<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________________ to __________________
Commission file number 1-7746
SONAT OFFSHORE DRILLING INC.
----------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 72-0464968
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4 Greenway Plaza, Houston, Texas 77046
-------------------------------- -----
(Address of principal executive offices) (Zip Code)
(713) 871-7500
--------------
(Registrant's telephone number, including area code)
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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: Common Stock, $.01 par value,
28,476,589 shares outstanding as of July 31, 1996.
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SONAT OFFSHORE DRILLING INC.
INDEX TO FORM 10-Q
QUARTER ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
Page
<S> <C>
PART I - FINANCIAL INFORMATION
- ------------------------------
ITEM 1. Financial Statements (Unaudited)
Condensed Consolidated Statements of Operations
Three and Six Months Ended June 30, 1996 and 1995....... 2
Condensed Consolidated Balance Sheets
June 30, 1996 and December 31, 1995..................... 3
Condensed Consolidated Statements of Cash Flows
Six Months Ended June 30, 1996 and 1995................. 5
Notes to Condensed Consolidated Financial Statements..... 6
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations...................... 8
PART II - OTHER INFORMATION
- ---------------------------
ITEM 4. Submission of Matters to a Vote of Security Holders... 16
ITEM 6. Exhibits and Reports on Form 8-K...................... 16
SIGNATURES........................................................ 17
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</TABLE>
1
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SONAT OFFSHORE DRILLING INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per-share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------- --------------------------
1996 1995 1996 1995
----------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Operating Revenues $108,881 $85,510 $190,101 $156,236
- --------------------------- -------- ------- -------- --------
Costs and Expenses
Operating and maintenance 67,173 61,066 123,328 109,718
Depreciation 6,300 6,237 12,358 12,515
General and administrative 5,174 6,294 10,230 11,382
-------- ------- -------- --------
78,647 73,597 145,916 133,615
-------- ------- -------- --------
Operating Income 30,234 11,913 44,185 22,621
- --------------------------- -------- ------- -------- --------
Other Income (Expense), Net
Equity in earnings of joint ventures 1,423 612 2,603 871
Interest income 1,189 769 2,711 1,427
Interest expense, net (91) (580) (533) (1,153)
Interest income related to settlement of tax case - - 983 -
Other, net 6,488 141 7,457 430
-------- ------- -------- --------
9,009 942 13,221 1,575
-------- ------- -------- --------
Income Before Income Taxes 39,243 12,855 57,406 24,196
Income Taxes 13,766 4,665 20,104 8,730
-------- ------- -------- --------
Net Income $ 25,477 $ 8,190 $ 37,302 $ 15,466
======== ======= ======== ========
Earnings Per Share of Common Stock $ 0.89 $ 0.29 $ 1.31 $ 0.54
======== ======= ======== ========
Weighted Average Shares Outstanding 28,474 28,385 28,455 28,379
-------- ------- -------- --------
Dividends Paid Per Share $ 0.06 $ 0.06 $ 0.12 $ 0.12
======== ======= ======== ========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
2
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SONAT OFFSHORE DRILLING INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
--------- ------------
<S> <C> <C>
ASSETS
Cash and Cash Equivalents $ 60,431 $112,972
Accounts Receivable 72,894 52,833
Deferred Income Taxes 7,130 9,336
Costs Incurred on Turnkey Drilling Projects in Progress 7,398 1,002
Materials and Supplies 9,234 10,195
Prepayments 4,899 8,693
-------- --------
Total Current Assets 161,986 195,031
-------- --------
Investments in and Advances to Joint Ventures 30,931 31,891
Property and Equipment 723,189 666,526
Less Accumulated Depreciation 352,960 363,057
-------- --------
Property and Equipment, net 370,229 303,469
-------- --------
Other Assets 11,370 11,873
-------- --------
Total Assets $574,516 $542,264
======== ========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
3
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SONAT OFFSHORE DRILLING INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
--------- ------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts Payable
Trade $ 10,178 $ 14,213
Affiliates 6,475 6,480
Accrued Income Taxes 18,364 11,272
Income Taxes Payable to Affiliate 3,028 3,028
Other Current Liabilities 24,446 27,151
-------- --------
Total Current Liabilities 62,491 62,144
-------- --------
Notes Payable 30,000 30,000
Deferred Income Taxes 63,985 66,405
Other Long-Term Liabilities 20,293 20,142
-------- --------
Total Long-Term Liabilities 114,278 116,547
-------- --------
Preferred Stock, $0.10 par value;
50,000,000 shares authorized,
none issued and outstanding - -
Common Stock, $0.01 par value;
55,000,000 shares authorized,
28,475,338 and 28,414,753 shares
issued and outstanding at June 30, 1996
and December 31, 1995, respectively 285 284
Additional Paid-in Capital 307,378 307,093
Retained Earnings 90,084 56,196
-------- --------
Total Stockholders' Equity 397,747 363,573
-------- --------
Total Liabilities and Stockholders' Equity $574,516 $542,264
======== ========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
4
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SONAT OFFSHORE DRILLING INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
---------------------------
1996 1995
--------- ----------
<S> <C> <C>
Cash Flows from Operating Activities
Net income $ 37,302 $ 15,466
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation 12,358 12,515
Deferred income taxes (benefit) 93 (965)
Equity in earnings of joint ventures (2,603) (871)
Gain on disposal of assets (7,768) (122)
Other, net (260) (148)
Changes in operating assets and liabilities
Accounts receivable (8,021) (13,424)
Turnkey work in progress (6,396) 2,420
Accounts payable (4,040) (1)
Income taxes receivable/payable, net 7,092 6,371
Other current assets 3,242 719
Other current liabilities (2,705) 542
-------- --------
Net cash provided by operating activities 28,294 22,502
-------- --------
Cash Flows from Investing Activities
Capital expenditures (80,122) (6,478)
Proceeds from disposal of assets 3,517 466
Joint ventures and other investments 3,563 377
Other (4,150) -
-------- --------
Net cash used in investing activities (77,192) (5,635)
-------- --------
Cash Flows from Financing Activities
Changes in minority interest 409 (784)
Exercise of stock options 644 34
Other (1,282) (832)
Dividends paid (3,414) (3,406)
-------- --------
Net cash used in financing activities (3,643) (4,988)
-------- --------
Net Increase (Decrease) in Cash and Cash Equivalents (52,541) 11,879
-------- --------
Cash and Cash Equivalents at Beginning of Period 112,972 46,830
-------- --------
Cash and Cash Equivalents at End of Period $ 60,431 $ 58,709
======== ========
Supplemental Disclosures of Cash Flow Information
Cash paid for
Interest $ 1,132 $ 1,102
Income taxes, net 12,921 3,577
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
5
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SONAT OFFSHORE DRILLING INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1996
(Unaudited)
NOTE 1 - GENERAL
The accompanying condensed consolidated financial statements of Sonat Offshore
Drilling Inc. and its consolidated subsidiaries (the "Company") have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all disclosures required by
generally accepted accounting principles for complete financial statements.
Operating results for the three and six month periods ended June 30, 1996 are
not necessarily indicative of the results that may be expected for the year
ended December 31, 1996. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's 1995 annual
report on Form 10-K.
The financial statements reflect all adjustments which are, in the opinion of
management, necessary for a fair statement of the results for the interim
periods. Such adjustments are considered to be of a normal recurring nature
unless otherwise identified.
NOTE 2 - PURCHASE AND CONVERSION OF DRILLING RIGS
In February 1996, the Company purchased a semisubmersible multi-service vessel,
the MSV P.Portia (to be renamed the "Offshore Marianas"), which it intends to
convert to a deep-water drilling unit. After certain hull modifications to the
vessel, the Company will mobilize it to a U.S. Gulf Coast facility where it will
undergo the remaining conversion to drilling mode. The purchase and conversion
on this rig is expected to result in capital spending of approximately $68
million in 1996 and $92 million in 1997. The Company spent $10.5 million and
$31.5 million in the second quarter and first half of 1996, respectively, on
this construction project.
In May 1996, the Company announced plans to construct the world's largest deep-
water mobile offshore drilling rig. This rig, which will be named the
"Discoverer Enterprise", will initially be outfitted to drill in 7,000 feet of
water but will be capable of being outfitted for exploration and development
drilling in water depths up to 10,000 feet. The Company and Amoco Exploration
and Production Company ("Amoco") have entered into an agreement under which the
Company will provide the Discoverer Enterprise and a second-generation
semisubmersible to Amoco for a combined minimum commitment of six years. In
June 1996, the Company purchased, for $32 million, a second-generation
semisubmersible for this purpose, to be called the "Offshore Amirante", which
will be upgraded and is expected to be operational by mid-1997. In July 1996,
the Company entered into a contract, at approximately $75 million, with a
Spanish shipyard, Astilleros y Talleres del Noroeste SA, for the construction of
the hull and major marine systems of the Discoverer Enterprise. Construction
will begin immediately and the drillship is expected to be operational by mid-
1998. The required capital commitment for both rigs is expected to be
approximately $330 million.
NOTE 3 - DISPOSAL OF DRILLING RIG
In January 1996, the Offshore Bahram sank while under tow offshore Egypt. In
June 1996, the Company disposed of the rig and recognized a net pre-tax gain of
approximately $6.6 million ($4.3 million after-tax or $0.15 per share).
6
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NOTE 4 - PROPOSED BUSINESS COMBINATION
On July 26, 1996, the Board of Directors of the Company approved a transaction
under which the businesses of the Company and Transocean ASA ("Transocean"), a
Norwegian offshore drilling company, would be combined under the ownership of
one company to be known as "Transocean Offshore Inc." In order to effect such
transaction, on August 5, 1996, the Company commenced an exchange offer for the
outstanding shares of Transocean providing for the issuance of (i) .53 of a
share of common stock of the Company for each of 43,248,358 shares of Transocean
and (ii) $27.25 for each remaining share of Transocean, which total
approximately 10,800,000 shares (the "Exchange Offer"). Consummation of the
transaction is subject to certain conditions, including approval by the
shareholders of the Company and the tender of more than 80 percent of the
Transocean shares. The expiration date of the exchange offer, and the date of
the Company's shareholders meeting to consider certain proposals relating to the
exchange offer, is September 3, 1996.
In connection with the Transocean transaction, the Company has entered into a
new credit agreement (the "Credit Agreement") with a group of banks. The Credit
Agreement provides for borrowing by the Company under (i) a six-year term loan
facility in the amount of $200 million and (ii) a six-year revolving credit
facility in the amount of $400 million. Loans under the Credit Agreement would
bear interest, at the option of the Company, at a base rate or LIBOR plus a
margin that varies depending on the Company's funded debt to total capital
ratio, which margin is initially expected to be .45 percent. The Credit
Agreement requires compliance with various restrictive covenants and effectively
limits the Company's ability to pay dividends based on specified net worth
requirements. Funding under the Credit Agreement is subject to the consumation
of the transaction and certain other requirements.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
Sonat Offshore Drilling Inc. and its consolidated subsidiaries (the "Company")
provide contract drilling services for oil and gas wells located in offshore
areas throughout the world. A broad array of integrated services are provided to
customers on either a dayrate or turnkey basis. The Company's fleet of mobile
offshore drilling rigs includes some of the industry's most technically advanced
rigs. The Company plans to continue to invest in its existing fleet and to
continually review opportunities for fleet additions to meet increasing customer
demands.
In May 1996, the Company announced plans to construct the world's largest deep-
water mobile offshore drilling rig. This rig, which will be named the
"Discoverer Enterprise", will initially be outfitted to drill in 7,000 feet of
water but will be capable of being outfitted for exploration and development
drilling in water depths up to 10,000 feet. The Company and Amoco Exploration
and Production Company ("Amoco") have entered into an agreement under which the
Company will provide the Discoverer Enterprise and a second-generation
semisubmersible to Amoco for a combined minimum commitment of six years. In
June 1996, the Company purchased a second-generation semisubmersible (to be
renamed the "Offshore Amirante") for purposes of the Amoco agreement. See
Liquidity and Capital Resources.
On July 26, 1996, the Board of Directors of the Company approved a transaction
under which the businesses of the Company and Transocean ASA ("Transocean"), a
Norwegian offshore drilling company, would be combined under the ownership of
one company to be known as "Transocean Offshore Inc." In order to effect such
transaction, on August 5, 1996, the Company commenced an exchange offer for the
outstanding shares of Transocean providing for the issuance of (i) .53 of a
share of common stock of the Company for each of 43,248,358 shares of Transocean
and (ii) $27.25 for each remaining share of Transocean, which total
approximately 10,800,000 shares (the "Exchange Offer"). Consummation of the
transaction is subject to certain conditions, including approval by the
shareholders of the Company and the tender of more than 80 percent of the
Transocean shares (the "Minimum Condition"). The expiration date of the
Exchange Offer, and the date of the Company's shareholders meeting to consider
certain proposals relating to the Exchange Offer, is September 3, 1996.
OPERATING RESULTS
Summary
Net income was $25.5 million and $37.3 million, respectively, for the three and
six months ended June 30, 1996. For the comparable periods ended June 30, 1995,
net income was $8.2 million and $15.5 million, respectively. The increases in
1996's results over 1995's were due to increases in both operating income and
other income, slightly offset by a related increase in income taxes.
8
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Comparative data relating to the Company's revenues and operating income by
segment and geographic area is as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------- ----------------------
1996 1995 1996 1995
---------- --------- ---------- ----------
(In thousands)
<S> <C> <C> <C> <C>
REVENUES
Dayrate Operations
U.S. Gulf of Mexico $ 40,789 $26,128 $ 69,234 $ 51,002
Europe 25,785 25,101 53,118 51,412
Other Western Hemisphere 6,168 5,812 12,309 11,859
Middle East/Africa 8,680 6,996 22,102 14,057
-------- ------- -------- --------
81,422 64,037 156,763 128,330
-------- ------- -------- --------
Turnkey Operations
U.S. Gulf of Mexico 9,123 5,538 13,135 12,465
Other Western Hemisphere 12,536 12,323 14,403 12,323
Middle East/Africa 5,800 - 5,800 -
China - 4,300 - 4,300
-------- ------- -------- --------
27,459 22,161 33,338 29,088
-------- ------- -------- --------
Intersegment Eliminations (A) - (688) - (1,182)
-------- ------- -------- --------
Total Revenues $108,881 $85,510 $190,101 $156,236
======== ======= ======== ========
OPERATING INCOME (LOSS)
Dayrate Operations
U.S. Gulf of Mexico $ 22,200 $ 7,340 $ 30,450 $ 12,842
Europe 6,096 6,175 12,665 13,317
Other Western Hemisphere 1,122 453 2,406 1,522
Middle East/Africa 2,284 2,203 5,489 4,790
Other (417) 1,394 (852) 1,277
-------- ------- -------- --------
31,285 17,565 50,158 33,748
-------- ------- -------- --------
Turnkey Operations
U.S. Gulf of Mexico 873 534 972 1,126
Other Western Hemisphere 2,726 (762) 3,020 (1,701)
Middle East/Africa 829 - 829 -
China - 935 - 935
Other (125) (9) (230) (5)
-------- ------- -------- --------
4,303 698 4,591 355
-------- ------- -------- --------
Corporate expenses (5,354) (6,350) (10,564) (11,482)
-------- ------- -------- --------
Operating Income $ 30,234 $11,913 $ 44,185 $ 22,621
======== ======= ======== ========
</TABLE>
(a) Intersegment eliminations reflect the elimination of the dayrate revenues
earned when the Company's rigs are utilized in its turnkey operations.
Quarter ended June 30, 1996, compared to Quarter ended June 30,1995
Revenues increased to $108.9 million for the quarter ended June 30, 1996 from
$85.5 million for the prior year quarter, an increase of $23.4 million or 27
percent. Operating income increased by $18.3 million or 154 percent, up from
$11.9 million in the second quarter of 1995 to $30.2 million in the same quarter
of 1996. The increase in revenues was primarily attributable to improved
dayrates during the current quarter and higher revenues on four turnkey projects
completed in the second quarter of 1996 compared to the same number of turnkey
projects completed in the corresponding period in 1995. Since operating expenses
do not necessarily increase with higher dayrates, the increase in operating
income for the second quarter of 1996 compared to the second quarter of 1995 is
primarily attributable
9
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to higher revenues without a corresponding increase in expenses. In addition,
increased operating income is attributable to better performance results on
turnkey projects completed in the second quarter of 1996 compared to turnkey
projects completed in the second quarter of 1995.
Revenues and operating income from dayrate operations increased in the second
quarter of 1996 compared to the same quarter of 1995. The increases in the U.S.
Gulf of Mexico resulted in part from a shift in the operations of one rig to the
U.S. Gulf of Mexico from offshore Italy (included in Europe), where it worked
during the second quarter of 1995. The increases in the U.S. Gulf of Mexico
also resulted from increases in dayrates earned by the rigs. Partially
offsetting these increases were lower revenues and operating income of $6.2
million and $1.1 million, respectively, from five bottom-supported rigs that
were sold during the third quarter of 1995. Revenues and operating income from
the Middle East/Africa increased primarily due to an integrated services project
in Qatar in the second quarter of 1996. No such services were provided during
the prior year's second quarter. Partially offsetting these increases were
lower revenues and operating income from one rig which was out of service during
the second quarter of 1996 and was sold in June 1996 (see Liquidity and Capital
Resources). In Europe, the increases in both revenues and operating income
resulted primarily from higher dayrates and increased incentive drilling
revenues earned in the second quarter of 1996 over the prior year quarter,
partially offset by the shift in operations of one rig from Europe to the U.S.
Gulf of Mexico.
Revenues from turnkey operations increased from $22.2 million in the second
quarter of 1995 to $27.5 million in the same quarter of 1996, an increase of
$5.3 million or 24 percent, attributable to higher contracted revenues on the
projects completed in the 1996 period. In the second quarters of 1996 and 1995,
two turnkey wells were completed in the U.S. Gulf of Mexico. Offshore Mexico
(included in Other Western Hemisphere) one turnkey well was completed during
1996 as well as in 1995. Operating income from turnkey operations increased in
the second quarter of 1996 primarily due to operating profit of $2.7 million on
the Mexico turnkey well completed during the 1996 period compared to a loss on
the Mexico turnkey well completed during the 1995 period. Turnkey operations in
the second quarter of 1995 included an additional estimated loss of $0.9 million
for the first well in a five-well Pemex project. The total loss on the first
well, which was completed in May 1995, amounted to $2.7 million for the six-
months ended June 30, 1995. One turnkey well was completed in Senegal during
the second quarter of 1996, while one was completed in China in the second
quarter of 1995. The Company provided for an expected loss of $0.8 million for
the Senegal well in December 1995 when the third party rig that was contracted
to perform the drilling incurred operational difficulties in mobilizing to the
site, resulting in a delay in the program. During the second quarter of 1996,
operations were completed on the well at approximately break-even. Second
quarter 1996 results reflect the benefit of reversing the previous loss
estimate.
General and administrative expense in the second quarter of 1996 was $1.1
million lower than the same quarter in 1995 primarily due to non-recurring
expenses associated with accelerated vesting of restricted stock and potential
corporate acquisition costs included in the 1995 period.
Other income increased $8.1 million for the 1996 second quarter primarily due to
a $6.6 million pre-tax ($4.3 million or $0.15 per share after-tax) gain on the
disposal of the Offshore Bahram, a bottom-supported rig out of service since
January 1996, increased equity in unconsolidated joint ventures and additional
interest income on cash balances. Interest expense decreased by $0.5 million
due to the capitalization of interest expense on a major construction project.
Six Months Ended June 30, 1996, Compared to Six Months Ended June 30, 1995
Revenues increased to $190.1 million for the six months ended June 30, 1996, up
from $156.2 million for the comparable period in 1995, an increase of $33.9
million or 22 percent. Operating income increased $21.6 million or 96 percent
from $22.6 million for the six months ended June 30, 1995 to $44.2 million for
the same period of 1996. The increase in revenues and the related increase in
10
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operating income were primarily due to improved dayrates and higher revenues and
better performance results on turnkey projects completed during 1996.
Revenues and operating income from dayrate operations increased in the first six
months of 1996 compared to the same period of 1995. The increases in the U.S.
Gulf of Mexico were due primarily to the relocation of a rig from offshore
Italy, where it worked during the 1995 period, to the U.S. Gulf of Mexico where
the rig worked in the same period of 1996. In addition, the U.S. Gulf of Mexico
earned higher dayrates on all of the rigs in the first six months of 1996
compared to the same period of 1995. Partially offsetting these increases were
lower revenues and operating income of $12 million and $1.7 million,
respectively, from the five bottom-supported rigs sold during September 1995.
The increases in revenue and operating income in the Middle East/Africa resulted
primarily from an integrated services project in Qatar during the 1996 period.
No such services were provided during the same period of 1995. Partially
offsetting these increases were lower results due to a rig being out of service
during most of the six months ended June 30, 1996.
Revenues and operating income from turnkey operations increased from the six
months ended June 30, 1995 to the corresponding period of 1996. Increases in
turnkey revenues in the first six months of 1996 are related to higher
contracted revenue amounts for the five wells completed during the 1996 period
compared to the six wells completed in 1995. Operating income from turnkey
operations for the six months ended June 30, 1996 are higher due to better
performance results on the Mexico well completed in 1996 compared to the one
completed in 1995 and the reversal of the previous loss estimate on the Senegal
well. See discussion in the quarter-to-quarter comparison above.
Other income increased $11.6 million in the first six months of 1996 compared to
the same period of 1995 primarily due to a $6.6 million pre-tax gain on the
disposal of a rig, increased equity in earnings of joint ventures and increased
interest income due to higher cash balances held during the 1996 period over the
comparable period of 1995. Interest income for the 1996 period also included
$1.0 million related to the finalization of the interest component on a
previously settled tax case. Interest expense decreased by $0.6 million due to
capitalized interest related to a major construction project.
MARKET OUTLOOK
The Company achieved an average fleet utilization of 92 percent and 90 percent
in the second quarter and the first half of 1996, respectively, consistent with
the same percentages (excluding the six bottom-supported rigs sold in the third
quarter of 1995) in the corresponding 1995 periods. Utilization of the floating
drilling equipment, which in 1996 included seven semisubmersibles and two deep-
water drillships, was 100 percent for the second quarter of 1996 and 98 percent
for the first six months of 1996 compared to 99 percent and 97 percent,
respectively, in the comparable periods in 1995. The interest in deep-water and
harsh-environment drilling that began in 1994 continues to grow in 1996. Demand
for rigs suitable to operate in these conditions is expected to continue to
increase. Long-term contracts with major operators have been secured for all of
the Company's strategic rigs. The Company continues to evaluate alternatives,
through conversions, acquisitions, upgrades and new construction, to meet this
growing demand.
The improved demand and higher dayrates in the deep-water and harsh-environment
markets that began in 1995 continued into 1996 as new contracts were negotiated.
The improvement in the markets was due to increased interest by major operators
in harsh-environment and deep-water locations caused in part by the increasing
impact of technological advances that have broadened opportunities for offshore
exploration and development. The U.S. Gulf of Mexico and North Sea markets have
experienced increased utilization and significantly higher dayrates in 1996, and
customers increasingly are seeking to contract rigs serving in these markets
under long-term contracts (as opposed to single-well or well-to-well contracts).
11
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The demand for floating drilling rigs in the U.S. Gulf of Mexico remains strong.
After the completion of its current contract in Brazil, expected to be in late
1996, the Discoverer Seven Seas is committed to begin work with Exxon which will
keep the rig utilized for up to two years. The Discoverer 534 is under contract
with Amoco at higher dayrates than it earned in 1995. This contract is expected
to keep the drilling unit utilized until October 1998. The Sonat Rather and
Sonat Richardson are operating for Shell Offshore under contracts which are at
higher dayrates than earned in 1995 and which will keep both rigs occupied into
1998. The Sonat D-F 96 will undergo planned capital upgrades in the U.S. Gulf
of Mexico in connection with operations for Texaco under a one-year term
contract which began May 1996 at a dayrate more than double that of early 1995.
A new U.S. law that provides royalty relief to certain projects in deep-water
areas of the central and western Gulf of Mexico is expected to result in
additional drilling opportunities. This law provides relief on production
levels ranging from the first 17.5 million to the first 87.5 million barrels
depending on the water depth of the field. Further indications of the strength
of the Gulf of Mexico market are the recent transactions involving the
Discoverer Enterprise, the Offshore Amirante and the Offshore Marianas. See
Liquidity and Capital Resources.
The North Sea market continues to strengthen. The John Shaw is operating for
Amerada Hess through November 1996 and has a letter of intent from Shell for a
two and a half year follow-on contract at rates significantly higher than those
earned in 1995. The Henry Goodrich, a fourth-generation semisubmersible owned
by Arcade Drilling as. and managed by the Company, is operating for Shell U.K.
through September 1996 and has a letter of intent from British Petroleum for a
three year follow-on contract. The Company had operating income of $0.3 million
and $0.7 million in the second quarter and first six months of 1996,
respectively, relating to the management and bareboat charter of this rig. The
Company does not expect to manage the rig following the completion of the
current contract with Shell U.K. All management fees and bareboat charter fees
to the Company will cease with the termination of such management and charter.
Offshore Norway, the Polar Pioneer is under contract with Norsk Hydro through
mid-1997. Contract options with Norsk Hydro could keep the rig operating for an
additional four years.
In response to the increasing demands of our customers, the Company provides
well engineering and planning through integrated service teams. These teams may
consist of Company personnel as well as third-party well servicing
subcontractors, with the Company acting as lead contractor. Such services may
be provided on either a dayrate or turnkey basis. The Company was selected by
Elf Petroleum as lead contractor on a four-well integrated services contract in
Qatar, which has recently been completed.
In April 1996, turnkey operations were successfully completed on the fourth well
of the multi-well program offshore Mexico for Pemex. Operations were completed
on the turnkey portion of the fifth and final well in this program in early
August. In the U.S. Gulf of Mexico, turnkey operations were completed on two
wells during the second quarter of 1996 and were in progress on one well at the
end of the quarter. An additional well in the U.S. Gulf of Mexico began in July
1996. A one-well project offshore Senegal was completed in the second quarter of
1996.
In light of the continued improvements in the market and planned upgrades, the
Company has reevaluated and extended the remaining lives on nine of its rigs by
an average of approximately five years, effective July 1, 1996.
Historically, the contract drilling market has been highly competitive and
cyclical, and the Company cannot predict the extent to which the current market
conditions will continue.
LIQUIDITY AND CAPITAL RESOURCES
Cash flows provided by operations for the six months ended June 30, 1996
increased $5.8 million from $22.5 million in 1995 to $28.3 million in 1996. The
higher level of cash provided by operations during the current period resulted
primarily from an increase in operating income earned in 1996 versus 1995,
as discussed above.
12
<PAGE>
Cash used in investing activities increased $71.6 million, primarily as a result
of capital expenditures associated with the purchase and conversion of the
Offshore Marianas, the purchase of the second-generation semisubmersible to be
upgraded for the Amoco agreement, the Offshore Amirante, and upgrade and
improvement costs on several of the rigs in the operating fleet.
In January 1996, the Offshore Bahram sank while under tow offshore Egypt. All
personnel were evacuated without injury. The Company disposed of the rig in
June 1996 and recognized a net pre-tax gain of approximately $6.6 million.
Gross proceeds from the disposal were approximately $10 million.
In February 1996, the Company purchased a semisubmersible multi-service vessel,
the MSV P.Portia (to be renamed "Offshore Marianas"), and is in the process of
converting it to an ultra deep-water drilling unit. After certain hull
modifications to the vessel, the Company will mobilize it to a U.S. Gulf Coast
facility where it will undergo the remaining conversion to drilling mode. The
Company has received a letter of intent from Shell Offshore regarding a proposed
three-year contract for the Offshore Marianas, which could be extended to five
years at the customer's option. This contract, which is contingent upon the
Company's conversion of the rig, should generate revenue from $128 million to
$211 million, depending on final contract length.
In May 1996, the Company announced plans to construct the world's largest deep-
water mobile offshore drilling rig, the Discoverer Enterprise. The Company and
Amoco have entered into an agreement under which the Company will provide the
Discoverer Enterprise and a second generation semisubmersible to Amoco for a
combined minimum commitment of six years. In June 1996, the Company purchased,
for $32 million, the Offshore Amirante for this purpose, which will be upgraded
and is expected to be operational by mid-1997. In July 1996, the Company
entered into a contract, at approximately $75 million, with a Spanish shipyard,
Atilleros Y Talleres del Noroeste SA, for the construction of the hull and major
marine systems of the Discoverer Enterprise. Construction will begin
immediately and the drillship is expected to be operational by mid-1998.
Revenues generated from the base dayrates over the minimum period of the Amoco
agreement are expected to range from $330 million to $375 million.
The Company's investments in its existing fleet and fleet additions announced
during the first six months of 1996 will require significant capital
expenditures during the remainder of 1996 and into future years. The Company
expects capital expenditures in 1996 and 1997 to be approximately $310 million
and $320 million, respectively. The purchase and conversion of the Offshore
Marianas is expected to require expenditures of approximately $160 million. The
required capital commitments for the Discoverer Enterprise and Offshore Amirante
are expected to reach $330 million. Expenditures for upgrades and improvements
to rigs in the operating fleet during 1996 are expected to be approximately $75
million.
As discussed under General above, the Company commenced an Exchange Offer
providing for the issuance of .53 of a share of Company common stock per
Transocean share for 80 percent of the outstanding shares of Transocean and
$27.25 for each remaining Transocean share. The cash component of the Exchange
Offer (assuming all Transocean shares are tendered), together with the expenses
relating thereto, is expected to aggregate approximately $310 million. In
addition, if the Exchange Offer is consummated, the Company intends to repay
substantially all of the outstanding debt of Transocean, which is expected to be
approximately $150 million.
If the Company acquires more than 45 percent of all of the issued and
outstanding shares of Transocean pursuant to the Exchange Offer, it will be
required under Norwegian law to make a mandatory bid to be settled in cash or
including a cash alternative for any remaining shares of Transocean at a price
not less than the highest price paid by the Company to acquire shares of
Transocean during the six months preceding consummation of the Exchange Offer.
For these purposes, the price paid in the case of shares of Transocean acquired
for Company common stock pursuant to the Exchange Offer will be determined based
upon the closing price of the Company common stock on the New York Stock
Exchange composite tape on the day preceding the date that the Company purchases
shares of
13
<PAGE>
Transocean pursuant to the Exchange Offer. If the Company acquires more than 90
percent of the shares of Transocean, it has the right to acquire the remaining
shares and the holders thereof have the right to require the Company to purchase
such shares pursuant to a compulsory acquisition. If the parties cannot agree
on the purchase price in the compulsory acquisition, it will be submitted to a
court for final determination. As a result of the foregoing provisions of
Norwegian law, the Company may be required to acquire shares of Transocean for
more than the anticipated $295 million of cash in the aggregate (equivalent to
20 percent of the outstanding shares of Transocean on a fully diluted basis at
$27.25 per share) if the price required to be paid in the mandatory bid or the
compulsory acquisition exceeds $27.25 per share or if the Company waives the
Minimum Condition, acquires less than 80 percent of the outstanding Transocean
shares for Company common stock pursuant to the Exchange Offer and acquires more
than 20 percent of the outstanding Transocean shares for cash. The Company has
not determined to waive the Minimum Condition. However, the Company cannot
predict the cash price that it may be required to pay pursuant to any such
mandatory bid or compulsory acquisition.
The Company intends to fund the cash requirements relating to the upgrade of the
Offshore Marianas, the cash requirements of the Exchange Offer and the repayment
of Transocean debt through available cash balances and borrowing under a new
credit agreement (the "Credit Agreement"). The Credit Agreement provides for
borrowing by the Company under (i) a six-year term loan facility in the amount
of $200 million and (ii) a six-year revolving credit facility in the amount of
$400 million. In addition to providing the above described required funds, the
borrowing capacity under the Credit Agreement will be used to provide working
capital for general corporate purposes and may be used to refinance the
Company's $30 million 6.9% Senior Notes if the noteholders do not agree to
certain amendments requested by the Company to accommodate the Exchange Offer.
Loans under the Credit Agreement would bear interest, at the option of the
Company, at a base rate or LIBOR plus a margin that varies depending on the
Company's funded debt to total capital ratio, which margin is initially expected
to be .45 percent. The Credit Agreement includes various covenants applicable
to the Company, including requirements that the Company's interest coverage
ratio be at or above three to one, its funded debt to total capital ratio be 45
percent or below for the 10 quarters ended on or prior to December 31, 1998 and
40 percent or below thereafter, its consolidated net worth be not less than $1.4
billion, subject to increase for adjusted net income, and restrictions in the
Company's incurrence of additional indebtedness, asset dispositions, and
incurrence of liens and investments. Although the Credit Agreement does not
expressly restrict the payment of dividends by the Company, the consolidated net
worth requirement effectively imposes a limitation.
The Company intends to finance the construction of the Discoverer Enterprise and
the upgrade of the Offshore Amirante required for the Amoco agreement through
additional financing. The Company has no definitive arrangements relating to
such additional financing, but has entered into discussions with financial
institutions regarding its financing alternatives and is confident of its
ability to finalize necessary financing absent significant changes in the
capital markets.
The Company has requested that the holders of its $30 million 6.9% Senior Notes
("Notes") consent to amendments to the covenants applicable to such Notes to
accommodate the transactions relating to the Exchange Offer. If such consents
are not obtained, the Notes will be redeemed at par, without any prepayment
premium (based on current Treasury rates applicable to the calculation).
The Company's turnkey projects may from time to time require significant working
capital commitments depending on the program. These amounts should be recovered
from payments received upon completion of turnkey contracts.
The Company regularly reviews possible acquisitions of businesses and drilling
units, and may from time to time in the future make significant capital
commitments for such purposes. Any such acquisition could involve payment by
the Company of a substantial amount of cash and the issuance of a substantial
number of additional shares of Company Common Stock. The Company would expect
to fund the cash portion of any such acquisition through cash balances on hand,
the incurrence of
14
<PAGE>
additional debt, sales of assets or a combination of all three.
The Company believes that its cash and cash equivalents, cash generated from
operations, borrowings available under its credit facility and access to other
financing sources will be adequate to meet its anticipated short-term and long-
term liquidity requirements.
NEW ACCOUNTING PRONOUNCEMENTS
In March 1995, the Financial Accounting Standards Board (FASB) issued the
Statement of Financial Accounting Standard (SFAS) No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of.
This statement provides authoritative guidance on when an impairment loss should
be recognized and how the amount of that loss should be calculated. The Company
adopted SFAS No. 121 in the first quarter of 1996. Its adoption had no effect
on the financial statements.
In October 1995, the FASB issued SFAS No. 123, Accounting and Disclosure of
Stock-Based Compensation. SFAS No. 123 establishes an alternative method of
accounting for stock-based compensation to the method outlined in the Accounting
Principles Board Opinion No. 25. This new computation is based on the fair
value of stock options and similar instruments. SFAS No. 123 encourages, but
does not require, adoption of that method. The Company adopted the disclosure
provisions of SFAS No. 123 in the first quarter of 1996 with no disclosures
required before the 1996 annual report.
15
<PAGE>
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Company's Annual Meeting of Stockholders on April 26, 1996, two matters
were submitted to a vote of stockholders. The first matter was the election of
Class III Directors to the Company's Board of Directors. Mr. Robert J. Lanigan,
Mr. Max L. Lukens and Mr. Donald G. Russell were elected by stockholders, with
the number of votes for and withheld as follows: Robert J. Lanigan 25,782,451
for and 38,937 withheld; Max L. Lukens 25,726,711 for and 94,677 withheld;
Donald G. Russell 25,726,801 for and 94,587 withheld. There were no broker non-
votes or other abstentions for the above matter. The terms as directors of the
Company of Messrs. Martin B. McNamara, J. Michael Talbert, Richard D. Kinder,
Ronald L. Kuehn, Jr. and Gilbert M.A. Portal continued after the Annual Meeting.
The second matter submitted was the request for approval of the Amended and
Restated Long-Term Incentive Plan. The Plan had been amended to reserve
1,000,000 additional shares, to make changes required by Section 162(m) of the
Internal Revenue Code, to modify the definition of "Change Of Control" and to
make certain other technical amendments to the Plan. The Amended and Restated
Plan was approved by the stockholders with 19,224,550 voting for the Plan,
6,524,734 voting against and 72,104 abstaining from voting. There were no broker
non-votes.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
<TABLE>
<CAPTION>
(a) Exhibits
Number Description Method of Filing
------ ----------- ----------------
<S> <C> <C>
10 - (1) Secured Credit Agreement Filed herewith
Dated as of July 30, 1996
Among Sonat Offshore Drilling
Inc., the Lenders Party hereto and
ABN Amro Bank N.V., Houston Agency,
as Agent, and SunTrust Bank, Atlanta,
And Credit Lyonnais, New York Branch,
as Documentation Agents and Bank of
Montreal, The Fuji Bank, Limited, Royal
Bank of Canada and Wells Fargo Bank
(Texas) National Association, as Co-Agents
27 - (1) Financial Data Schedule Filed with EDGAR filing
only.
(b) Reports on Form 8-K
</TABLE>
The Company filed a Current Report on Form 8-K dated April 25, 1996, reporting
under Item 5, the proposed combination with Transocean ASA.
The Company filed a Current Report on Form 8-K dated May 20, 1996, reporting
under Item 5, the letter agreement with Tiger Management Corporation.
16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SONAT OFFSHORE DRILLING INC.
(Registrant)
Date: August 9, 1996 /s/ Robert L. Long
-------------------------------------
Robert L. Long
Senior Vice President
Date: August 9, 1996 /s/ Barbara S. Koucouthakis
-------------------------------------
Barbara S. Koucouthakis
Vice President and Controller
17
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION METHOD OF FILING PAGE NO.
- -------------- ----------- ---------------- --------
<S> <C> <C> <C>
10 - (1) Secured Credit Agreement Filed herewith
Dated as of July 30, 1996
Among Sonat Offshore Drilling
Inc., the Lenders Party hereto and
ABN Amro Bank N.V., Houston Agency,
as Agent, and SunTrust Bank, Atlanta,
And Credit Lyonnais, New York Branch,
as Documentation Agents and Bank of
Montreal, The Fuji Bank, Limited, Royal
Bank of Canada and Wells Fargo Bank
(Texas) National Association, as Co-Agents
27-(1) Financial Data Schedule. Filed with EDGAR filing only.
</TABLE>
<PAGE>
EXHIBIT 10-(1)
- --------------------------------------------------------------------------------
SECURED CREDIT AGREEMENT
Dated as of
July 30, 1996
Among
SONAT OFFSHORE DRILLING INC.,
THE LENDERS PARTY HERETO,
AND
ABN AMRO BANK N.V., HOUSTON AGENCY,
AS AGENT,
AND
SUNTRUST BANK, ATLANTA, AND
CREDIT LYONNAIS NEW YORK BRANCH,
AS DOCUMENTATION AGENTS
AND
BANK OF MONTREAL,
THE FUJI BANK, LIMITED,
ROYAL BANK OF CANADA AND
WELLS FARGO BANK (TEXAS), NATIONAL ASSOCIATION,
AS CO-AGENTS
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
<S> <C>
SECTION 1. DEFINITIONS; INTERPRETATION......................................................... 1
Section 1.1. Definitions..................................................................... 1
Section 1.2. Interpretation..................................................................17
SECTION 2. THE CREDIT FACILITIES...............................................................17
Section 2.1. Borrowings of Revolving Loans...................................................17
Section 2.2. Letters of Credit...............................................................17
Section 2.3. Borrowings of Term Loans........................................................20
Section 2.4. Types of Loans and Minimum Borrowing Amounts....................................21
Section 2.5. Manner of Borrowing.............................................................21
Section 2.6. Interest Periods................................................................24
Section 2.7. Maturity of Loans...............................................................24
Section 2.8. Applicable Interest Rates.......................................................25
Section 2.9. Default Rate....................................................................25
Section 2.10. Optional Prepayments............................................................26
Section 2.11. Mandatory Prepayments of Loans..................................................27
Section 2.12. The Notes.......................................................................28
Section 2.13. Breakage Fees...................................................................28
Section 2.14. Commitment Terminations.........................................................29
SECTION 3. FEES AND PAYMENTS...................................................................30
Section 3.1. Fees............................................................................30
Section 3.2. Place and Application of Payments...............................................31
Section 3.3. Withholding Taxes...............................................................32
SECTION 4. CONDITIONS PRECEDENT................................................................34
Section 4.1. Initial Borrowing...............................................................34
Section 4.2. All Borrowings..................................................................37
SECTION 5. REPRESENTATIONS AND WARRANTIES......................................................38
Section 5.1. Corporate Organization..........................................................38
Section 5.2. Corporate Power and Authority; Validity.........................................39
Section 5.3. No Violation....................................................................39
Section 5.4. Litigation......................................................................39
Section 5.5. Use of Proceeds; Margin Regulations.............................................39
Section 5.6. Investment Company Act..........................................................40
Section 5.7. Public Utility Holding Company Act..............................................40
Section 5.8. True and Complete Disclosure....................................................40
Section 5.9. Financial Statements............................................................40
Section 5.10. No Material Adverse Change......................................................40
Section 5.11. Labor Controversies.............................................................40
Section 5.12. Taxes...........................................................................41
Section 5.13. ERISA...........................................................................41
Section 5.14. Security Interests..............................................................41
Section 5.15. Consents........................................................................41
Section 5.16. Capitalization..................................................................41
</TABLE>
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<TABLE>
<CAPTION>
TABLE OF CONTENTS
(CONTINUED) PAGE
<S> <C> <C>
Section 5.17. Intellectual Property...........................................................41
Section 5.18. Ownership of Property...........................................................42
Section 5.19. Compliance with Statutes, Etc...................................................42
Section 5.20. Environmental Matters...........................................................42
Section 5.21. Existing Indebtedness...........................................................42
Section 5.22. Dividend Restrictions...........................................................43
SECTION 6. COVENANTS...........................................................................43
Section 6.1. Corporate Existence.............................................................43
Section 6.2. Maintenance.....................................................................43
Section 6.3. Taxes...........................................................................43
Section 6.4. ERISA...........................................................................43
Section 6.5. Burdensome Restrictions, Etc....................................................44
Section 6.6. Insurance.......................................................................44
Section 6.7. Financial Reports and Other Information.........................................44
Section 6.8. Lender Inspection Rights........................................................46
Section 6.9. Conduct of Business.............................................................47
Section 6.10. Interest Rate Protection........................................................47
Section 6.11. New Subsidiaries................................................................47
Section 6.12. Limitation on Certain Restrictions on Subsidiaries; Dividends;
Negative Pledges................................................................47
Section 6.13. Restrictions on Fundamental Changes.............................................49
Section 6.14. Liens...........................................................................50
Section 6.15. Indebtedness....................................................................52
Section 6.16. Use of Property and Facilities; Environmental Laws..............................54
Section 6.17. Advances, Investments and Loans.................................................54
Section 6.18. Modifications of Corporate Documents............................................56
Section 6.19. Transfer of Assets..............................................................56
Section 6.20. Transactions with Affiliates....................................................57
Section 6.21. Optional Prepayments............................................................57
Section 6.22. Compliance with Laws............................................................57
Section 6.23. Interest Coverage Ratio.........................................................57
Section 6.24. Total Funded Debt to Total Capital Ratio........................................58
Section 6.25. Minimum Consolidated Net Worth..................................................58
Section 6.26. SODI Credit Facility and Transocean Credit Facility Releases....................58
SECTION 7. EVENTS OF DEFAULT AND REMEDIES......................................................58
Section 7.1. Events of Default...............................................................58
Section 7.2. Non-Bankruptcy Defaults.........................................................60
Section 7.3. Bankruptcy Defaults.............................................................61
Section 7.4. Collateral for Undrawn Letters of Credit........................................61
Section 7.5. Notice of Default...............................................................62
Section 7.6. Expenses........................................................................62
Section 7.7. Distribution and Application of Proceeds........................................62
</TABLE>
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<PAGE>
<TABLE>
TABLE OF CONTENTS
(CONTINUED) PAGE
<S> <C>
SECTION 8. CHANGE IN CIRCUMSTANCES.............................................................63
Section 8.1. Change of Law..................................................................63
Section 8.2. Unavailability of Deposits or Inability to Ascertain LIBOR Rate................64
Section 8.3. Increased Cost and Reduced Return..............................................64
Section 8.4. Lending Offices................................................................66
Section 8.5. Discretion of Lender as to Manner of Funding...................................66
Section 8.6. Substitution of Lender.........................................................66
SECTION 9. THE AGENTS..........................................................................67
Section 9.1. Appointment and Authorization of Agent, Collateral Agent,
Documentation Agent and Co-Agents..............................................67
Section 9.2. Rights and Powers..............................................................67
Section 9.3. Action by Agent, Collateral Agent, Documentation Agents and Co-Agents..........67
Section 9.4. Consultation with Experts......................................................68
Section 9.5. Indemnification Provisions; Credit Decision....................................68
Section 9.6. Indemnity......................................................................69
Section 9.7. Resignation of Agent and Successor Agent.......................................69
SECTION 10. MISCELLANEOUS......................................................................70
Section 10.1. No Waiver......................................................................70
Section 10.2. Non-Business Day...............................................................70
Section 10.3. Documentary Taxes..............................................................70
Section 10.4. Survival of Representations....................................................70
Section 10.5. Survival of Indemnities........................................................70
Section 10.6. Setoff.........................................................................71
Section 10.7. Notices........................................................................71
Section 10.8. Counterparts...................................................................72
Section 10.9. Successors and Assigns.........................................................72
Section 10.10. Sales and Transfers of Borrowings and Notes; Participations
in Borrowings and Notes........................................................73
Section 10.11. Amendments, Waivers and Consents...............................................75
Section 10.12. Headings.......................................................................76
Section 10.13. Legal Fees, Other Costs and Indemnification....................................76
Section 10.14. Governing Law; Submission to Jurisdiction; Waiver of Jury Trial................77
Section 10.15. Confidentiality................................................................78
Section 10.16. Effectiveness..................................................................78
Section 10.17. Severability...................................................................78
Section 10.18 Currency Conversion............................................................78
Section 10.19. Dollar Equivalent Combinations.................................................79
Section 10.20. Change in Accounting Principles, Fiscal Year or Tax Laws.......................79
Section 10.21. Notice.........................................................................80
Section 10.22. Officer's Certificates.........................................................80
Section 10.23. Effect of Inclusion of Exceptions..............................................80
</TABLE>
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<TABLE>
<CAPTION>
TABLE OF CONTENTS
(CONTINUED)
<S> <C>
EXHIBITS
2.2A - Form of Issuance Request
2.2B - Forms of Letter of Credit Applications
2.5 - Form of Borrowing Request
2.12A - Form of Revolving Note (U.S. Dollars)
2.12B - Form of Revolving Note (British Pounds Sterling)
2.12C - Form of Revolving Note (Norwegian Kroner)
2.12D - Form of Term Note
4.1A - Form of Stock Pledge Agreement
4.1B - Form of Note Pledge Agreement
4.1C - Form of Subsidiary Guaranty
4.1D - Form of Legal Opinion of Hughes Hubbard & Reed LLP
4.1E - Form of Legal Opinion of General Counsel to Borrower
4.1F - Form of Intercreditor Agreement
6.7 - Form of Compliance Certificate
10.10 - Form of Assignment Agreement
SCHEDULES
2.7 - Term Loan Repayment Schedule
4.1 - List of Stock Pledged
5.1 - List of Subsidiaries
5.13 - ERISA Disclosure
5.16 - List of Outstanding Stock Rights
5.20 - List of Environmental Claims
5.21 - List of Existing Indebtedness
5.22 - Dividend Restrictions
6.14 - List of Existing Liens
6.17 - List of Existing Investments
</TABLE>
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<PAGE>
SECURED CREDIT AGREEMENT (the "Agreement"), dated as of July 30, 1996, among
Sonat Offshore Drilling Inc. (the "Borrower"), a Delaware corporation, the
lenders from time to time parties hereto (each a "Lender" and collectively, the
"Lenders"), ABN AMRO Bank N.V. ("ABN AMRO"), a Netherlands chartered bank acting
through its Houston agency, as agent for the Lenders (in such capacity, the
"Agent"), SunTrust Bank, Atlanta, and Credit Lyonnais New York Branch, as
documentation agents for the Lenders (in such capacity, each a "Documentation
Agent" and together, the "Documentation Agents"), and Bank of Montreal, The Fuji
Bank, Limited, Royal Bank of Canada, and Wells Fargo Bank (Texas), National
Association, as co-agents for the Lenders (in such capacity, each a "Co-Agent"
and collectively, the "Co-Agents").
WITNESSETH:
WHEREAS, the Borrower desires to obtain commitments from each of the Lenders
to make loans to the Borrower and to participate in letters of credit for the
account of the Borrower; and
WHEREAS, the Lenders are willing to extend such commitments to the Borrower on
the terms and subject to the conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and of the mutual covenants
herein contained, the parties hereto agree as follows:
SECTION 1. DEFINITIONS; INTERPRETATION .
SECTION 1.1 Definitions. Unless otherwise defined herein, the following
terms shall have the following meanings, which meanings shall be equally
applicable to both the singular and plural form of such terms:
"Adjusted LIBOR" means, for any Borrowing of Eurodollar Loans, a rate
per annum determined in accordance with the following formula:
Adjusted LIBOR = LIBOR Rate
----------------------
1.00 - Eurodollar Reserve Percentage
"Agent" means ABN AMRO acting in its capacity as agent for the Lenders,
and any successor agent appointed hereunder pursuant to Section 9.7.
"Agreement" means this Secured Credit Agreement, as amended, restated or
supplemented from time to time.
"Amortization Date" means a scheduled repayment date of the Term Loans
as defined in Section 2.7 and set forth in Schedule 2.7.
1
<PAGE>
"Applicable Margin" means, for any day, either (i) at such times as
the relevant Total Funded Debt to Total Capital Ratio (expressed as a
percentage) is in one of the following ranges, the percentage per annum set
forth opposite such Total Funded Debt to Total Capital Ratio:
<TABLE>
<CAPTION>
Total Funded Debt to Total Capital Ratio Percentage
---------------------------------------- -----------
<S> <C>
Less than 20% 0.375%
Equal to or greater than 20% 0.400%
but less than 25%
Equal to or greater than 25% 0.450%
but less than 30%
Equal to or greater than 30% 0.500%
but less than 35%
Equal to or greater than 35% 0.625%
</TABLE>
or (ii) at such times as an investment grade rating (either express or implied)
by S&P or Moody's (or in the event that both cease the issuance of debt ratings
generally, such other ratings agency agreed to by the Borrower and the Agent) is
in effect on the Borrower's senior unsecured long-term debt and if such
percentage per annum is lower than the percentage determined in accordance with
(i) above, the percentage per annum set forth opposite such investment grade
rating:
<TABLE>
Debt Rating Percentage
----------- ----------
<S> <C>
BBB+/Baa1 or above 0.350%
BBB/Baa2 0.375%
BBB-/Baa3 0.425%
</TABLE>
If the ratings issued by S&P and Moody's differ by one rating, the higher
rating shall apply to determine the Applicable Margin. If the ratings issued by
S&P and Moody's differ by two ratings, the rating which falls between them shall
apply to determine the Applicable Margin. If the ratings in effect on the
Borrower's senior unsecured long-term debt applied to determine the Applicable
Margin as provided above fall below the investment grade ratings listed above,
the Applicable Margin shall be determined based on the Total Funded Debt to
Total Capital Ratio grid as set forth in (i) above. The Borrower shall give
written notice to the Agent of any ratings issued by either S&P or Moody's on
such debt, of any changes to such ratings and of any change to the Total Funded
Debt to Total Capital Ratio affecting the Applicable Margin, within three (3)
Business Days thereof and any change to the Applicable Margin shall be effective
one (1) day thereafter.
"Application" means an application for a Letter of Credit as defined
in Section 2.2(b).
"Assignment Agreement" means an agreement in substantially the form of
Exhibit 10.10 whereby a Lender conveys part or all of its Commitments, Loans and
participations in Letters of Credit to another Person that is, or thereupon
becomes, a Lender, or increases its
2
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Commitments, outstanding Loans and outstanding participations in Letters of
Credit, pursuant to Section 10.10.
"BASE RATE" means for any day the greater of:
(i) the fluctuating commercial loan rate announced by the Lender
which is the Agent from time to time at its Chicago, Illinois office (or other
corresponding office, in the case of any successor Agent) as its base rate for
U.S. Dollar loans in the United States of America in effect on such day (which
base rate may not be the lowest rate charged by such Lender on loans to any of
its customers), with any change in the Base Rate resulting from a change in such
announced rate to be effective on the date of the relevant change; and
(ii) the sum of (x) the rate per annum (rounded upwards, if
necessary, to the nearest 1/16th of 1%) equal to the weighted average of the
rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the next Business Day, provided that (A)
if such day is not a Business Day, the rate on such transactions on the
immediately preceding Business Day as so published on the next Business Day
shall apply, and (B) if no such rate is published on such next Business Day, the
rate for such day shall be the average of the offered rates quoted to the Agent
by two (2) federal funds brokers of recognized standing on such day for such
transactions as selected by the Agent, plus (y) one-half of one percent (0.50%)
per annum.
"Base Rate Loan" means a Loan bearing interest prior to maturity at
the rate specified in Section 2.8(a).
"Borrower" means Sonat Offshore Drilling Inc., a Delaware corporation.
"Borrowing" means any extension of credit made by the Lenders by way
of Loans or Letters of Credit, including any Borrowings advanced, continued or
converted. A Borrowing is "advanced" on the day the Lenders advance funds
comprising such Borrowing to the Borrower or a Letter of Credit is issued, is
"continued" (in the case of Eurodollar Loans) on the date a new Interest Period
commences for such Borrowing, and is "converted" when such Borrowing is changed
from one type of Loan to the other, all as requested by the Borrower pursuant to
Section 2.5(a).
"Business Day" means any day other than a Saturday or Sunday on which
banks are not authorized or required to close in Houston, Texas, or New York,
New York and, if the applicable Business Day relates to the advance or
continuation of, conversion into, or payment on a Eurodollar Borrowing, on which
banks are dealing in Dollar, Pounds or Kroner deposits, as applicable, in the
applicable interbank eurocurrency market in London, England.
"Capitalized Lease Obligations" means, for any Person, the amount of
such Person's liabilities under all leases of real or personal property (or any
interest therein) which is required to be capitalized on the balance sheet of
such Person as determined in accordance with GAAP.
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"Cash Equivalents" means (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof having maturities of not more than twelve (12) months
from the date of acquisition, (ii) time deposits and certificates of deposits
maturing within one year from the date of acquisition thereof or repurchase
agreements with financial institutions whose short-term unsecured debt rating is
A or above as obtained from either S&P or Moody's, (iii) commercial paper or
Eurocommercial paper with a rating of at least A-1 by S&P or at least P-1 by
Moody's, with maturities of not more than twelve (12) months from the date of
acquisition, (iv) repurchase obligations entered into with any Lender, or any
other Person whose short-term senior unsecured debt rating from S&P is at least
A-1 or from Moody's is at least P-1, which are secured by a fully perfected
security interest in any obligation of the type described in (i) above and has a
market value of the time such repurchase is entered into of not less than 100%
of the repurchase obligation of such Lender or such other Person thereunder, (v)
marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within twelve (12) months from the date of
acquisition thereof or providing for the resetting of the interest rate
applicable thereto not less often than annually and, at the time of acquisition,
having one of the two highest ratings obtainable from either S&P or Moody's,
(vi) money market funds which have at least $1,000,000,000 in assets and which
invest primarily in securities of the types described in clauses (i) through (v)
above, and (vii) temporary investments of cash not otherwise permitted above to
the extent the same is being held to fund reasonably anticipated working capital
needs, such investments described in this clause (vii) not to exceed at any time
outstanding the equivalent of U.S. $10,000,000.
"Co-Agents" shall mean each of Bank of Montreal, The Fuji Bank,
Limited, Royal Bank of Canada and Wells Fargo Bank (Texas), National
Association, in their capacity as co-agents for the Lenders, and any successor
co-agents appointed pursuant to Section 9.7.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" means all property and assets of the Borrower and the
Subsidiaries in which the Agent or the Collateral Agent is granted a Lien for
the benefit of the Lenders under the terms of a Security Document.
"Collateral Account" means the cash collateral account for outstanding
undrawn Letters of Credit defined in Section 7.4(b).
"Collateral Agent" means ABN AMRO acting in its capacity as collateral
agent for the Lenders, and any successor collateral agent appointed hereunder
pursuant to Section 9.7.
"Combination Conditions" means the conditions to the obligation of the
Borrower to consummate the Exchange Offer set forth in clause (1) of the section
entitled "The Exchange Offer--Certain Conditions of the Exchange Offer" in
Amendment No. 1 to the Prospectus/Offer to Purchase/Proxy Statement of the
Borrower relating to the Exchange Offer, as filed with the SEC as a Preliminary
Proxy Statement.
"Commitment" means, relative to any Lender, such Lender's obligations
to make Loans and participate in Letters of Credit pursuant to Sections 2.1, 2.2
and 2.3 in the percentages set
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forth opposite its signature hereto or pursuant to Section 10.10, as such
commitments may be reduced from time to time pursuant to this Agreement.
"Commitment Termination Date" means the earliest of (i) July 30, 2002,
(ii) the date on which the Commitments are terminated in full or reduced to zero
pursuant to Section 2.14, (iii) the occurrence of any Event of Default described
in Section 7.1(g) or (h) with respect to the Borrower or the occurrence and
continuance of any other Event of Default and either (x) the declaration of the
Loans to be due and payable pursuant to Section 7.2, or (y) in the absence of
such declaration, the giving of written notice by the Agent, acting at the
direction of the Majority Lenders, to the Borrower pursuant to Section 7.2 that
the Commitments have been terminated, or (iv) September 30, 1996, if (and only
if) the Initial Borrowing Date has not occurred on or before such date.
"Compliance Certificate" means a certificate in the form of
Exhibit 6.7.
"Compulsory Acquisition" has the meaning ascribed to such term in the
Offer to Purchase.
"Consolidated Adjusted Net Income" means, for any period, (i) the net
income (or loss), after provision for taxes, of the Borrower and its
Subsidiaries for such period on a consolidated basis determined in accordance
with GAAP, excluding the effects of (v) extraordinary gains or losses, together
with any related provisions for taxes, (w) the net income (or loss) of any
Person that is not a Subsidiary, (x) the net income (or loss) of any Subsidiary
to the extent such Subsidiary is subject to any agreement restricting or
limiting the declaration or payment of dividends or any other distributions to
the Borrower or any intermediate parent company of such Subsidiary (1) other
than agreements as to formalities required to declare or make a dividend or
distribution, agreements that require retention of reasonable cash reserves for
working capital purposes, or any APB23 declarations, and (2) except to the
extent cash dividends or distributions have actually been paid out of such
Subsidiary during such period, (y) the net income (or loss) of Persons (other
than Persons that are already Subsidiaries during such period) acquired by,
merged into or consolidated with the Borrower or any of its Subsidiaries earned
before the effective date of such acquisition, merger or consolidation, and (z)
non-recurring writeoffs and costs and expenses in connection with the Exchange
Offer, the Mandatory Bid and the Compulsory Acquisition, if any; plus (ii)
dividends or distributions received by the Borrower and its Subsidiaries during
such period from SPVs or other Persons that are not Subsidiaries.
"Consolidated Interest Expense" means, for any period, total interest
expense of the Borrower and its Subsidiaries on a consolidated basis for such
period, in connection with Indebtedness, all as determined in accordance with
GAAP, but excluding capitalized interest expense and interest expense
attributable to expected federal income tax settlements.
"Consolidated Interest Income" means, for any period, total interest
income of the Borrower and its Subsidiaries on a consolidated basis for such
period in connection with Indebtedness, determined in accordance with GAAP.
"Consolidated Net Worth" means, as of any date of determination, the
Borrower's consolidated stockholders equity determined in accordance with GAAP,
excluding any capital
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stock subject to mandatory redemption before the Maturity Date. For purposes of
this definition, SPVs shall be accounted for pursuant to the equity method of
accounting.
"Consolidated Tangible Assets" means, as of any date of determination,
an amount equal to the aggregate book value of the assets of the Borrower, its
Subsidiaries and, to the extent of the equity interest of the Borrower and its
Subsidiaries therein, SPVs at such time determined on a consolidated basis minus
the aggregate book value of Intangible Assets of the Borrower, its Subsidiaries
and, to the extent of the equity interest of the Borrower and its Subsidiaries
therein, SPVs at such time determined on a consolidated basis, in accordance
with GAAP.
"Controlling Affiliate" means for the Borrower, (i) any other Person
that directly or indirectly through one or more intermediaries controls, or is
under common control with, the Borrower (other than Persons controlled by the
Borrower), and (ii) any other Person owning beneficially or controlling ten
percent (10%) or more of the equity interests in the Borrower. As used in this
definition, "control" means the power, directly or indirectly, to direct or
cause the direction of management or policies of a Person (through ownership of
voting securities or other equity interests, by contract or otherwise).
"Credit" means the credit facilities for making Loans and issuing
Letters of Credit described in Sections 2.1, 2.2 and 2.3.
"Credit Documents" means this Agreement, the Notes, the Subsidiary
Guaranties, the Applications, and the Security Documents.
"Credit Party" means the Borrower or any Guarantor.
"Default" means any event or condition the occurrence of which would,
with the passage of time or the giving of notice, or both, constitute an Event
of Default.
"Documentation Agents" shall mean each of SunTrust Bank, Atlanta, and
Credit Lyonnais New York Branch, in their capacity as documentation agents for
the Lenders, and any successor documentation agents thereto appointed pursuant
to Section 9.7.
"Dollar" and "U.S. Dollar" and the sign "$" mean lawful money of the
United States of America.
"EBIT" means, for any period, Consolidated Adjusted Net Income before
(i) Consolidated Interest Expense and interest expense attributable to expected
federal income tax settlements, and (ii) provisions for taxes based on income or
revenues, all as determined in accordance with GAAP for such period.
"EBITDA" means, for any period, (i) EBIT plus (ii) the amount of all
depreciation and amortization expense deducted in determining Consolidated
Adjusted Net Income, all as determined in accordance with GAAP for such period.
"Effective Date" means the date this Agreement shall become effective
as defined in Section 10.16.
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"Environmental Claims" means any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens, notices of non-
compliance or violation, investigations or proceedings relating to any
Environmental Law ("Claims") or any permit issued under any Environmental Law,
including, without limitation, (i) any and all Claims by governmental or
regulatory authorities for enforcement, cleanup, removal, response, remedial or
other actions or damages pursuant to any applicable Environmental Law, and (ii)
any and all Claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief resulting from
Hazardous Materials or arising from alleged injury or threat of injury to the
environment.
"Environmental Law" means any federal, state or local statute, law,
rule, regulation, ordinance, code, policy or rule of common law now or hereafter
in effect, including any judicial or administrative order, consent, decree or
judgment, relating to the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Eurodollar Loan" means a Loan bearing interest before maturity at the
rate specified in Section 2.8(b).
"Eurodollar Reserve Percentage" means, with respect to each Interest
Period for a Eurodollar Loan, a percentage (expressed as a decimal) equal to the
daily average during such Interest Period of the percentages in effect on each
day of such Interest Period, if any, as prescribed by the Board of Governors of
the Federal Reserve System (or any successor thereto), for determining the
maximum reserve requirements (including, without limitation, any supplemental,
marginal and emergency reserves) applicable to "Eurocurrency Liabilities" of
member banks of the Federal Reserve System in New York City with deposits
exceeding $1,000,000,000 pursuant to Regulation D of the Board of Governors of
the Federal Reserve System or any other then applicable regulation of the Board
of Governors which prescribes reserve requirements applicable to "Eurocurrency
Liabilities" as presently defined in Regulation D.
"Event of Default" means any of the events or circumstances specified
in Section 7.1.
"Exchange Conditions" means the conditions to the obligation of the
Borrower to consummate the Exchange Offer set forth in clause (2) of the section
entitled "The Exchange Offer--Certain Conditions of the Exchange Offer" in
Amendment No. 1 to the Prospectus/Offer to Purchase/Proxy Statement of the
Borrower relating to the Exchange Offer, as filed with the SEC as a Preliminary
Proxy Statement.
"Exchange Offer" means the "Exchange Offer" of the Borrower for the
shares of Transocean made pursuant to the Offer to Purchase.
"Exchange Offer Consummation Date" means the date the Exchange Offer
is consummated.
"Exchange Offer Documents" means (i) the Offer to Purchase, (ii) the
forms of the related letters of transmittal, (iii) all definitive documents
filed by or on behalf of the Borrower
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or its Affiliates with the SEC in connection with the Exchange Offer, and (iv)
all amendments, modifications or supplements to any of the foregoing.
"Foreign Plan" means any pension, profit sharing, deferred
compensation, or other employee benefit plan, program or arrangement maintained
by any foreign Subsidiary of the Borrower which, under applicable local law, is
required to be funded through a trust or other funding vehicle, but shall not
include any benefit provided by a foreign government or its agencies.
"GAAP" means generally accepted accounting principles from time to
time in effect as set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
the statements and pronouncements of the Financial Accounting Standards Board or
in such other statements, opinions and pronouncements by such other entity as
may be approved by a significant segment of the U.S. accounting profession.
"Guarantor" means any of Sonat Offshore Norway Inc., Sonat Offshore
Ventures Inc., Sonat Turnkey Drilling Inc. and Sonat Offshore U.K. Inc. or any
other domestic Subsidiary of the Borrower required to become a Guarantor
hereunder pursuant to Section 6.11, in each case unless and until the relevant
Subsidiary Guaranty is released pursuant to Section 6.11.
"Guaranty" by any Person means all contractual obligations (other than
endorsements in the ordinary course of business of negotiable instruments for
deposit or collection or similar transactions in the ordinary course of
business) of such Person guaranteeing any Indebtedness, dividend or other
obligation (including, without limitation, obligations in connection with sales
of any property) of any other Person (the "primary obligor") in any manner,
whether directly or indirectly, including, without limitation, all obligations
incurred through an agreement, contingent or otherwise, by such Person: (i) to
purchase such Indebtedness or obligation, or to purchase any property or assets
constituting security therefor, primarily for the purpose of assuring the owner
of such Indebtedness or obligations of the ability of the primary obligor to
make payment of such Indebtedness or obligation; or (ii) to advance or supply
funds (x) for the purchase or payment of such Indebtedness or obligation, or (y)
to maintain working capital or other balance sheet condition, or otherwise to
advance or make available funds for the purchase or payment of such Indebtedness
or obligation, in each case primarily for the purpose of assuring the owner of
such Indebtedness or obligation of the ability of the primary obligor to make
payment of such Indebtedness or obligation; or (iii) to lease property, or to
purchase securities or other property or services, of the primary obligor,
primarily for the purpose of assuring the owner of such Indebtedness or
obligation of the ability of the primary obligor to make payment of such
Indebtedness or obligation; or (iv) otherwise to assure the owner of such
Indebtedness or obligation of the primary obligor against loss in respect
thereof. For the purpose of all computations made under this Agreement, the
amount of a Guaranty in respect of any obligation shall be deemed to be equal to
the amount that would apply if such obligation was the direct obligation of such
Person rather than the primary obligor or, if less, the maximum aggregate
potential liability of such Person under the terms of the Guaranty.
"Hazardous Material" shall have the meaning assigned to that term in
the Comprehensive Environmental Response Compensation and Liability Act of 1980,
as amended by the Superfund
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Amendments and Reauthorization Acts of 1986, and shall also include petroleum,
including crude oil or any fraction thereof, or any other substance defined as
"hazardous" or "toxic" or words with similar meaning and effect under any
Environmental Law applicable to the Borrower or any of its Subsidiaries.
"Highest Lawful Rate" means the maximum nonusurious interest rate, if
any, that any time or from time to time may be contracted for, taken, reserved,
charged or received on the Loans, under laws applicable to any of the Lenders
which are presently in effect or, to the extent allowed by applicable law, under
such laws which may hereafter be in effect and which allow a higher maximum
nonusurious interest rate than applicable laws now allow. Determination of the
rate of interest for the purpose of determining whether the Loans are usurious
under all applicable laws shall be made by amortizing, prorating, allocating,
and spreading, in equal parts during the period of the full stated term of the
Loans, all interest at any time contracted for, taken, reserved, charged or
received from the Borrower in connection with the Loans.
"Indebtedness" means, for any Person, the following obligations of
such Person, without duplication: (i) obligations of such Person for borrowed
money; (ii) obligations of such Person representing the deferred purchase price
of property or services other than accounts payable arising in the ordinary
course of business and other than amounts which are being contested in good
faith and for which reserves in conformity with GAAP have been provided; (iii)
obligations of such Person evidenced by bonds, notes, bankers acceptances,
debentures or other similar instruments of such Person or arising, whether
absolute or contingent, out of letters of credit issued for such Person's
account or pursuant to such Person's application; (iv) obligations of other
Persons, whether or not assumed, secured by Liens (other than Permitted Liens)
upon property or payable out of the proceeds or production from property now or
hereafter owned or acquired by such Person, but only to the extent of such
property's fair market value; (v) Capitalized Lease Obligations of such Person;
(vi) obligations under (x) Interest Rate Protection Agreements, (y) commodity
hedge, swap, exchange, forward, future, collar or cap arrangements, fixed price
commodity agreements and all other agreements or arrangements, in each case
designed primarily to protect against fluctuations in commodity prices, and (z)
futures agreements, arrangements or options designed primarily to protect
against fluctuations in currency exchange rates; and (vii) obligations of such
Person pursuant to a Guaranty of any of the foregoing of another Person;
provided, however, Indebtedness shall exclude Non-recourse Debt. For purposes
of this Agreement, the Indebtedness of any Person shall include the Indebtedness
of any partnership or joint venture to the extent such Indebtedness is recourse
to such Person.
"Initial Borrowing Date" means the date on which all conditions
precedent set forth herein to the initial Borrowings are satisfied or waived in
writing and the initial Borrowing hereunder occurs, which date shall be no later
than September 30, 1996.
"Intangible Assets" means patents, copyrights, trademarks, trade
names, service marks, brand names, franchises, goodwill, experimental expenses
and other similar intangibles, and all other property which would be considered
to be intangible under GAAP.
"Intercreditor Agreement" has the meaning ascribed to such term in
Section 4.1(a).
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"Interest Coverage Ratio" means, as of the end of any fiscal quarter,
the ratio of (i) EBITDA for the four fiscal quarter period then ended, minus all
dividends paid to shareholders of the Borrower during such four fiscal quarter
period and all cash income taxes paid during such four fiscal quarter period, to
(ii) Consolidated Interest Expense for the four fiscal quarter period then
ended; provided that for the first three (3) full fiscal quarters ended after
the Exchange Offer Consummation Date, the Interest Coverage Ratio shall be
determined for the number of full fiscal quarters ended after the Exchange Offer
Consummation Date only.
"Interest Payment Date" means (i) for a Base Rate Loan, the last
Business Day of each calendar quarter such Loan is outstanding commencing
September 30, 1996, and (ii) for a Eurodollar Loan, the last Business Day of
each Interest Period for such Loan and, during any Interest Period of six (6)
months, the next Business Day occurring three (3) months after the commencement
of such Interest Period.
"Interest Period" means the period commencing on the date that a
Borrowing of Eurodollar Loans is advanced, continued or created by conversion
and, subject to Section 2.6, ending on the date 1, 2, 3 or 6 months thereafter
as selected by the Borrower pursuant to the terms of this Agreement.
"Interest Rate Protection Agreement" shall mean any interest rate
swap, interest rate cap, interest rate collar, or other interest rate hedging
agreement or arrangement designed to protect against fluctuations in interest
rates.
"Kroner" means lawful money of the Kingdom of Norway.
"L/C Documents" means the Letters of Credit, any Issuance Requests and
Applications with respect thereto, any draft or other document presented in
connection with a drawing thereunder and this Agreement.
"L/C Obligations" means the undrawn face amounts of all outstanding
Letters of Credit and all unpaid Reimbursement Obligations.
"Lender" is defined in the preamble.
"Lending Office" means the branch, office or affiliate of a Lender
specified on the appropriate signature page hereof, or designated pursuant to
Sections 8.4 or 10.10, as the office through which it will make its Loans
hereunder for each type of Loan available hereunder.
"Letter of Credit" means any of the letters of credit to be issued by
the Agent on behalf of the Lenders for the account of the Borrower pursuant to
Section 2.2(a).
"LIBOR Rate" means, relative to any Interest Period for each
Eurodollar Loan comprising part of the same Borrowing, a rate of interest per
annum (rounded upwards, if necessary, to the nearest whole multiple of 1/16 of
1%), equal to (i) with respect to Loans in Dollars or Pounds, the arithmetic
mean of the "LIBOR" rates of interest per annum appearing on Telerate Page 3750
(or any successor publication) for the applicable currency or (ii) with respect
to Loans in Kroners, the rate of interest determined by the Agent to be the rate
at which the Agent is offered
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deposits of Kroners in New York, New York, in each case two (2) Business Days
before the commencement of such Interest Period for delivery on the first day of
such Interest Period, at or about 11:00 a.m. (London, England time with respect
to Loans in Dollars or Pounds and New York, New York time with respect to Loans
in Kroners) for a period approximately equal to such Interest Period and in an
amount equal or comparable to the aggregate principal amount of the Eurodollar
Loans to which such Interest Period relates. If the foregoing Telerate rate is
unavailable for any reason, then such rate shall be determined by the Agent from
the Reuters Screen LIBOR page, or if such rate is also unavailable on such
service, on any other interest rate reporting service of recognized standing
selected by the Agent after consultation with the Borrower.
"Lien" means any interest in any property or asset in favor of a
Person other than the owner of such property or asset and securing an obligation
owed to, or a claim by, such Person, whether such interest is based on the
common law, statute or contract, including, but not limited to, the security
interest lien arising from a mortgage, encumbrance, pledge, conditional sale,
security agreement or trust receipt, or a lease, consignment or bailment for
security purposes.
"Loan" means a Base Rate Loan or Eurodollar Loan, each of which is a
"type" of Loan hereunder, outstanding as a Revolving Loan or Term Loan.
"Majority Lenders" means, at any time, Lenders then holding in the
aggregate at least fifty-one percent (51%) of (a) the aggregate outstanding
principal amount of the Term Loans, plus (b) so long as the Revolving Credit
Commitments have not terminated pursuant to the terms hereof, the Revolving
Credit Commitment Amount, or if such Commitments have so terminated, the
aggregate Revolving Obligations. The percentage set forth opposite each
Lender's name on the signature page hereto reflects the initial voting
percentage of each Lender hereunder.
"Mandatory Bid" has the meaning ascribed to such term in the Offer to
Purchase.
"Mandatory Bid Bank Guarantee" means any bank guarantee issued by a
bank at the request of the Borrower in connection with the Mandatory Bid as
required under Norwegian law or by the Oslo Stock Exchange, which guarantee
shall be in a maximum amount no greater than the aggregate cash purchase price
offered for the shares of Transocean stock in the Mandatory Bid, together with
interest thereon as is required under Norwegian law or by the Oslo Stock
Exchange.
"Mandatory Bid Payment Date" means the date of any Borrowing hereunder
to pay for the shares of Transocean tendered in connection with the Mandatory
Bid (or, if no such Borrowing has occurred prior to December 30, 1996, such
date).
"Material Adverse Effect" means an effect that results in a material
adverse (i) change, since March 31, 1996 (or after the Exchange Offer
Consummation Date, since the Exchange Offer Consummation Date), in (x) the
business, properties, assets, financial condition or (prior to the Initial
Borrowing Date) prospects of (a) before the Exchange Offer Consummation Date,
the Borrower and its Subsidiaries taken as a whole, or Transocean and its
Subsidiaries taken as a whole, or (b) after the Exchange Offer Consummation
Date, the Borrower and its Subsidiaries taken as a whole, or (y) the ability of
the Borrower or the Borrower and the other Credit Parties
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taken as a whole to perform their Obligations under this Agreement, the Notes or
the other Credit Documents to which they are a party, or (ii) change in the
rights and remedies of the Lenders or the Agent in any material adverse respect
under the Credit Documents (other than in accordance with the express terms
thereof).
"Material Subsidiary" means Sonat Offshore Norway Inc., Sonat Offshore
Ventures Inc., Sonat Turnkey Drilling Inc., Sonat Offshore U.K. Inc., Sonat
Offshore Far East and, after the Exchange Offer Consummation Date, NSub and
Transocean (in each case for so long as such entity is a Subsidiary), and each
other Subsidiary of the Borrower that has total assets (excluding assets that
would be eliminated in consolidation with the Borrower and its Subsidiaries)
which equates to at least five percent (5%) of the Borrower's Total Assets or
that had net income (determined in accordance with GAAP but excluding revenues
and expenses that would be eliminated in consolidation with the Borrower and its
Subsidiaries) during the most recently completed fiscal year of the Borrower in
excess of the greater of (i) $1,000,000 and (ii) fifteen percent (15%) of
Consolidated Adjusted Net Income during such fiscal year of the Borrower.
"Maturity Date" means July 30, 2002.
"Moody's" means Moody's Investors Service, Inc., or any successor
thereto.
"Net Cash Proceeds" means, for any Transfer, the cash proceeds
(including any cash payments actually received as a deferred payment of
principal pursuant to a note, installment receivable, purchase price adjustment
receivable or otherwise) of such Transfer net of (i) all legal fees, accountant
fees, investment banking fees, brokerage fees, finders fees, survey costs, title
insurance premiums, required debt payments (other than of Obligations) and other
customary fees, costs and expenses actually incurred, paid or made in connection
therewith, (ii) taxes or other governmental fees or charges paid or payable as a
result thereof and (iii) reasonable reserves for purchase price adjustments.
"Non-recourse Debt" means with respect to any Person (i) obligations
of such Person against which the obligee has no recourse to such Person except
as to certain named or described present or future assets or interests, and (ii)
the obligations of SPVs to the extent the obligee thereof has no recourse to the
Borrower or any of its Subsidiaries.
"Norwegian GAAP" means generally accepted accounting principles from
time to time in effect in the Kingdom of Norway.
"Note" means any of the promissory notes of the Borrower defined in
Section 2.12.
"Noteholders" means the holders, from time to time, of the Borrower's
6.90% Senior Notes Due February 15, 2004.
"Note Pledge Agreement" means the Note Pledge Agreement in
substantially the form of Exhibit 4.1B.
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"Note Purchase Agreements" mean the Note Purchase Agreements dated as
of February 15, 1994, relating to the $30,000,000 aggregate principal amount
6.90% Senior Notes Due February 15, 2004, of the Borrower.
"NSub" means a company to be organized by the Borrower under the laws
of the Kingdom of Norway to hold the stock of Transocean immediately after the
Exchange Offer Consummation Date.
"Obligations" means all obligations of the Borrower and any other
Credit Party to pay fees, costs and expenses hereunder, to pay principal or
interest on Loans and Reimbursement Obligations and to pay any other obligations
to the Agent or any Lender arising under any Credit Document.
"Offer to Purchase" means the definitive Prospectus/Offer to
Purchase/Proxy Statement of the Borrower relating to the Exchange Offer, as
amended or extended by the Borrower.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.
"Percentage" means, for each Lender, the percentage of the Commitments
represented by such Lender's Commitment; provided, that, if the Commitments are
terminated, each Lender's Percentage shall be calculated based on its Commitment
in effect immediately before such termination, subject to any assignments by
such Lender of Obligations pursuant to Section 10.10.
"Performance Guaranties" means all Guaranties of the Borrower or any
of its Subsidiaries delivered in connection with the construction financing of
drill ships, offshore mobile drilling units or offshore drilling rigs for which
firm drilling contracts have been obtained by the Borrower, any of its
Subsidiaries or a SPV.
"Performance Letters of Credit" means all letters of credit for the
account of the Borrower, any Subsidiary or a SPV issued as support for Non-
recourse Debt or a Performance Guaranty.
"Permitted Business" has the meaning ascribed to such term in
Section 6.9.
"Permitted Liens" means the Liens described in Section 6.14.
"Person" means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization or any other
entity or organization, including a government or any agency or political
subdivision thereof.
"Plan" means an employee pension benefit plan covered by Title IV of
ERISA or subject to the minimum funding standards under Section 412 of the Code
that is either (i) maintained by the Borrower or any of its Subsidiaries, or
(ii) maintained pursuant to a collective bargaining agreement or any other
arrangement under which more than one employer makes contributions and to which
the Borrower or any of its Subsidiaries is then making or accruing an obligation
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to make contributions or has within the preceding five (5) plan years made or
had an obligation to make contributions.
"Pounds" means British Pounds Sterling.
"Reimbursement Obligation" means the obligations of the Borrower to
reimburse the Agent for each drawing under a Letter of Credit as described in
Section 2.2(c).
"Required Lenders" means, at any time, Lenders then holding in the
aggregate at least seventy-five percent (75%) of (a) the aggregate outstanding
principal amount of the Term Loans, plus (b) so long as the Revolving Credit
Commitments have not terminated pursuant to the terms hereof, the Revolving
Credit Commitment Amount, or if such Commitments have so terminated, the
aggregate Revolving Obligations.
"Reuters Screen" means, when used in connection with any designated
page and the "LIBOR" rate, the display page so designated on the Reuter Money
2000 Service (or such other page as may replace that page on that service or on
any replacement Reuter Service for the purpose of displaying rates comparable to
the "LIBOR" rate).
"Revolving Credit" means the credit facility for making Revolving
Loans and issuing Letters of Credit described in Sections 2.1 and 2.2.
"Revolving Credit Commitment" means, relative to any Lender, such
Lender's obligations to make Revolving Loans and participate in Letters of
Credit pursuant to Sections 2.1 and 2.2.
"Revolving Credit Commitment Amount" means an amount equal to
$400,000,000, as such amount may be reduced from time to time pursuant to the
terms of this Agreement.
"Revolving Loan" means the revolving loans defined in Section 2.1.
"Revolving Notes" means certain promissory notes of the Borrower as
defined in Section 2.12.
"Revolving Obligations" means the sum of the principal amount of all
Revolving Loans and L/C Obligations outstanding.
"SEC" means the Securities and Exchange Commission.
"S&P" means Standard & Poor's Ratings Group or any successor thereto.
"Security Documents" means the Stock Pledge Agreement, the Note Pledge
Agreement, the Subsidiary Guaranties, Section 7.4 of this Agreement and all
other security agreements, mortgages and like agreements or instruments
delivered by the Borrower or any Guarantor granting a Lien on any of such
Person's property to the Agent or the Collateral Agent for the benefit of the
Lenders to secure the Obligations, as any of the same may be amended,
supplemented or otherwise modified from time to time.
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"SODI Credit Facility" means that certain Amended and Restated Credit
Agreement dated as of December 28, 1995, by and among the Borrower, SunTrust
Bank, Atlanta, as Agent, ABN AMRO, as Co-Agent, and certain lenders parties
thereto.
"SPV" means any Person that is not a Guarantor that is designated by
the Borrower as a SPV, provided that the Borrower shall not designate as a SPV
any Subsidiary that owns, directly or indirectly, any Material Subsidiary or
Guarantor. The Borrower may elect to treat any Subsidiary as a SPV (provided
such Subsidiary would otherwise qualify as such), and may rescind any such prior
election, by giving written notice thereof to the Agent specifying the name of
such Subsidiary or SPV, as the case may be, and the effective date of such
election, which shall be a date within sixty (60) days after the date such
notice is given. The election to treat a particular Person as a SPV may only be
made once.
"Stock Pledge Agreement" means the Stock Pledge Agreement in
substantially the form of Exhibit 4.1A.
"Subsidiary" means, for any Person, any other Person (other than,
except in the context of Section 6.7(a), a SPV) of which more than fifty percent
(50%) of the outstanding stock or comparable equity interests having ordinary
voting power for the election of the board of directors of such corporation, any
managers of such limited liability company or similar governing body
(irrespective of whether or not at the time stock or other equity interests of
any other class or classes of such corporation or other entity shall have or
might have voting power by reason of the happening of any contingency), is at
the time directly or indirectly owned by such former Person or by one or more of
its Subsidiaries.
"Subsidiary Guaranty" means any Guaranty of any Subsidiary delivered
pursuant to Sections 4.1 or 6.11.
"Taxes" has the meaning set forth in Section 5.12.
"Telerate" means, when used in connection with any designated page and
the "LIBOR" rate, the display page so designated on the Dow Jones Telerate
Service (or such other page as may replace that page on that service or on any
replacement Dow Jones Service for the purpose of displaying rates comparable to
the "LIBOR" rate).
"Term Credit" means the credit facility for making Term Loans
described in Section 2.3.
"Term Credit Commitment" means relative to any Lender, such Lender's
obligations to make Term Loans pursuant to Section 2.3.
"Term Credit Commitment Amount" means $200,000,000, as such amount may
be reduced pursuant to the terms of this Agreement.
"Term Loan" means the term loans defined in Section 2.3.
"Term Notes" means certain promissory notes of the Borrower as defined
in Section 2.12.
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"Total Assets" means, as of any date of determination, the aggregate
book value of the assets of the Borrower and its Subsidiaries determined on a
consolidated basis in accordance with GAAP as of such date.
"Total Capital" means, as of any date of determination, the sum of
Total Funded Debt plus Consolidated Net Worth as of such date.
"Total Commitment Amount" means the sum of the Revolving Credit
Commitment Amount and the Term Credit Commitment Amount.
"Total Funded Debt" means, as of any date of determination, the sum
(without duplication) of (i) Indebtedness for borrowed money, all obligations
evidenced by bonds, debentures, notes or similar instruments, and obligations to
pay the deferred purchase price of property which in accordance with GAAP would
be shown on a consolidated balance sheet as a liability, (ii) all obligations,
contingent or otherwise, relative to the face amount of letters of credit and
bankers acceptances issued and outstanding and (iii) all obligations as lessee
under leases which are required to be recorded as Capitalized Lease Obligations
in accordance with GAAP, all calculated on a consolidated basis for the Borrower
and its Subsidiaries; provided, however, Total Funded Debt shall exclude (x)
Non-recourse Debt, (y) Performance Letters of Credit and Performance Guaranties
until any such Performance Letter of Credit is drawn upon or any such
Performance Guarantee is called upon, in which case the aggregate amount drawn
thereunder or called upon, and unpaid from time to time, shall be included from
and after the date and time of such event and (z) letters of credit issued and
outstanding in the ordinary course of business to comply with governmental
requirements relating to the import and export of vessels until any such letter
of credit is drawn upon, in which case the aggregate amount drawn thereunder and
unpaid from time to time shall be included from and after the date and time of
such event.
"Total Funded Debt to Total Capital Ratio" means, as of any date, the
ratio, expressed as a percentage, of Total Funded Debt to Total Capital. For
purposes of this ratio, (i) until the delivery of the consolidated balance sheet
of the Borrower as of September 30, 1996, Consolidated Net Worth shall equal
$1,580,000,000, and (ii) from and after the delivery of such consolidated
balance sheet, Consolidated Net Worth as of any date shall be determined as of
the date of most recent consolidated balance sheet of the Borrower delivered
pursuant to Section 6.7(a)(i) or (ii).
"Transfer" means a sale, transfer, conveyance, assignment or other
disposition (or a series of related dispositions), including, without
limitation, any transfer pursuant to an option to purchase, any sale or
assignment (with or without recourse) of any accounts receivable and any sale
and leaseback of assets, of an asset having a net book value as established in
accordance with GAAP in excess of $250,000, but excluding any involuntary
transfer by operation of law and any transfers of an asset pursuant to any
casualty or theft with respect to such asset.
"Transocean" means Transocean ASA, a company organized under the laws
of the Kingdom of Norway.
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"Transocean Credit Facility" means that certain Facility Agreement
dated as of December 20, 1995, by and among Transocean, Den Norske Bank AS as
agent and security agent, Chase Investment Bank Limited, Den Norske Bank AS and
Meespierson N.V., as arrangers, and others.
"Unfunded Vested Liabilities" means, for any Plan at any time, the
amount (if any) by which the present value of all vested nonforfeitable accrued
benefits under such Plan exceeds the fair market value of all Plan assets
allocable to such benefits, determined as of the then most recent valuation date
for such Plan, but only to the extent that such excess represents a potential
liability of the Borrower or any of its Subsidiaries to the PBGC or such Plan.
Section 1.2. Interpretation. The foregoing definitions shall be
equally applicable to the singular and plural forms of the terms defined. All
references to times of day in this Agreement shall be references to New York,
New York time unless otherwise specifically provided.
SECTION 2. THE CREDIT FACILITIES.
Section 2.1. Borrowings of Revolving Loans. Subject to the terms and
conditions hereof, each Lender severally and not jointly agrees to make one or
more loans (each a "Revolving Loan") to the Borrower from time to time before
the Commitment Termination Date on a revolving basis in an aggregate amount not
to exceed at any time outstanding an amount equal to its Percentage of the
Revolving Credit Commitment Amount (for each Lender, its "Revolving Credit
Commitment"), subject to any reductions thereof pursuant to the terms of this
Agreement. No Lender shall be permitted or required to make any Revolving Loan
if, after giving effect thereto, (i) the aggregate principal amount of the
Revolving Loans of all Lenders and other Revolving Obligations outstanding of
the Borrower would thereby exceed the Revolving Credit Commitment Amount then in
effect; or (ii) all Revolving Loans of such Lender and its participating
interest in all Letters of Credit would thereby exceed the Percentage of such
Lender of the Revolving Credit Commitment Amount then in effect. Each Borrowing
of Revolving Loans shall be made ratably from the Lenders in proportion to their
respective Percentages. Revolving Loans may be repaid, in whole or in part, and
all or any portion of the principal amount thereof reborrowed, before the
Commitment Termination Date, subject to the terms and conditions hereof. Funding
of any Revolving Loans shall be in any combination of Dollars, Pounds or Kroner
as specified by the Borrower as set forth in Section 2.2(b) or 2.5, as
applicable; provided, that the Dollar equivalent amount of outstanding Revolving
Loans funded, and Letters of Credit issued, in Pounds and Kroner determined,
with respect to each such Revolving Loan so funded or Letter of Credit so
issued, in accordance with Section 10.19 on the date such Revolving Loan is so
funded, continued or converted or the date such Letter of Credit is so issued,
as applicable, shall not exceed an aggregate of $130,000,000.
Section 2.2. Letters of Credit. (a) Letters of Credit. Subject to the
terms and conditions hereof, the Agent agrees to issue, from time to time prior
to the Commitment Termination Date, at the request of the Borrower and on behalf
of the Lenders and in reliance on their obligations under this Section 2.2, one
or more letters of credit (each a "Letter of Credit") for the Borrower's account
in a face amount of at least $500,000 and in an aggregate undrawn face amount at
any time outstanding not to exceed the Revolving Credit Commitment Amount;
provided, that the Agent shall not issue a Letter of Credit, and the Lenders
shall have no
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obligation to purchase a participation interest in a Letter of Credit pursuant
to Section 2.2(d) if, after the issuance thereof, (i) the outstanding Revolving
Obligations would thereby exceed the Revolving Credit Commitment Amount then in
effect, or (ii) the issuance of such Letter of Credit would violate any legal or
regulatory restriction then applicable to the Agent or any Lender as notified by
such Lender to the Agent before the date of issuance of such Letter of Credit.
Letters of Credit and any renewals thereof hereunder, may be issued in face
amounts of either Dollars, Pounds or Kroner; provided further, that the Dollar
equivalent amount of outstanding Revolving Loans funded, and Letters of Credit
issued, in Pounds and Kroner determined, with respect to each such Revolving
Loan so funded or Letter of Credit so issued, in accordance with Section 10.19
on the date such Revolving Loan is so funded, continued or converted or the date
such Letter of Credit is so issued, as applicable, shall not exceed an aggregate
of $130,000,000.
(b) Issuance Procedure. To request that the Agent issue a Letter of
Credit, the Borrower shall deliver to the Agent (with a duplicate copy to an
operations employee of the Agent as designated by the Agent from time to time) a
duly executed Issuance Request substantially in the form of Exhibit 2.2A (each
an "Issuance Request"), together with a duly executed application for the
relevant Letter of Credit substantially in the form of Exhibit 2.2B (each an
"Application"), or such other computerized issuance or application procedure,
instituted from time to time by the Agent and agreed to by the Borrower,
completed to the reasonable satisfaction of the Agent, and such other
information as the Agent may reasonably request. In the event of any
irreconcilable difference or inconsistency between this Agreement and an
Application, the provisions of this Agreement shall govern. If the requested
Letter of Credit is to be issued in connection with the Mandatory Bid Bank
Guarantee, the Borrower shall give to the Agent written notice thereof in the
applicable Issuance Request. Upon receipt of a properly completed and executed
Application and any other reasonably requested information at least three (3)
Business Days prior to any requested issuance date, the Agent will process such
Application in accordance with its customary procedures and issue the requested
Letter of Credit on the requested issuance date. The Borrower may cancel any
requested issuance of a Letter of Credit prior to the issuance thereof. The
Agent will notify each Lender of the amount and expiration date of each Letter
of Credit it issues promptly upon issuance thereof. Each Letter of Credit shall
have an expiration date no later than four (4) Business Days before the Maturity
Date. If the Agent issues any Letters of Credit with expiration dates that
automatically extend unless the Agent gives notice that the expiration date will
not so extend, the Agent will give such notice of non-renewal before the time
necessary to prevent such automatic extension if (and will not give such notice
of non-renewal before such time unless) before such required notice date (i) the
expiration date of such Letter of Credit if so extended would be later than four
(4) Business Days before the Maturity Date, (ii) the Commitment Termination Date
shall have occurred, (iii) a Default or an Event of Default exists and the
Majority Lenders have given the Agent instructions not to so permit the
expiration date of such Letter of Credit to be extended, or (iv) the Agent is so
directed by the Borrower. The Agent agrees to issue amendments to any Letter of
Credit increasing its amount, or extending its expiration date, at the request
of the Borrower subject to the conditions precedent for all Loans of Section 4.2
and the other terms and conditions of this Section 2.2.
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(c) The Borrower's Reimbursement Obligations.
(i) The Borrower hereby irrevocably and unconditionally agrees to
reimburse the Agent for each payment or disbursement made by the Agent to settle
its obligations under any draft drawn under a Letter of Credit (a "Reimbursement
Obligation") within two (2) Business Days from when such draft is paid with
either funds not borrowed hereunder or with a Borrowing of Revolving Loans
subject to Section 2.5 and the other terms and conditions contained in this
Agreement. The Reimbursement Obligation shall bear interest (which the Borrower
hereby promises to pay) from and after the date such draft is paid until (but
excluding the date) the Reimbursement Obligation is paid at the lesser of the
Highest Lawful Rate or the Base Rate so long as the Reimbursement Obligation
shall not be past due, and thereafter at the default rate per annum as set forth
in Section 2.9(c), whether or not the Maturity Date shall have occurred. If any
such payment or disbursement is reimbursed to the Agent on the date such payment
or disbursement is made by the Agent, interest shall be paid on the reimbursable
amount for one (1) day. The Agent shall give the Borrower notice of any drawing
on a Letter of Credit within one (1) Business Day after such drawing is paid.
(ii) The Borrower agrees for the benefit of the Agent and each Lender
that, notwithstanding any provision of any Application, the obligations of the
Borrower under this Section 2.2(c) and each applicable Application shall be
absolute, unconditional and irrevocable and shall be performed strictly in
accordance with the terms of this Agreement and each applicable Application
under all circumstances whatsoever (other than the defense of payment in
accordance with this Agreement or a defense based on the gross negligence or
willful misconduct of the Agent or any Lender), including, without limitation,
the following circumstances (subject in all cases to the defense of payment in
accordance with this Agreement or a defense based on the gross negligence or
willful misconduct of the Agent or any Lender):
(1) any lack of validity or enforceability of any of the L/C
Documents;
(2) any amendment or waiver of or any consent to depart from all or
any of the provisions of any of the L/C Documents;
(3) the existence of any claim, set-off, defense or other right the
Borrower may have at any time against a beneficiary of a Letter of Credit (or
any Person for whom a beneficiary may be acting), the Agent, any Lender or any
other Person, whether in connection with this Agreement, another L/C Document or
any unrelated transaction;
(4) any statement or any other document presented under a Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any respect
or any statement therein being untrue or inaccurate in any respect;
(5) payment by the Agent under a Letter of Credit against
presentation to the Agent of a draft or certificate that does not comply with
the terms of the Letter of Credit, provided that the Agent's determination that
documents presented under the Letter of Credit comply with the terms thereof did
not constitute gross negligence or willful misconduct of the Agent; or
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(6) any other act or omission to act or delay of any kind by the
Agent, any Lender or any other Person or any other event or circumstance
whatsoever that might, but for the provisions of this Section 2.2(c), constitute
a legal or equitable discharge of the Borrower's obligations hereunder, under an
Issuance Request or under an Application provided that such act or omission of
the Agent did not constitute gross negligence or willful misconduct of the
Agent.
(d) The Participating Interests. Each Lender severally and not jointly
agrees to purchase from the Agent, and the Agent hereby agrees to sell to each
Lender, an undivided percentage participating interest, to the extent of its
Percentage, in each Letter of Credit issued by, and Reimbursement Obligation
owed to, the Agent in connection with a Letter of Credit. Upon any failure by
the Borrower to pay any Reimbursement Obligation in connection with a Letter of
Credit at the time required in Sections 2.2(c) and 2.5(c), or if the Agent is
required at any time to return to the Borrower or to a trustee, receiver,
liquidator, custodian or other Person any portion of any payment by the Borrower
of any Reimbursement Obligation in connection with a Letter of Credit, the Agent
shall promptly give notice of same to each Lender, and the Agent shall have the
right to require each Lender to fund its participation in such Reimbursement
Obligation. Each Lender (except the Agent to the extent it is also a Lender)
shall pay to the Agent an amount equal to such Lender's Percentage of such
unpaid or recaptured Reimbursement Obligation not later than the Business Day it
receives notice from the Agent to such effect, if such notice is received before
2:00 p.m., or not later than the following Business Day if such notice is
received after such time. If a Lender fails to pay timely such amount to the
Agent, it shall also pay to the Agent interest on such amount accrued from the
date payment of such amount was made by the Agent to the date of such payment by
the Lender at a rate per annum equal to the Base Rate in effect for each such
day and only after such payment shall such Lender be entitled to receive its
Percentage of each payment received on the relevant Reimbursement Obligation and
of interest paid thereon. The several obligations of the Lenders to the Agent
under this Section 2.2(d) shall be absolute, irrevocable and unconditional under
any and all circumstances whatsoever and shall not be subject to any set-off,
counterclaim or defense to payment any Lender may have or have had against the
Borrower, the Agent, any other Lender or any other Person whatsoever including,
but not limited to, any defense based on the failure of the demand for payment
under the Letter of Credit to conform to the terms of such Letter of Credit or
the legality, validity, regularity or enforceability of such Letter of Credit
and INCLUDING, BUT NOT LIMITED TO, THOSE RESULTING FROM THE AGENT'S OWN SIMPLE
OR CONTRIBUTORY NEGLIGENCE. Without limiting the generality of the foregoing,
such obligations shall not be affected by any Default or Event of Default or by
any subsequent reduction or termination of any Commitment of a Lender, and each
payment by a Lender under Section 2.2 shall be made without any offset,
abatement, withholding or reduction whatsoever.
Section 2.3. Borrowings of Term Loans. Subject to the terms and
conditions hereof, each Lender agrees to make a loan (each a "Term Loan") to the
Borrower on the Initial Borrowing Date and/or on the Mandatory Bid Payment Date
in an aggregate amount not to exceed an amount equal to its Percentage of the
Term Credit Commitment Amount (its "Term Credit Commitment"). The Term Loans
shall be made ratably from the Lenders in proportion to their respective
Percentages. No Lender shall be permitted or required to make any Term Loan if,
after giving effect thereto, the aggregate principal amount of all Term Loans
(a) of all
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Lenders would exceed the Term Credit Commitment Amount, or (b) of such Lender
would exceed the Percentage of such Lender of the Term Credit Commitment Amount.
Any portion of the Term Credit Commitments not borrowed prior to or on the
Mandatory Bid Payment Date shall terminate and not be available for borrowing.
Funding and maintenance of the Term Loans shall be in Dollars.
Section 2.4. Types of Loans and Minimum Borrowing Amounts. Borrowings
of both Revolving Loans and Term Loans may be outstanding as either Base Rate
Loans or Eurodollar Loans, as selected by the Borrower pursuant to Section 2.5;
provided, however, that any Revolving Loans funded in Pounds or Kroner may only
be outstanding as Eurodollar Loans. All Borrowings advanced on the Initial
Borrowing Date shall be advanced in Dollars as Base Rate Loans. Each Borrowing
of Base Rate Loans shall be in an amount of not less than $1,000,000 and each
Borrowing of Eurodollar Loans shall be in an amount of not less than $5,000,000
(or the equivalent thereof in Pounds or Kroner as applicable and as determined
in accordance with Section 10.19).
Section 2.5. Manner of Borrowing. (a) Notice to the Agent. The
Borrower shall give notice to the Agent by no later than 12:00 p.m. (i) at least
three (3) Business Days before the date on which the Borrower requests the
Lenders to advance a Borrowing of Eurodollar Loans to be funded in Dollars and
at least four (4) Business Days before the date on which the Borrower requests
the Lenders to advance a Borrowing of Eurodollar Loans in Pounds or Kroner, and
(ii) on the date the Borrower requests the Lenders to advance a Borrowing of
Base Rate Loans pursuant to a duly executed Borrowing Request substantially in
the form of Exhibit 2.5 (each a "Borrowing Request"). If the requested advance
is to pay for the shares of Transocean tendered in connection with the Mandatory
Bid, the Borrower shall give to the Agent written notice thereof in the
applicable Borrowing Request. The Loans included in each Borrowing shall bear
interest initially at the type of rate specified in the Borrowing Request with
respect to such Borrowing. Thereafter, the Borrower may from time to time elect
to change or continue the type of interest rate borne by each Borrowing or,
subject to Section 2.4's minimum amount requirement for each outstanding
Borrowing, a portion thereof, as follows: (i) if such Borrowing is of Eurodollar
Loans, the Borrower may continue part or all of such Borrowing as Eurodollar
Loans for an Interest Period specified by the Borrower or convert part or all of
such Borrowing into Base Rate Loans on the last day of the Interest Period
applicable thereto, or the Borrower may earlier convert part or all of such
Borrowing into Base Rate Loans so long as it pays the breakage fees and funding
losses provided in Section 2.13; and (ii) if such Borrowing is of Base Rate
Loans, the Borrower may convert all or part of such Borrowing into Eurodollar
Loans for an Interest Period specified by the Borrower on any Business Day. The
Borrower may select multiple Interest Periods for the Term Loans and for the
Revolving Loans constituting any particular Borrowing, provided that at no time
shall the number of different Interest Periods for outstanding Eurodollar Loans
exceed twenty (20) (it being understood for such purposes that (x) Interest
Periods of the same duration, but commencing on different dates, shall be
counted as different Interest Periods and (y) all Interest Periods commencing on
the same date and of the same duration shall be counted as one Interest Period
regardless of the number of Borrowings or Loans involved (except they shall
count as two different Interest Periods if both Revolving Loans and Term Loans
are involved). Notices of the continuation of a Borrowing of Eurodollar Loans
for an additional Interest Period or of the conversion of part or all of a
Borrowing of Eurodollar Loans into Base Rate Loans or of Base Rate Loans into
Eurodollar Loans must be
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given by no later than 12:00 p.m. at least three (3) Business Days with respect
to Eurodollar Loans funded in Dollars and four (4) Business Days with respect to
Eurodollar Loans funded in Pounds or Kroner, before the date of the requested
continuation or conversion. The Borrower shall give such notices concerning the
advance, continuation, or conversion of a Borrowing by telephone or facsimile
(which notice shall be irrevocable once given and, if by telephone, shall be
promptly confirmed in writing) pursuant to a Borrowing Request which shall
specify the date of the requested advance, continuation or conversion (which
shall be a Business Day), the amount and currency of the requested Borrowing,
the Credit under which the Borrowing is to be advanced, continued, or converted,
the type of Loans to comprise such new, continued or converted Borrowing and, if
such Borrowing is to be comprised of Eurodollar Loans, the Interest Period
applicable thereto. The Borrower agrees that the Agent may rely on any such
telephonic or facsimile notice given by any person it in good faith believes is
an authorized representative of the Borrower without the necessity of
independent investigation and that, if any such notice by telephone conflicts
with any written confirmation, such telephonic notice shall govern if the Agent
has acted in reliance thereon.
(b) Notice to the Lenders. The Agent shall give prompt telephonic,
telex or facsimile notice to each Lender of any notice received pursuant to
Section 2.5(a) relating to a Borrowing. The Agent shall give notice to the
Borrower and each Lender under a Credit by like means of the interest rate
applicable to each Borrowing of Eurodollar Loans under such Credit (but, if such
notice is given by telephone, the Agent shall confirm such rate in writing)
promptly after the Agent has made such determination.
(c) Borrower's Failure to Notify. If the Borrower fails to give notice
pursuant to Section 2.5(a) of (i) the continuation or conversion of any
outstanding principal amount of a Borrowing of Eurodollar Loans or of (ii) a
Borrowing of Loans to pay outstanding Reimbursement Obligations, and has not
notified the Agent by 12:00 p.m. at least three (3) Business Days before the
last day of the Interest Period for any Borrowing of Eurodollar Loans funded in
Dollars or at least four (4) Business Days before the last day of the Interest
Period for any Borrowing of Eurodollar Loans funded in Pounds or Kroner, or by
the day such Reimbursement Obligation becomes due, that it intends to repay such
Borrowing or such Reimbursement Obligation with funds not borrowed hereunder,
the Borrower shall be deemed to have requested, as applicable, (x) the
continuation of such Borrowing as a Eurodollar Loan with an Interest Period of
one (1) month or (y) the advance of a new Borrowing of Base Rate Loans under the
Revolving Credit (after converting, if necessary, the Reimbursement Obligation
into Dollars as provided in Section 10.19) on such day in the amount of the
Reimbursement Obligation then due, which Borrowing pursuant to this sub-clause
(y) shall be deemed to have been funded on such date by the Lenders in
accordance with Section 2.1(a) and to have been applied on such day to pay the
Reimbursement Obligation then due, in each case so long as no Event of Default
shall have occurred and be continuing or would occur as a result of such
Borrowing but otherwise disregarding the conditions to Borrowings set forth in
Section 4.2. Upon the occurrence and during the continuance of any Event of
Default, (i) each Eurodollar Loan will automatically, on the last day of the
then existing Interest Period therefor, convert into a Base Rate Loan and (ii)
the obligation of the Lenders to fund Loans in Pounds or Kroner and to make,
continue or convert Loans into, Eurodollar Loans shall be suspended.
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(d) Disbursement of Loans. Not later than 12:00 p.m. with respect to
Eurodollar Loans and 1:00 p.m. with respect to Base Rate Loans on the date of
any requested advance of a new Borrowing of Loans, each Lender, subject to all
other provisions hereof, shall make available its Loan comprising its ratable
share of such Borrowing in funds immediately available in New York, New York for
the benefit of the Agent and according to the disbursement instructions of the
Agent. The Agent shall make the proceeds of each such Borrowing available in
immediately available funds to the Borrower (or as directed in writing by
Borrower) on such date; provided that any portion of a Borrowing which the
Borrower intends to use to pay for the shares of Transocean tendered in
connection with the Mandatory Bid shall be made available by the Agent to the
bank which issues the Mandatory Bid Bank Guarantee or such other Person or
Persons as agreed by the Borrower and the Agent. In the event that any Lender
does not make such amounts available to the Agent by the time prescribed above,
but such amount is received later that day, such amount may be credited to the
Borrower in the manner described in the preceding sentence on the next Business
Day (with interest on such amount to begin accruing hereunder on such next
Business Day) provided that acceptance by the Borrower of any such late amount
shall not be deemed a waiver by the Borrower of any rights it may have against
such Lender. No Lender shall be responsible to the Borrower for any failure by
another Lender to fund its portion of a Borrowing, and no such failure by a
Lender shall relieve any other Lender from its obligation, if any, to fund its
portion of a Borrowing.
(e) Agent Reliance on Lender Funding. Unless the Agent shall have been
notified by a Lender before the date on which such Lender is scheduled to make
payment to the Agent of the proceeds of a Loan (which notice shall be effective
upon receipt) that such Lender does not intend to make such payment, the Agent
may assume that such Lender has made such payment when due and in reliance upon
such assumption may (but shall not be required to) make available to the
Borrower the proceeds of the Loan to be made by such Lender and, if any Lender
has not in fact made such payment to the Agent, such Lender shall, on demand,
pay to the Agent the amount made available to the Borrower attributable to such
Lender together with interest thereon for each day during the period commencing
on the date such amount was made available to the Borrower and ending on (but
excluding) the date such Lender pays such amount to the Agent at a rate per
annum equal to the Agent's cost of funds. If such amount is not received from
such Lender by the Agent immediately upon demand, the Borrower will, on demand,
repay to the Agent the proceeds of the Loan attributable to such Lender with
interest thereon at a rate per annum equal to the interest rate applicable to
the relevant Loan. Nothing in this subsection shall be deemed to relieve any
Lender from its obligation to fund its Commitments hereunder or to prejudice any
rights which the Borrower may have against any Lender as a result of any default
by such Lender hereunder.
(f) Conversion. If the Borrower shall elect to convert any particular
Borrowing from one Type of Loan to the other only in part, then, from and after
the date on which such conversion shall be effective, such particular Borrowing
shall, for all purposes of this Agreement (including, without limitation, for
purposes of subsequent application of this sentence) be deemed to instead
constitute two Borrowings (each originally advanced on the same date as such
particular Borrowing), one comprised of (subject to subsequent conversion in
accordance with this Agreement) Eurodollar Loans in an aggregate principal
amount equal to the portion of such Borrowing so elected by the Borrower to be
comprised of Eurodollar Loans and the second comprised of (subject to subsequent
conversion in accordance with this Agreement) Base Rate
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Loans in an aggregate principal amount equal to the portion of such particular
Borrowing so elected by the Borrower to be comprised of Base Rate Loans. If the
Borrower shall elect to have multiple Interest Periods apply to any particular
Borrowing comprised of Eurodollar Loans, then, from and after the date such
multiple Interest Periods commence, such particular Borrowing shall, for all
purposes of this Agreement (including, without limitation, for purposes of
subsequent application of this sentence), be deemed to constitute a number of
separate Borrowings (each originally advanced on the same date as such
particular Borrowing) equal to the number of, and corresponding to, the
different Interest Periods so elected, each such deemed separate Borrowing
corresponding to a particular selected Interest Period comprised of (subject to
subsequent conversion in accordance with this Agreement) Eurodollar Loans in an
aggregate principal amount equal to the portion of such particular Borrowing so
elected by the Borrower to have such Interest Period. This Section 2.5(f) shall
be applied appropriately in the event that the Borrower shall make the elections
described in the two preceding sentences at the same time with respect to the
same particular Borrowing. Nothing in this Section 2.5(f) shall affect the
categorization of a Loan as a Term Loan as opposed to a Revolving Loan.
Section 2.6. Interest Periods. As provided in Section 2.5(a), at the
time of each request for the advance or continuation of, or conversion into, a
Borrowing of Eurodollar Loans, the Borrower shall select an Interest Period(s)
applicable to such Loans from among the available options subject to the
limitations in Section 2.5(a); provided, however, that:
(i) the Borrower may not select an Interest Period for a Borrowing of
Loans that extends beyond the Maturity Date;
(ii) the Borrower may not select an Interest Period for a Borrowing of
Term Loans that would end after an Amortization Date if, as a result, the
aggregate principal amount of Term Loans scheduled to be outstanding with
Interest Periods ending after such Amortization Date would exceed the principal
amount of Term Loans permitted to be outstanding after such Amortization Date
unless the Borrower confirms its agreement to pay the breakage fees and funding
losses provided in Section 2.13 at the time of such selection;
(iii) whenever the last day of any Interest Period would otherwise be
a day that is not a Business Day, the last day of such Interest Period shall
either be (i) extended to the next succeeding Business Day, or (ii) reduced to
the immediately preceding Business Day if the next succeeding Business Day is in
the next calendar month; and
(iv) for purposes of determining an Interest Period, a month means a
period starting on one day in a calendar month and ending on the numerically
corresponding day in the next calendar month; provided, however, that if there
is no such numerically corresponding day in the month in which an Interest
Period is to end or if an Interest Period begins on the last Business Day of a
calendar month, then such Interest Period shall end on the last Business Day of
the calendar month in which such Interest Period is to end.
Section 2.7. Maturity of Loans. Each Revolving Loan shall mature and
become due and payable by the Borrower on the Maturity Date. The Borrower shall
repay a portion of the Term Loans on the last Business Day of each calendar
quarter, commencing December 31, 1996 (each an "Amortization Date"), in the
quarterly principal amounts set forth opposite such period
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on Schedule 2.7 (or, if less, the aggregate principal amount of Term Loans then
outstanding). The Borrower shall repay in full the unpaid principal amount of
the Term Loans on the Maturity Date.
Section 2.8. Applicable Interest Rates. (a) Base Rate Loans. Each Base
Rate Loan shall bear interest (computed on the basis of a 360-day year and
actual days elapsed excluding the date of repayment) on the unpaid principal
amount thereof from the date such Loan is made until maturity (whether by
acceleration or otherwise) or conversion to a Eurodollar Loan, at a rate per
annum equal to the lesser of (i) the Highest Lawful Rate, or (ii) the Base Rate
from time to time in effect, payable on each Interest Payment Date for such Loan
and at maturity (whether by acceleration or otherwise).
(b) Eurodollar Loans. Each Eurodollar Loan shall bear interest
(computed on the basis of a 360-day year and actual days elapsed, except with
respect to Eurodollar Loans funded in Pounds, in which case interest will be
computed on the basis of a 365-day year and actual days elapsed, in each case
excluding the date of repayment) on the unpaid principal amount thereof from the
date such Loan is made until maturity (whether by acceleration or otherwise) or
conversion to a Base Rate Loan at a rate per annum equal to the lesser of (i)
the Highest Lawful Rate, or (ii) the sum of Adjusted LIBOR plus the Applicable
Margin, payable on each Interest Payment Date for such Loan and at maturity
(whether by acceleration or otherwise) or conversion to a Base Rate Loan.
(c) Rate Determinations. The Agent shall determine each interest rate
applicable to the Loans and Reimbursement Obligations hereunder insofar as such
interest rate involves a determination of Adjusted LIBOR and such determination
shall be conclusive and binding except in the case of the Agent's manifest error
or willful misconduct. The Agent shall promptly give notice to the Borrower and
each Lender of each determination of Adjusted LIBOR with respect to each
Eurodollar Loan.
Section 2.9. Default Rate. If any payment of principal on any Loan is
not made when due after the expiration of the grace period therefor provided in
Section 7.1(a) (whether by acceleration or otherwise), such Loan shall bear
interest (computed on the basis of a year of 360, 365 or 366 days, as
applicable, and actual days elapsed) after such grace period expires until such
principal then due is paid in full, payable on demand, at a rate per annum equal
to:
(a) for any Base Rate Loan the lesser of (i) the Highest Lawful Rate,
or (ii) the sum of two percent (2%) per annum plus the Base Rate from time to
time in effect (but not less than the Base Rate in effect at maturity);
(b) for any Eurodollar Loan the lesser of (i) the Highest Lawful Rate,
or (ii) the sum of two percent (2%) per annum plus the rate of interest in
effect thereon at the time of such default until the end of the Interest Period
for such Loan and, thereafter, at a rate per annum equal to the sum of two
percent (2%) per annum plus the Base Rate from time to time in effect (but not
less than the Base Rate in effect at maturity); and
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<PAGE>
(c) for any unpaid Reimbursement Obligations, the lesser of (i) the
Highest Lawful Rate, or (ii) the sum of two percent (2%) per annum plus the Base
Rate from time to time in effect (but not less than the Base Rate in effect at
maturity).
It is the intention of the Agent and the Lenders to conform strictly to usury
laws applicable to them. Accordingly, if the transactions contemplated hereby or
the Loans would be usurious as to any of the Lenders under laws applicable to it
(including the laws of the United States of America and the State of New York or
any other jurisdiction whose laws may be mandatorily applicable to such Lender
notwithstanding the other provisions of this Agreement, the Notes or any other
Credit Document), then, in that event, notwithstanding anything to the contrary
in this Agreement, the Notes or any other Credit Document, it is agreed as
follows: (i) the aggregate of all consideration which constitutes interest under
laws applicable to such Lender that is contracted for, taken, reserved, charged
or received by such Lender under this Agreement, the Notes or any other Credit
Document or otherwise shall under no circumstances exceed the Highest Lawful
Rate, and any excess shall be credited by such Lender on the principal amount of
the Notes or to the Reimbursement Obligations (or, if the principal amount of
the Notes and all Reimbursement Obligations shall have been paid in full,
refunded by such Lender to the Borrower); and (ii) in the event that the
maturity of the Notes is accelerated by reason of an election of the holder or
holders thereof resulting from any Event of Default hereunder or otherwise, or
in the event of any required or permitted prepayment, then such consideration
that constitutes interest under laws applicable to such Lender may never include
more than the Highest Lawful Rate, and excess interest, if any, provided for in
this Agreement, the Notes, any other Credit Document or otherwise shall be
automatically canceled by such Lender as of the date of such acceleration or
prepayment and, if theretofore paid, shall be credited by such Lender on the
principal amount of the Notes or to the Reimbursement Obligations (or if the
principal amount of the Notes and all Reimbursement Obligations shall have been
paid in full, refunded by such Lender to the Borrower). To the extent that
Article 5069-1.04 of the Texas Revised Civil Statutes is relevant to the Agent
and the Lenders for the purpose of determining the Highest Lawful Rate, the
Agent and the Lenders hereby elect to determine the applicable rate ceiling
under such Article by the indicated (weekly) rate ceiling from time to time in
effect, subject to their right subsequently to change such method in accordance
with applicable law. In the event the Loans and all Reimbursement Obligations
are paid in full by the Borrower prior to the full stated term of the Loans and
the interest received for the actual period of the existence of the Loans
exceeds the Highest Lawful Rate, the Lenders shall refund to the Borrower the
amount of the excess or shall credit the amount of the excess against amounts
owing under the Loans and none of the Agent or the Lenders shall be subject to
any of the penalties provided by law for contracting for, taking, reserving,
charging or receiving interest in excess of the Highest Lawful Rate. Tex. Rev.
Civ. Stat. Ann. Art. 5069, Ch. 15 (which regulates certain revolving credit loan
accounts and revolving tri-party accounts) shall not apply to this Agreement or
the Notes.
Section 2.10. Optional Prepayments. The Borrower shall have the
privilege of prepaying Base Rate Loans without premium or penalty at any time in
whole or at any time and from time to time in part (but, if in part, then in an
amount which is equal to or greater than $1,000,000); provided, however, that
the Borrower shall have given notice of such prepayment to the Agent no later
than 12:00 p.m. on the date of such prepayment. The Borrower shall have the
privilege of prepaying Eurodollar Loans (a) without premium or penalty in whole
or in part
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(but, if in part, then in an amount which is equal to or greater than $5,000,000
(or the equivalent thereof in Pounds or Kroner, as applicable and as determined
in accordance with Section 10.19)) only on the last Business Day of an Interest
Period for such Loan, and (b) at any other time so long as the breakage fees and
funding losses provided for in Section 2.13 are paid; provided, however, that
the Borrower shall have given notice of such prepayment to the Agent no later
than 12:00 p.m. at least three (3) Business Days before the last Business Day of
such Interest Period or the proposed prepayment date. Any such prepayments shall
be made by the payment of the principal amount to be prepaid and accrued and
unpaid interest thereon to the date of such prepayment. Optional prepayments
shall be applied as selected by the Borrower to the Term Loans or the Revolving
Loans. Optional prepayments on the Term Loans shall be credited against the
remaining required Term Loan payments pursuant to Section 2.7 on a pro rata
basis to the remaining payments, and upon the prepayment in full of all Term
Loans, any optional prepayments shall then be applied to the outstanding balance
of the Revolving Loans. Amounts prepaid on the Term Loans may not be reborrowed.
Optional prepayments of the Revolving Loans shall be applied to the Revolving
Loans, then pro rata to the Reimbursement Obligations with respect to Letters of
Credit.
Section 2.11. Mandatory Prepayments of Loans. If the aggregate Dollar
equivalent principal amount of outstanding Revolving Loans and L/C Obligations
determined in accordance with Section 10.19 shall exceed the Revolving Credit
Commitment Amount then in effect, the Borrower shall, immediately and without
notice or demand, pay the amount of such excess to the Agent for the ratable
benefit of the Lenders as a prepayment of the Revolving Loans, provided that the
Dollar equivalent of any Revolving Loans funded or Letters of Credit issued in
Pounds or Kroner shall be determined only on the date any such Revolving Loan is
initially funded, continued or converted or such Letter of Credit is issued or
extended, as the case may be. Any mandatory prepayment of Revolving Loans
pursuant hereto shall not be limited by the notice provision for prepayments set
forth in Section 2.10, but immediately upon determining the need to make any
such prepayment, the Borrower shall notify the Agent of such required prepayment
and of the identity of the particular Revolving Loans being prepaid. Each such
prepayment shall be accompanied by a payment of all accrued and unpaid interest
on the Revolving Loans prepaid and any applicable breakage fees and funding
losses pursuant to Section 2.13.
(b) Within ninety (90) days after receipt by the Borrower or any of
its Subsidiaries of (i) Net Cash Proceeds from any Transfer of an asset or group
of assets (except Transfers permitted by Section 6.19(a), (b), (c), (d), (e)
(disregarding Section 6.13(e)), (f), (g), (i) or (k)), in excess in the
aggregate in any fiscal year of $25,000,000, the Borrower shall make a mandatory
prepayment of the Term Loans in an amount equal to such excess Net Cash
Proceeds; provided, however, the Borrower shall not be required to make such
mandatory prepayments to the extent that the Borrower or any of its Subsidiaries
makes investments in Permitted Businesses within six (6) months of the receipt
of any such Net Cash Proceeds. Within ten (10) days after receipt by the
Borrower of the proceeds of any subordinated debt issue which is issued pursuant
to Section 6.15(j), the Borrower shall make a mandatory prepayment of the Term
Loans in an amount equal to 40% of the net proceeds of such subordinated debt
issue. Amounts prepaid on the Term Loans may not be reborrowed. Each prepayment
pursuant to this Section 2.11(b) shall be credited against the remaining
required Term Loan payments pursuant to Section 2.7 on a pro rata basis, and
upon the prepayment in full of all Term Loans, the mandatory prepayments shall
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then be applied to the outstanding balance of the Revolving Loans. Each such
prepayment shall be accompanied by a payment of all accrued and unpaid interest
on the Loans prepaid and any applicable breakage fees and funding losses
pursuant to Section 2.13.
Section 2.12. The Notes. (a) The Revolving Loans outstanding to the
Borrower from each Lender shall be evidenced by three promissory notes of the
Borrower payable to such Lender in the forms of Exhibits 2.12A (U.S. Dollars),
2.12B (British Pounds Sterling) and 2.12C (Norwegian Kroner), respectively (each
a "Revolving Note"). The Term Loans outstanding to the Borrower from each Term
Lender shall be evidenced by a single promissory note of the Borrower payable to
such Term Lender in the form of Exhibit 2.12D (each a "Term Note").
(b) Each holder of a Note shall record on its books and records or on
a schedule to its appropriate Note (and prior to any transfer of its Notes shall
endorse thereon or on schedules forming a part thereof appropriate notations to
evidence) the amount of each Loan outstanding from it to the Borrower, all
payments of principal and interest and the principal balance from time to time
outstanding thereon, the type of such Loan and, if a Eurodollar Loan, the
Interest Period and interest rate applicable thereto. Such record, whether shown
on the books and records of a holder of a Note or on a schedule to its Note,
shall be prima facie evidence as to all such matters; provided, however, that
the failure of any holder to record any of the foregoing or any error in any
such record shall not limit or otherwise affect the obligation of the Borrower
to repay all Loans outstanding to it hereunder together with accrued interest
thereon. At the request of any holder of a Note and upon such holder tendering
to the Borrower the Note to be replaced, the Borrower shall furnish a new Note
to such holder to replace any outstanding Note and at such time the first
notation appearing on the schedule on the reverse side of, or attached to, such
new Note shall set forth the aggregate unpaid principal amount of all Loans, if
any, then outstanding thereon.
Section 2.13. Breakage Fees. If any Lender incurs any loss, cost or
expense (excluding loss of anticipated profits) by reason of the liquidation or
re-employment of deposits or other funds acquired by such Lender to fund or
maintain any Eurodollar Loan as a result of any of the following events other
than any such occurrence as a result of a change of circumstance described in
Sections 8.1 or 8.2:
(a) any payment, prepayment or conversion of a Eurodollar Loan on a
date other than the last day of its Interest Period (whether by acceleration,
mandatory prepayment or otherwise);
(b) any failure to make a principal payment of a Eurodollar Loan on
the due date therefor; or
(c) any failure by the Borrower to borrow, continue or prepay, or
convert to, a Eurodollar Loan on the date specified in a notice given pursuant
to Section 2.5(a) (other than by reason of a default of such Lender),
then the Borrower shall pay to such Lender such amount as will reimburse such
Lender for such loss, cost or expense. If any Lender makes such a claim for
compensation, it shall provide to the Borrower a certificate executed by an
officer of such Lender setting forth the amount of such
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loss, cost or expense in reasonable detail (including an explanation of the
basis for and the computation of such loss, cost or expense) no later than
ninety (90) days after the event giving rise to the claim for compensation, and
the amounts shown on such certificate shall be conclusive and binding absent
manifest error. Within ten (10) days of receipt of such certificate, the
Borrower shall pay directly to such Lender such amount as will compensate such
Lender for such loss, cost or expense as provided herein, unless such Lender has
failed to timely give notice to the Borrower of such claim for compensation as
provided herein, in which event the Borrower shall not have any obligation to
pay such claim.
Section 2.14. Commitment Terminations.
(a) The Borrower shall have the right at any time and from time to
time, upon three (3) Business Days' prior and irrevocable written notice to the
Agent, to terminate or reduce the Revolving Credit Commitments without premium
or penalty, in whole or in part, any partial termination to be (i) in an amount
not less than $5,000,000 as determined by the Borrower and in integral multiples
of $5,000,000, and (ii) allocated ratably among the Lenders in proportion to
their respective Revolving Credit Commitments; provided, that the Revolving
Credit Commitment Amount may not be reduced to an amount less than the sum of
the aggregate principal amount of outstanding Revolving Loans plus the aggregate
undrawn face amount of outstanding Letters of Credit plus any unpaid
Reimbursement Obligations with respect to Letters of Credit after converting, if
necessary, any such outstanding Obligations to Dollars in accordance with
Section 10.19 and after giving effect to payments on such proposed termination
or reduction date, unless the Borrower provides to the Agent cash collateral in
an amount sufficient to cover such shortage or back to back letters of credit
from a bank(s) or financial institution(s) whose short-term unsecured debt
rating is rated A or above from either S&P or Moody's or such other bank(s) or
financial institution(s) satisfactory to the Majority Lenders in an amount equal
to the undrawn face amount of any applicable outstanding Letters of Credit with
an expiration date of at least five (5) days after the expiration date of any
applicable Letter of Credit and which provide that the Agent may make a drawing
thereunder in the event that it pays a drawing under such Letter of Credit. The
Agent shall give prompt notice to each Lender of any such termination or
reduction of the Revolving Credit Commitments. Any termination of Revolving
Credit Commitments pursuant to this Section 2.14(a) is permanent and may not be
reinstated.
(b) The Borrower shall have the right at any time and from time to
time, upon three (3) Business Days' prior and irrevocable written notice to the
Agent, to terminate or reduce the Term Credit Commitments without premium or
penalty, in whole or in part, any partial termination to be (i) in an amount not
less than $5,000,000 as determined by the Borrower and in integral multiples of
$5,000,000, and (ii) allocated ratably among the Lenders in proportion to their
respective Term Credit Commitments; provided, that the Term Credit Commitment
Amount may not be reduced to an amount less than the sum of the aggregate
principal amount of outstanding Term Loans. The Agent shall give prompt notice
to each Lender of any termination or reduction of the Term Credit Commitments.
Any termination of Term Credit Commitments pursuant to this Section 2.14(b) is
permanent and may not be reinstated.
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SECTION 3. FEES AND PAYMENTS.
Section 3.1. Fees. (a) Commitment Fees. For the period from the
Effective Date to and including the Maturity Date with respect to the Revolving
Credit, and from the Effective Date to and including the Mandatory Bid Payment
Date with respect to the Term Credit, the Borrower shall pay to the Agent for
the ratable account of the Lenders, a commitment fee (computed on a basis of a
360-day year and actual days elapsed) on the average daily difference between
(x) the Revolving Credit Commitment Amount and the Revolving Obligations with
respect to the Revolving Credit, and (y) the Term Credit Commitment Amount and
the aggregate outstanding principal amount of the Term Loans with respect to the
Term Credit, such commitment fees to be calculated, for any day, either (i) at
such times as the relevant Total Funded Debt to Total Capital Ratio (expressed
as a percentage) is in one of the following ranges, the percentage per anum set
forth opposite such Total Funded Debt to Total Capital Ratio set forth below:
Total Funded Debt to Total Capital Ratio Commitment Fee
- ---------------------------------------- --------------
Less than 20% 0.125%
Equal to or greater than 20%
but less than 25% 0.150%
Equal to or greater than 25%
but less than 30% 0.150%
Equal to or greater than 30%
but less than 35% 0.175%
Equal to or greater than 35% 0.225%
or (ii) at such times as an investment grade rating (either express or
implied) by S&P or Moody's (or in the event that both cease the issuance of debt
ratings generally, such other rating agency agreed to by the Borrower and the
Agent) is in effect on the Borrower's senior unsecured long-term debt and if
such percentage per annum is lower than the percentage determined in accordance
with (i) above, the percentage per annum set forth opposite such investment
grade rating:
Debt Rating Commitment Fee
----------- --------------
BBB+/Baa1 or above 0.110%
BBB/Baa2 0.125%
BBB-/Baa3 0.150%
If the ratings issued by S&P and Moody's differ by one rating, the higher
rating shall apply to determine the commitment fees. If the ratings issued by
S&P and Moody's differ by two ratings, the rating which falls between them shall
apply to determine the commitment fees. If the ratings in effect on the
Borrower's senior unsecured long-term debt applied to determine the commitment
fees as provided above falls below the investment grade ratings listed above,
the commitment fees will be determined based on the Total Funded Debt to Total
Capital Ratio grid
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as set forth in (i) above. Such fees shall be payable in arrears commencing on
September 30, 1996, and on the last Business Day of each calendar quarter
thereafter and on the Maturity Date for the Revolving Loans or the Mandatory Bid
Payment Date with respect to the Term Credit, as applicable, unless the
Revolving Credit Commitment or the Term Credit Commitment, as applicable, is
terminated in whole on an earlier date, in which event the commitment fees with
respect thereto for the period to but not including the date of such termination
shall be paid in whole on the date of such termination. Any change to the
commitment fees as a result of a change in the Total Funded Debt to Total
Capital Ratio or any changes in such ratings shall be effective as of the date
provided in the definition of Applicable Margin.
(b) Letter of Credit Fees. Commencing upon the date of issuance or
extension of any Letter of Credit and thereafter on the last Business Day of
each calendar quarter, the Borrower shall pay to the Agent quarterly in advance,
for the period until the next Letter of Credit fee payment date, for the ratable
account of the Lenders, a non-refundable fee payable in Dollars equal to the
Applicable Margin multiplied by the outstanding face amount of such Letter of
Credit during such upcoming period calculated on the basis of a 360 day year and
actual days elapsed and based on the then scheduled expiration date of the
Letter of Credit. For any Letter of Credit issued with a face amount in Pounds
or Kroner, the fees shall be converted into Dollars in accordance with Section
10.19 as of two (2) days before the issuance date thereof, and thereafter five
(5) days before any fee with respect thereto shall be due and payable hereunder.
In addition, the Borrower shall pay to the Agent solely for the Agent's account,
in connection with each Letter of Credit, administrative and amendment fees and
expenses for letters of credit as agreed from time to time between the Agent and
the Borrower.
(c) Agent Fees. The Borrower shall pay to the Agent the fees from time
to time agreed to by the Borrower and the Agent.
Section 3.2. Place and Application of Payments. (a) All payments of
principal of and interest on the Loans, of Reimbursement Obligations and of all
other amounts payable by the Borrower under the Credit Documents shall be made
by the Borrower to the Agent by no later than 2:30 p.m. on the due date thereof
at the office of the Agent in New York, New York (or such other location in the
United States as the Agent may designate to the Borrower) for the benefit of the
Lenders entitled to such payments. Any payments received by the Agent from the
Borrower after 2:30 p.m. shall be deemed to have been received on the next
Business Day. If the Borrower does not, or is unable for any reason to, effect
payment of a Revolving Loan or Reimbursement Obligation to the Lenders in the
applicable currency or if the Borrower shall default in the payment when due of
any payment in such currency, the Lenders may, at their option, require such
payment to be made to the Lenders in the Dollars equivalent of such currency
determined in accordance with Section 10.19. With respect to any amount due and
payable in Pounds or Kroner, the Borrower agrees to hold the Lenders harmless
from any losses incurred by the Lenders arising from any change in the value of
Dollars in relation to such currency between the date such payment became due
and the date of payment thereof. The Agent will, on the same day each payment is
received or deemed to have been received in accordance with this Section 3.2,
cause to be distributed like funds in like currency to each Lender owed an
Obligation for which such payment was received, pro rata based on the respective
amounts of such type of Obligation then owing to each Lender.
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(b) If any payment received by the Agent under any Credit Document is
insufficient to pay in full all amounts then due and payable to the Agent and
the Lenders under the Credit Documents, such payment shall be distributed by the
Agent and applied by the Agent and the Lenders in the order set forth in Section
7.7. In calculating the amount of Obligations owing each Lender other than for
principal and interest on Loans and Reimbursement Obligations and fees under
Section 3.1, the Agent shall only be required to include such other Obligations
that Lenders have certified to the Agent in writing are due to such Lenders.
Section 3.3. Withholding Taxes. (a) Payments Free of Withholding.
Except as otherwise required by law and subject to Section 3.3(b), each payment
by the Borrower or any Guarantor to any Lender or the Agent under this Agreement
or any other Credit Document shall be made without withholding for or on account
of any present or future taxes imposed by or within the jurisdiction in which
the Borrower or such Guarantor is domiciled, any jurisdiction from which the
Borrower or such Guarantor makes any payment, or (in each case) any political
subdivision or taxing authority thereof or therein, excluding, in the case of
each Lender and the Agent, taxes, assessments or other governmental charges
(i) imposed on, based upon, or measured by its income, and branch
profits, franchise and similar taxes imposed on it, by any jurisdiction in which
such Lender or the Agent, as the case may be, is incorporated or maintains its
principal place of business or Lending Office or which subjects such Lender or
the Agent to tax by reason of a connection between the taxing jurisdiction and
such Lender or the Agent (other than a connection resulting from the
transactions contemplated by this Agreement);
(ii) imposed as a result of a connection between the taxing
jurisdiction and such Lender or the Agent, as the case may be, other than a
connection resulting from the transactions contemplated by this Agreement;
(iii) imposed as a result of the transfer by such Lender of its
interest in this Agreement or any other Credit Document or a designation by such
Lender (other than pursuant to Section 8.3(c)) of a new Lending Office (other
than taxes imposed as a result of any change in treaty, law or regulation after
such transfer of such Lender's interest in this Agreement or any other Credit
Document or designation of a new Lending Office);
(iv) imposed by the United States of America upon a Lender organized
under the laws of a jurisdiction outside of the United States, except to the
extent that such tax is imposed or increased as a result of any change in
applicable law, regulation or treaty (other than any addition of or change in
any "anti-treaty shopping," "limitation of benefits," or similar provision
applicable to a treaty) after the date hereof, in the case of each Lender
originally a party hereto or, in the case of any Purchasing Lender (as defined
in Section 10.10), after the date on which it becomes a Lender; or
(v) which would not have been imposed but for (a) the failure of any
Lender or the Agent, as the case may be, to provide (I) an Internal Revenue
Service Form 1001 or 4224, as the case may be, or any substitute or successor
form prescribed by the Internal Revenue Service, pursuant to Section 3.3(b), or
(II) any other certification, documentation or proof which is reasonably
requested by the Borrower, or (b) a
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determination by a taxing authority or a court of competent jurisdiction that a
certification, documentation or other proof provided by such Lender or the Agent
to establish an exemption from such tax, assessment or other governmental charge
is false
(all such non-excluded taxes, assessments or other governmental charges and
liabilities being hereinafter referred to as "Indemnified Taxes"). If any such
withholding is so required, the Borrower or such Guarantor, as applicable, shall
make the withholding, pay the amount withheld to the appropriate governmental
authority before penalties attach thereto or interest accrues thereon and
forthwith pay such additional amount as may be necessary to ensure that the net
amount actually received by each Lender and the Agent is free and clear of such
Indemnified Taxes (including Indemnified Taxes on such additional amount) and is
equal to the amount that such Lender or the Agent (as the case may be) would
have received had such withholding not been made. If the Agent or any Lender
pays any amount in respect of any Indemnified Taxes, penalties or interest, the
Borrower or such Guarantor, as applicable, shall reimburse the Agent or that
Lender for the payment on demand in the currency in which such payment was made.
If the Borrower or such Guarantor pays any Indemnified Taxes, or penalties or
interest in connection therewith, it shall deliver official tax receipts
evidencing the payment or certified copies thereof, or other satisfactory
evidence of payment if such tax receipts have not yet been received by the
Borrower or such Guarantor (with such tax receipts to be promptly delivered when
actually received), to the Lender or Agent on whose account such withholding was
made (with a copy to the Agent if not the recipient of the original) within
fifteen (15) days of such payment. Each such Lender shall make written demand
on the Borrower for indemnification or compensation hereunder no later than
ninety (90) days after the earlier of (i) the date on which such Lender or the
Agent makes payment of Indemnified Taxes, and (ii) the date on which the
relevant taxing authority or other governmental authority makes written demand
upon such Lender or the Agent for payment of Indemnified Taxes. In the event
that such Lender or the Agent fails to give the Borrower timely notice as
provided herein, the Borrower shall not have any obligation to pay such claim
for compensation or indemnification.
(b) U.S. Withholding Tax Exemptions. Each Lender that is not a United
States person (as such term is defined in Section 7701(a)(30) of the Code) shall
submit to the Borrower and the Agent on or before the Initial Borrowing Date,
two duly completed and signed copies of either Form 1001 (entitling such Lender
to a complete exemption from withholding under the Code on all amounts to be
received by such Lender, including fees, pursuant to the Credit Documents) or
Form 4224 (relating to all amounts to be received by such Lender, including
fees, pursuant to the Credit Documents) of the United States Internal Revenue
Service. Thereafter and from time to time, each such Lender shall submit to the
Borrower and the Agent such additional duly completed and signed copies of one
or the other of such forms (or such successor forms as shall be adopted from
time to time by the relevant United States taxing authorities) as may be (i)
notified by the Borrower, directly or through the Agent, to such Lender, and
(ii) required under then-current United States law or regulations to avoid
United States withholding taxes on payments in respect of all amounts to be
received by such Lender, including fees, pursuant to the Credit Documents. Upon
the request of the Borrower, each Lender that is a United States person shall
submit to the Borrower a certificate to the effect that it is such a United
States person.
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(c) Inability of Lender to Submit Forms. If any Lender determines, as
a result of any change in applicable law, regulation or treaty, or in any
official application or interpretation thereof, that it is unable to submit to
the Borrower or Agent any form or certificate that such Lender is obligated to
submit pursuant to subsection (b) of this Section 3.3 or that such Lender is
required to withdraw or cancel any such form or certificate previously submitted
or any such form or certificate otherwise becomes ineffective or inaccurate,
such Lender shall promptly notify the Borrower and Agent of such fact and the
Lender shall to that extent not be obligated to provide any such form or
certificate and will be entitled to withdraw or cancel any affected form or
certificate, as applicable.
(d) Refund of Taxes. If any Lender or the Agent receives a refund of
any Indemnified Tax or any tax referred to in Section 10.3 with respect to which
the Borrower or any Guarantor has paid any amount pursuant to this Section 3.3
or Section 10.3, such Lender or the Agent shall pay the amount of such refund
(including any interest received with respect thereto) to the Borrower or such
Guarantor.
SECTION 4. CONDITIONS PRECEDENT.
Section 4.1. Initial Borrowing. The obligation of each Lender to
advance the initial Loans hereunder and of the Agent to issue any Letter of
Credit on the Initial Borrowing Date is subject to the following conditions
precedent, all in form and substance satisfactory to the Agent (and which shall
be evidenced by the making of such Loan(s) and, if applicable, the issuance of
such Letter(s) of Credit), all in sufficient number of signed counterparts,
where applicable, to provide one for each Lender (except for the Notes, of which
only one original shall be signed for each Lender):
(a) The Agent shall have received:
(i) Notes. The duly executed Notes of the Borrower;
(ii) Stock Pledge Agreement. The duly executed Stock Pledge Agreement
from the Borrower in substantially the form of Exhibit 4.1A, together with all
of the pledged securities referred to in Schedule 4.1 as required to be
delivered to effectuate and perfect such stock pledge, accompanied by an
executed and undated stock power in blank, or such other instrument, as may be
required under applicable law to perfect the pledge and two (2) UCC-1 Financing
Statements covering such pledged securities to be filed in the Office of the
Secretary of State of each of Delaware and Texas;
(iii) Note Pledge Agreement. The duly executed Note Pledge Agreement
from the Borrower in substantially the form of Exhibit 4.1B, together with the
Pledged Notes (as defined therein) then existing duly endorsed (without
recourse) to the Agent and two (2) UCC-1 Financing Statements covering such
Pledged Notes to be filed in the Office of the Secretary of State of each of
Delaware and Texas;
(iv) Subsidiary Guaranties. The duly executed Subsidiary Guaranties
of the Guarantors in substantially the form of Exhibit 4.1C;
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(v) Certificates of Officers of Credit Parties. Certificates of the
Secretary or Assistant Secretary and the President or Vice President of each
Credit Party containing specimen signatures of the persons authorized to execute
Credit Documents on each Credit Party's behalf or any other documents provided
for herein or therein, together with (x) copies of resolutions of the Board of
Directors or other appropriate body of each Credit Party authorizing the
execution and delivery of the Credit Documents to which it is a party and of all
other legal documents or proceedings taken by the Credit Parties in connection
with the execution and delivery of the Credit Documents, (y) copies of each
Credit Party's Certificate or Articles of Incorporation, certified by the
Secretary of State or other applicable entity of such Credit Party's
jurisdiction of organization and bylaws or other governing documents, and (z) a
certificate of existence and good standing from the appropriate governing agency
of such Credit Party's jurisdiction of organization and of such other
jurisdictions where such Credit Party is authorized to do business as and to the
extent agreed with the Agent;
(vi) Regulatory Filings. All actions and proceedings required by
applicable law or regulation to have been taken prior to or on the Exchange
Offer Consummation Date in order for the Borrower to be able lawfully to
consummate the Exchange Offer, the Mandatory Bid and the Compulsory Acquisition,
if necessary, shall have been taken, all waiting periods thereunder and therefor
shall have expired or terminated without any action being taken by any competent
authority which restrains, prevents or imposes materially adverse conditions
upon the consummation of the Exchange Offer, the Mandatory Bid and the
Compulsory Acquisition, if necessary, and all consents, waivers, and approvals
(including, without limitation, those of any governmental authority or
regulatory body) necessary to have been given or obtained prior to or on the
Exchange Offer Consummation Date in order for the Borrower to be able lawfully
to consummate the Exchange Offer, the Mandatory Bid and the Compulsory
Acquisition, if necessary, shall have been given or obtained and remain in full
force and effect;
(vii) Lien Searches. The results of recent lien searches and Uniform
Commercial Code searches showing no Liens on any of the property or assets of
any of the Borrower or its Material Subsidiaries other than Permitted Liens, or
evidence that any such Liens other than Permitted Liens have been terminated or
will be terminated concurrently with the Initial Borrowing Date;
(viii) Certificate of Financial Condition. A certificate of the Chief
Financial Officer of the Borrower documenting the solvency of the Borrower and
its Subsidiaries on a consolidated basis, after giving effect to the Borrowings
on the Initial Borrowing Date hereunder and the consummation of the Exchange
Offer;
(ix) Insurance Certificate. An insurance certificate dated within ten
(10) days of the Initial Borrowing Date from the Borrower describing in
reasonable detail the insurance maintained by the Borrower and its Subsidiaries
as required by the Credit Documents;
(x) Fees. Payment of all fees and all expenses incurred through the
Effective Date then due and owing to the Agent and the Lenders pursuant to this
Agreement;
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(xi) Compliance Certificate. A duly executed pro forma Compliance
Certificate;
(xii) Consents. Certified copies of all documents evidencing any
necessary corporate action, consents and governmental approvals (if any) taken
or obtained by any Credit Party with respect to the Credit Documents;
(xiii) Opinions of Counsel. The opinions of Hughes Hubbard & Reed LLP,
legal counsel to the Borrower, and Eric B. Brown, Esq., General Counsel to the
Borrower, in substantially the forms attached as Exhibit 4.1D and 4.1E,
respectively;
(xiv) Exchange Offer Matters.
(1) All of the Combination Conditions, except the Due Diligence
Condition, the Regulatory Approval Condition and the Sonat Offshore Stockholder
Approval Condition (to the extent such latter condition relates to proposals
other than the Exchange Offer Proposal) (each term as defined in the Combination
Conditions), shall have been satisfied in full (without amendment or waiver of,
or other forbearance to exercise any rights with respect to, any of the terms
and provisions thereof and without giving effect to the judgment or discretion
of the Borrower set forth therein to proceed with the Exchange Offer provided
that the applicable percentage contained in the Minimum Condition (as defined in
the Combination Conditions) may be reduced by the Borrower to not less than
78%);
(2) All of the Exchange Conditions shall have been satisfied in full
(or waived by the Borrower, provided that the waiver of any of such Exchange
Conditions is not reasonably likely to have a Material Adverse Effect);
(3) No judgment, order, injunction or other similar restraint
prohibiting or imposing materially adverse conditions upon the purchase of
shares of Transocean by the Borrower pursuant to the Exchange Offer and, if
necessary, the Mandatory Bid or the Compulsory Acquisition shall be outstanding,
and no actions, suits or proceedings shall be pending or threatened with respect
to the Borrower or Transocean or their respective Subsidiaries which is
reasonably likely to have a material adverse effect on the Exchange Offer;
(4) The Borrower has such amount of cash and/or reasonably anticipated
net cash flow from operations as will enable it, when added to the proceeds of
the initial Loans hereunder, the amounts available to be drawn hereunder and
other anticipated sources of Indebtedness permitted under Section 6.15 and of
Non-recourse Debt, to consummate the Exchange Offer and, if necessary, the
Mandatory Bid and the Compulsory Acquisition (and to do so in compliance with
Regulations G, U, and X of the Board of Governors of the Federal Reserve
System), to fund the Borrower's reasonably anticipated capital expenditure needs
for the period of three (3) months after the Exchange Offer Consummation Date
and to maintain cash reserves and/or availability under the Revolving Credit of
$50,000,000 for such three-month period, all as demonstrated by the Borrower to
the satisfaction of the Agent in its sole discretion;
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(5) The Agent shall have received a certificate of the Borrower to the
effect that the Borrower shall have purchased or shall, within five (5) Business
Days of the initial Loans hereunder, purchase, pursuant to the Exchange Offer at
least that number of shares of Transocean that, when added to the number of
shares of stock already owned by it, represents at least 78% of the outstanding
shares of Transocean on a fully-diluted basis;
(6) The shares of stock of Transocean purchased or to be purchased, as
the case may be, in the Exchange Offer, when so purchased in accordance with the
Exchange Offer, were when purchased or will be when purchased, as the case may
be, free and clear of all restrictions to purchase imposed by applicable laws or
otherwise and any voting trusts, proxies, or similar arrangements or applicable
laws or regulations that would restrict the Borrower's right to exercise the
voting rights attributable to such shares;
(7) The Lenders shall have received a copy, certified by the Borrower
as true, correct and complete, of the Exchange Offer Documents; and
(xv) An intercreditor agreement in substantially the form of Exhibit
4.1F (the "Intercreditor Agreement") executed by the Noteholders and delivered
(unless all notes issued under the Note Purchase Agreements are being paid with
the initial Borrowings hereunder), which agreement the Agent shall execute and
deliver on behalf of the Lenders.
Any of the conditions precedent contained in Sections 4.1(a)(v), (vi), (vii),
(viii), (ix), (xi), (xii) and (xiv) may be waived with the consent of the
Required Lenders. Any of the forms of the documents referenced in Sections
4.1(a)(i), (ii), (iii), (iv), (xiii) and (xv) may be amended with the consent of
the Majority Lenders unless the approval of all Lenders would otherwise be
required under Section 10.11.
(b) All legal matters incident to the execution and delivery of the
Credit Documents shall be reasonably satisfactory to the Agent.
Section 4.2. All Borrowings. In the case of each advance of a
Borrowing hereunder (including the issuance of, increase in the amount of, or
extension of the expiration date of, a Letter of Credit and the initial
Borrowing hereunder (but subject to Sections 2.2(b) and 2.5(c)):
(a) Notices. In the case of a Borrowing, the Agent shall have received
the Borrowing Request required by the first sentence of Section 2.5, and in the
case of the issuance, extension or increase of a Letter of Credit, the Agent
shall have received a duly completed Issuance Request and Application for such
Letter of Credit, as the case may be, meeting the requirements of Section 2.2;
(b) Warranties True and Correct. Each of the representations and
warranties of the Borrower and its Subsidiaries set forth herein and in the
other Credit Documents shall be true and correct in all material respects as of
the time of such new Borrowing, except as a result of the transactions expressly
permitted hereunder or thereunder and except to the extent that any
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such representation or warranty relates solely to an earlier date, in which case
it shall have been true and correct in all material respects as of such earlier
date;
(c) No Default. No Default or Event of Default shall have occurred and
be continuing or would occur as a result of such Borrowing; and
(d) Regulation G, U and X. The Borrowings to be made by the Borrower
shall not result in the Borrower or any Lender being in non-compliance with or
in violation of Regulation G, U or X of the Board of Governors of the Federal
Reserve System.
Each acceptance by the Borrower of an advance of a Borrowing or of the
issuance of, increase in the amount of, or extension of the expiration date of,
a Letter of Credit shall be deemed to be a representation and warranty by the
Borrower on the date of such Borrowing, or issuance of, increase in the amount
of, or extension of the expiration date of, such Letter of Credit, as the case
may be, that all conditions precedent to such Borrowing set forth in this
Section 4.2 and in Section 4.1 with respect to the initial Borrowings hereunder
have (except to the extent waived in accordance with the terms hereof) been
satisfied or fulfilled unless the Borrower gives to the Lenders written notice
to the contrary, in which case none of the Lenders shall be required to fund
such advances and the Agent shall not be required to issue, increase the amount
of or extend the expiration date of such Letter of Credit unless the Majority
Lenders shall have previously waived in writing such non-compliance.
SECTION 5. REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants to each Lender and the Agent as
follows (it being understood and agreed that the following representations and
warranties, to the extent made (or deemed made) prior to or on the Initial
Borrowing Date and insofar as they relate to Transocean and its Subsidiaries,
are to the knowledge of the officers of the Borrower and are based solely on the
Borrower's review of publicly available information and certain confidential
information made available to the Borrower by Transocean without making any
representation or warranty as to the accuracy of any such information):
Section 5.1. Corporate Organization. (a) The Borrower and each of its
Material Subsidiaries: (i) is a duly organized and existing corporation (or
other Person) in good standing under the laws of the jurisdiction of its
organization; (ii) has all necessary corporate power (or comparable power, in
the case of a Material Subsidiary that is not a corporation) to own the property
and assets it uses in its business and otherwise to carry on its present
business; and (iii) is duly licensed or qualified and in good standing in each
jurisdiction in which the nature of the business transacted by it or the nature
of the property owned or leased by it makes such licensing or qualification
necessary except where the failure to be so licensed or qualified or to be in
good standing, as the case may be, would not have a Material Adverse Effect.
(b) As of the Effective Date, the Borrower and Transocean each has no
Subsidiaries other than those Subsidiaries listed on Schedule 5.1. Schedule 5.1
correctly sets forth, as of the Effective Date, the percentage ownership (direct
and indirect) of the Borrower and of Transocean in each class of capital stock
of each of its Subsidiaries.
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Section 5.2. Corporate Power and Authority; Validity. Each Credit
Party has the corporate power and authority to execute, deliver and carry out
the terms and provisions of the Credit Documents to which it is a party and has
taken all necessary corporate action (or comparable action, in the case of a
Credit Party that is not a corporation) to authorize the execution, delivery and
performance of such Credit Documents. Each Credit Party has duly executed and
delivered each Credit Document to which it is a party and each such Credit
Document constitutes the legal, valid and binding obligation of such Credit
Party enforceable against it in accordance with its terms, subject as to
enforcement only to bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights generally and
equitable principles.
Section 5.3. No Violation. Neither the execution, delivery or
performance by any Credit Party of the Credit Documents to which it is a party
nor compliance by it with the terms and provisions thereof, nor the consummation
by it of the transactions contemplated herein or therein, will (i) contravene in
any material respect any applicable provision of any law, statute, rule or
regulation, or any applicable order, writ, injunction or decree of any court or
governmental instrumentality, (ii) conflict with or result in any breach of any
term, covenant, condition or other provision of, or constitute a default under,
or result in the creation or imposition of (or the obligation to create or
impose) any Lien other than any Permitted Lien upon any of the property or
assets of the Borrower or any of its Subsidiaries under, the terms of any
material contractual obligation to which the Borrower or any of its Subsidiaries
is a party or by which they or any of their properties or assets are bound or to
which they may be subject, or (iii) violate or conflict with any provision of
the certificate or articles of incorporation or by-laws or other applicable
corporate governance documents of the Borrower or any of its Subsidiaries.
Section 5.4. Litigation. There are no actions, suits, proceedings or
counterclaims (including, without limitation, derivative or injunctive actions)
pending or, to the knowledge of the Borrower, threatened against the Borrower or
any of its Subsidiaries that are reasonably likely to have a Material Adverse
Effect.
Section 5.5. Use of Proceeds; Margin Regulations. (a) The proceeds of
the Loans shall only be used to (i) finance the acquisition of Transocean, (ii)
refinance existing Transocean funded debt under the Transocean Credit Facility
and, if applicable, the SODI Credit Facility, (iii) refinance the Note Purchase
Agreements at the option of the Borrower and (iv) provide working capital,
including the issuance of performance and documentary letters of credit, and
otherwise for general corporate purposes.
(b) Neither the Borrower nor any of its Subsidiaries is engaged in the
business of extending credit for the purpose of purchasing or carrying margin
stock. No proceeds of any Loan will be used for a purpose which violates
Regulations G, T, U or X of the Board of Governors of the Federal Reserve
System. After application of the proceeds of any of the Borrowings and any
acquisitions permitted hereunder, less than 25% of the assets of each of the
Borrower and each of its Subsidiaries consists of "margin stock" (as defined in
Regulation U of the Board of Governors of the Federal Reserve System).
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Section 5.6. Investment Company Act. Neither the Borrower nor any of
its Subsidiaries is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended.
Section 5.7. Public Utility Holding Company Act. Neither the Borrower
nor any of its Subsidiaries is a "holding company," or a "subsidiary company" of
a "holding company," or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company," within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
Section 5.8. True and Complete Disclosure. All factual information
(taken as a whole) furnished by the Borrower or any of its Subsidiaries in
writing to the Agent or any Lender in connection with any Credit Document or any
transaction contemplated therein is, disregarding any updated, corrected,
supplemented, superseded or otherwise modified information except as so updated,
corrected, supplemented, superseded or otherwise modified, and all other such
factual information hereafter furnished by any such Persons in writing to the
Agent or any Lender in connection herewith, or with any of the other Credit
Documents or the Loans, will be, on the date of such information, true and
accurate in all material respects and not incomplete by omitting to state any
material fact necessary to make such information (taken as a whole) not
misleading at such time in light of the circumstances under which such
information was provided.
Section 5.9. Financial Statements. The financial statements heretofore
delivered to the Lenders (i) for the Borrower's and Transocean's fiscal years
ending December 31, 1995, and for the Borrower's and Transocean's fiscal
quarters ending March 31, 1996, have been prepared in accordance with GAAP and
Norwegian GAAP, respectively, applied on a basis consistent, except as otherwise
noted therein, with such entity's financial statements for the previous fiscal
year. Each of such annual and quarterly financial statements fairly presents on
a consolidated basis the financial position of the Borrower and Transocean, as
applicable, as of the dates thereof, and the results of operations for the
periods covered thereby, subject in the case of interim financial statements, to
normal year-end audit adjustments and omission of certain footnotes (in the case
of the Borrower, as permitted by the SEC). As of the Effective Date, the
Borrower and its Subsidiaries, considered as a whole, had no material contingent
liabilities or material Indebtedness required under GAAP to be disclosed in a
consolidated balance sheet of the Borrower that were not disclosed in the
financial statements referred to in this Section 5.9 or in the notes thereto or
disclosed in writing to the Agent. The pro forma financial statements heretofore
delivered to the Lenders for the Borrower as of March 31, 1996, have been
prepared on a basis consistent, except as otherwise noted therein, with the
Borrower's financial statements for the fiscal quarter ending March 31, 1996.
Section 5.10. No Material Adverse Change. There has occurred no event
or effect that has had or is reasonably likely to have a Material Adverse
Effect.
Section 5.11. Labor Controversies. There are no labor controversies
pending or, to the best knowledge of the Borrower, threatened against the
Borrower or any of its Subsidiaries that are reasonably likely to have a
Material Adverse Effect.
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Section 5.12. Taxes. The Borrower and its Subsidiaries have filed all
United States federal income tax returns, and all other material tax returns
required to be filed, whether in the United States or in any foreign
jurisdiction, and have paid all governmental taxes, rates, assessments, fees,
charges and levies (collectively, "Taxes") shown to be due and payable on such
returns or on any assessments made against Borrower and its Subsidiaries or any
of their properties (other than any such assessments that are not more than
ninety (90) days past due or which can thereafter be paid without penalty or
which are being contested in good faith by appropriate proceedings and for which
reserves have been provided in conformity with GAAP).
Section 5.13. ERISA. With respect to each Plan, the Borrower and its
Subsidiaries have fulfilled their obligations under the minimum funding
standards of, and are in compliance in all material respects with, ERISA and
with the Code to the extent applicable to it, and have not incurred any
liability under Title IV of ERISA to the PBGC or a Plan other than a liability
to the PBGC for premiums under Section 4007 of ERISA except as described in
Schedule 5.13, and in each case with such exceptions as are not reasonably
likely to have a Material Adverse Effect. As of the Effective Date, neither the
Borrower nor any of its Subsidiaries has any contingent liability with respect
to any post-retirement benefits under a welfare plan subject to ERISA, other
than liability for continuation coverage described in Part 6 of Title I of ERISA
and as disclosed in the financial statements of the Borrower for the fiscal
quarter ending March 31, 1996, described in Section 5.9.
Section 5.14. Security Interests. On and after the Initial Borrowing
Date, each of the Note Pledge Agreement and the Stock Pledge Agreement will
create, upon the filing of properly completed UCC financing statements in the
appropriate jurisdictions or possession of the Collateral by the Agent if
necessary to perfect a security interest in such Collateral, in favor of the
Agent and the Lenders as security for the Obligations, a valid and enforceable
perfected first priority (subject only to Permitted Liens) security interest in
and Lien on all of the Collateral described therein, subject to no other Liens
except Permitted Liens.
Section 5.15. Consents. At the time of consummation thereof, all
consents and approvals of, and filings and registrations with, and all other
actions of, all governmental agencies, authorities or instrumentalities required
to have been obtained or made by the Borrower in order to consummate the
Borrowings hereunder have been or will have been obtained or made and are or
will be in full force and effect.
Section 5.16. Capitalization. All outstanding shares of the Material
Subsidiaries of the Borrower have been duly and validly issued, are fully paid
and are nonassessable, in each case with such exceptions as are not reasonably
likely to have either a Material Adverse Effect or an adverse effect on the
control of the Borrower of any such Material Subsidiary. Except as described on
Schedule 5.16, none of the Material Subsidiaries of the Borrower, as of the
Exchange Offer Consummation Date, will have outstanding any securities
convertible into or exchangeable for its capital stock or outstanding any rights
to subscribe for or to purchase, or any options for the purchase of, or any
agreement providing for the issuance (contingent or otherwise) of its capital
stock.
Section 5.17. Intellectual Property. The Borrower and its Subsidiaries
own or hold valid licenses to use all the material patents, trademarks, permits,
service marks, and trade names that
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are necessary to the operation of the business of the Borrower and its
Subsidiaries as presently conducted with such exceptions which are not
reasonably likely to have a Material Adverse Effect.
Section 5.18. Ownership of Property. The Borrower and each domestic
Material Subsidiary has good title to or a valid leasehold interest in all of
its real property and good title to, or a valid leasehold interest in, all of
its other property, and each foreign Material Subsidiary owns or has a valid
leasehold interest in all of its real property and owns or has a valid leasehold
interest in, all of its other properties, in each case with such exceptions as
are not, individually or in the aggregate, reasonably likely to have a Material
Adverse Effect, subject to no Liens except Permitted Liens.
Section 5.19. Compliance with Statutes, Etc. The Borrower and its
Subsidiaries are in compliance with all applicable statutes, regulations and
orders of, and all applicable restrictions imposed by, all governmental bodies,
domestic and foreign, in respect of the conduct of their businesses and the
ownership of their properties, except for such instances of non-compliance as
are not reasonably likely to, individually or in the aggregate, have a Material
Adverse Effect.
Section 5.20. Environmental Matters. (a) Except as described in
Schedule 5.20, the Borrower and its Subsidiaries are in compliance with all
applicable Environmental Laws and the requirements of any permits issued under
such Environmental Laws, except for such instances of non-compliance as are not
reasonably likely to have a Material Adverse Effect. To the best knowledge of
the Borrower, there are no pending, past or threatened Environmental Claims
against the Borrower or any of its Subsidiaries on any property owned or
operated by the Borrower or any of its Subsidiaries except as described in
Schedule 5.20 or except as are not reasonably likely to have a Material Adverse
Effect. To the best knowledge of the Borrower, there are no conditions or
occurrences on any property owned or operated by the Borrower or any of its
Subsidiaries or on any property adjoining or in the vicinity of any such
property that are reasonably likely to form the basis of an Environmental Claim
against the Borrower or any of its Subsidiaries or any such property that
individually or in the aggregate are reasonably likely to have a Material
Adverse Effect.
(b) To the best of the Borrower's knowledge, (i) Hazardous Materials
have not at any time been generated, used, treated or stored on, or transported
to or from, any property owned or operated by the Borrower or any of its
Subsidiaries in a manner that has violated or could reasonably be expected to
violate any Environmental Law, and (ii) Hazardous Materials have not at any time
been released on or from any property owned or operated by the Borrower or any
of its Subsidiaries, in the case of both (i) and (ii), with such exceptions as
are not reasonably likely to have a Material Adverse Effect.
Section 5.21. Existing Indebtedness. Schedule 5.21 contains a complete
list of all Indebtedness outstanding as of the Effective Date (other than the
Obligations hereunder and Indebtedness permitted by Section 6.15(c) through (r))
and permitted by Section 6.15(b), in each case showing the aggregate principal
amount thereof, the name of the respective borrower and any other entity which
directly or indirectly guaranteed such Indebtedness, and the scheduled payments
of such Indebtedness.
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Section 5.22. Dividend Restrictions. Except as permitted under Section
6.12 or described on Schedule 5.22, as of the Effective Date, none of the
Subsidiaries of the Borrower is party to or subject to any agreement or
understanding restricting or limiting the payment of any dividends or other
distributions on its capital stock by any such Subsidiary.
SECTION 6. COVENANTS.
The Borrower covenants and agrees that, so long as any Note,
Reimbursement Obligation or Commitment is outstanding hereunder, or any other
Obligation is due and payable hereunder:
Section 6.1. Corporate Existence. Each of the Borrower and its
Material Subsidiaries will preserve and maintain its existence except for the
dissolution of any Material Subsidiaries whose assets are transferred to the
Borrower or any of its Subsidiaries or except as otherwise expressly permitted
herein.
Section 6.2. Maintenance. Each of the Borrower and its Material
Subsidiaries will maintain, preserve and keep its properties and equipment
necessary to the proper conduct of its business in reasonably good repair,
working order and condition (normal wear and tear excepted) and will from time
to time make all reasonably necessary repairs, renewals, replacements, additions
and betterments thereto so that at all times such properties and equipment are
reasonably preserved and maintained, in each case with such exceptions as are
not, individually or in the aggregate, likely to have a Material Adverse Effect;
provided, however, that nothing in this Section 6.2 shall prevent the Borrower
or any Material Subsidiary from discontinuing the operation or maintenance of
any such properties or equipment if such discontinuance is, in the judgment of
the Borrower or any Material Subsidiary, as applicable, desirable in the conduct
of their businesses.
Section 6.3. Taxes. Each of the Borrower and its Subsidiaries will
duly pay and discharge all Taxes upon or against it or its properties before
penalties accrue thereon (or, if later, within ninety (90) days of becoming past
due), unless and to the extent that the same is being contested in good faith
and by appropriate proceedings and reserves have been established in conformity
with GAAP.
Section 6.4. ERISA. Each of the Borrower and its Subsidiaries will
timely pay and discharge all obligations and liabilities arising under ERISA or
otherwise with respect to each Plan of a character which if unpaid or
unperformed might result in the imposition of a material Lien against any
properties or assets of the Borrower or any Material Subsidiary and will
promptly notify the Agent upon an officer of the Borrower becoming aware
thereof, of (i) the occurrence of any reportable event (as defined in ERISA)
relating to a Plan (other than a multi-employer plan, as defined in ERISA, so
long as the event thereunder is not reasonably likely to have a Material Adverse
Effect), other than any such event with respect to which the PBGC has waived
notice by regulation; (ii) receipt of any notice from PBGC of its intention to
seek termination of any Plan or appointment of a trustee therefor; (iii)
Borrower's or any of its Subsidiaries' intention to terminate or withdraw from
any Plan if such termination or withdrawal would result in liability under Title
IV of ERISA; and (iv) the receipt by the Borrower or its Subsidiaries of notice
of the occurrence of any event that is reasonably likely to result in the
incurrence of any liability (other than for benefits), fine or penalty to the
Borrower and/or to the
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Borrower's Subsidiaries that would be material to the Borrower and its
Subsidiaries, taken as a whole, or any plan amendment that is reasonably likely
to materially increase the contingent liability of the Borrower and its
Subsidiaries, taken as a whole, in connection with any post-retirement benefit
under a welfare plan (subject to ERISA). The Borrower will also promptly notify
the Agent of (i) any material contributions to any Foreign Plan that have not
been made by the required due date for such contribution if such default is
reasonably likely to have a Material Adverse Effect; (ii) any Foreign Plan that
is not funded to the extent required by the law of the jurisdiction whose law
governs such Foreign Plan based on the actuarial assumptions reasonably used at
any time if such underfunding (together with any penalties likely to result)
could reasonably be expected to have a Material Adverse Effect, and (iii) any
material change anticipated to any Foreign Plan that is reasonably likely to
have a Material Adverse Effect.
Section 6.5. Burdensome Restrictions, Etc. Promptly upon any officer
of the Borrower becoming aware thereof, the Borrower shall give to the Agent
written notice of (i) the adoption of any new requirement of law which is
reasonably likely to have a Material Adverse Effect, and (ii) the existence or
occurrence of any strike, slow down or work stoppage which is reasonably likely
to have a Material Adverse Effect.
Section 6.6. Insurance. Each of the Borrower, its Material
Subsidiaries and any SPVs will maintain or cause to be maintained, with
responsible insurance companies, insurance against any loss or damage to all
insurable property and assets owned by it, such insurance to be of a character
and in or in excess of such amounts as are customarily maintained by companies
similarly situated and operating like property or assets (subject to self-
insured retentions and deductibles) and will (subject to self-insured retentions
and deductibles) maintain or cause to be maintained insurance with respect to
employers' and public and product liability risks. The Borrower will within ten
(10) Business Days after the Initial Borrowing Date and on or before March 31st
of each calendar year and upon the request of the Agent, furnish a certificate
from an officer of the Borrower setting forth the nature and extent of the
insurance maintained pursuant to this Section 6.6.
Section 6.7. Financial Reports and Other Information. (a) The
Borrower, its Subsidiaries and any SPVs will maintain a system of accounting in
such manner as will enable preparation of financial statements in accordance
with GAAP and will furnish to the Lenders and their respective authorized
representatives such information about the business and financial condition of
the Borrower, its Subsidiaries and any SPVs as any Lender may reasonably
request; and, without any request, will furnish to the Agent:
(i) within sixty (60) days after the end of each of the first three
(3) fiscal quarters of each fiscal year of the Borrower, the consolidated
balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal
quarter and the related consolidated statements of income and retained earnings
and of cash flows for such fiscal quarter and for the portion of the fiscal year
ended with the last day of such fiscal quarter, all of which shall be in
reasonable detail or in the form filed with the SEC, and certified by the chief
financial officer of the Borrower that they fairly present the financial
condition of the Borrower and its Subsidiaries as of the dates indicated and the
results of their operations and changes in their cash flows for the periods
indicated and that they have been prepared in accordance with GAAP, in each
case,
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subject to normal year-end audit adjustments and the omission of any footnotes
as permitted by the SEC (delivery to the Agent of a copy of the Borrower's Form
10-Q filed with the SEC (without exhibits) in any event will satisfy the
requirements of this subsection subject to Section 6.7(b));
(ii) within one hundred twenty (120) days after the end of each fiscal
year of the Borrower, the consolidated balance sheet of the Borrower and its
Subsidiaries as at the end of such fiscal year and the related consolidated
statements of income and retained earnings and of cash flows for such fiscal
year and setting forth consolidated comparative figures as of the end of and for
the preceding fiscal year, audited by an independent nationally-recognized
accounting firm and in the form filed with the SEC (delivery to the Agent of a
copy of the Borrower's Form 10-K filed with the SEC (without exhibits) in any
event will satisfy the requirements of this subsection subject to Section
6.7(b));
(iii) commencing with fiscal year 1997, to the extent actually
prepared and approved by the Borrower's board of directors, a projection of
Borrower's consolidated balance sheet and consolidated income, retained earnings
and cash flows for its current fiscal year showing such projected budget for
each fiscal quarter of the Borrower ending during such year; and
(iv) within ten (10) days after the sending or filing thereof, copies
of all financial statements, projections, documents and other communications
that the Borrower sends to its stockholders generally or files with the SEC or
any similar governmental authority (and is publicly available).
The Agent will forward promptly to the Lenders the information provided by the
Borrower pursuant to (i) through (iv) above.
(b) Each financial statement furnished to the Lenders pursuant to
subsections (i) and (ii) of Section 6.7(a) shall be (i) accompanied by
additional information setting forth calculations excluding the effects of any
SPVs and containing such calculations for any SPVs as reasonably requested by
the Agent, and (ii) accompanied by (x) a written certificate signed by the
Borrower's chief financial officer (or other financial officer of the Borrower),
in his or her capacity as such, to the effect that no Default or Event of
Default then exists or, if any such Default or Event of Default exists as of the
date of such certificate, setting forth a description of such Default or Event
of Default and specifying the action, if any, taken by the Borrower to remedy
the same, and (y) a Compliance Certificate in the form of Exhibit 6.7 showing
the Borrower's compliance with certain of the covenants set forth herein.
Together with the financial statements required pursuant to subsections (i) and
(ii) of Section 6.7(a), the Borrower shall furnish to the Lenders a certificate
of the chief financial officer of the Borrower reporting all Transfers of assets
effected by the Borrower and its Subsidiaries during the fiscal year covered by
such financial statements which were other than in the ordinary course of
business and involved asset net book values in excess of $250,000 in any single
transaction or related series of transactions, including the net book value of
such assets and the amounts received by the Borrower and its Subsidiaries with
respect to such Transfers, and such other information regarding such
transactions as the Agent may reasonably request.
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(c) Promptly upon receipt thereof, the Borrower will provide the Agent
with a copy of each report or "management letter" submitted to the Borrower, any
of its Material Subsidiaries or any SPVs by its independent accountants or
auditors in connection with any annual, interim or special audit made by them of
the books and records of the Borrower, any of its Material Subsidiaries or any
SPVs.
(d) Promptly after any officer of the Borrower obtains knowledge of
any of the following, the Borrower will provide the Agent with written notice in
reasonable detail of:
(i) any pending or threatened material Environmental Claim against the
Borrower, any of its Subsidiaries or any SPV or any property owned or operated
by the Borrower, any of its Subsidiaries or any SPV;
(ii) any condition or occurrence on any property owned or operated by
the Borrower, any of its Subsidiaries or any SPV that results in material
noncompliance by the Borrower, any of its Subsidiaries or any SPV with any
Environmental Law; and
(iii) the taking of any material remedial action in response to the
actual or alleged presence of any Hazardous Material on any property owned or
operated by the Borrower, any of its Subsidiaries or any SPV other than in the
ordinary course of business.
(e) The Borrower will promptly, and in any event within five (5) Days,
after an officer of the Borrower has knowledge thereof, give written notice to
the Agent of (who will in turn provide notice to the Lenders of): (i) the
occurrence of any Default or Event of Default; (ii) any litigation or
governmental proceeding of the type described in Section 5.4; (iii) any
circumstance that has had or reasonably threatens a Material Adverse Effect;
(iv) the occurrence of any event which has resulted in a breach of, or is likely
to result in a breach of, Sections 6.23, 6.24 or 6.25; and (v) any notice
received by it, any Subsidiary or any SPV from the holder(s) of Indebtedness of
the Borrower, any Subsidiary or any SPV in an amount which, in the aggregate,
exceeds $5,000,000, where such notice states or claims the existence or
occurrence of any default or event of default with respect to such Indebtedness
under the terms of any indenture, loan or credit agreement, debenture, note, or
other document evidencing or governing such Indebtedness.
Section 6.8. Lender Inspection Rights. Upon reasonable notice from the
Agent or any Lender, the Borrower will permit the Agent or any Lender (and such
Persons as the Agent or such Lender may reasonably designate) during normal
business hours at such entity's sole expense unless a Default or Event of
Default shall have occurred and be continuing, in which event at the Borrower's
expense, to visit and inspect any of the properties of the Borrower, any of its
Subsidiaries or any SPV, to examine all of their books and records, to make
copies and extracts therefrom, and to discuss their respective affairs, finances
and accounts with their respective officers and independent public accountants
(and by this provision the Borrower authorizes such accountants to discuss with
the Agent and any Lender (and such Persons as the Agent or such Lender may
reasonably designate) the affairs, finances and accounts of the Borrower, its
Subsidiaries and any SPVs), all as often, and to such extent, as may be
reasonably requested. The chief financial officer of the Borrower and/or his or
her designee shall be afforded the opportunity to be present at any meeting of
the Agent or the Lenders and such
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accountants. The Agent agrees to use reasonable efforts to minimize, to the
extent practicable, the number of separate requests from the Lenders to exercise
their rights under this Section 6.8 and/or Section 6.7 and to coordinate the
exercise by the Lenders of such rights.
Section 6.9. Conduct of Business. Except as expressly permitted
herein, the Borrower, its Subsidiaries and any SPVs will not engage in any line
of business other than the (i) contract drilling business, (ii) any hydrocarbon
exploration services or hydrocarbon development services business, (iii) on and
after the Exchange Offer Consummation Date, any then existing business of
Transocean or any of its Subsidiaries or (iv) any related business (each a
"Permitted Business").
Section 6.10. Interest Rate Protection. The Borrower will no later
than six (6) months following the Initial Borrowing Date enter into one or more
Interest Rate Protection Agreements providing the Borrower protection against
increases in interest rates on at least fifty percent (50%) of the outstanding
principal balance of the Term Loans and maintain such protection for a period of
not less than two (2) years. If the Agent or a Lender is the counterparty to an
Interest Rate Protection Agreement, any obligations of the Borrower thereunder
shall be secured pari passu by the Collateral; provided that when no Notes,
Reimbursement Obligations and Commitments are outstanding hereunder and no other
Obligation is due and payable hereunder, any Collateral for any such Interest
Rate Protection Agreements shall be released.
Section 6.11. New Subsidiaries. The Borrower shall cause any direct
domestic Subsidiary of the Borrower (i) which Subsidiary is formed or acquired
after the Effective Date and which is a Material Subsidiary, or (ii) which
Subsidiary becomes a Material Subsidiary after the Effective Date, to become a
Guarantor with respect to, and jointly and severally liable with all other
Guarantors for, all the obligations under this Agreement and the Notes within
thirty (30) days following such formation or acquisition pursuant to a
Subsidiary Guaranty substantially in the form of Exhibit 4.1C. The Borrower
shall pledge all of the capital stock owned by it of, but in no event more than
65% (based on total combined voting power of all classes of stock entitled to
vote) of the outstanding voting capital stock of, any direct foreign Subsidiary
of the Borrower which is formed or acquired after the Effective Date and which
is a Material Subsidiary or which becomes a Material Subsidiary after the
Effective Date pursuant to a Stock Pledge Agreement substantially in the form of
Exhibit 4.1A, and any certificates representing such stock, together with
undated stock powers duly executed in blank, or such other documentation, as
necessary to perfect the pledge of such stock shall be delivered to the Agent
within thirty (30) days following such formation or acquisition. In the event
any Subsidiary whose stock is pledged by the Borrower is sold or otherwise
disposed of in accordance with Section 6.19, the Collateral Agent shall release
such stock from the Lien of the relevant Stock Pledge Agreement. In the event
any Subsidiary which is a Guarantor is sold or otherwise disposed of in
accordance with Section 6.19, upon the request of the Borrower, the Agent and
the Lenders shall execute and deliver to such Person an instrument acknowledging
the termination of the Subsidiary Guaranty of such Person.
Section 6.12. Limitation on Certain Restrictions on Subsidiaries;
Dividends; Negative Pledges. (a) The Borrower and its Subsidiaries will not,
directly or indirectly, create or otherwise permit to exist or become effective
any contractual restriction on the ability of any Subsidiaries of the Borrower
to (i) pay dividends or make any other distributions on its capital
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stock, or any other interest or participation in its profits, owned by the
Borrower or pay any Indebtedness owed to the Borrower, or (ii) make loans or
advances to the Borrower, except for (1) restrictions existing under or by
reason of applicable law or this Agreement and the other Credit Documents or the
Note Purchase Agreements or any modifications thereof containing provisions no
more onerous than in this Agreement, (2) agreements as to formalities required
to declare or make a dividend or distribution or that require retention of
reasonable cash reserves for working capital purposes, (3) with respect to any
particular Subsidiary, any such restriction contained in any agreement for the
sale or disposition of all or substantially all of the capital stock or assets
of such Subsidiary or of any other Subsidiary that directly or indirectly
controls such Subsidiary or providing for obligations of the nature described in
the definition of the term "Non-recourse Debt," (4) prior to the Exchange Offer
Consummation Date, any such restriction contained in the SODI Credit Facility,
and (5) any restrictions (not otherwise permitted above) existing in connection
with any Person acquired by, or merged with or into, the Borrower or any
Subsidiary of the Borrower after the Effective Date, in which case the Borrower
shall either promptly cause the removal or release of any such restrictions not
otherwise permitted above or not advance the proceeds of any Loan to the
relevant Subsidiary even if otherwise permitted by this Agreement.
(b) The Borrower may only redeem, purchase or otherwise acquire any
shares of its capital stock if capital stock of the Borrower is purchased (or
the purchase thereof funded) (i) for any Code Section 401(K) plan, Code Section
423 plan or Plan or Foreign Plan of the Borrower or any of its Subsidiaries, or
(ii) so long as the Consolidated Net Worth (after giving effect to such
redemption, purchase or acquisition) is at least equal to the minimum
Consolidated Net Worth then required under Section 6.25 plus $100,000,000; in
each case so long as no Default or Event of Default shall have occurred and be
continuing or would occur as a result of such redemption, purchase or
acquisition. The Borrower shall not, and will not permit any Subsidiary to, make
any deposit for any purpose prohibited by this Section 6.12(b). Nothing in this
Section 6.12(b) shall (i) prohibit the redemption, purchase or acquisition of
capital stock of the Borrower within sixty (60) days after the commitment to
effect such redemption, purchase or acquisition is made, if at the date such
commitment is made, such redemption, purchase or acquisition would have complied
with this Section 6.12(b), (ii) prohibit the making of any deposit for any
redemption, purchase or acquisition of capital stock of the Borrower, if at the
date such deposit is made such redemption, purchase or acquisition would have
complied with this Section 6.12(b), or (iii) prohibit the payment of cash in
lieu of fractional shares.
(c) The Borrower and its Subsidiaries shall not enter into any
agreement expressly and directly (i) prohibiting the creation or assumption of
any Lien upon its properties, revenues or assets, whether now owned or hereafter
acquired, or (ii) prohibiting or restricting the ability of the Borrower or any
Subsidiary of the Borrower from amending or otherwise modifying this Agreement
or any other Credit Document, except that the Borrower or any Subsidiary of the
Borrower may do so (x) in connection with (1) the creation, incurrence or
assumption of any Lien permitted to exist pursuant to Section 6.14, (2) the
incurrence or assumption of any Indebtedness or letters of credit permitted to
exist pursuant to Section 6.15 or of any Non-recourse Debt or (3) a transaction
or proposed transaction pursuant to which the Term Loans would be prepaid in
like amount, (y) with respect to any particular property or asset (or the
revenues associated therewith), in connection with any permitted transaction
involving such property or asset (including, without limitation, prohibitions in
agreements on the assignment
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or granting of a Lien thereon) or the Subsidiary of the Borrower owning such
property or asset, or (z) any modification of the Note Purchase Agreements
containing provisions no more onerous than in this Agreement.
Section 6.13. Restrictions on Fundamental Changes. Neither the
Borrower nor any of its Subsidiaries shall be a party to any merger into or
consolidation with, or purchase or otherwise acquire all or substantially all of
the assets or stock of any other Person, or sell all or substantially all of its
assets or stock except:
(a) the Exchange Offer, any subsequent acquisition of the stock of
Transocean, and any transfer of stock in Transocean by the Borrower to NSub;
(b) the Borrower or any of its Subsidiaries may form new Subsidiaries;
(c) the Borrower or any of its Subsidiaries may merge into, or
consolidate with, or purchase or otherwise acquire all or substantially all of
the assets or stock of any other Person if upon the consummation of any such
merger, consolidation, purchase or acquisition, (i) the Borrower or such
Subsidiary is the surviving corporation to any such merger or consolidation (or
the other Person is, or will thereby become, a Subsidiary of the Borrower), (ii)
the Borrower or any such Subsidiary complies with Sections 6.11 and 6.12 to the
extent applicable and (iii) no Event of Default shall have occurred and be
continuing or would otherwise be existing as a result of such merger,
consolidation, purchase or acquisition;
(d) the Borrower may purchase or otherwise acquire all or
substantially all of the stock or assets of, or otherwise acquire by merger or
consolidation, any Subsidiary; and any of the Borrower's Subsidiaries may merge
into, or consolidate with, or purchase or otherwise acquire all or substantially
all of the assets or stock of or sell all or substantially all of their assets
or stock to, any other Subsidiary of the Borrower (or to a Person who will
contemporaneously therewith become a Subsidiary of the Borrower) and the
Borrower may sell all or substantially all of the stock of any Subsidiary of the
Borrower to any other Subsidiary of the Borrower (or to a Person who will
contemporaneously therewith become a Subsidiary of the Borrower), so long as (i)
Sections 6.11 and 6.12 are complied with to the extent applicable and (ii) no
Default or Event of Default shall have occurred and be continuing or would
otherwise be existing after or result from such merger, consolidation, purchase
or acquisition;
(e) any Transfer (including any Transfer of the stock of a Subsidiary
of the Borrower) permitted under Section 6.19, and any merger or consolidation
involving any Subsidiary of the Borrower which, if treated as a Transfer of the
assets of such Subsidiary, would be permitted under Section 6.19; and
(f) the Borrower and its Subsidiaries may issue additional capital
stock or ownership interests so long as there is no scheduled mandatory
redemption or scheduled liquidating distribution of any such stock or interest
before the Maturity Date. The Borrower shall not take any action which will
result in a decrease in the percentage of the outstanding shares of capital
stock which it owns in NSub or any other direct Material Subsidiary, and will
not permit NSub to take any action which will result in a decrease in the
percentage of the outstanding shares of capital stock which NSub owns in
Transocean. The Borrower or any Subsidiary of the Borrower
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may decrease its ownership percentage of any other Material Subsidiary (i) so
long as (x) the Borrower, directly or indirectly, maintains an ownership
interest of at least fifty-one percent (51%) and has voting control of the Board
of Directors or similar governing body in such Material Subsidiary or (y) its
entire ownership interest in such Material Subsidiary is transferred pursuant to
the terms hereof, or (ii) in connection with any dissolution of such Material
Subsidiary permitted by Section 6.1 or any other transaction expressly permitted
herein.
Section 6.14. Liens. The Borrower and its Subsidiaries shall not
create, incur, assume or suffer to exist any Lien of any kind on any property or
asset of any kind of the Borrower or any Subsidiary, except the following
(collectively, the "Permitted Liens"):
(a) Liens arising in the ordinary course of business by operation of
law, deposits, pledges or other Liens in connection with workers' compensation,
unemployment insurance, old age benefits, social security obligations, taxes,
assessments, public or statutory obligations or other similar charges, good
faith deposits, pledges or other Liens in connection with (or to obtain letters
of credit in connection with) bids, performance, return-of-money or payment
bonds, contracts or leases to which the Borrower or its Subsidiaries are parties
or other deposits required to be made in the ordinary course of business;
provided that in each case the obligation secured is not for Indebtedness for
borrowed money and is not overdue or, if overdue, is being contested in good
faith by appropriate proceedings and reserves in conformity with GAAP have been
provided therefor;
(b) mechanics', workmen's, materialmen's, landlords', carriers' or
other similar Liens arising in the ordinary course of business (or deposits to
obtain the release of such Liens) related to obligations not overdue for more
than thirty (30) days if such Liens arise with respect to domestic assets and
for more than ninety (90) days if such Liens arise with respect to foreign
assets, or, if so overdue, that are being contested in good faith by appropriate
proceedings and reserves in conformity with GAAP have been provided therefor;
(c) Liens for Taxes not more than ninety (90) days past due or which
can thereafter be paid without penalty or which are being contested in good
faith by appropriate proceedings and reserves in conformity with GAAP have been
provided therefor;
(d) Liens imposed by ERISA (or comparable foreign laws) which are
being contested in good faith by appropriate proceedings and reserves in
conformity with GAAP have been provided therefor;
(e) Liens arising out of judgments or awards against the Borrower or
any of its Subsidiaries, or in connection with surety or appeal bonds or the
like in connection with bonding such judgments or awards, the time for appeal
from which or petition for rehearing of which shall not have expired or for
which the Borrower or such Subsidiary shall be prosecuting on appeal or
proceeding for review, and for which it shall have obtained (within thirty (30)
days with respect to a judgment or award rendered in the United States or within
sixty (60) days with respect to a judgment or award rendered in a foreign
jurisdiction after entry of such judgment or award or expiration of any previous
such stay, as applicable) a stay of execution or the like pending such appeal or
proceeding for review; provided, that the aggregate amount of uninsured or
underinsured liabilities (including interest, costs, fees and penalties, if any)
of the Borrower
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and its Subsidiaries secured by such Liens shall not exceed $15,000,000 at any
one time outstanding;
(f) Liens securing Indebtedness permitted by Section 6.15(d) or (e)
(or on repairs, renewals, replacements, additions, accessions and betterments
thereto);
(g) (i) Liens on assets and interests acquired after the Effective
Date, and Liens on the Amaranti and the Discoverer Enterprise, in each case so
long as such Liens secure "Non-recourse Debt", and (ii) Liens on the stock or
assets of SPVs;
(h) Liens on property existing at the time such property is acquired
by the Borrower or any Subsidiary of the Borrower and not created in
contemplation of such acquisition (or on repairs, renewals, replacements,
additions, accessions and betterments thereto) and Liens on the assets of any
Person at the time such Person becomes a Subsidiary of the Borrower and not
created in contemplation of such Person becoming a Subsidiary of the Borrower
(or on repairs, renewals, replacements, additions, accessions and betterments
thereto), provided that the aggregate amount of Indebtedness secured by all such
Liens does not exceed $30,000,000 at any one time outstanding;
(i) Liens existing on the date hereof and listed on Schedule 6.14;
(j) any extension, renewal or replacement (or successive extensions,
renewals or replacements) in whole or in part of any Lien referred to in the
foregoing subsections (a) through (i), provided, however, that the principal
amount of Indebtedness secured thereby does not exceed the principal amount
secured at the time of such extension, renewal or replacement, and that such
extension, renewal or replacement is limited to the property already subject to
the Lien so extended, renewed or replaced;
(k) rights reserved to or vested in any municipality or governmental,
statutory or public authority by the terms of any right, power, franchise,
grant, license or permit, or by any provision of law, to terminate such right,
power, franchise, grant, license or permit or to purchase, condemn, expropriate
or recapture or to designate a purchaser of any of the property of a Person;
(l) rights reserved to or vested in any municipality or governmental,
statutory or public authority to control, regulate or use any property of a
Person;
(m) rights of a common owner of any interest in property held by a
Person and such common owner as tenants in common or through other common
ownership;
(n) encumbrances (other than to secure the payment of Indebtedness),
easements, restrictions, servitudes, permits, conditions, covenants, exceptions
or reservations in any property or rights-of-way of a Person for the purpose of
roads, pipelines, transmission lines, transportation lines, distribution lines,
removal of gas, oil, coal, metals, steam, minerals, timber or other natural
resources, and other like purposes, or for the joint or common use of real
property, rights-of-way, facilities or equipment, or defects, irregularity and
deficiencies in title of any property or rights-of-way;
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(o) zoning, planning and environmental laws and ordinances and
municipal regulations;
(p) financing statements filed by lessors of property (but only with
respect to the property so leased);
(q) Liens created by the Security Documents;
(r) Liens on properties or assets, such as (without limitation)
contracts and books and records, directly relating to any properties or assets
subject to a Lien otherwise permitted by this Section 6.14;
(s) Liens on rents, revenues and other income associated with, or
other proceeds of, any properties or assets subject to a Lien permitted under
this Section 6.14;
(t) Liens to secure the SODI Credit Facility or the Transocean Credit
Facility until such time as the Indebtedness thereunder is required to be paid
pursuant to the terms hereof;
(u) Liens on up to $4,900,000 in cash (or any investments thereof) to
secure performance by Transocean and/or its Subsidiaries of their obligations in
respect of the Bank Guarantee (as defined in the Transocean Credit Facility);
(v) Liens on cash in an aggregate amount no greater than the aggregate
cash purchase price offered for the shares of Transocean stock in the Mandatory
Bid (together with interest thereon as required under Norwegian law or by the
Oslo Stock Exchange), deposited with the bank issuing any Mandatory Bid Bank
Guarantee or any other reasonably necessary Person for the purpose of
discharging the Borrower's obligations under the Mandatory Bid (or any
investments thereof); and
(w) Liens (not otherwise permitted by this Section 6.14) on property
securing Indebtedness (or other obligations) aggregating at any time outstanding
no greater than $5,000,000.
Section 6.15. Indebtedness. The Borrower and its Subsidiaries shall
not incur, assume or suffer to exist any Indebtedness, except:
(a) Indebtedness under the Credit Documents;
(b) (i) existing Indebtedness outstanding on the Effective Date and
listed on Schedule 5.21, and any subsequent extensions, renewals or refinancings
thereof so long as such Indebtedness is not increased in amount, the maturity
date thereof (if prior to the Maturity Date) is not made earlier in time, the
interest rate per annum applicable thereto is not increased, any amortization of
principal thereunder prior to the Maturity Date is not shortened and the
payments thereunder are not increased; and (ii) through the Initial Borrowing
Date, any Indebtedness under the SODI Credit Facility;
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(c) Indebtedness incurred, assumed or existing in connection with the
Liens permitted by Section 6.14;
(d) Capitalized Lease Obligations;
(e) Indebtedness incurred for the purpose of financing or refinancing
all or any part of the purchase price of, or the cost of acquisition,
construction or improvement of, assets acquired, constructed or improved after
the date hereof (it being understood and agreed that the "cost of acquisition,
construction or improvement" may include, without limitation, interest (and
other financing fees and expenses) incurred during the period of acquisition,
construction or improvement);
(f) unsecured intercompany loans and advances to the Borrower or its
Subsidiaries, and unsecured intercompany loans and advances from any of such
Subsidiaries to the Borrower or any other Subsidiaries of the Borrower;
(g) Indebtedness under any Interest Rate Protection Agreements entered
into to protect the Borrower against fluctuations in interest rates and not for
speculative purposes;
(h) Indebtedness under unsecured foreign exchange futures agreements,
arrangements or options designed to protect against fluctuations in currency
exchange rates from time to time entered into not for speculative purposes;
(i) Indebtedness not otherwise permitted by this Section 6.15 under
overdraft lines of credit or for working capital purposes in foreign countries
with financial institutions on terms no more favorable to the lenders thereunder
than under this Agreement, and Indebtedness arising from the honoring by a bank
or other Person of a check, draft or similar instrument inadvertently drawing
against insufficient funds, not to exceed $35,000,000 in the aggregate at any
time outstanding, provided that amounts under overdraft lines of credit or
outstanding as a result of drawings against insufficient funds shall be
outstanding for one (1) Business Day before being included in such aggregate
amount;
(j) unsecured Indebtedness subordinated in payment to the Obligations
in an aggregate amount of up to $200,000,000 at any time outstanding with a
maturity after the Maturity Date, with no scheduled principal payments until
after the Maturity Date, containing covenants no more restrictive than the
covenants contained in this Agreement, containing a standstill period of at
least one hundred twenty (120) days after notice to the Agent before the lenders
can accelerate the Indebtedness thereunder and containing subordination
provisions reasonably acceptable to the Agent;
(k) Indebtedness of a Person existing at the time such Person becomes
a Subsidiary of the Borrower or is merged with or into the Borrower or any
Subsidiary of the Borrower and not incurred in contemplation of such
transaction, provided that all such Indebtedness does not exceed $30,000,000 in
the aggregate at any one time outstanding;
(l) Indebtedness of the nature described in the last sentence of the
definition of the term "Indebtedness";
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(m) Indebtedness under Performance Guaranties and Performance Letters
of Credit;
(n) obligations in respect of letters of credit issued in the ordinary
course of business of the Borrower or any of its Subsidiaries;
(o) existing Indebtedness of Transocean and/or its Subsidiaries to
Nissho Iwai in connection with the financing of the Ross Rig and in connection
with the Bank Guarantee (as defined in the Transocean Credit Facility);
(p) Indebtedness in connection with any Mandatory Bid Bank Guarantee;
(q) Indebtedness under the Transocean Credit Facility until eleven
(11) days after the Initial Borrowing Date; and
(r) any Guaranty by the Borrower or any Guarantor of any Indebtedness
of the Borrower or any Subsidiary of the Borrower otherwise permitted under this
Section 6.15.
Section 6.16. Use of Property and Facilities; Environmental Laws. The
Borrower and its Subsidiaries shall comply in all material respects with all
Environmental Laws applicable to or affecting the properties or business
operations of the Borrower or any Subsidiary of the Borrower, where the failure
to comply is reasonably likely to have a Material Adverse Effect.
Section 6.17. Advances, Investments and Loans. The Borrower and its
Subsidiaries shall not lend money or make advances to any Person, or purchase or
acquire any stock, indebtedness, obligations or securities of, or any other
interest in, or make any capital contribution to, any other Person (any of the
foregoing, an "Investment") except:
(a) Investments in Cash Equivalents and deposit accounts;
(b) receivables owing to the Borrower or a Subsidiary of the Borrower
created or acquired in the ordinary course of business and payable on customary
trade terms of the Borrower or such Subsidiary;
(c) Investments received in connection with the bankruptcy or
reorganization of suppliers and customers and in settlement of delinquent
obligations of, and other disputes with, customers and suppliers arising in the
ordinary course of business;
(d) Interest Rate Protection Agreements and foreign exchange futures
agreements, arrangements or options entered into in compliance with Section
6.15(g) or 6.15(h);
(e) deposits and progress payments made in the ordinary course of
business;
(f) any Investment by the Borrower or any Subsidiary of the Borrower
in the Borrower, any Subsidiary of the Borrower or any Person that, upon such
Investment, will become a Subsidiary of the Borrower or will be merged with or
into the Borrower or any Subsidiary of the Borrower and any Guaranties with
respect thereto except as expressly restricted hereunder;
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(g) as permitted by Section 6.12 or 6.13;
(h) Investments of substantially equivalent quality to those referred
to in subsections (i), (ii), and (iii) of the definition of Cash Equivalents
denominated in a currency other than Dollars, provided that the aggregate net
book value of all such investments under this Section 6.17(h) shall not exceed
an amount equal to five percent (5%) of Consolidated Tangible Assets at any time
outstanding;
(i) Investments existing on the Effective Date and referred to on
Schedule 6.17;
(j) travel, relocation, sales commission and other advances to, and
loans to, officers and employees incurred or made in the ordinary course of
business;
(k) Investments in another Person received in connection with the
disposition of assets by the Borrower or any Subsidiary of the Borrower not
prohibited herein;
(l) to the extent (if any) constituting Investments, obligations of
other Persons to the Borrower or any of its Subsidiaries in respect of the
existence or performance of Performance Guaranties, Performance Letters of
Credit (or related reimbursement obligations) or Indebtedness described in
Section 6.15(l);
(m) Investments in SPVs and other Persons, including, without
limitation, by means of advances or loans to another Person who has a direct or
indirect investment in a Subsidiary of the Borrower or a SPV, provided that (i)
such SPV or such other Person is engaged in a Permitted Business, and (ii) an
investment shall not be permitted under this Section 6.17(m) if at the time it
is made and after giving effect thereto the aggregate net book value of all such
Investments under this Section 6.17(m) shall exceed twenty-five percent (25%) of
Consolidated Tangible Assets determined at such time; and (iii) no drillships,
offshore mobile drilling units or offshore drilling rigs now owned by the
Borrower or any of its Subsidiaries (or from and after the Exchange Offer
Consummation Date, Transocean or any of its Subsidiaries) are transferred to any
such entity pursuant to this Section 6.17(m) (excluding the Amaranti and the
Discoverer Enterprise);
(n) temporary Investments of cash not otherwise permitted above to the
extent the same is being held to fund reasonably anticipated working capital
needs, not to exceed the equivalent of $5,000,000 in the aggregate;
(o) Investments in obligations of a state of the United States of
America or any state or other political subdivision thereof given a rating of A
or better by S&P or Moody's and maturing within one (1) year from the date of
acquisition;
(p) Investments in any variable-dividend rate preferred stock issued
by a closed-ended investment company regulated under the Investment Company Act
of 1940, as amended, which invests solely in obligations of any state of the
United States of America or any state or other political subdivision thereof
given the highest ratings by S&P or Moody's (or the highest rating by another
U.S. nationally recognized rating agency) the dividend rate of which preferred
stock is reset no less frequently than each thirty (30) days;
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(q) Investments in shares of investment companies regulated under the
Investment Company Act of 1940, as amended, provided that such companies invest
primarily in investments of the types described in the definition of Cash
Equivalents;
(r) other Investments received by way of dividend, distribution or
mandatory exchange or conversion in respect of any of the foregoing;
(s) consummation of the Exchange Offer; and
(t) Investments not otherwise permitted by this Section 6.17 having an
aggregate net book value at any time outstanding not in excess of $5,000,000.
Section 6.18. Modifications of Corporate Documents. Neither the
Borrower nor any of its Subsidiaries shall amend, modify or change in any way
materially adverse to the interests of the Lenders, its certificate or articles
of incorporation or by-laws or (in the case of persons other than corporations)
other comparable corporate governance documents, it being acknowledged and
agreed that the amendments to the Borrower's certificate of incorporation
described in the Offer to Purchase do not violate this Section 6.18.
Section 6.19. Transfers of Assets. The Borrower and its Subsidiaries
shall not permit any Transfer of an asset except:
(a) the Transfer of inventory, equipment and other assets in the
ordinary course of business;
(b) the retirement or replacement of assets in the ordinary course of
business;
(c) the Transfer of any assets among any of the Borrower and its
Subsidiaries;
(d) any Transfer permitted by Section 6.12;
(e) any Transfer permitted by Section 6.13;
(f) any Investment permitted by Section 6.17;
(g) the Liens permitted by Section 6.14;
(h) sale and leaseback transactions, provided that the aggregate
amount that would be reflected as a liability on the balance sheet of the
Borrower if such transactions were treated as Capitalized Lease Obligations
shall not exceed $35,000,000 at any one time;
(i) the Transfer of assets that are obsolete, worn out or no longer
useful in the business of the Borrower or the relevant Subsidiary of the
Borrower, as the case may be;
(j) the Transfer of any Investment in a SPV or any Person other than a
Subsidiary of the Borrower;
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(k) exchanges of assets that are of a like kind and value; and
(l) the Transfer of any assets not otherwise covered by this Section
6.19, provided that (i) the net book value of such assets shall not exceed in
the aggregate $25,000,000 for fiscal year 1996, and (ii) for each fiscal year
thereafter, the net book value of such assets shall not exceed five percent (5%)
of Total Assets as of the last day of the preceding fiscal year and the annual
contribution to EBIT of such assets shall not exceed in the aggregate ten
percent (10%) of EBIT for the preceding fiscal year (or, for fiscal year 1997,
pro forma EBIT for fiscal year 1996), in each case determined in accordance with
GAAP.
Section 6.20. Transactions with Affiliates. Except as otherwise
specifically permitted herein, the Borrower and its Subsidiaries shall not
(except pursuant to contracts outstanding as of (i) with respect to the
Borrower, the Effective Date or (ii) with respect to any Subsidiary of the
Borrower, the Effective Date or, if later, the date such Subsidiary first became
a Subsidiary of the Borrower) enter into or engage in any material transaction
or arrangement or series of related transactions or arrangements which in the
aggregate would be material with any Controlling Affiliate, including without
limitation, the purchase from, sale to or exchange of property with, any merger
or consolidation with or into, or the rendering of any service by or for, any
Controlling Affiliate, except pursuant to the requirements of the Borrower's or
such Subsidiary's business and unless such transaction or arrangement or series
of related transactions or arrangements, taken as a whole, is fair and equitable
to the Borrower or such Subsidiary.
Section 6.21. Optional Prepayments. Neither the Borrower nor any
Subsidiary of the Borrower shall, directly or indirectly, optionally prepay,
purchase, redeem, retire, defease or otherwise acquire, or make any optional
payment on account of any principal of, interest on, or premium payable in
connection with the optional prepayment, redemption or retirement of, any of its
Indebtedness (other than Indebtedness to the Borrower or any Subsidiary of the
Borrower), or give an optional notice of redemption with respect to any such
Indebtedness, in each case if any Default or Event of Default shall have
occurred and be continuing hereunder (after giving effect to any such optional
payment).
Section 6.22. Compliance with Laws. Without limiting any of the other
covenants of the Borrower in this Section 6, the Borrower and its Subsidiaries
shall conduct their business, and otherwise be, in compliance with all
applicable laws, regulations, ordinances and orders of any governmental or
judicial authorities; provided, however, that this Section 6.22 shall not
require the Borrower or any Subsidiary of the Borrower to comply with any such
law, regulation, ordinance or order if (x) it shall be contesting such law,
regulation, ordinance or order in good faith by appropriate proceedings and
reserves in conformity with GAAP have been provided therefor, or (y) the failure
to comply therewith is reasonably likely to have a Material Adverse Effect.
Section 6.23. Interest Coverage Ratio. The Borrower will not permit
the Interest Coverage Ratio as of the end of each fiscal quarter of the
Borrower, commencing with the first full fiscal quarter ended after the Exchange
Offer Consummation Date, to be less than 3:00 to 1:00.
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Section 6.24. Total Funded Debt to Total Capital Ratio. The Borrower
will maintain, as of the end of each fiscal quarter of the Borrower, commencing
with the first full fiscal quarter ended after the Exchange Offer Consummation
Date, a ratio (expressed as a percentage) of Total Funded Debt to Total Capital
of (i) no greater than 45% during the period from the first day of such first
full fiscal quarter through December 31, 1998, and (ii) at any time from January
1, 1999, until final maturity, no greater than 40%.
Section 6.25. Minimum Consolidated Net Worth. The Borrower will (i)
maintain, for the period from immediately after the Exchange Offer Consummation
Date through the consummation of the Mandatory Bid, a minimum Consolidated Net
Worth of at least ninety percent (90%) of Consolidated Net Worth as of
immediately after the Exchange Offer Consummation Date, and will have a
Consolidated Net Worth of at least $1,400,000,000 as of immediately after the
consummation of the Mandatory Bid, and (ii) maintain a minimum Consolidated Net
Worth, as of the end of each full fiscal quarter of the Borrower after the
Exchange Offer Consummation Date, of at least the sum of (x) $1,400,000,000,
plus (y) an amount equal to 50% of Consolidated Adjusted Net Income (if
positive) for the fiscal quarter ending December 31, 1996, plus (z) an amount
equal to the greater of 0 and 50% of fiscal year-to-date Consolidated Adjusted
Net Income (if positive) for each fiscal quarter thereafter.
Section 6.26. SODI Credit Facility and Transocean Credit Facility
Releases. The Borrower will provide to the Agent evidence that the promissory
notes and all other outstanding Indebtedness under the SODI Credit Facility and
the Transocean Credit Facility have been paid in full and evidence that all
Liens under the SODI Credit Facility and the Transocean Credit Facility have
been released within one (1) day of the Initial Borrowing Date with respect to
the SODI Credit Facility and within eleven (11) days of the Initial Borrowing
Date with respect to the Transocean Credit Facility.
SECTION 7. EVENTS OF DEFAULT AND REMEDIES.
Section 7.1. Events of Default. Any one or more of the following shall
constitute an Event of Default:
(a) default by the Borrower in the payment of the principal amount of
any Loan, any Reimbursement Obligation, any interest thereon or any fees payable
hereunder within two (2) Business Days following the date when due;
(b) default by the Borrower in the observance or performance of any
covenant set forth in Sections 6.12, 6.13, 6.19, 6.21, 6.23, 6.24, 6.25 or 6.26;
(c) any event of default or default described in a Security Document
other than any Events of Default specifically provided in this Section 7.1 shall
occur and remain unremedied after any applicable grace period therefor, or if no
grace period is provided therein, the applicable grace period for purposes
hereof shall be thirty (30) days following notice to the Borrower by the Agent
of the occurrence of such event of default or default;
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(d) default by any Credit Party in the observance or performance of
any provision hereof or of any other Credit Document not mentioned in (a), (b)
or (c) above, which is not remedied within thirty (30) days after notice thereof
to the Borrower by the Agent;
(e) any representation or warranty made or deemed made herein or in
any other Credit Document by the Borrower or any Subsidiary proves untrue in any
material respect as of the date of the making, or deemed making, thereof;
(f) default occurs in the payment when due of Indebtedness or default
occurs in the payment, after any demand therefor, under a Performance Guaranty,
in an aggregate principal amount of $5,000,000 or more when aggregated with any
Indebtedness described in Section 7.1(l) which is then in default, of the
Borrower or any Subsidiary of the Borrower after any applicable grace period
therefor, and such default, if in payment when due of Indebtedness, continues
for a period of time sufficient to permit the holder or beneficiary of such
Indebtedness, or a trustee therefor, to cause the acceleration of the maturity
of any such Indebtedness or any mandatory unscheduled prepayment, purchase, or
other early funding thereof;
(g) the Borrower or any Material Subsidiary (i) has entered
involuntarily against it an order for relief under the United States Bankruptcy
Code or a comparable action is taken under any bankruptcy or insolvency law of
another country or political subdivision of such country, (ii) generally does
not pay, or admits its inability generally to pay, its debts as they become due,
(iii) makes a general assignment for the benefit of creditors, (iv) applies for,
seeks, consents to, or acquiesces in, the appointment of a receiver, custodian,
trustee, liquidator or similar official for it or any substantial part of its
property under the Bankruptcy Code or under the bankruptcy or insolvency laws of
another country or a political subdivision of such country, (v) institutes any
proceeding seeking to have entered against it an order for relief under the
United States Bankruptcy Code or any comparable law, to adjudicate it insolvent,
or seeking dissolution, winding up, liquidation, reorganization, arrangement,
adjustment or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors or fails to file
an answer or other pleading denying the material allegations of or consents to
or acquiesces in any such proceeding filed against it, (vi) makes any board of
directors resolution in direct furtherance of any matter described in clauses
(i)-(v) above, or (vii) fails to contest in good faith any appointment or
proceeding described in this Section 7.1(g);
(h) a custodian, receiver, trustee, liquidator or similar official is
appointed for the Borrower or any Material Subsidiary or any substantial part of
its property under the Bankruptcy Code or under the bankruptcy or insolvency
laws of another country or a political subdivision of such country, or a
proceeding described in Section 7.1(g)(v) is instituted against the Borrower or
any Material Subsidiary, and such appointment continues undischarged or such
proceeding continues undismissed and unstayed for a period of sixty (60) days
(or one hundred twenty (120) days in the case of any such event occurring
outside the United States of America);
(i) the Borrower or any Subsidiary of the Borrower fails within thirty
(30) days with respect to a judgment or order that is rendered in the United
States or sixty (60) days with respect to a judgment or order that is rendered
in a foreign jurisdiction (or such earlier date as any execution on such
judgment or order shall take place) to vacate, pay, bond or otherwise discharge
any judgment or order for the payment of money the uninsured portion of which is
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in excess of $15,000,000 and which is not stayed on appeal or otherwise being
appropriately contested in good faith in a manner that stays execution;
(j) the Borrower or any Subsidiary of the Borrower fails to pay when
due an amount aggregating in excess of $5,000,000 that it is liable to pay to
the PBGC or to a Plan under Title IV of ERISA; or a notice of intent to
terminate a Plan having Unfunded Vested Liabilities of the Borrower or any of
its Subsidiaries in excess of $5,000,000 (a "Material Plan") is filed under
Title IV of ERISA; or the PBGC institutes proceedings under Title IV of ERISA to
terminate or to cause a trustee to be appointed to administer any Material Plan
or a proceeding is instituted by a fiduciary of any Material Plan against any
Borrower or any Subsidiary to collect any liability under Section 515 or
4219(c)(5) of ERISA, and in each case such proceeding is not dismissed within
thirty (30) days thereafter; or a condition exists by reason of which the PBGC
would be entitled to obtain a decree adjudicating that any Material Plan must be
terminated;
(k) any Credit Party or any Person authorized to act on behalf of a
Credit Party challenges the validity of any Credit Document or such Credit
Party's obligations thereunder in any material respect, or any Credit Document
ceases, other than in accordance with its terms, to be valid and binding or
ceases, in any material respect, other than in accordance with its terms, to
give to the Agent and the Lenders the Liens, rights, and powers purported to be
granted in their favor thereby;
(l) the Borrower or any Subsidiary of the Borrower shall default in
any payment under any Interest Rate Protection Agreement or futures agreement
permitted pursuant to Section 6.15(g) or (h) when obligated to make such
payment, whether by acceleration or otherwise, and such payment default shall
continue after any applicable grace period and be in an amount in excess of
$5,000,000 when aggregated with all Indebtedness described in Section 7.1(f)
which is then in default as described in Section 7.1(f);
(m) any event of default under any of the Note Purchase Agreements
shall occur after any applicable grace period therefor;
(n) any Person or two or more Persons acting in concert shall acquire
beneficial ownership (within the meaning of Rule 13d-3 of the SEC under the
Securities Exchange Act of 1934, as amended), directly or indirectly, of
securities of the Borrower (or other securities convertible into such
securities) representing fifty percent (50%) or more of the combined voting
power of all outstanding securities of the Borrower entitled to vote in the
election of directors, other than securities having such power only by reason of
the happening of a contingency; or
(o) any event of default under any letter of credit or reimbursement
agreement by and between the Borrower and the Agent shall occur after any
applicable grace period therefor.
Section 7.2. Non-Bankruptcy Defaults. When any Event of Default (other
than those described in subsections (g) or (h) of Section 7.1 with respect to
the Borrower) has occurred and is continuing, the Agent shall, by notice to the
Borrower: (a) if so directed by the Majority Lenders, terminate the remaining
Commitments to the Borrower hereunder on the date stated in such notice (which
may be the date thereof); (b) if so directed by the Majority Lenders, declare
the principal of and the accrued interest on all outstanding Notes to be
forthwith due and
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payable and thereupon all outstanding Notes, including both principal and
interest thereon, shall be and become immediately due and payable together with
all other accrued amounts payable under the Credit Documents without further
demand, presentment, protest or notice of any kind, including, but not limited
to, notice of intent to accelerate and notice of acceleration, each of which is
expressly waived by the Borrower; and (c) if so directed by the Majority
Lenders, demand that the Borrower immediately pay to the Agent (to be held by
the Agent pursuant to Section 7.4) the full amount then available for drawing
under each outstanding Letter of Credit, and the Borrower agrees to immediately
make such payment and acknowledges and agrees that the Lenders would not have an
adequate remedy at law for failure by the Borrower to honor any such demand and
that the Agent, for the benefit of the Lenders, shall have the right to require
the Borrower to specifically perform such undertaking whether or not any
drawings or other demands for payment have been made under any Letter of Credit.
The Agent, after giving notice to the Borrower pursuant to Section 7.1(c) or
this Section 7.2, shall also promptly send a copy of such notice to the other
Lenders, but the failure to do so shall not impair or annul the effect of such
notice.
Section 7.3. Bankruptcy Defaults. When any Event of Default described
in subsections (g) or (h) of Section 7.1 has occurred and is continuing with
respect to the Borrower, then all outstanding Notes shall immediately become due
and payable together with all other accrued amounts payable under the Credit
Documents without presentment, demand, protest or notice of any kind, each of
which is expressly waived by the Borrower; and all obligations of the Lenders to
extend further Credit pursuant to any of the terms hereof shall immediately
terminate and the Borrower shall immediately pay to the Agent (to be held by the
Agent pursuant to Section 7.4) the full amount then available for drawing under
all outstanding Letters of Credit, the Borrower acknowledging that the Lenders
and the Agent would not have an adequate remedy at law for failure by the
Borrower to honor any such demand and that the Lenders and the Agent shall have
the right to require the Borrower to specifically perform such undertaking
whether or not any drawings or other demands for payment have been made under
any of the Letters of Credit.
Section 7.4. Collateral for Undrawn Letters of Credit. (a) If the
prepayment of the amount available for drawing under any or all outstanding
Letters of Credit is required under Section 7.2 or 7.3, the Borrower shall
forthwith pay the amount required to be so prepaid, to be held by the Agent as
provided in subsection (b) below.
(b) All amounts prepaid pursuant to subsection (a) above shall be held
by the Agent in a separate collateral account (such account, and the credit
balances, properties and any investments from time to time held therein, and any
substitutions for such account, any certificate of deposit or other instrument
evidencing any of the foregoing and all proceeds of and earnings on any of the
foregoing being collectively called the "Collateral Account") as security for,
and for application by the Agent (to the extent available) to, the reimbursement
of any drawing under any Letter of Credit then or thereafter paid by the Agent,
and to the payment of the unpaid balance of any Loans and all other due and
unpaid Obligations (collectively, the "Collateralized Obligations"). The
Collateral Account shall be held in the name of and subject to the exclusive
dominion and control of the Agent, for the benefit of the Agent and the Lenders,
as pledgee hereunder. If and when requested by the Borrower, the Agent shall
invest and reinvest funds held in the Collateral Account from time to time in
Cash Equivalents specified
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from time to time by the Borrower, provided that the Agent is irrevocably
authorized to sell investments held in the Collateral Account when and as
required to make payments out of the Collateral Account for application to
Collateralized Obligations due and owing from the Borrower to the Agent or the
Lenders. When and if (A) (i) the Borrower shall have made payment of all
Collateralized Obligations then due and payable, (ii) all relevant preference or
other disgorgement periods relating to the receipt of such payments have passed,
and (iii) no Commitments or Loans remain outstanding and no Reimbursement
Obligations or other Obligations remain outstanding and due and payable
hereunder, or (B) no Default or Event of Default shall be continuing, the Agent
shall repay to the Borrower any remaining amounts and assets held in the
Collateral Account, provided that if the Collateral Account is being released
pursuant to clause (A) and any Letter of Credit then remains outstanding, the
Borrower, prior to or contemporaneously with such release, shall make
arrangements with respect to such outstanding Letters of Credit in the manner
described in the first sentence of Section 2.14.
Section 7.5. Notice of Default. The Agent shall give notice to the
Borrower under Section 7.1(c) and 7.2 promptly upon being requested to do
so by the Majority Lenders and shall thereupon notify all the Lenders thereof.
Section 7.6. Expenses. The Borrower agrees to pay to the Agent and
each Lender all reasonable out-of-pocket expenses incurred or paid by the Agent
or such Lender, including reasonable attorneys' fees and court costs, in
connection with any Default or Event of Default by the Borrower hereunder or in
connection with the enforcement of any of the Credit Documents.
Section 7.7. Distribution and Application of Proceeds. Subject to the
Intercreditor Agreement, after the occurrence of and during the continuance of
an Event of Default, any payment to the Agent or any Lender hereunder or under
any Guaranty or from the proceeds of any Collateral, the Collateral Account or
otherwise shall be paid to the Agent to be distributed and applied as follows
(unless otherwise agreed by the Borrower, the Agent and all Lenders):
(a) First, to the payment of any and all reasonable out-of-pocket
costs and expenses of the Agent and the Collateral Agent, including without
limitation reasonable attorneys' fees and out-of-pocket costs and expenses, as
provided by this Agreement or by any other Credit Document, incurred in
connection with the collection of such payment or in respect of the enforcement
of any rights of the Agent, the Collateral Agent or the Lenders under this
Agreement or any other Credit Document;
(b) Second, to the payment of any and all reasonable out-of-pocket
costs and expenses of the Lenders, including, without limitation reasonable
attorneys' fees and out-of-pocket costs and expenses, as provided by this
Agreement or by any other Credit Document, incurred in connection with the
collection of such payment or in respect of the enforcement of any rights of the
Lenders under this Agreement or any other Credit Document; pro rata in the
proportion in which the amount of such costs and expenses unpaid to each Lender
bears to the aggregate amount of the costs and expenses unpaid to all Lenders
collectively, until all such fees, costs and expenses have been paid in full;
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(c) Third, to the payment of any due and unpaid fees to the Agent or
any Lender as provided by this Agreement or any other Credit Document, pro rata
in the proportion in which the amount of such fees due and unpaid to the Agent
and each Lender bears to the aggregate amount of the fees due and unpaid to the
Agent and all Lenders collectively, until all such fees have been paid in full;
(d) Fourth, to the payment of accrued and unpaid interest on the Notes
or the Reimbursement Obligations to the date of such application, pro rata in
the proportion in which the amount of such interest, accrued and unpaid to each
Lender bears to the aggregate amount of such interest accrued and unpaid to all
Lenders collectively, until all such accrued and unpaid interest has been paid
in full;
(e) Fifth, to the payment of the outstanding due and payable principal
amount of each of the Notes and the amount of the outstanding Reimbursement
Obligations (reserving cash collateral for all undrawn face amounts of any
outstanding Letters of Credit (if Section 7.4(a) has not been complied with)),
pro rata in the proportion in which the outstanding principal amount of such
Notes and the amount of such outstanding Reimbursement Obligations owing to each
Lender, together (if Section 7.4(a) has not been complied with) with the undrawn
face amounts of such outstanding Letters of Credit, bears to the aggregate
amount of all outstanding Notes, outstanding Reimbursement Obligations and (if
Section 7.4(a) has not been complied with) the undrawn face amounts of all
outstanding Letters of Credit. In the event that any such Letters of Credit, or
any portions thereof, expire without being drawn, any cash collateral therefor
shall be distributed by the Agent until the principal amount of all Notes and
Reimbursement Obligations shall have been paid in full;
(f) Sixth, to the payment of any other outstanding Obligations then
due and payable, pro rata in the proportion in which the outstanding Obligations
owing to each Lender bears to the aggregate amount of such Obligations until all
such Obligations have been paid in full; and
(g) Seventh, to the Borrower or as the Borrower may direct.
SECTION 8. CHANGE IN CIRCUMSTANCES.
Section 8.1. Change of Law. (a) Notwithstanding any other provisions
of this Agreement or any Note, if at any time any change, after the date hereof
(or, if later, after the date the Agent, any Documentation Agent, any Co-Agent
or a Lender becomes the Agent, a Documentation Agent, a Co-Agent or a Lender),
in applicable law or regulation or in the interpretation thereof makes it
unlawful for any Lender to make or continue to maintain Eurodollar Loans, such
Lender shall promptly give written notice thereof and of the basis therefor in
reasonable detail to the Borrower and such Lender's obligations to fund Loans in
Pounds or Kroner, or make, continue or convert Loans into Eurodollar Loans under
this Agreement shall thereupon be suspended until it is no longer unlawful for
such Lender to make or maintain Eurodollar Loans.
(b) Upon the giving of the notice to Borrower referred to in
subsection (a) above, (i) any outstanding Eurodollar Loan of such Lender shall
be automatically converted to a Base Rate Loan in Dollars on the last day of the
Interest Period then applicable thereto or on
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such earlier date as required by law, and (ii) such Lender shall make an advance
as part of any requested Borrowing of Eurodollar Loans as a Base Rate Loan,
which Base Rate Loan shall, for all other purposes, be considered part of such
Borrowing.
(c) Any Lender that has given any notice pursuant to Section 8.1(a)
shall, upon determining that it would no longer be unlawful for it to make
Eurodollar Loans, give prompt written notice thereof to the Borrower and the
Agent, and upon giving such notice, its obligation to make, allow conversions
into and maintain Eurodollar Loans shall be reinstated.
Section 8.2. Unavailability of Deposits or Inability to Ascertain
LIBOR Rate. If on or before the first day of any Interest Period for any
Borrowing of Eurodollar Loans the Agent determines in good faith (after
consultation with the other Lenders) that, due to changes in circumstances since
the date hereof, adequate and fair means do not exist for determining the
Adjusted LIBOR Rate or such rate will not accurately reflect the cost to the
Majority Lenders of funding Eurodollar Loans for such Interest Period, the Agent
shall give written notice (in reasonable detail) of such determination and of
the basis therefor to the Borrower and the Lenders, whereupon until the Agent
notifies the Borrower and Lenders that the circumstances giving rise to such
suspension no longer exist (which the Agent shall do promptly after they do not
exist), (i) the obligations of the Lenders to fund Loans in Pounds or Kroner, or
make, continue or convert Loans into Eurodollar Loans, or to convert Base Rate
Loans into Eurodollar Loans, shall be suspended and (ii) each Eurodollar Loan
will automatically on the last day of the then existing Interest Period
therefor, convert into a Base Rate Loan in Dollars.
Section 8.3. Increased Cost and Reduced Return. (a) If, on or after
the date hereof, the adoption of or any change in any applicable law, rule or
regulation, or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender (or its
Lending Office), including the Agent in its capacity as the issuer of Letters of
Credit, with any request or directive (whether or not having the force of law)
of any such authority, central bank or comparable agency exercising control over
banks or financial institutions generally issued after the date hereof (or, if
later, after the date the Agent, a Documentation Agent, a Co-Agent or Lender
becomes the Agent, a Documentation Agent, a Co-Agent or Lender):
(i) subjects any Lender (or its Lending Office) to any tax, duty or
other charge related to any Eurodollar Loan, Letter of Credit or Reimbursement
Obligation, or its participation in any thereof, or its obligation to advance or
maintain Eurodollar Loans, issue Letters of Credit or to participate therein, or
shall change the basis of taxation of payments to any Lender (or its Lending
Office) of the principal of or interest on its Eurodollar Loans, Letters of
Credit, or participations therein, or any other amounts due under this Agreement
related to its Eurodollar Loans, Letters of Credit, Reimbursement Obligations or
participations therein, or its obligation to make Eurodollar Loans, issue
Letters of Credit, or acquire participations therein (except for changes with
respect to income or franchise taxes excluded from indemnification pursuant to
Section 3.3); or
(ii) imposes, modifies or deems applicable any reserve, special
deposit or similar requirement (including, without limitation, any such
requirement imposed by the Board
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of Governors of the Federal Reserve System, but excluding for any Eurodollar
Loan any such requirement included in an applicable Eurodollar Reserve
Percentage) against assets of, deposits with or for the account of, or credit
extended by, any Lender (or its Lending Office) or imposes on any Lender (or its
Lending Office) or on the interbank market any other condition affecting its
Eurodollar Loans, its Letters of Credit, any Reimbursement Obligation owed to
it, or its participation in any thereof, or its obligation to advance or
maintain Eurodollar Loans, issue Letters of Credit or participate in any
thereof;
and the result of any of the foregoing is to increase the cost to such
Lender (or its Lending Office) of advancing or maintaining any Eurodollar Loan,
issuing or maintaining a Letter of Credit or participating therein, or to reduce
the amount of any sum received or receivable by such Lender (or its Lending
Office) in connection therewith under this Agreement or its Note(s), by an
amount deemed by such Lender to be material, then, subject to Section 8.3(c),
from time to time, within thirty (30) days after receipt of a certificate from
such Lender (with a copy to the Agent) pursuant to subsection (c) below setting
forth in reasonable detail such determination and the basis thereof, the
Borrower shall be obligated to pay to such Lender such additional amount or
amounts as will compensate such Lender for such increased cost or reduction.
(b) If, after the date hereof, the Agent or any Lender shall have
reasonably determined that the adoption after the date hereof of any applicable
law, rule or regulation regarding capital adequacy, or any change therein
(including, without limitation, any revision in the Final Risk-Based Capital
Guidelines of the Board of Governors of the Federal Reserve System (12 CFR Part
208, Appendix A; 12 CFR Part 225, Appendix A) or of the Office of the
Comptroller of the Currency (12 CFR Part 3, Appendix A), or in any other
applicable capital adequacy rules heretofore adopted and issued by any
governmental authority), or any change after the date hereof in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by the Agent or any Lender (or its Lending Office) with
any request or directive regarding capital adequacy (whether or not having the
force of law) of any such authority, central bank or comparable agency, has or
would have the effect of reducing the rate of return on such Lender's capital,
or on the capital of any corporation controlling such Lender, as a consequence
of its obligations hereunder to a level below that which such Lender could have
achieved but for such adoption, change or compliance (taking into consideration
such Lender's or its controlling corporation's policies with respect to capital
adequacy in effect immediately before such adoption, change or compliance) by an
amount reasonably deemed by such Lender to be material, then, subject to Section
8.3(c), from time to time, within thirty (30) days after its receipt of a
certificate from such Lender (with a copy to the Agent) pursuant to subsection
(c) below setting forth in reasonable detail such determination and the basis
thereof, the Borrower shall pay to such Lender such additional amount or amounts
as will compensate such Lender for such reduction or the Borrower may prepay all
Eurodollar Loans of such Lender.
(c) The Agent and each Lender that determines to seek compensation
under this Section 8.3 shall give written notice to the Borrower and, in the
case of a Lender other than the Agent, the Agent of the circumstances that
entitle the Agent or such Lender to such compensation no later than ninety (90)
days after such Lender receives actual notice or obtains actual knowledge of the
law, rule, order or interpretation or occurrence of another event giving rise to
a claim hereunder. In any event the Borrower shall not have any obligation to
pay any
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amount with respect to claims accruing prior to the ninetieth day preceding such
written demand. The Agent and each Lender shall use reasonable efforts to avoid
the need for, or reduce the amount of, such compensation and any payment under
Section 3.3, including, without limitation, the designation of a different
Lending Office, if such action or designation will not, in the sole judgment of
the Agent or such Lender made in good faith, be otherwise disadvantageous to it;
provided that the foregoing shall not in any way affect the rights of any Lender
or the obligations of the Borrower under this Section 8.3, and provided further
that no Lender shall be obligated to make its Eurodollar Loans hereunder at any
office located in the United States of America. A certificate of the Agent or
any Lender, as applicable, claiming compensation under this Section 8.3 and
setting forth the additional amount or amounts to be paid to it hereunder and
accompanied by a statement prepared by the Agent or such Lender, as applicable,
describing in reasonable detail the calculations thereof shall be rebuttable
presumptive evidence thereof in the absence of manifest error. In determining
such amount, such Lender may use any reasonable averaging and attribution
methods.
Section 8.4. Lending Offices. The Agent and each Lender may, at its
option, elect to make its Loans hereunder at the Lending Office for each type of
Loan available hereunder or at such other of its branches, offices or affiliates
as it may from time to time elect and designate in a written notice to the
Borrower and the Agent, provided that, except that in the case of any such
transfer to another of its branches, offices or affiliates made at the request
of the Borrower, the Borrower shall not be responsible for the costs arising
under Section 3.3 or 8.3 resulting from any such transfer to the extent not
otherwise applicable to such Lender prior to such transfer.
Section 8.5. Discretion of Lender as to Manner of Funding. Subject to
the other provisions of this Agreement, each Lender shall be entitled to fund
and maintain its funding of all or any part of its Loans in any manner it sees
fit.
Section 8.6. Substitution of Lender. If (a) any Lender has demanded
compensation or given notice of its intention to demand compensation under
Section 8.3, (b) the Borrower is required to pay any additional amount to any
Lender under Section 2.13, (c) any Lender is unable to submit any form or
certificate required under Section 3.3(b) or withdraws or cancels any previously
submitted form with no substitution therefor, (d) any Lender gives notice of any
change in law or regulations, or in the interpretation thereof, pursuant to
Section 8.1, (e) any Lender has been declared insolvent or a receiver or
conservator has been appointed for a material portion of its assets, business or
properties or (f) any Lender shall seek to avoid its obligation to make Loans
hereunder for any reason, including, without limitation, reliance upon 12 U.S.C.
(S) 1821(e) or (n) (1) (B), (g) any taxes referred to in Section 3.3 have been
levied or imposed (or the Borrower determines in good faith that there is a
substantial likelihood that such taxes will be levied or imposed) so as to
require withholding or deductions by the Borrower or payment by the Borrower of
additional amounts to any Lender, or other reimbursement or indemnification of
any Lender, as a result thereof, (h) any Lender shall decline to consent to a
modification or waiver of the terms of this Agreement or any other Credit
Documents requested by the Borrower, or (i) any Lender gives notice pursuant to
Section 2.2(a)(ii) that the issuance of a Letter of Credit would violate any
legal or regulatory restriction then applicable to such Lender, then and in such
event, upon request from the Borrower delivered to such Lender and the Agent,
such Lender shall assign, in accordance with the provisions of Section 10.10 and
an
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appropriately completed Assignment Agreement, all of its rights and obligations
under the Credit Documents to another Lender or a commercial banking institution
selected by the Borrower and (in the case of a commercial banking institution)
reasonably satisfactory to the Agent, in consideration for the payments set
forth in such Assignment Agreement and payment by the Borrower to such Lender of
all other amounts which such Lender may be owed pursuant to this Agreement,
including, without limitation, Sections 2.13, 3.3, 8.3 and 10.13.
SECTION 9. THE AGENTS.
Section 9.1. Appointment and Authorization of Agent, Collateral Agent,
Documentation Agent and Co-Agents. Each Lender hereby appoints ABN AMRO as the
Agent and Collateral Agent, each of SunTrust Bank, Atlanta, and Credit Lyonnais
New York Branch, as the Documentation Agents, and each of Bank of Montreal, The
Fuji Bank, Limited, Royal Bank of Canada and Wells Fargo Bank (Texas), National
Association, as the Co-Agents, under the Credit Documents and hereby authorizes
the Agent, the Collateral Agent, the Documentation Agents and the Co-Agents to
take such action as Agent, Collateral Agent, Documentation Agents and Co-Agents
on each of its behalf and to exercise such powers under the Credit Documents as
are delegated to the Agent, the Collateral Agent, the Documentation Agents and
the Co-Agents, respectively, by the terms thereof, together with such powers as
are reasonably incidental thereto. Each Lender hereby authorizes ABN AMRO, as
Agent for the Lenders and as Collateral Agent, to execute and deliver the
Intercreditor Agreement.
Section 9.2. Rights and Powers. The Agent, the Collateral Agent, the
Documentation Agents and the Co-Agents shall have the same rights and powers
under the Credit Documents as any other Lender and may exercise or refrain from
exercising such rights and power as though it were not an Agent, a Collateral
Agent, a Documentation Agent or a Co-Agent, and the Agent, the Collateral Agent,
the Documentation Agents and the Co-Agents and their respective Affiliates may
accept deposits from, lend money to, and generally engage in any kind of
business with the Borrower or any of its Subsidiaries or Affiliates as if it
were not an Agent, a Collateral Agent, a Documentation Agent or a Co-Agent under
the Credit Documents. The term Lender as used in all Credit Documents, unless
the context otherwise clearly requires, includes the Agent, the Collateral
Agent, the Documentation Agents or the Co-Agents in their respective individual
capacities as a Lender.
Section 9.3. Action by Agent, Collateral Agent, Documentation Agents
and Co-Agents. The obligations of the Agent, the Collateral Agent, the
Documentation Agents and the Co-Agents under the Credit Documents are only those
expressly set forth therein. Without limiting the generality of the foregoing,
the Agent shall not be required to take any action concerning any Default or
Event of Default, except as expressly provided in Sections 7.2 and 7.5. Unless
and until the Majority Lenders give such direction the Agent may, except as
otherwise expressly provided herein or therein, take or refrain from taking such
actions as it deems appropriate and in the best interest of all the Lenders. In
no event, however, shall the Agent, the Collateral Agent, any Documentation
Agent or any Co-Agent be required to take any action in violation of applicable
law or of any provision of any Credit Document, and each of the Agent, the
Collateral Agent, the Documentation Agents and the Co-Agents shall in all cases
be fully justified in failing or refusing to act hereunder or under any other
Credit Document unless it first receives any further assurances of its
indemnification from the Lenders that it may require,
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including prepayment of any related expenses and any other protection it
requires against any and all costs, expenses, and liabilities it may incur in
taking or continuing to take any such action. The Agent shall be entitled to
assume that no Default or Event of Default exists unless notified in writing to
the contrary by a Lender or the Borrower. In all cases in which the Credit
Documents do not require the Agent, the Collateral Agent, any Documentation
Agent or any Co-Agent to take specific action, the Agent, the Collateral Agent,
the Documentation Agents and the Co-Agents shall be fully justified in using its
discretion in failing to take or in taking any action thereunder. Any
instructions of the Majority Lenders, or of any other group of Lenders called
for under specific provisions of the Credit Documents, shall be binding on all
the Lenders and holders of Notes.
Section 9.4. Consultation with Experts. Each of the Agent, the
Collateral Agent, the Documentation Agents and the Co-Agents may consult with
legal counsel, independent public accountants and other experts selected by it
and shall not be liable for any action taken or omitted to be taken by it in
good faith in accordance with the advice of such counsel, accountants or
experts.
Section 9.5. Indemnification Provisions; Credit Decision. Neither the
Agent, the Collateral Agent, the Documentation Agents, the Co-Agents nor any of
their directors, officers, agents, or employees shall be liable for any action
taken or not taken by them in connection with the Credit Documents (i) with the
consent or at the request of the Majority Lenders or (ii) in the absence of
their own gross negligence or willful misconduct. Neither the Agent, the
Collateral Agent, the Documentation Agents, the Co-Agents nor any of their
directors, officers, agents or employees shall be responsible for or have any
duty to ascertain, inquire into or verify (i) any statement, warranty or
representation made in connection with this Agreement, any other Credit Document
or any Borrowing; (ii) the performance or observance of any of the covenants or
agreements of the Borrower or any Subsidiary contained herein or in any other
Credit Document; (iii) the satisfaction of any condition specified in Section 4,
except receipt of items required to be delivered to the Agent; or (iv) the
validity, effectiveness, genuineness, enforceability, value, worth or
collectability hereof or of any other Credit Document or of any other documents
or writing furnished in connection with any Credit Document; and the Agent, the
Collateral Agent, the Documentation Agents and the Co-Agents make no
representation of any kind or character with respect to any such matters
mentioned in this sentence. The Agent, the Collateral Agent, the Documentation
Agents and the Co-Agents may execute any of their duties under any of the Credit
Documents by or through employees, agents, and attorneys-in-fact and shall not
be answerable to the Lenders or any other Person for the default or misconduct
of any such agents or attorneys-in-fact selected with reasonable care. The
Agent, the Collateral Agent, the Documentation Agents and the Co-Agents shall
not incur any liability by acting in reliance upon any notice, consent,
certificate, other document or statement (whether written or oral) believed by
it to be genuine or to be sent by the proper party or parties. In particular and
without limiting any of the foregoing, the Agent and the Documentation Agents
shall have no responsibility for confirming the accuracy of any Compliance
Certificate or other document or instrument received by any of them under the
Credit Documents. The Agent, the Collateral Agent, the Documentation Agents and
the Co-Agents may treat the payee of any Note as the holder thereof until
written notice of transfer shall have been filed with such Agent signed by such
owner in form satisfactory to such agent. Each Lender acknowledges that it has
independently and without reliance on the Agent, the Collateral Agent, any of
the Co-Agents or
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either of the Documentation Agents or any other Lender obtained such information
and made such investigations and inquiries regarding the Borrower and its
Subsidiaries as it deems appropriate, and based upon such information,
investigations and inquiries, made its own credit analysis and decision to
extend credit to the Borrower in the manner set forth in the Credit Documents.
It shall be the responsibility of each Lender to keep itself informed about the
creditworthiness and business, properties, assets, liabilities, condition
(financial or otherwise) and prospects of the Borrower and its Subsidiaries, and
the Agent, the Collateral Agent, the Documentation Agents and the Co-Agents
shall have no liability whatsoever to any Lender for such matters. The Agent,
the Collateral Agent, the Documentation Agents and the Co-Agents shall have no
duty to disclose to the Lenders information that is not required by any Credit
Document to be furnished by the Borrower or any Subsidiaries to such agent at
such time, but is voluntarily furnished to such agent (either in their
respective capacity as Agent, the Collateral Agent, the Documentation Agents or
the Co-Agents or in their individual capacity).
Section 9.6. Indemnity. The Lenders shall ratably, in accordance with
their Percentages, indemnify and hold the Agent, the Collateral Agent, the
Documentation Agents, the Co-Agents, and their directors, officers, employees,
agents and representatives harmless from and against any liabilities, losses,
costs or expenses suffered or incurred by it or by any security trustee under
any Credit Document or in connection with the transactions contemplated thereby,
regardless of when asserted or arising, except to the extent they are promptly
reimbursed for the same by the Borrower and except to the extent that any event
giving rise to a claim was caused by the gross negligence or willful misconduct
of the party seeking to be indemnified. The obligations of the Lenders under
this Section 9.6 shall survive termination of this Agreement.
Section 9.7. Resignation of Agent and Successor Agent. The Agent, the
Collateral Agent, any Documentation Agent and any Co-Agent may resign at any
time and shall resign upon any removal thereof as a Lender pursuant to the terms
of this Agreement or, at the request of the Borrower, in the event it refuses to
issue or participate in a Letter of Credit, as the case may be, pursuant to
Section 2.2(a)(ii), upon at least thirty (30) days' prior written notice to the
Lenders and the Borrower. Any resignation of the Agent shall not be effective
until a replacement therefor is appointed pursuant to the terms hereof. Upon any
such resignation of the Agent, the Collateral Agent, any Documentation Agent or
any Co-Agent, the Majority Lenders, with the consent of the Borrower, which
consent shall not be unreasonably withheld, shall have the right to appoint a
successor Agent, Collateral Agent, Documentation Agent or Co-Agent, as the case
may be. If no successor Agent, Collateral Agent, Documentation Agent or Co-
Agent, as the case may be, shall have been so appointed by the Majority Lenders
and shall have accepted such appointment within thirty (30) days after the
retiring Agent's, Collateral Agent's, Co-Agent's or Documentation Agent's giving
of notice of resignation, then the retiring Agent, Collateral Agent,
Documentation Agent or Co-Agent, as the case may be, may, on behalf of the
Lenders and with the consent of the Borrower, which consent shall not be
unreasonably withheld or delayed, appoint a successor Agent, Collateral Agent,
Documentation Agent or Co-Agent, as the case may be, which shall be any Lender
hereunder or any commercial bank organized under the laws of the United States
of America or of any State thereof and having a combined capital and surplus of
at least $1,000,000,000. Upon the acceptance of its appointment as the Agent,
the Collateral Agent, any Documentation Agent or any Co-Agent hereunder, such
successor Agent, Collateral Agent, Documentation Agent or Co-Agent, as the
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case may be, shall thereupon succeed to and become vested with all the rights
and duties of the retiring Agent, Collateral Agent, Documentation Agent or Co-
Agent, as the case may be, under the Credit Documents, and the retiring Agent,
Collateral Agent, Documentation Agent or any Co-Agent shall be discharged from
its duties and obligations thereunder. After any retiring Agent's, Collateral
Agent's, Documentation Agent's or Co-Agent's resignation hereunder as Agent,
Collateral Agent, Documentation Agent or Co-Agent, as the case may be, the
provisions of this Section 9 and all protective provisions of the other Credit
Documents shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent, Collateral Agent, Documentation Agent or Co-
Agent, as the case may be.
SECTION 10. MISCELLANEOUS.
Section 10.1. No Waiver. No delay or failure on the part of the Agent
or any Lender, or on the part of the holder or holders of any Notes, in the
exercise of any power, right or remedy under any Credit Document shall operate
as a waiver thereof or as an acquiescence in any default, nor shall any single
or partial exercise thereof preclude any other or further exercise of any other
power, right or remedy. To the fullest extent permitted by applicable law, the
powers, rights and remedies under the Credit Documents of the Agent, the Lenders
and the holder or holders of any Notes are cumulative to, and not exclusive of,
any powers, rights or remedies any of them would otherwise have.
Section 10.2. Non-Business Day. Subject to Section 2.6, if any payment
of principal or interest on any Loan, any Reimbursement Obligation or of any
other Obligation shall fall due on a day which is not a Business Day, interest
or fees (as applicable) at the rate, if any, such Loan, Reimbursement Obligation
or other Obligation bears for the period prior to maturity shall continue to
accrue in the manner set forth herein on such Obligation from the stated due
date thereof to the next succeeding Business Day, on which the same shall
instead be payable.
Section 10.3. Documentary Taxes. The Borrower agrees that it will pay
any documentary, stamp or similar taxes payable with respect to any Credit
Document, including interest and penalties, in the event any such taxes are
assessed irrespective of when such assessment is made, other than any such taxes
imposed as a result of any transfer of an interest in a Credit Document.
Section 10.4. Survival of Representations. All representations and
warranties made herein or in certificates given pursuant hereto shall survive
the execution and delivery of this Agreement and the other Credit Documents, and
shall continue in full force and effect with respect to the date as of which
they were made as long as the Borrower has any Obligation hereunder or any
Commitment hereunder is in effect.
Section 10.5. Survival of Indemnities. All indemnities and all
provisions relative to reimbursement to the Lenders of amounts sufficient to
protect the yield of the Lenders with respect to the Loans and the L/C
Obligations, including, but not limited to, Section 2.13, Section 3.3, Section
7.6, Section 8.3 and Section 10.13 hereof, shall, subject to Section 8.3(c),
survive the termination of this Agreement and the other Credit Documents and the
payment of the Loans and all other Obligations and, with respect to any Lender,
any replacement by the Borrower of such Lender pursuant to the terms hereof, in
each case for a period of one (1) year.
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Section 10.6. Setoff. In addition to any rights now or hereafter
granted under applicable law and not by way of limitation of any such rights,
upon the occurrence of, and throughout the continuance of, any Event of Default,
each Lender and each subsequent holder of any Note is hereby authorized by the
Borrower at any time or from time to time, without notice to the Borrower or any
other Person, any such notice being hereby expressly waived, to set off and to
appropriate and to apply any and all deposits (general or special, including,
but not limited to, Indebtedness evidenced by certificates of deposit, whether
matured or unmatured, but not including trust accounts, and in whatever currency
denominated) and any other Indebtedness at any time owing by that Lender or that
subsequent holder to or for the credit or the account of the Borrower, whether
or not matured, against and on account of the due and unpaid obligations and
liabilities of the Borrower to that Lender or that subsequent holder under the
Credit Documents, irrespective of whether or not that Lender or that subsequent
holder shall have made any demand hereunder. Each Lender shall promptly give
notice to the Borrower of any action taken by it under this Section 10.6,
provided that any failure of such Lender to give such notice to the Borrower
shall not affect the validity of such setoff. Each Lender agrees with each other
Lender a party hereto that if such Lender receives and retains any payment,
whether by setoff or application of deposit balances or otherwise, on any of the
Loans or L/C Obligations in excess of its ratable share of payments on all such
Obligations then owed to the Lenders hereunder, then such Lender shall purchase
for cash at face value, but without recourse, ratably from each of the other
Lenders such amount of the Loans or L/C Obligations, or participations therein,
held by each such other Lender as shall be necessary to cause such Lender to
share such excess payment ratably with all the other Lenders; provided, however,
that if any such purchase is made by any Lender, and if such excess payment or
part thereof is thereafter recovered from such purchasing Lender, the related
purchases from the other Lenders shall be rescinded ratably and the purchase
price restored as to the portion of such excess payment so recovered, but
without interest.
Section 10.7. Notices. Except as otherwise specified herein, all
notices under the Credit Documents shall be in writing (including cable,
telecopy or telex) and shall be given to a party hereunder at its address,
telecopier number or telex number set forth below or such other address,
telecopier number or telex number as such party may hereafter specify by notice
to the Agent and the Borrower, given by courier, by United States certified or
registered mail, by telegram or by other telecommunication device capable of
creating a written record of such notice and its receipt. Notices under the
Credit Documents to the Lenders and the Agent shall be addressed to their
respective addresses, telecopier or telex number, or telephone numbers set forth
on the signature pages hereof, and to the Borrower to:
Sonat Offshore Drilling Inc.
4 Greenway Plaza
Houston, Texas 77046
Attention: Robert L. Long
Telephone No.: (713) 871-7500
Fax No.: (713) 850-3815
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With a copy to:
Hughes Hubbard & Reed LLP
Attention: John K. Hoyns
One Battery Park Plaza
New York, New York 10004-1482
Telephone No.: (212) 837-6000
Fax No.: (212) 422-4726
Each such notice, request or other communication shall be effective
(i) if given by telecopier, when such telecopy is transmitted to the telecopier
number specified in this Section 10.7, on the signature pages hereof or pursuant
to Section 10.10 and a confirmation of receipt of such telecopy has been
received by the sender, (ii) if given by telex, when such telex is transmitted
to the telex number specified in this Section 10.7, on the signature pages
hereof or pursuant to Section 10.10 and the answerback is received by sender,
(iii) if given by courier, when delivered, (iv) if given by mail, five (5) days
after such communication is deposited in the mail, certified or registered with
return receipt requested, or (v) if given by any other means, when delivered at
the addresses specified in this Section 10.7, on the signature pages hereof or
pursuant to Section 10.10; provided that any notice given pursuant to Section 2
shall be effective only upon receipt and, provided, further, that any notice
that but for this proviso would be effective after the close of business on a
Business Day or on a day that is not a Business Day shall be effective at the
opening of business on the next Business Day.
Section 10.8. Counterparts. This Agreement may be executed in any
number of counterparts, and by the different parties on different counterpart
signature pages, each of which when executed shall be deemed an original, but
all such counterparts taken together shall constitute one and the same
Agreement.
Section 10.9. Successors and Assigns. This Agreement shall be binding
upon the Borrower, each of the Lenders, the Agent, the Collateral Agent, the
Documentation Agents, the Co-Agents, and their respective successors and
assigns, and shall inure to the benefit of the Borrower, each of the Lenders,
the Agent, the Collateral Agent, the Documentation Agents, the Co-Agents, and
their respective successors and assigns, including any subsequent holder of any
Note; provided, however, the Borrower may not assign any of its rights or
obligations under this Agreement or any other Credit Document without the
written consent of all Lenders, the Agent, the Collateral Agent, the
Documentation Agents and the Co-Agents, and the Agent, the Collateral Agent, the
Documentation Agents and the Co-Agents may not assign any of their respective
rights or obligations under this Agreement or any Credit Document except in
accordance with Section 9 and no Lender may assign any of its rights or
obligations under this Agreement or any other Credit Document except in
accordance with Section 10.10. Any Lender may at any time pledge or assign all
or any portion of its rights under this Agreement and the Notes issued to it to
a Federal Reserve Bank to secure extensions of credit by such Federal Reserve
Bank to such Lender; provided that no such pledge or assignment shall release a
Lender from any of its obligations hereunder or substitute any such Federal
Reserve Bank for such Lender as a party hereto.
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Section 10.10. Sales and Transfers of Borrowings and Notes;
Participations in Borrowings and Notes.
(a) Any Lender may at any time sell to one or more commercial banking
institutions ("Participants") participating interests in any Borrowing owing to
such Lender, any Note held by such Lender, any Commitment of such Lender or any
other interest of such Lender hereunder, provided that no Lender may sell any
participating interests in any such Borrowing, Note, Commitment or other
interest hereunder without also selling to such Participant the appropriate pro
rata share of all its Borrowings, Notes, Commitments and other interests
hereunder, and provided further that no Lender shall transfer, grant or assign
any participation under which the Participant shall have rights to vote upon or
to consent to any matter to be decided by the Lenders or the Majority Lenders
hereunder or under any other Credit Document or to approve any amendment to or
waiver of this Agreement or any other Credit Document except to the extent such
amendment or waiver would (i) increase the amount of such Lender's Commitment
and such increase would affect such Participant, (ii) reduce the principal of,
or interest on, any of such Lender's Borrowings, or any fees or other amounts
payable to such Lender hereunder and such reduction would affect such
Participant, (iii) postpone any date fixed for any scheduled payment of
principal of, or interest on, any of such Lender's Borrowings, or any fees or
other amounts payable to such Lender hereunder and such postponement would
affect such Participant, or (iv) release any collateral security for any
Obligation, except as otherwise specifically provided in any Credit Document. In
the event of any such sale by a Lender of participating interests to a
Participant, such Lender's obligations under this Agreement to the other parties
to this Agreement shall remain unchanged, such Lender shall remain solely
responsible for the performance thereof, such Lender shall remain the holder of
any such Note for all purposes under this Agreement, the Borrower and the Agent
shall continue to deal solely and directly with such Lender in connection with
such Lender's rights and obligations under this Agreement and such Lender shall
retain the sole right to enforce the obligations of any Credit Party under any
Credit Document. The Borrower agrees that if amounts outstanding under this
Agreement and the Notes shall have been declared or shall have become due and
payable in accordance with Section 7.2 or 7.3 upon the occurrence of an Event of
Default, each Participant shall be deemed to have the right of setoff in respect
of its participating interest in amounts owing under this Agreement and any Note
to the same extent as if the amount of its participating interest were owing
directly to it as a Lender under this Agreement or any Note, provided that such
right of setoff shall be subject to the obligation of such Participant to share
with the Lenders, and the Lenders agree to share with such Participant, as
provided in Section 10.6. The Borrower also agrees that each Participant shall
be entitled to the benefits of Sections 2.13, 3.3 and 8.3 with respect to its
participation in the Commitments and the Borrowings outstanding from time to
time, provided that no Participant shall be entitled to receive any greater
amount pursuant to such Sections than the transferor Lender would have been
entitled to receive in respect of the amount of the participation transferred if
no participation had been transferred and provided, further, that Sections
8.3(c) and 8.6 shall apply to the transferor Lender with respect to any claim by
any Participant pursuant to Section 2.13, 3.3 or 8.3 as fully as if such claim
was made by such Lender. Anything herein to the contrary notwithstanding, the
Borrower shall not, at any time, be obligated to pay to any Lender any sum in
excess of the sum the Borrower would have been obligated to pay to such Lender
hereunder if such Lender had not sold any participation in its rights and
obligations under this Agreement or any other Credit Document.
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(b) Any Lender may at any time sell to (i) any other Lender or any
affiliate thereof that is a commercial banking institution not subject to
Regulation T of the Board of Governors of the Federal Reserve System and, (ii)
with the prior written consent of the Agent and the Borrower (which shall not be
unreasonably withheld or delayed), to one or more commercial banking
institutions not subject to Regulation T of the Board of Governors of the
Federal Reserve System (any of (i) or (ii), a "Purchasing Lender"), all or any
part of its rights and obligations under this Agreement and the other Credit
Documents, pursuant to an Assignment Agreement in the form attached as Exhibit
10.10, executed by such Purchasing Lender and such transferor Lender (and, in
the case of a Purchasing Lender which is not then a Lender or an affiliate
thereof, by the Borrower and the Agent) and delivered to the Agent; provided
that each such sale to a Purchasing Lender shall be in an amount of $10,000,000
or more, or if in a lesser amount or if as a result of such sale the sum of the
unfunded Commitment of such Lender plus the aggregate principal amount of such
Lender's Loans and participations in Letters of Credits would be less than
$10,000,000, such sale shall be of all of such Lender's rights and obligations
under this Agreement and all of the other Credit Documents payable to it to one
Purchasing Lender. Notwithstanding the requirement of the Borrower's consent set
forth above, but subject to all of the other terms and conditions of this
Section 10.10(b), any Lender may sell to one or more commercial banking
institutions not subject to Regulation T of the Board of Governors of the
Federal Reserve System, all or any part of their rights and obligations under
this Agreement and the other Credit Documents with only the consent of the Agent
(which shall not be unreasonably withheld or delayed) if an Event of Default
shall have occurred and be continuing. No Lender may sell any Loans to a
Purchasing Lender without also selling to such Purchasing Lender the appropriate
pro rata share of its Borrowings, Notes, Commitments and other interests
hereunder, including participations in Letters of Credit hereunder. Upon such
execution, delivery and acceptance, from and after the effective date of the
transfer determined pursuant to such Assignment Agreement, (x) the Purchasing
Lender thereunder shall be a party hereto and, to the extent provided in such
Assignment Agreement, have the rights and obligations of a Lender hereunder with
a Commitment as set forth herein and (y) the transferor Lender thereunder shall,
to the extent provided in such Assignment Agreement, be released from its
obligations under this Agreement (and, in the case of an Assignment Agreement
covering all or the remaining portion of a transferor Lender's rights and
obligations under this Agreement, such transferor Lender shall cease to be a
party hereto). Such Assignment Agreement shall be deemed to amend this Agreement
to the extent, and only to the extent, necessary to reflect the addition of such
Purchasing Lender and the resulting adjustment of Commitments and Percentages
arising from the purchase by such Purchasing Lender of all or a portion of the
rights and obligations of such transferor Lender under this Agreement, the Notes
and the other Credit Documents. On or prior to the effective date of the
transfer determined pursuant to such Assignment Agreement, the Borrower, at its
own expense, shall execute and deliver to the Agent in exchange for any
surrendered Note, a new Note as appropriate to the order of such Purchasing
Lender in an amount equal to the Commitments assumed by it pursuant to such
Assignment Agreement, and, if the transferor Lender has retained a Commitment or
Borrowing hereunder, a new Note to the order of the transferor Lender in an
amount equal to the Commitments or Borrowings retained by it hereunder. Such new
Notes shall be dated the Initial Borrowing Date and shall otherwise be in the
form of the Notes replaced thereby. The Notes surrendered by the transferor
Lender shall be returned by the Agent to the Borrower marked "cancelled."
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(c) Upon its receipt of an Assignment Agreement executed by a
transferor Lender, a Purchasing Lender and the Agent (and, in the case of a
Purchasing Lender that is not then a Lender or an affiliate thereof, by the
Borrower), together with payment by the transferor Lender to the Agent hereunder
of a registration and processing fee of $3,500 (unless the Borrower is replacing
such Lender pursuant to the terms hereof, in which event such fee shall be paid
by the Borrower), the Agent shall (i) promptly accept such Assignment Agreement,
and (ii) on the effective date of the transfer determined pursuant thereto give
notice of such acceptance and recordation to the Lenders and the Borrower. The
Borrower shall not be responsible for such registration and processing fee or
any costs or expenses incurred by any Lender, any Purchasing Lender or the Agent
in connection with such assignment except as provided above.
(d) If, pursuant to this Section 10.10 any interest in this Agreement
or any Note is transferred to any transferee which is organized under the laws
of any jurisdiction other than the United States of America or any State
thereof, the transferor Lender shall cause such transferee, concurrently with
the effectiveness of such transfer, (i) to represent to the transferor Lender
(for the benefit of the transferor Lender, the Agent and the Borrower) that
under applicable law and treaties no taxes will be required to be withheld by
the Agent, the Borrower or the transferor Lender with respect to any payments to
be made to such transferee in respect of the Loans or the L/C Obligations, (ii)
to furnish to the transferor Lender (and, in the case of any Purchasing Lender,
the Agent and the Borrower) two duly completed and signed copies of either U.S.
Internal Revenue Service Form 4224 or U.S. Internal Revenue Service Form 1001 or
such successor forms as shall be adopted from time to time by the relevant
United States taxing authorities (wherein such transferee claims entitlement to
complete exemption from U.S. federal withholding tax on all interest payments
hereunder), and (iii) to agree (for the benefit of the transferor Lender, the
Agent and the Borrower) to provide the transferor Lender (and, in the case of
any Purchasing Lender, the Agent and the Borrower) new forms as contemplated by
Section 3.3(b) upon the expiration or obsolescence of any previously delivered
form and comparable statements in accordance with applicable U.S. laws and
regulations and amendments duly executed and completed by such transferee, and
to comply from time to time with all applicable U.S. laws and regulations with
regard to such withholding tax exemption.
(e) Notwithstanding any other provisions of this Section 10.10, no
transfer or assignment of the interests of any Lender hereunder or any grant of
participations therein shall be permitted if such transfer, assignment or grant
would require the Borrower or any other Credit Party to file a registration
statement with the SEC or to qualify the Loans, the Notes or any other
Obligations under the securities laws of any jurisdiction.
Section 10.11. Amendments, Waivers and Consents. Any provision of the
Credit Documents may be amended or waived if, but only if, such amendment or
waiver is in writing and is signed by (a) the Borrower, (b) the Majority
Lenders, and (c) if the rights or duties of the Agent, the Collateral Agent, the
Documentation Agents or the Co-Agents are affected thereby, the Agent, the
Collateral Agent, the Documentation Agents or the Co-Agents, as the case may be,
provided that:
(i) no amendment or waiver shall (A) increase the Total Commitment
Amount, the Revolving Credit Commitment Amount or the Term Credit Commitment
Amount without the consent of all Lenders or increase any Commitment of any
Lender without the consent of such
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Lender, (B) postpone the Maturity Date without the consent of all Lenders or
reduce the amount of or postpone the date for any scheduled payment of any
principal of or interest on any Loan or Reimbursement Obligation or of any fee
payable hereunder without the consent of each Lender owed any such Obligation,
or (C) release any Collateral for any Obligation (including, without limitation,
any Guaranty) without the consent of all Lenders; and
(ii) no amendment or waiver shall, unless signed by each Lender,
change the provisions of this Section 10.11 or the definition of Majority
Lenders or the number of Lenders required to take any action under any other
provision of the Credit Documents.
Section 10.12. Headings. Section headings used in this Agreement are
for reference only and shall not affect the construction of this Agreement.
Section 10.13. Legal Fees, Other Costs and Indemnification. The
Borrower, upon demand by the Agent, agrees to pay the reasonable fees and
disbursements of legal counsel to the Agent in connection with the preparation
and execution of the Credit Documents, and any amendment, waiver or consent
related thereto, whether or not the transactions contemplated therein are
consummated. The Borrower further agrees to indemnify each Lender, the Agent,
the Collateral Agent, the Documentation Agents, the Co-Agents, and their
respective directors, officers, employees and attorneys (collectively, the
"Indemnified Parties"), against all losses, claims, damages, penalties,
judgments, liabilities and expenses (including, without limitation, all
reasonable attorneys' fees and other reasonable expenses of litigation or
preparation therefor, whether or not such Indemnified Party is a party thereto)
which any of them may pay or incur arising out of or relating to (a) any action,
suit or proceeding by any third party or governmental authority against such
Indemnified Party and relating to any Credit Document, the Loans, any Letter of
Credit or the application or proposed application by any of the Borrower of the
proceeds of any Loan, REGARDLESS OF WHETHER SUCH CLAIMS OR ACTIONS ARE FOUNDED
IN WHOLE OR IN PART UPON THE ALLEGED SIMPLE OR CONTRIBUTORY NEGLIGENCE OF ANY OF
THE INDEMNIFIED PARTIES AND/OR ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS,
EMPLOYEES OR ATTORNEYS, (b) any investigation of any third party or any
governmental authority involving any Lender (as a lender hereunder) or the
Agent, the Collateral Agent, the Documentation Agents or the Co-Agents (in such
capacity hereunder) and related to any use made or proposed to be made by the
Borrower of the proceeds of the Borrowings, or any transaction financed or to be
financed in whole or in part, directly or indirectly with the proceeds of any
Borrowing, and (c) any investigation of any third party or any governmental
authority, litigation or proceeding involving any Lender (as a lender hereunder)
or the Agent, the Collateral Agent, the Documentation Agents or the Co-Agents
(in such capacity hereunder) and related to any environmental cleanup, audit,
compliance or other matter relating to any Environmental Law or the presence of
any Hazardous Material (including, without limitation, any losses, liabilities,
damages, injuries, costs, expenses or claims asserted or arising under any
Environmental Law) with respect to the Borrower, regardless of whether caused
by, or within the control of, the Borrower; provided, however, that the Borrower
shall not be obligated to indemnify any Indemnified Party for any of the
foregoing arising out of such Indemnified Party's, or the Agent's, the
Collateral Agent's, any Documentation Agent's or any Co-Agent's, as the case may
be, gross negligence or willful misconduct or the gross negligence or wilful
misconduct of any other Indemnified Party with respect to the same Lender. The
Borrower, upon demand by the
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Agent, the Collateral Agent, a Documentation Agent, a Co-Agent or a Lender at
any time, shall reimburse the Agent or such Lender for any reasonable legal or
other expenses incurred in connection with investigating or defending against
any of the foregoing except if the same is excluded from indemnification
pursuant to the provisions of the preceding sentence.
Section 10.14. Governing Law; Submission to Jurisdiction; Waiver of
Jury Trial.
(A) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS, AND THE RIGHTS AND
DUTIES OF THE PARTIES THERETO, SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK.
(B) TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE PARTIES
HERETO AGREE THAT ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH, THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENT (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF
THE AGENT, THE DOCUMENTATION AGENTS, THE CO-AGENTS, THE COLLATERAL AGENT, THE
LENDERS OR THE BORROWER MAY BE BROUGHT AND MAINTAINED IN THE COURTS OF THE STATE
OF NEW YORK SITTING IN THE BOROUGH OF MANHATTAN OR THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF NEW YORK. TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY SUCH
LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT
RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION. TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, THE BORROWER FURTHER IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS, BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE
WITHIN OR WITHOUT THE STATE OF NEW YORK. TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES ANY
OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY
SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT
ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT
THAT THE BORROWER HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF
ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OF NOTICE,
ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH
RESPECT TO ITSELF OR ITS PROPERTY, THE BORROWER HEREBY IRREVOCABLY WAIVES TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, SUCH IMMUNITY IN RESPECT OF ITS
OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS.
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(C) TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY
HERETO WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT OR UNDER ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE
DELIVERED IN CONNECTION HEREWITH OR ARISING FROM ANY BANKING RELATIONSHIP
EXISTING IN CONNECTION WITH THIS AGREEMENT, AND AGREES THAT ANY SUCH ACTION OR
PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
Section 10.15. Confidentiality. Each Lender agrees it will not
disclose without the Borrower's consent any information concerning the Borrower
or any of its Subsidiaries furnished pursuant to, or otherwise in connection
with, any of the Credit Documents; provided that any Lender may disclose any
such information (a) to its employees, auditors, counsel or other professional
advisors who are or are expected to be involved in the evaluation of such
information in connection with the transactions contemplated by this Agreement
and who in each case agree for the benefit of the Borrower to be bound by the
provisions of this Section 10.15, (b) to any other Lender, (c) that has become
generally available to the public, (d) if required or appropriate in any
examination or audit by, or report, statement or testimony submitted to, any
federal or state regulatory body having or claiming to have jurisdiction over
such Lender, (e) if required or appropriate in response to any summons or
subpoena or in connection with any litigation, (f) in order to comply with the
mandatory provisions of any law, order, regulation or ruling applicable to such
Lender, (g) to any prospective or actual permitted transferee in connection with
any contemplated or actual permitted transfer of any of the Notes or any
interest therein by such Lender, and (h) in connection with the exercise of any
remedies by the Agent or any Lender; provided that such actual or prospective
transferee executes an agreement with such Lender (and expressly for the benefit
of the Borrower) containing provisions substantially identical to those
contained in this Section 10.15 prior to such transferee's receipt of any such
information.
Section 10.16. Effectiveness. This Agreement shall become effective on
the date (the "Effective Date") on which each the Borrower, the Agent, and each
Lender has signed and delivered to the Agent a counterparty signature page
hereto or, in the case of a Lender, the Agent has received telex or facsimile
notice that such a counterpart has been signed and mailed to the Agent.
Section 10.17. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Section 10.18. Currency Conversion. All payments of Obligations under
this Agreement, the Notes or any other Credit Document shall be made in Dollars,
except for Revolving Loans funded, or Reimbursement Obligations with respect to
Letters of Credit issued, in Pounds or Kroner, which shall be repaid, including
interest thereon, in the applicable currency. If any payment of any Obligation,
whether through payment by the Borrower, the
78
<PAGE>
Guarantor or the proceeds of any Collateral, shall be made in a currency other
than the currency required hereunder, such amount shall be converted into the
currency required hereunder at the official rate for the purchase of the
currency required hereunder with the currency in which such obligation was paid,
as quoted by the Lender who is the Agent in accordance with the methods
customarily used by such Lender for such purposes as of the close of business on
the date of determination. The parties hereto hereby agree, to the fullest
extent that they may effectively do so under applicable law, that (i) if for the
purposes of obtaining any judgment or award it becomes necessary to convert from
any currency other than the currency required hereunder into the currency
required hereunder any amount in connection with the Obligations, then the
conversion shall be made as provided above on the Business Day before the day on
which the judgment or award is given, (ii) in the event that there is a change
in the rate of exchange prevailing between the Business Day before the day on
which the judgment or award is given and the date of payment, the Borrower will
pay to the Agent, for the benefit of the Lenders, such additional amounts (if
any) as may be necessary, and the Agent, on behalf of the Lenders, will pay to
the Borrower such excess amounts (if any) as result from such change in the rate
of exchange, to assure that the amount paid on such date is the amount in such
other currency, which when converted at the rate of exchange described herein on
the date of payment, is the amount then due in the currency required hereunder,
and (iii) any amount due from the Borrower under this Section 10.18 shall be due
as a separate debt and shall not be affected by judgment or award being obtained
for any other sum due.
Section 10.19. Dollar Equivalent Combinations. Unless otherwise
provided herein, to the extent that the determination of compliance with any
requirement of this Agreement requires the conversion to Dollars of foreign
currency amounts, such Dollar amount shall be computed using the Dollar
equivalent of the amount of such foreign currency at the time such item is to be
calculated or is incurred, created, transferred or sold for purposes of this
Agreement. The Dollar equivalent shall be determined by converting such currency
involved in such computation into Dollars at the spot rate for the purchase of
Dollars with the applicable currency as quoted by the Lender who is the Agent in
accordance with the methods customarily used by such Lender for such purposes as
of the close of business on the date of determination thereof specified herein
or, if the date of determination thereof is not otherwise specified herein, on
the date two (2) Business Days prior to such determination.
Section 10.20. Change in Accounting Principles, Fiscal Year or Tax
Laws. If (i) any change in accounting principles from those used in the
preparation of the financial statements of the Borrower referred to in Section
5.9 is hereafter occasioned by the promulgation of rules, regulations,
pronouncements and opinions by or required by the Financial Accounting Standards
Board or the American Institute of Certified Public Accounts (or successors
thereto or agencies with similar functions) other than changes mandated by SFAS
106 and such change materially affects the calculation of any component of any
financial covenant, standard or term found in this Agreement, or (ii) there is a
material change in federal or foreign tax laws which materially affects any of
the Borrower and its Subsidiaries' ability to comply with the financial
covenants, standards or terms found in this Agreement, the Borrower and the
Majority Lenders agree to enter into negotiations in order to amend such
provisions so as to equitably reflect such changes
79
<PAGE>
with the desired result that the criteria for evaluating any of the Borrower's
and its Subsidiaries' financial condition shall be the same after such changes
as if such changes had not been made. Unless and until such provisions have been
so amended, the provisions of this Agreement shall govern.
Section 10.21. Notice. The Credit Documents constitute the entire
understanding among the Credit Parties, the Lenders, and the Agent and supersede
all earlier or contemporaneous agreements, whether written or oral, concerning
the subject matter of the Credit Documents. THIS WRITTEN AGREEMENT TOGETHER WITH
THE OTHER CREDIT DOCUMENTS REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.
Section 10.22. Officer's Certificates. It is not intended that any
certificate of any officer of any Credit Party delivered to the Agent or any
Lender pursuant to this Agreement shall give rise to any personal liability on
the part of such officer.
Section 10.23. Effect of Inclusion of Exceptions. It is not intended
that the specification of any exception to any covenant herein shall imply that
the excepted matter would, but for such exception, be prohibited or required.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their duly authorized officers as of the day
and year first above written.
Borrower:
SONAT OFFSHORE DRILLING INC.,
a Delaware corporation
By: /s/ R. L. Long
-----------------------------
Name: Robert L. Long
Title: Senior Vice President
80
<PAGE>
LENDERS:
Percentage: 9.16666666666667% ABN AMRO BANK N.V., Houston Agency, as
Agent and as a Lender
BY: ABN AMRO NORTH AMERICA, INC., as Agent
By: /s/ Cheryl I. Lipshutz
--------------------------------
Cheryl I. Lipshutz
Group Vice President and Director
Address for Notices:
By: /s/ Charles W. Randall
--------------------------------
ABN AMRO Bank N.V., Houston Agency Charles W. Randall
Three Riverway, Suite 1700 Senior Vice President and
Houston, Texas 77056 Managing Director
Attention: Belinda Rowell
Telephone No.: (713) 629-6666
Fax No.: (713) 629-7533
Telex No.: 686-8916
Answerback: ABN INTL HOU
with copies to:
Ms. Linda Boardman
ABN AMRO Bank N.V.
335 Madison Avenue
New York, New York 10017
Telephone No.: (212) 370-8509
Fax No.: (212) 682-0364
Payment Office:
ABN AMRO Bank N.V.
New York ABA #0260-0958-0
For Credit to ABN AMRO Bank N.V.
Houston Branch
Account No. 651001071541
Attention: Belinda Rowell Ref: Sonat Offshore
Letter of Credit Office:
Three Riverway, Suite 1700
Houston, Texas 77056
(same payment instructions)
Lending Office:
ABN AMRO Bank N.V.
335 Madison Avenue
New York, New York 10017
Telephone No.: (212) 370-8509
Fax No.: (212) 682-0364
81
<PAGE>
Percentage: 8.33333333333333% SUNTRUST BANK, ATLANTA, as Documentation
Agent and as a Lender
By: /s/ F. McClellan Deaver, III
---------------------------------------
Name: F. McClellan Deaver, III
Title: Group Vice President
By: /s/ John A. Fields, Jr.
---------------------------------------
Name: John A. Fields, Jr.
Title: Vice President
Address for Notices:
Twenty-Five Park Place, N.E.
Atlanta, Georgia 30303
Telephone: (404) 827-6270
Fax: (404) 588-8833
Telex No.: 542210
Answerback: TRUSCO INT ALL
Payment Office:
P.O. Box 4418
Atlanta, Georgia 30302
Attn: Ms. Lisa Biddle
Letter of Credit Office:
Twenty-Five Park Place
Tenth Floor
Atlanta, Georgia 30303
Lending Office:
Twenty-five Park Place, N.E.
24th Floor, Mail Code 120
Atlanta, Georgia 30303
82
<PAGE>
Percentage: 8.33333333333333% CREDIT LYONNAIS NEW YORK BRANCH, as
Documentation Agent and as a Lender
By: /s/ Alain Papiasse
--------------------------------
Name: Alain Papiasse
Title: EVP
Address for Notices:
c/o Credit Lyonnais Houston
Representative Office
1000 Louisiana, Suite 5360
Houston, Texas 77002
Attention: Page Dillehunt
Telephone: (713) 751-0500
Fax: (713) 751-0307
Telex No.: 6868674
Answerback: CLHOU UW
Payment Office:
Credit Lyonnais
New York Branch
Credit Lyonnais Building
1301 Avenue of the Americas
New York, New York 10019
Payment Instructions:
Name: Credit Lyonnais New York
Method of Payment: ABA #026008073
Account No.: 01-88179-2140-00001
Reference: Sonat Offshore Drilling
Letter of Credit Office:
Credit Lyonnais New York Branch
Credit Lyonnais Building
1301 Avenue of the Americas
New York, New York 10019
Lending Office:
Credit Lyonnais New York Branch
Credit Lyonnais Building
1301 Avenue of the Americas
New York, New York 10019
83
<PAGE>
Percentage: 6.66666666666667% BANK OF MONTREAL, as Co-Agent and as a
Lender
By: /s/ Donald G. Skipper
----------------------------------
Name: Donald G. Skipper
Title: Director
Address for Notices:
Bank of Montreal
700 Louisiana Street, Suite 4400
Houston, Texas 77002
Attention: Don Skipper
Telephone No.: (713) 546-9769
Fax No.: (713) 223-4007
Payment Instructions:
Name of Credit Bank: Bank of Montreal
City, State: Chicago, Illinois
Method of Payment: ABA #071000288
For Credit To: Bank of Montreal, Chicago Branch
Account No.: 124-856-6
Reference: Sonat Offshore Drilling
Lending Office:
Bank of Montreal
115 S. LaSalle St., Floor 12W
Chicago, Illinois 60603
Attention: Lara Benton or Farid Ali
Telephone No.: (312) 750-3844 (Benton)
Telephone No.: (312) 750-3727 (Ali)
Fax No.: (312) 750-4345 (Benton)
Fax No.: (312) 750-6061 (Ali)
84
<PAGE>
Percentage: 6.66666666666667% THE FUJI BANK, LIMITED, HOUSTON AGENCY, as
Co-Agent and as a Lender
By: /s/ David Kelley
-----------------------------------
Name: David Kelley
Title: Senior Vice President &
Senior Manager
Address for Notices:
The Fuji Bank, Limited
One Houston Center
1221 McKinney Street, Suite 4100
Houston, Texas 77010
Attention: Mark E. Polasek, Vice President
Telephone No.: (713) 650-7863
Fax No.: (713) 759-0048
Payment Instructions:
Name of Credit Bank: Texas Commerce Bank, N.A.
City, State: Houston, Texas
Method of Payment: ABA #113000609
For Credit To: The Fuji Bank, Ltd., Houston Agency
Account No.: 0010-197-3098
Reference: Sonat
Attention: Loan Administration
Lending Office:
The Fuji Bank, Limited
One Houston Center
1221 McKinney Street, Suite 4100
Houston, Texas 77010
Attention: Jenny Lin
Telephone No.: (713) 650-7821
Fax No.: (713) 759-0048
85
<PAGE>
Percentage: 6.66666666666667% ROYAL BANK OF CANADA, as Co-Agent and as a
Lender
By: /s/ J. D. Frost
-----------------------------------
Name: J. D. Frost
Title: Senior Manager
Address for Notices:
Royal Bank of Canada
600 Wilshire Boulevard, Suite 800
Los Angeles, California 90017
Attention: Gil J. Benard, Senior Manager
Telephone No.: (213) 955-5321
Fax No.: (213) 955-5350
Payment Instructions:
Name of Credit Bank: Chase Manhattan Bank, New York
City, State: New York, New York
Method of Payment: ABA #021000021
For Credit To: Royal Bank of Canada, New York
Chips: ID 0002
For Further Credit To: 218-599-9
Account No.: 920-1-033363
Reference: Sonat Offshore Drilling Inc.
Other: Fees, interest and payment
Lending Office:
Royal Bank of Canada
One Financial Square, 23rd Floor
New York, New York 10005-3531
Attention: Linda Smith, Loan Administrator
Telephone No.: (212) 428-6323
Fax No.: (212) 428-2372
Telex: MCI 62519
Answerback: ROYBAN
86
<PAGE>
Percentage: 6.66666666666667% WELLS FARGO BANK (TEXAS), NATIONAL ASSOCIATION,
as Co-Agent and as a Lender
By: /s/ Frank W. Schageman
--------------------------------------
Name: Frank W. Schageman
Title: Vice President
Address for Notices:
Wells Fargo Bank (Texas), National Association
Energy Lending
1000 Louisiana, Third Floor
Houston, Texas 77002
Telephone No.: (713) 250-4352
Fax No.: (713) 250-7912
Payment Instructions:
Name of Credit Bank: Wells Fargo Bank (Texas), National Association
City, State: Houston, Texas (Attn: Beaverton Oregon Loan Center)
Method of Payment: ABA #113001064
For Further Credit To: Special Loan Services
Account No.: 0040185019606
Attention: Sonat Offshore Drilling Inc.
Reference: Sonat Offshore Drilling Inc.
Lending Office:
Beaverton Loan Center
Attn: Special Loans
18700 N.W. Walker Road, Building 92
Attention: Sunil Singh
Telephone No.: (503) 614-6453
Fax No.: (503) 614-5878
87
<PAGE>
Percentage: 5.83333333333333% BANK OF TOKYO - MITSUBISHI, LTD., HOUSTON AGENCY
By: /s/ Michael Meiss
------------------------------------
Name: Michael Meiss
Title: Vice President & Manager
Address for Notices:
Bank of Tokyo - Mitsubishi, Ltd.,
Houston Agency
1100 Louisiana, Suite 2800
Houston, Texas 77002
Attention: Deanna Breland
Telephone No.: (713) 655-3810
Fax No.: (713) 655-3855
Payment Instructions:
Name of Credit Bank: The Bank of Tokyo-Mitsubishi, Ltd., New York Agency
City, State: New York, New York
Method of Payment: ABA #026-009-632
For Further Credit To: The Bank of Tokyo-Mitsubishi, Ltd., Houston Agency
Account No.: 30001710
Attention: Nadra H. Breir
Reference: Sonat
Lending Office:
Bank of Tokyo - Mitsubishi, Ltd.,
Houston Agency
1100 Louisiana, Suite 2800
Houston, Texas 77002
Attention: Nadra H. Breir
Telephone No.: (713) 655-3847
Fax No.: (713) 658-0116
88
<PAGE>
Percentage: 5.83333333333333% SKANDINAVISKA ENSKILDA BANKEN AB (publ.)
By: /s/ Bjarte Boe
----------------------------------
Name: Bjarte Boe
Title: Director
Address for Notices:
Skandinaviska Enskilda Banken AB (publ.)
P.O. Box 1843
0123 Oslo Norway
Attention: Bjarte Boe/Snorre Krogstad
Telephone No.: 47 22 82 70 04/05
Fax No.: 47 22 82 71 31
Payment Instructions:
Name of Credit Bank: Skandinaviska Ensk. Banken AB (publ.)
City, State: New York, New York
Method of Payment: Chips # 26003036
For Further Credit To: Skandinaviska Ensk. Banken, Oslo
Account No.: 01110140
Attention: TS OPS
Lending Office:
Skandinaviska Enskilda Banken AB (publ.)
P.O. Box 1843
0123 Oslo Norway
Attention: Anne Merethe Sveen
Telephone No.: 47 22 82 70 60
Fax No.: 47 22 82 71 13
89
<PAGE>
Percentage: 5.83333333333333% WESTDEUTSCHE LANDESBANK GIROZENTRALE
By: /s/ Robert Carino
--------------------------------
Name: Robert Carino
Title: Vice President
Address for Notices:
Westdeutsche Landesbank Girozentrale By: /s/ Alan S. Beekspan
1211 Avenue of the Americas --------------------------------
New York, New York 10036 Name: Alan S. Beekspan
Attention: Robert Carino, Vice President Title: Vice President
Telephone No.: (212) 852-6217
Fax No.: (212) 852-6148
Telex: (ITT) 420736 (MCI) 666668
Payment Instructions:
Name of Credit Bank: Chase Manhattan Bank
City, State: New York, New York
Method of Payment: ABA # 021-00-0021
For Further Credit To: Westdeutsche Landesbank
Account No.: 920-1-060 663
Reference: Transocean Offshore
Lending Office:
Westdeutsche Landesbank Girozentrale
1211 Avenue of the Americas
New York, New York 10036
Attention: Cheryl Wilson, Vice President and Manager
Telephone No.: (212) 852-6152
Fax No.: (212) 302-7946
Telex: (ITT) 420736 (MCI) 666668
90
<PAGE>
Percentage: 3.33333333333333% AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED
By: /s/ Signature appears here
--------------------------------
Name:
Title:
Address for Notices:
Australia and New Zealand Banking
Group Limited
1177 Avenue of the Americas
New York, New York 10036
Attention: Tessie Amerre
Telephone: (212) 801-9744
Fax: (212) 801-9859
Telex: 667559
Answerback: ANZBANK667559
Payment Instructions:
Name of Credit Bank: Morgan Guaranty Trust Company
City, State: New York, New York
Method of Payment: ABA #021000238
For Credit To: Australia and New Zealand Banking Group Limited
Account No.: 63100888
Reference: Sonat
Lending Office:
Australia and New Zealand Banking
Group Limited
1177 Avenue of the Americas
New York, New York 10036
Attention: Kyle Loughlin
Telephone: (212) 801-9853
Fax: (212) 801-9131
Telex: 667559
Answerback: ANZBANK667559
91
<PAGE>
Percentage: 3.33333333333333% THE BANK OF NEW YORK
By: /s/ Renee Bijlani
------------------------------
Name: Renee Bijlani
Title: Vice President
Address for Notices:
The Bank of New York
1 Wall Street, 19th Floor
New York, New York 10286
Attention: Renee Bijlani
Telephone No.: (212) 635-7875
Fax No.: (212) 635-7923
Payment Instructions:
Name of Credit Bank: The Bank of New York
City, State: New York, New York
Method of Payment: ABA #021000018
For Credit To: Commercial Loan Servicing Department
GLA #111556
Reference: Sonat Offshore Drilling Inc.
Specify: Fee, Interest or Principal (Period Covered)
Lending Office:
The Bank of New York
1 Wall Street, 19th Floor
New York, New York 10286
Attention: Nina Russo
Telephone No.: (212) 635-7921
Fax No.: (212) 635-7924
92
<PAGE>
Percentage: 3.33333333333333% THE BANK OF NOVA SCOTIA,
ATLANTA AGENCY
By: /s/ F.C.H. Ashby
--------------------------------
Name: F.C.H. Ashby
Title: Senior Manager
Loan Operations
Address for Notices:
The Bank of Nova Scotia,
Atlanta Agency
600 Peachtree Street N.E., Suite 2700
Atlanta, Georgia 30308
Attention: F.C.H. Ashby
Telephone No.: (404) 877-1500
Fax No.: (404) 888-8998
Telex: 00542319
Answerback: SCOTIABANK ATL
with a copy to:
The Bank of Nova Scotia
Houston Representative Office
1100 Louisiana, Suite 3000
Houston, Texas 77002
Attention: Mark Ammerman
Telephone No.: (713) 759-3441
Fax No.: (713) 752-2425
Telex: RCA 216312
Answerback: SCOTIABANK HOU
Payment Instructions:
Name of Credit Bank: The Bank of Nova Scotia, New York Agency
City, State: New York, New York
Method of Payment: ABA #026002532
For Further Credit To: The Bank of Nova Scotia, Atlanta Agency
Account No.: 0606634
Reference: Sonat Offshore Drilling Inc.
Attention: Cleve Bushey
Lending Office:
The Bank of Nova Scotia,
Atlanta Agency
600 Peachtree Street N.E., Suite 2700
Atlanta, Georgia 30308
Attention: F.C.H. Ashby
Telephone No.: (404) 877-1500
Fax No.: (404) 888-8998
Telex: 00542319
Answerback: SCOTIABANK ATL
93
<PAGE>
Percentage: 3.33333333333333% THE DAI-ICHI KANGYO BANK, LIMITED
By: /s/ Masayoshi Komaki
---------------------------------
Name: Masayoshi Komaki
Title: Assistant Vice President
Address for Notices:
The Dai-Ichi Kangyo Bank, Limited
1100 Louisiana, Suite 4940
Houston, Texas 77002
Attention: Kelton Glasscock, Vice President
Telephone No.: (713) 654-5055
Fax No.: (713) 654-1667
Payment Instructions:
Name of Credit Bank: Dai-Ichi Kangyo Bank
City, State: New York, New York
Method of Payment: ABA #026004307
Reference: Sonat Offshore Drilling Inc.
Attention: Loan Administration Asst. General Manager
Lending Office:
The Dai-Ichi Kangyo Bank, Limited
1 World Trade Center, Suite 4911
New York, New York 10048
Attention: Tina Brucculeri
Telephone No.: (212) 432-6643
Fax No.: (212) 912-1879
94
<PAGE>
Percentage: 3.33333333333333% DG BANK DEUTSCHE GENOSSENSCHAFTSBANK, CAYMAN
ISLAND BRANCH
By: /s/ Mark K. Connelly
---------------------------------
Name: Mark K. Connelly
Title: Vice President
By: /s/ Signature appears here
---------------------------------
Name:
Title:
Address for Notices:
DG Bank
609 Fifth Avenue
New York, New York 10017
Attention: Ya-Roo Yang, Assistant Treasurer
Telephone No.: (212) 745-1568
Fax No.: (212) 745-1556/1550
Payment Instructions:
Name of Credit Bank: DG Bank
Method of Payment: (1) Chips System DG Bank ABA #845
(2) Federal Reserve Bank of New York
Routing/Account 026008455
Lending Office:
DG Bank
609 Fifth Avenue
New York, New York 10017
Attention: Mark K. Connelly, Vice President
Telephone No.: (212) 745-1560
Fax No.: (212) 745-1556/1550
95
<PAGE>
Percentage: 3.33333333333333% FIRST NATIONAL BANK OF COMMERCE
By: /s/ J. Charles Freel, Jr.
----------------------------------
Name: J. Charles Freel, Jr.
Title: Vice President
Address for Notices:
First National Bank of Commerce
P.O. Box 60279
210 Baronne Street
New Orleans, Louisiana 70112
Attention: J. Charles Freel, Jr.
Telephone No.: (504) 561-1638
Fax No.: (504) 561-1316
Payment Instructions:
Name of Credit Bank: First NBC
City, State: New Orleans, Louisiana
Method of Payment: Fed ABA #065000029
Reference: Sonat Offshore Drilling Inc.
Attention: Document Review Department
Lending Office:
First National Bank of Commerce
P.O. Box 60279
210 Baronne Street
New Orleans, Louisiana 70112
Attention: Lisa Glennon
Telephone No.: (504) 561-1352
Fax No.: (504) 561-1316
96
<PAGE>
Percentage: 3.33333333333333% SOCIETE GENERALE, SOUTHWEST AGENCY
By: /s/ Paul E. Cornell
------------------------------
Name: Paul E. Cornell
Title: First Vice President
Address for Notices:
Societe Generale, Southwest Agency
1111 Bagby Street, #2020
Houston, Texas 77002
Attention: Elizabeth Hunter
Telephone No.: (713) 759-6330
Fax No.: (713) 750-0824
Payment Instructions:
Name of Credit Bank: Societe Generale, Southwest Agency
City, State: New York, New York
Method of Payment: ABA #026004226
For Further Credit To: Sonat Offshore Drilling
Account Number: 9036253
Lending Office:
Societe Generale, Southwest Agency
2001 Ross Avenue, #4800
Dallas, Texas 75201
Attention: Tequlla English
Telephone No.: (214) 979-2767
Fax No.: (214) 754-0171
97
<PAGE>
Percentage: 3.33333333333333% THE SANWA BANK, LIMITED, DALLAS AGENCY
By: /s/ R. Blake Wright
-------------------------------
Name: R. Blake Wright
Title: Vice President
Address for Notices:
The Sanwa Bank, Limited, Dallas Agency
2200 Ross Avenue, #4100 West
Dallas, Texas 75201
Attention: Blake Wright
Telephone No.: (214) 665-0216
Fax No.: (214) 741-6535
Telex: 735282
Answerback: SANWA BK DAL
Payment Instructions:
--------------------
Name of Credit Bank: The Sanwa Bank, Limited, New York Branch
City, State: 55 East 52nd Street, New York, New York
Method of Payment: ABA #026009823
For Further Credit To: The Sanwa Bank, Limited, Dallas Agency
Reference: Sonat
Attention: Greg Crowe
Lending Office:
The Sanwa Bank, Limited, Dallas Agency
2200 Ross Avenue, #4100 West
Dallas, Texas 75201
Attention: Greg Crowe
Telephone No.: (214) 665-0229
Fax No.: (214) 741-6535
Telex: 735282
Answerback: SANWA BK DAL
98
<PAGE>
Percentage: 3.33333333333333% THE SUMITOMO BANK, LIMITED, HOUSTON AGENCY
By: /s/ Signature appears here
---------------------------
Name:
Title: General Manager
Address for Notices:
The Sumitomo Bank, Limited, Houston Agency
700 Louisiana, Suite 1750
Houston, Texas 77002
Attention: Robert Johnson, V.P.
Telephone No.: (713) 238-8235
Fax No.: (713) 759-0020
Telex: 774417
Answerback: SUMITBK
with copies to:
Ms. Andrea Wei
V.P./Associate General Counsel
The Sumitomo Bank, Limited
International Planning Dept. - Legal
277 Park Avenue
New York, New York 10172
Telephone: (212) 224-4414
Fax: (212) 224-5194
Telex/Answerback: 420515/232407
Payment Instructions:
Name of Credit Bank: Morgan Guaranty Trust Company
City, State: New York, New York
Method of Payment: Fed Funds ABA #021000238
For Credit To: The Sumitomo Bank, Ltd. - New York
Account No.: 63128256
For Further Credit To: The Sumitomo Bank, Ltd. - Houston Agency
Account No.: 818004
Attention: Loan Section
Reference: [Sonat Offshore Drilling, Inc.]
Lending Office:
The Sumitomo Bank, Limited, Houston Agency
700 Louisiana, Suite 1750
Houston, Texas 77002
Telephone No.: (713) 759-0136
Fax No.: (713) 759-0020
Telex: 774417
Answerback: SUMITBK
99
<PAGE>
EXHIBIT 2.2A
FORM OF ISSUANCE REQUEST
<PAGE>
EXHIBIT 2.2A
ISSUANCE REQUEST
______________, _____
ABN AMRO Bank N.V., Houston Agency, As Agent
Three Riverway, Suite 1700
Houston, Texas 77056
Attention: Ms. Cheryl I. Lipshutz
Re: Sonat Offshore Drilling Inc.
Ladies and Gentlemen:
This Issuance Request is delivered to you pursuant to Section 2.2 of that
certain Secured Credit Agreement dated as of July 30, 1996 (herein, as the same
may be amended, modified, supplemented, extended, rearranged, and/or restated
from time to time, called the "SECURED CREDIT AGREEMENT") by and between Sonat
Offshore Drilling Inc. (the "BORROWER"), the various financial institutions
(collectively, the "LENDERS") as are or may from time to time become parties
thereto, ABN AMRO Bank N.V., Houston Agency, as Agent for the Lenders, SunTrust
Bank, Atlanta and Credit Lyonnais New York Branch, as Documentation Agents for
the Lenders, and Bank of Montreal, The Fuji Bank, Limited, Royal Bank of Canada,
and Wells Fargo Bank (Texas), National Association, as Co-Agents for the
Lenders. Any term defined in the Secured Credit Agreement and used in this
Issuance Request shall have the meaning given to it in the Secured Credit
Agreement.
The Borrower hereby requests that the Agent issue a Letter of Credit
on ___________________, ______ in the initial face amount of _________________
[and in the form attached hereto].
The beneficiary of the requested Letter of Credit will be
________________________________, and such Letter of Credit will be in support
of
_______________________________________________________________________________
_______________________________________________________________________________
[provide description and state if the Letter of Credit will be issued in
connection with the Mandatory Bid Bank Guarantee] and will have a stated expiry
date of ____________________, _____.
<PAGE>
The following documents will be required upon presentation:
[Provide Description]
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
A completed Application with respect to the Letter of Credit is
attached.
Date: ___________________, _____.
SONAT OFFSHORE DRILLING INC.
By:_______________________________
Name:_____________________________
Title:____________________________
2
<PAGE>
EXHIBIT 2.2B
FORMS OF LETTER OF CREDIT APPLICATIONS
<PAGE>
[ABN-ANRO LOGO APPEARS HERE]
<TABLE>
<S> <C> <C>
APPLICATION AND AGREEMENT FOR STANDBY LETTER OF CREDIT OR GUARANTEE
TO: ABN AMRO BANK N.V. DATE______________________
HOUSTON AGENCY
THREE RIVERWAY, SUITE 1700 L/C NO.___________________
HOUSTON, TEXAS 77056 (FOR BANK USE ONLY)
(713) 629-6666
PLEASE ISSUE AN IRREVOCABLE STANDBY LETTER OF CREDIT/GUARANTEE SUBSTANTIALLY AS
SET FORTH BELOW BY:
[ ] TELEX-FULL DETAILS TELEX NO. ________ [ ] AIRMAIL [ ] COURIER
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[ ] ADVISING BANK [ ] CONFIRMING BANK FOR ACCOUNT OF (APPLICANT) GIVE FULL NAME & ADDRESS
____________________________________________________________________________________________________________________________________
IN FAVOR OF (BENEFICIARY) GIVE FULL NAME & ADDRESS AMOUNT
--------------------------------------------------------------
EXPIRY DATE
AT ABN AMRO, HOUSTON, TEXAS UNLESS OTHERWISE INDICATED
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AVAILABLE BY DRAFTS AT _____________________________________________ DRAWN ON YOU OR YOUR CORRESPONDENT WHEN ACCOMPANIED BY THE
FOLLOWING DOCUMENTS.
[ ] PLEASE ISSUE PER ATTACHED FORMAT WHICH FORMS AN INTEGRAL PART OF THIS APPLICATION.
THIS LETTER OF CREDIT IS SUBJECT TO THE UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS OF THE INTERNATIONAL CHAMBER OF
COMMERCE IN EFFECT ON THE DATE HEREOF.
IN CONSIDERATION OF YOUR ISSUING THE STANDBY LETTER OF CREDIT/GUARANTEE SUBSTANTIALLY IN ACCORDANCE WITH THE FOREGOING APPLICATION,
THE UNDERSIGNED HEREBY (JOINTLY AND SEVERALLY) AGREE(S) TO EACH AND ALL OF THE TERMS AND CONDITIONS ON THE REVERSE HEREOF AND/OR
ATTACHED HERETO WHICH ARE HEREBY INCORPORATED HEREIN BY REFERENCE. THIS WRITTEN LOAN AGREEMENT REPRESENTS THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IF MORE THAN ONE PERSON SIGNS THIS APPLICATION, THE PERSON SHOWN BELOW AS "DESIGNATED PARTY" SHALL HAVE THE EXCLUSIVE RIGHT TO
RECEIVE NOTICES, ISSUE INSTRUCTIONS, AGREE TO WAIVERS, AMENDMENTS, EXTENSIONS AND INCREASES, AND OTHERWISE DEAL WITH THE ISSUER WITH
RESPECT TO THIS LETTER OF CREDIT.
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NAME OF APPLICANT NAME OF DESIGNATED PARTY
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SIGNATURE OF APPLICANT SIGNATURE OF DESIGNATED PARTY
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NAME AND TITLE NAME AND TITLE OF DESIGNATED PARTY
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PLEASE DATE AND SIGN THIS AGREEMENT AND ALL PAGES OF ATTACHMENTS, IF ANY.
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FOR ABN AMRO BANK USE ONLY
PROPOSED L/C AMOUNT_________________________________________ CURRENT APPROVED LINE AMOUNT________________________________________
L/C'S AND B/A'S_____________________________________________ WITHIN CREDIT LINE Y/N______________________________________________
LOANS OUTSTANDING___________________________________________ COMM. RATE__________________________________________________________
TOTAL AMOUNT________________________________________________ APPROVED____________________________________________________________
11/94
</TABLE>
<PAGE>
In consideration of ABN AMRO Bank N.V., Houston Agency (the "Issuer") issuing an
irrevocable standby letter of credit substantially in accordance with the
Application appearing on the reverse side hereof or attached hereto (the
"Application") and as such letter of credit may be amended (the "Credit"), the
undersigned, jointly and severally if there is more than one of the undersigned
(the "Applicant") unconditionally and irrevocably agrees as follows:
1. ISSUER'S GENERAL OBLIGATIONS. Upon the issuance of a Credit, the Issuer's
obligations to the Applicant with respect to the Credit include good faith and
observance of general banking usage, but do NOT include liability or
responsibility of any kind arising out of or in connection with: (a) performance
of the underlying contract or other transactions between the Applicant and the
beneficiary or any other person; (b) acts, errors, defaults or omissions of any
person other than the Issuer, including any use of the Credit by any such
person; (c) loss or destruction of any telegram, cable, letter, instrument or
document while in transit or in the possession of others; (d) knowledge or lack
of knowledge of any custom or usage of any particular trade; (e) transmission,
delivery, translation or interpretation of any message including any
interruption, delay, error or omission therein; (f) insufficiency, lack of
authorization, invalidity of, lack of genuineness, truthfulness or error or
fraud in any documents presented under the Credit or in any instructions
purporting to be from the Applicant or the Issuer's correspondent, (g) validity
or correctness of any transfer or proper identity of any transferee (if the
Credit is issued in transferable form); (h) waiver of any requirement which
exists for the Issuer's protection and not the protection of the Applicant, or
which waiver does not in fact materially prejudice the Applicant; or (i) any
other act or omission for which banks are relieved of responsibility under the
"Uniform Customs & Practice for Documentary Credits" of the International
Chamber of Commerce (hereafter, the "UCP"), in effect on the date hereof.
2. ISSUER'S OBLIGATIONS CONCERNING DOCUMENTS.
(a) The Issuer's obligations relative to the Credit include the examination
of documents with reasonable care so as to ascertain that on their face they
appear to comply with the terms of Credit, but do NOT include liability or
responsibility of any kind arising out of or in connection with: (i) validity,
sufficiency, truthfulness, genuineness or effect of documents which appear on
Issuer's examination to be regular on their face; (ii) honor of drafts or
demands for payment which appear on Issuer's examination to be regular on their
face; or (iii) the ultimate correctness of Issuer's decision regarding
documentary compliance, where such decision is based on Issuer's examination of
the documents, or Issuer's exercise of judgment, in a manner not manifestly
unreasonable. The Issuer may in its discretion (but shall not be obligated to)
accept documents which substantially or reasonably comply with the terms of the
Credit.
(b) Unless otherwise specified in the Application, the Issuer may in its
discretion (but shall not be obligated to) accept or honor (in the case of
negotiable Credits) as complying with the Credit (i) drafts or documents signed
by or issued to the purported agent, executor, administrator, liquidator,
receiver, trustee in bankruptcy or other legal representative of any party
designated in the Credit; (ii) drafts which fail to bear any or adequate
reference to the Credit, or notation to be made on the Credit, or the Credit to
be surrendered, or documents to be forwarded apart from the draft, whether or
not required by the Credit; (iii) drafts or documents which comply under the
laws, rules, regulations, and general banking or trade customs and usages of the
place of drawing or presentation; or (iv) drafts or documents which comply with
the UCP.
3. PAYMENT; COMMISSIONS.
(a) The Applicant shall pay the Issuer in United States currency at the
office identified on the Application, the amount paid or to be paid by the
Issuer or the Issuer's agent or any party on Issuer's behalf on each draft or
other order, instrument or demand drawn, presented or purporting to be drawn or
presented under the Credit (the "Item") together with all other amounts owing to
the Issuer in connection therewith, such payment to be made at the time of
honor of each item if so demanded by the Issuer, on demand in advance of any
drawing. In the case of Items drawn in foreign currency, such payments shall be
at the Issuer's current rate of exchange for transfers to the place of payment
in the currency in which such Item is drawn (or, if for any reason the Issuer is
unable to establish such a rate of exchange, in an amount equal to the Issuer's
actual cost of settlement). The Applicant shall reimburse the Issuer in the same
currency in which the Item is payable, provided that at the Issuer's option,
Applicant shall reimburse Issuer in United States dollars for Items payable in a
foreign currency at the rate at which Issuer could sell such foreign currency in
exchange for United States dollars for transfer to the place of payment of the
Item, or, if there is no such rate, the United States dollar equivalent of
Applicant's actual cost of settlement. Applicant agrees to pay Issuer on demand
in United States dollars such amounts as Issuer may be required to expend to
comply with any and all governmental exchange regulations now or hereafter
applicable to the purchase of foreign currency.
(b) The Applicant shall pay the Issuer on demand, in United States currency
at the office as identified on the Application: (i) a nonrefundable commission
at such rate as the Issuer may establish; (ii) interest on all amounts due and
owing to the Issuer, from and including the date such amount is paid or incurred
by the Issuer or otherwise due and owing hereunder until such amount is paid in
full, at a fluctuating rate per annum equal to the lesser of (x) Issuer's Prime
Rate plus two percent (2%) and (y) the maximum non-usurious rate of interest
permitted by applicable law in effect from time to time. "Prime Rate" shall
mean the rate in effect from time to time as set by the Issuer and called its
Prime Rate for United States dollar loans, which rate is not necessarily the
lowest or best interest rate offered by the Issuer and interest shall be
calculated on the basis of a 360 day year for actual days elapsed (unless such
calculation would cause a usury violation, in which event interest shall be
calculated on the basis of a year of 365 or 366 days); (iii) all charges and
expenses, including attorney's fees, legal expenses, court costs or similar
costs or liabilities from time to time paid or incurred by the Issuer in
connection with the issuance or maintenance of the Credit, the performance under
the Credit and this Agreement and all transactions (including, without
limitation, the involvement of the Issuer in any court proceeding regarding the
Credit) related to or contemplated by this Agreement (including, without
limitation, the creation, perfection, maintenance, protection, exercise,
enforcement or other realization upon the Issuer's interests, rights and
remedies); and (iv) all charges and fees payable under any fee schedule of the
Issuer in effect from time to time or as otherwise agreed.
(c) All amounts payable by the Applicant hereunder shall be paid at the
office of the Issuer identified on the Application, in immediately available and
freely transferable funds at such place of payment. The Issuer is authorized to
set off or charge to any account or other funds of the Applicant in Issuer's
possession all obligations of the Applicant owing hereunder, irrespective of the
currency in which such account or funds are denominated.
(d) If, as a result of any law, regulation, treaty or directive, or any
change therein, or in the interpretation or application thereof or Issuer's
compliance with any request or directive (whether or not having the force of
law) from any court or governmental authority, agency, instrumentality, any
reserve, capital requirement, premium, special deposit, special assessment or
similar requirement against the Issuer's assets, deposits or credit extended by
the Issuer, are imposed, modified or deemed applicable and the Issuer shall
determine that, by reason thereof, the cost to the Issuer of issuing or
maintaining the Credit is increased, the Applicant agrees to pay the Issuer upon
demand such additional amount or amounts as will compensate the Issuer for such
additional cost. Determinations by the Issuer of the additional amounts required
to compensate the Issuer in respect of the foregoing shall be conclusive, absent
manifest error. The Applicant further agrees to pay any applicable levies or
other taxes imposed in connection with the Credit other than net income taxes
payable by the Issuer, and to otherwise comply with all domestic and foreign
laws and regulations applicable to all transactions under or in connection with
the Credit.
(e) The Issuer may (but shall not be obligated to) make a loan to the
Applicant in an amount equal to the reimbursement obligation of the Applicant
under Section 3(a) hereof and the Issuer shall be hereby authorized to apply the
proceeds of such loan to the repayment of such reimbursement obligation. Each
such loan shall, except to the extent otherwise agreed to in writing between the
Applicant and the Issuer, be due on demand and shall bear interest payable on
demand at the rate per annum set forth in Section 3(b)(ii) hereof.
4. GRANT OF SECURITY INTEREST. The Applicant hereby grants to the Issuer, as
security for all of its obligations to the Issuer, whether absolute or
contingent, due or to become due, now or hereafter arising from this or any
other agreement the Issuer may have with the Applicant, a security interest in
and pledges to the Issuer all property of the Applicant of any nature, including
all goods, equipment, inventory, accounts, instruments, chattel paper, documents
and general intangibles now or hereafter in the actual or constructive
possession of the Issuer or its correspondents or in transit to the Issuer or
its correspondents from or for the Applicant in any manner whatsoever, whether
expressly as security or otherwise, and all proceeds and products of the
foregoing (the "Collateral"). The Issuer shall have all of the rights of a
secured party under the Uniform Commercial Code (as in effect from time to time
in any applicable jurisdiction) in the Collateral, and in addition all of the
rights specified in this Agreement, including the right to set off or apply any
of the Collateral to any of the Applicant's obligations to the Issuer at any
time, without notice, in any order, manner, and amount the Issuer may determine.
The Applicant shall execute any financing statements, trust receipts, or other
documents the Issuer requests in order to perfect, maintain, protect, enforce or
realize on the security interest in the Collateral and the Applicant shall pay
all filing, recording and other fees in connection therewith. The Applicant
authorizes the Issuer to file this Agreement or any statement, instrument,
document or amendment, without the Applicant's signature, in all public offices
as the Issuer in its sole discretion may deem necessary to create, preserve,
perfect or validate any lien or security interest or to enable the Issuer to
exercise or enforce its rights with respect to such lien or security interest
and agrees to pay the cost of filing or recording the same and all other costs
and expenses in connection with the custody, care, preservation, perfection or
collection of the Collateral. Upon request, the Applicant shall deposit with the
Issuer such additional security for the Applicant's obligations as the Issuer
may in good faith deem necessary or advisable for its protection.
5. OBLIGATION OF APPLICANT; ASSUMPTION OF RISK BY APPLICANT; INDEMNIFICATION OF
ISSUER BY APPLICANT; SUBROGATION.
(a) The Applicant's obligations to the Issuer hereunder are, and shall
remain, absolute and unconditional notwithstanding any lack of enforceability of
the Credit or the existence of any claim, counterclaim, defense or right of set
off the Applicant may have against the Issuer.
(b) The beneficiary or any other user of the Credit and any other drawer of
any draft or the presenter of any demand for payment thereunder shall be deemed
Applicant's agents, and the Applicant assumes all risk, loss, liability, charges
and expenses with respect to their acts or omissions and also with respect to
any error, delay, misdelivery or loss in or arising out of the transmission of
telegrams, cables, letters or other communications, documents or items forwarded
in connection with the drafts or the Credit. The Applicant shall not be
relieved from any obligation or liability, nor shall the terms of this Agreement
be affected by the occurrence of the foregoing. Any action or inaction by the
Issuer or its correspondents in connection with the Credit or with instructions,
drafts or documents relative to the Credit, shall, if in good faith,
conclusively be deemed to have been authorized by the Applicant, and the Issuer
shall have no liability therefor.
(c) THE APPLICANT SHALL INDEMNIFY THE ISSUER AND ITS CORRESPONDENTS AND
SHALL DEFEND AND HOLD THE ISSUER AND ITS CORRESPONDENTS HARMLESS FROM AND
AGAINST ANY AND ALL CLAIMS, DAMAGES, LOSS, COSTS, EXPENSES (INCLUDING ATTORNEY'S
FEES) AND LIABILITIES, OF ANY NATURE WHATEVER, SUSTAINED OR INCURRED OR ASSERTED
IN CONNECTION WITH THE CREDIT, THE PAYMENT OR ACCEPTANCE OR REFUSAL TO PAY OR
ACCEPT ANY DRAFT OR OTHER DEMAND FOR PAYMENT, AND ANY OTHER ACTION OR INACTION
IN RELIANCE UPON THE PROVISIONS OF THIS AGREEMENT (including but not limited to
any and all claims, damages, loss, costs, expenses and liabilities arising out
of or resulting from the negligence (sole, ordinary, contributory or other) of
the person to be indemnified) except, only if, and to the extent that any such
claims, damages, loss, expenses or liabilities shall have been determined by a
court of competent jurisdiction to have been directly caused by the willful
misconduct or gross negligence of the Issuer in performing its obligations under
the Credit or by the Issuer's failure to make payment of any drawing or other
demand for payment made in strict conformity with the Credit. It is understood
that in making payment under the Credit the Issuer's exclusive reliance on the
documents presented to the Issuer in accordance with the terms of the Credit as
to any and all matters set forth therein, whether or not any statement or any
document presented pursuant to the Credit proves to be forged, fraudulent,
invalid or insufficient in any respect whatsoever, shall not be deemed willful
misconduct or gross negligence of the Issuer.
(d) The Issuer shall be subrogated (for purposes of defending against the
Applicant's claims and proceeding against others to the extent of the Issuer's
liability to the Applicant) to the Applicant's rights against any person who may
be liable to the Applicant on any underlying transaction, to the rights of any
holder in due course or person with similar status against the Applicant and to
the rights of the beneficiary or its assignee or person with similar status
against the Applicant.
(e) The Applicant certifies that transactions in any commodities covered by
the Application are not prohibited under the foreign assets control regulations
of the United States Treasury Department and that any importation covered by the
Application conforms in every respect with all United States regulations then in
effect.
6. DEFAULT; REMEDIES.
(a) The Applicant shall be in default under this Agreement upon the
occurrence of any of the following: (i) any failure by the Applicant to pay or
perform when and as due hereunder any of its obligations or liabilities under
this Agreement or any other agreement with the Issuer or instrument delivered to
the Issuer, including without limitation the Applicant's obligation to pay
promptly all sums due to the Issuer; (ii) any failure to furnish, upon the
Issuer's demand, additional security satisfactory to the Issuer; (iii) any
failure to furnish upon demand any financial information the Issuer may request
or to permit an inspection of Applicant's books, records and accounts at any
reasonable time; (iv) any act or event evidencing or reasonably appearing to
evidence the bankruptcy, reorganization, rehabilitation, arrangement,
liquidation, insolvency or financial instability of any party hereto signing as
an Applicant or any guarantor thereof; (v) any material misrepresentation made
in connection with the Credit; (vi) any default by Applicant under any agreement
involving the borrowing of money or the obtaining of credit; (vii) the death or
appointment of a guardian, conservator or similar representative of any party
signing as an Applicant, or of any guarantor thereof; or (viii) any other act,
event or occurrence which in the Issuer's sole judgment impairs the Issuer's
security or increases its risk.
(b) WITHOUT PRESENTMENT, PROTEST, NOTICE OR DEMAND AND WITHOUT NOTICE OF
INTENTION TO ACCELERATE OR NOTICE OF ACCELERATION, ALL OF WHICH ARE HEREBY
WAIVED. Upon default, all obligations and liabilities of the Applicant to the
Issuer, of whatever nature, whether contingent or absolute, shall become
immediately due and payable and without limiting the foregoing and any other
rights of the Issuer hereunder, the Applicant shall immediately pay to the
Issuer an amount equal to the available undrawn amount of the Credit. The Issuer
shall have all the rights and remedies of a secured party under the Uniform
Commercial Code, and in addition to such rights and remedies, the Applicant
further agrees that any default under this Agreement shall also be a default
under all other agreements with the Issuer.
(c) All amounts due and payable shall accrue interest, from and including
the date such amount is paid or incurred by the Issuer until payment in full, at
the rate per annum set forth in Section 3(b)(ii) hereof.
7. WAIVER BY ISSUER; ACTS NOT AFFECTING AGREEMENT. The Issuer shall have no
duty to exercise any of its rights hereunder, and shall not be liable for any
failure or delay in doing so. No failure or delay on the part of the Issuer or
its correspondents shall operate as a waiver, and no notice to or demand by the
Issuer or its correspondents shall be deemed a waiver of the Issuer's right to
take any other or further action without notice or demand. Issuer's rights,
including all security interests in Collateral, and Applicant's obligations and
liabilities under this Agreement shall continue unimpaired and this Agreement
shall remain binding upon each party hereto signing as an Applicant,
notwithstanding: (a) release or substitution of any Collateral or any right or
interest therein; (b) extension of the maturity or time for presentation of
drafts, acceptances or documents; (c) any other modification of the terms of the
Credit at the request of any party hereto signing as an Applicant, with or
without notification to any other party; or (d) any increase in the amount of
the Credit at the request of any party hereto. No delay, extension of time,
renewal, compromise or other indulgence which the Issuer may permit in
connection with any of its rights hereunder shall impair those rights, and the
Issuer shall not be deemed to have waived any rights unless such waiver is in
writing and signed by the Issuer or its authorized agent, nor shall any such
waiver constitute a waiver of any other right or of the same right at any future
time.
8. SOLE OBLIGATION OF ISSUER. Without limiting any other provision herein,
the Issuer is hereby expressly authorized and directed to honor any request for
payment which is made under and in compliance with the terms of the Credit
without regard to, and without any duty on the part of the Issuer to inquire
into, the existence of any disputes or controversies between any of the
Applicant, the beneficiary of the Credit or any other person, firm or
corporation, or the respective rights, duties or liabilities of any of them or
whether any facts represented in any of the documents presented under the Credit
are true or correct. Furthermore, the Applicant agrees that the Issuer's
obligation to the Applicant shall be limited to honoring requests for payment
made under and in compliance with the terms of the Credit and this Agreement and
the Issuer's obligation remains so limited even if the Issuer may have assisted
in the preparation of the wording of the Credit or any documents required to be
presented thereunder or the Issuer may otherwise be aware of the underlying
transaction giving rise to the Credit and this Agreement.
9. DURATION OF AGREEMENT; AGREEMENT BINDING UPON SUCCESSORS. This
Agreement shall remain in full force and effect until the Issuer has actually
received written notice to the contrary from the Applicant, and after receipt of
such written notice shall continue in full force and effect as to all
transactions between the Applicant and the Issuer commenced prior to the date of
such receipt. All indemnities, covenants, agreements, representations and
warranties made in this Agreement shall survive the issuance by the Issuer of
the Credit and shall continue in full force and effect so long as the Credit, or
any portion thereof, shall be unexpired or any sums drawn thereunder or other
amounts owing hereunder shall remain unpaid, provided, however, that the
provisions of Sections 3(b)(iii), 3(d), 5(c), 9, 11, 12(b), 12(c) and 12(k)
shall survive the termination of this Agreement. This Agreement shall not be
revoked or impaired by the death of any party hereto, by the revocation or
release of any obligations hereunder of any one or more parties hereto (or if
any party hereto shall be a partnership, by any changes in the parties composing
the partnership). If this Agreement is terminated or revoked as to any party
for any reason, the Applicant shall indemnify and hold the Issuer harmless from
any loss incurred in acting hereunder prior to the actual receipt of written
notice of such termination or revocation. The invalidity or lack of
enforceability of any provision hereto shall not affect the validity or
enforceability of any other provision hereof. If this Agreement is signed by two
or more parties, it shall constitute the joint and several agreement of such
parties; provided, that the Designated Party, as defined below, shall have the
exclusive right to issue all instructions relating to the Credit including,
without limitation, instructions as to the disposition of documents and any
unutilized funds, waivers of discrepancies and to agree with the Issuer upon any
amendments, modifications, extensions, renewals or increases in the Credit or
the further financing or refinancing of any transaction effected hereunder,
irrespective of whether the same may now or hereafter affect the rights of any
party hereto or their legal representatives, heirs or assigns. The Designated
Party shall have specimen signatures on file with the Issuer and the Issuer may
give any notices to the Designated Party without notice to any other party.
10. LAW GOVERNING. The Credit and this Agreement shall be governed by and
construed in accordance with the laws of the State of Texas applicable to
contracts made and to be wholly performed within such State. Unless inconsistent
with such state law or except so far as otherwise expressly stated in the
Credit, the Credit and this Agreement are subject to the terms of the UCP in
effect on the date of the Application, provided, however, that without limiting
the foregoing, Articles 41 and 43 of UCP 500 shall have no application to the
Credit or this Agreement. In the absence of proof expressly to the contrary, the
UCP shall serve as evidence of general banking usage.
11. GROSS-UP PROVISION. Any and all payments made to Issuer hereunder shall
be made free and clear of, and without deduction or withholding for, any present
or future taxes, levies, imposts, deductions, charges or withholdings of any
nature, and all liabilities with respect thereto, excluding taxes imposed on net
income of the Issuer and all income and franchise taxes of the United States and
any political subdivision thereof imposed on the Issuer (all such non-excluded
taxes, levies, imposts, deductions, charges, withholdings and liabilities are
referred to herein as "Taxes"). If the Applicant shall be required by law to
deduct any Taxes from or in respect to any sum payable hereunder (i) the sum
payable shall be increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 11), the Issuer shall receive an amount equal to the sum the Issuer
would have received had no deductions been made; (ii) the Applicant shall make
all such deductions; and (iii) the Applicant shall pay the full amount deducted
to the relevant taxation authority or other authority in compliance with
applicable law. THE APPLICANT SHALL INDEMNIFY THE ISSUER FOR THE FULL AMOUNT OF
TAXES, (INCLUDING WITHOUT LIMITATION, ANY TAXES IMPOSED BY ANY JURISDICTION ON
AMOUNTS PAYABLE HEREUNDER) PAID BY THE ISSUER AND ANY LIABILITY (INCLUDING
PENALTIES, INTEREST AND EXPENSES) ARISING THEREFROM OR WITH RESPECT THERETO,
whether or not such Taxes were correctly or legally asserted. Payment upon this
indemnification shall be made within thirty (30) days from the date the Issuer
makes written demand therefor. Within thirty (30) days after date of the payment
of Taxes, the Applicant shall furnish to the Issuer the original or certified
copy of a receipt evidencing payment thereof.
12. OTHER TERMS
(a) If the Credit shall contain any provision for automatic renewal, the
Applicant acknowledges and agrees that the Issuer is under no obligation to
allow such renewal to occur and any such renewal shall remain within the sole
and absolute discretion of the Issuer. The Applicant hereby irrevocably consents
to the automatic renewal of such Credit in accordance with its terms should the
Issuer decide to allow such renewal to occur; provided, however, that the
Applicant shall have the right to request the Issuer to disallow such renewal on
the condition that the Applicant shall give the Issuer prior written notice of
such request not less than thirty (30) days prior to the deadline imposed upon
the Issuer for notification to the beneficiary of non-renewal of the Credit.
(b) The Applicant shall indemnify the Issuer against any loss incurred by
the Issuer as a result of any judgment or order being given or made for the
payment of any amount due hereunder in a particular currency (the "Currency of
Account") and such judgment or order being expressed in a currency (the
"Judgment Currency") other than the Currency of Account and as a result of any
variation having occurred in the rates of exchange between the date which such
amount is converted into the Judgment Currency and the date of actual payment
pursuant thereto. The foregoing indemnity shall constitute a separate and
independent obligation of the Applicant.
(c) Each party signing as Applicant and any guarantor thereof agrees that
if any amount paid to the Issuer hereunder is rescinded or must be otherwise
restored or returned by the Issuer due to the insolvency, bankruptcy,
liquidation or reorganization of any party hereto, each party's obligations
hereunder with respect to each such amount shall be reinstated to the same
extent as if such payment had not been made.
(d) The Applicant authorizes the Issuer to set forth the terms of the
Application in the Credit in such language as the Issuer deems appropriate, with
such variations from such terms as the Issuer may in its discretion determine to
be necessary (which determination shall be conclusive) and not materially
inconsistent with the Application. If Applicant, or in the case of more than one
Applicant, the Designated Party, does not notify the Issuer within ten (10)
calendar days of its issuance, Applicant agrees that such Credit is conclusively
presumed to be in proper form. Upon receipt of timely notice of any
discrepancy in the Credit, the Issuer will endeavor to obtain the consent of the
confirming bank (if any) and the beneficiary for an appropriate modification to
the Credit; provided, however, that the Issuer shall assume no liability or
responsibility for its failure to obtain such consent.
(e) No party to this Agreement may assign its rights or obligations under
this Agreement without the prior written consent of the Issuer, provided that
the obligations of the Issuer under this Agreement may be provided or fulfilled
by any affiliate of the Issuer so long as the Issuer assumes full
responsibility for such obligations.
(f) This Agreement and any exhibits hereto constitute the entire agreement
among the parties and supersede any and all prior agreements, proposals,
negotiations and representations pertaining to the obligations and duties to be
performed under this Agreement. No amendments or modifications of this Agreement
shall be valid unless in writing and signed by or on behalf of Applicant and
Issuer.
(g) Except as otherwise provided in this Agreement, all notices required to
be given pursuant to this Agreement shall be effective when received, and shall
be sufficient if given in writing, hand delivered or sent by First Class United
States Mail, postage prepaid, air courier or telecopier, and addressed to the
appropriate party at its address as shown on the signature page hereof or at
such other address as the sending party shall have been advised in writing.
(h) Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or lack of enforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such provision
in any other jurisdiction. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law.
(i) This Agreement 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 to be an original and all of which taken
together shall constitute but one and the same instrument.
(j) Regardless of the expiry date of the Credit, the Applicant shall remain
liable hereunder until the Issuer is released from liability by every person,
firm, corporation or other entity which is entitled to draw or demand payment
under the Credit.
(k) Applicant agrees to indemnify and hold Issuer harmless from each and
every claim, demand, liability, loss, cost or expense (including, but not
limited to, attorneys' fees and court costs (any and all claims, damages, loss,
costs, expenses and liabilities arising out of or resulting from the negligence
(sole, ordinary, contributory or other) of the person to be indemnified) which
may arise or be created by Issuer's acceptance of telecommunication instructions
in connection with the Credit, including, but not limited to, telephone or
facsimile instructions in connection with any waiver of discrepancies.
(l) Applicant, or in the case of more than one person signing as Applicant,
the Designated Party, agrees to examine promptly all instruments and documents
delivered to the Applicant or Designated Party, as the case may be, from time to
time and in the event the Applicant or Designated Party shall have any claim of
non-compliance with their instructions or of discrepancies or other
irregularity, the Applicant or the Designated Party, as the case may be, shall
immediately notify the Issuer thereof in writing. The Applicant and the
Designated Party shall conclusively be deemed to have waived any such claim
against the Issuer unless such immediate notice is given as stated above.
(m) For multiple parties signing as Applicant, such parties may request
that the Credit be issued with the name of one of the Applicants, and agree that
such party shall be the Designated Party for the purposes of this Agreement.
(n) The parties hereto each hereby submit to the jurisdiction of the courts
of the State of Texas, the venue of which shall be in the county of Harris and
the United States District Court for the Southern District of Texas, as well as
to the jurisdiction of all courts to which an appeal may be taken or other
review sought from the aforesaid courts, for the purpose of any suit, action or
other proceeding arising out of Applicant's obligations under or with respect to
this Agreement and the Credit and expressly waive any and all objections they
may have as to venue in any such courts. ISSUER AND APPLICANT EACH WAIVE TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THEM
AGAINST THE OTHER ON ANY MATTER WHATSOEVER (INCLUDING, WITHOUT LIMITATION, ANY
ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN ANY WAY CONNECTED WITH
THIS AGREEMENT, THE CREDIT, ANY OTHER DOCUMENTS EXECUTED IN CONNECTION HEREWITH
OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN OR THEREIN). No party to this
Agreement, including but not limited to any assignee or successor of a party,
shall seek a jury trial in any lawsuit, proceeding, counterclaim or any other
litigation procedure based upon, or arising out of this Agreement, the Credit,
any related instruments, any Collateral or the dealings or the relationship
between the parties. No party will seek to consolidate any such action, in which
a jury trial has been waived, with any other action in which a jury trial cannot
be or has not been waived. THE PROVISIONS OF THIS PARAGRAPH HAVE BEEN FULLY
DISCUSSED BY THE PARTIES HERETO WITH LEGAL COUNSEL AND THESE PROVISIONS SHALL BE
SUBJECT TO NO EXCEPTIONS. NO PARTY HAS IN ANY WAY AGREED WITH OR REPRESENTED TO
ANY OTHER PARTY THAT THE PROVISIONS OF THIS PARAGRAPH WILL NOT BE FULLY ENFORCED
IN ALL INSTANCES.
<PAGE>
PAGE 3 OF THE STANDBY LETTER OF CREDIT APPLICATION
NOTWITHSTANDING THE FOREGOING, THE LETTER OF CREDIT REFERRED TO HEREIN SHALL BE
ISSUED UNDER THE SECURED CREDIT AGREEMENT DATED AS OF JULY 30, 1996, BY AND
BETWEEN SONAT OFFSHORE DRILLING INC., THE VARIOUS FINANCIAL INSTITUTIONS
(COLLECTIVELY, THE "LENDERS") AS ARE OR MAY FROM TIME TO TIME BECOME PARTIES
THERETO, ABN AMRO BANK N.V., HOUSTON AGENCY, AS AGENT FOR SUCH LENDERS, SUNTRUST
BANK, ATLANTA AND CREDIT LYONNAIS NEW YORK BRANCH, AS DOCUMENTATION AGENTS FOR
THE LENDERS, AND BANK OF MONTREAL, THE FUJI BANK, LIMITED, ROYAL BANK OF CANADA,
AND WELLS FARGO BANK (TEXAS), NATIONAL ASSOCIATION, AS CO-AGENTS FOR THE LENDERS
(AS THE SAME MAY BE FROM TIME TO TIME AMENDED, RESTATED OR OTHERWISE MODIFIED,
THE "CREDIT AGREEMENT"), AND TO THE EXTENT ANY PROVISION HEREOF CONFLICTS WITH
PROVISIONS OF THE CREDIT AGREEMENT, THE CREDIT AGREEMENT PROVISION SHALL
PREVAIL. IN ADDITION, SECTIONS 3, 4, 5(A), 5(B), 11, 12(A) AND 12(B) OF THIS
APPLICATION, AND ALL OTHER REFERENCES HEREIN TO "COLLATERAL", ARE HEREBY DELETED
AND SHALL NOT APPLY TO THE LETTER OF CREDIT REFERRED TO HEREIN. SECTIONS 10 AND
12(N) OF THIS APPLICATION SHALL BE HEREBY AMENDED TO DELETE REFERENCES TO TEXAS
LAW, THE COUNTY OF HARRIS AND THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF TEXAS AND TO INSERT IN THEIR PLACE NEW YORK LAW, NEW YORK COUNTY AND
THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK.
<PAGE>
[ABN-ANRO LOGO APPEARS HERE]
<TABLE>
<S> <C> <C>
APPLICATION AND AGREEMENT FOR COMMERCIAL LETTER OF CREDIT
TO: ABN AMRO BANK N.V. DATE______________________
HOUSTON AGENCY
THREE RIVERWAY, SUITE 1700 L/C NO.___________________
HOUSTON, TEXAS 77056 (FOR BANK USE ONLY)
(713) 629-6666
THE UNDERSIGNED HEREBY REQUESTS YOU TO ISSUE YOUR IRREVOCABLE LETTER OF CREDIT
AS SUBSTANTIALLY SET FORTH BELOW AND FORWARD SAME TO YOUR CORRESPONDENT FOR
DELIVERY TO THE BENEFICIARY OR DIRECTLY TO THE BENEFICIARY (AS APPLICABLE) BY:
[ ] TELEX-FULL DETAILS TELEX NO. ________ [ ] AIRMAIL [ ] COURIER
- ------------------------------------------------------------------------------------------------------------------------------------
[ ] ADVISING BANK [ ] CONFIRMING BANK FOR ACCOUNT OF (APPLICANT) GIVE FULL NAME & ADDRESS
____________________________________________________________________________________________________________________________________
IN FAVOR OF (BENEFICIARY) GIVE FULL NAME & ADDRESS AMOUNT
--------------------------------------------------------------
EXPIRY DATE
AT ABN AMRO, HOUSTON, TEXAS UNLESS OTHERWISE INDICATED
- ------------------------------------------------------------------------------------------------------------------------------------
Available by draft(s) at ______________________ drawn on ________________________ for ___% of invoice value accompanied by the
following documents (check required documents):
[ ] Signed Original Commercial Invoice and ___ copies evidencing shipment of _______________________________________________________
____________________________________________________________________________________________________________________________________
[ ] Packing List and ____ copies
[ ] Negotiable Insurance Policy or Certificate in duplicate for ____% of invoice value covering:
[ ] Marine [ ] Air [ ] War Risks [ ] All Risks [ ] Other Risks (please specify) ____________________________________________________
(All claims to be payable in the currency of this Letter of Credit, unless otherwise provided)
[ ] Insurance effected by ourselves
[ ] Full set clean on board Ocean Bill of Lading plus one non-negotiable copy consigned to the order of ____________________________
marked "freight [ ] collect [ ] prepaid" and notify_________________________________________________________________________________
[ ] Full set clean, Multimodal Transport Document plus one non-negotiable copy consigned to the order of __________________________,
marked "freight [ ]collect [ ]prepaid" and notify___________________________________________________________________________________
indicating that goods have been [ ]dispatched or [ ]taken in charge or [ ]loaded on board.
[ ] Clean Air Transport Document plus one copy issued to ___________________________________________________________________________
marked "freight [ ]collect [ ]prepaid" and notify___________________________________________________________________________________
[ ] Other documents, if any
Shipping terms (please check one): [ ]Ex-Works [ ]FOB [ ]CFR [ ]CIF [ ]CPT [ ]DDP [ ]Other___________________________________
(all such terms shall be interpreted in accordance with the ICC 1990 Incoterms)
Transport document to indicate shipment
FROM (port of loading): TO (port of discharge):
Partial Shipments [ ] permitted [ ] prohibited Transshipments [ ] permitted [ ] prohibited
SPECIAL INSTRUCTIONS:
[ ] Documents must be presented within ___________________ days after date of shipment.
[ ] All banking charges other than those of the issuing bank's are for the account of the [ ] Beneficiary [ ] Applicant.
[ ] Transferable [ ] Non-Transferable By (Nominated Bank): ________________________________________________________________________
Other instructions:
THIS LETTER OF CREDIT IS SUBJECT TO THE UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS OF THE INTERNATIONAL CHAMBER OF
COMMERCE IN EFFECT ON THE DATE HEREOF.
IN CONSIDERATION OF YOUR ISSUING THE LETTER OF CREDIT SUBSTANTIALLY IN ACCORDANCE WITH THE FOREGOING APPLICATIONS, THE UNDERSIGNED
HEREBY (JOINTLY AND SEVERALLY) AGREE(S) TO EACH AND ALL OF THE TERMS AND CONDITIONS ON THE REVERSE HEREOF OR ATTACHED HERETO WHICH
ARE HEREBY INCORPORATED HEREIN BY REFERENCE. THIS WRITTEN LOAN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
IF MORE THAN ONE PERSON SIGNS THIS APPLICATION, THE PERSON SHOWN BELOW AS "DESIGNATED PARTY" SHALL HAVE THE EXCLUSIVE RIGHT TO
RECEIVE NOTICES, ISSUE INSTRUCTIONS, AGREE TO WAIVERS, AMENDMENTS, EXTENSIONS AND INCREASES, AND OTHERWISE DEAL WITH THE ISSUER WITH
RESPECT TO THIS LETTER OF CREDIT.
- -----------------------------------------------------------------------------------------------------------------------------------
NAME OF APPLICANT NAME OF DESIGNATED PARTY
- ------------------------------------------------------------------------------------------------------------------------------------
SIGNATURE OF APPLICANT SIGNATURE OF DESIGNATED PARTY
- ------------------------------------------------------------------------------------------------------------------------------------
NAME AND TITLE NAME AND TITLE OF DESIGNATED PARTY
- ------------------------------------------------------------------------------------------------------------------------------------
FOR ABN AMRO BANK USE ONLY
PROPOSED L/C AMOUNTS________________________________________ CURRENT APPROVED LINE AMOUNT________________________________________
L/C'S AND B/A'S_____________________________________________ WITHIN CREDIT LINE Y/N______________________________________________
LOANS OUTSTANDING___________________________________________ COMM. RATE__________________________________________________________
TOTAL AMOUNT________________________________________________ APPROVED____________________________________________________________
11/94
</TABLE>
<PAGE>
In consideration of ABN AMRO Bank N.V. (the "Issuer") issuing an
irrevocable commercial letter of credit substantially in accordance with the
Application appearing on the reverse side hereof or attached hereto (the
"Application") and as such letter of credit may be amended (the "Credit"), the
undersigned, jointly and severally if there is more than one of the undersigned
(the "Applicant") unconditionally and irrevocably agrees as follows:
1. ISSUER'S GENERAL OBLIGATIONS. Upon the issuance of a Credit, the
Issuer's obligations to the Applicant with respect to the Credit include good
faith and observance of general banking usage, but do NOT include liability or
responsibility of any kind arising out of or in connection with: (a) performance
of the underlying contract or other transactions between the Applicant and the
beneficiary or any other person; (b) acts, errors, defaults or omissions of any
person other than the Issuer, including any use of the Credit by any such
person; (c) loss or destruction of any telegram, cable, letter, instrument or
document while in transit or in the possession of others; (d) knowledge or lack
of knowledge of any custom or usage of any particular trade; (e) transmission,
delivery, translation or interpretation of any message including any
interruption, delay, error or omission therein; (f) insufficiency, lack of
authorization, invalidity of, lack of genuineness, truthfulness or error or
fraud in any documents presented under the Credit or in any instructions
purporting to be from the Applicant or the Issuer's correspondent, (g) validity
or correctness of any transfer or proper identity of any transferee (if the
Credit is issued in transferable form); (h) waiver of any requirement which
exists for the Issuer's protection and not the protection of the Applicant, or
which waiver does not in fact materially prejudice the Applicant; or (i) any
other act or omission for which banks are relieved of responsibility under the
"Uniform Customs & Practice for Documentary Credits" of the International
Chamber of Commerce (hereafter, the "UCP"), in effect on the date hereof.
2. ISSUER'S OBLIGATIONS CONCERNING DOCUMENTS.
(a) The Issuer's obligations relative to the Credit include the examination
of documents with reasonable care so as to ascertain that on their face they
appear to comply with the terms of Credit, but do NOT include liability or
responsibility of any kind arising out of or in connection with: (i) validity,
sufficiency, truthfulness, genuineness or effect of documents which appear on
Issuer's examination to be regular on their face; (ii) honor of drafts or
demands for payment which appear on Issuer's examination to be regular on their
face; or (iii) the ultimate correctness of Issuer's decision regarding
documentary compliance, where such decision is based on Issuer's examination of
the documents, or Issuer's exercise of judgment, in a manner not manifestly
unreasonable. The Issuer may in its discretion (but shall not be obligated to)
accept documents which substantially or reasonably comply with the terms of the
Credit.
(b) Unless otherwise specified in the Application, the Issuer may in its
discretion (but shall not be obligated to) accept or honor (in the case of
negotiable Credits) as complying with the Credit: (i) drafts drawn prior to the
expiry of the Credit but presented to the Issuer on the banking day following
such expiry, if such expiry falls on a non-banking day; (ii) drafts with respect
to partial shipments, or timely shipments subsequent to a non-conforming
shipment; (iii) transport documents, multimodal transport documents or air
transport documents providing for transshipments, if the entire carriage is
covered by one transport document, the date of the on-board notation of such
transport document to be deemed the date of such shipment; (iv) transport
documents which indicate transshipment will occur in containers, trailers or
LASH barges and the entire ocean carriage is covered by one bill of lading, even
if transshipment is prohibited by the Application; (v) drafts or documents
signed by or issued by the purported agent, executor, administrator, liquidator,
receiver, trustee in bankruptcy or other legal representative of any party
designated in the Credit; (vi) drafts which fail to bear any or adequate
reference to the Credit, or notation to be made on the Credit, or the Credit to
be surrendered, or documents to be forwarded apart from the draft, whether or
not required by the Credit; (vii) drafts or documents which comply under the
laws, rules, regulations, and general banking or trade customs and usages of the
place of drawing, negotiation or presentation; or (viii) drafts or documents
which comply with the UCP.
(c) Unless otherwise specified in the Application, the Issuer may accept
(i) as a "bill of lading" any document purporting to be issued by or on behalf
of a carrier and acknowledging the receipt of goods for transportation
irrespective of the specific provisions of such documents; (ii) insurance
policies or insurance certificates or declarations under an open cover
pre-signed by an insurance company or underwriters or their agents as documents
of insurance; (iii) description of property contained in any invoice as
sufficient and controlling against other descriptions contained in any bills of
lading, insurance or other documents accepted, as long as such descriptions are
not inconsistent with one another; (iv) any document containing stamped, written
or typewritten provisions whether or not signed and initialed, as if the same
were placed with authority on the document at the time of its issuance by the
carrier, other issuer or their agents. The date of each bill of lading or other
transport document shall be deemed the date of shipment. In the event that, at
Applicant's request, some of the documents required under this Credit are
forwarded directly to Applicant or any other party designated by Applicant; or
at the request of Applicant, the Issuer releases or consents to the release of
some or all of the property shipped under the Credit prior to the presentation
of the respective Item (as defined in Section 3(a), below), Applicant agrees to
pay Issuer on demand the amount of any claim made against Issuer by reason
thereof and authorizes Issuer to honor such Item when it is presented regardless
of whether or not such Item or any document which may accompany it complies with
the terms of the Credit. In the case of the issuance of a steamship indemnity
for Applicant's account, Issuer is authorized to retain original bills of lading
for delivery to the shipping company to secure the release of the Issuer's
indemnity.
3. PAYMENT; COMMISSIONS.
(a) The Applicant shall pay the Issuer in United States currency at the
office identified on the Application, the amount paid or to be paid by the
Issuer or the Issuer's agent or any party on the Issuer's behalf, on each draft
or other order, instrument or demand drawn, presented or purporting to be drawn
or presented under the Credit (the "Item") together with all other amounts owing
to the Issuer in connection therewith, such payment to be made at the time of
honor of each Item or if so demanded by the Issuer, on demand in advance of any
drawing. In the case of Items drawn in foreign currency, such payments shall be
at the Issuer's current rate of exchange for transfers to the place of payment
in the currency in which such Item is drawn (or, if for any reason the Issuer is
unable to establish such a rate of exchange, in an amount equal to the Issuer's
actual cost of settlement). The Applicant shall reimburse the Issuer in the same
currency in which the Item is payable, provided that at the Issuer's option,
Applicant shall reimburse Issuer in United States dollars for Items payable in a
foreign currency at the rate at which Issuer could sell such foreign currency in
exchange for United States dollars for transfer to the place of payment of the
Item, or, if there is no such rate, the United States dollar equivalent of
Applicant's actual cost of settlement. Applicant agrees to pay Issuer on demand
in United States dollars such amounts as Issuer may be required to expend to
comply with any and all governmental exchange regulations now or hereafter
applicable to the purchase of foreign currency.
(b) The Applicant shall pay the Issuer on demand, in United States currency
at the office as identified on the Application: (i) a nonrefundable commission
at such rate as the Issuer may establish; (ii) interest on all amounts due and
owing to the Issuer, from and including the date such amount is paid or incurred
by the Issuer or otherwise due and owing hereunder until such amount is paid in
full, at a fluctuating rate per annum equal to the lesser of (x) the Issuer's
Prime Rate plus two percent (2%) and (y) the maximum non-usurious rate of
interest permitted by applicable law in effect from time to time. "Prime Rate"
shall mean the rate in effect from time to time as set by the Issuer and called
its Prime Rate for United States dollar loans, which rate is not necessarily the
lowest or best interest rate offered by the Issuer and interest shall be
calculated on the basis of a 360 day year for actual days elapsed (unless such
calculation would cause a usury violation, in which event interest shall be
calculated on the basis of a year of 365 or 366 days, as the case may be); (iii)
all charges and expenses, including attorney's fees, legal expenses, court
costs, and any similar costs or liabilities from time to time paid or incurred
by the Issuer in connection with the issuance or maintenance of the Credit, the
performance under the Credit and this Agreement and all transactions (including,
without limitation, the involvement of the Issuer in any court proceeding
regarding the Credit), related to or contemplated by this Agreement (including
without limitation, the creation, perfection, maintenance, protection, exercise,
enforcement or other realization upon the Issuer's interests, rights and
remedies); and (iv) all charges and fees payable under any fee schedule of the
Issuer in effect from time to time, or as otherwise agreed.
(c) All amounts payable by the Applicant hereunder shall be paid at the
office of the Issuer identified on the Application, in immediately available and
freely transferable funds at such place of payment. The Issuer is authorized to
set off or charge to any account or other funds of the Applicant in Issuer's
possession all obligations of the Applicant owing hereunder, irrespective of the
currency in which such account or funds are denominated.
(d) If, as a result of any law, regulation, treaty or directive, or any
change therein, or in the interpretation or application thereof or Issuer's
compliance with any request or directive (whether or not having the force of
law) from any court or governmental authority, agency or instrumentality, any
reserve, capital requirement, premium, special deposit, special assessment or
similar requirements against the Issuer's assets, deposits or credit extended by
the Issuer, are imposed, modified, or deemed applicable and the Issuer shall
determine that, by reason thereof, the cost to the Issuer of issuing or
maintaining the Credit is increased, the Applicant agrees to pay the Issuer upon
demand such additional amount or amounts as will compensate the Issuer for such
additional cost. Determinations by the Issuer of the additional amounts required
to compensate the Issuer in respect of the foregoing shall be conclusive, absent
manifest error. The Applicant further agrees to pay any applicable levies or
other taxes imposed in connection with the Credit other than net income taxes
payable by the Issuer, and to otherwise comply with all domestic and foreign
laws and regulations applicable to all transactions under or in connection with
the Credit.
(e) The Issuer may (but shall not be obligated to) make a loan to the
Applicant in an amount equal to the reimbursement obligation of the Applicant
under Section 3(a) hereof and the Issuer shall be hereby authorized to apply the
proceeds of such loan to the repayment of such reimbursement obligation. Each
such loan shall, except to the extent otherwise agreed to in writing between the
Applicant and the Issuer, be due on demand and shall bear interest payable on
demand at the rate per annum set forth in Section 3(b)(ii) hereof.
4. GRANT OF SECURITY INTEREST. The Applicant hereby grants to the Issuer,
as security for all of its obligations to the Issuer, whether absolute or
contingent, due or to become due, now or hereafter arising from this or any
other agreement the Issuer may have with the Applicant, a security interest in
and pledges to the Issuer all property of the Applicant of any nature, including
all goods, equipment, inventory, accounts, instruments, chattel paper, documents
and general intangibles now or hereafter in the actual or constructive
possession of the Issuer or its correspondents or in transit to the Issuer or
its correspondents from or for the Applicant in any manner whatsoever, whether
expressly as security or otherwise, and all proceeds and products of the
foregoing (the "Collateral"). The Issuer shall have all of the rights of a
secured party under the Uniform Commercial Code (as in effect from time to time
in any applicable jurisdiction) in the Collateral, and in addition all of the
rights specified in this Agreement, including the right to set off or apply any
of the Collateral to any of the Applicant's obligations to the Issuer at any
time, without notice, in any order, manner, and amount the Issuer may determine.
The Applicant shall execute any financing statements, trust receipts, or other
documents the Issuer requests in order to perfect, maintain, protect, enforce or
realize on the security interest in the Collateral and the Applicant shall pay
all filing, recording and other fees in connection therewith. The Applicant
authorizes the Issuer to file this Agreement or any statement, instrument,
document or amendment, without the Applicant's signature, in all public offices
as the Issuer in its sole discretion may deem necessary to create, preserve,
perfect or validate any lien or security interest or to enable the Issuer to
exercise or enforce its rights with respect to such lien or security interest
and agrees to pay the cost of filing or recording the same and all other costs
and expenses in connection with the custody, care, preservation, perfection or
collection of the Collateral. Upon request, the Applicant shall deposit with the
Issuer such additional security for the Applicant's obligations as the Issuer
may in good faith deem necessary or advisable for its protection.
5. ADDITIONAL COLLATERAL; DELIVERY OF DOCUMENTS OF TITLE.
In addition to the foregoing, the Applicant grants a security interest in and
pledges to the Issuer as security for the obligations of the Applicant:
(a) all property shipped or stored in connection with the Credit or any
drafts drawn thereon;
(b) all shipping documents, warehouse receipts, documents of title,
policies or certificates of insurance and all other documents accompanying or
related to the Credit;
(c) all claims which Applicant may have against anyone in connection with
any of the foregoing, including, without limitation, any guarantees,
indemnities, agreements or policies of insurance in connection therewith;
(d) all property (including deposit accounts and other credits),
merchandise and documents in the actual or constructive possession of the
Applicant, the Bank or its correspondents or in transit to any such party or
their agent or bailee; and
(e) all products and proceeds thereof.
If the Issuer delivers to the Applicant or any other party any documents of
title in which Issuer has a security interest prior to the receipt by Issuer of
payment in full of all liabilities of the Applicant, the Applicant agrees to
either (i) obtain possession of goods evidenced by such documents within 21 days
from the date of the delivery of the documents, or (ii) cause such goods to be
segregated from other goods and held at the Issuer's disposal.
In addition, Applicant agrees (i) that it shall keep all Collateral, which
is customarily insured against loss, damages, theft and other risks, insured in
amounts and by companies satisfactory to Issuer, and either assign the policies
and certificates or other evidence of insurance to Issuer or make the loss or
adjustment payable to Issuer and hold as Issuer's agent in trust for Issuer any
proceeds received by the Applicant under such policies and promptly deliver the
same to Issuer; (ii) that, if Issuer at any time deems such insurance inadequate
for any reason, Issuer may procure such insurance as Issuer deems necessary, at
Applicant's expense, and (iii) to furnish to Issuer such certificates or other
evidence with respect to the foregoing as Issuer may request. Applicant agrees
to keep the Collateral free and clear of all other interests and claims and, at
any time and from time to time, upon Issuer's request, deliver to Issuer any of
the Collateral that may then be in or may hereafter come into Applicant's
possession or control.
Issuer shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral if Issuer takes such action as Applicant shall
request in writing, but Issuer's failure to comply with any request shall not be
a failure to exercise reasonable care. If Applicant does not make a request in
writing, Issuer's failure to preserve or protect any rights to the Collateral
shall not be a failure to exercise reasonable care in the custody and
preservation of the Collateral.
6. OBLIGATION OF APPLICANT; ASSUMPTION OF RISK BY APPLICANT;
INDEMNIFICATION OF ISSUER BY APPLICANT; SUBROGATION.
(a) The Applicant's obligations to the Issuer hereunder are, and shall
remain, absolute and unconditional notwithstanding any lack of enforceability of
the Credit or the existence of any claim, counterclaim, defense or right of set
off the Applicant may have against the Issuer.
(b) The beneficiary or any other user of the Credit and any other drawer of
any draft or the presenter of any demand for payment thereunder shall be deemed
Applicant's agents, and the Applicant assumes all risk, loss, liability, charges
and expenses with respect to their acts or omissions and also with respect to
any error, delay, misdelivery or loss on or arising out of the transmission of
telegrams, cables, letters or other communications, documents or items forwarded
in connection with the drafts or the Credit. The Applicant shall not be relieved
from any obligation or liability, nor shall the terms of this Agreement be
affected by the occurrence of the foregoing. Any action or inaction by the
Issuer or its correspondents in connection with the Credit or with instructions,
drafts or documents or merchandise relative to the Credit, shall, if in good
faith, conclusively be deemed to have been authorized by the Applicant, and the
Issuer shall have no liability therefor.
(c) THE APPLICANT SHALL INDEMNIFY THE ISSUER AND ITS CORRESPONDENTS AND
SHALL DEFEND AND HOLD THE ISSUER AND ITS CORRESPONDENTS HARMLESS FROM AND
AGAINST ANY AND ALL CLAIMS, DAMAGES, LOSS, COSTS, EXPENSES (INCLUDING ATTORNEY'S
FEES) AND LIABILITIES, OF ANY NATURE WHATEVER, SUSTAINED OR INCURRED OR ASSERTED
IN CONNECTION WITH THE CREDIT, THE PAYMENT OR ACCEPTANCE OR REFUSAL TO PAY OR
ACCEPT ANY DRAFT OR OTHER DEMAND FOR PAYMENT, AND ANY OTHER ACTION OR INACTION
IN RELIANCE UPON THE PROVISIONS OF THIS AGREEMENT EXCEPT, (including but not
limited to any and all claims, damages, loss, costs, expenses and liabilities
arising out of or resulting from the negligence (sole, ordinary, contributory or
other) of the person to be indemnified) except, only if, and to the extent that
any such claims, damages, loss, costs, expenses or liabilities shall have been
determined by a court of competent jurisdiction to have been directly caused by
the willful misconduct or gross negligence of the Issuer in performing its
obligations under the Credit or by the Issuer's failure to make payment of any
drawing or other demand for payment made in strict conformity with the Credit.
It is understood that in making payment under the Credit, the Issuer's exclusive
reliance on the documents presented to the Issuer in accordance with the terms
of the Credit as to any and all matters set forth therein, whether or not any
statement or any document presented pursuant to the Credit shall be forged,
fraudulent, invalid or insufficient in any respect whatsoever, shall not be
deemed willful misconduct or gross negligence of the Issuer.
(d) The Issuer shall be subrogated (for purposes of defending against the
Applicant's claims and proceeding against others to the extent of the Issuer's
liability to the Applicant) to the Applicant's rights against any person who may
be liable to the Applicant on any underlying transaction, to the rights of any
holder in due course or person with similar status against the Applicant and to
the rights of the beneficiary or its assignee or person with similar status
against the Applicant.
(e) The Applicant certifies that transactions in any commodities covered by
the Application are not prohibited under the foreign assets control regulations
of the United States Treasury Department and that any importation covered by the
Application conforms in every respect with all United States regulations then in
effect.
7. DEFAULT; REMEDIES.
(a) The Applicant shall be in default under this Agreement upon the
occurrence of any of the following: (i) any failure by the Applicant to pay or
perform when and as due hereunder any of its obligations or liabilities under
this Agreement or any other agreement with the Issuer or instrument delivered to
the Issuer, including without limitation the Applicant's obligation to pay
promptly all sums due to the Issuer; (ii) any failure to furnish, upon the
Issuer's demand, additional security satisfactory to the Issuer; (iii) any
failure to furnish upon demand any financial information the Issuer may request
or to permit an inspection of Applicant's books, records and accounts at any
reasonable time; (iv) any act or event evidencing or reasonably appearing to
evidence the bankruptcy, reorganization, rehabilitation, arrangement,
liquidation, insolvency or financial instability of any party hereto signing as
an Applicant or any guarantor thereof; (v) any material misrepresentation made
in connection with the Credit; (vi) any default by Applicant under any agreement
involving the borrowing of money or the obtaining of credit; (vii) the death or
appointment of a guardian, conservator or similar representative of any party
signing hereto as an Applicant, or any guarantor thereof; or (viii) any other
act, event or occurrence which in the Issuer's sole judgment impairs the
Issuer's security or increases its risk.
(b) Upon default, all obligations and liabilities of the Applicant to the
Issuer, of whatever nature, whether contingent or absolute, shall become
immediately due and payable WITHOUT PRESENTMENT, PROTEST, NOTICE OR DEMAND AND
WITHOUT NOTICE OF INTENTION TO ACCELERATE OR NOTICE OF ACCELERATION, ALL OF
WHICH ARE HEREBY WAIVED and, without limiting the foregoing and any other rights
of the Issuer hereunder, the Applicant shall immediately pay to the Issuer an
amount equal to the available undrawn amount of the Credit. The Issuer shall
have all the rights and remedies of a secured party under the Uniform Commercial
Code, and in addition to such rights and remedies, the Applicant further agrees
that any default under this Agreement shall also be a default under all other
agreements with the Issuer.
(c) All amounts due and payable shall accrue interest, from and including
the date such amount is paid or incurred by the Issuer until payment in full, at
the per annum rate set forth in Section 3(b)(ii) hereof.
8. WAIVER BY ISSUER; ACTS NOT AFFECTING AGREEMENT. The Issuer shall have no
duty to exercise any of its rights hereunder, and shall not be liable for any
failure or delay in doing so. No failure or delay on the part of the Issuer or
its correspondents shall operate as a waiver, and no notice to or demand by the
Issuer or its correspondents shall be deemed a waiver of the Issuer's right to
take any other or further action without notice or demand. Issuer's rights,
including all security interests in Collateral, and Applicant's obligations and
liabilities under this Agreement shall continue unimpaired and this Agreement
shall remain binding upon each party hereto signing as an Applicant,
notwithstanding: (a) release or substitution of any Collateral or any right or
interest therein; (b) extension of the maturity or time for presentation of
drafts, acceptances or documents; (c) any other modification of the terms of the
Credit at the request of any party hereto signing as an Applicant, with or
without notification to any other party; or (d) any increase in the amount of
the Credit at the request of any party hereto. No delay, extension of time,
renewal, compromise or other indulgence which the Issuer may permit in
connection with any of its rights hereunder shall impair those rights, and the
Issuer shall not be deemed to have waived any rights unless such waiver is in
writing and signed by the Issuer or its authorized agent; nor shall any such
waiver constitute a waiver of any other right or of the same right at any future
time.
9. SOLE OBLIGATION OF ISSUER. Without limiting any other provision herein,
the Issuer is hereby expressly authorized and directed to honor any request for
payment which is made under and in compliance with the terms of the Credit
without regard to, and without any duty on the part of the Issuer to inquire
into, the existence of any disputes or controversies between any of the
Applicant, the beneficiary of the Credit or any other person, firm or
corporation, or the respective rights, duties or liabilities of any of them or
whether any facts represented in any of the documents presented under the Credit
are true or correct. Furthermore, the Applicant agrees that the Issuer's
obligation to the Applicant shall be limited to honoring requests for payment
made under and in compliance with the terms of the Credit and this Agreement and
the Issuer's obligation remains so limited even if the Issuer may have assisted
in the preparation of the wording of the Credit or any documents required to be
presented thereunder or the Issuer may otherwise be aware of the underlying
transaction giving rise to the Credit and this Agreement.
10. DURATION OF AGREEMENT; AGREEMENT BINDING UPON SUCCESSORS; INDEMNITY.
This Agreement shall remain in full force and effect until the Issuer has
actually received written notice to the contrary from the Applicant, and after
receipt of such written notice shall continue in full force and effect as to all
transactions between the Applicant and the Issuer commenced prior to the date of
such receipt. All indemnities, covenants, agreements, representations and
warranties made in this Agreement shall survive the issuance by the Issuer of
the Credit and shall continue in full force and effect so long as the Credit, or
any portion thereof, shall be unexpired or any sums drawn thereunder or other
amounts owing hereunder shall remain unpaid, provided, however, that the
provisions of Sections 3(b)(iii), 3(d), 6(c), 10, 12, 13(b), 13(c) and 13(k)
shall survive the termination of this Agreement. This Agreement shall not be
revoked or impaired by the death of any party hereto, by the revocation or
release of any obligations hereunder of any one or more parties hereto (or if
any party hereto shall be a partnership, by any changes in the parties composing
the partnership). If this Agreement is terminated or revoked as to any party for
any reason, the Applicant shall indemnify and hold the Issuer harmless from any
loss incurred in acting hereunder prior to the actual receipt of written notice
of such termination or revocation. The invalidity or lack of enforceability of
any provision hereof shall not affect the validity or enforceability of any
other provision hereof. If this Agreement is signed by two or more parties, it
shall constitute the joint and several agreement of such parties; provided that
the Designated Party, as defined below, shall have the exclusive right to issue
all instructions relating to the Credit including, without limitation,
instructions as to the disposition of documents and any unutilized funds, waiver
or discrepancies and to agree with the Issuer upon any amendments,
modifications, extensions, renewals, or increases in the Credit or the further
financing or refinancing of any transaction effected hereunder, irrespective of
whether the same may now or hereafter affect the rights of any party hereto or
of their legal representatives, heirs or assigns. The Designated Party shall
have specimen signatures on file with the Issuer and the Issuer may give any
notices to the Designated Party without notice to any other party.
11. LAW GOVERNING. The Credit and this Agreement shall be governed by and
construed in accordance with the laws of the State of Texas applicable to
contracts made and to be wholly performed within such State. Unless inconsistent
with such state law or exempt so far as otherwise expressly stated in the
Credit, the Credit and this Agreement are subject to the terms of the UCP in
effect on the date of the Application provided, however, that Articles 41 and 43
of UCP 500 shall have no application to the Credit or this Agreement. In the
absence of proof expressly to the contrary, the UCP shall serve as evidence of
general banking usage.
12. GROSS-UP PROVISION. Any and all payments made to Issuer hereunder shall
be made free and clear of, and without deduction or withholding for, any present
or future taxes, levies, imposts, deductions, charges or withholdings of any
nature, and all liabilities with respect thereto, excluding taxes imposed on net
income of the Issuer and all income and franchise taxes of the United States and
any political subdivision thereof (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities are referred to herein as
"Taxes"). If the Applicant shall be required by law to deduct any Taxes from or
in respect to any sum payable hereunder (i) the sum payable shall be increased
as may be necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 12), the
Issuer shall receive an amount equal to the sum the Issuer would have received
had no deductions been made; (ii) the Applicant shall make all such deductions;
and (iii) the Applicant shall pay the full amount deducted to the relevant
taxation authority or other authority in compliance with applicable law. THE
APPLICANT SHALL INDEMNIFY THE ISSUER FOR THE FULL AMOUNT OF TAXES, (INCLUDING,
WITHOUT LIMITATION, ANY TAXES IMPOSED BY ANY JURISDICTION ON AMOUNTS PAYABLE
HEREUNDER) PAID BY THE ISSUER AND ANY LIABILITY (INCLUDING PENALTIES, INTEREST
AND EXPENSES) ARISING THEREFROM OR WITH RESPECT THERETO, whether or not such
Taxes were correctly or legally asserted. Payment upon this indemnification
shall be made within thirty (30) days from the date the Issuer makes written
demand therefor. Within thirty (30) days after date of the payment of Taxes, the
Applicant shall furnish to the Issuer the original or certified copy of a
receipt evidencing payment thereof.
13. OTHER TERMS.
(a) If the Credit shall contain any provision for automatic renewal, the
Applicant acknowledges and agrees that the Issuer is under no obligation to
allow such renewal to occur and any such renewal shall remain within the sole
and absolute discretion of the Issuer. The Applicant hereby irrevocably consents
to the automatic renewal of such Credit in accordance with its terms should the
Issuer decide to allow such renewal to occur, provided, however, that the
Applicant shall have the right to request the Issuer to disallow such renewal on
the condition that the Applicant shall give the Issuer prior written notice of
such request not less than thirty (30) days prior to the deadline imposed upon
the Issuer for notification to the beneficiary of non-renewal of the Credit.
(b) The Applicant shall indemnify the Issuer against any loss incurred by
the Issuer as a result of any judgment or order being given or made for the
payment of any amount due hereunder in a particular currency (the "Currency of
Account") and such judgment or order being expressed in a currency (the
"Judgment Currency") other than the Currency of Account and as a result of any
variation having occurred in the rates of exchange between the date which such
amount is converted into the Judgment Currency and the date of actual payment
pursuant thereto. The foregoing indemnity shall constitute a separate and
independent obligation of the Applicant.
(c) Each party signing as Applicant and any guarantor thereof agrees that
if any amount paid to the Issuer hereunder is rescinded or must be otherwise
restored or returned by the Issuer due to the insolvency, bankruptcy,
liquidation or reorganization of any party hereto, each party's obligations
hereunder with respect to each such amount shall be reinstated to the same
extent as if such payment had not been made.
(d) The Applicant authorizes the Issuer to set forth the terms of the
Application in the Credit in such language as the Issuer deems appropriate, with
such variations from such terms as the Issuer may in its discretion determine to
be necessary (which determination shall be conclusive) and not materially
inconsistent with the Application. If Applicant, or in the case of more than one
Applicant, the Designated Party, does not notify the Issuer within ten (10)
calendar days of its issuance, Applicant agrees that such Credit is conclusively
presumed to be in proper form. Upon its receipt of timely notice of any
discrepancy in the Credit, the Issuer will endeavor to obtain the consent of the
confirming bank (if any) and the beneficiary for an appropriate modification to
the Credit; provided, however, that the Issuer shall assume no liability or
responsibility for its failure to obtain such consent.
(e) No party to this Agreement may assign its rights or obligations under
this Agreement without the prior written consent of the Issuer, provided that
the obligations of the Issuer under this Agreement may be provided or fulfilled
by any affiliate of the Issuer so long as the Issuer assumes full
responsibility for such obligations.
(f) This Agreement and any exhibits hereto constitute the entire agreement
among the parties and supersede any and all prior agreements, proposals,
negotiations and representations pertaining to the obligations and duties to be
performed under this Agreement. No amendments or modifications of this Agreement
shall be valid unless in writing and signed by or on behalf of Applicant and
Issuer.
(g) Except as otherwise provided in this Agreement, all notices required to
be given pursuant to this Agreement shall be effective when received, and shall
be sufficient if given in writing, hand delivered or sent by First Class United
States Mail, postage prepaid, air courier or telecopier, and addressed to the
appropriate party at its address as shown on the signature page hereof or at
such other address as the sending party shall have been advised of in writing.
(h) Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or lack of enforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such provision
in any other jurisdiction. Whenever possible, each provision of this Agreement
shall be interpreted in such a manner as to be effective and valid under
applicable law.
(i) This Agreement 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 to be an original and all of which taken
together shall constitute but one and the same instrument.
(j) Regardless of the expiry date of the Credit, the Applicant shall remain
liable hereunder until the Issuer is released from liability by every person,
firm, corporation or other entity which is entitled to draw or demand payment
under the Credit.
(k) APPLICANT AGREES TO INDEMNIFY AND HOLD ISSUER HARMLESS FROM EACH AND
EVERY CLAIM, DEMAND, LIABILITY, LOSS, COST OR EXPENSE (INCLUDING, BUT NOT
LIMITED TO, ATTORNEYS' FEES AND COURT COSTS (INCLUDING BUT NOT LIMITED TO ANY
AND ALL CLAIMS, DAMAGES, LOSS, COSTS, EXPENSES AND LIABILITIES ARISING OUT OF OR
RESULTING FROM THE NEGLIGENCE (SOLE, ORDINARY, CONTRIBUTORY OR OTHER) OF THE
PERSON TO BE INDEMNIFIED) WHICH MAY ARISE OR BE CREATED BY ISSUER'S ACCEPTANCE
OF TELECOMMUNICATION INSTRUCTIONS IN CONNECTION WITH THE CREDIT, INCLUDING, BUT
NOT LIMITED TO, TELEPHONE OR FACSIMILE INSTRUCTIONS IN CONNECTION WITH ANY
WAIVER OF DISCREPANCIES.
(l) Applicant, or in the case of more than one person signing as Applicant,
the Designated Party, agrees to examine promptly all instruments and documents
delivered to the Applicant or Designated Party, as the case may be, from time to
time and in the event the Applicant or Designated Party shall have any claim of
non-compliance with their instructions or of discrepancies or other
irregularity, the Applicant or the Designated Party, as the case may be, shall
immediately notify the Issuer thereof in writing and the Applicant and the
Designated Party shall conclusively be deemed to have waived any such claim
against the Issuer unless such immediate notice is given as stated above.
(m) For multiple parties signing as Applicant, such parties may request
that the Credit be issued with the name of one of the Applicants, and agree that
such party shall be the Designated Party for purposes of this Agreement.
(n) The parties hereto each hereby submit to the jurisdiction of the courts
of the State of Texas, the venue of which shall be in the county of Harris and
the United States District Court for the Southern District of Texas, as well as
to the jurisdiction of all courts to which an appeal may be taken or other
review sought from the aforesaid courts, for the purpose of any suit, action or
other proceeding arising out of Applicant's obligations under or with respect to
this Agreement and the Credit and expressly waive any all objections they may
have as to venue in any such courts. ISSUER AND APPLICANT EACH WAIVE TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THEM AGAINST
THE OTHER ON ANY MATTER WHATSOEVER (INCLUDING, WITHOUT LIMITATION, ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS
AGREEMENT, THE CREDIT, ANY OTHER DOCUMENTS EXECUTED IN CONNECTION HEREWITH OR
ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN OR THEREIN). No party to this
Agreement, including but not limited to any assignee or successor of a party,
shall seek a jury trial in any lawsuit, proceeding, counterclaim or any other
litigation procedure based upon, or arising out of this Agreement, the Credit,
any related instruments, any Collateral or the dealings or the relationship
between the parties. No party will seek to consolidate any such action, in which
a jury trial has been waived, with any other action in which a jury trial cannot
be or has not been waived. THE PROVISIONS OF THIS PARAGRAPH HAVE BEEN FULLY
DISCUSSED BY THE PARTIES HERETO WITH LEGAL COUNSEL, AND THESE PROVISIONS SHALL
BE SUBJECT TO NO EXCEPTIONS. NO PARTY HAS IN ANY WAY AGREED WITH OR REPRESENTED
TO ANY OTHER PARTY THAT THE PROVISIONS OF THIS PARAGRAPH WILL NOT BE FULLY
ENFORCED IN ALL INSTANCES.
<PAGE>
PAGE 3 OF THE COMMERCIAL LETTER OF CREDIT APPLICATION
NOTWITHSTANDING THE FOREGOING, THE LETTER OF CREDIT REFERRED TO HEREIN SHALL BE
ISSUED UNDER THE SECURED CREDIT AGREEMENT DATED AS OF JULY 30, 1996, BY AND
BETWEEN SONAT OFFSHORE DRILLING INC., THE VARIOUS FINANCIAL INSTITUTIONS
(COLLECTIVELY, THE "LENDERS") AS ARE OR MAY FROM TIME TO TIME BECOME PARTIES
THERETO, ABN AMRO BANK N.V., HOUSTON AGENCY, AS AGENT FOR SUCH LENDERS, SUNTRUST
BANK, ATLANTA AND CREDIT LYONNAIS NEW YORK BRANCH, AS DOCUMENTATION AGENTS FOR
THE LENDERS, AND BANK OF MONTREAL, THE FUJI BANK, LIMITED, ROYAL BANK OF CANADA,
AND WELLS FARGO BANK (TEXAS), NATIONAL ASSOCIATION, AS CO-AGENTS FOR THE LENDERS
(AS THE SAME MAY BE FROM TIME TO TIME AMENDED, RESTATED OR OTHERWISE MODIFIED,
THE "CREDIT AGREEMENT"), AND TO THE EXTENT ANY PROVISION HEREOF CONFLICTS WITH
PROVISIONS OF THE CREDIT AGREEMENT, THE CREDIT AGREEMENT PROVISION SHALL
PREVAIL. IN ADDITION, SECTIONS 3, 4, 5, 6(A), 6(B), 7, 12, 13(A) AND 13(B) OF
THIS APPLICATION, AND ALL OTHER REFERENCES HEREIN TO "COLLATERAL", ARE HEREBY
DELETED AND SHALL NOT APPLY TO THE LETTER OF CREDIT REFERRED TO HEREIN.
SECTIONS 11 AND 13(N) OF THIS APPLICATION SHALL BE HEREBY AMENDED TO DELETE
REFERENCES TO TEXAS LAW, THE COUNTY OF HARRIS AND THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF TEXAS AND TO INSERT IN THEIR PLACE NEW YORK
LAW, NEW YORK COUNTY, AND THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK.
<PAGE>
EXHIBIT 2.5
FORM OF BORROWING REQUEST
<PAGE>
EXHIBIT 2.5
BORROWING REQUEST
______________, ____
ABN AMRO Bank N.V., Houston Agency, As Agent
Three Riverway, Suite 1700
Houston, Texas 77056
Attention: Ms. Cheryl I. Lipshutz
Re: Sonat Offshore Drilling Inc.
Ladies and Gentlemen:
This Borrowing Request is delivered to you pursuant to Section 2.5 of that
certain Secured Credit Agreement dated as of July 30, 1996 (herein, as the same
may be amended, modified, supplemented, extended, rearranged, and/or restated
from time to time, called the "SECURED CREDIT AGREEMENT") by and between Sonat
Offshore Drilling Inc. (the "BORROWER"), the various financial institutions
(collectively called the "LENDERS") as are or may from time to time become
parties thereto, ABN AMRO Bank N.V., Houston Agency, as Agent for the Lenders,
SunTrust Bank, Atlanta and Credit Lyonnais New York Branch, as Documentation
Agents for the Lenders, and Bank of Montreal, The Fuji Bank, Limited, Royal Bank
of Canada, and Wells Fargo Bank (Texas), National Association, as Co-Agents for
the Lenders. Any term defined in the Secured Credit Agreement and used in this
request shall have the meaning given to it in the Secured Credit Agreement.
___ 1. REVOLVING LOANS
---------------
___ A. The Borrower hereby requests that Revolving Loans be made by the
Lenders on ____________, ____, in accordance with each such Lender's Revolving
Loan Commitment pursuant to the terms and conditions of the Secured Credit
Agreement in the aggregate principal amount for all such Revolving Loans of
[_________________ Dollars] [_____________________ Kroner] [_________________
Pounds], with [__________ Dollars] [__________ Kroner] [__________ Pounds] of
such Revolving Loans as Eurodollar Loans having an Interest Period of
_________________ month(s); and/or [_________________ Dollars] of such Revolving
Loans as Base Rate Loans.
<PAGE>
___ B. The Borrower hereby requests (check as applicable) [___] a
rollover of [___] all or [_________________ Dollars] [______________Kroner]
[_____________ Pounds] of such Revolving Loans to Eurodollar Loans having an
Interest Period of ____ month(s); [___] a conversion of [___] all or
[_________________ Dollars] of such Revolving Loans to Base Rate Loans; and/or
[___] a conversion of [___] all or [___] [______________ Dollars] of such
Revolving Loans to Eurodollar Loans in [_________________ Dollars]
[__________________ Kroner] [______________ Pounds] having an Interest Period of
______ months(s)./1/
___ 2. LETTERS OF CREDIT
-----------------
The Borrower hereby requests that the Agent [___] issue, [___] increase the
amount of, [___] extend the expiration date of a Letter of Credit pursuant to
Section 2.2 of the Secured Credit Agreement. Attached hereto is a duly executed
Issuance Request and Application.
3. TERM LOAN
---------
___ A. The Borrower hereby requests that Term Loans be made by the Lenders in
accordance with each such Lender's Term Loan Commitment pursuant to the terms
and conditions of the Secured Credit Agreement in the aggregate principal amount
for all such Term Loans of $____________ on _______________, 1996 (check as
applicable) [__________________ Dollars] as Eurodollar Loans having an Interest
Period of ____________ month(s) and/or [________________ Dollars] of such Term
Loans as Base Rate Loans.
___ B. The Borrower hereby requests (check as applicable) [___] a
rollover of [___] all or [_________________ Dollars] of such Term Loans to
Eurodollar Loans having an Interest Period of ____ month(s); [___] a conversion
of [___] all or [_________________ Dollars] of such Term Loans to Base Rate
Loans; and/or [___] a conversion of [___] all or [______________ Dollars] of
such Term Loans to Eurodollar Loans in [______________ Dollars] having an
Interest Period of ______ months(s).
The Borrower hereby certifies to the Agent and each Lender that all
applicable conditions precedent to the Borrowings set forth in Section 4 of the
Secured Credit Agreement have (except to the extent waived in accordance with
the terms of the Secured Credit Agreement) been satisfied or fulfilled and that
this Borrowing Notice constitutes a representation and warranty by the Borrower
that on the date of such Borrowing or issuance of, increase in the amount of, or
extension of the expiration date of, such Letter of Credit, as the case may be,
all conditions
- ----------
/1/Make appropriate changes for multiple Interest Periods.
2
<PAGE>
precedent to such Borrowing will (except to the extent waived in accordance with
the terms of the Secured Credit Agreement) be satisfied or fulfilled. The
Borrower hereby agrees that if prior to the time of the making of the Loans or
the issuance of, increase in the amount of, or extension of the expiration date
of a Letter of Credit, as requested hereby, any matter certified herein by it
will not be true and correct, it will immediately so notify the Agent in
writing.
Schedule 1 attached to this Borrowing Notice and incorporated herein for
all purposes shows the availability of the Revolving Credit under the Secured
Credit Agreement. The Borrower hereby certifies that each amount thereon is
correctly stated. [Do not include if only Term Loan being requested.]
[__________ portion of the Borrowing requested herein is for payment of the
shares of Transocean offered in the Mandatory Bid.]
Please wire transfer the proceeds of the Loans to the following accounts of
the following Persons at the financial institutions indicated respectively:
Account
Amount to be ---------------------------------------- Name, Address, etc. of
Transferred Name Account No. Transferee Bank
- ----------- --------------------- --------------- ---------------
- ----------- --------------------- --------------- ----------------------
----------------------
----------------------
Attn:
------------------
- ----------- --------------------- --------------- ----------------------
----------------------
----------------------
Attn:
------------------
The undersigned certifies that he is the officer of the Borrower as
designated below, and that as such he is authorized to execute this Borrowing
Notice on behalf of the Borrower.
Date:____________________, ____.
SONAT OFFSHORE DRILLING INC.
By:__________________________________
Name:________________________________
Title:_______________________________
3
<PAGE>
SCHEDULE 1 TO BORROWING REQUEST
-------------------------------
(All figures are calculated into Dollars pursuant to terms of Secured Credit
Agreement)
1. Revolving Credit Commitment Amount [$400,000,000]
2. Outstanding principal amount of all Revolving $ __________
Loans
3. Outstanding L/C Obligations $ __________
4. Amount of reduction in outstanding L/C Obligations
after giving effect to requested Revolving Loans $___________
5. Available Revolving Credit (1 minus the sum of
(i) 2 plus (ii) 4 subtracted from 3) $___________
6. Principal amount of requested Revolving Loans $___________
7. Face amount of requested Letters of Credit $___________
8. Remaining available Revolving Credit $___________
after giving effect to requested Revolving Loans
or issuance of requested Letters of Credit
(5 minus the sum of 6 plus 7)
<PAGE>
EXHIBIT 2.12A
FORM OF REVOLVING NOTE (U.S. DOLLARS)
<PAGE>
EXHIBIT 2.12A
REVOLVING NOTE (U.S. DOLLARS)
$___________________ ________, 1996
FOR VALUE RECEIVED, the undersigned unconditionally promises to pay to the
order of _________________________ (the "Lender"), at the payment office of the
Agent (as hereinafter defined) located in New York City, New York, on or before
July 30, 2002, the principal sum of __________________________________________
DOLLARS ($____________), or, if less, the aggregate unpaid principal amount of
all Revolving Loans (as such term is defined in the Credit Agreement hereinafter
defined) made in United States Dollars by the Lender to the undersigned pursuant
to the Credit Agreement, as shown, at the Lender's option, either on the grid
schedule attached hereto (and any continuation thereof), or in the records of
the Lender; provided that the failure of the Lender to make any such recordation
or endorsement shall not affect the obligations of the undersigned hereunder.
Prior to any transfer hereof, all Revolving Loans made in United States Dollars
by the Lender, the respective maturities thereof and all repayments of the
principal thereof shall be endorsed by the Lender on the grid schedule attached
hereto, or on a continuation of such schedule attached to and made a part
hereof; provided that the failure of the Bank to make any such recordation or
endorsement shall not affect the obligations of the undersigned.
The undersigned also promises to pay interest on the unpaid principal amount
hereof from time to time outstanding from the date hereof until maturity
(whether by acceleration or otherwise) and, after maturity, until paid, at the
rates per annum and on the dates specified in the Credit Agreement; provided,
however, that in no event shall such interest exceed the Highest Lawful Rate (as
hereinafter defined).
All payments of principal and interest hereunder shall be made in lawful
money of the United States of America in freely transferable United States
dollars.
"Highest Lawful Rate" shall mean the maximum nonusurious interest rate, if
any, that at any time or from time to time may be contracted for, taken,
reserved, charged or received on this Note under laws applicable to the payee
which are presently in effect or, to the extent allowed by applicable law, under
such laws which may hereafter be in effect and which allow a higher maximum
nonusurious interest rate than applicable laws now allow. Determination of the
rate of interest for the purpose of determining whether the Loans represented
hereby are usurious under all applicable laws shall be made by amortizing,
prorating, allocating, and spreading, in equal parts during the period of the
full stated term of the Loans represented hereby, all interest at any time
contracted for, charged, or received from the undersigned in connection with
such Loans.
It is the intention of the payee to conform strictly to usury laws
applicable to it. Accordingly, if the transactions contemplated hereby or the
Loans represented hereby would be
<PAGE>
usurious as to the payee under laws applicable to it (including the laws of the
United States of America and the State of New York or any other jurisdiction
whose laws may be mandatorily applicable to such payee notwithstanding the other
provisions of this Note or the Credit Agreement), then, in that event,
notwithstanding anything to the contrary in this Note, the Credit Agreement or
any other instrument or agreement entered into in connection with this Note, it
is agreed as follows: (i) the aggregate of all consideration which constitutes
interest under laws applicable to the payee that is contracted for, taken,
reserved, charged or received by the payee under this Note, the Credit
Agreement, or under any of the aforesaid agreements or instruments entered into
in connection with this Note or otherwise shall under no circumstances exceed
the Highest Lawful Rate, and any excess shall be credited by the payee on the
principal amount of this Note (or, if the principal amount of this Note shall
have been paid in full, refunded by the payee to the undersigned); and (ii) in
the event that the maturity of this Note is accelerated by reason of an election
of the holder or holders hereof resulting from any Event of Default under the
Credit Agreement or otherwise, or in the event of any required or permitted
prepayment, then such consideration that constitutes interest under laws
applicable to the payee may never include more than the Highest Lawful Rate, and
excess interest, if any, provided for in this Note, the Credit Agreement or
otherwise shall be automatically canceled by the payee as of the date of such
acceleration or prepayment and, if theretofore paid, shall be credited by the
payee on the principal amount of this Note (or if the principal amount of this
Note shall have been paid in full, refunded by the payee to the undersigned),
and in each case, to the extent permitted by applicable law, the payee shall not
be subject to any of the penalties provided by law for contracting for, taking,
reserving, charging or receiving interest in excess of the Highest Lawful Rate.
To the extent that Article 5069-1.04 of the Texas Revised Civil Statutes is
relevant to payee for the purpose of determining the Highest Lawful Rate, payee
hereby elects to determine the applicable rate ceiling under such Article by the
indicated (weekly) rate ceiling from time to time in effect, subject to payee's
right subsequently to change such method in accordance with applicable law.
Chapter 15 of Article 5069 of the Texas Revised Civil Statutes, which regulates
certain revolving credit loan accounts and revolving tri-party accounts, shall
not apply to this Note.
This Note is one of the Revolving Notes referred to in and is entitled to
the benefits of that certain Secured Credit Agreement dated as of July 30, 1996
(as the same may be amended, modified, supplemented, extended, rearranged and/or
restated from time to time, the "Credit Agreement"), entered into by and among
the undersigned, certain financial institutions from time to time parties
thereto (the "Lenders"), ABN AMRO Bank N.V., Houston Agency, as Agent for the
Lenders, SunTrust Bank, Atlanta and Credit Lyonnais New York Branch, as
Documentation Agents for the Lenders, and Bank of Montreal, The Fuji Bank,
Limited, Royal Bank of Canada, and Wells Fargo Bank (Texas), National
Association, as Co-Agents for the Lenders, and secured by the Security Documents
(as such term is defined in the Credit Agreement). Reference is hereby made to
the Credit Agreement for a statement of the prepayment rights and obligations of
the undersigned, a description of the properties and assets mortgaged,
encumbered and assigned, the nature and extent of the security and the rights of
the parties to the Security Documents in respect of such security, and for a
statement of the terms and conditions under which the due date of this Note may
be accelerated. Upon the occurrence and during the
2
<PAGE>
continuance of any Event of Default as specified in the Credit Agreement, the
principal balance hereof and the interest accrued hereon may be declared to be
forthwith due and payable in accordance with the Credit Agreement.
All parties hereto, whether as makers, endorsees, or otherwise, severally
waive presentment for payment, demand, protest, notice of intent to accelerate,
notice of acceleration, notice of dishonor and all other notices whatsoever in
respect of this Note.
THIS NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE
OF NEW YORK AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
SONAT OFFSHORE DRILLING INC.,
A DELAWARE CORPORATION
By:______________________________
Name:____________________________
Title:___________________________
3
<PAGE>
LOANS AND PRINCIPAL PAYMENTS
----------------------------
<TABLE>
<CAPTION>
<C> <S> <C> <C> <C> <C>
Amount of Principal
Date Type of Loan Made Repaid Unpaid Principal Balance Notation
Base Rate Eurodollar Rate Base Rate Eurodollar Rate Base Rate Eurodollar Rate Total Made By
</TABLE>
4
<PAGE>
EXHIBIT 2.12B
FORM OF REVOLVING NOTE (BRITISH POUNDS STERLING)
<PAGE>
EXHIBIT 2.12B
REVOLVING NOTE (BRITISH POUNDS STERLING)
Currency Loan
Commitment:
British Pound Sterling
equivalent of U.S. $___________________ __________, 1996
FOR VALUE RECEIVED, the undersigned unconditionally promises to pay to the
order of _________________________ (the "Lender"), at the payment office of the
Agent (as hereinafter defined) located in New York City, New York, on or before
July 30, 2002, the aggregate unpaid principal amount of all Revolving Loans (as
such term is defined in the Credit Agreement hereinafter defined) made in
British Pounds Sterling by the Lender to the undersigned pursuant to the Credit
Agreement, as shown, at the Lender's option, either on the grid schedule
attached hereto (and any continuation thereof), or in the records of the Lender;
provided that the failure of the Lender to make any such recordation or
endorsement shall not affect the obligations of the undersigned hereunder.
Prior to any transfer hereof, all Revolving Loans made in British Pounds
Sterling by the Lender, the respective maturities thereof and all repayments of
the principal thereof shall be endorsed by the Lender on the grid schedule
attached hereto, or on a continuation of such schedule attached to and made a
part hereof; provided that the failure of the Bank to make any such recordation
or endorsement shall not affect the obligations of the undersigned.
The undersigned also promises to pay interest on the unpaid principal amount
hereof from time to time outstanding from the date hereof until maturity
(whether by acceleration or otherwise) and, after maturity, until paid, at the
rates per annum and on the dates specified in the Credit Agreement; provided,
however, that in no event shall such interest exceed the Highest Lawful Rate (as
hereinafter defined).
All payments of principal and interest hereunder shall be made in lawful
money of the United Kingdom in freely transferable British Pounds Sterling.
"Highest Lawful Rate" shall mean the maximum nonusurious interest rate, if
any, that at any time or from time to time may be contracted for, taken,
reserved, charged or received on this Note under laws applicable to the payee
which are presently in effect or, to the extent allowed by applicable law, under
such laws which may hereafter be in effect and which allow a higher maximum
nonusurious interest rate than applicable laws now allow. Determination of the
rate of interest for the purpose of determining whether the Loans represented
hereby are usurious under all applicable laws shall be made by amortizing,
prorating, allocating, and spreading, in equal parts during the period of the
full stated term of the Loans represented hereby, all interest at any time
contracted for, charged, or received from the undersigned in connection with
such Loans.
<PAGE>
It is the intention of the payee to conform strictly to usury laws
applicable to it. Accordingly, if the transactions contemplated hereby or the
Loans represented hereby would be usurious as to the payee under laws applicable
to it (including the laws of the United States of America and the State of New
York or any other jurisdiction whose laws may be mandatorily applicable to such
payee notwithstanding the other provisions of this Note or the Credit
Agreement), then, in that event, notwithstanding anything to the contrary in
this Note, the Credit Agreement or any other instrument or agreement entered
into in connection with this Note, it is agreed as follows: (i) the aggregate
of all consideration which constitutes interest under laws applicable to the
payee that is contracted for, taken, reserved, charged or received by the
payee under this Note, the Credit Agreement, or under any of the aforesaid
agreements or instruments entered into in connection with this Note or otherwise
shall under no circumstances exceed the Highest Lawful Rate, and any excess
shall be credited by the payee on the principal amount of this Note (or, if the
principal amount of this Note shall have been paid in full, refunded by the
payee to the undersigned); and (ii) in the event that the maturity of this Note
is accelerated by reason of an election of the holder or holders hereof
resulting from any Event of Default under the Credit Agreement or otherwise, or
in the event of any required or permitted prepayment, then such consideration
that constitutes interest under laws applicable to the payee may never include
more than the Highest Lawful Rate, and excess interest, if any, provided for in
this Note, the Credit Agreement or otherwise shall be automatically canceled by
the payee as of the date of such acceleration or prepayment and, if theretofore
paid, shall be credited by the payee on the principal amount of this Note (or if
the principal amount of this Note shall have been paid in full, refunded by the
payee to the undersigned), and in each case, to the extent permitted by
applicable law, the payee shall not be subject to any of the penalties provided
by law for contracting for, taking, reserving, charging or receiving interest in
excess of the Highest Lawful Rate. To the extent that Article 5069-1.04 of the
Texas Revised Civil Statutes is relevant to payee for the purpose of determining
the Highest Lawful Rate, payee hereby elects to determine the applicable rate
ceiling under such Article by the indicated (weekly) rate ceiling from time to
time in effect, subject to payee's right subsequently to change such method in
accordance with applicable law. Chapter 15 of Article 5069 of the Texas Revised
Civil Statutes, which regulates certain revolving credit loan accounts and
revolving tri-party accounts, shall not apply to this Note.
This Note is one of the Revolving Notes referred to in and is entitled to
the benefits of that certain Secured Credit Agreement dated as of July 30, 1996
(as the same may be amended, modified, supplemented, extended, rearranged and/or
restated from time to time, the "Credit Agreement"), entered into by and among
the undersigned, certain financial institutions from time to time parties
thereto (the "Lenders"), ABN AMRO Bank N.V., Houston Agency, as Agent for the
Lenders, SunTrust Bank, Atlanta and Credit Lyonnais New York Branch, as
Documentation Agents for the Lenders, and Bank of Montreal, The Fuji Bank,
Limited, Royal Bank of Canada, and Wells Fargo Bank (Texas), National
Association, as Co-Agents for the Lenders, and secured by the Security Documents
(as such term is defined in the Credit Agreement). Reference is hereby made to
the Credit Agreement for a statement of the prepayment rights and obligations of
the undersigned, a description of the properties and assets mortgaged,
encumbered and assigned, the nature and extent of the security and the rights of
the parties to the Security
2
<PAGE>
Documents in respect of such security, and for a statement of the terms and
conditions under which the due date of this Note may be accelerated. Upon the
occurrence and during the continuance of any Event of Default as specified in
the Credit Agreement, the principal balance hereof and the interest accrued
hereon may be declared to be forthwith due and payable in accordance with the
Credit Agreement.
All parties hereto, whether as makers, endorsees, or otherwise, severally
waive presentment for payment, demand, protest, notice of intent to accelerate,
notice of acceleration, notice of dishonor and all other notices whatsoever in
respect of this Note.
THIS NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE
OF NEW YORK AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
SONAT OFFSHORE DRILLING INC.,
A DELAWARE CORPORATION
By:____________________________
Name:__________________________
Title:_________________________
3
<PAGE>
LOANS AND PRINCIPAL PAYMENTS
----------------------------
<TABLE>
<C> <S> <C> <C> <C> <C>
Amount of Principal
Date Type of Loan Made Repaid Unpaid Principal Balance
Base Rate Eurodollar Rate Base Rate Eurodollar Rate Base Rate Eurodollar Rate Total Notation
Made By
</TABLE>
4
<PAGE>
EXHIBIT 2.12C
FORM OF REVOLVING NOTE (NORWEGIAN KRONER)
<PAGE>
EXHIBIT 2.12C
REVOLVING NOTE (NORWEGIAN KRONER)
Currency Loan
Commitment:
Norwegian Kroner
equivalent of U.S. $___________________ __________, 1996
FOR VALUE RECEIVED, the undersigned unconditionally promises to pay to the
order of _________________________ (the "Lender"), at the payment office of the
Agent (as hereinafter defined) located in New York City, New York, on or before
July 30, 2002, the aggregate unpaid principal amount of all Revolving Loans (as
such term is defined in the Credit Agreement hereinafter defined) made in
Norwegian Kroner by the Lender to the undersigned pursuant to the Credit
Agreement, as shown, at the Lender's option, either on the grid schedule
attached hereto (and any continuation thereof), or in the records of the Lender;
provided that the failure of the Lender to make any such recordation or
endorsement shall not affect the obligations of the undersigned hereunder.
Prior to any transfer hereof, all Revolving Loans made in Norwegian Kroner by
the Lender, the respective maturities thereof and all repayments of the
principal thereof shall be endorsed by the Lender on the grid schedule attached
hereto, or on a continuation of such schedule attached to and made a part
hereof; provided that the failure of the Bank to make any such recordation or
endorsement shall not affect the obligations of the undersigned.
The undersigned also promises to pay interest on the unpaid principal amount
hereof from time to time outstanding from the date hereof until maturity
(whether by acceleration or otherwise) and, after maturity, until paid, at the
rates per annum and on the dates specified in the Credit Agreement; provided,
however, that in no event shall such interest exceed the Highest Lawful Rate (as
hereinafter defined).
All payments of principal and interest hereunder shall be made in lawful
money of the Kingdom of Norway in freely transferable Norwegian Kroner.
"Highest Lawful Rate" shall mean the maximum nonusurious interest rate, if
any, that at any time or from time to time may be contracted for, taken,
reserved, charged or received on this Note under laws applicable to the payee
which are presently in effect or, to the extent allowed by applicable law, under
such laws which may hereafter be in effect and which allow a higher maximum
nonusurious interest rate than applicable laws now allow. Determination of the
rate of interest for the purpose of determining whether the Loans represented
hereby are usurious under all applicable laws shall be made by amortizing,
prorating, allocating, and spreading, in equal parts during the period of the
full stated term of the Loans represented hereby, all interest at any time
contracted for, charged, or received from the undersigned in connection with
such Loans.
<PAGE>
It is the intention of the payee to conform strictly to usury laws
applicable to it. Accordingly, if the transactions contemplated hereby or the
Loans represented hereby would be usurious as to the payee under laws applicable
to it (including the laws of the United States of America and the State of New
York or any other jurisdiction whose laws may be mandatorily applicable to such
payee notwithstanding the other provisions of this Note or the Credit
Agreement), then, in that event, notwithstanding anything to the contrary in
this Note, the Credit Agreement or any other instrument or agreement entered
into in connection with this Note, it is agreed as follows: (i) the aggregate
of all consideration which constitutes interest under laws applicable to the
payee that is contracted for, taken, reserved, charged or received by the
payee under this Note, the Credit Agreement, or under any of the aforesaid
agreements or instruments entered into in connection with this Note or otherwise
shall under no circumstances exceed the Highest Lawful Rate, and any excess
shall be credited by the payee on the principal amount of this Note (or, if the
principal amount of this Note shall have been paid in full, refunded by the
payee to the undersigned); and (ii) in the event that the maturity of this Note
is accelerated by reason of an election of the holder or holders hereof
resulting from any Event of Default under the Credit Agreement or otherwise, or
in the event of any required or permitted prepayment, then such consideration
that constitutes interest under laws applicable to the payee may never include
more than the Highest Lawful Rate, and excess interest, if any, provided for in
this Note, the Credit Agreement or otherwise shall be automatically canceled by
the payee as of the date of such acceleration or prepayment and, if theretofore
paid, shall be credited by the payee on the principal amount of this Note (or if
the principal amount of this Note shall have been paid in full, refunded by the
payee to the undersigned), and in each case, to the extent permitted by
applicable law, the payee shall not be subject to any of the penalties provided
by law for contracting for, taking, reserving, charging or receiving interest in
excess of the Highest Lawful Rate. To the extent that Article 5069-1.04 of the
Texas Revised Civil Statutes is relevant to payee for the purpose of determining
the Highest Lawful Rate, payee hereby elects to determine the applicable rate
ceiling under such Article by the indicated (weekly) rate ceiling from time to
time in effect, subject to payee's right subsequently to change such method in
accordance with applicable law. Chapter 15 of Article 5069 of the Texas Revised
Civil Statutes, which regulates certain revolving credit loan accounts and
revolving tri-party accounts, shall not apply to this Note.
This Note is one of the Revolving Notes referred to in and is entitled to
the benefits of that certain Secured Credit Agreement dated as of July 30, 1996
(as the same may be amended, modified, supplemented, extended, rearranged and/or
restated from time to time, the "Credit Agreement"), entered into by and among
the undersigned, certain financial institutions from time to time parties
thereto (the "Lenders"), ABN AMRO Bank N.V., Houston Agency, as Agent for the
Lenders, SunTrust Bank, Atlanta and Credit Lyonnais New York Branch, as
Documentation Agents for the Lenders, and Bank of Montreal, The Fuji Bank,
Limited, Royal Bank of Canada, and Wells Fargo Bank (Texas), National
Association, as Co-Agents for the Lenders, and secured by the Security Documents
(as such term is defined in the Credit Agreement). Reference is hereby made to
the Credit Agreement for a statement of the prepayment rights and obligations of
the undersigned, a description of the properties and assets mortgaged,
encumbered and assigned, the nature and extent of the security and the rights of
the parties to the Security
2
<PAGE>
Documents in respect of such security, and for a statement of the terms and
conditions under which the due date of this Note may be accelerated. Upon the
occurrence and during the continuance of any Event of Default as specified in
the Credit Agreement, the principal balance hereof and the interest accrued
hereon may be declared to be forthwith due and payable in accordance with the
Credit Agreement.
All parties hereto, whether as makers, endorsees, or otherwise, severally
waive presentment for payment, demand, protest, notice of intent to accelerate,
notice of acceleration, notice of dishonor and all other notices whatsoever in
respect of this Note.
THIS NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE
OF NEW YORK AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
SONAT OFFSHORE DRILLING INC.,
A DELAWARE CORPORATION
By:______________________________
Name:____________________________
Title:___________________________
3
<PAGE>
LOANS AND PRINCIPAL PAYMENTS
----------------------------
<TABLE>
<C> <S> <C> <C> <C> <C>
Amount of Principal
Date Type of Loan Made Repaid Unpaid Principal Balance
Base Rate Eurodollar Rate Base Rate Eurodollar Rate Base Rate Eurodollar Rate Total Notation
Made By
</TABLE>
4
<PAGE>
EXHIBIT 2.12D
FORM OF TERM NOTE
<PAGE>
EXHIBIT 2.12D
TERM NOTE
$________________ _________, 1996
FOR VALUE RECEIVED, the undersigned unconditionally promises to pay to the
order of __________________________ (the "Lender"), at the payment office of the
Agent (as hereinafter defined) located in New York City, New York, on or before
July 30, 2002, the principal sum of ___________________________________________
DOLLARS ($___________), or, if less, the aggregate unpaid principal amount of
the Term Loans (as defined in the Credit Agreement hereinafter defined) made by
the Lender to the undersigned pursuant to the Credit Agreement, as shown, at the
Lender's option, either on the grid schedule attached hereto (and any
continuation thereof), or in the records of the Lender; provided that the
failure of the Lender to make any such recordation or endorsement shall not
affect the obligations of the undersigned hereunder. Prior to any transfer
hereof, all Term Loans made by the Lender, the respective maturities thereof and
all repayments of the principal thereof shall be endorsed by the Lender on the
grid schedule attached hereto, or on a continuation of such schedule attached to
and made a part hereof; provided that the failure of the Bank to make any such
recordation or endorsement shall not affect the obligations of the undersigned.
The undersigned also promises to pay interest on the unpaid principal amount
hereof from time to time outstanding from the date hereof until maturity
(whether by acceleration or otherwise) and, after maturity, until paid, at the
rates per annum and on the dates specified in the Credit Agreement; provided,
however, that in no event shall such interest exceed the Highest Lawful Rate (as
hereinafter defined).
All payments of principal and interest hereunder shall be made in lawful
money of the United States of America in freely transferable United States
dollars.
"Highest Lawful Rate" shall mean the maximum nonusurious interest rate, if
any, that at any time or from time to time may be contracted for, taken,
reserved, charged or received on this Note under laws applicable to the payee
which are presently in effect or, to the extent allowed by applicable law, under
such laws which may hereafter be in effect and which allow a higher maximum
nonusurious interest rate than applicable laws now allow. Determination of the
rate of interest for the purpose of determining whether the Loans represented
hereby are usurious under all applicable laws shall be made by amortizing,
prorating, allocating, and spreading, in equal parts during the period of the
full stated term of the Loans represented
<PAGE>
hereby, all interest at any time contracted for, charged, or received from the
undersigned in connection with such Loans.
It is the intention of the payee to conform strictly to usury laws
applicable to it. Accordingly, if the transactions contemplated hereby or the
Loans represented hereby would be usurious as to the payee under laws applicable
to it (including the laws of the United States of America and the State of New
York or any other jurisdiction whose laws may be mandatorily applicable to such
payee notwithstanding the other provisions of this Note or the Credit
Agreement), then, in that event, notwithstanding anything to the contrary in
this Note, the Credit Agreement or any other instrument or agreement entered
into in connection with this Note, it is agreed as follows: (i) the aggregate
of all consideration which constitutes interest under laws applicable to the
payee that is contracted for, taken, reserved, charged or received by the
payee under this Note, the Credit Agreement, or under any of the aforesaid
agreements or instruments entered into in connection with this Note or otherwise
shall under no circumstances exceed the Highest Lawful Rate, and any excess
shall be credited by the payee on the principal amount of this Note (or, if the
principal amount of this Note shall have been paid in full, refunded by the
payee to the undersigned); and (ii) in the event that the maturity of this Note
is accelerated by reason of an election of the holder or holders hereof
resulting from any Event of Default under the Credit Agreement or otherwise, or
in the event of any required or permitted prepayment, then such consideration
that constitutes interest under laws applicable to the payee may never include
more than the Highest Lawful Rate, and excess interest, if any, provided for in
this Note, the Credit Agreement or otherwise shall be automatically canceled by
the payee as of the date of such acceleration or prepayment and, if theretofore
paid, shall be credited by the payee on the principal amount of this Note (or if
the principal amount of this Note shall have been paid in full, refunded by the
payee to the undersigned), and in each case, to the extent permitted by
applicable law, the payee shall not be subject to any of the penalties provided
by law for contracting for, taking, reserving, charging or receiving interest in
excess of the Highest Lawful Rate. To the extent that Article 5069-1.04 of the
Texas Revised Civil Statutes is relevant to payee for the purpose of determining
the Highest Lawful Rate, payee hereby elects to determine the applicable rate
ceiling under such Article by the indicated (weekly) rate ceiling from time to
time in effect, subject to payee's right subsequently to change such method in
accordance with applicable law. Chapter 15 of Article 5069 of the Texas Revised
Civil Statutes, which regulates certain revolving credit loan accounts and
revolving tri-party accounts, shall not apply to this Note.
This Note is one of the Term Notes referred to in and is entitled to the
benefits of that certain Secured Credit Agreement dated as of July 30, 1996 (as
the same may be amended, modified, supplemented, extended, rearranged and/or
restated from time to time, the "Credit Agreement"), entered into by and among
the undersigned, certain financial institutions from time to time parties
thereto (the "Lenders"), ABN AMRO Bank N.V., Houston Agency, as Agent for the
Lenders, SunTrust Bank, Atlanta and Credit Lyonnais New York Branch, as
Documentation Agents for the Lenders, and Bank of Montreal, The Fuji Bank,
Limited, Royal Bank of Canada, and Wells Fargo Bank (Texas), National
Association, as Co-Agents for the Lenders, and secured by the Security Documents
(as such term is defined in the Credit Agreement). Reference is
2
<PAGE>
hereby made to the Credit Agreement for a statement of the prepayment rights and
obligations of the undersigned, a description of the properties and assets
mortgaged, encumbered and assigned, the nature and extent of the security and
the rights of the parties to the Security Documents in respect of such security,
and for a statement of the terms and conditions under which the due date of this
Note may be accelerated. Upon the occurrence and during the continuance of any
Event of Default as specified in the Credit Agreement, the principal balance
hereof and the interest accrued hereon may be declared to be forthwith due and
payable in accordance with the Credit Agreement.
All parties hereto, whether as makers, endorsees, or otherwise, severally
waive presentment for payment, demand, protest, notice of intent to accelerate,
notice of acceleration, notice of dishonor and all other notices whatsoever in
respect of this Note.
THIS NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE
OF NEW YORK AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
SONAT OFFSHORE DRILLING INC.,
A DELAWARE CORPORATION
By:_______________________________
Name:_____________________________
Title:____________________________
3
<PAGE>
LOANS AND PRINCIPAL PAYMENTS
----------------------------
<TABLE>
<C> <S> <C> <C> <C> <C>
Amount of Principal
Date Type of Loan Made Repaid Unpaid Principal Balance
Base Rate Eurodollar Rate Base Rate Eurodollar Rate Base Rate Eurodollar Rate Total Notation
Made By
</TABLE>
4
<PAGE>
EXHIBIT 4.1A
FORM OF STOCK PLEDGE AGREEMENT
<PAGE>
EXHIBIT 4.1A
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (this "AGREEMENT") dated as of _________,
1996, is made between SONAT OFFSHORE DRILLING INC., a Delaware corporation
("PLEDGOR"), having its principal place of business at 4 Greenway Plaza,
Houston, Texas 77046, and ABN AMRO BANK N.V., a Netherlands chartered bank ("ABN
AMRO"), acting through its Houston Agency, as collateral agent for the Lenders
referred to in Secured Credit Agreement (as hereinafter defined), for the Swap
Parties [and for the Noteholders] (the "SECURED PARTY").
RECITALS:
A. Pledgor, the various financial institutions (collectively, the
"LENDERS") as are or may from time to time become parties thereto, ABN AMRO,
acting through its Houston Agency, as Agent for the Lenders, SunTrust Bank,
Atlanta and Credit Lyonnais New York Branch, as Documentation Agents for the
Lenders, and Bank of Montreal, The Fuji Bank, Limited, Royal Bank of Canada, and
Wells Fargo Bank (Texas), National Association, as Co-Agents for the Lenders,
have entered into that certain Secured Credit Agreement dated as of July 30,
1996 (herein, as the same may be amended, modified, supplemented, extended,
rearranged, and/or restated from time to time, called the "SECURED CREDIT
AGREEMENT"), pursuant to which, upon the terms and conditions therein set forth,
the Lenders have agreed to (a) make loans to Pledgor, which loans are evidenced
by promissory notes of Pledgor (herein, as amended, extended, modified,
rearranged and/or supplemented, from time to time together with any promissory
notes given by Pledgor in extension, replacement, rearrangement, modification
and/or substitution thereof or therefor, collectively called the "NOTES"), each
dated the Initial Borrowing Date under the Secured Credit Agreement, in the
original aggregate principal amount of $600,000,000 payable the order of the
Lenders respectively, and (b) issue and participate in Letters of Credit (as
defined in the Secured Credit Agreement) for the account of Pledgor.
Capitalized terms used herein without definition shall have the meanings
assigned in the Secured Credit Agreement.
B. Pledgor may from time to time enter into Interest Rate Protection
Agreements (as defined in the Secured Credit Agreement) with certain of the
Lenders or their affiliates.
[C. Pledgor has outstanding certain 6.90% Senior Notes Due February 15,
2004 (herein, as heretofore or hereafter amended, extended, modified, rearranged
and/or supplemented from time to time, together with any promissory notes given
by Pledgor in
<PAGE>
extension, replacement, rearrangement, modification and/or substitution thereof
or therefor, collectively called the "NOTEHOLDER NOTES") issued pursuant to
several Note Purchase Agreements dated as of February 15, 1994 (as heretofore or
hereafter amended, modified, supplemented, extended, rearranged and/or restated
from time to time, may be referred to herein collectively as the "NOTE PURCHASE
AGREEMENTS"). The holders of the Noteholder Notes have agreed to certain
modifications to the terms of the Note Purchase Agreements requested by Pledgor
in order to, inter alia, permit Pledgor to incur indebtedness under the Secured
Credit Agreement and grant the liens contemplated thereby, but as a condition
precedent to the effectiveness thereof, the Pledgor is required to execute and
deliver this Agreement.]/1/
D. Upon the Initial Borrowing Date, Pledgor intends to secure the
Noteholder Notes equally and ratably with the Indebtedness of Pledgor under the
Secured Credit Agreement and under the Credit Documents.
E. Under the terms of the Secured Credit Agreement, Pledgor is required
by the Lenders to provide certain security in respect of the liabilities of
Pledgor under the Secured Credit Agreement.
F. Under the terms of the Secured Credit Agreement, the Secured Party
requires that this Agreement be entered into by Pledgor.
G. The Lenders, the Swap Parties (as hereinafter defined) [and the
holders from time to time of the Noteholder Notes (the "NOTEHOLDERS")] by
acceptance of the benefits hereof are deemed to have appointed ABN AMRO as their
agent hereunder for the purposes of administering this Agreement and holding and
disposing of the Collateral (as hereinafter defined) and to have agreed to be
bound by all of the terms and provisions of this Agreement.
NOW THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
SECURITY INTEREST AND PLEDGE
1.01. Security Interest and Pledge. Subject to the terms of this
Agreement, Pledgor hereby pledges and grants to Secured Party for the benefit of
the Lenders, the Swap Parties [and the Noteholders] a first priority security
interest in the following property (such property being hereinafter called the
"COLLATERAL"):
- -----------
/1/The bracketed language in this form will be inserted if any of the Noteholder
Notes is to be outstanding after the Initial Borrowing Date.
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(a) the shares of capital stock of each company set forth in Exhibit A hereto
evidenced by the stock certificates identified therein, and any other
shares of capital stock in each such company hereafter pledged to Secured
Party pursuant to Section 3.09(b);
(b) the shares of capital stock of any other company that may be identified in
a supplement to this Agreement executed and delivered by Pledgor pursuant
to Section 6.12 of the Secured Credit Agreement; and
(c) subject to Section 4.03 hereof, all products and proceeds of the foregoing
capital stock, including, without limitation, all distributions, dividends,
stock dividends, securities, and other property, rights, and interests that
Pledgor is at any time entitled to receive on account of the same;
provided, however, that in no event shall Secured Party's security interest
encumber capital stock of the companies set forth in Exhibit A or in any
supplement to this Agreement, or any "controlled foreign corporation"
(within the meaning of the Code), representing more than sixty-five percent
(65%) of the aggregate Voting Stock (as hereinafter defined) of any such
entity (all of the foregoing described in this clause (c), other than any
portion thereof required to continue to be pledged pursuant to Section
3.09(b), the "COLLATERAL PROCEEDS").
1.02. Obligations. The Collateral shall equally and ratably secure the
following obligations, indebtedness, and liabilities (all such obligations,
indebtedness, and liabilities being hereinafter sometimes called the
"OBLIGATIONS"):
(a) The payment of the indebtedness evidenced by the Notes;
(b) All Reimbursement Obligations of the Pledgor to reimburse the Lenders for
each drawing under a Letter of Credit;
(c) All future advances by the Lenders pursuant to the Secured Credit Agreement
to Pledgor;
(d) The performance and payment of the obligations of Pledgor or any other
Credit Party under any of the Credit Documents, including, without
limitation, the Obligations (as defined in the Secured Credit Agreement),
and the payment and performance of Pledgor's obligations hereunder;
(e) All amounts payable by Pledgor or any Subsidiary under any Interest Rate
Protection Agreement now or hereafter entered into by Pledgor or any
Subsidiary with any counterparty who, at the time such Interest Rate
Protection Agreement is entered into, is then a Lender or an affiliate of a
Lender that is a party to the Intercreditor Agreement (any such
counterparty, a "SWAP PARTY");
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[(f) The payment of the indebtedness evidenced by the Noteholder Notes and the
performance and payment of the obligations of Pledgor under the Note
Purchase Agreements and the Notes, including, without limitation, any Make-
Whole Amount (as defined in the Note Purchase Agreements) that may
hereafter become due and payable thereunder]; and
(g) All extensions, renewals, rearrangements and modifications of any of the
foregoing agreed to by Pledgor.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Pledgor represents and warrants to Secured Party for the benefit of the
Lenders, the Swap Parties [and the Noteholders] that:
2.01. Title. Pledgor owns or, with respect to Collateral acquired after
the date hereof, Pledgor will own, legally and beneficially, the Collateral free
and clear of any lien, security interest, pledge, claim, or other encumbrance or
any right or option on the part of any third person to purchase or otherwise
acquire the Collateral or any part thereof, except as permitted under the
Secured Credit Agreement and except for the security interest granted hereunder
and except for Permitted Liens. Pledgor has the unrestricted right to pledge
the Collateral as contemplated hereby. All of the Collateral consisting of
shares of capital stock has been duly and validly issued and is fully paid and
nonassessable, except as disclosed in the Secured Credit Agreement.
2.02. Organization and Authority. Pledgor is a company duly organized and
validly existing under the laws of the state of its incorporation and is in good
standing under the laws of such jurisdiction and each other jurisdiction in
which its properties or operations so require and in which the failure to be in
good standing would have a Material Adverse Effect. Pledgor has the corporate
power and authority to execute, deliver, and perform this Agreement, and the
execution, delivery, and performance of this Agreement by Pledgor have been duly
authorized by all necessary corporate action on the part of Pledgor. Neither the
execution, delivery or performance by the Pledgor of this Agreement nor
compliance by it with the terms and provisions hereof, nor the consummation of
the transactions contemplated herein, will (i) contravene in any material
respect any applicable provision of any law, statute, rule or regulation, or any
order, writ, injunction or decree of any court or governmental instrumentality,
(ii) conflict with or result in any breach of any term, covenant, condition or
other provision of, or constitute a default under, or (other than pursuant to
the Security Documents) result in the creation or imposition of (or the
obligation to create or impose) any Lien other than any Permitted Lien upon any
of the property or assets of Pledgor under, the terms of any contractual
obligation to which Pledgor is a party or by which it or any of its properties
or assets is bound or to which they may be subject or (iii) violate or conflict
with any provision of the corporate governance documents of Pledgor.
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2.03. Principal Place of Business. As of the date hereof, the principal
place of business and chief executive office of Pledgor, and the office where
Pledgor keeps its books and records, is located at 4 Greenway Plaza, Houston,
Texas 77046.
2.04. Percentage of Stock. The Collateral constitutes not less than the
percent of the issued and outstanding shares of common capital stock of each
company listed in Exhibit A or in any supplement to this Agreement.
2.05. First Priority Perfected Security Interest. This Agreement creates
in favor of Secured Party, for the benefit of the Lenders, the Swap Parties [and
the Noteholders], a first priority (subject only to Permitted Liens) security
interest in the Collateral currently in existence, which will be perfected upon
delivery of the certificates evidencing the Collateral together with undated
stock powers endorsed in blank, or such other agreements, as may be required
under applicable law to perfect the pledge.
ARTICLE III
COVENANTS
Pledgor covenants and agrees with Secured Party, for the benefit of the
Lenders, the Swap Parties [and the Noteholders], that until the Collateral
Termination Date (as hereinafter defined), subject to Sections 6.12(a) and 6.13:
3.01. Encumbrances. Except as permitted by the Secured Credit Agreement,
Pledgor shall not create, permit, or suffer to exist, and shall defend the
Collateral against, any Lien on the Collateral except the pledge and security
interest of Secured Party hereunder and except for Permitted Liens, and shall
defend Pledgor's rights in the Collateral and Secured Party's security interest
in the Collateral against the claims of all persons and entities (other than any
person or entity claiming by, through or under Secured Party or any obligee of
the Obligations).
3.02. Sale of Collateral. Pledgor shall not sell, assign, or otherwise
dispose of the Collateral or any part thereof except as permitted by the Secured
Credit Agreement.
3.03. Distributions. If Pledgor shall become entitled to receive or shall
receive any stock certificate (including, without limitation, any certificate
representing a stock dividend or a distribution in connection with any
reclassification, increase, or reduction of capital or issued in connection with
any reorganization), option or rights constituting Collateral, whether as an
addition to, in substitution of, or in exchange for any Collateral or otherwise,
Pledgor agrees to accept the same as Secured Party's agent and to hold the same
in trust for Secured Party, for the benefit of the Lenders, the Swap Parties
[and the Noteholders], and to deliver the same (to the extent in form capable of
delivery) promptly to Secured Party in the exact form received, with the
appropriate endorsement of Pledgor when necessary and/or appropriate undated
stock powers duly executed in blank, to be held by Secured Party, for the
benefit of the Lenders, the
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Swap Parties [and the Noteholders], as additional Collateral for the
Obligations, subject to the terms hereof. Any sums paid upon or in respect of
the Collateral upon the liquidation or dissolution of the issuer thereof in
violation of the Secured Credit Agreement shall be paid over to Secured Party to
be held by it, for the benefit of the Lenders, the Swap Parties [and the
Noteholders], as additional Collateral for the Obligations subject to the terms
hereof except as otherwise provided in the Secured Credit Agreement; and in case
any distribution of capital shall be made on or in respect of the Collateral
while a Default or an Event of Default shall be continuing or any property shall
be distributed while a Default or an Event of Default shall be continuing upon
or with respect to the Collateral pursuant to any recapitalization or
reclassification of the capital of the issuer thereof or pursuant to any
reorganization of the issuer thereof, the property so distributed shall be
delivered to the Secured Party to be held by it, as additional Collateral for
the Obligations, subject to the terms hereof. All sums of money and property so
paid or distributed in respect of the Collateral that are received by Pledgor
shall, until paid or delivered to Secured Party, be held by Pledgor in trust as
additional security for the Obligations, provided that except to the extent that
such sums of money or property have theretofore been applied against the
Obligations in accordance herewith, with the Secured Credit Agreement [and with
the Intercreditor Agreement as hereinafter defined], such sums of money or
property shall forthwith be delivered to Pledgor at such time as no Default or
Event of Default shall be continuing under the Secured Credit Agreement.
3.04. Further Assurances. Pledgor has delivered the certificates referred
to in Section 1.01 (a) and (b) to Secured Party to the extent such shares of
capital stock are certificated, with an undated stock power duly executed in
blank or such other agreements as may be required under applicable law to
perfect the pledge herein, to be held by Secured Party for the benefit of the
Lenders, the Swap Parties [and the Noteholders] as Collateral for the
Obligations, subject to the terms hereof. At any time and from time to time,
upon the request of Secured Party, and at the sole expense of Pledgor, Pledgor
shall promptly execute and deliver all such further instruments and documents
and take such further action as Secured Party may deem reasonably necessary or
desirable to preserve and perfect its security interest in the Collateral and
carry out the provisions and purposes of this Agreement, including, without
limitation, the execution and filing of such financing statements as Secured
Party may require. A carbon, photographic, or other reproduction of this
Agreement or of any financing statement covering the Collateral or any part
thereof shall be sufficient as a financing statement and may be filed as a
financing statement to the extent provided by applicable law.
3.05. Inspection Rights. Upon reasonable notice from Secured Party,
Pledgor shall permit Secured Party and its representatives to examine, inspect,
and copy Pledgor's books and records concerning ownership of the Collateral at
any reasonable time during normal business hours and as often as Secured Party
may desire.
3.06. Notification. Pledgor shall promptly after an officer of the
Borrower has knowledge thereof, notify Secured Party of (i) any lien, security
interest, encumbrance, or claim made or threatened against the Collateral other
than Permitted Liens, and (ii) the occurrence or existence of any Default or
Event of Default.
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3.07. Books and Records. Pledgor shall mark its books and records to
reflect the security interest of Secured Party under this Agreement.
3.08. Additional Securities. Pledgor shall not consent to or approve the
issuance of any additional shares of any class of capital stock of any of the
companies set forth in Exhibit A or any supplement hereto, or any securities
convertible into, or exchangeable for, any such shares or any warrants, options,
rights, or other commitments entitling any person or entity to purchase or
otherwise acquire any such shares, except in, or in connection with,
transactions permitted under the Secured Credit Agreement, or as required to
comply with the laws of its jurisdiction of organization (in which case it shall
give to Secured Party written notice of such issuance thereof).
3.09. Pledge of Shares of Controlled Foreign Corporation.
(a) In the event that the Collateral hereunder would, but for this Section
3.09(a), represent more than sixty-five percent (65%) of the combined
voting power of all classes of stock entitled to vote (the "VOTING STOCK")
of an issuer, then a number of shares of Voting Stock of such company in
excess of such sixty-five percent (65%) automatically shall be released
from the lien of, and the terms and provisions of, this Agreement.
(b) In the event that the Collateral hereunder represents less than sixty-five
percent (65%) of the Voting Stock of any company set forth on Exhibit A or
any supplement hereto (or, if less, 100% of the Voting Stock of such
company owned by Pledgor), then Pledgor will promptly pledge additional
capital stock to increase the number of shares pledged hereunder to such
sixty-five percent (65%) (or, if less, 100% of the Voting Stock of such
company owned by Pledgor).
ARTICLE IV
RIGHTS OF SECURED PARTY AND PLEDGOR
4.01. Power of Attorney. Pledgor hereby irrevocably constitutes and
appoints Secured Party and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead and in the name of Pledgor or in its
own name, from time to time in Secured Party's discretion during the continuance
of an Event of Default and prior to the Collateral Termination Date, to take any
and all action and to execute any and all documents and instruments which may be
necessary or desirable to accomplish the purposes of this Agreement and, without
limiting the generality of the foregoing, hereby gives Secured Party the power
and right on behalf of Pledgor and in its own name to do any of the following
after the occurrence and during the continuance of or Event of Default and to
the extent permitted by applicable laws, without notice to or the consent of
Pledgor:
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(a) to demand, sue for, collect, or receive in the name of Pledgor or in its
own name, any money or property at any time payable or receivable on
account of or in exchange for any of the Collateral and, in connection
therewith, endorse checks, notes, drafts, acceptances, money orders, or any
other instruments for the payment of money under the Collateral;
(b) to pay or discharge taxes, liens, security interests, or other encumbrances
(other than Permitted Liens) levied or placed on or threatened against the
Collateral;
(c) (i) to direct account debtors and any other parties liable for any payment
under any of the Collateral to make payment of any and all monies due and
to become due thereunder directly to Secured Party or as Secured Party
shall direct; (ii) to receive payment of and receipt for any and all
monies, claims, and other amounts due and to become due at any time in
respect of or arising out of any Collateral; (iii) to sign and endorse any
drafts, assignments, proxies, stock powers, verifications, notices, and
other documents relating to the Collateral; (iv) to commence and prosecute
any suit, actions or proceedings at law or in equity in any court of
competent jurisdiction to collect the Collateral or any part thereof and to
enforce any other right in respect of any Collateral; (v) to defend any
suit, action, or proceeding brought against Pledgor with respect to any
Collateral; (vi) to settle, compromise, or adjust any suit, action, or
proceeding described in clause (v) above and, in connection therewith, to
give such discharges or releases as Secured Party may deem appropriate;
(vii) to exchange any of the Collateral for other property upon any merger,
consolidation, reorganization, recapitalization, or other readjustment of
the issuer thereof and, in connection therewith, deposit any of the
Collateral with any committee, depositary, transfer agent, registrar, or
other designated agency upon such terms as Secured Party may determine;
(viii) to add or release any guarantor, endorser, surety, or other party to
any of the Collateral or the Obligations; and (ix) to sell, transfer,
pledge, make any agreement with respect to or otherwise deal with any of
the Collateral as fully and completely as though Secured Party were the
absolute owner thereof for all purposes, and to do, at Secured Party's
option and Pledgor's expense, at any time, or from time to time, all acts
and things which Secured Party deems necessary to protect, preserve, or
realize upon the Collateral and Secured Party's security interest therein
for the benefit of the Lenders, the Swap Parties [and the Noteholders].
This power of attorney is a power coupled with an interest and shall be
irrevocable. Secured Party shall be under no duty to exercise or withhold the
exercise of any of the rights, powers, privileges, and options expressly or
implicitly granted to Secured Party in this Agreement, and shall not be liable
for any failure to do so or any delay in doing so. Secured Party shall not be
liable for any act or omission or for any error of judgment or any mistake of
fact or law in its individual capacity or in its capacity as attorney-in-fact
except acts or omissions constituting or resulting from its willful misconduct
or gross negligence. This power of attorney
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is conferred on Secured Party solely to protect, preserve, and realize upon its
security interest in the Collateral.
4.02. Voting Rights. Until written notice shall be given to Pledgor in
accordance with Section 5.02(d) that Secured Party has exercised its rights
under Section 5.02(d) to vote the Collateral (provided, however, if Secured
Party is prevented from providing such notice as a result of Section 362 of the
United States Bankruptcy Code or similar law Pledgor shall be entitled to
exercise such rights so long as no Event of Default shall have occurred and be
continuing), Pledgor shall be entitled to exercise any and all voting and other
rights relating or pertaining to the Collateral or any part thereof (and the
Secured Party shall execute and deliver (or cause to be executed and delivered)
to Pledgor all such proxies and other instruments as Pledgor may reasonably
request for the purpose of enabling Pledgor to exercise the voting and other
rights which it is entitled to exercise pursuant to this sentence).
4.03. Dividends. Until written notice shall be given to Pledgor in
accordance with Section 5.02(d) that Secured Party has exercised its rights
under Section 5.02(d) to vote the Collateral, Pledgor shall be entitled to
receive and collect for its own use all Collateral Proceeds free of the Lien of
this Agreement. Any Collateral Proceeds collected or received by or paid over to
Pledgor pursuant to this Section 4.03 shall thereupon automatically cease to
constitute Collateral and, without limitation of the foregoing, Secured Party
will, at Pledgor's request and expense, execute and deliver to Pledgor a proper
instrument or instruments acknowledging the release of the Lien of this
Agreement in respect of all Collateral Proceeds; provided however, if Secured
Party is prevented from providing such notice as a result of Section 362 of the
United States Bankruptcy Code or similar law, Secured Party shall be entitled to
collect such Collateral Proceeds pursuant to the terms hereof.
4.04. Performance by Secured Party of Pledgor's Obligations. If an Event
of Default has occurred and is continuing or if Pledgor fails to perform or
comply with any of its agreements contained herein and Secured Party itself
shall cause performance of or compliance with such agreement, the reasonable
expenses of Secured Party, together with interest thereon at the rate of
interest provided in the Secured Credit Agreement, shall be payable by Pledgor
to Secured Party on demand and shall constitute Obligations secured by this
Agreement.
4.05. Secured Party's Duty of Care. Other than the exercise of reasonable
care in the physical custody of the Collateral while held by Secured Party
hereunder, Secured Party shall have no responsibility for or obligation or duty
with respect to all or any part of the Collateral or any matter or proceeding
arising out of or relating thereto, including, without limitation, any
obligation or duty to collect any sums due in respect thereof or to protect or
preserve any rights against prior parties or any other rights pertaining
thereto, it being understood and agreed that Pledgor shall be responsible for
preservation of all rights in the Collateral. Without limiting the generality
of the foregoing, Secured Party shall be conclusively deemed to have exercised
reasonable care in the custody of the Collateral if Secured Party takes such
action, for purposes of preserving rights in the Collateral, as Pledgor may
reasonably request in writing, but no failure or omission or delay by Secured
Party in complying with any such request by Pledgor,
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and no refusal by Secured Party to comply with any such request by Pledgor,
shall of itself be deemed to be a failure to exercise reasonable care.
4.06. Assignment by Secured Party. Secured Party may from time to time
assign the Collateral to any successor as Agent under the Secured Credit
Agreement, and the assignee shall be entitled to all of the rights and remedies
of Secured Party under this Agreement in relation thereto.
ARTICLE V
DEFAULT
5.01. Events of Default. Each of the following shall be deemed an "EVENT
OF DEFAULT":
(a) The failure of the Collateral pledged to Secured Party hereunder to
constitute at least the percent of the issued and outstanding Voting Stock
of such company set forth in Exhibit A or any supplement hereto as is
reflected in such Exhibit or such supplement with respect thereto except as
permitted by the Secured Credit Agreement or as permitted herein, unless
Pledgor is in compliance with Section 3.09(b);
(b) An Event of Default as defined in the Secured Credit Agreement shall have
occurred;
(c) Failure by Pledgor to perform any agreement contained herein and
continuance of such non-compliance or failure for thirty (30) days after
notice thereof to Pledgor from the Agent; or
(d) Any representation, statement or warranty of Pledgor contained herein shall
be untrue in any material respect as of the date made.
5.02. Rights and Remedies. Prior to the Collateral Termination Date, upon
the occurrence of an Event of Default and so long as the same shall be
continuing [and subject to the terms of the Intercreditor Agreement], Secured
Party shall have the following rights and remedies to the extent not prohibited
by applicable laws:
(a) In addition to all other rights and remedies granted to Secured Party in
this Agreement and in any other instrument or agreement securing,
evidencing, or relating to the Obligations, Secured Party shall have all of
the rights and remedies of a secured party under the Uniform Commercial
Code as adopted by the State of New York. Without limiting the generality
of the foregoing, Secured Party may (A) without demand or notice to
Pledgor, collect, receive, or take possession of the Collateral or any part
thereof, (B) sell or otherwise dispose of the Collateral, or any part
thereof, in one or more parcels at public or private sale
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or sales, at Secured Party's offices or elsewhere, for cash, on credit, or
for future delivery without assumption of any credit risk, and/or (C) bid
and become a purchaser at any such sale free of any right or equity of
redemption in Pledgor, which right or equity is hereby expressly waived and
released by Pledgor to the extent permitted by applicable law. Upon the
request of Secured Party, Pledgor shall assemble the Collateral and make it
available to Secured Party at any place designated by Secured Party that is
reasonably convenient to Pledgor and Secured Party. Pledgor agrees, to the
fullest extent that it may effectively do so under applicable laws, that
Secured Party shall not be obligated to give more than ten (10) days' prior
written notice of the time and place of any public sale or of the time
after which any private sale may take place and that such notice shall
constitute reasonable notice of such matters. Pledgor shall be liable for
all reasonable expenses of retaking, holding, preparing for sale, or the
like, and all reasonable attorneys' fees and other reasonable expenses
incurred by Secured Party in connection with the collection of the
Obligations and the enforcement of Secured Party's rights under this
Agreement, in each case during the continuance of an Event of Default, all
of which expenses and fees shall constitute additional Obligations secured
by this Agreement. Secured Party may apply the Collateral against the
Obligations then due and payable in such order and manner as provided in
Section 6.15. Pledgor shall remain liable for any deficiency if the
proceeds of any sale or disposition of the Collateral are insufficient to
pay the Obligations. Pledgor waives all rights of marshalling in respect of
the Collateral.
(b) Secured Party may cause any or all of the Collateral held by it to be
transferred into the name of Secured Party or the name or names of Secured
Party's nominee or nominees (in each case as pledgee hereunder).
(c) Secured Party shall be entitled to receive all cash dividends payable in
respect of the Collateral to the extent not prohibited by applicable laws.
(d) Secured Party shall have the right, but shall not be obligated to, exercise
or cause to be exercised all voting rights and corporate powers in respect
of the Collateral, and Pledgor shall deliver to Secured Party, if requested
by Secured Party, irrevocable proxies with respect to the Collateral in
form satisfactory to Secured Party.
Because of applicable securities laws, including without limitation, the
Securities Act of 1933, as amended, the securities laws of New York and other
applicable state or foreign securities laws, there may be legal restrictions or
limitations affecting attempts of Secured Party to dispose of the Collateral in
the enforcement of its rights and remedies hereunder. Secured Party is hereby
authorized by Pledgor, but not obligated, upon the occurrence and during the
continuance of an Event of Default, to the extent permitted by applicable law,
to sell all or any part of the Collateral at private sale, subject to investment
letters or in any other manner which will not require the Collateral or any part
thereof, to be registered in accordance with the Securities Act
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of 1933, as amended, or the rules and regulations promulgated thereunder, or any
other applicable securities law or regulation. Pledgor specifically agrees that
under these circumstances, such a sale is a commercially reasonable method of
disposition of the Collateral. Secured Party is also hereby authorized by
Pledgor, but not obligated, to take such actions, give such notices, obtain such
rulings and consents, and do such other things as Secured Party may deem
appropriate in the event of such a sale or disposition of any of the Collateral.
Pledgor acknowledges that Secured Party may, in its reasonable discretion,
approach a restricted number of potential purchasers and that a sale under such
circumstances may yield a lower price for the Collateral or any part or parts
thereof than would otherwise be obtainable if the same were registered and sold
in the open market. Pledgor agrees that such private sale shall constitute a
commercially reasonable method of disposing of the Collateral in view of the
time, expense, and potential liability to the parties of such transactions of
registration of the Collateral in accordance with applicable securities laws.
ARTICLE VI
MISCELLANEOUS
6.01. No Waiver; Cumulative Remedies. No failure on the part of Secured
Party to exercise and no delay in exercising, and no course of dealing with
respect to, any right, power, or privilege under this Agreement shall operate as
a waiver thereof, nor shall any single or partial exercise of any right, power,
or privilege under this Agreement preclude any other or further exercise thereof
or the exercise of any other right, power, or privilege. To the fullest extent
permitted by applicable laws, the rights and remedies provided for in this
Agreement are cumulative and not exclusive of any rights and remedies provided
by law.
6.02. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of Pledgor and Secured Party and their respective heirs,
successors, and assigns, except that Pledgor may not assign any of its rights or
obligations under this Agreement without the prior written consent of the
Lenders except to the extent permitted by the Secured Credit Agreement, and
Secured Party may not assign any of its rights or obligations under this
Agreement without the prior written consent of Pledgor, except to the extent
permitted by Section 4.06.
6.03. Amendment; Entire Agreement. This Agreement, together with any
applicable pledge or other agreement required by applicable laws, embodies the
final, entire agreement among the parties hereto and supersedes any and all
prior commitments, agreements, representations, and understandings, whether
written or oral, relating to the subject matter hereof. The provisions of this
Agreement may be amended or waived only by an instrument in writing signed by
the parties hereto with the requisite consent of the Lenders as provided in the
Secured Credit Agreement.
6.04. Notices. Any notice, consent, or other communication required or
permitted to be given under this Agreement to Secured Party or Pledgor must be
in writing and delivered in
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person or by facsimile or by registered or certified mail, return receipt
requested, postage prepaid, as follows:
To Secured Party: ABN AMRO Bank N.V., Houston Agency, as Agent
Attn: Ms. Cheryl Lipshutz, Group Vice President and Director
Three Riverway, Suite 1700
Houston, Texas 77056
Facsimile: (713) 629-7533
To Pledgor: As specified in or pursuant to the Secured Credit
Agreement
Any such notice, consent, or other communication shall be deemed given when
delivered in person or, if given by mail, five (5) days after such communication
is deposited in the mail, certified or registered with return receipt requested.
6.05. Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.
This Agreement, and the rights and duties of the parties hereto, shall be
construed in accordance with and governed by the internal laws of the State of
New York; provided, however that any enforcement of Secured Party's rights and
remedies in any other jurisdiction shall, to the extent required by applicable
laws, be governed by the laws of the jurisdiction of enforcement. Each party
hereto hereby submits to the nonexclusive jurisdiction of the United States
District Court for the Southern District of New York and of any New York State
court sitting in New York City for purposes of all legal proceedings arising out
of or relating to this Agreement or the transactions contemplated hereby. Each
party hereto irrevocably waives, to the fullest extent permitted by law, any
objection it may now or hereafter have to the laying of the venue of any such
proceeding brought in such a court and any claim that any such proceeding
brought in such a court has been brought in an inconvenient forum. EACH PARTY
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
OR THE TRANSACTIONS CONTEMPLATED HEREBY.
6.06. Headings. The headings, captions, and arrangements used in this
Agreement are for convenience only and shall not affect the interpretation of
this Agreement.
6.07. Survival of Representations and Warranties. All representations and
warranties made in this Agreement or in any certificate delivered pursuant
hereto shall survive the execution and delivery of this Agreement, and no
investigation by Secured Party, the Lenders, the Swap Parties [or the
Noteholders] shall affect the representations and warranties or the right of
Secured Party, the Lenders, the Swap Parties [and the Noteholders] to rely upon
them.
6.08. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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<PAGE>
6.09. Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Agreement, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
6.10. Construction. Pledgor and Secured Party acknowledge that each of
them has had the benefit of legal counsel of its own choice and has been
afforded an opportunity to review this Agreement with its legal counsel and that
this Agreement shall be construed as if jointly drafted by Pledgor and Secured
Party.
6.11. Obligations Absolute. The obligations of Pledgor under this
Agreement shall be absolute and unconditional and shall not be released,
discharged, reduced, or in any way impaired by any circumstance whatsoever,
including, without limitation, any amendment, modification, extension, or
renewal of this Agreement, the Obligations, or any document or instrument
evidencing, securing, or otherwise relating to the Obligations, or any release,
subordination, or impairment of collateral, or any waiver, consent, extension,
indulgence, compromise, settlement, or other action or inaction in respect of
this Agreement, the Obligations, or any document or instrument evidencing,
securing, or otherwise relating to the Obligations, or any exercise or failure
to exercise any right, remedy, power, or privilege in respect of the
Obligations. Nothing in this Section 6.11 affects or qualifies the express
terms hereof or in the Secured Credit Agreement.
6.12. Termination; Release. (a) Secured Party specifically acknowledges
that Pledgor may sell, assign, transfer or otherwise dispose of any Collateral
so long as such action is not in violation of any of the terms of the Secured
Credit Agreement. In connection with any such non-violating sale, assignment,
transfer or other disposition of any Collateral, Secured Party, at the request
and expense of Pledgor, will execute and deliver a proper instrument or
instruments acknowledging the termination of the Liens created hereby with
respect to the Collateral that is the subject of such sale, assignment, transfer
or other disposition and, if such Collateral is in the possession of Secured
Party, will (without recourse and without any representation or warranty (except
that such Collateral shall be free and clear of all Liens in favor of Secured
Party or created by Secured Party)) forthwith duly assign, transfer and deliver
such Collateral to Pledgor or such other Person as Pledgor may direct in
writing; provided, however, that Secured Party's obligations under this Section
6.12(a) shall be subject to no Default or Event of Default having occurred and
being continuing at the time that Secured Party is obligated to terminate the
Liens created hereby or assign, transfer and deliver such Collateral.
(b) On the Collateral Termination Date, the Liens created hereby shall
terminate, and Secured Party, at the request and expense of Pledgor, forthwith
will execute and deliver to Pledgor a proper instrument or instruments
acknowledging the satisfaction and termination of the Liens created hereby and
will duly assign, transfer and deliver to Pledgor (without recourse and without
any representation or warranty (except that such Collateral shall be free and
clear of all Liens in favor of Secured Party or created by Secured Party)), such
of
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<PAGE>
the Collateral as may be in the possession of Pledgor and as has not theretofore
been sold or otherwise applied pursuant to this Agreement or the Secured Credit
Agreement. Upon such release and redelivery, this Agreement shall terminate. The
"Collateral Termination Date" shall mean the first date on which no Note,
Reimbursement Obligation or Commitment is outstanding under the Secured Credit
Agreement and no other Obligation (as defined in the Secured Credit Agreement)
is due and payable thereunder.
6.13. Transactions Permitted Under the Secured Credit Agreement. Nothing
contained in this Agreement shall in any manner prohibit or restrict Pledgor or
any of its Subsidiaries from consummating any transaction, entering into any
agreement or otherwise taking any other action that is not in violation of the
terms of the Secured Credit Agreement, the Interest Rate Protection Agreements
[and the Note Purchase Agreements].
6.14. Action and Authority of Secured Party. Secured Party may not
exercise any of its rights or remedies hereunder that are contingent upon the
occurrence, or the occurrence and continuance, of an Event of Default except as
specifically directed or consented to by the Majority Lenders (without any
consent being required of the Swap Parties [or the Noteholders]) or as otherwise
provided in the Secured Credit Agreement. Secured Party shall have and be
entitled, as between itself and the Lenders, the Swap Parties [and the
Noteholders], to exercise all such powers hereunder as are specifically
delegated to the Secured Party by the terms hereof, together with such powers as
are incidental thereto. The Secured Party may execute, as between itself and
the Lenders, the Swap Parties [and the Noteholders], any of its duties hereunder
by or through agents or employees and shall be entitled to retain counsel and to
act in reliance upon the advice of such counsel concerning all matters
pertaining to its duties hereunder. Secured Party agrees to hold any and all
Collateral, and the proceeds thereof, at any time received hereunder for the
benefit of the Lenders, the Swap Parties [and the Noteholders]. Neither Secured
Party, nor any director, officer, or employee of Secured Party, shall be liable
to the Borrower, any Lender, any Swap Party [or any Noteholder] for any action
taken or omitted to be taken by it or them hereunder or in connection herewith,
except for its or their own gross negligence or willful misconduct.
6.15. Disposition of Collateral. The Secured Credit Agreement governs [,
subject to the terms of the Intercreditor Agreement], inter alia, application of
the proceeds of any disposition by the Secured Party of the Collateral;
provided, however, that if any Obligation specified in Section 1.02(e) (a "SWAP
OBLIGATION") is then due and owing to a Swap Party, any due and unpaid fees
constituting Swap Obligations, any accrued and unpaid interest constituting Swap
Obligations, any due and payable principal amount of any such Swap Obligations
and any other outstanding Swap Obligations, in each case owed to such Swap
Party, shall be included by the Collateral Agent within Section 7.7(c), (d), (e)
and (f) of the Secured Credit Agreement, respectively, when calculating and
distributing the proceeds of any Collateral.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first written above.
PLEDGOR:
SONAT OFFSHORE DRILLING INC.,
a Delaware corporation
By:______________________________
Name:____________________________
Title:___________________________
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SECURED PARTY:
ABN AMRO BANK N.V., Houston Agency
BY: ABN AMRO NORTH AMERICA, INC., as collateral
agent
By:_______________________________________
Cheryl I. Lipshutz
Group Vice President and Director
By:_______________________________________
Charles W. Randall
Senior Vice President and Managing
Director
17
<PAGE>
EXHIBIT A
Issuer Class Jurisdiction Certificate No. of
of Formation No. Shares
=====================================================================
NSub Norway __ ___
- ------------------------------------------------------------=========
Sonat Offshore Far East Cayman __ __
Islands
=====================================================================
<PAGE>
EXHIBIT 4.1B
FORM OF NOTE PLEDGE AGREEMENT
<PAGE>
EXHIBIT 4.1B
NOTE PLEDGE AGREEMENT
THIS NOTE PLEDGE AGREEMENT dated as of ________, 1996 (this "AGREEMENT"), is
made between SONAT OFFSHORE DRILLING INC., a Delaware corporation ("PLEDGOR"),
having its principal place of business at 4 Greenway Plaza, Houston, Texas
77046, and ABN AMRO BANK, N.V., a Netherlands chartered bank ("ABN AMRO"),
acting through its Houston Agency, as collateral agent for the Lenders referred
to in the Secured Credit Agreement (as hereinafter defined), for the Swap
Parties (as hereinafter defined) [and for the Noteholders] (the "SECURED
PARTY").
RECITALS:
A. Pledgor, the various financial institutions (collectively, the "LENDERS")
as are or may from time to time become parties thereto, ABN AMRO, acting through
its Houston Agency, as Agent for the Lenders, SunTrust Bank, Atlanta and Credit
Lyonnais New York Branch, as Documentation Agents for the Lenders, and Bank of
Montreal, The Fuji Bank, Limited, Royal Bank of Canada, and Wells Fargo Bank
(Texas), National Association, as Co-Agents for the Lenders, have entered into
that certain Secured Credit Agreement dated as of July 30, 1996 (herein, as the
same may be amended, modified, supplemented, extended, rearranged, and/or
restated from time to time, called the "SECURED CREDIT AGREEMENT"), pursuant to
which, upon the terms and conditions therein set forth, the Lenders have agreed
to (a) make loans to Pledgor, which loans are evidenced by promissory notes of
Pledgor (herein, as amended, extended, modified, rearranged and/or supplemented,
from time to time together with any promissory notes given by Pledgor in
extension, replacement, rearrangement, modification and/or substitution thereof
or therefor, collectively called the "NOTES"), each dated the Initial Borrowing
Date under the Secured Credit Agreement, in the original aggregate principal
amount of $600,000,000, payable to the order of the Lenders respectively, and
(b) issue and participate in Letters of Credit for the account of Pledgor.
Capitalized terms used herein without definition shall have the meanings
assigned in the Secured Credit Agreement.
B. Pledgor may from time to time enter into Interest Rate Protection
Agreements with certain of the Lenders or their affiliates.
[C. Pledgor has outstanding certain 6.90% Senior Notes Due February 15, 2004
(herein, as heretofore or hereafter amended, extended, modified, rearranged
and/or supplemented from time to time, together with any promissory notes given
by Pledgor in extension, replacement, rearrangement, modification and/or
substitution thereof or therefor, collectively called the "NOTEHOLDER NOTES")
pursuant to several Note Purchase Agreements dated as of February 15, 1994 (as
heretofore or hereafter amended, modified, supplemented, extended,
<PAGE>
rearranged and/or restated from time to time, may be referred to herein
collectively as the "NOTE PURCHASE AGREEMENTS"). The holders of the Noteholder
Notes have agreed to certain modifications to the terms of the Note Purchase
Agreements requested by Pledgor in order to, inter alia, permit Pledgor to incur
indebtedness under the Secured Credit Agreement and grant the liens contemplated
thereby, but as a condition precedent to the effectiveness thereof, the Pledgor
is required to execute and deliver this Agreement.]/1/
D. Under the terms of the Secured Credit Agreement, Pledgor is required by the
Lenders to provide certain security in respect of the liabilities of Pledgor
under the Secured Credit Agreement.
E. Pledgor is, or may be, the holder of certain promissory notes of [insert
name of NSub] and Sonat Offshore Far East, including without limitation, the
promissory notes described in Exhibit A hereto (herein, as amended, extended,
renewed, modified, rearranged and/or supplemented from time to time and together
with any promissory note taken in extension and/or renewal thereof or in
substitution therefor collectively called the "PLEDGED NOTES" and individually
called a "PLEDGED NOTE").
F. Under the terms of the Secured Credit Agreement, the Secured Party requires
that this Agreement be entered into by Pledgor.
G. The Lenders, the Swap Parties [and the holders from time to time of the
Noteholder Notes (the "NOTEHOLDERS")] by acceptance of the benefits hereof are
deemed to have appointed ABN AMRO as their agent hereunder for the purposes of
administering this Agreement and holding and disposing of the Collateral (as
hereinafter defined) and to have agreed to be bound by all of the terms and
provisions of this Agreement.
NOW THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
SECURITY INTEREST AND PLEDGE
1.01. Security Interest and Pledge. Subject to the terms of this
Agreement, Pledgor hereby pledges and grants to Secured Party for the benefit of
the Lenders, the Swap Parties [and the Noteholders] a first priority security
interest in the following property (such property being hereinafter called the
"COLLATERAL"):
(a) the Pledged Notes and the indebtedness evidenced thereby;
- ----------
/1/The bracketed language in this form will be inserted if any of the Noteholder
Notes is to be outstanding after the Initial Borrowing Date.
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<PAGE>
(b) any and all extensions, renewals, replacements or substitutions of or for
any of the items described in the foregoing clause (a); and
(c) any and all proceeds with respect to any of the items described in the
foregoing clauses (a)-(b), including without limitation all cash and non-
cash payments and any other property received with respect thereto (all of
the foregoing described in this clause (c), other than any portion thereof
itself constituting Pledged Notes, the "COLLATERAL PROCEEDS").
1.02. Obligations. The Collateral shall equally and ratably secure the
following obligations, indebtedness, and liabilities (all such obligations,
indebtedness, and liabilities being hereinafter sometimes called the
"OBLIGATIONS"):
(a) The payment of the indebtedness evidenced by the Notes;
(b) All Reimbursement Obligations of the Pledgor to reimburse the Lenders or
the Agent, as the case may be, for each drawing under a Letter of Credit;
(c) All future advances by the Lenders pursuant to the Secured Credit Agreement
to Pledgor;
(d) The performance and payment of the obligations of Pledgor or any other
Credit Party under any of the Credit Documents, including, without
limitation, the Obligations (as defined in the Secured Credit Agreement)
and the payment and performance of Pledgor's obligations hereunder;
(e) All amounts payable by Pledgor or any Subsidiary under any Interest Rate
Protection Agreement now or hereafter entered into by Pledgor or any
Subsidiary with any counterparty who, at the time such Interest Rate
Protection Agreement is entered into, is then a Lender or an affiliate of a
Lender (any such counterparty, a "SWAP PARTY");
[(f) The payment of the indebtedness evidenced by the Noteholder Notes and the
performance and payment of the obligations of Pledgor under the Note
Purchase Agreements and the Noteholder Notes, including, without
limitation, any Make-Whole Amount (as defined in the Note Purchase
Agreements) that may hereafter become due and payable thereunder]; and
(g) All extensions, renewals, rearrangements and modifications of any of the
foregoing.
3
<PAGE>
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Pledgor represents and warrants to Secured Party for the benefit of the
Lenders, the Swap Parties [and the Noteholders] that:
2.01. Title. Pledgor owns or, with respect to Collateral acquired after the
date hereof, Pledgor will own, legally and beneficially, the Collateral free and
clear of any lien, security interest, pledge, claim, or other encumbrance or any
right or option on the part of any third person to purchase or otherwise acquire
the Collateral or any part thereof except as permitted under the Secured Credit
Agreement, and except for the security interest granted hereunder and except for
Permitted Liens. Pledgor has the unrestricted right to pledge the Collateral as
contemplated hereby.
2.02. Organization and Authority. Pledgor is a company duly organized and
validly existing under the laws of the jurisdiction of its incorporation, and in
good standing under the laws of the jurisdiction of its incorporation and each
other jurisdiction in which its properties or operations so require and in which
the failure to be in good standing would have a Material Adverse Effect. Pledgor
has the corporate power and authority to execute, deliver, and perform this
Agreement, and the execution, delivery, and performance of this Agreement by
Pledgor have been duly authorized by all necessary corporate action on the part
of Pledgor. Neither the execution, delivery or performance by the Pledgor of
this Agreement nor compliance by it with the terms and provisions hereof, nor
the consummation of the transactions contemplated herein, will (i) contravene in
any material respect any applicable provision of any law, statute, rule or
regulation, or any order, writ, injunction or decree of any court or
governmental instrumentality, (ii) conflict with or result in any breach of any
term, covenant, condition or other provision of, or constitute a default under,
or (other than pursuant to the Security Documents) result in the creation or
imposition of (or the obligation to create or impose) any Lien other than any
Permitted Lien upon any of the property or assets of Pledgor under, the terms of
any contractual obligation to which Pledgor is a party or by which it or any of
its properties or assets is bound or to which they may be subject or (iii)
violate or conflict with any provision of the corporate governance documents of
Pledgor.
2.03. Pledged Notes. Pledgor has furnished to the Agent the true, genuine
executed original of each of the Pledged Notes outstanding as of the date
hereof, properly endorsed (without recourse) to the order of the Agent, and
Exhibit A contains a true, correct and complete list of all of the Pledged Notes
outstanding on the date hereof.
2.04. Principal Place of Business. As of the date hereof, the principal place
of business and chief executive office of Pledgor, and the office where Pledgor
keeps its books and records, is located at 4 Greenway Plaza, Houston, Texas
77046.
2.05. First Priority Security Interest. This Agreement creates in favor of
Secured Party, for the benefit of the Lenders, the Swap Parties [and the
Noteholders], a first priority (subject
4
<PAGE>
only to Permitted Liens) security interest in the Collateral currently in
existence which will be perfected upon delivery of the Pledged Notes evidencing
the Collateral.
ARTICLE III
COVENANTS
Pledgor covenants and agrees with Secured Party, for the benefit of the
Lenders, the Swap Parties [and the Noteholders], that until the Collateral
Termination Date (as hereinafter defined) subject to Sections 6.12(a) and 6.13:
3.01. Encumbrances. Except as permitted by the Secured Credit Agreement,
Pledgor shall not create, permit, or suffer to exist, and shall defend the
Collateral against, any Lien on the Collateral except the pledge and security
interest of Secured Party hereunder and except for Permitted Liens, and shall
defend Pledgor's rights in the Collateral and Secured Party's security interest
in the Collateral against the claims of all persons and entities (other than any
person or entity claiming by, through or under Secured Party or any obligee of
the Obligations).
3.02. Sale of Collateral. Pledgor shall not sell, assign, or otherwise dispose
of the Collateral or any part thereof except as permitted by the Secured Credit
Agreement (and in any event subject to Sections 4.05, 6.12 and 6.13 hereof).
3.03. Further Assurances. Pledgor has delivered the Pledged Notes to Secured
Party, to be held by Secured Party, for the benefit of the Lenders, the Swap
Parties [and the Noteholders], as Collateral for the Obligations, subject to the
terms hereof. At any time and from time to time, upon the reasonable request of
Secured Party, and at the sole expense of Pledgor, Pledgor shall promptly
execute and deliver all such further instruments and documents and take such
further action as Secured Party may deem reasonably necessary or desirable to
preserve and perfect its security interest in the Collateral and carry out the
provisions and purposes of this Agreement, including, without limitation, the
execution and filing of such financing statements as Secured Party may require.
A carbon, photographic, or other reproduction of this Agreement or of any
financing statement covering the Collateral or any part thereof shall be
sufficient as a financing statement and may be filed as a financing statement to
the extent provided by applicable law.
3.04. Inspection Rights. Upon reasonable notice from Secured Party, Pledgor
shall permit Secured Party and its representatives to examine, inspect, and copy
Pledgor's books and records pertaining to the Collateral at any reasonable time
during normal business hours and as often as Secured Party may desire.
3.05. Notification. Pledgor shall promptly after an officer of the Borrower
has knowledge thereof, notify Secured Party of (i) any lien, security interest,
encumbrance, or claim made or threatened against the Collateral other than
Permitted Liens, and (ii) the occurrence or existence of any Default or Event of
Default.
5
<PAGE>
3.06. Books and Records. Pledgor shall from time to time at the request of
Secured Party deliver to Secured Party such information regarding the Collateral
as Secured Party may reasonably request.
ARTICLE IV
RIGHTS OF SECURED PARTY AND PLEDGOR
4.01. Power of Attorney. Pledgor hereby irrevocably constitutes and appoints
Secured Party and any officer or agent thereof, with full power of substitution,
as its true and lawful attorney-in-fact with full irrevocable power and
authority in the place and stead and in the name of Pledgor or in its own name,
from time to time in Secured Party's discretion during the continuance of an
Event of Default and prior to the Collateral Termination Date, to take any and
all action and to execute any and all documents and instruments which may be
necessary or desirable to accomplish the purposes of this Agreement and, without
limiting the generality of the foregoing, hereby gives Secured Party the power
and right on behalf of Pledgor and in its own name to do any of the following
after the occurrence and during the continuance of or Event of Default and to
the extent permitted by applicable laws, without notice to or the consent of
Pledgor:
(a) to demand, sue for, collect, or receive in the name of Pledgor or in its
own name, any money or property at any time payable or receivable on
account of or in exchange for any of the Collateral and, in connection
therewith, endorse checks, notes, drafts, acceptances, money orders, or any
other instruments for the payment of money under the Collateral;
(b) to pay or discharge taxes, liens, security interests, or other encumbrances
(other than Permitted Liens) levied or placed on or threatened against the
Collateral;
(c) (i) to direct the maker of the Pledged Notes and any other parties liable
for any payment under any of the Collateral to make payment of any and all
monies due and to become due thereunder directly to Secured Party or as
Secured Party shall direct; (ii) to receive payment of and receipt for any
and all monies, claims, and other amounts due and to become due at any time
in respect of or arising out of any Collateral; (iii) to sign and endorse
any drafts, assignments, verifications, notices, and other documents
relating to the Collateral; (iv) to commence and prosecute any suit,
actions or proceedings at law or in equity in any court of competent
jurisdiction to collect the Collateral or any part thereof and to enforce
any other right in respect of any Collateral; (v) to defend any suit,
action, or proceeding brought against Pledgor with respect to any
Collateral; (vi) to settle, compromise, or adjust any suit, action, or
proceeding described in clause (v) above and, in connection therewith, to
give such discharges or releases as Secured Party may deem appropriate;
(vii) to exchange any of the Collateral for other property upon any merger,
consolidation, reorganization, recapitalization, or other readjustment of
the issuer thereof and, in connection therewith, deposit any of the
Collateral with any committee, depositary, transfer agent, registrar, or
other designated agency upon such terms as Secured Party may determine;
(viii) to add or release any guarantor, endorser, surety, or other party to
any of the
6
<PAGE>
Collateral or the Obligations; and (ix) to sell, transfer, pledge, make any
agreement with respect to or otherwise deal with any of the Collateral as
fully and completely as though Secured Party were the absolute owner
thereof for all purposes, and to do, at Secured Party's option and
Pledgor's expense, at any time, or from time to time, all acts and things
which Secured Party deems necessary to protect, preserve, or realize upon
the Collateral and Secured Party's security interest therein for the
benefit of the Lenders, the Swap Parties [and the Noteholders].
This power of attorney is a power coupled with an interest and shall be
irrevocable. Secured Party shall be under no duty to exercise or withhold the
exercise of any of the rights, powers, privileges, and options expressly or
implicitly granted to Secured Party in this Agreement, and shall not be liable
for any failure to do so or any delay in doing so. Secured Party shall not be
liable for any act or omission or for any error of judgment or any mistake of
fact or law in its individual capacity or in its capacity as attorney-in-fact
except acts or omissions constituting or resulting from its willful misconduct
or gross negligence. This power of attorney is conferred on Secured Party
solely to protect, preserve, and realize upon its security interest in the
Collateral.
4.02. Performance by Secured Party of Pledgor's Obligations. If an Event of
Default has occurred and is continuing or if Pledgor fails to perform or comply
with any of its agreements contained herein and Secured Party itself shall cause
performance of or compliance with such agreement, the reasonable expenses of
Secured Party, together with interest thereon at the rate of interest provided
in the Secured Credit Agreement, shall be payable by Pledgor to Secured Party on
demand and shall constitute Obligations secured by this Agreement.
4.03. Secured Party's Duty of Care. Other than the exercise of reasonable care
in the physical custody of the Collateral while held by Secured Party hereunder,
Secured Party shall have no responsibility for or obligation or duty with
respect to all or any part of the Collateral or any matter or proceeding arising
out of or relating thereto, including, without limitation, any obligation or
duty to collect any sums due in respect thereof or to protect or preserve any
rights against prior parties or any other rights pertaining thereto, it being
understood and agreed that Pledgor shall be responsible for preservation of all
rights in the Collateral. Without limiting the generality of the foregoing,
Secured Party shall be conclusively deemed to have exercised reasonable care in
the custody of the Collateral if Secured Party takes such action, for purposes
of preserving rights in the Collateral, as Pledgor may reasonably request in
writing, but no failure or omission or delay by Secured Party in complying with
any such request by Pledgor, and no refusal by Secured Party to comply with any
such request by Pledgor, shall of itself be deemed to be a failure to exercise
reasonable care.
7
<PAGE>
4.04. Assignment by Secured Party. Secured Party may from time to time assign
the Collateral to any successor as Agent under the Secured Credit Agreement, and
the assignee shall be entitled to all of the rights and remedies of Secured
Party under this Agreement in relation thereto.
4.05. Pledgor's Rights.
(a) Until written notice shall be given to Pledgor in accordance with
Section 5.02 that Secured Party is exercising its rights under Section 5.02,
Pledgor shall have the right, subject to any express prohibitions contained in
the Secured Credit Agreement, to give consents, waivers or notifications with
respect to the Collateral, to exercise its rights, powers and privileges under
the Collateral, to agree to any modification of any of the terms of the Pledged
Notes and otherwise to act with respect to the Collateral as if this Agreement
had not been executed. Secured Party shall from time to time execute such
instruments and take such other action, in each instance, at Pledgor's expense,
as may reasonably be requested of it to give effect to, or to confirm any action
taken by Pledgor in accordance with, this Section 4.05(a).
(b) Pledgor shall be entitled, from time to time, to collect and receive
for its own use all Collateral Proceeds, free of the Lien of this Agreement.
Any Collateral Proceeds collected or received by or paid over to Pledgor
pursuant to this Section 4.05 shall thereupon automatically cease to constitute
Collateral and, without limitation of the foregoing, Secured Party will, at
Pledgor's request and expense, execute and deliver to Pledgor a proper
instrument or instruments acknowledging the release of the Lien of this
Agreement in respect of all Collateral Proceeds.
ARTICLE V
DEFAULT
5.01. Events of Default. Each of the following shall be deemed an "EVENT OF
DEFAULT":
(a) An Event of Default as defined in the Secured Credit Agreement shall have
occurred;
(b) Failure by Pledgor to perform any agreement contained herein and
continuance of such non-compliance or failure after thirty (30) days following
notice thereof to Pledgor from the Agent; or
(c) Any representation, statement or warranty of Pledgor contained herein
shall be untrue in any material respect as of the date made.
5.02. Rights and Remedies. Prior to the Collateral Termination Date, upon the
occurrence of an Event of Default and so long as the same shall be continuing
[and subject to the terms of the Intercreditor Agreement], Secured Party shall
have the following rights and remedies to the extent not prohibited by
applicable laws:
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<PAGE>
(a) In addition to all other rights and remedies granted to Secured Party in
this Agreement and in any other instrument or agreement securing,
evidencing, or relating to the Obligations, Secured Party shall have all of
the rights and remedies of a secured party under the Uniform Commercial
Code as adopted by the State of New York. Without limiting the generality
of the foregoing, Secured Party may (i) without demand or notice to
Pledgor, collect, receive, or take possession of the Collateral or any part
thereof, (ii) sell or otherwise dispose of the Collateral, or any part
thereof, in one or more parcels at public or private sale or sales, at
Secured Party's offices or elsewhere, for cash, on credit, or for future
delivery without assumption of any credit risk, and/or (iii) bid and become
a purchaser at any such sale free of any right or equity of redemption in
Pledgor, which right or equity is hereby expressly waived and released by
Pledgor to the extent permitted by applicable law. Pledgor agrees, to the
fullest extent that it may effectively do so under applicable laws, that
Secured Party shall not be obligated to give more than ten (10) days' prior
written notice of the time and place of any public sale or of the time
after which any private sale may take place and that such notice shall
constitute reasonable notice of such matters. Pledgor shall be liable for
all reasonable expenses of retaking, holding, preparing for sale, or the
like, and all reasonable attorneys' fees and other reasonable expenses
incurred by Secured Party in connection with the collection of the
Obligations and the enforcement of Secured Party's rights under this
Agreement, in each case during the continuance of an Event of Default, all
of which expenses and fees shall constitute additional Obligations secured
by this Agreement. Secured Party may apply the Collateral against the
Obligations then due and payable in such order and manner as provided in
Section 6.15. Pledgor shall remain liable for any deficiency if the
proceeds of any sale or disposition of the Collateral are insufficient to
pay the Obligations. Pledgor waives all rights of marshalling in respect
of the Collateral.
(b) Secured Party may cause any or all of the Collateral held by it to be
transferred into the name of Secured Party or the name or names of Secured
Party's nominee or nominees (in each case as pledgee hereunder).
(c) Secured Party shall be entitled to receive all payments made in respect of
the Collateral to the extent not prohibited by applicable laws.
ARTICLE VI
MISCELLANEOUS
6.01. No Waiver; Cumulative Remedies. No failure on the part of Secured Party
to exercise and no delay in exercising, and no course of dealing with respect
to, any right, power, or privilege under this Agreement shall operate as a
waiver thereof, nor shall any single or partial exercise of any right, power, or
privilege under this Agreement preclude any other or further exercise thereof or
the exercise of any other right, power, or privilege. To the fullest
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extent permitted by applicable laws, the rights and remedies provided for in
this Agreement are cumulative and not exclusive of any rights and remedies
provided by law.
6.02. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of Pledgor and Secured Party and their respective heirs,
successors, and assigns, except that Pledgor may not assign any of its rights or
obligations under this Agreement without the prior written consent of the
Lenders except to the extent permitted by the Secured Credit Agreement, and
Secured Party may not assign any of its rights or obligations under this
Agreement without the prior written consent of Pledgor, except to the extent
permitted by Section 4.04.
6.03. Amendment; Entire Agreement. This Agreement, together with any
applicable pledge or other agreement required by applicable laws, embodies the
final, entire agreement among the parties hereto and supersedes any and all
prior commitments, agreements, representations, and understandings, whether
written or oral, relating to the subject matter hereof. The provisions of this
Agreement may be amended or waived only by an instrument in writing signed by
the parties hereto with the requisite consent of the Lenders as provided in the
Secured Credit Agreement.
6.04. Notices. Any notice, consent, or other communication required or
permitted to be given under this Agreement to Secured Party or Pledgor must be
in writing and delivered in person or by facsimile or by registered or certified
mail, return receipt requested, postage prepaid, as follows:
To Secured Party: ABN AMRO Bank N.V., Houston Agency, as Agent
Attn: Ms. Cheryl Lipshutz, Group Vice President and Director
Three Riverway, Suite 1700
Houston, Texas 77056
Facsimile: (713) 629-7533
To Pledgor: As specified in or pursuant to the Secured Credit Agreement
Any such notice, consent, or other communication shall be deemed given when
delivered in person or, if given by mail, five (5) days after such communication
is deposited in the mail, certified or registered with return receipt requested.
6.05. Governing Law; Submission to Jurisdiction; Waiver of Jury Trial. This
Agreement, and the rights and duties of the parties hereto, shall be construed
in accordance with and governed by the internal laws of the State of New York;
provided, however that any enforcement of Secured Party's rights and remedies in
any other jurisdiction shall, to the extent required by applicable laws, be
governed by the laws of the jurisdiction of enforcement. Each party hereto
hereby submits to the nonexclusive jurisdiction of the United States District
Court for the Southern District of New York and of any New York State court
sitting in New York City for purposes of all legal proceedings arising out of or
relating to this Agreement or the transactions contemplated hereby. Each party
hereto irrevocably waives, to the fullest extent
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permitted by law, any objection it may now or hereafter have to the laying of
the venue of any such proceeding brought in such a court and any claim that any
such proceeding brought in such a court has been brought in an inconvenient
forum. EACH PARTY 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 OR THE TRANSACTIONS CONTEMPLATED HEREBY.
6.06. Headings. The headings, captions, and arrangements used in this
Agreement are for convenience only and shall not affect the interpretation of
this Agreement.
6.07. Survival of Representations and Warranties. All representations and
warranties made in this Agreement or in any certificate delivered pursuant
hereto shall survive the execution and delivery of this Agreement, and no
investigation by Secured Party, the Lenders, the Swap Parties [and the
Noteholders] shall affect the representations and warranties or the right of
Secured Party, the Lenders, the Swap Parties [or the Noteholders] to rely upon
them.
6.08. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
6.09. Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions of this Agreement, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
6.10. Construction. Pledgor and Secured Party acknowledge that each of them
has had the benefit of legal counsel of its own choice and has been afforded an
opportunity to review this Agreement with its legal counsel and that this
Agreement shall be construed as if jointly drafted by Pledgor and Secured Party.
6.11. Obligations Absolute. The obligations of Pledgor under this Agreement
shall be absolute and unconditional and shall not be released, discharged,
reduced, or in any way impaired by any circumstance whatsoever, including,
without limitation, any amendment, modification, extension, or renewal of this
Agreement, the Obligations, or any document or instrument evidencing, securing,
or otherwise relating to the Obligations, or any release, subordination, or
impairment of collateral, or any waiver, consent, extension, indulgence,
compromise, settlement, or other action or inaction in respect of this
Agreement, the Obligations, or any document or instrument evidencing, securing,
or otherwise relating to the Obligations, or any exercise or failure to exercise
any right, remedy, power, or privilege in respect of the Obligations. Nothing in
this Section 6.11 affects or qualifies the express terms hereof or in the
Secured Credit Agreement.
6.12. Termination; Release. (a) Secured Party specifically acknowledges that
Pledgor may sell, assign, transfer or otherwise dispose of any Collateral so
long as such action is not in
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violation of any of the terms of the Secured Credit Agreement. In connection
with any such non-violating sale, assignment, transfer or other disposition of
any Collateral, Secured Party, at the request and expense of Pledgor, will
execute and deliver a proper instrument or instruments acknowledging the
termination of the Liens created hereby with respect to the Collateral that is
the subject of such sale, assignment, transfer or other disposition and, if such
Collateral is in the possession of Secured Party, will (without recourse and
without any representation or warranty (except that such Collateral shall be
free and clear of all Liens in favor of Secured Party or created by Secured
Party)) forthwith duly assign, transfer and deliver such Collateral to Pledgor
or such other Person as Pledgor may direct in writing; provided, however, that
Secured Party's obligations under this Section 6.12(a) shall be subject to no
Default or Event of Default having occurred and being continuing at the time
that Secured Party is obligated to terminate the Liens created hereby or assign,
transfer and deliver such Collateral.
(b) On the Collateral Termination Date, the Liens created hereby shall
terminate, and Secured Party, at the request and expense of Pledgor, forthwith
will execute and deliver to Pledgor a proper instrument or instruments
acknowledging the satisfaction and termination of the Liens created hereby and
will duly assign, transfer and deliver to Pledgor (without recourse and without
any representation or warranty (except that such Collateral shall be free and
clear of all Liens in favor of Secured Party or created by Secured Party)), such
of the Collateral as may be in the possession of Pledgor and as has not
theretofore been sold or otherwise applied pursuant to this Agreement or the
Secured Credit Agreement. Upon such release and redelivery, this Agreement
shall terminate. The "Collateral Termination Date" shall mean the first date on
which no Note, Reimbursement Obligation or Commitment is outstanding under the
Secured Credit Agreement and no other Obligation (as defined in the Secured
Credit Agreement) is due and payable thereunder.
6.13. Transactions Permitted Under the Secured Credit Agreement. Nothing
contained in this Agreement shall in any manner prohibit or restrict Pledgor or
any of its Subsidiaries from consummating any transaction, entering into any
agreement or otherwise taking any other action that is not in violation of the
terms of the Secured Credit Agreement, the Interest Rate Protection Agreements
[and the Note Purchase Agreements].
6.14. Action and Authority of Secured Party. Secured Party may not exercise
any of its rights or remedies hereunder that are contingent upon the occurrence,
or the occurrence and continuance, of an Event of Default except as specifically
directed or consented to by the Majority Lenders (without any consent being
required of the Swap Parties [or the Noteholders]) or as otherwise provided in
the Secured Credit Agreement. Secured Party shall have and be entitled, as
between itself and the Lenders, the Swap Parties [and the Noteholders], to
exercise all such powers hereunder as are specifically delegated to the Secured
Party by the terms hereof, together with such powers as are incidental thereto.
The Secured Party, as between itself and the Lenders, the Swap Parties [and the
Noteholders], may execute any of its duties hereunder by or through agents or
employees and shall be entitled to retain counsel and to act in reliance upon
the advice of such counsel concerning all matters pertaining to its duties
hereunder. Secured Party agrees to hold any and all Collateral, and the proceeds
thereof, at any time received hereunder for the benefit of the Lenders, the Swap
Parties [and the Noteholders].
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Neither Secured Party, nor any director, officer or employee of Secured Party,
shall be liable to the Borrower, any Lender, Swap Party [or Noteholder] for any
action taken or omitted to be taken by it or them hereunder or in connection
herewith, except for its or their own gross negligence or willful misconduct.
6.15. Disposition of Collateral. The Secured Credit Agreement governs[,
subject to the terms of the Intercreditor Agreement], inter alia, the
application of the proceeds of any disposition by the Secured Party of the
Collateral; provided, however, that if any Obligation specified in Section
1.02(e) (a "SWAP OBLIGATION") is then due and owing to a Swap Party, any due and
unpaid fees constituting Swap Obligations, any accrued and unpaid interest
constituting Swap Obligations, any due and payable principal amount of any such
Swap Obligations and any other outstanding Swap Obligations, in each case owed
to such Swap Party, shall be included by the Collateral Agent within Section
7.7(c), (d), (e) and (f) of the Secured Credit Agreement, respectively, when
calculating and distributing the proceeds of any Collateral.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year first written above.
PLEDGOR:
SONAT OFFSHORE DRILLING INC.,
a Delaware corporation
By:________________________________
Name:______________________________
Title:_____________________________
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SECURED PARTY:
ABN AMRO BANK N.V., Houston Agency,
as Agent
By: ABN AMRO NORTH AMERICA, INC.,
as Agent
By:_______________________________
Cheryl I. Lipshutz
Group Vice President and Director
By:_______________________________
Charles W. Randall
Senior Vice President and Managing
Director
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EXHIBIT A
PLEDGED NOTES
1.
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2.
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EXHIBIT 4.1C
FORM OF SUBSIDIARY GUARANTY
<PAGE>
EXHIBIT 4.1C
SUBSIDIARY GUARANTY
THIS SUBSIDIARY GUARANTY (this "GUARANTY") dated as of _____________, 1996,
is from _________________, a ___________ corporation (the "GUARANTOR"), to the
Lenders referred to hereinafter and ABN AMRO BANK N.V. ("ABN AMRO"), a
Netherlands chartered bank, acting through its Houston agency, as Agent for the
Lenders (herein in such capacity, together with its successors in such capacity,
the "AGENT") and as Collateral Agent for the Lenders, the Swap Parties [and the
Noteholders] (herein in such capacity, together with its successors in such
capacity, the "COLLATERAL AGENT"), to the Swap Parties (as defined herein) [and
to the Noteholders (as defined herein)]./1/
W I T N E S S E T H:
A. Sonat Offshore Drilling Inc. (the "BORROWER"), a Delaware
corporation, the various financial institutions (collectively, the "LENDERS") as
are or may from time to time become parties thereto, the Agent, SunTrust Bank,
Atlanta and Credit Lyonnais New York Branch, as Documentation Agents for the
Lenders, and Bank of Montreal, The Fuji Bank, Limited, Royal Bank of Canada, and
Wells Fargo Bank (Texas), National Association, as Co-Agents for the Lenders,
have entered into that certain Secured Credit Agreement dated as of July 30,
1996 (herein, as the same may be amended, modified, supplemented, extended,
rearranged, and/or restated from time to time, called the "SECURED CREDIT
AGREEMENT"), pursuant to which, upon the terms and conditions therein set forth,
the Lenders have agreed to (a) make loans to the Borrower, which loans are
evidenced by promissory notes of the Borrower (herein, as amended, extended,
modified, rearranged and/or supplemented, from time to time together with any
promissory notes given by Borrower in extension, replacement, rearrangement,
modification and/or substitution thereof or therefor, collectively called the
"NOTES"), each dated the Initial Borrowing Date under the Secured Credit
Agreement, in the original aggregate principal amount of $600,000,000, payable
the order of the Lenders respectively, and (b) issue and participate in Letters
of Credit for the account of Borrower. Capitalized terms used herein without
definition shall have the meanings assigned in the Secured Credit Agreement.
B. As a condition precedent to the making of the Loans and the
issuance of the Letters of Credit under the Secured Credit Agreement, the
Guarantor is required to execute and deliver this Guaranty.
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/1/The bracketed language in this form will be inserted if any of the Noteholder
Notes is to be outstanding after the Initial Borrowing Date.
<PAGE>
C. The Borrower and its other Subsidiaries may from time to time
enter into Interest Rate Protection Agreements with certain of the Lenders or
their affiliates (each such counterparty who is a Lender or an affiliate of a
Lender at the time such Interest Rate Protection Agreement is entered into a
"SWAP PARTY" and each such Interest Rate Protection Agreement with a Swap Party,
as amended, extended, modified, rearranged and/or supplemented from time to
time, a "GUARANTEED INTEREST RATE PROTECTION AGREEMENT").
[D. The Borrower has outstanding certain 6.90% Senior Notes Due February
15, 2004 (herein, as heretofore or hereafter amended, extended, modified,
rearranged and/or supplemented from time to time, together with any promissory
notes given by Pledgor in extension, replacement, rearrangement, modification
and/or substitution thereof or therefor, collectively called the "NOTEHOLDER
NOTES") issued pursuant to several Note Purchase Agreements dated as of February
15, 1994, (herein, as heretofore or hereafter amended, modified, supplemented,
extended, rearranged and/or restated from time to time, the "NOTE PURCHASE
AGREEMENTS"). The holders of the Noteholder Notes have agreed to certain
modifications to the terms of the Note Purchase Agreements requested by Pledgor
in order to, inter alia, permit Pledgor to incur indebtedness under the Secured
Credit Agreement and grant the liens contemplated thereby, but as a condition
precedent to the effectiveness thereof, the Pledgor is required to execute and
deliver this Agreement.]
E. The Guarantor has duly authorized the execution, delivery and
performance of this Guaranty.
F. It is in the best interests of the Guarantor to execute this
Guaranty inasmuch as the Guarantor will derive substantial direct and indirect
benefits from the Loans made from time to time to the Borrower and the issuance
of and participation in Letters of Credit by the Lenders pursuant to the Secured
Credit Agreement and any Guaranteed Interest Rate Protection Agreements entered
into by the Borrower and its other Subsidiaries.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to induce the Lenders
to make Loans (including the initial Loans) to the Borrower and to issue and
participate in Letters of Credit pursuant to the Secured Credit Agreement and
the Swap Parties to enter into Guaranteed Interest Rate Protection Agreements
with the Borrower [and each Noteholder to enter into modifications of the Note
Purchase Agreements], the Guarantor agrees, for the benefit of the Agent, the
Collateral Agent, each Lender, each Swap Party [and each Noteholder] as follows:
ARTICLE I
GUARANTY
1.1 Guaranty. For value received, and in consideration of any loan or
other financial accommodation heretofore or hereafter at any time made or
granted to the Borrower by the Lenders and the Swap Parties [and in
consideration of the matters set forth in the recitals above],
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the Guarantor hereby unconditionally, irrevocably and absolutely guarantees (a)
to the Lenders, the Agent, the Collateral Agent and the Swap Parties,] the full
and prompt payment when due, whether by acceleration or otherwise, and at all
times thereafter, of all obligations of the Borrower to the Lenders, the Agent,
the Collateral Agent, the Swap Parties and their successors and assigns
(howsoever created, arising or evidenced, whether direct or indirect, primary or
secondary, absolute or contingent, joint or several, or now or hereafter
existing or due or to become due, including, without limitation, all such
amounts which would become due but for the operation of the automatic stay under
Section 362(a) of the United States Bankruptcy Code, 11 U.S.C. (S) 362(a), and
the operation of Sections 502(b) and 506(b) of such Bankruptcy Code, 11 U.S.C.
(S) 502(b) and (S) 506(b)), (i) under the Secured Credit Agreement, including,
without limitation, under (x) the Notes, (y) the Letters of Credit, including
any Reimbursement Obligations with respect thereto, and (z) all other
Obligations of the Borrower thereunder, and (ii) under any Guaranteed Interest
Rate Protection Agreements (all such obligations [described in this clause (a)]
being hereinafter collectively called the "[LENDER] LIABILITIES"), [and (b) to
the holders from time to time of the Noteholder Notes (the "NOTEHOLDERS"), the
full and prompt payment when due, whether by acceleration or otherwise, and at
all times thereafter, of all obligations of the Borrower to the Noteholders and
their successors and assigns (howsoever created, arising or evidenced, whether
direct or indirect, primary or secondary, absolute or contingent, joint or
several, or now or hereafter existing or due or to become due, including,
without limitation, all such amounts which would become due but for the
operation of the automatic stay under Section 362(a) of the United States
Bankruptcy Code, 11 U.S.C. (S) 362(a), and the operation of Sections 502(b) and
506(b) of such Bankruptcy Code, 11 U.S.C. (S) 502(b) and (S) 506(b)), under (i)
the Noteholder Notes and (ii) the Note Purchase Agreements, including, without
limitation, all obligations of the Borrower thereunder (all such obligations
described in this clause (b) being hereinafter collectively called the
"NOTEHOLDER LIABILITIES;" the Lender Liabilities and the Noteholder Liabilities
being hereinafter collectively called the "LIABILITIES")], and the Guarantor
further agrees to pay all reasonable expenses (including reasonable attorneys'
fees and legal expenses) paid or incurred by the Agent, the Lenders, the Swap
Parties [or the Noteholders] in enforcing this Guaranty. Anything herein
contained to the contrary notwithstanding, the amount of this Guaranty, however,
shall not exceed the greater of
(a) an amount $1.00 less than the amount which, if paid by the Guarantor would
render the Guarantor insolvent, and
(b) an amount equal to the value of all benefits received by the Guarantor as a
result of the execution, delivery, and performance by the Borrower of (i)
the Secured Credit Agreement and each other Credit Document, including all
loans, advances, and contributions, if any, made by the Borrower to the
Guarantor, (ii) the Guaranteed Interest Rate Protection Agreements, and
(iii) the Note Purchase Agreements.
The term "insolvent" as used herein, means, with respect to the Guarantor
on a particular date, that on such date
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(a) the fair salable value of the property of the Guarantor is less than the
total amount of liabilities (including contingent, subordinated, unmatured
and unliquidated liabilities) of the Guarantor;
(b) the present fair salable value of the assets of the Guarantor is less than
the amount that will be required to pay the probable liabilities of the
Guarantor as they become absolute and matured;
(c) the Guarantor is not able to realize upon its assets and pay its debts and
other liabilities, contingent obligations, and other commitments as they
mature in the normal course of business; or
(d) the Guarantor has an unreasonably small capital.
1.2. Bankruptcy. The Guarantor hereby agrees that, in the event of the
occurrence of an Event of Default described in subsections (g) or (h) of Section
7.1 of the Secured Credit Agreement, and if such event shall occur at a time
when any of the Liabilities may not then be due and payable, the Guarantor will
pay to the Agent and the Lenders, the Swap Parties [and the Noteholders]
forthwith the full amount which would be payable hereunder by the Guarantor as
if all Liabilities had been accelerated as provided in the Secured Credit
Agreement, any Interest Rate Protection Agreements [or any Note Purchase
Agreements, as applicable].
1.3. Setoff. (a) In addition to any rights now or hereafter granted
under applicable law and not by way of limitation of any such rights, upon the
occurrence of, and throughout the continuance of, any Event of Default, each
Lender, each subsequent holder of any Note and each Swap Party is hereby
authorized by the Guarantor without notice to the Borrower, the Guarantor or any
other Person, any such notice being hereby expressly waived, to set off and to
appropriate and to apply any and all deposits (general or special, including,
but not limited to, Indebtedness evidenced by certificates of deposit, whether
matured or unmatured, but not including trust accounts, and in whatever currency
denominated) and any other Indebtedness at any time held or owing by that
Lender, that subsequent holder or that Swap Party to or for the credit or the
account of the Guarantor, whether or not matured, against and on account of the
due and unpaid obligations and liabilities of the Borrower or the Guarantor to
that Lender, that subsequent holder or that Swap Party under the Credit
Documents or the applicable Guaranteed Interest Rate Protection Agreement,
irrespective of whether or not that Lender, that subsequent holder or that Swap
Party shall have made any demand hereunder.
[(b) In addition to any rights now or hereafter granted under applicable law
and not by way of limitation of any such rights, upon the occurrence of, and
throughout the continuance of, any Event of Default, each Noteholder is hereby
authorized by the Guarantor without notice to the Borrower, the Guarantor or any
other Person, any such notice being hereby expressly waived, to set off and to
appropriate and to apply any and all deposits (general or special, including,
but not limited to, Indebtedness evidenced by certificates of deposit, whether
matured or unmatured, but not including trust accounts, and in whatever currency
denominated) and any
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other Indebtedness at any time held or owing by Noteholder to or for the credit
or the account of the Guarantor, whether or not matured, against and on account
of the due and unpaid obligations and liabilities of the Borrower or the
Guarantor to that Noteholder under the Note Purchase Agreements and the
Noteholder Notes, irrespective of whether or not that Noteholder shall have made
any demand hereunder.]
1.4. Guaranty Absolute, etc. This Guaranty shall in all respects be a
continuing, absolute, irrevocable and unconditional Guaranty, and shall remain
in full force and effect (notwithstanding, without limitation, the dissolution
of the Borrower or the Guarantor or that at any time or from time to time all
Liabilities may have been paid in full), until the Commitment Termination Date.
1.5. Reinstatement. The Guarantor further agrees that, if at any time
all or any part of any payment theretofore applied by the Agent, the Collateral
Agent, any Lender or any Swap Party to any of the [Lender] Liabilities [or by
any Noteholder to any of the Noteholder Liabilities] is or must be rescinded or
returned by the Agent, the Collateral Agent, any Lender, any Swap Party [or any
Noteholder] for any reason whatsoever (including, without limitation, the
insolvency, bankruptcy or reorganization of the Borrower), such Liabilities
shall, for the purposes of this Guaranty, to the extent that such payment is or
must be rescinded or returned, be deemed to have continued in existence,
notwithstanding such application by the Agent, the Collateral Agent, such
Lender, such Swap Party [or such Noteholder] and this Guaranty shall continue to
be effective or be reinstated, as the case may be, as to such Liabilities, all
as though such application by the Agent, the Collateral Agent, such Lender, such
Swap Party [or such Noteholder] had not been made.
1.6. Rights of Agent, Collateral Agent, Lenders, Swap Parties [and
Noteholders]. The Agent, the Collateral Agent, any Lender, any Swap Party [or
any Noteholder] may, from time to time, at its sole discretion and without
notice to the Guarantor, take any or all of the following actions:
(a) retain, obtain, release or fail to perfect a lien upon or a security
interest in any property to secure any of the Liabilities or any obligation
hereunder;
(b) retain, obtain or release the primary or secondary obligation of any
obligor or obligors, in addition to the Guarantor, with respect to any of the
Liabilities;
(c) extend or renew for one or more periods (whether or not longer than the
original period), alter or exchange any of the Liabilities, or release or
compromise any obligation of the Guarantor hereunder or any obligation of any
nature of any other obligor with respect to any of the Liabilities;
(d) extend or renew for one or more periods (whether or not longer than the
original period) or release, compromise, alter or exchange any obligations of
any nature of any obligor with respect to any such property securing any of the
Liabilities; or
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(e) resort to the Guarantor for payment of any of the Liabilities, whether or
not the Agent, the Collateral Agent, any Lender, any Swap Party [or Noteholder]
shall have proceeded against any other obligor primarily or secondarily
obligated with respect to any of the Liabilities (all of the actions referred to
in this clause being hereby expressly waived by the Guarantor).
1.7. Application of Payments. Any amounts received by the Agent, the
Collateral Agent, any Lender, any Swap Parties [and any Noteholder] from
whatsoever source on account of the [Lender] Liabilities may be applied by it
toward the payment of such of the [Lender] Liabilities, and in such order of
application, as set forth in the Credit Documents, the applicable Interest Rate
Protection Agreement or the applicable Note Purchase Agreement, provided that
upon the occurrence of any Event of Default and during the continuance thereof,
all such amounts shall be applied in the order of application set forth in the
Secured Credit Agreement [subject to the terms of the Intercreditor Agreement].
1.8. Waiver. (a) The Guarantor hereby expressly waives:
(i) notice of the acceptance by the Agent, the Collateral Agent, the Lenders,
the Swap Parties [and the Noteholders] of this Guaranty;
(ii) notice of the existence or creation or non-payment of all or any of the
Liabilities;
(iii) presentment for payment, demand, protest, notice of intent to
accelerate, notice of acceleration, notice of dishonor and all other notices
whatsoever; and
(iv) all diligence in collection or protection of or realization upon the
Liabilities or any thereof, any obligation hereunder, or any security for or
guaranty of any of the foregoing.
(b) No delay on the part of the Agent, the Collateral Agent, any Lender, any
Swap Party [or any Noteholder] in the exercise of any right or remedy shall
operate as a waiver thereof, and no single or partial exercise by the Agent, the
Collateral Agent, any Lender, any Swap Party [or any Noteholder] of any right or
remedy shall preclude any other or further exercise thereof or the exercise of
any other right or remedy; nor (subject to Section 3.5) shall any modification
or waiver of any of the provisions of this Guaranty be binding upon the Agent,
the Collateral Agent, any Lender, any Swap Party [or any Noteholder] except as
expressly set forth in a writing duly signed and delivered on behalf of the
Agent, the Collateral Agent, such Lender, such Swap Party [or such Noteholder],
as the case may be. No action of the Agent, the Collateral Agent, any Lender,
any Swap Party [or any Noteholder] permitted hereunder shall in any way affect
or impair the rights of the Agent, the Collateral Agent, any Lender, any Swap
Party [or any Noteholder] and the obligations of the Guarantor under this
Guaranty. To the fullest
6
<PAGE>
extent permitted by applicable law, the obligations of the Guarantor under this
Guaranty shall be absolute and unconditional irrespective of any circumstance
whatsoever which might constitute a legal or equitable discharge or defense of
the Guarantor, including, without limitation, invalidity or unenforceability of
any of the Liabilities. The Guarantor hereby acknowledges that there are no
conditions to the effectiveness of this Guaranty.
1.9. Subrogation. No payment made by or for the account of the
Guarantor pursuant to this Guaranty shall entitle the Guarantor by subrogation
or otherwise to demand or receive any payments by the Borrower or from or out of
any properties of the Borrower until the Liabilities shall have been paid in
full, and the Guarantor hereby expressly waives all rights to any such
subrogation and any such payment to the fullest extent permitted by applicable
law. The Guarantor shall not exercise any right or remedy against the Borrower
or any properties of the Borrower by reason of any performance by the Guarantor
of this Guaranty until the Liabilities shall have been paid in full.
1.10. Excess Liabilities. The creation or existence from time to time
of Liabilities in excess of the amount to which the right of recovery under this
Guaranty is limited, if any, is hereby authorized, without notice to the
Guarantor, and shall in no way affect or impair the rights of the Agent, the
Collateral Agent, any Lender, any Swap Party [or any Noteholder] and the
obligation of the Guarantor under this Guaranty.
1.11. Successors, Transferees and Assigns. The Agent, the Collateral
Agent, each Lender, each Swap Party [and each Noteholder] may, from time to
time, without notice to the Guarantor, assign or transfer any or all of the
Liabilities or any interest therein in accordance with the terms of the Secured
Credit Agreement, any Interest Rate Protection Agreement [[or any Note Purchase
Agreement, as the case may be]; and, notwithstanding any such assignment or
transfer or any subsequent assignment or transfer thereof, such Liabilities
shall be and remain Liabilities for the purposes of this Guaranty, and each and
every immediate and successive assignee or transferee of any of the Liabilities
or of any interest therein shall, to the extent of the interest of such assignee
or transferee in the Liabilities, be entitled to the benefits of this Guaranty
to the same extent as if such assignee or transferee were the transferring
Agent, Collateral Agent, Lender, Swap Party [or Noteholder, as the case may be].
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Independent Means of Obtaining Information. The Guarantor hereby
represents and warrants to the Agent, the Collateral Agent, each Lender, each
Swap Party [and each Noteholder] that it now has and will continue to have
independent means of obtaining information concerning the affairs, operations,
financial condition, business and prospects of the Borrower.
7
<PAGE>
2.2 Authorization; No Conflict. The Guarantor hereby further
represents and warrants to the Agent, the Collateral Agent, each Lender, each
Swap Party [and each Noteholder] that
(a) the execution and delivery of this Guaranty, and the performance by the
Guarantor of its obligations hereunder, are within the Guarantor's corporate
powers and have been duly authorized by all necessary corporate action on the
part of the Guarantor and by all necessary governmental or other approvals (if
any shall be required); and
(b) this Guaranty has been duly executed and delivered on behalf of the
Guarantor and is the legal, valid and binding obligation of the Guarantor,
enforceable in accordance with its terms subject as to enforcement only to
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and equitable
principles and the making and performance of this Guaranty by the Guarantor do
not and will not contravene or conflict with the articles of incorporation and
by-laws or other corporate governance documents of the Guarantor or violate in
any material respect any law, any presently existing requirement or restriction
imposed by any judicial, arbitral or governmental instrumentality or violate or
constitute a default under any material agreement, instrument or indenture by
which the Guarantor is bound.
2.3 Validity and Binding Nature. This Guaranty shall be binding upon
the Guarantor, and upon any successor or successors, whether immediate or
remote, to such corporation; provided, however, that the Guarantor may not
assign any of its obligations hereunder without the prior written consent of the
Agent and all Lenders except as may be provided in the Secured Credit Agreement.
ARTICLE III
MISCELLANEOUS PROVISIONS
3.1 Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.
This Guaranty, and the rights and duties of the parties hereto, shall be
construed in accordance with and governed by the internal laws of the State of
New York. Each party hereto hereby submits to the nonexclusive jurisdiction of
the United States District Court for the Southern District of New York and of
any New York State court sitting in New York City for purposes of all legal
proceedings arising out of or relating to this Guaranty or the transactions
contemplated hereby. Each party hereto irrevocably waives, to the fullest
extent permitted by law, any objection it may now or hereafter have to the
laying of the venue of any such proceeding brought in such a court and any claim
that any such proceeding brought in such a court has been brought in an
inconvenient forum. EACH PARTY TO THIS GUARANTY HEREBY IRREVOCABLY WAIVES ALL
RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT
OF OR RELATING TO THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY.
8
<PAGE>
3.2. Severability. Wherever possible, each provision of this Guaranty
shall be interpreted in such manner as to be effective and valid under
applicable laws, but if any provision of this Guaranty shall be prohibited by or
invalid under such laws, such provision shall be ineffective to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Guaranty.
3.3 Notices. Except as otherwise specified herein, all notices under
this Guaranty shall be in writing (including cable, telecopy or telex) and shall
be given to the Guarantor at its address, telecopier number or telex number set
forth on the signature page hereof or such other address, telecopier number or
telex number as the Guarantor may hereafter specify by notice to the Agent,
given by courier, by United States certified or registered mail, by telegram or
by other telecommunication device capable of creating a written record of such
notice and its receipt. Each such notice, request or other communication shall
be effective (i) if given by telecopier, when such telecopy is transmitted to
the telecopier number specified in this Section on the signature pages hereof
and a confirmation of receipt of such telecopy has been received by the sender,
(ii) if given by telex, when such telex is transmitted to the telex number
specified on the signature pages hereof and the answerback is received by
sender, (iii) if given by courier, when delivered, (iv) if given by mail, five
(5) days after such communication is deposited in the mail, certified or
registered with return receipt requested, or (v) if given by any other means,
when delivered at the addresses specified on the signature page hereof.
3.4 Termination. This Guaranty, subject to Section 1.5, automatically
shall terminate (and cease to have any further force or effect) on the
Collateral Termination Date. This Guaranty, and Section 1.5, shall terminate
(and cease to have any further force or effect) upon the Guarantor ceasing to be
a Subsidiary of the Borrower provided that the transaction resulting in such
cessation is not in violation of the Secured Credit Agreement. For purposes
hereof, the "Collateral Termination Date" shall mean the first date on which no
Note, Reimbursement Obligation or Commitment (as such terms are defined in the
Secured Credit Agreement) is outstanding under the Secured Credit Agreement and
no other Obligation (as defined in the Secured Credit Agreement) is due and
payable thereunder.
3.5 Amendment and Waiver. Any term of this Guaranty to the contrary
notwithstanding, this Guaranty may be amended, modified or released by an
instrument executed and delivered by the Guarantor and the requisite Lenders
under the Secured Credit Agreement, and compliance by the Guarantor with any
provision hereof may be waived by an instrument executed and delivered by the
requisite Lenders under the Secured Credit Agreement, and any such amendment,
modification, release or waiver shall be binding upon the Agent, each Lender,
each Swap Party [and each Noteholder, provided that any such amendment,
modification or waiver (but not any such release) that expressly discriminates
against any Swap Party or Noteholder shall not be effective as against such Swap
Party or Noteholder unless it has consented thereto].
9
<PAGE>
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly executed
and delivered by its duly authorized officer as of the date first above written.
_____________________________________
By:__________________________________
Name:________________________________
Title:_______________________________
Address:
______________________________
______________________________
______________________________
10
<PAGE>
EXHIBIT 4.1D
FORM OF LEGAL OPINION OF HUGHES HUBBARD & REED LLP
<PAGE>
EXHIBIT 4.1D
[HUGHES HUBBARD & REED LLP LETTERHEAD]
__________, 1996
To the Persons Listed
on Schedule I hereto
Re: Secured Credit Agreement (the "Credit Agreement") dated as of July 30,
1996, among Sonat Offshore Drilling Inc., ABN AMRO Bank N.V., as Agent
for the Lenders, SunTrust Bank, Atlanta and Credit Lyonnais New York
Branch, as Documentation Agents for the Lenders, and Bank of Montreal,
The Fuji Bank, Limited, Royal Bank of Canada, and Wells Fargo Bank
(Texas), National Association, as Co-Agents for the Lenders
Ladies and Gentlemen:
We have acted as counsel to Sonat Offshore Drilling Inc., a Delaware
corporation (the "Borrower"), in connection with the execution and delivery of
(i) the Credit Agreement, (ii) the Notes dated as of __________, 1996 being
executed and delivered on the date hereof pursuant to Section 4.1(a)(i) of the
Credit Agreement (collectively, the "Notes"), (iii) the Subsidiary Guaranties of
each of Sonat Offshore Norway Inc., Sonat Offshore Ventures, Inc., Sonat Turnkey
Drilling Inc. and Sonat Offshore (U.K.), Inc. (collectively, the "Guarantors"),
each dated _______________, 1996 being executed and delivered on the date hereof
pursuant to Section 4.1(a)(iv) of the Credit Agreement (collectively, the
"Subsidiary Guaranties"), (iv) the Stock Pledge Agreement dated ____________,
1996 being executed and delivered on the date hereof pursuant to Section
4.1(a)(ii) of the Credit Agreement (the "Stock Pledge Agreement"), and (v) the
Note Pledge Agreement dated _____________, 1996 being executed and delivered on
the date hereof pursuant to Section 4.1(a)(iii) of the Credit Agreement (the
"Note Pledge Agreement"). The Credit Agreement, the Notes, the Subsidiary
Guaranties, the Stock Pledge Agreement and the Note Pledge Agreement are
collectively referred to herein as the "Transaction Documents." The Borrower
and the Guarantors are collectively referred to herein as the "Transaction
Parties." This Opinion Letter is delivered pursuant to Section 4.1(a)(xiii) of
the Credit Agreement. Capitalized terms used in this Opinion Letter and not
otherwise defined herein shall have the respective defined meanings set forth in
the Credit Agreement or (if not defined in the Credit Agreement) the Accord
referred to below.
This Opinion Letter is governed by, and shall be interpreted in
accordance with, the Legal Opinion Accord (the "Accord") of the ABA Section of
Business Law (1991). As a consequence, it is subject to a number of
qualifications, exceptions, definitions, limitations on
<PAGE>
To the Persons Listed
on Schedule I hereto
Opinion Letter
Page 2
___________, 1996
coverage and other limitations, all as more particularly described in the
Accord, and this Opinion Letter should be read in conjunction therewith.
Pursuant to (S)21 of the Accord, this Opinion Letter also is subject to the
following additional qualifications, exceptions, limitations on coverage,
assumptions and other limitations:
A. We are members of the bar of the State of New York. The law covered
by the opinions set forth below is limited to the Federal law of the United
States of America, the law of the State of New York and the General Corporation
Law of the State of Delaware.
B. In rendering the opinions set forth below, we have as to factual
matters relied without independent investigation on the representations and
warranties made by the Transaction Parties in the Transaction Documents.
C. We express no opinion as to the enforceability of (i) any provision of
the Transaction Documents, including without limitation provisions for late
charges or increased interest rates upon default, to the extent that any such
provision is determined to constitute a penalty, or (ii) any provision of the
Transaction Documents (1) that purports to establish or may be construed to
establish evidentiary standards, (2) as such provision relates to the
jurisdiction of federal courts and the waiver of venue and inconvenient forum
with respect to proceedings in federal courts, (3) that constitutes a waiver
which is prohibited under the Uniform Commercial Code, as in effect in the State
of New York (the "UCC"), (4) that is contrary to Section 9-311, or Part V of
Article 9, or subsection (3) of Section 1-102, of the UCC or (5) providing for
waiver of rights to trial by jury. We express no opinion as to the third-to-
last, and last, sentences of Section 2.9, Section 10.6, the third-to-last
sentence of Section 10.10(a), or Section 10.18, of the Credit Agreement, the
last two sentences of the fifth paragraph of the Notes or Section 1.3 of the
Guaranty. Our opinion as to the enforceability of any governing law provision
contained in any Transaction Document is qualified by the effects of subsection
(2) of Section 1-105 of the UCC. Certain of the rights and powers granted to
the Secured Party (as defined in the Stock Pledge Agreement and the Note Pledge
Agreement) in, and certain of the other remedial and procedural provisions of,
the Transaction Documents may be or are unenforceable in whole or in part (or
under certain circumstances) pursuant to applicable law or judicially adopted
principles, but the inclusion of such provisions does not, in our judgment
(insofar as substantive provisions of Federal law or New York State law are
relevant to such judgment and subject to (i) the effects of (x) any third party
consents and approvals that may be required in connection with the exercise of
rights and remedies and (y) any delay that may result from adherence to such law
and principles and (ii) the other exceptions, assumptions, qualifications and
limitations set forth in this Opinion Letter), make the remedies afforded by the
Transaction Documents (taken together), or otherwise available under applicable
law, inadequate for the practical realization of the substantive benefits
intended to be afforded by the Transaction Documents.
<PAGE>
To the Persons Listed
on Schedule I hereto
Opinion Letter
Page 3
___________, 1996
D. We wish to point out that the provisions of any Transaction Document
that permit any Person to take action (including without limitation to take
action pursuant to a power of attorney) or make determinations (and/or to have
such determinations be binding on other parties to any degree), or to benefit
from indemnities or similar undertakings, or waivers, exculpatory provisions or
similar provisions, may be subject to limitations imposed by law or by public
policy considerations, including, without limitation, a requirement that such
action be taken or such determination be made, or that any action or inaction by
any Person in respect of which such an indemnity or similar undertaking, or such
a waiver, exculpatory provision or similar provision, may be called upon or
raised, be taken or not taken, as the case may be, on a reasonable and lawful
basis and in good faith. Provisions of any Transaction Document which provide
that a guarantee by a party thereto, or the grant of a Lien or security interest
by a party thereto to secure the obligations of a third party, shall not be
affected by changes in or amendments to the Transaction Documents or other
relevant documents might be enforceable only to the extent such changes or
amendments are not so material as to constitute a new agreement among the
parties to such documents.
E. Except as expressly set forth in paragraph 7 below, we express no
opinion with respect to the existence, creation, validity, attachment,
perfection, priority or (to the extent dependent on the foregoing) enforcement
of any security interest in or other Lien on any Collateral or any other
property covered by the Transaction Documents. We express no opinion as to the
existence, nature or extent of the Borrower's rights in any of the Pledged
Securities or the Pledged Note[s] (as such terms are defined in paragraph 7
below). To the extent that any opinion is expressed with respect to such
matters below or such matters are relevant to the opinions expressed below, (i)
our opinions are limited to the extent that Section 552 of the United States
Bankruptcy Code limits the extent to which property acquired by the debtor after
the commencement of a case under the Bankruptcy Code may be subject to a lien
arising from a security agreement entered into by the debtor before the
commencement of such case, (ii) our opinions are subject to (1) the provisions
of Section 9-203 and 9-204 of the UCC relating to the time of attachment of a
security interest in an item of collateral in which the Person granting the
security interest does not presently have rights, and (2) the limitations on the
continuation and perfection of security interests and the limitations with
respect to proceeds resulting from the operation of Sections 8-301, 8-302 and 9-
306 through 9-309 of the UCC, (iii) we have assumed that the Secured Party has
taken delivery of the stock certificates representing the Pledged Securities,
and of the Pledged Note[s], and has acquired its security interest in the
Pledged Securities in "good faith" and without notice or knowledge of any
"adverse claim" (as such terms are used in Article 8 of the UCC), and (iv) we
have assumed that as of the date hereof Section 3.09(a) of the Stock Pledge
Agreement is not applicable to the Pledged Securities and (v) we have assumed
that the initial Loans under the Credit Agreement have been made to the
Borrower. We have assumed that the Pledged Securities constitute "certificated
securities" within the meaning and ambit of Article 8 of the UCC and we express
no opinion as to the effect of the law
<PAGE>
To the Persons Listed
on Schedule I hereto
Opinion Letter
Page 4
___________, 1996
of the jurisdiction[s] of incorporation of the issuer[s] of the Pledged
Securities with respect to the Stock Pledge Agreement.
F. In giving the opinions set forth in paragraphs 3 and 6 below, we have
relied on an officer's certificate of [Borrower/Transocean] to the effect that
the shares of stock to be acquired in the Exchange Offer, the Mandatory Bid or
the Compulsory Acquisition do not constitute "margin stock" within the meaning
of Regulation U of the Board of Governors of the Federal Reserve System and that
none of the Lenders is subject to Regulation T of the Board of Governors of the
Federal Reserve System.
G. The General Qualifications shall apply to paragraphs 3 and 6 below.
Our opinions in paragraphs 3 and 4 below are based upon a review of those State
of New York or Federal statutes, rules and regulations which, in our experience,
are normally applicable to transactions of the type contemplated by the
Transaction Documents.
Based upon and subject to the foregoing, it is our opinion that:
1. Each of the Transaction Parties is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware.
2. Each of the Transaction Parties has full corporate power and corporate
authority to execute, deliver and perform its obligations under the Transaction
Documents to which it is a party.
3. The execution, delivery and performance of the Transaction Documents
by each of the Transaction Parties have been duly authorized by all necessary
corporate action of each Transaction Party. There is no provision in (i) the
certificate of incorporation or by-laws of any of the Transaction Parties, (ii)
any Court Order of any State of New York or Federal court or governmental agency
that any of the Transaction Parties has advised us is binding on any of the
Transaction Parties, [(iii) the Note Purchase Agreements (as amended and in
effect in the date hereof),]/1/ or (iv) any present State of New York or Federal
statute, rule or regulation (including without limitation Regulation G, U or X
of the Board of Governors of the Federal Reserve System) applicable to the
Transaction Parties, which will be contravened in any material respect by the
execution or delivery by any of the Transaction Parties of any of the
Transaction Documents, the consummation by the Transaction Parties of the
transactions contemplated to be consummated by them thereunder on the date
hereof or the performance by the Transaction Parties of their respective
Obligations under the Transaction Documents.
- ----------
/1/. The bracketed language will be deleted if the notes issued under the
Note Purchase Agreement are to be prepaid with the proceeds of the initial
Borrowings.
<PAGE>
To the Persons Listed
on Schedule I hereto
Opinion Letter
Page 5
___________, 1996
4. No authorization, consent, approval, license, waiver, exemption or
other similar action by any State of New York or Federal governmental authority
or agency having jurisdiction over any of the Transaction Parties is required to
be obtained by the Transaction Parties in connection with the execution and
delivery of the Transaction Documents by the Transaction Parties, the
consummation by the Transaction Parties of the transactions contemplated to be
consummated by them thereunder on the date hereof or the performance by the
Transaction Parties of their respective Obligations under the Transaction
Documents.
5. The Transaction Documents have been duly and validly executed and
delivered by each Transaction Party a party thereto.
6. Each Transaction Document constitutes the legal, valid and binding
obligation of each Transaction Party a party thereto, enforceable against each
such Transaction Party in accordance with its terms.
7. Insofar as such matter is governed by the substantive provisions of
the UCC, assuming that the Secured Party has taken, and is in, possession
(within the meaning of Sections 8-313 and 9-304(1) of the UCC), in the State of
New York, of the stock certificates representing the shares of capital stock of
[NSub] and Sonat Offshore Far East described in Exhibit A to the Stock Pledge
Agreement (such shares, the "Pledged Securities") appropriately endorsed for
assignment or accompanied by an appropriately executed stock power, the Stock
Pledge Agreement creates in favor of the Secured Party a valid and perfected
security interest in all right, title and interest of the Borrower in the
Pledged Securities. Assuming that the Secured Party has taken, and is in,
possession (within the meaning of Sections 8-313 and 9-304(1) of the UCC), in
the State of New York, of the promissory note[s] described in Exhibit A to the
Note Pledge Agreement (such promissory note[s], the "Pledged Note[s]")
appropriately endorsed for assignment, the Note Pledge Agreement creates in
favor of the Secured Party a valid and perfected security interest in all right,
title and interest of the Borrower in the Pledged Note[s].
Very truly yours,
<PAGE>
SCHEDULE I
ABN AMRO Bank N.V.
Three Riverway, Suite 1700
Houston, Texas 77056
Credit Lyonnais New York Branch
1301 Avenue of the Americas
New York, New York 10019
SunTrust Bank, Atlanta
25 Park Place
24th Floor, Center 120
Atlanta, Georgia 30303
Bank of Montreal
700 Louisiana, Suite 4400
Houston, Texas 77002
The Fuji Bank, Limited
One Houston Center, Suite 4100
1221 McKinney Street
Houston, Texas 77010
Royal Bank of Canada
5410 Autumn Breeze Court
Spring, Texas 77379
Wells Fargo Bank (Texas),
National Association
First Interstate Plaza Building
1000 Louisiana, Third Floor
Houston, Texas 77002
Bank of Tokyo - Mitsubishi
1100 Louisiana, Suite 2800
Houston, Texas 77002
Enskilda SkandinaviskaEnskilda Banken
Rosenkrantzgt. 22
0160 Oslo
Norway
Westdeutsche Landesbank
1211 Avenue of the Americas, 23rd Floor
New York, New York 10036
Australia and New Zealand
Banking Group Limited
1177 Avenue of the Americas
New York, New York 10036-2798
The Bank of New York
One Wall Street, 19th Floor
New York, New York 10286
The Bank of Nova Scotia,
Atlanta Agency
600 Peachtree Street N.E.,
Suite 2700
Atlanta, Georgia 30308
Dai-Ichi Kangyo Bank, Ltd.
1100 Louisiana, Suite 4940
Houston, Texas 77002
DG Bank
DG Bank Building
609 Fifth Avenue
New York, New York 10017-1021
First National Bank of Commerce
210 Baronne Street
New Orleans, Louisiana 70160
The Sanwa Bank Limited
4100 W. Texas Commerce Tower
2200 Ross Avenue
Dallas, Texas 75201
Societe Generale
1111 Bagby Street, Suite 2020
Houston, Texas 77002
The Sumitomo Bank, Limited
NationsBank Center, Suite 1750
700 Louisiana, Street
Houston, Texas 77002
<PAGE>
EXHIBIT 4.1E
FORM OF LEGAL OPINION OF GENERAL COUNSEL OF BORROWER
<PAGE>
EXHIBIT 4.1E
[LETTERHEAD OF SONAT OFFSHORE DRILLING INC.]
__________, 1996
To the Persons Listed
on Schedule I hereto
Re: Secured Credit Agreement (the "Credit Agreement") dated as of July 30,
1996, among Sonat Offshore Drilling Inc., AMRO Bank N.V., as Agent for
the Lenders, SunTrust Bank, Atlanta and Credit Lyonnais New York Branch,
as Documentation Agents for the Lenders, and Bank of Montreal, The Fuji
Bank, Limited, Royal Bank of Canada, and Wells Fargo Bank (Texas),
National Association, as Co-Agents for the Lenders
Ladies and Gentlemen:
As General Counsel of Sonat Offshore Drilling Inc., a Delaware
corporation (the "Borrower"), I have acted as counsel to the Borrower and to
Sonat Offshore Norway Inc., Sonat Offshore Ventures, Inc., Sonat Turnkey
Drilling Inc. and Sonat Offshore (U.K.), Inc. (collectively, the "Guarantors"),
in connection with the execution and delivery by the Borrower, and the
Guarantors, as applicable, of (i) the Credit Agreement, (ii) the Notes dated as
of ________, 1996 being executed and delivered on the date hereof pursuant to
Section 4.1(a)(i) of the Credit Agreement (collectively, the "Notes"), (iii) the
Subsidiary Guaranties dated _______________, 1996 being executed and delivered
on the date hereof pursuant to Section 4.1(a)(iv) of the Credit Agreement
(collectively, the "Subsidiary Guaranties"), (iv) the Stock Pledge Agreement
dated ____________, 1996 being executed and delivered on the date hereof
pursuant to Section 4.1(a)(ii) of the Credit Agreement (the "Stock Pledge
Agreement"), and (v) the Note Pledge Agreement dated _____________, 1996 being
executed and delivered on the date hereof pursuant to Section 4.1(a)(iii) of the
Credit Agreement (the "Note Pledge Agreement"). The Credit Agreement, the
Notes, the Subsidiary Guaranties, the Stock Pledge Agreement and the Note Pledge
Agreement are collectively referred to herein as the "Transaction Documents."
The Borrower and the Guarantors are collectively referred to herein as the
"Transaction Parties." This Opinion Letter is delivered pursuant to Section
4.1(a)(xiii) of the Credit Agreement. Capitalized terms used in this Opinion
Letter and not otherwise defined herein shall have the respective defined
meanings set forth in the Credit Agreement or (if not defined in the Credit
Agreement) the Accord referred to below.
<PAGE>
To the Persons Listed
on Schedule 1 hereto
Opinion Letter
Page 2
_______________, 1996
This Opinion Letter is governed by, and shall be interpreted in accordance
with, the Legal Opinion Accord (the "Accord") of the ABA Section of Business Law
(1991). As a consequence, it is subject to a number of qualifications,
exceptions, definitions, limitations on coverage and other limitations, all as
more particularly described in the Accord, and this Opinion Letter should be
read in conjunction therewith. Pursuant to (S)21 of the Accord, this Opinion
Letter also is subject to the following additional qualifications, exceptions,
limitations on coverage, assumptions and other limitations:
A. I am a member of the bar of the State of Texas. The law covered by
the opinions set forth below is limited to the law of the State of Texas.
B. The opinions in paragraphs 1 and 3 below are based upon a review of
those State of Texas statutes, rules and regulations which, in my experience,
are normally applicable to transactions of the type contemplated by the
Transaction Documents. The General Qualifications shall apply to paragraph 3
below.
C. [With respect to the opinion in paragraph 4 below, I point out that
I am not aware of any reported decisions interpreting Section 35.51.]/1/ The
opinion in paragraph 4 below is qualified by the effects (if any) of (i) clause
(4) of subsection (f) of Section 35.51, (ii) without limitation of clause (i),
Section 1.105 of the Texas Business and Commerce Code and (iii) a Texas state
court's consideration of the conflict of laws statutes and rules of the State of
New York.
Based upon and subject to the foregoing, it is my opinion that:
1. No authorization, consent, approval, license, waiver, exemption or other
similar action by any State of Texas governmental authority or agency having
jurisdiction over the Transaction Parties is required to be obtained by the
Transaction Parties in connection with the execution and delivery of the
Transaction Documents by the Transaction Parties, the consummation by the
Transaction Parties of the transactions contemplated therein to be consummated
by them on the date hereof or the performance by the Transaction Parties of
their respective Obligations under the Transaction Documents.
2. Each of the Transaction Parties has the requisite corporate power to own
its property and to carry on its business as currently conducted.
3. The execution and delivery by the Transaction Parties of the Transaction
Documents, the consummation by the Transaction Parties of the transactions
contemplated to be consummated by them thereunder on the date hereof and the
performance by the Transaction
- ----------
/1/. The bracketed language may be deleted by the opinion giver.
<PAGE>
To the Persons Listed
on Schedule 1 hereto
Opinion Letter
Page 3
_______________, 1996
Parties of their respective Obligations under the Transaction Documents (i) will
not violate any material contractual obligation of the Transaction Parties known
to me and (ii) will not contravene in any material respect any State of Texas
statute, rule or regulation applicable to the Transaction Parties. [I express
no opinion as to the Note Purchase Agreements, as to which I refer you to the
opinion of Hughes Hubbard & Reed LLP dated as of even date herewith.]/7/
4. Under Section 35.51 of the Texas Business and Commerce Code ("Section
35.51"), the governing law provisions of the Transaction Documents, to the
extent stating that the laws of the State of New York govern the interpretation
or construction of such Transaction Documents, should be enforced by a Texas
state court.I hereby confirm that, to my Actual Knowledge, there is no action,
suit or proceeding at law or in equity, before any court or governmental
authority, arbitration board or tribunal, pending or overtly threatened in
writing against one or more of the Borrower and its consolidated Subsidiaries
[(other than Transocean and its Subsidiaries)]/8/ that I reasonably expect to
have a Material Adverse Effect.
Very truly yours,
Eric B. Brown
Attachment
- ----------
/7/. The bracketed language will be deleted if the notes issued under the
Note Purchase Agreement are to be prepaid with the proceeds of the initial
Borrowings.
/8/. Bracketed language will be deleted if Transocean is not a Subsidiary
of the Borrower as of the date of this opinion.
<PAGE>
SCHEDULE I
ABN AMRO Bank N.V.
Three Riverway, Suite 1700
Houston, Texas 77056
Credit Lyonnais New York Branch
1301 Avenue of the Americas
New York, New York 10019
SunTrust Bank, Atlanta
25 Park Place
24th Floor, Center 120
Atlanta, Georgia 30303
Bank of Montreal
700 Louisiana, Suite 4400
Houston, Texas 77002
The Fuji Bank, Limited
One Houston Center, Suite 4100
1221 McKinney Street
Houston, Texas 77010
Royal Bank of Canada
5410 Autumn Breeze Court
Spring, Texas 77379
Wells Fargo Bank (Texas),
National Association
First Interstate Plaza Building
1000 Louisiana, Third Floor
Houston, Texas 77002
Bank of Tokyo - Mitsubishi
1100 Louisiana, Suite 2800
Houston, Texas 77002
Enskilda Skandinaviska
Enskilda Banken
Rosenkrantzgt. 22
0160 Oslo
Norway
Westdeutsche Landesbank
1211 Avenue of the Americas, 23rd Floor
New York, New York 10036
Australia and New Zealand
Banking Group Limited
1177 Avenue of the Americas
New York, New York 10036-2798
The Bank of New York
One Wall Street, 19th Floor
New York, New York 10286
The Bank of Nova Scotia, Atlanta Agency
600 Peachtree Street N.E.,
Suite 2700
Atlanta, Georgia 30308
Dai-Ichi Kangyo Bank, Ltd.
1100 Louisiana, Suite 4940
Houston, Texas 77002
DG Bank
DG Bank Building
609 Fifth Avenue
New York, New York 10017-1021
First National Bank of Commerce
210 Baronne Street
New Orleans, Louisiana 70160
The Sanwa Bank Limited
4100 W. Texas Commerce Tower
2200 Ross Avenue
Dallas, Texas 75201
Societe Generale
1111 Bagby Street, Suite 2020
Houston, Texas 77002
The Sumitomo Bank, Limited
NationsBank Center, Suite 1750
700 Louisiana, Street
Houston, Texas 77002
<PAGE>
EXHIBIT 4.1F
INTERCREDITOR AGREEMENT
<PAGE>
EXHIBIT 4.1F
INTERCREDITOR AGREEMENT
This INTERCREDITOR AGREEMENT (this "Agreement") dated as of _________________,
1996, is by and among ABN AMRO Bank N.V., a Netherlands chartered bank acting
through its Houston Agency ("ABN AMRO"), as Agent for the Lenders (as
hereinafter defined) and as Collateral Agent, Sonat Offshore Drilling Inc., a
Delaware corporation (solely as to Sections 2, 23, 24 and 28) (the "Borrower"),
[_____________________________________ (the "Swap Lender")]/*/ and
____________________ and ___________________.
W I T N E S S E T H :
WHEREAS, the Agent, SunTrust Bank, Atlanta, and Credit Lyonnais New York
Branch, as Documentation Agents for the Lenders, Bank of Montreal, The Fuji
Bank, Limited, Royal Bank of Canada, and Wells Fargo Bank (Texas), National
Association, as Co-Agents for the Lenders, the financial institutions from time
to time parties thereto (the "Lenders") and the Borrower are parties to that
certain Secured Credit Agreement dated as of July 30, 1996 (as such agreement
may be amended, extended, modified, renewed, supplemented or restated from time
to time, the "Credit Agreement");
WHEREAS, the Borrower or any of its Subsidiaries may from time to time enter
into Interest Rate Protection Agreements with any Lender or any affiliate of a
Lender that is or becomes a party hereto (a "Hedging Affiliate") (all
obligations of the Borrower or any of its Subsidiaries under such Interest Rate
Protection Agreements entered into with any counterparty who, at the time such
agreement or arrangement was entered into, was then a Lender or a Hedging
Affiliate, herein collectively the "Secured Hedging Obligations" and any such
counterparty, [including, but not limited to, the Swap Lender,]1* a "Swap
Party");
WHEREAS, each of the Noteholders are parties, together with the Borrower, to
certain Note Purchase Agreements dated as of February 15, 1994, relating to the
$30,000,000 aggregate principal amount 6.90% Senior Notes Due February 15, 2004,
of the Borrower (as heretofore or hereafter amended, modified, supplemented,
extended, rearranged and/or restated from time to time, the "Note Purchase
Agreements"); and
WHEREAS, each of the parties hereto desire to set forth their agreement with
respect to the sharing of payments and the proceeds of the Common Collateral (as
hereinafter defined);
- ----------
/*/Insert if Interest Rate Protection Agreement entered into with a Lender or an
affiliate of a Lender as swap counterparty on date of execution.
<PAGE>
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agrees as follows:
1. Definitions. Unless otherwise defined herein, capitalized terms used
herein shall have the meanings ascribed to such terms in the Credit Agreement as
in effect on the date hereof. Additionally, as used hereafter in this
Agreement, the following terms shall have the following respective meanings:
"Collateral Termination Date" means the first date on which no Note,
Reimbursement Obligation or Commitment is outstanding under the Credit Agreement
and no other Obligation is due and payable thereunder.
"Common Collateral" means (i) all Collateral, (ii) all Subsidiary
Guaranties, and (iii) all collateral referenced in Section 4(a).
"Lender Parties" means each Lender, each Swap Party and each Noteholder,
and any permitted successors or assigns thereto pursuant to the applicable
Secured Debt Documents.
"Noteholders" means the holders from time to time of the Noteholder
Notes.
"Noteholder Notes" means each of the 6.90% Senior Notes due February 15,
2004, of the Borrower, as heretofore or hereafter amended, extended, modified,
rearranged and/or supplemented from time to time, together with any promissory
notes given by the Borrower in extension, replacement, rearrangement,
modification and/or substitution thereof or therefor.
"Noteholder Obligations" means all obligations of the Borrower to any of
the Noteholders pursuant to the Noteholder Notes or the Note Purchase
Agreements.
"Secured Debt" means the Obligations, the Secured Hedging Obligations and
the Noteholder Obligations.
"Secured Debt Documents" means the Notes, the Credit Agreement, the other
Credit Documents, any agreement evidencing any Secured Hedging Obligation, the
Noteholder Notes and the Note Purchase Agreements.
"Triggering Event" means either (i) the acceleration of the maturity of
the Loans, or (ii) the final maturity of any of the Loans and receipt by the
Collateral Agent of written instructions from the Majority Lenders to proceed
with the enforcement of the rights and remedies granted in the Security
Documents, including, without limitation, the Subsidiary Guaranties, or
available at law or in equity.
2
<PAGE>
2. Distribution and Application of Payments and Proceeds after Triggering
Event. Any proceeds received by the Collateral Agent (i) from the foreclosure,
sale, lease or other disposition of any Common Collateral pursuant to the
exercise of any remedies under any Security Document, including, without
limitation, payments under any of the Subsidiary Guaranties, after a Triggering
Event, or (ii) from any disposition of, or on account of, all or any of the
Common Collateral or proceeds of any Common Collateral or any claim against the
Borrower, any Guarantor, or any of the Borrower's other Subsidiaries, in each
case upon the dissolution, winding up, liquidation, arrangement, reorganization,
adjustment, protection, relief, or composition of the Borrower, any Guarantor or
any of the Borrower's other Subsidiaries or the debts thereof, whether in
bankruptcy, insolvency, arrangement, reorganization, receivership, relief or
similar proceedings or upon an assignment for the benefit of creditors or any
other marshalling of assets and liabilities of the Borrower, any Guarantor or
any of the Borrower's other Subsidiaries (including, without limitation,
payments in respect of interest accruing after the filing of a petition
initiating any proceeding referred to above), shall be paid by the Collateral
Agent for application and shall be applied by the Lenders, each Swap Party, each
Noteholder and the Collateral Agent as follows:
(a) First, to the payment of any and all reasonable out-of-pocket
costs and expenses of the Collateral Agent, including, without limitation,
reasonable attorneys' fees and out-of-pocket costs and expenses, incurred in
connection with the collection of such proceeds or the protection of the rights
and interests of the Collateral Agent herein, in the Credit Agreement, under the
Security Documents, including, without limitation, the Subsidiary Guaranties, in
the Common Collateral or in respect of the enforcement of any of the rights and
obligations of the Collateral Agent under this Agreement, the Credit Agreement,
any of the Security Documents, including, without limitation, any Subsidiary
Guaranty, or any other Credit Document;
(b) Second, to the payment of any and all reasonable out-of-pocket
costs and expenses of the Lenders, the Swap Parties and the Noteholders,
including, without limitation, reasonable attorneys' fees and out-of-pocket
costs and expenses, as provided by any applicable Secured Debt Document incurred
in connection with the collection of such proceeds or the protection or
enforcement of the rights and interests of such Lender Party under any
applicable Secured Debt Document; pro rata in the proportion in which the amount
of such costs and expenses unpaid to each Lender Party bears to the aggregate
amount of the costs and expenses unpaid to all Lender Parties collectively,
until all such fees, costs and expenses have been paid in full;
(c) Third, to the payment of any due and unpaid fees owed by the
Borrower or any Guarantor to the Collateral Agent or any Lender Party as
provided in any applicable Secured Debt Document, pro rata in the proportion in
which the amount of such fees due and unpaid to the Collateral Agent and each
Lender Party bears to the aggregate amount of the fees due and unpaid to the
Collateral Agent and all Lender Parties collectively, until all such fees have
been paid in full;
3
<PAGE>
(d) Fourth, to the payment of accrued and unpaid interest on the
Notes, the Reimbursement Obligations, the Secured Hedging Obligations and the
Noteholder Notes to the date of such application, pro rata in the proportion in
which the amount of such interest, accrued and unpaid to each Lender Party bears
to the aggregate amount of such interest accrued and unpaid to all Lender
Parties collectively, until all such accrued and unpaid interest has been paid
in full;
(e) Fifth, to the payment of the outstanding due and payable principal
amount of each of the Notes, the amount of the outstanding Reimbursement
Obligations (reserving cash collateral for all undrawn face amounts of any
outstanding Letters of Credit (if Section 7.4(a) of the Credit Agreement has not
been complied with)), the Secured Hedging Obligations and the amount of each of
the Noteholder Notes, pro rata in the proportion in which the outstanding
principal amount of such Notes and the amount of such outstanding Reimbursement
Obligations owing to each Lender Party, the amount of the Secured Hedging
Obligations owing to each Swap Party and the amount of such Noteholder Note
owing to each Noteholder, together (if Section 7.4(a) of the Credit Agreement
has not been complied with) with the undrawn face amounts of outstanding Letters
of Credit, bears to the aggregate amount of all outstanding Notes, outstanding
Reimbursement Obligations, together (if Section 7.4(a) of the Credit Agreement
has not been complied with) with the undrawn face amounts of all such
outstanding Letters of Credit, Secured Hedging Obligations and Noteholder
Obligations. In the event that any such Letters of Credit, or any portions
thereof, expire without being drawn, any cash collateral therefor shall be
distributed by the Collateral Agent until the principal amount of all Notes,
Reimbursement Obligations, Secured Hedging Obligations and Noteholder Notes
shall have been paid in full;
(f) Sixth, to the payment of any other outstanding Secured Debt then
due and payable, pro rata in the proportion in which such outstanding Secured
Debt owing to each Lender Party bears to the aggregate amount of all such
outstanding Secured Debt until all such obligations have been paid in full; and
(g) Seventh, to the Borrower or as the Borrower may direct.
Any cash Common Collateral held by the Collateral Agent while an Event of
Default shall be continuing shall continue to be held by the Collateral Agent
or, consistent with the Security Documents and if so directed by the requisite
Lenders under the Credit Agreement (but without any consent being required of
any Swap Party or any of the Noteholders), applied to the payment of the Secured
Debt, but if such cash Common Collateral is to be applied to the payment of
Secured Debt, it shall be applied as set forth in this Section 2.
3. Enforcement Instructions by Majority Lenders.
(a) After acceleration of the maturity of or final maturity of any of the
Loans, the Collateral Agent may proceed, and is hereby authorized by each Swap
Party and each
4
<PAGE>
Noteholder to proceed on its behalf, consistent with the Security Documents,
including, without limitation, the Subsidiary Guaranties, and this Agreement,
with enforcement of the rights and remedies granted in the Security Documents,
including, without limitation, the Subsidiary Guaranties, or available at law or
in equity, or with commencement of suits or proceedings as appropriate to
enforce the rights, liens, or security interests granted in any of the Security
Documents, including, without limitation, the Subsidiary Guaranties. The
Collateral Agent shall proceed upon the written instructions of the Majority
Lenders (without any consent being required of any Swap Parties or any of the
Noteholders) to enforce, consistent with the Security Documents, including,
without limitation, the Subsidiary Guaranties, the rights or powers provided
therein for the benefit of the Lender Parties and shall give such notice or
direction or shall exercise such right or power thereunder or hereunder or
incidental thereto as shall be reasonably specified in such instructions and
consistent with the terms of such agreements and this Agreement. The Collateral
Agent may, in its discretion, but shall not be obligated to, at any time request
directions from the Majority Lenders as provided in the Credit Agreement or from
the Lender Parties as provided herein as to any course of action or other matter
relating hereto or to any Security Document, including, without limitation, any
Subsidiary Guaranty. Each Lender Party agrees to respond to any such request as
promptly as practicable, and the Collateral Agent may refrain from taking any
action until it receives such direction. Each Lender Party and the Collateral
Agent agrees that it will not attempt to prevent, hinder or delay any of such
action.
(b) After acceleration of the maturity of or final maturity of any of the
Loans and upon the written instructions of the Majority Lenders (without any
consent being required of any Swap Parties or any of the Noteholders) to the
Collateral Agent that any of such Loans have matured, the Collateral Agent shall
proceed, consistent with the Security Documents, including without limitation,
the Subsidiary Guaranties, for the benefit of all of the Secured Debt with
enforcement of any private powers of sale granted in the Security Documents, or
with commencement of suits or proceedings as reasonably appropriate to enforce
the rights, liens, or security interests granted in the Security Documents,
including, without limitation, the Subsidiary Guaranties, or for the appointment
of a receiver or receivers for the property subject to the Security Documents,
including, without limitation, the Subsidiary Guaranties, or any part thereof,
including, as reasonably necessary, suits or proceedings for the recovery of a
judgment for the Obligations and any Secured Hedging Obligations and Noteholder
Obligations then due and payable, and shall give such notice or direction, or
shall exercise such right, remedy or power under any Security Document,
including, without limitation, any Subsidiary Guaranty, incidental thereto, all
as shall be reasonably specified in such instructions and consistent with the
terms of the Security Documents, including, without limitation, the Subsidiary
Guaranties, as applicable, and this Agreement. Each Lender, each Swap Party and
each Noteholder agrees that it will not attempt to enforce such foreclosure on
or assert any rights against the Common Collateral except as provided in this
Agreement.
(c) Without regard to the acceleration of the maturity or final maturity
of any of the Obligations, upon the written instruction of the Majority Lenders
(without any consent
5
<PAGE>
being required of any Swap Parties or any of the Noteholders), the Collateral
Agent shall proceed to enforce consistent with the Security Documents,
including, without limitation, the Subsidiary Guaranties, as applicable, the
rights or powers provided in the Security Documents, including, without
limitation, the Subsidiary Guaranties, for the benefit of the Secured Debt
(other than those rights which are to be exercised only after the acceleration
of the maturity or the final maturity of any of the Obligations) and shall give
such notice or direction or shall exercise such right or power hereunder or
under any of the Security Documents, including, without limitation, the
Subsidiaries Guaranties, as applicable, incidental thereto as shall be
reasonably specified in such instructions and consistent with the terms of the
Security Documents, including, without limitation, the Subsidiary Guaranties,
and this Agreement.
4. Sharing of Security; Pro Rata Treatment.
(a) Each Lender Party, the Agent and the Collateral Agent agrees that,
after a Triggering Event, (i) if it shall receive any security or the proceeds
of any security pursuant to the terms of this Agreement or any Secured Debt
Document (other than through payment by the Collateral Agent in accordance with
Section 2), then it shall promptly turn the same over to the Collateral Agent
for payment in accordance with Section 2, and (ii) it will not take or cause to
be taken any action, including, without limitation, the commencement of any
legal or equitable proceedings except as provided in Sections 3(a) and (b), the
purpose of which is or could be to give such Lender Party any preference or
priority against the other parties hereto with respect to such security or the
proceeds thereof, other than any preference or priority provided for in this
Agreement, as amended, extended, modified, renewed, supplemented or restated
from time to time. Each Lender Party and the Collateral Agent further agrees
that if it obtains, from and after the date hereof, any collateral as security
for any of the Obligations, any Secured Hedging Obligation or any Noteholder
Obligation in addition to the Common Collateral (including, without limitation,
by means of offset of any balances, credits, deposits, amounts or moneys of the
Borrower or its Subsidiaries held by or on behalf of such Lender Party), such
collateral shall be shared and applied by the parties hereto in accordance with
Section 2.
(b) Each Lender Party and the Collateral Agent agrees that after a
Triggering Event each payment, prepayment, distribution of cash or other assets
(whether or not from Common Collateral or any other collateral security or as a
result of any unsecured or undersecured claim) by or from or received for the
account of the Borrower, any Guarantor, any of the Borrower's other Subsidiaries
or any other Person in respect of any Secured Debt shall be shared and applied
by the parties hereto in accordance with Section 2. In the event that after a
Triggering Event any Lender Party shall obtain payment, whether partial or in
full, from any source in respect of any such Secured Debt due to such holder,
including without limitation, by means of offset of any balances, credits,
deposits, amounts of moneys of the Borrower or its Subsidiaries or any other
Person, or banker's lien, general lien or counterclaim,. such Lender Party shall
promptly pay to the Collateral Agent such amount to be applied in accordance
with Section 2.
6
<PAGE>
5. Priority of Liens and Security Interests. The agreements of the
parties herein are applicable without regard to: (i) the date a loan, advance,
or extension of credit is made to, or any other Secured Debt is incurred by, the
Borrower, any Guarantor or any other Subsidiary of the Borrower; (ii) the time
or order of attachment, perfection, filing, or recording of the security
interests and liens in the Common Collateral or the time or order of filing
financing statements and other security documents or the giving or failure to
give notice of the acquisition of any security interest and liens in the Common
Collateral; and (iii) the rules of priority established under the Uniform
Commercial Code or other laws of any relevant state relating to the priority of
security interests or liens or the provisions of any federal bankruptcy laws.
The Lenders, the Swap Parties and the Noteholders acknowledge that there may be
intervening liens between the respective security interests and liens created in
the Common Collateral; nonetheless, the Lenders, the Swap Parties and the
Noteholders agree that the provisions of Section 2 shall apply and entitle all
Lenders, all Swap Parties and all Noteholders to receive payments hereunder
until such time as all Lenders, all Swap Parties and all Noteholders receive
payment in full of all Secured Debt or until this Agreement shall terminate
pursuant to Section 28. To the extent that a Lender Party's (an "Affected
Party") security interests and liens created in any security for the debt of the
Borrower or any Guarantor to the Affected Party are extinguished, terminated or
deemed to be paid by reason of the foreclosure of any security interests and
liens, each other Lender Party hereto shall be deemed to have granted,
respectively, to the Affected Party a participation interest in such other
Lender Party's respective debt to the extent that such other Lender Party
receives payment by operation of Section 2 which results from the Collateral
Agent's so foreclosing or taking such other actions in respect of the Affected
Party's security interest and liens or debt.
6. Bidding. Each Lender, each Swap Party and each Noteholder agrees that
if a Lender, a Swap Party or a Noteholder desires to bid a higher or lower
amount at a foreclosure sale than the amount the Collateral Agent in its sole
discretion deems appropriate, then such Lender, such Swap Party or such
Noteholder shall be entitled to bid, and if such Lender, such Swap Party or such
Noteholder is the successful bidder, purchase the relevant portion of the Common
Collateral in its own name pursuant to the terms of the relevant Security
Document, it being understood that the consideration to be paid by such Lender,
such Swap Party or such Noteholder shall be paid in the same manner, and be of
the same type and terms as that required to be paid by a third-party bidder. The
Lender, the Swap Party or such Noteholder who is the successful bidder at any
such foreclosure sale shall pay over the amount of its successful bid to the
Collateral Agent (or the trustee therefor) for apportionment in accordance with
Section 2.
7. Pledged Stock and Pledged Notes. Each of the Lenders, the Swap Parties
and the Noteholders severally acknowledges and agrees that the Collateral Agent
is holding all certificates evidencing Pledged Stock and the Pledged Notes (each
term as defined in the Security Documents), and all other Collateral hereafter
pledged to the Collateral Agent under any Security Documents, for and on behalf
of and as bailee for all Lenders, all Swap Parties, and all Noteholders. The
Collateral Agent agrees not to relinquish possession of any of the Pledged Stock
or the Pledged Notes (other than in accordance with the terms of the relevant
7
<PAGE>
Security Documents or the Credit Agreement) unless (and only to the extent that)
any one of the following conditions is satisfied on or prior to such
relinquishment or foreclosure:
(a) the Collateral Agent is directed to do so pursuant to a written
release delivered to the Collateral Agent of any or all such Collateral by the
requisite Lenders under the Credit Agreement (without any consent being required
of any Swap Parties or any of the Noteholders);
(b) the Collateral Agent is directed to do so by a court of competent
jurisdiction; or
(c) pursuant to a written notice from the Agent notifying the Collateral
Agent that all of the Obligations have been satisfied in full, in which event
the Collateral Agent shall deliver the relevant Collateral to the Borrower.
The parties hereto agree that with respect to Common Collateral of which
possession must be obtained or retained by a secured party in order to perfect
its security interest pursuant to the Uniform Commercial Code, such Common
Collateral shall be delivered to and held by the Collateral Agent for and on
behalf of and as bailee for all Lenders, all Swap Parties and all Noteholders in
accordance with the terms of this Section 7.
8. Representations. Each of the parties hereto represents and warrants to
the other parties hereto as follows:
(a) this Agreement has been duly executed and delivered by its duly
authorized officer(s) and constitutes its legal, valid and binding obligation
enforceable against it in accordance with the terms hereof; and
(b) the execution, delivery and performance by it of this Agreement have
been duly authorized by all necessary corporate or trust action and do not and
will not (a) violate any provision of any law, rule or regulation having
applicability to it or of its articles of association or by-laws or other
governing documents, (b) result in a breach of or constitute a default under any
other material agreement, lease or instrument to which it is a party, or (c)
require the consent or approval of any governmental authority or arbitrator.
9. No Trust Relationship. This Agreement is intended to create a
relationship among independent contractors, and nothing in this Agreement shall
be deemed to create a fiduciary, agency or trust relationship among any of the
parties hereto except as specifically provided herein.
10. Agreement Solely for Benefit of Parties. This Agreement is for the
benefit of the Collateral Agent, the Agent, the Lenders, the Swap Parties, the
Noteholders and with respect to Sections 2, 23, 24 and 28, the Borrower, and no
other Person shall be entitled to rely on, or
8
<PAGE>
is intended to receive any benefit under, this Agreement. Except as expressly
set forth herein to the contrary, (i) nothing contained in this Agreement is
intended to affect or limit, in any way whatsoever, the security interests and
liens that the Collateral Agent, the Lenders, the Swap Parties and the
Noteholders have in any of the assets of the Borrower or any Guarantor, insofar
as the rights of the Borrower, any Guarantor or any third parties are involved,
and (ii) the parties hereto specifically reserve any and all of their respective
rights, security interests and liens as against the Borrower or any Guarantor
and any third parties.
11. Obligations Hereunder Not Affected. All rights and interests of the
parties hereunder shall remain in full force and effect irrespective of any
amendment to any Secured Debt Document, any lack of validity or enforcement of
any thereof, any failure of any party to assert a claim or exercise any right or
remedy under any thereof or any circumstance that might otherwise constitute a
defense available to or a discharge of the Borrower or any Guarantor. This
Agreement shall continue to be effective or be reinstated, as the case may be,
if at any time any payment of any of the Secured Debt to any of the Agent, the
Collateral Agent, the Lenders, any Swap Party or any Noteholder is rescinded or
must otherwise be returned by any party hereto upon the insolvency, bankruptcy
or reorganization of the Borrower or any Guarantor, all as though such payment
had not been made.
12. Credit Investigation. Each Lender, each Swap Party and each
Noteholder acknowledges that it entered into the Secured Debt Documents in
reliance upon its independent investigation of the financial condition and
credit-worthiness of such legal persons as was deemed necessary, and not in
reliance upon any information relating to such financial condition or credit-
worthiness provided by any other party hereto. Each Lender, each Swap Party and
each Noteholder further acknowledges that it has entered into this Agreement
after review hereof as it deemed appropriate, including review by its legal
counsel as it deemed appropriate.
13. Waiver of Marshalling and Similar Rights. To the fullest extent
permitted by applicable law, each of the Lenders, the Swap Parties and the
Noteholders waives any requirement regarding, and agrees not to demand, request,
plead or otherwise claim the benefit of, any marshalling, appraisement,
valuation or other similar right that may otherwise be available under
applicable law.
14. Duties of Collateral Agent; Release of Collateral. The Collateral
Agent shall not have any implied duties or any obligation to take any action
under this Agreement, including, without limitation, any action to enforce the
Security Documents, including, without limitation, the Subsidiary Guaranties, or
to realize upon, or take any action in connection with (other than release
thereof) any Common Collateral unless, with respect to the Common Collateral,
the Majority Lenders (with no consent of any Swap Party or any Noteholder being
required) shall have so instructed the Collateral Agent in writing in accordance
with Section 4, which instructions shall be binding on all the Lenders, all the
Swap Parties and all Noteholders (including, without limitation, all subsequent
holders of the Notes, the Secured Hedging Obligations and the Noteholder Notes).
Upon such written request, the Collateral Agent shall
9
<PAGE>
take such action as may be available to it under the Security Documents, the
Subsidiary Guaranties or with respect to any Common Collateral; provided,
further, however, that the Collateral Agent shall not be required to do any act
hereunder or under any other document or instrument delivered hereunder or in
connection herewith or take any action toward the execution or enforcement of
the agency hereby created, or to prosecute or defend any suit in respect of this
Agreement, the Security Documents, including, without limitation, the Subsidiary
Guaranties, or any Common Collateral, unless the Collateral Agent is fully and
specifically indemnified to its satisfaction by the Lenders, the Swap Parties
and the Noteholders against any and all claims, liabilities, obligations,
losses, damages, penalties, costs, disbursements and expenses of any kind or
nature whatsoever relating to or arising out of such action (other than any
portions of such claims, liabilities, obligations, losses, damages, penalties,
costs, disbursements and expenses resulting from the Collateral Agent's gross
negligence or wilful misconduct). The relationship between the Collateral Agent
on the one hand and the Lenders, the Swap Parties and the Noteholders on the
other hand is and shall be that of agent and principal only and nothing herein
contained shall be construed to constitute the Collateral Agent a trustee for
any Lender, any Swap Party, any holder of a Note or a Noteholder Note or of a
participation therein, any Swap Party or any Noteholder or to impose on the
Collateral Agent duties and obligations other than those expressly provided for
herein. Anything herein contained or in the Security Documents, including,
without limitation, the Subsidiary Guaranties, to the contrary notwithstanding,
the Collateral Agent may release any Common Collateral (including, without
limitation, any Subsidiary Guaranty) (i) with the written consent of all the
Lenders (without the consent of any Swap Party or any Noteholder being
required); (ii) if instructed to do so by a court of competent jurisdiction; or
(iii) upon receipt by the Collateral Agent and the Lenders of a certification of
an officer of the Borrower that the release of such Common Collateral is
permitted or required by the Credit Agreement or any Security Document, upon
which certification the Lenders, the Swap Parties and the Noteholders permit the
Collateral Agent to rely absent any receipt by the Collateral Agent of any
objection thereto within ten (10) Business Days.
15. Exculpation. Neither the Collateral Agent nor any of its respective
directors, officers, employees, agents or attorneys shall (i) be responsible to
the Lenders, the Swap Parties or the Noteholders for any recitals,
representations or warranties contained in, or for the execution, validity,
genuineness, effectiveness or enforceability of this Agreement or any Secured
Debt Document or any other instrument or document delivered hereunder or in
connection herewith or therewith, (ii) be responsible for the validity,
genuineness, perfection, effectiveness, enforceability, existence, value or
enforcement of any Common Collateral, any Security Document or any Secured Debt
Document, (iii) be under any duty to inquire into or pass upon any of the
foregoing matters, or to make any inquiry concerning the performance by the
Borrower, any Guarantor or any other obligor of its obligations, or the
observance of any of the terms, covenants or conditions thereof on the part of
the Borrower, any Guarantor or any other obligor, or (iv) in any event, be
liable as such for any action taken or omitted by it or them, except for its or
their own gross negligence or wilful misconduct. The agency hereby created
shall in no way impair or affect any of the rights and powers of, or impose any
duties
10
<PAGE>
or obligations upon, the Collateral Agent in its individual capacity.
16. Employment of Counsel, etc. The Collateral Agent may execute any of
its duties under this Agreement, any Security Document, any Secured Debt
Document and any instrument, agreement or document executed, issued or delivered
pursuant hereto or in connection herewith, by or through employees, agents and
attorneys-in-fact and shall not be answerable for the default or misconduct of
any such employee, agent or attorney-in-fact selected by it with reasonable
care. The Collateral Agent shall be entitled to rely on advice of counsel
(including counsel who are the employees of the Collateral Agent) selected by
the Collateral Agent concerning all matters pertaining to the agency hereby
created and its duties under this Agreement, any Security Document, any Secured
Debt Document, and any instrument, agreement or document executed, issued or
delivered pursuant hereto or in connection herewith or therewith.
17. Reliance on Documents. The Collateral Agent shall be entitled to rely
upon any notice, consent, waiver, amendment, certificate, affidavit, letter,
telegram, statement, paper or document believed by it to be genuine and correct
and to have been signed or sent by the proper Person or Persons.
18. Authorization and Indemnification of Collateral Agent. Each Lender
Party hereby authorizes the Collateral Agent to act as its exclusive collateral
agent for the several benefit of the Lender Parties hereto and hereby
irrevocably authorizes the Collateral Agent, as collateral agent on its behalf,
to take such action on its behalf and to exercise such powers and perform such
duties as are specifically delegated to or required of the Collateral Agent
hereunder or under the Security Documents, including, without limitation, the
Subsidiary Guaranties, or with respect to any Common Collateral, together with
such powers as are reasonably incident thereto. Each Lender Party hereby agrees
to indemnify and does hereby indemnify the Collateral Agent (to the extent not
reimbursed by the Borrower or any Guarantor), pro rata according to its share of
the aggregate of all outstanding Secured Debt of the Borrower to the Lender
Parties hereto under the Secured Debt Documents from and against any and all
claims, liabilities, obligations, losses, damages, penalties, costs, expenses
and disbursements of any kind or nature whatsoever which may be paid by, imposed
on, incurred by, or asserted against the Collateral Agent in any way relating to
or arising out of this Agreement, any Credit Document, any Secured Hedging
Obligation, any Note Purchase Agreement, any other Secured Debt Document or any
other document executed in connection herewith or therewith or any action taken
or omitted by the Collateral Agent under any of such documents except as
provided herein, provided that none of the Lender Parties hereto shall be liable
for any portion of such claims, liabilities, obligations, losses, damages,
penalties, costs, expenses and disbursements resulting from the Collateral
Agent's own gross negligence or wilful misconduct. To the extent the Lender
Parties hereto have made any required indemnity payment hereunder and the
Collateral Agent subsequently receives payment from the Borrower or any
Guarantor to reimburse it for any such claims, liabilities and obligations,
losses, damages, penalties, costs, expenses or disbursements so paid by the
Lender Parties, it shall reimburse to such Lender Parties any excess amount, pro
rata according to the payments actually received from such Lender Parties.
11
<PAGE>
19. Resignation. The Collateral Agent may resign as Collateral Agent
pursuant to the provisions of the Credit Agreement and upon at least thirty (30)
days' prior notice to the Swap Parties and the Noteholders. In the event of any
such resignation, a successor Collateral Agent shall be appointed pursuant to
the terms of the Credit Agreement. Upon the appointment of a successor
Collateral Agent, such successor Collateral Agent shall thereupon succeed to and
become vested with all rights, powers, privileges and duties of the retiring
Collateral Agent hereunder and such retiring Collateral Agent shall be
discharged from its duties and obligations hereunder.
20. Withholding Taxes. Each Lender, each Swap Party and each Noteholder
represents and agrees with the Collateral Agent that under applicable law and
treaties no taxes will be required to be withheld by the Collateral Agent with
respect to any payments to be made to such Lender, such Swap Party or such
Noteholder hereunder in respect of any loan, note or any other Secured Debt, and
each Lender, each Swap Party and each Noteholder that is not a United States
person (as such term is defined in Section 7701(a)(30) of the Code agrees to
furnish the Collateral Agent in respect of any loan, note or any other Secured
Debt in a timely fashion either Form 4224 or Form 1001 of the Internal Revenue
Service or such other documentation as may from time to time be required
(wherein such Lender, such Swap Party or such Noteholder claims entitlement to
the benefits of a tax treaty that provides for a zero rate of withholding), or
comparable statements in accordance with applicable United States laws and
regulations, and amendments and renewals thereof, duly executed and completed by
such Lender, such Swap Party or such Noteholder (and each such Lender, such Swap
Party and such Noteholder agree to comply from time to time with all applicable
United States laws and regulations with regard to such withholding tax
exemption). Notwithstanding the foregoing, if the Collateral Agent, in its
capacity as a United States withholding tax agent, is required by law to and
does pay any United States withholding tax on behalf of a Lender, a Swap Party
or a Noteholder, such Lender, such Swap Party or such Noteholder, hereby agrees
to indemnify and hold harmless the Collateral Agent from any such withholding
tax and from any penalties or interest paid by the Collateral Agent in
connection therewith, together with any other related damages, losses, claims,
liabilities, costs and expenses (including, without limitation, reasonable fees
of counsel, reasonable out-of-pocket expenses and reasonable expenses of
investigation). The Lenders, the Swap Parties and the Noteholders who are not
subject to the statutory United States withholding tax on payments made by the
Collateral Agent under this Agreement or any Secured Debt Document shall file
with the Collateral Agent all IRS forms deemed by the Collateral Agent to be
reasonably necessary or convenient in order for it not to be required to
withhold any tax on payments to such Lender, such Swap Party and such Noteholder
or in order for it to withhold at a reduced rate of tax. Failure by a Lender, a
Swap Party or a Noteholder to supply the necessary Internal Revenue Service
forms to the Collateral Agent regarding an exemption from or a reduction of
withholding tax entitles the Collateral Agent (in its capacity as a withholding
tax agent) to withhold tax on payments made under this Agreement or any Secured
Debt Document pursuant to its obligations under the Internal Revenue Code of
1986, as amended, and the regulations thereunder.
12
<PAGE>
21. Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto on separate counterparts, each
of which when so executed shall be an original, but all such counterparts shall
together constitute but one and the same instrument.
22. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES
OF CONFLICT OF LAWS. Whenever possible, each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
23. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns. In connection with any assignment by it of any of its rights to receive
Secured Debt payments, each Lender Party agrees to cause its assignee to execute
a counterpart hereof as a Lender, Swap Party or Noteholder, as the case may be.
No Swap Party shall be entitled to any of the benefits of this Agreement unless
it shall execute and deliver a counterpart hereof to the other parties hereto.
24. Complete Agreement; Amendments and Waivers. This Agreement expresses
the entire understanding of the parties hereto with regard to the subject matter
hereof and supersedes all prior understandings, written or oral, among the
parties. This Agreement may be amended, modified, waived or supplemented only in
writing and with the consent of (i) the Agent, acting with the consent of the
requisite Lenders under the Credit Agreement, (ii) the Noteholders, (iii) each
Swap Party and (iv) if such amendment, waiver or supplement directly or
indirectly affects Sections 2, 23, 28 or 29 or this Section 24, the Borrower.
25. Notices. All notices hereunder shall be in writing or by telephone,
confirmed promptly in writing, and shall be deemed given (i) when actually
received, in the case of a notice given to the Collateral Agent, and (ii) in all
other cases, when delivered by hand, when transmitted by telecopy or telex and
receipt thereof has been received by the intended recipient or three (3) days
after sent by registered or certified U.S. mail, with postage prepaid. The
addresses of the parties hereto for the purpose of any notice or the remitting
of funds to such party shall be, in the case of the Lenders and the Borrower,
the respective addresses designated in the Credit Agreement, or, in the case of
each Swap Party and each Noteholder, at the addresses designated below, or such
other address as may be designated for such purpose by written notice to each
other party hereto.
[list addresses]
13
<PAGE>
26. Lien Challenge. Each of the Lender Parties agrees not to directly or
indirectly challenge, contest, dispute or attack in any way, and not to cause
any other Person to directly or indirectly challenge, contest, dispute or attack
in any way, and not to assist any other Person in challenging, contesting,
disputing or attacking in any way, any guaranty, lien, security interest, or any
other interest of any kind or nature whatsoever (including, without limitation,
under the Security Documents), or the priority, ranking or perfection of any
thereof, securing or guaranteeing or purporting to secure or guaranty all or any
of the debt of the Borrower or any Guarantor to any Lenders under the Credit
Agreement or any other Credit Documents, the Swap Parties under the Secured
Hedging Obligations or any Noteholder under its Note Purchase Agreement. So
long as payments shall be made in accordance with the terms of this Agreement,
none of the Lender Parties hereto shall seek any legal or equitable remedy the
effect of which, if granted, would amend, alter or otherwise interfere with the
operation of this Agreement in accordance with its terms.
27. WAIVER OF JURY TRIAL. EACH PARTY HERETO WAIVES ANY RIGHT TO A TRIAL
BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS
AGREEMENT OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR
WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR ARISING FROM ANY
INTERCREDITOR RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT, AND
AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT
BEFORE A JURY.
28. Termination. Notwithstanding anything to the contrary contained
herein, each Lender, each Swap Party and each Noteholder agrees that (i) this
Agreement shall terminate and be of no further force and effect upon the
Collateral Termination Date and (ii) the Collateral Agent may, with the consent
of the requisite Lenders under the Credit Agreement (but without any consent
being required of any Swap Party or any of the Noteholders), enter into any
amendment or modification of any Security Document of any nature whatsoever
(other than any such amendment or modification that expressly discriminates
against any Swap Party or Noteholder without the consent of such Swap Party or
Noteholder) or release or terminate any such Security Document. No provision of
this Agreement shall be deemed to modify or qualify any provision of any
Security Document providing for the release of Collateral and anything herein
contained to the contrary notwithstanding, any Common Collateral shall be
released, and/or shall automatically be deemed to have been released, from the
lien of any particular Security Document as provided herein or as provided in
such Security Document.
29. Consent of Borrower. The terms of this Agreement as originally
executed are hereby acknowledged and consented to by the Borrower. The Borrower
further acknowledges and agrees to the application and distribution of proceeds
and payments described in Section 2 notwithstanding any provisions to the
contrary in any Security Document. The Borrower further acknowledges and agrees
that it is not and is not intended to be a party to, or a third party
beneficiary of, this Agreement or any of its provisions other than with respect
to Sections 2, 23,
14
<PAGE>
24 and 28 and shall not have any rights or claims under this Agreement or any
provisions, including, without limitation, any right to consent to any amendment
or modification of this Agreement other than as set forth in Section 24, whether
as a party to, or a third party beneficiary of this Agreement or otherwise, and
the Borrower hereby expressly and irrevocably waives any such rights or claims.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their duly authorized officers as of the day and year
first above written.
AGENT AND COLLATERAL AGENT:
ABN AMRO BANK N.V., as Agent for the Lenders and as
Collateral Agent
By:________________________________________
Name:______________________________________
Title:_____________________________________
By:________________________________________
Name:______________________________________
Title:_____________________________________
[SWAP LENDER:/*/
By:________________________________________
Name:______________________________________
Title:____________________________________]
________________________
/*/Insert if Interest Rate Protection Agreement entered into with a Lender
or an affiliate of Lender as swap counterparty on date of execution.
15
<PAGE>
NOTEHOLDERS:
-----------
By:___________________________________
Name:_________________________________
Title:________________________________
By:___________________________________
Name:_________________________________
Title:________________________________
16
<PAGE>
BORROWER:
--------
SONAT OFFSHORE DRILLING INC.
By:__________________________________
Name:________________________________
Title:_______________________________
17
<PAGE>
AGREEMENT AND CONSENT TO INTERCREDITOR AGREEMENT
------------------------------------------------
The terms of the foregoing Agreement as originally executed are hereby
acknowledged and consented to by each of the undersigned. Terms defined in the
foregoing Agreement are used herein with the same meaning. Each of the
undersigned further acknowledges and agrees to the application and distribution
of proceeds and payments described in the foregoing Agreement notwithstanding
any provisions to the contrary in any Security Document. Each of the
undersigned further acknowledges and agrees that none of them is or is intended
to be a third party beneficiary to the foregoing Agreement or any of its
provisions, and that none of them shall have any rights or claims under the
foregoing Agreement or any provision thereof, including, without limitation, any
right to consent to any amendment or modification of the foregoing Agreement,
whether as a third party beneficiary or otherwise, and each hereby expressly and
irrevocably waives any such rights or claims.
SONAT OFFSHORE NORWAY INC.
By:___________________________________
Name:_________________________________
Title:________________________________
SONAT OFFSHORE VENTURES, INC.
By:___________________________________
Name:_________________________________
Title:________________________________
SONAT TURNKEY DRILLING INC.
By:___________________________________
Name:_________________________________
Title:________________________________
SONAT OFFSHORE (U.K.), INC.
By:___________________________________
Name:_________________________________
Title:________________________________
18
<PAGE>
EXHIBIT 6.7
FORM OF COMPLIANCE CERTIFICATE
<PAGE>
EXHIBIT 6.7
COMPLIANCE CERTIFICATE
Sonat Offshore Drilling Inc. (the "Borrower"), the financial institutions
parties thereto (collectively, the "Lenders"), ABN AMRO Bank N.V., Houston
Agency, as Agent for the Lenders, SunTrust Bank, Atlanta and Credit Lyonnais New
York Branch, as Documentation Agents for the Lenders, and Bank of Montreal, The
Fuji Bank, Limited, Royal Bank of Canada and Wells Fargo Bank (Texas), National
Association, as Co-Agents for the Lenders, executed and delivered that certain
Secured Credit Agreement (as amended, supplemented and restated from time to
time, the "Secured Credit Agreement") dated as of July 30, 1996. Any term
defined in the Secured Credit Agreement and used in this Compliance Certificate
shall have the meaning given to it in the Secured Credit Agreement.
The undersigned, solely in his capacity as Chief Financial Officer or
other financial officer (as noted below) of the Borrower, hereby certifies to
the Lenders, the Agent, the Documentation Agents and the Co-Agents that:
A. The attached financial statements are (check one) [ ] quarterly
financial statements [ ] annual financial statements and fairly present on a
consolidated basis the financial condition of the Borrower and its Subsidiaries
(excluding the effects of any SPV's other than the aggregate equity investment
therein) as of the date indicated and the results of their operations and
changes in their cash flows for the periods indicated and that they have been
prepared in accordance with GAAP, subject to normal year-end audit adjustments
for any such financial statements that are quarterly financial statements and
other than the omission of any footnotes as permitted at such time by the SEC.
B. As of the date of the attached financial statements and with respect to
the Borrower and its Subsidiaries on a consolidated basis:
1. INTEREST COVERAGE RATIO (for first 3 full fiscal quarters ended
after the Exchange Offer Consummation Date, determined for the number of full
fiscal quarters ended after the Exchange Offer Consummation Date, and thereafter
determined for 4 fiscal quarter period then ended).
a. EBITDA $___________________
b. Dividends paid $___________________
c. Cash income taxes paid $___________________
d. a minus the sum of b and c $___________________
<PAGE>
e. Consolidated Interest Expense $___________________
f. Interest Coverage Ratio
(Ratio of d to e; not less
than 3:00 to 1:00) ______ to ______
2. TOTAL FUNDED DEBT TO TOTAL CAPITAL RATIO
a. Borrowings $_________________
b. Face amount of Letters of Credit $_________________
c. Capitalized Leases $_________________
d. Total Funded Debt (sum
(of a, b and c) $_________________
e. Consolidated Net Worth $_________________
f. Total Capital (d plus e) $_________________
g. Total Funded Debt to Total Capital Ratio
(d expressed as percentage of f) _____%
h. Maximum permitted as of the end of _____%
applicable fiscal quarter
3. MINIMUM CONSOLIDATED NET WORTH
a. Consolidated stockholders equity $_________________
b. Capital stock subject to mandatory $_________________
redemption before Maturity Date
c. Consolidated Net Worth (a minus b) $_________________
d. Minimum Consolidated Net Worth $_________________
(as of immediately after Exchange
Offer Consummation Date)
e. Consolidated Adjusted Net Income
for fiscal quarter ending
i. net income (or loss) after
provision for taxes $_________________
(A) plus extraordinary losses $_________________
2
<PAGE>
(B) minus extraordinary gains $_________________
(C) minus net income (or loss) of
any Person not a Subsidiary $_________________
(D) minus net income (or loss)
from Subsidiaries restricted
from paying dividends or
distributions $_________________
(E) minus net income (or loss)
earned by an acquired
Subsidiary prior to
acquisition $________________
(F) plus non-recurring write-
offs in connection with
Exchange Offer, Mandatory
Bid and Compulsory
Acquisition $_______________
ii. plus dividend or distributions
received from SPVs or other
Persons not Subsidiaries $_______________
f. Consolidated Adjusted Net Income
for the quarter $_______________
g. Year-to-date Consolidated
Adjusted Net Income $_______________
h. Minimum Consolidated Net Worth
as of immediately after Mandatory Bid $ 1,400,000,000
i. 50% of positive year-to-date Consolidated
Adjusted Net Income $_________________
j. 50% of positive Consolidated Adjusted
Net Income for prior years (after 1996) $_________________
k. Minimum Consolidated Net Worth
(sum of h, i and j) $_________________
3
<PAGE>
C. (Check EITHER 1 or 2) To the best of my knowledge after due inquiry:
[__] 1. As of the date hereof, no Default or Event of Default has
occurred and is continuing.
[__] 2. As of the date hereof, no Default or Event of Default has
occurred and is continuing except the following matters: [Describe all such
Defaults or Events of Default, specifying the nature, duration and status
thereof and what action the Borrower has taken or propose to take with respect
thereto].
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
D. As of the date of the attached financial statements and with respect to
the Borrower and its Subsidiaries on a consolidated basis, Transfers of assets
effected by the Borrower and its Subsidiaries during the fiscal quarters or year
covered by such statements which were other than in the ordinary course of
business, aggregate $____________ in net book value for all such assets, and the
Net Cash Proceeds which the Borrower and its Subsidiaries received with respect
to all such Transfers during such period aggregate $____________.
Date: _____________________, ______.
SONAT OFFSHORE DRILLING INC.
By:________________________________
Name:______________________________
Title:_____________________________
4
<PAGE>
EXHIBIT 10.10
FORM OF ASSIGNMENT AGREEMENT
<PAGE>
EXHIBIT 10.10
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AGREEMENT (this "AGREEMENT") dated as of ________________,
____, is by and among _________________________________________ (the
"ASSIGNOR"), _____________________________ (the "ASSIGNEE"), SONAT OFFSHORE
DRILLING INC., a Delaware corporation (the "BORROWER"), and ABN AMRO BANK N.V.,
Houston Agency, as Agent for the Lenders (as hereinafter defined) (in such
capacity, the "AGENT").
WITNESSETH:
----------
WHEREAS, the Borrower and the Agent have entered into that certain Secured
Credit Agreement (as amended, supplemented and restated from time to time, the
"SECURED CREDIT AGREEMENT") dated as of July 30, 1996, by and among the
Borrower, the lenders from time parties thereto (collectively, the "LENDERS"),
including the Assignor as one such Lender, the Agent, as agent for the Lenders,
SunTrust Bank, Atlanta and Credit Lyonnais New York Branch, as Documentation
Agents for the Lenders, and Bank of Montreal, The Fuji Bank, Limited, Royal Bank
of Canada, and Wells Fargo Bank (Texas), National Association, as Co-Agents for
the Lenders;
WHEREAS, the Assignor has agreed to make certain Loans to and participate in
Letters of Credit for the account of the Borrower in accordance with the terms
of the Secured Credit Agreement, with the maximum aggregate amount of the
Assignor's Loans and participation in Letters of Credit outstanding not to
exceed the Assignor's Commitment;
WHEREAS, on a pro rata basis, the Assignor proposes to sell and assign to the
Assignee, and the Assignee proposes to buy and accept from the Assignor, a _____
percent (_____%) interest (the "ASSIGNED INTEREST") in the rights and
obligations of the Assignor under the Credit Documents with the effect that the
Assignee will have a maximum Commitment of $________________, resulting in a
Percentage of ______%;
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements
contained herein, the parties hereto agree as follows:
SECTION 1. Definitions. Any term defined in the Secured Credit Agreement and
used in this Agreement shall have the meaning ascribed to it in the Secured
Credit Agreement. Section 1.1 of the Secured Credit Agreement is hereby
incorporated into this Agreement by reference.
<PAGE>
SECTION 2. Assignment. The Assignor hereby assigns and sells, without
recourse or warranty except as specifically set forth herein, to the Assignee
the Assigned Interest in the rights and obligations of the Assignor under the
Credit Documents. The Assignee hereby purchases and accepts, without recourse
or warranty except as specifically set forth herein, from the Assignor all of
such rights and obligations of the Assignor, including the corresponding portion
of (a) the principal amount of the Loans made by the Assignor, (b) the
participation of the Assignor in the Letters of Credit, if any, and (c) any
Reimbursement Obligations of the Borrower owing to the Assignor outstanding on
the date hereof. As of the date hereof, the Assignee's Percentage of the
outstanding principal balance of the Loans and Reimbursement Obligations of the
Borrower is $____________. Subject to the execution and delivery hereof by the
Assignor, the Assignee, the Borrower and the Agent as of the date hereof, (a)
the Assignee shall succeed, on a pro rata basis, to the rights and interests,
and be obligated to perform the obligations, of a Lender under the Credit
Documents with a Percentage of _______%, and shall be considered a Lender for
all purposes; (b) the Assignee shall deliver to the Assignor, in immediately
available funds, the Assignee's Percentage of the outstanding Loans (minus an
amount equal to the Assignee's Percentage of any Letter of Credit fee paid by
the Borrower to the Assignor pursuant to the terms of the Secured Credit
Agreement for the remaining portion of the calendar quarter), and (c) the
Percentage of the Assignor as of the date hereof shall be reduced by the
Percentage acquired by the Assignee, and the Assignor shall be released from its
obligations under the Credit Documents which have been so assigned to and
accepted by the Assignee. The Assignee shall participate in all outstanding
Letters of Credit as provided in the Credit Documents.
SECTION 3. Payments. Commitment fees accrued to the date hereof with respect
to the Assignor's Percentage of the Commitment pursuant to Section 3.1 of the
Secured Credit Agreement are for the account of the Assignor and such fees
accruing from and including the date hereof with respect to the Assigned
Interest are for the account of the Assignee. All payments of principal of and
accrued interest on the Loans and of Reimbursement Obligations are to be made by
the Borrower to the Agent. The Agent shall divide such payments among the
Lenders as their interests may appear, with all interest accruing on the Loans
of the Assignor, and Reimbursement Obligations payable to the Assignor, before
the date hereof to belong to the Assignor. Each of the Assignor and the
Assignee hereby agrees that if it receives any amount from the Borrower under
the Credit Documents which is for the account of the other party hereto, it
shall receive the same for the account of such other party to the extent of such
other party's interest therein and shall promptly pay the same to such other
party. The rights of the Assignor and the Assignee under this Section are in
addition to other rights and remedies which the Assignor or the Assignee may
have.
SECTION 4. Consent of the Borrowers and the Agent. This Agreement is
conditioned upon the consent of the Borrower and the Agent to the extent
required by Section 10.10(b) of the Secured Credit Agreement. The execution of
this Agreement by the Borrower and the Agent is evidence of any such consent.
Pursuant to Section 10.10(b) of the Secured Credit Agreement, (a) the Assignor
agrees to deliver its current Notes executed by the Borrower to the Borrower,
marked "Renewed" or its equivalent, and simultaneously therewith (b) the
Borrower agrees to
2
<PAGE>
execute and deliver new Notes payable to the order of the Assignee and, if
applicable, to the Assignor to evidence the assignment and acceptance provided
for herein.
SECTION 5. The Assignor. The Assignor (a) represents and warrants to the
Assignee that it is the legal and beneficial owner of the Assigned Interest and
that such Assigned Interest is free and clear of any Lien; (b) makes no
representation or warranty and assumes no responsibility with respect to (i) any
statements, warranties or representations made in or in connection with the
Credit Documents or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Documents or any document
furnished pursuant thereto or (ii) the financial condition of the Borrower or
any other Credit Party or the performance or observance by the Borrower or any
other Credit Party of any of its obligations under the Credit Documents.
SECTION 6. The Assignee. The Assignee (a) confirms that it has received a
copy of the Credit Documents, together with such other documents and information
as it has deemed appropriate to make its own credit analysis and decision to
enter into this Agreement; (b) agrees that it will, independently and without
reliance upon the Agent, the Assignor or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Credit
Documents; (c) appoints and authorizes the Agent to take such action as agent on
behalf of the Assignee and to exercise such powers under the Credit Documents as
are delegated to the Agent by the terms thereof, together with such powers as
are reasonably incidental thereto; and (d) agrees that it will perform in
accordance with their terms all of the obligations which by the terms of the
Credit Documents are required to be performed by it as a Lender. If the
Assignee is organized under the laws of any jurisdiction other than the United
States of America or any State thereof, the Assignee hereby (a) represents to
the Assignor, the Agent and the Borrower that under applicable law and treaties
no taxes will be required to be withheld by the Agent, the Borrower or the
Assignor with respect to any payments to be made to such Assignor in respect of
the Loans or the Letters of Credit, (b) furnishes to the Assignor, the Agent and
the Borrower the forms required by Section 10.10(d) of the Secured Credit
Agreement, either U.S. Internal Revenue Service Form 4224 or U.S. Internal
Revenue Service Form 1001 (wherein the Assignee claims entitlement to complete
exemption from U.S. federal withholding tax on all interest payments under the
Credit Documents), and (c) agrees for the benefit of the Assignor, the Agent and
the Borrower to provide the Assignor, the Agent and the Borrower from time to
time new forms as required by Sections 10.10(d)(iii) and 3.3(b) of the Secured
Credit Agreement, and to comply from time to time with all applicable U.S. laws
and regulations with regard to such withholding tax exemption.
SECTION 7. Notices and Payment Instructions. All notices in connection
herewith shall be given in accordance with Section 10.7 of the Secured Credit
Agreement. The address of the Assignee for notices hereunder and thereunder,
together with payment instructions for amounts to be paid to the Assignee under
the Secured Credit Agreement, shall be initially as set forth on the signature
pages hereof.
3
<PAGE>
SECTION 8. Miscellaneous. This Agreement (a) embodies the entire agreement
and understanding between the parties with respect to the subject matter hereof
and supersedes all prior agreements, consents and understandings relating to
such subject matter, (b) is a Credit Document, and (c) shall be governed by and
construed in accordance with the laws of the State of New York. [The Borrower
is hereby agreed to be, and is hereby constituted, an express, intended third-
party beneficiary of this Agreement. Without limitation of the preceding
sentence, this Agreement may not be amended, modified or supplemented without
the written consent of the Borrower, and the Borrower may enforce the terms
hereof as fully as if it was a signatory hereto./*/]
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and
delivered by their duly authorized officers as of the date first above written.
[NAME OF ASSIGNOR]
By:______________________________
Name:____________________________
Title:___________________________
[NAME OF ASSIGNEE]
By:______________________________
Name:____________________________
Title:___________________________
[Insert Address]
_________________________________
Attention:_______________________
Telecopy No.: (___)______________
Answerback No.: (___)___________
Telex No.: (___)________________
Send payments to:
---------------------------------
---------------------------------
---------------------------------
[Reference: Sonat Offshore Drilling Inc.]
________________
/*/Insert bracketed language if the Borrower's execution hereof is not required
under Section 10.10(b) of the Secured Credit Agreement.
4
<PAGE>
[SONAT OFFSHORE DRILLING INC.]/*/
By:__________________________________
Name:________________________________
Title:_______________________________
ABN AMRO BANK N.V., HOUSTON AGENCY, AS AGENT
By: ABN AMRO North America, Inc., as Agent
By:_____________________________
Name:___________________________
Title:__________________________
By:_____________________________
Name:___________________________
Title:__________________________
________________
/*/Delete bracketed signature block if the Borrower's execution hereof is not
required under Section 10.10(b) of the Secured Credit Agreement.
5
<PAGE>
SCHEDULE 2.7
TERM LOAN REPAYMENT SCHEDULE
Date Principal Amount
---- ----------------
December 31, 1996 $ 6,750,000
March 31, 1997 $ 6,750,000
June 30, 1997 $ 6,750,000
September 30, 1997 $ 6,750,000
December 31, 1997 $ 6,750,000
March 31, 1998 $ 6,750,000
June 30, 1998 $ 6,750,000
September 30, 1998 $ 6,750,000
December 31, 1998 $ 8,250,000
March 31, 1999 $ 8,250,000
June 30, 1999 $ 8,250,000
September 30, 1999 $ 8,250,000
December 31, 1999 $ 8,250,000
March 31, 2000 $ 8,250,000
June 30, 2000 $ 8,250,000
September 30, 2000 $ 8,250,000
December 31, 2000 $10,000,000
March 31, 200 $10,000,000
June 30, 2001 $10,000,000
September 30, 2001 $10,000,000
December 31, 2001 $10,000,000
March 31, 2002 $10,000,000
June 30, 2002 $10,000,000
Maturity Date $10,000,000
<PAGE>
SCHEDULE 4.1
LIST OF STOCK PLEDGED
<TABLE>
<CAPTION>
PLEDGOR STOCK PLEDGED PERCENTAGE PLEDGED JURISDICTION
------- ------------- ------------------ ------------
<S> <C> <C> <C>
Sonat Offshore Drilling Inc. NSub 65% Norway
Sonat Offshore Drilling Inc. Sonat Offshore Far East 60% Cayman Islands
</TABLE>
<PAGE>
SCHEDULE 5.1
LIST OF SUBSIDIARIES
<TABLE>
<CAPTION>
A. Sonat Offshore Drilling Inc.'s Subsidiaries:
Jurisdiction Percentage
of Ownership
Name of Subsidiary Organization Interest
------------------ -------------- -------------------------------
<S> <C> <C>
(Direct & Indirect)
1. Asie Sonat Offshore Sdn. Bhd. Malaysia 49%
2. EPN-Sonat, S.A. de C.V. Mexico 49%
3. ES Perforadoras II Mexico Joint ventured, not capitalized
4. ES Perforadoras I Mexico Joint ventured, not capitalized
5. Offshore Turnkey Ventures U.S. 50%
6. Partrederiet Polar Frontier Drilling Norway 47.5%
7. Polar A/S Norway 40%
8. Polar Frontier Drilling A/S Norway 47.5%
9. Sonat Brasocean Servicos
de Perfuracoes Ltda. Panama 100%
10. Sonat Norwegian Ventures Inc. U.S. 100%
11. Sonat Off. PEII Package "E" U.S. 100%
12. Sonat Offshore do Brazil Perfuracoes
Maratimos, Ltda. Brazil 100%
13. Sonat Offshore Drilling Services Inc. U.S. 100%
14. Sonat Offshore Ecodrill Turnkey United Kingdom Not capitalized
15. Sonat Offshore Far East Cayman 100%
16. Sonat Offshore Ltd. Cayman 100%
17. Sonat Offshore International Cayman 100%
18. Sonat Offshore Nigeria Ltd. Nigeria Not capitalized
19. Sonat Offshore Norway Inc. U.S. 100%
20. Sonat Offshore Petroleum Services Cayman 100%
21. Sonat Offshore S.A. Panama 100%
22. Sonat Offshore (U.K.), Inc. U.S. 100%
23. Sonat Offshore USA Inc. U.S. 100%
24. Sonat Offshore Ventures Inc. U.S. 100%
25. Sonat Serv. Maritimos Ltda Brazil 100%
26. Sonat Turnkey Drilling Inc. U.S. 100%
</TABLE>
<PAGE>
B. Transocean's Subsidiaries:
<TABLE>
<CAPTION>
Jurisdiction Percentage
of Ownership
Name of Subsidiary Organization Interest
------------------ ------------ ---------
<S> <C> <C>
1. Transocean I Norway 100%
2. Transocean II Norway 100%
3. Transocean III Norway 100%
4. Transocean Petroleum Technology AS Norway 100%
5. Transocean Petroleum Technology Ltd. United Kingdom 100%
6. Transocean Internationale S.A. Argentina 100%
7. Ross International AS Norway 100%
8. Dynamic Drilling Partnership Marshall Islands 80%
9. Defiant Weighing Ltd. United Kingdom 100%
10. North Sea Drilling Services AS Norway 100%
11. Ross Drilling Co. AS Norway 100%
12. Transocean Management AS Norway 100%
13. SDS Offshore AS Norway 100%
14. Pelerin Drilling AS Norway 100%
15. Procon Engineering AS Norway 100%
16. Lynne Projects Ltd. United Kingdom 100%
17. Transnor Rig AS Norway 100%
18. Transocean Drilling GMBH Germany 100%
19. Ross Offshore AS Norway 100%
20. Target Drilling Services AS Norway 100%
21. Treasure Nymphea AS Norway 100%
22. Procon Engineering UK Ltd. United Kingdom 100%
23. SDS Offshore Ltd. United Kingdom 100%
24. Transocean Drilling Co. Inc. Panama 100%
25. Transocean Drilling AS Danmark Norway 100%
26. Transocean Drilling Netherlands Ltd. Bahamas 100%
27. Transor Rig Ltd. United Kingdom 100%
28. Ross Offshore UK Ltd. United Kingdom 100%
29. Transocean Drilling Ltd. United Kingdom 100%
30. Shelf Drilling Ltd. United Kingdom 100%
31. Transocean Kan Tan Ltd. United Kingdom 100%
32. Transocean Sino Ltd. United Kingdom 60%
33. Wilrig Offshore UK Ltd. United Kingdom 100%
34. Wilrig Drilling Inc. Canada Canada 100%
35. Wilrig Holdings Ltd. United Kingdom 100%
36. Transocean Drilling (USA) Inc. USA 100%
37. Wilrig Offshore Bahamas Inc. Bahamas 100%
38. Transocean Drilling (Nigeria) Ltd. Nigeria 100%
39. Wilrig International AS Norway 100%
40. Odebrecht - Transocean J/V Brazil 50%
41. Shelf Drilling Ltd. United Kingdom 100%
</TABLE>
<PAGE>
SCHEDULE 5.13
ERISA DISCLOSURE
NOTHING TO DISCLOSE
<PAGE>
SCHEDULE 5.16
LIST OF OUTSTANDING STOCK RIGHTS
SONAT OFFSHORE DRILLING INC. MATERIAL SUBSIDIARIES
Nothing to Disclose
TRANSOCEAN ASA
Capitalization - The company has outstanding convertible bonds where NOK 46,000
are outstanding, which includes the right to subscribe for shares of Nkr 5 par
value at a price of Nkr 79. An indirect subsidiary of Transocean also has
outstanding a Procon/Lynne convertible stock loan where GBP 474,500 are
outstanding.
<PAGE>
SCHEDULE 5.20
LIST OF ENVIRONMENTAL CLAIMS
NOTHING TO DISCLOSE
<PAGE>
SCHEDULE 5.21
LIST OF EXISTING INDEBTEDNESS
SONAT OFFSHORE DRILLING AND SUBSIDIARIES
Outstanding as of 7/25/96
-------------------------
$30MM Senior Notes dated February 15, 1996 US$ $30,000,000
TRANSOCEAN AND SUBSIDIARIES
Nkr 50MM Credit Facility Nkr 0
$3.75 MM remaining balance on Nissho Iwai Loan US$ $3,750,000
Transocean Convertible Bonds Nkr 46,000
Nkr 8MM Procon Guarantee Facility Nkr 0
Nkr 2MM Procon Overdraft Facility Nkr 0
Nkr 2.8MM remaining balance on Procon Debenture Nkr 2,800,000
Procon/Defiant Term Loan GBP 100,000
Procon/Defiant Overdraft Facility GBP 370,000
Procon U.K. Overdraft Facility GBP 4,600
Procon/Lynne Convertible stock loan GBP 474,500
Capital Leases US 246,934
(Does not include RUBICON lease of Nkr 40MM not yet signed) Nkr 1,406,760
This list does not include letters of credit of which less than US $7,000,000
are outstanding for both companies
<PAGE>
SCHEDULE 5.22
DIVIDEND RESTRICTIONS
NOTHING TO DISCLOSE
<PAGE>
SCHEDULE 6.14
LIST OF EXISTING LIENS
SONAT OFFSHORE DRILLING INC. AND SUBSIDIARIES
First Naval Ship Mortgage dated April 6, 1987 between Dixilyn-Field (U.K.), Inc.
(Now, Sonat Offshore (U.K.), Inc.) and Dixene Corporation relating to Sonat D-F
96.
First Naval Ship Mortgage dated April 6, 1987 between Dixilyn-Field (U.K.), Inc.
(Now, Sonat Offshore (U.K.), Inc.) and Dixene Corporation relating to Sonat D-F
97.
TRANSOCEAN AND SUBSIDIARIES
Mortgages associated with US $275MM Revolver
Rig Name Mortgagee
-------- ---------
Transocean 8 DNB as Agent
Transocean Arctic "
Treasure Prospect "
Transocean Searcher "
Treasure Saga "
Treasure Legend "
Vildkat Explorer "
Transocean Explorer "
Transocean 9 "
Shelf Explorer "
Other
Assignment of earnings to DNB as Agent under US $275MM Revolver
Assignment of insurances to DNB as Agent under US $275MM Revolver
Bank Guarantee to Christiana Bank for Nissho Iwai US $3.75MM Loan
Liens on various equipment associated with Capital Leases disclosed in Schedule
5.21
<PAGE>
SCHEDULE 6.17
LIST OF EXISTING INVESTMENTS
SONAT OFFSHORE DRILLING INC. AND SUBSIDIARIES
Arcade Shipping AS 1,000 Shares
Arcade Drilling AS 26,887,491 Shares
TRANSOCEAN AND SUBSIDIARIES
US $11MM Notes issued by Deep Tech International, Inc. maturing in
November 1997
Deutag Transocean AS 50% Interest
Transocean Welltrain AS 50% Interest
Integrated Technology Consultants (ITC) 36% Interest
Vestfold Flyplassinvest 3% Interest
Transocean Ensign Drilling Technology, Ltd. 50% Interest
Midtnorske Driftstjenester AS 50% Interest
Odebrecht Transocean Joint Venture 50% Interest
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 60,431
<SECURITIES> 0
<RECEIVABLES> 72,894
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 161,986
<PP&E> 723,189
<DEPRECIATION> 352,960
<TOTAL-ASSETS> 574,516
<CURRENT-LIABILITIES> 62,491
<BONDS> 30,000
0
0
<COMMON> 285
<OTHER-SE> 397,462
<TOTAL-LIABILITY-AND-EQUITY> 574,516
<SALES> 0
<TOTAL-REVENUES> 190,101
<CGS> 0
<TOTAL-COSTS> 145,916
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 533
<INCOME-PRETAX> 57,406
<INCOME-TAX> 20,104
<INCOME-CONTINUING> 37,302
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 37,302
<EPS-PRIMARY> 1.31
<EPS-DILUTED> 0
</TABLE>
