3.CONDITIONS 12
3.1.Conditions to Initial Advances on the Loan 12
3.2.Conditions to Subsequent Advance on the Loan 14
SECTION 4.REPRESENTATIONS AND WARRANTIES 14
4.1.Organization and Good Standing; Capitalization 15
4.2.Authorization and Power 15
4.3.No Conflicts or Consents 15
4.4.Enforceable Obligations 15
4.5.Properties; Liens 16
4.6.No Default 16
4.7.Use of Proceeds; Margin Stock, etc 16
4.8.Survival of Representations and Warranties 16
SECTION 5.COVENANTS 16
5.1.Indenture Covenants 16
5.2.Reports of Defaults, Etc 17
5.3.Payments in U.S. Dollars 17
5.4.Performance and Enforcement Under the Loan Documents 17
5.5.Liens 17
5.6.Transfer of Mortgage Rig to a Restricted Subsidiary 17
5.7.Security Interest and Lien on Equipment 17
SECTION 6.EVENTS OF DEFAULT 17
6.1.Failure To Make Payments When Due 18
6.2.Default Under The Indenture 18
6.3.Other Loan Agreement 18
6.4.Breach of Certain Covenants 18
6.5.Breach of Warranty 18
6.6.Other Defaults Under Agreement or Loan Documents 18
6.7.Involuntary Bankruptcy; Appointment of Custodian, etc 18
6.8.Voluntary Bankruptcy; Appointment of a Custodian; etc 18
SECTION 7.MISCELLANEOUS 20
7.1.Pledges and Assignments of Loan and Note 20
7.2.Expenses 20
7.3.Indemnity 20
7.4.Additional Amounts 21
7.5.Taxes and Other Taxes 22
7.6.Amendments and Waivers 23
7.7.Independence of Covenants 23
7.8.Notices 23
7.9.Survival of Warranties and Certain Agreements 23
7.10.Failure or Indulgence Not Waiver; Remedies Cumulative 24
7.11.Severability 24
7.12.Headings 24
7.13.Applicable Law 24
7.14.Successors and Assigns; Subsequent Holders of Notes 24
7.15.Counterparts; Effectiveness 24
7.16.Consent to Jurisdiction; Venue; Waiver of Jury Trial 24
7.17.Waiver of Stay, Extension or Usury Laws 25
7.18.Usury Savings Clause 25
EXHIBITS
I FORM OF NOTE
II FORM OF NOTICE OF BORROWING
III FORM OF OPINION OF GARDERE & WYNNE - SPECIAL COUNSEL FOR THE BORROWER
IV FORM OF MORTGAGE
V SCHEDULE OF EQUIPMENT
- ------------------------------------------------------------------------
This Senior Secured Loan Agreement is dated as of March 26, 1999,
and entered into by and among R&B Falcon, Inc., a Delaware corporation
(the "Company") and RBF Finance Co., a Delaware corporation (the
"Lender").
RECITALS
WHEREAS, the Lender has entered into an Indenture of even date
herewith (as the same may be amended, or supplemented or otherwise
modified from time to time, the "Indenture") with United States Trust
Company of New York as Trustee (the "Trustee"), pursuant to which the
Lender will issue in two series up to $400,000,000 aggregate principal
amount of its 11% Senior Secured Notes due 2006 (the "7-year Secured
Notes") and up to $400,000,000 aggregate principal amount of its
11 3/8% Senior Secured Notes due 2009 (the "10-year Secured Notes; the
7-year Secured Notes and the 10-year Secured Notes being hereinafter
collectively called the "Secured Notes"); and
WHEREAS, the Indenture provides that the Lender may utilize the
proceeds of the Secured Notes to make loans to the Company, each for
the purpose of either (i) financing all or a portion of the cost of
acquiring, constructing, altering, improving or repairing a drilling
rig or drillship (a "Rig") or improvements used or to be used in
connection with such a Rig, or (ii) financing all or any part of the
purchase price of the Rig or improvements used or to be used in
connection with such Rig, which indebtedness is incurred prior to or
within one year after the date of the completion of construction,
alteration, improvement or repair or the commencement of commercial
operations thereof; and
WHEREAS, the Company desires that the Lender extend senior secured
credit facilities to the Company for such purposes herein; and
WHEREAS, the Indenture provides that the Lender will enter into a
Senior Secured Note Security and Pledge Agreement of even date
herewith (the "Issuer Security Agreement") between the Lender, the
Trustee and United States Trust Company of New York as Collateral
Agent (in such capacity, the "Collateral Agent"), pursuant to which
the Lender will pledge and grant a security in the loans made with the
proceeds of the Secured Notes which are or will be secured by Rigs;
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, the parties
hereby agree as follows:
SECTION 1 DEFINITIONS
1.1 Certain Defined Terms. The following terms used in this Agreement
shall have the following meanings:
"Agreement" means this Senior Secured Loan Agreement dated as of
March 26, 1999, as it may be amended, supplemented or otherwise
modified from time to time in accordance with the terms hereof.
"Board of Directors" means, with respect to any Person, the Board
of Directors of such Person or any duly authorized committee of that
Board.
"Board Resolution" means a duly adopted resolution of the Board of
Directors of the Company in full force and effect at the time of
determination and certified as such by the Secretary or Assistant
Secretary of the Company.
"Business Day" means any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of New York, New York or is a
day on which banking institutions therein located are authorized or
required by law or other governmental action to close.
"Cash Equivalents" means (i) U.S. Governmental Obligations with a
maturity of four years or less; (ii) commercial paper issued by any
corporation if such commercial paper has credit ratings of at least "A-
1" from S&P or at least "P-1" by Moody's; (iii) certificates of
deposit, bankers' acceptances, time deposits, Eurocurrency Deposits
and similar types of Investments routinely offered by commercial banks
with final maturities of one year or less issued by commercial banks
having combined capital and surplus in excess of $100,000,000; and
(iv) shares in money market mutual or similar funds having assets in
excess of $100,000,000.
"Closing Date" means the date on or before March 26, 1999 on which
the initial advance of the Loan is made and the conditions set forth
in Section 3.1 are satisfied or waived in accordance with Section 7.7.
"Collateral" means the Mortgaged Rig and any other property subject
to the Lien created under a Mortgage or a Loan Document.
"Commission" means the Securities and Exchange Commission.
"Company" has the meaning ascribed to such term in the introduction
to this Agreement.
"Compliance Certificate" means a certificate substantially in the
form of Exhibit III annexed hereto delivered to the Lender by the
Company pursuant to Section 5.1.
"Contractual Obligation," as applied to any Person, means any
provision of any Security issued by that Person or of any indenture,
mortgage, deed of trust, contract, undertaking, agreement or other
instrument to which that Person is a party or by which it or any of
its properties is bound or to which it or any of its properties is
subject.
"Dollars" or the sign "$" means the lawful money of the United
States of America.
"Equipment" means all items of equipment of the Borrower used in
connection with the Mortgaged Rig, whether currently owned or
hereafter acquired, and whether on board the Mortgaged Rig or not,
including but not limited to the items set forth on Schedule V
attached hereto.
"Event of Default" means each of the events set forth in
Section 6.
"indemnified liabilities" has the meaning ascribed to such term in
Section 7.3.
"Indemnitees" has the meaning ascribed to such term in Section 7.3.
"Indenture" has the meaning ascribed to such term in the recitals
of this Agreement.
"Laws" means all applicable statutes, laws, ordinances,
regulations, rules, orders, judgments, writs, injunctions or decrees
of any state, commonwealth, nation, territory, possession, province,
county, parish, town, township, village, municipality or Tribunal, and
"Law" means each of the foregoing.
"Lender" has the meaning ascribed to that term in the introduction
of this Agreement and shall include any assignee of the Loan or the
Note or Loan Commitment to the extent of such assignment.
"Lien" means any lien, mortgage, pledge, assignment, security
interest, charge or encumbrance of any kind (including any conditional
sale or other title retention agreement, any lease in the nature
thereof, and any agreement to give any security interest) and any
option, trust or other preferential arrangement having the practical
effect of any of the foregoing.
"Loan" means, collectively, the loans made by the Lender pursuant
to Section 2.1.
"Loan Documents" means this Agreement, the Note and the Mortgage.
"Margin Stock" has the meaning assigned to that term in
Regulation U of the Board of Governors of the Federal Reserve System
as in effect from time to time.
"Material Adverse Effect" means (i) a material adverse effect upon
the business, property, assets, nature of assets, liabilities
condition (financial or otherwise), results of operation or prospects
of the Company and its Restricted Subsidiaries, taken as a whole, or
(ii) the impairment of the ability of the Company or any of its
Restricted Subsidiaries to perform, or the impairment of the ability
of Lender to enforce, any material right or remedy under the
Obligations.
"Maturity" means the date on which the principal of the Loan,
whether the 7-year Tranche or 10-year Tranche or both, becomes due and
payable as provided in this Agreement whether at Stated Maturity, upon
redemption, by declaration of acceleration or otherwise.
"Mortgage" means a mortgage substantially in the form of Exhibit IV
covering the Mortgaged Rig.
"Mortgaged Rig" means the Peregrine VII.
"Notes" has the meaning ascribed to such term in Section 2.1C.
"Notice of Borrowing" means a notice substantially in the form of
Exhibit II annexed hereto with respect to a proposed borrowing.
"Obligations" means all obligations of every nature of the Company
from time to time owed to the Lender under the Loan Documents, whether
for principal, reimbursements, interest (including post-petition
interest), fees, expenses, indemnities or otherwise, and whether
primary, secondary, direct, indirect, contingent, fixed or otherwise
(including obligations of performance).
"Officer" means the Chairman of the Board, the Chief Executive
Officer, the Chief Operating Officer, the President, any Vice
President, the Chief Financial Officer, the Controller, the Chief
Accounting Officer, any Vice President, the Treasurer or the Secretary
of the Company.
"Officers' Certificate" means, as applied to any corporation, a
certificate executed on behalf of such corporation by two officers;
provided, however, that every Officers' Certificate with respect to
the compliance with a condition precedent to the making of the Loans
hereunder shall include (i) a statement that the officer or officers
making or giving such Officers' Certificate have read such condition
and any definitions or other provisions contained in this Agreement
relating thereto, (ii) a statement that, in the opinion of the
signers, they have made or have caused to be made such examination or
investigation as is necessary to enable them to express an informed
opinion as to whether or not such condition has been complied with,
and (iii) a statement as to whether, in the opinion of the signers,
such condition has been complied with.
"Other Loan" means a loan made pursuant to an Other Loan Agreement
by the Lender with the proceeds of the Secured Notes which is secured
by a Mortgaged Rig.
"Other Loan Agreement" means a loan agreement among the Lender, the
Company and the Trustee pursuant to which the Lender will utilize the
proceeds of the Secured Notes to make an Other Loan for the purposes
specified in the second recital of this Agreement
"Other Mortgaged Rig" means a Rig which has been mortgaged to
secure an Other Loan or which is the subject of a construction
contract which has been pledged to secure an Other Loan.
"Other Taxes" has the meaning ascribed to such term in Section 7.6.
"Payment Office" shall mean the office of United States Trust
Company of New York located at 114 West 47th Street, 25th Floor, New
York, New York 10036 or such other office in the State of New York as
the Lender may designate to the Company and the Trustee from time to
time.
"Potential Event of Default" means a condition or event which,
after notice or lapse of time or both, would constitute an Event of
Default if that condition or event were not cured or removed within
any applicable grace or cure period.
"Purchase Agreement" means the Purchase Agreement dated March 19,
1999 among the Lender, the Company and the Initial Purchaser relating
to the Secured Notes.
"Securities" means any stock, shares, partnership interests, voting
trust certificates, certificates of interest or participation in any
profit sharing agreement or arrangement, bonds, debentures, options,
warrants, notes, or other evidences of indebtedness, secured or
unsecured, convertible, subordinated or otherwise, or in general any
instruments commonly known as "securities" or any certificates of
interest, shares or participations in temporary or interim
certificates for the purchase or acquisition of, or any right to
subscribe to, purchase or acquire, any of the foregoing.
"7-year Tranche" means advances on the Loan aggregating up to
$112,800,000 and having a final Loan Maturity of March 15, 2006.
"Taxes" means all taxes, assessments, fees, levies, imposts,
duties, penalties, deductions, liabilities, withholdings or other
charges of any nature whatsoever, including interest penalties, from
time to time or at any time imposed by any Law or any Tribunal.
"10-year Tranche" means advances on the Loan aggregating up to
$112,800,000 and having a final Maturity of March 15, 2009.
"Transaction Costs" means the fees, costs and expenses payable by
the Company pursuant hereto and other fees, costs and expenses payable
by the Company in connection with the Transactions.
"Transactions" shall mean, collectively, (i) the issuances and sale
of the Secured Notes, (ii) the incurrence of the Loan hereunder on the
Closing Date, (iii) the incurrence of the Other Loans under the Other
Loan Agreements, (iv) any other transaction on the Closing Date
contemplated in relation to the foregoing and (v) the payment of fees
and expenses in connection with the foregoing.
"Tranches" means collectively the 7-year Tranche and the 10-year
Tranche.
"Tribunal" means any governmental, any arbitration panel, any court
or any governmental department, commission, board, bureau, agency,
authority or instrumentality of the United States or any state,
province, commonwealth, nation, territory, possession, county, parish,
town, township, village or municipality, whether now or hereafter
constituted and/or existing.
"Trustee" has the meaning ascribed to such term in the introduction
of this Agreement and shall include any successor Trustee appointed
pursuant to terms of the Indenture.
"U.S. Legal Tender" means such coin or currency of the United
States of America as at the time of payment shall be legal tender for
the payment of public and private debts.
1.2 Other Defined Terms. Any capitalized term used in this Agreement
and not defined herein shall have the meaning assigned to such term in
the Indenture.
1.3 Accounting Terms. For the purposes of this Agreement, all
accounting terms to otherwise defined herein shall have the meanings
assigned to them in conformity with GAAP.
1.4 Other Definitional Provisions. Any of the terms defined in
Section 1.1 may, unless the context otherwise requires, be used in the
singular or the plural depending on the reference.
SECTION 2 LOAN COMMITMENT AND LOAN
2.1 The Loan and Notes.
A. Loan Commitment. Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties of
the Company herein set forth, the Lender hereby agrees to lend to the
Company on the Closing Date and thereafter up to $225,600,000 in the
aggregate (the "Loan") consisting of $112,800,000 of 7-year Tranche
advances and $112,800,000 of 10-year Tranche advances. The Lender's
commitment to make the Loan to the Company pursuant to this
Section 2.1 is herein called the "Loan Commitment."
B. Notice of Borrowing. When the Company desires to borrow under this
Agreement, it shall deliver to the Collateral Agent a Notice of
Borrowing no later than 11:00 a.m. (New York time), at least one
Business Day in advance of the Closing Date or such other date as
shall be agreed to by the Lender and the Trustee. The Notice of
Borrowing shall specify the amount of each Tranche and the applicable
date of borrowing (which shall be a Business Day).
C. Disbursement of Funds. No later than 3:00 p.m. (New York time) on
the Closing Date, the Lender promptly will make available to the
Company by depositing to its account at the Payment Office the
aggregate of the amount of the Loan to be made on such Closing Date.
D. Notes. The Company shall execute and deliver to the Lender on the
Closing Date two Notes dated the Closing Date, one substantially in
the form of Exhibit I annexed hereto with appropriate insertions to
evidence the maximum amount of the 7-year Tranche of Loan which may be
made hereunder by the Lender and the other substantially in the form
of Exhibit I annexed hereto with appropriate insertions to evidence
the maximum amount of 10-year Tranche of the Loan which may be made by
the Lender hereunder.
E. Scheduled Payments of Loan.
(i) One of the Other Loan Agreements relates to the Mortgaged Rig
Deepwater IV, which Mortgaged Rig is presently under construction
pursuant to a construction contract and which has an expected
completion date during the third calendar quarter of 2000. Upon
completion of the Mortgaged Rig Deepwater IV, the Company is required
to grant a Lien on such Mortgaged Rig pursuant to a Mortgage. Upon
the filing of the Mortgage for the Mortgaged Rig Deepwater IV, the
Company and the Lender agree that the $29,200,000 of the 7-year
Tranche and $29,200,000 of the 10-year Tranche will be exchanged for
additional advances under the Other Loan Agreement relating to the
Mortgaged Rig Deepwater IV in an aggregate principal amount of
$58,400,000.
(ii) The Company shall pay on or before 10:00 a.m. on the date of the
final Maturity of the 7-year Tranche of the Loan all of the principal
amount of the 7-year Tranche remaining outstanding, which amount will
be $112,800,000 principal amount of the Loan, reduced by any previous
prepayments of principal made on the 7-year Tranche of the Loan to the
extent that such payments have been allocated pursuant to the
provisions of Section 2.3 hereof and the Indenture to the 7-year
Secured Notes, together with accrued and unpaid interest, fees and a
pro rata portion of the amount of the Special Interest and Additional
Amounts, if any, due on the 7-year Secured Notes. The Company shall
pay on or before 10:00 a.m. on the date of the final Maturity of the
10-year Tranche all of the principal amount of the 10-year Tranche
then remaining outstanding, reduced by any previous prepayments of
principal made on the 10-year Tranche of the Loan to the extent that
such payments have been allocated pursuant to the provisions of
Section 2.3 hereof and the Indenture to the 10-year Secured Notes,
together with accrued and unpaid interest fees and a pro rata portion
of the amount of the Special Interest and Additional Amounts, if any,
due on the 10-year Secured Notes. Such payments shall be made
directly to the Trustee for deposit in the Issuer Escrow Account
established pursuant to the Issuer Escrow Agreement.
F. Termination of Loan Commitment. The Loan Commitment hereunder shall
terminate on the earlier (i) the Stated Maturity (whether by
acceleration, redemption, purchase or otherwise) of the Secured Notes
pursuant to the terms of the Indenture or (ii) May 14, 1999, if no
portion of the Loan has been made on or before such date (other than
as a result of failure of the Lender to fulfill its obligations
hereunder).
G. Satisfaction by Payments on the Guarantee. Pursuant to the
Indenture, the Company will guarantee the due and punctual payment of
the principal of, premium, if any, and interest on, and all other
amounts payable under, the Secured Notes (including any Additional
Amounts payable upon redemption, in respect thereof) when and as the
same shall become due and payable, whether at Stated Maturity, by
declaration of acceleration or otherwise. To the extent that the
Company makes a payment on the Guarantee, it will be deemed to have
made a payment on the Issuer Loans then outstanding, such payments to
be allocated pro rata to each of Tranches of the Loan and pro rata to
the Loan and the Other Loans.
2.2 Interest on the Loans.
A. Rate of Interest. The 7-year Tranche of the Loan shall bear interest
on the unpaid principal amount thereof from the date made through
Maturity for the 7-year Tranche (whether by prepayment, acceleration
or otherwise) at a rate equal to 11% per annum plus 2 basis points per
annum and the 10-year Tranche of the Loan shall bear interest on the
unpaid principal amount thereof from the date made through Maturity
for the 10-year Tranche (whether by prepayment, acceleration or
otherwise) at a rate equal to 11 3/8% per annum plus 2 basis points per
annum.
B. Special Interest. The Lender and the Company have entered into a
Registration Rights Agreement (the "Registration Rights Agreement")
dated March 26, 1999 with Donaldson, Lufkin & Jenrette Securities
Corporation for the benefit of the Holders of the Secured Notes, in
which the Lender and the Company have agreed to: (A) file a
registration statement within 60 days after the closing date of the
offering of Secured Notes for an offer to exchange Secured Notes of
each series for debt securities of that series with identical terms
(except for transfer restrictions); (B) use their best efforts to
cause the registration statement to become effective within 150 days
after the closing date of the offering of the Secured Notes; and
(C) complete the registered exchange offer within 180 days after the
closing date of the offering of the Secured Notes. Under certain
circumstances, the Lender and the Company may be required to file a
shelf registration statement for the Secured Notes registering the
resale of the Secured Notes. If the Lender and the Company do not
comply with their obligations under the Registration Rights Agreement,
the Lender will be required to pay additional interest ("Special
Interest") specified in Section 5 of the Registration Rights
Agreement. The Company will pay on each date that the Lender pays
Special Interest to the Holders of the Secured Notes as Special
Interest on the Loan an amount equal to the percentage of Special
Interest, if any, which the Lender owes to the Holders of the Secured
Notes that the principal amount of the Loan bears to the total
aggregate principal amount of the Loan and all Other Loans then
outstanding. Such payment shall be paid directly to the Trustee for
deposit into the Issuer Escrow Account.
Notwithstanding any provisions of this Section 2.2 or any
other provision herein, in no event will the combined sum of interest
(cash or otherwise) on the Loan exceed the maximum amount permitted by
applicable law.
C. Interest Payments. Interest (including Special Interest, if any,
and Additional Amounts, if any) shall be payable semi-annually on
March 15 and September 15 of each year, commencing September 15, 1999
but in no event to exceed the maximum permitted by applicable law.
All payments of interest on the Loan shall be made on or before 10:00
a.m. (New York time) on the date of payment and shall be paid directly
to the Trustee for deposit into the Issuer Escrow Account.
D. Post-Maturity Interest. Any principal payments on the Loan not paid
when due and, to the extent permitted by applicable law, any interest
payment on the Loan not paid when due, in each case whether at Stated
Maturity, by notice of prepayment, by acceleration or otherwise, shall
thereafter bear interest payable upon demand at a rate of interest
otherwise payable under this Agreement for the Loan but in no event to
exceed the maximum interest rate permitted by applicable law.
E. Computation of Interest. Interest on the Loan shall be computed on
the basis of a 360-day year of twelve 30-day months.
2.3 Redemptions.
A. Redemption upon Loss of the Mortgaged Rig. If an Event of Loss
occurs at any time with respect to the Mortgaged Rig attributable to
the Loan, the Company shall apply funds in an amount (the "Loss
Redemption Amount") equal to the principal amount of the Loan
outstanding on the date (the "Loss Date") on which such Event of Loss
was deemed to have occurred, together with all accrued and unpaid
interest (including Special Interest, if any, and Additional Amounts,
if any) thereon, to the prepayment of the Loan. If an Event of Loss
occurs at any time with respect to any Other Mortgaged Rig, the
Indenture and the applicable Other Loan Agreement require that the
Company shall apply funds to the principal amount of the applicable
Other Loan secured by the Other Mortgaged Rig outstanding on the Loss
Date for such other Mortgaged Rig, together with all accrued and
unpaid interest (including Special Interest, if any, and Additional
Amounts, if any) thereon, to the payment of such Other Loan. If a
Default under the Indenture shall have occurred and be continuing at
the time of the receipt of the Event of Loss Proceeds with respect to
such Other Mortgaged Rig, the Indenture requires, and the Company
hereby agrees, that it shall prepay the Loan and the remaining Other
Loans on a pro rata basis in an aggregate amount equal to the excess
of the Net Event of Loss Proceeds over the Loss Redemption Amount, if
any, together with all accrued and unpaid interest (including Special
Interest, if any, and Additional Amounts, if any) thereon for the
Other Loan which is secured by such Other Mortgaged Rig. All payments
on the Loan shall be allocated on a pro rata basis between the
Tranches and shall be made directly to the Trustee for deposit into
the Issuer Escrow Account.
B. Redemption upon Sale of the Mortgaged Rig. If the Mortgaged Rig or
the Capital Stock of a Subsidiary Guarantor then owning the Mortgaged
Rig is sold in compliance with the terms of the Indenture, the Company
shall apply funds in an amount (the "Sale Redemption Amount") equal to
the principal amount of the Loan secured by the Mortgaged Rig on the
date of such sale (the "Sale Date"), together with all accrued and
unpaid interest (including Special Interest, if any, and Additional
Amounts, if any thereon, plus any additional amounts required by the
Lender to redeem the Secured Notes to the extent required by
Section 3.9 of the Indenture, to the prepayment of the Loan. If any
Other Mortgaged Rig or the Capital Stock of a Subsidiary Guarantor
then owning an Other Mortgaged Rig is sold in compliance with the
terms of the Indenture, the Company shall apply funds equal to the
applicable Other Loan secured by the Other Mortgaged Rig outstanding
on the Sale Date for such Other Mortgaged Rig, together with all
accrued and unsecured interest (including Special Interest, if any,
and Additional Amounts, if any) thereon, to the payment of such Other
Loan. If a Default under the Indenture shall have occurred and be
continuing at the time of receipt of the cash consideration with
respect to such Other Mortgaged Rig or Capital Stock of the Subsidiary
Guarantor owning such Other Mortgaged Rig, the Indenture requires, and
the Company hereby agrees, that it shall also be required to prepay
the Loan and the remaining Other Loans on a pro rata basis in an
aggregate amount equal to the excess of such Net Available Cash
attributable to such Sold Mortgaged Rig over such Sale Redemption
Amount. Such payments on the Loan and the Other Loans pursuant hereto
shall be respectively allocated between the Tranches of the Loan and
the Other Loans on a pro rata basis and shall be made directly to the
Trustee for deposit into the Issuer Escrow Account.
C. Other Redemptions.
(i)Redemptions to Fund Optional Redemptions of the 10-year Secured
Notes. Under the terms of the Indenture, on or after March 15, 2004,
the 10-year Secured Notes will be redeemable, at the Lender's option,
in whole or in part, at any time or from time to time, upon not less
than 30 nor more than 60 days' prior notice to the Holders of the 10-
year Secured Notes, at the following Redemption Prices (expressed in
percentages of principal amount), plus accrued and unpaid interest
(including Special Interest, if any, and Additional Amounts, if any)
to the Redemption Date, if redeemed during the 12-month period
commencing on March 15 of the years set forth below.
Redemption
Period Price
2004 105.6875%
2005 103.7917
2006 101.8958
2007 and thereafter 100.0000
The Company shall prepay the 10-year Tranche of the Loan and
of the Other Loans, in whole or in part, to provide funds for
such redemption. Any prepayments by the Company on the Loan and
the Other Loans required to be made to provide funds for the
Lender to make such a redemption shall be made on this Loan and
the Other Loans on a pro rata basis. All payments on the Loan
and the Other Loans pursuant hereto shall be made directly to the
Trustee for deposit into the Issuer Escrow Account.
(ii) Redemptions to Fund Optional Redemptions of the 7-year Secured
Notes. Under the terms of the Indenture, the 7-year Secured Notes
will be redeemable, at the Lender's option at any time in whole or
from time to time in part upon not less than 30 and not more than
60 days' prior notice mailed by first class mail to the Holders of the
7-year Secured Notes, on any date prior to Maturity at a price equal
to 100% of the principal amount thereof plus accrued and unpaid
interest (including Special Interest, if any, and Additional Amounts,
if any) to the Redemption Date plus the Make-Whole Premium applicable
to the 7-year Secured Notes determined in the manner provided for in
Section 3.7 of the Indenture. The Company shall prepay the 7-year
Tranche of the Loan and of the Other Loans in whole or in part to
provide funds for such redemption. Any prepayments by the Company on
the Loan and the Other Loans required to be made to provide funds for
the Lender to make such a redemption shall be made on the Loan and the
Other Loans on a pro rata basis. All payments on the Loan and the
Other Loans pursuant hereto shall be made directly to the Trustee for
deposit into the Issuer Escrow Account.
D. Excess Proceeds Offers. The Indenture provides in Section 3.10
thereof that if, as of the first day of any calendar month, the
aggregate amount of Sale Excess Proceeds and Loss Excess Proceeds
exceeds 10% of consolidated total assets of the Company, and if the
aggregate amount of Sale Excess Proceeds and Loss Excess Proceeds in
excess of 10% of consolidated total assets of the Company that has not
theretofore been subject to an Excess Proceeds Offer (as defined
below) (the "Excess Proceeds Offer Amount"), totals at least $10
million, the Lender must, not later than the fifteenth Business Day of
such month, make an offer ( an "Excess Proceeds Offer") to purchase
from the Holders of the Secured Notes, pursuant to and subject to the
conditions contained in the Indenture, and from Holders of the New
Senior Notes, pursuant to provisions of the New Senior Note Indenture,
Secured Notes at a purchase price equal to 100% of their principal
amount, plus any accrued interest (including Additional Amounts and
Special Interest, if any) to the date of purchase and New Senior Notes
at a purchase price equal to 100% of their principal amount, plus any
accrued interest (including Special Interest, if any) to the date of
purchase in an aggregate principal amount equal to the Excess Proceeds
Offer Amount (an "Excess Proceeds Payment"). If the Lender is ever
required pursuant to Section 3.10 of the Indenture to make an Excess
Proceeds Offer to the Holders of the Secured Notes to purchase from
such Holders their Secured Notes, and to the Holders of Senior Notes
to purchase from such Holders their New Senior Notes, the Indenture
provides, and the Company agrees, that the Company will prepay the
Loan and the Other Loans on a pro rata basis to permit the Lender to
purchase any Secured Notes validly tendered pursuant to an Excess
Proceeds Offer. All payments on the Loan shall be allocated between
the appropriate Tranches of the Loan; and all payments on the Loan and
the Other Loans pursuant hereto shall be made directly to the Trustee
for deposit into the Issuer Escrow Account.
E. Change of Control. If the Lender is ever required to make pursuant
to the provisions of Section 4.8 of the Indenture a Change of Control
Offer to the Holders of the Secured Notes at a purchase price in cash
equal to 101% of the principal amount thereof plus accrued and unpaid
interest (including Additional Amounts and Special Interest, if any)
thereon, the Indenture provides, and Company agrees, that the Company
will prepay the Loan and the Other Loans on a pro rata basis at a
redemption price equal to 101% of the principal amount hereof being
repaid, plus accrued and unpaid interest, Special Interest, if any,
and Additional Amounts, if any, thereon, in order to provide funds
sufficient to permit the Lender to purchase any Secured Notes validly
tendered pursuant to the foregoing offer to purchase Secured Notes
upon a Change of Control. All payments on the Loan shall be allocated
between the appropriate Tranches of the Loans and all payments on the
Loan and the Other Loans pursuant hereto shall be made directly to the
Trustee for deposit into the Issuer Escrow Account.
F. Notice. The Company shall notify the Lender and the Trustee of any
prepayment to be made pursuant to this Section 2.3 at least two
Business Days prior to such prepayment date.
G. Determination of Amounts of the Tranches Subject to Such
Redemptions. The Lender will submit a written determination to the
Trustee for its approval of the amount (including the pro rata
allocations between the Tranches of the Loan and between the Loan and
the Other Loans) with respect to any such redemption. The Trustee
shall approve or disapprove such allocations in its sole discretion
and such decision shall be conclusive, absent manifest error. A
certificate of the Lender setting forth such determination, with the
written approval of the Trustee thereon, shall be delivered to the
Company at least one Business Day prior to the payment date.
H. Company's Mandatory Prepayment Obligation; Application of
Prepayments. All prepayments shall include payment of accrued
interest (including Special Interest and Additional Amounts, if
applicable) on the principal amount so prepaid and shall be applied to
payment of interest before application to principal.
I. Manner and Time of Payment. Unless otherwise expressly set forth
herein, all payments of principal and interest hereunder and under the
Notes by the Company shall be made without defense, set-off or
counterclaim and in same-day funds and delivered to the Trustee for
deposit into the Issuer Escrow Account, unless otherwise specified,
not later than 10:00 a.m. (New York time) on the date due at the
Payment Office; funds received by the Trustee after that time shall be
deemed to have been paid by the Company on the next succeeding
Business Day.
J. Payments on Non-Business Days. Whenever any payment to be made
hereunder or under the Notes shall be stated to be due on a day which
is not a Business Day, the payment shall be made on the next
succeeding Business Day and such extension of time shall be included
in the computation of the payment of interest hereunder or under the
Loan.
2.4 Use of Proceeds.
A. Loan. The proceeds of the Loan may be applied by the Company to
finance certain costs of acquiring, constructing, repairing and
improving the Mortgaged Rig and, to the extent that such costs have
already been paid, for general corporate purposes.
B. Margin Regulations. No portion of the proceeds of any borrowing
under this Agreement shall be used by the Company in any manner which
might cause the borrowing or the application of such proceeds to
violate the applicable requirements of Regulation U, Regulation T or
Regulation X of the Board of Governors of the Federal Reserve System
or any other regulation of the Board or to violate the Exchange Act,
in each case as in effect on the date or dates of such borrowing and
such use of proceeds.
2.5 Commitment Fee. The Company agrees to pay a commitment fee for the
period from and including the Closing Date to and including the date
of termination specified in Section 2.1.F. on the undrawn portion of
the Loan equal to the average of the daily excess of the Loan
Commitment over the aggregate principal amount of the Loan outstanding
multiplied by 7% per annum, such commitment fee to be calculated on
the basis of a 360-day year consisting of twelve 30-day months and to
be payable semi-annually in arrears on each March 15 and September 15,
commencing September 15, 1999.
SECTION 3 CONDITIONS
3.1 Conditions to Initial Advances on the Loan. The obligation of the
Lender to make the initial advance on the Loan is subject to prior or
concurrent satisfaction of each of the following conditions:
A. On or before the Closing Date, all corporate and other proceedings
taken or to be taken in connection with the transactions contemplated
hereby and all documents incidental thereto not previously found
acceptable by the Lender and the Trustee shall be reasonably
satisfactory in form and substance to the Lender and the Trustee, and
the Lender and the Trustee shall have received the following items,
each of which shall be in form and substance satisfactory to the
Lender and the Trustee and, unless otherwise noted, dated the Closing
Date:
(i) a certified copy of the Company's charter, together with a
certificate of status, compliance, good standing or like certificate
with respect to the Company issued by the appropriate government
officials of the jurisdiction of its incorporation and of each
jurisdiction in which it owns any material assets or carries on any
material business, each to be dated a recent date prior to the Closing
Date;
(ii) a copy of the Company's bylaws, certified as of the Closing Date
by its Secretary or one of its Assistant Secretaries;
(iii) resolutions of the Company's Board of Directors approving and
authorizing the execution, delivery and performance of this Agreement,
the Notes, the Mortgage, each of the other Loan Documents, the
Indenture and any other documents, instruments and certificates
required to be executed by the Company in connection herewith and
therewith and approving and authorizing the execution, delivery and
payment of the Loan, each certified as of the Closing Date by its
Secretary or one of its Assistant Secretaries as being in full force
and effect without modification or amendment;
(iv) signature and incumbency certificates of the Company's officers
executing this Agreement, the Other Loan Documents and the Notes;
(v) executed copies of this Agreement and the Notes substantially in
the form of Exhibit I annexed hereto executed in accordance with
Section 2.1C drawn to the order of the Lender and with appropriate
insertions;
(vi) an originally executed Notice of Borrowing substantially in the
form of Exhibit II annexed hereto, signed by the President or a Vice
President of the Company on behalf of the Company and delivered to the
Lender; and
(vii) originally executed copies of one or more favorable written
opinions of Gardere & Wynne, special counsel for the Company,
substantially in the form of the Exhibit III hereto and addressed to
the Lender, the Trustee and the Initial Purchaser, and such other
opinions of counsel and such certificates or opinions of accountants,
appraisers or other professionals as the Lender, the Trustee or the
Initial Purchaser shall have reasonably requested.
B. The Lender shall have received a fully executed Mortgage in the
form of Exhibit IV hereto, which has been filed in all appropriate
jurisdictions, and the Lien provided in Section 5.7 shall have been
perfected in all appropriate United States jurisdictions.
C. On or before the Closing Date, all authorizations, consents and
approvals necessary in connection with the Transactions shall have
been obtained and remain in full force and effect and all applicable
waiting periods, if any, under law applicable to the Transactions
shall have expired without any action being taken by any competent
authority (including without limitation, any Tribunal) which
restrains, prevents or imposes materially adverse conditions upon the
completion of the Transactions or the financing thereof and evidence
of the receipt of such authorizations, consents and approvals
satisfactory to the Lender and the Trustee shall have been delivered
to the Lender and the Trustee.
D. On or before the Closing Date, the Indenture and the Purchase
Agreement shall have been executed and delivered by all parties
thereto. No default or event of default shall have occurred under the
Indenture and the Purchase Agreement, all conditions to the execution
delivery and authentication of the Secured Notes thereunder shall have
been satisfied under the Indenture, and all conditions to the purchase
of the Secured Notes by the Initial Purchaser under the Purchase
Agreement have been satisfied or waived by the Initial Purchaser.
E. Simultaneously with the making of the Loan by the Lender, the
Company shall have delivered to the Lender and the Trustee an
Officers' Certificate from the Company in form and substance
satisfactory to the Lender and the Trustee to the effect that (i) the
representations ad warranties of the Company in Section 4 are true,
correct and complete in all material respects on and as of the Closing
Date to the same extent as though made on and as of that date, and
(ii) on or prior to the Closing Date, the Company has performed and
complied with in all material respects all covenants and conditions to
be performed and observed by the Company on or prior to the Closing
Date and
F. No event shall have occurred and be continuing or would result from
the consummation of the borrowing contemplated by the Notice of
Borrowing which would constitute and Event of Default, a Potential
Event of Default or a Default.
G. No order, judgment or decree of any court, arbitrator or
governmental authority shall purport to enjoin or restrain the Lender
from making the Loan.
H. The making of the Loan in the manner contemplated in this Agreement
shall not violate the applicable provisions of Regulation T, U or X of
the Board of Governors of the Federal Reserve Board or any other
regulation of the Board.
3.2 Conditions to Subsequent Advance on the Loan. The obligation of
the Lender to make a subsequent advance on the Loan is subject to the
prior or concurrent satisfaction of each of the following conditions:
A. The Lender and the Trustee shall have received in form and substance
satisfactory to the Lender and the Trustee and dated the date of such
advance an originally executed Notice of Borrowing substantially in
the form of Exhibit II annexed hereto, signed by the President or a
Vice President of the Company on behalf of the Company and delivered
to the Lender.
B. No event shall have occurred and be continuing or would result from
the consummation of the borrowing contemplated by the Notice of
Borrowing which would constitute an Event of Default, a Potential
Event of Default or a Default.
C. No order, judgment or decree of any court, arbitrator or
governmental authority shall purport to enjoin or restrain the Lender
from making the Loan.
D. The making of the Loan in the manner contemplated in this Agreement
shall not violate the applicable provisions of Regulation T, U or X of
the Board of Governors of the Federal Reserve Board or any other
regulation of the Board.
E. Simultaneously with the making of the advance on the Loan by the
Lender, the Company shall have delivered to the Lender and the Trustee
an Officers' Certificate from the Company in form and substance
satisfactory to the Lender and the Trustee to the effect that (i) the
representations and warranties of the Company in Section 4 are true,
correct and complete in all material respects on and as of the date of
such advance to the same extent as though made on and as of that date,
and (ii) on or prior to the date of such advance, the Company has
performed and complied with in all material respects all covenants and
conditions to be performed and observed by the Company on or prior to
the date of such advance.
SECTION 4 REPRESENTATIONS AND WARRANTIES
In order to induce the Lender to enter into this Agreement and to
make the Loan, the Company represents and warrants to the Lender that,
at the time of execution hereof and after consummation of the making
of the Loan and the Transactions, the following statements are true,
correct and complete:
4.1 Organization and Good Standing; Capitalization. The Company is a
corporation duly organized and existing and in good standing under the
laws of its jurisdiction of incorporation. The Company has the
corporate power and authority to own and operate its properties and to
carry on its business as now conducted and as proposed to be conducted
and is duly qualified as a foreign corporation and in good standing in
all jurisdictions in which it is doing business, except where failure
to be so qualified or in good standing, singly or in the aggregated,
has not had and will not have a Material Adverse Effect.
4.2 Authorization and Power. The Company has the corporate power and
requisite authority, and has taken all corporate action necessary, to
consummate the Transactions and to execute, deliver and perform its
obligations under this Agreement, the Mortgage, the other the Loan
Documents, Indenture and each other document and instrument to be
delivered in connection with the Transactions executed or to be
executed by it and to issue the Notes.
4.3 No Conflicts or Consents.
A. The execution and delivery of the Loan Agreement, the Notes, the
Mortgage, the other Loan Documents and each other document to be
executed and delivered in connection with the Transactions, the
consummation of each of the transactions herein or therein
contemplated, the compliance with each of the terms and previsions
hereof or thereof, and the issuance, delivery and performance of the
Notes, this Agreement, the Mortgage and the Indenture, do not and will
not (i) violate any provision of any law or any governmental rule or
regulation applicable to the Company, its Certificate of Incorporation
or Bylaws or any order, judgment or decree of any court or other
agency of government binding on it, (ii) conflict with, result in a
breach of or constitute (with due notice or lapse of time or both) a
default under any Contractual Obligation of the Company which could
reasonably be expected to result in a Material Adverse Effect, (iii)
result in or require the creation or imposition of any Lien upon any
of the properties or assets of the Company (other than any Liens
created under this Agreement and the Other Loan Agreements), (iv)
require any approval of stockholders or any approval or consent of any
Person under any Contractual Obligation of the Company except for such
approvals or consents which will be obtained on or before the Closing
Date and disclosed in writing to Lender, the Trustee and the Initial
Purchaser or such approvals or consents the failure to obtain which
could not reasonably be expected to singly or in the aggregate result
in a Material Adverse Effect.
B. No consent, approval, authorization or order of any Tribunal or
other Person is required in connection with the execution and delivery
by the Company of this Agreement, the Loan Documents or any other
document or instrument to be delivered in connection with the
Transactions or the consummation of the transactions contemplated
hereby or thereby, other than any such consent, approval,
authorization or order which has been obtained and remains in full
force and effect or which has been waived in writing by the Lender or
the failure of which to obtain would not, singly or in the aggregated,
have a Material Adverse Effect.
4.4 Enforceable Obligations. Each of this Agreement, the Notes, the
Mortgage, the other Loan Documents, and each other document or
instrument to be delivered in connection therewith has been duly
authorized; each of this Agreement, the Notes, the Mortgage, the Other
Loan Documents and each other document or instrument to be delivered
in connection therewith to be executed and delivered on or prior to
the Closing Date has been duly executed and delivered by the Company
and each of this Agreement, the Notes, the Mortgage, the Other Loan
Documents and each other document or instrument to be delivered in
connection therewith to be executed and delivered on or prior to the
Closing Date is, and each of this Agreement, the Notes, the Mortgage
and the other Loan Documents to be executed and delivered after the
Closing Date will be, upon such execution and delivery, the legal,
valid and binding obligations of the Company, enforceable in
accordance with their respective terms, except to the extent that the
enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization or similar laws affecting the enforcement
of creditors' rights generally or by general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law)
4.5 Properties; Liens. The Company has good and marketable title to
the Mortgaged Rig, the equipment purchased and paid for by the Company
to be installed or used thereon and the Other Mortgaged Rigs to the
extent specified in such Other Loan Agreements. Except as specified
in Schedule 4.5 or as permitted by this Agreement, the Mortgaged Rig
and such equipment are so owned free and clear of Liens.
4.6 No Default. No event has occurred and is continuing which
constitutes a Default, a Potential Event of Default or an Event of
Default.
4.7 Use of Proceeds; Margin Stock, etc. The proceeds of the Loan will
be used solely for the purposes specified herein. None of such
proceeds will be used for the purpose of purchasing or carrying any
Margin Stock within the meaning of the applicable provisions of
Regulation T, U or X, or for the purpose of reducing or retiring any
Indebtedness which was originally incurred to purchase or carry a
Margin Stock or for any other purpose which might constitute this
transaction a "purpose credit" within the meaning of the applicable
provisions of Regulation T, U or X. The Company has not taken nor
will it take any action which might cause any of the Loan Documents to
violate the applicable provisions of Regulation T, U or X, or any
other regulation of the Board of Governors of the Federal Reserve
System.
4.8 Survival of Representations and Warranties. All representations
and warranties in the Loan Documents shall survive delivery of the
Notes and the making of the Loan and shall continue until one year
after repayment of the Notes and the Obligations, and any
investigation at any time made by or on behalf of the Lender shall not
diminish the Lender's right to rely thereon.
SECTION 5 COVENANTS
5.1 Indenture Covenants. Each of the covenants conferred in the
Indenture applicable to the Company and its Restricted Subsidiaries
are incorporated herein by reference. The Company covenants and
agrees that, until the Loan and the Notes and all other amounts due
under this Agreement have been indefeasibly paid in full it shall
perform all covenants applied to it or any of its Restricted
Subsidiaries which are contained in the Indenture.
5.2 Reports of Defaults, Etc. The Company will deliver to each Lender
and the Trustee promptly upon, but in no event more than five (5)
Business Days after, any Officer's obtaining knowledge of any
condition or event which constitutes a Default, an Event of Default or
a Potential Event of Default, an Officer's Certificate specifying the
nature and period of existence of any such condition or event, or
specifying the notice given or the claim of Default, Event of Default,
Potential Event of Default, or the event or condition, and what action
the Company has taken, is taking and proposes to take with respect
thereto;
5.3 Payments in U.S. Dollars. All payments of any Obligations to be
made hereunder or under the Note by the Company or any other obligor
with respect thereto shall be made solely in U.S. Dollars or such
other currency as is then legal tender for public and private debts in
the United States of America.
5.4 Performance and Enforcement Under the Loan Documents. The Company
shall promptly perform all of its obligations under the Loan Documents
and each document and instrument related thereto or delivered in
connection with any thereof, in each case, to the extent within its
control. The Company shall (A) diligently and in good faith promptly
pursue the performance of each other party to each such document, and
(B) diligently seek the enforcement of all rights and remedies under
each such document.
5.5 Liens. The Company shall not, nor shall it cause or permit any of
its Restricted Subsidiaries to, directly or indirectly, create, incur,
assume or permit to exist, any Lien on or with respect to any property
or asset (including the Mortgaged Rig) of the Company or of any of its
Restricted Subsidiaries, whether now owned or hereafter acquired, or
assign or otherwise convey any right to receive any income or profits
therefrom, or file or permit the filing of, or permit to remain in
effect, any financing statement or other similar notice of any Lien
with respect to any such property, asset, income or profits under the
Uniform Commercial Code of any State or under any similar recording or
notice statute, except Liens permitted by the Indenture and Liens
permitted by the Loan Documents.
5.6 Transfer of Mortgage Rig to a Restricted Subsidiary. The Company
shall not, nor shall the Company cause or permit any of its Restricted
Subsidiaries to, directly or indirectly, transfer the Mortgaged Rig to
any Subsidiary of the Company unless (i) such Subsidiary guarantees
all Obligations of the Company under this Agreement and executes a
Mortgage and a Security Agreement, (iii) the Liens of the Subsidiary's
Mortgage and Security Agreement are perfected and enforceable, and
(iv) such Subsidiary executes a Subsidiary Guarantee pursuant to the
Indenture.
5.7 Security Interest and Lien on Equipment. The Borrower hereby
grants a security interest and Lien in favor of the Lender and unto
the Lender's successors and assigns for the benefit of the Lender's
own proper use and benefit, as security for the Obligations now or in
the future, in and to the Equipment and the Mortgaged Rig.
SECTION 6 EVENTS OF DEFAULT
If any of the following conditions of events ("Events of Default")
shall occur and be continuing:
6.1 Failure To Make Payments When Due. Failure to pay any installment
of principal including Premium of the Loan when due, whether at stated
maturity, by acceleration, by notice of prepayment or otherwise; or
failure to pay any interest (including Special Interest and Additional
Amounts) on the Loan or any other amount due under this Agreement
continued for 30 days; or
6.2 Default Under The Indenture. An Event of Default occurs and is
continuing under the Indenture; or
6.3 Other Loan Agreement. An Event of Default (as defined in an other
Loan Agreement) occurs and is continuing under such Other Loan
Agreement; or
6.4 Breach of Certain Covenants. Failure of the Company to perform or
comply with any covenant, term or condition contained in Sections 5.2
through 5.7 and Sections 7.3 through 7.5 of this Agreement; or
6.5 Breach of Warranty. Any representation, warranty or certification
made by the Company in any Loan Document or in any statement or
certificate at any time given by the Company in writing pursuant
hereto or thereto or in connection herewith or therewith shall be
false or incorrect in any material respect on the date as of which
made or deemed made; or
6.6 Other Defaults Under Agreement or Loan Documents. The Company
shall default in the performance of or compliance with any covenant,
term or condition contained in this Agreement or the other Loan
Documents (other than those covered by Sections 5.2 through 5.7 and
such default shall not have been remedied or waived in accordance with
Section 7.6 of this Agreement within 30 days after the date of written
notice of such default from the Lender, the Collateral Agent, the
Trustee or the Holder or Holders of not less than 25% in aggregate
principal amount of the Secured Notes then outstanding; or
6.7 Involuntary Bankruptcy; Appointment of Custodian, etc. The entry
by a court having jurisdiction in the premises of (i) a decree or
order for relief in respect of the Company or any Significant
Subsidiary in an involuntary case or proceeding under U.S. bankruptcy
laws, as now or hereafter constituted, or any other applicable
Federal, state, or foreign bankruptcy, insolvency, or other similar
law or (ii) a decree or order adjudging the Company or any Significant
Subsidiary a bankruptcy or insolvent, or approving as properly filed a
petition seeking reorganization, arrangement, adjustment or
composition of or in respect of the Company or any Significant
Subsidiary under U.S. bankruptcy laws, as now or hereafter
constituted, or any other applicable Federal, state or foreign
bankruptcy, insolvency, or similar law, or appointing a custodian,
liquidator, assignee, trustee, sequestrator or other similar official
of the Company or any Significant Subsidiary or of any substantial
part of the Property or assets of the Company or any Significant
Subsidiary, or ordering the winding up or liquidation of the affairs
of the Company or any Significant Subsidiary, and the continuance of
any such decree or order for relief or any such other decree or order
unstayed and in effect for a period of 60 consecutive days; or
6.8 Voluntary Bankruptcy; Appointment of a Custodian, etc. The
commencement by the Company or any Significant Subsidiary of a
voluntary case or proceeding under the U.S. bankruptcy laws, as now or
hereafter constituted, or any other applicable Federal, state or
foreign bankruptcy, insolvency or other similar law or of any other
case or proceeding to be adjudicated a bankrupt or insolvent; or
(ii) the consent by the Company or any Significant Subsidiary to the
entry of a decree or order for relief in respect of the Company or any
Significant Subsidiary in an involuntary case or proceeding under U.S.
bankruptcy laws, as now or hereafter constituted, or any other
applicable Federal, state, or foreign bankruptcy, insolvency or other
similar law or to the commencement of any bankruptcy or insolvency
case or proceeding against the Company or any Significant Subsidiary;
or (iii) the filing by the Company or any Significant Subsidiary of a
petition or answer or consent seeking reorganization or relief under
U.S. bankruptcy laws, as now or hereafter constituted, or any other
applicable Federal, state or foreign bankruptcy, insolvency or other
similar law; or (iv) the consent by the Company or any Significant
Subsidiary to the filing of such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator, assignee,
trustee, sequestrator or similar official of the Company or any
Significant Subsidiary or of any substantial part of the property or
assets of the Company or any Significant Subsidiary, or the making by
the Company or any Significant Subsidiary of an assignment for the
benefit of creditors; or (v) the admission by the Company or any
Significant Subsidiary in writing of its inability to pay its debts
generally as they become due; or (vi) the taking of corporate action
by the Company or any Significant Subsidiary in furtherance of such
action;
THEN (i) upon the occurrence of any Event of Default described in
the foregoing Section 6.7 or 6.8, all of the unpaid principal amount
of and accrued interest on the Loan and all other outstanding
Obligations shall automatically become immediately due and payable,
without presentment, demand, protest, waiver of notice of intent to
accelerate and waiver of notice of such acceleration or notice of any
other kind or other requirements of any kind, all of which are hereby
expressly waived by the Company, and Obligations and the Loan
Commitment of the Lender hereunder shall thereupon terminate, and
(ii) upon the occurrence of any other Event of Default, the Lender
shall, upon written notice of the Lender, to the Company, upon written
notice of the Trustee or the Collateral Agent to the Company and the
Lender, or upon written notice of a Holder or Holders of the Secured
Note or Notes, to the Company, the Lender, the Collateral Agent and
the Trustee, declare all of the unpaid principal amount of and accrued
interest on the Loan and all other outstanding Obligations to be, and
the same shall forthwith become, due and payable, and the obligations
and Loan Commitments of the Lender hereunder shall thereupon
terminate; provided, however, that upon the occurrence of an Event of
Default described in Section 6.4 of this Agreement or an "event of
default" under Section 6.4 of any Other Loan Agreement, the Lender
shall not declare the Obligations hereunder to be due and payable for
a period of 60 days after notice of the occurrence of such Event of
Default or "event of default." Nevertheless, if at any time after
acceleration of the Maturity of the Loan, the Company shall pay all
arrears of interest and all payments on account of the principal
thereof which shall have become due otherwise than by acceleration
(with interest on principal and, to the extent permitted by law, on
overdue interest, at the rates specified in this Agreement or the
Notes) and all Events of Default and Potential Events of Default
(other than non-payment of principal of and accrued interest on the
Loan and the Notes due and payable solely by virtue of acceleration)
shall be remedied or waived pursuant to Section 7.6, then the Lender
shall, upon receipt of the written notice from the Collateral Agent
and the Trustee of such remedy or waiver, by written notice to the
Company rescind and annul the acceleration and its consequences; but
such action shall not affect any subsequent Default, Event of Default
or Potential Event of Default or impair any right consequent thereon.
SECTION 7 MISCELLANEOUS
7.1 Pledges and Assignments of Loan and Note. The Lender shall have
the right at any time to sell, pledge, assign, transfer or negotiate
all or any portion of the Note or its Loan Commitment. The Company
acknowledges that the Lender will pledge its rights under this
Agreement, the Notes, the Mortgage and the Other Loan Documents to the
Collateral Agent pursuant to the Issuer Security Agreement to secure
the Lender's obligations under the Indenture and the Secured Notes.
7.2 Expenses. Whether or not the transactions contemplated hereby
shall be consummated, the Company, its successors and assigns agrees
to promptly pay (i) all the actual costs and expenses of preparation
of the Loan Documents and all the costs of furnishing all opinions by
counsel for the Company (including without limitation any opinions
requested by the Lender as to any legal matters arising hereunder),
and of the Company's performance of and compliance with all agreements
and conditions contained herein on its part to be performed or
complied with; (ii) the reasonable fees, expenses and disbursements of
counsel to the Lender and the Trustee and the Collateral Agent, its
successors and assigns (including allocated costs of internal counsel)
in connection with the negotiation, preparation, execution and
administration of the Loan Documents and the Loan hereunder, and any
amendments, modifications and waivers hereto or thereto and consents
to departures from the terms hereof and thereof; and (iii) after the
occurrence of an Event of Default, all costs and expenses (including
reasonable attorneys fees, including allocated costs of internal
counsel, and costs of settlement) incurred by the Lender, its
successors and assigns in enforcing any Obligations of or in
collecting any payments due from the Company hereunder or under the
Notes by reason of such Event of Default or in connection with any
refinancing or restructuring of the credit arrangements provided under
this Agreement in the nature of a "work-out" or of any insolvency or
bankruptcy proceedings.
7.3 Indemnity. In addition to the payment of expenses pursuant to
Section 7.2, whether or not the transactions contemplated hereby shall
be consummated, the Company agrees to indemnify, pay and hold the
Lender, the Collateral Agent, the Trustee and any Holder of the
Secured Notes and holder of the Notes, and each of their officers,
directors, employees, and agents, (collectively called the
"Indemnitees"), harmless from and against any all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits,
claims, costs, expenses and disbursements of any kind or nature
whatsoever (including, without limitation, the fees and disbursements
of counsel for such Indemnitees in connection with any investigative,
administrative or judicial proceeding commenced or threatened, whether
or not such Indemnitee shall be designated as a party thereto), which
may be suffered by imposed on, incurred by, or asserted against that
Indemnitee, in any manner resulting from, connected with, in respect
of, relating to or arising out of this Agreement, the Notes, the
Mortgage, the Lender's agreement to make the Loan or the use or
intended use of any of the proceeds of the Loan hereunder or the
Transactions (the "indemnified liabilities"); provided, however, that
the Company shall have no obligation to an Indemnitee hereunder with
respect to indemnified liabilities (i) to the extent such is finally
judicially determined to have resulted solely from (A) the gross
negligence or willful misconduct of that Indemnitee or (B) the failure
of such Indemnitee to perform its obligations under any Loan Document
or (C) such Indemnitee's violation of law or (ii) in connection with
the obligations of any Indemnitee under any Loan Document. To the
extend that the undertaking to indemnify, pay and hold harmless set
forth in the preceding sentence may be unenforceable because it is
violative of any law or public policy, the Company shall contribute
the maximum portion which it is permitted to pay and satisfy under
applicable law to the payment and satisfaction of all indemnified
liabilities incurred by the Indemnitees or any of them.
7.4 Additional Amounts. Except to the extent required by any applicable
law, regulation law, regulation or governmental policy, any and all
payments of, or in respect of the Loan, this Agreement, the Notes, any
Loan Document or any Secured Note shall be made free and clear of and
without deduction for or on account of any and all present or future
taxes, levies, imposts, deduction, charges or withholdings and all
liabilities with respect thereto imposed by Panama, The Bahamas, The
Marshall Islands or any other jurisdiction with which the Company or
any Subsidiary has some connection (including any jurisdiction (other
than the United States of America) from or through which payments
under this Agreement, the Notes, any Loan Document, the Guarantee or
the Secured Notes are made) or any political subdivision of or any
taxing authority in any such jurisdiction ("Panamanian Taxes,"
"Bahamian Taxes," "MI Taxes," or "Other Taxes," respectively). If the
Lender, the Company or any Subsidiary Guarantor shall be required by
law to withhold or deduct any Panamanian Taxes, Bahamian Taxes, MI
Taxes, or Other Taxes from or in respect of any sum payable under this
Agreement, the Notes, any Loan Document, the Guarantee or the Secured
Notes, the sum payable by the Company or such Subsidiary Guarantor, as
the case may be, thereunder shall be increased by the amount
("Additional Amounts") necessary so that after making all required
withholdings and deductions, Lender or any Holder or beneficial owner
of Secured Notes shall receive an amount equal to the sum that it
would have received had not such withholdings and deductions been
made; provided that any such sum shall not be paid in respect of any
Panamanian Taxes, Bahamian Taxes, MI Taxes or Other Taxes to a Holder
(an "Excluded Holder") (i) resulting from the beneficial owner of such
Secured Note carrying on business or being deemed to carry on business
in or through a permanent establishment or fixed base in the relevant
taxing jurisdiction or having any other connection with the relevant
taxing jurisdiction or any political subdivision thereof or any taxing
authority therein other than the mere holding or owning of such
Secured Note, being a beneficiary of the Guarantee or any applicable
Subsidiary Guarantee, the receipt of any income or payments in respect
of such Secured Note, the Loan, the Guarantee or any applicable
Subsidiary Guarantee or the enforcement of such Secured Note, the
Loan, the Guarantee or any applicable Subsidiary Guarantee, or (ii)
that would not have been imposed but for the presentation (where
presentation is required) of such Secured Note for payment more than
180 days after the date such payment became due and payable or was
duly provided for, whichever occurs later. The Lender, the Company or
the Subsidiary Guarantors, as applicable, will also (i) make such
withholding or deduction and (ii) remit the full amount deducted or
withheld to the relevant authority in accordance with applicable law,
and, in any such case, the Lender is required to furnish under the
Indenture to each Holder on whose behalf an amount was so remitted,
within 30 calendar days after the date the payment of any Panamanian
Taxes, Bahamian Taxes, MI Taxes or Other Taxes is due pursuant to
applicable law, certified copies of tax receipts evidencing such
payment by the Lender, the Company or the Subsidiary Guarantors, as
applicable. The Company will, upon written request of each Holder
(other than an Excluded Holder), reimburse each such holder for the
amount of (i) any Panamanian Taxes, Bahamian Taxes, MI Taxes or Other
Taxes so levied or imposed and paid by such Holder as a result of
payments made under or with respect to any Secured Notes, and (ii) any
Panamanian Taxes, Bahamian Taxes, MI Taxes or Other Taxes so levied or
imposed with respect to any reimbursement under the foregoing clause
(i) so that the net amount received by such Holder (net of payments
made under or with respect to such Secured Notes, the Loan, the
Guarantee or the applicable Subsidiary Guarantees) after such
reimbursement will not be less than the net amount the Holder would
have received if Panamanian Taxes, Bahamian Taxes, MI Taxes or Other
Taxes on such reimbursement had not been imposed.
At least 30 calendar days prior to each date on which any payment
under or with respect to the Secured Notes is due and payable, if the
Lender, the Company or the Subsidiary Guarantors, as applicable, will
be obligated to pay Additional Amounts with respect to such payment,
the Lender, the Company or the Subsidiary Guarantors, as applicable,
will deliver to the Trustee an officer's certificate stating the fact
that such Additional Amounts will be payable and the amounts will be
payable and the amounts so payable and will set forth such other
information necessary to enable the Trustee to pay such Additional
Amounts to Holders on the payment date.
7.5 Taxes and Other Taxes.
A. Any and all payments by the Company hereunder or under any of the
other Loan Documents shall be made free and clear of and without
deduction or withholding for any and all present or future Taxes,
unless such Taxes are required by law or the administration thereof to
be deducted or withheld and excluding (a) in the case of each Lender,
Taxes imposed on its net income and franchise taxes or taxes on gross
receipts and capital imposed on it by the jurisdiction under the laws
of the United States or any political subdivision thereof (all such
nonexcluded Taxes being hereinafter referred to as "Covered Taxes").
If the Company shall be required by Law or the administration thereof
to deduct or withhold any Covered Taxes from or in respect of any sum
payable hereunder or under any other Loan Documents, the sum payable
shall be increased as may be necessary so that after making all
required deductions or withholdings (including deductions or
withholdings applicable to additional amounts paid under this
paragraph), the Lender receives an amount equal to the sum it would
have received if no such deduction or withholding had been made;
(b) the Company shall make such deductions or withholdings; and
(c) the Company forthwith shall pay the full amount deducted or
withheld to the relevant taxation or other authority in accordance
with applicable Law.
B. The Company agrees to pay forthwith any present or future stamp
documentary taxes or any other excise or property taxes charges or
similar levies (all such taxes, charges and levies being herein
referred to as "Other Taxes") imposed by any jurisdiction (or any
political subdivision or taxing authority thereof or therein) which
arise from any payment made by the Company hereunder or under any of
the other Loan Documents or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement or any
of the other Loan Documents.
C. The Company agrees to indemnify the Lender for the full amount of
Covered Taxes or Other Taxes not deducted or withheld and paid by the
Company in accordance with Section 7.5(A) and (B) to the relevant
taxation or other authority and any Taxes other than Covered Taxes or
Other Taxes imposed by any jurisdiction on amounts payable by the
Company under this Section 7.5 paid by the Lender and any liability
(including penalties, interest and expenses) arising therefrom or with
respect thereto, whether or not any such Taxes or Other Taxes were
correctly or legally asserted. Payment under this indemnification
shall be made within 30 days from the date the Lender makes written
demand therefor. A certificate as to the amount of such Taxes or
Other Taxes and evidence of payment thereof submitted to the Company
shall be prima facie evidence, absent manifest error, of the amount
due from the Company to the Lender.
D. The Company shall furnish to the Lender the original or a certified
copy of a receipt evidencing any payment of Taxes or Other Taxes made
by the Company as soon as such receipt becomes available.
E. The provisions of this Section 7.5 shall survive the termination of
the Agreement and repayment of all Obligations.
7.6 Amendments and Waivers. No amendment, modification, termination or
waiver of any term or provision of this Agreement, of the Note, the
Mortgage or any Other Loan Document or consent to any departure by the
Company therefrom, shall in any event be effective without the prior
written concurrence of the Company, the Lender, the Collateral Agent
and the Trustee, and, upon the request of the Lender, the Collateral
Agent or the Trustee, the receipt of a written opinion of counsel of
the Company addressed to the Lender, the Collateral Agent and the
Trustee to the effect that such amendment, modification, termination,
waiver or consent does not violate or conflict with any of the terms
and provisions of the Indenture or any Contractual Obligations of the
Company.
7.7 Independence of Covenants. All covenants hereunder shall be given
independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be
permitted by an exception to, or be otherwise within the limitation
of, another covenant shall not avoid the occurrence of an Event of
Default or Potential Event of Default if such action is taken or
condition exists.
7.8 Notices. Unless otherwise provided herein, any notice or other
communications herein required or permitted to be given shall be in
writing and may be personally served, telecopied or sent by mail and
shall be deemed to have been given when delivered in person, upon
receipt of telecopy against receipt of answer back or four Business
Days after depositing it in the mail, registered or certified, with
postage prepaid and properly addressed; provided, however, that
notices shall not be effective until received. For the purposes
hereof, the addresses of the parties hereto (unless notice of a change
thereof is delivered as provided in this Section 7.8) shall be set
forth under each party's name on the signature pages hereto.
7.9 Survival of Warranties and Certain Agreements. All agreements,
representations and warranties made herein and in the other Loan
Documents shall survive the execution and delivery of this Agreement
and in the other Loan Documents, the making of the Loan hereunder and
the execution and delivery of the Notes or the Loan Documents and,
notwithstanding the making of the Loan, the execution and delivery of
the Notes and the other Loan Documents or any investigation made by or
on behalf of any party, shall continue in full force and effect. The
closing of the transactions herein contemplated shall not prejudice
any right of one party against any other party in respect of anything
done or omitted hereunder or in respect of any right to damages or
other remedies.
7.10 Failure or Indulgence Not Waiver; Remedies Cumulative. No failure
or delay on the part of the Lender or the holder of the Notes or the
Trustee in the exercise of any power, right or privilege or be
construed to be a waiver of any default or acquiescence therein, nor
shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or of any other
right, power or privilege. All rights and remedies existing under
this Agreement, the Notes or any other Loan Document are cumulative to
and not exclusive of any rights or remedies otherwise available.
7.11 Severability. In case any provision in or obligation under this
Agreement, under a Guarantee or the Notes shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any
way be affected or impaired thereby.
7.12 Headings. Section and Section headings in this Agreement are
included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given
any substantive effect.
7.13 Applicable Law. THIS AGREEMENT, EACH LOAN DOCUMENT OTHER THAN THE
MORTGAGE AND THE NOTES SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW.
7.14 Successors and Assigns; Subsequent Holders of Notes. This
Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of
the parties hereto and the successors and assigns of the Lenders. The
terms and provisions of this Agreement and each Loan Document shall
inure to the benefit of any assignee or transferee of the Notes
pursuant to Section 7.1, and in the event of such transfer or
assignment, the rights and privileges herein conferred upon the Lender
shall automatically extend to and be vested in such transferee or
assignee, all subject to the terms and conditions hereof. The
Company's rights or any interest therein hereunder may not be assigned
without the prior express written consent of the Lender and the
Trustee.
7.15 Counterparts; Effectiveness. This Agreement and any amendments,
waivers, consents or supplements may be executed in any number of
counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one
and the same instrument. This Agreement shall become effective upon
the execution of a counterpart hereof by each of the parties hereto.
7.16 Consent to Jurisdiction; Venue; Waiver of Jury Trial.
A. Any legal action or proceeding with respect to this Agreement, any
Note or any 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
parties to this Agreement hereby irrevocably accepts for itself and in
respect of its respective property, generally and unconditionally, the
jurisdiction of the aforesaid courts. Each of the parties to this
Agreement hereby further irrevocably waives any claim that any such
courts lack jurisdiction over itself, and agrees not to plead or
claim, in any legal action or proceeding with respect to this
Agreement, the Notes or Loan Documents brought in any of the aforesaid
courts, that any such court lacks jurisdiction over such party. Each
of the parties to this Agreement irrevocably consents to the service
of process in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to such
party, at its respective address for notices pursuant to Section 7.8,
such service to become effective 30 days after such mailing. To the
extent permitted by law, each of the parties to this Agreement hereby
irrevocably waives any objection to such service of process and
further irrevocably waives and agrees not to plead or claim in any
action or proceeding commenced hereunder or under the Notes or any
Loan Document that service of process was in any way invalid or
ineffective. Nothing herein shall affect the right of any party to
this Agreement to serve process in any other manner permitted by law
or to commence legal proceedings or otherwise proceed against any
party in any other jurisdiction.
B. Each of the parties to this Agreement hereby irrevocably waives any
objection which it may now or hereafter have to the laying of venue of
any of the aforesaid any of actions or proceedings arising out of or
in connection with this Agreement, the Notes or any of the Loan
Documents brought in the courts referred to in clause A above and
hereby further irrevocably waives and agrees not to plead or claim in
any such court that any such action or proceeding brought in any such
court has been brought in an inconvenient forum.
C. Each of the parties to this Agreement hereby irrevocably waives all
right to a trial by jury in any action, proceeding or counterclaim
arising out of or relating to this Agreement, the Notes or the Loan
Documents or the transactions contemplated hereby or thereby.
7.17 Waiver of Stay, Extension or Usury Laws. The Company covenants
(to the extent that it may lawfully do so) that it will not at any
time insist upon, plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law or any usury law or
other law that would prohibit or forgive the Company from paying all
or any portion of the principal of or interest on the Loan as
contemplated herein, wherever enacted, now or at the time hereafter in
force, or which may affect the covenants or the performance of this
Agreement and (to the extent that it may lawfully do so), the Company
hereby expressly waives all benefit or advantage of any such law, and
covenants that it will not hinder, delay or impede the execution of
any power herein granted to the Lender, but will suffer and permit the
execution of every such power as though no such law had been enacted.
7.18 Usury Savings Clause. It is the intention of the parties hereto
to comply with applicable usury laws (now or hereafter enacted);
accordingly, notwithstanding any provision to the contrary in this
Agreement, any Note, any of the other Loan Documents or any other
document related hereto or thereto, in no event shall this Agreement
or any such other document require the payment or permit the
collection of interest in excess of the maximum amount permitted by
such laws. If from any circumstances whatsoever, fulfillment of any
provision of this Agreement, any Note, any of the other Loan Documents
or of any other document pertaining hereto or thereto, shall involve
transcending the limit of validity prescribed by applicable law for
the collection or charging of interest, then, ipso facto, the
obligation to be fulfilled shall be reduced to the limit of such
validity, and if from any such circumstances the Lender shall ever
receive anything of value as interest or deemed interest by applicable
law under this Agreement, any Note, any of the other Loan Documents or
any other document pertaining hereto or otherwise an amount that would
exceed the highest lawful rate, such amount that would be excessive
interest shall be applied to the reduction of the principal amount
owing under the Loan or on account of any other indebtedness of the
Company, and not to the payment of interest, or if such excessive
interest exceeds the unpaid balance of principal of such indebtedness,
such excess shall be refunded to the Company. In determining whether
or not the interest paid or payable with respect to any indebtedness
of the Company to Lender under any specified contingency, exceeds the
highest lawful rate, the Company and the Lender shall, to the maximum
extent permitted by applicable law, (a) characterize any non-principal
payment as an expense, fee or premium rather than as interest,
(b) exclude voluntary prepayments and the effects thereof,
(c) amortize, prorate, allocate and spread the total amount of
interest thereon does not exceed the maximum amount permitted by
applicable laws, and/or (d) allocate interest throughout the full term
of such indebtedness so that interest between portions of such
indebtedness, to the end that no such portion shall bear interest at a
rate greater than that permitted by applicable law.
WITNESS the due execution hereof by the respective duly authorized
officers of the undersigned as of the date first written above.
COMPANY:
R&B FALCON CORPORATION
By:
Name: Robert Fulton
Title: Executive Vice President
Notice Address:
901 Threadneedle
Houston, TX 77079-2982
Telephone: (281) 496-5000
Telecopy: (281) 496-0285
LENDER:
RBF FINANCE CO.
By:
Name: Leighton Moss
Title: Vice President
Notice Address:
901 Threadneedle
Houston, TX 77079-2982
Telephone: (281) 496-5000
Telecopy: (281) 597-7556
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Exhibit I
R&B FALCON CORPORATION
SENIOR SECURED ___- YEAR TRANCHE PROMISSORY NOTE
New York, New York
$______________ March 26, 1999
FOR VALUE RECEIVED, R&B FALCON CORPORATION (the "Company"),
promises to pay to the order of RBF FINANCE CO. ("Payee"), the
principal amount of _________________________ Dollars ($_____________)
(or such lesser amount as shall equal the aggregate unpaid principal
amount of the __-year Tranche advances of the Loan) at the times
specified by the provisions of the Senior Secured Credit Agreement
dated as of March 26, 1999, as the same may at any time be amended,
modified or supplemented and in effect (the "Loan Agreement") between
the Company and the Lender.
The Company also promises to pay interest on the unpaid principal
amount hereof from the date hereof until paid in full at the rates and
at the times which shall be determined in accordance with the
provisions of the Loan Agreement.
This Note is issued pursuant to and entitled to the benefits of the
Loan Agreement, to which reference is hereby made for a more complete
statement of the terms and conditions under which the Loan evidenced
hereby was made and is to be repaid. Capitalized terms used herein
without definition shall have the meanings set forth in the Loan
Agreement.
The Senior Secured Credit Agreement dated as of March 26, 1999, as
the same may at any time be amended, modified or supplemented and in
effect (the "Loan Agreement") between the Company, the Lender named
therein, and United States Trust Company of New York, as Trustee.
All payments of principal and interest in respect of this Note
shall be made in lawful money of the United States of America in same
day funds to Payee at the office of United States Trust Company of New
York located at 114 West 47th Street, 25th Floor, New York, New York,
or at such other place in the State of New York as shall be designated
in writing for such purpose in accordance with the terms of the Loan
Agreement. Each of Payee and any subsequent holder of this Note
agrees, by its acceptance hereof, that before disposing of this Note
or any part hereof it will make a notation hereon of all principal
payments previously made hereunder and of the date to which interest
hereon has been paid; provided, however, that the failure to make a
notation of any payment made on this Note shall not limit or otherwise
affect the obligation of the Company hereunder with respect to
payments of principal or interest on this Note.
Whenever any payment on this Note shall be stated to be due on a
day which is not a Business Day, such payment shall be made on the
next succeeding Business Day and such extension of time shall be
included in the computation of the payment of interest on this Note.
This Note is subject to mandatory prepayment as provided in the
Loan Agreement and prepayment at the option of the Company as provided
in the Loan Agreement.
THE LOAN AGREEMENT AND THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK WITHOUT REGARD TO THE PRINCIPALS OF CONFLICTS OF LAWS.
Upon the occurrence of an Event of Default, the unpaid balance of
the principal amount of this Note, together with all accrued but
unpaid interest thereon, may become, or may be declared to be, due and
payable in the manner, upon the conditions and with the effect
provided in the Loan Agreement.
The terms of this Note are subject to amendment only in the manner
provided in the Loan Agreement.
No reference herein to the Loan Agreement and no provision of this
Note or the Loan Agreement shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of
and interest on this Note at the place, at the respective times, and
in the currency herein prescribed.
The Company promises to pay all costs and expenses, including all
attorneys' fees, all as provided in Section 7.2 of the Loan Agreement,
incurred in the collection and enforcement of this Note. The Company
and endorsers of this Note hereby consent to renewals and extensions
of time at or after the maturity hereof, without notice, and hereby
waive diligence, presentment, protest, demand and notice of every kind
and, to the full extent permitted by law, the right to plead any
statute of limitations as a defense to any demand hereunder.
IN WITNESS WHEREOF, the Company has caused this Note to be executed
and delivered by its duly authorized officer, as of the day and year
and at the place first above written.
R&B FALCON CORPORATION
By:
Title:
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EXHIBIT II
NOTICE OF BORROWING
The undersigned hereby certifies that he is the ________________
__________________ of R&B Falcon Corporation, a Delaware corporation (
the "Company"), and that as such he is authorized to execute this
Notice of Borrowing on behalf of the Company. With reference to that
certain Loan Agreement dated as of _______________, 1999 (as same may
be amended, modified, increased, supplemented and/or restated from
time to time, the "Agreement") entered into by and between the Company
and RBF Finance Co., and any other future holder of any Note issued
pursuant to the Agreement ("Lender"), the undersigned further
certifies, represents and warrants on behalf of the Company that all
of the foregoing statements are true and correct (each capitalized
term used herein having the same meaning given to it in the Agreement
unless otherwise specified):
(a)The Company requests that the Lender make an advance to the Company
on the 7-year Tranche of the Loan in the aggregate principal amount of
$_________________ and an advance to the Company on the 10-year
Tranche of the Loan in the aggregate principal amount of $__________
by no later than _______________. Immediately following such advance,
the aggregate outstanding balance of advances made on the 7-year
Tranche and the 10-year Tranche Loan shall equal $_______________ and
$___________, respectively.
(b)As of the date hereof, and as a result of the making of the
requested advance, no event shall have occurred and be continuing or
would result from the consummation of the borrowing contemplated by
the Notice of Borrowing which would constitute an Event of Default, a
Potential Event of Default or a Default.
(c)Borrower has performed and complied with all agreements and
conditions contained in the Agreement which are required to be
performed or complied with by Borrower before or on the date hereof
and, except as waived in writing or otherwise agreed to in writing by
the Lender, all of the conditions precedent set forth in Section 3.1
or 3.2, as applicable, of the Agreement under Conditions to Loan have
been satisfied.
(d)The representations and warranties of the Company contained in
Section 4 of the Agreement are true, correct and complete in all
material respects on and as of the date hereof to the same extent as
though made on and as of that date, and (ii) on or prior to the date
hereof, the Company has performed and complied with in all material
respects all covenants and conditions to be performed and observed by
the Company on or prior to the date hereof.
EXECUTED AND DELIVERED this _______ day of _____________, _____.
R&B FALCON CORPORATION
By:
Name:
Title:
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EXHIBIT III
FORM OF LEGAL OPINION
Opinions of Counsel that (i) the Company has duly
authorized, executed and delivered the Mortgage; (ii) the Mortgage
constitutes a legally binding obligation of the Company enforceable
against the Company in accordance with its terms (except as (i) the
enforceability thereof may be limited bankruptcy, insolvency or other
similar laws affecting creditors' rights, generally, and (ii) the
enforceability thereof may be limited by right of acceleration and the
availability of enforceable remedies may be limited by equitable
principles of general applicability, and subject to such other
exceptions, limitations or qualifications that are usual and customary
for such opinions) and (iii) the Mortgage constitutes a valid and
perfected first mortgage lien on the Mortgaged Rig.
- ----------------------------------------------------------------------
SCHEDULE 4.5
Title/Lien Exceptions
1.Statutory or inchoate liens for amounts not more than 30 days past
due or that are being contested in good faith.
EXHIBIT 10.8
[FALCON 100]
=========================================================================
SENIOR SECURED LOAN AGREEMENT
Dated as of
March 26, 1999
between
R&B FALCON CORPORATION,
as Borrower
and
RBF FINANCE CO.,
as Lender
=========================================================================
TABLE OF CONTENTS
Page
SECTION 1.DEFINITIONS 1
1.1.Certain Defined Terms 1
1.2.Other Defined Terms 5
1.3.Accounting Terms 5
1.4.Other Definitional Provisions 5
SECTION 2.LOAN COMMITMENT AND LOAN 5
2.1.Termination of Loan Commitment 7
2.2.Termination of Loan Commitment 7
2.3.Interest on the Loans 7
2.4.Redemptions 8
2.5.Excess Proceeds Offers 10
2.6.Use of Proceeds 12
2.7.Commitment Fee 12
SECTION 3.CONDITIONS 12
3.1.Conditions to Initial Advances on the Loan 12
3.2.Conditions to Subsequent Advance on the Loan 14
SECTION 4.REPRESENTATIONS AND WARRANTIES 14
4.1.Organization and Good Standing; Capitalization 15
4.2.Authorization and Power 15
4.3.No Conflicts or Consents 15
4.4.Enforceable Obligations 15
4.5.Properties; Liens 16
4.6.No Default 16
4.7.Use of Proceeds; Margin Stock, etc 16
4.8.Survival of Representations and Warranties 16
SECTION 5.COVENANTS 16
5.1.Indenture Covenants 16
5.2.Reports of Defaults, Etc 17
5.3.Payments in U.S. Dollars 17
5.4.Performance and Enforcement Under the Loan Documents 17
5.5.Liens 17
5.6.Transfer of Mortgage Rig to a Restricted Subsidiary 17
5.7.Security Interest and Lien on Equipment 17
SECTION 6.EVENTS OF DEFAULT 18
6.1.Failure To Make Payments When Due 18
6.2.Default Under The Indenture 18
6.3.Other Loan Agreement 18
6.4.Breach of Certain Covenants 18
6.5.Breach of Warranty 18
6.6.Other Defaults Under Agreement or Loan Documents 18
6.7.Involuntary Bankruptcy; Appointment of Custodian, etc 18
6.8.Voluntary Bankruptcy; Appointment of a Custodian; etc 19
SECTION 7.MISCELLANEOUS 20
7.1.Pledges and Assignments of Loan and Note 20
7.2.Expenses 20
7.3.Indemnity 20
7.4.Additional Amounts 21
7.5.Taxes and Other Taxes 22
7.6.Amendments and Waivers 23
7.7.Independence of Covenants 23
7.8.Notices 23
7.9.Survival of Warranties and Certain Agreements 23
7.10.Failure or Indulgence Not Waiver; Remedies Cumulative 24
7.11.Severability 24
7.12.Headings 24
7.13.Applicable Law 24
7.14.Successors and Assigns; Subsequent Holders of Notes 24
7.15.Counterparts; Effectiveness 24
7.16.Consent to Jurisdiction; Venue; Waiver of Jury Trial 25
7.17.Waiver of Stay, Extension or Usury Laws 25
7.18.Usury Savings Clause 25
EXHIBITS
I FORM OF NOTE
II FORM OF NOTICE OF BORROWING
III FORM OF OPINION OF GARDERE & WYNNE - SPECIAL COUNSEL FOR THE BORROWER
IV FORM OF MORTGAGE
V SCHEDULE OF EQUIPMENT
- ------------------------------------------------------------------------
This Senior Secured Loan Agreement is dated as of March 26, 1999,
and entered into by and among R&B Falcon, Inc., a Delaware corporation
(the "Company") and RBF Finance Co., a Delaware corporation (the
"Lender").
RECITALS
WHEREAS, the Lender has entered into an Indenture of even date
herewith (as the same may be amended, or supplemented or otherwise
modified from time to time, the "Indenture") with United States Trust
Company of New York as Trustee (the "Trustee"), pursuant to which the
Lender will issue in two series up to $400,000,000 aggregate principal
amount of its 11% Senior Secured Notes due 2006 (the "7-year Secured
Notes") and up to $400,000,000 aggregate principal amount of its
11 3/8% Senior Secured Notes due 2009 (the "10-year Secured Notes;" the
7-year Secured Notes and the 10-year Secured Notes being hereinafter
collectively called the "Secured Notes"); and
WHEREAS, the Indenture provides that the Lender may utilize the
proceeds of the Secured Notes to make loans to the Company, each for
the purpose of either (i) financing all or a portion of the cost of
acquiring, constructing, altering, improving or repairing a drilling
rig or drillship (a "Rig") or improvements used or to be used in
connection with such a Rig, or (ii) financing all or any part of the
purchase price of the Rig or improvements used or to be used in
connection with such Rig, which indebtedness is incurred prior to or
within one year after the date of the completion of construction,
alteration, improvement or repair or the commencement of commercial
operations thereof; and
WHEREAS, the Company desires that the Lender extend senior secured
credit facilities to the Company for such purposes herein; and
WHEREAS, the Indenture provides that the Lender will enter into a
Senior Secured Note Security and Pledge Agreement of even date
herewith (the "Issuer Security Agreement") between the Lender, the
Trustee and United States Trust Company of New York as Collateral
Agent (in such capacity, the "Collateral Agent"), pursuant to which
the Lender will pledge and grant a security in the loans made with the
proceeds of the Secured Notes which are or will be secured by Rigs;
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, the parties
hereby agree as follows:
SECTION 1 DEFINITIONS
1.1 Certain Defined Terms. The following terms used in this Agreement
shall have the following meanings:
"Agreement" means this Senior Secured Loan Agreement dated as of
March 26, 1999, as it may be amended, supplemented or otherwise
modified from time to time in accordance with the terms hereof.
"Board of Directors" means, with respect to any Person, the Board
of Directors of such Person or any duly authorized committee of that
Board.
"Board Resolution" means a duly adopted resolution of the Board of
Directors of the Company in full force and effect at the time of
determination and certified as such by the Secretary or Assistant
Secretary of the Company.
"Business Day" means any day excluding Saturday, Sunday and any
day which is a legal holiday under the laws of New York, New York or
is a day on which banking institutions therein located are authorized
or required by law or other governmental action to close.
"Cash Equivalents" means (i) U.S. Governmental Obligations with a
maturity of four years or less; (ii) commercial paper issued by any
corporation if such commercial paper has credit ratings of at least "A-
1" from S&P or at least "P-1" by Moody's; (iii) certificates of
deposit, bankers' acceptances, time deposits, Eurocurrency Deposits
and similar types of Investments routinely offered by commercial banks
with final maturities of one year or less issued by commercial banks
having combined capital and surplus in excess of $100,000,000; and
(iv) shares in money market mutual or similar funds having assets in
excess of $100,000,000.
"Closing Date" means the date on or before March 26, 1999 on which
the initial advance of the Loan is made and the conditions set forth
in Section 3.1 are satisfied or waived in accordance with Section 7.7.
"Collateral" means the Mortgaged Rig and any other property
subject to the Lien created under a Mortgage or a Loan Document.
"Commission" means the Securities and Exchange Commission.
"Company" has the meaning ascribed to such term in the
introduction to this Agreement.
"Collateral Agent" has the meaning assigned to such term in the
recitals to this Agreement.
"Contractual Obligation," as applied to any Person, means any
provision of any Security issued by that Person or of any indenture,
mortgage, deed of trust, contract, undertaking, agreement or other
instrument to which that Person is a party or by which it or any of
its properties is bound or to which it or any of its properties is
subject.
"Dollars" or the sign "$" means the lawful money of the United
States of America.
"Equipment" means all items of equipment of the Borrower used in
connection with the Mortgaged Rig, whether currently owned or
hereafter acquired, and whether on board the Mortgaged Rig or not,
including but not limited to the items set forth on Schedule V
attached hereto.
"Event of Default" means each of the events set forth in
Section 6.
"indemnified liabilities" has the meaning ascribed to such term in
Section 7.3.
"Indemnitees" has the meaning ascribed to such term in
Section 7.3.
"Indenture" has the meaning ascribed to such term in the recitals
of this Agreement.
"Laws" means all applicable statutes, laws, ordinances,
regulations, rules, orders, judgments, writs, injunctions or decrees
of any state, commonwealth, nation, territory, possession, province,
county, parish, town, township, village, municipality or Tribunal, and
"Law" means each of the foregoing.
"Lender" has the meaning ascribed to that term in the introduction
of this Agreement and shall include any assignee of the Loan or the
Note or Loan Commitment to the extent of such assignment.
"Lien" means any lien, mortgage, pledge, assignment, security
interest, charge or encumbrance of any kind (including any conditional
sale or other title retention agreement, any lease in the nature
thereof, and any agreement to give any security interest) and any
option, trust or other preferential arrangement having the practical
effect of any of the foregoing.
"Loan" means, collectively, the loans made by the Lender pursuant
to Section 2.1.
"Loan Documents" means this Agreement, the Note and the Mortgage.
"Margin Stock" has the meaning assigned to that term in
Regulation U of the Board of Governors of the Federal Reserve System
as in effect from time to time.
"Material Adverse Effect" means (i) a material adverse effect upon
the business, property, assets, nature of assets, liabilities
condition (financial or otherwise), results of operation or prospects
of the Company and its Restricted Subsidiaries, taken as a whole, or
(ii) the impairment of the ability of the Company or any of its
Restricted Subsidiaries to perform, or the impairment of the ability
of Lender to enforce, any material right or remedy under the
Obligations.
"Maturity" means the date on which the principal of the Loan,
whether the 7-year Tranche or 10-year Tranche or both, becomes due and
payable as provided in this Agreement whether at Stated Maturity, upon
redemption, by declaration of acceleration or otherwise.
"Mortgage" means a mortgage substantially in the form of Exhibit
IV covering the Mortgaged Rig.
"Mortgaged Rig" means the Falcon 100.
"Notes" has the meaning ascribed to such term in Section 2.1C.
"Notice of Borrowing" means a notice substantially in the form of
Exhibit II annexed hereto with respect to a proposed borrowing.
"Obligations" means all obligations of every nature of the Company
from time to time owed to the Lender under the Loan Documents, whether
for principal, reimbursements, interest (including post-petition
interest), fees, expenses, indemnities or otherwise, and whether
primary, secondary, direct, indirect, contingent, fixed or otherwise
(including obligations of performance).
"Officer" means the Chairman of the Board, the Chief Executive
Officer, the Chief Operating Officer, the President, any Vice
President, the Chief Financial Officer, the Controller, the Chief
Accounting Officer, any Vice President, the Treasurer or the Secretary
of the Company.
"Officers' Certificate" means, as applied to any corporation, a
certificate executed on behalf of such corporation by two officers;
provided, however, that every Officers' Certificate with respect to
the compliance with a condition precedent to the making of the Loans
hereunder shall include (i) a statement that the officer or officers
making or giving such Officers' Certificate have read such condition
and any definitions or other provisions contained in this Agreement
relating thereto, (ii) a statement that, in the opinion of the
signers, they have made or have caused to be made such examination or
investigation as is necessary to enable them to express an informed
opinion as to whether or not such condition has been complied with,
and (iii) a statement as to whether, in the opinion of the signers,
such condition has been complied with.
"Other Loan" means a loan made pursuant to an Other Loan Agreement
by the Lender with the proceeds of the Secured Notes which is secured
by a Mortgaged Rig.
"Other Loan Agreement" means a loan agreement among the Lender,
the Company and the Trustee pursuant to which the Lender will utilize
the proceeds of the Secured Notes to make an Other Loan for the
purposes specified in the second recital of this Agreement
"Other Mortgaged Rig" means a Rig which has been mortgaged to
secure an Other Loan or which is the subject of a construction
contract which has been pledged to secure an Other Loan.
"Other Taxes" has the meaning ascribed to such term in
Section 7.6.
"Payment Office" shall mean the office of United States Trust
Company of New York located at 114 West 47th Street, 25th Floor, New
York, New York 10036 or such other office in the State of New York as
the Lender may designate to the Company and the Trustee from time to
time.
"Potential Event of Default" means a condition or event which,
after notice or lapse of time or both, would constitute an Event of
Default if that condition or event were not cured or removed within
any applicable grace or cure period.
"Purchase Agreement" means the Purchase Agreement dated March 19,
1999 among the Lender, the Company and the Initial Purchaser relating
to the Secured Notes.
"Securities" means any stock, shares, partnership interests,
voting trust certificates, certificates of interest or participation
in any profit sharing agreement or arrangement, bonds, debentures,
options, warrants, notes, or other evidences of indebtedness, secured
or unsecured, convertible, subordinated or otherwise, or in general
any instruments commonly known as "securities" or any certificates of
interest, shares or participations in temporary or interim
certificates for the purchase or acquisition of, or any right to
subscribe to, purchase or acquire, any of the foregoing.
"7-year Tranche" means advances on the Loan aggregating up to
$52,650,000 and having a final Loan Maturity of March 15, 2006.
"Taxes" means all taxes, assessments, fees, levies, imposts,
duties, penalties, deductions, liabilities, withholdings or other
charges of any nature whatsoever, including interest penalties, from
time to time or at any time imposed by any Law or any Tribunal.
"10-year Tranche" means advances on the Loan aggregating up to
$52,650,000 and having a final Maturity of March 15, 2009.
"Transaction Costs" means the fees, costs and expenses payable by
the Company pursuant hereto and other fees, costs and expenses payable
by the Company in connection with the Transactions.
"Transactions" shall mean, collectively, (i) the issuances and
sale of the Secured Notes, (ii) the incurrence of the Loan hereunder
on the Closing Date, (iii) the incurrence of the Other Loans under the
Other Loan Agreements, (iv) any other transaction on the Closing Date
contemplated in relation to the foregoing and (v) the payment of fees
and expenses in connection with the foregoing.
"Tranches" means collectively the 7-year Tranche and the 10-year
Tranche.
"Tribunal" means any governmental, any arbitration panel, any
court or any governmental department, commission, board, bureau,
agency, authority or instrumentality of the United States or any
state, province, commonwealth, nation, territory, possession, county,
parish, town, township, village or municipality, whether now or
hereafter constituted and/or existing.
"Trustee" has the meaning ascribed to such term in the
introduction of this Agreement and shall include any successor Trustee
appointed pursuant to terms of the Indenture.
"U.S. Legal Tender" means such coin or currency of the United
States of America as at the time of payment shall be legal tender for
the payment of public and private debts.
1.2 Other Defined Terms. Any capitalized term used in this Agreement
and not defined herein shall have the meaning assigned to such term in
the Indenture.
1.3 Accounting Terms. For the purposes of this Agreement, all
accounting terms to otherwise defined herein shall have the meanings
assigned to them in conformity with GAAP.
1.4 Other Definitional Provisions. Any of the terms defined in
Section 1.1 may, unless the context otherwise requires, be used in the
singular or the plural depending on the reference.
SECTION 2 LOAN COMMITMENT AND LOAN
2.1 The Loan and Notes.
A. Loan Commitment. Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties of
the Company herein set forth, the Lender hereby agrees to lend to the
Company on the Closing Date and thereafter up to $105,300,000 in the
aggregate (the "Loan") consisting of $52,650,000 of 7-year Tranche
advances and $52,650,000 of 10-year Tranche advances. The Lender's
commitment to make the Loan to the Company pursuant to this
Section 2.1 is herein called the "Loan Commitment."
B. Notice of Borrowing. When the Company desires to borrow under
this Agreement, it shall deliver to the Collateral Agent a Notice of
Borrowing no later than 11:00 a.m. (New York time), at least one
Business Day in advance of the Closing Date or such other date as
shall be agreed to by the Lender and the Trustee. The Notice of
Borrowing shall specify the amount of each Tranche and the applicable
date of borrowing (which shall be a Business Day).
C. Disbursement of Funds. No later than 3:00 p.m. (New York time) on
the Closing Date, the Lender promptly will make available to the
Company by depositing to its account at the Payment Office the
aggregate of the amount of the Loan to be made on such Closing Date.
D. Notes. The Company shall execute and deliver to the Lender on the
Closing Date two Notes dated the Closing Date, one substantially in
the form of Exhibit I annexed hereto with appropriate insertions to
evidence the maximum amount of the 7-year Tranche of Loan which may be
made hereunder by the Lender and the other substantially in the form
of Exhibit I annexed hereto with appropriate insertions to evidence
the maximum amount of 10-year Tranche of the Loan which may be made by
the Lender hereunder.
E. Scheduled Payments of Loan.
(i)One of the Other Loan Agreements relates to the Mortgaged Rig
Deepwater IV, which Mortgaged Rig is presently under construction
pursuant to a construction contract and which has an expected
completion date during the third calendar quarter of 2000. Upon
completion of the Mortgaged Rig Deepwater IV, the Company is required
to grant a Lien on such Mortgaged Rig pursuant to a Mortgage. Upon
the filing of the Mortgage for the Mortgaged Rig Deepwater IV, the
Company and the Lender agree that the $16,000,000 of the 7-year
Tranche and $16,000,000 of the 10-year Tranche will be exchanged for
additional advances under the Other Loan Agreement relating to the
Mortgaged Rig Deepwater IV in an aggregate principal amount of
$32,000,000.
(ii)The Company shall pay on or before 10:00 a.m. on the date of the
final Maturity of the 7-year Tranche of the Loan all of the principal
amount of the 7-year Tranche remaining outstanding, which amount will
be $52,650,000 principal amount of the Loan, reduced by any previous
prepayments of principal made on the 7-year Tranche of the Loan to the
extent that such payments have been allocated pursuant to the
provisions of Section 2.3 hereof and the Indenture to the 7-year
Secured Notes, together with accrued and unpaid interest, fees and a
pro rata portion of the amount of the Special Interest and Additional
Amounts, if any, due on the 7-year Secured Notes. The Company shall
pay on or before 10:00 a.m. on the date of the final Maturity of the
10-year Tranche all of the principal amount of the 10-year Tranche
then remaining outstanding, reduced by any previous prepayments of
principal made on the 10-year Tranche of the Loan to the extent that
such payments have been allocated pursuant to the provisions of
Section 2.3 hereof and the Indenture to the 10-year Secured Notes,
together with accrued and unpaid interest fees and a pro rata portion
of the amount of the Special Interest and Additional Amounts, if any,
due on the 10-year Secured Notes. Such payments shall be made
directly to the Trustee for deposit in the Issuer Escrow Account
established pursuant to the Issuer Escrow Agreement.
F. Termination of Loan Commitment. The Loan Commitment hereunder shall
terminate on the earlier (i) the Stated Maturity (whether by
acceleration, redemption, purchase or otherwise) of the Secured Notes
pursuant to the terms of the Indenture or (ii) May 14, 1999, if no
portion of the Loan has been made on or before such date (other than
as a result of failure of the Lender to fulfill its obligations
hereunder).
G. Satisfaction by Payments on the Guarantee. Pursuant to the
Indenture, the Company will guarantee the due and punctual payment of
the principal of, premium, if any, and interest on, and all other
amounts payable under, the Secured Notes (including any Additional
Amounts payable upon redemption, in respect thereof) when and as the
same shall become due and payable, whether at Stated Maturity, by
declaration of acceleration or otherwise. To the extent that the
Company makes a payment on the Guarantee, it will be deemed to have
made a payment on the Issuer Loans then outstanding, such payments to
be allocated pro rata to each of Tranches of the Loan and pro rata to
the Loan and the Other Loans.
2.2 Interest on the Loans.
A. Rate of Interest. The 7-year Tranche of the Loan shall bear interest
on the unpaid principal amount thereof from the date made through
Maturity for the 7-year Tranche (whether by prepayment, acceleration
or otherwise) at a rate equal to 11% per annum plus 2 basis points per
annum and the 10-year Tranche of the Loan shall bear interest on the
unpaid principal amount thereof from the date made through Maturity
for the 10-year Tranche (whether by prepayment, acceleration or
otherwise) at a rate equal to 11 3/8% per annum plus 2 basis points per
annum.
B. Special Interest. The Lender and the Company have entered into a
Registration Rights Agreement (the "Registration Rights Agreement")
dated March 26, 1999 with Donaldson, Lufkin & Jenrette Securities
Corporation for the benefit of the Holders of the Secured Notes, in
which the Lender and the Company have agreed to: (A) file a
registration statement within 60 days after the closing date of the
offering of Secured Notes for an offer to exchange Secured Notes of
each series for debt securities of that series with identical terms
(except for transfer restrictions); (B) use their best efforts to
cause the registration statement to become effective within 150 days
after the closing date of the offering of the Secured Notes; and
(C) complete the registered exchange offer within 180 days after the
closing date of the offering of the Secured Notes. Under certain
circumstances, the Lender and the Company may be required to file a
shelf registration statement for the Secured Notes registering the
resale of the Secured Notes. If the Lender and the Company do not
comply with their obligations under the Registration Rights Agreement,
the Lender will be required to pay additional interest ("Special
Interest") specified in Section 5 of the Registration Rights
Agreement. The Company will pay on each date that the Lender pays
Special Interest to the Holders of the Secured Notes as Special
Interest on the Loan an amount equal to the percentage of Special
Interest, if any, which the Lender owes to the Holders of the Secured
Notes that the principal amount of the Loan bears to the total
aggregate principal amount of the Loan and all Other Loans then
outstanding. Such payment shall be paid directly to the Trustee for
deposit into the Issuer Escrow Account.
Notwithstanding any provisions of this Section 2.2 or any
other provision herein, in no event will the combined sum of interest
(cash or otherwise) on the Loan exceed the maximum amount permitted by
applicable law.
C. Interest Payments. Interest (including Special Interest, if any,
and Additional Amounts, if any) shall be payable semi-annually on
March 15 and September 15 of each year, commencing September 15, 1999
but in no event to exceed the maximum permitted by applicable law.
All payments of interest on the Loan shall be made on or before 10:00
a.m. (New York time) on the date of payment and shall be paid directly
to the Trustee for deposit into the Issuer Escrow Account.
D. Post-Maturity Interest. Any principal payments on the Loan not paid
when due and, to the extent permitted by applicable law, any interest
payment on the Loan not paid when due, in each case whether at Stated
Maturity, by notice of prepayment, by acceleration or otherwise, shall
thereafter bear interest payable upon demand at a rate of interest
otherwise payable under this Agreement for the Loan but in no event to
exceed the maximum interest rate permitted by applicable law.
E. Computation of Interest. Interest on the Loan shall be computed on
the basis of a 360-day year of twelve 30-day months.
2.3 Redemptions.
A. Redemption upon Loss of the Mortgaged Rig. If an Event of Loss
occurs at any time with respect to the Mortgaged Rig attributable to
the Loan, the Company shall apply funds in an amount (the "Loss
Redemption Amount") equal to the principal amount of the Loan
outstanding on the date (the "Loss Date") on which such Event of Loss
was deemed to have occurred, together with all accrued and unpaid
interest (including Special Interest, if any, and Additional Amounts,
if any) thereon, to the prepayment of the Loan. If an Event of Loss
occurs at any time with respect to any Other Mortgaged Rig, the
Indenture and the applicable Other Loan Agreement require that the
Company shall apply funds to the principal amount of the applicable
Other Loan secured by the Other Mortgaged Rig outstanding on the Loss
Date for such other Mortgaged Rig, together with all accrued and
unpaid interest (including Special Interest, if any, and Additional
Amounts, if any) thereon, to the payment of such Other Loan. If a
Default under the Indenture shall have occurred and be continuing at
the time of the receipt of the Event of Loss Proceeds with respect to
such Other Mortgaged Rig, the Indenture requires, and the Company
hereby agrees, that it shall prepay the Loan and the remaining Other
Loans on a pro rata basis in an aggregate amount equal to the excess
of the Net Event of Loss Proceeds over the Loss Redemption Amount, if
any, together with all accrued and unpaid interest (including Special
Interest, if any, and Additional Amounts, if any) thereon for the
Other Loan which is secured by such Other Mortgaged Rig. All payments
on the Loan shall be allocated on a pro rata basis between the
Tranches and shall be made directly to the Trustee for deposit into
the Issuer Escrow Account.
B. Redemption upon Sale of the Mortgaged Rig. If the Mortgaged Rig or
the Capital Stock of a Subsidiary Guarantor then owning the Mortgaged
Rig is sold in compliance with the terms of the Indenture, the Company
shall apply funds in an amount (the "Sale Redemption Amount") equal to
the principal amount of the Loan secured by the Mortgaged Rig on the
date of such sale (the "Sale Date"), together with all accrued and
unpaid interest (including Special Interest, if any, and Additional
Amounts, if any thereon, plus any additional amounts required by the
Lender to redeem the Secured Notes to the extent required by
Section 3.9 of the Indenture, to the prepayment of the Loan. If any
Other Mortgaged Rig or the Capital Stock of a Subsidiary Guarantor
then owning an Other Mortgaged Rig is sold in compliance with the
terms of the Indenture, the Company shall apply funds equal to the
applicable Other Loan secured by the Other Mortgaged Rig outstanding
on the Sale Date for such Other Mortgaged Rig, together with all
accrued and unsecured interest (including Special Interest, if any,
and Additional Amounts, if any) thereon, to the payment of such Other
Loan. If a Default under the Indenture shall have occurred and be
continuing at the time of receipt of the cash consideration with
respect to such Other Mortgaged Rig or Capital Stock of the Subsidiary
Guarantor owning such Other Mortgaged Rig, the Indenture requires, and
the Company hereby agrees, that it shall also be required to prepay
the Loan and the remaining Other Loans on a pro rata basis in an
aggregate amount equal to the excess of such Net Available Cash
attributable to such Sold Mortgaged Rig over such Sale Redemption
Amount. Such payments on the Loan and the Other Loans pursuant hereto
shall be respectively allocated between the Tranches of the Loan and
the Other Loans on a pro rata basis and shall be made directly to the
Trustee for deposit into the Issuer Escrow Account.
C. Other Redemptions.
(i)Redemptions to Fund Optional Redemptions of the 10-year Secured
Notes. Under the terms of the Indenture, on or after March 15, 2004,
the 10-year Secured Notes will be redeemable, at the Lender's option,
in whole or in part, at any time or from time to time, upon not less
than 30 nor more than 60 days' prior notice to the Holders of the 10-
year Secured Notes, at the following Redemption Prices (expressed in
percentages of principal amount), plus accrued and unpaid interest
(including Special Interest, if any, and Additional Amounts, if any)
to the Redemption Date, if redeemed during the 12-month period
commencing on March 15 of the years set forth below.
Redemption
Period Price
2004 105.6875%
2005 103.7917
2006 101.8958
2007 and thereafter 100.0000
The Company shall prepay the 10-year Tranche of the Loan and of
the Other Loans, in whole or in part, to provide funds for such
redemption. Any prepayments by the Company on the Loan and the
Other Loans required to be made to provide funds for the Lender to
make such a redemption shall be made on this Loan and the Other
Loans on a pro rata basis. All payments on the Loan and the Other
Loans pursuant hereto shall be made directly to the Trustee for
deposit into the Issuer Escrow Account.
(ii)Redemptions to Fund Optional Redemptions of the 7-year Secured
Notes. Under the terms of the Indenture, the 7-year Secured Notes
will be redeemable, at the Lender's option at any time in whole or
from time to time in part upon not less than 30 and not more than
60 days' prior notice mailed by first class mail to the Holders of the
7-year Secured Notes, on any date prior to Maturity at a price equal
to 100% of the principal amount thereof plus accrued and unpaid
interest (including Special Interest, if any, and Additional Amounts,
if any) to the Redemption Date plus the Make-Whole Premium applicable
to the 7-year Secured Notes determined in the manner provided for in
Section 3.7 of the Indenture. The Company shall prepay the 7-year
Tranche of the Loan and of the Other Loans in whole or in part to
provide funds for such redemption. Any prepayments by the Company on
the Loan and the Other Loans required to be made to provide funds for
the Lender to make such a redemption shall be made on the Loan and the
Other Loans on a pro rata basis. All payments on the Loan and the
Other Loans pursuant hereto shall be made directly to the Trustee for
deposit into the Issuer Escrow Account.
D. Excess Proceeds Offers. The Indenture provides in Section 3.10
thereof that if, as of the first day of any calendar month, the
aggregate amount of Sale Excess Proceeds and Loss Excess Proceeds
exceeds 10% of consolidated total assets of the Company, and if the
aggregate amount of Sale Excess Proceeds and Loss Excess Proceeds in
excess of 10% of consolidated total assets of the Company that has not
theretofore been subject to an Excess Proceeds Offer (as defined
below) (the "Excess Proceeds Offer Amount"), totals at least $10
million, the Lender must, not later than the fifteenth Business Day of
such month, make an offer ( an "Excess Proceeds Offer") to purchase
from the Holders of the Secured Notes, pursuant to and subject to the
conditions contained in the Indenture, and from Holders of the New
Senior Notes, pursuant to provisions of the New Senior Note Indenture,
Secured Notes at a purchase price equal to 100% of their principal
amount, plus any accrued interest (including Additional Amounts and
Special Interest, if any) to the date of purchase and New Senior Notes
at a purchase price equal to 100% of their principal amount, plus any
accrued interest (including Special Interest, if any) to the date of
purchase in an aggregate principal amount equal to the Excess Proceeds
Offer Amount (an "Excess Proceeds Payment"). If the Lender is ever
required pursuant to Section 3.10 of the Indenture to make an Excess
Proceeds Offer to the Holders of the Secured Notes to purchase from
such Holders their Secured Notes, and to the Holders of Senior Notes
to purchase from such Holders their New Senior Notes, the Indenture
provides, and the Company agrees, that the Company will prepay the
Loan and the Other Loans on a pro rata basis to permit the Lender to
purchase any Secured Notes validly tendered pursuant to an Excess
Proceeds Offer. All payments on the Loan shall be allocated between
the appropriate Tranches of the Loan; and all payments on the Loan and
the Other Loans pursuant hereto shall be made directly to the Trustee
for deposit into the Issuer Escrow Account.
E. Change of Control. If the Lender is ever required to make pursuant
to the provisions of Section 4.8 of the Indenture a Change of Control
Offer to the Holders of the Secured Notes at a purchase price in cash
equal to 101% of the principal amount thereof plus accrued and unpaid
interest (including Additional Amounts and Special Interest, if any)
thereon, the Indenture provides, and Company agrees, that the Company
will prepay the Loan and the Other Loans on a pro rata basis at a
redemption price equal to 101% of the principal amount hereof being
repaid, plus accrued and unpaid interest, Special Interest, if any,
and Additional Amounts, if any, thereon, in order to provide funds
sufficient to permit the Lender to purchase any Secured Notes validly
tendered pursuant to the foregoing offer to purchase Secured Notes
upon a Change of Control. All payments on the Loan shall be allocated
between the appropriate Tranches of the Loans and all payments on the
Loan and the Other Loans pursuant hereto shall be made directly to the
Trustee for deposit into the Issuer Escrow Account.
F. Notice. The Company shall notify the Lender and the Trustee of any
prepayment to be made pursuant to this Section 2.3 at least two
Business Days prior to such prepayment date.
G. Determination of Amounts of the Tranches Subject to Such
Redemptions. The Lender will submit a written determination to the
Trustee for its approval of the amount (including the pro rata
allocations between the Tranches of the Loan and between the Loan and
the Other Loans) with respect to any such redemption. The Trustee
shall approve or disapprove such allocations in its sole discretion
and such decision shall be conclusive, absent manifest error. A
certificate of the Lender setting forth such determination, with the
written approval of the Trustee thereon, shall be delivered to the
Company at least one Business Day prior to the payment date.
H. Company's Mandatory Prepayment Obligation; Application of
Prepayments. All prepayments shall include payment of accrued
interest (including Special Interest and Additional Amounts, if
applicable) on the principal amount so prepaid and shall be applied to
payment of interest before application to principal.
I. Manner and Time of Payment. Unless otherwise expressly set forth
herein, all payments of principal and interest hereunder and under the
Notes by the Company shall be made without defense, set-off or
counterclaim and in same-day funds and delivered to the Trustee for
deposit into the Issuer Escrow Account, unless otherwise specified,
not later than 10:00 a.m. (New York time) on the date due at the
Payment Office; funds received by the Trustee after that time shall be
deemed to have been paid by the Company on the next succeeding
Business Day.
J. Payments on Non-Business Days. Whenever any payment to be made
hereunder or under the Notes shall be stated to be due on a day which
is not a Business Day, the payment shall be made on the next
succeeding Business Day and such extension of time shall be included
in the computation of the payment of interest hereunder or under the
Loan.
2.4 Use of Proceeds.
A. Loan. The proceeds of the Loan may be applied by the Company to
finance certain costs of acquiring, constructing, repairing and
improving the Mortgaged Rig and, to the extent that such costs have
already been paid, for general corporate purposes.
B. Margin Regulations. No portion of the proceeds of any borrowing
under this Agreement shall be used by the Company in any manner which
might cause the borrowing or the application of such proceeds to
violate the applicable requirements of Regulation U, Regulation T or
Regulation X of the Board of Governors of the Federal Reserve System
or any other regulation of the Board or to violate the Exchange Act,
in each case as in effect on the date or dates of such borrowing and
such use of proceeds.
2.5 Commitment Fee. The Company agrees to pay a commitment fee for the
period from and including the Closing Date to and including the date
of termination specified in Section 2.1.F. on the undrawn portion of
the Loan equal to the average of the daily excess of the Loan
Commitment over the aggregate principal amount of the Loan outstanding
multiplied by 7% per annum, such commitment fee to be calculated on
the basis of a 360-day year consisting of twelve 30-day months and to
be payable semi-annually in arrears on each March 15 and September 15,
commencing September 15, 1999.
SECTION 3 CONDITIONS
3.1 Conditions to Initial Advances on the Loan. The obligation of the
Lender to make the initial advance on the Loan is subject to prior or
concurrent satisfaction of each of the following conditions:
A. On or before the Closing Date, all corporate and other proceedings
taken or to be taken in connection with the transactions contemplated
hereby and all documents incidental thereto not previously found
acceptable by the Lender and the Trustee shall be reasonably
satisfactory in form and substance to the Lender and the Trustee, and
the Lender and the Trustee shall have received the following items,
each of which shall be in form and substance satisfactory to the
Lender and the Trustee and, unless otherwise noted, dated the Closing
Date:
(i) a certified copy of the Company's charter, together with a
certificate of status, compliance, good standing or like certificate
with respect to the Company issued by the appropriate government
officials of the jurisdiction of its incorporation and of each
jurisdiction in which it owns any material assets or carries on any
material business, each to be dated a recent date prior to the Closing
Date;
(ii) a copy of the Company's bylaws, certified as of the Closing Date
by its Secretary or one of its Assistant Secretaries;
(iii) resolutions of the Company's Board of Directors approving and
authorizing the execution, delivery and performance of this Agreement,
the Notes, the Mortgage, each of the other Loan Documents, the
Indenture and any other documents, instruments and certificates
required to be executed by the Company in connection herewith and
therewith and approving and authorizing the execution, delivery and
payment of the Loan, each certified as of the Closing Date by its
Secretary or one of its Assistant Secretaries as being in full force
and effect without modification or amendment;
(iv) signature and incumbency certificates of the Company's officers
executing this Agreement, the Other Loan Documents and the Notes;
(v) executed copies of this Agreement and the Notes substantially in
the form of Exhibit I annexed hereto executed in accordance with
Section 2.1C drawn to the order of the Lender and with appropriate
insertions;
(vi) an originally executed Notice of Borrowing substantially in the
form of Exhibit II annexed hereto, signed by the President or a Vice
President of the Company on behalf of the Company and delivered to the
Lender; and
(vii) originally executed copies of one or more favorable written
opinions of Gardere & Wynne, special counsel for the Company,
substantially in the form of the Exhibit III hereto and addressed to
the Lender, the Trustee and the Initial Purchaser, and such other
opinions of counsel and such certificates or opinions of accountants,
appraisers or other professionals as the Lender, the Trustee or the
Initial Purchaser shall have reasonably requested.
B. The Lender shall have received a fully executed Mortgage in
the form of Exhibit IV hereto, which has been filed in all appropriate
jurisdictions, and the Lien provided in Section 5.7 shall have been
perfected in all appropriate United States jurisdictions.
C. On or before the Closing Date, all authorizations, consents and
approvals necessary in connection with the Transactions shall have
been obtained and remain in full force and effect and all applicable
waiting periods, if any, under law applicable to the Transactions
shall have expired without any action being taken by any competent
authority (including without limitation, any Tribunal) which
restrains, prevents or imposes materially adverse conditions upon the
completion of the Transactions or the financing thereof and evidence
of the receipt of such authorizations, consents and approvals
satisfactory to the Lender and the Trustee shall have been delivered
to the Lender and the Trustee.
D. On or before the Closing Date, the Indenture and the Purchase
Agreement shall have been executed and delivered by all parties
thereto. No default or event of default shall have occurred under the
Indenture and the Purchase Agreement, all conditions to the execution
delivery and authentication of the Secured Notes thereunder shall have
been satisfied under the Indenture, and all conditions to the purchase
of the Secured Notes by the Initial Purchaser under the Purchase
Agreement have been satisfied or waived by the Initial Purchaser.
E. Simultaneously with the making of the Loan by the Lender, the
Company shall have delivered to the Lender and the Trustee an
Officers' Certificate from the Company in form and substance
satisfactory to the Lender and the Trustee to the effect that (i) the
representations ad warranties of the Company in Section 4 are true,
correct and complete in all material respects on and as of the Closing
Date to the same extent as though made on and as of that date, and
(ii) on or prior to the Closing Date, the Company has performed and
complied with in all material respects all covenants and conditions to
be performed and observed by the Company on or prior to the Closing
Date and
F. No event shall have occurred and be continuing or would result from
the consummation of the borrowing contemplated by the Notice of
Borrowing which would constitute and Event of Default, a Potential
Event of Default or a Default.
G. No order, judgment or decree of any court, arbitrator or
governmental authority shall purport to enjoin or restrain the Lender
from making the Loan.
H. The making of the Loan in the manner contemplated in this Agreement
shall not violate the applicable provisions of Regulation T, U or X of
the Board of Governors of the Federal Reserve Board or any other
regulation of the Board.
3.2 Conditions to Subsequent Advance on the Loan. The obligation of
the Lender to make a subsequent advance on the Loan is subject to the
prior or concurrent satisfaction of each of the following conditions:
A. The Lender and the Trustee shall have received in form and substance
satisfactory to the Lender and the Trustee and dated the date of such
advance an originally executed Notice of Borrowing substantially in
the form of Exhibit II annexed hereto, signed by the President or a
Vice President of the Company on behalf of the Company and delivered
to the Lender.
B. No event shall have occurred and be continuing or would result from
the consummation of the borrowing contemplated by the Notice of
Borrowing which would constitute an Event of Default, a Potential
Event of Default or a Default.
C. No order, judgment or decree of any court, arbitrator or
governmental authority shall purport to enjoin or restrain the Lender
from making the Loan.
D. The making of the Loan in the manner contemplated in this Agreement
shall not violate the applicable provisions of Regulation T, U or X of
the Board of Governors of the Federal Reserve Board or any other
regulation of the Board.
E. Simultaneously with the making of the advance on the Loan by the
Lender, the Company shall have delivered to the Lender and the Trustee
an Officers' Certificate from the Company in form and substance
satisfactory to the Lender and the Trustee to the effect that (i) the
representations and warranties of the Company in Section 4 are true,
correct and complete in all material respects on and as of the date of
such advance to the same extent as though made on and as of that date,
and (ii) on or prior to the date of such advance, the Company has
performed and complied with in all material respects all covenants and
conditions to be performed and observed by the Company on or prior to
the date of such advance.
SECTION 4 REPRESENTATIONS AND WARRANTIES
In order to induce the Lender to enter into this Agreement and to
make the Loan, the Company represents and warrants to the Lender that,
at the time of execution hereof and after consummation of the making
of the Loan and the Transactions, the following statements are true,
correct and complete:
4.1 Organization and Good Standing; Capitalization. The Company is a
corporation duly organized and existing and in good standing under the
laws of its jurisdiction of incorporation. The Company has the
corporate power and authority to own and operate its properties and to
carry on its business as now conducted and as proposed to be conducted
and is duly qualified as a foreign corporation and in good standing in
all jurisdictions in which it is doing business, except where failure
to be so qualified or in good standing, singly or in the aggregated,
has not had and will not have a Material Adverse Effect.
4.2 Authorization and Power. The Company has the corporate power and
requisite authority, and has taken all corporate action necessary, to
consummate the Transactions and to execute, deliver and perform its
obligations under this Agreement, the Mortgage, the other the Loan
Documents, Indenture and each other document and instrument to be
delivered in connection with the Transactions executed or to be
executed by it and to issue the Notes.
4.3 No Conflicts or Consents.
(A) The execution and delivery of the Loan Agreement, the Notes,
the Mortgage, the other Loan Documents and each other document to be
executed and delivered in connection with the Transactions, the
consummation of each of the transactions herein or therein
contemplated, the compliance with each of the terms and previsions
hereof or thereof, and the issuance, delivery and performance of the
Notes, this Agreement, the Mortgage and the Indenture, do not and will
not (i) violate any provision of any law or any governmental rule or
regulation applicable to the Company, its Certificate of Incorporation
or Bylaws or any order, judgment or decree of any court or other
agency of government binding on it, (ii) conflict with, result in a
breach of or constitute (with due notice or lapse of time or both) a
default under any Contractual Obligation of the Company which could
reasonably be expected to result in a Material Adverse Effect, (iii)
result in or require the creation or imposition of any Lien upon any
of the properties or assets of the Company (other than any Liens
created under this Agreement and the Other Loan Agreements), (iv)
require any approval of stockholders or any approval or consent of any
Person under any Contractual Obligation of the Company except for such
approvals or consents which will be obtained on or before the Closing
Date and disclosed in writing to Lender, the Trustee and the Initial
Purchaser or such approvals or consents the failure to obtain which
could not reasonably be expected to singly or in the aggregate result
in a Material Adverse Effect.
(B) No consent, approval, authorization or order of any
Tribunal or other Person is required in connection with the execution
and delivery by the Company of this Agreement, the Loan Documents or
any other document or instrument to be delivered in connection with
the Transactions or the consummation of the transactions contemplated
hereby or thereby, other than any such consent, approval,
authorization or order which has been obtained and remains in full
force and effect or which has been waived in writing by the Lender or
the failure of which to obtain would not, singly or in the aggregated,
have a Material Adverse Effect.
4.4 Enforceable Obligations. Each of this Agreement, the Notes, the
Mortgage, the other Loan Documents, and each other document or
instrument to be delivered in connection therewith has been duly
authorized; each of this Agreement, the Notes, the Mortgage, the Other
Loan Documents and each other document or instrument to be delivered
in connection therewith to be executed and delivered on or prior to
the Closing Date has been duly executed and delivered by the Company
and each of this Agreement, the Notes, the Mortgage, the Other Loan
Documents and each other document or instrument to be delivered in
connection therewith to be executed and delivered on or prior to the
Closing Date is, and each of this Agreement, the Notes, the Mortgage
and the other Loan Documents to be executed and delivered after the
Closing Date will be, upon such execution and delivery, the legal,
valid and binding obligations of the Company, enforceable in
accordance with their respective terms, except to the extent that the
enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization or similar laws affecting the enforcement
of creditors' rights generally or by general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law)
4.5 Properties; Liens. The Company has good and marketable title to
the Mortgaged Rig, the equipment purchased and paid for by the Company
to be installed or used thereon and the Other Mortgaged Rigs to the
extent specified in such Other Loan Agreement. Except as specified in
Schedule 4.5 or as permitted by this Agreement, the Mortgaged Rig and
such equipment are so owned free and clear of Liens.
4.6 No Default. No event has occurred and is continuing which
constitutes a Default, a Potential Event of Default or an Event of
Default.
4.7 Use of Proceeds; Margin Stock, etc. The proceeds of the Loan will
be used solely for the purposes specified herein. None of such
proceeds will be used for the purpose of purchasing or carrying any
Margin Stock within the meaning of the applicable provisions of
Regulation T, U or X, or for the purpose of reducing or retiring any
Indebtedness which was originally incurred to purchase or carry a
Margin Stock or for any other purpose which might constitute this
transaction a "purpose credit" within the meaning of the applicable
provisions of Regulation T, U or X. The Company has not taken nor
will it take any action which might cause any of the Loan Documents to
violate the applicable provisions of Regulation T, U or X, or any
other regulation of the Board of Governors of the Federal Reserve
System.
4.8 Survival of Representations and Warranties. All representations
and warranties in the Loan Documents shall survive delivery of the
Notes and the making of the Loan and shall continue until one year
after repayment of the Notes and the Obligations, and any
investigation at any time made by or on behalf of the Lender shall not
diminish the Lender's right to rely thereon.
SECTION 5 COVENANTS
5.1 Indenture Covenants. Each of the covenants conferred in the
Indenture applicable to the Company and its Restricted Subsidiaries
are incorporated herein by reference. The Company covenants and
agrees that, until the Loan and the Notes and all other amounts due
under this Agreement have been indefeasibly paid in full it shall
perform all covenants applied to it or any of its Restricted
Subsidiaries which are contained in the Indenture.
5.2 Reports of Defaults, Etc. The Company will deliver to each Lender
and the Trustee promptly upon, but in no event more than five (5)
Business Days after, any Officer's obtaining knowledge of any
condition or event which constitutes a Default, an Event of Default or
a Potential Event of Default, an Officer's Certificate specifying the
nature and period of existence of any such condition or event, or
specifying the notice given or the claim of Default, Event of Default,
Potential Event of Default, or the event or condition, and what action
the Company has taken, is taking and proposes to take with respect
thereto;
5.3 Payments in U.S. Dollars. All payments of any Obligations to be
made hereunder or under the Note by the Company or any other obligor
with respect thereto shall be made solely in U.S. Dollars or such
other currency as is then legal tender for public and private debts in
the United States of America.
5.4 Performance and Enforcement Under the Loan Documents. The Company
shall promptly perform all of its obligations under the Loan Documents
and each document and instrument related thereto or delivered in
connection with any thereof, in each case, to the extent within its
control. The Company shall (A) diligently and in good faith promptly
pursue the performance of each other party to each such document, and
(B) diligently seek the enforcement of all rights and remedies under
each such document.
5.5 Liens. The Company shall not, nor shall it cause or permit any of
its Restricted Subsidiaries to, directly or indirectly, create, incur,
assume or permit to exist, any Lien on or with respect to any property
or asset (including the Mortgaged Rig) of the Company or of any of its
Restricted Subsidiaries, whether now owned or hereafter acquired, or
assign or otherwise convey any right to receive any income or profits
therefrom, or file or permit the filing of, or permit to remain in
effect, any financing statement or other similar notice of any Lien
with respect to any such property, asset, income or profits under the
Uniform Commercial Code of any State or under any similar recording or
notice statute, except Liens permitted by the Indenture and Liens
permitted by the Loan Documents.
5.6 Transfer of Mortgage Rig to a Restricted Subsidiary. The Company
shall not, nor shall the Company cause or permit any of its Restricted
Subsidiaries to, directly or indirectly, transfer the Mortgaged Rig to
any Subsidiary of the Company unless (i) such Subsidiary guarantees
all Obligations of the Company under this Agreement and executes a
Mortgage and a Security Agreement, (ii) the Liens of the Subsidiary's
Mortgage and Security Agreement are perfected and enforceable, and
(iii) such Subsidiary executes a Subsidiary Guarantee pursuant to the
Indenture.
5.7 Security Interest and Lien on Equipment. The Borrower hereby
grants a security interest and Lien in favor of the Lender and unto
the Lender's successors and assigns for the benefit of the Lender's
own proper use and benefit, as security for the Obligations now or in
the future, in and to the Equipment and the Mortgaged Rig.
SECTION 6 EVENTS OF DEFAULT
If any of the following conditions of events ("Events of Default")
shall occur and be continuing:
6.1 Failure To Make Payments When Due. Failure to pay any installment
of principal including Premium of the Loan when due, whether at stated
maturity, by acceleration, by notice of prepayment or otherwise; or
failure to pay any interest (including Special Interest and Additional
Amounts) on the Loan or any other amount due under this Agreement
continued for 30 days; or
6.2 Default Under The Indenture. An Event of Default occurs and is
continuing under the Indenture; or
6.3 Other Loan Agreement. An Event of Default (as defined in an other
Loan Agreement) occurs and is continuing under such Other Loan
Agreement; or
6.4 Breach of Certain Covenants. Failure of the Company to perform or
comply with any covenant, term or condition contained in Sections 5.2
through 5.7 and Sections 7.3 through 7.5 of this Agreement; or
6.5 Breach of Warranty. Any representation, warranty or certification
made by the Company in any Loan Document or in any statement or
certificate at any time given by the Company in writing pursuant
hereto or thereto or in connection herewith or therewith shall be
false or incorrect in any material respect on the date as of which
made or deemed made; or
6.6 Other Defaults Under Agreement or Loan Documents. The Company
shall default in the performance of or compliance with any covenant,
term or condition contained in this Agreement or the other Loan
Documents (other than those covered by Sections 5.2 through 5.7 and
such default shall not have been remedied or waived in accordance with
Section 7.6 of this Agreement within 30 days after the date of written
notice of such default from the Lender, the Collateral Agent, the
Trustee or the Holder or Holders of not less than 25% in aggregate
principal amount of the Secured Notes then outstanding; or
6.7 Involuntary Bankruptcy; Appointment of Custodian, etc. The entry
by a court having jurisdiction in the premises of (i) a decree or
order for relief in respect of the Company or any Significant
Subsidiary in an involuntary case or proceeding under U.S. bankruptcy
laws, as now or hereafter constituted, or any other applicable
Federal, state, or foreign bankruptcy, insolvency, or other similar
law or (ii) a decree or order adjudging the Company or any Significant
Subsidiary a bankruptcy or insolvent, or approving as properly filed a
petition seeking reorganization, arrangement, adjustment or
composition of or in respect of the Company or any Significant
Subsidiary under U.S. bankruptcy laws, as now or hereafter
constituted, or any other applicable Federal, state or foreign
bankruptcy, insolvency, or similar law, or appointing a custodian,
liquidator, assignee, trustee, sequestrator or other similar official
of the Company or any Significant Subsidiary or of any substantial
part of the Property or assets of the Company or any Significant
Subsidiary, or ordering the winding up or liquidation of the affairs
of the Company or any Significant Subsidiary, and the continuance of
any such decree or order for relief or any such other decree or order
unstayed and in effect for a period of 60 consecutive days; or
6.8 Voluntary Bankruptcy; Appointment of a Custodian, etc. The
commencement by the Company or any Significant Subsidiary of a
voluntary case or proceeding under the U.S. bankruptcy laws, as now or
hereafter constituted, or any other applicable Federal, state or
foreign bankruptcy, insolvency or other similar law or of any other
case or proceeding to be adjudicated a bankrupt or insolvent; or
(ii) the consent by the Company or any Significant Subsidiary to the
entry of a decree or order for relief in respect of the Company or any
Significant Subsidiary in an involuntary case or proceeding under U.S.
bankruptcy laws, as now or hereafter constituted, or any other
applicable Federal, state, or foreign bankruptcy, insolvency or other
similar law or to the commencement of any bankruptcy or insolvency
case or proceeding against the Company or any Significant Subsidiary;
or (iii) the filing by the Company or any Significant Subsidiary of a
petition or answer or consent seeking reorganization or relief under
U.S. bankruptcy laws, as now or hereafter constituted, or any other
applicable Federal, state or foreign bankruptcy, insolvency or other
similar law; or (iv) the consent by the Company or any Significant
Subsidiary to the filing of such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator, assignee,
trustee, sequestrator or similar official of the Company or any
Significant Subsidiary or of any substantial part of the property or
assets of the Company or any Significant Subsidiary, or the making by
the Company or any Significant Subsidiary of an assignment for the
benefit of creditors; or (v) the admission by the Company or any
Significant Subsidiary in writing of its inability to pay its debts
generally as they become due; or (vi) the taking of corporate action
by the Company or any Significant Subsidiary in furtherance of such
action;
THEN (i) upon the occurrence of any Event of Default described in
the foregoing Section 6.7 or 6.8, all of the unpaid principal amount
of and accrued interest on the Loan and all other outstanding
Obligations shall automatically become immediately due and payable,
without presentment, demand, protest, waiver of notice of intent to
accelerate and waiver of notice of such acceleration or notice of any
other kind or other requirements of any kind, all of which are hereby
expressly waived by the Company, and Obligations and the Loan
Commitment of the Lender hereunder shall thereupon terminate, and
(ii) upon the occurrence of any other Event of Default, the Lender
shall, upon written notice of the Lender, to the Company, upon written
notice of the Trustee or the Collateral Agent to the Company and the
Lender, or upon written notice of a Holder or Holders of the Secured
Note or Notes, to the Company, the Lender, the Collateral Agent and
the Trustee, declare all of the unpaid principal amount of and accrued
interest on the Loan and all other outstanding Obligations to be, and
the same shall forthwith become, due and payable, and the obligations
and Loan Commitments of the Lender hereunder shall thereupon
terminate; provided, however, that upon the occurrence of an Event of
Default described in Section 6.4 of this Agreement or an "event of
default" under Section 6.4 of any Other Loan Agreement, the Lender
shall not declare the Obligations hereunder to be due and payable for
a period of 60 days after notice of the occurrence of such Event of
Default or "event of default." Nevertheless, if at any time after
acceleration of the Maturity of the Loan, the Company shall pay all
arrears of interest and all payments on account of the principal
thereof which shall have become due otherwise than by acceleration
(with interest on principal and, to the extent permitted by law, on
overdue interest, at the rates specified in this Agreement or the
Notes) and all Events of Default and Potential Events of Default
(other than non-payment of principal of and accrued interest on the
Loan and the Notes due and payable solely by virtue of acceleration)
shall be remedied or waived pursuant to Section 7.6, then the Lender
shall, upon receipt of the written notice from the Collateral Agent
and the Trustee of such remedy or waiver, by written notice to the
Company rescind and annul the acceleration and its consequences; but
such action shall not affect any subsequent Default, Event of Default
or Potential Event of Default or impair any right consequent thereon.
SECTION 7 MISCELLANEOUS
7.1 Pledges and Assignments of Loan and Note. The Lender shall have
the right at any time to sell, pledge, assign, transfer or negotiate
all or any portion of the Note or its Loan Commitment. The Company
acknowledges that the Lender will pledge its rights under this
Agreement, the Notes, the Mortgage and the Other Loan Documents to the
Collateral Agent pursuant to the Issuer Security Agreement to secure
the Lender's obligations under the Indenture and the Secured Notes.
7.2 Expenses. Whether or not the transactions contemplated hereby
shall be consummated, the Company, its successors and assigns agrees
to promptly pay (i) all the actual costs and expenses of preparation
of the Loan Documents and all the costs of furnishing all opinions by
counsel for the Company (including without limitation any opinions
requested by the Lender as to any legal matters arising hereunder),
and of the Company's performance of and compliance with all agreements
and conditions contained herein on its part to be performed or
complied with; (ii) the reasonable fees, expenses and disbursements of
counsel to the Lender and the Trustee and the Collateral Agent, their
successors and assigns (including allocated costs of internal counsel)
in connection with the negotiation, preparation, execution and
administration of the Loan Documents and the Loan hereunder, and any
amendments, modifications and waivers hereto or thereto and consents
to departures from the terms hereof and thereof; and (iii) after the
occurrence of an Event of Default, all costs and expenses (including
reasonable attorneys fees, including allocated costs of internal
counsel, and costs of settlement) incurred by the Lender, its
successors and assigns in enforcing any Obligations of or in
collecting any payments due from the Company hereunder or under the
Notes by reason of such Event of Default or in connection with any
refinancing or restructuring of the credit arrangements provided under
this Agreement in the nature of a "work-out" or of any insolvency or
bankruptcy proceedings.
7.3 Indemnity. In addition to the payment of expenses pursuant to
Section 7.2, whether or not the transactions contemplated hereby shall
be consummated, the Company agrees to indemnify, pay and hold the
Lender, the Collateral Agent, the Trustee and any Holder of the
Secured Notes and holder of the Notes, and each of their officers,
directors, employees, and agents, (collectively called the
"Indemnitees"), harmless from and against any all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits,
claims, costs, expenses and disbursements of any kind or nature
whatsoever (including, without limitation, the fees and disbursements
of counsel for such Indemnitees in connection with any investigative,
administrative or judicial proceeding commenced or threatened, whether
or not such Indemnitee shall be designated as a party thereto), which
may be suffered by imposed on, incurred by, or asserted against that
Indemnitee, in any manner resulting from, connected with, in respect
of, relating to or arising out of this Agreement, the Notes, the
Mortgage, the Lender's agreement to make the Loan or the use or
intended use of any of the proceeds of the Loan hereunder or the
Transactions (the "indemnified liabilities"); provided, however, that
the Company shall have no obligation to an Indemnitee hereunder with
respect to indemnified liabilities (i) to the extent such is finally
judicially determined to have resulted solely from (A) the gross
negligence or willful misconduct of that Indemnitee or (B) the failure
of such Indemnitee to perform its obligations under any Loan Document
or (C) such Indemnitee's violation of law or (ii) in connection with
the obligations of any Indemnitee under any Loan Document. To the
extend that the undertaking to indemnify, pay and hold harmless set
forth in the preceding sentence may be unenforceable because it is
violative of any law or public policy, the Company shall contribute
the maximum portion which it is permitted to pay and satisfy under
applicable law to the payment and satisfaction of all indemnified
liabilities incurred by the Indemnitees or any of them.
7.4 Additional Amounts. Except to the extent required by any applicable
law, regulation law, regulation or governmental policy, any and all
payments of, or in respect of the Loan, this Agreement, the Notes, any
Loan Document or any Secured Note shall be made free and clear of and
without deduction for or on account of any and all present or future
taxes, levies, imposts, deduction, charges or withholdings and all
liabilities with respect thereto imposed by Panama, The Bahamas, The
Marshall Islands or any other jurisdiction with which the Company or
any Subsidiary has some connection (including any jurisdiction (other
than the United States of America) from or through which payments
under this Agreement, the Notes, any Loan Document, the Guarantee or
the Secured Notes are made) or any political subdivision of or any
taxing authority in any such jurisdiction ("Panamanian Taxes,"
"Bahamian Taxes," "MI Taxes," or "Other Taxes," respectively). If the
Lender, the Company or any Subsidiary Guarantor shall be required by
law to withhold or deduct any Panamanian Taxes, Bahamian Taxes, MI
Taxes, or Other Taxes from or in respect of any sum payable under this
Agreement, the Notes, any Loan Document, the Guarantee or the Secured
Notes, the sum payable by the Company or such Subsidiary Guarantor, as
the case may be, thereunder shall be increased by the amount
("Additional Amounts") necessary so that after making all required
withholdings and deductions, Lender or any Holder or beneficial owner
of Secured Notes shall receive an amount equal to the sum that it
would have received had not such withholdings and deductions been
made; provided that any such sum shall not be paid in respect of any
Panamanian Taxes, Bahamian Taxes, MI Taxes or Other Taxes to a Holder
(an "Excluded Holder") (i) resulting from the beneficial owner of such
Secured Note carrying on business or being deemed to carry on business
in or through a permanent establishment or fixed base in the relevant
taxing jurisdiction or having any other connection with the relevant
taxing jurisdiction or any political subdivision thereof or any taxing
authority therein other than the mere holding or owning of such
Secured Note, being a beneficiary of the Guarantee or any applicable
Subsidiary Guarantee, the receipt of any income or payments in respect
of such Secured Note, the Loan, the Guarantee or any applicable
Subsidiary Guarantee or the enforcement of such Secured Note, the
Loan, the Guarantee or any applicable Subsidiary Guarantee, or (ii)
that would not have been imposed but for the presentation (where
presentation is required) of such Secured Note for payment more than
180 days after the date such payment became due and payable or was
duly provided for, whichever occurs later. The Lender, the Company or
the Subsidiary Guarantors, as applicable, will also (i) make such
withholding or deduction and (ii) remit the full amount deducted or
withheld to the relevant authority in accordance with applicable law,
and, in any such case, the Lender is required to furnish under the
Indenture to each Holder on whose behalf an amount was so remitted,
within 30 calendar days after the date the payment of any Panamanian
Taxes, Bahamian Taxes, MI Taxes or Other Taxes is due pursuant to
applicable law, certified copies of tax receipts evidencing such
payment by the Lender, the Company or the Subsidiary Guarantors, as
applicable. The Company will, upon written request of each Holder
(other than an Excluded Holder), reimburse each such holder for the
amount of (i) any Panamanian Taxes, Bahamian Taxes, MI Taxes or Other
Taxes so levied or imposed and paid by such Holder as a result of
payments made under or with respect to any Secured Notes, and (ii) any
Panamanian Taxes, Bahamian Taxes, MI Taxes or Other Taxes so levied or
imposed with respect to any reimbursement under the foregoing clause
(i) so that the net amount received by such Holder (net of payments
made under or with respect to such Secured Notes, the Loan, the
Guarantee or the applicable Subsidiary Guarantees) after such
reimbursement will not be less than the net amount the Holder would
have received if Panamanian Taxes, Bahamian Taxes, MI Taxes or Other
Taxes on such reimbursement had not been imposed.
At least 30 calendar days prior to each date on which any payment
under or with respect to the Secured Notes is due and payable, if the
Lender, the Company or the Subsidiary Guarantors, as applicable, will
be obligated to pay Additional Amounts with respect to such payment,
the Lender, the Company or the Subsidiary Guarantors, as applicable,
will deliver to the Trustee an officer's certificate stating the fact
that such Additional Amounts will be payable and the amounts will be
payable and the amounts so payable and will set forth such other
information necessary to enable the Trustee to pay such Additional
Amounts to Holders on the payment date.
7.5 Taxes and Other Taxes.
A. Any and all payments by the Company hereunder or under any of the
other Loan Documents shall be made free and clear of and without
deduction or withholding for any and all present or future Taxes,
unless such Taxes are required by law or the administration thereof to
be deducted or withheld and excluding (a) in the case of each Lender,
Taxes imposed on its net income and franchise taxes or taxes on gross
receipts and capital imposed on it by the jurisdiction under the laws
of the United States or any political subdivision thereof (all such
nonexcluded Taxes being hereinafter referred to as "Covered Taxes").
If the Company shall be required by Law or the administration thereof
to deduct or withhold any Covered Taxes from or in respect of any sum
payable hereunder or under any other Loan Documents, the sum payable
shall be increased as may be necessary so that after making all
required deductions or withholdings (including deductions or
withholdings applicable to additional amounts paid under this
paragraph), the Lender receives an amount equal to the sum it would
have received if no such deduction or withholding had been made;
(b) the Company shall make such deductions or withholdings; and
(c) the Company forthwith shall pay the full amount deducted or
withheld to the relevant taxation or other authority in accordance
with applicable Law.
B. The Company agrees to pay forthwith any present or future stamp
documentary taxes or any other excise or property taxes charges or
similar levies (all such taxes, charges and levies being herein
referred to as "Other Taxes") imposed by any jurisdiction (or any
political subdivision or taxing authority thereof or therein) which
arise from any payment made by the Company hereunder or under any of
the other Loan Documents or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement or any
of the other Loan Documents.
C. The Company agrees to indemnify the Lender for the full amount of
Covered Taxes or Other Taxes not deducted or withheld and paid by the
Company in accordance with Section 7.5(A) and (B) to the relevant
taxation or other authority and any Taxes other than Covered Taxes or
Other Taxes imposed by any jurisdiction on amounts payable by the
Company under this Section 7.5 paid by the Lender and any liability
(including penalties, interest and expenses) arising therefrom or with
respect thereto, whether or not any such Taxes or Other Taxes were
correctly or legally asserted. Payment under this indemnification
shall be made within 30 days from the date the Lender makes written
demand therefor. A certificate as to the amount of such Taxes or
Other Taxes and evidence of payment thereof submitted to the Company
shall be prima facie evidence, absent manifest error, of the amount
due from the Company to the Lender.
D. The Company shall furnish to the Lender the original or a certified
copy of a receipt evidencing any payment of Taxes or Other Taxes made
by the Company as soon as such receipt becomes available.
E. The provisions of this Section 7.5 shall survive the termination of
the Agreement and repayment of all Obligations.
7.6 Amendments and Waivers. No amendment, modification, termination or
waiver of any term or provision of this Agreement, of the Note, the
Mortgage or any Other Loan Document or consent to any departure by the
Company therefrom, shall in any event be effective without the prior
written concurrence of the Company, the Lender, the Collateral Agent
and the Trustee, and, upon the request of the Lender, the Collateral
Agent or the Trustee, the receipt of a written opinion of counsel of
the Company addressed to the Lender, the Collateral Agent and the
Trustee to the effect that such amendment, modification, termination,
waiver or consent does not violate or conflict with any of the terms
and provisions of the Indenture or any Contractual Obligations of the
Company.
7.7 Independence of Covenants. All covenants hereunder shall be given
independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be
permitted by an exception to, or be otherwise within the limitation
of, another covenant shall not avoid the occurrence of an Event of
Default or Potential Event of Default if such action is taken or
condition exists.
7.8 Notices. Unless otherwise provided herein, any notice or other
communications herein required or permitted to be given shall be in
writing and may be personally served, telecopied or sent by mail and
shall be deemed to have been given when delivered in person, upon
receipt of telecopy against receipt of answer back or four Business
Days after depositing it in the mail, registered or certified, with
postage prepaid and properly addressed; provided, however, that
notices shall not be effective until received. For the purposes
hereof, the addresses of the parties hereto (unless notice of a change
thereof is delivered as provided in this Section 7.8) shall be set
forth under each party's name on the signature pages hereto.
7.9 Survival of Warranties and Certain Agreements. All agreements,
representations and warranties made herein and in the other Loan
Documents shall survive the execution and delivery of this Agreement
and in the other Loan Documents, the making of the Loan hereunder and
the execution and delivery of the Notes or the Loan Documents and,
notwithstanding the making of the Loan, the execution and delivery of
the Notes and the other Loan Documents or any investigation made by or
on behalf of any party, shall continue in full force and effect. The
closing of the transactions herein contemplated shall not prejudice
any right of one party against any other party in respect of anything
done or omitted hereunder or in respect of any right to damages or
other remedies.
7.10 Failure or Indulgence Not Waiver; Remedies Cumulative. No failure
or delay on the part of the Lender or the holder of the Notes or the
Trustee in the exercise of any power, right or privilege or be
construed to be a waiver of any default or acquiescence therein, nor
shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or of any other
right, power or privilege. All rights and remedies existing under
this Agreement, the Notes or any other Loan Document are cumulative to
and not exclusive of any rights or remedies otherwise available.
7.11 Severability. In case any provision in or obligation under this
Agreement, under a Guarantee or the Notes shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any
way be affected or impaired thereby.
7.12 Headings. Section and Section headings in this Agreement are
included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given
any substantive effect.
7.13 Applicable Law. THIS AGREEMENT, EACH LOAN DOCUMENT OTHER THAN THE
MORTGAGE AND THE NOTES SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW.
7.14 Successors and Assigns; Subsequent Holders of Notes. This
Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of
the parties hereto and the successors and assigns of the Lenders. The
terms and provisions of this Agreement and each Loan Document shall
inure to the benefit of any assignee or transferee of the Notes
pursuant to Section 7.1, and in the event of such transfer or
assignment, the rights and privileges herein conferred upon the Lender
shall automatically extend to and be vested in such transferee or
assignee, all subject to the terms and conditions hereof. The
Company's rights or any interest therein hereunder may not be assigned
without the prior express written consent of the Lender and the
Trustee.
7.15 Counterparts; Effectiveness. This Agreement and any amendments,
waivers, consents or supplements may be executed in any number of
counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one
and the same instrument. This Agreement shall become effective upon
the execution of a counterpart hereof by each of the parties hereto.
7.16 Consent to Jurisdiction; Venue; Waiver of Jury Trial.
A. Any legal action or proceeding with respect to this Agreement, any
Note or any 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
parties to this Agreement hereby irrevocably accepts for itself and in
respect of its respective property, generally and unconditionally, the
jurisdiction of the aforesaid courts. Each of the parties to this
Agreement hereby further irrevocably waives any claim that any such
courts lack jurisdiction over itself, and agrees not to plead or
claim, in any legal action or proceeding with respect to this
Agreement, the Notes or Loan Documents brought in any of the aforesaid
courts, that any such court lacks jurisdiction over such party. Each
of the parties to this Agreement irrevocably consents to the service
of process in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to such
party, at its respective address for notices pursuant to Section 7.8,
such service to become effective 30 days after such mailing. To the
extent permitted by law, each of the parties to this Agreement hereby
irrevocably waives any objection to such service of process and
further irrevocably waives and agrees not to plead or claim in any
action or proceeding commenced hereunder or under the Notes or any
Loan Document that service of process was in any way invalid or
ineffective. Nothing herein shall affect the right of any party to
this Agreement to serve process in any other manner permitted by law
or to commence legal proceedings or otherwise proceed against any
party in any other jurisdiction.
B. Each of the parties to this Agreement hereby irrevocably waives any
objection which it may now or hereafter have to the laying of venue of
any of the aforesaid any of actions or proceedings arising out of or
in connection with this Agreement, the Notes or any of the Loan
Documents brought in the courts referred to in clause A above and
hereby further irrevocably waives and agrees not to plead or claim in
any such court that any such action or proceeding brought in any such
court has been brought in an inconvenient forum.
C. Each of the parties to this Agreement hereby irrevocably waives all
right to a trial by jury in any action, proceeding or counterclaim
arising out of or relating to this Agreement, the Notes or the Loan
Documents or the transactions contemplated hereby or thereby.
7.17 Waiver of Stay, Extension or Usury Laws. The Company covenants
(to the extent that it may lawfully do so) that it will not at any
time insist upon, plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law or any usury law or
other law that would prohibit or forgive the Company from paying all
or any portion of the principal of or interest on the Loan as
contemplated herein, wherever enacted, now or at the time hereafter in
force, or which may affect the covenants or the performance of this
Agreement and (to the extent that it may lawfully do so), the Company
hereby expressly waives all benefit or advantage of any such law, and
covenants that it will not hinder, delay or impede the execution of
any power herein granted to the Lender, but will suffer and permit the
execution of every such power as though no such law had been enacted.
7.18 Usury Savings Clause. It is the intention of the parties hereto
to comply with applicable usury laws (now or hereafter enacted);
accordingly, notwithstanding any provision to the contrary in this
Agreement, any Note, any of the other Loan Documents or any other
document related hereto or thereto, in no event shall this Agreement
or any such other document require the payment or permit the
collection of interest in excess of the maximum amount permitted by
such laws. If from any circumstances whatsoever, fulfillment of any
provision of this Agreement, any Note, any of the other Loan Documents
or of any other document pertaining hereto or thereto, shall involve
transcending the limit of validity prescribed by applicable law for
the collection or charging of interest, then, ipso facto, the
obligation to be fulfilled shall be reduced to the limit of such
validity, and if from any such circumstances the Lender shall ever
receive anything of value as interest or deemed interest by applicable
law under this Agreement, any Note, any of the other Loan Documents or
any other document pertaining hereto or otherwise an amount that would
exceed the highest lawful rate, such amount that would be excessive
interest shall be applied to the reduction of the principal amount
owing under the Loan or on account of any other indebtedness of the
Company, and not to the payment of interest, or if such excessive
interest exceeds the unpaid balance of principal of such indebtedness,
such excess shall be refunded to the Company. In determining whether
or not the interest paid or payable with respect to any indebtedness
of the Company to Lender under any specified contingency, exceeds the
highest lawful rate, the Company and the Lender shall, to the maximum
extent permitted by applicable law, (a) characterize any non-principal
payment as an expense, fee or premium rather than as interest,
(b) exclude voluntary prepayments and the effects thereof,
(c) amortize, prorate, allocate and spread the total amount of
interest thereon does not exceed the maximum amount permitted by
applicable laws, and/or (d) allocate interest throughout the full term
of such indebtedness so that interest between portions of such
indebtedness, to the end that no such portion shall bear interest at a
rate greater than that permitted by applicable law.
WITNESS the due execution hereof by the respective duly authorized
officers of the undersigned as of the date first written above.
COMPANY:
R&B FALCON CORPORATION
By:
Name: Robert Fulton
Title: Executive Vice President
Notice Address:
901 Threadneedle
Houston, TX 77079-2982
Telephone: (281) 496-5000
Telecopy: (281) 496-0285
LENDER:
RBF FINANCE CO.
By:
Name: Leighton Moss
Title: Vice President
Notice Address:
901 Threadneedle
Houston, TX 77079-2982
Telephone: (281) 496-5000
Telecopy: (281) 597-7556
- -----------------------------------------------------------------------
Exhibit I
R&B FALCON CORPORATION
SENIOR SECURED ___- YEAR TRANCHE PROMISSORY NOTE
New York, New York
$______________ March 26, 1999
FOR VALUE RECEIVED, R&B FALCON CORPORATION (the "Company"),
promises to pay to the order of RBF FINANCE CO. ("Payee"), the
principal amount of _________________________ Dollars ($_____________)
(or such lesser amount as shall equal the aggregate unpaid principal
amount of the __-year Tranche advances of the Loan) at the times
specified by the provisions of the Senior Secured Credit Agreement
dated as of March 26, 1999, as the same may at any time be amended,
modified or supplemented and in effect (the "Loan Agreement") between
the Company and the Lender.
The Company also promises to pay interest on the unpaid principal
amount hereof from the date hereof until paid in full at the rates and
at the times which shall be determined in accordance with the
provisions of the Loan Agreement.
This Note is issued pursuant to and entitled to the benefits of
the Loan Agreement, to which reference is hereby made for a more
complete statement of the terms and conditions under which the Loan
evidenced hereby was made and is to be repaid. Capitalized terms used
herein without definition shall have the meanings set forth in the
Loan Agreement.
The Senior Secured Credit Agreement dated as of March 26, 1999,
as the same may at any time be amended, modified or supplemented and
in effect (the "Loan Agreement") between the Company, the Lender named
therein, and United States Trust Company of New York, as Trustee.
All payments of principal and interest in respect of this Note
shall be made in lawful money of the United States of America in same
day funds to Payee at the office of United States Trust Company of New
York located at 114 West 47th Street, 25th Floor, New York, New York,
or at such other place in the State of New York as shall be designated
in writing for such purpose in accordance with the terms of the Loan
Agreement. Each of Payee and any subsequent holder of this Note
agrees, by its acceptance hereof, that before disposing of this Note
or any part hereof it will make a notation hereon of all principal
payments previously made hereunder and of the date to which interest
hereon has been paid; provided, however, that the failure to make a
notation of any payment made on this Note shall not limit or otherwise
affect the obligation of the Company hereunder with respect to
payments of principal or interest on this Note.
Whenever any payment on this Note shall be stated to be due on a
day which is not a Business Day, such payment shall be made on the
next succeeding Business Day and such extension of time shall be
included in the computation of the payment of interest on this Note.
This Note is subject to mandatory prepayment as provided in the
Loan Agreement and prepayment at the option of the Company as provided
in the Loan Agreement.
THE LOAN AGREEMENT AND THIS NOTE SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK WITHOUT REGARD TO THE PRINCIPALS OF CONFLICTS OF LAWS.
Upon the occurrence of an Event of Default, the unpaid balance of
the principal amount of this Note, together with all accrued but
unpaid interest thereon, may become, or may be declared to be, due and
payable in the manner, upon the conditions and with the effect
provided in the Loan Agreement.
The terms of this Note are subject to amendment only in the
manner provided in the Loan Agreement.
No reference herein to the Loan Agreement and no provision of
this Note or the Loan Agreement shall alter or impair the obligation
of the Company, which is absolute and unconditional, to pay the
principal of and interest on this Note at the place, at the respective
times, and in the currency herein prescribed.
The Company promises to pay all costs and expenses, including all
attorneys' fees, all as provided in Section 7.2 of the Loan Agreement,
incurred in the collection and enforcement of this Note. The Company
and endorsers of this Note hereby consent to renewals and extensions
of time at or after the maturity hereof, without notice, and hereby
waive diligence, presentment, protest, demand and notice of every kind
and, to the full extent permitted by law, the right to plead any
statute of limitations as a defense to any demand hereunder.
IN WITNESS WHEREOF, the Company has caused this Note to be
executed and delivered by its duly authorized officer, as of the day
and year and at the place first above written.
R&B FALCON CORPORATION
By:
Title:
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EXHIBIT II
NOTICE OF BORROWING
The undersigned hereby certifies that he is the __________________ of
R&B Falcon Corporation, a Delaware corporation ( the "Company"), and
that as such he is authorized to execute this Notice of Borrowing on
behalf of the Company. With reference to that certain Loan Agreement
dated as of _______________, 1999 (as same may be amended, modified,
increased, supplemented and/or restated from time to time, the
"Agreement") entered into by and between the Company and RBF Finance
Co., and any other future holder of any Note issued pursuant to the
Agreement ("Lender"), the undersigned further certifies, represents
and warrants on behalf of the Company that all of the foregoing
statements are true and correct (each capitalized term used herein
having the same meaning given to it in the Agreement unless otherwise
specified):
(a)The Company requests that the Lender make an advance to the Company
on the 7-year Tranche of the Loan in the aggregate principal amount of
$_________________ and an advance to the Company on the 10-year
Tranche of the Loan in the aggregate principal amount of $__________
by no later than _______________. Immediately following such advance,
the aggregate outstanding balance of advances made on the 7-year
Tranche and the 10-year Tranche Loan shall equal $_______________ and
$___________, respectively.
(b)As of the date hereof, and as a result of the making of the
requested advance, no event shall have occurred and be continuing or
would result from the consummation of the borrowing contemplated by
the Notice of Borrowing which would constitute an Event of Default, a
Potential Event of Default or a Default.
(c)Borrower has performed and complied with all agreements and
conditions contained in the Agreement which are required to be
performed or complied with by Borrower before or on the date hereof
and, except as waived in writing or otherwise agreed to in writing by
the Lender, all of the conditions precedent set forth in Section 3.1
or 3.2, as applicable, of the Agreement under Conditions to Loan have
been satisfied.
(d)The representations and warranties of the Company contained in
Section 4 of the Agreement are true, correct and complete in all
material respects on and as of the date hereof to the same extent as
though made on and as of that date, and (ii) on or prior to the date
hereof, the Company has performed and complied with in all material
respects all covenants and conditions to be performed and observed by
the Company on or prior to the date hereof.
EXECUTED AND DELIVERED this _______ day of _____________, _____.
R&B FALCON CORPORATION
By:
Name:
Title:
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EXHIBIT III
FORM OF LEGAL OPINION
Opinions of Counsel that (i) the Company has duly authorized,
executed and delivered the Mortgage; (ii) the Mortgage constitutes a
legally binding obligation of the Company enforceable against the
Company in accordance with its terms (except as (i) the enforceability
thereof may be limited bankruptcy, insolvency or other similar laws
affecting creditors' rights, generally, and (ii) the enforceability
thereof may be limited by right of acceleration and the availability
of enforceable remedies may be limited by equitable principles of
general applicability, and subject to such other exceptions,
limitations or qualifications that are usual and customary for such
opinions) and (iii) the Mortgage constitutes a valid and perfected
first mortgage lien on the Mortgaged Rig.
- ----------------------------------------------------------------------
SCHEDULE 4.5
Title/Lien Exceptions
1.Statutory or inchoate liens for amounts not more than 30 days past
due or that are being contested in good faith.
EXHIBIT 10.9
[W.D. KENT]
==========================================================================
SENIOR SECURED LOAN AGREEMENT
Dated as of
March 26, 1999
between
R&B FALCON CORPORATION,
as Borrower
and
RBF FINANCE CO.,
as Lender
========================================================================
TABLE OF CONTENTS
Page
SECTION 1.SECTION 1.DEFINITIONS
1.1.Certain Defined Terms
1.2.Other Defined Terms
1.3.Accounting Terms
1.4.Other Definitional Provisions
SECTION 2.LOAN COMMITMENT AND LOAN
2.1.Termination of Loan Commitment
2.2.Termination of Loan Commitment
2.3.Interest on the Loans
2.4.Redemptions
2.5.Excess Proceeds Offers
2.6.Use of Proceeds
2.7.Commitment Fee
SECTION 3.CONDITIONS
3.1.Conditions to Initial Advances on the Loan
3.2.Conditions to Subsequent Advance on the Loan
SECTION 4.REPRESENTATIONS AND WARRANTIES
4.1.Organization and Good Standing; Capitalization
4.2.Authorization and Power
4.3.No Conflicts or Consents
4.4.Enforceable Obligations
4.5.Properties; Liens
4.6.No Default
4.7.Use of Proceeds; Margin Stock, etc
4.8.Survival of Representations and Warranties
SECTION 5.COVENANTS
5.1.Indenture Covenants
5.2.Reports of Defaults, Etc
5.3.Payments in U.S. Dollars
5.4.Performance and Enforcement Under the Loan Documents
5.5.Liens
5.6.Transfer of Mortgage Rig to a Restricted Subsidiary
SECTION 6.EVENTS OF DEFAULT
6.1.Failure To Make Payments When Due
6.2.Default Under The Indenture
6.3.Other Loan Agreement
6.4.Breach of Certain Covenants
6.5.Breach of Warranty
6.6.Other Defaults Under Agreement or Loan Documents
6.7.Involuntary Bankruptcy; Appointment of Custodian, etc
6.8.Voluntary Bankruptcy; Appointment of a Custodian; etc
SECTION 7.MISCELLANEOUS
7.1.Pledges and Assignments of Loan and Note
7.2.Expenses
7.3.Indemnity
7.4.Additional Amounts
7.5.Taxes and Other Taxes
7.6.Amendments and Waivers
7.7.Independence of Covenants
7.8.Notices
7.9.Survival of Warranties and Certain Agreements
7.10.Failure or Indulgence Not Waiver; Remedies Cumulative
7.11.Severability
7.12.Headings
7.13.Applicable Law
7.14.Successors and Assigns; Subsequent Holders of Notes
7.15.Counterparts; Effectiveness
7.16.Consent to Jurisdiction; Venue; Waiver of Jury Trial
7.17.Waiver of Stay, Extension or Usury Laws
7.18.Usury Savings Clause
EXHIBITS
I FORM OF NOTE
II FORM OF NOTICE OF BORROWING
III FORM OF OPINION OF GARDERE & WYNNE - SPECIAL COUNSEL FOR THE BORROWER
IV FORM OF MORTGAGE
- --------------------------------------------------------------------------
This Senior Secured Loan Agreement is dated as of March 26, 1999,
and entered into by and among R&B Falcon, Inc., a Delaware corporation
(the "Company") and RBF Finance Co., a Delaware corporation (the
"Lender").
RECITALS
WHEREAS, the Lender has entered into an Indenture of even date
herewith (as the same may be amended, or supplemented or otherwise
modified from time to time, the "Indenture") with United States Trust
Company of New York as Trustee (the "Trustee"), pursuant to which the
Lender will issue in two series up to $400,000,000 aggregate principal
amount of its 11% Senior Secured Notes due 2006 (the "7-year Secured
Notes") and up to $400,000,000 aggregate principal amount of its
11 3/8% Senior Secured Notes due 2009 (the "10-year Secured Notes;" the
7-year Secured Notes and the 10-year Secured Notes being hereinafter
collectively called the "Secured Notes"); and
WHEREAS, the Indenture provides that the Lender may utilize the
proceeds of the Secured Notes to make loans to the Company, each for
the purpose of either (i) financing all or a portion of the cost of
acquiring, constructing, altering, improving or repairing a drilling
rig or drillship (a "Rig") or improvements used or to be used in
connection with such a Rig, or (ii) financing all or any part of the
purchase price of the Rig or improvements used or to be used in
connection with such Rig, which indebtedness is incurred prior to or
within one year after the date of the completion of construction,
alteration, improvement or repair or the commencement of commercial
operations thereof; and
WHEREAS, the Company desires that the Lender extend senior secured
credit facilities to the Company for such purposes herein; and
WHEREAS, the Indenture provides that the Lender will enter into a
Senior Secured Note Security and Pledge Agreement of even date
herewith (the "Issuer Security Agreement") between the Lender, the
Trustee and United States Trust Company of New York as Collateral
Agent (in such capacity, the "Collateral Agent"), pursuant to which
the Lender will pledge and grant a security in the loans made with the
proceeds of the Secured Notes which are or will be secured by Rigs;
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, the parties
hereby agree as follows:
SECTION 1 DEFINITIONS
1.1 Certain Defined Terms. The following terms used in this Agreement
shall have the following meanings:
"Agreement" means this Senior Secured Loan Agreement dated as of
March 26, 1999, as it may be amended, supplemented or otherwise
modified from time to time in accordance with the terms hereof.
"Board of Directors" means, with respect to any Person, the Board
of Directors of such Person or any duly authorized committee of that
Board.
"Board Resolution" means a duly adopted resolution of the Board of
Directors of the Company in full force and effect at the time of
determination and certified as such by the Secretary or Assistant
Secretary of the Company.
"Business Day" means any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of New York, New York or is a
day on which banking institutions therein located are authorized or
required by law or other governmental action to close.
"Cash Equivalents" means (i) U.S. Governmental Obligations with a
maturity of four years or less; (ii) commercial paper issued by any
corporation if such commercial paper has credit ratings of at least "A-
1" from S&P or at least "P-1" by Moody's; (iii) certificates of
deposit, bankers' acceptances, time deposits, Eurocurrency Deposits
and similar types of Investments routinely offered by commercial banks
with final maturities of one year or less issued by commercial banks
having combined capital and surplus in excess of $100,000,000; and
(iv) shares in money market mutual or similar funds having assets in
excess of $100,000,000.
"Closing Date" means the date on or before March 26, 1999 on which
the initial advance of the Loan is made and the conditions set forth
in Section 3.1 are satisfied or waived in accordance with Section 7.7.
"Collateral" means the Mortgaged Rig and any other property subject
to the Lien created under a Mortgage or a Loan Document.
"Commission" means the Securities and Exchange Commission.
"Company" has the meaning ascribed to such term in the introduction
to this Agreement.
"Collateral Agent" has the meaning assigned to such term in the
recitals to this Agreement.
"Contractual Obligation," as applied to any Person, means any
provision of any Security issued by that Person or of any indenture,
mortgage, deed of trust, contract, undertaking, agreement or other
instrument to which that Person is a party or by which it or any of
its properties is bound or to which it or any of its properties is
subject.
"Dollars" or the sign "$" means the lawful money of the United
States of America.
"Event of Default" means each of the events set forth in Section 6.
"indemnified liabilities" has the meaning ascribed to such term in
Section 7.3.
"Indemnitees" has the meaning ascribed to such term in Section 7.3.
"Indenture" has the meaning ascribed to such term in the recitals
of this Agreement.
"Laws" means all applicable statutes, laws, ordinances,
regulations, rules, orders, judgments, writs, injunctions or decrees
of any state, commonwealth, nation, territory, possession, province,
county, parish, town, township, village, municipality or Tribunal, and
"Law" means each of the foregoing.
"Lender" has the meaning ascribed to that term in the introduction
of this Agreement and shall include any assignee of the Loan or the
Note or Loan Commitment to the extent of such assignment.
"Lien" means any lien, mortgage, pledge, assignment, security
interest, charge or encumbrance of any kind (including any conditional
sale or other title retention agreement, any lease in the nature
thereof, and any agreement to give any security interest) and any
option, trust or other preferential arrangement having the practical
effect of any of the foregoing.
"Loan" means, collectively, the loans made by the Lender pursuant
to Section 2.1.
"Loan Documents" means this Agreement, the Note and the Mortgage.
"Margin Stock" has the meaning assigned to that term in
Regulation U of the Board of Governors of the Federal Reserve System
as in effect from time to time.
"Material Adverse Effect" means (i) a material adverse effect upon
the business, property, assets, nature of assets, liabilities
condition (financial or otherwise), results of operation or prospects
of the Company and its Restricted Subsidiaries, taken as a whole, or
(ii) the impairment of the ability of the Company or any of its
Restricted Subsidiaries to perform, or the impairment of the ability
of Lender to enforce, any material right or remedy under the
Obligations.
"Maturity" means the date on which the principal of the Loan,
whether the 7-year Tranche or 10-year Tranche or both, becomes due and
payable as provided in this Agreement whether at Stated Maturity, upon
redemption, by declaration of acceleration or otherwise.
"Mortgage" means a mortgage substantially in the form of Exhibit IV
covering the Mortgaged Rig.
"Mortgaged Rig" means the W.D. Kent.
"Notes" has the meaning ascribed to such term in Section 2.1C.
"Notice of Borrowing" means a notice substantially in the form of
Exhibit II annexed hereto with respect to a proposed borrowing.
"Obligations" means all obligations of every nature of the Company
from time to time owed to the Lender under the Loan Documents, whether
for principal, reimbursements, interest (including post-petition
interest), fees, expenses, indemnities or otherwise, and whether
primary, secondary, direct, indirect, contingent, fixed or otherwise
(including obligations of performance).
"Officer" means the Chairman of the Board, the Chief Executive
Officer, the Chief Operating Officer, the President, any Vice
President, the Chief Financial Officer, the Controller, the Chief
Accounting Officer, any Vice President, the Treasurer or the Secretary
of the Company.
"Officers' Certificate" means, as applied to any corporation, a
certificate executed on behalf of such corporation by two officers;
provided, however, that every Officers' Certificate with respect to
the compliance with a condition precedent to the making of the Loans
hereunder shall include (i) a statement that the officer or officers
making or giving such Officers' Certificate have read such condition
and any definitions or other provisions contained in this Agreement
relating thereto, (ii) a statement that, in the opinion of the
signers, they have made or have caused to be made such examination or
investigation as is necessary to enable them to express an informed
opinion as to whether or not such condition has been complied with,
and (iii) a statement as to whether, in the opinion of the signers,
such condition has been complied with.
"Other Loan" means a loan made pursuant to an Other Loan Agreement
by the Lender with the proceeds of the Secured Notes which is secured
by a Mortgaged Rig.
"Other Loan Agreement" means a loan agreement among the Lender, the
Company and the Trustee pursuant to which the Lender will utilize the
proceeds of the Secured Notes to make an Other Loan for the purposes
specified in the second recital of this Agreement
"Other Mortgaged Rig" means a Rig which has been mortgaged to
secure an Other Loan or which is the subject of a construction
contract which has been pledged to secure an Other Loan.
"Other Taxes" has the meaning ascribed to such term in Section 7.6.
"Payment Office" shall mean the office of United States Trust
Company of New York located at 114 West 47th Street, 25th Floor, New
York, New York 10036 or such other office in the State of New York as
the Lender may designate to the Company and the Trustee from time to
time.
"Potential Event of Default" means a condition or event which,
after notice or lapse of time or both, would constitute an Event of
Default if that condition or event were not cured or removed within
any applicable grace or cure period.
"Purchase Agreement" means the Purchase Agreement dated March 19,
1999 among the Lender, the Company and the Initial Purchaser relating
to the Secured Notes.
"Securities" means any stock, shares, partnership interests, voting
trust certificates, certificates of interest or participation in any
profit sharing agreement or arrangement, bonds, debentures, options,
warrants, notes, or other evidences of indebtedness, secured or
unsecured, convertible, subordinated or otherwise, or in general any
instruments commonly known as "securities" or any certificates of
interest, shares or participations in temporary or interim
certificates for the purchase or acquisition of, or any right to
subscribe to, purchase or acquire, any of the foregoing.
"7-year Tranche" means advances on the Loan aggregating up to
$5,950,000 and having a final Loan Maturity of March 15, 2006.
"Taxes" means all taxes, assessments, fees, levies, imposts,
duties, penalties, deductions, liabilities, withholdings or other
charges of any nature whatsoever, including interest penalties, from
time to time or at any time imposed by any Law or any Tribunal.
"10-year Tranche" means advances on the Loan aggregating up to
$5,950,000 and having a final Maturity of March 15, 2009.
"Transaction Costs" means the fees, costs and expenses payable by
the Company pursuant hereto and other fees, costs and expenses payable
by the Company in connection with the Transactions.
"Transactions" shall mean, collectively, (i) the issuances and sale
of the Secured Notes, (ii) the incurrence of the Loan hereunder on the
Closing Date, (iii) the incurrence of the Other Loans under the Other
Loan Agreements, (iv) any other transaction on the Closing Date
contemplated in relation to the foregoing and (v) the payment of fees
and expenses in connection with the foregoing.
"Tranches" means collectively the 7-year Tranche and the 10-year
Tranche.
"Tribunal" means any governmental, any arbitration panel, any court
or any governmental department, commission, board, bureau, agency,
authority or instrumentality of the United States or any state,
province, commonwealth, nation, territory, possession, county, parish,
town, township, village or municipality, whether now or hereafter
constituted and/or existing.
"Trustee" has the meaning ascribed to such term in the introduction
of this Agreement and shall include any successor Trustee appointed
pursuant to terms of the Indenture.
"U.S. Legal Tender" means such coin or currency of the United
States of America as at the time of payment shall be legal tender for
the payment of public and private debts.
1.2 Other Defined Terms. Any capitalized term used in this Agreement
and not defined herein shall have the meaning assigned to such term in
the Indenture.
1.3 Accounting Terms. For the purposes of this Agreement, all
accounting terms to otherwise defined herein shall have the meanings
assigned to them in conformity with GAAP.
1.4 Other Definitional Provisions. Any of the terms defined in
Section 1.1 may, unless the context otherwise requires, be used in the
singular or the plural depending on the reference.
SECTION 2 LOAN COMMITMENT AND LOAN
2.1 The Loan and Notes.
A. Loan Commitment. Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties of
the Company herein set forth, the Lender hereby agrees to lend to the
Company on the Closing Date and thereafter up to $11,900,000 in the
aggregate (the "Loan") consisting of $5,950,000 of 7-year Tranche
advances and $5,950,000 of 10-year Tranche advances. The Lender's
commitment to make the Loan to the Company pursuant to this
Section 2.1 is herein called the "Loan Commitment."
B. Notice of Borrowing. When the Company desires to borrow under this
Agreement, it shall deliver to the Collateral Agent a Notice of
Borrowing no later than 11:00 a.m. (New York time), at least one
Business Day in advance of the Closing Date or such other date as
shall be agreed to by the Lender and the Trustee. The Notice of
Borrowing shall specify the amount of each Tranche and the applicable
date of borrowing (which shall be a Business Day).
C. Disbursement of Funds. No later than 3:00 p.m. (New York time) on
the Closing Date, the Lender promptly will make available to the
Company by depositing to its account at the Payment Office the
aggregate of the amount of the Loan to be made on such Closing Date.
D. Notes. The Company shall execute and deliver to the Lender on the
Closing Date two Notes dated the Closing Date, one substantially in
the form of Exhibit I annexed hereto with appropriate insertions to
evidence the maximum amount of the 7-year Tranche of Loan which may be
made hereunder by the Lender and the other substantially in the form
of Exhibit I annexed hereto with appropriate insertions to evidence
the maximum amount of 10-year Tranche of the Loan which may be made by
the Lender hereunder.
E. Scheduled Payments of Loan. The Company shall pay on or before 10:00
a.m. on the date of the final Maturity of the 7-year Tranche of the
Loan all of the principal amount of the 7-year Tranche remaining
outstanding, which amount will be $5,950,000 principal amount of the
Loan, reduced by any previous prepayments of principal made on the
7-year Tranche of the Loan to the extent that such payments have been
allocated pursuant to the provisions of Section 2.3 hereof and the
Indenture to the 7-year Secured Notes, together with accrued and
unpaid interest, fees and a pro rata portion of the amount of the
Special Interest and Additional Amounts, if any, due on the 7-year
Secured Notes. The Company shall pay on or before 10:00 a.m. on the
date of the final Maturity of the 10-year Tranche all of the principal
amount of the 10-year Tranche then remaining outstanding, reduced by
any previous prepayments of principal made on the 10-year Tranche of
the Loan to the extent that such payments have been allocated pursuant
to the provisions of Section 2.3 hereof and the Indenture to the 10-
year Secured Notes, together with accrued and unpaid interest fees and
a pro rata portion of the amount of the Special Interest and
Additional Amounts, if any, due on the 10-year Secured Notes. Such
payments shall be made directly to the Trustee for deposit in the
Issuer Escrow Account established pursuant to the Issuer Escrow
Agreement.
F. Termination of Loan Commitment. The Loan Commitment hereunder shall
terminate on the earlier (i) the Stated Maturity (whether by
acceleration, redemption, purchase or otherwise) of the Secured Notes
pursuant to the terms of the Indenture or (ii) May 14, 1999, [if no
portion of the Loan has been made on or before such date (other than
as a result of failure of the Lender to fulfill its obligations
hereunder).
G. Satisfaction by Payments on the Guarantee. Pursuant to the
Indenture, the Company will guarantee the due and punctual payment of
the principal of, premium, if any, and interest on, and all other
amounts payable under, the Secured Notes (including any Additional
Amounts payable upon redemption, in respect thereof) when and as the
same shall become due and payable, whether at Stated Maturity, by
declaration of acceleration or otherwise. To the extent that the
Company makes a payment on the Guarantee, it will be deemed to have
made a payment on the Issuer Loans then outstanding, such payments to
be allocated pro rata to each of Tranches of the Loan and pro rata to
the Loan and the Other Loans.
2.2 Interest on the Loans.
A. Rate of Interest. The 7-year Tranche of the Loan shall bear interest
on the unpaid principal amount thereof from the date made through
Maturity for the 7-year Tranche (whether by prepayment, acceleration
or otherwise) at a rate equal to 11% per annum plus 2 basis points per
annum and the 10-year Tranche of the Loan shall bear interest on the
unpaid principal amount thereof from the date made through Maturity
for the 10-year Tranche (whether by prepayment, acceleration or
otherwise) at a rate equal to 11 3/8% per annum plus 2 basis points per
annum.
B. Special Interest. The Lender and the Company have entered into a
Registration Rights Agreement (the "Registration Rights Agreement")
dated March 26, 1999 with Donaldson, Lufkin & Jenrette Securities
Corporation for the benefit of the Holders of the Secured Notes, in
which the Lender and the Company have agreed to: (A) file a
registration statement within 60 days after the closing date of the
offering of Secured Notes for an offer to exchange Secured Notes of
each series for debt securities of that series with identical terms
(except for transfer restrictions); (B) use their best efforts to
cause the registration statement to become effective within 150 days
after the closing date of the offering of the Secured Notes; and
(C) complete the registered exchange offer within 180 days after the
closing date of the offering of the Secured Notes. Under certain
circumstances, the Lender and the Company may be required to file a
shelf registration statement for the Secured Notes registering the
resale of the Secured Notes. If the Lender and the Company do not
comply with their obligations under the Registration Rights Agreement,
the Lender will be required to pay additional interest ("Special
Interest") specified in Section 5 of the Registration Rights
Agreement. The Company will pay on each date that the Lender pays
Special Interest to the Holders of the Secured Notes as Special
Interest on the Loan an amount equal to the percentage of Special
Interest, if any, which the Lender owes to the Holders of the Secured
Notes that the principal amount of the Loan bears to the total
aggregate principal amount of the Loan and all Other Loans then
outstanding. Such payment shall be paid directly to the Trustee for
deposit into the Issuer Escrow Account.
Notwithstanding any provisions of this Section 2.2 or any
other provision herein, in no event will the combined sum of interest
(cash or otherwise) on the Loan exceed the maximum amount permitted by
applicable law.
C. Interest Payments. Interest (including Special Interest, if any,
and Additional Amounts, if any) shall be payable semi-annually on
March 15 and September 15 of each year, commencing September 15, 1999
but in no event to exceed the maximum permitted by applicable law.
All payments of interest on the Loan shall be made on or before 10:00
a.m. (New York time) on the date of payment and shall be paid directly
to the Trustee for deposit into the Issuer Escrow Account.
D. Post-Maturity Interest. Any principal payments on the Loan not paid
when due and, to the extent permitted by applicable law, any interest
payment on the Loan not paid when due, in each case whether at Stated
Maturity, by notice of prepayment, by acceleration or otherwise, shall
thereafter bear interest payable upon demand at a rate of interest
otherwise payable under this Agreement for the Loan but in no event to
exceed the maximum interest rate permitted by applicable law.
E. Computation of Interest. Interest on the Loan shall be computed on
the basis of a 360-day year of twelve 30-day months.
2.3 Redemptions.
A. Redemption upon Loss of the Mortgaged Rig. If an Event of Loss
occurs at any time with respect to the Mortgaged Rig attributable to
the Loan, the Company shall apply funds in an amount (the "Loss
Redemption Amount") equal to the principal amount of the Loan
outstanding on the date (the "Loss Date") on which such Event of Loss
was deemed to have occurred, together with all accrued and unpaid
interest (including Special Interest, if any, and Additional Amounts,
if any) thereon, to the prepayment of the Loan. If an Event of Loss
occurs at any time with respect to any Other Mortgaged Rig, the
Indenture and the applicable Other Loan Agreement require that the
Company shall apply funds to the principal amount of the applicable
Other Loan secured by the Other Mortgaged Rig outstanding on the Loss
Date for such other Mortgaged Rig, together with all accrued and
unpaid interest (including Special Interest, if any, and Additional
Amounts, if any) thereon, to the payment of such Other Loan. If a
Default under the Indenture shall have occurred and be continuing at
the time of the receipt of the Event of Loss Proceeds with respect to
such Other Mortgaged Rig, the Indenture requires, and the Company
hereby agrees, that it shall prepay the Loan and the remaining Other
Loans on a pro rata basis in an aggregate amount equal to the excess
of the Net Event of Loss Proceeds over the Loss Redemption Amount, if
any, together with all accrued and unpaid interest (including Special
Interest, if any, and Additional Amounts, if any) thereon for the
Other Loan which is secured by such Other Mortgaged Rig. All payments
on the Loan shall be allocated on a pro rata basis between the
Tranches and shall be made directly to the Trustee for deposit into
the Issuer Escrow Account.
B. Redemption upon Sale of the Mortgaged Rig. If the Mortgaged Rig or
the Capital Stock of a Subsidiary Guarantor then owning the Mortgaged
Rig is sold in compliance with the terms of the Indenture, the Company
shall apply funds in an amount (the "Sale Redemption Amount") equal to
the principal amount of the Loan secured by the Mortgaged Rig on the
date of such sale (the "Sale Date"), together with all accrued and
unpaid interest (including Special Interest, if any, and Additional
Amounts, if any thereon, plus any additional amounts required by the
Lender to redeem the Secured Notes to the extent required by
Section 3.9 of the Indenture, to the prepayment of the Loan. If any
Other Mortgaged Rig or the Capital Stock of a Subsidiary Guarantor
then owning an Other Mortgaged Rig is sold in compliance with the
terms of the Indenture, the Company shall apply funds equal to the
applicable Other Loan secured by the Other Mortgaged Rig outstanding
on the Sale Date for such Other Mortgaged Rig, together with all
accrued and unsecured interest (including Special Interest, if any,
and Additional Amounts, if any) thereon, to the payment of such Other
Loan. If a Default under the Indenture shall have occurred and be
continuing at the time of receipt of the cash consideration with
respect to such Other Mortgaged Rig or Capital Stock of the Subsidiary
Guarantor owning such Other Mortgaged Rig, the Indenture requires, and
the Company hereby agrees, that it shall also be required to prepay
the Loan and the remaining Other Loans on a pro rata basis in an
aggregate amount equal to the excess of such Net Available Cash
attributable to such Sold Mortgaged Rig over such Sale Redemption
Amount. Such payments on the Loan and the Other Loans pursuant hereto
shall be respectively allocated between the Tranches of the Loan and
the Other Loans on a pro rata basis and shall be made directly to the
Trustee for deposit into the Issuer Escrow Account.
C. Other Redemptions.
(i)Redemptions to Fund Optional Redemptions of the 10-year Secured
Notes. Under the terms of the Indenture, on or after March 15, 2004,
the 10-year Secured Notes will be redeemable, at the Lender's option,
in whole or in part, at any time or from time to time, upon not less
than 30 nor more than 60 days' prior notice to the Holders of the 10-
year Secured Notes, at the following Redemption Prices (expressed in
percentages of principal amount), plus accrued and unpaid interest
(including Special Interest, if any, and Additional Amounts, if any)
to the Redemption Date, if redeemed during the 12-month period
commencing on March 15 of the years set forth below.
Redemption
Period Price
2004 105.6875%
2005 103.7917
2006 101.8958
2007 and thereafter 100.0000
The Company shall prepay the 10-year Tranche of the Loan and of
the Other Loans, in whole or in part, to provide funds for such
redemption. Any prepayments by the Company on the Loan and the
Other Loans required to be made to provide funds for the Lender to
make such a redemption shall be made on this Loan and the Other
Loans on a pro rata basis. All payments on the Loan and the Other
Loans pursuant hereto shall be made directly to the Trustee for
deposit into the Issuer Escrow Account.
(ii)Redemptions to Fund Optional Redemptions of the 7-year Secured
Notes. Under the terms of the Indenture, the 7-year Secured Notes
will be redeemable, at the Lender's option at any time in whole or
from time to time in part upon not less than 30 and not more than
60 days' prior notice mailed by first class mail to the Holders of the
7-year Secured Notes, on any date prior to Maturity at a price equal
to 100% of the principal amount thereof plus accrued and unpaid
interest (including Special Interest, if any, and Additional Amounts,
if any) to the Redemption Date plus the Make-Whole Premium applicable
to the 7-year Secured Notes determined in the manner provided for in
Section 3.7 of the Indenture. The Company shall prepay the 7-year
Tranche of the Loan and of the Other Loans in whole or in part to
provide funds for such redemption. Any prepayments by the Company on
the Loan and the Other Loans required to be made to provide funds for
the Lender to make such a redemption shall be made on the Loan and the
Other Loans on a pro rata basis. All payments on the Loan and the
Other Loans pursuant hereto shall be made directly to the Trustee for
deposit into the Issuer Escrow Account.
D. Excess Proceeds Offers. The Indenture provides in Section 3.10
thereof that if, as of the first day of any calendar month, the
aggregate amount of Sale Excess Proceeds and Loss Excess Proceeds
exceeds 10% of consolidated total assets of the Company, and if the
aggregate amount of Sale Excess Proceeds and Loss Excess Proceeds in
excess of 10% of consolidated total assets of the Company that has not
theretofore been subject to an Excess Proceeds Offer (as defined
below) (the "Excess Proceeds Offer Amount"), totals at least $10
million, the Lender must, not later than the fifteenth Business Day of
such month, make an offer (an "Excess Proceeds Offer") to purchase
from the Holders of the Secured Notes, pursuant to and subject to the
conditions contained in the Indenture, and from Holders of the New
Senior Notes, pursuant to provisions of the New Senior Note Indenture,
Secured Notes at a purchase price equal to 100% of their principal
amount, plus any accrued interest (including Additional Amounts and
Special Interest, if any) to the date of purchase and New Senior Notes
at a purchase price equal to 100% of their principal amount, plus any
accrued interest (including Special Interest, if any) to the date of
purchase in an aggregate principal amount equal to the Excess Proceeds
Offer Amount (an "Excess Proceeds Payment"). If the Lender is ever
required pursuant to Section 3.10 of the Indenture to make an Excess
Proceeds Offer to the Holders of the Secured Notes to purchase from
such Holders their Secured Notes, and to the Holders of Senior Notes
to purchase from such Holders their New Senior Notes, the Indenture
provides, and the Company agrees, that the Company will prepay the
Loan and the Other Loans on a pro rata basis to permit the Lender to
purchase any Secured Notes validly tendered pursuant to an Excess
Proceeds Offer. All payments on the Loan shall be allocated between
the appropriate Tranches of the Loan; and all payments on the Loan and
the Other Loans pursuant hereto shall be made directly to the Trustee
for deposit into the Issuer Escrow Account.
E. Change of Control. If the Lender is ever required to make pursuant
to the provisions of Section 4.8 of the Indenture a Change of Control
Offer to the Holders of the Secured Notes at a purchase price in cash
equal to 101% of the principal amount thereof plus accrued and unpaid
interest (including Additional Amounts and Special Interest, if any)
thereon, the Indenture provides, and Company agrees, that the Company
will prepay the Loan and the Other Loans on a pro rata basis at a
redemption price equal to 101% of the principal amount hereof being
repaid, plus accrued and unpaid interest, Special Interest, if any,
and Additional Amounts, if any, thereon, in order to provide funds
sufficient to permit the Lender to purchase any Secured Notes validly
tendered pursuant to the foregoing offer to purchase Secured Notes
upon a Change of Control. All payments on the Loan shall be allocated
between the appropriate Tranches of the Loans and all payments on the
Loan and the Other Loans pursuant hereto shall be made directly to the
Trustee for deposit into the Issuer Escrow Account.
F. Notice. The Company shall notify the Lender and the Trustee of any
prepayment to be made pursuant to this Section 2.3 at least two
Business Days prior to such prepayment date.
G. Determination of Amounts of the Tranches Subject to Such
Redemptions. The Lender will submit a written determination to the
Trustee for its approval of the amount (including the pro rata
allocations between the Tranches of the Loan and between the Loan and
the Other Loans) with respect to any such redemption. The Trustee
shall approve or disapprove such allocations in its sole discretion
and such decision shall be conclusive, absent manifest error. A
certificate of the Lender setting forth such determination, with the
written approval of the Trustee thereon, shall be delivered to the
Company at least one Business Day prior to the payment date.
H. Company's Mandatory Prepayment Obligation; Application of
Prepayments. All prepayments shall include payment of accrued
interest (including Special Interest and Additional Amounts, if
applicable) on the principal amount so prepaid and shall be applied to
payment of interest before application to principal.
I. Manner and Time of Payment. Unless otherwise expressly set forth
herein, all payments of principal and interest hereunder and under the
Notes by the Company shall be made without defense, set-off or
counterclaim and in same-day funds and delivered to the Trustee for
deposit into the Issuer Escrow Account, unless otherwise specified,
not later than 10:00 a.m. (New York time) on the date due at the
Payment Office; funds received by the Trustee after that time shall be
deemed to have been paid by the Company on the next succeeding
Business Day.
J. Payments on Non-Business Days. Whenever any payment to be made
hereunder or under the Notes shall be stated to be due on a day which
is not a Business Day, the payment shall be made on the next
succeeding Business Day and such extension of time shall be included
in the computation of the payment of interest hereunder or under the
Loan.
2.4 Use of Proceeds.
A. Loan. The proceeds of the Loan may be applied by the Company to
finance certain costs of acquiring, constructing, repairing and
improving the Mortgaged Rig and, to the extent that such costs have
already been paid, for general corporate purposes.
B. Margin Regulations. No portion of the proceeds of any borrowing
under this Agreement shall be used by the Company in any manner which
might cause the borrowing or the application of such proceeds to
violate the applicable requirements of Regulation U, Regulation T or
Regulation X of the Board of Governors of the Federal Reserve System
or any other regulation of the Board or to violate the Exchange Act,
in each case as in effect on the date or dates of such borrowing and
such use of proceeds.
2.5 Commitment Fee. The Company agrees to pay a commitment fee for the
period from and including the Closing Date to and including the date
of termination specified in Section 2.1.F. on the undrawn portion of
the Loan equal to the average of the daily excess of the Loan
Commitment over the aggregate principal amount of the Loan outstanding
multiplied by 7% per annum, such commitment fee to be calculated on
the basis of a 360-day year consisting of twelve 30-day months and to
be payable semi-annually in arrears on each March 15 and September 15,
commencing September 15, 1999.
SECTION 3 CONDITIONS
3.1 Conditions to Initial Advances on the Loan. The obligation of the
Lender to make the initial advance on the Loan is subject to prior or
concurrent satisfaction of each of the following conditions:
A. On or before the Closing Date, all corporate and other proceedings
taken or to be taken in connection with the transactions contemplated
hereby and all documents incidental thereto not previously found
acceptable by the Lender and the Trustee shall be reasonably
satisfactory in form and substance to the Lender and the Trustee, and
the Lender and the Trustee shall have received the following items,
each of which shall be in form and substance satisfactory to the
Lender and the Trustee and, unless otherwise noted, dated the Closing
Date:
(i) a certified copy of the Company's charter, together with a
certificate of status, compliance, good standing or like certificate
with respect to the Company issued by the appropriate government
officials of the jurisdiction of its incorporation and of each
jurisdiction in which it owns any material assets or carries on any
material business, each to be dated a recent date prior to the Closing
Date;
(ii) a copy of the Company's bylaws, certified as of the Closing Date
by its Secretary or one of its Assistant Secretaries;
(iii) resolutions of the Company's Board of Directors approving and
authorizing the execution, delivery and performance of this Agreement,
the Notes, the Mortgage, each of the other Loan Documents, the
Indenture and any other documents, instruments and certificates
required to be executed by the Company in connection herewith and
therewith and approving and authorizing the execution, delivery and
payment of the Loan, each certified as of the Closing Date by its
Secretary or one of its Assistant Secretaries as being in full force
and effect without modification or amendment;
(iv) signature and incumbency certificates of the Company's officers
executing this Agreement, the Other Loan Documents and the Notes;
(v) executed copies of this Agreement and the Notes substantially in
the form of Exhibit I annexed hereto executed in accordance with
Section 2.1C drawn to the order of the Lender and with appropriate
insertions;
(vi) an originally executed Notice of Borrowing substantially in the
form of Exhibit II annexed hereto, signed by the President or a Vice
President of the Company on behalf of the Company and delivered to the
Lender; and
(vii) originally executed copies of one or more favorable written
opinions of Gardere & Wynne, special counsel for the Company,
substantially in the form of the Exhibit III hereto and addressed to
the Lender, the Trustee and the Initial Purchaser, and such other
opinions of counsel and such certificates or opinions of accountants,
appraisers or other professionals as the Lender, the Trustee or the
Initial Purchaser shall have reasonably requested.
B. The Lender shall have received a fully executed Mortgage in
the form of Exhibit IV hereto, which has been filed in all appropriate
jurisdictions.
C. On or before the Closing Date, all authorizations, consents and
approvals necessary in connection with the Transactions shall have
been obtained and remain in full force and effect and all applicable
waiting periods, if any, under law applicable to the Transactions
shall have expired without any action being taken by any competent
authority (including without limitation, any Tribunal) which
restrains, prevents or imposes materially adverse conditions upon the
completion of the Transactions or the financing thereof and evidence
of the receipt of such authorizations, consents and approvals
satisfactory to the Lender and the Trustee shall have been delivered
to the Lender and the Trustee.
D. On or before the Closing Date, the Indenture and the Purchase
Agreement shall have been executed and delivered by all parties
thereto. No default or event of default shall have occurred under the
Indenture and the Purchase Agreement, all conditions to the execution
delivery and authentication of the Secured Notes thereunder shall have
been satisfied under the Indenture, and all conditions to the purchase
of the Secured Notes by the Initial Purchaser under the Purchase
Agreement have been satisfied or waived by the Initial Purchaser.
E. Simultaneously with the making of the Loan by the Lender, the
Company shall have delivered to the Lender and the Trustee an
Officers' Certificate from the Company in form and substance
satisfactory to the Lender and the Trustee to the effect that (i) the
representations ad warranties of the Company in Section 4 are true,
correct and complete in all material respects on and as of the Closing
Date to the same extent as though made on and as of that date, and
(ii) on or prior to the Closing Date, the Company has performed and
complied with in all material respects all covenants and conditions to
be performed and observed by the Company on or prior to the Closing
Date and
F. No event shall have occurred and be continuing or would result from
the consummation of the borrowing contemplated by the Notice of
Borrowing which would constitute and Event of Default, a Potential
Event of Default or a Default.
G. No order, judgment or decree of any court, arbitrator or
governmental authority shall purport to enjoin or restrain the Lender
from making the Loan.
H. The making of the Loan in the manner contemplated in this Agreement
shall not violate the applicable provisions of Regulation T, U or X of
the Board of Governors of the Federal Reserve Board or any other
regulation of the Board.
3.2 Conditions to Subsequent Advance on the Loan. The obligation of
the Lender to make a subsequent advance on the Loan is subject to the
prior or concurrent satisfaction of each of the following conditions:
A. The Lender and the Trustee shall have received in form and substance
satisfactory to the Lender and the Trustee and dated the date of such
advance an originally executed Notice of Borrowing substantially in
the form of Exhibit II annexed hereto, signed by the President or a
Vice President of the Company on behalf of the Company and delivered
to the Lender.
B. No event shall have occurred and be continuing or would result from
the consummation of the borrowing contemplated by the Notice of
Borrowing which would constitute an Event of Default, a Potential
Event of Default or a Default.
C. No order, judgment or decree of any court, arbitrator or
governmental authority shall purport to enjoin or restrain the Lender
from making the Loan.
D. The making of the Loan in the manner contemplated in this Agreement
shall not violate the applicable provisions of Regulation T, U or X of
the Board of Governors of the Federal Reserve Board or any other
regulation of the Board.
E. Simultaneously with the making of the advance on the Loan by the
Lender, the Company shall have delivered to the Lender and the Trustee
an Officers' Certificate from the Company in form and substance
satisfactory to the Lender and the Trustee to the effect that (i) the
representations and warranties of the Company in Section 4 are true,
correct and complete in all material respects on and as of the date of
such advance to the same extent as though made on and as of that date,
and (ii) on or prior to the date of such advance, the Company has
performed and complied with in all material respects all covenants and
conditions to be performed and observed by the Company on or prior to
the date of such advance.
SECTION 4 REPRESENTATIONS AND WARRANTIES
In order to induce the Lender to enter into this Agreement and to
make the Loan, the Company represents and warrants to the Lender that,
at the time of execution hereof and after consummation of the making
of the Loan and the Transactions, the following statements are true,
correct and complete:
4.1 Organization and Good Standing; Capitalization. The Company is a
corporation duly organized and existing and in good standing under the
laws of its jurisdiction of incorporation. The Company has the
corporate power and authority to own and operate its properties and to
carry on its business as now conducted and as proposed to be conducted
and is duly qualified as a foreign corporation and in good standing in
all jurisdictions in which it is doing business, except where failure
to be so qualified or in good standing, singly or in the aggregated,
has not had and will not have a Material Adverse Effect.
4.2 Authorization and Power. The Company has the corporate power and
requisite authority, and has taken all corporate action necessary, to
consummate the Transactions and to execute, deliver and perform its
obligations under this Agreement, the Mortgage, the other the Loan
Documents, Indenture and each other document and instrument to be
delivered in connection with the Transactions executed or to be
executed by it and to issue the Notes.
4.3 No Conflicts or Consents.
A. The execution and delivery of the Loan Agreement, the Notes,
the Mortgage, the other Loan Documents and each other document to be
executed and delivered in connection with the Transactions, the
consummation of each of the transactions herein or therein
contemplated, the compliance with each of the terms and previsions
hereof or thereof, and the issuance, delivery and performance of the
Notes, this Agreement, the Mortgage and the Indenture, do not and will
not (i) violate any provision of any law or any governmental rule or
regulation applicable to the Company, its Certificate of Incorporation
or Bylaws or any order, judgment or decree of any court or other
agency of government binding on it, (ii) conflict with, result in a
breach of or constitute (with due notice or lapse of time or both) a
default under any Contractual Obligation of the Company which could
reasonably be expected to result in a Material Adverse Effect, (iii)
result in or require the creation or imposition of any Lien upon any
of the properties or assets of the Company (other than any Liens
created under this Agreement and the Other Loan Agreements), (iv)
require any approval of stockholders or any approval or consent of any
Person under any Contractual Obligation of the Company except for such
approvals or consents which will be obtained on or before the Closing
Date and disclosed in writing to Lender, the Trustee and the Initial
Purchaser or such approvals or consents the failure to obtain which
could not reasonably be expected to singly or in the aggregate result
in a Material Adverse Effect.
B. No consent, approval, authorization or order of any Tribunal or
other Person is required in connection with the execution and delivery
by the Company of this Agreement, the Loan Documents or any other
document or instrument to be delivered in connection with the
Transactions or the consummation of the transactions contemplated
hereby or thereby, other than any such consent, approval,
authorization or order which has been obtained and remains in full
force and effect or which has been waived in writing by the Lender or
the failure of which to obtain would not, singly or in the aggregated,
have a Material Adverse Effect.
4.4 Enforceable Obligations. Each of this Agreement, the Notes, the
Mortgage, the other Loan Documents, and each other document or
instrument to be delivered in connection therewith has been duly
authorized; each of this Agreement, the Notes, the Mortgage, the Other
Loan Documents and each other document or instrument to be delivered
in connection therewith to be executed and delivered on or prior to
the Closing Date has been duly executed and delivered by the Company
and each of this Agreement, the Notes, the Mortgage, the Other Loan
Documents and each other document or instrument to be delivered in
connection therewith to be executed and delivered on or prior to the
Closing Date is, and each of this Agreement, the Notes, the Mortgage
and the other Loan Documents to be executed and delivered after the
Closing Date will be, upon such execution and delivery, the legal,
valid and binding obligations of the Company, enforceable in
accordance with their respective terms, except to the extent that the
enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization or similar laws affecting the enforcement
of creditors' rights generally or by general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law)
4.5 Properties; Liens. The Company has good and marketable title to
the Mortgaged Rig and the Other Mortgaged Rigs to the extent specified
in the Other Loan Agreements. Except as permitted by this Agreement,
the Mortgaged Rig is so owned free and clear of Liens.
4.6 No Default. No event has occurred and is continuing which
constitutes a Default, a Potential Event of Default or an Event of
Default.
4.7 Use of Proceeds; Margin Stock, etc. The proceeds of the Loan will
be used solely for the purposes specified herein. None of such
proceeds will be used for the purpose of purchasing or carrying any
Margin Stock within the meaning of the applicable provisions of
Regulation T, U or X, or for the purpose of reducing or retiring any
Indebtedness which was originally incurred to purchase or carry a
Margin Stock or for any other purpose which might constitute this
transaction a "purpose credit" within the meaning of the applicable
provisions of Regulation T, U or X. The Company has not taken nor
will it take any action which might cause any of the Loan Documents to
violate the applicable provisions of Regulation T, U or X, or any
other regulation of the Board of Governors of the Federal Reserve
System.
4.8 Survival of Representations and Warranties. All representations
and warranties in the Loan Documents shall survive delivery of the
Notes and the making of the Loan and shall continue until one year
after repayment of the Notes and the Obligations, and any
investigation at any time made by or on behalf of the Lender shall not
diminish the Lender's right to rely thereon.
SECTION 5 COVENANTS
5.1 Indenture Covenants. Each of the covenants conferred in the
Indenture applicable to the Company and its Restricted Subsidiaries
are incorporated herein by reference. The Company covenants and
agrees that, until the Loan and the Notes and all other amounts due
under this Agreement have been indefeasibly paid in full it shall
perform all covenants applied to it or any of its Restricted
Subsidiaries which are contained in the Indenture.
5.2 Reports of Defaults, Etc. The Company will deliver to each Lender
and the Trustee promptly upon, but in no event more than five (5)
Business Days after, any Officer's obtaining knowledge of any
condition or event which constitutes a Default, an Event of Default or
a Potential Event of Default, an Officer's Certificate specifying the
nature and period of existence of any such condition or event, or
specifying the notice given or the claim of Default, Event of Default,
Potential Event of Default, or the event or condition, and what action
the Company has taken, is taking and proposes to take with respect
thereto;
5.3 Payments in U.S. Dollars. All payments of any Obligations to be
made hereunder or under the Note by the Company or any other obligor
with respect thereto shall be made solely in U.S. Dollars or such
other currency as is then legal tender for public and private debts in
the United States of America.
5.4 Performance and Enforcement Under the Loan Documents. The Company
shall promptly perform all of its obligations under the Loan Documents
and each document and instrument related thereto or delivered in
connection with any thereof, in each case, to the extent within its
control. The Company shall (A) diligently and in good faith promptly
pursue the performance of each other party to each such document, and
(B) diligently seek the enforcement of all rights and remedies under
each such document.
5.5 Liens. The Company shall not, nor shall it cause or permit any of
its Restricted Subsidiaries to, directly or indirectly, create, incur,
assume or permit to exist, any Lien on or with respect to any property
or asset (including the Mortgaged Rig) of the Company or of any of its
Restricted Subsidiaries, whether now owned or hereafter acquired, or
assign or otherwise convey any right to receive any income or profits
therefrom, or file or permit the filing of, or permit to remain in
effect, any financing statement or other similar notice of any Lien
with respect to any such property, asset, income or profits under the
Uniform Commercial Code of any State or under any similar recording or
notice statute, except Liens permitted by the Indenture and Liens
permitted by the Loan Documents.
5.6 Transfer of Mortgage Rig to a Restricted Subsidiary. The Company
shall not, nor shall the Company cause or permit any of its Restricted
Subsidiaries to, directly or indirectly, transfer the Mortgaged Rig to
any Subsidiary of the Company unless (i) such Subsidiary guarantees
all Obligations of the Company under this Agreement and executes a
Mortgage, (ii) the Liens of the Subsidiary's Mortgage and Security
Agreement are perfected and enforceable, and (iii) such Subsidiary
executes a Subsidiary Guarantee pursuant to the Indenture.
SECTION 6 EVENTS OF DEFAULT
If any of the following conditions of events ("Events of Default")
shall occur and be continuing:
6.1 Failure To Make Payments When Due. Failure to pay any installment
of principal including Premium of the Loan when due, whether at stated
maturity, by acceleration, by notice of prepayment or otherwise; or
failure to pay any interest (including Special Interest and Additional
Amounts) on the Loan or any other amount due under this Agreement
continued for 30 days; or
6.2 Default Under The Indenture. An Event of Default occurs and is
continuing under the Indenture; or
6.3 Other Loan Agreement. An Event of Default (as defined in an other
Loan Agreement) occurs and is continuing under such Other Loan
Agreement; or
6.4 Breach of Certain Covenants. Failure of the Company to perform or
comply with any covenant, term or condition contained in Sections 5.2
through 5.6 and Sections 7.3 through 7.5 of this Agreement; or
6.5 Breach of Warranty. Any representation, warranty or certification
made by the Company in any Loan Document or in any statement or
certificate at any time given by the Company in writing pursuant
hereto or thereto or in connection herewith or therewith shall be
false or incorrect in any material respect on the date as of which
made or deemed made; or
6.6 Other Defaults Under Agreement or Loan Documents. The Company
shall default in the performance of or compliance with any covenant,
term or condition contained in this Agreement or the other Loan
Documents (other than those covered by Sections 5.2 through 5.7 and
such default shall not have been remedied or waived in accordance with
Section 7.6 of this Agreement within 30 days after the date of written
notice of such default from the Lender, the Collateral Agent, the
Trustee or the Holder or Holders of not less than 25% in aggregate
principal amount of the Secured Notes then outstanding; or
6.7 Involuntary Bankruptcy; Appointment of Custodian, etc. The entry
by a court having jurisdiction in the premises of (i) a decree or
order for relief in respect of the Company or any Significant
Subsidiary in an involuntary case or proceeding under U.S. bankruptcy
laws, as now or hereafter constituted, or any other applicable
Federal, state, or foreign bankruptcy, insolvency, or other similar
law or (ii) a decree or order adjudging the Company or any Significant
Subsidiary a bankruptcy or insolvent, or approving as properly filed a
petition seeking reorganization, arrangement, adjustment or
composition of or in respect of the Company or any Significant
Subsidiary under U.S. bankruptcy laws, as now or hereafter
constituted, or any other applicable Federal, state or foreign
bankruptcy, insolvency, or similar law, or appointing a custodian,
liquidator, assignee, trustee, sequestrator or other similar official
of the Company or any Significant Subsidiary or of any substantial
part of the Property or assets of the Company or any Significant
Subsidiary, or ordering the winding up or liquidation of the affairs
of the Company or any Significant Subsidiary, and the continuance of
any such decree or order for relief or any such other decree or order
unstayed and in effect for a period of 60 consecutive days; or
6.8 Voluntary Bankruptcy; Appointment of a Custodian, etc. The
commencement by the Company or any Significant Subsidiary of a
voluntary case or proceeding under the U.S. bankruptcy laws, as now or
hereafter constituted, or any other applicable Federal, state or
foreign bankruptcy, insolvency or other similar law or of any other
case or proceeding to be adjudicated a bankrupt or insolvent; or
(ii) the consent by the Company or any Significant Subsidiary to the
entry of a decree or order for relief in respect of the Company or any
Significant Subsidiary in an involuntary case or proceeding under U.S.
bankruptcy laws, as now or hereafter constituted, or any other
applicable Federal, state, or foreign bankruptcy, insolvency or other
similar law or to the commencement of any bankruptcy or insolvency
case or proceeding against the Company or any Significant Subsidiary;
or (iii) the filing by the Company or any Significant Subsidiary of a
petition or answer or consent seeking reorganization or relief under
U.S. bankruptcy laws, as now or hereafter constituted, or any other
applicable Federal, state or foreign bankruptcy, insolvency or other
similar law; or (iv) the consent by the Company or any Significant
Subsidiary to the filing of such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator, assignee,
trustee, sequestrator or similar official of the Company or any
Significant Subsidiary or of any substantial part of the property or
assets of the Company or any Significant Subsidiary, or the making by
the Company or any Significant Subsidiary of an assignment for the
benefit of creditors; or (v) the admission by the Company or any
Significant Subsidiary in writing of its inability to pay its debts
generally as they become due; or (vi) the taking of corporate action
by the Company or any Significant Subsidiary in furtherance of such
action;
THEN (i) upon the occurrence of any Event of Default described in
the foregoing Section 6.7 or 6.8, all of the unpaid principal amount
of and accrued interest on the Loan and all other outstanding
Obligations shall automatically become immediately due and payable,
without presentment, demand, protest, waiver of notice of intent to
accelerate and waiver of notice of such acceleration or notice of any
other kind or other requirements of any kind, all of which are hereby
expressly waived by the Company, and Obligations and the Loan
Commitment of the Lender hereunder shall thereupon terminate, and
(ii) upon the occurrence of any other Event of Default, the Lender
shall, upon written notice of the Lender, to the Company, upon written
notice of the Trustee or the Collateral Agent to the Company and the
Lender, or upon written notice of a Holder or Holders of the Secured
Note or Notes, to the Company, the Lender, the Collateral Agent and
the Trustee, declare all of the unpaid principal amount of and accrued
interest on the Loan and all other outstanding Obligations to be, and
the same shall forthwith become, due and payable, and the obligations
and Loan Commitments of the Lender hereunder shall thereupon
terminate; provided, however, that upon the occurrence of an Event of
Default described in Section 6.4 of this Agreement or an "event of
default" under Section 6.4 of any Other Loan Agreement, the Lender
shall not declare the Obligations hereunder to be due and payable for
a period of 60 days after notice of the occurrence of such Event of
Default or "event of default." Nevertheless, if at any time after
acceleration of the Maturity of the Loan, the Company shall pay all
arrears of interest and all payments on account of the principal
thereof which shall have become due otherwise than by acceleration
(with interest on principal and, to the extent permitted by law, on
overdue interest, at the rates specified in this Agreement or the
Notes) and all Events of Default and Potential Events of Default
(other than non-payment of principal of and accrued interest on the
Loan and the Notes due and payable solely by virtue of acceleration)
shall be remedied or waived pursuant to Section 7.7, then the Lender
shall, upon receipt of the written notice from the Collateral Agent
and the Trustee of such remedy or waiver, by written notice to the
Company rescind and annul the acceleration and its consequences; but
such action shall not affect any subsequent Default, Event of Default
or Potential Event of Default or impair any right consequent thereon.
SECTION 7 MISCELLANEOUS
7.1 Pledges and Assignments of Loan and Note. The Lender shall have
the right at any time to sell, pledge, assign, transfer or negotiate
all or any portion of the Note or its Loan Commitment. The Company
acknowledges that the Lender will pledge its rights under this
Agreement, the Notes, the Mortgage and the Other Loan Documents to the
Collateral Agent pursuant to the Issuer Security Agreement to secure
the Lender's obligations under the Indenture and the Secured Notes.
7.2 Expenses. Whether or not the transactions contemplated hereby
shall be consummated, the Company, its successors and assigns agrees
to promptly pay (i) all the actual costs and expenses of preparation
of the Loan Documents and all the costs of furnishing all opinions by
counsel for the Company (including without limitation any opinions
requested by the Lender as to any legal matters arising hereunder),
and of the Company's performance of and compliance with all agreements
and conditions contained herein on its part to be performed or
complied with; (ii) the reasonable fees, expenses and disbursements of
counsel to the Lender and the Trustee and the Collateral Agent, their
successors and assigns (including allocated costs of internal counsel)
in connection with the negotiation, preparation, execution and
administration of the Loan Documents and the Loan hereunder, and any
amendments, modifications and waivers hereto or thereto and consents
to departures from the terms hereof and thereof; and (iii) after the
occurrence of an Event of Default, all costs and expenses (including
reasonable attorneys fees, including allocated costs of internal
counsel, and costs of settlement) incurred by the Lender, its
successors and assigns in enforcing any Obligations of or in
collecting any payments due from the Company hereunder or under the
Notes by reason of such Event of Default or in connection with any
refinancing or restructuring of the credit arrangements provided under
this Agreement in the nature of a "work-out" or of any insolvency or
bankruptcy proceedings.
7.3 Indemnity. In addition to the payment of expenses pursuant to
Section 7.2, whether or not the transactions contemplated hereby shall
be consummated, the Company agrees to indemnify, pay and hold the
Lender, the Collateral Agent, the Trustee and any Holder of the
Secured Notes and holder of the Notes, and each of their officers,
directors, employees, and agents, (collectively called the
"Indemnitees"), harmless from and against any all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits,
claims, costs, expenses and disbursements of any kind or nature
whatsoever (including, without limitation, the fees and disbursements
of counsel for such Indemnitees in connection with any investigative,
administrative or judicial proceeding commenced or threatened, whether
or not such Indemnitee shall be designated as a party thereto), which
may be suffered by imposed on, incurred by, or asserted against that
Indemnitee, in any manner resulting from, connected with, in respect
of, relating to or arising out of this Agreement, the Notes, the
Mortgage, the Lender's agreement to make the Loan or the use or
intended use of any of the proceeds of the Loan hereunder or the
Transactions (the "indemnified liabilities"); provided, however, that
the Company shall have no obligation to an Indemnitee hereunder with
respect to indemnified liabilities (i) to the extent such is finally
judicially determined to have resulted solely from (A) the gross
negligence or willful misconduct of that Indemnitee or (B) the failure
of such Indemnitee to perform its obligations under any Loan Document
or (C) such Indemnitee's violation of law or (ii) in connection with
the obligations of any Indemnitee under any Loan Document. To the
extend that the undertaking to indemnify, pay and hold harmless set
forth in the preceding sentence may be unenforceable because it is
violative of any law or public policy, the Company shall contribute
the maximum portion which it is permitted to pay and satisfy under
applicable law to the payment and satisfaction of all indemnified
liabilities incurred by the Indemnitees or any of them.
7.4 Additional Amounts. Except to the extent required by any applicable
law, regulation law, regulation or governmental policy, any and all
payments of, or in respect of the Loan, this Agreement, the Notes, any
Loan Document or any Secured Note shall be made free and clear of and
without deduction for or on account of any and all present or future
taxes, levies, imposts, deduction, charges or withholdings and all
liabilities with respect thereto imposed by Panama, The Bahamas, The
Marshall Islands or any other jurisdiction with which the Company or
any Subsidiary has some connection (including any jurisdiction (other
than the United States of America) from or through which payments
under this Agreement, the Notes, any Loan Document, the Guarantee or
the Secured Notes are made) or any political subdivision of or any
taxing authority in any such jurisdiction ("Panamanian Taxes,"
"Bahamian Taxes," "MI Taxes," or "Other Taxes," respectively). If the
Lender, the Company or any Subsidiary Guarantor shall be required by
law to withhold or deduct any Panamanian Taxes, Bahamian Taxes, MI
Taxes, or Other Taxes from or in respect of any sum payable under this
Agreement, the Notes, any Loan Document, the Guarantee or the Secured
Notes, the sum payable by the Company or such Subsidiary Guarantor, as
the case may be, thereunder shall be increased by the amount
("Additional Amounts") necessary so that after making all required
withholdings and deductions, Lender or any Holder or beneficial owner
of Secured Notes shall receive an amount equal to the sum that it
would have received had not such withholdings and deductions been
made; provided that any such sum shall not be paid in respect of any
Panamanian Taxes, Bahamian Taxes, MI Taxes or Other Taxes to a Holder
(an "Excluded Holder") (i) resulting from the beneficial owner of such
Secured Note carrying on business or being deemed to carry on business
in or through a permanent establishment or fixed base in the relevant
taxing jurisdiction or having any other connection with the relevant
taxing jurisdiction or any political subdivision thereof or any taxing
authority therein other than the mere holding or owning of such
Secured Note, being a beneficiary of the Guarantee or any applicable
Subsidiary Guarantee, the receipt of any income or payments in respect
of such Secured Note, the Loan, the Guarantee or any applicable
Subsidiary Guarantee or the enforcement of such Secured Note, the
Loan, the Guarantee or any applicable Subsidiary Guarantee, or (ii)
that would not have been imposed but for the presentation (where
presentation is required) of such Secured Note for payment more than
180 days after the date such payment became due and payable or was
duly provided for, whichever occurs later. The Lender, the Company or
the Subsidiary Guarantors, as applicable, will also (i) make such
withholding or deduction and (ii) remit the full amount deducted or
withheld to the relevant authority in accordance with applicable law,
and, in any such case, the Lender is required to furnish under the
Indenture to each Holder on whose behalf an amount was so remitted,
within 30 calendar days after the date the payment of any Panamanian
Taxes, Bahamian Taxes, MI Taxes or Other Taxes is due pursuant to
applicable law, certified copies of tax receipts evidencing such
payment by the Lender, the Company or the Subsidiary Guarantors, as
applicable. The Company will, upon written request of each Holder
(other than an Excluded Holder), reimburse each such holder for the
amount of (i) any Panamanian Taxes, Bahamian Taxes, MI Taxes or Other
Taxes so levied or imposed and paid by such Holder as a result of
payments made under or with respect to any Secured Notes, and (ii) any
Panamanian Taxes, Bahamian Taxes, MI Taxes or Other Taxes so levied or
imposed with respect to any reimbursement under the foregoing clause
(i) so that the net amount received by such Holder (net of payments
made under or with respect to such Secured Notes, the Loan, the
Guarantee or the applicable Subsidiary Guarantees) after such
reimbursement will not be less than the net amount the Holder would
have received if Panamanian Taxes, Bahamian Taxes, MI Taxes or Other
Taxes on such reimbursement had not been imposed.
At least 30 calendar days prior to each date on which any payment
under or with respect to the Secured Notes is due and payable, if the
Lender, the Company or the Subsidiary Guarantors, as applicable, will
be obligated to pay Additional Amounts with respect to such payment,
the Lender, the Company or the Subsidiary Guarantors, as applicable,
will deliver to the Trustee an officer's certificate stating the fact
that such Additional Amounts will be payable and the amounts will be
payable and the amounts so payable and will set forth such other
information necessary to enable the Trustee to pay such Additional
Amounts to Holders on the payment date.
7.5 Taxes and Other Taxes.
A. Any and all payments by the Company hereunder or under any of the
other Loan Documents shall be made free and clear of and without
deduction or withholding for any and all present or future Taxes,
unless such Taxes are required by law or the administration thereof to
be deducted or withheld and excluding (a) in the case of each Lender,
Taxes imposed on its net income and franchise taxes or taxes on gross
receipts and capital imposed on it by the jurisdiction under the laws
of the United States or any political subdivision thereof (all such
nonexcluded Taxes being hereinafter referred to as "Covered Taxes").
If the Company shall be required by Law or the administration thereof
to deduct or withhold any Covered Taxes from or in respect of any sum
payable hereunder or under any other Loan Documents, the sum payable
shall be increased as may be necessary so that after making all
required deductions or withholdings (including deductions or
withholdings applicable to additional amounts paid under this
paragraph), the Lender receives an amount equal to the sum it would
have received if no such deduction or withholding had been made;
(b) the Company shall make such deductions or withholdings; and
(c) the Company forthwith shall pay the full amount deducted or
withheld to the relevant taxation or other authority in accordance
with applicable Law.
B. The Company agrees to pay forthwith any present or future stamp
documentary taxes or any other excise or property taxes charges or
similar levies (all such taxes, charges and levies being herein
referred to as "Other Taxes") imposed by any jurisdiction (or any
political subdivision or taxing authority thereof or therein) which
arise from any payment made by the Company hereunder or under any of
the other Loan Documents or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement or any
of the other Loan Documents.
C. The Company agrees to indemnify the Lender for the full amount of
Covered Taxes or Other Taxes not deducted or withheld and paid by the
Company in accordance with Section 7.5(A) and (B) to the relevant
taxation or other authority and any Taxes other than Covered Taxes or
Other Taxes imposed by any jurisdiction on amounts payable by the
Company under this Section 7.5 paid by the Lender and any liability
(including penalties, interest and expenses) arising therefrom or with
respect thereto, whether or not any such Taxes or Other Taxes were
correctly or legally asserted. Payment under this indemnification
shall be made within 30 days from the date the Lender makes written
demand therefor. A certificate as to the amount of such Taxes or
Other Taxes and evidence of payment thereof submitted to the Company
shall be prima facie evidence, absent manifest error, of the amount
due from the Company to the Lender.
D. The Company shall furnish to the Lender the original or a certified
copy of a receipt evidencing any payment of Taxes or Other Taxes made
by the Company as soon as such receipt becomes available.
E. The provisions of this Section 7.5 shall survive the termination of
the Agreement and repayment of all Obligations.
7.6 Amendments and Waivers. No amendment, modification, termination or
waiver of any term or provision of this Agreement, of the Note, the
Mortgage or any Other Loan Document or consent to any departure by the
Company therefrom, shall in any event be effective without the prior
written concurrence of the Company, the Lender, the Collateral Agent
and the Trustee, and, upon the request of the Lender, the Collateral
Agent or the Trustee, the receipt of a written opinion of counsel of
the Company addressed to the Lender, the Collateral Agent and the
Trustee to the effect that such amendment, modification, termination,
waiver or consent does not violate or conflict with any of the terms
and provisions of the Indenture or any Contractual Obligations of the
Company.
7.7 Independence of Covenants. All covenants hereunder shall be given
independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be
permitted by an exception to, or be otherwise within the limitation
of, another covenant shall not avoid the occurrence of an Event of
Default or Potential Event of Default if such action is taken or
condition exists.
7.8 Notices. Unless otherwise provided herein, any notice or other
communications herein required or permitted to be given shall be in
writing and may be personally served, telecopied or sent by mail and
shall be deemed to have been given when delivered in person, upon
receipt of telecopy against receipt of answer back or four Business
Days after depositing it in the mail, registered or certified, with
postage prepaid and properly addressed; provided, however, that
notices shall not be effective until received. For the purposes
hereof, the addresses of the parties hereto (unless notice of a change
thereof is delivered as provided in this Section 7.8) shall be set
forth under each party's name on the signature pages hereto.
7.9 Survival of Warranties and Certain Agreements. All agreements,
representations and warranties made herein and in the other Loan
Documents shall survive the execution and delivery of this Agreement
and in the other Loan Documents, the making of the Loan hereunder and
the execution and delivery of the Notes or the Loan Documents and,
notwithstanding the making of the Loan, the execution and delivery of
the Notes and the other Loan Documents or any investigation made by or
on behalf of any party, shall continue in full force and effect. The
closing of the transactions herein contemplated shall not prejudice
any right of one party against any other party in respect of anything
done or omitted hereunder or in respect of any right to damages or
other remedies.
7.10 Failure or Indulgence Not Waiver; Remedies Cumulative. No failure
or delay on the part of the Lender or the holder of the Notes or the
Trustee in the exercise of any power, right or privilege or be
construed to be a waiver of any default or acquiescence therein, nor
shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or of any other
right, power or privilege. All rights and remedies existing under
this Agreement, the Notes or any other Loan Document are cumulative to
and not exclusive of any rights or remedies otherwise available.
7.11 Severability. In case any provision in or obligation under this
Agreement, under a Guarantee or the Notes shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any
way be affected or impaired thereby.
7.12 Headings. Section and Section headings in this Agreement are
included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given
any substantive effect.
7.13 Applicable Law. THIS AGREEMENT, EACH LOAN DOCUMENT OTHER THAN THE
MORTGAGE AND THE NOTES SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW.
7.14 Successors and Assigns; Subsequent Holders of Notes. This
Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of
the parties hereto and the successors and assigns of the Lenders. The
terms and provisions of this Agreement and each Loan Document shall
inure to the benefit of any assignee or transferee of the Notes
pursuant to Section 7.1, and in the event of such transfer or
assignment, the rights and privileges herein conferred upon the Lender
shall automatically extend to and be vested in such transferee or
assignee, all subject to the terms and conditions hereof. The
Company's rights or any interest therein hereunder may not be assigned
without the prior express written consent of the Lender and the
Trustee.
7.15 Counterparts; Effectiveness. This Agreement and any amendments,
waivers, consents or supplements may be executed in any number of
counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one
and the same instrument. This Agreement shall become effective upon
the execution of a counterpart hereof by each of the parties hereto.
7.16 Consent to Jurisdiction; Venue; Waiver of Jury Trial.
A. Any legal action or proceeding with respect to this Agreement, any
Note or any 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
parties to this Agreement hereby irrevocably accepts for itself and in
respect of its respective property, generally and unconditionally, the
jurisdiction of the aforesaid courts. Each of the parties to this
Agreement hereby further irrevocably waives any claim that any such
courts lack jurisdiction over itself, and agrees not to plead or
claim, in any legal action or proceeding with respect to this
Agreement, the Notes or Loan Documents brought in any of the aforesaid
courts, that any such court lacks jurisdiction over such party. Each
of the parties to this Agreement irrevocably consents to the service
of process in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to such
party, at its respective address for notices pursuant to Section 7.8,
such service to become effective 30 days after such mailing. To the
extent permitted by law, each of the parties to this Agreement hereby
irrevocably waives any objection to such service of process and
further irrevocably waives and agrees not to plead or claim in any
action or proceeding commenced hereunder or under the Notes or any
Loan Document that service of process was in any way invalid or
ineffective. Nothing herein shall affect the right of any party to
this Agreement to serve process in any other manner permitted by law
or to commence legal proceedings or otherwise proceed against any
party in any other jurisdiction.
B. Each of the parties to this Agreement hereby irrevocably waives any
objection which it may now or hereafter have to the laying of venue of
any of the aforesaid any of actions or proceedings arising out of or
in connection with this Agreement, the Notes or any of the Loan
Documents brought in the courts referred to in clause A above and
hereby further irrevocably waives and agrees not to plead or claim in
any such court that any such action or proceeding brought in any such
court has been brought in an inconvenient forum.
C. Each of the parties to this Agreement hereby irrevocably waives all
right to a trial by jury in any action, proceeding or counterclaim
arising out of or relating to this Agreement, the Notes or the Loan
Documents or the transactions contemplated hereby or thereby.
7.17 Waiver of Stay, Extension or Usury Laws. The Company covenants
(to the extent that it may lawfully do so) that it will not at any
time insist upon, plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law or any usury law or
other law that would prohibit or forgive the Company from paying all
or any portion of the principal of or interest on the Loan as
contemplated herein, wherever enacted, now or at the time hereafter in
force, or which may affect the covenants or the performance of this
Agreement and (to the extent that it may lawfully do so), the Company
hereby expressly waives all benefit or advantage of any such law, and
covenants that it will not hinder, delay or impede the execution of
any power herein granted to the Lender, but will suffer and permit the
execution of every such power as though no such law had been enacted.
7.18 Usury Savings Clause. It is the intention of the parties hereto
to comply with applicable usury laws (now or hereafter enacted);
accordingly, notwithstanding any provision to the contrary in this
Agreement, any Note, any of the other Loan Documents or any other
document related hereto or thereto, in no event shall this Agreement
or any such other document require the payment or permit the
collection of interest in excess of the maximum amount permitted by
such laws. If from any circumstances whatsoever, fulfillment of any
provision of this Agreement, any Note, any of the other Loan Documents
or of any other document pertaining hereto or thereto, shall involve
transcending the limit of validity prescribed by applicable law for
the collection or charging of interest, then, ipso facto, the
obligation to be fulfilled shall be reduced to the limit of such
validity, and if from any such circumstances the Lender shall ever
receive anything of value as interest or deemed interest by applicable
law under this Agreement, any Note, any of the other Loan Documents or
any other document pertaining hereto or otherwise an amount that would
exceed the highest lawful rate, such amount that would be excessive
interest shall be applied to the reduction of the principal amount
owing under the Loan or on account of any other indebtedness of the
Company, and not to the payment of interest, or if such excessive
interest exceeds the unpaid balance of principal of such indebtedness,
such excess shall be refunded to the Company. In determining whether
or not the interest paid or payable with respect to any indebtedness
of the Company to Lender under any specified contingency, exceeds the
highest lawful rate, the Company and the Lender shall, to the maximum
extent permitted by applicable law, (a) characterize any non-principal
payment as an expense, fee or premium rather than as interest,
(b) exclude voluntary prepayments and the effects thereof,
(c) amortize, prorate, allocate and spread the total amount of
interest thereon does not exceed the maximum amount permitted by
applicable laws, and/or (d) allocate interest throughout the full term
of such indebtedness so that interest between portions of such
indebtedness, to the end that no such portion shall bear interest at a
rate greater than that permitted by applicable law.
WITNESS the due execution hereof by the respective duly authorized
officers of the undersigned as of the date first written above.
COMPANY:
R&B FALCON CORPORATION
By:
Name: Robert Fulton
Title: Executive Vice President
Notice Address:
901 Threadneedle
Houston, TX 77079-2982
Telephone: (281) 496-5000
Telecopy: (281) 496-0285
LENDER:
RBF FINANCE CO.
By:
Name: Leighton Moss
Title: Vice President
Notice Address:
901 Threadneedle
Houston, TX 77079-2982
Telephone: (281) 496-5000
Telecopy: (281) 597-7556
- ----------------------------------------------------------------------
Exhibit I
R&B FALCON CORPORATION
SENIOR SECURED ___- YEAR TRANCHE PROMISSORY NOTE
New York, New York
$______________ March 26, 1999
FOR VALUE RECEIVED, R&B FALCON CORPORATION (the "Company"),
promises to pay to the order of RBF FINANCE CO. ("Payee"), the
principal amount of _________________________ Dollars ($_____________)
(or such lesser amount as shall equal the aggregate unpaid principal
amount of the __-year Tranche advances of the Loan) at the times
specified by the provisions of the Senior Secured Credit Agreement
dated as of March 26, 1999, as the same may at any time be amended,
modified or supplemented and in effect (the "Loan Agreement") between
the Company and the Lender.
The Company also promises to pay interest on the unpaid principal
amount hereof from the date hereof until paid in full at the rates and
at the times which shall be determined in accordance with the
provisions of the Loan Agreement.
This Note is issued pursuant to and entitled to the benefits of
the Loan Agreement, to which reference is hereby made for a more
complete statement of the terms and conditions under which the Loan
evidenced hereby was made and is to be repaid. Capitalized terms used
herein without definition shall have the meanings set forth in the
Loan Agreement.
The Senior Secured Credit Agreement dated as of March 26, 1999,
as the same may at any time be amended, modified or supplemented and
in effect (the "Loan Agreement") between the Company, the Lender named
therein, and United States Trust Company of New York, as Trustee.
All payments of principal and interest in respect of this Note
shall be made in lawful money of the United States of America in same
day funds to Payee at the office of United States Trust Company of New
York located at 114 West 47th Street, 25th Floor, New York, New York,
or at such other place in the State of New York as shall be designated
in writing for such purpose in accordance with the terms of the Loan
Agreement. Each of Payee and any subsequent holder of this Note
agrees, by its acceptance hereof, that before disposing of this Note
or any part hereof it will make a notation hereon of all principal
payments previously made hereunder and of the date to which interest
hereon has been paid; provided, however, that the failure to make a
notation of any payment made on this Note shall not limit or otherwise
affect the obligation of the Company hereunder with respect to
payments of principal or interest on this Note.
Whenever any payment on this Note shall be stated to be due on a
day which is not a Business Day, such payment shall be made on the
next succeeding Business Day and such extension of time shall be
included in the computation of the payment of interest on this Note.
This Note is subject to mandatory prepayment as provided in the
Loan Agreement and prepayment at the option of the Company as provided
in the Loan Agreement.
THE LOAN AGREEMENT AND THIS NOTE SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK WITHOUT REGARD TO THE PRINCIPALS OF CONFLICTS OF LAWS.
Upon the occurrence of an Event of Default, the unpaid balance of
the principal amount of this Note, together with all accrued but
unpaid interest thereon, may become, or may be declared to be, due and
payable in the manner, upon the conditions and with the effect
provided in the Loan Agreement.
The terms of this Note are subject to amendment only in the
manner provided in the Loan Agreement.
No reference herein to the Loan Agreement and no provision of
this Note or the Loan Agreement shall alter or impair the obligation
of the Company, which is absolute and unconditional, to pay the
principal of and interest on this Note at the place, at the respective
times, and in the currency herein prescribed.
The Company promises to pay all costs and expenses, including all
attorneys' fees, all as provided in Section 7.2 of the Loan Agreement,
incurred in the collection and enforcement of this Note. The Company
and endorsers of this Note hereby consent to renewals and extensions
of time at or after the maturity hereof, without notice, and hereby
waive diligence, presentment, protest, demand and notice of every kind
and, to the full extent permitted by law, the right to plead any
statute of limitations as a defense to any demand hereunder.
IN WITNESS WHEREOF, the Company has caused this Note to be
executed and delivered by its duly authorized officer, as of the day
and year and at the place first above written.
R&B FALCON CORPORATION
By:
Title:
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EXHIBIT II
NOTICE OF BORROWING
The undersigned hereby certifies that he is the __________________ of
R&B Falcon Corporation, a Delaware corporation ( the "Company"), and
that as such he is authorized to execute this Notice of Borrowing on
behalf of the Company. With reference to that certain Loan Agreement
dated as of _______________, 1999 (as same may be amended, modified,
increased, supplemented and/or restated from time to time, the
"Agreement") entered into by and between the Company and RBF Finance
Co., and any other future holder of any Note issued pursuant to the
Agreement ("Lender"), the undersigned further certifies, represents
and warrants on behalf of the Company that all of the foregoing
statements are true and correct (each capitalized term used herein
having the same meaning given to it in the Agreement unless otherwise
specified):
(a)The Company requests that the Lender make an advance to the Company
on the 7-year Tranche of the Loan in the aggregate principal amount of
$_________________ and an advance to the Company on the 10-year
Tranche of the Loan in the aggregate principal amount of $__________
by no later than _______________. Immediately following such advance,
the aggregate outstanding balance of advances made on the 7-year
Tranche and the 10-year Tranche Loan shall equal $_______________ and
$___________, respectively.
(b)As of the date hereof, and as a result of the making of the
requested advance, no event shall have occurred and be continuing or
would result from the consummation of the borrowing contemplated by
the Notice of Borrowing which would constitute an Event of Default, a
Potential Event of Default or a Default.
(c)Borrower has performed and complied with all agreements and
conditions contained in the Agreement which are required to be
performed or complied with by Borrower before or on the date hereof
and, except as waived in writing or otherwise agreed to in writing by
the Lender, all of the conditions precedent set forth in Section 3.1
or 3.2, as applicable, of the Agreement under Conditions to Loan have
been satisfied.
(d)The representations and warranties of the Company contained in
Section 4 of the Agreement are true, correct and complete in all
material respects on and as of the date hereof to the same extent as
though made on and as of that date, and (ii) on or prior to the date
hereof, the Company has performed and complied with in all material
respects all covenants and conditions to be performed and observed by
the Company on or prior to the date hereof.
EXECUTED AND DELIVERED this _______ day of _____________, _____.
R&B FALCON CORPORATION
By:
Name:
Title:
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EXHIBIT III
FORM OF LEGAL OPINION
Opinions of Counsel that (i) the Company has duly authorized,
executed and delivered the Mortgage; (ii) the Mortgage constitutes a
legally binding obligation of the Company enforceable against the
Company in accordance with its terms (except as (i) the enforceability
thereof may be limited bankruptcy, insolvency or other similar laws
affecting creditors' rights, generally, and (ii) the enforceability
thereof may be limited by right of acceleration and the availability
of enforceable remedies may be limited by equitable principles of
general applicability, and subject to such other exceptions,
limitations or qualifications that are usual and customary for such
opinions) and (iii) the Mortgage constitutes a valid and perfected
first mortgage lien on the Mortgaged Rig.
EXHIBIT 10.10
[DEEPWATER MILLENNIUM]
=========================================================================
SENIOR SECURED LOAN AGREEMENT
Dated as of
March 26, 1999
between
R&B FALCON CORPORATION,
as Borrower
and
RBF FINANCE CO.,
as Lender
=======================================================================
TABLE OF CONTENTS
Page
SECTION 1.DEFINITIONS 1
1.1.Certain Defined Terms 1
1.2.Other Defined Terms 5
1.3.Accounting Terms 5
1.4.Other Definitional Provisions 5
SECTION 2.LOAN COMMITMENT AND LOAN 6
2.1.Termination of Loan Commitment 7
2.2.Termination of Loan Commitment 7
2.3.Interest on the Loans 7
2.4.Redemptions 8
2.5.Excess Proceeds Offers 10
2.6.Use of Proceeds 11
2.7.Commitment Fee 12
SECTION 3.CONDITIONS 12
3.1.Conditions to Initial Advances on the Loan 12
3.2.Conditions to Subsequent Advance on the Loan 14
SECTION 4.REPRESENTATIONS AND WARRANTIES 14
4.1.Organization and Good Standing; Capitalization 14
4.2.Authorization and Power 15
4.3.No Conflicts or Consents 15
4.4.Enforceable Obligations 15
4.5.Properties; Liens 16
4.6.No Default 16
4.7.Use of Proceeds; Margin Stock, etc 16
4.8.Survival of Representations and Warranties 16
SECTION 5.COVENANTS 16
5.1.Indenture Covenants 16
5.2.Reports of Defaults, Etc 16
5.3.Payments in U.S. Dollars 17
5.4.Performance and Enforcement Under the Loan Documents 17
5.5.Liens 17
5.6.Transfer of Mortgage Rig to a Restricted Subsidiary 17
5.7.Filing of Mortgage 17
SECTION 6.EVENTS OF DEFAULT 17
6.1.Failure To Make Payments When Due 17
6.2.Default Under The Indenture 18
6.3.Other Loan Agreement 18
6.4.Breach of Certain Covenants 18
6.5.Breach of Warranty 18
6.6.Other Defaults Under Agreement or Loan Documents 18
6.7.Involuntary Bankruptcy; Appointment of Custodian, etc 18
6.8.Voluntary Bankruptcy; Appointment of a Custodian; etc 18
SECTION 7.MISCELLANEOUS 19
7.1.Pledges and Assignments of Loan and Note 19
7.2.Expenses 20
7.3.Indemnity 20
7.4.Additional Amounts 21
7.5.Taxes and Other Taxes 22
7.6.Amendments and Waivers 23
7.7.Independence of Covenants 23
7.8.Notices 23
7.9.Survival of Warranties and Certain Agreements 23
7.10.Failure or Indulgence Not Waiver; Remedies Cumulative 23
7.11.Severability 24
7.12.Headings 24
7.13.Applicable Law 24
7.14.Successors and Assigns; Subsequent Holders of Notes 24
7.15.Counterparts; Effectiveness 24
7.16.Consent to Jurisdiction; Venue; Waiver of Jury Trial 24
7.17.Waiver of Stay, Extension or Usury Laws 25
7.18.Usury Savings Clause 25
EXHIBITS
I FORM OF NOTE
II FORM OF NOTICE OF BORROWING
III FORM OF OPINION OF GARDERE & WYNNE - SPECIAL COUNSEL FOR THE BORROWER
IV FORM OF MORTGAGE
V FORM OF SECURITY AGREEMENT
- --------------------------------------------------------------------------
This Senior Secured Loan Agreement is dated as of March 26, 1999,
and entered into by and among R&B Falcon, Inc., a Delaware corporation
(the "Company") and RBF Finance Co., a Delaware corporation (the
"Lender").
RECITALS
WHEREAS, the Lender has entered into an Indenture of even date
herewith (as the same may be amended, or supplemented or otherwise
modified from time to time, the "Indenture") with United States Trust
Company of New York as Trustee (the "Trustee"), pursuant to which the
Lender will issue in two series up to $400,000,000 aggregate principal
amount of its 11% Senior Secured Notes due 2006 (the "7-year Secured
Notes") and up to $400,000,000 aggregate principal amount of its
11 3/8% Senior Secured Notes due 2009 (the "10-year Secured Notes;" the
7-year Secured Notes and the 10-year Secured Notes being hereinafter
collectively called the "Secured Notes"); and
WHEREAS, the Indenture provides that the Lender may utilize the
proceeds of the Secured Notes to make loans to the Company, each for
the purpose of either (i) financing all or a portion of the cost of
acquiring, constructing, altering, improving or repairing a drilling
rig or drillship (a "Rig") or improvements used or to be used in
connection with such a Rig, or (ii) financing all or any part of the
purchase price of the Rig or improvements used or to be used in
connection with such Rig, which indebtedness is incurred prior to or
within one year after the date of the completion of construction,
alteration, improvement or repair or the commencement of commercial
operations thereof; and
WHEREAS, the Company desires that the Lender extend senior secured
credit facilities to the Company for such purposes herein; and
WHEREAS, the Indenture provides that the Lender will enter into a
Senior Secured Note Security and Pledge Agreement of even date
herewith (the "Issuer Security Agreement") between the Lender, the
Trustee and United States Trust Company of New York as Collateral
Agent (in such capacity, the "Collateral Agent"), pursuant to which
the Lender will pledge and grant a security in the loans made with the
proceeds of the Secured Notes which are or will be secured by Rigs;
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, the parties
hereby agree as follows:
SECTION 1 DEFINITIONS
1.1 Certain Defined Terms. The following terms used in this Agreement
shall have the following meanings:
"Agreement" means this Senior Secured Loan Agreement dated as of
March 26, 1999, as it may be amended, supplemented or otherwise
modified from time to time in accordance with the terms hereof.
"Board of Directors" means, with respect to any Person, the Board
of Directors of such Person or any duly authorized committee of that
Board.
"Board Resolution" means a duly adopted resolution of the Board of
Directors of the Company in full force and effect at the time of
determination and certified as such by the Secretary or Assistant
Secretary of the Company.
"Business Day" means any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of New York, New York or is a
day on which banking institutions therein located are authorized or
required by law or other governmental action to close.
"Cash Equivalents" means (i) U.S. Governmental Obligations with a
maturity of four years or less; (ii) commercial paper issued by any
corporation if such commercial paper has credit ratings of at least "A-
1" from S&P or at least "P-1" by Moody's; (iii) certificates of
deposit, bankers' acceptances, time deposits, Eurocurrency Deposits
and similar types of Investments routinely offered by commercial banks
with final maturities of one year or less issued by commercial banks
having combined capital and surplus in excess of $100,000,000; and
(iv) shares in money market mutual or similar funds having assets in
excess of $100,000,000.
"Closing Date" means the date on or before March 26, 1999 on which
the initial advance of the Loan is made and the conditions set forth
in Section 3.1 are satisfied or waived in accordance with Section 7.7.
"Collateral" means all collateral described in and pledged under
the Security Agreement and the Company Escrow Agreement, the Mortgaged
Rig and any other property subject to the Lien created under a
Mortgage or a Loan Document.
"Commission" means the Securities and Exchange Commission.
"Company" has the meaning ascribed to such term in the introduction
to this Agreement.
"Collateral Agent" has the meaning assigned to such term in the
recitals to this Agreement.
"Contractual Obligation," as applied to any Person, means any
provision of any Security issued by that Person or of any indenture,
mortgage, deed of trust, contract, undertaking, agreement or other
instrument to which that Person is a party or by which it or any of
its properties is bound or to which it or any of its properties is
subject.
"Dollars" or the sign "$" means the lawful money of the United
States of America.
"Event of Default" means each of the events set forth in Section 6.
"indemnified liabilities" has the meaning ascribed to such term in
Section 7.3.
"Indemnitees" has the meaning ascribed to such term in Section 7.3.
"Indenture" has the meaning ascribed to such term in the recitals
of this Agreement.
"Laws" means all applicable statutes, laws, ordinances,
regulations, rules, orders, judgments, writs, injunctions or decrees
of any state, commonwealth, nation, territory, possession, province,
county, parish, town, township, village, municipality or Tribunal, and
"Law" means each of the foregoing.
"Lender" has the meaning ascribed to that term in the introduction
of this Agreement and shall include any assignee of the Loan or the
Note or Loan Commitment to the extent of such assignment.
"Lien" means any lien, mortgage, pledge, assignment, security
interest, charge or encumbrance of any kind (including any conditional
sale or other title retention agreement, any lease in the nature
thereof, and any agreement to give any security interest) and any
option, trust or other preferential arrangement having the practical
effect of any of the foregoing.
"Loan" means, collectively, the loans made by the Lender pursuant
to Section 2.1.
"Loan Documents" means this Agreement, the Note, the Mortgage, the
Company Escrow Agreement and the Security Agreement.
"Margin Stock" has the meaning assigned to that term in
Regulation U of the Board of Governors of the Federal Reserve System
as in effect from time to time.
"Material Adverse Effect" means (i) a material adverse effect upon
the business, property, assets, nature of assets, liabilities
condition (financial or otherwise), results of operation or prospects
of the Company and its Restricted Subsidiaries, taken as a whole, or
(ii) the impairment of the ability of the Company or any of its
Restricted Subsidiaries to perform, or the impairment of the ability
of Lender to enforce, any material right or remedy under the
Obligations.
"Maturity" means the date on which the principal of the Loan,
whether the 7-year Tranche or 10-year Tranche or both, becomes due and
payable as provided in this Agreement whether at Stated Maturity, upon
redemption, by declaration of acceleration or otherwise.
"Mortgage" means a mortgage substantially in the form of Exhibit IV
covering the Mortgaged Rig.
"Mortgaged Rig" means the Deepwater Millennium.
"Notes" has the meaning ascribed to such term in Section 2.1C.
"Notice of Borrowing" means a notice substantially in the form of
Exhibit II annexed hereto with respect to a proposed borrowing.
"Obligations" means all obligations of every nature of the Company
from time to time owed to the Lender under the Loan Documents, whether
for principal, reimbursements, interest (including post-petition
interest), fees, expenses, indemnities or otherwise, and whether
primary, secondary, direct, indirect, contingent, fixed or otherwise
(including obligations of performance).
"Officer" means the Chairman of the Board, the Chief Executive
Officer, the Chief Operating Officer, the President, any Vice
President, the Chief Financial Officer, the Controller, the Chief
Accounting Officer, any Vice President, the Treasurer or the Secretary
of the Company.
"Officers' Certificate" means, as applied to any corporation, a
certificate executed on behalf of such corporation by two officers;
provided, however, that every Officers' Certificate with respect to
the compliance with a condition precedent to the making of the Loans
hereunder shall include (i) a statement that the officer or officers
making or giving such Officers' Certificate have read such condition
and any definitions or other provisions contained in this Agreement
relating thereto, (ii) a statement that, in the opinion of the
signers, they have made or have caused to be made such examination or
investigation as is necessary to enable them to express an informed
opinion as to whether or not such condition has been complied with,
and (iii) a statement as to whether, in the opinion of the signers,
such condition has been complied with.
"Other Loan" means a loan made pursuant to an Other Loan Agreement
by the Lender with the proceeds of the Secured Notes which is secured
by a Mortgaged Rig.
"Other Loan Agreement" means a loan agreement among the Lender, the
Company and the Trustee pursuant to which the Lender will utilize the
proceeds of the Secured Notes to make an Other Loan for the purposes
specified in the second recital of this Agreement
"Other Mortgaged Rig" means a Rig which has been mortgaged to
secure an Other Loan or which is the subject of a construction
contract which has been pledged to secure an Other Loan.
"Other Taxes" has the meaning ascribed to such term in Section 7.6.
"Payment Office" shall mean the office of United States Trust
Company of New York located at 114 West 47th Street, 25th Floor, New
York, New York 10036 or such other office in the State of New York as
the Lender may designate to the Company and the Trustee from time to
time.
"Potential Event of Default" means a condition or event which,
after notice or lapse of time or both, would constitute an Event of
Default if that condition or event were not cured or removed within
any applicable grace or cure period.
"Purchase Agreement" means the Purchase Agreement dated March 19,
1999 among the Lender, the Company and the Initial Purchaser relating
to the Secured Notes.
"Securities" means any stock, shares, partnership interests, voting
trust certificates, certificates of interest or participation in any
profit sharing agreement or arrangement, bonds, debentures, options,
warrants, notes, or other evidences of indebtedness, secured or
unsecured, convertible, subordinated or otherwise, or in general any
instruments commonly known as "securities" or any certificates of
interest, shares or participations in temporary or interim
certificates for the purchase or acquisition of, or any right to
subscribe to, purchase or acquire, any of the foregoing.
"Security Agreement" shall mean a Security Agreement substantially
in the form of Exhibit V among the Company, the Lender, and the
Collateral Agent, as the same may be amended, modified or supplemented
in accordance with the terms thereof and hereof.
"7-year Tranche" means advances on the Loan aggregating up to
$104,950,000 and having a final Loan Maturity of March 15, 2006.
"Taxes" means all taxes, assessments, fees, levies, imposts,
duties, penalties, deductions, liabilities, withholdings or other
charges of any nature whatsoever, including interest penalties, from
time to time or at any time imposed by any Law or any Tribunal.
"10-year Tranche" means advances on the Loan aggregating up to
$104,950,000 and having a final Maturity of March 15, 2009.
"Transaction Costs" means the fees, costs and expenses payable by
the Company pursuant hereto and other fees, costs and expenses payable
by the Company in connection with the Transactions.
"Transactions" shall mean, collectively, (i) the issuances and sale
of the Secured Notes, (ii) the incurrence of the Loan hereunder on the
Closing Date, (iii) the incurrence of the Other Loans under the Other
Loan Agreements, (iv) any other transaction on the Closing Date
contemplated in relation to the foregoing and (v) the payment of fees
and expenses in connection with the foregoing.
"Tranches" means collectively the 7-year Tranche and the 10-year
Tranche.
"Tribunal" means any governmental, any arbitration panel, any court
or any governmental department, commission, board, bureau, agency,
authority or instrumentality of the United States or any state,
province, commonwealth, nation, territory, possession, county, parish,
town, township, village or municipality, whether now or hereafter
constituted and/or existing.
"Trustee" has the meaning ascribed to such term in the introduction
of this Agreement and shall include any successor Trustee appointed
pursuant to terms of the Indenture.
"U.S. Legal Tender" means such coin or currency of the United
States of America as at the time of payment shall be legal tender for
the payment of public and private debts.
1.2 Other Defined Terms. Any capitalized term used in this Agreement
and not defined herein shall have the meaning assigned to such term in
the Indenture.
1.3 Accounting Terms. For the purposes of this Agreement, all
accounting terms to otherwise defined herein shall have the meanings
assigned to them in conformity with GAAP.
1.4 Other Definitional Provisions. Any of the terms defined in
Section 1.1 may, unless the context otherwise requires, be used in the
singular or the plural depending on the reference.
SECTION 2 LOAN COMMITMENT AND LOAN
2.1 The Loan and Notes.
A. Loan Commitment. Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties of
the Company herein set forth, the Lender hereby agrees to lend to the
Company on the Closing Date and thereafter up to $209,900,000 in the
aggregate (the "Loan") consisting of $104,950,000 of 7-year Tranche
advances and $104,950,000 of 10-year Tranche advances. The Lender's
commitment to make the Loan to the Company pursuant to this
Section 2.1 is herein called the "Loan Commitment."
B. Notice of Borrowing. When the Company desires to borrow under this
Agreement, it shall deliver to the Collateral Agent a Notice of
Borrowing no later than 11:00 a.m. (New York time), at least one
Business Day in advance of the Closing Date or such other date as
shall be agreed to by the Lender and the Trustee. The Notice of
Borrowing shall specify the amount of each Tranche and the applicable
date of borrowing (which shall be a Business Day).
C. Disbursement of Funds. No later than 3:00 p.m. (New York time) on
the Closing Date, the Lender promptly will make available to the
Company by depositing to its account at the Payment Office the
aggregate of the amount of the Loan to be made on such Closing Date.
D. Notes. The Company shall execute and deliver to the Lender on the
Closing Date two Notes dated the Closing Date, one substantially in
the form of Exhibit I annexed hereto with appropriate insertions to
evidence the maximum amount of the 7-year Tranche of Loan which may be
made hereunder by the Lender and the other substantially in the form
of Exhibit I annexed hereto with appropriate insertions to evidence
the maximum amount of 10-year Tranche of the Loan which may be made by
the Lender hereunder.
E. Scheduled Payments of Loan.
(i)One of the Other Loan Agreements relates to the Mortgaged Rig
Deepwater IV, which Mortgaged Rig is presently under construction
pursuant to a construction contract and which has an expected
completion date during the third calendar quarter of 2000. Upon
completion of the Mortgaged Rig Deepwater IV, the Company is required
to grant a Lien on such Mortgaged Rig pursuant to a Mortgage. Upon
the filing of the Mortgage for the Mortgaged Rig Deepwater IV, the
Company and the Lender agree that the $21,350,000 of the 7-year
Tranche and $21,350,000 of the 10-year Tranche will be exchanged for
additional advances under the Other Loan Agreement relating to the
Mortgaged Rig Deepwater IV in an aggregate principal amount of
$42,700,000.
(ii)The Company shall pay on or before 10:00 a.m. on the date of the
final Maturity of the 7-year Tranche of the Loan all of the principal
amount of the 7-year Tranche remaining outstanding, together with
accrued and unpaid interest, fees and a pro rata portion of the amount
of the Special Interest and Additional Amounts, if any, due on the
7-year Secured Notes. The Company shall pay on or before 10:00 a.m.
on the date of the final Maturity of the 10-year Tranche all of the
principal amount of the 10-year Tranche then remaining outstanding,
together with accrued and unpaid interest fees and a pro rata portion
of the amount of the Special Interest and Additional Amounts, if any,
due on the 10-year Secured Notes. Such payments shall be made
directly to the Trustee for deposit in the Issuer Escrow Account
established pursuant to the Issuer Escrow Agreement.
F. Termination of Loan Commitment. The Loan Commitment hereunder shall
terminate on the earlier (i) the Stated Maturity (whether by
acceleration, redemption, purchase or otherwise) of the Secured Notes
pursuant to the terms of the Indenture or (ii) May 14, 1999, if no
portion of the Loan has been made on or before such date (other than
as a result of failure of the Lender to fulfill its obligations
hereunder).
G. Satisfaction by Payments on the Guarantee. Pursuant to the
Indenture, the Company will guarantee the due and punctual payment of
the principal of, premium, if any, and interest on, and all other
amounts payable under, the Secured Notes (including any Additional
Amounts payable upon redemption, in respect thereof) when and as the
same shall become due and payable, whether at Stated Maturity, by
declaration of acceleration or otherwise. To the extent that the
Company makes a payment on the Guarantee, it will be deemed to have
made a payment on the Issuer Loans then outstanding, such payments to
be allocated pro rata to each of Tranches of the Loan and pro rata to
the Loan and the Other Loans.
2.2 Interest on the Loans.
A. Rate of Interest. The 7-year Tranche of the Loan shall bear interest
on the unpaid principal amount thereof from the date made through
Maturity for the 7-year Tranche (whether by prepayment, acceleration
or otherwise) at a rate equal to 11% per annum plus 2 basis points per
annum and the 10-year Tranche of the Loan shall bear interest on the
unpaid principal amount thereof from the date made through Maturity
for the 10-year Tranche (whether by prepayment, acceleration or
otherwise) at a rate equal to 11 3/8% per annum plus 2 basis points per
annum.
B. Special Interest. The Lender and the Company have entered into a
Registration Rights Agreement (the "Registration Rights Agreement")
dated March 26, 1999 with Donaldson, Lufkin & Jenrette Securities
Corporation for the benefit of the Holders of the Secured Notes, in
which the Lender and the Company have agreed to: (A) file a
registration statement within 60 days after the closing date of the
offering of Secured Notes for an offer to exchange Secured Notes of
each series for debt securities of that series with identical terms
(except for transfer restrictions); (B) use their best efforts to
cause the registration statement to become effective within 150 days
after the closing date of the offering of the Secured Notes; and
(C) complete the registered exchange offer within 180 days after the
closing date of the offering of the Secured Notes. Under certain
circumstances, the Lender and the Company may be required to file a
shelf registration statement for the Secured Notes registering the
resale of the Secured Notes. If the Lender and the Company do not
comply with their obligations under the Registration Rights Agreement,
the Lender will be required to pay additional interest ("Special
Interest") specified in Section 5 of the Registration Rights
Agreement. The Company will pay on each date that the Lender pays
Special Interest to the Holders of the Secured Notes as Special
Interest on the Loan an amount equal to the percentage of Special
Interest, if any, which the Lender owes to the Holders of the Secured
Notes that the principal amount of the Loan bears to the total
aggregate principal amount of the Loan and all Other Loans then
outstanding. Such payment shall be paid directly to the Trustee for
deposit into the Issuer Escrow Account.
Notwithstanding any provisions of this Section 2.2 or any
other provision herein, in no event will the combined sum of interest
(cash or otherwise) on the Loan exceed the maximum amount permitted by
applicable law.
C. Interest Payments. Interest (including Special Interest, if any,
and Additional Amounts, if any) shall be payable semi-annually on
March 15 and September 15 of each year, commencing September 15, 1999
but in no event to exceed the maximum permitted by applicable law.
All payments of interest on the Loan shall be made on or before 10:00
a.m. (New York time) on the date of payment and shall be paid directly
to the Trustee for deposit into the Issuer Escrow Account.
D. Post-Maturity Interest. Any principal payments on the Loan not paid
when due and, to the extent permitted by applicable law, any interest
payment on the Loan not paid when due, in each case whether at Stated
Maturity, by notice of prepayment, by acceleration or otherwise, shall
thereafter bear interest payable upon demand at a rate of interest
otherwise payable under this Agreement for the Loan but in no event to
exceed the maximum interest rate permitted by applicable law.
E. Computation of Interest. Interest on the Loan shall be computed on
the basis of a 360-day year of twelve 30-day months.
2.3 Redemptions.
A. Redemption upon Loss of the Mortgaged Rig. If an Event of Loss
occurs at any time with respect to the Mortgaged Rig attributable to
the Loan, the Company shall apply funds in an amount (the "Loss
Redemption Amount") equal to the principal amount of the Loan
outstanding on the date (the "Loss Date") on which such Event of Loss
was deemed to have occurred, together with all accrued and unpaid
interest (including Special Interest, if any, and Additional Amounts,
if any) thereon, to the prepayment of the Loan. If an Event of Loss
occurs at any time with respect to any Other Mortgaged Rig, the
Indenture and the applicable Other Loan Agreement require that the
Company shall apply funds to the principal amount of the applicable
Other Loan secured by the Other Mortgaged Rig outstanding on the Loss
Date for such other Mortgaged Rig, together with all accrued and
unpaid interest (including Special Interest, if any, and Additional
Amounts, if any) thereon, to the payment of such Other Loan. If a
Default under the Indenture shall have occurred and be continuing at
the time of the receipt of the Event of Loss Proceeds with respect to
such Other Mortgaged Rig, the Indenture requires, and the Company
hereby agrees, that it shall prepay the Loan and the remaining Other
Loans on a pro rata basis in an aggregate amount equal to the excess
of the Net Event of Loss Proceeds over the Loss Redemption Amount, if
any, together with all accrued and unpaid interest (including Special
Interest, if any, and Additional Amounts, if any) thereon for the
Other Loan which is secured by such Other Mortgaged Rig. All payments
on the Loan shall be allocated on a pro rata basis between the
Tranches and shall be made directly to the Trustee for deposit into
the Issuer Escrow Account.
B. Redemption upon Sale of the Mortgaged Rig. If the Mortgaged Rig or
the Capital Stock of a Subsidiary Guarantor then owning the Mortgaged
Rig is sold in compliance with the terms of the Indenture, the Company
shall apply funds in an amount (the "Sale Redemption Amount") equal to
the principal amount of the Loan secured by the Mortgaged Rig on the
date of such sale (the "Sale Date"), together with all accrued and
unpaid interest (including Special Interest, if any, and Additional
Amounts, if any thereon, plus any additional amounts required by the
Lender to redeem the Secured Notes to the extent required by
Section 3.9 of the Indenture, to the prepayment of the Loan. If any
Other Mortgaged Rig or the Capital Stock of a Subsidiary Guarantor
then owning an Other Mortgaged Rig is sold in compliance with the
terms of the Indenture, the Company shall apply funds equal to the
applicable Other Loan secured by the Other Mortgaged Rig outstanding
on the Sale Date for such Other Mortgaged Rig, together with all
accrued and unsecured interest (including Special Interest, if any,
and Additional Amounts, if any) thereon, to the payment of such Other
Loan. If a Default under the Indenture shall have occurred and be
continuing at the time of receipt of the cash consideration with
respect to such Other Mortgaged Rig or Capital Stock of the Subsidiary
Guarantor owning such Other Mortgaged Rig, the Indenture requires, and
the Company hereby agrees, that it shall also be required to prepay
the Loan and the remaining Other Loans on a pro rata basis in an
aggregate amount equal to the excess of such Net Available Cash
attributable to such Sold Mortgaged Rig over such Sale Redemption
Amount. Such payments on the Loan and the Other Loans pursuant hereto
shall be respectively allocated between the Tranches of the Loan and
the Other Loans on a pro rata basis and shall be made directly to the
Trustee for deposit into the Issuer Escrow Account.
C. Other Redemptions.
(i)Redemptions to Fund Optional Redemptions of the 10-year Secured
Notes. Under the terms of the Indenture, on or after March 15, 2004,
the 10-year Secured Notes will be redeemable, at the Lender's option,
in whole or in part, at any time or from time to time, upon not less
than 30 nor more than 60 days' prior notice to the Holders of the 10-
year Secured Notes, at the following Redemption Prices (expressed in
percentages of principal amount), plus accrued and unpaid interest
(including Special Interest, if any, and Additional Amounts, if any)
to the Redemption Date, if redeemed during the 12-month period
commencing on March 15 of the years set forth below.
Redemption
Period Price
2004 105.6875%
2005 103.7917
2006 101.8958
2007 and thereafter 100.0000
The Company shall prepay the 10-year Tranche of the Loan and of
the Other Loans, in whole or in part, to provide funds for such
redemption. Any prepayments by the Company on the Loan and the
Other Loans required to be made to provide funds for the Lender to
make such a redemption shall be made on this Loan and the Other
Loans on a pro rata basis. All payments on the Loan and the Other
Loans pursuant hereto shall be made directly to the Trustee for
deposit into the Issuer Escrow Account.
(ii)Redemptions to Fund Optional Redemptions of the 7-year Secured
Notes. Under the terms of the Indenture, the 7-year Secured Notes
will be redeemable, at the Lender's option at any time in whole or
from time to time in part upon not less than 30 and not more than
60 days' prior notice mailed by first class mail to the Holders of the
7-year Secured Notes, on any date prior to Maturity at a price equal
to 100% of the principal amount thereof plus accrued and unpaid
interest (including Special Interest, if any, and Additional Amounts,
if any) to the Redemption Date plus the Make-Whole Premium applicable
to the 7-year Secured Notes determined in the manner provided for in
Section 3.7 of the Indenture. The Company shall prepay the 7-year
Tranche of the Loan and of the Other Loans in whole or in part to
provide funds for such redemption. Any prepayments by the Company on
the Loan and the Other Loans required to be made to provide funds for
the Lender to make such a redemption shall be made on the Loan and the
Other Loans on a pro rata basis. All payments on the Loan and the
Other Loans pursuant hereto shall be made directly to the Trustee for
deposit into the Issuer Escrow Account.
D. Excess Proceeds Offers. The Indenture provides in Section 3.10
thereof that if, as of the first day of any calendar month, the
aggregate amount of Sale Excess Proceeds and Loss Excess Proceeds
exceeds 10% of consolidated total assets of the Company, and if the
aggregate amount of Sale Excess Proceeds and Loss Excess Proceeds in
excess of 10% of consolidated total assets of the Company that has not
theretofore been subject to an Excess Proceeds Offer (as defined
below) (the "Excess Proceeds Offer Amount"), totals at least $10
million, the Lender must, not later than the fifteenth Business Day of
such month, make an offer ( an "Excess Proceeds Offer") to purchase
from the Holders of the Secured Notes, pursuant to and subject to the
conditions contained in the Indenture, and from Holders of the New
Senior Notes, pursuant to provisions of the New Senior Note Indenture,
Secured Notes at a purchase price equal to 100% of their principal
amount, plus any accrued interest (including Additional Amounts and
Special Interest, if any) to the date of purchase and New Senior Notes
at a purchase price equal to 100% of their principal amount, plus any
accrued interest (including Special Interest, if any) to the date of
purchase in an aggregate principal amount equal to the Excess Proceeds
Offer Amount (an "Excess Proceeds Payment"). If the Lender is ever
required pursuant to Section 3.10 of the Indenture to make an Excess
Proceeds Offer to the Holders of the Secured Notes to purchase from
such Holders their Secured Notes, and to the Holders of Senior Notes
to purchase from such Holders their New Senior Notes, the Indenture
provides, and the Company agrees, that the Company will prepay the
Loan and the Other Loans on a pro rata basis to permit the Lender to
purchase any Secured Notes validly tendered pursuant to an Excess
Proceeds Offer. All payments on the Loan shall be allocated between
the appropriate Tranches of the Loan; and all payments on the Loan and
the Other Loans pursuant hereto shall be made directly to the Trustee
for deposit into the Issuer Escrow Account.
E. Change of Control. If the Lender is ever required to make pursuant
to the provisions of Section 4.8 of the Indenture a Change of Control
Offer to the Holders of the Secured Notes at a purchase price in cash
equal to 101% of the principal amount thereof plus accrued and unpaid
interest (including Additional Amounts and Special Interest, if any)
thereon, the Indenture provides, and Company agrees, that the Company
will prepay the Loan and the Other Loans on a pro rata basis at a
redemption price equal to 101% of the principal amount hereof being
repaid, plus accrued and unpaid interest, Special Interest, if any,
and Additional Amounts, if any, thereon, in order to provide funds
sufficient to permit the Lender to purchase any Secured Notes validly
tendered pursuant to the foregoing offer to purchase Secured Notes
upon a Change of Control. All payments on the Loan shall be allocated
between the appropriate Tranches of the Loans and all payments on the
Loan and the Other Loans pursuant hereto shall be made directly to the
Trustee for deposit into the Issuer Escrow Account.
F. Notice. The Company shall notify the Lender and the Trustee of any
prepayment to be made pursuant to this Section 2.3 at least two
Business Days prior to such prepayment date.
G. Determination of Amounts of the Tranches Subject to Such
Redemptions. The Lender will submit a written determination to the
Trustee for its approval of the amount (including the pro rata
allocations between the Tranches of the Loan and between the Loan and
the Other Loans) with respect to any such redemption. The Trustee
shall approve or disapprove such allocations in its sole discretion
and such decision shall be conclusive, absent manifest error. A
certificate of the Lender setting forth such determination, with the
written approval of the Trustee thereon, shall be delivered to the
Company at least one Business Day prior to the payment date.
H. Company's Mandatory Prepayment Obligation; Application of
Prepayments. All prepayments shall include payment of accrued
interest (including Special Interest and Additional Amounts, if
applicable) on the principal amount so prepaid and shall be applied to
payment of interest before application to principal.
I. Manner and Time of Payment. Unless otherwise expressly set forth
herein, all payments of principal and interest hereunder and under the
Notes by the Company shall be made without defense, set-off or
counterclaim and in same-day funds and delivered to the Trustee for
deposit into the Issuer Escrow Account, unless otherwise specified,
not later than 10:00 a.m. (New York time) on the date due at the
Payment Office; funds received by the Trustee after that time shall be
deemed to have been paid by the Company on the next succeeding
Business Day.
J. Payments on Non-Business Days. Whenever any payment to be made
hereunder or under the Notes shall be stated to be due on a day which
is not a Business Day, the payment shall be made on the next
succeeding Business Day and such extension of time shall be included
in the computation of the payment of interest hereunder or under the
Loan.
2.4 Use of Proceeds.
A. Loan. The proceeds of the Loan may be applied by the Company to
finance certain costs of acquiring, constructing, repairing and
improving the Mortgaged Rig and, to the extent that such costs have
already been paid, for general corporate purposes.
B. Margin Regulations. No portion of the proceeds of any borrowing
under this Agreement shall be used by the Company in any manner which
might cause the borrowing or the application of such proceeds to
violate the applicable requirements of Regulation U, Regulation T or
Regulation X of the Board of Governors of the Federal Reserve System
or any other regulation of the Board or to violate the Exchange Act,
in each case as in effect on the date or dates of such borrowing and
such use of proceeds.
2.5 Commitment Fee. The Company agrees to pay a commitment fee for the
period from and including the Closing Date to and including the date
of termination specified in Section 2.1.F. on the undrawn portion of
the Loan equal to the average of the daily excess of the Loan
Commitment over the aggregate principal amount of the Loan outstanding
multiplied by 7% per annum, such commitment fee to be calculated on
the basis of a 360-day year consisting of twelve 30-day months and to
be payable semi-annually in arrears on each March 15 and September 15,
commencing September 15, 1999.
SECTION 3 CONDITIONS
3.1 Conditions to Initial Advances on the Loan. The obligation of the
Lender to make the initial advance on the Loan is subject to prior or
concurrent satisfaction of each of the following conditions:
A. On or before the Closing Date, all corporate and other proceedings
taken or to be taken in connection with the transactions contemplated
hereby and all documents incidental thereto not previously found
acceptable by the Lender and the Trustee shall be reasonably
satisfactory in form and substance to the Lender and the Trustee, and
the Lender and the Trustee shall have received the following items,
each of which shall be in form and substance satisfactory to the
Lender and the Trustee and, unless otherwise noted, dated the Closing
Date:
(i)a certified copy of the Company's charter, together with a
certificate of status, compliance, good standing or like certificate
with respect to the Company issued by the appropriate government
officials of the jurisdiction of its incorporation and of each
jurisdiction in which it owns any material assets or carries on any
material business, each to be dated a recent date prior to the Closing
Date;
(ii) a copy of the Company's bylaws, certified as of the Closing Date
by its Secretary or one of its Assistant Secretaries;
(iii) resolutions of the Company's Board of Directors approving and
authorizing the execution, delivery and performance of this Agreement,
the Notes, the Security Agreements, the Mortgage, each of the other
Loan Documents, the Indenture and any other documents, instruments and
certificates required to be executed by the Company in connection
herewith and therewith and approving and authorizing the execution,
delivery and payment of the Loan, each certified as of the Closing
Date by its Secretary or one of its Assistant Secretaries as being in
full force and effect without modification or amendment;
(iv) signature and incumbency certificates of the Company's officers
executing this Agreement, the Other Loan Documents and the Notes;
(v) executed copies of this Agreement and the Notes substantially in
the form of Exhibit I annexed hereto executed in accordance with
Section 2.1C drawn to the order of the Lender and with appropriate
insertions;
(vi) an originally executed Notice of Borrowing substantially in the
form of Exhibit II annexed hereto, signed by the President or a Vice
President of the Company on behalf of the Company and delivered to the
Lender; and
(vii) originally executed copies of one or more favorable written
opinions of Gardere & Wynne, special counsel for the Company,
substantially in the form of the Exhibit III hereto and addressed to
the Lender, the Trustee and the Initial Purchaser, and such other
opinions of counsel and such certificates or opinions of accountants,
appraisers or other professionals as the Lender, the Trustee or the
Initial Purchaser shall have reasonably requested.
B. The Lender shall have received a fully executed Security
Agreement, in the form of Exhibit V hereto, the Lien of which has been
perfected in all appropriate jurisdictions; provided, however, that
Liens on equipment purchased by the Company for the Mortgaged Rig that
has not yet been Mortgaged do not have to be perfected until required
by the Trustee, but only after the later to occur of one year after
the date of this Agreement or the completion date for the Mortgaged
Rig as scheduled on the date of this Agreement.
C. On or before the Closing Date, all authorizations, consents and
approvals necessary in connection with the Transactions shall have
been obtained and remain in full force and effect and all applicable
waiting periods, if any, under law applicable to the Transactions
shall have expired without any action being taken by any competent
authority (including without limitation, any Tribunal) which
restrains, prevents or imposes materially adverse conditions upon the
completion of the Transactions or the financing thereof and evidence
of the receipt of such authorizations, consents and approvals
satisfactory to the Lender and the Trustee shall have been delivered
to the Lender and the Trustee.
D. On or before the Closing Date, the Indenture and the Purchase
Agreement shall have been executed and delivered by all parties
thereto. No default or event of default shall have occurred under the
Indenture and the Purchase Agreement, all conditions to the execution
delivery and authentication of the Secured Notes thereunder shall have
been satisfied under the Indenture, and all conditions to the purchase
of the Secured Notes by the Initial Purchaser under the Purchase
Agreement have been satisfied or waived by the Initial Purchaser.
E. Simultaneously with the making of the Loan by the Lender, the
Company shall have delivered to the Lender and the Trustee an
Officers' Certificate from the Company in form and substance
satisfactory to the Lender and the Trustee to the effect that (i) the
representations ad warranties of the Company in Section 4 are true,
correct and complete in all material respects on and as of the Closing
Date to the same extent as though made on and as of that date, and
(ii) on or prior to the Closing Date, the Company has performed and
complied with in all material respects all covenants and conditions to
be performed and observed by the Company on or prior to the Closing
Date and
F. No event shall have occurred and be continuing or would result from
the consummation of the borrowing contemplated by the Notice of
Borrowing which would constitute and Event of Default, a Potential
Event of Default or a Default.
G. No order, judgment or decree of any court, arbitrator or
governmental authority shall purport to enjoin or restrain the Lender
from making the Loan.
H. The making of the Loan in the manner contemplated in this Agreement
shall not violate the applicable provisions of Regulation T, U or X of
the Board of Governors of the Federal Reserve Board or any other
regulation of the Board.
3.2 Conditions to Subsequent Advance on the Loan. The obligation of
the Lender to make a subsequent advance on the Loan is subject to the
prior or concurrent satisfaction of each of the following conditions:
A. The Lender and the Trustee shall have received in form and substance
satisfactory to the Lender and the Trustee and dated the date of such
advance an originally executed Notice of Borrowing substantially in
the form of Exhibit II annexed hereto, signed by the President or a
Vice President of the Company on behalf of the Company and delivered
to the Lender.
B. No event shall have occurred and be continuing or would result from
the consummation of the borrowing contemplated by the Notice of
Borrowing which would constitute an Event of Default, a Potential
Event of Default or a Default.
C. No order, judgment or decree of any court, arbitrator or
governmental authority shall purport to enjoin or restrain the Lender
from making the Loan.
D. The making of the Loan in the manner contemplated in this Agreement
shall not violate the applicable provisions of Regulation T, U or X of
the Board of Governors of the Federal Reserve Board or any other
regulation of the Board.
E. Simultaneously with the making of the advance on the Loan by the
Lender, the Company shall have delivered to the Lender and the Trustee
an Officers' Certificate from the Company in form and substance
satisfactory to the Lender and the Trustee to the effect that (i) the
representations and warranties of the Company in Section 4 are true,
correct and complete in all material respects on and as of the date of
such advance to the same extent as though made on and as of that date,
and (ii) on or prior to the date of such advance, the Company has
performed and complied with in all material respects all covenants and
conditions to be performed and observed by the Company on or prior to
the date of such advance.
SECTION 4 REPRESENTATIONS AND WARRANTIES
In order to induce the Lender to enter into this Agreement and to
make the Loan, the Company represents and warrants to the Lender that,
at the time of execution hereof and after consummation of the making
of the Loan and the Transactions, the following statements are true,
correct and complete:
4.1 Organization and Good Standing; Capitalization. The Company is a
corporation duly organized and existing and in good standing under the
laws of its jurisdiction of incorporation. The Company has the
corporate power and authority to own and operate its properties and to
carry on its business as now conducted and as proposed to be conducted
and is duly qualified as a foreign corporation and in good standing in
all jurisdictions in which it is doing business, except where failure
to be so qualified or in good standing, singly or in the aggregated,
has not had and will not have a Material Adverse Effect.
4.2 Authorization and Power. The Company has the corporate power and
requisite authority, and has taken all corporate action necessary, to
consummate the Transactions and to execute, deliver and perform its
obligations under this Agreement, the Mortgage, the Security
Agreement, the other the Loan Documents, Indenture and each other
document and instrument to be delivered in connection with the
Transactions executed or to be executed by it and to issue the Notes.
4.3 No Conflicts or Consents.
A. The execution and delivery of the Loan Agreement, the Notes, the
Mortgage, the Security Agreement, the other Loan Documents and each
other document to be executed and delivered in connection with the
Transactions, the consummation of each of the transactions herein or
therein contemplated, the compliance with each of the terms and
previsions hereof or thereof, and the issuance, delivery and
performance of the Notes, this Agreement, the Mortgage, the Security
Agreement and the Indenture, do not and will not (i) violate any
provision of any law or any governmental rule or regulation applicable
to the Company, its Certificate of Incorporation or Bylaws or any
order, judgment or decree of any court or other agency of government
binding on it, (ii) conflict with, result in a breach of or constitute
(with due notice or lapse of time or both) a default under any
Contractual Obligation of the Company which could reasonably be
expected to result in a Material Adverse Effect, (iii) result in or
require the creation or imposition of any Lien upon any of the
properties or assets of the Company (other than any Liens created
under this Agreement and the Other Loan Agreements), (iv) require any
approval of stockholders or any approval or consent of any Person
under any Contractual Obligation of the Company except for such
approvals or consents which will be obtained on or before the Closing
Date and disclosed in writing to Lender, the Trustee and the Initial
Purchaser or such approvals or consents the failure to obtain which
could not reasonably be expected to singly or in the aggregate result
in a Material Adverse Effect.
B. No consent, approval, authorization or order of any Tribunal or
other Person is required in connection with the execution and delivery
by the Company of this Agreement, the Loan Documents or any other
document or instrument to be delivered in connection with the
Transactions or the consummation of the transactions contemplated
hereby or thereby, other than any such consent, approval,
authorization or order which has been obtained and remains in full
force and effect or which has been waived in writing by the Lender or
the failure of which to obtain would not, singly or in the aggregated,
have a Material Adverse Effect.
4.4 Enforceable Obligations. Each of this Agreement, the Notes, the
Mortgage, the Security Agreement, the other Loan Documents, and each
other document or instrument to be delivered in connection therewith
has been duly authorized; each of this Agreement, the Notes, the
Mortgage, the Security Agreement, the Other Loan Documents and each
other document or instrument to be delivered in connection therewith
to be executed and delivered on or prior to the Closing Date has been
duly executed and delivered by the Company and each of this Agreement,
the Notes, the Mortgage, the Security Agreement, the Other Loan
Documents and each other document or instrument to be delivered in
connection therewith to be executed and delivered on or prior to the
Closing Date is, and each of this Agreement, the Notes, the Mortgage,
the Security Agreement and the other Loan Documents to be executed and
delivered after the Closing Date will be, upon such execution and
delivery, the legal, valid and binding obligations of the Company,
enforceable in accordance with their respective terms, except to the
extent that the enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization or similar laws affecting the
enforcement of creditors' rights generally or by general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law)
4.5 Properties; Liens. The Company has good and marketable title to
the contract for the construction of the Mortgaged Rig and the
equipment purchased and paid for by the Company to be installed or
used thereon and the Other Mortgaged Rigs to the extent specified in
such Other Loan Agreement. Except as described in Schedule 4.5 or as
permitted by this Agreement, the Company owns, and such contract and
equipment are owned, free and clear of Liens.
4.6 No Default. No event has occurred and is continuing which
constitutes a Default, a Potential Event of Default or an Event of
Default.
4.7 Use of Proceeds; Margin Stock, etc. The proceeds of the Loan will
be used solely for the purposes specified herein. None of such
proceeds will be used for the purpose of purchasing or carrying any
Margin Stock within the meaning of the applicable provisions of
Regulation T, U or X, or for the purpose of reducing or retiring any
Indebtedness which was originally incurred to purchase or carry a
Margin Stock or for any other purpose which might constitute this
transaction a "purpose credit" within the meaning of the applicable
provisions of Regulation T, U or X. The Company has not taken nor
will it take any action which might cause any of the Loan Documents to
violate the applicable provisions of Regulation T, U or X, or any
other regulation of the Board of Governors of the Federal Reserve
System.
4.8 Survival of Representations and Warranties. All representations
and warranties in the Loan Documents shall survive delivery of the
Notes and the making of the Loan and shall continue until one year
after repayment of the Notes and the Obligations, and any
investigation at any time made by or on behalf of the Lender shall not
diminish the Lender's right to rely thereon.
SECTION 5 COVENANTS
5.1 Indenture Covenants. Each of the covenants conferred in the
Indenture applicable to the Company and its Restricted Subsidiaries
are incorporated herein by reference. The Company covenants and
agrees that, until the Loan and the Notes and all other amounts due
under this Agreement have been indefeasibly paid in full it shall
perform all covenants applied to it or any of its Restricted
Subsidiaries which are contained in the Indenture.
5.2 Reports of Defaults, Etc. The Company will deliver to each Lender
and the Trustee promptly upon, but in no event more than five (5)
Business Days after, any Officer's obtaining knowledge of any
condition or event which constitutes a Default, an Event of Default or
a Potential Event of Default, an Officer's Certificate specifying the
nature and period of existence of any such condition or event, or
specifying the notice given or the claim of Default, Event of Default,
Potential Event of Default, or the event or condition, and what action
the Company has taken, is taking and proposes to take with respect
thereto;
5.3 Payments in U.S. Dollars. All payments of any Obligations to be
made hereunder or under the Note by the Company or any other obligor
with respect thereto shall be made solely in U.S. Dollars or such
other currency as is then legal tender for public and private debts in
the United States of America.
5.4 Performance and Enforcement Under the Loan Documents. The Company
shall promptly perform all of its obligations under the Loan Documents
and each document and instrument related thereto or delivered in
connection with any thereof, in each case, to the extent within its
control. The Company shall (A) diligently and in good faith promptly
pursue the performance of each other party to each such document, and
(B) diligently seek the enforcement of all rights and remedies under
each such document.
5.5 Liens. The Company shall not, nor shall it cause or permit any of
its Restricted Subsidiaries to, directly or indirectly, create, incur,
assume or permit to exist, any Lien on or with respect to any property
or asset (including the Mortgaged Rig) of the Company or of any of its
Restricted Subsidiaries, whether now owned or hereafter acquired, or
assign or otherwise convey any right to receive any income or profits
therefrom, or file or permit the filing of, or permit to remain in
effect, any financing statement or other similar notice of any Lien
with respect to any such property, asset, income or profits under the
Uniform Commercial Code of any State or under any similar recording or
notice statute, except Liens permitted by the Indenture and Liens
permitted by the Loan Documents.
5.6 Transfer of Mortgage Rig to a Restricted Subsidiary. The Company
shall not, nor shall the Company cause or permit any of its Restricted
Subsidiaries to, directly or indirectly, transfer the Mortgaged Rig to
any Subsidiary of the Company unless (i) such Subsidiary guarantees
all Obligations of the Company under this Agreement and executes a
Mortgage and a Security Agreement, (ii) the Liens of the Subsidiary's
Mortgage and Security Agreement are perfected and enforceable, and
(iii) such Subsidiary executes a Subsidiary Guarantee pursuant to the
Indenture.
5.7 Filing of Mortgage. Promptly upon completion of the Mortgaged Rig,
the Company shall grant a valid and perfected first Lien on the
Mortgaged Rig pursuant to a Mortgage in the form of Exhibit IV
attached hereto.
SECTION 6 EVENTS OF DEFAULT
If any of the following conditions of events ("Events of Default")
shall occur and be continuing:
6.1 Failure To Make Payments When Due. Failure to pay any installment
of principal including Premium of the Loan when due, whether at stated
maturity, by acceleration, by notice of prepayment or otherwise; or
failure to pay any interest (including Special Interest and Additional
Amounts) on the Loan or any other amount due under this Agreement
continued for 30 days; or
6.2 Default Under The Indenture. An Event of Default occurs and is
continuing under the Indenture; or
6.3 Other Loan Agreement. An Event of Default (as defined in an other
Loan Agreement) occurs and is continuing under such Other Loan
Agreement; or
6.4 Breach of Certain Covenants. Failure of the Company to perform or
comply with any covenant, term or condition contained in Sections 5.2
through 5.7 and Sections 7.3 through 7.5 of this Agreement; or
6.5 Breach of Warranty. Any representation, warranty or certification
made by the Company in any Loan Document or in any statement or
certificate at any time given by the Company in writing pursuant
hereto or thereto or in connection herewith or therewith shall be
false or incorrect in any material respect on the date as of which
made or deemed made; or
6.6 Other Defaults Under Agreement or Loan Documents. The Company
shall default in the performance of or compliance with any covenant,
term or condition contained in this Agreement or the other Loan
Documents (other than those covered by Sections 5.2 through 5.7 and
such default shall not have been remedied or waived in accordance with
Section 7.6 of this Agreement within 30 days after the date of written
notice of such default from the Lender, the Collateral Agent, the
Trustee or the Holder or Holders of not less than 25% in aggregate
principal amount of the Secured Notes then outstanding; or
6.7 Involuntary Bankruptcy; Appointment of Custodian, etc. The entry
by a court having jurisdiction in the premises of (i) a decree or
order for relief in respect of the Company or any Significant
Subsidiary in an involuntary case or proceeding under U.S. bankruptcy
laws, as now or hereafter constituted, or any other applicable
Federal, state, or foreign bankruptcy, insolvency, or other similar
law or (ii) a decree or order adjudging the Company or any Significant
Subsidiary a bankruptcy or insolvent, or approving as properly filed a
petition seeking reorganization, arrangement, adjustment or
composition of or in respect of the Company or any Significant
Subsidiary under U.S. bankruptcy laws, as now or hereafter
constituted, or any other applicable Federal, state or foreign
bankruptcy, insolvency, or similar law, or appointing a custodian,
liquidator, assignee, trustee, sequestrator or other similar official
of the Company or any Significant Subsidiary or of any substantial
part of the Property or assets of the Company or any Significant
Subsidiary, or ordering the winding up or liquidation of the affairs
of the Company or any Significant Subsidiary, and the continuance of
any such decree or order for relief or any such other decree or order
unstayed and in effect for a period of 60 consecutive days; or
6.8 Voluntary Bankruptcy; Appointment of a Custodian, etc. The
commencement by the Company or any Significant Subsidiary of a
voluntary case or proceeding under the U.S. bankruptcy laws, as now or
hereafter constituted, or any other applicable Federal, state or
foreign bankruptcy, insolvency or other similar law or of any other
case or proceeding to be adjudicated a bankrupt or insolvent; or
(ii) the consent by the Company or any Significant Subsidiary to the
entry of a decree or order for relief in respect of the Company or any
Significant Subsidiary in an involuntary case or proceeding under U.S.
bankruptcy laws, as now or hereafter constituted, or any other
applicable Federal, state, or foreign bankruptcy, insolvency or other
similar law or to the commencement of any bankruptcy or insolvency
case or proceeding against the Company or any Significant Subsidiary;
or (iii) the filing by the Company or any Significant Subsidiary of a
petition or answer or consent seeking reorganization or relief under
U.S. bankruptcy laws, as now or hereafter constituted, or any other
applicable Federal, state or foreign bankruptcy, insolvency or other
similar law; or (iv) the consent by the Company or any Significant
Subsidiary to the filing of such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator, assignee,
trustee, sequestrator or similar official of the Company or any
Significant Subsidiary or of any substantial part of the property or
assets of the Company or any Significant Subsidiary, or the making by
the Company or any Significant Subsidiary of an assignment for the
benefit of creditors; or (v) the admission by the Company or any
Significant Subsidiary in writing of its inability to pay its debts
generally as they become due; or (vi) the taking of corporate action
by the Company or any Significant Subsidiary in furtherance of such
action;
THEN (i) upon the occurrence of any Event of Default described in
the foregoing Section 6.7 or 6.8, all of the unpaid principal amount
of and accrued interest on the Loan and all other outstanding
Obligations shall automatically become immediately due and payable,
without presentment, demand, protest, waiver of notice of intent to
accelerate and waiver of notice of such acceleration or notice of any
other kind or other requirements of any kind, all of which are hereby
expressly waived by the Company, and Obligations and the Loan
Commitment of the Lender hereunder shall thereupon terminate, and
(ii) upon the occurrence of any other Event of Default, the Lender
shall, upon written notice of the Lender, to the Company, upon written
notice of the Trustee or the Collateral Agent to the Company and the
Lender, or upon written notice of a Holder or Holders of the Secured
Note or Notes, to the Company, the Lender, the Collateral Agent and
the Trustee, declare all of the unpaid principal amount of and accrued
interest on the Loan and all other outstanding Obligations to be, and
the same shall forthwith become, due and payable, and the obligations
and Loan Commitments of the Lender hereunder shall thereupon
terminate; provided, however, that upon the occurrence of an Event of
Default described in Section 6.4 of this Agreement or an "event of
default" under Section 6.4 of any Other Loan Agreement, the Lender
shall not declare the Obligations hereunder to be due and payable for
a period of 60 days after notice of the occurrence of such Event of
Default or "event of default." Nevertheless, if at any time after
acceleration of the Maturity of the Loan, the Company shall pay all
arrears of interest and all payments on account of the principal
thereof which shall have become due otherwise than by acceleration
(with interest on principal and, to the extent permitted by law, on
overdue interest, at the rates specified in this Agreement or the
Notes) and all Events of Default and Potential Events of Default
(other than non-payment of principal of and accrued interest on the
Loan and the Notes due and payable solely by virtue of acceleration)
shall be remedied or waived pursuant to Section 7.6, then the Lender
shall, upon receipt of the written notice from the Collateral Agent
and the Trustee of such remedy or waiver, by written notice to the
Company rescind and annul the acceleration and its consequences; but
such action shall not affect any subsequent Default, Event of Default
or Potential Event of Default or impair any right consequent thereon.
SECTION 7 MISCELLANEOUS
7.1 Pledges and Assignments of Loan and Note. The Lender shall have
the right at any time to sell, pledge, assign, transfer or negotiate
all or any portion of the Note or its Loan Commitment. The Company
acknowledges that the Lender will pledge its rights under this
Agreement, the Notes, the Mortgage and the Other Loan Documents to the
Collateral Agent pursuant to the Issuer Security Agreement to secure
the Lender's obligations under the Indenture and the Secured Notes.
7.2 Expenses. Whether or not the transactions contemplated hereby
shall be consummated, the Company, its successors and assigns agrees
to promptly pay (i) all the actual costs and expenses of preparation
of the Loan Documents and all the costs of furnishing all opinions by
counsel for the Company (including without limitation any opinions
requested by the Lender as to any legal matters arising hereunder),
and of the Company's performance of and compliance with all agreements
and conditions contained herein on its part to be performed or
complied with; (ii) the reasonable fees, expenses and disbursements of
counsel to the Lender and the Trustee and the Collateral Agent, their
successors and assigns (including allocated costs of internal counsel)
in connection with the negotiation, preparation, execution and
administration of the Loan Documents and the Loan hereunder, and any
amendments, modifications and waivers hereto or thereto and consents
to departures from the terms hereof and thereof; and (iii) after the
occurrence of an Event of Default, all costs and expenses (including
reasonable attorneys fees, including allocated costs of internal
counsel, and costs of settlement) incurred by the Lender, its
successors and assigns in enforcing any Obligations of or in
collecting any payments due from the Company hereunder or under the
Notes by reason of such Event of Default or in connection with any
refinancing or restructuring of the credit arrangements provided under
this Agreement in the nature of a "work-out" or of any insolvency or
bankruptcy proceedings.
7.3 Indemnity. In addition to the payment of expenses pursuant to
Section 7.2, whether or not the transactions contemplated hereby shall
be consummated, the Company agrees to indemnify, pay and hold the
Lender, the Collateral Agent, the Trustee and any Holder of the
Secured Notes and holder of the Notes, and each of their officers,
directors, employees, and agents, (collectively called the
"Indemnitees"), harmless from and against any all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits,
claims, costs, expenses and disbursements of any kind or nature
whatsoever (including, without limitation, the fees and disbursements
of counsel for such Indemnitees in connection with any investigative,
administrative or judicial proceeding commenced or threatened, whether
or not such Indemnitee shall be designated as a party thereto), which
may be suffered by imposed on, incurred by, or asserted against that
Indemnitee, in any manner resulting from, connected with, in respect
of, relating to or arising out of this Agreement, the Notes, the
Mortgage, the Security Agreement, the Lender's agreement to make the
Loan or the use or intended use of any of the proceeds of the Loan
hereunder or the Transactions (the "indemnified liabilities");
provided, however, that the Company shall have no obligation to an
Indemnitee hereunder with respect to indemnified liabilities (i) to
the extent such is finally judicially determined to have resulted
solely from (A) the gross negligence or willful misconduct of that
Indemnitee or (B) the failure of such Indemnitee to perform its
obligations under any Loan Document or (C) such Indemnitee's violation
of law or (ii) in connection with the obligations of any Indemnitee
under any Loan Document. To the extend that the undertaking to
indemnify, pay and hold harmless set forth in the preceding sentence
may be unenforceable because it is violative of any law or public
policy, the Company shall contribute the maximum portion which it is
permitted to pay and satisfy under applicable law to the payment and
satisfaction of all indemnified liabilities incurred by the
Indemnitees or any of them.
7.4 Additional Amounts. Except to the extent required by any applicable
law, regulation law, regulation or governmental policy, any and all
payments of, or in respect of the Loan, this Agreement, the Notes, any
Loan Document or any Secured Note shall be made free and clear of and
without deduction for or on account of any and all present or future
taxes, levies, imposts, deduction, charges or withholdings and all
liabilities with respect thereto imposed by Panama, The Bahamas, The
Marshall Islands or any other jurisdiction with which the Company or
any Subsidiary has some connection (including any jurisdiction (other
than the United States of America) from or through which payments
under this Agreement, the Notes, any Loan Document, the Guarantee or
the Secured Notes are made) or any political subdivision of or any
taxing authority in any such jurisdiction ("Panamanian Taxes,"
"Bahamian Taxes," "MI Taxes," or "Other Taxes," respectively). If the
Lender, the Company or any Subsidiary Guarantor shall be required by
law to withhold or deduct any Panamanian Taxes, Bahamian Taxes, MI
Taxes, or Other Taxes from or in respect of any sum payable under this
Agreement, the Notes, any Loan Document, the Guarantee or the Secured
Notes, the sum payable by the Company or such Subsidiary Guarantor, as
the case may be, thereunder shall be increased by the amount
("Additional Amounts") necessary so that after making all required
withholdings and deductions, Lender or any Holder or beneficial owner
of Secured Notes shall receive an amount equal to the sum that it
would have received had not such withholdings and deductions been
made; provided that any such sum shall not be paid in respect of any
Panamanian Taxes, Bahamian Taxes, MI Taxes or Other Taxes to a Holder
(an "Excluded Holder") (i) resulting from the beneficial owner of such
Secured Note carrying on business or being deemed to carry on business
in or through a permanent establishment or fixed base in the relevant
taxing jurisdiction or having any other connection with the relevant
taxing jurisdiction or any political subdivision thereof or any taxing
authority therein other than the mere holding or owning of such
Secured Note, being a beneficiary of the Guarantee or any applicable
Subsidiary Guarantee, the receipt of any income or payments in respect
of such Secured Note, the Loan, the Guarantee or any applicable
Subsidiary Guarantee or the enforcement of such Secured Note, the
Loan, the Guarantee or any applicable Subsidiary Guarantee, or (ii)
that would not have been imposed but for the presentation (where
presentation is required) of such Secured Note for payment more than
180 days after the date such payment became due and payable or was
duly provided for, whichever occurs later. The Lender, the Company or
the Subsidiary Guarantors, as applicable, will also (i) make such
withholding or deduction and (ii) remit the full amount deducted or
withheld to the relevant authority in accordance with applicable law,
and, in any such case, the Lender is required to furnish under the
Indenture to each Holder on whose behalf an amount was so remitted,
within 30 calendar days after the date the payment of any Panamanian
Taxes, Bahamian Taxes, MI Taxes or Other Taxes is due pursuant to
applicable law, certified copies of tax receipts evidencing such
payment by the Lender, the Company or the Subsidiary Guarantors, as
applicable. The Company will, upon written request of each Holder
(other than an Excluded Holder), reimburse each such holder for the
amount of (i) any Panamanian Taxes, Bahamian Taxes, MI Taxes or Other
Taxes so levied or imposed and paid by such Holder as a result of
payments made under or with respect to any Secured Notes, and (ii) any
Panamanian Taxes, Bahamian Taxes, MI Taxes or Other Taxes so levied or
imposed with respect to any reimbursement under the foregoing clause
(i) so that the net amount received by such Holder (net of payments
made under or with respect to such Secured Notes, the Loan, the
Guarantee or the applicable Subsidiary Guarantees) after such
reimbursement will not be less than the net amount the Holder would
have received if Panamanian Taxes, Bahamian Taxes, MI Taxes or Other
Taxes on such reimbursement had not been imposed.
At least 30 calendar days prior to each date on which any payment
under or with respect to the Secured Notes is due and payable, if the
Lender, the Company or the Subsidiary Guarantors, as applicable, will
be obligated to pay Additional Amounts with respect to such payment,
the Lender, the Company or the Subsidiary Guarantors, as applicable,
will deliver to the Trustee an officer's certificate stating the fact
that such Additional Amounts will be payable and the amounts will be
payable and the amounts so payable and will set forth such other
information necessary to enable the Trustee to pay such Additional
Amounts to Holders on the payment date.
7.5 Taxes and Other Taxes.
A. Any and all payments by the Company hereunder or under any of the
other Loan Documents shall be made free and clear of and without
deduction or withholding for any and all present or future Taxes,
unless such Taxes are required by law or the administration thereof to
be deducted or withheld and excluding (a) in the case of each Lender,
Taxes imposed on its net income and franchise taxes or taxes on gross
receipts and capital imposed on it by the jurisdiction under the laws
of the United States or any political subdivision thereof (all such
nonexcluded Taxes being hereinafter referred to as "Covered Taxes").
If the Company shall be required by Law or the administration thereof
to deduct or withhold any Covered Taxes from or in respect of any sum
payable hereunder or under any other Loan Documents, the sum payable
shall be increased as may be necessary so that after making all
required deductions or withholdings (including deductions or
withholdings applicable to additional amounts paid under this
paragraph), the Lender receives an amount equal to the sum it would
have received if no such deduction or withholding had been made;
(b) the Company shall make such deductions or withholdings; and
(c) the Company forthwith shall pay the full amount deducted or
withheld to the relevant taxation or other authority in accordance
with applicable Law.
B. The Company agrees to pay forthwith any present or future stamp
documentary taxes or any other excise or property taxes charges or
similar levies (all such taxes, charges and levies being herein
referred to as "Other Taxes") imposed by any jurisdiction (or any
political subdivision or taxing authority thereof or therein) which
arise from any payment made by the Company hereunder or under any of
the other Loan Documents or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement or any
of the other Loan Documents.
C. The Company agrees to indemnify the Lender for the full amount of
Covered Taxes or Other Taxes not deducted or withheld and paid by the
Company in accordance with Section 7.5(A) and (B) to the relevant
taxation or other authority and any Taxes other than Covered Taxes or
Other Taxes imposed by any jurisdiction on amounts payable by the
Company under this Section 7.5 paid by the Lender and any liability
(including penalties, interest and expenses) arising therefrom or with
respect thereto, whether or not any such Taxes or Other Taxes were
correctly or legally asserted. Payment under this indemnification
shall be made within 30 days from the date the Lender makes written
demand therefor. A certificate as to the amount of such Taxes or
Other Taxes and evidence of payment thereof submitted to the Company
shall be prima facie evidence, absent manifest error, of the amount
due from the Company to the Lender.
D. The Company shall furnish to the Lender the original or a certified
copy of a receipt evidencing any payment of Taxes or Other Taxes made
by the Company as soon as such receipt becomes available.
E. The provisions of this Section 7.5 shall survive the termination of
the Agreement and repayment of all Obligations.
7.6 Amendments and Waivers. No amendment, modification, termination or
waiver of any term or provision of this Agreement, of the Note, the
Mortgage, the Security Agreement or any Other Loan Document or consent
to any departure by the Company therefrom, shall in any event be
effective without the prior written concurrence of the Company, the
Lender, the Collateral Agent and the Trustee, and, upon the request of
the Lender, the Collateral Agent or the Trustee, the receipt of a
written opinion of counsel of the Company addressed to the Lender, the
Collateral Agent and the Trustee to the effect that such amendment,
modification, termination, waiver or consent does not violate or
conflict with any of the terms and provisions of the Indenture or any
Contractual Obligations of the Company.
7.7 Independence of Covenants. All covenants hereunder shall be given
independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be
permitted by an exception to, or be otherwise within the limitation
of, another covenant shall not avoid the occurrence of an Event of
Default or Potential Event of Default if such action is taken or
condition exists.
7.8 Notices. Unless otherwise provided herein, any notice or other
communications herein required or permitted to be given shall be in
writing and may be personally served, telecopied or sent by mail and
shall be deemed to have been given when delivered in person, upon
receipt of telecopy against receipt of answer back or four Business
Days after depositing it in the mail, registered or certified, with
postage prepaid and properly addressed; provided, however, that
notices shall not be effective until received. For the purposes
hereof, the addresses of the parties hereto (unless notice of a change
thereof is delivered as provided in this Section 7.8) shall be set
forth under each party's name on the signature pages hereto.
7.9 Survival of Warranties and Certain Agreements. All agreements,
representations and warranties made herein and in the other Loan
Documents shall survive the execution and delivery of this Agreement
and in the other Loan Documents, the making of the Loan hereunder and
the execution and delivery of the Notes or the Loan Documents and,
notwithstanding the making of the Loan, the execution and delivery of
the Notes and the other Loan Documents or any investigation made by or
on behalf of any party, shall continue in full force and effect. The
closing of the transactions herein contemplated shall not prejudice
any right of one party against any other party in respect of anything
done or omitted hereunder or in respect of any right to damages or
other remedies.
7.10 Failure or Indulgence Not Waiver; Remedies Cumulative. No failure
or delay on the part of the Lender or the holder of the Notes or the
Trustee in the exercise of any power, right or privilege or be
construed to be a waiver of any default or acquiescence therein, nor
shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or of any other
right, power or privilege. All rights and remedies existing under
this Agreement, the Notes or any other Loan Document are cumulative to
and not exclusive of any rights or remedies otherwise available.
7.11 Severability. In case any provision in or obligation under this
Agreement, under a Guarantee or the Notes shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any
way be affected or impaired thereby.
7.12 Headings. Section and Section headings in this Agreement are
included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given
any substantive effect.
7.13 Applicable Law. THIS AGREEMENT, EACH LOAN DOCUMENT OTHER THAN THE
MORTGAGE AND THE NOTES SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW.
7.14 Successors and Assigns; Subsequent Holders of Notes. This
Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of
the parties hereto and the successors and assigns of the Lenders. The
terms and provisions of this Agreement and each Loan Document shall
inure to the benefit of any assignee or transferee of the Notes
pursuant to Section 7.1, and in the event of such transfer or
assignment, the rights and privileges herein conferred upon the Lender
shall automatically extend to and be vested in such transferee or
assignee, all subject to the terms and conditions hereof. The
Company's rights or any interest therein hereunder may not be assigned
without the prior express written consent of the Lender and the
Trustee.
7.15 Counterparts; Effectiveness. This Agreement and any amendments,
waivers, consents or supplements may be executed in any number of
counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one
and the same instrument. This Agreement shall become effective upon
the execution of a counterpart hereof by each of the parties hereto.
7.16 Consent to Jurisdiction; Venue; Waiver of Jury Trial.
A. Any legal action or proceeding with respect to this Agreement, any
Note or any 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
parties to this Agreement hereby irrevocably accepts for itself and in
respect of its respective property, generally and unconditionally, the
jurisdiction of the aforesaid courts. Each of the parties to this
Agreement hereby further irrevocably waives any claim that any such
courts lack jurisdiction over itself, and agrees not to plead or
claim, in any legal action or proceeding with respect to this
Agreement, the Notes or Loan Documents brought in any of the aforesaid
courts, that any such court lacks jurisdiction over such party. Each
of the parties to this Agreement irrevocably consents to the service
of process in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to such
party, at its respective address for notices pursuant to Section 7.8,
such service to become effective 30 days after such mailing. To the
extent permitted by law, each of the parties to this Agreement hereby
irrevocably waives any objection to such service of process and
further irrevocably waives and agrees not to plead or claim in any
action or proceeding commenced hereunder or under the Notes or any
Loan Document that service of process was in any way invalid or
ineffective. Nothing herein shall affect the right of any party to
this Agreement to serve process in any other manner permitted by law
or to commence legal proceedings or otherwise proceed against any
party in any other jurisdiction.
B. Each of the parties to this Agreement hereby irrevocably waives any
objection which it may now or hereafter have to the laying of venue of
any of the aforesaid any of actions or proceedings arising out of or
in connection with this Agreement, the Notes or any of the Loan
Documents brought in the courts referred to in clause A above and
hereby further irrevocably waives and agrees not to plead or claim in
any such court that any such action or proceeding brought in any such
court has been brought in an inconvenient forum.
C.Each of the parties to this Agreement hereby irrevocably waives all
right to a trial by jury in any action, proceeding or counterclaim
arising out of or relating to this Agreement, the Notes or the Loan
Documents or the transactions contemplated hereby or thereby.
7.17 Waiver of Stay, Extension or Usury Laws. The Company covenants
(to the extent that it may lawfully do so) that it will not at any
time insist upon, plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law or any usury law or
other law that would prohibit or forgive the Company from paying all
or any portion of the principal of or interest on the Loan as
contemplated herein, wherever enacted, now or at the time hereafter in
force, or which may affect the covenants or the performance of this
Agreement and (to the extent that it may lawfully do so), the Company
hereby expressly waives all benefit or advantage of any such law, and
covenants that it will not hinder, delay or impede the execution of
any power herein granted to the Lender, but will suffer and permit the
execution of every such power as though no such law had been enacted.
7.18 Usury Savings Clause. It is the intention of the parties hereto
to comply with applicable usury laws (now or hereafter enacted);
accordingly, notwithstanding any provision to the contrary in this
Agreement, any Note, any of the other Loan Documents or any other
document related hereto or thereto, in no event shall this Agreement
or any such other document require the payment or permit the
collection of interest in excess of the maximum amount permitted by
such laws. If from any circumstances whatsoever, fulfillment of any
provision of this Agreement, any Note, any of the other Loan Documents
or of any other document pertaining hereto or thereto, shall involve
transcending the limit of validity prescribed by applicable law for
the collection or charging of interest, then, ipso facto, the
obligation to be fulfilled shall be reduced to the limit of such
validity, and if from any such circumstances the Lender shall ever
receive anything of value as interest or deemed interest by applicable
law under this Agreement, any Note, any of the other Loan Documents or
any other document pertaining hereto or otherwise an amount that would
exceed the highest lawful rate, such amount that would be excessive
interest shall be applied to the reduction of the principal amount
owing under the Loan or on account of any other indebtedness of the
Company, and not to the payment of interest, or if such excessive
interest exceeds the unpaid balance of principal of such indebtedness,
such excess shall be refunded to the Company. In determining whether
or not the interest paid or payable with respect to any indebtedness
of the Company to Lender under any specified contingency, exceeds the
highest lawful rate, the Company and the Lender shall, to the maximum
extent permitted by applicable law, (a) characterize any non-principal
payment as an expense, fee or premium rather than as interest,
(b) exclude voluntary prepayments and the effects thereof,
(c) amortize, prorate, allocate and spread the total amount of
interest thereon does not exceed the maximum amount permitted by
applicable laws, and/or (d) allocate interest throughout the full term
of such indebtedness so that interest between portions of such
indebtedness, to the end that no such portion shall bear interest at a
rate greater than that permitted by applicable law.
WITNESS the due execution hereof by the respective duly authorized
officers of the undersigned as of the date first written above.
COMPANY:
R&B FALCON CORPORATION
By:
Name: Robert Fulton
Title: Executive Vice President
Notice Address:
901 Threadneedle
Houston, TX 77079-2982
Telephone: (281) 496-5000
Telecopy: (281) 496-0285
LENDER:
RBF FINANCE CO.
By:
Name: Leighton Moss
Title: Vice President
Notice Address:
901 Threadneedle
Houston, TX 77079-2982
Telephone: (281) 496-5000
Telecopy: (281) 597-7556
- --------------------------------------------------------------------
Exhibit I
R&B FALCON CORPORATION
SENIOR SECURED ___- YEAR TRANCHE PROMISSORY NOTE
New York, New York
$______________ March 26, 1999
FOR VALUE RECEIVED, R&B FALCON CORPORATION (the "Company"),
promises to pay to the order of RBF FINANCE CO. ("Payee"), the
principal amount of _________________________ Dollars ($_____________)
(or such lesser amount as shall equal the aggregate unpaid principal
amount of the __-year Tranche advances of the Loan) at the times
specified by the provisions of the Senior Secured Credit Agreement
dated as of March 26, 1999, as the same may at any time be amended,
modified or supplemented and in effect (the "Loan Agreement") between
the Company and the Lender.
The Company also promises to pay interest on the unpaid principal
amount hereof from the date hereof until paid in full at the rates and
at the times which shall be determined in accordance with the
provisions of the Loan Agreement.
This Note is issued pursuant to and entitled to the benefits of
the Loan Agreement, to which reference is hereby made for a more
complete statement of the terms and conditions under which the Loan
evidenced hereby was made and is to be repaid. Capitalized terms used
herein without definition shall have the meanings set forth in the
Loan Agreement.
The Senior Secured Credit Agreement dated as of March 26, 1999,
as the same may at any time be amended, modified or supplemented and
in effect (the "Loan Agreement") between the Company, the Lender named
therein, and United States Trust Company of New York, as Trustee.
All payments of principal and interest in respect of this Note
shall be made in lawful money of the United States of America in same
day funds to Payee at the office of United States Trust Company of New
York located at 114 West 47th Street, 25th Floor, New York, New York,
or at such other place in the State of New York as shall be designated
in writing for such purpose in accordance with the terms of the Loan
Agreement. Each of Payee and any subsequent holder of this Note
agrees, by its acceptance hereof, that before disposing of this Note
or any part hereof it will make a notation hereon of all principal
payments previously made hereunder and of the date to which interest
hereon has been paid; provided, however, that the failure to make a
notation of any payment made on this Note shall not limit or otherwise
affect the obligation of the Company hereunder with respect to
payments of principal or interest on this Note.
Whenever any payment on this Note shall be stated to be due on a
day which is not a Business Day, such payment shall be made on the
next succeeding Business Day and such extension of time shall be
included in the computation of the payment of interest on this Note.
This Note is subject to mandatory prepayment as provided in the
Loan Agreement and prepayment at the option of the Company as provided
in the Loan Agreement.
THE LOAN AGREEMENT AND THIS NOTE SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK WITHOUT REGARD TO THE PRINCIPALS OF CONFLICTS OF LAWS.
Upon the occurrence of an Event of Default, the unpaid balance of
the principal amount of this Note, together with all accrued but
unpaid interest thereon, may become, or may be declared to be, due and
payable in the manner, upon the conditions and with the effect
provided in the Loan Agreement.
The terms of this Note are subject to amendment only in the
manner provided in the Loan Agreement.
No reference herein to the Loan Agreement and no provision of
this Note or the Loan Agreement shall alter or impair the obligation
of the Company, which is absolute and unconditional, to pay the
principal of and interest on this Note at the place, at the respective
times, and in the currency herein prescribed.
The Company promises to pay all costs and expenses, including all
attorneys' fees, all as provided in Section 7.2 of the Loan Agreement,
incurred in the collection and enforcement of this Note. The Company
and endorsers of this Note hereby consent to renewals and extensions
of time at or after the maturity hereof, without notice, and hereby
waive diligence, presentment, protest, demand and notice of every kind
and, to the full extent permitted by law, the right to plead any
statute of limitations as a defense to any demand hereunder.
IN WITNESS WHEREOF, the Company has caused this Note to be
executed and delivered by its duly authorized officer, as of the day
and year and at the place first above written.
R&B FALCON CORPORATION
By:
Title:
- ----------------------------------------------------------------------
EXHIBIT II
NOTICE OF BORROWING
The undersigned hereby certifies that he is the __________________
of R&B Falcon Corporation, a Delaware corporation ( the "Company"),
and that as such he is authorized to execute this Notice of Borrowing
on behalf of the Company. With reference to that certain Loan
Agreement dated as of _______________, 1999 (as same may be amended,
modified, increased, supplemented and/or restated from time to time,
the "Agreement") entered into by and between the Company and RBF
Finance Co., and any other future holder of any Note issued pursuant
to the Agreement ("Lender"), the undersigned further certifies,
represents and warrants on behalf of the Company that all of the
foregoing statements are true and correct (each capitalized term used
herein having the same meaning given to it in the Agreement unless
otherwise specified):
(a)The Company requests that the Lender make an advance to the Company
on the 7-year Tranche of the Loan in the aggregate principal amount of
$_________________ and an advance to the Company on the 10-year
Tranche of the Loan in the aggregate principal amount of $__________
by no later than _______________. Immediately following such advance,
the aggregate outstanding balance of advances made on the 7-year
Tranche and the 10-year Tranche Loan shall equal $_______________ and
$___________, respectively.
(b)As of the date hereof, and as a result of the making of the
requested advance, no event shall have occurred and be continuing or
would result from the consummation of the borrowing contemplated by
the Notice of Borrowing which would constitute an Event of Default, a
Potential Event of Default or a Default.
(c)Borrower has performed and complied with all agreements and
conditions contained in the Agreement which are required to be
performed or complied with by Borrower before or on the date hereof
and, except as waived in writing or otherwise agreed to in writing by
the Lender, all of the conditions precedent set forth in Section 3.1
or 3.2, as applicable, of the Agreement under Conditions to Loan have
been satisfied.
(d)The representations and warranties of the Company contained in
Section 4 of the Agreement are true, correct and complete in all
material respects on and as of the date hereof to the same extent as
though made on and as of that date, and (ii) on or prior to the date
hereof, the Company has performed and complied with in all material
respects all covenants and conditions to be performed and observed by
the Company on or prior to the date hereof.
EXECUTED AND DELIVERED this _______ day of _____________, _____.
R&B FALCON CORPORATION
By:
Name:
Title:
- --------------------------------------------------------------------
SCHEDULE 4.5
Title/Lien Exceptions
1. Statutory or inchoate liens for amounts not more than 30 days past
due or that are being contested in good faith.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements of RBF Finance Co. for the period from inception
(March 19, 1999) to December 31, 1999 and is qualified in its entirety
by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> MAR-19-1999
<PERIOD-END> DEC-31-1999
<CASH> 1
<SECURITIES> 0
<RECEIVABLES> 26,151
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 26,152
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 826,612
<CURRENT-LIABILITIES> 26,443
<BONDS> 800,000
0
0
<COMMON> 0
<OTHER-SE> 168
<TOTAL-LIABILITY-AND-EQUITY> 826,612
<SALES> 0
<TOTAL-REVENUES> 68,661
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 29
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 68,374
<INCOME-PRETAX> 258
<INCOME-TAX> 90
<INCOME-CONTINUING> 168
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 168
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
