<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
---------
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997
---------------------------------------------
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 1-8097
ENSCO INTERNATIONAL INCORPORATED
(Exact name of registrant as specified in its charter)
DELAWARE 76-0232579
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2700 Fountain Place
1445 Ross Avenue, Dallas Texas 75202 - 2792
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (214) 922-1500
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 twelve 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 [ ]
There were 70,873,236 shares of Common Stock, $.10 par value, of
the registrant outstanding as of April 28, 1997.<PAGE>
ENSCO INTERNATIONAL INCORPORATED
INDEX TO FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1997
PAGE
--------
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Review Report of Independent Accountants 3
Consolidated Statement of Income
Three Months Ended March 31, 1997 and 1996 4
Consolidated Balance Sheet
March 31, 1997 and December 31, 1996 5
Consolidated Statement of Cash Flows
Three Months Ended March 31, 1997 and 1996 6
Notes to Consolidated Financial Statements 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 10
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 18
SIGNATURES 19<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
REVIEW REPORT OF INDEPENDENT ACCOUNTANTS
----------------------------------------
To the Board of Directors and Stockholders
of ENSCO International Incorporated
We have reviewed the accompanying consolidated balance sheet of ENSCO
International Incorporated as of March 31, 1997 and the related
consolidated statements of income and of cash flows for the three month
periods ended March 31, 1997 and 1996. This financial information is the
responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical
procedures to financial data and making inquiries of persons responsible
for financial and accounting matters. It is substantially less in scope
than an audit conducted in accordance with generally accepted auditing
standards, the objective of which is the expression of an opinion regarding
the financial statements taken as a whole. Accordingly, we do not express
such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying financial information for it to be in
conformity with generally accepted accounting principles.
We previously audited in accordance with generally accepted auditing
standards, the consolidated balance sheet as of December 31, 1996, and the
related consolidated statements of income and of cash flows for the year
then ended (not presented herein), and in our report dated January 28, 1997
we expressed an unqualified opinion on those consolidated financial
statements. In our opinion, the information set forth in the accompanying
consolidated balance sheet information as of December 31, 1996, is fairly
stated in all material respects in relation to the consolidated balance
sheet from which it has been derived.
/s/ Price Waterhouse LLP
- -------------------------
Dallas, Texas
April 28, 1997<PAGE>
<TABLE>
ENSCO INTERNATIONAL INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(In thousands, except per share data)
(Unaudited)
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
----------------------
1997 1996
-------- --------
<S> <C> <C>
OPERATING REVENUES........................... $161,600 $ 84,546
OPERATING EXPENSES
Operating costs............................ 70,111 43,524
Depreciation and amortization.............. 24,185 16,374
General and administrative................. 3,082 2,215
-------- --------
97,378 62,113
OPERATING INCOME............................. 64,222 22,433
OTHER INCOME (EXPENSE)
Interest income............................ 1,414 1,236
Interest expense........................... (5,857) (4,049)
Other, net................................. 91 264
-------- --------
(4,352) (2,549)
INCOME BEFORE INCOME TAXES AND MINORITY
INTEREST................................... 59,870 19,884
PROVISION FOR INCOME TAXES
Current income taxes....................... 9,191 367
Deferred income taxes...................... 13,474 4,400
-------- --------
22,665 4,767
MINORITY INTEREST............................ 928 427
-------- --------
NET INCOME .................................. $ 36,277 $ 14,690
======== ========
EARNINGS PER SHARE........................... $ .51 $ .24
======== ========
WEIGHTED AVERAGE SHARES OUTSTANDING.......... 70,864 60,651
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.<PAGE>
<TABLE>
ENSCO INTERNATIONAL INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(In thousands, except for share amounts)
<CAPTION>
MARCH 31, DECEMBER 31,
1997 1996
------------ -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
- ------
CURRENT ASSETS
Cash and cash equivalents..................... $ 87,544 $ 80,698
Accounts and notes receivable, net............ 124,113 111,033
Prepaid expenses and other.................... 17,053 19,668
---------- ----------
Total current assets.................... 228,710 211,399
PROPERTY AND EQUIPMENT, AT COST................. 1,280,123 1,248,873
Less accumulated depreciation................. 280,394 257,284
---------- ----------
Property and equipment, net............. 999,729 991,589
OTHER ASSETS, NET............................... 111,341 112,432
---------- ----------
$1,339,780 $1,315,420
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES
Accounts payable.............................. $ 10,660 $ 11,447
Accrued liabilities........................... 56,347 57,490
Current maturities of long-term debt.......... 35,314 34,943
---------- ----------
Total current liabilities............... 102,321 103,880
LONG-TERM DEBT.................................. 235,590 258,635
DEFERRED INCOME TAXES........................... 86,437 72,963
OTHER LIABILITIES............................... 33,024 33,991
COMMITMENTS AND CONTINGENCIES...................
STOCKHOLDERS' EQUITY
Common stock, $.10 par value, 125.0 million
shares authorized and 77.2 million shares
issued...................................... 7,725 7,718
Additional paid-in capital.................... 837,157 835,475
Retained earnings............................. 108,079 71,802
Restricted stock (unearned compensation)...... (4,639) (4,929)
Cumulative translation adjustment............. (1,086) (1,086)
Treasury stock at cost, 6.4 million and 6.3
million shares.............................. (64,828) (63,029)
---------- ----------<PAGE>
Total stockholders' equity ............. 882,408 845,951
---------- ----------
$1,339,780 $1,315,420
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.<PAGE>
<TABLE>
ENSCO INTERNATIONAL INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
(Unaudited)
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------
1997 1996
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES
Net income........................................ $ 36,277 $ 14,690
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization................. 24,185 16,374
Deferred income tax provision................. 13,474 4,400
Amortization of other assets.................. 1,388 752
Other......................................... (37) (262)
Changes in operating assets and liabilities:
Increase in accounts receivable............. (13,087) (4,275)
(Increase) decrease in prepaid expenses
and other................................. 543 (642)
Increase (decrease) in accounts payable..... (787) 7,495
Decrease in accrued liabilities............. (1,978) (1,491)
-------- --------
Net cash provided by operating activities. 59,978 37,041
-------- --------
INVESTING ACTIVITIES
Additions to property and equipment............... (31,718) (38,878)
Sale of short-term investments.................... - 5,000
Other............................................. 366 2,128
-------- --------
Net cash used by investing activities..... (31,352) (31,750)
-------- --------
FINANCING ACTIVITIES
Reduction of long-term borrowings................. (22,477) (7,846)
Reduction in restricted cash...................... 1,075 -
Other............................................. (378) 645
-------- --------
Net cash used by financing activities..... (21,780) (7,201)
-------- --------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS.... 6,846 (1,910)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD...... 80,698 77,064
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD............ $ 87,544 $ 75,154
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.<PAGE>
ENSCO INTERNATIONAL INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 - Unaudited Financial Statements
The consolidated financial statements included herein have been prepared by
ENSCO International Incorporated (the "Company"), without audit, pursuant
to the rules and regulations of the Securities and Exchange Commission and
in accordance with generally accepted accounting principles and, in the
opinion of management, reflect all adjustments (which consist of normal
recurring adjustments) which are necessary for a fair presentation of the
financial position and results of operations for the interim periods
presented.
The financial data for the three month period ended March 31, 1997 included
herein has been subjected to a limited review by Price Waterhouse LLP, the
registrant's independent accountants. The accompanying review report of
independent accountants is not a report within the meaning of Sections 7
and 11 of the Securities Act of 1933 and the independent accountant's
liability under Section 11 does not extend to it.
Results of operations for the three month period ended March 31, 1997 are
not necessarily indicative of results of operations which will be realized
for the year ending December 31, 1997. It is recommended that these
statements be read in conjunction with the Company's consolidated financial
statements and notes thereto for the year ended December 31, 1996 included
in the Company's Annual Report to the Securities and Exchange Commission on
Form 10-K.
Note 2 - Acquisition of DUAL DRILLING COMPANY
On June 12, 1996, the Company acquired DUAL DRILLING COMPANY ("Dual"),
pursuant to an Agreement and Plan of Merger among the Company, a wholly
owned subsidiary of the Company, and Dual. The acquisition was approved on
that date by Dual stockholders who received 0.625 shares of the Company's
common stock for each share of Dual common stock. The Company issued
approximately 10.1 million shares of its common stock to Dual stockholders
in connection with the acquisition, resulting in an acquisition price of
approximately $218.4 million.
The Company accounted for the acquisition of Dual as a purchase. The
purchase price allocation has been based on preliminary estimates of fair
value and is subject to adjustment as additional information becomes
available and is evaluated. The primary areas subject to further purchase
price adjustment are reserves associated with insurance related matters and
taxes. The excess of the purchase price over net assets acquired
approximated $100 million and is being amortized over 40 years.
The acquired Dual operations consisted of a fleet of 20 offshore drilling
rigs, including 10 jackup rigs and 10 platform rigs. Four of the jackup
rigs are presently located in the Gulf of Mexico and six are located in
various locations throughout Southeast Asia. Of the 10 platform rigs
operated by Dual, seven are currently located in the Gulf of Mexico and
one, which is not owned but managed, is located off the coast of China.<PAGE>
The remaining two platform rigs were retired in September 1996.
The following unaudited pro forma information shows the consolidated
results of operations for the three months ended March 31, 1996 based upon
adjustments to the historical financial statements of the Company and the
historical financial statements of Dual to give effect to the acquisition
by the Company as if such acquisition had occurred January 1, 1996 (in
thousands, except per share data):
1996
--------
Operating revenues $114,007
Operating income $ 24,975
Net income $ 14,998
Earnings per share $ 0.21
The pro forma consolidated results of operations are not necessarily
indicative of the actual results that would have occurred had the
acquisition occurred on January 1, 1996, or of results that may occur in
the future.
Note 3 - Long-Term Debt
On February 27, 1997, the Company amended and restated its $150.0 million
revolving credit facility with a group of international banks, increasing
availability under the amended and restated revolving credit facility (the
"Facility") to $200.0 million and reducing the interest rate margin and the
commitment fee. Availability under the Facility will be reduced by $14.0
million on a semi-annual basis beginning April 1998. The final maturity
date of the Facility remains October 2001 and the Facility continues to be
collateralized by the majority of the Company's jackup rigs. The covenants
under the Facility are similar to the covenants that existed under the
original revolving credit facility and the interest rate continues to be
tied to London InterBank offered rates. As of March 31, 1997,
approximately $111.1 million was outstanding and $88.9 million was
available for withdrawal under the Facility. The weighted-average interest
rate on the Facility was 6.5% as of March 31, 1997.
Note 4 - Related Party Transaction
In January 1997, a director of the Company settled a $675,000 note payable
to the Company. The note payable related to the director's purchase of
168,750 shares of restricted common stock of the Company in 1988. The note
was settled through the delivery to the Company of restricted shares of the
Company's common stock valued at a formula price provided for in the
director's 1988 stock purchase agreement. As a result, the director
retained 132,998 net shares of common stock and $238,000 cash after
repayment of the note.
Note 5 - Amendment of Shareholder Rights Plan
On March 3, 1997, the Board of Directors of ENSCO amended the Shareholder
Rights Plan of the Company to increase the purchase price from $50.00 to
$250.00 for each one one-hundredth of a share of preferred stock
purchasable upon the exercise of a Right, subject to adjustment.<PAGE>
Note 6 - Purchase of Additional Rig Interest
In April 1997, the Company agreed to acquire the remaining 51% interest in
a jointly owned premium jackup rig located in Southeast Asia. The Company
previously acquired a 49% interest in the rig as a result of the
acquisition of Dual. The transaction is expected to close in May 1997,
subject to certain governmental approvals.
Note 7 - Earnings Per Share
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share,"
(the "Statement") which establishes new standards for computing and
presenting earnings per share. The new Statement is intended to simplify
the standard for computing earnings per share and will require the
presentation of basic and diluted earnings per share on the face of the
income statement, including all prior periods presented. The Statement is
effective for financial statements issued for periods ending after December
15, 1997, and earlier adoption is not permitted. For the quarters ended
March 31, 1997 and 1996, the calculation of earnings per share in
accordance with the provisions of SFAS No. 128 would have resulted in basic
earnings per share of $.52 and $.24 and diluted earnings per share of $.51
and $.24, for the respective periods.<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This report contains forward-looking statements based on current
expectations that involve a number of risks and uncertainties that could
cause actual results to differ materially from the results discussed in the
forward-looking statements. Generally, forward-looking statements include
words or phrases such as "management anticipates", "the Company believes",
"the Company anticipates" and words and phrases of similar impact. The
forward-looking statements are made pursuant to safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. The factors that
could cause actual results to differ materially include, but are not
limited to: (i)industry conditions and competition, (ii) the cyclical
nature of the industry, (iii) worldwide expenditures for oil and gas
drilling, (iv)operational risks and insurance, (v) risks associated with
operating in foreign jurisdictions, (vi) environmental liabilities which
may arise in the future which are not covered by insurance or indemnity,
(vii) the impact of current and future laws and governmental regulation, as
well as repeal or modification of the same, affecting the oil and gas
industry and the Company's operations in particular, and (viii) the risks
described from time to time in the Company's reports to the Securities and
Exchange Commission, including the Company's Annual Report on Form 10-K
for the year ended December 31, 1996.
Demand for the Company's services is significantly affected by worldwide
expenditures for oil and gas drilling. Expenditures for oil and gas
drilling activity fluctuate based upon many factors including world
economic conditions, the legislative environment in the U.S. and other
major countries, production levels and other activities of OPEC and other
oil and gas producers and the impact that these and other events have on
the current and expected future pricing of oil and natural gas.
BUSINESS ENVIRONMENT
ENSCO International Incorporated is one of the largest providers of
offshore drilling services and marine transportation services to the oil
and gas industry. The Company's operations are conducted in the geographic
cores of North America, Europe, Asia Pacific and South America. The
Company's largest geographic unit is North America where the Company
operates primarily in the Gulf of Mexico. The operations of the Europe
Unit are concentrated in the North Sea and the operations of the South
America Unit are conducted on Lake Maracaibo, Venezuela.
In the first quarter of 1997, strong demand continued to push day rates
upward from levels at the latter part of 1996. With nearly all actively
marketed rigs in the world under contract and demand for high quality rigs
exceeding supply in major markets, the current outlook remains positive for
additional increases in day rates and continued high demand for the
remainder of 1997.<PAGE>
Offshore rig and marine vessel industry utilization for the three months
ended March 31, 1997 and 1996 is summarized below:
INDUSTRY WIDE AVERAGES * 1997 1996
------------------------ ------ ------
Offshore Rigs
U.S. Gulf of Mexico:
All Rigs:
Rigs Under Contract 165 149
Total Rigs Available 183 178
% Utilization 90% 84%
Jackup Rigs:
Rigs Under Contract 123 115
Total Rigs Available 135 137
% Utilization 91% 84%
Platform Rigs:
Rigs Under Contract 18 16
Total Rigs Available 24 25
% Utilization 75% 64%
Worldwide:
All Rigs:
Rigs Under Contract 585 551
Total Rigs Available 636 641
% Utilization 92% 86%
Jackup Rigs:
Rigs Under Contract 355 334
Total Rigs Available 378 384
% Utilization 94% 87%
Platform Rigs:
Rigs Under Contract 112 103
Total Rigs Available 121 114
% Utilization 93% 90%
Marine Vessels
U.S. Gulf of Mexico:
Vessels Under Contract 277 268
Total Vessels Available 289 281
% Utilization 96% 95%
* Industry utilization based on data published by
OFFSHORE DATA SERVICES, INC.<PAGE>
RESULTS OF OPERATIONS
- ---------------------
The following analysis highlights the Company's operating results for the
three months ended March 31, 1997 and 1996 (in thousands):
1997 1996
Operating Results -------- --------
-----------------
Revenues $161,600 $ 84,546
Operating margin <F1> 91,489 41,022
Operating income 64,222 22,433
Other expense 4,352 2,549
Provision for income taxes 22,665 4,767
Minority interest 928 427
Net income 36,277 14,690
Revenues
--------
Contract drilling
Jackup rigs:
North America $ 67,684 $ 36,053
Europe 32,251 20,922
Asia Pacific <F2> 12,863 -
-------- --------
Total jackup rigs 112,798 56,975
Barge drilling rigs - South America 20,541 15,908
Platform rigs <F2> 7,411 -
-------- --------
Total contract drilling 140,750 72,883
Marine transportation
AHTS <F3> 4,695 3,778
Supply 13,569 6,595
Mini-supply 2,586 1,290
-------- --------
Total marine transportation 20,850 11,663
Total $161,600 $ 84,546
======== ========
Operating Margin <F1>
---------------------
Contract drilling
Jackup rigs:
North America $ 41,672 $ 16,154
Europe 19,288 9,429
Asia Pacific <F2> 2,424 -
-------- --------
Total jackup rigs 63,384 25,583
Barge drilling rigs - South America 13,086 9,994
Platform rigs <F2> 2,343 -
-------- --------
Total offshore rigs 78,813 35,577
Land rig <F4> - (31)
-------- --------
Total contract drilling 78,813 35,546
-------- --------<PAGE>
1997 1996
Operating Margin <F1> (Cont.) -------- --------
-----------------------------
Marine transportation
AHTS <F3> 2,812 2,177
Supply 8,453 2,901
Mini-supply 1,411 398
-------- --------
Total marine transportation 12,676 5,476
-------- --------
Total $ 91,489 $ 41,022
======== ========
<F1> Defined as revenues less operating expenses, exclusive of
depreciation and general and administrative expenses.
<F2> The Company did not have an Asia Pacific Unit or platform rigs
prior to the Dual acquisition.
<F3> Anchor handling tug supply vessels.
<F4> The Company sold its remaining land rig in July 1996.
<PAGE>
The following is an analysis of certain operating information of the
Company for the three months ended March 31, 1997 and 1996:
1997 1996
Contract Drilling -------- --------
-----------------
Rig utilization:
Jackup rigs:
North America 93% 90%
Europe 100% 94%
Asia Pacific <F1> 61% -
-------- --------
Total jackup rigs 88% 91%
Barge drilling rigs - South America 100% 80%
Platform rigs <F1> 61% -
-------- --------
Total 87% 88%
======== ========
Average day rates:
Jackup rigs:
North America $ 37,006 $ 23,385
Europe 60,649 43,345
Asia Pacific <F1> 32,624 -
-------- --------
Total jackup rigs 41,084 27,959
Barge drilling rigs - South America 22,813 21,798
Platform rigs <F1> 17,909 -
-------- --------
Total $ 34,653 $ 26,266
======== ========
Marine Transportation
---------------------
Fleet utilization:
AHTS <F2> 79% 88%
Supply 94% 89%
Mini-supply 96% 66%
-------- --------
Total 92% 84%
======== ========
Average day rates:
AHTS <F2> $ 10,992 $ 7,828
Supply 6,962 3,535
Mini-supply 3,726 2,678
-------- --------
Total $ 6,791 $ 4,120
======== ========
<F1> The Company did not have an Asia Pacific Unit or platform rigs
prior to the Dual acquisition.
<F2> Anchor handling tug supply vessels.
<PAGE>
The Company's consolidated revenues, operating margin and operating income
for the three months ended March 31, 1997 increased significantly from the
same period in 1996. The increases were due to higher average day rates
and utilization for the Company's drilling rigs and marine vessels that
were owned in both the first quarter of 1997 and 1996, as well as the
results from the drilling rigs acquired in the Dual acquisition. The
improved level of operating income in the first quarter of 1997 was reduced
by increased depreciation and amortization expense resulting from the Dual
acquisition and capital expenditures on the Company's fleet in 1996.<PAGE>
Contract Drilling
- -----------------
The following is an analysis of the Company's offshore drilling rigs at
March 31, 1997 and 1996:
1997 1996
---- ----
Jackup rigs:
North America 22 18
Europe 6 6
Asia Pacific 7 <F1> -
---- ----
Total jackup rigs 35 24
Barge drilling rigs - South America 10 10
Platform rigs 8 <F2> -
---- ----
Total 53 34
==== ====
<F1> Includes one jackup rig operated by the Company that is
currently 49% owned. The Company anticipates that the
remaining 51% interest will be acquired in a transaction
expected to close in May 1997 (see Note 6 to the
Consolidated Financial Statements).
<F2> Seven are located in the Gulf of Mexico and one, which is
not owned but operated under a management contract, is
located off the coast of China.
Revenues and operating margins for the Company's contract drilling segment
for the three months ended March 31, 1997 were up $67.9 million, or 93%,
and $43.3 million, or 122%, respectively, compared to the prior year
period. The significantly improved 1997 results were primarily due to
increased day rates and utilization for rigs owned by the Company in both
the current year and prior year period and to the revenue and operating
margins generated from the rigs added in the Dual acquisition.
For the three months ended March 31, 1997, revenues and operating margin
from the Company's North America jackup rigs increased by $31.6 million, or
88%, and $25.5 million, or 158%, respectively, compared to the same period
in 1996. These improvements are primarily due to an increase in average
day rates of approximately $13,600 and an increase in utilization over the
prior year period. In addition, the North America jackup rigs acquired in
the Dual acquisition contributed approximately $7.9 million in revenues and
$3.6 million in operating margin in the first quarter of 1997.
Revenues and operating margin from the Company's Europe jackup rigs
increased by $11.3 million, or 54%, and $9.9 million, or 105%,
respectively, from the prior year period. These improvements are primarily
due to an approximate $17,300, or 40%, increase in day rates and an
increase in utilization over the prior year period. In the prior year
period, two of the Company's Europe jackup rigs were undergoing
modifications and enhancements for a part of the quarter.
The Company did not have an Asia Pacific Unit prior to the Dual
acquisition. Subsequent to the Dual acquisition, the Company acquired an
additional jackup rig located in Southeast Asia in November 1996 and
transferred another jackup rig from the Gulf of Mexico to the Asia Pacific
Unit in the first quarter of 1997. Of the seven jackup rigs in the Asia<PAGE>
Pacific Unit, four were in the shipyard for all or a portion of the first
quarter of 1997. At March 31, 1997, two of the rigs remained in the
shipyard and are projected to return to work during the first to middle
part of May. In May 1997, the Company anticipates completing the
acquisition of the remaining 51% interest in a jointly owned jackup rig
located in Southeast Asia. This rig will undergo modifications and
enhancements during most of the second and part of the third quarters of
1997.
Revenues and operating margin from the Company's South America barge
drilling rigs increased by $4.6 million, or 29%, and $3.1 million, or 31%,
respectively, from the prior year period. These improvements are primarily
due to an increase in utilization to 100% in the current year period from
80% in the prior year period, and an approximate $1,000 increase in average
day rates. Two of the barge drilling rigs that were undergoing
modification for the entire first quarter of 1996 returned to work in May
and June of 1996.
Marine Transportation
- ---------------------
The following is an analysis of the Company's marine transportation vessels
as of March 31, 1997 and 1996:
1997 1996
---- ----
AHTS * 6 6
Supply 23 23
Mini-Supply 8 8
---- ----
Total 37 37
==== ====
* Anchor handling tug supply vessels.
Revenues and operating margins for the Company's marine transportation
segment for the three months ended March 31, 1997 were up $9.2 million, or
79%, and $7.2 million, or 131%, respectively, from the prior year period.
The 1997 results improved significantly from the prior year period due to
increased current year activity levels in the Gulf of Mexico which was a
contributing factor to higher average day rates for the Company's marine
transportation vessels as compared to the prior year period. Average day
rates for the Company's marine transportation vessels increased by
approximately $2,700 from the prior year period and utilization increased
to 92% in the current year period from 84% in the prior year period.
Depreciation and Amortization
- -----------------------------
Depreciation and amortization expense increased by $7.8 million, or 48%,
for the three months ended March 31, 1997 as compared to the prior year
period due primarily to depreciation and amortization from the additional
drilling rigs and goodwill associated with the Dual acquisition, and
depreciation associated with major modifications and enhancements to the
Company's fleet in 1996.<PAGE>
Other Income (Expense)
- ----------------------
Other income (expense) for the three months ended March 31, 1997 and 1996
was as follows (in thousands):
1997 1996
-------- --------
Interest income $ 1,414 $ 1,236
Interest expense (5,857) (4,049)
Other, net 91 264
-------- --------
$ (4,352) $ (2,549)
======== ========
Interest income increased due primarily to higher average cash balances in
the current period. Interest expense increased as a result of the debt
assumed in the Dual acquisition.
Provision for Income Taxes
- --------------------------
The Company's provision for income taxes increased by $17.9 million for the
three months ended March 31, 1997 as compared to the prior year period.
The increase in income taxes results from the Company's increased
profitability and the recognition of the remaining net operating losses for
financial reporting purposes.
LIQUIDITY AND CAPITAL RESOURCES
Cash Flow and Capital Expenditures
- ----------------------------------
The Company's cash flow from operations and capital expenditures for the
three months ended March 31, 1997 and 1996 are as follows (in thousands):
1997 1996
-------- --------
Cash flow from operations $ 59,978 $ 37,041
======== ========
Capital expenditures
Sustaining $ 7,666 $ 2,551
Enhancements 24,052 23,056
Acquisitions - 13,271
-------- --------
$ 31,718 $ 38,878
======== ========
Cash flow from operations increased by $22.9 million for the three months
ended March 31, 1997 as compared to the prior year period. The increase in
cash flow from operations is primarily a result of increased operating
margins in the first three months of 1997 offset, in part, by a decrease in
cash flow from changes in various working capital accounts.
Management anticipates that capital expenditures for the remainder of 1997
will be approximately $185 million, including $35 million for existing
operations, $130 million for modifications and enhancements of rigs and
vessels, and $20 million for acquisitions. The Company may spend
additional funds to acquire rigs or vessels in 1997, depending on market
conditions and opportunities.<PAGE>
Financing and Capital Resources
- -------------------------------
The Company's long-term debt, total capital and debt to capital ratios at
March 31, 1997 and December 31, 1996 are summarized below (in thousands,
except percentages):
March 31, December 31,
1997 1996
------------ ------------
Long-term debt $ 235,590 $ 258,635
Total capital 1,117,998 1,104,586
Long-term debt to total capital 21% 23%
The decrease in long-term debt is a result of debt repayments in the first
quarter of 1997. The total capital of the Company increased primarily due
to equity increases resulting from the profitability of the Company for the
three months ended March 31, 1997.
On February 27, 1997, the Company amended and restated its $150.0 million
revolving credit facility with a group of international banks, increasing
availability under the amended and restated revolving credit facility (the
"Facility") to $200.0 million and reducing the interest rate margin and the
commitment fee. Availability under the Facility will be reduced by $14.0
million on a semi-annual basis beginning April 1998. The final maturity
date of the Facility remains October 2001 and the Facility continues to be
collateralized by the majority of the Company's jackup rigs. The covenants
under the Facility are similar to the covenants that existed under the
original revolving credit facility and the interest rate continues to be
tied to London InterBank offered rates. As of March 31, 1997,
approximately $111.1 million was outstanding and $88.9 million was
available for withdrawal under the Facility. The weighted-average interest
rate on the Facility was 6.5% as of March 31, 1997.
The Company's liquidity position at March 31, 1997 and December 31, 1996 is
summarized in the table below (in thousands, except ratios):
March 31, December 31,
1997 1996
------------ ------------
Cash and short-term investments $ 87,544 $ 80,698
Working capital 126,389 107,519
Current ratio 2.2 2.0
The Company utilizes a conservative investment philosophy with respect to
its cash and cash equivalents and does not invest in any derivative
financial instruments.
Based on current energy industry conditions, management believes cash flow
from operations, the Company's existing credit facility and the Company's
working capital should be sufficient to fund the Company's short and long-
term liquidity needs.
Other Matters
- -------------
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share,"
(the "Statement") which establishes new standards for computing and<PAGE>
presenting earnings per share. The new Statement is intended to simplify
the standard for computing earnings per share and will require the
presentation of basic and diluted earnings per share on the face of the
income statement, including all prior periods presented. The Statement is
effective for financial statements issued for periods ending after December
15, 1997, and earlier adoption is not permitted. For the quarters ended
March 31, 1997 and 1996, the calculation of earnings per share in
accordance with the provisions of SFAS No. 128 would have resulted in basic
earnings per share of $.52 and $.24 and diluted earnings per share of $.51
and $.24, for the respective periods.<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits Filed with this Report
EXHIBIT NO.
-----------
10.1 Amended and Restated Credit Agreement dated as
of February 27, 1997 by and among ENSCO
International Incorporated, ENSCO Delaware,
Inc., ENSCO Offshore Company, ENSCO Offshore
U.K. Limited, Dual Holding Company, as the
borrowers, and Christiania Bank OG
Kreditkasse, New York Branch, and Den Norske
Bank ASA, New York Branch, as Co-Agents, and
Christiania Bank OG Kreditkasse, New York
Branch, as Admini-strative Agent and Security
Trustee.
15.1 Letter of Independent Accountants regarding
Awareness of Incorporation by Reference.
27.1 Financial Data Schedule. (Exhibit 27.1 is
being submitted as an exhibit only in the
electronic format of this Quarterly Report on
Form 10-Q submitted to the Securities and
Exchange Commission.)
(b) Reports on Form 8-K
(i) During the first quarter of 1997, the Company filed
a Current Report on Form 8-K, dated March 3, 1997,
which reported under Item 5, "Other Events," that
the Company's Board of Directors had amended the
Shareholder Rights Plan of the Company. <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.
ENSCO INTERNATIONAL INCORPORATED
Date: April 29, 1997 /s/ C. Christopher Gaut
------------------- ----------------------------------
C. Christopher Gaut
Chief Financial Officer
/s/ H. E. Malone
----------------------------------
H. E. Malone, Corporate Controller
and Chief Accounting Officer<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5<PAGE>
EXHIBIT NO. 27.1
----------------
<LEGEND>
This schedule contains summary financial information extracted from the
March 31, 1997 financial statements and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<PERIOD-TYPE> 3-MOS
<PERIOD-START> JAN-01-1997
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> $ 87,544
<SECURITIES> 0
<RECEIVABLES> 126,235
<ALLOWANCES> 2,122
<INVENTORY> 2,589
<CURRENT-ASSETS> 228,710
<PP&E> 1,280,123
<DEPRECIATION> 280,394
<TOTAL-ASSETS> 1,339,780
<CURRENT-LIABILITIES> 102,321
<BONDS> 235,590
<COMMON> 7,725
0
0
<OTHER-SE> 874,683
<TOTAL-LIABILITY-AND-EQUITY> 1,339,780
<SALES> 0
<TOTAL-REVENUES> 161,600
<CGS> 0
<TOTAL-COSTS> 70,111
<OTHER-EXPENSES> 27,267
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,857
<INCOME-PRETAX> 59,870
<INCOME-TAX> 22,665
<INCOME-CONTINUING> 36,277
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 36,277
<EPS-PRIMARY> 0.51
<EPS-DILUTED> 0.51<PAGE>
</TABLE>
<PAGE>
EXHIBIT NO. 10.1
********************
TO QUARTERLY REPORT
ON FORM 10-Q FOR THE
PERIOD ENDED 3/31/97
--------------------<PAGE>
==========================================================================
AMENDED AND RESTATED CREDIT AGREEMENT
among
ENSCO INTERNATIONAL INCORPORATED,
ENSCO DELAWARE, INC.,
ENSCO OFFSHORE COMPANY,
ENSCO OFFSHORE U.K. LIMITED,
DUAL HOLDING COMPANY,
VARIOUS LENDING INSTITUTIONS,
CHRISTIANIA BANK OG KREDITKASSE,
NEW YORK BRANCH
and
DEN NORSKE BANK ASA, NEW YORK BRANCH,
as Co-AGENTS
and
CHRISTIANIA BANK OG KREDITKASSE,
NEW YORK BRANCH,
as ADMINISTRATIVE AGENT
and SECURITY TRUSTEE
____________________________________
Dated as of December 15, 1993
and Amended and Restated as of September 27, 1995
and further Amended and Restated as of February 27, 1997
____________________________________
==========================================================================<PAGE>
TABLE OF CONTENTS
Page
----
SECTION 1. Amount and Terms of Credit . . . . . . . . . . . . . 1
1.01 The Commitments . . . . . . . . . . . . . . . . . . . 1
1.02 Minimum Borrowing Amounts, etc. . . . . . . . . . . . 3
1.03 Notice of Borrowing . . . . . . . . . . . . . . . . . 3
1.04 Disbursement of Funds . . . . . . . . . . . . . . . . 4
1.05 Notes . . . . . . . . . . . . . . . . . . . . . . . . 5
1.06 Conversions . . . . . . . . . . . . . . . . . . . . . 5
1.07 Pro Rata Borrowings . . . . . . . . . . . . . . . . . 6
1.08 Interest . . . . . . . . . . . . . . . . . . . . . . 6
1.09 Interest Periods . . . . . . . . . . . . . . . . . . 7
1.10 Increased Costs, Illegality, etc. . . . . . . . . . . 8
1.11 Compensation . . . . . . . . . . . . . . . . . . . . 11
1.12 Change of Lending Office; Limitation on Indemnities . 11
1.13 Replacement of Banks . . . . . . . . . . . . . . . . 11
SECTION 2. Letters of Credit . . . . . . . . . . . . . . . . . . 12
2.01 Letters of Credit . . . . . . . . . . . . . . . . . . 12
2.02 Letter of Credit Requests; Request for Issuance of
Letter of Credit . . . . . . . . . . . . . . . . . 13
2.03 Agreement to Repay Letter of Credit Payments . . . . 14
2.04 Letter of Credit Participations . . . . . . . . . . . 15
2.05 Increased Costs . . . . . . . . . . . . . . . . . . . 17
2.06 Indemnities . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3. Fees; Commitments . . . . . . . . . . . . . . . . . . 19
3.01 Fees . . . . . . . . . . . . . . . . . . . . . . . . 19
3.02 Voluntary Reduction of Commitments . . . . . . . . . 20
3.03 Mandatory Adjustments of Commitments, etc. . . . . . 21
SECTION 4. Payments . . . . . . . . . . . . . . . . . . . . . . 23
4.01 Voluntary Prepayments . . . . . . . . . . . . . . . . 23
4.02 Mandatory Prepayments . . . . . . . . . . . . . . . . 24
4.03 Method and Place of Payment . . . . . . . . . . . . . 26
4.04 Net Payments . . . . . . . . . . . . . . . . . . . . 26
SECTION 5. Conditions Precedent . . . . . . . . . . . . . . . . 29
5.01 Execution of Agreement . . . . . . . . . . . . . . . 29
5.02 No Default; Representations and Warranties . . . . . 29
5.03 No Default Under Existing Credit Agreement . . . . . 29
5.04 Opinions of Counsel . . . . . . . . . . . . . . . . . 29
5.05 Secretary Certificate; Corporate Proceedings . . . . 29
5.06 Fees . . . . . . . . . . . . . . . . . . . . . . . . 30
5.07 Security Agreement . . . . . . . . . . . . . . . . . 30
5.08 Mortgages . . . . . . . . . . . . . . . . . . . . . . 31
5.09 Evidence of Lien, etc. . . . . . . . . . . . . . . . 31
5.10 Insurance Report . . . . . . . . . . . . . . . . . . 31
5.11 Pledge Agreement . . . . . . . . . . . . . . . . . . 31<PAGE>
5.12 Subsidiary Guaranty . . . . . . . . . . . . . . . . . 32
5.13 Existing Credit Agreement . . . . . . . . . . . . . . 32
SECTION 6. Representations, Warranties and Agreements . . . . . 32
6.01 Corporate Status . . . . . . . . . . . . . . . . . . 32
6.02 Corporate Power and Authority . . . . . . . . . . . . 33
6.03 No Violation . . . . . . . . . . . . . . . . . . . . 33
6.04 Litigation . . . . . . . . . . . . . . . . . . . . . 33
6.05 Use of Proceeds; Margin Regulations . . . . . . . . . 34
6.06 Governmental Approvals . . . . . . . . . . . . . . . 34
6.07 Investment Company Act . . . . . . . . . . . . . . . 34
6.08 True and Complete Disclosure . . . . . . . . . . . . 34
6.09 Financial Condition; Financial Statements . . . . . . 34
6.10 Tax Returns and Payments . . . . . . . . . . . . . . 35
6.11 Compliance with ERISA . . . . . . . . . . . . . . . . 35
6.12 Subsidiaries . . . . . . . . . . . . . . . . . . . . 35
6.13 Patents, etc. . . . . . . . . . . . . . . . . . . . . 35
6.14 Pollution and Other Regulations . . . . . . . . . . . 35
6.15 Properties . . . . . . . . . . . . . . . . . . . . . 36
6.16 Citizenship . . . . . . . . . . . . . . . . . . . . . 36
6.17 Rig Classification . . . . . . . . . . . . . . . . . 36
SECTION 7. Affirmative Covenants . . . . . . . . . . . . . . . . 37
7.01 Information Covenants . . . . . . . . . . . . . . . . 37
7.02 Books, Records and Inspections . . . . . . . . . . . 39
7.03 Insurance . . . . . . . . . . . . . . . . . . . . . . 39
7.04 Payment of Taxes . . . . . . . . . . . . . . . . . . 39
7.05 Consolidated Corporate Franchises . . . . . . . . . . 40
7.06 Compliance with Statutes, etc. . . . . . . . . . . . 40
7.07 Good Repair . . . . . . . . . . . . . . . . . . . . . 40
7.08 End of Fiscal Years; Fiscal Quarters . . . . . . . . 40
7.09 Use of Proceeds . . . . . . . . . . . . . . . . . . . 40
7.10 Earnings Concentration Account . . . . . . . . . . . 40
7.11 Additional Rig Valuations . . . . . . . . . . . . . . 41
7.12 Further Assurances . . . . . . . . . . . . . . . . . 41
7.13 ERISA . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 8. Negative Covenants . . . . . . . . . . . . . . . . . 42
8.01 Changes in Business . . . . . . . . . . . . . . . . . 42
8.02 Consolidation, Merger or Sale of Assets, etc. . . . . 42
8.03 Liens on Assets . . . . . . . . . . . . . . . . . . . 43
8.04 Indebtedness . . . . . . . . . . . . . . . . . . . . 44
8.05 Dividends; Restrictions on Subsidiaries, etc. . . . . 45
8.06 Vessel Management; Registry . . . . . . . . . . . . . 46
8.07 Interest Coverage Ratio . . . . . . . . . . . . . . . 46
8.08 Working Capital . . . . . . . . . . . . . . . . . . . 47
8.09 Leverage Ratio . . . . . . . . . . . . . . . . . . . 47
8.10 Collateral Maintenance . . . . . . . . . . . . . . . 47
SECTION 9. Events of Default . . . . . . . . . . . . . . . . . . 47
9.01 Payments . . . . . . . . . . . . . . . . . . . . . . 47
9.02 Representations, etc. . . . . . . . . . . . . . . . . 47
9.03 Covenants . . . . . . . . . . . . . . . . . . . . . . 47
9.04 Default Under Other Agreements . . . . . . . . . . . 47
9.05 Bankruptcy, etc. . . . . . . . . . . . . . . . . . . 48
9.06 Security Documents . . . . . . . . . . . . . . . . . 48
9.07 Guaranty . . . . . . . . . . . . . . . . . . . . . . 49<PAGE>
9.08 Judgments . . . . . . . . . . . . . . . . . . . . . . 49
9.09 Citizenship . . . . . . . . . . . . . . . . . . . . . 49
9.10 Change of Control . . . . . . . . . . . . . . . . . . 49
SECTION 10. Definitions . . . . . . . . . . . . . . . . . . . . . 50
SECTION 11. The Administrative Agent and the Security Trustee . . 73
11.01 Appointment of the Administrative Agent and the
Security Trustee . . . . . . . . . . . . . . . . . 73
11.02 Nature of Duties . . . . . . . . . . . . . . . . . . 74
11.03 Lack of Reliance on the Administrative Agent . . . . 74
11.04 Certain Rights of the Administrative Agent . . . . . 75
11.05 Reliance . . . . . . . . . . . . . . . . . . . . . . 75
11.06 Indemnification . . . . . . . . . . . . . . . . . . . 75
11.07 The Administrative Agent in Its Individual Capacity . 76
11.08 Holders . . . . . . . . . . . . . . . . . . . . . . . 76
11.09 Resignation by the Administrative Agent . . . . . . . 76
SECTION 12. Miscellaneous . . . . . . . . . . . . . . . . . . . . 77
12.01 Payment of Expenses, etc. . . . . . . . . . . . . . . 77
12.02 Right of Setoff . . . . . . . . . . . . . . . . . . . 78
12.03 Notices . . . . . . . . . . . . . . . . . . . . . . . 78
12.04 Benefit of Agreement . . . . . . . . . . . . . . . . 79
12.05 No Waiver; Remedies Cumulative . . . . . . . . . . . 81
12.06 Payments Pro Rata . . . . . . . . . . . . . . . . . . 81
12.07 Calculations; Computations . . . . . . . . . . . . . 82
12.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE;
WAVER OF JURY TRIAL . . . . . . . . . . . . . . . . 82
12.09 Counterparts . . . . . . . . . . . . . . . . . . . . 83
12.10 Effectiveness . . . . . . . . . . . . . . . . . . . . 83
12.11 Headings Descriptive . . . . . . . . . . . . . . . . 84
12.12 Amendment or Waiver . . . . . . . . . . . . . . . . . 84
12.13 Survival . . . . . . . . . . . . . . . . . . . . . . 85
12.14 Domicile of Loans . . . . . . . . . . . . . . . . . . 85
12.15 Confidentiality . . . . . . . . . . . . . . . . . . . 85
12.16 Registry . . . . . . . . . . . . . . . . . . . . . . 85
12.17 Designated Senior Indebtedness . . . . . . . . . . . 86
SECTION 13. Guaranty . . . . . . . . . . . . . . . . . . . . . . 86
13.01 The Guaranty . . . . . . . . . . . . . . . . . . . . 86
13.02 Bankruptcy . . . . . . . . . . . . . . . . . . . . . 86
13.03 Nature of Liability . . . . . . . . . . . . . . . . . 87
13.04 Independent Obligation . . . . . . . . . . . . . . . 87
13.05 Waiver of Notice, etc. . . . . . . . . . . . . . . . 87
13.06 Authorization . . . . . . . . . . . . . . . . . . . . 88
13.07 Reliance . . . . . . . . . . . . . . . . . . . . . . 89
13.08 Subordination . . . . . . . . . . . . . . . . . . . . 89
13.09 Waiver . . . . . . . . . . . . . . . . . . . . . . . 89
13.10 Subrogation . . . . . . . . . . . . . . . . . . . . . 90
ANNEX I -- Commitments
ANNEX II -- Bank Addresses
ANNEX III -- Existing Letters of Credit
ANNEX IV -- Commitment Reduction Schedule
ANNEX V -- Subsidiaries
ANNEX VI -- Rigs and Vessels
ANNEX VII -- Approved Brokers<PAGE>
EXHIBIT A -- Form of Notice of Borrowing
EXHIBIT B-1 -- Form of Tranche A Note
EXHIBIT B-2 -- Form of Tranche B Note
EXHIBIT B-3 -- Form of Tranche C Note
EXHIBIT C -- Form of Letter of Credit Request
EXHIBIT D -- Form of Section 4.04(b)(ii) Certificate
EXHIBIT E-1 -- Form of Opinion of Robert O. Isaac, Esq.
EXHIBIT E-2 -- Form of Opinion of White & Case
EXHIBIT F -- Form of Secretary's Certificate
EXHIBIT G-1 -- Form of Borrower A Security Agreement
EXHIBIT G-2 -- Form of Borrower B Security Agreement
EXHIBIT G-3 -- Form of Borrower C and Subsidiary Guarantor
Security Agreement
EXHIBIT H-1 -- Form of US Fleet Mortgage
EXHIBIT H-2 -- Form of Liberian Fleet Mortgage
EXHIBIT H-3 -- Form of Bahamian Mortgage
EXHIBIT I -- Form of Aon Natural Resources Worldwide Opinion
EXHIBIT J -- Form of Pledge Agreement
EXHIBIT K -- Form of Subsidiary Guaranty
EXHIBIT L -- Form of Compliance Certificate
EXHIBIT M -- Form of Assignment and Assumption Agreement<PAGE>
AMENDED AND RESTATED CREDIT AGREEMENT, dated as of December 15,
1993, and Amended and Restated as of September 27, 1995 and further
Amended and Restated as of February 27, 1997, among ENSCO INTERNATIONAL
INCORPORATED ("Holdings"), a Delaware corporation, ENSCO DELAWARE, INC.
("Parent"), a Delaware corporation, ENSCO OFFSHORE COMPANY ("Borrower A"),
a Delaware corporation, ENSCO OFFSHORE U.K. LIMITED ("Borrower B"), a
company formed under the laws of the United Kingdom, DUAL HOLDING COMPANY
("Borrower C" and, together with Borrower A and Borrower B, each a
"Borrower" and collectively the "Borrowers"), a Delaware corporation, the
lending institutions listed from time to time on Annex I hereto (each a
"Bank" and, collectively, the "Banks"), CHRISTIANIA BANK OG KREDITKASSE,
NEW YORK BRANCH and DEN NORSKE BANK ASA, NEW YORK BRANCH, as co-agents
(the "Co-Agents") and CHRISTIANIA BANK OG KREDITKASSE, NEW YORK BRANCH, as
administrative agent and security trustee (the "Administrative Agent").
Unless otherwise defined herein, all capitalized terms used herein and
defined in Section 10 are used herein as so defined.
W I T N E S S E T H :
WHEREAS, Borrower A, Borrower B, Borrower C, each of the Banks
and the Co-Agents are party to an Amended and Restated Credit Agreement,
dated as of September 27, 1995 (as amended, modified or supplemented to
date, the "Existing Credit Agreement");
WHEREAS, Holdings, Parent, each of the Banks and the Co-Agents
are party to an Amended and Restated Guaranty, dated as of September 27,
1995 (as amended, modified or supplemented to date, the "Existing
Guaranty"); and
WHEREAS, the parties hereto wish to amend and restate the
Existing Credit Agreement and the Existing Guaranty in their entirety as
follows;
NOW, THEREFORE, IT IS AGREED:
SECTION 1. AMOUNT AND TERMS OF CREDIT.
1.01 The Commitments. (a) Subject to and upon the terms and
conditions herein set forth, each Tranche A Bank severally agrees to make
a loan or loans (each a "Tranche A Loan" and, collectively, the "Tranche A
Loans") under the Tranche A Facility to Borrower A, which Tranche A Loans
(i) shall be made at any time and from time to time on and after the
Restatement Effective Date and prior to the Maturity Date, (ii) except as
hereinafter provided, may, at the option of Borrower A, be incurred and
maintained as, and/or converted into, Base Rate Loans or Eurodollar Loans,
PROVIDED that all Tranche A Loans made as part of the same Borrowing
shall, unless otherwise specifically provided herein, consist of Tranche A
Loans of the same Type, (iii) may be repaid and reborrowed in accordance
with the provisions hereof, (iv) shall not exceed in the aggregate for all
Tranche A Banks at any time outstanding, the Total Tranche A Commitment
and (v) shall not exceed for any Tranche A Bank at any time outstanding
that aggregate principal amount which, when combined with the aggregate
outstanding principal amount of all other Tranche A Loans of such Bank and
with such Bank's Adjusted Tranche A Percentage of the Tranche A Letter of<PAGE>
Credit Outstandings (exclusive of Unpaid Drawings which are repaid with
the proceeds of, and simultaneously with the incurrence of, the respective
Tranche A Loans) at such time, equals (1) if such Bank is a Non-Defaulting
Bank, the Adjusted Tranche A Commitment of such Bank at such time and (2)
if such Bank is a Defaulting Bank, the Tranche A Commitment of such Bank
at such time.
(b) Subject to and upon the terms and conditions herein set
forth, each Tranche B Bank severally agrees to make a loan or loans (each
a "Tranche B Loan" and, collectively, the "Tranche B Loans") under the
Tranche B Facility to Borrower B, which Tranche B Loans (i) shall be made
at any time and from time to time on and after the Restatement Effective
Date and prior to the Maturity Date, (ii) except as herein provided, and
subject to Section 1.01(d) may, at the option of Borrower B, be
denominated in and maintained in, either US Dollars or Pounds Sterling,
(iii) if US Dollar Loans, except as hereinafter provided, may, at the
option of Borrower B, be incurred and maintained as, and/or converted
into, Base Rate Loans or Eurodollar Loans, PROVIDED that all Tranche B
Loans made as part of the same Borrowing shall, unless otherwise
specifically provided herein, consist of Tranche B Loans of the same Type
and denomination, (iv) if Pound Sterling Loans, shall be maintained as
Eurodollar Loans, (v) may be repaid and reborrowed in accordance with the
provisions hereof, (vi) shall not exceed in the aggregate for all Tranche
B Banks at any time outstanding, the Total Tranche B Commitment and (vii)
shall not exceed for any Tranche B Bank at any time outstanding that
aggregate principal amount which, when combined with the aggregate
outstanding principal amount of all other Tranche B Loans of such Bank,
equals the Tranche B Commitment of such Bank at such time.
(c) Subject to and upon the terms and conditions herein set
forth, each Tranche C Bank severally agrees to make a loan or loans (each
a "Tranche C Loan" and, collectively, the "Tranche C Loans", and, together
with the Tranche A Loans and the Tranche B Loans, each a "Loan" and
collectively, the "Loans") under the Tranche C Facility (together with the
Tranche A Facility and the Tranche B Facility, the "Facilities") to
Borrower C, which Tranche C Loans (i) shall be made at any time and from
time to time on and after the Restatement Effective Date and prior to the
Maturity Date, (ii) except as hereinafter provided, may, at the option of
Borrower C, be incurred and maintained as, and/or converted into, Base
Rate Loans or Eurodollar Loans, PROVIDED that all Tranche C Loans made as
part of the same Borrowing shall, unless otherwise specifically provided
herein, consist of Tranche C Loans of the same Type, (iii) may be repaid
and reborrowed in accordance with the provisions hereof, (iv) shall not
exceed in the aggregate for all Tranche C Banks at any time outstanding,
the Total Tranche C Commitment and (v) shall not exceed for any Tranche C
Bank at any time outstanding that aggregate principal amount which, when
combined with the aggregate outstanding principal amount of all other
Tranche C Loans of such Bank and with such Bank's Adjusted Tranche C
Percentage of the Tranche C Letter of Credit Outstandings (exclusive of
Unpaid Drawings which are repaid with the proceeds of, and simultaneously
with the incurrence of, the respective Tranche C Loans) at such time,
equals (1) if such Bank is a Non-Defaulting Bank, the Adjusted Tranche C
Commitment of such Bank at such time and (2) if such Bank is a Defaulting
Bank, the Tranche C Commitment of such Bank at such time.
(d) Whenever Borrower B incurs a Tranche B Loan pursuant to
Section 1.01(b) denominated in Pounds Sterling, the outstanding principal<PAGE>
amount of Tranche B Loans (the "Tranche B Outstandings") at such time
shall be affected by such Loan on the basis of the US Dollar Equivalent of
the stated amount of such Loan. Any US Dollar Equivalent established
according to the preceding sentence shall remain in effect until the last
day of the Interest Period applicable to any such Loan, except that in the
case of an Interest Period in excess of six (6) months, such US Dollar
Equivalent shall remain in effect until the date occurring six (6) months
after the first day of such Interest Period, at which time the Tranche B
Outstandings shall be adjusted to reflect the current US Dollar Equivalent
of the stated amount of any such Loan.
1.02 Minimum Borrowing Amounts, etc. The aggregate principal
amount of each Borrowing shall not be less than the Minimum Borrowing
Amount for the Loans constituting such Borrowing. More than one (1)
Borrowing may be incurred on any day, PROVIDED that at no time shall there
be outstanding more than ten (10) Borrowings of Eurodollar Loans.
1.03 Notice of Borrowing. Whenever a Borrower desires to incur
Loans hereunder, it shall give the Administrative Agent at its Notice
Office, prior to 3:00 p.m. (New York time), at least four (4) Business
Days' prior written notice (or telephonic notice promptly confirmed in
writing) of any Borrowing to be made hereunder. Each such notice (each a
"Notice of Borrowing") shall be in the form of Exhibit A and shall be
irrevocable and shall specify (i) the name of such Borrower, (ii) the date
of such Borrowing (which shall be a Business Day), (iii) whether such
Loans shall consist of Tranche A Loans, Tranche B Loans or Tranche C
Loans, and, if Tranche B Loans, whether such Loans will be denominated in
US Dollars or (to the extent permitted) Pounds Sterling, (iv) the
aggregate principal amount of the Loans to be made pursuant to such
Borrowing (stated in Pounds Sterling and the current US Dollar Equivalent
thereof in the case of Pound Sterling Loans), (v) whether the respective
Borrowing shall consist of Base Rate Loans or (to the extent permitted)
Eurodollar Loans and, if Eurodollar Loans, the Interest Period to be
initially applicable thereto and (vi) disbursement instructions. The
Administrative Agent shall promptly give each Bank written notice (or
telephonic notice promptly confirmed in writing) of each proposed Borrow-
ing, of such Bank's proportionate share thereof and of the other matters
covered by the Notice of Borrowing.
1.04 Disbursement of Funds. (a) No later than 11:00 A.M. (New
York time) on the date specified in each Notice of Borrowing, each Bank
with a Commitment under the respective Tranche will make available its pro
rata share of each Borrowing requested to be made on such date in the
manner provided below. All such amounts shall be made available to the
Administrative Agent in US Dollars in the case of a Borrowing of US Dollar
Loans or in Pounds Sterling in the case of a Borrowing of Pound Sterling
Loans and immediately available funds at the US Payment Office for any US
Dollar Loan or at the UK Payment Office for any Pound Sterling Loan and
the Administrative Agent promptly will make available to the respective
Borrower by depositing to its account at the respective Payment Office (or
in accordance with any other disbursement instructions given by such
Borrower) the aggregate of the amounts so made available in US Dollars or
Pounds Sterling, as the case may be, and immediately available funds.
Unless the Administrative Agent shall have been notified by any Bank prior
to the date of Borrowing that such Bank does not intend to make available
to the Administrative Agent its portion of the Borrowing or Borrowings to
be made on such date, the Administrative Agent may assume that such Bank<PAGE>
has made such amount available to the Administrative Agent on such date of
Borrowing, and the Administrative Agent, in reliance upon such assumption,
may (in its sole discretion and without any obligation to do so) make
available to the requesting Borrower a corresponding amount. If such
corresponding amount is not in fact made available to the Administrative
Agent by such Bank and the Administrative Agent has made available same to
such Borrower, the Administrative Agent shall be entitled to recover such
corresponding amount from such Bank. If such Bank does not pay such
corresponding amount forthwith upon the Administrative Agent's demand
therefor, the Administrative Agent shall promptly (and in any event within
two (2) Business Days from the date the Administrative Agent made such
funds available to such Borrower) notify such Borrower, and such Borrower
shall (within two (2) Business Days of receiving such demand) pay such
corresponding amount to the Administrative Agent. The Administrative
Agent shall also be entitled to recover on demand from such Bank or such
Borrower, as the case may be, interest on such corresponding amount in
respect of each day from the date such corresponding amount was made
available by the Administrative Agent to such Borrower to the date such
corresponding amount is recovered by the Administrative Agent, at a rate
per annum equal to (x) if paid by such Bank, the overnight Federal Funds
Effective Rate (calculated on the basis of the US Dollar Equivalent in the
case of Pound Sterling Loans) or (y) if paid by such Borrower, the then
applicable rate of interest, calculated in accordance with Section 1.08,
for the respective Loans.
(b) Nothing herein shall be deemed to relieve any Bank from its
obligation to fulfill its commitments hereunder or to prejudice any rights
which any Borrower may have against any Bank as a result of any default by
such Bank hereunder.
1.05 Notes. (a) Each Borrower's obligation to pay the
principal of, and interest on, the Loans made by each Bank to such
Borrower shall be evidenced (i) if Tranche A Loans, by a promissory note
duly executed and delivered by Borrower A substantially in the form of
Exhibit B-1 with blanks appropriately completed in conformity herewith
(each a "Tranche A Note" and, collectively, the "Tranche A Notes"), (ii)
if Tranche B Loans, by a promissory note duly executed and delivered by
Borrower B substantially in the form of Exhibit B-2 with blanks
appropriately completed in conformity herewith (each a "Tranche B Note"
and, collectively, the "Tranche B Notes"), (iii) if Tranche C Loans, by a
promissory note duly executed and delivered by Borrower C substantially in
the form of Exhibit B-3 with blanks appropriately completed in conformity
herewith (each a "Tranche C Note" and, collectively, the "Tranche C Notes"
and together with the Tranche A Notes and the Tranche B Notes, the
"Notes.")
(b) The Notes issued to each Bank shall (i) be executed by the
respective Borrower thereunder, (ii) be payable to the order of such Bank
and be dated the Restatement Effective Date, (iii) be in a stated
principal amount equal to the Commitment of such Bank under the respective
Tranche on such date and be payable in the principal amount of the Loans
evidenced thereby, (iv) mature on the Maturity Date, (v) bear interest as
provided in the appropriate clause of Section 1.08 in respect of the Base
Rate Loans and Eurodollar Loans, as the case may be, evidenced thereby,
(vi) be subject to mandatory repayment as provided in Section 4.02 and
(vii) be entitled to the benefits of and subject to this Agreement and the
other Credit Documents.<PAGE>
(c) Each Bank will note on its internal records the amount of
each Loan made by it and each payment in respect thereof and will, prior
to any transfer of any of its Notes, endorse on the reverse side thereof
the outstanding principal amount of Loans evidenced thereby. Failure to
make any such notation shall not affect the respective Borrower's obliga-
tions in respect of such Loans.
1.06 Conversions. The Borrowers shall have the option to
convert on any Business Day all or a portion at least equal to the
applicable Minimum Borrowing Amount of the outstanding principal amount of
the US Dollar Loans owing pursuant to the Tranche A Facility, the Tranche
B Facility or the Tranche C Facility, as the case may be, into a
Borrowing or Borrowings pursuant to such Facility of another Type of Loan,
provided that (i) except as otherwise provided in Section 1.10(b),
Eurodollar Loans may be converted into Base Rate Loans only on the last
day of an Interest Period applicable thereto and no partial conversion of
a Borrowing of Eurodollar Loans shall reduce the outstanding principal
amount of the Eurodollar Loans made pursuant to such Borrowing to less
than the Minimum Borrowing Amount applicable thereto, (ii) no Base Rate
Loans may be converted into Eurodollar Loans at any time when a Default or
Event of Default is in existence on the date of the conversion if the
Administrative Agent or the Required Banks have determined that such a
conversion would be disadvantageous to the Banks and (iii) Borrowings of
Eurodollar Loans resulting from this Section 1.06 shall be limited in
number as provided in Section 1.02. Each such conversion shall be
effected by the respective Borrower giving the Administrative Agent at its
Notice Office, prior to 12:00 Noon (New York time), at least three (3)
Business Days' prior written notice (or telephonic notice promptly
confirmed in writing) (each a "Notice of Conversion") specifying the Loans
to be so converted, the Type of Loans to be converted into and, if to be
converted into a Borrowing of Eurodollar Loans, the Interest Period to be
initially applicable thereto. The Administrative Agent shall give each
Bank prompt notice of any such proposed conversion affecting any of its
Loans.
1.07 Pro Rata Borrowings. All Loans under this Agreement shall
be made by the Banks pro rata on the basis of their respective
Commitments. No Bank shall be responsible for any default by any other
Bank in its obligation to make Loans hereunder and each Bank shall be
obligated to make the Loans provided to be made by it hereunder, regard-
less of the failure of any other Bank to fulfill its commitments
hereunder.
1,08 Interest. (a) The unpaid principal amount of each Base
Rate Loan shall bear interest from the date of the Borrowing thereof until
maturity (whether by acceleration or otherwise) at a rate per annum which
shall at all times be the Base Rate in effect from time to time.
(b) The unpaid principal amount of each Eurodollar Loan shall
bear interest from the date of the Borrowing thereof until maturity
(whether by acceleration or otherwise) at a rate per annum which shall at
all times be the Applicable Eurodollar Margin plus the relevant Eurodollar
Rate.
(c) All overdue principal and, to the extent permitted by law,
overdue interest in respect of each Loan and any other overdue amount
payable hereunder shall bear interest at a rate per annum equal to 2% per<PAGE>
annum in excess of the rate otherwise applicable thereto, PROVIDED that no
Loan shall bear interest after maturity (whether by acceleration or
otherwise) at a rate per annum less than 2% plus the rate of interest
applicable thereto at maturity.
(d) Interest shall accrue from and including the date of any
Borrowing to but excluding the date of any repayment thereof and shall be
payable (i) in respect of each Base Rate Loan, quarterly in arrears on the
first day of each January, April, July and October, (ii) in respect of
each Eurodollar Loan, on the last day of each Interest Period applicable
thereto and, in the case of an Interest Period in excess of six (6)
months, on the date occurring six (6) months after the first day of such
Interest Period and (iii) in respect of each Loan, on any prepayment or
conversion (other than the prepayment and conversion of Base Rate Loans)
(on the amount prepaid or converted), at maturity (whether by acceleration
or otherwise) and, after such maturity, on demand.
(e) All computations of interest hereunder shall be made in
accordance with Section 12.07(b).
(f) The Administrative Agent, upon determining the interest
rate for any Borrowing of Loans for any Interest Period, shall promptly
notify the respective Borrower and the Banks thereof.
1.09 Interest Periods. (a) At the time any Borrower gives a
Notice of Borrowing or Notice of Conversion in respect of the making of,
or conversion into, a Borrowing of Eurodollar Loans (in the case of the
initial Interest Period applicable thereto) or prior to 12:00 Noon (New
York time) on the third Business Day prior to the expiration of an
Interest Period applicable to a Borrowing of Eurodollar Loans, it shall
have the right to elect by giving the Administrative Agent written notice
(or telephonic notice promptly confirmed in writing) of the Interest
Period applicable to such Borrowing, which Interest Period shall, at the
option of such Borrower, be a one (1), three (3) or six (6) month period
(or, to the extent available and at the reasonable discretion of the
Administrative Agent, a nine (9) or twelve (12) month Interest Period or,
if each Bank agrees, a non-standard period). Notwithstanding anything to
the contrary contained above:
(i) the initial Interest Period for any Borrowing of
Eurodollar Loans shall commence on the date of such Borrowing
(including the date of any conversion from a Borrowing of Base Rate
Loans) and each Interest Period occurring thereafter in respect of
such Borrowing shall commence on the day on which the immediately
preceding Interest Period expires;
(ii) if any Interest Period begins on a day for which there is
no numerically corresponding day in the calendar month at the end of
such Interest Period, such Interest Period shall end on the last
Business Day of such calendar month;
(iii) if any Interest Period would otherwise expire on a day
which is not a Business Day, such Interest Period shall expire on the
next succeeding Business Day, PROVIDED that if any Interest Period
would otherwise expire on a day which is not a Business Day but is a
day of the month after which no further Business Day occurs in such<PAGE>
month, such Interest Period shall expire on the immediately preceding
Business Day;
(iv) no Interest Period shall extend beyond the Maturity Date;
(v) no Interest Period with respect to any Borrowing of Loans
under any Facility may be elected that would extend beyond any date
upon which a Scheduled Commitment Reduction is required to be made in
respect of such Facility if, after giving effect to the selection of
such Interest Period, the aggregate principal amount of Loans
maintained as Eurodollar Loans under the Facility with Interest
Periods ending after such date would exceed the aggregate principal
amount of Loans of such Facility permitted to be outstanding after
such Scheduled Commitment Reduction;
(vi) no Interest Period may be elected at any time when a
Default or Event of Default is then in existence if the
Administrative Agent or the Required Banks have determined that such
an election at such time would be disadvantageous to the Banks; and
(vii) no more than ten (10) Interest Periods (except as
described in Clause (b) below) of one (1) month may be selected by
the Borrowers in any calendar year.
(b) If upon the expiration of any Interest Period, the
respective Borrower has failed to (or may not) elect a new Interest Period
to be applicable to the respective Borrowing of Eurodollar Loans as
provided above, such Borrower shall be deemed to have elected a six (6)
month Interest Period for such Borrowing, PROVIDED that if such Borrower
may not elect an Interest Period as a result of clause (a)(vi) above, such
Borrower will be deemed to have elected a one (1) month Interest Period
effective as of the expiration date of such current Interest Period.
1.10 Increased Costs, Illegality, etc. (a) In the event that
(x) in the case of clause (i) and (iv) below, the Administrative Agent or
(y) in the case of clauses (ii) and (iii) below, any Bank shall have
determined (which determination shall, absent manifest error, be final and
conclusive and binding upon all parties hereto):
(i) on any date for determining the Eurodollar Rate for any
Interest Period that, by reason of any changes arising after the date
of this Agreement affecting the interbank Eurodollar market, adequate
and fair means do not exist for ascertaining the applicable interest
rate on the basis provided for in the definition of Eurodollar Rate;
or
(ii) at any time, that such Bank shall incur increased costs or
reductions in the amounts received or receivable hereunder with
respect to any Eurodollar Loans (other than any increased cost or
reduction in the amount received or receivable resulting from the
imposition of or a change in the rate or basis of taxes or similar
charges) because of (x) any change since the date of this Agreement
in any applicable law, governmental rule, regulation, guideline or
order (or in the interpretation or administration thereof and
including the introduction of any new law or governmental rule,
regulation, guideline or order) (such as, for example, but not<PAGE>
limited to, a change in official reserve requirements, but, in all
events, excluding reserves required under Regulation D to the extent
included in the computation of the Eurodollar Rate) and/or (y) other
circumstances occurring after the date of this Agreement and
affecting the interbank Eurodollar market;
(iii) at any time, that the making or continuance of any
Eurodollar Loan has become unlawful by compliance by such Bank in
good faith with any law, governmental rule, regulation, guideline (or
would conflict with any such governmental rule, regulation, guideline
or order not having the force of law but with which such Bank
customarily complies even though the failure to comply therewith
would not be unlawful); or
(iv) at any time, that Pounds Sterling are not available in
sufficient quantity, as determined in good faith by the
Administrative Agent, to fund any Borrowing of Pound Sterling Loans;
then, and in any such event, such Bank (or the Administrative Agent in the
case of clause (i) and (iv) above) shall (x) on such date and (y) within
ten (10) Business Days of the date on which such event no longer exists,
give notice (by telephone confirmed in writing) to the respective Borrower
and to the Administrative Agent of such determination (which notice the
Administrative Agent shall promptly transmit to each of the other Banks).
Thereafter (A) in the case of clause (i) above, Eurodollar Loans
(including, without limitation, Pound Sterling Loans) shall no longer be
available until such time as the Administrative Agent notifies the
respective Borrower and the Banks that the circumstances giving rise to
such notice by the Administrative Agent no longer exist, and any Notice of
Borrowing or Notice of Conversion given by such Borrower with respect to
Eurodollar Loans which have not yet been made shall be deemed rescinded by
such Borrower, (B) in the case of clause (ii) above, the respective
Borrower shall, subject to Section 1.12(b) (to the extent applicable), pay
to such Bank, upon written demand therefor, such additional amounts (in
the form of an increased rate of, or a different method of calculating,
interest or otherwise as such Bank in its sole discretion shall determine)
as shall be required to compensate such Bank for such increased costs or
reductions in amounts receivable hereunder (a written notice as to the
additional amounts owed to such Bank, showing the basis for the
calculation thereof, submitted to such Borrower by such Bank shall, absent
manifest error, be final and conclusive and binding upon all parties
hereto), (C) in the case of clause (iii) above, the respective Borrower
shall take the actions specified in Section 1.10(b) as promptly as pos-
sible and, in any event, within the time period required by law and (D) in
the case of clause (iv) above, Pound Sterling Loans shall no longer be
available until such time as the Administrative Agent notifies Borrower B
and the Tranche B Banks that the circumstances giving rise to such notice
by the Administrative Agent no longer exists and any Notice of Borrowing
given by Borrower B with respect to Pound Sterling Loans which have not
yet been incurred shall be deemed rescinded by Borrower B.
(b) At any time that any US Dollar Eurodollar Loan is affected
by the circumstances described in Section 1.10(a)(ii) or (iii), the
affected Borrower may (and in the case of a US Dollar Eurodollar Loan
affected pursuant to Section 1.10(a)(iii), such Borrower shall) either (i)
if the affected Eurodollar Loan is then being made pursuant to a
Borrowing, cancel said Borrowing by giving the Administrative Agent<PAGE>
telephonic notice (confirmed promptly in writing) thereof on the same date
that such Borrower was notified by a Bank pursuant to Section 1.10(a)(ii)
or (iii), or (ii) if the affected Eurodollar Loan is then outstanding,
upon at least three (3) Business Days' notice to the Administrative Agent,
require the affected Bank to convert each such Eurodollar Loan into a Base
Rate Loan, PROVIDED that if more than one (1) Bank is affected at any
time, then all affected Banks must be treated the same pursuant to this
Section 1.10(b). If at any time the making or continuance of any Pound
Sterling Loan, or giving effect to the obligations of a Bank in respect
thereof, has been made unlawful by any law coming into force or by any
change in any law or regulation or in the interpretation or application
thereof by any court or any statutory board or commission, then Borrower
B, upon at least three (3) Business Days' written notice to the
Administrative Agent and the affected Bank or Banks, shall repay such
Pound Sterling Loan in full.
(c) If any Bank shall have determined that after the
Restatement Effective Date, the adoption or effectiveness of any applic-
able law, rule or regulation regarding capital adequacy, or any change
therein, 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 such Bank
with any request or directive regarding capital adequacy (whether or not
having the force of law but with which such Bank customarily complies even
though the failure to comply therewith would not be unlawful) of any such
authority, central bank or comparable agency, has or would have the effect
of reducing the rate of return on such Bank's capital or assets as a con-
sequence of its commitments or obligations hereunder to a level below that
which such Bank could have achieved but for such adoption, effectiveness,
change or compliance (taking into consideration such Bank's policies with
respect to capital adequacy), then from time to time, within 15 days after
demand by such Bank (with a copy to the Administrative Agent), each Bor-
rower agrees, subject to Section 1.12(b) (to the extent applicable), to
pay to such Bank such additional amount or amounts as will compensate such
Bank for such reduction. Each Bank, upon determining in good faith that
any additional amounts will be payable pursuant to this Section 1.10(c),
will give written notice thereof (such notice to be given in accordance
with Section 1.12(b) below) to such Borrower, which notice shall set forth
the basis of the calculation of such additional amounts.
1.11 Compensation. Each Borrower shall compensate each Bank,
upon its written request (which request shall set forth the basis for
requesting such compensation), for all reasonable losses, expenses and
liabilities (including, without limitation, any loss, expense or liability
incurred by reason of the liquidation or reemployment of deposits or other
funds required by such Bank to fund its Eurodollar Loans but excluding in
any event the loss of anticipated profits) which such Bank may sustain:
(i) if for any reason (other than a default by such Bank or the
Administrative Agent) a Borrowing of Eurodollar Loans does not occur on a
date specified therefor in a Notice of Borrowing or Notice of Conversion
(whether or not withdrawn by the respective Borrower or deemed withdrawn
pursuant to Section 1.10(a)); (ii) if any prepayment, repayment or
conversion of any of its Eurodollar Loans (including as a result of
Section 1.10 or the last paragraph of Section 9) occurs on a date which is
not the last day of an Interest Period applicable thereto, (iii) if any
prepayment of any of such Borrower's Eurodollar Loans is not made on any
date specified in a notice of prepayment given by such Borrower; or (iv)<PAGE>
as a consequence of (x) any other default by such Borrower to repay its
Eurodollar Loans when required by the terms of this Agreement or (y) an
election made pursuant to Section 1.10(b).
1.12 Change of Lending Office; Limitation on Indemnities. (a)
Each Bank agrees that, upon the occurrence of any event giving rise to the
operation of Section 1.10(a)(ii) or (iii), 1.10(c), 2.05 or 4.04 with re-
spect to such Bank, it will, if requested by the affected Borrower, use
reasonable efforts (subject to overall policy considerations of such Bank)
to designate another lending office for any Loans or Letters of Credit
affected by such event, PROVIDED that such designation is made on such
terms that such Bank and its lending office suffer no economic, legal or
regulatory disadvantage, with the object of avoiding the consequence of
the event giving rise to the operation of any such Section. Nothing in
this Section 1.12 shall affect or postpone any of the obligations of any
Borrower or the right of any Bank provided in Section 1.10, 2.05 or 4.04.
(b) Notwithstanding anything in this Agreement to the contrary,
to the extent any notice required by Section 1.10, 2.05 or 4.04 is given
by any Bank more than 90 days after such Bank obtained, or reasonably
should have obtained, knowledge of the occurrence of the event giving rise
to the additional costs of the type described in such Section, such Bank
shall not be entitled to compensation under Section 1.10, 2.05 or 4.04 for
any amounts incurred or accruing prior to the giving of such notice to the
respective Borrower.
1.13 Replacement of Banks. (x) Upon the occurrence of any
event giving rise to the operation of Section 1.10(a)(ii) or (iii),
1.10(c), 2.05 or 4.04 with respect to any Bank which results in such Bank
charging to any Borrower increased costs in excess of those being
generally charged by the other Banks or such Bank becoming incapable of
making Eurodollar Loans, (y) if a Bank becomes a Defaulting Bank and/or
(z) as provided in Section 12.12(b), in the case of a refusal by a Bank to
consent to a proposed change, waiver, discharge or termination with
respect to this Agreement which has been approved by the Required Banks,
the Borrowers shall have the right, if no Default or Event of Default then
exists, to replace such Bank (the "Replaced Bank") with one or more other
Eligible Transferee or Transferees reasonably acceptable to the
Administrative Agent, none of which Eligible Transferees shall constitute
a Defaulting Bank at the time of such replacement (collectively, the
"Replacement Bank"), PROVIDED that (i) at the time of any replacement
pursuant to this Section 1.13, the Replacement Bank shall enter into one
or more Assignment and Assumption Agreements pursuant to Section 12.04(b)
(and with all fees payable pursuant to said Section 12.04(b) to be paid by
the Replacement Bank) pursuant to which the Replacement Bank shall acquire
all of the Commitments and outstanding Loans of, and in each case
participations in Letters of Credit by, the Replaced Bank and, in connec-
tion therewith, shall pay to (x) the Replaced Bank in respect thereof an
amount equal to the sum of (A) the principal of, and all accrued interest
on, all outstanding Loans of the Replaced Bank, (B) all Unpaid Drawings
that have been funded by (and not reimbursed to) such Replaced Bank,
together with all then unpaid interest with respect thereto at such time
and (C) all accrued, but theretofore unpaid, Fees owing to the Replaced
Bank pursuant to Section 3.01, and (y) the Letter of Credit Issuer an
amount equal to such Replaced Bank's Percentage of any Unpaid Drawing
(which at such time remains an Unpaid Drawing) to the extent such amount
was not theretofore funded by such Replaced Bank, and (ii) all obligations<PAGE>
of any Borrower owing to the Replaced Bank (other than those specifically
described in clause (i) above in respect of which the assignment purchase
price has been, or is concurrently being, paid) shall be paid in full to
such Replaced Bank concurrently with such replacement and such Replaced
Bank shall promptly return all cancelled Notes to the Borrowers. Upon the
execution of the respective Assignment and Assumption Agreements, the
payment of amounts referred to in clauses (i) and (ii) above, and, if so
requested by the Replacement Bank, delivery to the Replacement Bank of
appropriate Notes executed by the respective Borrowers, the Replacement
Bank shall become a Bank hereunder and the Replaced Bank shall cease to
constitute a Bank hereunder, except with respect to indemnification
provisions applicable to the Replaced Bank under this Agreement, which
shall survive as to such Replaced Bank as described herein.
SECTION 2. LETTERS OF CREDIT.
2.01 Letters of Credit. (a) Subject to and upon the terms and
conditions herein set forth, each US Borrower may request that the Letter
of Credit Issuer at any time and from time to time on or after the
Restatement Effective Date and prior to the Business Day immediately
preceding the Maturity Date issue, for the account of such Borrower and in
support of L/C Supportable Obligations, and subject to and upon the terms
and conditions herein set forth, the Letter of Credit Issuer agrees to
issue from time to time, irrevocable standby letters of credit denominated
in US Dollars and in such form as may be approved by the Letter of Credit
Issuer (each such standby letter of credit issued to Borrower A under the
Tranche A Facility, a "Tranche A Letter of Credit," and each such standby
letter of credit issued to Borrower C under the Tranche C Facility, a
"Tranche C Letter of Credit," and together with the Tranche A Letters of
Credit, the "Letters of Credit"). Annex III contains a description of all
letters of credit issued for the account of Borrower A under the Existing
Credit Agreement prior to the Restatement Effective Date and which will
remain outstanding on the Restatement Effective Date. Each such letter of
credit, including any extension thereof (each an "Existing Letter of
Credit") shall constitute a "Tranche A Letter of Credit", for all purposes
of this Agreement and shall be deemed issued for purposes of Sections 2.04
and 3.01 on the Restatement Effective Date.
(b) Notwithstanding the foregoing, (i) no Letter of Credit
shall be issued, the Stated Amount of which, when added to the Tranche A
Letter of Credit Outstandings and the Tranche C Letter of Credit
Outstandings (exclusive of Unpaid Drawings which are repaid on the date
of, and prior to the issuance of, the respective Letter of Credit) at such
time, would exceed either (x) $75,000,000 or (y) (A) in the case of a
Tranche A Letter of Credit, when added to the aggregate principal amount
of all Tranche A Loans made by Non-Defaulting Banks then outstanding, the
Adjusted Total Tranche A Commitment at such time and (B) in the case of a
Tranche C Letter of Credit, when added to the Aggregate principal amount
of all Tranche C Loans made by Non-Defaulting Banks then outstanding, the
Adjusted Total Tranche C Commitment at such time; and (ii) each Letter of
Credit shall have an expiry date occurring not later than the earlier of
(x) the date which occurs 30 months after the date of issuance thereof,
and (y) the Business Day immediately preceding the Maturity Date; PROVIDED
that the Borrower may request, and the Participants with respect thereto
may consent in their sole absolute discretion to extend the expiry dates
of certain Letters of Credit beyond the Maturity Date.<PAGE>
2.02 Letter of Credit Requests; Request for Issuance of Letter
of Credit. (a) Whenever a US Borrower desires that a Letter of Credit be
issued, such Borrower shall give the Letter of Credit Issuer written
notice (including by way of telecopier) in the form of Exhibit C prior to
12:00 Noon (New York time) at least seven (7) Business Days (or three (3)
Business Days if the issuance of the Letter of Credit has been approved in
advance by the Letter of Credit Issuer) prior to the proposed date of
issuance (which shall be a Business Day) (each a "Letter of Credit
Request"), which Letter of Credit Request shall include any documents that
the Letter of Credit Issuer may reasonably require in connection
therewith. The Letter of Credit Request shall after three (3) Business
Days (or one (1) Business Day if the issuance of the Letter of Credit has
been approved in advance by the Letter of Credit Issuer) be irrevocable.
The Letter of Credit Issuer shall promptly notify each Bank of each Letter
of Credit Request.
(b) The Letter of Credit Issuer shall, on the date of each
issuance of a Letter of Credit by it, give each Bank and the respective
Borrower written notice of the issuance of such Letter of Credit.
2.03 Agreement to Repay Letter of Credit
Payments. (a) (i) Borrower A hereby agrees to reimburse the Letter of
Credit Issuer, by making payment at the US Payment Office, for any payment
or disbursement made by the Letter of Credit Issuer under any Tranche A
Letter of Credit (each such amount so paid or disbursed until reimbursed,
a "Tranche A Unpaid Drawing") and (ii) Borrower C hereby agrees to
reimburse the Letter of Credit Issuer, by making payment at the US Payment
Office, for any payment or disbursement made by the Letter of Credit
Issuer under any Tranche C Letter of Credit (each such amount so paid or
disbursed until reimbursed, a "Tranche C Unpaid Drawing" and, together
with Tranche A Unpaid Drawings, "Unpaid Drawings"), in the case of each of
clauses (i) and (ii) above, immediately after, and in any event on the
date on which the respective Borrower is notified by the Letter of Credit
Issuer of such payment or disbursement with interest on the amount so paid
or disbursed by the Letter of Credit Issuer, to the extent not reimbursed
prior to 1:00 P.M. (New York time) on the date of such payment or dis-
bursement, from and including the date paid or disbursed to but not
including the date the Letter of Credit Issuer is reimbursed therefor at a
rate per annum which shall be the Base Rate as in effect on the date of
such notice of payment or disbursement (plus an additional 2% per annum if
not reimbursed by the third Business Day after the date of such notice of
payment or disbursement), such interest also to be payable on demand.
(b) (i) The Letter of Credit Issuer shall not concern itself
with the regularity or propriety of any demand made under any Letter of
Credit beyond the face thereof, provided that such demand strictly
complies with the terms of such Letter of Credit and (subject to the above
proviso) it shall not be a defense to a claim of the Letter of Credit
Issuer made pursuant to Section 13.01(ii) that the Letter of Credit Issuer
could have resisted the payment in respect of which such claim is made.
(ii) The respective Borrower's obligation under this Section
2.03 to reimburse the Letter of Credit Issuer with respect to Unpaid
Drawings (including, in each case, interest thereon) shall be absolute and
unconditional under any and all circumstances and irrespective of any
setoff, counterclaim or defense to payment which such Borrower may have or<PAGE>
have had against the Letter of Credit Issuer or any Bank, including,
without limitation, any defense based upon the failure of any drawing
under a Letter of Credit to conform to the terms of the Letter of Credit
(other than the failure of the Letter of Credit Issuer to determine that
any documents required to be delivered under such Letter of Credit have
been delivered and that they substantially comply on their face with the
requirements of such Letter of Credit) or any non-application or
misapplication by the beneficiary of the proceeds of such drawing;
PROVIDED, however, that such Borrower shall not be obligated to reimburse
the Letter of Credit Issuer for any wrongful payment made by the Letter of
Credit Issuer under a Letter of Credit as a result of acts or omissions
constituting willful misconduct or gross negligence on the part of the
Letter of Credit Issuer.
2.04 Letter of Credit Participations. (a) Immediately upon
the issuance by the Letter of Credit Issuer of any Tranche A Letter of
Credit, the Letter of Credit Issuer shall be deemed to have sold and
transferred to each Tranche A Bank, and each Tranche A Bank (each a
"Tranche A Participant") shall be deemed irrevocably and unconditionally
to have purchased and received from the Letter of Credit Issuer, without
recourse or warranty, an undivided interest and participation, to the
extent of such Bank's Adjusted Tranche A Percentage, in such Letter of
Credit, each substitute letter of credit, each drawing made thereunder and
the obligations of Borrower A under this Agreement with respect thereto
(although the Letter of Credit Fee shall be payable directly to the
Administrative Agent for the account of the Tranche A Participants as
provided in Section 3.01(b) and the Tranche A Participants shall have no
right to receive any portion of any Facing Fees) and any security therefor
or guaranty pertaining thereto. Upon any change in the Tranche A
Commitments or Adjusted Tranche A Percentages of the Banks pursuant to
Section 12.04(b) or upon a Bank Default, it is hereby agreed that, with
respect to all outstanding Tranche A Letters of Credit and Unpaid Drawings
thereon, there shall be an automatic adjustment to the participations
pursuant to this Section 2.04 to reflect the new Adjusted Tranche A
Percentages of the assigning and assignee Bank or of all Tranche A Banks,
as the case may be.
(b) Immediately upon the issuance by the Letter of Credit
Issuer of any Tranche C Letter of Credit, the Letter of Credit Issuer
shall be deemed to have sold and transferred to each Tranche C Bank, and
each Tranche C Bank (each a "Tranche C Participant" and, together with the
Tranche A Participants, each a "Participant" and, collectively, the
"Participants") shall be deemed irrevocably and unconditionally to have
purchased and received from the Letter of Credit Issuer, without recourse
or warranty, an undivided interest and participation, to the extent of
such Bank's Adjusted Tranche C Percentage, in such Letter of Credit, each
substitute letter of credit, each drawing made thereunder and the
obligations of Borrower C under this Agreement with respect thereto
(although the Letter of Credit Fee shall be payable directly to the
Administrative Agent for the account of the Tranche C Participants as
provided in Section 3.01(b) and the Tranche C Participants shall have no
right to receive any portion of any Facing Fees) and any security therefor
or guaranty pertaining thereto. Upon any change in the Tranche C
Commitments or Adjusted Tranche C Percentages of the Banks pursuant to
Section 12.04(b) or upon a Bank Default, it is hereby agreed that, with
respect to all outstanding Tranche C Letters of Credit and Unpaid Drawings
thereon, there shall be an automatic adjustment to the participations<PAGE>
pursuant to this Section 2.04 to reflect the new Adjusted Tranche C
Percentages of the assigning and assignee Bank or of all Tranche C Banks,
as the case may be.
(c) In determining whether to pay under any Letter of Credit,
the Letter of Credit Issuer shall not have any obligation relative to the
respective Participants other than to determine that any documents
required to be delivered under such Letter of Credit have been delivered
and that they substantially comply on their face with the requirements of
such Letter of Credit. Any action taken or omitted to be taken by the
Letter of Credit Issuer under or in connection with any Letter of Credit,
if taken or omitted in the absence of gross negligence or willful
misconduct, shall not create for the Letter of Credit Issuer any resulting
liability to the respective Participants.
(d) In the event that the Letter of Credit Issuer makes any
payment under any Letter of Credit and the respective Borrower shall not
have reimbursed such amount in full to the Letter of Credit Issuer
pursuant to Section 2.03(a), the Letter of Credit Issuer shall promptly
notify each respective Participant of such failure, and each such
Participant shall promptly and unconditionally pay to the Letter of Credit
Issuer, the amount of such Participant's Adjusted Tranche A Percentage or
Adjusted Tranche C Percentage, whichever the case may be, of such payment
in U.S. Dollars and in same day funds; PROVIDED, HOWEVER, that no Partici-
pant shall be obligated to pay to the Letter of Credit Issuer its Adjusted
Tranche A Percentage or Adjusted Tranche C Percentage, whichever the case
may be, of such unreimbursed amount for any wrongful payment made by the
Letter of Credit Issuer under a Letter of Credit as a result of acts or
omissions constituting willful misconduct or gross negligence on the part
of the Letter of Credit Issuer. If the Administrative Agent so notifies
any Participant required to fund an Unpaid Drawing under a Letter of
Credit prior to 1:00 P.M. (New York time) on any Business Day, such
Participant shall make available to the Letter of Credit Issuer such
Participant's Adjusted Tranche A Percentage or Adjusted Tranche C
Percentage, whichever the case may be, of the amount of such payment on
such Business Day in same day funds. If and to the extent such Partici-
pant shall not have so made its Adjusted Tranche A Percentage or Adjusted
Tranche C Percentage, whichever the case may be, of the amount of such
Unpaid Drawing available to the Letter of Credit Issuer, such Participant
agrees to pay to the Letter of Credit Issuer, forthwith on demand such
amount, together with interest thereon, for each day from such date until
the date such amount is paid to the Letter of Credit Issuer at the
overnight Federal Funds Effective Rate. The failure of any Participant to
make available to the Letter of Credit Issuer its Adjusted Tranche A
Percentage or Adjusted Tranche C Percentage, whichever the case may be, of
any Unpaid Drawing under any Letter of Credit shall not relieve any other
Participant of its obligation hereunder to make available to the Letter of
Credit Issuer its Adjusted Tranche A Percentage or Adjusted Tranche C
Percentage, whichever the case may be, of any payment under any Letter of
Credit on the date required, as specified above, but no Participant shall
be responsible for the failure of any other Participant to make available
to the Letter of Credit Issuer such other Participant's Adjusted Tranche A
Percentage or Adjusted Tranche C Percentage, whichever the case may be, of
any such payment.
(e) Whenever the Letter of Credit Issuer receives a payment of
a reimbursement obligation as to which the Administrative Agent has<PAGE>
received for the account of the Letter of Credit Issuer any payments from
the Participants pursuant to clause (d) above, the Letter of Credit Issuer
shall pay to each respective Participant which has paid its Adjusted
Tranche A Percentage or Adjusted Tranche C Percentage, whichever the case
may be, thereof, in Dollars and in same day funds, an amount equal to such
Participant's Adjusted Tranche A Percentage or Adjusted Tranche C
Percentage, whichever the case may be, of the principal amount thereof and
interest thereon accruing at the overnight Federal Funds Effective Rate
after the purchase of the respective participations.
(f) The obligations of the respective Participants to make pay-
ments to the Letter of Credit Issuer with respect to Letters of Credit
shall be irrevocable and not subject to counterclaim, set-off or other
defense or any other qualification or exception whatsoever (PROVIDED that
no Participant shall be required to make payments resulting from the
Letter of Credit Issuer's gross negligence or willful misconduct) and
shall be made in accordance with the terms and conditions of this Agree-
ment under all circumstances, including, without limitation, any of the
following circumstances:
(i) any lack of validity or enforceability of this Agreement or
any of the other Credit Documents;
(ii) the existence of any claim, set-off, defense or other right
which the respective Borrower may have at any time against a
beneficiary named in a Letter of Credit, any transferee of any Letter
of Credit (or any Person for whom any such transferee may be acting),
the Administrative Agent, any Bank or other Person, whether in
connection with this Agreement, any Letter of Credit, the
transactions contemplated herein or any unrelated transactions
(including any underlying transaction between such Borrower and the
beneficiary named in any such Letter of Credit);
(iii) any draft, certificate or other document presented under the
Letter of Credit proving to be forged, fraudulent, or invalid in any
respect or any statement therein being untrue or inaccurate in any
respect;
(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Credit
Documents; or
(v) the occurrence of any Default or Event of Default.
2.05 Increased Costs. If at any time after the date of the
Agreement, the adoption or effectiveness of any applicable law, rule or
regulation, or any change therein, 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 the Letter of Credit Issuer or any Bank with any
request or directive (whether or not having the force of law but with
which such Bank customarily complies even though the failure to comply
therewith would not be unlawful) by any such authority, central bank or
comparable agency shall either (i) impose, modify or make applicable any
reserve, deposit, capital adequacy or similar requirement against Letters
of Credit issued by the Letter of Credit Issuer or such Bank's
participation therein, or (ii) shall impose on the Letter of Credit Issuer<PAGE>
or any Bank any other conditions affecting this Agreement, any Letter of
Credit or such Bank's participation therein; and the result of any of the
foregoing is to increase the cost to the Letter of Credit Issuer or such
Bank of issuing, maintaining or participating in any Letter of Credit, or
to reduce the amount of any sum received or receivable by the Letter of
Credit Issuer or such Bank hereunder (other than any increased cost or
reduction in the amount received or receivable resulting from the imposi-
tion of or a change in the rate or basis of taxes or similar charges),
then, upon written demand to the respective Borrower by the Letter of
Credit Issuer or such Bank (a copy of which notice shall be sent by the
Letter of Credit Issuer or such Bank to the Administrative Agent), such
Borrower shall, subject to Section 1.11 (to the extent applicable), pay to
the Letter of Credit Issuer or such Bank such additional amount or amounts
as will compensate the Letter of Credit Issuer or such Bank for such
increased cost or reduction. A certificate submitted to such Borrower by
the Letter of Credit Issuer or such Bank, as the case may be (a copy of
which certificate shall be sent by the Letter of Credit Issuer or such
Bank to the Administrative Agent), setting forth a reasonable basis for
the determination of such additional amount or amounts necessary to
compensate the Letter of Credit Issuer or such Bank as aforesaid shall be
conclusive and binding on such Borrower absent manifest error.
2.06 Indemnities. The respective Borrower under each Letter of
Credit hereby agrees to reimburse and indemnify the Letter of Credit
Issuer for and against any and all liabilities, obligations, losses,
damages, penalties, claims, actions, judgments, suits, costs, expenses or
disbursements of whatsoever kind or nature which may be imposed on,
asserted against or incurred by the Letter of Credit Issuer in performing
its respective duties in any way relating to or arising out of its
issuance of Letters of Credit; PROVIDED that such Borrower shall not be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the Letter of Credit Issuer's gross negligence or willful
misconduct. To the extent the Letter of Credit Issuer is not indemnified
by the respective Borrower, the Participants will reimburse and indemnify
the Letter of Credit Issuer, in proportion to their respective
"percentages" of the Total Tranche A Commitment or Total Tranche C
Commitment, as the case may be, for and against any and all liabilities,
obligations, losses, damages, penalties, claims, actions, judgments,
suits, costs, expenses or disbursements of whatsoever kind or nature which
may be imposed on, asserted against or incurred by the Letter of Credit
Issuer in performing its respective duties in any way relating to or
arising out of its issuance of Letters of Credit; PROVIDED that no
Participants shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the Letter of Credit Issuer's
gross negligence or willful misconduct.
SECTION 3. FEES; COMMITMENTS.
3.01 Fees. (a) Each Borrower agrees to pay to the
Administrative Agent a commitment commission ("Commitment Commission") pro
rata for the account of (i) in the case of Borrower A, each Non Defaulting
Tranche A Bank, (ii) in the case of Borrower B, each Non Defaulting
Tranche B Bank and (iii) in the case of Borrower C, each Non-Defaulting
Tranche C Bank for the period from and including the Restatement Effective
Date to, but not including, the date the Total Commitment has been<PAGE>
terminated, which Commitment Commission shall be equal to the amount set
forth below as determined by Holdings' Pricing Ratio, as calculated for
the last day of the fiscal quarter last ended (PROVIDED that, for purposes
of calculating the Pricing Ratio on the Restatement Effective Date, and
subject to future determination, the Pricing Ratio shall be determined as
of December 31, 1996), computed at such rate for each day, on the daily
amount of such Bank's Unutilized Commitment under such Tranche; PROVIDED
that, in the event a change in the Commitment Commission is made, such
change shall not become effective until the date which is one (1) Business
Day after the date upon which the Administrative Agent receives written
notice from Holdings or any Borrower pursuant to Clause 7.01(e) evidencing
that such change is warranted:
Commitment
Pricing Ratio Commission
--------------------- --------------------
Less than 0.50:1.00 .15% per annum
Greater than 0.50:1.00 but less .20 % per annum
than 1.00:1.00
Greater than 1.00:1.00 but less .25% per annum
than 2.00:1.00
Greater than 2.00:1.00 but less .30% per annum
than 3.00:1.00
Greater than 3.00:1.00 but less .35% per annum
than 4.00:1.00
Greater than 4.00:1.00 .40% per annum
Such Commitment Commission shall be due and payable in arrears on the
first day of each January, April, July and October and on the date upon
which the Total Commitment is terminated.
(b) Borrower A and Borrower C each agree to pay to the
Administrative Agent for the account of (i) in the case of Borrower A,
each Non Defaulting Tranche A Bank and (ii) in the case of Borrower C,
each Non-Defaulting Tranche C Bank, pro rata on the basis of their
respective Adjusted Tranche A Percentages or Tranche C Percentages,
whichever the case may be, a fee in respect of each Tranche A Letter of
Credit or Tranche C Letter of Credit, whichever the case may be (the
"Letter of Credit Fee"), computed at a rate per annum equal to the
Applicable Eurodollar Margin then in effect less 1/10 of 1% on the daily
Stated Amount of such Letter of Credit. Accrued Letter of Credit Fees
shall be due and payable quarterly in arrears on the first day of each
January, April, July and October of each year and on the date after the
Total Commitment is terminated and no Letters of Credit remain
outstanding.
(c) Borrower A and Borrower C each agree to pay to the Letter
of Credit Issuer a fee in respect of (i) in the case of Borrower A, each
Tranche A Letter of Credit and (ii) in the case of Borrower C, each
Tranche C Letter of Credit issued by the Letter of Credit Issuer (the
"Facing Fee") computed at the rate of 1/10 of 1% per annum on the daily<PAGE>
Stated Amount of such Letter of Credit. Accrued Facing Fees shall be due
and payable quarterly in arrears on the first day of each January, April,
July and October of each year and on the date after the Total Commitment
is terminated and no Letters of Credit remain outstanding.
(d) Borrower A and Borrower C each agree to pay directly to the
Letter of Credit Issuer upon request the amount of any out-of-pocket
charges or expenses incurred by the Letter of Credit Issuer in connection
with any confirmation of (i) in the case of Borrower A, Tranche A Letters
of Credit and (ii) in the case of Borrower C, Tranche C Letters of Credit
by local banks requested by such Borrower or any beneficiary of any such
Letter of Credit.
(e) Each Borrower shall pay to the Co-Agents (x) on the
Restatement Effective Date for its own account and/or for distribution to
the Banks such Fees as heretofore agreed in writing by such Borrower and
the Co-Agents and (y) for their own accounts such other fees as agreed to
in writing between such Borrower and the Co-Agents, when and as due.
(f) All computations of Fees shall be made in accordance with
Section 12.07(b).
3.02 Voluntary Reduction of Commitments. (a) Upon at least
three (3) Business Days' prior written notice (or telephonic notice
confirmed in writing) to the Administrative Agent at its Notice Office
(which notice the Administrative Agent shall promptly transmit to each of
the affected Banks), each Borrower shall have the right, without premium
or penalty, to terminate or partially reduce the Total Unutilized
Commitment under (a) in the case of Borrower A, the Tranche A Facility,
(b) in the case of Borrower B, the Tranche B Facility and (c) in the case
of Borrower C, the Tranche C Facility, PROVIDED that (i) any such termin-
ation shall apply to proportionately and permanently reduce the respective
Commitment under such Facility of each Bank with a Commitment under such
Facility, (ii) no such reduction shall reduce any Non-Defaulting Bank's
Commitment under such Facility to an amount that is less than the sum of
(x) the outstanding Loans of such Bank under such Facility plus, in the
case of the Tranche A Facility and the Tranche C Facility, (y) such Bank's
Adjusted Tranche A Percentage or Adjusted Tranche C Percentage, whichever
the case may be, of Tranche A Letter of Credit Outstandings or Tranche C
Letter of Credit Outstandings, whichever the case may be, (iii) any
partial reduction pursuant to this Section 3.02 shall be in the amount of
at least $5,000,000 and (iv) any such reduction shall reduce the remaining
Scheduled Commitment Reductions under such Facility pro rata based on the
then remaining amounts of such Scheduled Commitment Reductions.
(b) Provided that no Default or Event of Default exists or would
result therefrom, upon at least three (3) Business Days' prior written
notice (or telephonic notice confirmed in writing) to the Administrative
Agent at its Notice Office (which notice the Administrative Agent shall
promptly transmit to each Tranche A Bank and each Tranche C Bank),
Borrower A or Borrower C may elect to increase (a maximum of six (6) times
during the term of this Agreement) the Total Tranche A Commitment or Total
Tranche C Commitment, as the case may be, by an amount not less than
$500,000 individually and not more than $15,000,000, either individually
or in the aggregate; PROVIDED that (i) in the event the Total Tranche A
Commitment is increased, the Total Tranche C Commitment shall be reduced
by an amount exactly equal to such increase and (ii) in the event the<PAGE>
Total Tranche C Commitment is increased, the Total Tranche A Commitment
shall be reduced by an amount exactly equal to such increase; and PROVIDED
FURTHER, that (x) any increase or decrease in the Total Tranche A
Commitment or Total Tranche C Commitment pursuant to this Section 3.02(b)
shall apply to proportionately increase or decrease, as the case may be,
the respective Commitment under such Facility of each Non-Defaulting Bank
with a Commitment under such Facility, (y) no such reduction shall reduce
any Non-Defaulting Bank's Commitment under such Facility to an amount that
is less than the sum of (A) the outstanding Loans of such Bank under such
Facility plus, (B) such Bank's Adjusted Tranche A Percentage or Adjusted
Tranche C Percentage, whichever the case may be, of Tranche A Letter of
Credit Outstandings or Tranche C Letter of Credit Outstandings, whichever
the case may be and (z) any such reduction and increase shall reduce or
increase the remaining Scheduled Commitment Reductions under such Facility
pro rata based on the then remaining amounts of such Scheduled Commitment
Reductions.
3.03 Mandatory Adjustments of Commitments, etc. (a) The Total
Commitment shall terminate on the earlier of (i) the Maturity Date or (ii)
unless the Required Banks otherwise consent, the date on which any Change
of Control occurs.
(b) In addition to any other mandatory commitment reductions
pursuant to this Section 3.03, on each date set forth below, the Total
Commitment shall be permanently reduced by the amount set forth opposite
such date (each such reduction, as same may be further reduced in
accordance with Section 3.02 and 3.03(c) and (d), a "Scheduled Commitment
Reduction") and such reduction shall be allocated to the respective
Tranches, to the extent of the outstanding Commitments thereunder, accord-
ing to the Borrowers' election; PROVIDED that in the event the Borrowers
fail to make such an election, each such Scheduled Commitment Reduction
shall be applied pro rata (based on the then outstanding Commitments under
the respective Tranches) to each Tranche:
Date Amount
---------------- ------------
April 18, 1998 $ 14,000,000
October 18, 1998 $ 14,000,000
April 18, 1999 $ 14,000,000
October 18, 1999 $ 14,000,000
April 18, 2000 $ 14,000,000
October 18, 2000 $ 14,000,000
April 18, 2001 $ 14,000,000
Maturity Date Remaining Amount of
Total Commitment
(c) In addition to any other mandatory commitment reductions
pursuant to this Section 3.03, on the Business Day following the date of
receipt by any Borrower or the Subsidiary Guarantor of the Cash Proceeds
from any Collateral Disposition, the Total Commitment then in effect shall<PAGE>
be permanently reduced by an amount equal to the Total Commitment as in
effect on the Restatement Effective Date multiplied by the percentage
adjacent to the name of the Mortgaged Rig which is the subject of such
Collateral Disposition under the heading "Percentage Reduction" set forth
on Annex IV hereto. The reduction to the Total Commitment described in
the preceding sentence shall be applied to reduce the relative Commitments
under each Tranche according to the Borrower's election; PROVIDED that if
no such election is made, such reduction shall be applied first to the
Tranche constituting the direct Obligation of the Person receiving the
Cash Proceeds from such Collateral Disposition, or, in the case of receipt
by the Subsidiary Guarantor, Tranche C, with any remaining amount to be
applied pro rata (based on the then outstanding Commitments under the
remaining Tranches) to each remaining Tranche.
(d) Notwithstanding anything to the contrary contained herein,
and in addition to any other mandatory commitment reductions pursuant to
this Section 3.03, in the case of any Collateral Disposition which reduces
the number of Collateral Rigs to below ten (10), on the Business Day
following the date of receipt by any Borrower or the Subsidiary Guarantor
of the Cash Proceeds from any such Collateral Disposition, the Total
Commitment then in effect shall be permanently reduced by an amount equal
to 100% of the Cash Proceeds received as a result of such Collateral
Disposition. The relative Commitments shall be reduced to the extent of
such Cash Proceeds according to the Borrower's election, PROVIDED that if
no such election is made, such Cash Proceeds shall be applied first to the
Tranche constituting the direct Obligation of the Person receiving such
proceeds, or, in the case of receipt by the Subsidiary Guarantor, Tranche
C, with any remaining amounts to be applied pro rata (based on the then
Outstanding Commitments under the remaining Tranches) to each remaining
Tranche.
(e) Each reduction of the Total Tranche A Commitment, the Total
Tranche B Commitment, or the Total Tranche C Commitment pursuant to this
Section 3.03 shall apply proportionately to the Commitment of each Bank
(if any) under such Tranche. Any reduction to the total Tranche A
Commitment, the Total Tranche B Commitment, or the Total Tranche C
Commitment pursuant to this Section 3.03 shall reduce the remaining
Scheduled Commitment Reductions under such Facility pro rata based on the
then remaining amounts of Scheduled Commitment Reductions under such
Facility.
SECTION 4. PAYMENTS.
4.01 Voluntary Prepayments. Each Borrower shall have the right
to prepay Loans in whole or in part, without premium or penalty, from time
to time on the following terms and conditions: (i) such Borrower shall
give the Administrative Agent at the Notice Office written notice (or
telephonic notice promptly confirmed in writing) of its intent to prepay
the Loans, the amount of such prepayment and (in the case of Eurodollar
Loans) the specific Borrowing or Borrowings pursuant to which made, which
notice shall be given by such Borrower at least five (5) Business Days
prior to the date of such prepayment of Loans, which notice shall promptly
be transmitted by the Administrative Agent to each of the Banks with a
Commitment under the Tranche being prepaid; (ii) all payments to be made
in respect of Pound Sterling Loans shall be made in Pounds Sterling; (iii)
each partial prepayment of any Borrowing shall be in an aggregate
principal amount of at least $2,000,000 (or the number of Pounds Sterling<PAGE>
which, at the time of such prepayment, would yield a US Dollar Equivalent
of $2,000,000) and, if greater, in an integral multiple of $2,000,000 (or
the number of Pounds Sterling which, at the time of such prepayment, would
yield a US Dollar Equivalent of $2,000,000), PROVIDED that no partial
prepayment of Eurodollar Loans made pursuant to a Borrowing shall reduce
the aggregate principal amount of the Loans outstanding pursuant to such
Borrowing to an amount less than the Minimum Borrowing Amount; (iv)
Eurodollar Loans may only be prepaid pursuant to this Section 4.01 on the
last day of the Interest Period applicable thereto; and (v) each prepay-
ment in respect of any Loans made pursuant to a Borrowing shall be applied
pro rata among the Banks which made such Loans, PROVIDED that at the
respective Borrower's election in connection with any prepayment of Loans
pursuant to this Section 4.01, such prepayment shall not be applied to any
Loans of a Defaulting Bank.
4.02 Mandatory Prepayments.
(A) Requirements:
------------
(a) (i) If on any date the sum of the aggregate outstanding
principal amount of Tranche A Loans made by Non-Defaulting Banks and the
Tranche A Letter of Credit Outstandings exceeds the Adjusted Total Tranche
A Commitment as then in effect, Borrower A shall repay on such date the
principal of Tranche A Loans of Non-Defaulting Banks, in an aggregate
amount equal to such excess. If, after giving effect to the repayment of
all outstanding Tranche A Loans of Non-Defaulting Banks, the aggregate
amount of Letter of Credit Outstandings exceeds the Adjusted Tranche A
Total Commitment then in effect, Borrower A shall pay to the
Administrative Agent an amount in cash and/or Cash Equivalents equal to
such excess (up to the aggregate amount of the Tranche A Letter of Credit
Outstandings at such time) and the Administrative Agent shall hold such
payment as security for the obligations of Borrower A hereunder pursuant
to a cash collateral agreement to be entered into in form and substance
reasonably satisfactory to Borrower A and the Administrative Agent (which
shall permit certain investments in Cash Equivalents satisfactory to
Borrower A and the Administrative Agent, until the proceeds are applied to
the secured obligations).
(ii) If on any date the sum of the aggregate outstanding
principal amount of Tranche B Loans made by Non-Defaulting Banks exceeds
the Total Tranche B Commitment as then in effect, Borrower B shall repay
on such date the principal of Tranche B Loans of Non-Defaulting Banks in
US Dollars or Pounds Sterling according to the denomination of such Loans
when made to Borrower B, in an aggregate amount equal to such excess.
(iii) If on any date the sum of the aggregate outstanding
principal amount of Tranche C Loans made by Non-Defaulting Banks and the
Tranche C Letter of Credit Outstandings exceeds the Adjusted Total Tranche
C Commitment as then in effect, Borrower C shall repay on such date the
principal of Tranche C Loans of Non-Defaulting Banks, in an aggregate
amount equal to such excess. If, after giving effect to the repayment of
all outstanding Tranche C Loans of Non-Defaulting Banks, the aggregate
amount of Letter of Credit Outstandings exceeds the Adjusted Total Tranche
C Commitment then in effect, Borrower C shall pay to the Administrative
Agent an amount in cash and/or Cash Equivalents equal to such excess (up
to the aggregate amount of the Tranche C Letter of Credit Outstandings at
such time) and the Administrative Agent shall hold such payment as secu-<PAGE>
rity for the obligations of Borrower C hereunder pursuant to a cash
collateral agreement to be entered into in form and substance reasonably
satisfactory to Borrower C and the Administrative Agent (which shall
permit certain investments in Cash Equivalents satisfactory to Borrower C
and the Administrative Agent, until the proceeds are applied to the
secured obligations).
(iv) If on any date the aggregate outstanding principal amount
of the Loans made by a Defaulting Bank pursuant to any Facility exceeds
the Commitment of such Defaulting Bank under such Facility, the respective
Borrower under such Facility shall repay the principal of such Loans of
such Defaulting Bank in an amount equal to such excess.
(b) Notwithstanding anything to the contrary contained
elsewhere in this Agreement, all then outstanding Loans shall be repaid in
full on the Maturity Date.
(c) On the date on which any Change of Control occurs, unless
otherwise agreed by the Required Banks, the outstanding principal amount
of all Loans, if any, shall become due and payable in full.
(B) Application:
-----------
With respect to each prepayment of Loans required by Section
4.02, the prepaying Borrower may designate the Types of Loans which are to
be prepaid and the specific Borrowing or Borrowings pursuant to which
made, PROVIDED that (i) Eurodollar Loans may only be repaid if no Base
Rate Loans of Non-Defaulting Banks pursuant to the respective Facility
remain outstanding; (ii) if any prepayment of Eurodollar Loans made
pursuant to a single Borrowing shall reduce the outstanding Loans made
pursuant to such Borrowing to an amount less than the Minimum Borrowing
Amount for such Borrowing, such Borrowing shall be immediately converted
into Base Rate Loans; and (iii) each prepayment of any Loans made by Non-
Defaulting Banks pursuant to a Borrowing shall be applied pro rata among
the Non-Defaulting Banks which made such Loans. In the absence of a
designation by such Borrower as described in the preceding sentence, the
Administrative Agent shall, subject to the above, make such designation in
its sole discretion with a view, but no obligation, to minimize breakage
costs owing under Section 1.11. Notwithstanding the foregoing provisions
of this Section 4.02(B), if at any time the mandatory prepayment of Loans
pursuant to Section 4.02(A) above would result, after giving effect to the
procedures set forth above, in any Borrower incurring breakage costs under
Section 1.11 as a result of Eurodollar Loans being prepaid other than on
the last day of an Interest Period applicable thereto (the "Affected
Eurodollar Loans"), then such Borrower may in its sole discretion
initially deposit a portion (up to 100%) of the amounts that otherwise
would have been paid in respect of the Affected Eurodollar Loans with the
Administrative Agent (which deposit must be equal in amount to the amount
of the Affected Eurodollar Loans not immediately prepaid) to be held as
security for the obligations of such Borrower hereunder pursuant to a cash
collateral agreement to be entered into in form and substance reasonably
satisfactory to such Borrower and the Administrative Agent and shall
provide for investments satisfactory to the Administrative Agent and such
Borrower, with such cash collateral to be directly applied upon the first
occurrence (or occurrences) thereafter of the last day of an Interest
Period applicable to the relevant Loans that are Eurodollar Loans (or such
earlier date or dates as shall be requested by such Borrower), to repay an<PAGE>
aggregate principal amount of such Loans equal to the Affected Eurodollar
Loans not initially prepaid pursuant to this sentence. Notwithstanding
anything to the contrary contained in the immediately preceding sentence,
all amounts deposited as cash collateral pursuant to the immediately
preceding sentence shall be held for the sole benefit of the Banks whose
Loans would otherwise have been immediately prepaid with the amounts
deposited and upon the taking of any action by the Administrative Agent or
the Banks pursuant to the remedial provisions of Section 9, any amounts
held as cash collateral pursuant to this Section 4.02(B) shall, subject to
the requirements of applicable law, be immediately applied to the Loans
made by such Borrower.
4.03 Method and Place of Payment. Except as otherwise
specifically provided herein, all payments under this Agreement shall be
made to the Administrative Agent for the ratable (based on its pro rata
share) account of the Banks entitled thereto, not later than 10:00 A.M.
(New York time) (or in the case of payments made in respect of Pound
Sterling Loans, 11:00 A.M. London time) on the date when due and shall be
made in immediately available funds and in lawful money of the United
States of America (or of the United Kingdom in the case of payments made
in respect of Pound Sterling Loans) at the US Payment Office (or in the
case of payments made in respect of Pound Sterling Loans, at the UK
Payment Office), it being understood that written notice from any Borrower
to the Administrative Agent to make a payment from the funds in such
Borrower's account at the respective US Payment Office or UK Payment
Office shall constitute the making of such payment to the extent of such
funds held in such account. Any payments under this Agreement which are
made later than 10:00 A.M. (New York time) (or in the case of payments
made in respect of Pound Sterling Loans 11:00 A.M. London time) shall be
deemed to have been made on the next succeeding Business Day. Whenever
any payment to be made hereunder shall be stated to be due on a day which
is not a Business Day, the due date thereof shall be extended to the next
succeeding Business Day and, with respect to payments of principal,
interest shall be payable during such extension at the applicable rate in
effect immediately prior to such extension.
4.04 Net Payments. (a) All payments made by each Borrower
hereunder or under any Note will be made without setoff, counterclaim or
other defense. Except as provided in Section 4.04(b) and (c), all such
payments will be made free and clear of, and without deduction or
withholding for, any present or future taxes, levies, imposts, duties,
fees, assessments or other charges of whatever nature now or hereafter
imposed by any jurisdiction or by any political subdivision or taxing
authority thereof or therein with respect to such payments (but excluding,
except as provided in the second succeeding sentence, any tax imposed on
or measured by the net income or net profits of a Bank pursuant to the
laws of the jurisdiction in which it is organized or managed and
controlled or the jurisdiction in which the principal office or applicable
lending office of such Bank is located or any subdivision thereof or
therein) and all interest, penalties or similar liabilities with respect
thereto (all such non-excluded taxes, levies, imposts, duties, fees,
assessments or other charges being referred to collectively as "Taxes").
If any Taxes are so levied or imposed, each Borrower agrees to pay the
full amount of such Taxes, and such additional amounts, if any, as may be
necessary so that every payment of all amounts due under this Agreement or
under any Note, after withholding or deduction for or on account of any
Taxes, will not be less than the amount provided for herein or in such<PAGE>
Note. If any amounts are payable by any Borrower in respect of Taxes
pursuant to the preceding sentence, such Borrower agrees to reimburse each
Bank, upon the written request of such Bank, for taxes imposed on or
measured by the net income or net profits of such Bank pursuant to the
laws of the jurisdiction in which the principal office or applicable
lending office of such Bank is located or under the laws of any political
subdivision or taxing authority of any such jurisdiction in which the
principal office or applicable lending office of such Bank is located and
for any withholding of taxes as such Bank shall determine are payable by,
or withheld from, such Bank in respect of such amounts so paid to or on
behalf of such Bank pursuant to the preceding sentence and in respect of
any amounts paid to or on behalf of such Bank pursuant to this sentence.
Such Borrower will furnish to the Administrative Agent within 45 days
after the date the payment of any Taxes is due pursuant to applicable law
certified copies of tax receipts evidencing such payment by such Borrower.
Such Borrower agrees to indemnify and hold harmless each Bank, and
reimburse such Bank upon its written request, for the amount of any Taxes
so levied or imposed and paid by such Bank.
(b) Each Bank that is not a United States person (as such term
is defined in Section 7701(a)(30) of the Code) agrees to deliver to the
Borrowers and the Administrative Agent on or prior to the date of this
Agreement, or in the case of a Bank that is an assignee or transferee of
an interest under this Agreement pursuant to Section 1.13 or 12.04 (unless
the respective Bank was already a Bank hereunder immediately prior to such
assignment or transfer), on the date of such assignment or transfer to
such Bank, (i) two (2) accurate and complete original signed copies of
Internal Revenue Service Form 4224 or 1001 (or successor forms) certifying
to such Bank's entitlement to a complete exemption from United States
withholding tax with respect to payments to be made under this Agreement
and under any Note, or (ii) if the Bank is not a "bank" within the meaning
of Section 881(c)(3)(A) of the Code and cannot deliver either Internal
Revenue Service Form 1001 or 4224 pursuant to clause (i) above, (x) a
certificate substantially in the form of Exhibit D (any such certificate,
a "Section 4.04(b)(ii) Certificate") and (y) two (2) accurate and complete
original signed copies of Internal Revenue Service Form W-8 (or successor
form) certifying to such Bank's entitlement to a complete exemption from
United States withholding tax with respect to payments of interest to be
made under this Agreement and under any Note. In addition, each Bank
agrees that from time to time after the date of this Agreement, when a
lapse in time or change in circumstances renders the previous cer-
tification obsolete or inaccurate in any material respect, it will deliver
to the Borrowers and the Administrative Agent two (2) new accurate and
complete original signed copies of Internal Revenue Service Form 4224 or
1001, or Form W-8 and a Section 4.04(b)(ii) Certificate, as the case may
be, and such other forms as may be required in order to confirm or estab-
lish the entitlement of such Bank to a continued exemption from or
reduction in United States withholding tax with respect to payments under
this Agreement and any Note, or it shall immediately notify the Borrowers
and the Administrative Agent in writing of its inability to deliver any
such Form or Certificate. Notwithstanding anything to the contrary con-
tained in Section 4.04(a), but subject to Section 12.04(b) and the
immediately succeeding sentence, (x) the Borrowers shall be entitled, to
the extent they are required to do so by law, to deduct or withhold income
or similar taxes imposed by the United States (or any political subdivi-
sion or taxing authority thereof or therein) from interest, fees or other
amounts payable hereunder for the account of any Bank which is not a<PAGE>
United States person (as such term is defined in Section 7701(a)(30) of
the Code) for U.S. Federal income tax purposes to the extent that such
Bank has not provided to the Borrowers U.S. Internal Revenue Service Forms
that establish a complete exemption from such deduction or withholding and
(y) the Borrowers shall not be obligated pursuant to Section 4.04(a)
hereof to gross-up payments to be made to a Bank in respect of income or
similar taxes imposed by the United States if (I) such Bank has not
provided to the Borrowers the Internal Revenue Service Forms required to
be provided to the Borrowers pursuant to this Section 4.04(b) or (II) in
the case of a payment, other than interest, to a Bank described in clause
(ii) above, to the extent that such Forms do not establish a complete
exemption from withholding of such taxes. Notwithstanding anything to the
contrary contained in the preceding sentence or elsewhere in this Section
4.04 and except as set forth in Section 12.04(b), the Borrowers agree to
pay additional amounts and to indemnify each Bank in the manner set forth
in Section 4.04(a) (without regard to the identity of the jurisdiction
requiring the deduction or withholding) in respect of any amounts deducted
or withheld by it as described in the immediately preceding sentence as a
result of any changes after the date of this Agreement in any applicable
law, treaty, governmental rule, regulation, guideline or order, or in the
interpretation thereof, relating to the deducting or withholding of income
or similar Taxes, PROVIDED such Bank shall provide to the Borrowers and
the Administrative Agent any applicable IRS tax form (reasonably similar
in its simplicity and lack of detail to IRS Form 1001) necessary or
appropriate for the exemption or reduction in the rate of such U.S.
Federal withholding tax.
(c) Each Bank shall make all filings that are required to apply
to the U.K. Inland Revenue Service under the relevant Double Taxation
Agreements for relief from U.K. withholding taxes in connection with the
Tranche B Facility. In the event that such relief is not obtained prior
to the first interest payment date and payment of U.K. withholding taxes
is required because of the absence of such relief, the Banks shall take
such action as is necessary to insure that no such withholding tax will be
due.
(d) The provisions of this Section 4.04 shall be subject to
Section 1.12(b) (to the extent applicable).
SECTION 5. CONDITIONS PRECEDENT. The obligation of the Banks
to make each Loan hereunder, and the obligation of the Letter of Credit
Issuer to issue Letters of Credit hereunder, is subject to the
satisfaction of each of the following conditions:
5.01 Execution of Agreement. On or prior to the Restatement
Effective Date, there shall have been delivered to the Administrative
Agent for the account of each Bank the appropriate Notes executed by the
respective Borrowers, in each case in the amount, maturity and as
otherwise provided herein.
5.02 No Default; Representations and Warranties. At the time
of each Credit Event and also after giving effect thereto, (i) there shall
exist no Default or Event of Default and (ii) all representations and
warranties contained herein or in the other Credit Documents in effect at
such time shall be true and correct in all material respects with the same
effect as though such representations and warranties had been made on and
as of the date of such Credit Event (except to the extent that such<PAGE>
representations and warranties expressly relate to an earlier date, in
which case they shall be true and correct in all material respects as of
such earlier date).
5.03 No Default Under Existing Credit Agreement. On the
Restatement Effective Date, there shall not exist any "Event of Default"
(as defined in the Existing Credit Agreement) or any situation which,
given the passage of time, would result in such an "Event of Default"
under the Existing Credit Agreement.
5.04 Opinions of Counsel. On the Restatement Effective Date,
the Administrative Agent shall have received opinions, addressed to the
Administrative Agent and each of the Banks and dated the Restatement
Effective Date, from (i) Robert Isaac, Esq., General Counsel to the Credit
Parties, which opinion shall cover the matters contained in Exhibit E-1,
(ii) White & Case, special counsel to the Administrative Agent, which
opinion shall cover the matters contained in Exhibit E-2 and (iii) from
local counsel satisfactory to the Administrative Agent as the
Administrative Agent may request, which opinions shall cover the perfec-
tion of the security interests granted pursuant to the Security Documents
and such other matters incident to the transactions contemplated herein as
the Administrative Agent may reasonably request and shall be in form and
substance satisfactory to the Administrative Agent.
5.05 Secretary Certificate; Corporate Proceedings. On the
Restatement Effective Date, the Administrative Agent shall have received
from each Credit Party a certificate, dated the Restatement Effective
Date, signed by the Secretary of such Credit Party in the form of
Exhibit F with appropriate insertions and deletions, together with copies
of the certificate of formation, the by-laws, or other organizational
documents of such Credit Party and the resolutions, or such other
administrative approval, of such Credit Party referred to in such
certificate and all of the foregoing (including each such certificate of
formation, certificate of incorporation and by-laws) shall be reasonably
satisfactory to the Administrative Agent.
5.06 Fees. On the Restatement Effective Date, each Borrower
shall have paid to the Administrative Agent and the Banks all Fees and
expenses agreed upon by such parties to be paid on or prior to such date.
5.07 Security Agreement. (a) On the Restatement Effective Date
each Borrower shall have duly authorized, executed and delivered a
Security Agreement relating to the Earnings Collateral and the Insurance
Collateral in the form of Exhibit G, with such changes (or with such other
documents) as may be requested by the Collateral Agent in connection with
local law (as modified, amended or supplemented from time to time in
accordance with the terms thereof and hereof, the "Security Agreement")
covering all of the Security Agreement Collateral together with:
(i) executed copies of Financing Statements (Form UCC-1 and/or
UCC-3) or appropriate local equivalent in appropriate form for filing
under the UCC or appropriate local equivalent of each jurisdiction as
may be necessary to perfect the security interests purported to be
created by the Security Agreement;
(ii) certified copies of Requests for Information or Copies
(Form UCC-11), or equivalent reports, each of a recent date listing<PAGE>
all effective financing statements that name any Credit Party as
debtor and that are filed in the jurisdictions referred to in clause
(i) above, together with copies of such financing statements (none of
which shall cover the Collateral except (x) those with respect to
which appropriate termination statements executed by the secured
lender thereunder have been delivered to the Collateral Agent and (y)
to the extent evidencing Permitted Liens); and
(iii) evidence that all other recordings and filings of, or with
respect to, the Security Agreement, and all other actions, as may be
necessary or, in the opinion of the Collateral Agent, desirable to
perfect the security interests intended to be created by the Security
Agreement have been completed (it being agreed that UCC financing
statements and termination statements shall be filed in the
appropriate governmental office within three (3) Business Days after
the Restatement Effective Date);
and the Security Agreement and such other documents shall be in full force
and effect.
(b) On the Restatement Effective Date, ENSCO Offshore U.K. Ltd.
shall have duly authorized, executed and delivered the Floating Charge.
5.08 Mortgages. (a) On the Restatement Effective Date, each
Borrower shall have duly authorized, executed and delivered the following
document or documents to which it is a party (as modified, amended or
supplemented from time to time in accordance with the terms thereof and
hereof, the "Mortgages"):
(i) with respect to the US Rigs, substantially in the form of
Exhibit H-1 (as amended, modified or supplemented from time to time
in accordance with the terms hereof and thereof, the "US Fleet
Mortgage");
(ii) with respect to the Bahamian Rigs, substantially in the form
of Exhibit H-2 (as amended, modified or supplemented from time to
time in accordance with the terms hereof and thereof, the "Bahamian
Mortgage");
(iii) with respect to the Liberian Rigs, substantially in the form
of Exhibit H-3 (as amended, modified or supplemented from time to
time in accordance with the terms hereof and thereof, the "Liberian
Fleet Mortgage"); and
(b) On the Restatement Effective Date, all actions necessary,
desirable or otherwise reasonably requested by the Collateral Agent to
provide the Collateral Agent with a perfected first priority security
interest in all Collateral purported to be covered by the Mortgages shall
have been taken.
5.09 Evidence of Lien, etc. On the Restatement Effective Date,
the Administrative Agent shall have received evidence that the respective
Mortgages have been registered with the appropriate vessel documentation
authorities so as to create the intended lien on such Collateral.<PAGE>
5.10 Insurance Report. On or prior to the Restatement
Effective Date, the Administrative Agent shall have received an opinion
from Aon Natural Resources Worldwide in the Form of Exhibit I, with
respect to the adequacy of the insurance maintained by the Borrowers in
connection with the Mortgaged Rigs.
5.11 Pledge Agreement. On the Restatement Effective Date,
ENSCO Delaware, Inc. shall have duly authorized, executed and delivered a
Pledge Agreement in the form of Exhibit J (as modified, supplemented or
amended from time to time, the "Pledge Agreement") and shall have
delivered to the Collateral Agent, as Pledgee, all the Pledged Stock
referred to therein then owned by ENSCO Delaware, Inc., together with
executed and undated stock powers relating to such Pledged Stock.
5.12 Subsidiary Guaranty. On the Restatement Effective Date,
the Subsidiary Guarantor shall have duly authorized, executed and
delivered a Subsidiary Guaranty in the form of Exhibit K (as modified,
amended or supplemented from time to time in accordance with the terms
hereof and thereof, the "Subsidiary Guaranty"), and the Subsidiary
Guaranty shall be in full force and effect.
5.13 Existing Credit Agreement. On the Restatement Effective
Date concurrently with the incurrence of Loans hereunder, (i) all loans
under the Existing Credit Agreement shall be converted, together with all
accrued interest and fees thereon, into Loans pursuant to Tranche A,
Tranche B or Tranche C according to the respective Borrower of record with
respect to such loans being converted, with the Interest Periods appli-
cable to any Eurodollar Loans resulting from such conversion to remain in
effect as though such Loans had originally been maintained as Eurodollar
Loans under the respective Tranche of this Agreement, (ii) all Letters of
Credit issued thereunder shall be assumed as Letters of Credit hereunder
and (iii) all other amounts owing pursuant to the Existing Credit
Agreement shall be carried forward and become owing under this Agreement
in accordance with the terms hereof.
All of the certificates, legal opinions and other documents and
papers referred to in this Section 5, unless otherwise specified, shall be
delivered to the Administrative Agent at its Notice Office for the account
of each of the Banks and, except for the Notes, in sufficient counterparts
or copies for each of the Banks and shall be satisfactory in form and
substance to the Administrative Agent.
SECTION 6. REPRESENTATIONS, WARRANTIES AND AGREEMENTS. In
order to induce the Banks to enter into this Agreement and to make the
Loans and issue and/or participate in Letters of Credit provided for
herein, each of Holdings, the Parent and the Borrowers make the following
representations and warranties to, and agreements with, the Banks, all of
which shall survive the execution and delivery of this Agreement and the
making of the Loans (with the making of each Credit Event thereafter being
deemed to constitute a representation and warranty that the matters
specified in this Section 6 are true and correct in all material respects
on and as of the date of each such Credit Event unless such representation
and warranty expressly indicates that it is being made as of any specific
date, in which case such representations and warranties shall be true and
correct in all material respects as of such date):<PAGE>
6.01 Corporate Status. Each Credit Party (i) is a duly organ-
ized and validly existing corporation in good standing under the laws of
the jurisdiction of its organization and has the corporate power and
authority to own its property and assets and to transact the business in
which it is engaged, except in such case where the failure to be so duly
organized and validly existing in good standing and to have such corporate
power and authority (x) is not reasonably likely to have a Material
Adverse Effect and (y) is not reasonably likely to have a material adverse
effect on the rights or remedies of the Banks or on the ability of any
Credit Party to perform its obligations to them hereunder and under the
other Credit Documents to which it is a party, and (ii) has duly qualified
and is authorized to do business and is in good standing in all juris-
dictions where it is required to be so qualified and where the failure to
be so qualified would have a Material Adverse Effect.
6.02 Corporate Power and Authority. 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 to authorize the execution, delivery
and performance of the Credit Documents to which it is a party. 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 such
Person in accordance with its terms, except to the extent that the
enforceability thereof may be limited by applicable bankruptcy, insol-
vency, reorganization, moratorium or similar laws generally affecting
creditors' rights and by equitable principles (regardless of whether
enforcement is sought in equity or at law).
6.03 No Violation. Neither the execution, delivery and
performance by any Credit Party of the Credit Documents to which it is a
party nor compliance with the terms and provisions thereof, nor the
consummation of the transactions contemplated therein (i) will contravene
any applicable provision of any law, statute, rule, regulation, order,
writ, injunction or decree of any court or governmental instrumentality of
the United States or any State thereof, or, to the extent relating to the
security interest granted by the Bahamian Mortgages and Liberian Fleet
Mortgage, the Bahamas or Liberia respectively, (ii) will result in any
breach of any of the terms, covenants, conditions or provisions 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 upon any of the property or assets of Holdings,
the Borrowers or any of their respective Subsidiaries pursuant to the
terms of, any material indenture, mortgage, deed of trust, agreement or
other instrument to which Holdings, the Borrowers or any of their
respective Subsidiaries is a party or by which it or any of its property
or assets are bound or to which it is subject or (iii) will violate any
provision of the Certificate of Incorporation or By-Laws of Holdings, the
Borrowers or any of their respective Subsidiaries.
6.04 Litigation. Except as otherwise disclosed in ENSCO's 10-Q
filing with the U.S. Securities and Exchange Commission for the period
ended September 30, 1996, there are no actions, suits or proceedings
pending or, to the best knowledge of Holdings, the Parent or the Borrowers
threatened with respect to Holdings, the Borrowers or any of their
respective Subsidiaries (i) that are likely to have a Material Adverse
Effect or (ii) that are reasonably likely to have a material adverse<PAGE>
effect on the rights or remedies of the Banks or on the ability of any
Credit Party to perform its obligations to them hereunder and under the
other Credit Documents to which it is a party.
6.05 Use of Proceeds; Margin Regulations. (a) The proceeds of
all Loans shall be utilized to provide for the general corporate purposes
of the Borrowers and their respective Subsidiaries.
(b) Neither the making of any Loan hereunder, nor the use of
the proceeds thereof, will violate or be inconsistent with the provisions
of Regulation G, T, U or X of the Board of Governors of the Federal
Reserve System and no part of the proceeds of any Loan will be used to
purchase or carry any Margin Stock in violation of Regulation U or to
extend credit for the purpose of purchasing or carrying any Margin Stock.
6.06 Governmental Approvals. Except for the orders, consents,
approvals, licenses, authorizations, validations, recordings,
registrations and exemptions that have already been duly made or obtained
and remain in full force and effect, no order, consent, approval, license,
authorization, or validation of, or filing (other than the filing of Form
UCC-1 Financing Statements or the appropriate equivalents, which such
filing, if this representation is being made more than ten (10) days after
the Restatement Effective Date, has been made), recording or registration
with, or exemption by, any foreign or domestic governmental or public body
or authority, or any subdivision thereof, is required to authorize or is
required in connection with (i) the execution, delivery and performance of
any Credit Document or (ii) the legality, validity, binding effect or
enforceability of any Credit Document.
6.07 Investment Company Act. None of the Borrowers or any of
their respective 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.
6.08 True and Complete Disclosure. No representation or
warranty contained in this Agreement and no statement contained in any
certificate, schedule, list, financial statement or other instrument
furnished by or on behalf of Holdings, the Parent, the Borrowers or any of
their respective Subsidiaries to the Administrative Agent or any Bank
contains any untrue statement of material fact, PROVIDED that where a
representation or warranty is made as of a particular date, such
representation or warranty shall only be required to be true and correct
as of such date.
6.09 Financial Condition; Financial Statements. (a) On and as
of the Restatement Effective Date, on a pro forma basis after giving
effect to all Indebtedness incurred, and to be incurred, and Liens
created, and to be created, by Holdings and its Subsidiaries in connection
therewith, (x) the sum of the assets, at a fair valuation, of Holdings and
its Subsidiaries taken as a whole will exceed its debts, (y) Holdings and
its Subsidiaries taken as a whole will not have incurred or intended to,
or believe that they will, incur debts beyond their ability to pay such
debts as such debts mature and (z) Holdings and its Subsidiaries taken as
a whole will not have unreasonably small capital with which to conduct
their business. <PAGE>
(b) (i) The consolidated balance sheet of Holdings and its
Subsidiaries at September 30, 1996 and the related consolidated statements
of operations and cash flows of Holdings and its Subsidiaries for the
fiscal year, as the case may be, ended as of said date, and (ii) the
consolidated balance sheet of Holdings and its Subsidiaries as of
September 30, 1996, copies of which have heretofore been furnished to each
Bank, present fairly the financial position of such entities at the dates
of said statements and the results for the period covered thereby in
accordance with GAAP, except to the extent provided in the notes to said
financial statements and, in the case of the September 30, 1996 state-
ments, subject to normal and recurring year-end audit adjustment. All
such financial statements have been prepared in accordance with GAAP and
practices consistently applied except to the extent provided in the notes
to said financial statements. As of the Restatement Effective Date,
nothing has occurred since December 31, 1995 that has had or is reasonably
likely to have a Material Adverse Effect.
6.10 Tax Returns and Payments. Each Credit Party has filed all
federal income tax returns and all other material tax returns, domestic
and foreign, required to be filed by it and has paid all material taxes
and assessments payable by it which have become due, other than those not
yet delinquent and except for those contested in good faith. Each Credit
Party has paid, or has provided adequate reserves with respect thereto, in
accordance with GAAP, for the payment of, all federal, state and foreign
income taxes applicable for all prior fiscal years and for the current
fiscal year to the date hereof.
6.11 Compliance with ERISA. No Reportable Event has occurred
and is continuing with respect to any Plan.
6.12 Subsidiaries. Annex V lists each Subsidiary of Holdings
(and the direct and indirect ownership interest of Holdings therein), and
indicates which of such Subsidiaries are Restricted Subsidiaries for
purposes of this Agreement, in each case existing on the Restatement
Effective Date.
6.13 Patents, etc. Each Credit Party has obtained all material
patents, trademarks, service marks, trade names, copyrights, licenses and
other rights, free from burdensome restrictions, that are necessary for
the operation of their businesses taken as a whole as presently conducted.
6.14 Pollution and Other Regulations. (a) Each of Holdings
and its Consolidated Subsidiaries is in substantial compliance with all
applicable Environmental Laws governing its business for which failure to
comply is reasonably likely to have a Material Adverse Effect. All
licenses, permits, registrations or approvals required to preserve the
ownership and operation of the drilling rigs of Holdings and each of its
Consolidated Subsidiaries under any Environmental Law have been secured.
Neither Holdings nor any of its Consolidated Subsidiaries is in any re-
spect in noncompliance with, breach of or default under any writ, order,
judgment, injunction, or decree to which Holdings or such Consolidated
Subsidiary is a party or which would affect the ability of Holdings or
such Consolidated Subsidiary to own or operate any offshore drilling rig
and no event has occurred and is continuing which, with the passage of
time or the giving of notice or both, would constitute noncompliance,
breach or default thereunder, except in each such case, such noncompli-
ance, breaches or defaults as are not likely to adversely affect the<PAGE>
ownership or operation of any offshore drilling rig. There are as of the
Restatement Effective Date no Environmental Claims pending or, to the best
knowledge of Holdings, the Parent and the Borrowers, threatened, against
Holdings or any of its Consolidated Subsidiaries wherein an unfavorable
decision, ruling or finding would be reasonably likely to adversely affect
the ownership or operation of any offshore drilling rig.
(b) Hazardous Materials have not at any time been released on
or from any offshore drilling rig or vessel at any time owned or operated
by Holdings or any of its Consolidated Subsidiaries, in each case where,
to the best of Holdings', the Parent's or the Borrowers' knowledge, such
occurrence or event individually or in the aggregate is reasonably likely
to have a Material Adverse Effect.
6.15 Properties. (a) The Borrowers and each of their
respective Subsidiaries has title to all material properties constituting
Collateral owned by them, free and clear of all Liens, other than (i) as
referred to in the consolidated balance sheet or in the notes thereto or
(ii) Permitted Liens.
(b) Annex VI sets forth all the Mortgaged Rigs owned by
Holdings and each of its Subsidiaries on the Restatement Effective Date,
and identifies the registered owner, flag, official or patent number, as
the case may be, the home port and class on the Restatement Effective
Date.
6.16 Citizenship. The Borrowers are qualified to own and
operate the Mortgaged Rigs under the laws of the United States, the
Bahamas and Liberia, as may be applicable.
6.17 Rig Classification. Each Mortgaged Rig is classified in
the highest class available for rigs or vessels of its age and type with
the American Bureau of Shipping, Inc. or another internationally
recognized classification society reasonably acceptable to the Collateral
Agent or the Security Trustee, as the case may be, free of any material
outstanding requirements or recommendations, other than as permitted under
the Mortgage relating thereto.
SECTION 7. AFFIRMATIVE COVENANTS. Holdings, the Parent and the
Borrowers covenant and agree that on the Restatement Effective Date and
thereafter for so long as this Agreement is in effect (and until all
Commitments have terminated, no Letters of Credit or Notes are outstanding
and the Loans and Unpaid Drawings, together with interest, Fees and all
other Obligations incurred hereunder, are paid in full):
7.01 Information Covenants. Holdings and/or the Borrowers will
furnish to each Bank:
(a) Annual Financial Statements. Within 90 days after the
close of each fiscal year of Holdings, the consolidated balance sheet
of Holdings and its Consolidated Subsidiaries, as at the end of such
fiscal year and the related consolidated statements of operations and
of cash flows for such fiscal year, in each case setting forth
comparative consolidated figures for the preceding fiscal year, and
examined by independent certified public accountants of recognized
national standing whose opinion shall be in accordance with generally
accepted auditing standards and shall not be qualified as to the<PAGE>
scope of audit and as to the status of Holdings and its Consolidated
Subsidiaries as a going concern. Together with the financial
statements required to be delivered above, Holdings or the Borrowers
shall deliver to the Administrative Agent and the Banks analogous
statements of operations and cash flows, on a stand alone basis, for
any Unrestricted Subsidiary, which statements will include, without
limitation, line items relating to all Non-Recourse Indebtedness.
(b) Quarterly Financial Statements. As soon as available and
in any event within 45 days after the close of each of the first
three (3) quarterly accounting periods in each fiscal year, the
consolidated balance sheet of Holdings and its Consolidated
Subsidiaries, as at the end of such quarterly period and the related
consolidated statements of operations and of cash flows for such
quarterly period and for the elapsed portion of the fiscal year ended
with the last day of such quarterly period, in each case setting
forth comparative consolidated figures for the related period in the
prior fiscal year, all of which shall be unaudited, but certified by
the chief financial officer or controller of Holdings, subject to
changes resulting from audit and normal year-end audit adjustments.
Together with the financial statements required to be delivered
above, Holdings or the Borrowers shall deliver to the Administrative
Agent and the Banks analogous statements of operations and cash
flows, on a stand alone basis, for any Unrestricted Subsidiary, which
statements will include, without limitation, line items relating to
all Non-Recourse Indebtedness.
(c) Rig Status Report. As soon as available and in any event
within 45 days after the close of each fiscal quarter of Holdings, a
report (in form satisfactory to the Administrative Agent) detailing
(i) the then current location of each of the Mortgaged Rigs, (ii) the
then current term of and parties to any contract of any offshore
drilling rig or vessel owned by Holdings or any of its Subsidiaries,
and (iii) the average day rate for each offshore drilling rig or
vessel owned by Holdings or any of its Subsidiaries for the preceding
fiscal quarter.
(d) Forecast; etc. Prior to the beginning of each fiscal year
of Holdings, a forecast which includes an income statement and cash
flow statement of Holdings and its Consolidated Subsidiaries for the
upcoming fiscal year, including a breakdown of revenues, operating
expenses and utilizations for each offshore drilling rig and vessel
owned or leased by Holdings and its Consolidated Subsidiaries.
(e) Compliance Certificate. Prior to or at the time of the
delivery of the financial statements provided for in Sections 7.01(a)
and (b), a certificate of Holdings signed by its chief financial
officer, controller or other Authorized Officer in the form of
Exhibit L to the effect that no Default or Event of Default exists
or, if any Default or Event of Default does exist, specifying the
nature and extent thereof, which certificate shall set forth the
calculations required to establish whether Holdings and its Subsidi-
aries were in compliance with the provisions of Section 8 as at the
end of such fiscal period or year, as the case may be.
(f) Notice of Default or Litigation. Promptly, and in any
event within (x) three (3) Business Days after an Authorized Officer<PAGE>
of Holdings, the Parent or any Borrower obtains knowledge thereof,
notice of the occurrence of any event which constitutes a Default or
Event of Default which notice shall specify the nature thereof, the
period of existence thereof and what action Holdings, the Parent or
the Borrowers proposes to take with respect thereto and (y) ten (10)
Business Days after any Borrower obtains knowledge thereof, notice of
the commencement of or any significant development in any litigation
or governmental proceeding pending against Holdings or any of its
Subsidiaries which is likely to have a Material Adverse Effect or is
likely to have a material adverse effect on the ability of any Credit
Party to perform its obligations hereunder or under any other Credit
Document.
(g) Insurance Report. On or before September 30 of each year,
a report from Holdings and/or the Borrowers' independent maritime
insurance broker as required by the Mortgages.
(h) Annual Rig Valuation Report. On or before September 30 of
each year, an updated rig valuation report from an Approved Broker
setting forth the current Market Value of each Mortgaged Rig.
(i) SEC Reports. Promptly upon transmission thereof, copies of
any material filings and registration with, and reports to, the SEC
by Holdings or any of its Subsidiaries and copies of all financial
statements, proxy statements, notices and reports as Holdings or any
of its Subsidiaries shall generally send to analysts or all holders
of their capital stock in their capacity as such holders (in each
case to the extent not theretofore delivered to the Banks pursuant to
this Agreement).
(j) Other Information. From time to time, such other
information or documents (financial or otherwise) as the
Administrative Agent on its own behalf or on behalf of the Required
Banks may reasonably request.
7.02 Books, Records and Inspections. Within five (5) Business
Days of a written request from the Banks to the chief financial officer,
controller or any Authorized Officer of Holdings or any Borrower, Holdings
will, and will cause each of its Subsidiaries to make available to the
Banks such information as the Banks may reasonably request with respect to
the business, affairs or condition (financial or otherwise) of Holdings or
any of its Subsidiaries, subject to any applicable confidentiality
agreements dealing with such information; provided, however, that Holdings
and the Borrowers will use their best efforts to obtain any necessary
consents in order to allow such information to be provided to the Banks,
and, will permit officers and designated representatives of the
Administrative Agent or the Required Banks, to the extent necessary, to
examine the books of account of Holdings and any of its Subsidiaries and
discuss the affairs, finances and accounts of Holdings and of any of its
Subsidiaries with, and be advised as to the same by, its and their
officers and independent accountants, all at such reasonable times and
intervals and to such reasonable extent as the Administrative Agent or the
Required Banks may desire.
7.03 Insurance. The Borrowers shall insure, or cause to be
insured, the Mortgaged Rigs pursuant to the terms of the U.S. Fleet
Mortgage, the Bahamian Mortgages and the Liberian Fleet Mortgage. The<PAGE>
Borrowers will promptly notify the Administrative Agent of any material
change in such insurances or any change in the underwriters or clubs
providing such insurance. The Borrowers shall annually, but no later than
the anniversary of the date of this Agreement, furnish the Administrative
Agent with evidence of all such insurance policies currently in force.
7.04 Payment of Taxes. Holdings will pay and discharge, and
will cause each of the other Credit Parties to pay and discharge, all
taxes, assessments and governmental charges or levies imposed upon it or
upon its income or profits, or upon any properties belonging to it, prior
to the date on which penalties attach thereto, and all lawful claims
which, if unpaid, might become a Lien or charge upon any properties of
Holdings or any of its Subsidiaries, PROVIDED that neither Holdings nor
any Subsidiary shall be required to pay any such tax, assessment, charge,
levy or claim which is being contested in good faith and by proper
proceedings if it has maintained adequate reserves with respect thereto in
accordance with GAAP.
7.05 Consolidated Corporate Franchises. Holdings will do, and
will cause the Borrowers and the Borrowers' respective Subsidiaries to do,
or cause to be done, all things necessary to preserve and keep in full
force and effect its existence, material rights and authority, unless the
failure to do so is not reasonably likely to have a Material Adverse
Effect, PROVIDED that any transaction permitted by Section 8.02 will not
constitute a breach of this Section 7.05.
7.06 Compliance with Statutes, etc. Holdings will, and will
cause the Borrowers and the Borrowers' respective Subsidiaries to, comply
with all applicable statutes, regulations and orders of, and all appli-
cable restrictions imposed by, all governmental bodies, domestic or
foreign, in respect of the conduct of its business and the ownership of
its property other than those the non- compliance with which would not
have a Material Adverse Effect or would not have a material adverse effect
on the ability of any Credit Party to perform its obligations under any
Credit Document to which it is party.
7.07 Good Repair. The Borrowers will, and will cause each of
their respective Subsidiaries to, keep the Mortgaged Rigs, in whomsoever's
possession they may be, in good repair, working order and condition,
normal wear and tear excepted, and, subject to Section 8.02, see that from
time to time there are made in such Mortgaged Rigs all necessary and
proper repairs, renewals, replacements, extensions, additions, betterments
and improvements thereto to the extent and in the manner useful or
customary for companies in similar businesses.
7.08 End of Fiscal Years; Fiscal Quarters. Holdings will, for
financial reporting purposes, cause (i) each of its fiscal years to end on
December 31 of each year and (ii) each of its fiscal quarters to end on
March 31, June 30, September 30 and December 31 of each year.
7.09 Use of Proceeds. All proceeds of the Loans shall be used
as provided in Section 6.05.
7.10 Earnings Concentration Account. Upon the occurrence of
an Event of Default, the Borrowers shall open and maintain with the
Collateral Agent, for the benefit of the Banks, on terms substantially
similar to those typically offered to similar depositors, an account (the<PAGE>
"Concentration Account") into which all Earnings of the Borrowers arising
from the operation of the Mortgaged Rigs shall be deposited. For so long
thereafter as such Event of Default is continuing, such Earnings shall
continue to be deposited, and the Borrowers hereby agree to continue to
deposit such Earnings, in such account and maintained as cash collateral
in accordance with the Security Agreement. Funds remaining in the
Concentration Account shall be released from time to time to the Borrowers
(i) at the discretion of the Required Banks or (ii) upon the termination
of any then existing Default or Event of Default.
7.11 Additional Rig Valuations. At any time when in the
reasonable judgment of the Required Banks there has been an adverse
development in the market for drilling rigs comparable to the Mortgaged
Rigs, upon the written request of the Administrative Agent on behalf of
the Required Banks and at the expense of the Borrowers, Holdings or the
Borrowers shall retain an Approved Broker to supply a written report
setting forth the Market Value of each Mortgaged Rig at such time.
Holdings or the Borrowers may retain a second Approved Broker of their own
choosing at such time and at its own expense to supply a second written
report setting forth the Market Value of such Mortgaged Rigs. Promptly
upon receipt thereof Holdings and/or the Borrowers shall deliver copies of
each such report to the Banks.
7.12 Further Assurances. (a) The Borrowers will, and will
cause each of their respective Subsidiaries to, at the expense of the
Borrowers, make, execute, endorse, acknowledge, file and/or deliver to the
Collateral Agent or the Security Trustee, as the case may be, from time to
time such vouchers, invoices, schedules, confirmatory assignments, convey-
ances, financing statements, transfer endorsements, powers of attorney,
certificates, real property surveys, reports and other assurances or
instruments and take such further steps relating to the Collateral as the
Collateral Agent or the Security Trustee, as the case may be, may
reasonably require.
(b) The Borrowers agree that each action required above by this
Section 7.12 shall be completed as soon as possible, but in no event later
than 60 days after such action is requested to be taken by the
Administrative Agent or the Required Banks, PROVIDED that in no event
shall Holdings or the Borrowers be required to take any action, other than
using its reasonable commercial efforts without any material expenditure,
to obtain consents or other actions from third parties with respect to its
compliance with this Section 7.12.
7.13 ERISA. (a) As soon as possible and, in any event, within
30 days after Holdings, the Parent, the Borrowers, any of their respective
Subsidiaries or any ERISA Affiliate knows that any Reportable Event with
respect to any Plan has occurred, Holdings or the Borrowers will deliver
to each of the Banks a statement of an Authorized Officer of Holdings or
the affected Borrowers setting forth details as to such Reportable Event
and the action, if any, that Holdings, the Parent, the Borrowers, such
Subsidiary or such ERISA Affiliate is required or proposes to take with
respect thereto, together with a copy of the notice of such Reportable
Event given to the PBGC, if a copy of such notice is available to any
Borrower and (b) promptly after receipt thereof, a copy of any notice
relating to a Reportable Event having a Material Adverse Effect which
Holdings or any of its Subsidiaries may receive from the PBGC or the
Internal Revenue Service with respect to any Plan; PROVIDED, HOWEVER, this<PAGE>
clause (b) shall not apply to notices of general application promulgated
by the Department of Labor.
SECTION 8. NEGATIVE COVENANTS. Holdings, the Parent and the
Borrowers hereby covenant and agree that as of the Restatement Effective
Date and thereafter for so long as this Agreement is in effect and until
all Commitments have terminated, no Letters of Credit or Notes are out-
standing and the Loans and Unpaid Drawings, together with interest, Fees
and all other Obligations incurred hereunder, are paid in full:
8.01 Changes in Business. Holdings will not and will not
permit the Borrowers and the Borrowers' respective Subsidiaries to,
materially alter the character of their business taken as a whole from
that conducted on the Restatement Effective Date (including any material
expansion outside of the oil field service industry), PROVIDED that this
Section 8.01 shall not restrict such Persons from engaging in businesses
ancillary to the oil field service industry.
8.02 Consolidation, Merger or Sale of Assets, etc. Holdings
will not, and will not permit the Parent, the Borrowers or the Subsidiary
Guarantor to, wind up, liquidate or dissolve its affairs, or enter into
any transaction of merger or consolidation, sell or otherwise dispose of
all or substantially all of its property or assets or of any Collateral or
agree to do any of the foregoing at any future time, except that the
following shall be permitted:
(a) (i) the Subsidiary Guarantor may be merged with or into, or
be liquidated into, Borrower C, so long as Borrower C is the
surviving entity, (ii) all or any part of the business properties and
assets of the Subsidiary Guarantor may be conveyed, leased, sold or
transferred to Borrower C, and (iii) the Parent may be merged or
consolidated with or into, or be liquidated into, any entity so long
as the pledge made pursuant to the Pledge Agreement remains in effect
following such merger consolidation or liquidation, PROVIDED that if
any Collateral is transferred pursuant to this Section 8.02(a),
Holdings and/or a Borrower shall provide the Administrative Agent
with ten (10) Business Days' prior notice of such transfer, and such
Borrower or Guarantor, as the case may be, owning the Collateral
after such transfer shall take all action reasonably requested by the
Collateral Agent and/or the Security Trustee in respect of the con-
tinued priority and perfection of such Collateral;
(b) other sales or dispositions of assets PROVIDED that (i) (x)
no Collateral, other than surplus or scrap equipment from any
Mortgaged Rig, may be sold without the prior written approval of the
Required Banks and (y) in the event of such sale concerning a
Mortgaged Rig, the Total Commitment shall be reduced as required by
Section 3.03(c) or (d) and (ii) no such sale or disposition shall
constitute the sale or disposition of all or substantially all of the
combined assets of Holdings and its Subsidiaries taken as a whole;
and
(c) other sales or dispositions of assets in each case to the
extent the Required Banks have consented in writing thereto and
subject to such conditions as may be set forth in such consent.<PAGE>
To the extent any Collateral is sold or otherwise disposed of
(to any Person other than Holdings and its Subsidiaries) as permitted by
this Section 8.02, such Collateral shall be sold or otherwise disposed of
free and clear of the Liens created by the Security Documents, and the
Administrative Agent, the Collateral Agent and the Security Trustee shall
be authorized to take any actions deemed appropriate in order to effect
the foregoing.
8.03 Liens on Assets. The Borrowers will not, and will not
permit any of their respective Subsidiaries to, create, incur, assume or
suffer to exist any Lien upon or with respect to any Collateral or sell
any such Collateral subject to an understanding or agreement, contingent
or otherwise, to repurchase such Collateral or assign any right to receive
income derived from such Collateral, or file or permit the filing of any
financing statement with respect to any such Collateral under the UCC or
any other similar notice of Lien under any similar recording or notice
statute; except that the following shall be permitted:
(a) Liens for taxes not yet due or Liens for taxes being
contested in good faith and by appropriate proceedings for which
adequate reserves with respect thereto, in accordance with GAAP, have
been established;
(b) Liens imposed by law which were incurred in the ordinary
course of business, such as carriers', warehousemen's and mechanics'
Liens, statutory landlord's Liens, maritime Liens and other similar
Liens arising in the ordinary course of business, and (x) which do
not in the aggregate materially detract from the value of such
Collateral or materially impair the use thereof in the operation of
the business of any Borrower or any of their respective Subsidiaries
or (y) which are being contested in good faith by appropriate
proceedings (including the providing of bail), which proceedings have
the effect of preventing the forfeiture or sale of the property or
assets subject to such Lien or procuring the release of the property
or assets subject to such Lien from arrest or detention;
(c) Liens created by or pursuant to this Agreement or the other
Credit Documents;
(d) Liens permitted under the express terms of the Mortgages or
other Security Documents;
(e) Judgment Liens in existence less than 30 days after the
entry thereof or with respect to which execution has been stayed or
the payment of which is covered in full by insurance;
(f) any interest or title of a lessor or charterer under any
lease or charter (i) in existence on the Restatement Effective Date,
(ii) among any Borrower and any of its Subsidiaries or (iii)
otherwise permitted by this Agreement; and
(g) Liens on equipment which is the subject of an operating
lease or similar use arrangement entered into in the ordinary course
of business and title to which is held by a third party;
(h) Liens incurred in the ordinary course of business in
connection with workmen's compensation, unemployment insurance or<PAGE>
other forms of governmental insurance or benefits, or to secure
performance of tenders and statutory obligations entered into in the
ordinary course of business or to secure obligations on surety or
appeal bonds in the ordinary course of business or easements, rights
of way and similar encumbrances incurred in the ordinary course of
business and not interfering with the ordinary conduct of the
Borrowers or any of their respective Subsidiaries; and
(i) Liens on permitted Indebtedness described in Section
8.04(i), (ii), (iii), (viii) and (x), and up to $20,000,000 in the
aggregate of Indebtedness described in Section 8.04(vi).
8.04 Indebtedness. Holdings will not permit any Restricted
Subsidiary to contract, create, incur, assume or suffer to exist any
Indebtedness, except:
(i) Indebtedness incurred pursuant to this Agreement and the
other Credit Documents;
(ii) Indebtedness evidenced by Capitalized Lease Obligations so
long as the aggregate principal amount of Capitalized Lease
Obligations outstanding at any time pursuant to this Section 8.04
does not exceed $1,000,000 in the aggregate;
(iii) Indebtedness under Interest Rate Agreements with one or
both of the Co-Agents;
(iv) intercompany Indebtedness of any Wholly-Owned Subsidiary
of any Borrower owing to such Borrower;
(v) unsecured loans from one Borrower to another Borrower,
from any Subsidiary of a Borrower to a Borrower, from any Restricted
Subsidiary to another Restricted Subsidiary, PROVIDED that such
Indebtedness must be expressly subordinate to the obligations of the
recipient pursuant to this Agreement;
(vi) letters of credit, performance and bid bonds obtained by
the Borrowers and their respective Subsidiaries in the ordinary
course of business up to an aggregate amount of $50,000,000;
(vii) supersedeas bonds obtained by the Borrowers and their
respective Subsidiaries in the ordinary course of business;
(viii) so long as no Default or Event of Default exists or would
result therefrom, the Borrowers, the Borrowers' Subsidiaries and/or
the Subsidiary Guarantor may incur purchase money Indebtedness up to
50% of the total consideration paid by such Person to acquire any
offshore drilling rig;
(ix) Indebtedness of Borrower C outstanding on the Restatement
Effective Date pursuant to its 9 7/8% Senior Subordinated Notes
issued under and governed by the Dual Indenture; and
(x) additional Indebtedness of the Borrowers and their
Subsidiaries incurred in the ordinary course of business not to
exceed $15,000,000 in aggregate principal amount outstanding at any
one time.<PAGE>
8.05 Dividends; Restrictions on Subsidiaries,
etc. (a) Holdings will not, and will not permit any of its Subsidiaries
to, declare or pay any dividends or return any capital to, the stock-
holders of Holdings or authorize or make any other distribution, payment
or delivery of property or cash to the stockholders of Holdings as such,
or set aside any funds for any of the foregoing purposes, or permit any of
its Subsidiaries to purchase or otherwise acquire for consideration any
shares of any class of the capital stock of Holdings, now or hereafter
outstanding (or any options or warrants or stock appreciation rights
issued by Holdings with respect to its capital stock) (all of the
foregoing "Dividends"); PROVIDED that so long as no Default or Event of
Default exists or would result therefrom, Holdings shall be permitted to
(i) pay or make Dividends on its common stock in an amount not to exceed
50%, in the aggregate, of Consolidated Net Income on a cumulative basis
beginning January 1, 1993 and (ii) pay dividends on any class of preferred
stock, not to exceed $8,000,000 in the aggregate for any fiscal year of
Holdings.
(b) The Parent and the Borrowers will not, and will not permit
any of the Restricted Subsidiaries to, create or otherwise cause or suffer
to exist any encumbrance or restriction which prohibits or otherwise
restricts (A) the ability of any Guarantor or of any Borrower to (a) pay
dividends or make other distributions or pay any Indebtedness owed to any
Borrower or any Guarantor, or (b) make loans or advances to any Borrower
or any Guarantor, (c) transfer any of its properties or assets to any
Borrower or any Guarantor or (B) the ability of any Borrower or any
Guarantor of such Borrower to create, incur, assume or suffer to exist any
Lien upon its property or assets to secure the Obligations, other than
prohibitions or restrictions existing under or by reason of:
(i) this Agreement and the other Credit Documents;
(ii) applicable law;
(iii) customary non-assignment provisions entered into in the
ordinary course of business and consistent with past practices;
(iv) any restriction or encumbrance with respect to a
Subsidiary Guarantor imposed pursuant to an agreement which has been
entered into for the sale or disposition of all or substantially all
of the capital stock or assets of such Subsidiary Guarantor, so long
as such sale or disposition is permitted under this Agreement; and
(v) Permitted Liens and any documents or instruments governing
the terms of any Indebtedness or other obligations secured by any
such Liens, PROVIDED that such prohibitions or restrictions apply
only to the assets subject to such Liens.
8.06 Vessel Management; Registry. The Borrowers will not, and
will not permit any of their respective Subsidiaries to, without the prior
written consent of the Required Banks (which consent will not be
unreasonably withheld), (i) change the overall management of any of the
Mortgaged Rigs from the Borrowers and/or the Subsidiary Guarantor or (ii)
change the national registry of any Mortgaged Rig.
8.07 Interest Coverage Ratio. Holdings will not permit the
ratio of (i) Consolidated EBITDA to (ii) Consolidated Interest Expense for<PAGE>
any period of twelve (12) consecutive calendar months of Holdings (taken
as one accounting period) to be less than 4.00:1.00.
8.08 Working Capital. Holdings will not permit the Working
Capital Ratio on the last day of any calendar month to be less than
1.50:1.00.
8.09 Leverage Ratio. Holdings will not permit the Leverage
Ratio at the end of any calendar month ending after the Restatement
Effective Date to be greater than 0.35:1.00.
8.10 Collateral Maintenance. The Borrowers and their
respective Subsidiaries shall not permit the Market Value of the Mortgaged
Rigs at any time (a) prior to October 18, 1999, to be less than 2.0 times
and (b) thereafter, to be less than 2.5 times, the Total Commitment in
effect from time to time; PROVIDED that, in the event that any valuation
provided pursuant to Section 7.01(h) or 7.11 establishes that the Market
Value of the Mortgaged Rigs is less than that otherwise required by this
Section 8.10, the Borrowers may satisfy the requirements of this Section
8.10 (subject to future evaluation) by providing additional collateral
security acceptable to the Required Banks sufficient to insure that the
Market Value of the Mortgaged Rigs is sufficient to meet the requirements
of Section 8.10(a) or (b), as applicable.
SECTION 9. EVENTS OF DEFAULT. Upon the occurrence of any of
the following specified events (each an "Event of Default"):
9.01 Payments. Any Borrower shall default in the payment when
due of any principal of the Loans, any Unpaid Drawing, any interest on the
Loans or any Fees or any other amounts owing hereunder or under any other
Credit Document and such default shall continue for two (2) more Business
Days; or
9.02 Representations, etc. Any representation, warranty or
statement made by any Credit Party herein or in any other Credit Document
or in any statement or certificate delivered or required to be delivered
pursuant hereto or thereto shall prove to be untrue in any material
respect on the date as of which made or deemed made; or
9.03 Covenants. Any Credit Party shall (a) default in the due
performance or observance by it of any term, covenant or agreement
contained in Section 7.08 or Section 8 or (b) default in the due
performance or observance by it of any term, covenant or agreement (other
than those referred to in Section 9.01, 9.02 or clause (a) of this Section
9.03) contained in this Agreement and such default shall continue
unremedied for a period of at least 30 days after notice to any Borrower
by the Administrative Agent or the Required Banks; or
9.04 Default Under Other Agreements. (a) Any Credit Party or
any of their respective Subsidiaries shall (i) default in any payment with
respect to any Indebtedness (other than the Obligations) beyond the period
of grace, if any, applicable thereto or (ii) default in the observance or
performance of any agreement or condition relating to any such
Indebtedness or contained in any instrument or agreement evidencing,
securing or relating thereto, or any other event shall occur or condition
exist, the effect of which default or other event or condition results in
acceleration or the renegotiation of the material payment terms of any<PAGE>
such Indebtedness to become due prior to its stated maturity; or (b) any
such Indebtedness of any Credit Party or any of their respective
Subsidiaries shall be declared to be due and payable, or required to be
prepaid other than by a regularly scheduled required prepayment, prior to
the stated maturity thereof, PROVIDED that it shall not constitute an
Event of Default pursuant to this Section 9.04 unless (x) the aggregate
principal amount of such Indebtedness in default exceeds $5,000,000 at any
one time and (y) adequate reserves (determined in accordance with GAAP)
have not been provided; or
9.05 Bankruptcy, etc. Any Credit Party or any direct or
indirect parent of any Credit Party shall commence a voluntary case
concerning itself under Title 11 of the United States Code entitled
"Bankruptcy," as now or hereafter in effect, or any successor thereto (the
"Bankruptcy Code"); or an involuntary case is commenced against any Credit
Party or any direct or indirect parent of any Credit Party and the peti-
tion is not controverted within 10 days, or is not stayed or dismissed
within 90 days, after commencement of the case; or a custodian (as defined
in the Bankruptcy Code) is appointed for, or takes charge of, all or
substantially all of the property of any Credit Party or any direct or
indirect parent of any Credit Party; or any Credit Party or any direct or
indirect parent of any Credit Party commences any other proceeding under
any reorganization, arrangement, adjustment of debt, relief of debtors,
dissolution, insolvency or liquidation or similar law of any jurisdiction
whether now or hereafter in effect relating to any Credit Party or any
direct or indirect parent of any Credit Party; or there is commenced
against any Credit Party or any direct or indirect parent of any Credit
Party any such case or proceeding which remains undismissed for a period
of 90 days; or any Credit Party or any direct or indirect parent of any
Credit Party is adjudicated insolvent or bankrupt; or any order of relief
or other order approving any such case or proceeding is entered; any
Credit Party or any direct or indirect parent of any Credit Party suffers
any appointment of any custodian or the like for it or any substantial
part of its property to continue undischarged or unstayed for a period of
90 days; or any Credit Party or any direct or indirect parent of any
Credit Party makes a general assignment for the benefit of creditors; or
any corporate action is taken by any Credit Party or any direct or
indirect parent of any Credit Party for the purpose of effecting any of
the foregoing; or
9.06 Security Documents. (i) Any Security Document shall,
after the execution and delivery thereof, cease to be in full force and
effect, or shall cease to give the Collateral Agent or the Security
Trustee, as the case may be, the Liens, rights, powers and privileges
purported to be created thereby in favor of the Collateral Agent or the
Security Trustee, as the case may be; PROVIDED that, to the extent any
Security Document ceases to be in full force and effect or fails to create
the Liens, rights, powers and privileges purported to be created thereby
as a result of a change in law of a jurisdiction outside of the United
States, such failure shall not constitute an Event of Default unless such
failure continues for a period of more than 30 days without the Banks and
the Borrowers finding a mutually acceptable solution to such failure or
(ii) any Credit Party shall default in any respect in the due performance
or observance of any term, covenant or agreement on its part to be
performed or observed pursuant to any such Security Document and such
default (unless such default creates an Event of Default under clause (i)
above) shall continue unremedied for a period of at least 30 days after<PAGE>
notice to any Borrower by the Administrative Agent or the Required Banks;
or
9.07 Guaranty. Any Guaranty or any provision thereof shall
cease to be in full force and effect, or any Guarantor or any Person
acting by or on behalf of such Guarantor shall deny or disaffirm all or
any portion of such Guarantor's obligation thereunder, or any Guarantor
shall default in the observance of any term, covenant or agreement on its
part to be performed or observed pursuant thereto and such default (other
than any default arising from a failure to make any payment thereunder)
shall continue unremedied for a period of at least 30 days after notice to
any Borrower by the Administrative Agent or the Required Banks; or
9.08 Judgments. Any judgment or decree shall be entered
against Holdings, the Borrowers or any other Credit Party (i) by a U.S.
Jurisdiction involving a liability of $5,000,000 or more in the case of
any one such judgment or decree, to the extent not paid or not covered by
insurance, and any such judgment or decree shall not have been vacated,
discharged or stayed or bonded pending appeal within 60 days from the
entry thereof or (ii) by a foreign jurisdiction involving a liability
which is reasonably likely to result in a Material Adverse Effect; or
9.09 Citizenship. Any Mortgagor shall cease to be qualified
to own and operate the Mortgaged Rigs under the laws of the United States,
the Bahamas or Liberia, as may be applicable; or
9.10 Change of Control. A Change of Control shall occur;
then, and in any such event, and at any time thereafter, if any Event of
Default shall then be continuing, the Administrative Agent shall, upon the
written request of the Required Banks, by written notice to the Borrowers,
take any or all of the following actions, without prejudice to the rights
of the Administrative Agent or any Bank to enforce its claims against any
Credit Party, except as otherwise specifically provided for in this
Agreement (PROVIDED that, if an Event of Default specified in Section 9.05
shall occur with respect to the Borrowers, the result which would occur
upon the giving of written notice by the Administrative Agent as specified
in clauses (i) and (ii) below shall occur automatically without the giving
of any such notice): (i) declare the Total Commitment terminated, where-
upon the Commitment of each Bank shall forthwith terminate immediately and
any Commitment Commission or any other Fees shall forthwith become due and
payable without any other notice of any kind; (ii) declare the principal
of and any accrued interest in respect of all Loans and all obligations
owing hereunder (including Unpaid Drawings) and thereunder to be,
whereupon the same shall become, forthwith due and payable without pre-
sentment, demand, protest or other notice of any kind, all of which are
hereby waived by each Credit Party; (iii) enforce, as Collateral Agent (or
direct the Collateral Agent to enforce), any or all of the Liens and
security interests created pursuant to the Security Documents; (iv)
terminate any Letter of Credit which may be terminated in accordance with
its terms; (v) direct the Borrowers to pay (and each Borrower hereby
agrees upon receipt of such notice, or upon the occurrence of any Event of
Default specified in Section 9.05 in respect of such Borrower, it will
pay) to the Collateral Agent at the US Payment Office such additional
amounts of cash, to be held as security for such Borrower's reimbursement
obligations in respect of Letters of Credit then outstanding (if any)
equal to the aggregate Stated Amount of all (x) in the case of Borrower A,<PAGE>
Tranche A Letters of Credit and (y) in the case of Borrower C, Tranche C
Letters of Credit then outstanding; and (vi) apply any amounts held as
cash collateral pursuant to Section 4.02 or this Section 9 to repay
Obligations.
SECTION 10. DEFINITIONS. As used herein, the following terms
shall have the meanings herein specified unless the context otherwise
requires. Defined terms in this Agreement shall include in the singular
number the plural and in the plural the singular:
"Adjusted Total Tranche A Commitment" shall mean at any time the
Total Tranche A Commitment less the aggregate Tranche A Commitments of all
Defaulting Banks.
"Adjusted Total Tranche C Commitment" shall mean at any time the
total Tranche C Commitment less the aggregate Tranche C Commitments of all
Defaulting Banks.
"Adjusted Tranche A Commitment" for each Non-Defaulting Bank
shall mean at any time the product of such Bank's Adjusted Tranche A
Percentage and the Adjusted Total Tranche A Commitment.
"Adjusted Tranche A Percentage" shall mean (x) at a time when no
Bank Default exists, for each Bank such Bank's Tranche A Percentage and
(y) at a time when a Bank Default exists (i) for each Bank that is a
Defaulting Bank, zero and (ii) for each Bank that is a Non-Defaulting
Bank, the percentage determined by dividing such Bank's Tranche A
Commitment at such time by the Adjusted Total Tranche A Commitment at such
time, it being understood that all references herein to Tranche A
Commitments and the Adjusted Total Tranche A Commitment at a time when the
Total Tranche A Commitment or Adjusted Total Tranche A Commitment, as the
case may be, has been terminated shall be references to the Tranche A
Commitments or Adjusted Total Tranche A Commitment, as the case may be, in
effect immediately prior to such termination, PROVIDED that (A) no Bank's
Adjusted Tranche A Percentage shall change upon the occurrence of a Bank
Default from that in effect immediately prior to such Bank Default if,
after giving effect to such Bank Default and any repayment of Tranche A
Loans at such time pursuant to Section 4.02(A)(a) or otherwise, the sum of
(i) the aggregate outstanding principal amount of Tranche A Loans of all
Non-Defaulting Banks plus (ii) the Tranche A Letter of Credit
Outstandings, exceeds the Adjusted Total Tranche A Commitment; (B) the
changes to the Adjusted Tranche A Percentage that would have become
effective upon the occurrence of a Bank Default but that did not become
effective as a result of the preceding clause (A) shall become effective
on the first date after the occurrence of the relevant Bank Default on
which the sum of (i) the aggregate outstanding principal amount of the
Tranche A Loans of all Non-Defaulting Banks plus (ii) the Letter of Credit
Outstandings is equal to or less than the Adjusted Total Tranche A
Commitment; and (C) if (i) a Non-Defaulting Bank's Adjusted Tranche A
Percentage is changed pursuant to the preceding clause (B) and (ii) any
repayment of such Bank's Tranche A Loans, or of Unpaid Drawings with
respect to Tranche A Letters of Credit, that were made during the period
commencing after the date of the relevant Bank Default and ending on the
date of such change to its Adjusted Tranche A Percentage must be returned
to Borrower A as a preferential or similar payment in any bankruptcy or
similar proceeding of Borrower A, then the change to such Non-Defaulting
Bank's Adjusted Tranche A Percentage effected pursuant to said clause (B)<PAGE>
shall be reduced to that positive change, if any, as would have been made
to its Adjusted Tranche A Percentage if (x) such repayments had not been
made and (y) the maximum change to its Adjusted Tranche A Percentage would
have resulted in the sum of the outstanding principal of Tranche A Loans
made by such Bank plus such Bank's new Adjusted Tranche A Percentage of
the outstanding principal amount of Tranche A Letter of Credit
Outstandings equalling such Bank's Commitment at such time.
"Adjusted Tranche C Commitment" for each Non-Defaulting Bank
shall mean at any time the product of such Banks Adjusted Tranche C
Percentage and the Adjusted Total Tranche C Commitment.
"Adjusted Tranche C Percentage" shall mean (x) at a time when no
Bank Default exists, for each Bank such Bank's Tranche C Percentage and
(y) at a time when a Bank Default exists (i) for each Bank that is a
Defaulting Bank, zero and (ii) for each Bank that is a Non-Defaulting
Bank, the percentage determined by dividing such Bank's Tranche C
Commitment at such time by the Adjusted Total Tranche C Commitment at such
time, it being understood that all references herein to Tranche C
Commitments and the Adjusted Total Tranche C Commitment at a time when the
Total Tranche C Commitment or Adjusted Total Tranche C Commitment, as the
case may be, has been terminated shall be references to the Tranche C
Commitments or Adjusted Total Tranche C Commitment, as the case may be, in
effect immediately prior to such termination, PROVIDED that (A) no Bank's
Adjusted Tranche C Percentage shall change upon the occurrence of a Bank
Default from that in effect immediately prior to such Bank Default if,
after giving effect to such Bank Default and any repayment of Tranche C
Loans at such time pursuant to Section 4.02(A)(a) or otherwise, the sum of
(i) the aggregate outstanding principal amount of Tranche C Loans of all
Non-Defaulting Banks plus (ii) the Tranche C Letter of Credit
Outstandings, exceeds the Adjusted Total Tranche C Commitment; (b) the
changes to the Adjusted Tranche C Percentage that would have become
effective upon the occurrence of a Bank Default but that did not become
effective as a result of the preceding clause (A) shall become effective
on the first date after the occurrence of the relevant Bank Default on
which the sum of (i) the aggregate outstanding principal amount of the
Tranche C Loans of all Non-Defaulting Banks plus (ii) the Tranche C Letter
of Credit Outstandings is equal to or less than the Adjusted Total Tranche
C Commitment; and (C) if (i) a Non-Defaulting Bank's Adjusted Tranche C
Percentage is changed pursuant to the preceding clause (B) and (ii) any
repayment of such Bank's Tranche C Loans, or of Unpaid Drawings with
respect to Tranche C Letters of Credit, that were made during the period
commencing after the date of the relevant Bank Default and ending on the
date of such change to its Adjusted Tranche C Percentage must be returned
to Borrower C as a preferential or similar payment in any bankruptcy or
similar proceeding of Borrower C, then the change to such Non-Defaulting
Bank's Adjusted Tranche C Percentage effected pursuant to said clause (B)
shall be reduced to that positive change, if any, as would have been made
to its Adjusted Tranche C Percentage if (x) such repayments had not been
made and (y) the maximum change to its Adjusted Tranche C Percentage would
have resulted in the sum of the outstanding principal of Tranche C Loans
made by such Bank plus such Bank's new Adjusted Tranche C Percentage of
the outstanding principal amount of Tranche C Letter of Credit
Outstandings equalling such Bank's Tranche C Commitment at such time.<PAGE>
"Administrative Agent" shall have the meaning provided in the
first paragraph of this Agreement and shall include any successor to the
Administrative Agent appointed pursuant to Section 11.09.
"Affected Eurodollar Loan" shall have the meaning provided in
Section 4.02(B).
"Affiliate" shall mean, with respect to any Person, any other
Person directly or indirectly controlling (including but not limited to
all directors and officers of such Person), controlled by, or under direct
or indirect common control with such Person. A Person shall be deemed to
control a corporation if such Person possesses, directly or indirectly,
the power (i) to vote 10% or more of the securities having ordinary voting
power for the election of directors of such corporation or (ii) to direct
or cause the direction of the management and policies of such corporation,
whether through the ownership of voting securities, by contract or
otherwise.
"Agreement" shall mean this Credit Agreement, as the same may be
from time to time modified, amended and/or supplemented.
"Applicable Eurodollar Margin" shall be equal to the percentage
per annum set forth below opposite Holdings' applicable Pricing Ratio, as
calculated for the last day of the fiscal quarter last ended; PROVIDED
that, in the event a change in the Applicable Eurodollar Margin is to be
made, such change shall not become effective until the date which is one
(1) Business Day after the date upon which the Administrative Agent
receives written notice from Holdings or any Borrower pursuant to Clause
7.01(e) evidencing that such change is warranted:
Eurodollar
Pricing Ratio Margin
------------------------------- ---------------
Less than or equal to 0.50:1.00 .40% per annum
Greater than 0.50:1.00 but
less than or equal to 1.00:1.00 .50% per annum
Greater than 1.00:1.00 but
less than or equal to 2.00:1.00 .75% per annum
Greater than 2.00:1.00 but
less than or equal to 3.00:1.00 1.00% per annum
Greater than 3.00:1.00 but
less than or equal to 4.00:1.00 1.25% per annum
Greater than 4.00:1.00 1.50% per annum
"Approved Bank" shall have the meaning provided in the
definition of "Cash Equivalents."
"Approved Broker" shall mean each of the first-class,
international, independent, sale-and-purchase brokers of offshore drilling
units similar to those listed on Annex VIII, as such Annex may be revised<PAGE>
from time to time at the request of the Required Banks with the consent of
the Borrowers, which consent shall not be unreasonably withheld.
"Approved Company" shall have the meaning provided in the
definition of "Cash Equivalents."
"Assignment and Assumption Agreement" shall mean the Assignment
and Assumption Agreement substantially in the form of Exhibit M
(appropriately completed).
"Authorized Officer" shall mean any officer of Holdings or any
Borrower designated as such in writing to the Administrative Agent by
Holdings or such Borrower.
"Bahamian Mortgage" shall have the meaning provided in Section
5.08(a).
"Bahamian Rigs" shall mean ENSCO 80 (official no. 724944), ENSCO
85 (official no. 724945), and ENSCO 92 (official no. 724946).
"Bank" shall have the meaning provided in the first paragraph of
this Agreement.
"Bank Default" shall mean (i) the refusal (which has not been
retracted) of a Bank to make available its portion of any Loans or to fund
its portion of any unreimbursed payment under Section 2.04(d) or (ii) a
Bank having notified the Administrative Agent and/or any Borrower that it
does not intend to comply with the obligations under Section 1.01 or under
Section 2.04(d), in the case of either (i) or (ii) as a result of the
appointment of a receiver or conservator with respect to such Bank at the
direction or request of any regulatory agency or authority.
"Bankruptcy Code" shall have the meaning provided in Section
9.05.
"Base Rate" shall mean the higher of (i) the Administrative
Agent's Prime Rate, and (ii) 0.50% per annum above the Federal Funds
Effective Rate.
"Base Rate Loan" shall mean each Loan bearing interest at the
rates provided in Section 1.08(a).
"Borrower" shall have the meaning provided in the first
paragraph of this Agreement.
"Borrower A" shall have the meaning provided in the first
paragraph of this Agreement.
"Borrower B" shall have the meaning provided in the first
paragraph of this Agreement.
"Borrower C" shall have the meaning provided in the first
paragraph of this Agreement.
"Borrowing" shall mean the incurrence of one Type of Loan
pursuant to any Facility by any Borrower from all of the Banks with a
Commitment under such Facility on a pro rata basis on a given date (or<PAGE>
resulting from conversions on a given date), having in the case of
Eurodollar Loans the same Interest Period; PROVIDED that Base Rate Loans
incurred pursuant to Section 1.10(b) shall be considered included in any
related Borrowing of Eurodollar Loans.
"Business Day" shall mean (i) for all purposes other than as
covered by clause (ii) below, any day excluding Saturday, Sunday and any
day which shall be in the Cities of New York and/or London and/or Dallas a
legal holiday or a day on which banking institutions are authorized by law
or other governmental actions to close and (ii) with respect to all
notices and determinations in connection with, and payments of principal
and interest on, Loans, any day which is a Business Day described in
clause (i) and which is also a day for trading by and between banks in
U.S. dollar deposits in the interbank Eurodollar market.
"Capital Lease" as applied to any Person shall mean any lease of
any property (whether real, personal or mixed) by that Person as lessee
which, in conformity with GAAP, is accounted for as a capital lease on the
balance sheet of that Person.
"Capitalized Lease Obligations" shall mean, with respect to any
Person, all obligations under Capital Leases in each case taken at the
amount thereof accounted for as liabilities in accordance with GAAP.
"Cash Equivalents" shall mean (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 one
(1) year from the date of acquisition, (ii) U.S. dollar denominated time
deposits, certificates of deposit and bankers' acceptances of (x) any
Bank, (y) any domestic commercial bank of recognized standing having capi-
tal and surplus in excess of $500,000,000 or (z) any bank (or the parent
company of such bank) whose short-term commercial paper rating from
Standard & Poor's Corporation ("S&P") is at least A-2 or the equivalent
thereof or from Moody's Investors Service, Inc. ("Moody's") is at least
P-2 or the equivalent thereof (any such bank, an "Approved Bank"), in each
case with maturities of not more than six (6) months from the date of
acquisition, (iii) fully secured repurchase obligations with a term of not
more than 90 days for underlying securities of the types described in
clause (i) above entered into with any bank meeting the qualifications
specified in clause (ii) above, (iv) commercial paper issued by any Bank
or Approved Bank or by the parent company of any Bank or Approved Bank and
commercial paper issued by, or guaranteed by, any industrial or financial
company with a short-term commercial paper rating of at least A-1 or the
equivalent thereof by S&P or at least P-1 or the equivalent thereof by
Moody's (any such company, an "Approved Company"), or guaranteed by any
industrial company with a long term unsecured debt rating of at least A or
A2, or the equivalent of each thereof, from S&P or Moody's, as the case
may be, and in each case maturing within six (6) months after the date of
acquisition and (v) investments in money market funds substantially all of
whose assets are comprised of securities of the type described in clauses
(i) through (iv) above.
"Cash Proceeds" shall mean, with respect to any Collateral
Disposition, the aggregate cash payments (including any cash received by
way of deferred payment pursuant to a note receivable issued in connection
with such Collateral Disposition, other than the portion of such deferred<PAGE>
payment constituting interest, but only as and when so received) received
by Holdings and/or any Subsidiary from such Collateral Disposition.
"CBK" shall mean Christiania Bank og Kreditkasse, New York
Branch.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section
9601 et seq.
"Change of Control" shall mean (a) Holdings shall at any time
cease to own 100% of the capital stock of each Borrower or, directly or
indirectly, any Guarantor (other than Holdings), (b) any "person" (as such
term is used in Sections 13(d) and 14(d) of the Exchange Act), is or
becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under
the Exchange Act), directly or indirectly, of more than 50% of the total
voting power of the Voting Stock of Holdings or (c) the Board of Directors
of Holdings ceases for any reason to consist of a majority of Continuing
Directors.
"Claims" shall have the meaning provided in the definition of
"Environmental Claims."
"Co-Agents" shall have the meaning provided in the first
paragraph of this Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time and the regulations promulgated and the rulings issued
thereunder. Section references to the Code are to the Code, as in effect
at the Restatement Effective Date and any subsequent provisions of the
Code, amendatory thereof, supplemental thereto or substituted therefor.
"Collateral" shall mean all of the Security Agreement
Collateral, the "Pledged Stock" as defined in the Pledge Agreement, the
Mortgaged Rigs, any collateral delivered to the Collateral Agent or
otherwise pledged, whether or not pursuant to any Lien, in connection with
this Agreement, including, without limitation, any cash collateral
delivered to the Collateral Agent pursuant to this Agreement.
"Collateral Agent" shall mean the Administrative Agent acting as
collateral agent for the Banks.
"Collateral Disposition" shall mean for any Borrower or the
Subsidiary Guarantor (a) the sale, transfer or other voluntary disposition
of any asset constituting Collateral by such Borrower or the Subsidiary
Guarantor to any Person other than Holdings, the Parent or Borrower A or
(b) any Total Loss of any Mortgaged Rig; PROVIDED that, a sale pursuant to
clause (a) above involving a Mortgaged Rig shall not constitute a
Collateral Disposition to the extent (i) (x) the respective Borrower
provides seven (7) Business Days' prior written notice to the
Administrative Agent of such sale, (y) simultaneously with the release of
such Mortgaged Rig from its respective Mortgage and/or the Security
Agreement, such Mortgaged Rig is replaced by a substitute drilling rig or
vessel which, in the absolute discretion of the Required Banks, shall be
of similar or greater value and quality to such Mortgaged Rig and (z) such
replacement rig or vessel is pledged pursuant to a comparable mortgage and
made subject to all first priority, perfected security interests in favor<PAGE>
of the Collateral Agent for the benefit of the Banks as the Required Banks
shall request, including, without limitation, those pertaining to Earnings
and insurances of such replacement rig or vessel or (ii) the respective
Borrower, upon seven (7) Business Days' prior written notice to the
Administrative Agent and simultaneously with such sale, deposits US
Dollars in an amount equal to the Market Value of the rig or vessel being
sold in an account to be maintained by the Collateral Agent for the
benefit of the Banks, which account shall be subject to a first priority
perfected security interest in favor of the Collateral Agent for the
benefit of the Banks.
"Commitment" shall mean, with respect to each Bank, the sum of
the Tranche A Commitment, Tranche B Commitment and Tranche C Commitment of
such Bank.
"Commitment Commission" shall have the meaning provided in
Section 3.01(a).
"Consolidated Current Assets" shall mean, the current assets of
Holdings and its Subsidiaries determined on a consolidated basis in
accordance with GAAP, including cash and Cash Equivalents.
"Consolidated Current Liabilities" shall mean, the current
liabilities of Holdings and its Subsidiaries determined on a consolidated
basis in accordance with GAAP, but excluding the current liability
associated with up to $88,000,000 of the required repayment of Loans in
connection with the Scheduled Commitment Reduction occurring on the
Maturity Date.
"Consolidated EBIT" shall mean, for any period, (A) the sum of
the amounts for such period of (i) Consolidated Net Income, (ii)
provisions for taxes based on income, (iii) Consolidated Interest Expense,
(iv) amortization or write-off of deferred financing costs or any other
non-cash charges to the extent deducted in determining Consolidated Net
Income and (v) losses on sales of assets (excluding sales in the ordinary
course of business, which in any event will not include sales of drilling
rigs) and other extraordinary losses or expenses less (B) the amount for
such period of gains on sales of assets (excluding sales in the ordinary
course of business not involving drilling rigs) and other extraordinary
gains, all as determined on a consolidated basis in accordance with GAAP.
"Consolidated EBITDA" shall mean, for any period, the sum of the
amounts for such period of (i) Consolidated EBIT, (ii) depreciation
expense and (iii) amortization expense, all as determined on a con-
solidated basis in accordance with GAAP.
"Consolidated Funded Indebtedness" shall mean, all Indebtedness
of Holdings and its Subsidiaries (excluding Indebtedness referred to in
clauses (ii), (iv), (vi), (vii) and (viii) of the definition of
"Indebtedness" and clause (iii) of such definition to the extent such
letters of credit constitute performance letters of credit and letters of
credit issued to support bid and performance bonds in the ordinary course
of business) calculated on a consolidated basis in accordance with GAAP;
PROVIDED that with respect to calculations made pursuant to Section 8.09
only, Consolidated Funded Indebtedness shall exclude up to $100,000,000 in
the aggregate of unsecured subordinated Indebtedness issued or outstanding
(whether on or after the Restatement Effective Date but subject to the<PAGE>
following proviso} of Holdings and/or Borrower C pursuant to one or more
public offerings, which shall (i) mature after the Maturity Date, (ii) not
have any principal payments prior to the Maturity Date, and (iii) be
subordinated to this Facility on a basis satisfactory to the Co-Agents;
and PROVIDED FURTHER, that no such subordinated Indebtedness shall be so
excluded which is issued by Borrower C pursuant to a public offering
occurring after the Restatement Effective Date.
"Consolidated Interest Expense" shall mean, for any period,
total interest expense (including that attributable to Capital Leases) of
Holdings and its Subsidiaries in accordance with GAAP on a consolidated
basis with respect to all outstanding Indebtedness of Holdings and its
Subsidiaries, including, without limitation, all commissions, discounts
and other fees and charges owed with respect to letters of credit and
bankers' acceptance financing.
"Consolidated Net Income" shall mean for any period, the net
income (or loss) of Holdings and its Subsidiaries on a consolidated basis
for such period taken as a single accounting period determined in
conformity with GAAP.
"Consolidated Net Worth" shall mean, at any time, shareholders
equity (excluding treasury stock) of Holdings and its Subsidiaries on a
consolidated basis determined in accordance with GAAP; PROVIDED that
Consolidated Net Worth shall include preferred stock of Holdings issued
after the Restatement Effective Date so long as such preferred stock may
only be redeemed at the option of Holdings.
"Consolidated Subsidiary" shall mean and include each Subsidiary
of Holdings and each Unrestricted Subsidiary.
"Contingent Obligations" shall mean as to any Person any
obligation of such Person guaranteeing or intending to guarantee any
Indebtedness ("primary obligations") of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, including,
without limitation, any obligation of such Person, whether or not
contingent, (a) to purchase any such primary obligation or any property
constituting direct or indirect security therefor, (b) to advance or
supply funds (i) for the purchase or payment of any such primary obliga-
tion or (ii) to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency of the primary
obligor, (c) to purchase property, securities or services primarily for
the purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor to make payment of such primary obligation
or (d) otherwise to assure or hold harmless the owner of such primary
obligation against loss in respect thereof; PROVIDED, HOWEVER, that the
term Contingent Obligation shall not include endorsements of instruments
for deposit or collection in the ordinary course of business. The amount
of any Contingent Obligation shall be deemed to be an amount equal to the
stated or determinable amount of the primary obligation in respect of
which such Contingent Obligation is made or, if not stated or
determinable, the maximum reasonably anticipated liability in respect
thereof (assuming such Person is required to perform thereunder) as
determined by such Person in good faith.
"Continuing Directors" shall mean the directors of Holdings on
the Restatement Effective Date and each other director, if such director's<PAGE>
nomination for election to the Board of Directors of Holdings is
recommended by a majority of the then Continuing Directors serving on the
Nominating and Compensation Committee.
"Credit Documents" shall mean this Agreement, the Notes, and the
Security Documents and any documents executed in connection therewith.
"Credit Event" shall mean and include the making of a Loan or
the issuance of a Letter of Credit.
"Credit Party" shall mean Holdings, the Parent, the Borrowers
and the Subsidiary Guarantor.
"Default" shall mean any event, act or condition which with
notice or lapse of time, or both, would constitute an Event of Default.
"Defaulting Bank" shall mean any Bank with respect to which a
Bank Default is in effect.
"Dividends" shall have the meaning provided in Section 8.05.
"Dual Indenture" shall mean the Indenture, dated as of January
15, 1994, (as the same may be amended or supplemented from time to time)
among Dual [Holding] Company, the Subsidiary Guarantors and Shawmut Bank,
National Association, as Trustee, governing the 9 7/8% Senior Subordinated
Notes of Dual [Holding] Company due 2004.
"Earnings" shall have the definition provided in the Security
Agreement.
"Eligible Transferee" shall mean and include a commercial bank,
financial institution or other "accredited investor" (as defined by
Regulation D of the Securities Act of 1933).
"Environmental Claims" means any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, claims,
liens, notices of noncompliance or violation, investigations (other than
internal reports prepared by Holdings or any of its Subsidiaries solely in
the ordinary course of such Person's business and not in response to any
third party action or request of any kind) or proceedings relating in any
way to any Environmental Law or any permit issued, or any approval given,
under any such Environmental Law (hereafter, "Claims"), including, without
limitation, (a) any and all Claims by governmental or regulatory author-
ities for enforcement, cleanup, removal, response, remedial or other
actions or damages pursuant to any applicable Environmental Law, and (b)
any and all Claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief re-
sulting from Hazardous Materials arising from alleged injury or threat of
injury to health, safety or the environment.
"Environmental Law" means any applicable Federal, state, foreign
or local statute, law, rule, regulation, ordinance, code, guide, policy
and rule of common law now or hereafter in effect and in each case as
amended, and any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent decree or judg-
ment, relating to the environment, health, safety or Hazardous Materials,
including, without limitation, CERCLA; RCRA; the Federal Water Pollution<PAGE>
Control Act, as amended, 33 U.S.C. Section 1251 et seq.; the Toxic
Substances Control Act, 15 U.S.C. Section 7401 et seq.; the Clean Air Act,
42 U.S.C. Section 7401 et seq.; the Safe Drinking Water Act, 42 U.S.C.
Section 3808 et seq.; the Oil Pollution Act of 1990, 33 U.S.C. Section
2701 et seq. and any applicable state and local or foreign counterparts or
equivalents.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time, and the regulations promulgated and
rulings issued thereunder. Section references to ERISA are to ERISA, as
in effect at the Restatement Effective Date and any subsequent provisions
of ERISA, amendatory thereof, supplemental thereto or substituted
therefor.
"ERISA Affiliate" shall mean each person (as defined in Section
3(9) of ERISA) which together with Holdings or any Subsidiary would be
deemed to be a "single employer" (i) within the meaning of Sections
414(b), (c), (m) and (o) of the Code or (ii) as a result of Holdings or
any Subsidiary being or having been a general partner of such person.
"Eurodollar Loans" shall mean each Loan bearing interest at the
rates provided in Section 1.08(b).
"Eurodollar Rate" shall mean with respect to each Interest
Period for a Loan, the offered rate (rounded upward to the nearest 1/16 of
one (1) percent) for deposits of (i) in the case of US Dollar Loans, US
Dollars and (ii) in the case of Pound Sterling Loans, Pounds Sterling, for
a period equivalent to such period at or about 11:00 A.M. (London time) on
the second London Banking Day before the first day of such period as is
displayed on Telerate page 3750 (British Bankers' Association Interest
Settlement Rates) (or such other page as may replace such page 3750 on
such system or on any other system of the information vendor for the time
being designated by the British Bankers' Association to calculate the BBA
Interest Settlement Rate (as defined in the British Bankers' Association's
Recommended Terms and Conditions ("BBAIRS" terms) dated August 1985)),
provided that if on such date no such rate is so displayed, the Eurodollar
Rate for such period shall be the rate quoted to the Administrative Agent
as the offered rate for deposits of US Dollars or Pounds Sterling, as the
case may be, in an amount approximately equal to the amount in relation to
which the Eurodollar Rate is to be determined for a period equivalent to
such period by prime banks in the London Interbank Market at or about
11:00 A.M. (London time) on the second Banking Day before the first day of
such period.
"Event of Default" shall have the meaning provided in Section 9.
"Existing Credit Agreement" shall have the meaning provided in
the recitals to this Agreement.
"Existing Guaranty" shall have the meaning provided in the
recitals to this Agreement.
"Existing Letter of Credit" shall have the meaning provided in
Section 2.01(a).
"Facility" shall mean any of the credit facilities established
under this Agreement, evidenced by the Total Commitment.<PAGE>
"Facing Fee" shall have the meaning provided in Section 3.01(c).
"Federal Funds Effective Rate" shall mean for any period, a
fluctuating interest rate equal for each day during such period to the
weighted average of the rates on overnight Federal Funds transactions with
members of the Federal Reserve System arranged by Federal Funds brokers,
as published for such day (or, if such day is not a Business Day, for the
next preceding Business Day) by the Federal Reserve Bank of New York, or,
if such rate is not so published for any day which is a Business Day, the
average of the quotations for such day on such transactions received by
the Administrative Agent from three (3) Federal Funds brokers of
recognized standing selected by the Administrative Agent.
"Fees" shall mean all amounts payable pursuant to, or referred
to in, Section 3.01.
"Floating Charge" shall mean the Debenture, dated as of February
27, 1997 between ENSCO Offshore U.K. Ltd. and CBK, as Collateral Agent and
Security Trustee for the Banks party to this Agreement.
"GAAP" shall mean generally accepted accounting principles in
the United States of America as in effect on the date of this Agreement;
it being understood and agreed that determinations in accordance with GAAP
for purposes of Section 8, including defined terms as used therein, are
subject (to the extent provided therein) to Section 12.07(a).
"Guaranteed Obligations" shall mean all obligations of each
Borrower to each Bank for the full and prompt payment when due (whether at
the stated maturity, by acceleration or otherwise) of the principal and
interest on each Note issued by such Borrower to such Bank, and Loans
made, under the Credit Agreement and all reimbursement obligations and
Unpaid Drawings with respect to Letters of Credit, together with all the
other obligations and liabilities (including, without limitation,
indemnities, fees and interest thereon) of such Borrower to such Bank now
existing or hereafter incurred under, arising out of or in connection with
the Credit Agreement or any other Credit Document and the due performance
and compliance with all the terms, conditions and agreements contained in
the Credit Documents by such Borrower.
"Guarantor" shall mean Holdings, the Parent, the Subsidiary
Guarantor and Borrower A.
"Guaranty" shall mean the guaranty of Holdings, the Parent, and
Borrower A pursuant to Section 13 hereof and of the Subsidiary Guarantor
pursuant to the Subsidiary Guaranty.
"Hazardous Materials" means (a) any petroleum or petroleum
products, radioactive materials, asbestos in any form that is or could
become friable, urea formaldehyde foam insulation, transformers or other
equipment that contained, electric fluid containing levels of
polychlorinated biphenyls, and radon gas; (b) any chemicals, materials or
substances defined as or included in the definition of "hazardous
substances," "hazardous waste," "hazardous materials," "extremely
hazardous waste," "restricted hazardous waste," "toxic substances," "toxic
pollutants," "contaminants," or "pollutants," or words of similar import,
under any applicable Environmental Law; and (c) any other chemical,<PAGE>
material or substance, exposure to which is prohibited, limited or
regulated by any governmental authority.
"Holdings" shall have the meaning provided in the first
paragraph of this Agreement.
"Indebtedness" of any Person shall mean without duplication (i)
all indebtedness of such Person for borrowed money, (ii) the deferred
purchase price of assets or services which in accordance with GAAP would
be shown on the liability side of the balance sheet of such Person, (iii)
the face amount of all letters of credit issued for the account of such
Person and, without duplication, all drafts drawn thereunder, (iv) all
Indebtedness of a second Person secured by any Lien on any property owned
by such first Person, whether or not such indebtedness has been assumed,
(v) all Capitalized Lease Obligations of such Person, (vi) all obligations
of such Person to pay a specified purchase price for goods or services
whether or not delivered or accepted, i.e., take-or-pay and similar
obligations, (vii) all net obligations of such Person under Interest Rate
Agreements and (viii) all Contingent Obligations of such Person (other
than Contingent Obligations arising from the guaranty by such Person of
the obligations of any Restricted Subsidiary to the extent such guaranteed
obligations are permitted under this Agreement); PROVIDED that
Indebtedness shall not include (x) trade payables and accrued expenses, in
each case arising in the ordinary course of business, (y) indebtedness of
an Unrestricted Subsidiary and (z) deferred tax liabilities.
"Interest Period" with respect to any Loan shall mean the
interest period applicable thereto, as determined pursuant to Section
1.09.
"Interest Rate Agreement" shall mean any interest rate swap
agreement, any interest rate cap agreement, any interest rate collar
agreement or other similar agreement or arrangement designed to protect
any Credit Party against interest rate risk.
"L/C Supportable Obligations" shall mean such obligations of the
Credit Parties as are not inconsistent with the issuance policies of the
Letter of Credit Issuer.
"Leasehold" of any Person means all of the right, title and
interest of such Person as lessee or licensee in, to and under leases or
licenses of land, improvements and/or fixtures.
"Letter of Credit" shall have the meaning provided in Section
2.01(a).
"Letter of Credit Fee" shall have the meaning provided in
Section 3.01(b).
"Letter of Credit Issuer" shall mean Christiania Bank og
Kreditkasse, New York Branch.
"Letter of Credit Request" shall have the meaning provided in
Section 2.02(a).<PAGE>
"Leverage Ratio" shall mean, at any date of determination, the
ratio of Consolidated Funded Indebtedness on such date to Total
Capitalization on such date.
"Liberian Fleet Mortgage" shall have the meaning provided in
Section 5.08(a).
"Liberian Rigs" shall mean the offshore drilling rigs ENSCO 50
(Official No. 9383), ENSCO 51 (Official No. 9384), ENSCO 53 (Official No.
10260) and ENSCO 54 (Official No. 10159).
"Lien" shall mean any mortgage, pledge, security interest,
security title, encumbrance, lien or charge of any kind (including any
agreement to give any of the foregoing, any conditional sale or other
title retention agreement or any lease in the nature thereof) other than
arising from an event constituting a Total Loss.
"Loan" shall have the meaning provided in Section 1.01(c).
"Margin Stock" shall have the meaning provided in Regulation U.
"Market Value" shall mean as of any date of calculation the
value as of such date of any offshore drilling rig or other vessel
provided in the most recent valuation report delivered in connection with
Section 7.11, or in the case two (2) reports have been supplied as of such
date, the arithmetic mean of the values provided in such reports.
"Material Adverse Effect" shall mean, unless specified
otherwise, to affect in a material manner the ability of a Credit Party to
perform its respective obligations under this Agreement, the Security
Documents or the Subsidiary Guaranty.
"Maturity Date" shall mean October 18, 2001.
"Minimum Borrowing Amount" shall mean (i) for Borrowings under
the Tranche A Facility and the Tranche C Facility, $2,000,000 and (ii) for
Borrowings under the Tranche B Facility, $2,000,000 or, in the case of
Pound Sterling Loans, the number of Pounds Sterling which, at the time of
such Borrowing, yields a US Dollar Equivalent of $2,000,000.
"Mortgage" shall have the meaning provided in Section 5.08(a).
"Mortgaged Rigs" shall mean and include the US Rigs, the
Bahamian Rigs, the Liberian Rigs and any replacement rig or vessel
mortgaged pursuant to the proviso contained in the definition of
"Collateral Disposition".
"Mortgages" shall mean the US Fleet Mortgage, the Liberian Fleet
Mortgage and the Bahamian Mortgages.
"Non-Defaulting Bank" shall mean each Bank other than a
Defaulting Bank.
"Non-Recourse Indebtedness" shall mean Indebtedness of which
neither Holdings, nor any of its Subsidiaries (without giving effect to
the current status of the obligor thereunder) is liable or obligated in
any manner.<PAGE>
"Note" shall have the meaning provided in Section 1.05(a).
"Notice of Borrowing" shall have the meaning provided in Section
1.03.
"Notice of Conversion" shall have the meaning provided in
Section 1.06.
"Notice Office" shall mean the office of the Administrative
Agent at 11 West 42nd Street, 7th Floor, New York, New York 10036 or such
other office as the Administrative Agent may designate to the Borrowers
from time to time.
"Obligations" shall mean all amounts, direct or indirect,
contingent or absolute, of every type or description, and at any time
existing, owing to the Administrative Agent, the Collateral Agent or any
Bank pursuant to the terms of this Agreement or any other Credit Document.
"Parent" shall have the meaning provided in the first paragraph
of this Agreement.
"Participant" shall have the meaning provided in Section
2.04(a).
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Section 4002 of ERISA, or any successor thereto.
"Permitted Liens" shall mean Liens described in Section 8.03(a)
through (i).
"Person" shall mean any individual, partnership, joint venture,
firm, corporation, association, trust or other enterprise or any
government or political subdivision or any agency, department or
instrumentality thereof.
"Plan" shall mean any multiemployer or single-employer plan as
defined in Section 4001 of ERISA, which is maintained or contributed to by
(or to which there is an obligation to contribute of) Holdings or a
Subsidiary of Holdings or an ERISA Affiliate.
"Pledge Agreement" shall have the meaning provided in Section
5.11.
"Pounds Sterling" shall mean freely transferrable lawful money
of the United Kingdom.
"Pound Sterling Loan" shall mean a Tranche B Loan denominated
in Pounds Sterling.
"Pricing Ratio" shall mean the ratio of Consolidated Funded
Indebtedness as calculated on the last day of the fiscal quarter last
ended to Consolidated EBITDA for the preceding twelve (12) month period
ended on the last day of the fiscal quarter last ended.
"Prime Rate" shall mean the rate which CBK announces from time
to time as its prime lending rate, the Prime Rate to change when and as
such prime lending rate changes.<PAGE>
"RCRA" shall mean the Resource Conservation and Recovery Act, as
amended, 42 U.S.C. Section 6901 et seq.
"Real Property" of any Person shall mean all of the right, title
and interest of such Person in and to land, improvements and fixtures,
including Leaseholds.
"Register" shall have the meaning provided in Section 12.16.
"Regulation D" shall mean Regulation D of the Board of Governors
of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof establishing reserve requirements.
"Regulation U" shall mean Regulation U of the Board of Governors
of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof establishing margin requirements.
"Replaced Bank" shall have the meaning provided in Section 1.13.
"Replacement Bank" shall have the meaning provided in Section
1.13.
"Reportable Event" shall mean an event described in Section
4043(c) of ERISA with respect to a Plan other than those events as to
which the 30-day notice period is waived under subsection .13, .14, .16,
.18, .19 or .20 of PBGC Regulation Section 2615.
"Required Banks" shall mean Non-Defaulting Banks including the
Co-Agents, the sum of whose outstanding Tranche A Commitments (or, if
after the Total Tranche A Commitment has been terminated, outstanding
Tranche A Loans and Adjusted Tranche A Percentage of Tranche A Letter of
Credit Outstandings), plus outstanding Tranche B Commitments (or, if after
the Total Tranche B Commitment has been terminated, the Tranche B
Outstandings calculated in accordance with Section 1.01(d)), plus out-
standing Tranche C Commitments (or, if after the Total Tranche C
Commitment has been terminated, outstanding Tranche C Loans and Adjusted
Tranche C Percentage of Tranche C Letter of Credit Outstandings) con-
stitute greater than 50% of the sum of the Adjusted Total Tranche A
Commitment (or, if after the Total Tranche A Commitment has been termin-
ated, the total of outstanding Tranche A Loans of Non-Defaulting Tranche A
Banks and the aggregate Adjusted Tranche A Percentages of all Non-Default-
ing Tranche A Banks of the total Tranche A Letter of Credit Outstandings
at such time) plus the Total Tranche B Commitment (or, if after the Total
Tranche B Commitment has been terminated, the total of outstanding Tranche
B Loans of Non-Defaulting Tranche B Banks), plus the Adjusted Total
Tranche C Commitment (or, if after the Total Tranche C Commitment has been
terminated, the total of outstanding Tranche C Loans of Non-Defaulting
Tranche C Banks and the aggregate Adjusted Tranche C Percentages of all
Non-Defaulting Tranche C Banks of the total Tranche C Letter of Credit
Outstandings at such time).
"Restatement Effective Date" shall have the meaning provided in
Section 12.10.
"Restricted Subsidiary" shall mean the Borrowers, the Borrowers'
Subsidiaries and any Subsidiary (other than the Parent) with a direct or
indirect ownership interest in any Borrower.<PAGE>
"Scheduled Commitment Reduction" shall have the meaning provided
in Section 3.03(b).
"SEC" shall mean the Securities and Exchange Commission or any
successor thereto.
"Section 4.04(b)(ii) Certificate" shall have the meaning
provided in Section 4.04(b)(ii).
"Secured Creditors" shall have the meaning set forth in the
Security Documents.
"Security Agreement" shall have the meaning provided in Section
5.07.
"Security Agreement Collateral" shall mean all "Collateral" as
defined in the Security Agreement.
"Security Documents" shall mean and include the Security
Agreement, the Pledge Agreement and each Mortgage.
"Security Trustee" shall mean Christiania Bank og Kreditkasse,
New York Branch, as trustee for the Banks with respect to the US Fleet
Mortgage, and any successor trustee appointed in accordance with the terms
hereof.
"Stated Amount" of each Letter of Credit shall mean the maximum
available to be drawn thereunder (regardless of whether any conditions for
drawing could then be met).
"Subsidiary" of any Person shall mean and include (i) any
corporation more than 50% of whose stock of any class or classes having by
the terms thereof ordinary voting power to elect a majority of the
directors of such corporation (irrespective of whether or not at the time
stock of any class or classes of such corporation shall have or might have
voting power by reason of the happening of any contingency) is at the time
owned by such Person directly or indirectly through Subsidiaries and (ii)
any partnership, association, joint venture or other entity in which such
Person directly or indirectly through Subsidiaries, has more than a 50%
equity interest at the time, PROVIDED that, with respect to any Person,
"Subsidiary" shall not include any Unrestricted Subsidiary of such Person.
Unless otherwise expressly provided, all references herein to "Subsidiary"
shall mean a Subsidiary of Holdings.
"Subsidiary Guarantor" shall mean ENSCO Offshore Company II, a
Delaware corporation.
"Substitute Basis" shall have the meaning provided in Section
1.09(b).
"Taxes" shall have the meaning provided in Section 4.04(a).
"Total Capitalization" shall mean, at any time, the sum of
Consolidated Funded Indebtedness and Consolidated Net Worth at such time.
"Total Commitment" shall mean, at any time, the sum of the
Commitments of each of the Banks.<PAGE>
"Total Tranche A Commitment" shall mean the sum of the Tranche A
Commitments of each Tranche A Bank.
"Total Tranche C Commitment" shall mean the sum of the Tranche C
Commitments of each Tranche C Bank.
"Total Tranche B Commitment" shall mean the sum of the Tranche B
Commitments of each Tranche B Bank.
"Total Loss" shall mean any "Total Loss" as defined in any
Mortgage.
"Total Unutilized Commitment" shall mean, at any time, (i) the
Total Commitment at such time less (ii) the sum of the aggregate principal
amount of all Loans at such time plus the Letter of Credit Outstandings at
such time.
"Tranche" shall mean the respective Facility and Commitments
used to make Loans hereunder, with there being three (3) separate
Tranches, i.e. Tranche A Loans, Tranche B Loans and Tranche C Loans.
"Tranche A Bank" shall mean any Bank with a Tranche A
Commitment.
"Tranche A Commitment" shall mean, with respect to each Bank,
the amount set forth opposite such Bank's name in Annex I directly below
the column entitled "Tranche A Commitment" as the same may be (i) reduced
from time to time pursuant to Sections 3.02(a), 3.03, and/or 9 or (ii)
adjusted from time to time as a result of (x) assignments to or from such
Bank pursuant to Section 12.04 or (y) an election of Borrower A and
Borrower C under Section 3.02(b).
"Tranche A Facility" shall mean the credit facility made
available to Borrower A hereunder, as evidenced by the Total Tranche A
Commitment.
"Tranche A Letter of Credit" shall have the meaning provided in
Section 2.01(a).
"Tranche A Letter of Credit Outstandings" shall mean, at any
time, the sum of, without duplication, (i) the aggregate Stated Amount of
all outstanding Tranche A Letters of Credit and (ii) the aggregate amount
of all Unpaid Drawings not theretofore repaid in respect of all Tranche A
Letters of Credit.
"Tranche A Loans" shall have the meaning provided in Section
1.01(a) of this Agreement.
"Tranche A Note" shall have the meaning provided in Section
1.05(a).
"Tranche A Participant" shall have the meaning provided in
Section 2.04(a).
"Tranche A Percentage" shall mean for each Bank the percentage
obtained by dividing such Bank's Tranche A Commitment by the Total Tranche
A Commitment, PROVIDED that if the Total Tranche A Commitment has been<PAGE>
terminated, the Tranche A Percentage of each Bank shall be determined by
dividing such Bank's Tranche A Commitment immediately prior to such
termination by the Total Tranche A Commitment immediately prior to such
termination.
"Tranche A Unpaid Drawing" shall have the meaning provided in
Section 2.03(a).
"Tranche B Bank" shall meany any Bank with a Tranche B
Commitment.
"Tranche B Commitment" shall mean, with respect to each Bank,
the amount set forth opposite such Bank's name in Annex I directly below
the column entitled "Tranche B Commitment" as the same may be (i) reduced
from time to time pursuant to Sections 3.02(a), 3.03, and/or 9 or (ii)
adjusted from time to time as a result of (x) assignments to or from such
Bank pursuant to Section 12.04.
"Tranche B Facility" shall mean the credit facility made
available to Borrower B hereunder, as evidenced by the Total Tranche B
Commitment.
"Tranche B Loans" shall have the meaning provided in Section
1.01(b) of this Agreement.
"Tranche B Note" shall have the meaning provided in Section
1.05(a).
"Tranche B Outstandings" shall have the meaning provided in
Section 1.01(d).
"Tranche C Bank" shall mean any Bank with a Tranche C
Commitment.
"Tranche C Commitment" shall mean, with respect to each Bank,
the amount set forth opposite such Bank's name in Annex I directly below
the column entitled "Tranche C Commitment" as the same may be (i) reduced
from time to time pursuant to Sections 3.02(a), 3.03, and/or 9 or (ii)
adjusted from time to time as a result of assignments to or from such Bank
pursuant to Section 12.04 or (iii) an election of Borrower C and Borrower
A under Section 3.02(b).
"Tranche C Facility" shall mean the credit facility made
available to Borrower C hereunder, as evidenced by the Total Tranche C
Commitment.
"Tranche C Letter of Credit" shall have the meaning provided in
Section 2.01(a).
"Tranche C Letter of Credit Outstandings" shall mean, at any
time, the sum of, without duplication, (i) the aggregate Stated Amount of
all outstanding Tranche C Letters of Credit and (ii) the aggregate amount
of all Unpaid Drawings not theretofore repaid in respect of all Tranche C
Letters of Credit.
"Tranche C Loans" shall have the meaning provided in Section
1.01(c) of this Agreement.<PAGE>
"Tranche C Note" shall have the meaning provided in Section
1.05(a).
"Tranche C Participant" shall have the meaning provided in
Section 2.04(b).
"Tranche C Percentage" shall mean for each Bank the percentage
obtained by dividing such Bank's Tranche C Commitment by the Total Tranche
C Commitment, PROVIDED that if the Total Tranche C Commitment has been
terminated, the Tranche C Percentage of each Bank shall be determined by
dividing such Bank's Tranche C Commitment immediately prior to such
termination by the Total Tranche C Commitment immediately prior to such
termination.
"Tranche C Unpaid Drawing" shall have the meaning provided in
Section 2.03(a).
"Type" shall mean any type of Loan determined with respect to
the interest option applicable thereto, i.e., a Base Rate Loan or
Eurodollar Loan.
"UCC" shall mean the Uniform Commercial Code.
"UK Payment Office" shall mean Christiania Bank og Kreditkasse,
London Branch, London, England for the account of Christiania Bank og
Kreditkasse, New York Branch, Account No. 06543101, Ref: ENSCO Loan (or
such other account as the Administrative Agent may designate.
"Unpaid Drawing" shall have the meaning provided in Section
2.03(a).
"Unrestricted Subsidiary" shall mean any direct or indirect
Subsidiary of Holdings (other than a Restricted Subsidiary) which is the
obligor with respect to exclusively Non-Recourse Indebtedness.
"Unutilized Commitment" for each Bank with a Commitment under
the respective Tranche, shall mean the excess of (i) the Commitment of
such Bank under such Tranche over (ii) the sum of (x) the aggregate out-
standing principal amount of Loans made by such Bank under such Tranche
plus, in the case of the Tranche A Facility and the Tranche C Facility,
(y) an amount equal to such Bank's Adjusted Tranche A Percentage or
Adjusted Tranche C Percentage, whichever the case may be, of the Tranche A
Letter of Credit Outstandings or the Tranche C Letter of Credit
Outstandings, respectively, at such time.
"US Borrower" shall mean and include Borrower A and Borrower C.
"US Dollar Equivalent" shall mean, at the time of determination
thereof, the amount of US Dollars necessary to purchase the required
amount of Pounds Sterling at the spot exchange rate therefor as quoted by
the Administrative Agent as of 11:00 A.M. (London time) on the date two
(2) Business Days prior to the date of any determination thereof.
"US Dollar Loan" shall mean any Loan denominated in US Dollars.
"US Dollars" and "$" shall mean freely transferable lawful money
of the United States.<PAGE>
"US Fleet Mortgage" shall have the meaning provided in Section
5.08(a).
"US Payment Office" shall mean The Bank of New York, New York,
(ABA 021000018) for the account of Christiania Bank og Kreditkasse, New
York Branch, Account No. 8026120277, Ref: ENSCO Loan.
"US Rigs" shall mean the following offshore drilling vessels:
Name Official No.
-------- -----------
ENSCO 68 574668
ENSCO 81 606512
ENSCO 82 602912
ENSCO 83 605536
ENSCO 84 637544
ENSCO 86 643110
ENSCO 87 648969
ENSCO 88 645637
ENSCO 89 652440
ENSCO 90 647859
ENSCO 93 651385
ENSCO 94 638685
ENSCO 95 642112
ENSCO 98 589096
ENSCO 99 682070
"Voting Stock" shall mean, with respect to any corporation, the
outstanding stock of all classes (or equivalent interests) which
ordinarily, in the absence of contingencies, entitles holders thereof to
vote for the election of directors (or Persons performing similar
functions) of such corporation, even though the right so to vote has been
suspended by the happening of such a contingency.
"Wholly-Owned Subsidiary" of any Person shall mean any
Subsidiary of such Person to the extent all of the capital stock or other
ownership interests in such Subsidiary, other than directors' qualifying
shares or shares held by a nominee or in trust for such Person, is owned
directly or indirectly by such Person.
"Working Capital Ratio" shall mean the ratio of Consolidated
Current Assets to Consolidated Current Liabilities.
"Written" or "in writing" shall mean any form of written
communication or a communication by means of telex or facsimile
transmission.
SECTION 11. THE ADMINISTRATIVE AGENT AND THE SECURITY TRUSTEE.
11.01 Appointment of the Administrative Agent and the Security
Trustee. (a) The Banks hereby designate Christiania Bank og Kreditkasse,
New York Branch as Administrative Agent to act as specified herein and in
the other Credit Documents. Each Bank hereby irrevocably authorizes, and
each holder of any Note by the acceptance of such Note shall be deemed
irrevocably to authorize, the Administrative Agent to take such action on
its behalf under the provisions of this Agreement, the other Credit<PAGE>
Documents and any other instruments and agreements referred to herein or
therein and to exercise such powers and to perform such duties hereunder
and thereunder as are specifically delegated to or required of the
Administrative Agent by the terms hereof and thereof and such other powers
as are reasonably incidental thereto. The Administrative Agent may
perform any of its duties hereunder by or through its respective officers,
directors, agents, employees or Affiliates.
(b) Each of the Banks irrevocably appoints Christiania Bank og
Kreditkasse, New York Branch as Security Trustee solely for the purpose of
holding legal title to the US Fleet Mortgage on behalf of the Banks with
regard to the (i) security, powers, rights, titles, benefits and interests
(both present and future) constituted by and conferred on the Banks or any
of them or for the benefit thereof under or pursuant to the US Fleet
Mortgage (including, without limitation, the benefit of all covenants,
undertakings, representations, warranties and obligations given, made or
undertaken to any Bank in the US Fleet Mortgage), (ii) all moneys,
property and other assets paid or transferred to or vested in any Bank or
any agent of any Bank or received or recovered by any Bank or any agent of
any Bank pursuant to, or in connection with, the US Fleet Mortgage,
whether from any Borrower or any Guarantor or any other Person and (iii)
all money, investments, property and other assets at any time representing
or deriving from any of the foregoing, including all interest, income and
other sums at any time received or receivable by any Bank or any agent of
any Bank in respect of the same (or any part thereof). CBK hereby accepts
such appointment as Security Trustee.
(c) For purposes of this Section 11, the term "Administrative
Agent" shall include CBK in its capacity as Collateral Agent,
Administrative Agent and Security Trustee.
11.02 Nature of Duties. The Administrative Agent shall not
have any duties or responsibilities except those expressly set forth in
this Agreement and the other Credit Documents. Neither the Administrative
Agent nor any of its respective officers, directors, agents, employees or
Affiliates shall be liable for any action taken or omitted by it or them
hereunder or under any other Credit Document or in connection herewith or
therewith, unless caused by its or their gross negligence or willful
misconduct. The duties of the Administrative Agent shall be mechanical
and administrative in nature; the Administrative Agent shall not have by
reason of this Agreement or any other Credit Document a fiduciary
relationship in respect of any Bank or the holder of any Note; and nothing
in this Agreement or any other Credit Document, expressed or implied, is
intended to or shall be so construed as to impose upon the Administrative
Agent any obligations in respect of this Agreement or any other Credit
Document except as expressly set forth herein or therein.
11.03 Lack of Reliance on the Administrative Agent. Independ-
ently and without reliance upon the Administrative Agent, each Bank and
the holder of each Note, to the extent it deems appropriate, has made and
shall continue to make (i) its own independent investigation of the
financial condition and affairs of Holdings and its Subsidiaries in
connection with the making and the continuance of the Loans and issuance
and/or participation in Letters of Credit and the taking or not taking of
any action in connection herewith and (ii) its own appraisal of the
creditworthiness of Holdings and its Subsidiaries and, except as expressly
provided in this Agreement, the Administrative Agent shall not have any<PAGE>
duty or responsibility, either initially or on a continuing basis, to
provide any Bank or the holder of any Note with any credit or other
information with respect thereto, whether coming into its possession
before the making of the Loans or at any time or times thereafter. The
Administrative Agent shall not be responsible to any Bank or the holder of
any Note for any recitals, statements, information, representations or
warranties herein or in any document, certificate or other writing
delivered in connection herewith or for the execution, effectiveness,
genuineness, validity, enforceability, perfection, collectibility, prior-
ity or sufficiency of this Agreement or any other Credit Document or the
financial condition of Holdings and its Subsidiaries or be required to
make any inquiry concerning either the performance or observance of any of
the terms, provisions or conditions of this Agreement or any other Credit
Document, or the financial condition of Holdings and its Subsidiaries or
the existence or possible existence of any Default or Event of Default.
11.04 Certain Rights of the Administrative Agent. If the
Administrative Agent shall request instructions from the Required Banks
with respect to any act or action (including failure to act) in connection
with this Agreement or any other Credit Document, the Administrative Agent
shall be entitled to refrain from such act or taking such action unless
and until the Administrative Agent shall have received instructions from
the Required Banks; and the Administrative Agent shall not incur liability
to any Person by reason of so refraining. Without limiting the foregoing,
neither any Bank nor the holder of any Note shall have any right of action
whatsoever against the Administrative Agent as a result of the
Administrative Agent acting or refraining from acting hereunder or under
any other Credit Document in accordance with the instructions of the
Required Banks.
11.05 Reliance. The Administrative Agent shall be entitled to
rely, and shall be fully protected in relying, upon any note, writing,
resolution, notice, statement, certificate, telex, teletype or telecopier
message, cablegram, radiogram, order or other document or telephone
message signed, sent or made by any Person that the Administrative Agent
believed to be the proper Person, and, with respect to all legal matters
pertaining to this Agreement and any other Credit Document and its duties
hereunder and thereunder, upon advice of counsel selected by the
Administrative Agent (which may be counsel for Holdings and/or any
Borrower).
11.06 Indemnification. To the extent the Administrative Agent
is not reimbursed and indemnified by any Borrower, the Banks will
reimburse and indemnify the Administrative Agent, in proportion to their
respective "percentages" as used in determining the Required Banks, for
and against any and all liabilities, obligations, losses, damages,
penalties, claims, actions, judgments, suits, costs, expenses or dis-
bursements of whatsoever kind or nature which may be imposed on, asserted
against or incurred by the Administrative Agent in performing its
respective duties hereunder or under any other Credit Document, in any way
relating to or arising out of this Agreement or any other Credit Document;
PROVIDED that no Bank shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, claims, actions, judgments,
suits, costs, expenses or disbursements resulting from the Administrative
Agent's gross negligence or willful misconduct.<PAGE>
11.07 The Administrative Agent in Its Individual Capacity.
With respect to its obligation to make Loans under this Agreement, the
Administrative Agent shall have the rights and powers specified herein for
a "Bank" and may exercise the same rights and powers as though it were not
performing the duties specified herein; and the term "Banks," "Required
Banks," "holders of Notes" or any similar terms shall, unless the context
clearly otherwise indicates, include the Administrative Agent in its indi-
vidual capacity. The Administrative Agent may accept deposits from, lend
money to, and generally engage in any kind of banking, trust or other
business with Holdings or its Subsidiaries or any Affiliate thereof as if
it were not performing the duties specified herein, and may accept fees
and other consideration from Holdings or any of its Subsidiaries for ser-
vices in connection with this Agreement and otherwise without having to
account for the same to the Banks.
11.08 Holders. The Administrative Agent may deem and treat the
payee of any Note as the owner thereof for all purposes hereof unless and
until a written notice of the assignment, transfer or endorsement thereof,
as the case may be, shall have been filed with the Administrative Agent.
Any request, authority or consent of any Person who, at the time of making
such request or giving such authority or consent, is the holder of any
Note shall be conclusive and binding on any subsequent holder, transferee,
assignee or indorsee, as the case may be, of such Note or of any Note or
Notes issued in exchange therefor.
11.09 Resignation by the Administrative Agent. (a) The
Administrative Agent may resign from the performance of all its functions
and duties hereunder and/or under the other Credit Documents at any time
by giving 15 Business Days' prior written notice to the Borrowers and the
Banks. Such resignation shall take effect upon the appointment of a
successor Administrative Agent pursuant to clauses (b) and (c) below or as
otherwise provided below.
(b) Upon any such notice of resignation, the Required Banks
shall appoint a successor Administrative Agent hereunder or thereunder who
shall be a commercial bank or trust company reasonably acceptable to the
Borrowers.
(c) If a successor Administrative Agent shall not have been so
appointed within such 15 Business Day period, the Administrative Agent,
with the consent of the Borrowers, shall then appoint a successor
Administrative Agent who shall serve as Administrative Agent hereunder or
thereunder until such time, if any, as the Required Banks appoint a suc-
cessor Administrative Agent as provided above.
(d) If no successor Administrative Agent has been appointed
pursuant to clause (b) or (c) above by the 20th Business Day after the
date such notice of resignation was given by the Administrative Agent, the
Administrative Agent's resignation shall become effective and the Required
Banks shall thereafter perform all the duties of the Administrative Agent
hereunder and/or under any other Credit Document until such time, if any,
as the Required Banks appoint a successor Administrative Agent as provided
above.
SECTION 12. MISCELLANEOUS.<PAGE>
12.01 Payment of Expenses, etc. The Borrowers agree to: (i)
whether or not the transactions herein contemplated are consummated, pay
all reasonable out-of-pocket costs and expenses of the Administrative
Agent in connection with the negotiation, preparation, execution and
delivery of the Credit Documents and the documents and instruments
referred to therein and any amendment, waiver or consent relating thereto
(including, without limitation, the reasonable fees and disbursements of
White & Case and special maritime counsel Watson, Farley & Williams) and
of the Administrative Agent and the Collateral Agent and, after the occur-
rence and during the continuance of an Event of Default, each of the Banks
in connection with the enforcement of the Credit Documents and the
documents and instruments referred to therein (including, without
limitation, the actual reasonable fees and disbursements of counsel for
the Administrative Agent and, after the occurrence and during the
continuance of an Event of Default for each of the Banks); (ii) pay and
hold each of the Banks harmless from and against any and all present and
future stamp and other similar taxes with respect to the foregoing matters
and save each of the Banks harmless from and against any and all lia-
bilities with respect to or resulting from any delay or omission (other
than to the extent attributable to such Bank) to pay such taxes; and (iii)
indemnify each Bank (including in its capacity as the Administrative
Agent, Letter of Credit Issuer Collateral Agent or Collateral Trustee),
its officers, directors, employees, representatives and agents from and
hold each of them harmless against any and all liabilities, obligations,
losses, damages, penalties, claims, actions, judgments, suits, costs,
expenses or disbursements of whatsoever kind or nature which may be im-
posed on, asserted against or incurred by any of them as a result of, or
arising out of, or in any way related to, or by reason of, (a) any
investigation, litigation or other proceeding (whether or not any Bank is
a party thereto) related to the entering into and/or performance of any
Credit Document or the use of the proceeds of any Loans hereunder or the
consummation of any transactions contemplated in any Credit Document,
whether initiated by any Borrower or any other Person, including, without
limitation, the actual reasonable fees and disbursements of counsel in-
curred in connection with any such investigation, litigation or other
proceeding (but excluding any such losses, liabilities, claims, damages or
expenses to the extent incurred by reason of the gross negligence or
willful misconduct of the Person to be indemnified) or (b) the actual or
alleged presence of Hazardous Materials in the air, surface water,
groundwater, surface or subsurface of any Real Property, offshore drilling
rig, facility, vessel or location at any time owned or operated by
Holdings or any of its Subsidiaries, the generation, storage, transporta-
tion or disposal of Hazardous Materials at any Real Property, offshore
drilling rig, facility, vessel or location at any time owned or operated
by Holdings or any of its Subsidiaries, the non-compliance of any Real
Property, offshore drilling rig, facility, vessel or location at any time
owned or operated by Holdings or any of its Subsidiaries with federal,
state and local laws, regulations, and ordinances (including applicable
permits thereunder) applicable to any such Real Property, offshore
drilling rig, facility, vessel or location, or any Environmental Claim
asserted against Holdings, any of its Subsidiaries, or any Real Property,
offshore drilling rig, facility, vessel or location at any time owned or
operated by Holdings or any of its Subsidiaries, including, in each case,
without limitation, the actual reasonable fees and disbursements of
counsel and other consultants incurred in connection with any such
investigation, litigation or other proceeding (but excluding any losses,
liabilities, claims, damages or expenses to the extent incurred by reason<PAGE>
of the gross negligence or willful misconduct of the Person to be
indemnified). To the extent that the undertaking to indemnify, pay or
hold harmless the Administrative Agent or any Bank set forth in the
preceding sentence may be unenforceable because it is violative of any law
or public policy, each Borrower shall make the maximum contribution to the
payment and satisfaction of each of the indemnified liabilities which is
permissible under applicable law.
12.02 Right of Setoff. In addition to any rights now or
hereafter granted under applicable law or otherwise, and not by way of
limitation of any such rights, if an Event of Default then exists, each
Bank is hereby authorized at any time or from time to time, without pre-
sentment, demand, protest or other notice of any kind to any Borrower or
to any other Person, any such notice being hereby expressly waived, to set
off and to appropriate and apply any and all deposits (general or special)
and any other Indebtedness at any time held or owing by such Bank
(including without limitation by branches and agencies of such Bank
wherever located) to or for the credit or the account of any Borrower
against and on account of the Obligations and liabilities of such Borrower
to such Bank under this Agreement or under any of the other Credit
Documents, including, without limitation, all interests in Obligations of
such Borrower purchased by such Bank pursuant to Section 12.06(b), and all
other claims of any nature or description arising out of or connected with
this Agreement or any other Credit Document, irrespective of whether or
not such Bank shall have made any demand hereunder and although said
Obligations, liabilities or claims, or any of them, shall be contingent or
unmatured.
12.03 Notices. (a) Except as otherwise expressly provided
herein, all notices and other communications provided for hereunder shall
be in writing (including telex or telecopier communication) and mailed,
telecopied or delivered, if to Holdings or its Subsidiaries, at the
address specified opposite its signature below or in the other relevant
Credit Documents, as the case may be; if to any Bank, at its address
specified for such Bank on Annex II; or, at such other address as shall be
designated by any party in a written notice to the other parties hereto.
All such notices and communications shall be effective when received.
(b) Without in any way limiting the obligation of any Borrower
to confirm in writing any telephonic notice permitted to be given
hereunder, the Administrative Agent may, prior to receipt of written con-
firmation, act without liability upon the basis of such telephonic notice
believed by the Administrative Agent in good faith to be from an
Authorized Officer of any Borrower. In each such case, the Borrowers
hereby waive the right to dispute the Administrative Agent's record of the
terms of such telephonic notice.
12.04 Benefit of Agreement. (a) This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the
respective successors and assigns of the parties hereto, PROVIDED that the
Borrowers may not assign or transfer any of their rights or obligations
hereunder without the prior written consent of the Banks. Each Bank may
at any time grant participations in any of its rights hereunder or under
any of the Notes to another financial institution, PROVIDED that in the
case of any such participation, the participant shall not have any rights
under this Agreement or any of the other Credit Documents (the
participant's rights against such Bank in respect of such participation to<PAGE>
be those set forth in the agreement executed by such Bank in favor of the
participant relating thereto) and all amounts payable by the Borrowers
hereunder shall be determined as if such Bank had not sold such partici-
pation, except that the participant shall be entitled to the benefits of
Sections 1.10 and 4.04 of this Agreement to the extent that such Bank
would be entitled to such benefits if the participation had not been
entered into or sold, and, PROVIDED FURTHER, that no Bank shall transfer,
grant or assign any participation under which the participant shall have
rights 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) extend the final scheduled maturity of any Loan or Note in which such
participant is participating (it being understood that any waiver of the
application of any prepayment or the method of any application of any
prepayment to, the Scheduled Commitment Reductions shall not constitute an
extension of the final maturity date), or reduce the rate or extend the
time of payment of interest or Fees thereon (except in connection with a
waiver of the applicability of any post-default increase in interest
rates), or reduce the principal amount thereof, or increase such
participant's participating interest in any Commitment over the amount
thereof then in effect (it being understood that a waiver of any
condition, covenant, Default or Event of Default or of a mandatory
reduction in the Total Commitment, or a mandatory prepayment, shall not
constitute a change in the terms of any Commitment), (ii) release all or
substantially all of the Collateral or (iii) consent to the assignment or
transfer by any Borrower of any of its rights and obligations under this
Agreement.
(b) Notwithstanding the foregoing, (x) any Bank may assign all
or a portion of its outstanding Commitment and its rights and obligations
hereunder to its Affiliate or to another Bank, and (y) with the consent of
the Administrative Agent and the affected Borrowers (which consent shall
not be unreasonably withheld), any Bank may assign all or a portion of its
outstanding Commitment and its rights and obligations hereunder to one or
more Eligible Transferees; PROVIDED that (subject to Section 4.04 hereof)
any such assignment must be made on a pro rata basis among the three
Tranches. No assignment pursuant to the immediately preceding sentence
shall to the extent such assignment represents an assignment to an
institution other than one or more Banks hereunder, be in an aggregate
amount less than $10,000,000 unless the entire Commitment of the assigning
Bank is so assigned. If any Bank so sells or assigns all or a part of its
rights hereunder or under the Notes, any reference in this Agreement or
the Notes to such assigning Bank shall thereafter refer to such Bank and
to the respective assignee to the extent of their respective interests and
the respective assignee shall have, to the extent of such assignment
(unless otherwise provided therein), the same rights and benefits as it
would if it were such assigning Bank. Each assignment pursuant to this
Section 12.04(b) shall be effected by the assigning Bank and the assignee
Bank executing an Assignment and Assumption Agreement. In the event of
any such assignment (x) to a commercial bank or other financial
institution not previously a Bank hereunder, either the assigning or the
assignee Bank shall pay to the Administrative Agent a nonrefundable
assignment fee of $3,500 and (y) to a Bank, either the assigning or
assignee Bank shall pay to the Administrative Agent a nonrefundable
assignment fee of $1,500, and at the time of any assignment pursuant to
this Section 12.04(b), (i) Annex I shall be deemed to be amended to
reflect the respective Commitments of the assignee (which shall result in
a direct reduction to the Commitment of the assigning Bank) and of the<PAGE>
other Banks, and (ii) if any such assignment occurs after the Restatement
Effective Date, if requested by the assigning Bank and the assignee Bank,
the Borrowers will issue new Notes to the respective assignee and to the
assigning Bank in conformity with the requirements of Section 1.05 and the
assigning Bank will return the cancelled Notes to the appropriate
Borrower. Each Bank and the Borrowers agree to execute such documents
(including, without limitation, amendments to this Agreement and the other
Credit Documents) as shall be necessary to effect the foregoing. Nothing
in this clause (b) shall prevent or prohibit any Bank from pledging its
Notes or Loans to a Federal Reserve Bank in support of borrowings made by
such Bank from such Federal Reserve Bank.
(c) Notwithstanding any other provisions of this Section 12.04,
no transfer or assignment of the interests or obligations of any Bank
hereunder or any grant of participation therein shall be permitted if such
transfer, assignment or grant would require Holdings or any Borrower to
file a registration statement with the SEC or to qualify the Loans under
the "Blue Sky" laws of any State.
(d) Each Bank initially party to this Agreement hereby
represents, and each Person that became a Bank pursuant to an assignment
permitted by this Section 12 will, upon its becoming party to this
Agreement, represent that it is a commercial lender, other financial
institution or other "accredited" investor (as defined in SEC Regulation
D) which makes loans in the ordinary course of its business and that it
will make or acquire Loans for its own account in the ordinary course of
such business, PROVIDED that subject to the preceding clauses (a) and (b),
the disposition of any promissory notes or other evidences of or interests
in Indebtedness held by such Bank shall at all times be within its
exclusive control.
12.05 No Waiver; Remedies Cumulative. No failure or delay on
the part of the Administrative Agent or any Bank in exercising any right,
power or privilege hereunder or under any other Credit Document and no
course of dealing between the Credit Parties and the Administrative Agent
or any Bank shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, power or privilege hereunder or under any
other Credit Document preclude any other or further exercise thereof or
the exercise of any other right, power or privilege hereunder or
thereunder. The rights and remedies herein expressly provided are
cumulative and not exclusive of any rights or remedies which the
Administrative Agent or any Bank would otherwise have. No notice to or
demand on any Credit Party in any case shall entitle such Credit Party to
any other or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of the Administrative Agent or the Banks
to any other or further action in any circumstances without notice or
demand.
12.06 Payments Pro Rata. (a) The Administrative Agent agrees
that promptly after its receipt of each payment from or on behalf of any
Credit Party in respect of any Obligations of the Borrowers or any other
Credit Party hereunder, it shall distribute such payment to the Banks
(other than any Bank that has expressly waived its right to receive its
pro rata share thereof) pro rata based upon their respective shares, if
any, of the Obligations with respect to which such payment was received.<PAGE>
(b) Each of the Banks agrees that, if it should receive any
amount hereunder (whether by voluntary payment, by realization upon
security, by the exercise of the right of setoff or banker's lien, by
counterclaim or cross action, by the enforcement of any right under the
Credit Documents, or otherwise) which is applicable to the payment of the
principal of, or interest on, the Loans, Unpaid Drawings or Fees, of a sum
which with respect to the related sum or sums received by other Banks is
in a greater proportion than the total of such Obligation then owed and
due to such Bank bears to the total of such Obligation then owed and due
to all of the Banks in accordance with their respective Commitments
immediately prior to such receipt, then such Bank receiving such excess
payment shall purchase for cash without recourse or warranty from the
other Banks an interest in the Obligations of the Borrowers or any other
Credit Party, respectively, to such Banks in such amount as shall result
in a proportional participation by all of the Banks in accordance with
their respective Commitments in such amount, PROVIDED that if all or any
portion of such excess amount is thereafter recovered from such Bank, such
purchase shall be rescinded and the purchase price restored to the extent
of such recovery, but without interest.
(c) Notwithstanding anything to the contrary contained herein,
the provisions of the preceding Sections 12.06(a) and (b) shall be subject
to the express provisions of this Agreement which require, or permit,
differing payments to be made to Non-Defaulting Banks as opposed to
Defaulting Banks.
12.07 Calculations; Computations. (a) The financial
statements to be furnished to the Banks pursuant hereto shall be made and
prepared in accordance with GAAP consistently applied throughout the
periods involved (except as set forth in the notes thereto or as otherwise
disclosed in writing by Holdings or the Borrowers to the Banks), PROVIDED
that except as otherwise specifically provided herein, all computations
determining compliance with Section 8, including definitions used therein,
shall utilize accounting principles and policies in effect at the time of
the preparation of, and in conformity with those used to prepare, the
September 30, 1996 historical financial statements of Holdings delivered
to the Banks pursuant to Section 6.09(b), except as otherwise amended or
modified in accordance with GAAP.
(b) All computations of interest and fees hereunder shall be
made (i) with respect to Pound Sterling Loans and US Dollar Loans
maintained as Base Rate Loans, on the actual number of days elapsed over a
year of 365 days and (ii) with respect to US Dollar Loans maintained as
Eurodollar Loans, on the actual number of days elapsed over a year of 360
days.
12.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER
OF JURY TRIAL. (a) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE
CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF
NEW YORK. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT
OR ANY OTHER CREDIT DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF
NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK,
AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, HOLDINGS AND EACH OF THE
BORROWERS HEREBY IRREVOCABLY ACCEPT FOR THEMSELVES AND IN RESPECT OF THEIR
PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID
COURTS. HOLDINGS AND THE BORROWERS FURTHER IRREVOCABLY CONSENT TO THE<PAGE>
SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH
ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, TO SUCH BORROWER LOCATED OUTSIDE NEW YORK
CITY AND BY HAND DELIVERY TO SUCH BORROWER IF LOCATED WITHIN NEW YORK
CITY, AT ITS ADDRESS FOR NOTICES PURSUANT TO SECTION 12.03, SUCH SERVICE
TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL
AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT, ANY BANK OR THE HOLDER OF
ANY NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO
COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST HOLDINGS OR ANY
BORROWER IN ANY OTHER JURISDICTION.
(b) HOLDINGS AND THE BORROWERS HEREBY IRREVOCABLY WAIVE ANY
OBJECTION WHICH THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF
ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN THE
COURTS REFERRED TO IN CLAUSE (A) ABOVE AND HEREBY FURTHER IRREVOCABLY
WAIVE AND AGREE NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH
ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.
(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER
CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
12.09 Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an
original, but all of which shall together constitute one and the same
instrument. A set of counterparts executed by all the parties hereto
shall be lodged with the Borrowers and the Administrative Agent.
12.10 Effectiveness. This Agreement shall become effective on
the date (the "Restatement Effective Date") on which Holdings, the Parent,
the Borrowers and each of the Banks shall have signed a copy hereof
(whether the same or different copies) and shall have delivered the same
to the Administrative Agent at the Notice Office of the Administrative
Agent or, in the case of the Banks, shall have given to the Administrative
Agent telephonic (confirmed in writing), written telex or facsimile
transmission notice (actually received) at such office that the same has
been signed and mailed to it.
12.11 Headings Descriptive. The headings of the several
sections and subsections of this Agreement are inserted for convenience
only and shall not in any way affect the meaning or construction of any
provision of this Agreement.
12.12 Amendment or Waiver. (a) Neither this Agreement nor
any other Credit Document nor any terms hereof or thereof may be changed,
waived, discharged or terminated unless such change, waiver, discharge or
termination is in writing signed by all affected Borrowers and the
Required Banks, PROVIDED that no such change, waiver, discharge or termin-
ation shall, without the consent of each Bank (other than a Defaulting
Bank) affected thereby, (i) extend the Maturity Date (it being understood
that any waiver of the application of any prepayment of the Loans or the
method of application of any prepayment to the Scheduled Commitment
Reductions, shall not constitute any such extension), or reduce the rate<PAGE>
or extend the time of payment of interest (other than as a result of
waiving the applicability of any post-default increase in interest rates)
or Fees thereon, or reduce the principal amount thereof, (ii) increase the
Commitment of any Bank over the amount thereof then in effect (it being
understood that a waiver of any condition, covenant, Default or Event of
Default shall not constitute a change in the terms of any Commitment of
any Bank), (iii) release or permit the release of (x) any Mortgaged Rig
from the Lien of the respective Security Documents (except to the extent
such Mortgaged Rig is replaced in accordance with the proviso contained in
the definition of "Collateral Disposition") or (y) the Guaranty of
Holdings, Borrower A and the Parent pursuant to Section 13 or (except, in
the case of both (x) and (y) above, as expressly provided in the Credit
Documents), (iv) amend, modify or waive any provision of this Section
12.12 or the proviso contained in the definition of "Collateral
Disposition", (v) reduce the percentage specified in the definition of
Required Banks (except that, with the consent of the Required Banks,
additional extensions of credit pursuant to this Agreement may be included
in the determination of Required Banks on substantially the same basis as
the Commitments (and related extensions of credit) are included on the
Restatement Effective Date), (vi) consent to the assignment or transfer by
any Borrower of any of its rights and obligations under this Agreement or
(vii) waive, change the timing or amount of, or extend any mandatory
reduction in the Total Commitment including, without limitation, a
Scheduled Commitment Reduction. No provision of Sections 2 or 11, or any
other provisions relating to the Letter of Credit Issuer or the
Administrative Agent may be modified without the consent of the
Administrative Agent.
(b) If, in connection with any proposed change, waiver,
discharge or termination to any of the provisions of this Agreement as
contemplated by clauses (i) through (vii), inclusive, of the proviso to
Section 12.12(a), the consent of the Required Banks is obtained but the
consent of one or more of such other Banks whose consent is required is
not obtained, then the Borrowers shall have the right to replace each such
non-consenting Bank or Banks (so long as all non-consenting Banks are so
replaced) with one or more Replacement Banks pursuant to Section 1.13 so
long as at the time of such replacement, each such Replacement Bank
consents to the proposed change, waiver, discharge or termination;
PROVIDED that the Borrowers shall not have the right to replace a Bank
solely as a result of the exercise of such Bank's rights (and the
withholding of any required consent by such Bank) pursuant to Section
12.12(a)(ii).
12.13 Survival. All indemnities set forth herein including,
without limitation, in Section 1.10, 1.11, 2.05, 4.04, 11.06 or 12.01
shall survive the execution and delivery of this Agreement and the making
and repayment of the Loans.
12.14 Domicile of Loans. Each Bank may transfer and carry its
Loans at, to or for the account of any branch office, subsidiary or
Affiliate of such Bank, PROVIDED that the Borrowers shall not be
responsible for costs arising under Section 1.10 or 4.04 resulting from
any such transfer (other than a transfer pursuant to Section 1.12(a)) to
the extent not otherwise applicable to such Bank prior to such transfer.
12.15 Confidentiality. Subject to Section 12.04, the Banks
shall hold all non-public information obtained pursuant to the require-<PAGE>
ments of this Agreement in accordance with its customary procedure for
handling confidential information of this nature and in accordance with
safe and sound banking practices and in any event may make disclosure
reasonably required by any bona fide transferee or participant in connec-
tion with the contemplated transfer of any Loans or participation therein
(so long as such transferee or participant agrees to be bound by the
provisions of this Section 12.15) or as required or requested by any
governmental agency or representative thereof or pursuant to legal pro-
cess, PROVIDED that, unless specifically prohibited by applicable law or
court order, each Bank shall notify the Borrowers of any request by any
governmental agency or representative thereof (other than any such request
in connection with an examination of the financial condition of such Bank
by such governmental agency) for disclosure of any such non-public
information prior to disclosure of such information, and provided further
that in no event shall any Bank be obligated or required to return any
materials furnished by Holdings or any Subsidiary.
12.16 Registry. The Borrowers hereby designate the
Administrative Agent to serve as the Borrowers' agent, solely for purposes
of this Section 12.16, to maintain a register (the "Register") on which it
will record the Commitments from time to time of each of the Banks, the
Loans made by each of the Banks and each repayment in respect of the
principal amount of the Loans of each Bank. Failure to make any such
recordation, or any error in such recordation shall not affect the
Borrowers' obligations in respect of such Loans. With respect to any
Bank, the transfer of the Commitments of such Bank and the rights to the
principal of, and interest on, any Loan made pursuant to such Commitments
shall not be effective until such transfer is recorded on the Register
maintained by the Administrative Agent with respect to ownership of such
Commitments and Loans and prior to such recordation all amounts owing to
the transferor with respect to such Commitments and Loans shall remain
owing to the transferor. The registration of assignment or transfer of
all or part of any Commitments and Loans shall be recorded by the
Administrative Agent on the Register only upon the acceptance by the
Administrative Agent of a properly executed and delivered Assignment and
Assumption Agreement pursuant to Section 12.04(b). Coincident with the
delivery of such an Assignment and Assumption Agreement to the
Administrative Agent for acceptance and registration of assignment or
transfer of all or part of a Loan, or as soon thereafter as practicable,
the assigning or transferor Bank shall surrender the Note evidencing such
Loan, and thereupon one or more new Notes in the same aggregate principal
amount shall be issued to the assigning or transferor Bank and/or the new
Bank.
12.17 Designated Senior Indebtedness. Borrower C and each of
its Subsidiaries hereby designates its obligations under this Agreement
and the other Credit Documents as "Designated Senior Indebtedness" for
purposes of, and as defined in the Dual Indenture.
SECTION 13. GUARANTY.
13.01 The Guaranty. In order to induce the Banks to enter
into this Agreement and to extend credit hereunder and in recognition of
the direct benefits to be received by Holdings, the Parent and Borrower A
from the proceeds of the Loans and the issuance of the Letters of Credit,
Holdings, the Parent and Borrower A hereby agree with the Banks as
follows: (i) each of Holdings and the Parent hereby jointly and<PAGE>
severally, unconditionally and irrevocably guarantees as primary obligor
and not merely as surety the full and prompt payment when due, whether
upon maturity, by acceleration or otherwise, of any and all of the
Guaranteed Obligations of each of the Borrowers to the Secured Creditors,
and if any or all of the Guaranteed Obligations of any Borrower to the
Secured Creditors becomes due and payable hereunder, each of Holdings and
the Parent unconditionally promises to pay such indebtedness to the
Secured Creditors, on order or demand, together with any and all
reasonable expenses which may be incurred by the Administrative Agent or
the Secured Creditors in collecting any of the Guaranteed Obligations and
(ii) Borrower A hereby jointly and severally with the corresponding
obligations of Holdings and the Parent (subject to the operation of
Section 2.03(b)(i)), unconditionally and irrevocably guarantees as primary
obligor and not merely as surety the full and prompt payment when due,
whether upon maturity, by acceleration or otherwise, of any and all of the
Guaranteed Obligations of Borrower B and Borrower C to the Secured
Creditors, and if any or all of the Guaranteed Obligations of Borrower B
and Borrower C to the Secured Creditors becomes due and payable hereunder,
Borrower A unconditionally promises to pay such indebtedness to the
Secured Creditors, on order or demand, together with any and all
reasonable expenses which may be incurred by the Administrative Agent or
the Secured Creditors in collecting any of the Guaranteed Obligations.
13.02 Bankruptcy. Additionally, each of Holdings, the Parent
and Borrower A unconditionally and irrevocably guarantees the payment of
any and all of the Guaranteed Obligations of (i) in the case of Holdings
and the Parent, each of the Borrowers and (ii) in the case of Borrower A,
Borrower B and Borrower C, to the Secured Creditors whether or not then
due or payable by such Persons upon the occurrence in respect of such
Persons of any of the events specified in Section 9.05, and uncondition-
ally and irrevocably promises to pay such Guaranteed Obligations to the
Secured Creditors, on order, or demand, in lawful money of the United
States. The guaranty by Holdings, the Parent and Borrower A of the
payment of any and all of the Guaranteed Obligations hereunder shall
constitute a guaranty of payment, and not of collection.
13.03 Nature of Liability. The liability of Holdings, the
Parent and Borrower A hereunder is exclusive and independent of any
security for or other guaranty of the Guaranteed Obligations of any
Borrower whether executed by Holdings, the Parent and Borrower A, any
other guarantor or by any other party, and the liability of Holdings, the
Parent and Borrower A hereunder shall not be affected or impaired by (a)
any direction as to application of payment by any Borrower or by any other
party, or (b) any other continuing or other guaranty, undertaking or
maximum liability of a guarantor or of any other party as to the
Guaranteed Obligations of any Borrower, or (c) any payment on or in
reduction of any such other guaranty or undertaking, or (d) any dissol-
ution, termination or increase, decrease or change in personnel by any
Borrower, or (e) any payment made to the Administrative Agent or the
Secured Creditors on the indebtedness which the Administrative Agent or
such Secured Creditors repays to any Borrower pursuant to court order in
any bankruptcy, reorganization, arrangement, moratorium or other debtor
relief proceeding, and Holdings, the Parent and Borrower A waive any right
to the deferral or modification of its obligations hereunder by reason of
any such proceeding.<PAGE>
13.04 Independent Obligation. The obligations of Holdings,
the Parent and Borrower A hereunder are independent of the obligations of
any other guarantor or any Borrowers, and a separate action or actions may
be brought and prosecuted against Holdings, the Parent and Borrower A whe-
ther or not action is brought against any other guarantor or any Borrower
and whether or not any other guarantor or any Borrower be joined in any
such action or actions. Holdings, the Parent and Borrower A waive, to the
fullest extent permitted by law, the benefit of any statute of limitations
affecting its liability hereunder or the enforcement thereof. Any payment
by any Borrower or other circumstance which operates to toll any statute
of limitations as to such Borrower or Borrowers shall operate to toll the
statute of limitations as to Holdings, the Parent and Borrower A.
13.05 Waiver of Notice, etc. Holdings, the Parent and Borrower
A hereby waive notice of acceptance of this Guaranty and notice of any
liability to which it may apply, and waive promptness, diligence,
presentment, demand of payment, protest, notice of dishonor or nonpayment
of any such liabilities, suit or taking of other action by the
Administrative Agent, any Bank, the Letter of Credit Issuer, the
Collateral Agent or the Security Trustee against, and any other notice to,
any party liable thereon (including Holdings, the Parent and Borrower A,
any other guarantor or the Borrowers).
13.06 Authorization. Holdings, the Parent and Borrower A
authorize the Administrative Agent and the Secured Creditors without
notice or demand (except as shall be required by applicable statute and
cannot be waived), and without affecting or impairing their liability
hereunder, from time to time to:
(a) change the manner, place or terms of payment of, and/or
change or extend the time of payment of, renew, increase, accelerate
or alter, any of the Guaranteed Obligations (including any increase
or decrease in the rate of interest thereon), any security therefor,
or any liability incurred directly or indirectly in respect thereof,
and the Guaranty herein made shall apply to the Guaranteed
Obligations as so changed, extended, renewed or altered;
(b) take and hold security for the payment of the Guaranteed
Obligations and sell, exchange, release, surrender, realize upon or
otherwise deal with in any manner and in any order any property by
whomsoever at any time pledged or mortgaged to secure, or howsoever
securing, the Guaranteed Obligations or any liabilities (including
any of those hereunder) incurred directly or indirectly in respect
thereof or hereof, and/or any offset thereagainst;
(c) exercise or refrain from exercising any rights against any
Borrower or other Persons or otherwise act or refrain from acting;
(d) release or substitute any one or more endorsers,
guarantors, Borrowers or other obligors;
(e) settle or compromise any of the Guaranteed Obligations, any
security therefor or any liability (including any of those hereunder)
incurred directly or indirectly in respect thereof or hereof, and may
subordinate the payment of all or any part thereof to the payment of
any liability (whether due or not) of any Borrower to its creditors
other than the Banks;<PAGE>
(f) apply any sums by whomsoever paid or howsoever realized to
any liability or liabilities of any Borrower to the Secured Creditors
regardless of what liability or liabilities of Holdings, the Parent
and Borrower A or any Borrower remain unpaid;
(g) consent to or waive any breach of, or any act, omission or
default under, this Agreement or any of the instruments or agreements
referred to herein, or otherwise amend, modify or supplement this
Agreement or any of such other instruments or agreements; and/or
(h) take any other action which would, under otherwise
applicable principles of common law, give rise to a legal or
equitable discharge of Holdings, the Parent and Borrower A from its
liabilities under this Section 13.
13.07 Reliance. It is not necessary for the Administrative
Agent or the Secured Creditors to inquire into the capacity or powers of
any Borrower or its Subsidiaries or the officers, directors, partners or
agents acting or purporting to act on its behalf, and any Guaranteed
Obligations made or created in reliance upon the professed exercise of
such powers shall be guaranteed hereunder.
13.08 Subordination. Any of the indebtedness of any Borrower
relating to the Guaranteed Obligations now or hereafter owing to Holdings,
the Parent and Borrower A is hereby subordinated to the Guaranteed
Obligations of such Borrower owing to the Administrative Agent and the
Secured Creditors; and if the Administrative Agent so requests at a time
when an Event of Default exists, all such indebtedness relating to the
Guaranteed Obligations of any Borrower to Holdings, the Parent and
Borrower A shall be collected, enforced and received by Holdings, the
Parent and Borrower A for the benefit of the Secured Creditors and be paid
over to the Administrative Agent on behalf of the Secured Creditors on
account of the Guaranteed Obligations of such Borrower to the Secured
Creditors, but without affecting or impairing in any manner the liability
of Holdings, the Parent and Borrower A under the other provisions of this
Guaranty. Prior to the transfer by Holdings, the Parent and Borrower A of
any note or negotiable instrument evidencing any of the indebtedness
relating to the Guaranteed Obligations of any Borrower to any of Holdings,
the Parent and Borrower A, Holdings, the Parent or Borrower A shall mark
such note or negotiable instrument with a legend that the same is subject
to this subordination.
13.09 Waiver. (a) Each of Holdings, the Parent and Borrower
A waives any right (except as shall be required by applicable statute and
cannot be waived) to require the Administrative Agent or the Secured
Creditors to (i) proceed against any Borrower, any other guarantor or any
other party, (ii) proceed against or exhaust any security held from any
Borrower, any other guarantor or any other party or (iii) pursue any other
remedy in the Administrative Agent's or the Secured Creditors' power
whatsoever. Each of Holdings, the Parent and Borrower A waives any
defense based on or arising out of any defense of any Borrower, any other
guarantor or any other party, other than payment in full of the Guaranteed
Obligations, based on or arising out of the disability of such Borrower,
any other guarantor or any other party, or the unenforceability of the
Guaranteed Obligations or any part thereof from any cause, or the
cessation from any cause of the liability of such Borrower other than
payment in full of the Guaranteed Obligations. Subject to Section 13.10,<PAGE>
the Administrative Agent and the Secured Creditors may, at their election,
foreclose on any security held by the Administrative Agent, the Collateral
Agent or the Secured Creditors by one or more judicial or nonjudicial
sales, whether or not every aspect of any such sale is commercially
reasonable (to the extent such sale is permitted by applicable law), or
exercise any other right or remedy the Administrative Agent and the
Secured Creditors may have against any Borrower or any other party, or any
security, without affecting or impairing in any way the liability of
Holdings, the Parent and Borrower A hereunder except to the extent the
Guaranteed Obligations have been paid. Each of Holdings, the Parent and
Borrower A waives any defense arising out of any such election by the
Administrative Agent and the Secured Creditors, even though such election
operates to impair or extinguish any right of reimbursement or subrogation
or other right or remedy of Holdings, the Parent or Borrower A against any
Borrower or any other party or any security.
(b) Each of Holdings, the Parent and Borrower A waives all
presentments, demands for performance, protests and notices, including,
without limitation, notices of nonperformance, notices of protest, notices
of dishonor, notices of acceptance of this Guaranty, and notices of the
existence, creation or incurring of new or additional Guaranteed
Obligations. Each of Holdings, the Parent and Borrower A assumes all re-
sponsibility for being and keeping itself informed of the Borrowers'
financial condition and assets, and of all other circumstances bearing
upon the risk of nonpayment of the Guaranteed Obligations and the nature,
scope and extent of the risks which Holdings, the Parent or Borrower A
assumes and incurs hereunder, and agrees that the Administrative Agent and
the Secured Creditors shall have no duty to advise Holdings, the Parent or
Borrower A of information known to them regarding such circumstances or
risks.
13.10 Subrogation. Holdings, the Parent and Borrower A will
not exercise any rights which they may acquire by way of subrogation under
this Guaranty, by any payment made hereunder or otherwise, until all the
Guaranteed Obligations shall have been paid in full. If any amount shall
be paid to Holdings, the Parent or Borrower A on account of such
subrogation rights at any time when all the Guaranteed Obligations shall
not have been paid in full, such amount shall be forthwith paid to the
Administrative Agent on behalf of the Secured Creditors to be credited and
applied against the Guaranteed Obligations. If Holdings, the Parent and
Borrower A shall make payment to the Administrative Agent of all or any
part of the Guaranteed Obligations and all the Guaranteed Obligations
shall have been paid in full, the Administrative Agent and the Secured
Creditors will execute and deliver to Holdings, the Parent and/or Borrower
A appropriate documents, without recourse and without representation or
warranty, releasing this Guaranty and transferring to Holdings, the Parent
and/or Borrower A any and all rights the Administrative Agent and the
Secured Creditors may have against the Borrowers or necessary to evidence
the transfer by subrogation to Holdings, the Parent and Borrower A of any
interest in the Guaranteed Obligations resulting from such payment by
Holdings, the Parent and/or Borrower A.
* * * *
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Agreement to be duly executed and delivered as of the
date first above written.
Address: ENSCO INTERNATIONAL INCORPORATED
2700 Fountain Place
1445 Ross Avenue By /S/ ROBERT O. ISAAC
Dallas, Texas 75202 ---------------------------------
Attn: Chief Financial Officer Name: Robert O. Isaac
Telephone: (214) 922-1500 Title:
Facsimile: (214) 855-0300
ENSCO DELAWARE, INC.
By /S/ ROBERT O. ISAAC
---------------------------------
Name: Robert O. Isaac
Title:
ENSCO OFFSHORE COMPANY
By /S/ ROBERT O. ISAAC
---------------------------------
Name: Robert O. Isaac
Title:
ENSCO OFFSHORE U.K. LTD.
By /S/ ROBERT O. ISAAC
---------------------------------
Name: Robert O. Isaac
Title:<PAGE>
DUAL HOLDING COMPANY
By /S/ ROBERT O. ISAAC
---------------------------------
Name: Robert O. Isaac
Title: Asst. Secretary
CHRISTIANIA BANK OG KREDITKASSE, NEW YORK
BRANCH,
Individually and as Administrative Agent
By /S/ MARTIN LUNDER
---------------------------------
Name: Martin Lunder
Title: First Vice President
By /S/ HANS CHR. KJELSRUD
---------------------------------
Name: Hans Chr. Kjelsrud
Title: Vice President
DEN NORSKE BANK ASA, NEW YORK BRANCH,
Individually and as Co-Agent
By /S/ BARBARA GRONQUIST
---------------------------------
Name: Barbara Gronquist
Title: Vice President
By /S/ DICK H. FAGERSTAL
---------------------------------
Name: Dick H. Fagerstal
Title: First Vice President<PAGE>
BANQUE INDOSUEZ
By
---------------------------------
Name:
Title:
MEESPIERSON N.V.
By
---------------------------------
Name:
Title:<PAGE>
ANNEX I
-------
COMMITMENTS
-----------
Tranche A Tranche B Tranche C
Bank Commitment Commitment Commitment
---- ------------ ------------ -----------
Christiania Bank $ 36,250,000 $18,125,000 $18,125,000
Den norske Bank 36,250,000 18,125,000 18,125,000
Banque Indosuez 15,000,000 7,500,000 7,500,000
MeesPierson 2,500,000 6,250,000 6,250,000
Total $100,000,000 $50,000,000 $50,000,000
============ =========== ===========
<PAGE>
ANNEX II
--------
BANK ADDRESSES
--------------
Christiania Bank og Kreditkasse, 11 West 42nd Street
New York Branch 7th Floor
New York, NY 10036
Attn: Hans Chr. Kjelsrud
Tel. No.: (212) 827-4800
Fax No.: (212) 827-4888
Den norske Bank, 200 Park Avenue
New York Branch New York, NY 10166
Attn: Barbara Gronquist
Tel. No.: (212) 681-3859
Fax No.: (212) 681-3900
Banque Indosuez Representative Office Norway
Ruselokkveien 6
0120 Oslo, Norway
Attn: Mr. Bjorn Hundevadt-Gulbrandsen
Mr. Hans Jorgen Wibstad
Tel. No.: 011 47 22 83 30 50
Fax No.: 011 47 22 83 30 55
MeesPierson Camomile Court
23 Camomile Street
London EC3A 7PP
Attn: Harris Antoniou
Tel. No.: 44 171 444 8789
Fax No.: 44 171 444 8810<PAGE>
ANNEX III
---------
EXISTING LETTERS OF CREDIT
--------------------------
None<PAGE>
ANNEX IV
--------
ENSCO - FLEET VALUATION LIST
------------------------------
% of
RIG NAME TOTAL FMV FMV
-------- --------- --------------
ENSCO 68 3.95% $29,000,000.00
ENSCO 98 3.54% $26,000,000.00
ENSCO 83 3.68% $27,000,000.00
ENSCO 84 3.68% $27,000,000.00
ENSCO 86 3.95% $29,000,000.00
ENSCO 88 3.81% $28,000,000.00
ENSCO 89 3.95% $29,000,000.00
ENSCO 90 3.81% $28,000,000.00
ENSCO 93 4.02% $29,500,000.00
ENSCO 99 4.02% $29,500,000.00
ENSCO 94 3.81% $28,000,000.00
ENSCO 95 3.81% $28,000,000.00
ENSCO 51 4.77% $35,000,000.00
ENSCO 54 4.77% $35,000,000.00
ENSCO 81 5.45% $40,000,000.00
ENSCO 82 5.38% $39,000,000.00
ENSCO 87 5.59% $41,000,000.00
ENSCO 80 6.27% $46,000,000.00
ENSCO 85 6.13% $45,000,000.00
ENSCO 92 6.06% $44,500,000.00
ENSCO 50 4.77% $35,000,000.00
ENSCO 53 4.77% $35,000,000.00
TOTAL 100.00% $734,000,000.00<PAGE>
ANNEX V
-------
SUBSIDIARIES OF ENSCO INTERNATIONAL INCORPORATED
------------------------------------------------
The following list sets forth the name and jurisdiction of
incorporation of each "Subsidiary" (as that term is defined in the
Agreement) of ENSCO International Incorporated (other than certain
subsidiaries that, considered in the aggregate as a single subsidiary,
would not constitute a significant subsidiary) and the percentage of
voting securities owned by each Subsidiary's immediate parent.
Percentage
Percentage of Voting
of Voting Securities
Securities Owned by
Owned by Immediate
Registrant Parent
---------- ----------
ENSCO Drilling Company (Delaware) . . . . . . . . 100%
ENSCO Drilling (Caribbean), Inc. (Cayman Islands) 85%
ENSCO Drilling Venezuela, Inc. (Cayman Islands) 100%
*ENSCO Engineering Company (Delaware) . . . . . . . 100%
*ENSCO Holding Corporation (Delaware) . . . . . 100%
ENSCO Delaware, Inc. (Delaware) . . . . . . . 100%
*ENSCO Offshore Company (Delaware) . . . . . 100%
*ENSCO Offshore U.K. Limited (U.K.) . . . 100%
ENSCO Incorporated (Texas) . . . . . . . . . . . . 100%
ENSCO Limited (Cayman Islands) . . . . . . . . . . 100%
ENSCO Marine Company (Delaware) . . . . . . . . . 100%
ENSCO Oceanics Company (Delaware) . . . . . . . . 100%
ENSCO Netherlands Ltd. (Cayman Islands) . . . . 100%
Petroleum Finance Corporation (Cayman Islands) 100%
ENSCO Brazil Servicos de Petroleo Limitada (Brazil) 99%
ENSCO Drilling Company (Nigeria), Ltd. (Nigeria) 99%
ENSCO Acquisition Company (Delaware) . . . . . . . 100%
*Dual Holding Company . . . . . . . . . . . . . . . 100%
*ENSCO Offshore Company II . . . . . . . . . . . 100%
*ENSCO Qatar Company . . . . . . . . . . . . . 100%
*ENSCO Oceanics Company II . . . . . . . . . . . 100%
*ENSCO Maritime Limited . . . . . . . . . . . 100%
*Dual Drilling Arabia, Ltd. . . . . . . . . 50%
*ENSCO Asia Company II . . . . . . . . . . . . 100%
*P. T. Dual Perkasa Offshore . . . . . . . . 80%
*Sociedada Brasiliero de Perfuacoes . . . . 99%
*ENSCO Platform Company . . . . . . . . . . . . 100%
*Dual Drilling Nigeria Ltd. . . . . . . . . . 100%
*Dual Drilling de Venezuela . . . . . . . . . 100%
*ENSCO Platform AS . . . . . . . . . . . . . . . 100%
*ENSCO Malaysia Company . . . . . . . . . . . . 100%
*Sime ENSCO Sdn. Bhd. . . . . . . . . . . . . 49%
*Sime Dual Drilling Ltd. . . . . . . . . . . . 100%
* Denotes a "Restricted Subsidiary", as that term is defined in the
Agreement.<PAGE>
ANNEX VI
--------
RIGS
----
OFFICIAL
NAME OWNER FLAG HOME PORT NO. CLASS
- -------- --------------------------- ------- ----------- ------- -----
ENSCO 68 ENSCO Offshore Company U.S. New Orleans 574668 *
ENSCO 81 ENSCO Offshore Company U.S. New Orleans 606512 *
ENSCO 82 ENSCO Offshore Company U.S. New Orleans 606912 *
ENSCO 83 ENSCO Offshore Company U.S. New Orleans 605536 *
ENSCO 84 ENSCO Offshore Company U.S. New Orleans 637544 *
ENSCO 86 ENSCO Offshore Company U.S. New Orleans 643110 *
ENSCO 87 ENSCO Offshore Company U.S. New Orleans 648969 *
ENSCO 88 ENSCO Offshore Company U.S. New Orleans 645637 *
ENSCO 89 ENSCO Offshore Company U.S. New Orleans 652440 *
ENSCO 90 ENSCO Offshore Company U.S. New Orleans 647859 *
ENSCO 93 ENSCO Offshore Company U.S. New Orleans 651385 *
ENSCO 94 ENSCO Offshore Company U.S. New Orleans 638685 *
ENSCO 95 ENSCO Offshore Company U.S. New Orleans 642112 *
ENSCO 98 ENSCO Offshore Company U.S. New Orleans 589096 *
ENSCO 99 ENSCO Offshore Company U.S. New Orleans 682070 *
ENSCO 80 ENSCO Offshore U.K. Limited Bahamas Nassau 724944 *
ENSCO 85 ENSCO Offshore U.K. Limited Bahamas Nassau 724945 *
ENSCO 92 ENSCO Offshore U.K. Limited Bahamas Nassau 724946 *
ENSCO 50 ENSCO Offshore Company II Liberia Monrovia 9383 *
ENSCO 51 ENSCO Offshore Company II Liberia Monrovia 9384 *
ENSCO 53 ENSCO Offshore Company II Liberia Monrovia 10260 *
ENSCO 54 ENSCO Offshore Company II Liberia Monrovia 10159 *
* All rigs are classed by the American Bureau of Shipping
(ABS) as Maltese Cross A-1 Self-Elevating Drilling Units.<PAGE>
ANNEX VII
---------
SHIPBROKERS
-----------
Normarine Offshore Consultants, Inc.
24 Greenway Plaza, Suite 1305
Houston, Texas 77046
(713) 871-8988
R.S. Platou (USA) Inc.
3535 Briarpark Drive, Suite 201
Houston, Texas 77042
(713) 974-5505
Johan G. Olsen Shipbrokers A/S
Dronningensgt. 3
P.O. Box 234
N-4601 Kristiansand S., Norway
(47) 38-07-08-11
Fearnley Offshore A/S
P.O. Box 1158 Sentrum
N-0107 Oslo, Norway
(47) 22-93-60-00
Bassoe Offshore
2000 West Loop South, Suite 2110
Houston, Texas 77027
(713) 850-9002<PAGE>
*************************************
E X H I B I T S
TO
AMENDED AND RESTATED CREDIT AGREEMENT
____________________________________
Dated as of December 15, 1993
and Amended and Restated as of September 27, 1995
and further Amended and Restated as of February 27, 1997
____________________________________
*************************************<PAGE>
EXHIBIT A
---------
FORM OF NOTICE OF BORROWING
---------------------------
[Date]
Christiania Bank og Kreditkasse,
New York Branch, as Administrative Agent
for the Banks party to the Credit
Agreement referred to below
11 West 42nd Street
New York, New York 10036
Attention: Loan Administration
Ladies and Gentlemen:
The undersigned, [ENSCO Offshore Company]<F1> [ENSCO Offshore
U.K. Limited]<F2> [Dual Holding Company]<F3> (the "Borrower"), refers to
the Credit Agreement, dated as of February 27, 1997 (as amended, modified
or supplemented from time to time, the "Credit Agreement", the capitalized
terms defined therein being used herein as therein defined), among ENSCO
International Incorporated, ENSCO Delaware, Inc., ENSCO Offshore Company,
ENSCO Offshore U.K. Limited, Dual Holding Company, the lending insti-
tutions from time to time party thereto (the "Banks"), Christiania Bank og
Kreditkasse, New York Branch and Den norske Bank ASA, New York Branch, as
co-agents, and you, as administrative agent and security trustee for such
Banks, and, pursuant to Section 1.03 of the Credit Agreement, hereby gives
you irrevocable notice that the undersigned hereby requests a Borrowing
under the Credit Agreement, and in that connection sets forth below the
information relating to such Borrowing (the "Proposed Borrowing") as
required by Section 1.03 of the Credit Agreement:
(i) The aggregate principal amount of the Proposed Borrowing is
[$____________].[Pound Sterling __________]<F4>
(ii) The Business Day of the Proposed Borrowing is [Date].<F5>
(iii) The Proposed Borrowing shall consist of [Tranche A Loans]
[Tranche B Loans] [Tranche C Loans].
(iv) The Loans to be made pursuant to the Proposed Borrowing
shall be initially maintained as [Base Rate Loans] [Eurodollar
Loans].<F6)
[ (v) The initial Interest Period for the Proposed Borrowing
is ____ month(s).]<F7>
The undersigned hereby certifies that the following statements
are true on the date hereof, and will be true on the date of the Proposed
Borrowing:<PAGE>
(A) the representations and warranties contained in Section 6
of the Credit Agreement and the other Credit Documents are and will
be true and correct in all material respects, both before and after
giving effect to the Proposed Borrowing and to the application of the
proceeds thereof, as though made on such date, unless stated to
relate to a specific earlier date, in which case such representations
and warranties shall be true and correct in all material respects as
of such earlier date; and
(B) no Default or Event of Default has occurred and is
continuing, or would result from such Proposed Borrowing or from the
application of the proceeds thereof.
Very truly yours,
[ENSCO OFFSHORE COMPANY]<F8> [ENSCO
OFFSHORE U.K. LIMITED]<F9> [DUAL HOLDING
COMPANY]<F10>
By:__________________________________
Name:
Title:
_______________
<F1> Include bracketed language if Loan made under the Tranche A
Facility.
<F2> Include bracketed language if Loan made under the Tranche B
Facility.
<F3> Include bracketed language if Loan made under the Tranche C
Facility.
<F4> Pound Sterling Loans may only be borrowed pursuant to the Tranche B
Facility.
<F5> Shall be a Business Day at least four Business Days after the date
hereof.
<F6> Pound Sterling Loans may only be borrowed as Eurodollar loans.
<F7> To be included for a Proposed Borrowing of Eurodollar Loans.
<F8> Include bracketed language if Loan made under the Tranche A
Facility.
<F9> Include bracketed language if Loan made under the Tranche B
Facility.
<F10> Include bracketed language if Loan made under the Tranche C
Facility.
<PAGE>
EXHIBIT B-1
-----------
FORM OF TRANCHE A NOTE
----------------------
$_______________. New York, New York
February __, 1997
FOR VALUE RECEIVED, ENSCO OFFSHORE COMPANY, a Delaware
corporation (the "Borrower"), hereby promises to pay to the order of
_______________________ (the "Bank"), in lawful money of the United States
of America in immediately available funds, at the office of Christiania
Bank og Kreditkasse, New York Branch (the "Administrative Agent") located
at 11 West 42nd Street, New York, New York 10036, on the Maturity Date (as
defined in the Agreement referred to below) the principal sum of
_________________ DOLLARS ($_________) or, if less, the then unpaid
principal amount of all Tranche A Loans (as defined in the Agreement
referred to below) made by the Bank pursuant to the Agreement.
The Borrower promises also to pay interest on the unpaid
principal amount hereof in like money at said office from the date hereof
until paid at the rates and at the times provided in Section 1.08 of the
Agreement.
This Note is one of the Tranche A Notes referred to in the
Credit Agreement, dated as of February 27, 1997 among ENSCO International
Incorporated, ENSCO Delaware, Inc., ENSCO Offshore Company, ENSCO Offshore
U.K. Limited, Dual Holding Company, the lending institutions from time to
time party thereto (including the Bank), Christiania Bank og Kreditkasse,
New York Branch and Den norske Bank ASA, New York Branch, as co-agents and
Christiania Bank og Kreditkasse, New York Branch, as administrative agent
and security trustee (as amended, modified or supplemented from time to
time, the "Agreement"), and is entitled to the benefits thereof and of the
other Credit Documents (as defined in the Agreement). This Note is
secured by the Security Documents (as defined in the Agreement) and is
entitled to certain benefits under the Guaranty (as defined in the
Agreement). As provided in the Agreement, this Note is subject to
voluntary prepayment and mandatory prepayment prior to the Maturity Date,
in whole or in part.
In case an Event of Default (as defined in the Agreement) shall
occur and be continuing, the principal of and accrued interest on this
Note may be declared to be due and payable in the manner and with the
effect provided in the Agreement.<PAGE>
The Borrower hereby waives presentment, demand, protest or
notice of any kind in connection with this Note.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED
BY THE LAW OF THE STATE OF NEW YORK.
ENSCO OFFSHORE COMPANY
By____________________________
Name:
Title:<PAGE>
EXHIBIT B-2
-----------
FORM OF TRANCHE B NOTE
----------------------
$__________. New York, New York
February __, 1997
FOR VALUE RECEIVED, ENSCO OFFSHORE U.K. LIMITED, a company
formed under the laws of England and Wales (the "Borrower"), hereby
promises to pay to the order of _______________________ (the "Bank"), in
lawful money of the [United States of America and/or United Kingdom] in
immediately available funds, at the UK Payment Office (as defined in the
Agreement referred to below), on the Maturity Date (as defined in the
Agreement referred to below) the principal sum of _________________
DOLLARS ($_________) or, in the event (i) any Borrowing (as defined in the
Agreement referred to below) of Pound Sterling Loans (as defined in the
Agreement referred to below) has been made and remains outstanding, and/or
(ii) the aggregate unpaid principal amount of Tranche B Loans (as defined
in the Agreement referred to below) made by the Bank and borrowed as US
Dollar Loans (as defined in the Agreement referred to below) is less than
$__________, the then unpaid principal amount of, if clause (i) above is
applicable, all (x) US Dollar Loans borrowed as Tranche B Loans and (y)
Pound Sterling Loans, and, if only clause (ii) above is applicable, the
unpaid principal amount of US Dollar Loans borrowed as Tranche B Loans,
made by the Bank pursuant to the Agreement.
The Borrower promises also to pay interest on the unpaid
principal amount hereof in like money at said office from the date hereof
until paid at the rates and at the times provided in Section 1.08 of the
Agreement.
This Note is one of the Tranche B Notes referred to in the
Credit Agreement, dated as of February 27, 1997 among ENSCO International
Incorporated, ENSCO Delaware, Inc., ENSCO Offshore Company, ENSCO Offshore
U.K. Limited, Dual Holding Company, the lending institutions from time to
time party thereto (including the Bank), Christiania Bank og Kreditkasse,
New York Branch and Den norske Bank ASA, New York Branch, as co-agents and
Christiania Bank og Kreditkasse, New York Branch, as administrative agent
and security trustee (as amended, modified or supplemented from time to
time, the "Agreement"), and is entitled to the benefits thereof and of the
other Credit Documents (as defined in the Agreement). This Note is
secured by the Security Documents (as defined in the Agreement) and is
entitled to certain benefits under the Guaranty (as defined in the
Agreement). As provided in the Agreement, this Note is subject to
voluntary prepayment and mandatory prepayment prior to the Maturity Date,
in whole or in part.
In case an Event of Default (as defined in the Agreement) shall
occur and be continuing, the principal of and accrued interest on this
Note may be declared to be due and payable in the manner and with the
effect provided in the Agreement.<PAGE>
The Borrower hereby waives presentment, demand, protest or
notice of any kind in connection with this Note.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED
BY THE LAW OF THE STATE OF NEW YORK.
ENSCO OFFSHORE U.K. LIMITED
By____________________________
Name:
Title:<PAGE>
EXHIBIT B-3
-----------
FORM OF TRANCHE C NOTE
----------------------
$________________. New York, New York
February __, 1997
FOR VALUE RECEIVED, DUAL HOLDING COMPANY, a Delaware corporation
(the "Borrower"), hereby promises to pay to the order of
_______________________ (the "Bank"), in lawful money of the United States
of America in immediately available funds, at the office of Christiania
Bank og Kreditkasse, New York Branch (the "Administrative Agent") located
at 11 West 42nd Street, New York, New York 10036, on the Maturity Date (as
defined in the Agreement referred to below) the principal sum of
_________________ DOLLARS ($_________) or, if less, the then unpaid
principal amount of all Tranche C Loans (as defined in the Agreement
referred to below) made by the Bank pursuant to the Agreement.
The Borrower promises also to pay interest on the unpaid
principal amount hereof in like money at said office from the date hereof
until paid at the rates and at the times provided in Section 1.08 of the
Agreement.
This Note is one of the Tranche C Notes referred to in the
Credit Agreement, dated as of February 27, 1997 among ENSCO International
Incorporated, ENSCO Delaware Inc., ENSCO Offshore Company, ENSCO Offshore
U.K. Limited, Dual Holding Company, the lending institutions from time to
time party thereto (including the Bank), Christiania Bank og Kreditkasse,
New York Branch and Den norske Bank ASA, New York Branch, as co-agents and
Christiania Bank og Kreditkasse, New York Branch, as administrative agent
and security trustee (as amended, modified or supplemented from time to
time, the "Agreement"), and is entitled to the benefits thereof and of the
other Credit Documents (as defined in the Agreement). This Note is
secured by the Security Documents (as defined in the Agreement) and is
entitled to certain benefits under the Guaranty (as defined in the
Agreement) and the Subsidiary Guaranty (as defined in the Agreement). As
provided in the Agreement, this Note is subject to voluntary prepayment
and mandatory prepayment prior to the Maturity Date, in whole or in part.
In case an Event of Default (as defined in the Agreement) shall
occur and be continuing, the principal of and accrued interest on this
Note may be declared to be due and payable in the manner and with the
effect provided in the Agreement.
The Borrower hereby waives presentment, demand, protest or
notice of any kind in connection with this Note.<PAGE>
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED
BY THE LAW OF THE STATE OF NEW YORK.
DUAL HOLDING COMPANY
By____________________________
Name:
Title:<PAGE>
EXHIBIT C
---------
FORM OF LETTER OF CREDIT REQUEST
--------------------------------
No.___<F1> Dated __________<F2>
Christiania Bank og Kreditkasse,
New York Branch, as Administrative Agent
and Letter of Credit Issuer, under
the Credit Agreement referred
to below
11 West 42nd Street
New York, New York 10036
Attention: Loan Administration
Ladies and Gentlemen:
The undersigned, [ENSCO Offshore Company]<F3> [Dual Holding
Company]<F4> (the "Borrower"), refers to the Credit Agreement, dated as of
February 27, 1997 (as amended, modified or supplemented from time to time,
the "Credit Agreement", the capitalized terms defined therein being used
herein as therein defined), among ENSCO International Incorporated, ENSCO
Delaware, Inc., ENSCO Offshore Company, ENSCO Offshore U.K. Limited, Dual
Holding Company, the lending institutions from time to time party thereto
(the "Banks"), Christiania Bank og Kreditkasse, New York Branch and Den
norske Bank ASA, New York Branch, as co-agents and Christiania Bank og
Kreditkasse, New York Branch, as administrative agent and security trustee
for such Banks.
The undersigned hereby requests that the Letter of Credit
Issuer, issue on behalf and for the account of ____________<F5> a Letter
of Credit on _____________ (the "Date of Issuance") in the aggregate
amount of ____________<F6>. The requested Letter of Credit shall be
denominated in U.S. Dollars.
The beneficiary of the requested Letter of Credit will be
________,<F7> and such Letter of Credit will be in support of _______<F8>
and will have a stated termination date of _________<F9>.
The undersigned hereby certifies that the following statements
are true on the date hereof, and will be true on the Date of Issuance:
(A) the representations and warranties contained in Section 6
of the Credit Agreement and the other Credit Documents are and will
be true and correct in all material respects, before and after giving
effect to the issuance of the Letter of Credit requested hereby, as
though made on the Date of Issuance, unless stated to relate to a
specific earlier date, in which case such representations and
warranties shall be true and correct in all material respects as of
such earlier date; and<PAGE>
(B) no Default or Event of Default has occurred and is
continuing, or would result after giving effect to the issuance of
the Letter of Credit requested hereby.
Copies of all documentation, if any, with respect to the
supported transaction are attached hereto.
[ENSCO OFFSHORE COMPANY]<F10>
[DUAL HOLDING COMPANY]<F11>
By___________________________
Name:
Title:
___________________
<F1> Letter of Credit Request Number.
<F2> At least seven (7) Business Days prior to the proposed Date of
Issuance (or three (3) Business Days if the issuance of the Letter
of Credit has been approved in advance by the Letter of Credit
Issuer). This Letter of Credit Request shall after three (3)
Business Days (or one (1) Business Day if the issuance of the
Letter of Credit has been approved in advance by the Letter of
Credit Issuer) be irrevocable.
<F3> Include bracketed language if letter of credit is to be issued
under the Tranche A Facility.
<F4> Include bracketed language if letter of credit is to be issued
under the Tranche C Facility.
<F5> In the case of a Tranche A Letter of Credit, ENSCO Offshore
Company; In the case of a Tranche C Letter of Credit, Dual Holding
Company.
<F6> Aggregate initial Stated Amount of Letter of Credit.
<F7> Insert name and address of beneficiary.
<F8> Insert description of the L/C Supportable Obligations to which this
Letter of Credit Request relates.
<F9> Insert last date upon which drafts may be presented which may not
be later than the earlier of (i) the date which occurs 30 months
after the date of issuance thereof, and (ii) the Business Day
immediately preceding the Maturity Date (note, however, that the
Borrower may request, and the Required Banks may consent in their
sole absolute discretion to extend the expiry dates of certain
Letters of Credit beyond the Maturity Date).
<F10> Include bracketed language if letter of credit is to be issued
under the Tranche A Facility.
<F11> Include bracketed language if letter of credit is to be issued
under the Tranche C Facility.
<PAGE>
EXHIBIT D
---------
FORM OF SECTION 4.04(b)(ii) CERTIFICATE
---------------------------------------
Reference is hereby made to the Credit Agreement, dated as of
February 27, 1997, among ENSCO International Incorporated, ENSCO Delaware,
Inc., ENSCO Offshore Company, ENSCO Offshore U.K. Limited, Dual Holding
Company, the lending institutions from time to time party thereto (the
"Banks"), Christiania Bank og Kreditkasse, New York Branch and Den norske
Bank ASA, New York Branch, as co-agents and Christiania Bank og
Kreditkasse, New York Branch, as administrative agent and security trustee
for such Banks (as amended, modified or supplemented from time to time,
the "Credit Agreement"). Pursuant to the provisions of
Section 4.04(b)(ii) of the Credit Agreement, the undersigned hereby
certifies that it is not a "bank" as such term is used in Section
881(c)(3)(A) of the Internal Revenue Code of 1986, as amended.
[NAME OF BANK]
By ____________________________
Title:
Date: _______________<PAGE>
EXHIBIT E-1
-----------
FORM OF OPINION OF ROBERT O. ISAAC, ESQ.
-----------------------------------------
February 27, 1997
To Each of the Banks Party to the Credit Agreement
hereinafter Referred to and Christiania Bank og
Kreditkasse, New York Branch, as Administrative
Agent and Collateral Agent
c/o Christiania Bank og Kreditkasse,
New York Branch
11 West 42nd Street, 7th Floor
New York, New York 10036
Gentlemen:
I have acted as counsel to ENSCO International Incorporated, a Delaware
corporation ("Holdings"), ENSCO Delaware, Inc., a Delaware corporation
(the "Parent"), ENSCO Offshore Company, a Delaware corporation ("ENSCO"),
ENSCO Offshore U.K. Limited, a company formed under the laws of England
and Wales ("ENSCO UK"), and Dual Holding Company, a Delaware corporation
("Dual") (collectively, the "Companies") in connection with the Credit
Agreement dated as of February 27, 1997 (the "Credit Agreement") among
Holdings, the Parent, ENSCO, ENSCO UK, Dual, the Banks party thereto,
Christiania Bank og Kreditkasse, New York Branch, and Den norske Bank ASA,
New York Branch, as co-agents, and Christiania Bank og Kreditkasse, New
York Branch, as administrative agent and security trustee (in its relative
capacities, the "Administrative Agent" and the "Collateral Agent").
Additionally, I have also acted as counsel to ENSCO Offshore Company II
("ENSCO II") in its capacity as "Subsidiary Guarantor" of the "Borrower C"
obligations as stated under the Credit Agreement and as Mortgagor under
the Liberian Fleet Mortgage.
This opinion is being furnished to you pursuant to Section 5.04(i) of the
Credit Agreement. Capitalized terms not otherwise defined herein have the
meanings ascribed to them in the Credit Agreement.
In this connection and as a basis for the opinions hereinafter expressed,
I have made the investigations described below and have not independently
verified information obtained from third parties except as otherwise set
forth herein. As to matters of fact and in making the investigations
referred to in my opinions expressed herein, I have examined and relied
upon originals or copies, certified or otherwise identified to my
satisfaction, of the following documents:
a. the Credit Agreement;
b. the Notes;
c. the Mortgages;
d. the Security Agreements;<PAGE>
e. the UCC-1 financing statements in respect of the
Security Agreement (the"Financing Statements"); and
f. the Pledge Agreement;
g. the Subsidiary Guaranty;
h. the Floating Charge
(collectively referred to as the "Documents").
As counsel to the Companies and ENSCO II, I am familiar with the relevant
corporate proceedings and have examined such documents and records of the
Companies and ENSCO II and have obtained such other information as I have
deemed necessary to form a basis for the opinions expressed below.
In rendering the opinions set forth below, I have relied, to the extent I
deemed appropriate, upon certificates or other written or oral advice of
an officer or other authorized representative of a particular governmental
authority, corporation, or other person or entity concerned.
Furthermore, the opinions rendered herein are subject to the following
additional qualifications, limitations and assumptions:
(i) the effect of applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or conveyance or other laws
affecting creditors' rights generally, and the general
principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law) and future
court decisions affecting or interpreting any of the foregoing;
(ii) all documents submitted to me as originals are accurate and
complete;
(iii) all documents submitted to me as copies are true, correct and
complete copies of the originals thereof;
(iv) the due organization and existence of all parties to the
Documents (other than the Companies and ENSCO II);
(v) the legal right and the corporate power and authority of all
parties to the Documents (other than the Companies and ENSCO II)
to execute and deliver, and to consummate the transactions
contemplated by, the Documents to which they are parties;
(vi) the due authorization, execution and delivery of the Documents
by all parties to the Documents (other than the Companies and
ENSCO II);
(vii) that the Documents constitute the legal, valid, binding and
enforceable obligations of all of the parties thereto (other
than the Companies and ENSCO II);
(viii) all of the signatures, other than the signatures of the officers
of the Companies and ENSCO II, on all documents submitted to me
are genuine;<PAGE>
(ix) (a) you will comply with usury laws which may apply to the
provisions of the Credit Agreement or other Credit Documents,
(b) in connection therewith you will take into account any
consideration, in whatsoever form, which could constitute or be
deemed to constitute interest under Texas law and (c) there is
no other consideration paid or to be paid by the Borrowers in
connection with the Credit Agreement;
(x) the opinions rendered herein are specifically limited to the
current applicable United States federal law (including maritime
laws), the Delaware General Corporation Law and the substantive
laws of the State of Texas as they relate to the opinions
expressed herein. I am a member of the State Bar of Texas and
have neither been admitted to nor purport to be an expert on the
laws of any other state or jurisdiction, although I am generally
familiar with the General Corporation Law of the State of
Delaware;
(xi) no opinion is expressed as to the enforceability of choice of
law, choice of jurisdiction and forum selection clauses
contained in the Documents;
(xii) the enforceability of the Documents (1) may be limited by the
application of the standard "good faith", such as that defined
in Section 1.203 of the Texas Uniform Commercial Code, as the
same may be amended from time to time, and (2) is subject to the
discretion of the courts of the State of Texas in granting
equitable remedies such as specific performance or injunctive
relief and their power to stay proceedings before them and to
stay the execution of judgments. The enforceability of some of
the remedial provisions of the Documents may be limited by, and
some provisions of the Documents may be rendered unenforceable
under, applicable federal and state laws, rules, regulations,
court decisions, and constitutional requirements in and of the
State of Texas or the United States, but such laws, rules,
regulations, court decisions and constitutional requirements
should not, in my opinion, substantially interfere with the
practical realization of the rights and benefits afforded by the
Documents, although such laws, rules, regulations, court
decisions and constitutional requirements may delay the ability
of the Agents, the Administrative Agent or the Banks to enforce
their respective rights and remedies provided thereunder;
(xiii) to the extent that ENSCO or ENSCO II receive payment of accounts
constituting a portion of the property of ENSCO and/or ENSCO II
which are subject to the provisions of the Security Agreements
and such receipt occurs in a state other than the State of Texas
or Louisiana, perfection of a security interest in such accounts
and proceeds thereof may be governed by the laws of such other
state;
(xiv) insofar as the laws (including, without limitation, maritime
regulations) of England, the Commonwealth of the Bahamas and/or
the Republic of Liberia are concerned or may relate to the
undertakings of ENSCO UK and/or ENSCO II as set forth in the
Documents, I have expressed no opinion.<PAGE>
The opinions expressed below are made as of the date hereof. I assume no,
and expressly disclaim any, obligation to update or supplement such
opinions to reflect any facts or circumstances which may hereafter come to
my attention or any changes in laws which may hereafter occur.
Based upon the foregoing and having regard to the legal considerations I
deem relevant, and subject to the assumptions, limitations, qualifications
and exceptions set forth herein, it is my opinion that:
1. Each of the Companies and ENSCO II is a corporation duly
organized and validly existing and in good standing under the
laws of the state of its incorporation and has the corporate
power and authority (i) to own or lease and operate its
properties and carry on its business as carried on at the date
hereof and (ii) to execute and deliver, and to consummate the
transactions contemplated by, the Documents to which it is a
party.
2. Each of such Companies and ENSCO II has taken all necessary
corporate action to authorize the execution and delivery of, and
the consummation of the transactions contemplated by, each of
the Documents to which it is a party. Such execution and
delivery, and consummation of the transactions contemplated by
the Documents, will not (i) result in a violation of any such
Companies' or ENSCO II's certificate of incorporation or bylaws,
or to my knowledge any law or governmental regulation to which
each such Company and/or ENSCO II is subject, or (ii) result in
a violation of or constitute a breach of or default under any
agreement or order of which I am aware. Each of the Documents
to which any of the Companies and/or ENSCO II (as the case may
be) is a party has been duly authorized, executed and delivered
by each of such Companies.
3. Each of the Documents constitutes the legal, valid and binding
obligation of, as the case may be, each of the Companies party
thereto and/or ENSCO II, enforceable against each such Company
and/or ENSCO II, as the case may be, in accordance with its
terms. I have assumed, with your permission, that each of the
Documents stated by its terms to be governed by New York law
constitutes a legal, valid and binding obligation under New York
law, enforceable against each of the parties thereto in
accordance with its respective terms.
4. If, notwithstanding the choice of New York law contained
therein, Texas law were applied to the Documents, each of the
Documents would constitute the legal, valid and binding
obligation of each of the Companies and ENSCO II to the extent
parties thereto, enforceable against each such Company or ENSCO
II in accordance with its terms. Notwithstanding the foregoing,
no opinion is expressed in this paragraph 4 with respect to the
Floating Charge, any UCC-1 Financing Statement filed by ENSCO
UK, the Bahamian Mortgage or the Liberian Fleet Mortgage.
5. The execution and delivery of, and the consummation of the
transactions by, each of the Companies and/or ENSCO II (as the
case may be) of the Documents to which it is a party do not
require, with respect to any of such Companies and/or ENSCO II,<PAGE>
the consent, approval, waiver, license or authorization or other
action or filing with any Texas or Delaware corporate or federal
governmental authority, except for filings pursuant to the
Uniform Commercial Code as in effect in the State of Texas (the
"UCC").
6. The Mortgagor of a US Rig is qualified, within the meaning of 46
U.S.C. Section 12102, to document the Rig(s) owned by such
Mortgagor under the laws of the United States.
7. The US Rigs are duly documented in the name of ENSCO under the
regulations of the United States Coast Guard, free and clear of
all liens and encumbrances (other than Permitted Liens and the
U.S. Fleet Mortgage).
8. When the US Fleet Mortgage has been duly filed for recordation,
it will constitute a first preferred ship mortgage under 46
U.S.C. Section 31325 on the Rig(s) described therein, in favor
of the Security Trustee, as mortgagee under such US Fleet
Mortgage, entitled to the benefits afforded by 46 U.S.C. Section
31326, having the effect and with the priority provided in such
provision.
9. To my knowledge, after due inquiry, there is no action, suit or
proceeding pending or threatened against any of the Companies
and/or ENSCO II before or by any court, arbitration panel or
administrative agency which, if adversely determined, could
reasonably be expected to result or have a Material Adverse
Effect on the business or condition of any of the Companies
and/or ENSCO II or prevent any of the Companies and/or ENSCO II
from performing any of their respective obligations under the
Documents.
10. None of the Companies is an "investment company" or an entity
"controlled" by an "investment company" under the Investment
Company act of 1940, as amended, and the rules and regulations
promulgated by the Securities and Exchange Commission (the
"Commission") thereunder (the "Investment Company Act").
11. The UCC-1 Financing Statements to be filed in the state of Texas
are in the proper form for filing pursuant to the UCC, and upon
filing with the Secretary of State of the State of Texas
pursuant to the UCC, will constitute a valid and enforceable
lien of the Collateral Agent in all right, title and interest of
the applicable debtor in the collateral described in the
Financing Statements; provided, however, notwithstanding the
foregoing opinion, no opinion is given or expressed in respect
to any UCC-1 filing by ENSCO UK.
12. Assuming the filing of the Financing Statements on Form UCC-1
with the Secretary of State of the State of Texas, the execution
and delivery of the UCC-1 Financing Statements creates valid and
enforceable liens within the State of Texas on and a security
interests in the "Collateral" (as such term is defined in the
Security Agreements) to the extent a valid and enforceable lien
or security interest in such Collateral may be perfected by the
filing of a financing statement under the UCC; provided,<PAGE>
however, notwithstanding the foregoing opinion, no opinion is
given or expressed in respect to any UCC-1 filing by ENSCO UK.
The scope of the foregoing opinion is limited to those issues specifically
considered herein, and no further or more expansive opinion is to be
implied from any of the opinions expressed above. Any variation or
difference in the assumptions upon which this opinion is based might
affect my conclusions in an adverse manner and make them inaccurate.
Furthermore, the opinions expressed herein are rendered solely for your
benefit and may not be relied upon or used by any other person (it being
understood that you may be required to show this opinion to bank
regulators and auditors) without my prior written consent.
Very truly yours,
/s/ Robert O. Isaac
- ---------------------------
Robert O. Isaac
Senior Counsel<PAGE>
EXHIBIT E-2
-----------
FORM OF OPINION OF WHITE & CASE
-------------------------------
February 27, 1997
To: The Administrative Agent, the Co-Agents
and the various lending institutions
(collectively, the "Banks") from time to time
party to the Credit Agreement referred to below
Re: Credit Agreement, dated as of February 27, 1997
(the Credit Agreement ), among ENSCO International
Incorporated, ENSCO Delaware, Inc., ENSCO Offshore
Company, ENSCO Offshore U.K. Limited, Dual Holding
Company, the Banks, Christiania Bank og Kreditkasse,
New York Branch and Den norske Bank ASA,
New York Branch as co-agents and Christiania Bank
og Kreditkasse, New York Branch,
as administrative agent and security trustee
Ladies and Gentlemen:
We have acted as special counsel to the Administrative Agent in
connection with the execution and delivery of the Credit Agreement. This
opinion is delivered to you pursuant to Section 5.04(ii) of the Credit
Agreement. Terms used herein which are defined in the Credit Agreement
shall have the respective meanings set forth in the Credit Agreement
unless otherwise defined herein.
In connection with this opinion, we have examined the originals,
or certified, conformed or reproduction copies, of all records,
agreements, instruments and documents as we have deemed relevant or
necessary as the basis for the opinions hereinafter expressed. In stating
our opinion, we have assumed the genuineness of all signatures on original
or certified copies, the authenticity of documents submitted to us as
originals and the conformity to original or certified copies of all copies
submitted to us as certified or reproduction copies.
We have also assumed, for purposes of the opinions expressed
herein, that the parties to the Credit Agreement have the corporate power
and authority to enter into and per-form the Credit Agreement and that the
Credit Agreement has been duly authorized, executed and delivered by each
such party.<PAGE>
Based upon the foregoing, and subject to the limitations set
forth herein, we are of the opinion that the Credit Agreement constitutes
the valid and binding obligation of Holdings, the Parent and the Borrowers
enforceable in accordance with its terms except to the extent that
enforcement may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws affecting creditors rights generally
and by equity principles (regardless of whether enforcement is sought in
equity or at law).
We have not been requested to render and, with your permission,
we express no opinion as to the applicability to the obligations of
Holdings, the Parent or the Borrowers under the Credit Agreement of
Section 548 of the Bankruptcy Code and article 10 of the New York Debtor &
Creditor Law relating to fraudulent transfers and obligations. We
understand, without independent verification, that, to the extent they
have deemed necessary in the context of the proposed transaction, the
Banks have satisfied themselves on the basis of, among other things, the
financial information furnished to the Banks and their knowledge of the
credit facilities available to the Borrowers, that neither Holdings nor
any of its Subsidiaries is insolvent and neither Holdings, nor any of its
Subsidiaries will be rendered insolvent by the transactions contemplated
by the Credit Agreement and the other Credit Documents and that, after
giving effect to such transactions, neither Holdings nor any of its
Subsidiaries will be left with unreasonably small capital with which to
engage in its anticipated business and that neither the Holdings nor any
of its Subsidiaries will have intended to incur, or will have believed it
has incurred, debts beyond its ability to pay as such debts mature.
This opinion is limited of the federal law of the United States
of America and the law of the State of New York.
Very truly yours,
/s/ White & Case
-----------------------<PAGE>
EXHIBIT F
---------
[NAME OF CREDIT PARTY]
FORM OF SECRETARY'S CERTIFICATE
-------------------------------
I, the undersigned, certify that I am the duly elected
Secretary of [Name of Credit Party], a corporation organized and existing
under the laws of ________ (the "Company"), and further certify on behalf
of the Company that:
1. This Certificate is furnished pursuant to the Credit
Agreement, dated as of February 27, 1997, among ENSCO International
Incorporated, ENSCO Delaware, Inc., ENSCO Offshore Company, ENSCO Offshore
U.K. Limited, Dual Holding Company, the lending institutions from time to
time party thereto, Christiania Bank og Kreditkasse, New York Branch and
Den norske Bank ASA, New York Branch, as co-agents and Christiania Bank og
Kreditkasse, New York Branch, as administrative agent and security trustee
for such Banks (as amended, modified or supplemented from time to time,
such Credit Agreement, as in effect on the date of this Certificate, being
herein called the "Credit Agreement"). Unless otherwise defined herein,
capitalized terms used in this Certificate shall have the meanings set
forth in the Credit Agreement.
2. Attached hereto as Exhibit A is a certified copy of the
Certificate of Incorporation of the Company, as filed in the Office of the
Secretary of State of the State of _________________ on ___________, 19__,
together with all amendments thereto adopted through the date hereof.
3. Attached hereto as Exhibit B is a true and correct copy
of the By-Laws of the Company which were duly adopted, are in full force
and effect on the date hereof, and have been in effect since
_____________, 19__.
4. Attached hereto as Exhibit C is a true and correct copy
of resolutions which were duly adopted on __________, 19__ [by unanimous
written consent of the Board of Directors of the Company] [by a meeting of
the Board of Directors of the Company at which a quorum was present and
acting throughout], and said resolutions have not been rescinded, amended
or modified. Except as attached hereto as Exhibit C, no resolutions have
been adopted by the Board of Directors of the Company which deal with the
execution, delivery or performance of any Credit Document to which the
Company is a party.
5. There is no provision of the Certificate of Incorporation
or By-Laws of the Company limiting the powers of the Board of Directors to
pass or consent to the resolutions referred to above and such resolutions
are in conformity with the provisions of said Certificate of Incorporation
and By-Laws.<PAGE>
6. The following named individuals are elected officers of
the Company, each holds the office of the Company set forth opposite
his/her name and has held such office since __________, 19__<F1>. The
signature written opposite the name and title of each such officer is
his/her genuine signature.
NAME<F2> OFFICE SIGNATURE
______________ ___________ _____________
______________ ___________ _____________
______________ ___________ _____________
IN WITNESS WHEREOF, I have hereunto set my hand this ___ day of
February, 1997.
______________________________
Name:
Title: Secretary
__________________
<F1> Insert a date prior to the time of any corporate action relating
to the Credit Documents or related documentation.
<F2> Include name, office and signature of each officer who will sign
any Credit Document, including the officer who will sign the
certification at the end of this Certificate or related
documentation.
<PAGE>
I, the undersigned, Director of the Company, certify on behalf of the
Company that:
1. [Name of Person making above certifications] is the duly
elected and qualified Secretary of the Company and the signature above is
his genuine signature.
IN WITNESS WHEREOF, I have hereunto set my hand this ___ day of
February, 1997.
____________________________
Name:
Title: Director<PAGE>
EXHIBIT G-1
-----------
FORM OF BORROWER A SECURITY AGREEMENT
-------------------------------------
SECURITY AGREEMENT (as amended, modified or supplemented from time
to time, this "Agreement"), dated as of February 27, 1997, between ENSCO
Offshore Company (the "Assignor") and Christiania Bank og Kreditkasse, New
York Branch, as Collateral Agent (the "Collateral Agent"), for the benefit
of the Banks, the Letter of Credit Issuer, and the Administrative Agent
under, and as defined in, the Credit Agreement hereinafter referred to
(such Banks, Letter of Credit Issuer and Administrative Agent are
hereinafter called the "Secured Creditors"). Except as otherwise defined
herein, capitalized terms used herein and defined in the Credit Agreement
shall be used herein as so defined.
W I T N E S S E T H :
WHEREAS, ENSCO International Incorporated, ENSCO Delaware, Inc.,
ENSCO Offshore Company ("Borrower A"), ENSCO Offshore U.K. Limited
("Borrower B"), Dual Holding Company ("Borrower C"), the lending
institutions from time to time party thereto, Christiania Bank og
Kreditkasse, New York Branch and Den norske Bank ASA, New York Branch, as
co-agents and Christiania Bank og Kreditkasse, New York Branch, as
administrative agent and security trustee have entered into a Credit
Agreement, dated as of February 27, 1997 (as modified, supplemented or
amended from time to time, the "Credit Agreement"), providing for the mak-
ing of Loans and the issuance of, and participation in, Letters of Credit
as contemplated therein;
WHEREAS, Borrower A, Borrower B and Borrower C desire to incur
Loans under the Credit Agreement;
WHEREAS, Borrower A and Borrower C desire to have Letters of
Credit issued for their respective accounts under the Credit Agreement.
WHEREAS, the Assignor, a Delaware corporation, is the sole owner
of the United States registered offshore drilling rigs ENSCO 68 (official
no. 574668), ENSCO 81 (official no. 606512), ENSCO 82 (official no.
606912), ENSCO 83 (official no. 605536), ENSCO 84 (official no. 637544),
ENSCO 86 (official no. 643110), ENSCO 87 (official no. 648969), ENSCO 88
(official no. 645637), ENSCO 89 (official no. 652440), ENSCO 90 (official
no. 647859), ENSCO 93 (official no. 651385), ENSCO 94 (official no.
638685), ENSCO 95 (official no. 642112), ENSCO 98 (f/k/a/ ENSCO 63)
(official no. 589096) and ENSCO 99 (official no. 682070) (all of the
aforementioned vessels being herein collectively referred to as the
"Rigs");
WHEREAS, the Assignor has unconditionally guaranteed the
obligations of Borrower B and Borrower C under the Credit Agreement and
the other Credit Documents;<PAGE>
WHEREAS, it is a condition precedent to the making of Loans and
the issuance of Letters of Credit under the Credit Agreement and to the
occurrence of the Effective Date that the Assignor shall have executed and
delivered to the Collateral Agent this Agreement; and
WHEREAS, the Assignor desires to execute this Agreement to satisfy
the condition described in the preceding paragraph;
NOW, THEREFORE, in consideration of the benefits accruing to the
Assignor, the receipt and sufficiency of which are hereby acknowledged,
the Assignor hereby makes the following representations and warranties to
the Collateral Agent and hereby covenants and agrees with the Collateral
Agent as follows:
SECTION 1. OBLIGATIONS SECURED.
1.01 Obligations Secured. The Agreement is made for the
benefit of the Secured Creditors to secure, with respect to the
obligations of Borrower A under the Credit Agreement and the other Credit
Documents, each of the following, and with respect to the obligations of
Borrower B and Borrower C under the Credit Agreement and the other Credit
Documents, the Assignor's guaranty of each of the following: (i) the full
and prompt payment when due of (A) the principal of and interest on the
Notes issued, and Loans made, under the Credit Agreement, and all
reimbursement obligations and Unpaid Drawings with respect to the Letters
of Credit issued under the Credit Agreement and (B) all other obligations
and indebtedness (including, without limitation, indemnities, Fees and
interest thereon) of the Borrowers to the Secured Creditors, whether now
existing or hereafter incurred under, arising out of or in connection with
the Credit Agreement and the other Credit Documents and the due
performance and compliance by the Borrowers with all of the terms,
conditions and agreements contained in the Credit Agreement and the other
Credit Documents; (ii) any and all sums advanced by the Collateral Agent
in order to preserve the Collateral (as hereinafter defined) or preserve
its security interest in the Collateral; (iii) in the event of any pro-
ceeding for the collection or enforcement of any indebtedness,
obligations, or liabilities of the Borrowers referred to in clause (i)
above, after an Event of Default shall have occurred and be continuing,
the reasonable expenses of the Collateral Agent of re-taking, holding,
preparing for sale or lease, selling or otherwise disposing of or
realizing on the Collateral, or of any exercise by the Collateral Agent of
its rights hereunder, together with reasonable attorneys' fees of counsel
to the Collateral Agent and court costs; and (iv) all reasonable amounts
paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement under Section 11 of this Agreement (all such obligations,
liabilities, sums and expenses referred to in clauses (i) through (iv)
above being collectively referred to as the "Obligations"). The
"Obligations" shall include extensions of credit of the types described
above, whether outstanding on the date of this Agreement or extended from
time to time after the date of this Agreement.
SECTION 2. ASSIGNMENT OF EARNINGS.
2.01 The Assignor, as legal and beneficial owner, hereby
assigns, transfers and sets over unto the Collateral Agent for the benefit<PAGE>
of the Secured Creditors and their successors and assigns, and hereby
grants the Collateral Agent a security interest in, all of its right,
title and interest in and to: (i) all day rate payments, freights, charter
hire and any other moneys earned and to be earned, due or to become due or
paid or payable to, or for the account of the Assignor, of whatsoever
nature, arising out of any charter parties, drilling contracts or as a
result of the ownership, chartering and other operations of any kind
whatsoever by the Assignor or its agents of the Rigs, (ii) all moneys and
claims for moneys due and to become due to the Assignor and all claims for
damages arising out of the breach of any and all present or future
drilling contracts, charter parties, and operations of every kind
whatsoever of the Rigs and in and to any and all claims and causes of
action for money, loss or damages that may accrue or belong to the
Assignor, their successors, or assigns, arising out of or in any way
connected with any and all present and future requisitions, drilling
contracts, charter parties, and other operations of the Rigs of any kind
whatsoever, (iii) all moneys and claims for moneys due and to become due
to the Assignor, and all claims for damages in respect of the actual or
constructive total loss of or requisition or use of or title to any of the
Rigs subject to Section 3.03(c) of the Credit Agreement and (iv) any
proceeds of any of the foregoing (collectively, the "Earnings
Collateral").
2.02 Subject to the provisions of Section 2.03 of this
Agreement, the Collateral Agent's security interest in all accounts
receivable included in, or representing proceeds of, the Earnings
Collateral shall automatically be and be deemed released, without the need
for any action on the part of the Collateral Agent, from time to time as
such accounts receivable arise or are created, or as funds representing
payments of such Collateral (or part thereof) are collected by the
Assignor.
2.03 Upon the occurrence of an Event of Default pursuant to
Section 9.05 of the Credit Agreement (a "Bankruptcy Default") and without
any further act or notice, or upon the giving by the Collateral Agent of a
written notice (a "Release Termination Notice") to the Assignor after the
occurrence and during the continuance of an Event of Default, the
automatic release set forth in Section 2.02 of this Agreement shall
terminate.
2.04 Upon the occurrence of an Event of Default, the Assignor
hereby represents, warrants and undertakes that:
(a) notice of this Agreement in the form attached hereto
as Exhibit 1 will be promptly delivered to any
charterers of the Rigs; and
(b) it will use its good faith efforts to cause any
charterer to execute a Consent and Agreement to this
Agreement in the form attached hereto as Exhibit 2 and
deliver such Consent and Agreement to the Collateral
Agent.
2.05 Upon the occurrence of an Event of Default, the Collateral
Agent shall be entitled to receive all payments of Earnings Collateral of
the Rigs payable to the Assignor and assigned hereby. Such payment shall
be made to the account of the Collateral Agent, and the Assignor shall<PAGE>
cause all sums so payable to the Assignor and assigned hereby to be paid
directly into such account.
2.06 It is hereby expressly agreed that, anything contained
herein to the contrary notwithstanding, the Assignor shall remain liable
under all charters and contracts pertaining to the Rigs to perform the
obligations assumed by it thereunder, and the Collateral Agent shall have
no obligation or liability of any nature whatsoever under any such charter
or contract by reason of, or arising out of, this Agreement, nor shall the
Collateral Agent be required to assume or be obligated in any manner to
perform or fulfill any obligation of the Assignor under or pursuant to any
such charter or contract or to make any payment or make any inquiry as to
the nature or sufficiency of any payment received by the Collateral Agent,
or, unless and until indemnified to its satisfaction, to present or file
any claim or to take any other action to collect or enforce the payment of
any amounts which may have been assigned to it or to which it may be
entitled hereunder or pursuant hereto at any time or times.
2.07 The Assignor shall promptly notify the Collateral Agent in
writing of the commencement and termination of any period during which any
of the Rigs owned by it are requisitioned.
2.08 Upon the occurrence of an Event of Default, the Collateral
Agent has the right to give notice of this Agreement to all account
debtors.
2.09 The Collateral Agent shall not be required to make any
inquiry as to the nature or sufficiency of any payment received by the
Collateral Agent, or, unless and until indemnified to its satisfaction,
to present or file any claim, or to take any other action to collect or
enforce the payment of any amounts which may have been assigned to it or
to which it may be entitled hereunder or pursuant hereto at any time or
times.
SECTION 3. ASSIGNMENT OF INSURANCE
3.01 The Assignor hereby sells, assigns, transfers, sets over
and grants a security interest unto the Collateral Agent as collateral
security for the Obligations, in and to the following (all of the
following, collectively, the "Insurance Collateral" and, together with the
Earnings Collateral, the "Collateral"): (i) all policies and contracts of
insurances in respect of the Rigs whether now or hereafter to be effected
and all renewals of or replacements for the same, (ii) all claims, returns
of premium and other moneys and claims for moneys due and to be come due
under said insurances or in respect of said insurances, (iii) all other
rights of the Assignor under or in respect of said insurances and (iv) any
proceeds of any of the foregoing.
3.02 It is expressly agreed that anything herein contained to
the contrary notwithstanding, the Assignor shall remain liable under said
insurances to perform all of the obligations assumed by it thereunder and
the Collateral Agent shall have no obligation or liability (including,
without limitation, any obligation or liability with respect to the
payment of premiums, calls or assessments) under said insurances by reason
of or arising out of this instrument of assignment nor shall the
Collateral Agent be required or obligated in any manner to perform or<PAGE>
fulfill any obligations of the Assignor under or pursuant to said
insurances or to make any payment or to make any inquiry as to the nature
or sufficiency of any payment received by it or to present or file any
claim, or to take any other action to collect or enforce the payment of
any amounts which or may have been assigned to it or to which it may be
entitled hereunder at any time or times.
3.03 The Assignor hereby covenants and agrees to deliver notice
of this Assignment, in the form of Annex I hereto, to all underwriters and
that where the consent of any underwriter is required pursuant to any of
the insurances assigned hereby, the Assignor shall use its good faith
efforts to obtain such consent in the form of Annex II hereto, and
evidence thereof shall be given to the Collateral Agent, and there shall
be duly endorsed upon all slips, cover notes, policies, certificates of
entry or other instruments issued or to be issued in connection with the
insurances assigned hereby such clauses as to additional named assured or
loss payees as the Collateral Agent may reasonably request. In all cases,
unless otherwise agreed in writing by the Collateral Agent, such slips,
cover notes, notices, certificates of entry or other instruments shall
show the Collateral Agent as additional named assured and shall provide
that there will be no recourse against the Collateral Agent for payment of
premiums, calls or assessments.
3.04 In the event that the Insurance Collateral or any portion
thereof is sold in connection with a sale permitted by Section 8.02 of the
Credit Agreement or by the proviso contained in the definition of
"Collateral Disposition" in the Credit Agreement or is otherwise released
at the direction of the Required Banks (or all the Banks, to the extent
required by Section 12.12 of the Credit Agreement), the Collateral Agent,
at the request and expense of the Assignor, will duly assign, transfer and
deliver to the Assignor (without recourse and without any representation
or warranty) such of the Insurance Collateral (and releases therefor) as
is then being (or has been) so sold or released and as may be in the
possession of the Collateral Agent and has not theretofore been released
pursuant to this Agreement. At any time the Assignor desires that the
Insurance Collateral or a portion thereof be released as provided in this
section, the Assignor shall deliver to the Collateral Agent a certificate
signed by an Authorized Officer (as defined in the Credit Agreement)
stating that the release of the Insurance Collateral or portion thereof is
permitted pursuant to this section.
3.05 The Assignor hereby authorizes the Collateral Agent to
execute and file Financing Statements (Form UCC-1) and amendments thereto
as provided in Article 9 of the Uniform Commercial Code.
SECTION 4. FURTHER ASSURANCES.
The Assignor will, at any time and from time to time, at its own
expense, promptly execute and deliver all further agreements, instruments
and other documents and take all further action that may be necessary or
that the Collateral Agent may reasonably request in order to perfect and
protect the security interest purported to be created hereby or otherwise
to enable the Collateral Agent to exercise and enforce its rights and
remedies hereunder.<PAGE>
SECTION 5. TRANSFERS AND OTHER LIENS.
The Assignor will not, without the written consent of the
Collateral Agent, (i) sell, assign (by operation of law or otherwise) or
otherwise dispose of any interest in the Collateral (other than as
expressly permitted under this Agreement and the other Credit Documents)
or (ii) create or suffer to exist any Lien, security interest or other
charge or encumbrance upon or with respect to any Collateral except for
Permitted Liens and the security interest purported to be created hereby.
SECTION 6. ATTORNEY-IN-FACT.
The Assignor hereby appoints the Collateral Agent as the
Assignor's attorney-in-fact, with full authority only after the occurrence
of and during the continuance of an Event of Default, in the place and
stead of the Assignor and in the name of the Assignor or otherwise, from
time to time in the Collateral Agent's discretion to execute any
instrument and to take any other action which the Collateral Agent may in
good faith reasonably deem necessary or advisable to accomplish the
purposes of this Agreement or to facilitate the assignment or other
transfer by the Collateral Agent of any or all of its rights hereunder,
including, without limitation, (i) to receive, endorse and collect all
instruments made payable to the Assignor and representing any interest
payment or other distribution in respect of the Collateral and to give
full discharge for the same and (ii) to execute and deliver any and all
instruments and other documents that the Collateral Agent may request in
connection with the exercise by the Collateral Agent of any or all of its
rights hereunder. Such appointment of the Collateral Agent as attorney-
in-fact is irrevocable and coupled with an interest.
SECTION 7. PERFORMANCE BY THE COLLATERAL AGENT.
If the Assignor fails to perform any agreement or obligation
contained herein, the Collateral Agent itself may perform or cause
performance of such agreement or obligation, and the reasonable expenses
of the Collateral Agent incurred in connection therewith shall be payable
to the Collateral Agent by the Assignor.
SECTION 8. RESPONSIBILITY OF THE COLLATERAL AGENT.
Other than the exercise of reasonable care to assure the safe
custody of the Collateral while held hereunder, the Collateral Agent shall
have no duty or liability to preserve rights pertaining thereto and shall
be relieved of all responsibility for the Collateral upon surrendering it
or tendering surrender of it to the Assignor. The Collateral Agent shall
be deemed to have exercised reasonable care in the custody and pre-
servation of the Collateral in its possession if the Collateral is
accorded treatment substantially equal to that which the Collateral Agent
accords its own property. Without limiting the generality of the
foregoing, neither the Collateral Agent nor any of its directors,
officers, agents or employees shall be liable (i) for any failure to
invest or reinvest any cash in accordance herewith in the absence of its
or their own gross negligence or willful misconduct or for any losses
incurred by reason of investments made by the Collateral Agent pursuant to<PAGE>
Section 2.03 or (ii) for any action taken or omitted to be taken by the
Collateral Agent (x) in good faith in accordance with the advice of
counsel with respect to any question as to the construction of any
provision hereof or any action to be taken by the Collateral Agent
hereunder or (y) in accordance with any instructions or other notice which
the Collateral Agent believes in good faith to be properly given by the
Assignor hereunder. This Section 8 shall have no application to
Christiania Bank og Kreditkasse except in its capacity as Collateral
Agent.
SECTION 9. APPLICATION OF PROCEEDS.
(a) Subject to the applicability of Section 10 of the US Fleet
Mortgage and the provisions of Section 3.03(c) of the Credit Agreement,
all moneys collected by the Collateral Agent upon any sale or other
disposition of any Collateral, together with all other moneys received by
the Collateral Agent hereunder or under any of the other Security
Documents, shall be applied as follows:
(i) first, to the payment of all amounts owing the Collateral
Agent of the type described in clauses (ii) and (iii) of Section 1.01;
(ii) second, to the extent moneys remain after the application
pursuant to the preceding clause (i), an amount equal to the
outstanding Obligations shall be paid to the Secured Creditors as
provided in Section 9(c), with each Secured Creditor receiving an
amount equal to such Obligations held by it or, if the proceeds are
insufficient to pay in full all such Obligations, its Pro Rata Share
(as defined below) of the amount remaining to be distributed; and
(iii) third, to the extent moneys remain after the application
pursuant to the preceding clauses (i) and (ii), and following the
termination of this Agreement pursuant to Section 12, any surplus then
remaining shall be paid to the Assignor, subject, however, to the
rights of the holder of any then existing Lien of which the Collateral
Agent has actual notice (without investigation).
(b) For purposes of this Agreement "Pro Rata Share" shall mean,
when calculating a Secured Creditor's portion of any distribution or
amount in respect of any Obligations, the amount (expressed as a
percentage) equal to a fraction the numerator of which is the then unpaid
amount of such Obligations owing to or held by such Secured Creditor and
the denominator of which is the then outstanding amount of all such
Obligations. For purposes of determining the amount payable to each
Secured Creditor, the Collateral Agent shall be entitled to request each
Secured Creditor to furnish it with written notice of the amount of
Obligations then owed to it and shall be entitled to rely upon the amounts
stated therein in making such distributions.
(c) All payments required to be made to Secured Creditors
hereunder shall be made to the Collateral Agent for the account of the
Secured Creditors.
(d) For purposes of applying payments received in accordance with
this Section 9, the Collateral Agent shall be entitled to rely upon (i)
the Administrative Agent under the Credit Agreement and (ii) the Secured<PAGE>
Creditors for a determination (which the Administrative Agent and each
Secured Creditor, by their acceptance of the benefits of this Agreement
shall be obligated to provide upon request of the Collateral Agent) of the
outstanding Obligations owed to the Secured Creditors. Unless it has
actual knowledge (including by way of written notice from a Secured
Creditor) to the contrary, the Administrative Agent under the Credit
Agreement, in furnishing information pursuant to the preceding sentence,
and the Collateral Agent, in acting hereunder, shall be entitled to assume
that (x) no obligations other than principal, interest and regularly
accruing fees are owing to any Secured Creditor.
SECTION 10. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
ASSIGNOR.
10.01 The Assignor hereby represents and warrants it has not
assigned or pledged, and hereby covenants that, without the prior written
consent thereof of the Collateral Agent, so long as this Agreement shall
remain in effect, it will not assign or pledge the whole or any part of
the right, title and interest hereby assigned to anyone other than the
Collateral Agent, its successors or assigns, and that it will not take or
omit to take any action, the taking or omission of which might result in
an alteration or impairment of the Collateral or this Agreement, or of any
of the rights created in the Collateral by this Agreement.
10.02 As of the Restatement Effective Date, this Agreement
creates a valid and enforceable perfected security interest in and Lien on
all of the Collateral in favor of the Collateral Agent for the benefit of
the Banks, and no filings or recordings are required to perfect such
security interest except for filings or recordings required in connection
with this Agreement which shall have been made upon or prior to (or are
the subject of arrangements, satisfactory to the Administrative Agent, for
filing on or promptly after the date of) the execution and delivery of
this Agreement.
SECTION 11. INDEMNITY.
11.01 The Assignor hereby covenants with the Assignee for the
benefit of the Collateral Agent and the Banks that it will pay to the
Assignee on demand all moneys whatsoever which the Assignee or the
Collateral Agent or the Banks shall or may reasonably expend, be put to or
become liable for, in or about the protection, maintenance or enforcement
of the security created by this Agreement or in or about the exercise by
the Assignee or the Collateral Agent and the Banks of any of the powers
vested in it or them under the Mortgages or hereunder together with
interest thereon at the rate provided for in Section 1.08 of the Credit
Agreement from the date when such moneys were expended by the Assignee or
such Bank until the date of actual receipt, whether before or after any
relevant judgment.
11.02 Any amounts paid by any Indemnitee as to which such
Indemnitee has the right to reimbursement shall constitute Obligations
secured by the Collateral. The indemnity obligations of the Assignor
contained in this Section 11 shall continue in full force and effect
notwithstanding the full payment of all the Notes issued under the Credit<PAGE>
Agreement and all of the other Obligations and notwithstanding the
discharge thereof.
SECTION 12. TERMINATION; RELEASE; PARTIAL RELEASE.
(a) On the date on which the Credit Agreement and all Letters
of Credit shall have been terminated, when no Note remains outstanding and
all Obligations shall have been irrevocably paid in full, this Agreement
shall terminate, and the Collateral Agent, at the request and expense of
the Assignor, will execute and deliver to the Assignor a proper instrument
or instruments acknowledging the satisfaction and termination of this
Agreement, and will duly assign, transfer and deliver to the Assignor
(without recourse and without any representation or warranty) such of the
Collateral as may remain in the possession of the Collateral Agent
together with any moneys at the time held by the Collateral Agent
hereunder.
SECTION 13. NOTICES, ETC.
Except as otherwise expressly provided herein, all notices and
other communications provided for hereunder shall be delivered and become
effective in accordance with Section 12.03 of the Credit Agreement.
SECTION 14. MISCELLANEOUS.
14.01 This Agreement shall be binding upon the Assignor and its
successors and assigns (although the Assignor may not assign its rights or
obligations under this Agreement) and shall inure to the benefit of and be
enforceable by the Collateral Agent and its successors and assigns. The
headings in this Agreement are for purposes of reference only and shall
not limit or define the meaning hereof. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH
AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK. This Agreement may
be executed in any number of counterparts, each of which shall be an
original, but all of which shall constitute one instrument. This
Agreement shall become effective on the date on which each of the parties
shall have executed and delivered a copy hereof. In the event that any
provision of this Agreement shall at any time for any reason be declared
or decided to be invalid, void or otherwise inoperative by a court of
competent jurisdiction, such declaration or decision shall not affect the
validity of any other provision or provisions of this Agreement, or the
validity of this Agreement as a whole. In the event that by reason of any
law or regulation in force or to become in force, or by reason of a ruling
of any court of competent jurisdiction, or by any other reason whatsoever,
this Agreement is rendered either wholly or partly defective, the Assignor
shall furnish the Collateral Agent with an alternative assignment or
security and do all such other acts as are reasonably required in order to
ensure and give effect to the full intent of this Agreement.
14.02 It is declared and agreed that the security created by this
Agreement shall be held by the Collateral Agent as a continuing security
for the payment of all moneys which may at any time and from time to time
be or become payable by the Assignor under the Credit Agreement and the
other Credit Documents and that the security so created shall not be<PAGE>
satisfied by all intermediate payment or satisfaction of any part of the
amount hereby secured and that the security so created shall be in
addition to and shall not in any way be prejudiced or affected by any
collateral or other security now or hereafter held by the Collateral Agent
for all or any part of the moneys hereby secured.
14.03 Each and every right, power and remedy given herein or in
the Credit Agreement or in the other Credit Documents to the Collateral
Agent shall be cumulative and shall be in addition to every other right,
power and remedy of the Collateral Agent now or hereafter existing at law,
in equity or by statute, and each and every right, power and remedy,
whether herein given or otherwise existing, may be exercised from time to
time, in whole or in part, and as often and in such order as may be deemed
expedient by the Collateral Agent, and the exercise or the commencement of
the exercise of any right, power or remedy shall not be construed to be a
waiver of the right to exercise at the same time or thereafter any other
right, power or remedy. No delay or omission by the Collateral Agent in
the exercise of any right or power in the pursuance of any remedy accruing
upon any breach or default by the Assignor shall impair any such right,
power or remedy or be construed to be a waiver of any such right, power or
remedy or to be an acquiescence therein; nor shall the acceptance by the
Collateral Agent of any security or of any payment of or on account of any
of the amounts due from the Assignor to the Collateral Agent and maturing
after any breach or default or of any payment on account of any past
breach or default be construed to be a waiver of any right to take
advantage of any future breach or default or of any past breach or default
not completely cured thereby.
SECTION 15. WAIVER; AMENDMENT.
None of the terms and conditions of this Agreement may be changed,
waived, modified or varied in any manner whatsoever unless in writing duly
signed by the Assignor and the Collateral Agent (with the consent of
either the Required Banks (as defined in the Credit Agreement) or, to the
extent required by Section 12.12 of the Credit Agreement, all of the
Banks).
SECTION 16. SECURED CREDITOR ACKNOWLEDGMENT.
By accepting the benefits of this Agreement, each Secured Creditor
acknowledges and agrees that the rights and obligations of the Collateral
Agent shall be as set forth in Section 12 of the Credit Agreement.<PAGE>
IN WITNESS WHEREOF, the Assignor and the Collateral Agent have
caused this Agreement to be executed by their duly elected officers duly
authorized as of the date first above written.
ADDRESS: ENSCO OFFSHORE COMPANY
1445 Ross Avenue
Suite 2700
Dallas, Texas 77202-2792 By________________________________
Attention: Chief Financial Officer Title:
Tel: (214) 922-1500
Fax: (214) 855-0080
11 West 42nd Street CHRISTIANIA BANK OG KREDITKASSE,
New York, New York 10036 NEW YORK BRANCH, as Collateral Agent
Attention: Hans Chr. Kjelsrud
Tel: (212) 827-4814
Fax: (212) 827-4888
By________________________________
Title:
By________________________________
Title: <PAGE>
EXHIBIT 1
to
Security Agreement
------------------
NOTICE OF ASSIGNMENT
TO:
TAKE NOTICE THAT:
By a Security Agreement, dated the __ day of February, 1997 made by us
to Christiania Bank og Kreditkasse, as agent (the "Assignee"), and
relating to the United States flag vessel ________ (the "Rig"), we
have assigned to the Assignee as from the date hereof all our right,
title and interest in and to any moneys whatsoever payable to us under
that certain [Charter Contract] dated as of ________, ____ as at any
time amended (the "Contract") between yourselves and the undersigned
concerning the Rig, as the Contract may at any time be amended or
supplemented, and all other rights and benefits whatsoever accruing to
us which arise or may arise from the operation of the Rig under the
Contract including (but without prejudice to the generality of the
foregoing) all claims for damages for any breach of the Contract by
you.
DATED THIS ___ day of ___________, _____.
[ ]
By __________________________
Its:<PAGE>
EXHIBIT 2
to
Security Agreement
------------------
CONSENT AND AGREEMENT
The undersigned, [ ], a party to the Contract to which the
Notice of Assignment delivered pursuant to the foregoing Security
Agreement refers (terms defined in the Security Agreement are used herein
with the same meaning), in consideration of the sum of one dollar ($1.00)
lawful money of the United States of America and other good and valuable
consideration, paid by Christiania Bank og Kreditkasse, as agent (the
"Assignee"), the receipt of which is hereby acknowledged, hereby acknowl-
edges notice of and consents and agrees to the foregoing collateral
assignment of earnings and to all of the terms thereof and agrees that:
(1) it will make payment directly to the account advised by the Assignee,
of all moneys due and to become due from it under the Contract until
receipt of written notice from the Assignee that all obligations to the
Banks secured by said Security Agreement have been paid in full; and (2)
any such payment shall be final and the undersigned will not seek to
recover from the Assignee for any reason whatsoever any moneys paid by the
undersigned to the Assignee by virtue of the foregoing Security Agreement
and this Consent and Agreement but this shall not prevent the set off or
credit against or deduction from any moneys payable to the Assignee by
virtue of said Security Agreement of amounts owing to the undersigned by
the Assignor under the Contract.
[ ], as charterer, confirms and agrees that the Contract is in
full force and effect and is enforceable in accordance with its terms and
the Assignor is not in default thereunder.
This Consent and Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York, without
reference to principles of conflicts of law.
Dated: ___________, ____
[ ]
By _________________<PAGE>
ANNEX 1
to
Security Agreement
------------------
NOTICE OF ASSIGNMENT
__________________________________________ (the "Owner"), the owner of
the United States flag offshore drilling rig _____________ (the "Rig"),
HEREBY GIVES NOTICE that by a Security Agreement dated February __, 1997
and made between the Owner and Christiania Bank og Kreditkasse, New York
Branch, as Collateral Agent (the "Assignee") for itself and certain other
Banks, the Owner assigned to the Assignee all of the Owner's right, title
and interest in and to all insurances and the benefit of all insurances
now or hereafter taken out in respect of the Rig. This Notice of
Assignment and loss payable clauses substantially similar to those set
forth below are to be indorsed on all policies and certificates of entry
evidencing such insurance.
[OWNER]
By_________________________
Its:
Loss Payable Clauses:
- --------------------
All amounts of whatsoever nature payable under any insurance shall be
payable to the Security Trustee for distribution first to itself, the
Secured Creditors, the Co-Agents and thereafter to the Owner or others as
their interests may appear. Nevertheless, until otherwise required by the
Security Trustee by notice to the underwriters, (i) amounts payable under
any insurance on the Rigs with respect to the protection and indemnity
risks shall be paid directly to the Owner to reimburse it for any loss,
damage or expense incurred by it and covered by such insurance or to the
person to whom any liability covered by such insurance has been incurred,
and (ii) amounts payable under any insurance with respect to the Rigs
involving any damage to any Rigs not constituting an actual or
constructive total loss, shall be paid by the underwriters directly for
the repair, salvage or other charges involved or, if the Owner shall have
first fully repaired the damage or paid all of the salvage or other
charges shall be paid to the Owner as reimbursement therefore, PROVIDED,
no amounts in excess of US$2,000,000 shall be paid from any insurances
without the prior written consent of the Security Trustee.
In the event of an actual or constructive total loss or a compromised
constructive total loss or requisition of any Rig, all insurance payments
therefor shall be paid to the Security Trustee and applied to reduce the
Total Commitment in accordance with and subject to the terms of Section
3.03(c) and/or (d) of the Credit Agreement. The Owner shall not declare
or agree with underwriters that any Rig is a constructive or compromised,<PAGE>
agreed or arranged constructive total loss without the prior written
consent of the Security Trustee.
In the event of an actual constructive total loss of any Rig, the
Security Trustee shall retain out of the insurance payments received on
account of such loss and held by the Security Trustee in accordance with
the Credit Agreement, any sum or sums that shall be or become owing to the
Security Trustee under this Mortgage for the cost, if any, of collecting
the insurance, which sum or sums shall become the sole property of the
Security Trustee, and pay the balance to the Banks for application
pursuant to and subject to Section 3.03(c) and/or (d) of the Credit
Agreement.<PAGE>
ANNEX II
to
Security Agreement
------------------
CONSENT AND AGREEMENT
The undersigned, [ ], a party to the Contract to which the
Notice of Assignment delivered pursuant to the foregoing Security
Agreement refers (terms defined in the Security Agreement are used herein
with the same meaning), hereby acknowledges notice of and consents and
agrees to the foregoing collateral assignment of insurance and to all of
the terms thereof and agrees that it will, subject to the loss payable
clauses, make payment directly to the account advised by Christiania Bank
og Kreditkasse, New York Branch (the "Assignee"), of all moneys due and to
become due from it under the Contract until receipt of written notice from
the Assignee that all obligations to the Banks secured by said Security
Agreement have been paid in full.
This Consent and Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York, without
reference to principles of conflicts of law.
Dated: ___________, ____
[ ]
By _________________<PAGE>
EXHIBIT G-2
-----------
FORM OF BORROWER B SECURITY AGREEMENT
-------------------------------------
SECURITY AGREEMENT (as amended, modified or supplemented from time
to time, this "Agreement"), dated as of February 27, 1997, between ENSCO
Offshore U.K. Limited (the "Assignor") and Christiania Bank og
Kreditkasse, New York Branch, as Collateral Agent (the "Collateral
Agent"), for the benefit of the Banks and the Administrative Agent under,
and as defined in, the Credit Agreement hereinafter referred to (such
Banks and Administrative Agent are hereinafter called the "Secured
Creditors"). Except as otherwise defined herein, capitalized terms used
herein and defined in the Credit Agreement shall be used herein as so
defined.
W I T N E S S E T H :
WHEREAS, ENSCO International Incorporated, ENSCO Delaware, Inc.,
ENSCO Offshore Company, the Assignor, Dual Holding Company, the lending
institutions from time to time party thereto, Christiania Bank og
Kreditkasse, New York Branch and Den norske Bank ASA, New York Branch, as
co-agents and Christiania Bank og Kreditkasse, New York Branch, as
administrative agent and security trustee have entered into a Credit
Agreement, dated as of February 27, 1997 (as modified, supplemented or
amended from time to time, the "Credit Agreement"), providing for, among
other things, the making of Tranche B Loans to the Assignor as
contemplated therein;
WHEREAS, the Assignor desires to incur Tranche B Loans under the
Credit Agreement;
WHEREAS, the Assignor, a company formed under the laws of the
United Kingdom, is the sole owner of the United States registered offshore
drilling rigs ENSCO 80 (official no. 724944), ENSCO 85 (official no.
724945) and ENSCO 92 (official no. 724946) (all of the aforementioned
vessels being herein collectively referred to as the "Rigs");
WHEREAS, it is a condition precedent to the making of Loans and
the issuance of Letters of Credit under the Credit Agreement and to the
occurrence of the Effective Date that the Assignor shall have executed and
delivered to the Collateral Agent this Agreement; and
WHEREAS, the Assignor desires to execute this Agreement to satisfy
the condition described in the preceding paragraph;
NOW, THEREFORE, in consideration of the benefits accruing to the
Assignor, the receipt and sufficiency of which are hereby acknowledged,
the Assignor hereby makes the following representations and warranties to
the Collateral Agent and hereby covenants and agrees with the Collateral
Agent as follows:<PAGE>
SECTION 1. OBLIGATIONS SECURED.
1.01 Obligations Secured. The Agreement is made for the
benefit of the Secured Creditors to secure (i) the full and prompt payment
when due of (x) the principal of and interest on the Tranche B Notes
issued, and Tranche B Loans made, under the Credit Agreement and (y) all
other obligations and indebtedness (including, without limitation,
indemnities, Fees and interest thereon) of the Assignor to the Secured
Creditors, whether now existing or hereafter incurred under, arising out
of or in connection with the Credit Agreement and the other Credit
Documents and the due performance and compliance by the Assignor with all
of the terms, conditions and agreements contained in the Credit Agreement
and the other Credit Documents; (ii) any and all sums advanced by the
Collateral Agent in order to preserve the Collateral (as hereinafter
defined) or preserve its security interest in the Collateral; (iii) in the
event of any proceeding for the collection or enforcement of any
indebtedness, obligations, or liabilities of the Assignor referred to in
clause (i) above, after an Event of Default shall have occurred and be
continuing, the reasonable expenses of the Collateral Agent of re-taking,
holding, preparing for sale or lease, selling or otherwise disposing of or
realizing on the Collateral, or of any exercise by the Collateral Agent of
its rights hereunder, together with reasonable attorneys' fees of counsel
to the Collateral Agent and court costs; and (iv) all reasonable amounts
paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement under Section 11 of this Agreement (all such obligations,
liabilities, sums and expenses referred to in clauses (i) through (iv)
above being collectively referred to as the "Obligations"). The
"Obligations" shall include extensions of credit of the types described
above, whether outstanding on the date of this Agreement or extended from
time to time after the date of this Agreement.
SECTION 2. ASSIGNMENT OF EARNINGS.
2.01 The Assignor, as legal and beneficial owner, hereby
assigns, transfers and sets over unto the Collateral Agent for the benefit
of the Secured Creditors and their successors and assigns, and hereby
grants the Collateral Agent a security interest in, all of its right,
title and interest in and to: (i) all day rate payments, freights,
charter hire and any other moneys earned and to be earned, due or to
become due or paid or payable to, or for the account of the Assignor, of
whatsoever nature, arising out of any charter parties, drilling contracts
or as a result of the ownership, chartering and other operations of any
kind whatsoever by the Assignor or its agents of the Rigs, (ii) all moneys
and claims for moneys due and to become due to the Assignor and all claims
for damages arising out of the breach of any and all present or future
drilling contracts, charter parties, and operations of every kind
whatsoever of the Rigs and in and to any and all claims and causes of
action for money, loss or damages that may accrue or belong to the
Assignor, their successors, or assigns, arising out of or in any way
connected with any and all present and future requisitions, drilling
contracts, charter parties, and other operations of the Rigs of any kind
whatsoever, (iii) all moneys and claims for moneys due and to become due
to the Assignor, and all claims for damages in respect of the actual or
constructive total loss of or requisition or use of or title to any of the
Rigs subject to Section 3.03(c) of the Credit Agreement and (iv) any<PAGE>
proceeds of any of the foregoing (collectively, the "Earnings
Collateral").
2.02 Subject to the provisions of Section 2.03 of this
Agreement, the Collateral Agent's security interest in all accounts
receivable included in, or representing proceeds of, the Earnings
Collateral shall automatically be and be deemed released, without the need
for any action on the part of the Collateral Agent, from time to time as
such accounts receivable arise or are created, or as funds representing
payments of such Collateral (or part thereof) are collected by the
Assignor.
2.03 Upon the occurrence of an Event of Default pursuant to
Section 9.05 of the Credit Agreement (a "Bankruptcy Default") and without
any further act or notice, or upon the giving by the Collateral Agent of a
written notice (a "Release Termination Notice") to the Assignor after the
occurrence and during the continuance of an Event of Default, the
automatic release set forth in Section 2.02 of this Agreement shall
terminate.
2.04 Upon the occurrence of an Event of Default, the Assignor
hereby represents, warrants and undertakes that:
(a) notice of this Agreement in the form attached hereto
as Exhibit 1 will be promptly delivered to any
charterers of the Rigs; and
(b) it will use its good faith efforts to cause any
charterer to execute a Consent and Agreement to this
Agreement in the form attached hereto as Exhibit 2 and
deliver such Consent and Agreement to the Collateral
Agent.
2.05 Upon the occurrence of an Event of Default, the Collateral
Agent shall be entitled to receive all payments of Earnings Collateral of
the Rigs payable to the Assignor and assigned hereby. Such payment shall
be made to the account of the Collateral Agent, and the Assignor shall
cause all sums so payable to the Assignor and assigned hereby to be paid
directly into such account.
2.06 It is hereby expressly agreed that, anything contained
herein to the contrary notwithstanding, the Assignor shall remain liable
under all charters and contracts pertaining to the Rigs to perform the
obligations assumed by it thereunder, and the Collateral Agent shall have
no obligation or liability of any nature whatsoever under any such charter
or contract by reason of, or arising out of, this Agreement, nor shall the
Collateral Agent be required to assume or be obligated in any manner to
perform or fulfill any obligation of the Assignor under or pursuant to any
such charter or contract or to make any payment or make any inquiry as to
the nature or sufficiency of any payment received by the Collateral Agent,
or, unless and until indemnified to its satisfaction, to present or file
any claim or to take any other action to collect or enforce the payment of
any amounts which may have been assigned to it or to which it may be
entitled hereunder or pursuant hereto at any time or times.<PAGE>
2.07 The Assignor shall promptly notify the Collateral Agent in
writing of the commencement and termination of any period during which any
of the Rigs owned by it are requisitioned.
2.08 Upon the occurrence of an Event of Default, the Collateral
Agent has the right to give notice of this Agreement to all account
debtors.
2.09 The Collateral Agent shall not be required to make any
inquiry as to the nature or sufficiency of any payment received by the
Collateral Agent, or, unless and until indemnified to its satisfaction,
to present or file any claim, or to take any other action to collect or
enforce the payment of any amounts which may have been assigned to it or
to which it may be entitled hereunder or pursuant hereto at any time or
times.
SECTION 3. ASSIGNMENT OF INSURANCE
3.01 The Assignor hereby sells, assigns, transfers, sets over
and grants a security interest unto the Collateral Agent as collateral
security for the Obligations, in and to the following (all of the
following, collectively, the "Insurance Collateral" and, together with the
Earnings Collateral, the "Collateral"): (i) all policies and contracts of
insurances in respect of the Rigs whether now or hereafter to be effected
and all renewals of or replacements for the same, (ii) all claims, returns
of premium and other moneys and claims for moneys due and to be come due
under said insurances or in respect of said insurances, (iii) all other
rights of the Assignor under or in respect of said insurances (iv) any
proceeds of any of the foregoing.
3.02 It is expressly agreed that anything herein contained to
the contrary notwithstanding, the Assignor shall remain liable under said
insurances to perform all of the obligations assumed by it thereunder and
the Collateral Agent shall have no obligation or liability (including,
without limitation, any obligation or liability with respect to the
payment of premiums, calls or assessments) under said insurances by reason
of or arising out of this instrument of assignment nor shall the
Collateral Agent be required or obligated in any manner to perform or
fulfill any obligations of the Assignor under or pursuant to said
insurances or to make any payment or to make any inquiry as to the nature
or sufficiency of any payment received by it or to present or file any
claim, or to take any other action to collect or enforce the payment of
any amounts which or may have been assigned to it or to which it may be
entitled hereunder at any time or times.
3.03 The Assignor hereby covenants and agrees to deliver notice
of this Assignment, in the form of Annex I hereto, to all underwriters and
that where the consent of any underwriter is required pursuant to any of
the insurances assigned hereby, the Assignor shall use its good faith
efforts to obtain such consent in the form of Annex II hereto, and
evidence thereof shall be given to the Collateral Agent, and there shall
be duly endorsed upon all slips, cover notes, policies, certificates of
entry or other instruments issued or to be issued in connection with the
insurances assigned hereby such clauses as to additional named assured or
loss payees as the Collateral Agent may reasonably request. In all cases,
unless otherwise agreed in writing by the Collateral Agent, such slips,<PAGE>
cover notes, notices, certificates of entry or other instruments shall
show the Collateral Agent as additional named assured and shall provide
that there will be no recourse against the Collateral Agent for payment of
premiums, calls or assessments.
3.04 In the event that the Insurance Collateral or any portion
thereof is sold in connection with a sale permitted by Section 8.02 of the
Credit Agreement or by the proviso contained in the definition of
"Collateral Disposition" in the Credit Agreement or is otherwise released
at the direction of the Required Banks (or all the Banks, to the extent
required by Section 12.12 of the Credit Agreement), the Collateral Agent,
at the request and expense of the Assignor, will duly assign, transfer and
deliver to the Assignor (without recourse and without any representation
or warranty) such of the Insurance Collateral (and releases therefor) as
is then being (or has been) so sold or released and as may be in the
possession of the Collateral Agent and has not theretofore been released
pursuant to this Agreement. At any time the Assignor desires that the
Insurance Collateral or a portion thereof be released as provided in this
section, the Assignor shall deliver to the Collateral Agent a certificate
signed by an Authorized Officer (as defined in the Credit Agreement)
stating that the release of the Insurance Collateral or portion thereof is
permitted pursuant to this section.
3.05 The Assignor hereby authorizes the Collateral Agent to
execute and file Financing Statements (Form UCC-1) (or foreign equivalent
thereof, including the Floating Charge) and amendments thereto as provided
in Article 9 of the Uniform Commercial Code.
SECTION 4. FURTHER ASSURANCES.
The Assignor will, at any time and from time to time, at its own
expense, promptly execute and deliver all further agreements, instruments
and other documents and take all further action that may be necessary or
that the Collateral Agent may reasonably request in order to perfect and
protect the security interest purported to be created hereby or otherwise
to enable the Collateral Agent to exercise and enforce its rights and
remedies hereunder.
SECTION 5. TRANSFERS AND OTHER LIENS.
The Assignor will not, without the written consent of the
Collateral Agent, (i) sell, assign (by operation of law or otherwise) or
otherwise dispose of any interest in the Collateral (other than as
expressly permitted under this Agreement and the other Credit Documents)
or (ii) create or suffer to exist any Lien, security interest or other
charge or encumbrance upon or with respect to any Collateral except for
Permitted Liens and the security interest purported to be created hereby.
SECTION 6. ATTORNEY-IN-FACT.
The Assignor hereby appoints the Collateral Agent as the
Assignor's attorney-in-fact, with full authority only after the occurrence
of and during the continuance of an Event of Default, in the place and
stead of the Assignor and in the name of the Assignor or otherwise, from<PAGE>
time to time in the Collateral Agent's discretion to execute any
instrument and to take any other action which the Collateral Agent may in
good faith reasonably deem necessary or advisable to accomplish the pur-
poses of this Agreement or to facilitate the assignment or other transfer
by the Collateral Agent of any or all of its rights hereunder, including,
without limitation, (i) to receive, endorse and collect all instruments
made payable to the Assignor and representing any interest payment or
other distribution in respect of the Collateral and to give full discharge
for the same and (ii) to execute and deliver any and all instruments and
other documents that the Collateral Agent may request in connection with
the exercise by the Collateral Agent of any or all of its rights
hereunder. Such appointment of the Collateral Agent as attorney-in-fact
is irrevocable and coupled with an interest.
SECTION 7. PERFORMANCE BY THE COLLATERAL AGENT.
If the Assignor fails to perform any agreement or obligation
contained herein, the Collateral Agent itself may perform or cause
performance of such agreement or obligation, and the reasonable expenses
of the Collateral Agent incurred in connection therewith shall be payable
to the Collateral Agent by the Assignor.
SECTION 8. RESPONSIBILITY OF THE COLLATERAL AGENT.
Other than the exercise of reasonable care to assure the safe
custody of the Collateral while held hereunder, the Collateral Agent shall
have no duty or liability to preserve rights pertaining thereto and shall
be relieved of all responsibility for the Collateral upon surrendering it
or tendering surrender of it to the Assignor. The Collateral Agent shall
be deemed to have exercised reasonable care in the custody and preser-
vation of the Collateral in its possession if the Collateral is accorded
treatment substantially equal to that which the Collateral Agent accords
its own property. Without limiting the generality of the foregoing,
neither the Collateral Agent nor any of its directors, officers, agents or
employees shall be liable (i) for any failure to invest or reinvest any
cash in accordance herewith in the absence of its or their own gross
negligence or willful misconduct or for any losses incurred by reason of
investments made by the Collateral Agent pursuant to Section 2.03 or (ii)
for any action taken or omitted to be taken by the Collateral Agent (x) in
good faith in accordance with the advice of counsel with respect to any
question as to the construction of any provision hereof or any action to
be taken by the Collateral Agent hereunder or (y) in accordance with any
instructions or other notice which the Collateral Agent believes in good
faith to be properly given by the Assignor hereunder. This Section 8
shall have no application to Christiania Bank og Kreditkasse except in its
capacity as Collateral Agent.
SECTION 9. APPLICATION OF PROCEEDS.
(a) Subject to the applicability of Section 10 of the Bahamian
Mortgages and the provisions of Section 3.03(c) of the Credit Agreement,
all moneys collected by the Collateral Agent upon any sale or other
disposition of any Collateral, together with all other moneys received by<PAGE>
the Collateral Agent hereunder or under any of the other Security
Documents, shall be applied as follows:
(i) first, to the payment of all amounts owing the Collateral
Agent of the type described in clauses (ii) and (iii) of Section 1.01;
(ii) second, to the extent moneys remain after the application
pursuant to the preceding clause (i), an amount equal to the
outstanding Obligations shall be paid to the Secured Creditors as
provided in Section 9(c), with each Secured Creditor receiving an
amount equal to such Obligations held by it or, if the proceeds are
insufficient to pay in full all such Obligations, its Pro Rata Share
(as defined below) of the amount remaining to be distributed; and
(iii) third, to the extent moneys remain after the application
pursuant to the preceding clauses (i) and (ii), and following the
termination of this Agreement pursuant to Section 12, any surplus then
remaining shall be paid to the Assignor, subject, however, to the
rights of the holder of any then existing Lien of which the Collateral
Agent has actual notice (without investigation).
(b) For purposes of this Agreement "Pro Rata Share" shall mean,
when calculating a Secured Creditor's portion of any distribution or
amount in respect of any Obligations, the amount (expressed as a
percentage) equal to a fraction the numerator of which is the then unpaid
amount of such Obligations owing to or held by such Secured Creditor and
the denominator of which is the then outstanding amount of all such
Obligations. For purposes of determining the amount payable to each
Secured Creditor, the Collateral Agent shall be entitled to request each
Secured Creditor to furnish it with written notice of the amount of
Obligations then owed to it and shall be entitled to rely upon the amounts
stated therein in making such distributions.
(c) All payments required to be made to Secured Creditors
hereunder shall be made to the Collateral Agent at the UK Payment Office
for the account of the Secured Creditors.
(d) For purposes of applying payments received in accordance with
this Section 9, the Collateral Agent shall be entitled to rely upon (i)
the Administrative Agent under the Credit Agreement and (ii) the Secured
Creditors for a determination (which the Administrative Agent and each
Secured Creditor, by their acceptance of the benefits of this Agreement
shall be obligated to provide upon request of the Collateral Agent) of the
outstanding Obligations owed to the Secured Creditors. Unless it has
actual knowledge (including by way of written notice from a Secured
Creditor) to the contrary, the Administrative Agent under the Credit
Agreement, in furnishing information pursuant to the preceding sentence,
and the Collateral Agent, in acting hereunder, shall be entitled to assume
that (x) no obligations other than principal, interest and regularly
accruing fees are owing to any Secured Creditor.
SECTION 10. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
ASSIGNOR.
10.01 The Assignor hereby represents and warrants it has not
assigned or pledged, and hereby covenants that, without the prior written<PAGE>
consent thereof of the Collateral Agent, so long as this Agreement shall
remain in effect, it will not assign or pledge the whole or any part of
the right, title and interest hereby assigned to anyone other than the
Collateral Agent, its successors or assigns, and that it will not take or
omit to take any action, the taking or omission of which might result in
an alteration or impairment of the Collateral or this Agreement, or of any
of the rights created in the Collateral by this Agreement.
10.02 As of the Restatement Effective Date, this Agreement
creates a valid and enforceable perfected security interest in and Lien on
all of the Collateral in favor of the Collateral Agent for the benefit of
the Banks, and no filings or recordings required in connection with this
Agreement which shall have been made prior to (or are the subject of
arrangements, satisfactory to the Administrative Agent, for filing on or
promptly after the date of) the execution and delivery of this Agreement.
SECTION 11. INDEMNITY.
11.01 The Assignor hereby covenants with the Assignee for the
benefit of the Collateral Agent and the Banks that it will pay to the
Assignee on demand all moneys whatsoever which the Assignee or the
Collateral Agent or the Banks shall or may reasonably expend, be put to or
become liable for, in or about the protection, maintenance or enforcement
of the security created by this Agreement or in or about the exercise by
the Assignee or the Collateral Agent and the Banks of any of the powers
vested in it or them under the Mortgages or hereunder together with
interest thereon at the rate provided for in Section 1.08 of the Credit
Agreement from the date when such moneys were expended by the Assignee or
such Bank until the date of actual receipt, whether before or after any
relevant judgment.
11.02 Any amounts paid by any Indemnitee as to which such
Indemnitee has the right to reimbursement shall constitute Obligations
secured by the Collateral. The indemnity obligations of the Assignor
contained in this Section 11 shall continue in full force and effect
notwithstanding the full payment of all the Tranche B Notes issued under
the Credit Agreement and all of the other Obligations and notwithstanding
the discharge thereof.
SECTION 12. TERMINATION; RELEASE; PARTIAL RELEASE.
(a) On the date on which the Credit Agreement has been
terminated, when no Tranche B Note remains outstanding and all Obligations
shall have been irrevocably paid in full, this Agreement shall terminate,
and the Collateral Agent, at the request and expense of the Assignor, will
execute and deliver to the Assignor a proper instrument or instruments
acknowledging the satisfaction and termination of this Agreement, and will
duly assign, transfer and deliver to the Assignor (without recourse and
without any representation or warranty) such of the Collateral as may
remain in the possession of the Collateral Agent together with any moneys
at the time held by the Collateral Agent hereunder.
SECTION 13. NOTICES, ETC.<PAGE>
Except as otherwise expressly provided herein, all notices and
other communications provided for hereunder shall be delivered and become
effective in accordance with Section 12.03 of the Credit Agreement.
SECTION 14. MISCELLANEOUS.
14.01 This Agreement shall be binding upon the Assignor and its
successors and assigns (although the Assignor may not assign its rights or
obligations under this Agreement) and shall inure to the benefit of and be
enforceable by the Collateral Agent and its successors and assigns. The
headings in this Agreement are for purposes of reference only and shall
not limit or define the meaning hereof. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH
AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK. This Agreement may
be executed in any number of counterparts, each of which shall be an
original, but all of which shall constitute one instrument. This
Agreement shall become effective on the date on which each of the parties
shall have executed and delivered a copy hereof. In the event that any
provision of this Agreement shall at any time for any reason be declared
or decided to be invalid, void or otherwise inoperative by a court of
competent jurisdiction, such declaration or decision shall not affect the
validity of any other provision or provisions of this Agreement, or the
validity of this Agreement as a whole. In the event that by reason of any
law or regulation in force or to become in force, or by reason of a ruling
of any court of competent jurisdiction, or by any other reason whatsoever,
this Agreement is rendered either wholly or partly defective, the Assignor
shall furnish the Collateral Agent with an alternative assignment or
security and do all such other acts as are reasonably required in order to
ensure and give effect to the full intent of this Agreement.
14.02 It is declared and agreed that the security created by this
Agreement shall be held by the Collateral Agent as a continuing security
for the payment of all moneys which may at any time and from time to time
be or become payable by the Assignor under the Credit Agreement and the
other Credit Documents and that the security so created shall not be
satisfied by all intermediate payment or satisfaction of any part of the
amount hereby secured and that the security so created shall be in
addition to and shall not in any way be prejudiced or affected by any
collateral or other security now or hereafter held by the Collateral Agent
for all or any part of the moneys hereby secured.
14.03 Each and every right, power and remedy given herein or in
the Credit Agreement or in the other Credit Documents to the Collateral
Agent shall be cumulative and shall be in addition to every other right,
power and remedy of the Collateral Agent now or hereafter existing at law,
in equity or by statute, and each and every right, power and remedy,
whether herein given or otherwise existing, may be exercised from time to
time, in whole or in part, and as often and in such order as may be deemed
expedient by the Collateral Agent, and the exercise or the commencement of
the exercise of any right, power or remedy shall not be construed to be a
waiver of the right to exercise at the same time or thereafter any other
right, power or remedy. No delay or omission by the Collateral Agent in
the exercise of any right or power in the pursuance of any remedy accruing
upon any breach or default by the Assignor shall impair any such right,
power or remedy or be construed to be a waiver of any such right, power or
remedy or to be an acquiescence therein; nor shall the acceptance by the<PAGE>
Collateral Agent of any security or of any payment of or on account of any
of the amounts due from the Assignor to the Collateral Agent and maturing
after any breach or default or of any payment on account of any past
breach or default be construed to be a waiver of any right to take
advantage of any future breach or default or of any past breach or default
not completely cured thereby.
SECTION 15. WAIVER; AMENDMENT.
None of the terms and conditions of this Agreement may be changed,
waived, modified or varied in any manner whatsoever unless in writing duly
signed by the Assignor and the Collateral Agent (with the consent of
either the Required Banks (as defined in the Credit Agreement) or, to the
extent required by Section 12.12 of the Credit Agreement, all of the
Banks).
SECTION 16. SECURED CREDITOR ACKNOWLEDGMENT.
By accepting the benefits of this Agreement, each Secured Creditor
acknowledges and agrees that the rights and obligations of the Collateral
Agent shall be as set forth in Section 12 of the Credit Agreement.<PAGE>
IN WITNESS WHEREOF, the Assignor and the Collateral Agent have
caused this Agreement to be executed by their duly elected officers duly
authorized as of the date first above written.
ADDRESS: ENSCO OFFSHORE U.K. LIMITED
1445 Ross Avenue
Suite 2700
Dallas, Texas 77202-2792 By________________________________
Attention: Chief Financial Officer Title:
Tel: (214) 922-1500
Fax: (214) 855-0080
11 West 42nd Street CHRISTIANIA BANK OG KREDITKASSE,
New York, New York 10036 NEW YORK BRANCH, as Collateral Agent
Attention: Hans Chr. Kjelsrud
Tel: (212) 827-4814
Fax: (212) 827-4888
By________________________________
Title:
By________________________________
Title: <PAGE>
EXHIBIT 1
to
Security Agreement
------------------
NOTICE OF ASSIGNMENT
TO:
TAKE NOTICE THAT:
By a Security Agreement, dated the __ day of February, 1997 made by us
to Christiania Bank og Kreditkasse, as agent (the "Assignee"), and
relating to the Bahamian flag vessel ________ (the "Rig"), we have
assigned to the Assignee as from the date hereof all our right, title
and interest in and to any moneys whatsoever payable to us under that
certain [Charter Contract] dated as of ________, ____ as at any time
amended (the "Contract") between yourselves and the undersigned
concerning the Rig, as the Contract may at any time be amended or
supplemented, and all other rights and benefits whatsoever accruing to
us which arise or may arise from the operation of the Rig under the
Contract including (but without prejudice to the generality of the
foregoing) all claims for damages for any breach of the Contract by
you.
DATED THIS ___ day of ___________, ____.
[ ]
By ___________________
Its:<PAGE>
EXHIBIT 2
to
Security Agreement
------------------
CONSENT AND AGREEMENT
The undersigned, [ ], a party to the Contract to which the
Notice of Assignment delivered pursuant to the foregoing Security
Agreement refers (terms defined in the Security Agreement are used herein
with the same meaning), in consideration of the sum of one dollar ($1.00)
lawful money of the United States of America and other good and valuable
consideration, paid by Christiania Bank og Kreditkasse, as agent (the
"Assignee"), the receipt of which is hereby acknowledged, hereby
acknowledges notice of and consents and agrees to the foregoing collateral
assignment of earnings and to all of the terms thereof and agrees that:
(1) it will make payment directly to the account advised by the Assignee,
of all moneys due and to become due from it under the Contract until
receipt of written notice from the Assignee that all obligations to the
Banks secured by said Security Agreement have been paid in full; and (2)
any such payment shall be final and the undersigned will not seek to
recover from the Assignee for any reason whatsoever any moneys paid by the
undersigned to the Assignee by virtue of the foregoing Security Agreement
and this Consent and Agreement but this shall not prevent the set off or
credit against or deduction from any moneys payable to the Assignee by
virtue of said Security Agreement of amounts owing to the undersigned by
the Assignor under the Contract.
[ ], as charterer, confirms and agrees that the Contract is in
full force and effect and is enforceable in accordance with its terms and
the Assignor is not in default thereunder.
This Consent and Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York, without
reference to principles of conflicts of law.
Dated: ___________, ____
[ ]
By _________________<PAGE>
ANNEX I
to
Security Agreement
------------------
NOTICE OF ASSIGNMENT
_____________________________________ (the "Owner"), the owner of the
Bahamian flag offshore drilling rig _____________ (the "Rig"), HEREBY
GIVES NOTICE that by a Security Agreement dated February __, 1997 and made
between the Owner and Christiania Bank og Kreditkasse, New York Branch, as
Collateral Agent (the "Assignee") for itself and certain other Banks, the
Owner assigned to the Assignee all of the Owner's right, title and
interest in and to all insurances and the benefit of all insurances now or
hereafter taken out in respect of the Rig. This Notice of Assignment and
loss payable clauses substantially similar to those set forth below are to
be indorsed on all policies and certificates of entry evidencing such
insurance.
[OWNER]
BY_________________________
Its:
Loss Payable Clauses:
- --------------------
All amounts of whatsoever nature payable under any insurance shall be
payable to the Security Trustee for distribution first to itself, the
Secured Creditors, the Co-Agents and thereafter to the Owner or others as
their interests may appear. Nevertheless, until otherwise required by the
Security Trustee by notice to the underwriters, (i) amounts payable under
any insurance on the Rigs with respect to the protection and indemnity
risks shall be paid directly to the Owner to reimburse it for any loss,
damage or expense incurred by it and covered by such insurance or to the
person to whom any liability covered by such insurance has been incurred,
and (ii) amounts payable under any insurance with respect to the Rigs
involving any damage to any Rigs not constituting an actual or
constructive total loss, shall be paid by the underwriters directly for
the repair, salvage or other charges involved or, if the Owner shall have
first fully repaired the damage or paid all of the salvage or other
charges shall be paid to the Owner as reimbursement therefore, PROVIDED,
no amounts in excess of US$2,000,000 shall be paid from any insurances
without the prior written consent of the Security Trustee.
In the event of an actual or constructive total loss or a compromised
constructive total loss or requisition of any Rig, all insurance payments
therefor shall be paid to the Security Trustee and applied to reduce the
Total Commitment in accordance with and subject to the terms of Section
3.03(c) and/or (d) of the Credit Agreement. The Owner shall not declare<PAGE>
or agree with underwriters that any Rig is a constructive or compromised,
agreed or arranged constructive total loss without the prior written
consent of the Security Trustee.
In the event of an actual constructive total loss of any Rig, the
Security Trustee shall retain out of the insurance payments received on
account of such loss and held by the Security Trustee in accordance with
the Credit Agreement, any sum or sums that shall be or become owing to the
Security Trustee under this Mortgage for the cost, if any, of collecting
the insurance, which sum or sums shall become the sole property of the
Security Trustee, and pay the balance to the Banks for application
pursuant to and subject to Section 3.03(c) and/or (d) of the Credit
Agreement.
<PAGE>
ANNEX II
to
Security Agreement
------------------
CONSENT AND AGREEMENT
The undersigned, [ ], a party to the Contract to which the
Notice of Assignment delivered pursuant to the foregoing Security
Agreement refers (terms defined in the Security Agreement are used herein
with the same meaning), hereby acknowledges notice of and consents and
agrees to the foregoing collateral assignment of insurance and to all of
the terms thereof and agrees that it will, subject to the loss payable
clauses make payment directly to the account advised by Christiania Bank
og Kreditkasse, New York Branch (the "Assignee"), of all moneys due and to
become due from it under the Contract until receipt of written notice from
the Assignee that all obligations to the Banks secured by said Security
Agreement have been paid in full.
This Consent and Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York, without
reference to principles of conflicts of law.
Dated: _______________, ____
[ ]
By _____________________<PAGE>
EXHIBIT G-3
-----------
FORM OF BORROWER C AND SUBSIDIARY
GUARANTOR SECURITY AGREEMENT
---------------------------------
SECURITY AGREEMENT (as amended, modified or supplemented from time
to time, this "Agreement"), dated as of February 27, 1997, among Dual
Holding Company ("Borrower C"), ENSCO Offshore Company II (the "Subsidiary
Guarantor" and, together with Borrower C, the "Assignors") and Christiania
Bank og Kreditkasse, New York Branch, as Collateral Agent (the "Collateral
Agent"), for the benefit of the Banks, the Letter of Credit Issuer, and
the Administrative Agent under, and as defined in, the Credit Agreement
hereinafter referred to (such Banks, Letter of Credit Issuer and
Administrative Agent are hereinafter called the "Secured Creditors").
Except as otherwise defined herein, capitalized terms used herein and
defined in the Credit Agreement shall be used herein as so defined.
W I T N E S S E T H :
WHEREAS, ENSCO International Incorporated, ENSCO Delaware, Inc.,
ENSCO Offshore Company, ENSCO Offshore U.K. Limited, Borrower C, the
lending institutions from time to time party thereto, Christiania Bank og
Kreditkasse, New York Branch and Den norske Bank ASA, New York Branch, as
co-agents and Christiania Bank og Kreditkasse, New York Branch, as
administrative agent and security trustee have entered into a Credit
Agreement, dated as of February 27, 1997 (as modified, supplemented or
amended from time to time, the "Credit Agreement"), providing for, among
other things, the making of Tranche C Loans and the issuance of, and
participation in, Tranche C Letters of Credit as contemplated therein;
WHEREAS, the Subsidiary Guarantor has executed the Subsidiary
Guaranty and thereby unconditionally guaranteed the obligations of
Borrower C under the Credit agreement and the other Credit Documents.
WHEREAS, the Subsidiary Guarantor, a Delaware corporation, is the
sole owner of the Liberian registered offshore drilling rigs ENSCO 50
(f/k/a Dual 38) (official no. 9383), ENSCO 51 (f/k/a Dual 41) (official
no. 9384), ENSCO 53 (f/k/a Dual 88) (official no. 10260) and ENSCO 54
(f/k/a Dual 89) (official no. 10159) (all of the aforementioned vessels
being herein collectively referred to as the "Rigs");
WHEREAS, Borrower C desires to incur Tranche C Loans and to have
Tranche C Letters of Credit issued for its account under the Credit
Agreement;
WHEREAS, it is a condition precedent to the making of Tranche C
Loans and the issuance of Tranche C Letters of Credit under the Credit<PAGE>
Agreement and to the occurrence of the Effective Date that the Assignors
shall have executed and delivered to the Collateral Agent this Agreement;
and
WHEREAS, the Subsidiary Guarantor will obtain benefits from the
incurrence of Tranche C Loans by Borrower C and the issuance of Tranche C
Letters of Credit under the Credit Agreement and, along with Borrower C,
desires to execute this Agreement to satisfy the condition described in
the preceding paragraph;
NOW, THEREFORE, in consideration of the benefits accruing to the
Assignors, the receipt and sufficiency of which are hereby acknowledged,
the Assignors hereby make the following representations and warranties to
the Collateral Agent and hereby covenant and agree with the Collateral
Agent as follows:
SECTION 1. OBLIGATIONS SECURED.
1.01 Obligations Secured. The Agreement is made for the
benefit of the Secured Creditors to secure, in the case of Borrower C,
each of the following, and in the case of the Subsidiary Guarantor, the
Subsidiary Guarantor's guaranty of each of the following: (i) the full and
prompt payment when due of (x) the principal of and interest on the
Tranche C Notes issued, and Tranche C Loans made, under the Credit
Agreement, and all reimbursement obligations and Unpaid Drawings with
respect to the Tranche C Letters of Credit issued under the Credit
Agreement and (y) all other obligations and indebtedness (including,
without limitation, indemnities, Fees and interest thereon) of Borrower C
to the Secured Creditors, whether now existing or hereafter incurred
under, arising out of or in connection with the Credit Agreement and the
other Credit Documents and the due performance and compliance by Borrower
C with all of the terms, conditions and agreements contained in the Credit
Agreement and the other Credit Documents; (ii) any and all sums advanced
by the Collateral Agent in order to preserve the Collateral (as
hereinafter defined) or preserve its security interest in the Collateral;
(iii) in the event of any proceeding for the collection or enforcement of
any indebtedness, obligations, or liabilities of Borrower C referred to in
clause (i) above, after an Event of Default shall have occurred and be
continuing, the reasonable expenses of the Collateral Agent of re-taking,
holding, preparing for sale or lease, selling or otherwise disposing of or
realizing on the Collateral, or of any exercise by the Collateral Agent of
its rights hereunder, together with reasonable attorneys' fees of counsel
to the Collateral Agent and court costs; and (iv) all reasonable amounts
paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement under Section 11 of this Agreement (all such obligations,
liabilities, sums and expenses referred to in clauses (i) through (iv)
above being collectively referred to as the "Obligations"). It is
acknowledged and agreed that the "Obligations" shall include extensions of
credit of the types described above, whether outstanding on the date of
this Agreement or extended from time to time after the date of this
Agreement.
SECTION 2. ASSIGNMENT OF EARNINGS.<PAGE>
2.01 The Subsidiary Guarantor, as legal and beneficial owner,
and Borrower C hereby assign, transfer and set over unto the Collateral
Agent for the benefit of the Secured Creditors and their successors and
assigns, and hereby grant the Collateral Agent a security interest in, all
of their right, title and interest in and to: (i) all day rate payments,
freights, charter hire and any other moneys earned and to be earned, due
or to become due or paid or payable to, or for the account of the
Assignors, of whatsoever nature, arising out of any charter parties,
drilling contracts or as a result of the ownership, chartering and other
operations of any kind whatsoever by the Assignors or their agents of the
Rigs, (ii) all moneys and claims for moneys due and to become due to the
Assignors and all claims for damages arising out of the breach of any and
all present or future drilling contracts, charter parties, and operations
of every kind whatsoever of the Rigs and in and to any and all claims and
causes of action for money, loss or damages that may accrue or belong to
the Assignors, their successors, or assigns, arising out of or in any way
connected with any and all present and future requisitions, drilling
contracts, charter parties, and other operations of the Rigs of any kind
whatsoever, (iii) all moneys and claims for moneys due and to become due
to the Assignors, and all claims for damages in respect of the actual or
constructive total loss of or requisition or use of or title to any of the
Rigs subject to Section 3.03(c) of the Credit Agreement and (iv) any
proceeds of any of the foregoing (collectively, the "Earnings
Collateral").
2.02 Subject to the provisions of Section 2.03 of this
Agreement, the Collateral Agent's security interest in all accounts
receivable included in, or representing proceeds of, the Earnings
Collateral shall automatically be and be deemed released, without the need
for any action on the part of the Collateral Agent, from time to time as
such accounts receivable arise or are created, or as funds representing
payments of such Collateral (or part thereof) are collected by the
Assignors.
2.03 Upon the occurrence of an Event of Default pursuant to
Section 9.05 of the Credit Agreement (a "Bankruptcy Default") and without
any further act or notice, or upon the giving by the Collateral Agent of a
written notice (a "Release Termination Notice") to the Assignors after the
occurrence and during the continuance of an Event of Default, the
automatic release set forth in Section 2.02 of this Agreement shall
terminate.
2.04 Upon the occurrence of an Event of Default, the Assignors
hereby represent, warrant and undertake that:
(a) notice of this Agreement in the form attached hereto
as Exhibit 1 will be promptly delivered to any
charterers of the Rigs; and
(b) each will use its good faith efforts to cause any
charterer to execute a Consent and Agreement to this
Agreement in the form attached hereto as Exhibit 2 and
deliver such Consent and Agreement to the Collateral
Agent.
2.05 Upon the occurrence of an Event of Default, the Collateral
Agent shall be entitled to receive all payments of Earnings Collateral of<PAGE>
the Rigs payable to the Assignors and assigned hereby. Such payment shall
be made to the account of the Collateral Agent, and the Assignors shall
cause all sums so payable to the Assignors and assigned hereby to be paid
directly into such account.
2.06 It is hereby expressly agreed that, anything contained
herein to the contrary notwithstanding, the Assignors shall remain liable
under all charters and contracts pertaining to the Rigs to perform the
obligations assumed by them thereunder, and the Collateral Agent shall
have no obligation or liability of any nature whatsoever under any such
charter or contract by reason of, or arising out of, this Agreement, nor
shall the Collateral Agent be required to assume or be obligated in any
manner to perform or fulfill any obligation of the Assignors under or
pursuant to any such charter or contract or to make any payment or make
any inquiry as to the nature or sufficiency of any payment received by the
Collateral Agent, or, unless and until indemnified to its satisfaction, to
present or file any claim or to take any other action to collect or
enforce the payment of any amounts which may have been assigned to it or
to which it may be entitled hereunder or pursuant hereto at any time or
times.
2.07 The Assignors shall promptly notify the Collateral Agent
in writing of the commencement and termination of any period during which
any of the Rigs owned by them is requisitioned.
2.08 Upon the occurrence of an Event of Default, the Collateral
Agent has the right to give notice of this Agreement to all account
debtors.
2.09 The Collateral Agent shall not be required to make any
inquiry as to the nature or sufficiency of any payment received by the
Collateral Agent, or, unless and until indemnified to its satisfaction,
to present or file any claim, or to take any other action to collect or
enforce the payment of any amounts which may have been assigned to it or
to which it may be entitled hereunder or pursuant hereto at any time or
times.
SECTION 3. ASSIGNMENT OF INSURANCE
3.01 The Assignors hereby sell, assign, transfer, set over and
grant a security interest unto the Collateral Agent as collateral security
for the Obligations, in and to the following (all of the following,
collectively, the "Insurance Collateral" and, together with the Earnings
Collateral, the "Collateral"): (i) all policies and contracts of
insurances in respect of the Rigs whether now or hereafter to be effected
and all renewals of or replacements for the same, (ii) all claims, returns
of premium and other moneys and claims for moneys due and to be come due
under said insurances or in respect of said insurances, (iii) all other
rights of the Assignors under or in respect of said insurances and (iv)
any proceeds of any of the foregoing.
3.02 It is expressly agreed that anything herein contained to
the contrary notwithstanding, the Assignors shall remain liable under said
insurances to perform all of the obligations assumed by them thereunder
and the Collateral Agent shall have no obligation or liability (including,
without limitation, any obligation or liability with respect to the<PAGE>
payment of premiums, calls or assessments) under said insurances by reason
of or arising out of this instrument of assignment nor shall the
Collateral Agent be required or obligated in any manner to perform or
fulfill any obligations of the Assignors under or pursuant to said
insurances or to make any payment or to make any inquiry as to the nature
or sufficiency of any payment received by it or to present or file any
claim, or to take any other action to collect or enforce the payment of
any amounts which or may have been assigned to it or to which it may be
entitled hereunder at any time or times.
3.03 The Assignors hereby covenant and agree to deliver notice
of this Assignment, in the form of Annex I hereto, to all underwriters and
that where the consent of any underwriter is required pursuant to any of
the insurances assigned hereby, the Assignors shall each use its good
faith efforts to obtain such consent in the form of Annex II hereto, and
evidence thereof shall be given to the Collateral Agent, and there shall
be duly endorsed upon all slips, cover notes, policies, certificates of
entry or other instruments issued or to be issued in connection with the
insurances assigned hereby such clauses as to additional named assured or
loss payees as the Collateral Agent may reasonably request. In all cases,
unless otherwise agreed in writing by the Collateral Agent, such slips,
cover notes, notices, certificates of entry or other instruments shall
show the Collateral Agent as additional named assured and shall provide
that there will be no recourse against the Collateral Agent for payment of
premiums, calls or assessments.
3.04 In the event that the Insurance Collateral or any portion
thereof is sold in connection with a sale permitted by Section 8.02 of the
Credit Agreement or by the proviso contained in the definition of
"Collateral Disposition" in the Credit Agreement or is otherwise released
at the direction of the Required Banks (or all the Banks, to the extent
required by Section 12.12 of the Credit Agreement), the Collateral Agent,
at the request and expense of the Assignors, will duly assign, transfer
and deliver to the Assignors (without recourse and without any
representation or warranty) such of the Insurance Collateral (and releases
therefor) as is then being (or has been) so sold or released and as may be
in the possession of the Collateral Agent and has not theretofore been
released pursuant to this Agreement. At any time the Assignors desire
that the Insurance Collateral or a portion thereof be released as provided
in this section, the Assignors shall deliver to the Collateral Agent a
certificate signed by an Authorized Officer (as defined in the Credit
Agreement) stating that the release of the Insurance Collateral or portion
thereof is permitted pursuant to this section.
3.05 The Assignors hereby authorize the Collateral Agent to
execute and file Financing Statements (Form UCC-1) and amendments thereto
as provided in Article 9 of the Uniform Commercial Code.
SECTION 4. FURTHER ASSURANCES.
The Assignors will, at any time and from time to time, at their
own expense, promptly execute and deliver all further agreements,
instruments and other documents and take all further action that may be
necessary or that the Collateral Agent may reasonably request in order to
perfect and protect the security interest purported to be created hereby<PAGE>
or otherwise to enable the Collateral Agent to exercise and enforce its
rights and remedies hereunder.
SECTION 5. TRANSFERS AND OTHER LIENS.
The Assignors will not, without the written consent of the
Collateral Agent, (i) sell, assign (by operation of law or otherwise) or
otherwise dispose of any interest in the Collateral (other than as
expressly permitted under this Agreement and the other Credit Documents)
or (ii) create or suffer to exist any Lien, security interest or other
charge or encumbrance upon or with respect to any Collateral except for
Permitted Liens and the security interest purported to be created hereby.
SECTION 6. ATTORNEY-IN-FACT.
The Assignors hereby appoint the Collateral Agent as the
Assignor's attorney-in-fact, with full authority only after the occurrence
of and during the continuance of an Event of Default, in the place and
stead of the Assignors and in the name of the Assignors or otherwise, from
time to time in the Collateral Agent's discretion to execute any
instrument and to take any other action which the Collateral Agent may in
good faith reasonably deem necessary or advisable to accomplish the
purposes of this Agreement or to facilitate the assignment or other
transfer by the Collateral Agent of any or all of its rights hereunder,
including, without limitation, (i) to receive, endorse and collect all
instruments made payable to the Assignors and representing any interest
payment or other distribution in respect of the Collateral and to give
full discharge for the same and (ii) to execute and deliver any and all
instruments and other documents that the Collateral Agent may request in
connection with the exercise by the Collateral Agent of any or all of its
rights hereunder. Such appointment of the Collateral Agent as attorney-
in-fact is irrevocable and coupled with an interest.
SECTION 7. PERFORMANCE BY THE COLLATERAL AGENT.
If the Assignors fail to perform any agreement or obligation
contained herein, the Collateral Agent itself may perform or cause
performance of such agreement or obligation, and the reasonable expenses
of the Collateral Agent incurred in connection therewith shall be payable
to the Collateral Agent by the Assignors.
SECTION 8. RESPONSIBILITY OF THE COLLATERAL AGENT.
Other than the exercise of reasonable care to assure the safe
custody of the Collateral while held hereunder, the Collateral Agent shall
have no duty or liability to preserve rights pertaining thereto and shall
be relieved of all responsibility for the Collateral upon surrendering it
or tendering surrender of it to the Assignors. The Collateral Agent shall
be deemed to have exercised reasonable care in the custody and
preservation of the Collateral in its possession if the Collateral is
accorded treatment substantially equal to that which the Collateral Agent
accords its own property. Without limiting the generality of the
foregoing, neither the Collateral Agent nor any of its directors,<PAGE>
officers, agents or employees shall be liable (i) for any failure to
invest or reinvest any cash in accordance herewith in the absence of its
or their own gross negligence or willful misconduct or for any losses
incurred by reason of investments made by the Collateral Agent pursuant to
Section 2.03 or (ii) for any action taken or omitted to be taken by the
Collateral Agent (x) in good faith in accordance with the advice of
counsel with respect to any question as to the construction of any
provision hereof or any action to be taken by the Collateral Agent
hereunder or (y) in accordance with any instructions or other notice which
the Collateral Agent believes in good faith to be properly given by the
Assignors hereunder. This Section 8 shall have no application to
Christiania Bank og Kreditkasse except in its capacity as Collateral
Agent.
SECTION 9. APPLICATION OF PROCEEDS.
(a) Subject to the applicability of Section 10 of the Liberian
Fleet Mortgage and the provisions of Section 3.03(c) of the Credit
Agreement, all moneys collected by the Collateral Agent upon any sale or
other disposition of any Collateral, together with all other moneys
received by the Collateral Agent hereunder or under any of the other
Security Documents, shall be applied as follows:
(i) first, to the payment of all amounts owing the
Collateral Agent of the type described in clauses (ii) and (iii) of
Section 1.01;
(ii) second, to the extent moneys remain after the
application pursuant to the preceding clause (i), an amount equal to
the outstanding Obligations shall be paid to the Secured Creditors as
provided in Section 9(c), with each Secured Creditor receiving an
amount equal to such Obligations held by it or, if the proceeds are
insufficient to pay in full all such Obligations, its Pro Rata Share
(as defined below) of the amount remaining to be distributed; and
(iii) third, to the extent moneys remain after the
application pursuant to the preceding clauses (i) and (ii), and
following the termination of this Agreement pursuant to Section 12,
any surplus then remaining shall be paid to the Assignors, subject,
however, to the rights of the holder of any then existing Lien of
which the Collateral Agent has actual notice (without investigation).
(b) For purposes of this Agreement "Pro Rata Share" shall
mean, when calculating a Secured Creditor's portion of any distribution or
amount in respect of any Obligations, the amount (expressed as a
percentage) equal to a fraction the numerator of which is the then unpaid
amount of such Obligations owing to or held by such Secured Creditor and
the denominator of which is the then outstanding amount of all such
Obligations. For purposes of determining the amount payable to each
Secured Creditor, the Collateral Agent shall be entitled to request each
Secured Creditor to furnish it with written notice of the amount of
Obligations then owed to it and shall be entitled to rely upon the amounts
stated therein in making such distributions.<PAGE>
(c) All payments required to be made to Secured Creditors
hereunder shall be made to the Collateral Agent for the account of the
Secured Creditors.
(d) For purposes of applying payments received in accordance
with this Section 9, the Collateral Agent shall be entitled to rely upon
(i) the Administrative Agent under the Credit Agreement and (ii) the
Secured Creditors for a determination (which the Administrative Agent and
each Secured Creditor, by their acceptance of the benefits of this
Agreement shall be obligated to provide upon request of the Collateral
Agent) of the outstanding Obligations owed to the Secured Creditors.
Unless it has actual knowledge (including by way of written notice from a
Secured Creditor) to the contrary, the Administrative Agent under the
Credit Agreement, in furnishing information pursuant to the preceding
sentence, and the Collateral Agent, in acting hereunder, shall be entitled
to assume that (x) no obligations other than principal, interest and
regularly accruing fees are owing to any Secured Creditor.
SECTION 10. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
ASSIGNORS.
10.01 The Assignors hereby represent and warrant that they have
not assigned or pledged, and hereby covenant that, without the prior
written consent thereof of the Collateral Agent, so long as this Agreement
shall remain in effect, they will not assign or pledge the whole or any
part of the right, title and interest hereby assigned to anyone other than
the Collateral Agent, its successors or assigns, and that they will not
take or omit to take any action, the taking or omission of which might
result in an alteration or impairment of the Collateral or this Agreement,
or of any of the rights created in the Collateral by this Agreement.
10.02 As of the Restatement Effective Date, this Agreement
creates a valid and enforceable perfected security interest in and Lien on
all of the Collateral in favor of the Collateral Agent for the benefit of
the Banks, and no filings or recordings are required to perfect such
security interest except for filings or recordings required in connection
with this Agreement which shall have been made upon or prior to (or are
the subject of arrangements, satisfactory to the Administrative Agent, for
filing on or promptly after the date of) the execution and delivery of
this Agreement.
SECTION 11. INDEMNITY.
11.01 The Assignor hereby covenants with the Assignee for the
benefit of the Collateral Agent and the Banks that it will pay to the
Assignee on demand all moneys whatsoever which the Assignee or the
Collateral Agent or the Banks shall or may reasonably expend, be put to or
become liable for, in or about the protection, maintenance or enforcement
of the security created by this Agreement or in or about the exercise by
the Assignee or the Collateral Agent and the Banks of any of the powers
vested in it or them under the Mortgages or hereunder together with
interest thereon at the rate provided for in Section 1.08 of the Credit
Agreement from the date when such moneys were expended by the Assignee or
such Bank until the date of actual receipt, whether before or after any
relevant judgment.<PAGE>
11.02 Any amounts paid by any Indemnitee as to which such
Indemnitee has the right to reimbursement shall constitute Obligations
secured by the Collateral. The indemnity obligations of the Assignors
contained in this Section 11 shall continue in full force and effect
notwithstanding the full payment of all the Tranche C Notes issued under
the Credit Agreement and all of the other Obligations and notwithstanding
the discharge thereof.
SECTION 12. TERMINATION; RELEASE; PARTIAL RELEASE.
(a) On the date on which the Credit Agreement and all Tranche
C Letters of Credit shall have been terminated, when no Tranche C Note
remains outstanding and all Obligations shall have been irrevocably paid
in full, this Agreement shall terminate, and the Collateral Agent, at the
request and expense of the Assignors, will execute and deliver to the
Assignors a proper instrument or instruments acknowledging the
satisfaction and termination of this Agreement, and will duly assign,
transfer and deliver to the Assignors (without recourse and without any
representation or warranty) such of the Collateral as may remain in the
possession of the Collateral Agent together with any moneys at the time
held by the Collateral Agent hereunder.
SECTION 13. NOTICES, ETC.
Except as otherwise expressly provided herein, all notices and
other communications provided for hereunder shall be delivered and become
effective in accordance with Section 12.03 of the Credit Agreement.
SECTION 14. MISCELLANEOUS.
14.01 This Agreement shall be binding upon the Assignors and its
successors and assigns (although the Assignors may not assign its rights
or obligations under this Agreement) and shall inure to the benefit of and
be enforceable by the Collateral Agent and its successors and assigns.
The headings in this Agreement are for purposes of reference only and
shall not limit or define the meaning hereof. THIS AGREEMENT AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN
ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK. This
Agreement may be executed in any number of counterparts, each of which
shall be an original, but all of which shall constitute one instrument.
This Agreement shall become effective on the date on which each of the
parties shall have executed and delivered a copy hereof. In the event
that any provision of this Agreement shall at any time for any reason be
declared or decided to be invalid, void or otherwise inoperative by a
court of competent jurisdiction, such declaration or decision shall not
affect the validity of any other provision or provisions of this
Agreement, or the validity of this Agreement as a whole. In the event
that by reason of any law or regulation in force or to become in force, or
by reason of a ruling of any court of competent jurisdiction, or by any
other reason whatsoever, this Agreement is rendered either wholly or
partly defective, the Assignors shall furnish the Collateral Agent with an
alternative assignment or security and do all such other acts as are
reasonably required in order to ensure and give effect to the full intent
of this Agreement.<PAGE>
14.02 It is declared and agreed that the security created by this
Agreement shall be held by the Collateral Agent as a continuing security
for the payment of all moneys which may at any time and from time to time
be or become payable by the Assignors under the Credit Agreement and the
other Credit Documents and that the security so created shall not be
satisfied by all intermediate payment or satisfaction of any part of the
amount hereby secured and that the security so created shall be in
addition to and shall not in any way be prejudiced or affected by any
collateral or other security now or hereafter held by the Collateral Agent
for all or any part of the moneys hereby secured.
14.03 Each and every right, power and remedy given herein or in
the Credit Agreement or in the other Credit Documents to the Collateral
Agent shall be cumulative and shall be in addition to every other right,
power and remedy of the Collateral Agent now or hereafter existing at law,
in equity or by statute, and each and every right, power and remedy,
whether herein given or otherwise existing, may be exercised from time to
time, in whole or in part, and as often and in such order as may be deemed
expedient by the Collateral Agent, and the exercise or the commencement of
the exercise of any right, power or remedy shall not be construed to be a
waiver of the right to exercise at the same time or thereafter any other
right, power or remedy. No delay or omission by the Collateral Agent in
the exercise of any right or power in the pursuance of any remedy accruing
upon any breach or default by the Assignors shall impair any such right,
power or remedy or be construed to be a waiver of any such right, power or
remedy or to be an acquiescence therein; nor shall the acceptance by the
Collateral Agent of any security or of any payment of or on account of any
of the amounts due from the Assignors to the Collateral Agent and maturing
after any breach or default or of any payment on account of any past
breach or default be construed to be a waiver of any right to take
advantage of any future breach or default or of any past breach or default
not completely cured thereby.
SECTION 15. WAIVER; AMENDMENT.
None of the terms and conditions of this Agreement may be changed,
waived, modified or varied in any manner whatsoever unless in writing duly
signed by the Assignors and the Collateral Agent (with the consent of
either the Required Banks (as defined in the Credit Agreement) or, to the
extent required by Section 12.12 of the Credit Agreement, all of the
Banks).
SECTION 16. SECURED CREDITOR ACKNOWLEDGMENT.
By accepting the benefits of this Agreement, each Secured Creditor
acknowledges and agrees that the rights and obligations of the Collateral
Agent shall be as set forth in Section 12 of the Credit Agreement.<PAGE>
IN WITNESS WHEREOF, the Assignors and the Collateral Agent have
caused this Agreement to be executed by their duly elected officers duly
authorized as of the date first above written.
ADDRESS: DUAL HOLDING COMPANY
1445 Ross Avenue
Suite 2700
Dallas, Texas 77202-2792 By________________________________
Attention: Chief Financial Officer Title:
Tel: (214) 922-1500
Fax: (214) 855-0080
ENSCO OFFSHORE COMPANY II
By________________________________
Title:
11 West 42nd Street CHRISTIANIA BANK OG KREDITKASSE,
New York, New York 10036 NEW YORK BRANCH, as Collateral Agent
Attention: Hans Chr. Kjelsrud
Tel: (212) 827-4814
Fax: (212) 827-4888
By________________________________
Title:
By________________________________
Title: <PAGE>
EXHIBIT 1
to
Security Agreement
------------------
NOTICE OF ASSIGNMENT
TO:
TAKE NOTICE THAT:
By a Security Agreement, dated the __ day of February, 1997 made by us
to Christiania Bank og Kreditkasse, as agent (the "Assignee"), and
relating to the Liberian flag vessel ________ (the "Rig"), we have
assigned to the Assignee as from the date hereof all our right, title
and interest in and to any moneys whatsoever payable to us under that
certain [Charter Contract] dated as of ________, ____ as at any time
amended (the "Contract") between yourselves and the undersigned
concerning the Rig, as the Contract may at any time be amended or
supplemented, and all other rights and benefits whatsoever accruing to
us which arise or may arise from the operation of the Rig under the
Contract including (but without prejudice to the generality of the
foregoing) all claims for damages for any breach of the Contract by
you.
DATED THIS ____ day of ___________, ____.
[ ]
By ___________________
Its:<PAGE>
EXHIBIT 2
to
Security Agreement
------------------
CONSENT AND AGREEMENT
The undersigned, [ ], a party to the Contract to which the
Notice of Assignment delivered pursuant to the foregoing Security
Agreement refers (terms defined in the Security Agreement are used herein
with the same meaning), in consideration of the sum of one dollar ($1.00)
lawful money of the United States of America and other good and valuable
consideration, paid by Christiania Bank og Kreditkasse, as agent (the
"Assignee"), the receipt of which is hereby acknowledged, hereby acknowl-
edges notice of and consents and agrees to the foregoing collateral
assignment of earnings and to all of the terms thereof and agrees that:
(1) it will make payment directly to the account advised by the Assignee,
of all moneys due and to become due from it under the Contract until
receipt of written notice from the Assignee that all obligations to the
Banks secured by said Security Agreement have been paid in full; and (2)
any such payment shall be final and the undersigned will not seek to
recover from the Assignee for any reason whatsoever any moneys paid by the
undersigned to the Assignee by virtue of the foregoing Security Agreement
and this Consent and Agreement but this shall not prevent the set off or
credit against or deduction from any moneys payable to the Assignee by
virtue of said Security Agreement of amounts owing to the undersigned by
the Assignors under the Contract.
[ ], as charterer, confirms and agrees that the Contract is in
full force and effect and is enforceable in accordance with its terms and
the Assignor is not in default thereunder.
This Consent and Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York, without
reference to principles of conflicts of law.
Dated: ______________, ____
[ ]
By _________________<PAGE>
ANNEX I
to
Security Agreement
------------------
NOTICE OF ASSIGNMENT
________________________________________ (the "Owner"), the owner of
the Liberian flag offshore drilling rig _____________ (the "Rig"), HEREBY
GIVES NOTICE that by a Security Agreement dated February __, 1997 and made
between the Owner and Christiania Bank og Kreditkasse, New York Branch, as
Collateral Agent (the "Assignee") for itself and certain other Banks, the
Owner assigned to the Assignee all of the Owner's right, title and
interest in and to all insurances and the benefit of all insurances now or
hereafter taken out in respect of the Rig. This Notice of Assignment and
loss payable clauses substantially similar to those set forth below are to
be indorsed on all policies and certificates of entry evidencing such
insurance.
[OWNER]
By_________________________
Its:
Loss Payable Clauses:
- --------------------
All amounts of whatsoever nature payable under any insurance shall be
payable to the Security Trustee for distribution first to itself, the
Secured Creditors, the Co-Agents and thereafter to the Owner or others as
their interests may appear. Nevertheless, until otherwise required by the
Security Trustee by notice to the underwriters, (i) amounts payable under
any insurance on the Rigs with respect to the protection and indemnity
risks shall be paid directly to the Owner to reimburse it for any loss,
damage or expense incurred by it and covered by such insurance or to the
person to whom any liability covered by such insurance has been incurred,
and (ii) amounts payable under any insurance with respect to the Rigs
involving any damage to any Rigs not constituting an actual or
constructive total loss, shall be paid by the underwriters directly for
the repair, salvage or other charges involved or, if the Owner shall have
first fully repaired the damage or paid all of the salvage or other
charges shall be paid to the Owner as reimbursement therefore, PROVIDED,
no amounts in excess of US$2,000,000 shall be paid from any insurances
without the prior written consent of the Security Trustee.
In the event of an actual or constructive total loss or a compromised
constructive total loss or requisition of any Rig, all insurance payments
therefor shall be paid to the Security Trustee and applied to reduce the
Total Commitment in accordance with and subject to the terms of Section
3.03(c) and/or (d) of the Credit Agreement. The Owner shall not declare<PAGE>
or agree with underwriters that any Rig is a constructive or compromised,
agreed or arranged constructive total loss without the prior written
consent of the Security Trustee.
In the event of an actual constructive total loss of any Rig, the
Security Trustee shall retain out of the insurance payments received on
account of such loss and held by the Security Trustee in accordance with
the Credit Agreement, any sum or sums that shall be or become owing to the
Security Trustee under this Mortgage for the cost, if any, of collecting
the insurance, which sum or sums shall become the sole property of the
Security Trustee, and pay the balance to the Banks for application
pursuant to and subject to Section 3.03(c) and/or (d) of the Credit
Agreement.<PAGE>
ANNEX II
to
Security Agreement
------------------
CONSENT AND AGREEMENT
The undersigned, [ ], a party to the Contract to which the
Notice of Assignment delivered pursuant to the foregoing Security
Agreement refers (terms defined in the Security Agreement are used herein
with the same meaning), hereby acknowledges notice of and consents and
agrees to the foregoing collateral assignment of insurance and to all of
the terms thereof and agrees that it, subject to the loss payable clauses
will make payment directly to the account advised by Christiania Bank og
Kreditkasse, New York Branch (the "Assignee"), of all moneys due and to
become due from it under the Contract until receipt of written notice from
the Assignee that all obligations to the Banks secured by said Security
Agreement have been paid in full.
This Consent and Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York, without
reference to principles of conflicts of law.
Dated: _______________, ____
[ ]
By ______________________<PAGE>
EXHIBIT H-1
-----------
FIRST PREFERRED FLEET MORTGAGE
Dated February ___, 1997
ENSCO OFFSHORE COMPANY
- in favor of -
CHRISTIANIA BANK OG KREDITKASSE,
NEW YORK BRANCH,
as Security Trustee
ENSCO 68
ENSCO 81
ENSCO 82
ENSCO 83
ENSCO 84
ENSCO 86
ENSCO 87
ENSCO 88
ENSCO 89
ENSCO 90
ENSCO 93
ENSCO 94
ENSCO 95
ENSCO 98
ENSCO 99<PAGE>
INDEX
-----
CLAUSE SUBJECT MATTER PAGE
- ------ -------------- ----
1. DEFINITIONS AND INTERPRETATION . . . . . . . . . . . . 3
2. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . 7
3. MORTGAGE . . . . . . . . . . . . . . . . . . . . . . . . 8
4. PAYMENT COVENANTS . . . . . . . . . . . . . . . . . . . 9
5. PRESERVATION OF SECURITY . . . . . . . . . . . . . . . . 9
6. INSURANCE . . . . . . . . . . . . . . . . . . . . . . . 11
7. RIG COVENANTS . . . . . . . . . . . . . . . . . . . . . 15
8. PROTECTION OF SECURITY . . . . . . . . . . . . . . . . . 18
9. ENFORCEABILITY AND SECURITY TRUSTEE'S POWERS . . . . . . 19
10. APPLICATION OF MONEYS . . . . . . . . . . . . . . . . . 21
11. FURTHER ASSURANCES . . . . . . . . . . . . . . . . . . . 22
12. POWER OF ATTORNEY . . . . . . . . . . . . . . . . . . . 23
13. INDEMNITIES . . . . . . . . . . . . . . . . . . . . . . 23
14. RIGHTS OF OWNER . . . . . . . . . . . . . . . . . . . . 24
15. COMMUNICATIONS . . . . . . . . . . . . . . . . . . . . . 25
16. ASSIGNMENTS . . . . . . . . . . . . . . . . . . . . . . 25
17. TOTAL AMOUNT, ETC. . . . . . . . . . . . . . . . . . . . 25
18. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . 25
19. JURISDICTION AND GOVERNING LAW . . . . . . . . . . . . . 26
ACKNOWLEDGEMENT OF MORTGAGE
EXHIBIT 1 FORM OF CREDIT AGREEMENT
EXHIBIT 2 FORM OF MASTER AGREEMENT<PAGE>
THIS FIRST PREFERRED FLEET MORTGAGE (this "Mortgage") is made on the
______ day of February, 1997
BY
- --
(1) ENSCO OFFSHORE COMPANY, a Delaware corporation having its principal
offices at 2700 Fountain Place, 1445 Ross Avenue, Dallas, Texas
75202 (the "Owner"),
IN FAVOR OF
- -----------
(2) CHRISTIANIA BANK OG KREDITKASSE, NEW YORK BRANCH, a Norwegian
banking corporation having its office at 11 West 42nd Street, New
York, New York, as security trustee for the Banks (as hereinafter
defined) and as mortgagee (the "Security Trustee")
WHEREAS
- -------
(A) The Owner is the sole owner of the whole of the following U.S. flag
drilling rigs (the "Rigs"):
Name Official No.
---- ------------
ENSCO 68 574668
ENSCO 81 606512
ENSCO 82 602912
ENSCO 83 605536
ENSCO 84 637544
ENSCO 86 643110
ENSCO 87 648969
ENSCO 88 645637
ENSCO 89 652440
ENSCO 90 647859
ENSCO 93 651385
ENSCO 94 638685
ENSCO 95 642112
ENSCO 98 589096
ENSCO 99 682070
which Rigs have been duly registered in the name of the Owner in
accordance with the laws of the United States of America with a home
port at New Orleans, LA.
(B) By a Credit Facility Agreement dated as of December 15, 1993,
Amended and Restated as of September 27, 1995, further amended by
Amendment No. 1 dated June 13, 1996, and further Amended and
Restated as of February 27, 1997 (as modified, amended or
supplemented from time to time, the "Credit Agreement") among (i)
the Owner, ENSCO Offshore U.K. Ltd. and Dual Holding Company, as
borrowers (collectively, the "Borrowers"); (ii) the Owner, ENSCO
Delaware, Inc. ("Parent") and ENSCO International Incorporated
("Holdings"), as guarantors (the "Guarantors"); (iii) the financial
institutions party thereto (the "Banks"); (iv) Christiania Bank og
Kreditkasse, New York Branch and Den norske Bank ASA, New York
Branch, as co-agents (the "Co-Agents"); and (v) the Security
Trustee, as administrative agent, letter of credit issuer and
security trustee (in such capacity, the "Administrative Agent") (the<PAGE>
form of which Credit Agreement together with Exhibit B-1 through B-3
thereto but without the remaining attachments is attached hereto as
Exhibit 1), it was agreed among other things that the Banks would
make available to the Borrowers upon the terms and conditions
therein described a senior secured revolving credit facility (the
"Facility") in an aggregate amount at any time outstanding of Two
Hundred Million United States Dollars (US$200,000,000), providing
for the making of Loans and the issuance of, and participation in,
Letters of Credit as contemplated therein.
(C) The obligations of the Borrowers with respect to the Facility are
evidenced by the Credit Agreement and the other Credit Documents,
including the promissory notes of the Borrowers payable to the order
of the respective Banks (each a "Note" and collectively the "Notes")
(the form of which are attached as Exhibit B-1 through B-3 to the
Credit Agreement).
(D) By separate Master Agreements (on the 1992 ISDA Master Agreement
Multicurrency-crossborder form) made or to be made between Holdings
and one or more of the Co-Agents (the form of which Master
Agreements and the Schedule thereto is attached hereto as Exhibit 2)
Holdings has entered or will enter into certain Transactions (as
such term is defined in the Master Agreements) pursuant to separate
Confirmations (as such terms are defined in the Master Agreements)
providing for, among other things, the payments of certain amounts
by Holdings to the respective Co-Agents. The Master Agreements, all
Transactions from time to time entered into or Confirmations
exchanged under the Master Agreement and any amending, supplemental
or replacement agreement, are hereinafter called the "Master
Agreements".
(E) This Mortgage is made for the benefit of the Security Trustee to
secure (i) the full and prompt payment when due of (x) the principal
of and interest on the Notes issued, and Loans made, under the
Credit Agreement, and all reimbursement obligations and Unpaid
Drawings with respect to the Letters of Credit issued under the
Credit Agreement and (y) all other obligations and indebtedness
(including without limitation, indemnities, Fees and interest
thereon) of the Borrowers to the Secured Creditors (as hereinafter
defined), whether now existing or hereafter incurred under, arising
out of or in connection with the Credit Agreement and the other
Credit Documents including, without limitation, this Mortgage and
the due performance and compliance by the Owner with all of the
terms, conditions and agreements contained in the Credit Agreement
and the other Credit Documents including, without limitation, this
Mortgage; (ii) any and all sums advanced by the Security Trustee in
order to preserve the Collateral (as hereinafter defined) or
preserve its security interest in the Collateral; (iii) in the event
of any proceeding for the collection or enforcement of any
indebtedness, obligations, or liabilities of the Borrowers referred
to in clause (i) above, after an Event of Default shall have
occurred and be continuing, the reasonable expenses of the Security
Trustee of re-taking, holding, preparing for sale or lease, selling
or otherwise disposing of or foreclosing on the Collateral, or of
any exercise by the Security Trustee of its rights hereunder,
together with reasonable attorneys' fees of counsel to the Security
Trustee and court costs; (iv) all amounts paid by any Indemnitee as<PAGE>
to which such Indemnitee has the right to reimbursement under Clause
13 of this Mortgage (all such obligations, liabilities, sums and
expenses referred to in clauses (i) through (iv) above being
collectively referred to as the "Obligations"); and (v) all
obligations of Holdings under the Master Agreements (the "Master
Agreement Liabilities"). It is acknowledged and agreed that the
"Obligations" shall include extensions of credit of the types
described above, whether outstanding on the date of this Mortgage or
extended from time to time after the date of this Mortgage.
(F) This First Preferred Fleet Mortgage is entered into by the Owner in
consideration of the Banks agreeing, at the request of the Owner and
the other Borrowers, to make the Facility available to the Borrowers
under the terms of the Credit Agreement and as a condition thereto
and for other good and valuable consideration provided by the Banks
(the sufficiency of which the Owner hereby acknowledges).
NOW THIS MORTGAGE WITNESSETH AND IT IS HEREBY AGREED
- ----------------------------------------------------
1. DEFINITIONS AND INTERPRETATION
------------------------------
1.01 In this Mortgage unless the context otherwise requires, the
following expressions shall have the following meanings:
"Administrative Agent" shall have the same meaning for such term as
set forth in the Credit Agreement;
"Bank" means any lender listed from time to time on Annex I to the
Credit Agreement (collectively, the "Banks");
"Collateral" shall have the same meaning for such term as set forth
in the Credit Agreement;
"Credit Agreement" means the Credit Facility Agreement dated as of
December 15, 1993, Amended and Restated as of September 27, 1995,
further amended by Amendment No. 1 dated June 13, 1996 and further
Amended and Restated as of February 27, 1997, among the Borrowers,
the Guarantors, the Banks, the Co-Agents and the Administrative
Agent first referred to in Recital (B) hereto, as modified, amended
or supplemented from time to time;
"Credit Documents" shall have the meaning for such term as set forth
in the Credit Agreement;
"Credit Facility Period" shall mean the period commencing on the
date hereof and ending on the date the Total Commitments have
terminated, no Letters of Credit remain outstanding and the Loans
and the Unpaid Drawings, together with interest, fees and all other
obligations are paid in full;
"Default Rate" shall mean the rate of interest calculated in
accordance with Section 1.08(c) of the Credit Agreement;
"Environmental Approvals" means all approvals, licenses, permits,
exemptions or authorization required under applicable Environmental
Laws;<PAGE>
"Environmental Claims" means any and all administrative, regulatory
or judicial actions, suits, demands, demand letters, claims, liens,
notices of noncompliance or violation, investigations (other than
internal reports prepared by Holdings or any of its Subsidiaries
solely in the ordinary course of such Person's business and not in
response to any third party action or request of any kind) or
proceedings relating in any way to any Environmental Law or any
permit issued, or any approval given, under any such Environmental
Law (hereafter, "Claims"), including, without limitation, (a) 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 (b) any
and all Claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief
resulting from Hazardous Materials arising from alleged injury or
threat of injury to health, safety or the environment;
"Environmental Incident" means (i) any release of Hazardous Material
from any of the Rigs, (ii) any incident in which Hazardous Material
is released from a vessel other than any of the Rigs and which
involves collision between the Rig and such other vessel or some
other incident of navigation or operation, in either case, where the
Rig or the Owner is actually or allegedly at fault or otherwise
liable (in whole or in part) or (iii) any incident in which
Hazardous Material is released from a vessel other than any of the
Rigs and where the Rig is actually or potentially liable to be
arrested as a result and/or where the Owner is actually or allegedly
at fault or otherwise liable (and, in each such case, "release"
shall mean disposing, discharging, injecting, spilling, leaking,
leaching, dumping, emitting, escaping, emptying, seeping, placing
and the like, into or upon any land or water or air, or otherwise
entering into the environment);
"Environmental Law" means any applicable Federal, state, foreign or
local statute, law, rule, regulation, ordinance, code, guide, policy
and rule of common law now or hereafter in effect and in each case
as amended, and any judicial or administrative interpretation
thereof, including any judicial or administrative order, consent
decree or judgment, relating to the environment, health, safety or
Hazardous Materials, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended, 42 U.S.C. Section 9601 ET SEQ.; the Resource
Conservation and Recovery Act, as amended, 42 U.S.C. Section 6901 ET
SEQ.; the Federal Water Pollution Control Act, as amended, 33 U.S.C.
Section 1251 ET SEQ.; the Toxic Substances Control Act, 15 U.S.C.
Section 7401 ET SEQ.; the Clean Air Act, 42 U.S.C. Section 7401 ET
SEQ.; the Safe Drinking Water Act, 42 U.S.C. Section 3808 ET SEQ.;
the Oil Pollution Act of 1990, 33 U.S.C. Section 2701 ET SEQ. and
any applicable state and local or foreign counterparts or
equivalents;
"Fees" shall have the same meaning for such term as set forth in the
Credit Agreement;
"Hazardous Materials" means (a) any petroleum or petroleum products,
radioactive materials, asbestos in any form that is or could become
friable, urea formaldehyde foam insulation, transformers or other<PAGE>
equipment that contained, electric fluid containing levels of
polychlorinated biphenyls, and radon gas; (b) any chemicals,
materials or substances defined as or included in the definition of
"hazardous substances," "hazardous waste," "hazardous materials,"
"extremely hazardous waste," "restricted hazardous waste," "toxic
substances," "toxic pollutants," "contaminants," or "pollutants," or
words of similar import, under any applicable Environmental Law; and
(c) any other chemical, material or substance, exposure to which is
prohibited, limited or regulated by any governmental authority;
"Indemnitee" shall have the meaning set forth in Section 13.01;
"Insurances" includes all policies and contracts of insurance (which
expression includes all entries of each of the Rigs in protection
and indemnity associations) which are from time to time taken out or
entered into in respect of the Rigs or otherwise by the Owner
(whether in the sole name of the Owner or in the joint names of the
Owner and the Administrative Agent) and all benefits thereof
(including claims of whatsoever nature and return of premiums);
"Interest Period" shall have the same meaning for such term as set
forth in Section 1.09 of the Credit Agreement;
"Letter of Credit" shall have the same meaning for such term as set
forth in Section 2.01(a) of the Credit Agreement;
"Loan(s)" shall have the same meaning for such term as set forth in
the Credit Agreement;
"Major Casualty" means any casualty to any of the Rigs in respect
whereof the claim or the aggregate of the claims against all
insurers, before adjustment for any relevant franchise or
deductible, exceeds Five Hundred Thousand United States Dollars
(US$500,000) or the equivalent in any other currency;
"Master Agreements" shall have the meaning provided in recital (D)
hereto;
"Master Agreement Liabilities" shall have the meaning provided in
recital (E) hereto;
"Note" means each promissory note of the Owner referred to in
Recital (C) hereto and in Section 1.05(a) of the Credit Agreement;
"Obligations" shall have the meaning provided in Recital (E) hereto;
"Oil Pollution Act 1990" means the Oil Pollution Act 1990 (33 U.S.C.
Section 2701 ET SEQ.), as amended;
"Other Rigs" means, individually or collectively, each of (i) the
jack-up drilling unit ENSCO 50 owned by ENSCO Offshore Company II
("ENSCO II") documented under the laws and flag of the Republic of
Liberia with Official Number 9383 of 5,395 gross registered tons and
1,618 net registered tons; (ii) the jack-up drilling unit ENSCO 51
owned by ENSCO II documented under the laws and flag of the Republic
of Liberia with Official Number 9384 of 4,089 gross registered tons
and 4,089 net registered tons; (iii) the jack-up drilling unit ENSCO<PAGE>
53 owned by ENSCO II documented under the laws and flag of the
Republic of Liberia with Official Number 10260 of 4,976 gross
registered tons and 1,244 net registered tons; (iv) the jack-up
drilling unit ENSCO 54 owned by ENSCO II documented under the laws
and flag of the Republic of Liberia with Official Number 10159 of
5,563 gross registered tons and 1,668 net registered tons; (v) the
drilling barge ENSCO 80 owned by ENSCO Offshore U.K. Ltd.
("Offshore") documented under the laws and flag of the Commonwealth
of the Bahamas with Official Number 724944 of 7,250 gross registered
tons and 7,250 net registered tons; (vi) the drilling barge ENSCO 85
owned by Offshore documented under the laws and flag of the
Commonwealth of the Bahamas with Official Number 724945 of 6,751
gross registered tons and 6,751 net registered tons; and (vii) the
drilling barge ENSCO 92 owned by Offshore documented under the laws
and flag of the Commonwealth of the Bahamas with Official Number
724946 of 6,541 gross registered tons and 6,541 net registered tons;
"Permitted Liens" shall have the same meaning for such term as set
forth in the Credit Agreement.
"Protection and indemnity risks" means the usual risks covered by
protection and indemnity associations of international repute
including the proportion not recoverable in case of collision under
the ordinary running-down clause (unless such is recoverable under
the relevant hull and machinery coverage);
"Requisition Compensation" means all moneys or other compensation
payable during the Credit Facility Period by reason of requisition
for title or other compulsory acquisition of any of the Rigs
otherwise than by requisition for hire;
"Rigs" means the rigs described in Recital (A) hereto and includes
any share or interest therein and their respective engines,
machinery, boats, tackle, outfit, spare gear, fuel, consumable or
other stores, belongings and appurtenances whether on board or
ashore and whether now owned or hereafter acquired (but excluding
therefrom any leased equipment owned by third parties);
"Secured Creditors" shall mean collectively the Security Trustee,
the Banks, the Letter of Credit Issuer and the Collateral Agent
under and as defined in the Credit Agreement;
"Security Documents" shall have the same meaning for such term as
set forth in the Credit Agreement;
"Security Interest" means a mortgage, charge (whether fixed or
floating), pledge, lien, hypothecation, assignment, trust
arrangement, title retention or other security interest or
arrangement of any kind whatsoever;
"Ship Mortgage Act" means the United States Ship Mortgage Act, 1920,
as amended, recodified at 46 U.S.C. Section 31301, ET SEQ.;
"Taxes" shall have the same meaning for such term as set forth in
the Credit Agreement;<PAGE>
"Total Commitment" shall have the same meaning for such term as set
forth in the Credit Agreement;
"Total Loss" means (a) the actual, constructive, arranged, agreed,
or compromised Total Loss of any of the Rigs; (b) the requisition
for title or other compulsory acquisition or forfeiture of any of
the Rigs otherwise than by requisition for hire; (c) the capture,
seizure, arrest, detention or confiscation of any of the Rigs by any
government or by persons acting or purporting to act on behalf of
any government unless the Rig or Rigs be released from such capture,
seizure, arrest or detention within thirty (30) days after the
occurrence thereof;
"United States Dollars" and "US$" means the lawful currency of the
United States of America;
"Unpaid Drawing" shall have the same meaning for such term as set
forth in the Credit Agreement;
"War Risks" includes the risk of mines and all risks excluded from
the standard form of English marine policy by the free of capture
and seizure clause.
1.02 Except where otherwise expressly provided or unless the context
otherwise requires, words and expressions defined in the Credit
Agreement shall have the same meanings when used in this Mortgage.
1.03 In this Mortgage:
(a) Clause headings are inserted for convenience only and shall not
affect the construction of this Mortgage and, unless otherwise
specified, all references to Clauses are to clauses of this
Mortgage;
(b) unless the context otherwise requires, words denoting the
singular number shall include the plural and vice versa;
(c) references to persons include bodies corporate and
unincorporated;
(d) references to assets include property, rights and assets of
every description;
(e) references to any document are to be construed as references to
such document as amended or supplemented from time to time; and
(f) references to any enactment include re-enactments, amendments
and extensions thereof.
2. REPRESENTATIONS AND WARRANTIES
------------------------------
2.01 The Owner hereby represents and warrants to the Security Trustee
that:
(a) the Owner lawfully owns and is lawfully possessed of the Rigs
free from any Security Interest (except for Permitted Liens and
the lien of this Mortgage), and the Owner warrants that it will<PAGE>
defend its title and possession in each of the Rigs and every
part thereof for the benefit of the Security Trustee against
the claims and demands of all persons whomsoever arising as the
result of any liens, charges or encumbrances, other than
Permitted Liens;
(b) the Owner is duly organized and is now existing as a
corporation under the laws of the State of Delaware and will
remain so during the term of this Mortgage;
(c) the Owner has full power and authority (i) to register each of
the Rigs in its name under United States flag, (ii) to execute
and deliver this Mortgage, (iii) to mortgage each of the Rigs
as security for the Obligations and (iv) to comply with the
provisions of, and perform all its obligations under, this
Mortgage;
(d) the Owner will not cause or permit the Rigs to be operated in
any manner contrary to applicable law and the Owner will not
engage in any unlawful trade or violate any law or carry any
cargo that may expose the Rigs to penalty, forfeiture or
capture or otherwise operate the Vessels in any way which might
jeopardize the Security Trustee's security in the Rigs. The
Owner will not do, or suffer or permit to be done, anything
which can or may injuriously affect the registration or
enrollment of the Rigs under the laws and regulations of the
United States of America and will at all times keep the Vessels
duly documented thereunder. The Owner is and will at all times
remain a citizen of the United States within the meaning of 46
USC Section 12102;
(e) the Owner has taken all necessary action to authorize the
execution and delivery of the Notes, the Credit Agreement and
this Mortgage, and this Mortgage constitutes, the legal, valid
and binding obligation of the Owner enforceable against the
Owner in accordance with its terms (except to the extent
limited by applicable bankruptcy, reorganization, insolvency,
moratorium or other laws of general application relating to or
affecting the enforcement of creditors' rights as from time to
time in effect and general equitable principles) and when filed
with the United States Coast Guard National Documentation
Center in Falling Waters, West Virginia, will create a legal,
valid and enforceable first preferred fleet mortgage lien on
each of the Rigs; and
(f) on and after the Restatement Effective Date (as defined in the
Credit Agreement), each of the Security Documents creates, as
security for the Obligations (in this paragraph 2.01(f), as
defined in the Credit Agreement) purported to be secured
thereby, a valid and enforceable perfected security interest in
and Lien (as defined in the Credit Agreement) on all of the
Collateral subject thereto, to the extent perfection of a
security interest or Lien is governed by Article 8 or Article 9
of the UCC (as defined in the applicable Security Documents),
or the Ship Mortgage Act, and subject to no other Liens (except
that the Collateral may be subject to Permitted Liens), in
favor of the Collateral Agent (as defined in the Credit<PAGE>
Agreement) or the Security Trustee, as the case may be, for the
benefit of the Banks. No filings or recordings are required in
order to perfect the Security Interests created under any
Security Document except for filings or recordings required in
connection with any such Security Document which shall have
been made upon or prior to (or are the subject of arrangements,
satisfactory to the Administrative Agent, for filing on or
promptly after the date of ) the execution and delivery
thereof.
2.02 The representations and warranties of the Owner set out in
Clause 2.01 shall survive the execution of this Mortgage and shall
be deemed to be repeated at the time of the making of each Loan and
at the time of the issuance of each Letter of Credit, with respect
to the facts and circumstances existing at each such time, as if
made at each such time.
3. MORTGAGE
--------
3.01 In order to secure the Obligations, the Owner has granted, conveyed
and mortgaged and does by these presents grant, convey and mortgage
unto the Security Trustee, its successors and assigns, the whole
(100%) of each of the Rigs TO HAVE AND TO HOLD the same unto the
Security Trustee, its successors and assigns upon the terms herein
set forth for the enforcement of the Obligations.
Provided only and the condition of these presents is such that if
all of the Obligations secured by this Mortgage have terminated or
have been performed in full as and when the same shall become due
and payable in accordance with the terms of this Mortgage and the
Owner and its successors and assigns shall observe and comply with
the covenants, terms and conditions contained in this Mortgage
expressed or implied to be performed, all without delay or fraud and
according to the true intent and meaning thereof, then these
presents and the rights hereunder shall cease, determine and be
void, otherwise to be and remain in full force and effect and, in
such event, the indenture Security Trustee agrees to execute and
record at the expense of the Owner, all such documents as the Owner
may reasonably require to discharge this Mortgage.
Notwithstanding anything to the contrary herein it is not intended
that any provision of this Mortgage shall waive the preferred status
of this Mortgage and that if any provision or part thereof herein
shall be construed as waiving the preferred status of this Mortgage
then such provision shall to such extent be void and of no effect.
3.02 The Owner shall remain liable to perform all the obligations assumed
by it in relation to the Rigs and none of the Secured Creditors
shall be under any obligation of any kind whatsoever in respect
thereof or be under any liability whatsoever in the event of any
failure by the Owner to perform its obligations in respect thereof.
3.03 On the date on which the Credit Agreement, all Letters of Credit and
the Master Agreement have been terminated, when no Note remains
outstanding and all Obligations and Master Agreement Liabilities
shall have been irrevocably paid in full, this Mortgage shall
terminate, and the Security Trustee at the request and expense of<PAGE>
the Owner, will execute and deliver to the Owner a proper instrument
or instruments acknowledging the satisfaction and termination of
this Mortgage, and will duly assign, transfer and deliver to the
Owner (without recourse and without any representation or warranty)
such of each of the Rigs as may remain in the possession of the
Security Trustee together with any moneys at the time held by the
Security Trustee hereunder.
4. PAYMENT COVENANTS
-----------------
4.01 The Owner hereby covenants with the Secured Creditors:
(a) to pay and indemnify the Secured Creditors for all such
expenses, claims, liabilities, losses, costs, duties, fees,
charges or other moneys as are stated in this Mortgage to be
payable by the Owner to or recoverable from the Owner by the
Secured Creditors (or in respect of which the Owner agrees in
this Mortgage to indemnify any of the Secured Creditors) at the
times and in the manner specified in this Mortgage;
(b) to pay interest on any such expenses, claims, liabilities,
losses, costs, duties, fees, charges or other moneys referred
to in Clause 4.01(a) as paid by the Secured Creditors from the
date on which demand is made by any Secured Creditor as the
case may be, for payment by the Owner of the relevant expense,
claim, liability, loss, cost, duty, fee, charge or other money
incurred by any Secured Creditor for which the Owner is
responsible (both before and after any relevant judgment) at
the Default Rate; and
(c) to pay and perform its obligations which may be or become due
or owing to any Secured Creditor under this Mortgage and the
other Credit Documents to which the Owner is or is to be a
party at the times and in the manner specified herein or
therein.
5. PRESERVATION OF SECURITY
------------------------
5.01 It is declared and agreed that:
(a) the security created by this Mortgage shall be held by the
Security Trustee as a continuing security for the performance
of the Obligations and that the security so created shall not
be satisfied by any intermediate payment or satisfaction of any
part of the Obligations;
(b) the security so created shall be in addition to and shall not
in any way be prejudiced or affected by any of the other
Security Documents;
(c) except as otherwise specifically provided in the Credit
Agreement or other Security Documents, the Security Trustee
shall not have to wait for the Collateral Agent, the Banks or
the Letter of Credit Issuer to enforce any of the other
Security Documents before enforcing the security created by
this Mortgage;<PAGE>
(d) no delay or omission on the part of the Security Trustee in
exercising any right, power or remedy under this Mortgage shall
impair such right, power or remedy or be construed as a waiver
thereof nor shall any single or partial exercise of any such
right, power or remedy preclude any further exercise thereof or
the exercise of any other right, power or remedy. The rights,
powers and remedies provided in this Mortgage are cumulative
and not exclusive of any rights, powers and remedies provided
by law and may be exercised from time to time and as often as
the Security Trustee may deem expedient; and
(e) any waiver by the Security Trustee of any terms of this
Mortgage or any consent given by the Security Trustee under
this Mortgage shall only be effective if given in writing and
then only for the purpose and upon the terms for which it is
given.
5.02 Any settlement or discharge under this Mortgage between the Security
Trustee and the Owner shall be conditional upon no security or
payment to the Secured Creditors or any of them by the Credit
Parties (as defined in the Credit Agreement) or any other person
being avoided or set-aside or ordered to be refunded or reduced by
virtue of any provision or enactment relating to bankruptcy,
insolvency, administration or liquidation for the time being in
force and, if such condition is not satisfied, the Security Trustee
shall be entitled to recover from the Owner on demand the value of
such security or the amount of any such payment as if such
settlement or discharge had not occurred.
5.03 The rights of the Secured Creditors under this Mortgage and the
security hereby constituted shall not be affected by any act,
omission, matter or thing which, but for this provision, might
operate to impair, affect or discharge such rights and security, in
whole or in part, including without limitation, and whether or not
known to or discoverable by the Credit Parties, the Secured
Creditors or any other person:
(a) any time or waiver granted to the Credit Parties or any other
person; or
(b) the taking, variation, compromise, renewal or release of or
refusal or neglect to perfect or enforce any rights, remedies
or securities against any of the Credit Parties or any other
persons; or
(c) any legal limitation, disability, incapacity or other
circumstances relating to the Credit Parties or any other
person; or
(d) any amendment or supplement to the Credit Agreement, any of the
other Credit Documents (other than this Mortgage) or any other
document or security; or
(e) the dissolution, liquidation, amalgamation, reconstruction or
reorganization of any of the Credit Parties or any other
person; or<PAGE>
(f) the unenforceability, invalidity or frustration of any
obligations of any of the Credit Parties or any other person
under the Credit Agreement, any of the other Credit Documents
(other than this Mortgage) or any other document or security.
6. INSURANCE
---------
6.01 The Owner covenants with the Security Trustee throughout the Credit
Facility Period that:
(a) The Owner shall, at its own expense, when and so long as any
Obligations remain outstanding, insure the Rigs and keep each
of them insured, or cause the Rigs to be insured, in lawful
money of the United States, in such amounts, for such risks
(including without limitation, hull and machinery/increased
value, protection and indemnity risks, pollution liability, War
Risks (subject to subparagraph (vii) below) and in addition
such other risks which would be covered by experienced,
prudent, and responsible companies engaged in the offshore
contract drilling of hydrocarbons in places and under
conditions comparable to those in which the Rigs are employed
from time to time and possessing financial and operating
characteristics similar to those of the Owner (herein called
"Similar Companies"), in such form (including without
limitation, the form of the loss payable clause and the
designation of named assureds) and with such first class
insurance companies, underwriters, funds, mutual insurance
associations or clubs, as shall be reasonably satisfactory to
the Administrative Agent. With respect to hull and machinery/
increased value insurance, including war risk, the Owner shall
insure the Rigs and keep each of them insured, or cause the
Rigs to be insured, for an amount which is when such amount is
aggregated with the amount of such insurance coverage on the
Other Rigs, such aggregate amount shall be not less than the
greater of (i) 125% of the Total Commitment and (ii) the amount
of coverage that would be in the range obtained by Similar
Companies on the Rigs and the Other Rigs. Such insurance shall
be on the basis of "new for old" with no deduction for
depreciation. The Rigs shall in no event be insured for an
amount less than the agreed valuation as set forth in the
applicable marine and war risk policies.
(i) Full form marine hull and machinery insurance extended
to insure against all risks of loss or damage, including
but not limited to the risk of loss from blowout and
cratering and against such risks and in such form as are
approved by the Security Trustee and are necessary or
advisable for the protection of the interest of the
Security Trustee and the Shipowner in an amount not less
than the greater of (A), when added to insurances
covering the Rigs and Other Rigs, 125% of the
Commitments or (B) the amount of coverage that would be
within the range obtained by Similar Companies on such
Rigs and the Other Rigs. The deductible or self-insured
retention under the policy shall not exceed US$250,000
per occurrence. The policies shall be endorsed to
delete the sue and labor requirements as applied to the<PAGE>
Security Trustee and to provide coverage for collision
and earthquake hazards;
(ii) Full form marine protection and indemnity and
comprehensive general liability insurance (including any
excess liability insurance), including coverage for
contractual liability, pollution liability, contractual
and legal wreck removal, crew coverage, excess
collision, salvage and general average, care, custody
and control coverage. Such protection and indemnity
insurance shall be maintained in the broadest forms
generally available to similar Companies in the United
States, London or Scandinavian markets and shall be in
an amount not less than the greater of (A) the range of
that carried by similar companies and (B)
US$200,000,000. Said policy shall not include a
deductible or self-insured retention in excess of
US$250,000 per occurrence. Such insurance shall include
a cross-liability endorsement;
(iii) The Owner shall, at all times during which the Rigs are
operating within the jurisdiction of the United States
of America, maintain insurance or post bond or maintain
approved evidence of financial responsibility with
respect to the Rigs to cover the actual cost of removal
of discharged oil which the Owner or the Rigs may be
held strictly liable (or held liable due to negligence
of the Owner or any other Person) under the applicable
Environmental Laws, or under any other federal or state
law which, in the future, may apply to the Rigs or to
the Owner; and the Owner shall maintain insurance or
post bond or maintain approved evidence of financial
responsibility covering similar pollution risks or
liabilities incident thereto under any law, regulation
or judicial decision of any foreign jurisdiction or
jurisdictions or political subdivision thereof
applicable to the Owner, the Rigs or its operations;
(iv) Such workmen's compensation or longshoremen's and harbor
workers' insurance as shall be required by applicable
law, including endorsements for Outer Continental Shelf
operations, borrowed servant, voluntary compensation and
IN REM claims;
(v) Insurance (with a limit of US$50,000,000 per occurrence)
naming the Owner and the Security Trustee assureds and
loss payees, as their interests may appear, against
Operator's Extra Expense ("O.E.E.") liability in
connection with operations conducted by the Rigs with
respect to Rigs operating under a drilling contract with
a financially responsible operator acceptable to the
Security Trustee that indemnifies against such O.E.E.
arising out of blowout (above and below ground),
cratering, redrilling/recompletion, cost of control,
clean-up, containment seepage, pollution, spillage or
leakage in connection with operations conducted by the
Rig, in form and substance satisfactory to the Security<PAGE>
Trustee, and third party liabilities that may be assumed
by a contract which is legally enforceable and in form
and substance satisfactory to the Security Trustee.
Deductibles or self-insured retentions shall not exceed
US$250,000 and shall be for the account of the Owner;
(vi) Excess seepage, pollution, clean-up and containment
liability coverage in the amount of US$50,000,000 in
respect of offshore operations in excess of and
following the seepage, pollution, clean-up and
containment liability coverage recited in subparagraph
(v) above.
(vii) Subject to the provisions of this subsection, War and
Political Risk insurance naming the Owner and the
Security Trustee as assureds and loss payees, which
shall be maintained in the broadest forms generally
available to Similar Companies in the United States,
London or Scandinavian markets, and shall include
coverage for War Risk, hull and machinery, War Risk
protection and indemnity, confiscation, expropriation,
nationalization, deprivation and inability to export.
Such insurance shall be in amounts, with deductibles or
self-insured retentions not to exceed, the corresponding
policies described in subparagraphs (i) and (ii) above.
The Shipowner shall obtain and maintain War and
Political Risk Insurance for any Rig operating in an
area deemed to be hostile by the Owner's underwriters or
protection and indemnity club;
(viii) Upon prior written notice to the Owner, the Security
Trustee may obtain mortgagee's interest insurance or
breach of warranty endorsement in favor of the Security
Trustee with such underwriters and under form of
policies approved by the Security Trustee in an amount
equal to at least 125% of the Commitments. The Owner
shall reimburse the Security Trustee, upon the Security
Trustee's written demand, from time to time, the
reasonable costs and expenses incurred by the Security
Trustee in effecting and maintaining such mortgagee's
interest insurance on such terms and in such amounts and
with such underwriters as the Security Trustee shall
deem appropriate; and
(ix) Upon prior written notice to the Owner, the Security
Trustee may obtain an Additional Perils-Pollution
endorsement covering the possible consequences of
pollution involving the Rigs including, without
limitation, the risk of expropriation or sequestration
of any Rig or the imposition of a lien or encumbrance of
any kind having priority over this Mortgage. The Owner
shall reimburse the Security Trustee, upon the Security
Trustee's written demand, from time to time, the
reasonable costs and expenses incurred by the Security
Trustee in effecting and maintaining on such terms and
in such amounts and with such underwriters such<PAGE>
Additional Perils-Pollution insurance coverage as the
Security Trustee shall deem appropriate.
(b) The Owner will furnish the Security Trustee from time to time
on request and, in any event, at least annually, a detailed
report signed by a firm of marine insurance brokers or
insurance companies acceptable to the Security Trustee with
respect to the insurance carried and maintained on each Rig,
together with their opinion that the insurance carried is
sufficient in that it is customary insurance which an
experienced broker would effect in similar circumstances with
Similar Companies and that, in the opinion of the brokers, it
complies with the provisions of this Section 6.01 and any
requirements which the Security Trustee may have notified to
the Owner. The Owner will use its best efforts to cause such
firm to agree to advise a responsible officer of the Security
Trustee in writing promptly of any default in the payment of
any premium or call and of any other act or omission on the
part of the Owner of which it has knowledge and which might
invalidate or render unenforceable, in whole or in part, any
insurance on any Rig.
(c) Unless the Security Trustee shall otherwise agree, all
insurance for the Rigs shall be placed through independent
brokers of recognized standing and with clubs or first class
underwriters reasonably acceptable to the Security Trustee and
must (i) name the Security Trustee as a named assured (except
as to the insurance referred to in Section 6.01(a)(iv) above),
but without liability for premiums, calls or assessments, (ii)
contain a cancellation clause providing that the insurers
undertake not to exercise any right of cancellation which they
may have by reason of non-payment of premiums or calls when due
without giving thirty (30) days' prior written notice of such
cancellation to a responsible officer of the Security Trustee
and an opportunity of paying any such unpaid premium or call,
(iii) if possible, based on the Owner's best efforts, contain a
provision that the insurance will not be permitted to lapse,
terminate or be materially modified without thirty (30) days'
prior written notice being given to a responsible officer of
the Security Trustee (except as to the insurance referred to in
Section 6.01(a)(ii) and (v) above for which fourteen (14) days'
prior written notice shall be required and (iv) contain the
agreement of the insurer that any loss thereunder shall be
payable to the trustee notwithstanding any action, inaction or
breach of representation or warranty by the Owner, except to
the extent provided by subsection (d) hereof. The Owner shall
not change underwriters or clubs as to any insurance for the
Owner without prompt written notice to a responsible officer of
the Security Trustee of any such change.
(d) All amounts of whatsoever nature payable under any insurance
shall be payable to the Security Trustee for distribution first
to itself, the Secured Creditors, the Co-Agents and thereafter
to the Owner or others as their interests may appear.
Nevertheless, until otherwise required by the Security Trustee
by notice to the underwriters, (i) amounts payable under any
insurance on the Rigs with respect to the protection and<PAGE>
indemnity risks shall be paid directly to the Owner to
reimburse it for any loss, damage or expense incurred by it and
covered by such insurance or to the person to whom any
liability covered by such insurance has been incurred, and (ii)
amounts payable under any insurance with respect to the Rigs
involving any damage to any Rigs not constituting an actual or
constructive total loss, shall be paid by the underwriters
directly for the repair, salvage or other charges involved or,
if the Owner shall have first fully repaired the damage or paid
all of the salvage or other charges, or irrevocably committed
to do so, shall be paid to the Owner as reimbursement
therefore, PROVIDED, no amount in excess of an aggregate of
US$2,000,000 per incident shall be paid from any insurances
without the prior written consent of the Security Trustee.
(e) In the event of an actual or constructive total loss or a
compromised constructive total loss or requisition of any Rig,
all insurance payments or compensation therefor shall be paid
to the Security Trustee and applied to reduce the Total
Commitment in accordance with and subject to the terms of
Section 3.03(c) and/or (d) of the Credit Agreement. The Owner
shall not declare or agree with underwriters that any Rig is a
constructive or compromised, agreed or arranged constructive
total loss without the prior written consent of the Security
Trustee.
(f) In the event of an actual or constructive total loss of any
Rig, the Security Trustee shall retain out of the insurance
payments received on account of such loss and held by the
Security Trustee in accordance with the Credit Agreement, any
sum or sums that shall be or become owing to the Security
Trustee under this Mortgage for the cost, if any, of collecting
the insurance, which sum or sums shall become the sole property
of the Security Trustee, and pay the balance to the Banks for
application pursuant to and subject to Section 3.03(c) and/or
(d) of the Credit Agreement.
(g) The Owner shall arrange for the execution of such guarantees as
may from time to time be required by any protection and
indemnity or war risks association.
7. RIG COVENANTS
-------------
7.01 The Owner covenants with the Security Trustee that throughout the
Credit Facility Period the Owner will:
(a) keep the Rigs documented in its name as United States vessels
and to do or allow to be done nothing whereby such
documentation may be forfeited or imperilled;
(b) not without the previous consent in writing of the Security
Trustee, which consent shall not be unreasonably withheld,
make, or permit to be made, any change in the physical
characteristics of any Rig which would, in the reasonable
judgment of the Security Trustee, materially interfere with the
suitability of such rig for normal commercial offshore drilling
operations; <PAGE>
(c) the Owner will, without cost or expense to the Security
Trustee, (i) maintain each Rig and its machinery in such
condition and repair as will keep the Rig entitled to the
highest classification in the American Bureau of Shipping, or
other classification society of like standing approved in
writing by the Security Trustee for such vessels, (ii) keep
each Rig, its machinery boilers, appurtenances and spare parts
in a good state of repair, wear and tear and depreciation
excepted, and in efficient operating condition in accordance
with good commercial maintenance practices employed in the
offshore oil and gas contract drilling industry, (iii) keep
each Rig tight, staunch, strong and in all respects seaworthy,
in so far as due diligence can make it, (iv) maintain each Rig
with full unexpired classification and other required
certificates and (v) furnish prior to December 1 of each year
to the Security Trustee, a written statement of the
classification society that any classification referred to in
clause (i) above is in effect. Except as otherwise permitted
by the Credit Agreement, each Rig shall, and the Owner
covenants that it will, at all times comply with all applicable
laws, treaties and conventions of the United States of America,
or to which the United States of America is a party, from time
to time in effect, and rules and regulations issued thereunder,
and shall have on board as and when required thereby valid
certificates showing compliance therewith;
(d) at all reasonable times afford the Security Trustee or its
authorized representatives full and complete access to the Rigs
during normal business hours for the purpose of inspecting the
Rigs and their cargoes and papers, and the Owner will deliver
for inspection copies of such contracts and documents relating
to the Rigs, whether on board or not, as the Security Trustee
may reasonably request, provided however, that (i) all
information not on file with any Governmental Agency obtained
by the Security Trustee pursuant to any Credit Document
concerning the Owner, the Rigs, the other assets or the
financial condition of the Owner and prospects shall be kept
confidential by the Security Trustee subject, however, to
requests from the Banks, any applicable governmental Agencies
and to disclosures of such information to assignees and
participants (and potential assignees and participants of which
the Banks notify the Security Trustee) pursuant to the Credit
Agreement, unless such non-governmental parties shall agree
prior thereto to be bound by this Section 6.01(d) and (ii) any
inspection of the Rigs, their cargoes and papers shall be
subject to the requirements of any operators of the Rigs and
any applicable Governmental Agencies. All reasonable expenses
incurred by the Security Trustee or its authorized
representatives in the exercise of its right of inspection
hereunder shall be promptly paid by the Owner;
(e) not transfer or change the flag or port of documentation of any
of the Rigs without the written consent of the Security Trustee
first hand and obtained, and any such written consent to any
one transfer or change of flag or port of documentation shall
not be construed to be a waiver of this provision with respect<PAGE>
to any subsequent proposed transfer or change of flag or port
of documentation;
(f) not sell, bareboat charter, transfer or mortgage any of the
Rigs other than to Holdings and its Subsidiaries (as defined in
the Credit Agreement), without the written consent of the
Security Trustee, which consent shall not be unreasonably
withheld. Any such written consent to any one sale, bareboat
charter, mortgage or transfer shall not be construed to be a
waiver of this provision with respect to any subsequent
proposed sale, bareboat charter, mortgage or transfer. Any
such sale, bareboat charter, transfer or mortgage of any Rig
shall be subject to the provisions of this Mortgage and the
lien thereof, and shall not affect the liabilities of the Owner
hereunder;
(g) promptly pay and discharge all debts, damages and liabilities
whatsoever which have given or may give rise to maritime or
possessory liens (other than Permitted Liens) on or claims
enforceable against the Rigs and all tolls, dues, taxes,
assessments, governmental charges, fines and penalties lawfully
charged on or in respect of the Rigs and all other outgoings
whatsoever in respect of the Rigs and in the event of arrest of
the Rigs pursuant to legal process, or in the event of the
detention of any of the Rigs in exercise or purported exercise
of any such lien or claim as aforesaid, procure the release of
the Rigs, as appropriate, from such arrest or detention
forthwith upon receiving notice thereof by providing bail or
otherwise as the circumstances may require;
(h) not employ the Rigs or allow the employment of any of the Rigs
in any trade or business which is unlawful under the laws of
any relevant jurisdiction or in carrying illicit or prohibited
goods or in any manner whatsoever which may render any of the
Rigs liable to destruction, seizure or confiscation and in the
event of hostilities in any part of the world (whether war be
declared or not) not employ the Rigs or suffer the employment
of any of the Rigs in carrying any contraband goods or to enter
or trade to any zone which is declared a war zone by any
government or by the War Risks insurers of the Rigs unless
there shall have been effected by the Owner (at its expense)
such special, additional or modified insurance cover as the
Administrative Agent may require;
(i) notify both the Security Trustee and the Administrative Agent
forthwith by telecopy, thereafter confirmed by letter of:
(i) any casualty to any of the Rigs which is or is likely to
be a Major Casualty, and
(ii) any occurrence in consequence whereof any of the Rigs
has become or is, by the passing of time or otherwise,
likely to become a Total Loss, and
(iii) any requirement or recommendation made by any insurer or
classification society or by any competent authority
which is not complied with within the time provided by<PAGE>
such insurer, classification society or competent
authority, including any extensions granted thereby, and
(iv) any arrest of any of the Rigs or the exercise or
purported exercise of any lien on any of the Rigs or any
requisition of any of the Rigs for hire;
(j) place, and use due diligence to retain, a properly certified
copy of this Mortgage on board each of the Rigs with the papers
and cause such certified copy of this Mortgage to be exhibited
to any and all persons having business with the Rigs which
might give rise to any lien thereon other than a lien for
crew's wages, general average and salvage and to any
representative of the Security Trustee on demand and to place
and keep prominently displayed in the chart room and in the
master's cabin of each of the Rigs a framed printed notice in
plain type in English of such size that the paragraph of
reading matter shall cover a space not less than 6 inches wide
and 9 inches high reading as follows:
"NOTICE OF MORTGAGE
-------------------
This Rig is covered by a First Preferred Fleet Mortgage to
CHRISTIANIA BANK OG KREDITKASSE, NEW YORK BRANCH, as Security
Trustee for the Banks defined in the said Mortgage under
authority of the United States Ship Mortgage Act, 1920, as
amended, recodified as 46 U.S.C. Section 31301 ET SEQ. Under
the terms of the said Mortgage neither the Owner nor any
charterer nor the master of this Rig nor any other person has
any right, power or authority to create, incur or permit to be
imposed upon this Rig any lien whatsoever other than for crew's
wages, general average and salvage."
(k) shall not cause or permit the Rigs to be operated in any manner
contrary to law, shall not abandon the Rigs in a foreign port,
shall not engage in any unlawful trade or violate any law or
carry any cargo that shall expose the Rigs to penalty,
forfeiture or capture, and shall not do, or suffer or permit to
be done, anything which can or may injuriously affect the
registration or enrollment of the Rigs under the laws of the
United States and will at all times keep the Rigs duly
documented thereunder;
(l) notify both the Security Trustee and Administrative Agent
forthwith by telecopy, thereafter confirmed by letter if a
libel be filed against any Rig or if any Rig is otherwise
attached, levied upon or taken into custody by virtue of any
legal proceeding in any court, tribunal or governmental
authority (de jure or de facto), or if any Rig suffers damage
in excess of US$500,000, in the case of any such libel or
attachment, within thirty (30) days will cause said Rig to be
released by posting bond, posting alternative security or other
means and all liens thereon to be discharged, and will promptly
notify the Security Trustee thereof in the manner aforesaid.
8. PROTECTION OF SECURITY
----------------------
8.01 The Security Trustee shall without prejudice to its other rights and
powers under this Mortgage and the other Credit Documents be
entitled (but not bound) at any time and as often as may be
necessary to take any such action as it may in the reasonable
exercise of its discretion think fit for the purpose of protecting
or maintaining the security created by this Mortgage and the other
Credit Documents (including, without limitation, such action as is
referred to in Clause 8.02) and each and every expense, liability,
or loss (including, without limitation, legal fees) so incurred by
the Secured Creditors in or about the protection or maintenance of
the said security together with interest payable thereon under
Clause 4.01(b) shall be repayable to it by the Owner on demand.
8.02 Without prejudice to the generality of Clause 8.01:
(a) if the Owner does not comply with the provisions of Clause 6 or
any of them, the Administrative Agent shall be entitled (but
not bound) to effect or to replace and renew and thereafter to
maintain the Insurances in such manner as in its discretion it
may think fit and to require that all policies, contracts and
other records relating to the Insurances (including details of
any correspondence concerning outstanding claims) be forthwith
delivered to such brokers as the Administrative Agent may
nominate and to collect, recover, compromise and give a good
discharge for all claims then outstanding or thereafter arising
under the Insurances or any of them and to take over or
institute (if necessary using the name of the Owner) all such
proceedings in connection therewith as the Administrative Agent
in its absolute discretion may think fit and to permit the
brokers through whom the collection or recovery is effected to
charge the usual brokerage therefor; and
(b) if the Owner does not comply with the provisions of Clause
7.01(c) the Security Trustee shall be entitled (but not bound)
to arrange for the carrying out of such repairs to and/or
surveys of the Rigs as it deems expedient or necessary; and
(c) if the Owner does not comply with the provisions of Clause
7.01(g) the Security Trustee shall be entitled (but not bound)
to pay and discharge all such debts, damages and liabilities
and all such tolls, dues, taxes, assessments, charges, fines,
penalties and other outgoings as are therein mentioned and/or
to take any such measures as it deems expedient or necessary
for the purpose of securing the release of the Rig or Rigs, as
the case may be.
9. ENFORCEABILITY AND SECURITY TRUSTEE'S POWERS
--------------------------------------------
9.01 Upon the happening of any of the Events of Default specified in the
Credit Agreement, and giving effect to any applicable grace periods
specified in the Credit Agreement, but without the necessity for any
court order or declaration in any jurisdiction to the effect that an
Event of Default has occurred the security constituted by this
Mortgage shall become immediately enforceable and the Security
Trustee shall be entitled, as and when it may see fit, to put into<PAGE>
force and exercise all or any of the powers possessed by it as
mortgagee of the Rigs or otherwise and in particular:
(a) to exercise all the rights and remedies in foreclosure and
otherwise given to mortgagees by applicable law including the
provisions of the Ship Mortgage Act;
(b) to take possession of any of the Rigs whether actually or
constructively and/or otherwise to take control of any of the
Rigs wherever such Rig or Rigs may be and cause the Owner or
any other person in possession of such Rig or Rigs forthwith
upon demand to surrender the same to the Security Trustee
without legal process and without liability of the Security
Trustee for any losses or damages incurred thereby and without
having to render accounts to the Owner in connection therewith;
(c) to require that all policies, contracts, certificates of entry
and other records relating to the Insurances (including details
of and correspondence concerning outstanding claims) be
forthwith delivered to or to the order of the Administrative
Agent;
(d) to collect, recover, compromise and give a good discharge for
or procure that the Administrative Agent collect, recover,
compromise and give good discharge for any and all moneys or
claims for moneys then outstanding or thereafter arising under
the Insurances or any Requisition Compensation and to permit
any brokers through whom collection or recovery is effected to
charge the usual brokerage therefor;
(e) to take over or institute (if necessary using the name of the
Owner) or, to the extent lawful, procure that the
Administrative Agent take over or institute all such
proceedings in connection with the Rigs, the Insurances, or any
Requisition Compensation as the Security Trustee in its
absolute discretion thinks fit and to discharge, compound,
release or compromise claims against the Owner in respect of
the Rigs which have given or may give rise to any charge or
lien on the Rigs or which are or may be enforceable by
proceedings against the Rig or Rigs, provided the Security
Trustee shall act in a commercially reasonable manner in
accordance with UCC Section 9-504;
(f) to sell any of the Rigs or any share therein with prior notice
to the Owner free from any claim of or by the Owner of any
nature whatsoever, and with or without the benefit of any
charterparty or other contract for the employment of such Rig
or Rigs, by public auction or private contract at such place
and upon such terms (including, without limitation, on terms
such that payment of some or all of the purchase price be
deferred) as the Security Trustee in its absolute discretion
may determine with power to postpone any such sale, without
being answerable for any loss occasioned by such sale or
resulting from postponement thereof, and/or itself to purchase
the Rig or Rigs, as the case may be, at any such public auction
and to set off the purchase price against all or any part of<PAGE>
the Obligations; notice of such public auction or private sale
contract shall be given in the following manner:
(i) by publishing such notice for ten consecutive days in a
daily newspaper of general circulation published in
Dallas, Texas;
(ii) if the place of sale should not be Dallas, Texas, then
also by publication of a similar notice in a daily
newspaper, if any, published at the place of sale; and
(iii) by mailing a similar notice to the Owner on the day of
first publication;
(g) to manage, insure, maintain and repair the Rig or Rigs, as the
case may be, and to charter, employ, sail or lay up the Rig or
Rigs, as the case may be, in such manner, upon such terms and
for such period as the Security Trustee in its absolute
discretion deems expedient and for the purposes aforesaid the
Security Trustee shall be entitled to do all acts and things
incidental or conducive thereto and in particular to enter into
such arrangements respecting the Rig or Rigs, as the case may
be, and the insurance, management, maintenance, repair,
classification, chartering and employment of the Rigs, in all
respects as if the Security Trustee were the owner of the Rigs
and without being responsible for any loss thereby incurred;
(h) to recover from the Owner on demand any expenses, liabilities
or losses as may be incurred by the Security Trustee in or
about the exercise of the power vested in the Security Trustee
under Clause 9.01(g);
(i) subject to the terms of this Mortgage and the Credit Documents
generally, to recover from the Owner on demand each and every
expense, liability or loss incurred by the Security Trustee in
or about or incidental to the exercise by it of any of the
powers aforesaid.
9.02 The Security Trustee shall not be obliged to make any enquiry as to
the nature or sufficiency of any payment received by it under this
Mortgage or to make any claim, take any action or enforce any rights
and benefits assigned to the Security Trustee by this Mortgage or to
which the Security Trustee may at any time be entitled hereunder.
9.03 Subject to the proviso in Section 9.04 below, neither the Secured
Creditors nor their agents, managers, officers, employees, delegates
and advisers shall be liable for any expense, claim, liability,
loss, cost, damage or expense incurred or arising in connection with
the exercise or purported exercise of any rights, powers and
discretions under this Mortgage in the absence of gross negligence
or wilful misconduct.
9.04 The Security Trustee shall not by reason of the taking possession of
the Rig or Rigs, as the case may be, or be liable to account as
mortgagee-in-possession or for anything except actual receipts or be
liable for any loss upon realization or for any default or omission
for which a mortgagee-in-possession might be liable PROVIDED,<PAGE>
HOWEVER, that so long as the Owner shall not have abandoned the Rig
or Rigs, if the Security Trustee shall have become a mortgagee-in-
possession, the Owner shall not be liable to third parties for
damages or losses arising from and after the date the Security
Trustee becomes mortgagee-in-possession.
9.05 Upon any sale of any of the Rigs or any share therein by the
Security Trustee the purchaser shall not be bound to see or enquire
whether the power of sale of the Security Trustee has arisen in the
manner provided in this Mortgage and the sale shall be deemed to be
within the power of the Security Trustee and the receipt of the
Security Trustee for the purchase money shall effectively discharge
the purchaser who shall not be concerned with the manner of
application of the proceeds of sale or be in any way answerable
therefor.
9.06 If at any time after an Event of Default and declaration of
acceleration pursuant to this Section 9, and prior to any
foreclosure action having been taken by the Security Trustee under
any of the Credit Documents to foreclose upon the security provided
by such documents, the Owner offers completely to cure all Events of
Default and to pay all expenses, advances and damages to the
Security Trustee consequent to such Events of Default, with interest
at the rate provided for in Section 1.08(c) of the Credit Agreement,
then the Security Trustee may accept such offer and payment and
restore the Owner to its former position. However, such action
shall not affect any subsequent Event of Default or impair any
rights of the Security Trustee consequent thereto.
9.07 Immediately upon the occurrence of an Event of Default, or of any
event which with the notice or lapse of time or both would
constitute an Event of Default, the owner shall notify a responsible
officer of the Security Trustee of such occurrence in writing
setting forth in reasonable detail the circumstances surrounding
such Event of Default or other event and what action the Owner
proposes to take with respect thereto.
10. APPLICATION OF MONEYS
---------------------
10.01 (a) All moneys received by the Security Trustee (or any other
Secured Creditor, as the case may be) in respect of sale of any
of the Rigs or any part thereof; in respect of recovery under
the Insurances; or in respect of Requisition Compensation,
shall be applied in the following manner:
(i) first, to the payment of all amounts owing the Security
Trustee of the type described in clauses (ii) and (iii)
of Recital (E);
(ii) second, to the extent moneys remain after the
application pursuant to the preceding clause (i), an
amount equal to the outstanding Obligations shall be
paid to the Secured Creditors as provided in Clause
10.01(c), with each Secured Creditor receiving an amount
equal to such Obligations held by it or, if the proceeds
are insufficient to pay in full all such Obligations,<PAGE>
its Pro Rata Share (as defined below) of the amount
remaining to be distributed;
(iii) third, to the payment of any Master Agreement
Liabilities; and
(iv) to the extent moneys remain after the application
pursuant to the preceding clauses (i), (ii) and (iii),
and following the termination of this Mortgage pursuant
to Clause 3.01, any surplus then remaining shall be paid
to the Owner, subject, however, to the rights of the
holder of any then existing Lien of which the Security
Trustee has actual notice (without investigation)
(b) For purposes of this Mortgage "Pro Rata Share" shall mean, when
calculating a Secured Creditor's portion of any distribution or
amount in respect of any Obligations, the amount (expressed as
a percentage) equal to a fraction the numerator of which is the
then unpaid amount of such Obligations owing to or held by such
Secured Creditor and the denominator of which is the then
outstanding amount of all such Obligations. For purposes of
determining the amount payable to each Secured Creditor, the
Security Trustee shall be entitled to request each Secured
Creditor to furnish it with written notice of the amount of
Obligations then owed to it and shall be entitled to reply upon
the amounts stated therein in making such distribution.
(c) All payments required to be made to Secured Creditors hereunder
shall be made to the Administrative Agent under the Credit
Agreement for the account of the Secured Creditors.
(d) For purposes of applying payments received in accordance with
this Clause 10.01, the Security Trustee shall be entitled to
rely upon (i) the Administrative Agent under the Credit
Agreement and (ii) the Secured Creditors for a determination
(which the Administrative Agent and each Secured Creditor, by
their acceptance of the benefits of this Mortgage shall be
obligated to provide upon request of the Security Trustee) of
the outstanding Obligations owed to the Secured Creditors.
Unless it has actual knowledge (including by way of written
notice from a Secured Creditor) to the contrary, the
Administrative Agent under the Credit Agreement, in furnishing
information pursuant to the preceding sentence, and the
Security Trustee, in acting hereunder, shall be entitled to
assume that no obligations other than principal, interest and
regularly accruing fees are owing to any Secured Creditor.
11. FURTHER ASSURANCES
------------------
11.01 The Owner shall execute and do all such assurances, acts and things
as the Security Trustee in its absolute discretion may require for:
(a) perfecting or protecting the security created (or intended to
be created) by this Mortgage; or<PAGE>
(b) preserving or protecting any of the rights of the Security
Trustee, and the other Secured Creditors under this Mortgage;
or
(c) ensuring that the security constituted by this Mortgage and the
covenants and obligations of the Owner under this Mortgage
shall enure to the benefit of any transferee, successor or
assignee of the Security Trustee; or
(d) enforcing the security constituted by this Mortgage on or at
any time after the same shall have become enforceable; or
(e) the exercise of any power, authority or discretion vested in
the Security Trustee under this Mortgage,
in any such case, forthwith upon demand by the Security Trustee and
at the expense of the Owner.
12. POWER OF ATTORNEY
-----------------
12.01 The Owner, by way of security and in order more fully to secure the
performance of the Obligations, hereby irrevocably appoints the
Security Trustee as its attorney until the Total Commitment is
terminated and none of the Obligations remain outstanding for the
purposes of:
(a) doing in its name all acts and executing, signing and (if
required) registering in its name all documents which the Owner
itself could do, execute, sign or register in relation to the
Rigs (including without limitation, transferring title to any
of the Rigs to a third party), PROVIDED, HOWEVER, that such
power shall not be exercisable by or on behalf of the Security
Trustee unless an Event of Default specified in the Credit
Agreement shall have occurred; and
(b) executing, signing, perfecting, doing and (if required)
registering every such further assurance document, act or thing
as is referred to in Clause 11.
12.02 The exercise of such power as is referred to in Clause 12.01(a) by
or on behalf of the Security Trustee shall not put any person
dealing with the Security Trustee upon any enquiry as to whether
this Mortgage has become enforceable nor shall such person be in any
way affected by notice that this Mortgage has not become enforceable
and, in relation to both Clauses 12.01(a) and 12.01(b), the exercise
by the Security Trustee of such power shall be conclusive evidence
of its right to exercise the same.
13. INDEMNITIES
-----------
13.01 Subject to the provisions of this Mortgage and the Credit Agreement,
the Owner will indemnify and save harmless each of the Secured
Creditors and each agent or attorney appointed under or pursuant to
this Mortgage (each an "Indemnitee") from and against any and all
expenses, claims, liabilities, losses, taxes, costs, duties, fees
and charges suffered, incurred or made by such Secured Creditor or
such agent or attorney in good faith:<PAGE>
(a) in the exercise or purported exercise of any rights, powers or
discretions vested in them pursuant to this Mortgage; or
(b) in the preservation or enforcement of the rights of the
Security Trustee under this Mortgage; or
(c) on the release of the Rigs from the security created by this
Mortgage,
and the Secured Creditors and each such agent or attorney may retain
and pay all sums in respect of the same out of money received under
the powers conferred by this Mortgage. All such amounts recoverable
by such Secured Creditors or such agent or attorney shall be
recoverable on a full indemnity basis.
13.02 Without limiting the foregoing Clause 13.01, the Owner hereby
further indemnifies and holds harmless each of the Secured Creditors
and their respective officers, directors, employees, attorneys and
agents from and against any and all liabilities, losses,
obligations, claims, damages, penalties, causes of action, costs and
expenses (including, without limitation, reasonable attorneys' fees
and expenses, consultant fees, investigation and laboratory fees)
imposed upon or incurred by or asserted against them, or any of
them, by reason of (a) an actual, alleged or threatened
Environmental Incident; (b) any personal injury (including wrongful
death) or property damage (real or personal) or economic damage
arising out of or related to such Environmental Incident; (c) any
Environmental Claim brought or threatened, or settlement reached; or
(d) any violation of laws, orders, regulations, requirements or
demands of government authorities relating to Hazardous Materials
at, or discharged from any of the Rigs, PROVIDED, HOWEVER, that in
the event that the Security Trustee shall have become a mortgagee-
in-possession in respect of one or more of the Rigs and the Owner
shall not have abandoned such Rig or Rigs, this indemnity shall not
cover claims of third parties arising from or after the Security
Trustee becomes mortgagee-in-possession.
13.03 If, under any applicable law or regulation, and whether pursuant to
a judgment being made or registered against the Owner or the
liquidation of the Owner or for any other reason, any payment under
or in connection with this Mortgage is made or fails to be satisfied
in a currency (the "payment currency") other than the currency in
which such payment is due under or in connection with this Mortgage
(the "contractual currency"), then to the extent that the amount of
such payment actually received by the Security Trustee, when
converted into the contractual currency at the rate of exchange,
falls short of the amount due under or in connection with this
Mortgage, the Owner, as a separate and independent obligation, shall
indemnify and hold harmless the Security Trustee against the amount
of such shortfall. For the purposes of this Clause 13.03, "rate of
exchange" means the rate at which the Security Trustee is able on
the date of such payment (or, if it is not practicable for the
Security Trustee to purchase the contractual currency with the
payment currency on the date of such payment, at the rate of
exchange as soon afterwards as is practicable for the Security
Trustee to do so) to purchase the contractual currency with the<PAGE>
payment currency and shall take into account any premium and other
costs of exchange with respect thereto.
14. RIGHTS OF OWNER
---------------
14.01 Until an Event of Default shall have occurred, the Owner:
(a) shall be suffered and permitted to retain actual possession and
use of the Rigs;
(b) subject to Section 8.02(b) of the Credit Agreement, shall have
the right, from time to time in its discretion and without
application to the Security Trustee, and without obtaining a
release thereof by the Security Trustee, to dispose of, free
from the lien hereof, any boilers, engines, machinery, masts,
spars, sails, rigging, boats, anchors, chains, tackle, apparel,
furniture, fittings, drilling equipment, pumps, drill pipes,
collars, racking, housing, spare parts and supporting
inventory, vehicles or living quarters or any other
appurtenances of the Rigs.
15. COMMUNICATIONS
--------------
15.01 All notices hereunder shall be made pursuant to Section 12.03 of the
Credit Agreement.
16. ASSIGNMENTS
-----------
16.01 This Mortgage shall be binding upon and shall enure to the benefit
of the Owner, the Secured Creditors and their respective
transferees, successors and permitted assigns and references in this
Mortgage to any of them shall be construed accordingly.
16.02 The Owner may not assign or transfer all or any part of its rights
and/or obligations under this Mortgage.
16.03 Pursuant to Section 12.04 of the Credit Agreement, each Bank has the
right to assign or transfer all or any part of its rights and/or
obligations under the Credit Agreement on the terms therein
provided. The Security Trustee shall notify the Owner promptly
following any such assignment, transfer or change.
17. TOTAL AMOUNT, ETC.
------------------
17.01 The total amount of the direct or contingent obligations secured by
this Mortgage is Two Hundred Million U.S. Dollars (US$200,000,000)
of principal plus interest, fees, commissions and performance of
mortgage covenants. The interest of the Owner in the Rigs is 100%.
The interest of the Security Trustee in the Rigs is 100%. The date
of maturity is October 18, 2001, and the discharge amount is the
same as the total amount plus such other sums as shall be payable by
the Owner to the Banks under the Credit Agreement.
18. MISCELLANEOUS
-------------
18.01 If at any time any one or more of the provisions in this Mortgage is
or becomes invalid, illegal or unenforceable in any respect under<PAGE>
any law or regulation, the validity, legality and enforceability of
the remaining provisions of this Mortgage shall not be in any way
affected or impaired thereby.
18.02 The Security Trustee, at any time and from time to time, may
delegate by power of attorney or in any other manner to any person
or persons all or any of the powers, authorities and discretions
which are for the time being exercisable by the Security Trustee
under this Mortgage in relation to the Rigs. Any such delegation
may be made upon such terms and subject to such regulations as the
Security Trustee may think fit. The Security Trustee shall not be
in any way liable or responsible to the Owner for any loss or damage
arising from any act, default, omission or misconduct on the part of
any such delegate.
18.03 A certification or determination by the Security Trustee as to any
matter provided for in this Mortgage shall, in the absence of
manifest error, be conclusive and binding on the Owner.
18.04 If there is a conflict between the provisions of this Mortgage and
the Credit Agreement, the Credit Agreement shall govern.
19. JURISDICTION AND GOVERNING LAW
------------------------------
19.01 THIS MORTGAGE AND ALL ISSUES ARISING IN CONNECTION WITH THIS
MORTGAGE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE UNITED STATES OF AMERICA AND TO THE EXTENT THAT THEY DO
NOT APPLY, TO THE INTERNAL LAWS OF THE STATE OF NEW YORK, TO WHICH
THE PARTIES HERETO SUBMIT.
19.02 The Owner agrees that the Security Trustee shall have the liberty
but shall not be obliged to take any proceedings in the courts of
any country to protect or enforce the security constituted by this
Mortgage and/or the Credit Agreement and the Security Documents or
to enforce any provisions of this Mortgage and/or the Credit
Agreement and the Security Documents or to enforce the Obligations
and for the purpose of any proceedings for such enforcement the
Owner hereby submits to the jurisdiction of the courts of any
country of the choice of the Security Trustee.
19.03 Without prejudice to the generality of Clause 19.02, the Security
Trustee shall have the right to arrest and take action against any
or all of the Rigs at whatever place such Rig or Rigs shall be found
lying and for the purpose of any action which the Security Trustee
may bring before the courts of such jurisdiction or other judicial
authority and for the purpose of any action which the Security
Trustee may bring against any or all of the Rigs, any writ, notice,
judgment or other legal process or documents may (without prejudice
to any other method of service under applicable law) be served upon
the respective master of such Rig or Rigs (or upon anyone acting as
the master) and such service shall be deemed good service on the
Owner for all purposes.
19.04 The Owner agrees that should the Security Trustee bring a legal
action or proceedings against it or its assets in relation to any
matters arising out of or in connection with this Mortgage, no
immunity from such legal action or proceedings (which shall be<PAGE>
deemed to include, without limitation, suit, attachment prior to
judgment, other attachment, the obtaining of judgment, execution or
other enforcement) shall be claimed by or on behalf of the Owner or
with respect of its assets, and the Owner hereby irrevocably waives
any such right of immunity which it or its assets now has or may
hereafter acquire and the Owner hereby consents generally in respect
of any legal action or proceedings arising out of or in connection
with this Mortgage to the giving out of any relief or the issue of
any process in connection with such action or proceedings including,
without limitation, the making, enforcement or execution or
attachment against any property whatsoever of any order or judgment
which may be made or given in such action or proceedings.
IN WITNESS whereof the Owner has caused this Mortgage to be executed the
day and year first before written.
ENSCO OFFSHORE COMPANY
By_____________________________________
Name: Robert O. Isaac
Title: Assistant Secretary<PAGE>
ACKNOWLEDGEMENT OF MORTGAGE
STATE OF NEW YORK )
) S.S.
COUNTY OF NEW YORK)
On this 27th day of February, 1997 before me personally appeared ROBERT O.
ISAAC to me known who being by me duly sworn did depose and say that he
resides at Dallas, Texas; that he is Assistant Secretary for ENSCO
OFFSHORE COMPANY, the corporation described in and which executed the
foregoing instrument; and that he signed his name thereto by order of the
Board of Directors of ENSCO OFFSHORE COMPANY.
__________________________________________
Notary Public<PAGE>
EXHIBIT H-2
-----------
FIRST PREFERRED FLEET MORTGAGE
Dated February 27, 1997
ENSCO OFFSHORE COMPANY II
- in favor of -
CHRISTIANIA BANK OG KREDITKASSE,
NEW YORK BRANCH,
as Security Trustee
ENSCO 50
ENSCO 51
ENSCO 53
ENSCO 54<PAGE>
INDEX
-----
CLAUSE SUBJECT MATTER PAGE
- ------ -------------- ----
1. DEFINITIONS AND INTERPRETATION . . . . . . . . . . . . 3
2. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . 7
3. MORTGAGE . . . . . . . . . . . . . . . . . . . . . . . 8
4. PAYMENT COVENANTS . . . . . . . . . . . . . . . . . . . 9
5. PRESERVATION OF SECURITY . . . . . . . . . . . . . . . 10
6. INSURANCE . . . . . . . . . . . . . . . . . . . . . . . 11
7. RIG COVENANTS . . . . . . . . . . . . . . . . . . . . . 15
8. PROTECTION OF SECURITY . . . . . . . . . . . . . . . . 18
9. ENFORCEABILITY AND SECURITY TRUSTEE'S POWERS . . . . . 19
10. APPLICATION OF MONEYS . . . . . . . . . . . . . . . . . 21
11. FURTHER ASSURANCES . . . . . . . . . . . . . . . . . . 22
12. POWER OF ATTORNEY . . . . . . . . . . . . . . . . . . . 23
13. INDEMNITIES . . . . . . . . . . . . . . . . . . . . . . 23
14. RIGHTS OF OWNER . . . . . . . . . . . . . . . . . . . . 24
15. COMMUNICATIONS . . . . . . . . . . . . . . . . . . . . 25
16. ASSIGNMENTS . . . . . . . . . . . . . . . . . . . . . . 25
17. TOTAL AMOUNT, ETC. . . . . . . . . . . . . . . . . . . 25
18. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . 25
19. JURISDICTION AND GOVERNING LAW . . . . . . . . . . . . 26
ACKNOWLEDGEMENT OF MORTGAGE
EXHIBIT 1 FORM OF CREDIT AGREEMENT
EXHIBIT 2 FORM OF SUBSIDIARY GUARANTY<PAGE>
THIS FIRST PREFERRED FLEET MORTGAGE (this "Mortgage") is made on the 27th
day of February, 1997
BY
- --
(1) ENSCO OFFSHORE COMPANY II, a Delaware corporation having its
principal offices at 2700 Fountain Place, 1445 Ross Avenue, Dallas,
Texas 75202 (the "Owner"),
IN FAVOR OF
- -----------
(2) CHRISTIANIA BANK OG KREDITKASSE, NEW YORK BRANCH, a Norwegian
banking corporation having its office at 11 West 42nd Street, New
York, New York, as security trustee for the Banks (as hereinafter
defined) and as mortgagee (the "Security Trustee")
WHEREAS
- -------
(A) The Owner is the sole owner of the whole of the following Liberian
flag drilling rigs (the "Rigs"):
Name Official No. GRT NRT
---- ------------ --- ---
ENSCO 50 9383 5395 1618
ENSCO 51 9384 4089 4089
ENSCO 53 10260 4976 1244
ENSCO 54 10159 5563 1668
which Rigs have been duly registered in the name of the Owner in
accordance with the laws of the Republic of Liberia with a home port
at Monrovia, Liberia.
(B) By a Credit Facility Agreement dated as of December 15, 1993,
Amended and Restated as of September 27, 1995, further amended by
Amendment No. 1 dated June 13, 1996, and further Amended and
Restated as of February 27, 1997 (as modified, amended or
supplemented from time to time, the "Credit Agreement") among (i)
ENSCO Offshore Company ("Offshore"), "ENSCO Offshore U.K. Ltd. and
Dual Holding Company, as borrowers (collectively, the "Borrowers");
(ii) Offshore, ENSCO Delaware, Inc. ("Parent") and ENSCO
International Incorporated ("Holdings"), as guarantors (the
"Guarantors"); (iii) the financial institutions party thereto (the
"Banks"); (iv) Christiania Bank og Kreditkasse, New York Branch and
Den norske Bank ASA, New York Branch, as co-agents (the "Co-
Agents"); and (v) the Security Trustee, as administrative agent,
letter of credit issuer and security trustee (in such capacity, the
"Administrative Agent") (the form of which Credit Agreement together
with Exhibit B-1 through B-3 thereto but without the remaining
attachments is attached hereto as Exhibit 1), it was agreed among
other things that the Banks would make available to the Borrowers
upon the terms and conditions therein described a senior secured
revolving credit facility (the "Facility") in an aggregate amount at
any time outstanding of Two Hundred Million United States Dollars
(US$200,000,000), providing for the making of Loans and the issuance
of, and participation in, Letters of Credit as contemplated therein.<PAGE>
(C) The obligations of the Borrowers with respect to the Facility are
evidenced by the Credit Agreement and the other Credit Documents,
including the promissory notes of the Borrowers payable to the order
of the respective Banks (each a "Note" and collectively the "Notes")
(the form of which are attached as Exhibit B-1 through B-3 to the
Credit Agreement).
(D) The Owner, for good and valuable consideration has authorized,
executed and delivered a Subsidiary Guaranty (as modified, amended
or supplemented from time to time, the "Subsidiary Guaranty"), the
form of which Subsidiary Guaranty is attached hereto as Exhibit 2,
in favor of the Administrative Agent guaranteeing the performance of
"Borrower C" (as that term is defined in the Credit Agreement) of
its obligations under the Credit Agreement and the other Credit
Documents.
(E) This Mortgage is made for the benefit of the Security Trustee to
secure the guaranty by the Owner of (i) the full and prompt payment
when due of (x) the principal of and interest on the Notes issued,
and Loans made, by Borrower C under the Credit Agreement, and all
reimbursement obligations and Unpaid Drawings with respect to the
Letters of Credit issued under the Credit Agreement for the benefit
of Borrower C, and (y) all other obligations and indebtedness
(including without limitation, indemnities, Fees and interest
thereon) of Borrower C to the Secured Creditors (as hereinafter
defined), whether now existing or hereafter incurred under, arising
out of or in connection with the Credit Agreement and the other
Credit Documents including, without limitation, this Mortgage and
the due performance and compliance by Borrower C with all of the
terms, conditions and agreements contained in the Credit Agreement
and the other Credit Documents including, without limitation, this
Mortgage; (ii) any and all sums advanced by the Security Trustee in
order to preserve the Collateral (as hereinafter defined) or
preserve its security interest in the Collateral; (iii) in the event
of any proceeding for the collection or enforcement of any
indebtedness, obligations, or liabilities of Borrower C referred to
in clause (i) above, after an Event of Default shall have occurred
and be continuing, the reasonable expenses of the Security Trustee
of re-taking, holding, preparing for sale or lease, selling or
otherwise disposing of or foreclosing on the Collateral, or of any
exercise by the Security Trustee of its rights hereunder, together
with reasonable attorneys' fees of counsel to the Security Trustee
and court costs; and (iv) all amounts paid by any Indemnitee as to
which such Indemnitee has the right to reimbursement under Clause 13
of this Mortgage (all such obligations, liabilities, sums and
expenses referred to in clauses (i) through (iv) above being
collectively referred to as the "Obligations"). It is acknowledged
and agreed that the "Obligations" shall include extensions of credit
of the types described above, whether outstanding on the date of
this Mortgage or extended from time to time after the date of this
Mortgage.
(F) This First Preferred Fleet Mortgage is entered into by the Owner in
consideration of the Banks agreeing, at the request of Borrower C,
to make the Facility available to Borrower C under the terms of the
Credit Agreement and as a condition thereto and for other good and
valuable consideration provided by the Banks (the sufficiency of
which the Owner hereby acknowledges).<PAGE>
NOW THIS MORTGAGE WITNESSETH AND IT IS HEREBY AGREED
- ----------------------------------------------------
1. DEFINITIONS AND INTERPRETATION
------------------------------
1.01 In this Mortgage unless the context otherwise requires, the
following expressions shall have the following meanings:
"Administrative Agent" shall have the same meaning for such term as
set forth in the Credit Agreement;
"Bank" means any lender listed from time to time on Annex I to the
Credit Agreement (collectively, the "Banks");
"Collateral" shall have the same meaning for such term as set forth
in the Credit Agreement;
"Credit Agreement" means the Credit Facility Agreement dated as of
December 15, 1993, Amended and Restated as of September 27, 1995,
further amended by Amendment No. 1 dated June 13, 1996 and further
Amended and Restated as of February 27, 1997, among the Borrowers,
the Guarantors, the Banks, the Co-Agents and the Administrative
Agent first referred to in Recital (B) hereto, as modified, amended
or supplemented from time to time;
"Credit Documents" shall have the meaning for such term as set forth
in the Credit Agreement;
"Credit Facility Period" shall mean the period commencing on the
date hereof and ending on the date the Total Commitments have
terminated, no Letters of Credit remain outstanding and the Loans
and the Unpaid Drawings, together with interest, fees and all other
obligations are paid in full;
"Default Rate" shall mean the rate of interest calculated in
accordance with Section 1.08(c) of the Credit Agreement;
"Environmental Approvals" means all approvals, licenses, permits,
exemptions or authorization required under applicable Environmental
Laws;
"Environmental Claims" means any and all administrative, regulatory
or judicial actions, suits, demands, demand letters, claims, liens,
notices of noncompliance or violation, investigations (other than
internal reports prepared by Holdings or any of its Subsidiaries
solely in the ordinary course of such Person's business and not in
response to any third party action or request of any kind) or
proceedings relating in any way to any Environmental Law or any
permit issued, or any approval given, under any such Environmental
Law (hereafter, "Claims"), including, without limitation, (a) 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 (b) any
and all Claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief
resulting from Hazardous Materials arising from alleged injury or
threat of injury to health, safety or the environment;<PAGE>
"Environmental Incident" means (i) any release of Hazardous Material
from any of the Rigs, (ii) any incident in which Hazardous Material
is released from a vessel other than any of the Rigs and which
involves collision between the Rig and such other vessel or some
other incident of navigation or operation, in either case, where the
Rig or the Owner is actually or allegedly at fault or otherwise
liable (in whole or in part) or (iii) any incident in which
Hazardous Material is released from a vessel other than any of the
Rigs and where the Rig is actually or potentially liable to be
arrested as a result and/or where the Owner is actually or allegedly
at fault or otherwise liable (and, in each such case, "release"
shall mean disposing, discharging, injecting, spilling, leaking,
leaching, dumping, emitting, escaping, emptying, seeping, placing
and the like, into or upon any land or water or air, or otherwise
entering into the environment);
"Environmental Law" means any applicable Federal, state, foreign or
local statute, law, rule, regulation, ordinance, code, guide, policy
and rule of common law now or hereafter in effect and in each case
as amended, and any judicial or administrative interpretation
thereof, including any judicial or administrative order, consent
decree or judgment, relating to the environment, health, safety or
Hazardous Materials, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended, 42 U.S.C. Section 9601 ET SEQ.; the Resource
Conservation and Recovery Act, as amended, 42 U.S.C. Section 6901 ET
SEQ.; the Federal Water Pollution Control Act, as amended, 33 U.S.C.
Section 1251 ET SEQ.; the Toxic Substances Control Act, 15 U.S.C.
Section 7401 ET SEQ.; the Clean Air Act, 42 U.S.C. Section 7401 ET
SEQ.; the Safe Drinking Water Act, 42 U.S.C. Section 3808 ET SEQ.;
the Oil Pollution Act of 1990, 33 U.S.C. Section 2701 ET SEQ. and
any applicable state and local or foreign counterparts or
equivalents;
"Fees" shall have the same meaning for such term as set forth in the
Credit Agreement;
"Hazardous Materials" means (a) any petroleum or petroleum products,
radioactive materials, asbestos in any form that is or could become
friable, urea formaldehyde foam insulation, transformers or other
equipment that contained, electric fluid containing levels of
polychlorinated biphenyls, and radon gas; (b) any chemicals,
materials or substances defined as or included in the definition of
"hazardous substances," "hazardous waste," "hazardous materials,"
"extremely hazardous waste," "restricted hazardous waste," "toxic
substances," "toxic pollutants," "contaminants," or "pollutants," or
words of similar import, under any applicable Environmental Law; and
(c) any other chemical, material or substance, exposure to which is
prohibited, limited or regulated by any governmental authority;
"Indemnitee" shall have the meaning set forth in Section 13.01;
"Insurances" includes all policies and contracts of insurance (which
expression includes all entries of each of the Rigs in protection
and indemnity associations) which are from time to time taken out or
entered into in respect of the Rigs or otherwise by the Owner
(whether in the sole name of the Owner or in the joint names of the<PAGE>
Owner and the Administrative Agent) and all benefits thereof
(including claims of whatsoever nature and return of premiums);
"Interest Period" shall have the same meaning for such term as set
forth in Section 1.09 of the Credit Agreement;
"Letter of Credit" shall have the same meaning for such term as set
forth in Section 2.01(a) of the Credit Agreement, except for
purposes hereof "Letter of Credit" shall relate only to those issued
at the request or for the benefit of Borrower C;
"Loan(s)" shall have the same meaning for such term as set forth in
the Credit Agreement;
"Major Casualty" means any casualty to any of the Rigs in respect
whereof the claim or the aggregate of the claims against all
insurers, before adjustment for any relevant franchise or
deductible, exceeds Five Hundred Thousand United States Dollars
(US$500,000) or the equivalent in any other currency;
"Note" means each promissory note of Borrower C referred to in
Recital (C) hereto and in Section 1.05(a) of the Credit Agreement;
"Obligations" shall have the meaning provided in Recital (E) hereto;
"Oil Pollution Act 1990" means the Oil Pollution Act 1990 (33 U.S.C.
Section 2701 ET SEQ.), as amended;
"Other Rigs" means, individually or collectively, each of (i) the
jack-up drilling unit ENSCO 68 owned by Offshore documented under
the laws and flag of the United States of America with Official
Number 574668; (ii) the jack-up drilling unit ENSCO 81 owned by
Offshore documented under the laws and flag of the United States of
America with Official Number 606512; (iii) the jack-up drilling unit
ENSCO 82 owned by Offshore documented under the laws and flag of the
United States of America with Official Number 602912; (iv) the jack-
up drilling unit ENSCO 83 owned by Offshore documented under the
laws and flag of the United States of America with Official
Number 605536; (v) the jack-up drilling unit ENSCO 84 owned by
Offshore documented under the laws and flag of the United States of
America with Official Number 637544; (vi) the jack-up drilling unit
ENSCO 86 owned by Offshore documented under the laws and flag of the
United States of America with Official Number 643110; (vii) the
jack-up drilling unit ENSCO 87 owned by Offshore documented under
the laws and flag of the United States of America with Official
Number 648969; (viii) the jack-up drilling unit ENSCO 88 owned by
Offshore documented under the laws and flag of the United States of
America with Official Number 645637; (ix) the jack-up drilling unit
ENSCO 89 owned by Offshore documented under the laws and flag of the
United States of America with Official Number 652440; (x) the jack-
up drilling unit ENSCO 90 owned by Offshore documented under the
laws and flag of the United States of America with Official Number
647859; (xi) the jack-up drilling unit ENSCO 93 owned by Offshore
documented under the laws and flag of the United States of America
with Official Number 651385; (xii) the jack-up drilling unit ENSCO
94 owned by Offshore documented under the laws and flag of the
United States of America with Official Number 638685; (xiii) the<PAGE>
jack-up drilling unit ENSCO 95 owned by Offshore documented under
the laws and flag of the United States of America with Official
Number 642112; (xiv) the jack-up drilling unit ENSCO 98 owned by
Offshore documented under the laws and flag of the United States of
America with Official Number 589096; (xv) the jack-up drilling unit
ENSCO 99 owned by Offshore documented under the laws and flag of the
United States of America with Official Number 682070; (xvi) the
drilling barge ENSCO 80 owned by ENSCO Offshore U.K. Ltd.
("Offshore") documented under the laws and flag of the Commonwealth
of the Bahamas with Official Number 724944; (xvii) the drilling
barge ENSCO 85 owned by Offshore documented under the laws and flag
of the Commonwealth of the Bahamas with Official Number 724945; and
(xviii) the drilling barge ENSCO 92 owned by Offshore documented
under the laws and flag of the Commonwealth of the Bahamas with
Official Number 724946;
"Permitted Liens" shall have the same meaning for such term as set
forth in the Credit Agreement.
"Protection and indemnity risks" means the usual risks covered by
protection and indemnity associations of international repute
including the proportion not recoverable in case of collision under
the ordinary running-down clause (unless such is recoverable under
the relevant hull and machinery coverage);
"Requisition Compensation" means all moneys or other compensation
payable during the Credit Facility Period by reason of requisition
for title or other compulsory acquisition of any of the Rigs
otherwise than by requisition for hire;
"Rigs" means the rigs described in Recital (A) hereto and includes
any share or interest therein and their respective engines,
machinery, boats, tackle, outfit, spare gear, fuel, consumable or
other stores, belongings and appurtenances whether on board or
ashore and whether now owned or hereafter acquired (but excluding
therefrom any leased equipment owned by third parties);
"Secured Creditors" shall mean collectively the Security Trustee,
the Banks, the Letter of Credit Issuer and the Collateral Agent
under and as defined in the Credit Agreement;
"Security Documents" shall have the same meaning for such term as
set forth in the Credit Agreement;
"Security Interest" means a mortgage, charge (whether fixed or
floating), pledge, lien, hypothecation, assignment, trust
arrangement, title retention or other security interest or
arrangement of any kind whatsoever;
"Subsidiary Guaranty" shall have the meaning for such term as set
forth in Whereas Clause (D);
"Taxes" shall have the same meaning for such term as set forth in
the Credit Agreement;
"Total Commitment" shall have the same meaning for such term as set
forth in the Credit Agreement;<PAGE>
"Total Loss" means (a) the actual, constructive, arranged, agreed,
or compromised Total Loss of any of the Rigs; (b) the requisition
for title or other compulsory acquisition or forfeiture of any of
the Rigs otherwise than by requisition for hire; (c) the capture,
seizure, arrest, detention or confiscation of any of the Rigs by any
government or by persons acting or purporting to act on behalf of
any government unless the Rig or Rigs be released from such capture,
seizure, arrest or detention within thirty (30) days after the
occurrence thereof;
"United States Dollars" and "US$" means the lawful currency of the
United States of America;
"Unpaid Drawing" shall have the same meaning for such term as set
forth in the Credit Agreement;
"War Risks" includes the risk of mines and all risks excluded from
the standard form of English marine policy by the free of capture
and seizure clause.
1.02 Except where otherwise expressly provided or unless the context
otherwise requires, words and expressions defined in the Credit
Agreement shall have the same meanings when used in this Mortgage.
1.03 In this Mortgage:
(a) Clause headings are inserted for convenience only and shall not
affect the construction of this Mortgage and, unless otherwise
specified, all references to Clauses are to clauses of this
Mortgage;
(b) unless the context otherwise requires, words denoting the
singular number shall include the plural and vice versa;
(c) references to persons include bodies corporate and
unincorporated;
(d) references to assets include property, rights and assets of
every description;
(e) references to any document are to be construed as references to
such document as amended or supplemented from time to time; and
(f) references to any enactment include re-enactments, amendments
and extensions thereof.
2. REPRESENTATIONS AND WARRANTIES
------------------------------
2.01 The Owner hereby represents and warrants to the Security Trustee
that:
(a) the Owner lawfully owns and is lawfully possessed of the Rigs
free from any Security Interest (except for Permitted Liens and
the lien of this Mortgage), and the Owner warrants that it will
defend its title and possession in each of the Rigs and every
part thereof for the benefit of the Security Trustee against
the claims and demands of all persons whomsoever arising as the<PAGE>
result of any liens, charges or encumbrances, other than
Permitted Liens;
(b) the Owner is duly organized and is now existing as a
corporation under the laws of the State of Delaware and will
remain so during the term of this Mortgage;
(c) the Owner is duly qualified as a Liberian Foreign Maritime
Entity under the laws of the Republic of Liberia and will
remain so during the term of this Mortgage;
(d) the Owner has full power and authority (i) to register each of
the Rigs in its name under the Liberian flag, (ii) to execute
and deliver this Mortgage, (iii) to mortgage each of the Rigs
as security for the Obligations and (iv) to comply with the
provisions of, and perform all its obligations under, this
Mortgage;
(e) the Owner will not cause or permit the Rigs to be operated in
any manner contrary to applicable law and the Owner will not
engage in any unlawful trade or violate any law or carry any
cargo that may expose the Rigs to penalty, forfeiture or
capture or otherwise operate the Vessels in any way which might
jeopardize the Security Trustee's security in the Rigs. The
Owner will not do, or suffer or permit to be done, anything
which can or may injuriously affect the registration or
enrollment of the Rigs under the laws and regulations of the
Republic of Liberia and will at all times keep the Rigs duly
documented thereunder.
(f) the Owner has taken all necessary action to authorize the
execution and delivery of the Subsidiary Guaranty and this
Mortgage, and this Mortgage constitutes, the legal, valid and
binding obligation of the Owner enforceable against the Owner
in accordance with its terms (except to the extent limited by
applicable bankruptcy, reorganization, insolvency, moratorium
or other laws of general application relating to or affecting
the enforcement of creditors' rights as from time to time in
effect and general equitable principles) and when filed with
the Office of the Deputy Commissioner of Maritime Affairs of
the Republic of Liberia, New York, New York will create a
legal, valid and enforceable first preferred fleet mortgage
lien on each of the Rigs; and
(f) on and after the Restatement Effective Date (as defined in the
Credit Agreement), each of the Security Documents to which the
Owner is a party creates, as security for the Borrower C
Obligations (in this paragraph 2.01(f), as defined in the
Credit Agreement) purported to be secured thereby, a valid and
enforceable perfected security interest in and Lien (as defined
in the Credit Agreement) on all of the Collateral subject
thereto, to the extent perfection of a security interest or
Lien is governed by Article 8 or Article 9 of the UCC (as
defined in the applicable Security Documents), or Title 22 of
the Liberian Code of Laws of 1956, as amended, and subject to
no other Liens (except that the Collateral may be subject to
Permitted Liens), in favor of the Collateral Agent (as defined<PAGE>
in the Credit Agreement) or the Security Trustee, as the case
may be, for the benefit of the Banks. No filings or recordings
are required in order to perfect the Security Interests created
under any Security Document except for filings or recordings
required in connection with any such Security Document which
shall have been made upon or prior to (or are the subject of
arrangements, satisfactory to the Administrative Agent, for
filing on or promptly after the date of ______) the execution
and delivery thereof.
2.02 The representations and warranties of the Owner set out in
Clause 2.01 shall survive the execution of this Mortgage and shall
be deemed to be repeated at the time of the making of each Loan and
at the time of the issuance of each Letter of Credit, with respect
to the facts and circumstances existing at each such time, as if
made at each such time.
3. MORTGAGE
--------
3.01 In order to secure the Obligations, the Owner has granted, conveyed
and mortgaged and does by these presents grant, convey and mortgage
unto the Security Trustee, its successors and assigns, the whole
(100%) of each of the Rigs TO HAVE AND TO HOLD the same unto the
Security Trustee, its successors and assigns upon the terms herein
set forth for the enforcement of the Obligations.
Provided only and the condition of these presents is such that if
all of the Obligations secured by this Mortgage have terminated or
have been performed in full as and when the same shall become due
and payable in accordance with the terms of this Mortgage and the
Owner and its successors and assigns shall observe and comply with
the covenants, terms and conditions contained in this Mortgage
expressed or implied to be performed, all without delay or fraud and
according to the true intent and meaning thereof, then these
presents and the rights hereunder shall cease, determine and be
void, otherwise to be and remain in full force and effect and, in
such event, the Security Trustee agrees to execute and record at the
expense of the Owner, all such documents as the Owner may reasonably
require to discharge this Mortgage.
Notwithstanding anything to the contrary herein it is not intended
that any provision of this Mortgage shall waive the preferred status
of this Mortgage and that if any provision or part thereof herein
shall be construed as waiving the preferred status of this Mortgage
then such provision shall to such extent be void and of no effect.
3.02 The Owner shall remain liable to perform all the obligations assumed
by it in relation to the Rigs and none of the Secured Creditors
shall be under any obligation of any kind whatsoever in respect
thereof or be under any liability whatsoever in the event of any
failure by the Owner to perform its obligations in respect thereof.
3.03 On the date on which the Credit Agreement, all Letters of Credit and
the Subsidiary Guaranty have been terminated, when no Note remains
outstanding and all Obligations as they relate to Borrower C shall
have been irrevocably paid in full, this Mortgage shall terminate,
and the Security Trustee at the request and expense of the Owner,<PAGE>
will execute and deliver to the Owner a proper instrument or
instruments acknowledging the satisfaction and termination of this
Mortgage, and will duly assign, transfer and deliver to the Owner
(without recourse and without any representation or warranty) such
of each of the Rigs as may remain in the possession of the Security
Trustee together with any moneys at the time held by the Security
Trustee hereunder.
4. PAYMENT COVENANTS
-----------------
4.01 The Owner hereby covenants with the Secured Creditors:
(a) to pay and indemnify the Secured Creditors for all such
expenses, claims, liabilities, losses, costs, duties, fees,
charges or other moneys as are stated in this Mortgage to be
payable by the Owner to or recoverable from the Owner by the
Secured Creditors (or in respect of which the Owner agrees in
this Mortgage to indemnify any of the Secured Creditors) at the
times and in the manner specified in this Mortgage;
(b) to pay interest on any such expenses, claims, liabilities,
losses, costs, duties, fees, charges or other moneys referred
to in Clause 4.01(a) as paid by the Secured Creditors from the
date on which demand is made by any Secured Creditor as the
case may be, for payment by the Owner of the relevant expense,
claim, liability, loss, cost, duty, fee, charge or other money
incurred by any Secured Creditor for which the Owner is
responsible (both before and after any relevant judgment) at
the Default Rate; and
(c) to pay and perform its obligations which may be or become due
or owing to any Secured Creditor under this Mortgage and the
other Credit Documents to which the Owner is or is to be a
party at the times and in the manner specified herein or
therein.
5. PRESERVATION OF SECURITY
------------------------
5.01 It is declared and agreed that:
(a) the security created by this Mortgage shall be held by the
Security Trustee as a continuing security for the performance
of the Obligations and that the security so created shall not
be satisfied by any intermediate payment or satisfaction of any
part of the Obligations;
(b) the security so created shall be in addition to and shall not
in any way be prejudiced or affected by any of the other
Security Documents;
(c) except as otherwise specifically provided in the Credit
Agreement or other Security Documents, the Security Trustee
shall not have to wait for the Collateral Agent, the Banks or
the Letter of Credit Issuer to enforce any of the other
Security Documents before enforcing the security created by
this Mortgage;<PAGE>
(d) no delay or omission on the part of the Security Trustee in
exercising any right, power or remedy under this Mortgage shall
impair such right, power or remedy or be construed as a waiver
thereof nor shall any single or partial exercise of any such
right, power or remedy preclude any further exercise thereof or
the exercise of any other right, power or remedy. The rights,
powers and remedies provided in this Mortgage are cumulative
and not exclusive of any rights, powers and remedies provided
by law and may be exercised from time to time and as often as
the Security Trustee may deem expedient; and
(e) any waiver by the Security Trustee of any terms of this
Mortgage or any consent given by the Security Trustee under
this Mortgage shall only be effective if given in writing and
then only for the purpose and upon the terms for which it is
given.
5.02 Any settlement or discharge under this Mortgage between the Security
Trustee and the Owner shall be conditional upon no security or
payment to the Secured Creditors or any of them by the Credit
Parties (as defined in the Credit Agreement) or any other person
being avoided or set-aside or ordered to be refunded or reduced by
virtue of any provision or enactment relating to bankruptcy,
insolvency, administration or liquidation for the time being in
force and, if such condition is not satisfied, the Security Trustee
shall be entitled to recover from the Owner on demand the value of
such security or the amount of any such payment as if such
settlement or discharge had not occurred.
5.03 The rights of the Secured Creditors under this Mortgage and the
security hereby constituted shall not be affected by any act,
omission, matter or thing which, but for this provision, might
operate to impair, affect or discharge such rights and security, in
whole or in part, including without limitation, and whether or not
known to or discoverable by the Credit Parties, the Secured
Creditors or any other person:
(a) any time or waiver granted to the Credit Parties or any other
person; or
(b) the taking, variation, compromise, renewal or release of or
refusal or neglect to perfect or enforce any rights, remedies
or securities against any of the Credit Parties or any other
persons; or
(c) any legal limitation, disability, incapacity or other
circumstances relating to the Credit Parties or any other
person; or
(d) any amendment or supplement to the Credit Agreement, any of the
other Credit Documents (other than this Mortgage) or any other
document or security; or
(e) the dissolution, liquidation, amalgamation, reconstruction or
reorganization of any of the Credit Parties or any other
person; or<PAGE>
(f) the unenforceability, invalidity or frustration of any
obligations of any of the Credit Parties or any other person
under the Credit Agreement, any of the other Credit Documents
(other than this Mortgage) or any other document or security.
6. INSURANCE
---------
6.01 The Owner covenants with the Security Trustee throughout the Credit
Facility Period that:
(a) The Owner shall, at its own expense, when and so long as any
Obligations remain outstanding, insure the Rigs and keep each
of them insured, or cause the Rigs to be insured, in lawful
money of the United States, in such amounts, for such risks
(including without limitation, hull and machinery/increased
value, protection and indemnity risks, pollution liability, War
Risks (subject to subparagraph (vii) below) and in addition
such other risks which would be covered by experienced,
prudent, and responsible companies engaged in the offshore
contract drilling of hydrocarbons in places and under
conditions comparable to those in which the Rigs are employed
from time to time and possessing financial and operating
characteristics similar to those of the Owner (herein called
"Similar Companies"), in such form (including without
limitation, the form of the loss payable clause and the
designation of named assureds) and with such first class
insurance companies, underwriters, funds, mutual insurance
associations or clubs, as shall be reasonably satisfactory to
the Administrative Agent. With respect to hull and machinery/
increased value insurance, including war risk, the Owner shall
insure the Rigs and keep each of them insured, or cause the
Rigs to be insured, for an amount which is when such amount is
aggregated with the amount of such insurance coverage on the
Other Rigs, such aggregate amount shall be not less than the
greater of (i) 125% of the Total Commitment and (ii) the amount
of coverage that would be in the range obtained by Similar
Companies on the Rigs and the Other Rigs. Such insurance shall
be on the basis of "new for old" with no deduction for
depreciation. The Rigs shall in no event be insured for an
amount less than the agreed valuation as set forth in the
applicable marine and war risk policies.
(i) Full form marine hull and machinery insurance extended
to insure against all risks of loss or damage, including
but not limited to the risk of loss from blowout and
cratering and against such risks and in such form as are
approved by the Security Trustee and are necessary or
advisable for the protection of the interest of the
Security Trustee and the Shipowner in an amount not less
than the greater of (A), when added to insurances
covering the Rigs and Other Rigs, 125% of the
Commitments or (B) the amount of coverage that would be
within the range obtained by Similar Companies on such
Rigs and the Other Rigs. The deductible or self-insured
retention under the policy shall not exceed US$250,000
per occurrence. The policies shall be endorsed to<PAGE>
delete the sue and labor requirements as applied to the
Security Trustee and to provide coverage for collision
and earthquake hazards;
(ii) Full form marine protection and indemnity and
comprehensive general liability insurance (including any
excess liability insurance), including coverage for
contractual liability, pollution liability, contractual
and legal wreck removal, crew coverage, excess
collision, salvage and general average, care, custody
and control coverage. Such protection and indemnity
insurance shall be maintained in the broadest forms
generally available to similar Companies in the United
States, London or Scandinavian markets and shall be in
an amount not less than the greater of (A) the range of
that carried by similar companies and (B)
US$200,000,000. Said policy shall not include a
deductible or self-insured retention in excess of
US$250,000 per occurrence. Such insurance shall include
a cross-liability endorsement;
(iii) The Owner shall, at all times during which the Rigs are
operating within the jurisdiction of the United States
of America, maintain insurance or post bond or maintain
approved evidence of financial responsibility with
respect to the Rigs to cover the actual cost of removal
of discharged oil which the Owner or the Rigs may be
held strictly liable (or held liable due to negligence
of the Owner or any other Person) under the applicable
Environmental Laws, or under any other federal or state
law which, in the future, may apply to the Rigs or to
the Owner; and the Owner shall maintain insurance or
post bond or maintain approved evidence of financial
responsibility covering similar pollution risks or
liabilities incident thereto under any law, regulation
or judicial decision of any foreign jurisdiction or
jurisdictions or political subdivision thereof
applicable to the Owner, the Rigs or its operations;
(iv) Such workmen's compensation or longshoremen's and harbor
workers' insurance as shall be required by applicable
law, including endorsements for Outer Continental Shelf
operations, borrowed servant, voluntary compensation and
IN REM claims;
(v) Insurance (with a limit of US$50,000,000 per occurrence)
naming the Owner and the Security Trustee assureds and
loss payees, as their interests may appear, against
Operator's Extra Expense ("O.E.E.") liability in
connection with operations conducted by the Rigs with
respect to Rigs operating under a drilling contract with
a financially responsible operator acceptable to the
Security Trustee that indemnifies against such O.E.E.
arising out of blowout (above and below ground),
cratering, redrilling/recompletion, cost of control,
clean-up, containment seepage, pollution, spillage or
leakage in connection with operations conducted by the<PAGE>
Rig, in form and substance satisfactory to the Security
Trustee, and third party liabilities that may be assumed
by a contract which is legally enforceable and in form
and substance satisfactory to the Security Trustee.
Deductibles or self-insured retentions shall not exceed
US$250,000 and shall be for the account of the Owner;
(vi) Excess seepage, pollution, clean-up and containment
liability coverage in the amount of US$50,000,000 in
respect of offshore operations in excess of and
following the seepage, pollution, clean-up and
containment liability coverage recited in subparagraph
(v) above.
(vii) Subject to the provisions of this subsection, War and
Political Risk insurance naming the Owner and the
Security Trustee as assureds and loss payees, which
shall be maintained in the broadest forms generally
available to Similar Companies in the United States,
London or Scandinavian markets, and shall include
coverage for War Risk, hull and machinery, War Risk
protection and indemnity, confiscation, expropriation,
nationalization, deprivation and inability to export.
Such insurance shall be in amounts, with deductibles or
self-insured retentions not to exceed, the corresponding
policies described in subparagraphs (i) and (ii) above.
The Shipowner shall obtain and maintain War and
Political Risk Insurance for any Rig operating in an
area deemed to be hostile by the Owner's underwriters or
protection and indemnity club;
(viii) Upon prior written notice to the Owner, the Security
Trustee may obtain mortgagee's interest insurance or
breach of warranty endorsement in favor of the Security
Trustee with such underwriters and under form of
policies approved by the Security Trustee in an amount
equal to at least 125% of the Commitments. The Owner
shall reimburse the Security Trustee, upon the Security
Trustee's written demand, from time to time, the
reasonable costs and expenses incurred by the Security
Trustee in effecting and maintaining such mortgagee's
interest insurance on such terms and in such amounts and
with such underwriters as the Security Trustee shall
deem appropriate; and
(ix) Upon prior written notice to the Owner, the Security
Trustee may obtain an Additional Perils-Pollution
endorsement covering the possible consequences of
pollution involving the Rigs including, without
limitation, the risk of expropriation or sequestration
of any Rig or the imposition of a lien or encumbrance of
any kind having priority over this Mortgage. The Owner
shall reimburse the Security Trustee, upon the Security
Trustee's written demand, from time to time, the
reasonable costs and expenses incurred by the Security
Trustee in effecting and maintaining on such terms and
in such amounts and with such underwriters such<PAGE>
Additional Perils-Pollution insurance coverage as the
Security Trustee shall deem appropriate.
(b) The Owner will furnish the Security Trustee from time to time
on request and, in any event, at least annually, a detailed
report signed by a firm of marine insurance brokers or
insurance companies acceptable to the Security Trustee with
respect to the insurance carried and maintained on each Rig,
together with their opinion that the insurance carried is
sufficient in that it is customary insurance which an
experienced broker would effect in similar circumstances with
Similar Companies and that, in the opinion of the brokers, it
complies with the provisions of this Section 6.01 and any
requirements which the Security Trustee may have notified to
the Owner. The Owner will use its best efforts to cause such
firm to agree to advise a responsible officer of the Security
Trustee in writing promptly of any default in the payment of
any premium or call and of any other act or omission on the
part of the Owner of which it has knowledge and which might
invalidate or render unenforceable, in whole or in part, any
insurance on any Rig.
(c) Unless the Security Trustee shall otherwise agree, all
insurance for the Rigs shall be placed through independent
brokers of recognized standing and with clubs or first class
underwriters reasonably acceptable to the Security Trustee and
must (i) name the Security Trustee as a named assured (except
as to the insurance referred to in Section 6.01(a)(iv) above),
but without liability for premiums, calls or assessments, (ii)
contain a cancellation clause providing that the insurers
undertake not to exercise any right of cancellation which they
may have by reason of non-payment of premiums or calls when due
without giving thirty (30) days' prior written notice of such
cancellation to a responsible officer of the Security Trustee
and an opportunity of paying any such unpaid premium or call,
(iii) if possible, based on the Owner's best efforts, contain a
provision that the insurance will not be permitted to lapse,
terminate or be materially modified without thirty (30) days'
prior written notice being given to a responsible officer of
the Security Trustee (except as to the insurance referred to in
Section 6.01(a)(ii) and (v) above for which fourteen (14) days'
prior written notice shall be required and (iv) contain the
agreement of the insurer that any loss thereunder shall be
payable to the trustee notwithstanding any action, inaction or
breach of representation or warranty by the Owner, except to
the extent provided by subsection (d) hereof. The Owner shall
not change underwriters or clubs as to any insurance for the
Owner without prompt written notice to a responsible officer of
the Security Trustee of any such change.
(d) All amounts of whatsoever nature payable under any insurance
shall be payable to the Security Trustee for distribution first
to itself, the Secured Creditors, the Co-Agents and thereafter
to the Owner or others as their interests may appear.
Nevertheless, until otherwise required by the Security Trustee
by notice to the underwriters, (i) amounts payable under any
insurance on the Rigs with respect to the protection and<PAGE>
indemnity risks shall be paid directly to the Owner to
reimburse it for any loss, damage or expense incurred by it and
covered by such insurance or to the person to whom any
liability covered by such insurance has been incurred, and (ii)
amounts payable under any insurance with respect to the Rigs
involving any damage to any Rigs not constituting an actual or
constructive total loss, shall be paid by the underwriters
directly for the repair, salvage or other charges involved or,
if the Owner shall have first fully repaired the damage or paid
all of the salvage or other charges, or irrevocably committed
to do so, shall be paid to the Owner as reimbursement
therefore, PROVIDED, no amount in excess of an aggregate of
US$2,000,000 per incident shall be paid from any insurances
without the prior written consent of the Security Trustee.
(e) In the event of an actual or constructive total loss or a
compromised constructive total loss or requisition of any Rig,
all insurance payments or compensation therefor shall be paid
to the Security Trustee and applied to reduce the Total
Commitment in accordance with and subject to the terms of
Section 3.03(c) and/or (d) of the Credit Agreement. The Owner
shall not declare or agree with underwriters that any Rig is a
constructive or compromised, agreed or arranged constructive
total loss without the prior written consent of the Security
Trustee.
(f) In the event of an actual or constructive total loss of any
Rig, the Security Trustee shall retain out of the insurance
payments received on account of such loss and held by the
Security Trustee in accordance with the Credit Agreement, any
sum or sums that shall be or become owing to the Security
Trustee under this Mortgage for the cost, if any, of collecting
the insurance, which sum or sums shall become the sole property
of the Security Trustee, and pay the balance to the Banks for
application pursuant to and subject to Section 3.03(c) and/or
(d) of the Credit Agreement.
(g) The Owner shall arrange for the execution of such guarantees as
may from time to time be required by any protection and
indemnity or war risks association.
7. RIG COVENANTS
-------------
7.01 The Owner covenants with the Security Trustee that throughout the
Credit Facility Period the Owner will:
(a) keep the Rigs documented in its name as Liberian vessels and to
do or allow to be done nothing whereby such documentation may
be forfeited or imperilled;
(b) not without the previous consent in writing of the Security
Trustee, which consent shall not be unreasonably withheld,
make, or permit to be made, any change in the physical
characteristics of any Rig which would, in the reasonable
judgment of the Security Trustee, materially interfere with the<PAGE>
suitability of such rig for normal commercial offshore drilling
operations;
(c) the Owner will, without cost or expense to the Security
Trustee, (i) maintain each Rig and its machinery in such
condition and repair as will keep the Rig entitled to the
highest classification in the American Bureau of Shipping, or
other classification society of like standing approved in
writing by the Security Trustee for such vessels, (ii) keep
each Rig, its machinery boilers, appurtenances and spare parts
in a good state of repair, wear and tear and depreciation
excepted, and in efficient operating condition in accordance
with good commercial maintenance practices employed in the
offshore oil and gas contract drilling industry, (iii) keep
each Rig tight, staunch, strong and in all respects seaworthy,
in so far as due diligence can make it, (iv) maintain each Rig
with full unexpired classification and other required
certificates and (v) furnish prior to December 1 of each year
to the Security Trustee, a written statement of the
classification society that any classification referred to in
clause (i) above is in effect. Except as otherwise permitted
by the Credit Agreement, each Rig shall, and the Owner
covenants that it will, at all times comply with all applicable
laws, treaties and conventions of the Republic of Liberia, or
to which the Republic of Liberia is a party, from time to time
in effect, and rules and regulations issued thereunder, and
shall have on board as and when required thereby valid
certificates showing compliance therewith;
(d) at all reasonable times afford the Security Trustee or its
authorized representatives full and complete access to the Rigs
during normal business hours for the purpose of inspecting the
Rigs and their cargoes and papers, and the Owner will deliver
for inspection copies of such contracts and documents relating
to the Rigs, whether on board or not, as the Security Trustee
may reasonably request, provided however, that (i) all
information not on file with any Governmental Agency obtained
by the Security Trustee pursuant to any Credit Document
concerning the Owner, the Rigs, the other assets or the
financial condition of the Owner and prospects shall be kept
confidential by the Security Trustee subject, however, to
requests from the Banks, any applicable governmental Agencies
and to disclosures of such information to assignees and
participants (and potential assignees and participants of which
the Banks notify the Security Trustee) pursuant to the Credit
Agreement, unless such non-governmental parties shall agree
prior thereto to be bound by this Section 6.01(d) and (ii) any
inspection of the Rigs, their cargoes and papers shall be
subject to the requirements of any operators of the Rigs and
any applicable Governmental Agencies. All reasonable expenses
incurred by the Security Trustee or its authorized
representatives in the exercise of its right of inspection
hereunder shall be promptly paid by the Owner;
(e) not transfer or change the flag or port of documentation of any
of the Rigs without the written consent of the Security Trustee
first hand and obtained, and any such written consent to any<PAGE>
one transfer or change of flag or port of documentation shall
not be construed to be a waiver of this provision with respect
to any subsequent proposed transfer or change of flag or port
of documentation;
(f) not sell, bareboat charter, transfer or mortgage any of the
Rigs other than to Holdings and its Subsidiaries (as defined in
the Credit Agreement), without the written consent of the
Security Trustee, which consent shall not be unreasonably
withheld. Any such written consent to any one sale, bareboat
charter, mortgage or transfer shall not be construed to be a
waiver of this provision with respect to any subsequent
proposed sale, bareboat charter, mortgage or transfer. Any
such sale, bareboat charter, transfer or mortgage of any Rig
shall be subject to the provisions of this Mortgage and the
lien thereof, and shall not affect the liabilities of the Owner
hereunder;
(g) promptly pay and discharge all debts, damages and liabilities
whatsoever which have given or may give rise to maritime or
possessory liens (other than Permitted Liens) on or claims
enforceable against the Rigs and all tolls, dues, taxes,
assessments, governmental charges, fines and penalties lawfully
charged on or in respect of the Rigs and all other outgoings
whatsoever in respect of the Rigs and in the event of arrest of
the Rigs pursuant to legal process, or in the event of the
detention of any of the Rigs in exercise or purported exercise
of any such lien or claim as aforesaid, procure the release of
the Rigs, as appropriate, from such arrest or detention
forthwith upon receiving notice thereof by providing bail or
otherwise as the circumstances may require;
(h) not employ the Rigs or allow the employment of any of the Rigs
in any trade or business which is unlawful under the laws of
any relevant jurisdiction or in carrying illicit or prohibited
goods or in any manner whatsoever which may render any of the
Rigs liable to destruction, seizure or confiscation and in the
event of hostilities in any part of the world (whether war be
declared or not) not employ the Rigs or suffer the employment
of any of the Rigs in carrying any contraband goods or to enter
or trade to any zone which is declared a war zone by any
government or by the War Risks insurers of the Rigs unless
there shall have been effected by the Owner (at its expense)
such special, additional or modified insurance cover as the
Administrative Agent may require;
(i) notify both the Security Trustee and the Administrative Agent
forthwith by telecopy, thereafter confirmed by letter of:
(i) any casualty to any of the Rigs which is or is likely to
be a Major Casualty, and
(ii) any occurrence in consequence whereof any of the Rigs
has become or is, by the passing of time or otherwise,
likely to become a Total Loss, and<PAGE>
(iii) any requirement or recommendation made by any insurer or
classification society or by any competent authority
which is not complied with within the time provided by
such insurer, classification society or competent
authority, including any extensions granted thereby, and
(iv) any arrest of any of the Rigs or the exercise or
purported exercise of any lien on any of the Rigs or any
requisition of any of the Rigs for hire;
(j) place, and use due diligence to retain, a properly certified
copy of this Mortgage on board each of the Rigs with the papers
and cause such certified copy of this Mortgage to be exhibited
to any and all persons having business with the Rigs which
might give rise to any lien thereon other than a lien for
crew's wages, general average and salvage and to any
representative of the Security Trustee on demand and to place
and keep prominently displayed in the chart room and in the
master's cabin of each of the Rigs a framed printed notice in
plain type in English of such size that the paragraph of
reading matter shall cover a space not less than 6 inches wide
and 9 inches high reading as follows:
"NOTICE OF MORTGAGE
-------------------
This Rig is covered by a First Preferred Fleet Mortgage to
CHRISTIANIA BANK OG KREDITKASSE, NEW YORK BRANCH, as Security
Trustee for the Banks defined in the said Mortgage under
authority of Title 22 of the Liberian Code of Laws of 1956, as
amended. Under the terms of the said Mortgage neither the
Owner nor any charterer nor the master of this Rig nor any
other person has any right, power or authority to create, incur
or permit to be imposed upon this Rig any lien whatsoever other
than for crew's wages, general average and salvage."
(k) shall not cause or permit the Rigs to be operated in any manner
contrary to law, shall not abandon the Rigs in a foreign port,
shall not engage in any unlawful trade or violate any law or
carry any cargo that shall expose the Rigs to penalty,
forfeiture or capture, and shall not do, or suffer or permit to
be done, anything which can or may injuriously affect the
registration or enrollment of the Rigs under the laws of the
United States and will at all times keep the Rigs duly
documented thereunder;
(l) notify both the Security Trustee and Administrative Agent
forthwith by telecopy, thereafter confirmed by letter if a
libel be filed against any Rig or if any Rig is otherwise
attached, levied upon or taken into custody by virtue of any
legal proceeding in any court, tribunal or governmental
authority (de jure or de facto), or if any Rig suffers damage
in excess of US$500,000, in the case of any such libel or
attachment, within thirty (30) days will cause said Rig to be
released by posting bond, posting alternative security or other
means and all liens thereon to be discharged, and will promptly
notify the Security Trustee thereof in the manner aforesaid.<PAGE>
8. PROTECTION OF SECURITY
----------------------
8.01 The Security Trustee shall without prejudice to its other rights and
powers under this Mortgage and the other Credit Documents be
entitled (but not bound) at any time and as often as may be
necessary to take any such action as it may in the reasonable
exercise of its discretion think fit for the purpose of protecting
or maintaining the security created by this Mortgage and the other
Credit Documents (including, without limitation, such action as is
referred to in Clause 8.02) and each and every expense, liability,
or loss (including, without limitation, legal fees) so incurred by
the Secured Creditors in or about the protection or maintenance of
the said security together with interest payable thereon under
Clause 4.01(b) shall be repayable to it by the Owner on demand.
8.02 Without prejudice to the generality of Clause 8.01:
(a) if the Owner does not comply with the provisions of Clause 6 or
any of them, the Administrative Agent shall be entitled (but
not bound) to effect or to replace and renew and thereafter to
maintain the Insurances in such manner as in its discretion it
may think fit and to require that all policies, contracts and
other records relating to the Insurances (including details of
any correspondence concerning outstanding claims) be forthwith
delivered to such brokers as the Administrative Agent may
nominate and to collect, recover, compromise and give a good
discharge for all claims then outstanding or thereafter arising
under the Insurances or any of them and to take over or
institute (if necessary using the name of the Owner) all such
proceedings in connection therewith as the Administrative Agent
in its absolute discretion may think fit and to permit the
brokers through whom the collection or recovery is effected to
charge the usual brokerage therefor; and
(b) if the Owner does not comply with the provisions of Clause
7.01(c) the Security Trustee shall be entitled (but not bound)
to arrange for the carrying out of such repairs to and/or
surveys of the Rigs as it deems expedient or necessary; and
(c) if the Owner does not comply with the provisions of Clause
7.01(g) the Security Trustee shall be entitled (but not bound)
to pay and discharge all such debts, damages and liabilities
and all such tolls, dues, taxes, assessments, charges, fines,
penalties and other outgoings as are therein mentioned and/or
to take any such measures as it deems expedient or necessary
for the purpose of securing the release of the Rig or Rigs, as
the case may be.
9. ENFORCEABILITY AND SECURITY TRUSTEE'S POWERS
--------------------------------------------
9.01 Upon the happening of any of the Events of Default specified in the
Credit Agreement, and giving effect to any applicable grace periods
specified in the Credit Agreement, but without the necessity for any
court order or declaration in any jurisdiction to the effect that an
Event of Default has occurred the security constituted by this
Mortgage shall become immediately enforceable and the Security
Trustee shall be entitled, as and when it may see fit, to put into<PAGE>
force and exercise all or any of the powers possessed by it as
mortgagee of the Rigs or otherwise and in particular:
(a) to exercise all the rights and remedies in foreclosure and
otherwise given to mortgagees by applicable law including the
provisions of the applicable provisions of Liberia law;
(b) to take possession of any of the Rigs whether actually or
constructively and/or otherwise to take control of any of the
Rigs wherever such Rig or Rigs may be and cause the Owner or
any other person in possession of such Rig or Rigs forthwith
upon demand to surrender the same to the Security Trustee
without legal process and without liability of the Security
Trustee for any losses or damages incurred by such actual or
constructive taking and without having to render accounts to
the Owner in connection therewith;
(c) to require that all policies, contracts, certificates of entry
and other records relating to the Insurances (including details
of and correspondence concerning outstanding claims) be
forthwith delivered to or to the order of the Administrative
Agent;
(d) to collect, recover, compromise and give a good discharge for
or procure that the Administrative Agent collect, recover,
compromise and give good discharge for any and all moneys or
claims for moneys then outstanding or thereafter arising under
the Insurances or any Requisition Compensation and to permit
any brokers through whom collection or recovery is effected to
charge the usual brokerage therefor;
(e) to take over or institute (if necessary using the name of the
Owner) or, to the extent lawful, procure that the
Administrative Agent take over or institute all such
proceedings in connection with the Rigs, the Insurances, or any
Requisition Compensation as the Security Trustee in its
absolute discretion thinks fit and to discharge, compound,
release or compromise claims against the Owner in respect of
the Rigs which have given or may give rise to any charge or
lien on the Rigs or which are or may be enforceable by
proceedings against the Rig or Rigs, provided the Security
Trustee shall act in a commercially reasonable manner in
accordance with Section 9-504 of the New York Uniform
Commercial Code;
(f) to sell any of the Rigs or any share therein with prior notice
to the Owner free from any claim of or by the Owner of any
nature whatsoever, and with or without the benefit of any
charterparty or other contract for the employment of such Rig
or Rigs, by public auction or private contract at such place
and upon such terms (including, without limitation, on terms
such that payment of some or all of the purchase price be
deferred) as the Security Trustee in its absolute discretion
may determine with power to postpone any such sale, without
being answerable for any loss occasioned by such sale or
resulting from postponement thereof, and/or itself to purchase
the Rig or Rigs, as the case may be, at any such public auction<PAGE>
and to set off the purchase price against all or any part of
the Obligations; notice of such public auction or private sale
contract shall be given in the following manner:
(i) by publishing such notice for ten consecutive days in a
daily newspaper of general circulation published in
Dallas, Texas;
(ii) if the place of sale should not be Dallas, Texas, then
also by publication of a similar notice in a daily
newspaper, if any, published at the place of sale; and
(iii) by mailing a similar notice to the Owner on the day of
first publication;
(g) to manage, insure, maintain and repair the Rig or Rigs, as the
case may be, and to charter, employ, sail or lay up the Rig or
Rigs, as the case may be, in such manner, upon such terms and
for such period as the Security Trustee in its absolute
discretion deems expedient and for the purposes aforesaid the
Security Trustee shall be entitled to do all acts and things
incidental or conducive thereto and in particular to enter into
such arrangements respecting the Rig or Rigs, as the case may
be, and the insurance, management, maintenance, repair,
classification, chartering and employment of the Rigs, in all
respects as if the Security Trustee were the owner of the Rigs
and without being responsible for any loss thereby incurred,
except as expressly provided in Section 9.04 below;
(h) to recover from the Owner on demand any expenses, liabilities
or losses as may be incurred by the Security Trustee in or
about the exercise of the power vested in the Security Trustee
under Clause 9.01(g);
(i) subject to the terms of this Mortgage and the Credit Documents
generally, to recover from the Owner on demand each and every
expense, liability or loss incurred by the Security Trustee in
or about or incidental to the exercise by it of any of the
powers aforesaid.
9.02 The Security Trustee shall not be obliged to make any enquiry as to
the nature or sufficiency of any payment received by it under this
Mortgage or to make any claim, take any action or enforce any rights
and benefits assigned to the Security Trustee by this Mortgage or to
which the Security Trustee may at any time be entitled hereunder.
9.03 Subject to the proviso in Section 9.04 below, neither the Secured
Creditors nor their agents, managers, officers, employees, delegates
and advisers shall be liable for any expense, claim, liability,
loss, cost, damage or expense incurred or arising in connection with
the exercise or purported exercise of any rights, powers and
discretions under this Mortgage in the absence of gross negligence
or wilful misconduct.
9.04 The Security Trustee shall not by reason of the taking possession of
the Rig or Rigs, as the case may be, or be liable to account as
mortgagee-in-possession or for anything except actual receipts or be<PAGE>
liable for any loss upon realization or for any default or omission
for which a mortgagee-in-possession might be liable PROVIDED,
HOWEVER, that so long as the Owner shall not have abandoned the Rig
or Rigs, if the Security Trustee shall have become a mortgagee-in-
possession, the Owner shall not be liable to third parties for
damages or losses arising from and after the date the Security
Trustee becomes mortgagee-in-possession.
9.05 Upon any sale of any of the Rigs or any share therein by the
Security Trustee the purchaser shall not be bound to see or enquire
whether the power of sale of the Security Trustee has arisen in the
manner provided in this Mortgage and the sale shall be deemed to be
within the power of the Security Trustee and the receipt of the
Security Trustee for the purchase money shall effectively discharge
the purchaser who shall not be concerned with the manner of
application of the proceeds of sale or be in any way answerable
therefor.
9.06 If at any time after an Event of Default and declaration of
acceleration pursuant to this Section 9, and prior to any
foreclosure action having been taken by the Security Trustee under
any of the Credit Documents to foreclose upon the security provided
by such documents, the Owner offers completely to cure all Events of
Default and to pay all expenses, advances and damages to the
Security Trustee consequent to such Events of Default, with interest
at the rate provided for in Section 1.08(c) of the Credit Agreement,
then the Security Trustee may accept such offer and payment and
restore the Owner to its former position. However, such action
shall not affect any subsequent Event of Default or impair any
rights of the Security Trustee consequent thereto.
9.07 Immediately upon the occurrence of an Event of Default, or of any
event which with the notice or lapse of time or both would
constitute an Event of Default, the owner shall notify a responsible
officer of the Security Trustee of such occurrence in writing
setting forth in reasonable detail the circumstances surrounding
such Event of Default or other event and what action the Owner
proposes to take with respect thereto.
10. APPLICATION OF MONEYS
---------------------
10.01 (a) All moneys received by the Security Trustee (or any other
Secured Creditor, as the case may be) in respect of sale of any
of the Rigs or any part thereof; in respect of recovery under
the Insurances; or in respect of Requisition Compensation,
shall, subject to the provisions of Section 3.03(c) and/or (d)
of the Credit Agreement, be applied in the following manner:
(i) first, to the payment of all amounts owing the Security
Trustee of the type described in clauses (ii) and (iii)
of Recital (E);
(ii) second, to the extent moneys remain after the
application pursuant to the preceding clause (i), an
amount equal to the outstanding Obligations of Borrower
C shall be paid to the Secured Creditors as provided in
Clause 10.01(c), with each Secured Creditor receiving an<PAGE>
amount equal to such Obligations of Borrower C held by
it or, if the proceeds are insufficient to pay in full
all such Obligations of Borrower C, its Pro Rata Share
(as defined below) of the amount remaining to be
distributed; and
(iii) to the extent moneys remain after the application
pursuant to the preceding clauses (i), (ii) and (iii),
and following the termination of this Mortgage pursuant
to Clause 3.01, any surplus then remaining shall be paid
to the Owner, subject, however, to the rights of the
holder of any then existing Lien of which the Security
Trustee has actual notice (without investigation)
(b) For purposes of this Mortgage "Pro Rata Share" shall mean, when
calculating a Secured Creditor's portion of any distribution or
amount in respect of any Obligations of Borrower C, the amount
(expressed as a percentage) equal to a fraction the numerator
of which is the then unpaid amount of such Obligations of
Borrower C owing to or held by such Secured Creditor and the
denominator of which is the then outstanding amount of all such
Obligations of Borrower C. For purposes of determining the
amount payable to each Secured Creditor, the Security Trustee
shall be entitled to request each Secured Creditor to furnish
it with written notice of the amount of Obligations of Borrower
C then owed to it and shall be entitled to reply upon the
amounts stated therein in making such distribution.
(c) All payments required to be made to Secured Creditors hereunder
shall be made to the Administrative Agent under the Credit
Agreement for the account of the Secured Creditors.
(d) For purposes of applying payments received in accordance with
this Clause 10.01, the Security Trustee shall be entitled to
rely upon (i) the Administrative Agent under the Credit
Agreement and (ii) the Secured Creditors for a determination
(which the Administrative Agent and each Secured Creditor, by
their acceptance of the benefits of this Mortgage shall be
obligated to provide upon request of the Security Trustee) of
the outstanding Obligations of Borrower C owed to the Secured
Creditors. Unless it has actual knowledge (including by way of
written notice from a Secured Creditor) to the contrary, the
Administrative Agent under the Credit Agreement, in furnishing
information pursuant to the preceding sentence, and the
Security Trustee, in acting hereunder, shall be entitled to
assume that no obligations other than principal, interest and
regularly accruing fees are owing to any Secured Creditor.
11. FURTHER ASSURANCES
------------------
11.01 The Owner shall execute and do all such assurances, acts and things
as the Security Trustee in its absolute discretion may require for:
(a) perfecting or protecting the security created (or intended to
be created) by this Mortgage; or<PAGE>
(b) preserving or protecting any of the rights of the Security
Trustee, and the other Secured Creditors under this Mortgage;
or
(c) ensuring that the security constituted by this Mortgage and the
covenants and obligations of the Owner under this Mortgage
shall enure to the benefit of any transferee, successor or
assignee of the Security Trustee; or
(d) enforcing the security constituted by this Mortgage on or at
any time after the same shall have become enforceable; or
(e) the exercise of any power, authority or discretion vested in
the Security Trustee under this Mortgage,
in any such case, forthwith upon demand by the Security Trustee and
at the expense of the Owner.
12. POWER OF ATTORNEY
-----------------
12.01 The Owner, by way of security and in order more fully to secure the
performance of the Obligations, hereby irrevocably appoints the
Security Trustee as its attorney until the Total Commitment is
terminated and none of the Obligations remain outstanding for the
purposes of:
(a) doing in its name all acts and executing, signing and (if
required) registering in its name all documents which the Owner
itself could do, execute, sign or register in relation to the
Rigs (including without limitation, transferring title to any
of the Rigs to a third party), PROVIDED, HOWEVER, that such
power shall not be exercisable by or on behalf of the Security
Trustee unless an Event of Default specified in the Credit
Agreement shall have occurred; and
(b) executing, signing, perfecting, doing and (if required)
registering every such further assurance document, act or thing
as is referred to in Clause 11.
12.02 The exercise of such power as is referred to in Clause 12.01(a) by
or on behalf of the Security Trustee shall not put any person
dealing with the Security Trustee upon any enquiry as to whether
this Mortgage has become enforceable nor shall such person be in any
way affected by notice that this Mortgage has not become enforceable
and, in relation to both Clauses 12.01(a) and 12.01(b), the exercise
by the Security Trustee of such power shall be conclusive evidence
of its right to exercise the same.
13. INDEMNITIES
-----------
13.01 Subject to the provisions of this Mortgage and the Credit Agreement,
the Owner will indemnify and save harmless each of the Secured
Creditors and each agent or attorney appointed under or pursuant to
this Mortgage (each an "Indemnitee") from and against any and all
expenses, claims, liabilities, losses, taxes, costs, duties, fees
and charges suffered, incurred or made by such Secured Creditor or
such agent or attorney in good faith:<PAGE>
(a) in the exercise or purported exercise of any rights, powers or
discretions vested in them pursuant to this Mortgage; or
(b) in the preservation or enforcement of the rights of the
Security Trustee under this Mortgage; or
(c) on the release of the Rigs from the security created by this
Mortgage,
and the Secured Creditors and each such agent or attorney may retain
and pay all sums in respect of the same out of money received under
the powers conferred by this Mortgage. All such amounts recoverable
by such Secured Creditors or such agent or attorney shall be
recoverable on a full indemnity basis.
13.02 Without limiting the foregoing Clause 13.01, the Owner hereby
further indemnifies and holds harmless each of the Secured Creditors
and their respective officers, directors, employees, attorneys and
agents from and against any and all liabilities, losses,
obligations, claims, damages, penalties, causes of action, costs and
expenses (including, without limitation, reasonable attorneys' fees
and expenses, consultant fees, investigation and laboratory fees)
imposed upon or incurred by or asserted against them, or any of
them, by reason of (a) an actual, alleged or threatened
Environmental Incident; (b) any personal injury (including wrongful
death) or property damage (real or personal) or economic damage
arising out of or related to such Environmental Incident; (c) any
Environmental Claim brought or threatened, or settlement reached; or
(d) any violation of laws, orders, regulations, requirements or
demands of government authorities relating to Hazardous Materials
at, or discharged from any of the Rigs, PROVIDED, HOWEVER, that in
the event that the Security Trustee shall have become a mortgagee-
in-possession in respect of one or more of the Rigs and the Owner
shall not have abandoned such Rig or Rigs, this indemnity shall not
cover claims of third parties arising from or after the Security
Trustee becomes mortgagee-in-possession.
13.03 If, under any applicable law or regulation, and whether pursuant to
a judgment being made or registered against the Owner or the
liquidation of the Owner or for any other reason, any payment under
or in connection with this Mortgage is made or fails to be satisfied
in a currency (the "payment currency") other than the currency in
which such payment is due under or in connection with this Mortgage
(the "contractual currency"), then to the extent that the amount of
such payment actually received by the Security Trustee, when
converted into the contractual currency at the rate of exchange,
falls short of the amount due under or in connection with this
Mortgage, the Owner, as a separate and independent obligation, shall
indemnify and hold harmless the Security Trustee against the amount
of such shortfall. For the purposes of this Clause 13.03, "rate of
exchange" means the rate at which the Security Trustee is able on
the date of such payment (or, if it is not practicable for the
Security Trustee to purchase the contractual currency with the
payment currency on the date of such payment, at the rate of
exchange as soon afterwards as is practicable for the Security
Trustee to do so) to purchase the contractual currency with the<PAGE>
payment currency and shall take into account any premium and other
costs of exchange with respect thereto.
14. RIGHTS OF OWNER
---------------
14.01 Until an Event of Default shall have occurred, the Owner:
(a) shall be suffered and permitted to retain actual possession and
use of the Rigs;
(b) subject to Section 8.02(b) of the Credit Agreement, shall have
the right, from time to time in its discretion and without
application to the Security Trustee, and without obtaining a
release thereof by the Security Trustee, to dispose of, free
from the lien hereof, any boilers, engines, machinery, masts,
spars, sails, rigging, boats, anchors, chains, tackle, apparel,
furniture, fittings, drilling equipment, pumps, drill pipes,
collars, racking, housing, spare parts and supporting
inventory, vehicles or living quarters or any other
appurtenances of the Rigs.
15. COMMUNICATIONS
--------------
15.01 All notices hereunder shall be made pursuant to the Subsidiary
Guaranty.
16. ASSIGNMENTS
-----------
16.01 This Mortgage shall be binding upon and shall enure to the benefit
of the Owner, the Secured Creditors and their respective
transferees, successors and permitted assigns and references in this
Mortgage to any of them shall be construed accordingly.
16.02 The Owner may not assign or transfer all or any part of its rights
and/or obligations under this Mortgage.
16.03 Pursuant to Section 12.04 of the Credit Agreement, each Bank has the
right to assign or transfer all or any part of its rights and/or
obligations under the Credit Agreement on the terms therein
provided. The Security Trustee shall notify the Owner promptly
following any such assignment, transfer or change.
17. TOTAL AMOUNT, ETC.
------------------
17.01 The total amount of the direct or contingent obligations secured by
this Mortgage is Fifty Million U.S. Dollars (US$50,000,000) subject
to the provisions of Section 3.02(b) of the Credit Agreement, of
principal plus interest, fees, commissions and performance of
mortgage covenants. The interest of the Owner in the Rigs is 100%.
The interest of the Security Trustee in the Rigs is 100%. The date
of maturity is October 18, 2001, and the discharge amount is the
same as the total amount plus such other sums as shall be payable by
the Owner to the Banks under the Credit Agreement.
18. MISCELLANEOUS
-------------<PAGE>
18.01 If at any time any one or more of the provisions in this Mortgage is
or becomes invalid, illegal or unenforceable in any respect under
any law or regulation, the validity, legality and enforceability of
the remaining provisions of this Mortgage shall not be in any way
affected or impaired thereby.
18.02 The Security Trustee, at any time and from time to time, may
delegate by power of attorney or in any other manner to any person
or persons all or any of the powers, authorities and discretions
which are for the time being exercisable by the Security Trustee
under this Mortgage in relation to the Rigs. Any such delegation
may be made upon such terms and subject to such regulations as the
Security Trustee may think fit. The Security Trustee shall not be
in any way liable or responsible to the Owner for any loss or damage
arising from any act, default, omission or misconduct on the part of
any such delegate.
18.03 A certification or determination by the Security Trustee as to any
matter provided for in this Mortgage shall, in the absence of
manifest error, be conclusive and binding on the Owner.
18.04 If there is a conflict between the provisions of this Mortgage and
the Credit Agreement, the Credit Agreement shall govern except with
respect to Section 19.01 below.
19. JURISDICTION AND GOVERNING LAW
------------------------------
19.01 THIS MORTGAGE AND ALL ISSUES ARISING IN CONNECTION WITH THIS
MORTGAGE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE REPUBLIC OF LIBERIA.
19.02 The Owner agrees that the Security Trustee shall have the liberty
but shall not be obliged to take any proceedings in the courts of
any country to protect or enforce the security constituted by this
Mortgage and/or the Credit Agreement and the Security Documents or
to enforce any provisions of this Mortgage and/or the Credit
Agreement and the Security Documents or to enforce the Obligations
and for the purpose of any proceedings for such enforcement the
Owner hereby submits to the jurisdiction of the courts of any
country of the choice of the Security Trustee.
19.03 Without prejudice to the generality of Clause 19.02, the Security
Trustee shall have the right to arrest and take action against any
or all of the Rigs at whatever place such Rig or Rigs shall be found
lying and for the purpose of any action which the Security Trustee
may bring before the courts of such jurisdiction or other judicial
authority and for the purpose of any action which the Security
Trustee may bring against any or all of the Rigs, any writ, notice,
judgment or other legal process or documents may (without prejudice
to any other method of service under applicable law) be served upon
the respective master of such Rig or Rigs (or upon anyone acting as
the master) and such service shall be deemed good service on the
Owner for all purposes.
19.04 The Owner agrees that should the Security Trustee bring a legal
action or proceedings against it or its assets in relation to any
matters arising out of or in connection with this Mortgage, no<PAGE>
immunity from such legal action or proceedings (which shall be
deemed to include, without limitation, suit, attachment prior to
judgment, other attachment, the obtaining of judgment, execution or
other enforcement) shall be claimed by or on behalf of the Owner or
with respect of its assets, and the Owner hereby irrevocably waives
any such right of immunity which it or its assets now has or may
hereafter acquire and the Owner hereby consents generally in respect
of any legal action or proceedings arising out of or in connection
with this Mortgage to the giving out of any relief or the issue of
any process in connection with such action or proceedings including,
without limitation, the making, enforcement or execution or
attachment against any property whatsoever of any order or judgment
which may be made or given in such action or proceedings.
IN WITNESS whereof the Owner has caused this Mortgage to be executed the
day and year first before written.
ENSCO OFFSHORE COMPANY II
By_____________________________________
Name: Robert O. Isaac
Title: <PAGE>
ACKNOWLEDGEMENT OF MORTGAGE
---------------------------
STATE OF NEW YORK )
) S.S.
COUNTY OF NEW YORK)
On this 27th day of February, 1997 before me personally appeared ROBERT O.
ISAAC to me known who being by me duly sworn did depose and say that he
resides at Dallas, Texas; that he is Assistant Secretary for ENSCO
OFFSHORE COMPANY II, the corporation described in and which executed the
foregoing instrument; and that he signed his name thereto by order of the
Board of Directors of ENSCO OFFSHORE COMPANY II.
_________________________________________
Notary Public<PAGE>
EXHIBIT H-3
-----------
Dated February 27, 1997
ENSCO OFFSHORE U.K. LTD.
as Owner
-and-
CHRISTIANIA BANK OG KREDITKASSE,
NEW YORK BRANCH,
as Mortgagee
ENSCO 80
ENSCO 85
ENSCO 92
__________________________________________________________________________
FLEET DEED OF COVENANTS
__________________________________________________________________________<PAGE>
INDEX
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CLAUSE PAGE
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1 DEFINITIONS AND INTERPRETATION 2
2 REPRESENTATIONS AND WARRANTIES 7
3 PAYMENT COVENANTS 9
4 MORTGAGE 9
5 PRESERVATION OF SECURITY 10
6 INSURANCE 11
7 RIG COVENANTS 15
8 PROTECTION OF SECURITY 18
9 ENFORCEABILITY AND MORTGAGEE'S POWERS 19
10 APPLICATION OF MONEYS 21
11 FURTHER ASSURANCES 22
12 POWER OF ATTORNEY 22
13 INDEMNITIES 23
14 RIGHTS OF OWNER 24
15 COMMUNICATIONS 24
16 ASSIGNMENTS 24
17 MISCELLANEOUS 25
18 LAW AND JURISDICTION 25
EXECUTION
EXHIBIT 1 FORM OF CREDIT AGREEMENT<PAGE>
THIS FLEET DEED OF COVENANTS is made on the 27th day of February, 1997
BETWEEN:
(1) ENSCO OFFSHORE U.K. LTD., a company organized under the laws of
England and Wales having its principal offices at 2700 Fountain
Place, 1445 Ross Avenue, Dallas, Texas 75202 (the "Owner"), and
(2) CHRISTIANIA BANK OG KREDITKASSE, a Norwegian banking corporation
acting through its New York Branch having an office at 11 West 42nd
Street, New York, NY 10036, as agent for the Banks (as hereinafter
defined) (the "Mortgagee")
WHEREAS
- -------
(A) By a Credit Facility Agreement dated as of December 15, 1993,
Amended and Restated as of September 27, 1995, further amended by
Amendment No. 1 dated June 13, 1996, and further Amended and Restated as
of February 27, 1997 (as further modified, amended or supplemented from
time to time, the "Credit Agreement"), among (i) the Owner, ENSCO Offshore
Company ("Offshore") and Dual Holding Company, as borrowers (the
"Borrowers"); (ii) Offshore, ENSCO Delaware, Inc. ("Parent") and ENSCO
International Incorporated ("Holdings"), as guarantors (the "Guarantors");
(iii) the financial institutions party thereto (the "Banks"); (iv)
Christiania Bank og Kreditkasse, New York Branch and Den norske Bank ASA,
New York Branch, as co-agents (the "Co-Agents") and (v) the Mortgagee, as
administrative agent, letter of credit issuer and security trustee (in
such capacity, the "Administrative Agent") (the form of which Credit
Agreement together with Exhibit B-1 through B-3 thereto, but without the
remaining attachments is attached hereto as Exhibit 1), it was agreed
among other things that the Banks would make available to the Borrowers
upon the terms and conditions therein described a senior secured revolving
credit facility (the "Facility") in an aggregate amount at any time
outstanding of Two Hundred Million United States Dollars (US$200,000,000),
providing for the making of Loans and the issuance of, and participation
in, Letters of Credits, as contemplated therein.
(B) The obligations of the Borrowers with respect to the Facility are
evidenced by the Credit Agreement and the other Credit Documents,
including the promissory notes of the Borrowers payable to the order of
the respective Banks (each a "Note" and, collectively, the "Notes") (the
forms of which are attached as Exhibit B-1 through B-3 to the Credit
Agreement).
(C) It is a condition precedent to the Banks advancing amounts under the
Credit Facility to the Owner that the Owner shall execute, deliver and
register statutory mortgages in favor of the Mortgagee over sixty four
sixty-fourth shares in each of the Rigs (as hereinafter defined) and shall
enter into a Fleet Deed of Covenants supplemental thereto in the form of
this Deed.
(D) The Owner has executed in favor of the Mortgagee statutory mortgages
in account current form bearing the same date as this Deed of Covenants
(the "Mortgages") and constituting first mortgages on sixty four sixty-
fourth shares in each of the said Rigs and the Mortgages and this Deed of
Covenants are each entered into by the Owner in consideration of the Banks
agreeing, at the request of the Owner and the other Borrowers, to make
Loans to the Borrowers and issue Letters of Credit for the account of the<PAGE>
Borrowers under the Credit Facility and as a condition thereto and for
other good and valuable consideration provided by the Banks (the
sufficiency and receipt of which the Owner hereby acknowledges). The
Mortgages and this Deed of Covenants are made for the benefit of the
Mortgagee and the other Secured Creditors (as hereinafter defined) to
secure (i) the full and prompt payment when due of (x) the principal of
and interest on the Tranche B Notes issued, and Tranche B Loans made,
under the Credit Agreement, and (y) all other obligations and indebtedness
(including without limitation, indemnities, Fees and interest thereon) of
the Owner to the Secured Creditors, whether now existing or hereafter
incurred under, arising out of or in connection with the Credit Agreement
and the other Credit Documents (including, without limitation, the
Mortgages and this Deed of Covenants) and the due performance and
compliance by the Owner with all of the terms, conditions and agreements
contained in the Credit Agreement and the other Credit Documents
(including, without limitation, the Mortgages and this Deed of Covenants);
(ii) any and all sums advanced by the Mortgagee/Secured Creditors in order
to preserve the Collateral (as hereinafter defined) or preserve its
security interest in the Collateral; (iii) in the event of any proceeding
for the collection or enforcement of any indebtedness, obligations, or
liabilities of the Owner referred to in clause (i) above, after an Event
of Default shall have occurred and be continuing, the reasonable expenses
of the Mortgagee of re-taking, holding, preparing for sale or lease,
selling or otherwise disposing of or foreclosing on the Collateral, or of
any exercise by the Mortgagee of its rights hereunder, together with
reasonable attorneys' fees of counsel to the Mortgagee and court costs;
and (iv) all amounts paid by any Indemnitee as to which such Indemnitee
has the right to reimbursement under Clause 13 of this Deed of Covenants
(all such obligations, liabilities, sums and expenses referred to in
clauses (i) through (iv) above being collectively referred to as the
"Obligations"). It is acknowledged and agreed that the "Obligations"
shall include extensions of credit of the types described above, whether
outstanding on the date of this Deed of Covenants or extended from time to
time after the date of this Deed of Covenants.
(E) This Deed of Covenants is supplemental to the Mortgages and to the
security thereby created.
NOW THIS DEED WITNESSETH AND IT IS HEREBY AGREED
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1 DEFINITIONS AND INTERPRETATION
------------------------------
1.1 In this Deed of Covenants unless the context otherwise requires, the
following expressions shall have the following meanings:
"Administrative Agent" shall have the same meaning for such term as
set forth in the Credit Agreement;
"Bank" shall have the meaning provided in recital (A) hereto;
"Collateral" shall have the same meaning for such term as set forth
in the Credit Agreement;
"Credit Agreement" shall have the meaning provided in recital (A)
hereto;<PAGE>
"Credit Documents" shall have the meaning for such term as set forth
in the Credit Agreement;
"Credit Facility Period" shall mean the period commencing on the
date hereof and ending on the date the Total Commitments have
terminated, no Letters of Credit remain outstanding and the Loans
and the Unpaid Drawings together with interest, Fees and all other
obligations are paid in full;
"Default Rate" shall mean the rate of interest calculated in
accordance with Section 1.08(c) of the Credit Agreement;
"Environmental Approvals" means all approvals, licenses, permits,
exemptions or authorization required under applicable Environmental
Laws;
"Environmental Claims" means any and all administrative, regulatory
or judicial actions, suits, demands, demand letters, claims, liens,
notices of noncompliance or violation, investigations (other than
internal reports prepared by Holdings or any of its Subsidiaries
solely in the ordinary course of such Person's business and not in
response to any third party action or request of any kind) or
proceedings relating in any way to any Environmental Law or any
permit issued, or any approval given, under any such Environmental
Law (hereafter, "Claims"), including, without limitation, (a) 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 (b) any
and all Claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief
resulting from Hazardous Materials arising from alleged injury or
threat of injury to health, safety or the environment;
"Environmental Incident" means (i) any release of Hazardous Material
from any of the Rigs, (ii) any incident in which Hazardous Material
is released from a vessel other than any of the Rigs and which
involves collision between the Rig and such other vessel or some
other incident of navigation or operation, in either case, where the
Rig or the Owner is actually or allegedly at fault or otherwise
liable (in whole or in part) or (iii) any incident in which
Hazardous Material is released from a vessel other than any of the
Rigs and where the Rig is actually or potentially liable to be
arrested as a result and/or where the Owner is actually or allegedly
at fault or otherwise liable (and, in each such case, "release"
shall mean disposing, discharging, injecting, spilling, leaking,
leaching, dumping, emitting, escaping, emptying, seeping, placing
and the like, into or upon any land or water or air, or otherwise
entering into the environment);
"Environmental Law" means any applicable Federal, state, foreign or
local statute, law, rule, regulation, ordinance, code, guide, policy
and rule of common law now or hereafter in effect and in each case
as amended, and any judicial or administrative interpretation
thereof, including any judicial or administrative order, consent
decree or judgment, relating to the environment, health, safety or
Hazardous Materials, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act<PAGE>
of 1980, as amended, 42 U.S.C. Section 9601 ET SEQ.; the Resource
Conservation and Recovery Act, as amended, 42 U.S.C. Section 6901 ET
SEQ.; the Federal Water Pollution Control Act, as amended, 33 U.S.C.
Section 1251 ET SEQ.; the Toxic Substances Control Act, 15 U.S.C.
Section 7401 ET SEQ.; the Clean Air Act, 42 U.S.C. Section 7401 ET
SEQ.; the Safe Drinking Water Act, 42 U.S.C. Section 3808 ET SEQ.;
the Oil Pollution Act of 1990, 33 U.S.C. Section 2701 ET SEQ. and
any applicable state and local or foreign counterparts or
equivalents;
"Fees" shall have the same meaning for such terms as set forth in
the Credit Agreement;
"Hazardous Materials" means (a) any petroleum or petroleum products,
radioactive materials, asbestos in any form that is or could become
friable, urea formaldehyde foam insulation, transformers or other
equipment that contained, electric fluid containing levels of
polychlorinated biphenyls, and radon gas; (b) any chemicals,
materials or substances defined as or included in the definition of
"hazardous substances," "hazardous waste," "hazardous materials,"
"extremely hazardous waste," "restricted hazardous waste," "toxic
substances," "toxic pollutants," "contaminants," or "pollutants," or
words of similar import, under any applicable Environmental Law; and
(c) any other chemical, material or substance, exposure to which is
prohibited, limited or regulated by any governmental authority;
"Indemnitee" shall have the meaning set forth in Section 13.1;
"Insurances" includes all policies and contracts of insurance (which
expression includes all entries of each of the Rigs in protection
and indemnity associations) which are from time to time taken out or
entered into in respect of the Rigs or otherwise by the Owner
(whether in the sole name of the Owner or in the joint names of the
Owner and the Administrative Agent) and all benefits thereof
(including claims of whatsoever nature and return of premiums);
"Letter of Credit" shall have the same meaning for such term as set
forth in Section 2.01(a) of the Credit Agreement;
"Letter of Credit Issuer" shall have the same meaning for such term
as set forth in the Credit Agreement;
"Loan(s)" shall have the same meaning for such term as set forth in
the Credit Agreement;
"Major Casualty" means any casualty to any of the Rigs in respect
whereof the claim or the aggregate of the claims against all
insurers, before adjustment for any relevant franchise or
deductible, exceeds Five Hundred Thousand United States Dollars
(US$500,000) or the equivalent in any other currency;
"Mortgages" means the statutory mortgages on the Rigs bearing the
same date as this Deed of Covenants first referred to in Recital (D)
hereto;
"Note" shall have the meaning provided in Recital (B) hereto;<PAGE>
"Obligations" shall have the meaning provided in Recital (D) hereto;
"Oil Pollution Act 1990" means the Oil Pollution Act 1990 (33 U.S.C.
Section 2701 ET SEQ.), as amended;
"Other Rigs" means, individually or collectively, each of (i) the
offshore drilling rig ENSCO 98 owned by ENSCO Offshore Company
("Offshore") documented under the laws and flag of the United States
with Official Number 589096; (ii) the offshore drilling rig ENSCO 68
owned by Offshore documented under the laws and flag of the United
States with Official Number 574668; (iii) the offshore drilling rig
ENSCO 81 owned by Offshore documented under the laws and flag of the
United States with Official Number 606512; (iv) the offshore
drilling rig ENSCO 82 owned by Offshore documented under the laws
and flag of the United States with Official Number 602912; (v) the
offshore drilling rig ENSCO 83 owned by Offshore documented under
the laws and flag of the United States with Official Number 605536;
(vi) the offshore drilling rig ENSCO 84 owned by Offshore documented
under the laws and flag of the United States with Official Number
637544; (vi) the offshore drilling rig ENSCO 86 owned by Offshore
documented under the laws and flag of the United States with
Official Number 643110; (viii) the offshore drilling rig ENSCO 87
owned by Offshore documented under the laws and flag of the United
States with Official Number 648969; (ix) the offshore drilling rig
ENSCO 88 owned by Offshore documented under the laws and flag of the
United States with Official Number 645637; (x) the offshore drilling
rig ENSCO 89 owned by Offshore documented under the laws and flag of
the United States with Official Number 652440; (xi) the offshore
drilling rig ENSCO 90 owned by Offshore documented under the laws
and flag of the United States with Official Number 647859; (xii) the
offshore drilling rig ENSCO 93 owned by Offshore documented under
the laws and flag of the United States with Official Number 651385;
(xiii) the offshore drilling rig ENSCO 94 owned by Offshore
documented under the laws and flag of the United States with
Official Number 638685; (xiv) the offshore drilling rig ENSCO 95
owned by Offshore documented under the laws and flag of the United
States with Official Number 642112; (xv) the offshore drilling rig
ENSCO 99 owned by Offshore documented under the laws and flag of the
United States with Official Number 682070; (xvi) the jack-up
drilling unit ENSCO 50 owned by ENSCO Offshore Company II ("ENSCO
II") documented under the laws and flag of the Republic of Liberia
with Official Number 9383; (xvii) the jack-up drilling unit ENSCO 51
owned by ENSCO II documented under the laws and flag of the Republic
of Liberia with Official Number 9384; (xviii) the jack-up drilling
unit ENSCO 53 owned by ENSCO II documented under the laws and flag
of the Republic of Liberia with Official Number 10260 and (xix) the
jack-up drilling unit ENSCO 54 owned by ENSCO II documented under
the laws and flag of the Republic of Liberia with Official
Number 10159;
"Permitted Liens" shall have the same meaning for such term as set
forth in the Credit Agreement.
"Requisition Compensation" means all moneys or other compensation
payable during the Credit Facility Period by reason of requisition
for title or other compulsory acquisition of any of the Rigs
otherwise than by requisition for hire;<PAGE>
"Rigs" means the whole of (i) the drilling barge ENSCO 80 with
Official Number 724944 of 7,250 gross registered tons and 7,250 net
registered tons; (ii) the drilling barge ENSCO 85 with Official
Number 724945 of 6,751 gross registered tons and 6,751 net
registered tons; and (iii) the drilling barge ENSCO 92 with Official
Number 724946 of 6,541 gross registered tons and 6,541 net
registered tons; each documented under the laws and flag of the
Commonwealth of Bahamas and includes any share or interest therein
and their respective engines, machinery, boats, tackle, outfit,
spare gear, fuel, consumable or other stores, belongings and
appurtenances whether on board or ashore and whether now owned or
hereafter acquired (but excluding therefrom any leased equipment
owned by third parties);
"Secured Creditors" shall mean collectively the Mortgagee, the
Banks, the Letter of Credit Issuer and the Collateral Agent under
and as defined in the Credit Agreement;
"Security Documents" shall have the same meaning for such term as
set forth in the Credit Agreement;
"Security Interest" means a mortgage, charge (whether fixed or
floating), pledge, lien, hypothecation, assignment, trust
arrangement, title retention or other security interest or
arrangement of any kind whatsoever;
"Taxes" shall have the same meaning for such term as set forth in
the Credit Agreement;
"Total Commitment" shall have the same meaning for such term as set
forth in the Credit Agreement;
"Total Loss" means (a) the actual, constructive, arranged, agreed,
or compromised Total Loss of any of the Rigs; (b) the requisition
for title or other compulsory acquisition or forfeiture of any of
the Rigs otherwise than by requisition for hire; (c) the capture,
seizure, arrest, detention or confiscation of any of the Rigs by any
government or by persons acting or purporting to act on behalf of
any government unless the Rig or Rigs be released from such capture,
seizure, arrest or detention within ninety (90) days after the
occurrence thereof;
"Tranche B Loans" shall have the same meaning for such term as set
forth in the Credit Agreement;
"Tranche B Note" shall have the same meaning for such term as set
forth in the Credit Agreement;
"United States Dollars" and "US$" means the lawful currency of the
United States of America;
"Unpaid Drawing" shall have the same meaning for such term as set
forth in the Credit Agreement;
"War Risks" includes the risk of mines and all risks excluded from
the standard form of English marine policy by the free of capture
and seizure clause.<PAGE>
1.2 Except where otherwise expressly provided or unless the context
otherwise requires, words and expressions defined in the Credit Agreement
shall bear the same meanings when used in this Deed of Covenants.
1.3 This Deed of Covenants shall be read together with the other
Security Documents.
1.4 Notwithstanding that this Deed of Covenants is supplemental to the
Mortgages it shall continue in full force and effect after any discharge
of the Mortgages.
1.5 In this Deed:
(a) Clause headings are inserted for convenience only and shall not
affect the construction of this Deed and, unless otherwise
specified, all references to Clauses are to clauses of this
Deed;
(b) unless the context otherwise requires, words denoting the
singular number shall include the plural and vice versa;
(c) references to persons include references to bodies corporate
and unincorporate;
(d) references to assets include property, rights and assets by
every description;
(e) references to any document are to be construed as references to
such document as amended or supplemented from time to time; and
(f) references to any enactment shall include re-enactments,
amendments and extensions thereof.
2 REPRESENTATIONS AND WARRANTIES
------------------------------
2.1 The Owner hereby represents and warrants to the Mortgagee that:
(a) the Owner is the sole legal and beneficial owner of sixty four
sixty-fourths shares of and in each of the Rigs and none of the
said shares is subject to any Security Interest (save as
constituted by the Permitted Liens, the Mortgages and this
Deed) and the Owner warrants that it will defend its title and
possession in each of the Rigs and every part thereof for the
benefit of the Mortgagee against the claims and demands of all
persons whomsoever arising as the result of any liens, charges
or encumbrances, other than Permitted Liens;
(b) the rigs are not (a) under arrest or (b) in the possession of
any person (other than their respective masters and crews);
(c) the Owner is a company duly organized and validly existing and
in good standing under the laws of England and Wales and has
power and has obtained all necessary consents for the execution
and performance of this Deed and each Security Document to
which it is a party;<PAGE>
(d) the Owner has full power and authority (i) to register each of
the Rigs in its name under flag of the Commonwealth of the
Bahamas, (ii) to execute and deliver this Deed of Covenants and
the Mortgages, (iii) to mortgage sixty four sixty-fourth shares
of and in each of the Rigs as security for the Obligations and
(iv) to comply with the provisions of, and perform all its
obligations under, this Deed;
(e) the Owner has complied with all statutory and other material
requirements relating to the ownership, registration and
operation of each of the Rigs;
(f) the Owner has not assigned or otherwise created any encumbrance
over its or any part of its right, title and interest in and to
earnings of the Rigs or any Requisition Compensation except
Permitted Liens;
(g) the Rigs are insured on the date hereof in compliance with the
requirements of Section 6.1 hereof;
(h) the Rigs are classified A1 drilling units with the American
Bureau of Shipping (or to such other classification or with
such other classification society as in either case the
Mortgagee may have approved in writing);
(i) except for registration of the Mortgages pursuant to Section 33
of the Merchant Shipping Act, Chapter 246 of the Bahamas, all
consents, licenses and approvals of, declarations to or
registrations with courts or government agencies required to
make the Mortgages and this Deed its valid and binding
obligations or to enable the Owner lawfully to enter into and
perform the obligations undertaken by it in the same have been
obtained or made and are in full force and effect;
(j) except for registration of the Mortgages pursuant to Section 33
of the Merchant Shipping Act, Chapter 246 of the Bahamas, it is
not necessary to ensure the legality, validity, enforceability
or admissibility in evidence of the Mortgages or this Deed in
any jurisdiction in which the Owner is incorporated, owns
assets or carries on business that such document be filed,
recorded, registered or enrolled with any court of government
agency of or in that jurisdiction;
(k) neither its entry into nor the performance by it of the
obligations undertaken by it in the Mortgages and this Deed (a)
give rise to, cause to crystallize or oblige any person to
create any encumbrance other than one in favor of the
mortgagee, (b) vest in any person any right to require
premature payment or repayment of any indebtedness of it or to
terminate or withdraw any Rig from service under any charter
party which it is a party or (c) is or will necessarily result
in any breach of or default under its memorandum and articles
of association (or documents of equivalent effect), any
provision of law or any agreement to which it is party or by
which it may be bound; <PAGE>
(l) the Owner has taken all necessary action to authorize the
execution and delivery of the Notes, the Credit Agreement, the
Mortgage and this Deed, and this Deed constitutes the legal,
valid and binding obligation of the Owner enforceable against
the Owner in accordance with its terms (except to the extent
limited by applicable bankruptcy, reorganization, insolvency,
moratorium or other laws of general application relating to or
affecting the enforcement of creditors' rights as from time to
time in effect and general equitable principles). The Mortgage
when filed with the Bahamian Registrar of Ships will create a
legal, valid and enforceable first priority mortgage lien on
each of the Rigs; and
(m) on and after the Restatement Effective Date (as defined in the
Credit Agreement), each of the Security Documents and the
Floating Charge (as defined in the Credit Agreement) creates,
as security for the Obligations (in this paragraph 2.2(m), as
defined in the Credit Agreement) purported to be secured
thereby, a valid and enforceable perfected security interest in
and Lien (as defined in the Credit Agreement) on all of the
Collateral subject thereto, to the extent perfection of a
security interest or Lien is governed by Article 8 or Article 9
of the UCC (as defined in the applicable Security Documents) or
the Merchant Shipping Act of the Bahamas or applicable security
interest filing provisions in England, and subject to no other
Liens (except that the Collateral may be subject to Permitted
Liens), in favor of the Collateral Agent (as defined in the
Credit Agreement) or the Security Trustee (as defined in the
Credit Agreement), as the case may be, for the benefit of the
Banks. No filings or recordings are required in order to
perfect the Security Interests created under any Security
Document and the Floating Charge except for filings or
recordings required in connection with any such Security
Document and the Floating Charge which shall have been made
upon or prior to (or are the subject of arrangements,
satisfactory to the Administrative Agent, for filing on or
promptly after the date of) the execution and delivery thereof.
2.2 The representations and warranties of the Owner set out in Clause
2.1 shall survive the execution of this Deed and shall be deemed to be
repeated throughout the Credit Facility Period at the time of the making
of each Loan and the issuance of each Letter of Credit with respect to the
facts and circumstances existing at each such time, as if made at each
such time.
3 PAYMENT COVENANTS
-----------------
3.1 The Owner hereby covenants with the Secured Creditors:
(a) to pay all such expenses, claims, liabilities, losses, costs,
duties, Fees, charges or other moneys as are stated in the
Credit Agreement and/or this Deed to be payable by the Owner to
or recoverable from the Owner by the Secured Creditors or any
of them (or in respect of which the Owner agrees in the Credit
Agreement and/or this Deed to indemnify any of the Secured
Creditors) at the times and in the manner specified in the
Credit Agreement and/or this Deed; and<PAGE>
(b) to pay interest on any amount payable by the Owner under the
Credit Agreement and on any such expenses, claims, liabilities,
losses, costs, duties, Fees, charges or other moneys referred
to in Clause 3.1(a) as paid by the Secured Creditors from the
date on which the relevant amount becomes payable under the
Credit Agreement or such expense, claim, liability, loss, cost,
duty, Fee, charge or other money is paid or incurred by any
Secured Creditor until the date of payment reimbursement
thereof to such Secured Creditor (as well after as before
judgment) at the Default Rate; and
(c) to pay each and every other sum of money which may be or become
owing to the any Secured Creditor under this Deed and the other
Credit Documents to which the Owner is or is to be a party at
the times and in the manner specified herein or therein.<PAGE>
4 MORTGAGE
--------
4.1 By way of security for the Obligations the Owner with full title
guarantee hereby mortgages and charges and agrees to mortgage and charge
to and in favor of the Mortgagee all its rights, title and interest,
present and future, to and in each of the Rigs.
4.2 The Owner covenants with the Mortgagee that it will not at any time
during the Credit Facility Period without the previous consent in writing
of the Mortgagee (and then only subject to such terms as the Mortgagee may
impose) create or suffer the creation of any Security Interest (other than
a Permitted Lien) on or in respect of any of the Rigs or any share therein
in favor of any person other than the Mortgagee or unless the same is
being contested in good faith by proceedings diligently conducted in
relation to which the Owner has established an adequate reserve.
4.3 The Owner shall remain liable to perform all the obligations assumed
by it in relation to the Rigs and the Mortgagee shall be under no
obligation of any kind whatsoever in respect thereof or be under any
liability whatsoever in event of any failure by the Owner to perform its
obligations in respect thereof.
4.4 On the date on which the Credit Agreement and all Letters of Credit
shall have been terminated, when no Note remains outstanding and all
Obligations shall have been irrevocably paid in full, the Mortgage and
this Deed of Covenants shall terminate, and the Mortgagee at the request
and expense of the Owner, will execute and deliver to the Owner a proper
instrument or instruments acknowledging the satisfaction and termination
of the Mortgage and this Deed of Covenants, and will duly assign, transfer
and deliver to the Owner (without recourse and without any representation
or warranty) such of each of the Rigs as may remain in the possession of
the Mortgagee together with any moneys at the time held by the Mortgagee
hereunder.
5 PRESERVATION OF SECURITY
------------------------
5.1 It is declared and agreed that:
(a) the security created by the Mortgages and this Deed (or either
of them) shall be held by the Mortgagee as a continuing
security for the performance of the Obligations and that the
security so created shall not be satisfied by any intermediate
payment or satisfaction of any part of the Obligations;
(b) the security so created shall be in addition to and shall not
in any way be prejudiced or affected by any of the other
Security Documents;
(c) except as otherwise specifically provided in the Credit
Agreement or other Security Documents, the Mortgagee shall not
have to wait for the Administrative Agent, the Banks or the
Letter of Credit Issuer to enforce any of the other Security
Documents before enforcing the security created by the
Mortgages and this Deed (or either of them);
(d) no delay or omission on the part of the Mortgagee in exercising
any right, power or remedy under the Mortgages and this Deed<PAGE>
(or either of them) shall impair such right, power or remedy or
be construed as a waiver thereof nor shall any single or
partial exercise of any such right, power or remedy preclude
any further exercise thereof or the exercise of any other
right, power or remedy. The rights, powers and remedies
provided in this Deed are cumulative and not exclusive of any
rights, powers and remedies provided by law and may be
exercised from time to time and as often as the Mortgagee may
deem expedient; and
(e) any waiver by the Mortgagee of any terms of this Deed or any
consent given by the Mortgagee under this Deed shall only be
effective if given in writing and then only for the purpose and
upon the terms for which it is given.
5.2 Any settlement or discharge under the Mortgages and this Deed (or
any of them) between the Mortgagee and the Owner shall be conditional upon
no security or payment to the Secured Creditors or any of them by the
Credit Parties (as defined in the Credit Agreement) or any person being
avoided or set-aside or ordered to be refunded or reduced by virtue of any
provision or enactment relating to bankruptcy, insolvency, administration
or liquidation for the time being in force and, if such condition is not
satisfied, the Mortgagee shall be entitled to recover from the Owner on
demand the value of such security or the amount of any such payment as if
such settlement or discharge had not occurred.
5.3 The rights of the Secured Creditors under the Mortgages and this
Deed and the security thereby and hereby constituted shall not be affected
by any act, omission, matter or thing which, but for this provision, might
operate to impair, affect or discharge such rights and security, in whole
or in part, including without limitation, and whether or not known to or
discoverable by any person:
(a) any time or waiver granted to or composition with any person;
or
(b) the taking, variation, compromise, renewal or release of or
refusal or neglect to perfect or enforce any rights, remedies
or securities against any of the Credit Parties or any other
person; or
(c) any legal limitation, disability, incapacity or other
circumstances relating to the Credit parties or any other
person; or
(d) any amendment or supplement to the Credit Agreement, any of the
Credit Documents (other than this Deed) or any other document
or security; or
(e) the dissolution, amalgamation, reconstruction or reorganization
of any of the Credit Parties or any other person; or
(f) the unenforceability, invalidity or frustration of any
obligations of any of the Credit Parties or any other person
under the Credit Agreement, any of the Credit Documents (other
than this Deed) or any other document or security.<PAGE>
6 INSURANCE
---------
6.1 The Owner covenants with the Mortgagee throughout the Credit
Facility Period that:
(a) The Owner shall, at its own expense, when and so long as any
Obligations remain outstanding, insure the Rigs and keep each
of them insured, or cause the Rigs to be insured, in lawful
money of the United States, in such amounts, for such risks
(including without limitation, hull and machinery/increased
value, protection and indemnity risks, pollution liability, War
Risks (subject to subparagraph (vii) below) and in addition
such other risks which would be covered by experienced,
prudent, and responsible companies engaged in the offshore
contract drilling of hydrocarbons in places and under
conditions comparable to those in which the Rigs are employed
from time to time and possessing financial and operating
characteristics similar to those of the Owner (herein called
"Similar Companies"), in such form (including without
limitation, the form of the loss payable clause and the
designation of named assureds) and with such first class
insurance companies, underwriters, funds, mutual insurance
associations or clubs, as shall be reasonably satisfactory to
the Administrative Agent. With respect to hull and machinery/
increased value insurance, including War Risk, the Owner shall
insure the Rigs and keep each of them insured, or cause the
Rigs to be insured, for an amount which is when such amount is
aggregated with the amount of such insurance coverage on the
Other Rigs, such aggregate amount shall be not less than the
greater of (i) 125% of the Total Commitment and (ii) the amount
of coverage that would be in the range obtained by Similar
Companies on the Rigs and the Other Rigs. Such insurance shall
be on the basis of "new for old" with no deduction for
depreciation. The Rigs shall in no event be insured for an
amount less than the agreed valuation as set forth in the
applicable marine and War Risk policies.
(i) Full form marine hull and machinery insurance extended
to insure against all risks of loss or damage, including
but not limited to the risk of loss from blowout and
cratering and against such risks and in such form as are
approved by the Mortgagee and are necessary or advisable
for the protection of the interest of the Mortgagee and
the Shipowner in an amount not less than the greater of
(A), when added to insurances covering the Rigs and
Other Rigs, 125% of the Commitments or (B) the amount of
coverage that would be within the range obtained by
Similar Companies on such Rigs and the Other Rigs. The
deductible or self-insured retention under the policy
shall not exceed US$250,000 per occurrence. The
policies shall be endorsed to delete the sue and labor
requirements as applied to the Mortgagee and to provide
coverage for collision and earthquake hazards;
(ii) Full form marine protection and indemnity and
comprehensive general liability insurance (including any
excess liability insurance), including coverage for<PAGE>
contractual liability, pollution liability, contractual
and legal wreck removal, crew coverage, excess
collision, salvage and general average, care, custody
and control coverage. Such protection and indemnity
insurance shall be maintained in the broadest forms
generally available to similar Companies in the United
States, London or Scandinavian markets and shall be in
an amount not less than the greater of (A) the range of
that carried by similar companies and (B)
US$200,000,000. Said policy shall not include a
deductible or self-insured retention in excess of
US$250,000 per occurrence. Such insurance shall include
a cross-liability endorsement;
(iii) The Owner shall, at all times during which the Rigs are
operating within the jurisdiction of the United States
of America, maintain insurance or post bond or maintain
approved evidence of financial responsibility with
respect to the Rigs to cover the actual cost of removal
of discharged oil which the Owner or the Rigs may be
held strictly liable (or held liable due to negligence
of the Owner or any other Person) under the applicable
Environmental Laws, or under any other federal or state
law which, in the future, may apply to the Rigs or to
the Owner; and the Owner shall maintain insurance or
post bond or maintain approved evidence of financial
responsibility covering similar pollution risks or
liabilities incident thereto under any law, regulation
or judicial decision of any foreign jurisdiction or
jurisdictions or political subdivision thereof
applicable to the Owner, the Rigs or its operations;
(iv) Such workmen's compensation or longshoremen's and harbor
workers' insurance as shall be required by applicable
law, including endorsements for Outer Continental Shelf
operations, borrowed servant, voluntary compensation and
IN REM claims;
(v) Insurance (with a limit of US$50,000,000 per occurrence)
naming the Owner and the Mortgagee assureds and loss
payees, as their interests may appear, against
Operator's Extra Expense ("O.E.E.") liability in
connection with operations conducted by the Rigs with
respect to Rigs operating under a drilling contract with
a financially responsible operator acceptable to the
Mortgagee that indemnifies against such O.E.E. arising
out of blowout (above and below ground), cratering,
redrilling/recompletion, cost of control, clean-up,
containment seepage, pollution, spillage or leakage in
connection with operations conducted by the Rig, in form
and substance satisfactory to the Mortgagee, and third
party liabilities that may be assumed by a contract
which is legally enforceable and in form and substance
satisfactory to the Mortgagee. Deductibles or self-
insured retentions shall not exceed US$250,000 and shall
be for the account of the Owner;<PAGE>
(vi) Excess seepage, pollution, clean-up and containment
liability coverage in the amount of US$50,000,000 in
respect of offshore operations in excess of and
following the seepage, pollution, clean-up and
containment liability coverage recited in subparagraph
(v) above.
(vii) Subject to the provisions of this subsection, War and
Political Risk insurance naming the Owner and the
Mortgagee as assureds and loss payees, which shall be
maintained in the broadest forms generally available to
Similar Companies in the United States, London or
Scandinavian markets, and shall include coverage for War
Risk hull and machinery, War Risk protection and
indemnity, confiscation, expropriation, nationalization,
deprivation and inability to export. Such insurance
shall be in amounts, with deductibles or self-insured
retentions not to exceed, the corresponding policies
described in subparagraphs (i) and (ii) above. The
Shipowner shall obtain and maintain War and Political
Risk Insurance for any Rig operating in an area deemed
to be hostile by the Owner's underwriters or protection
and indemnity club;
(viii) Upon prior written notice to the Owner, the Mortgagee
may obtain mortgagee's interest insurance or breach of
warranty endorsement in favor of the Mortgagee with such
underwriters and under form of policies approved by the
Mortgagee in an amount equal to at least 125% of the
Commitments. The Owner shall reimburse the Mortgagee,
upon the Mortgagee's written demand, from time to time,
the reasonable costs and expenses incurred by the
Mortgagee in effecting and maintaining such mortgagee's
interest insurance on such terms and in such amounts and
with such underwriters as the Mortgagee shall deem
appropriate; and
(ix) Upon prior written notice to the Owner, the Mortgagee
may obtain an Additional Perils-Pollution endorsement
covering the possible consequences of pollution
involving the Rigs including, without limitation, the
risk of expropriation or sequestration of any Rig or the
imposition of a lien or encumbrance of any kind having
priority over this Deed of Covenants or the Mortgages.
The Owner shall reimburse the Mortgagee, upon the
Mortgagee's written demand, from time to time, the
reasonable costs and expenses incurred by the Mortgagee
in effecting and maintaining on such terms and in such
amounts and with such underwriters such Additional
Perils-Pollution insurance coverage as the Mortgagee
shall deem appropriate.
(b) The Owner will furnish the Mortgagee from time to time on
request and, in any event, at least annually a detailed report
signed by a firm of marine insurance brokers or insurance
companies acceptable to the Mortgagee with respect to the
insurance carried and maintained on each Rig, together with<PAGE>
their opinion that the insurance carried is sufficient in that
it is customary insurance which an experienced broker would
effect in similar circumstances with Similar Companies and
that, in the opinion of the brokers, it complies with the
provisions of this Section 6.01 and any requirements which the
Mortgagee may have notified to the Owner. The Owner will use
its best efforts to cause such firm to agree to advise a
responsible officer of the Mortgagee in writing promptly of any
default in the payment of any premium or call and of any other
act or omission on the part of the Owner of which it has
knowledge and which might invalidate or render unenforceable,
in whole or in part, any insurance on any Rig.
(c) Unless the Mortgagee shall otherwise agree, all insurance for
the rigs shall be placed through independent brokers of
recognized standing and with clubs or first class underwriters
reasonably acceptable to the Mortgagee and must (i) name the
Mortgagee as a named assured (except as to the insurance
referred to in Section 6.01(a)(iv) above), but without
liability for premiums, calls or assessments, (ii) contain a
cancellation clause providing that the insurers undertake not
to exercise any right of cancellation which they may have by
reason of non-payment of premiums or calls when due without
giving thirty (30) days' prior written notice of such
cancellation to a responsible officer of the Mortgagee and an
opportunity of paying any such unpaid premium or call, (iii) if
possible, based on the Owner's best efforts, contain a
provision that the insurance will not be permitted to lapse,
terminate or be materially modified without thirty (30) days'
prior written notice being given to a responsible officer of
the Mortgagee (except as to the insurance referred to in
Section 6.01(a)(ii) and (v) above for which fourteen (14) days'
prior written notice shall be required and (iv) contain the
agreement of the insurer that any loss thereunder shall be
payable to the trustee notwithstanding any action, inaction or
breach of representation or warranty by the Owner, except to
the extent provided by subsection (d) hereof. The Owner shall
not change underwriters or clubs as to any insurance for the
Owner without prompt written notice to a responsible officer of
the Mortgagee of any such change.
(d) All amounts of whatsoever nature payable under any insurance
shall be payable to the Mortgagee for distribution first to
itself, the Secured Creditors, the Co-Agents and thereafter to
the Owner or others as their interests may appear.
Nevertheless, until otherwise required by the Mortgagee by
notice to the underwriters, (i) amounts payable under any
insurance on the Rigs with respect to the protection and
indemnity risks shall be paid directly to the Owner to
reimburse it for any loss, damage or expense incurred by it and
covered by such insurance or to the person to whom any
liability covered by such insurance has been incurred, and (ii)
amounts payable under any insurance with respect to the Rigs
involving any damage to any Rigs not constituting an actual or
constructive total loss, shall be paid by the underwriters
directly for the repair, salvage or other charges involved or,
if the Owner shall have first fully repaired the damage or paid<PAGE>
all of the salvage or other charges, or irrevocably committed
to do so, shall be paid to the Owner as reimbursement
therefore, PROVIDED, no amount in excess of an aggregate of
US$2,000,000 per incident shall be paid from any insurances
without the prior written consent of the Mortgagee.
(e) In the event of an actual or constructive total loss or a
compromised constructive total loss or requisition of any Rig,
all insurance payments or compensation therefor shall be paid
to the Mortgagee and applied to reduce the Total Commitment in
accordance with and subject to the terms of Section 3.03(c)
and/or (d) of the Credit Agreement. The Owner shall not
declare or agree with underwriters that any Rig is a
constructive or compromised, agreed or arranged constructive
total loss without the prior written consent of the Mortgagee.
(f) In the event of an actual or constructive total loss of any
Rig, the Mortgagee shall retain out of the insurance payments
received on account of such loss and held by the Mortgagee in
accordance with the Credit Agreement, any sum or sums that
shall be or become owing to the Mortgagee under this Deed of
Covenants or the Mortgages for the cost, if any, of collecting
the insurance, which sum or sums shall become the sole property
of the Mortgagee, and pay the balance to the Banks for
application pursuant to and subject to Section 3.03(c) and/or
(d) of the Credit Agreement.
(g) The Owner shall arrange for the execution of such guarantees as
may from time to time be required by any protection and
indemnity or War Risks association.
7 RIG COVENANTS
-------------
7.1 The Owner further covenants with the Mortgagee that throughout the
Credit Facility Period the Owner will:
(a) maintain its existence as a company in good standing duly
organized under the laws of England and Wales;
(b) keep the Rigs registered in its name as Bahamian flag vessels
at the Port of Nassau and to do or allow to be done nothing
whereby such registration may be forfeited or imperilled;
(c) not cause or permit the Rigs to be operated in any manner
contrary to the laws, regulations, treaties and conventions
(and all rules and regulations issued thereunder) from time to
time applicable to their operation or to the maintenance of
their flag;
(d) maintain and preserve the Rigs in good working order and repair
in accordance with good commercial maintenance practices
employed in the offshore oil and gas contract drilling
industry, ordinary wear and tear excepted, and in any event in
such condition as will entitle them to the classification A1
drilling unit American Bureau of shipping, or to the equivalent
classification in any other classification society of like
standing approved by the Mortgagee in writing and so as to<PAGE>
comply with all regulations and requirements (statutory or
otherwise) from time to time applicable to vessels registered
as Bahamian Ships and applicable to vessel or oil rigs trading
in any jurisdiction to which the rigs may, subject to the
provisions of this Deed, trade from time to time;
(e) not without the previous consent in writing of the Mortgagee,
which consent shall not be unreasonably withheld, or make any
modification to the Rigs which would or might materially
interfere with the suitability of the Rigs for normal
commercial offshore drilling operations;
(f) submit the Rigs regularly to such periodical or other surveys
as may be required by the classification society and if so
required to supply to the Mortgagee copies of all survey
reports issued in respect thereof;
(g) permit the Mortgagee by surveyors or other persons appointed by
it for that purpose to board any of the Rigs at all reasonable
times for the purpose of inspecting the condition of such Rig
or for the purpose of satisfying themselves in regard to
proposed or executed repairs and to afford all proper
facilities for such inspections;
(h) promptly pay and discharge all debts, damages and liabilities
whatsoever which have given or may give rise to maritime or
possessory liens (other than Permitted Liens) on or claims
enforceable against the Rigs and all tolls, dues, taxes,
assessments, governmental charges, fines and penalties lawfully
charged on or in respect of the Rigs and all other outgoings
whatsoever in respect of the Rigs and in the event of arrest of
any of the Rigs pursuant to legal process, or in the event of
the detention of any of the Rigs in exercise or purported
exercise of any such lien or claim as aforesaid, procure the
release of the Rig or Rigs, as appropriate, from such arrest or
detention forthwith upon receiving notice thereof by providing
bail or otherwise as the circumstances may require;
(i) not knowingly cause or permit the Rigs to trade with, or within
the territorial waters of any country where the Insurances of
the Rigs would be jeopardized or imperilled;
(j) not employ the Rigs or allow the employment of any of the Rigs
in any trade or business which is unlawful under the laws of
any relevant jurisdiction or in carrying illicit or prohibited
goods or in any manner whatsoever which may render any of the
Rigs liable to destruction, seizure or confiscation and in the
event of hostilities in any part of the world (whether war be
declared or not) not employ the Rigs or suffer the employment
of any of the Rigs in carrying any contraband goods or to enter
or trade to any zone which is declared a war zone by any
government or by the War Risks insurers of the Rigs unless
there shall have been effected by the Owner (at its expense)
such special, additional or modified insurance cover as the
Mortgagee may require;<PAGE>
(k) promptly furnish to the Mortgagee all such information as it
may from time to time reasonably require regarding the Rigs,
the employment of the Rigs, position and engagements;
(l) notify the Mortgagee forthwith by telecopy, thereafter
confirmed by letter of:
(i) any casualty to any of the Rigs which is or is likely to
be a Major Casualty, and
(ii) any occurrence in consequence whereof any of the Rigs
has become or is, by the passing of time or otherwise,
likely to become a Total Loss, and
(iii) any requirement or recommendation made by any insurer or
classification society or by any competent authority
which is not complied with within the time provided by
the insurer, classification society or competent
authorities, including any extensions granted thereby,
and
(iv) any arrest of any of the Rigs or the exercise or
purported exercise of any lien on any of the Rigs or any
requisition of any of the Rigs for hire; and
(m) keep each Mortgage registered against the respective Rigs as
valid first priority mortgages, to carry on board each of the
Rigs a certified copy of the Mortgage and this Deed and to
place and maintain in a conspicuous place in the navigation
room and the Master's cabin of each of the Rigs a framed
printed notice stating that such Rig is mortgaged by the Owner
to the Mortgagee.
7.2 The Owner further covenants with the Mortgagee that throughout the
Security Period the Owner will:
(a) shall not cause or permit the Rigs to be operated in any manner
contrary to law, shall not abandon the Rigs in a foreign port,
shall not engage in any unlawful trade or violate any law or
carry any cargo that shall expose the Rigs to penalty,
forfeiture or capture, and shall not do, or suffer or permit to
be done, anything which can or may injuriously affect the
registration or enrollment of the Rigs under the laws of the
United States and will at all times keep the Rigs duly
documented thereunder;
(b) notify the Mortgagee forthwith by telecopy, thereafter
confirmed by letter if a libel be filed against any Rig or if
any Rig is otherwise attached, levied upon or taken into
custody by virtue of any legal proceeding in any court,
tribunal or governmental authority (de jure or de facto), or if
any Rig suffers damage in excess of US$500,000, in the case of
any such libel or attachment, within thirty (30) days will
cause said Rig to be released by posting bond, posting
alternative security or other means and all liens thereon to be
discharged, and will promptly notify the Mortgagee thereof in
the manner aforesaid; and<PAGE>
(c) shall not sell, bareboat charter (other than to Holdings and
its Subsidiaries (as defined in the Credit Agreement)),
transfer or mortgage any of the Rigs without the written
consent of the Mortgagee first having been obtained, which
consent shall not be unreasonably withheld. Any such written
consent to any one sale, bareboat charter, transfer or mortgage
shall not be construed to be a waiver of this provision with
respect to any subsequent proposed sale, bareboat charter,
transfer or mortgage of any Rig shall be subject to the
provisions of this Deed and the respective Mortgage and the
lien thereof, and shall not affect the liabilities of the Owner
hereunder.
8 PROTECTION OF SECURITY
----------------------
8.1 The Mortgagee shall without prejudice to its other rights and powers
under the Mortgages and this Deed and the other Credit Documents be
entitled (but not bound) at any time and as often as may be necessary to
take any such action as it may in its discretion think fit for the purpose
of protecting or maintaining the security created by the Mortgage and this
Deed (including, without limitation, such action as is referred to in
Clause 8.2) and each and every expense, liability, or loss (including,
without limitation, legal fees) so incurred by the Mortgagee in or about
the protection or maintenance of the said security together with interest
payable thereon under Clause 3.1(c) shall be repayable to it by the Owner
on demand.
8.2 Without prejudice to the generality of Clause 8.1:
(a) if the Owner does not comply with the provisions of Clause 6.1
or any of them, the Mortgagee shall be entitled (but not bound)
to effect or to replace and renew and thereafter to maintain
Insurances in such manner as in its discretion it may think fit
and to require that all policies, contracts and other records
relating to the Insurances (including details of and
correspondence concerning outstanding claims) be forthwith
delivered to such brokers as the Mortgagee may nominate and to
collect, recover, compromise and give a good discharge for all
claims then outstanding or thereafter arising under the
Insurances or any of them and to take over or institute (if
necessary using the name of the Owner) all such proceedings in
connection therewith as the Mortgagee in its absolute
discretion may think fit and to permit the brokers through whom
the collection or recovery is effected to charge the usual
brokerage therefor; and
(b) if the Owner does not comply with the provisions of Clause
7.1(d) and/or 7.1(g) or any of them the Mortgagee shall be
entitled (but not bound) to arrange for the carrying out of
such repairs to and/or surveys of the Rigs as it deems
expedient or necessary; and
(c) if the Owner does not comply with the provisions of Clause
7.1(h) or any of them the Mortgagee shall be entitled (but not
bound) to pay and discharge all such debts, damages and
liabilities and all such tolls, dues, taxes, assessments,
charges, fines, penalties and other outgoings as are therein<PAGE>
mentioned and/or to take any such measures as it deems
expedient or necessary for the purpose of securing the release
of the Rig or Rigs, as the case may be.
9 ENFORCEABILITY AND MORTGAGEE'S POWERS
-------------------------------------
9.1 Upon the happening of any of the Events of Default specified in the
Credit Agreement, and giving effect to any applicable grace periods
specified in the Credit Agreement but without the necessity for any court
order or declaration in any jurisdiction to the effect that an Event of
Default has occurred the security constituted by the Mortgages and this
Deed shall become immediately enforceable and the power of sale and other
powers conferred by law shall be immediately exercisable and the Mortgagee
shall be entitled, as and when it may see fit, to put into force and to
exercise all the powers possessed by it as mortgagee and chargee of the
Rigs and in particular:
(a) to take possession of any of the Rigs whether actually or
constructively and/or otherwise to take control of any of the
Rigs wherever such Rig or Rigs may be and cause the Owner or
any other person in possession of such Rig or Rigs forthwith
upon demand to surrender the same to the Mortgagee without
legal process and without liability of the Mortgagee for any
losses or damages incurred by such actual or constructive
taking and without having to render accounts to the Owner in
connection therewith;
(b) to require that all policies, contracts, certificate of entry
and other records relating to the Insurances (including details
of and correspondence concerning outstanding claims) be
forthwith delivered to or to the order of the Mortgagee;
(c) to collect, recover, compromise and give a good discharge for
any and all moneys or claims for moneys then outstanding or
thereafter arising under the Insurances or Requisition
Compensation and to permit any brokers through whom collection
or recovery is effected to charge the usual brokerage therefor;
(d) to take over or institute (if necessary using the name of the
Owner) all such proceedings in connection with the Rigs, the
Insurances, or any Requisition Compensation as the Mortgagee in
its absolute discretion thinks fit and to discharge, compound,
release or compromise claims against the Owner in respect of
the Rigs which have given or may give rise to any charge or
lien on the Rigs or which are or may be enforceable by
proceedings against the Rig or Rigs provided the Mortgagee
shall act in a commercially reasonable manner in accordance
with Section 9-504 of the New York Uniform Commercial Code;
(e) to sell any of the Rigs or any share therein with prior notice
to the Owner, and with or without the benefit of any
charterparty or other contract for the employment of such Rig
or Rigs, by public auction or private contract at such place
and upon such terms (including, without limitation, on terms
such that payment of some or all of the purchase price be
deferred) as the Mortgagee in its absolute discretion may
determine with power to postpone any such sale, without being<PAGE>
answerable for any loss occasioned by such sale or resulting
from postponement thereof, and/or itself to purchase the Rig or
Rigs, as the case may be, at any such public auction and to set
off the purchase price against all or any part of the
Obligations; notice of such public auction or private sale
contract shall be given in the following manner:
(i) by publishing such notice for ten consecutive days in a
daily newspaper of general circulation published in
Dallas, Texas;
(ii) if the place of sale should not be Dallas, Texas, then
also by publication of a similar notice in a daily
newspaper, if any, published at the place of sale; and
(iii) by mailing a similar notice to the Owner on the day of
first publication;
(f) to manage, insure, maintain and repair the Rig or Rigs, as the
case may be, and to charter, employ, sail or lay up the Rig or
Rigs, as the case may be, in such manner, upon such terms and
for such period as the Mortgagee in its absolute discretion
deems expedient and for the purposes aforesaid the Mortgagee
shall be entitled to do all acts and things incidental or
conducive thereto and in particular to enter into such
arrangements respecting the Rig or Rigs, as the case may be,
and the insurance, management, maintenance, repair,
classification, chartering and employment of the Rig or Rigs,
as the case may be, in all respects as if the Mortgagee were
the owner of the Rigs and without being responsible for any
loss thereby incurred, except as expressly provided in Section
9.4 below;
(g) to recover from the Owner on demand any expenses, liabilities
or losses as may be incurred by the Mortgagee in or about the
exercise of the power vested in the Mortgagee under Clause
9.1(f);
(h) subject to the terms of the Mortgages, this Deed of Covenants
and the Credit Documents generally, to recover from the Owner
on demand each and every expense, liability or loss incurred by
the Mortgagee in or about or incidental to the exercise by it
of any of the powers aforesaid.
9.2 The Mortgagee shall not be obliged to make any enquiry as to the
nature or sufficiency of any payment received by it under the Mortgage and
this Deed (or either of them) or to make any claim under this Deed or to
enforce any rights and benefits assigned to the Mortgagee by this Deed or
to which the Mortgagee may at any time be entitled hereunder.
9.3 Subject to the proviso in Section 9.4 below, neither the Secured
Creditors nor their agents, managers, officers, employees, delegates and
advisers shall be liable for any expense, claim, liability, loss, cost,
damage or expense incurred or arising in connection with the exercise or
purported exercise of any rights, powers and discretions under the
Mortgages and this Deed (or either of them) in the absence of gross
negligence or wilful misconduct.<PAGE>
9.4 The Mortgagee shall not by reason of the taking possession of the
Rig or Rigs, as the case may be, be liable to account as
mortgagee-in-possession or for anything except actual receipts or be
liable for any loss upon realization or for any default or omission for
which a mortgagee-in-possession might be liable PROVIDED, HOWEVER, that so
long as the Owner shall not have abandoned the Rig or Rigs, if the
Mortgagee shall have become a mortgagee-in-possession, the Owner shall not
be liable to third parties for damages or losses arising from and after
the date the Mortgagee becomes mortgagee-in-possession, except for damages
or losses arising from the acts of the Owner.
9.5 Upon any sale of any of the Rigs or any share therein by the
Mortgagee, the purchaser shall not be bound to see or enquire whether the
power of sale of the Mortgagee has become exercisable in the manner
provided in this Deed and the sale shall be deemed to be within the power
of the Mortgagee and the receipt of the Mortgagee for the purchase money
shall effectively discharge the purchaser who shall not be concerned with
the manner of application of the proceeds of sale or be in any way
answerable therefor.
9.6 If at any time after an Event of Default and declaration of
acceleration pursuant to this Section 9, and prior to any foreclosure
action having been taken by the Mortgagee under any of the Credit
Documents to foreclose upon the security provided by such documents, the
Owner offers completely to cure all Events of Default and to pay all
expenses, advances and damages to the Mortgagee consequent to such Events
of Default, with interest at the rate provided for in Section 1.08(c) of
the Credit Agreement, then the Mortgagee may accept such offer and payment
and restore the Owner to its former position. However, such action shall
not affect any subsequent Event of Default or impair any rights of the
Mortgagee consequent thereto.
9.7 Immediately upon the occurrence of an Event of Default, or of any
event which with the notice or lapse of time or both would constitute an
Event of Default, the Owner shall notify a responsible officer of the
Mortgagee of such occurrence in writing setting forth in reasonable detail
the circumstances surrounding such Event of Default or other event and
what action the Owner proposes to take with respect thereto.
10 APPLICATION OF MONEYS
---------------------
10.1 (a) All moneys received by the Mortgagee in respect of sale of any
of the Rigs or any share therein; in respect of recovery under
the Insurances; or in respect of Requisition Compensation
shall, subject to the provisions of Section 3.03(c) and/or (d)
of the Credit Agreement, be applied as follows:
(i) first, to the payment of all amounts owing the Mortgagee
of the type described in clauses (ii) and (iii) of Recital D;
(ii) second, to the extent moneys remain after the
application pursuant to the preceding clause (i), an amount
equal to the outstanding Obligations shall be paid to the
Secured Creditors as provided in Clause 10.1(c), with each
Secured Creditor receiving an amount equal to such Obligations
held by it or, if the proceeds are insufficient to pay in full<PAGE>
all such Obligations, its Pro Rata Share (as defined below) of
the amount remaining to be distributed; and
(iii) third, to the extent moneys remain after the application
pursuant to the preceding clauses (i) and (ii), and following
the termination of Mortgage and this Deed of Covenants pursuant
to Clause 4.4, any surplus then remaining shall be paid to the
Owner, subject, however, to the rights of the holder of any
then existing Lien of which the Mortgagee has actual notice
(without investigation).
(b) For purposes of this Deed of Covenants "Pro Rata Share" shall
mean, when calculating a Secured Creditor's portion of any
distribution or amount in respect of any Obligations, the
amount (expressed as a percentage) equal to a fraction the
numerator of which is the then unpaid amount of such
Obligations owing to or held by such Secured Creditor and the
denominator of which is the then outstanding amount of all such
Obligations. For purposes of determining the amount payable to
each Secured Creditor, the Mortgagee shall be entitled to
request each Secured Creditor to furnish it with written notice
of the amount of Obligations then owed to it and shall be
entitled to reply upon the amounts stated therein in making
such distribution.
(c) All payments required to be made to Secured Creditors hereunder
shall be made to the Administrative Agent under the Credit
Agreement for the account of the Secured Creditors.
(d) For purposes of applying payments received in accordance with
this Clause 10.1, the Mortgagee shall be entitled to reply upon
(i) the Administrative Agent under the Credit Agreement and
(ii) the Secured Creditors for a determination (which the
Administrative Agent and each Secured Creditor, by their
acceptance of the benefits of this Deed shall be obligated to
provide upon request of the Mortgagee) of the outstanding
Obligations owed to the Secured Creditors. Unless it has
actual knowledge (including by way of written notice from a
Secured Creditor) to the contrary, the Administrative Agent
under the Credit Agreement, in furnishing information pursuant
to the preceding sentence, and the Mortgagee, in acting
hereunder, shall be entitled to assume that (x) no obligations
other than principal, interest and regularly accruing fees are
owing to any Secured Creditor.
11 FURTHER ASSURANCES
------------------
11.1 The Owner shall execute and do all such assurances, acts and things
as the Mortgagee in its absolute discretion may require for:
(a) perfecting or protecting the security created (or intended to
be created) by the Mortgages and this Deed; or
(b) preserving or protecting any of the rights of the Mortgagee and
the other Secured Creditors under the Mortgages and this Deed
(or either of them); or<PAGE>
(c) ensuring that the security constituted by the Mortgages and
this Deed and the covenants and obligations of the Owner under
this Deed shall enure to the benefit of any such assignee of
the Mortgagee as is referred to in Clause 16.3; or
(d) enforcing the security constituted by the Mortgages and this
Deed on or at any time after the same shall have become
enforceable; or
(e) the exercise of any power, authority or discretion vested in
the Mortgagee under the Mortgages and this Deed (or either of
them),
in any such case, forthwith upon demand by the Mortgagee and at the
expense of the Owner.
12 POWER OF ATTORNEY
-----------------
12.1 The Owner, by way of security and in order more fully to secure the
performance of the Obligations, hereby irrevocably appoints the Mortgagee
as its attorney for the duration of the Credit Facility Period for the
purposes of:
(a) doing in its name all acts and executing, signing and (if
required) registering in its name all documents which the Owner
itself could do, execute, sign or register in relation to the
(including without limitation, transferring title to any of the
Rigs to a third party) Provided however that such power shall
not be exercisable by or on behalf of the Mortgagee unless an
Event of Default specified in the Credit Agreement shall have
occurred; and
(b) executing, signing, perfecting, doing and (if required)
registering every such further assurance document, act or thing
as is referred to in Clause 11.
12.2 The exercise of such power as is referred to in Clause 12.1(a) by or
on behalf of the Mortgagee shall not put any person dealing with the
Mortgagee upon any enquiry as to whether the Mortgages and this Deed have
become enforceable nor shall such person be in any way affected by notice
that the Mortgages and this Deed have not become enforceable and, in
relation to both Clauses 12.1(a) and 12.1(b), the exercise by the
Mortgagee of such power shall be conclusive evidence of its right to
exercise the same.
13 INDEMNITIES
-----------
13.1 Subject to the provisions of this Deed and the Credit Agreement, the
Owner will indemnify and save harmless each of the Secured Creditors and
each agent or attorney appointed under or pursuant to this Deed (each, an
"Indemnitee") from and against any and all expenses, claims, liabilities,
losses, taxes, costs, duties, Fees and charges suffered, incurred or made
by such Secured Creditor or such agent or attorney:
(a) in the exercise or purported exercise of any rights, powers or
discretions vested in them pursuant to the Mortgages and this
Deed (or either of them); or<PAGE>
(b) in the preservation or enforcement of the rights of the
Mortgagee under the Mortgages and this Deed (or either of
them); or
(c) on the release of the Rigs or any share therein from the
security created by the Mortgages and this Deed (or either of
them),
and the Secured Creditors and each such agent or attorney may retain and
pay all sums in respect of the same out of money received under the powers
conferred by the Mortgages and this Deed (or either of them). All such
amounts recoverable by such Secured Creditor or such agent or attorney
shall be recoverable on a full indemnity basis.
13.2 Without limiting the foregoing Clause 13.1, the Owner hereby further
indemnifies and holds harmless each of the Secured Creditors and their
respective officers, directors, employees, attorneys and agents from and
against any and all liabilities, losses, obligations, claims, damages,
penalties, causes of action, costs and expenses (including, without
limitation, reasonable attorneys' fees and expenses, consultant fees,
investigation and laboratory fees) imposed upon or incurred by or asserted
against them, or any of them, by reason of (a) an actual, alleged or
threatened Environmental Incident; (b) any personal injury (including
wrongful death) or property damage (real or personal) or economic damage
arising out of or related to such Environmental Incident; (c) any
Environmental Claim brought or threatened, or settlement reached; or (d)
any violation of laws, orders, regulations, requirements or demands of
government authorities relating to Hazardous Materials at, or discharged
from any of the Rigs PROVIDED, HOWEVER, that in the event that the
Mortgagee shall have become a mortgagee-in-possession in respect of one or
more of the Rigs and the Owner shall not have abandoned such Rig or Rigs,
this indemnity shall not cover claims of third parties arising from or
after the Mortgagee becomes mortgagee-in-possession, except for claims of
third parties arising from the acts of the Owner.
13.3 If, under any applicable law or regulation, and whether pursuant to
a judgment being made or registered against the Owner or the liquidation
of the Owner or for any other reason, any payment under or in connection
with the Mortgages and this Deed (or any of them) is made or falls to be
satisfied in a currency (the "payment currency") other than the currency
in which such payment is due under or in connection with the Mortgages and
this Deed (the "contractual currency"), then to the extent that the amount
of such payment actually received by the Mortgagee, when converted into
the contractual currency at the rate of exchange, falls short of the
amount due under or in connection with the Mortgages and this Deed, the
Owner, as a separate and independent obligation, shall indemnify and hold
harmless the Mortgagee against the amount of such shortfall. For the
purposes of this Clause 13.3, "rate of exchange" means the rate at which
the Mortgagee is able on the date of such payment (or, if it is not
practicable for the Mortgagee to purchase the contractual currency with
the payment currency on the date of such payment, at the rate of exchange
as soon afterwards as it practicable for the Mortgagee to do so) to
purchase the contractual currency with the payment currency and shall take
into account any premium and other costs of exchange with respect thereto.
14 RIGHTS OF OWNER
---------------<PAGE>
14.1 Until an Event of Default shall have occurred, the Owner:
(a) shall be suffered and permitted to retain actual possession and
use of the Rigs;
(b) subject to Section 8.02(b) of the Credit Agreement, shall have
the right, from time to time in its discretion and without
application to the Mortgagee, and without obtaining a release
thereof by the Mortgagee, to dispose of, free from the lien
hereof, any boilers, engines, machinery, masts, spars, sails,
rigging, boats, anchors, chains, tackle, apparel, furniture,
fittings, drilling equipment, pumps, drill pipes, collars,
racking, housing, spare parts and supporting inventory,
vehicles or living quarters or any other appurtenances of the
Rigs.
15 COMMUNICATIONS
--------------
15.1 The provisions of Clause 12.03 of the Credit Agreement shall apply
in relation to any notice, demand or other communication under this Deed.
16 ASSIGNMENTS
-----------
16.1 The Mortgages and this Deed shall be binding upon and shall enure to
the benefit of the Owner and the Secured Creditors and their respective
successors and permitted assigns and references in the Mortgage and this
Deed to either of them shall be construed accordingly.
16.2 The Owner may not assign or transfer all or any part of its rights
and/or obligations under the Mortgages and this Deed (or either of them).
16.3 The Mortgagee may assign or transfer all or any part of its rights
or obligations under the Mortgages and this Deed to any permitted assignee
or transferee of all or any such part of its rights and/or obligations
under the Credit Agreement on the terms therein provided. The Mortgagee
shall notify the Owner promptly following any such assignment, transfer or
change.
17 MISCELLANEOUS
-------------
17.1 If at any time any one or more of the provisions in this Deed is or
becomes invalid, illegal or unenforceable in any respect under any law or
regulation, the validity, legality and enforceability of the remaining
provisions of this Deed shall not be in any way affected or impaired
thereby.
17.2 The Mortgagee, at any time and from time to time, may delegate by
power of attorney or in any other manner to any person or persons all or
any of the powers, authorities and discretions which are for the time
being exercisable by the Mortgagee under the Mortgages and this Deed (or
any of them) in relation to the Mortgaged Premises or any part thereof.
Any such delegation may be made upon such terms and subject to such
regulations as the Mortgagee may think fit. The Mortgagee shall not be in
any way liable or responsible to the Owner for any loss or damage arising
from any act, default, omission or misconduct on the part of any such
delegate.<PAGE>
17.3 This Deed may be executed in several counterparts, each of which
shall be an original, but which together shall constitute but one and the
same document.
17.4 If there is a conflict between the provisions of this Mortgage and
the Credit Agreement, the Credit Agreement shall govern, except with
respect to Section 18 below.
18 LAW AND JURISDICTION
--------------------
18.1 This Deed shall be governed by, and construed in accordance with
Bahamian Law.
18.2 The Owner agrees that the Mortgagee shall have the liberty, but
shall not be obligated, to take any proceedings in the courts of any
jurisdiction to protect and enforce the security hereby constituted or to
enforce any provision of the Security Documents or to enforce the
Obligations. For the purpose of any proceedings for the enforcement of
this Deed and the other Security Documents, the Owner hereby submits to
the jurisdiction of the courts of the Bahamas, the state and federal
courts located in New York, New York and the courts of any jurisdiction
where the Rig may be found, and the Owner agrees to accept service in
respect of any such proceeding by registered or certified mail addressed
in accordance with the Credit Agreement.
18.3 Without prejudice to the generality of Clause 18.2 the Mortgagee
shall have the right to arrest and take action against the Rig at whatever
place the Rig shall be found lying and for the purpose of any action which
the Mortgagee may bring before the Courts of such jurisdiction or other
judicial authority and for the purpose of any action which the Mortgagee
may bring against the Rig, any writ, notice, judgment or other legal
process or documents may (without prejudice to any other method of service
under applicable law) be served upon the Master of the Rig (or upon anyone
acting as the Master) and such service shall be deemed good service on the
Owner for all purposes.<PAGE>
IN WITNESS whereof the parties hereto have caused this Deed to be duly
executed the day and year first before written.
OWNER
- -----
SIGNED SEALED and DELIVERED )
on behalf of ENSCO OFFSHORE )
U.K. LTD. )
by Robert O. Isaac )
its duly authorized Secretary )
in the presence of: Robert Friedrich )
Witness:
MORTGAGEE
- ---------
SIGNED SEALED and DELIVERED )
on behalf of CHRISTIANIA BANK OG )
KREDITKASSE, NEW YORK BRANCH )
by )
its duly authorized attorney-in-fact )
in the presence of: )
Witness:
SIGNED SEALED and DELIVERED )
on behalf of CHRISTIANIA BANK OG )
KREDITKASSE, NEW YORK BRANCH )
by )
its duly authorized attorney-in-fact )
in the presence of: )
Witness:<PAGE>
EXHIBIT I
---------
FORM OF AON NATURAL RESOURCES WORLDWIDE OPINION
-----------------------------------------------
February 27, 1997
Christiania Bank og Kreditkasse,
New York Branch, as Administrative Agent
and Collateral Agent
Re: Insurance Provided Pursuant to the
Provisions of the Vessel Mortgages
Given by, respectively, ENSCO Offshore Company,
ENSCO Offshore U.K. Limited and ENSCO Offshore
Company II
To Whom It May Concern:
Aon Risk Services, Natural Resources Group is the Insurance Broker of
Record appointed by ENSCO Offshore Company, et al.
This opinion is given with the reservation that our competence and skill
as an Insurance Broker can only be relied upon as to matters normally
considered within the scope of an Insurance Broker.
In placing these insurances with respect to the ENSCO Fleet, we have
undertaken to provide ENSCO with insurances which are, in our opinion,
sufficient in the sense that they are customary insurance which an
experienced Broker would effect in these circumstances. It is also our
opinion that these insurances comply with the provisions of Clause 6 of
the U.S. Fleet Mortgage, Clause 6 of the Bahamian Fleet Mortgage and
Clause 6 of the Liberian Fleet Mortgage.
Pursuant to instructions received from ENSCO, we hereby agree to use our
best endeavors.
1. to provide evidences of insurance or copies of any Insurance Slips or
Contracts, and Policies when issued, and any renewal of such Policies
or new Policies terms as may be agreed; and
2. to arrange for agreed Loss Payable Clause(s) to be included on the
Policies, and
3. have endorsed on each and every Policy as and when the same is agreed
a Notice of Assignment, and<PAGE>
4. to advise you as soon as practicable if we cease to be the Broker of
the Assured or in the event of any material changes which may be made
to the terms of the insurances and renewal thereof.
Our above undertakings are given subject to our lien, if any, on the
Policies for premiums and subject to insurers right of cancellation in the
event of default in payment of such premiums but we undertake to advise
you as soon as practicable if any premiums are not paid to us by due date
and not to exercise such rights of cancellation, if any, without having
given you ten days notice in writing, whether by letter, telex, cable, and
a reasonable opportunity of paying any premiums outstanding. (In the case
of War Risks the terms of the Automatic Termination of Cover Clause
contained in the War Risk Policies shall override any undertakings given
by us as Brokers.)
Finally it is understood that all claims shall be collected through us, as
Brokers.
Yours very truly,
/s/ William F. Moore
- ----------------------
William F. Moore
Senior Vice President<PAGE>
EXHIBIT J
---------
FORM OF PLEDGE AGREEMENT
------------------------
PLEDGE AGREEMENT, dated as of February __, 1997 (as amended,
modified or supplemented from time to time, this "Agreement"), made by the
undersigned (the "Pledgor"), in favor of CHRISTIANIA BANK OG KREDITKASSE,
NEW YORK BRANCH, as Collateral Agent (the "Pledgee"), for the benefit of
the Creditors (as defined below). Except as otherwise defined herein,
terms used herein and defined in the Credit Agreement (as defined below)
shall be used herein as therein defined.
W I T N E S S E T H :
WHEREAS, ENSCO International Incorporated, ENSCO Delaware, Inc.,
ENSCO Offshore Company, ENSCO Offshore U.K. Limited, Dual Holding Company,
the lending institutions from time to time party thereto (the "Banks"),
Christiania Bank og Kreditkasse, New York Branch and Den norske Bank ASA,
New York Branch, as co-agents and Christiania Bank og Kreditkasse, New
York Branch, as administrative agent and security trustee (together with
any successor agent, the "Administrative Agent," and together with the
Pledgee and the Banks, the "Creditors"), have entered into a Credit
Agreement, dated as of February __, 1997 (as amended, modified or
supplemented from time to time, the "Credit Agreement"), providing for the
making of Loans to the Borrowers and the issuance of, and participation
in, Letters of Credit for the account of the U.S. Borrowers, all as
contemplated therein;
WHEREAS, pursuant to the Credit Agreement the Pledgor has
guaranteed to the Creditors the payment when due of the Guaranteed
Obligations (as defined in the Credit Agreement);
WHEREAS, it is a condition precedent to the extensions of credit
under the Credit Agreement that the Pledgor shall have executed and deliv-
ered to the Pledgee this Agreement;
WHEREAS, the Pledgor desires to execute this Agreement to satisfy
the conditions described in the preceding paragraph; and
NOW, THEREFORE, in consideration of the benefits accruing to the
Pledgor, the receipt and sufficiency of which are hereby acknowledged, the
Pledgor hereby makes the following representations and warranties to the
Pledgee and hereby covenants and agrees with the Pledgee as follows:
1. SECURITY FOR OBLIGATIONS. This Agreement is made by the
Pledgor for the benefit of the Creditors to secure:<PAGE>
(i) the Pledgor's guaranty of the full and prompt payment when
due (whether at the stated maturity, by acceleration or otherwise) of
all obligations and liabilities of each Borrower, now existing or
hereafter incurred under, arising out of or in connection with any
Credit Document to which such Borrower is a party and the due
performance and compliance by the Pledgor and each Borrower with the
terms of each Credit Document;
(ii) any and all sums advanced by the Pledgee in order to
preserve the Collateral (as hereinafter defined) or preserve its
security interest in the Collateral;
(iii) in the event of any proceeding for the collection or
enforcement of any indebtedness, obligations, or liabilities referred
to in clauses (i) and (ii) above, after an Event of Default shall have
occurred and be continuing, the reasonable expenses of retaking,
holding, preparing for sale or lease, selling or otherwise disposing
or realizing on the Collateral, or of any exercise by the Pledgee of
its rights hereunder, together with reasonable attorneys' fees and
court costs; and
(iv) all amounts paid by any Creditor as to which such Creditor
has the right to reimbursement under Section 11 of this Agreement;
all such obligations, liabilities, sums and expenses set forth in clauses
(i) through (iv) of this Section 1 being herein collectively called the
"Obligations."
2. DEFINITION OF SHARES. As used herein the term "Shares" shall
mean all of the issued and outstanding shares of capital stock at any time
owned by the Pledgor of ENSCO Offshore Company, a Delaware corporation
(the "Pledged Company"). The Pledgor represents and warrants that on the
date hereof (i) the Capital Stock of the Pledged Company held by the
Pledgor consists of the number and type of shares described in Annex A
hereto and (ii) such shares constitute 100% of the issued and outstanding
capital stock of the Pledged Company.
3. PLEDGE OF SHARES, ETC.
3.1. Pledge. To secure the Obligations and for the purposes set
forth in Section 1 hereof, the Pledgor hereby: (i) grants to the Pledgee
a security interest in all of the Collateral owned by the Pledgor; (ii)
pledges and deposits as security with the Pledgee all of the Shares owned
by the Pledgor on the date hereof, and delivers to the Pledgee
certificates therefor, accompanied by undated stock powers duly executed
in blank by the Pledgor, or such other instruments of transfer as are
acceptable to the Pledgee; and (iii) assigns, transfers, hypothecates,
mortgages, charges and sets over to the Pledgee all of the Pledgor's
right, title and interest in and to all of the Shares owned by the Pledgor
on the date hereof (and in and to all certificates or instruments evi-
dencing such Shares), to be held by the Pledgee, upon the terms and
conditions set forth in this Agreement.
3.2. Subsequently Acquired Shares. If the Pledgor shall acquire
(by purchase, stock dividend or otherwise) any additional Shares of the
Pledged Company at any time or from time to time after the date hereof,
the Pledgor will forthwith pledge and deposit such Shares (or certificates<PAGE>
representing such Shares) as security with the Pledgee and deliver to the
Pledgee certificates therefor, accompanied by undated stock powers duly
executed in blank, or such other instruments of transfer as are acceptable
to the Pledgee, and will promptly thereafter deliver to the Pledgee a
certificate executed by any Authorized Officer of the Pledgor describing
such Shares and certifying that the same have been duly pledged with the
Pledgee hereunder.
3.3. Uncertificated Shares. If any Pledged Shares (whether now
owned or hereafter acquired) are uncertificated securities, the Pledgor
shall promptly notify the Pledgee thereof, and shall promptly take all
actions required to perfect the security interest of the Pledgee under
applicable law (including, in any event, under Sections 8-313 and 8-321 of
the New York UCC, if applicable). The Pledgor further agrees to take such
actions as the Pledgee deems reasonably necessary or desirable to effect
the foregoing and to permit the Pledgee to exercise any of its rights and
remedies hereunder, and agrees to provide an opinion of counsel reasonably
satisfactory to the Pledgee with respect to any such pledge of
uncertificated Shares promptly upon request of the Pledgee.
3.4. Definition of Pledged Shares and Collateral. All Shares at
any time pledged or required to be pledged hereunder are hereinafter
called the "Pledged Shares," which together with all proceeds thereof,
including any securities and moneys received and at the time held by the
Pledgee hereunder and all Dividends and Distributions on or with respect
to any Pledged Shares is hereinafter called the "Collateral". As used
herein the term (i) Dividends shall mean all stock dividends, liquidating
dividends, shares of stock resulting from stock splits, reclassifications,
warrants, options, non-cash dividends and other distributions (whether
similar or dissimilar to the foregoing) on or with respect to any Pledged
Shares or other shares of capital stock constituting Collateral, but shall
not mean Distributions and (ii) Distributions shall mean all cash
dividends and cash distributions with respect to any Pledged Shares.
4. APPOINTMENT OF SUB-AGENTS; ENDORSEMENTS, ETC. The Pledgee
shall have the right to appoint one or more sub-agents for the purpose of
retaining physical possession of the Pledged Shares, which may be held (in
the discretion of the Pledgee) in the name of the Pledgor, endorsed or
assigned in blank or in favor of the Pledgee or any nominee or nominees of
the Pledgee or a sub-agent appointed by the Pledgee. The Pledgee agrees
to promptly notify the Pledgor after the appointment of any sub-agent;
PROVIDED, HOWEVER, that the failure to give such notice shall not affect
the validity of such appointment.
5. VOTING, ETC., WHILE NO NOTICED EVENT OF DEFAULT. Unless and
until a Noticed Event of Default shall have occurred and be continuing,
the Pledgor shall be entitled to exercise any and all voting and other
consensual rights pertaining to the Pledged Shares and to give all
consents, waivers or ratifications in respect thereof; PROVIDED, that no
vote shall be cast or any consent, waiver or ratification given or any
action taken which would violate or be inconsistent with any of the terms
of this Agreement or any other Credit Document, or which would have the
effect of impairing the rights, priorities or remedies of the Pledgee or
any other Creditor under this Agreement or any other Credit Document. All
such rights of the Pledgor to vote and to give consents, waivers and
ratifications shall cease in case a Noticed Event of Default shall occur
and be continuing, and Section 7 hereof shall become applicable. As used<PAGE>
herein, a "Noticed Event of Default" shall mean (i) an Event of Default
with respect to any Borrower under Section 9.05 of the Credit Agreement
and (ii) any other Event of Default in respect of which the Pledgee has
given the Pledgor notice that such Event of Default constitutes a "Noticed
Event of Default".
6. DIVIDENDS AND OTHER DISTRIBUTIONS. Unless a Noticed Event of
Default shall have occurred and be continuing, all cash dividends payable
in respect of the Pledged Shares shall be paid to the Pledgor. The
Pledgee shall also be entitled to receive directly, and to retain as part
of the Collateral:
(i) all other or additional stock or other securities or
property (other than cash) paid or distributed by way of dividend or
otherwise in respect of the Pledged Shares; and
(ii) all other or additional stock or other securities or
property (including cash) paid or distributed in respect of the
Pledged Shares by way of stock-split, spin-off, split-up, re-
classification, combination of shares or similar rearrangement.
7. REMEDIES IN CASE OF NOTICED EVENT OF DEFAULT. In case a
Noticed Event of Default shall have occurred and be continuing, the
Pledgee shall be entitled to exercise all of the rights, powers and
remedies (whether vested in it by this Agreement or by any other Credit
Document or by law) for the protection and enforcement of its rights in
respect of the Collateral, and the Pledgee shall be entitled, without
limitation, to exercise the following rights, which the Pledgor hereby
agrees to be commercially reasonable:
(i) to receive all amounts payable in respect of the
Collateral payable to the Pledgor under Section 6 hereof;
(ii) to transfer all or any part of the Pledged Shares into the
Pledgee's name or the name of its nominee or nominees (the Pledgee
agrees to promptly notify the Pledgor after such transfer; PROVIDED,
HOWEVER, that the failure to give such notice shall not affect the
validity of such transfer);
(iii) to vote all or any part of the Pledged Shares (whether or
not transferred into the name of the Pledgee) and give all consents,
waivers and ratifications in respect of the Collateral and otherwise
act with respect thereto as though it were the outright owner thereof
(the Pledgor hereby irrevocably constituting and appointing the
Pledgee the proxy and attorney-in-fact of the Pledgor, with full power
of substitution to do so); and
(iv) at any time or from time to time to sell, assign and
deliver, or grant options to purchase, all or any part of the
Collateral, or any interest therein, at any public or private sale,
without demand of performance, advertisement or notice of intention to
sell or of the time or place of sale or adjournment thereof or to
redeem or otherwise (all of which are hereby waived by the Pledgor),
for cash, on credit or for other property, for immediate or future
delivery without any assumption of credit risk, and for such price or
prices and on such terms as the Pledgee in its absolute discretion may
determine; PROVIDED, that at least 10 days' notice of the time and<PAGE>
place of any such sale shall be given to the Pledgor. The Pledgor
hereby waives and releases to the fullest extent permitted by law any
right or equity of redemption with respect to the Collateral, whether
before or after sale hereunder, and all rights, if any, of marshalling
the Collateral and any other security for the Obligations or other-
wise. At any such sale, unless prohibited by applicable law, the
Pledgee on behalf of the Creditors may bid for and purchase all or any
part of the Collateral so sold free from any such right or equity of
redemption. Neither the Pledgee nor any Creditor shall be liable for
failure to collect or realize upon any or all of the Collateral or for
any delay in so doing nor shall any of them be under any obligation to
take any action whatsoever with regard thereto.
8. REMEDIES, ETC., CUMULATIVE. Each right, power and remedy of
the Pledgee provided for in this Agreement or any other Credit Document or
now or hereafter existing at law or in equity or by statute shall be
cumulative and concurrent and shall be in addition to every other such
right, power or remedy. The exercise or beginning of the exercise by the
Pledgee or any other Creditor of any one or more of the rights, powers or
remedies provided for in this Agreement or any other Credit Document or
now or hereafter existing at law or in equity or by statute or otherwise
shall not preclude the simultaneous or later exercise by the Pledgee or
any other Creditor of all such other rights, powers or remedies, and no
failure or delay on the part of the Pledgee or any other Creditor to
exercise any such right, power or remedy shall operate as a waiver
thereof. The Creditors agree that this Agreement may be enforced only by
the action of the Collateral Agent or the Pledgee, in each case acting
upon the instructions of the Required Banks and that no other Creditor
shall have any right individually to seek to enforce or to enforce this
Agreement or to realize upon the security to be granted hereby, it being
understood and agreed that such rights and remedies may be exercised by
the Collateral Agent for the benefit of the Creditors upon the terms of
this Agreement.
9. APPLICATION OF PROCEEDS. All moneys collected by the
Pledgee upon any sale or other disposition of the Collateral pursuant to
the terms of this Agreement, together with all other moneys received by
the Pledgee hereunder, shall be applied in the manner provided in the
Security Agreement.
(b) It is understood and agreed that the Pledgor shall remain
liable to the extent of any deficiency between the amount of the proceeds
of the Collateral hereunder and the aggregate amount of the Obligations of
the Pledgor.
10. PURCHASERS OF COLLATERAL. Upon any sale of the Collateral by
the Pledgee hereunder (whether by virtue of the power of sale herein
granted, pursuant to judicial process or otherwise), the receipt of the
Pledgee or the officer making the sale shall be a sufficient discharge to
the purchaser or purchasers of the Collateral so sold, and such purchaser
or purchasers shall not be obligated to see to the application of any part
of the purchase money paid over to the Pledgee or such officer or be
answerable in any way for the misapplication or nonapplication thereof.
11. INDEMNITY. (a) The Pledgor hereby covenants with the
Pledgee for the benefit of the Collateral Agent and the Banks that it will
pay to the Pledgee on demand all moneys whatsoever which the Pledgee or<PAGE>
the Collateral Agent or the Banks shall or may reasonably expend, be put
to or become liable for, in or about the protection, maintenance or
enforcement of the security created by this Agreement or in or about the
exercise by the Pledgee or the Collateral Agent and the Banks of any of
the powers vested in it or them hereunder together with interest thereon
at the rate provided for in Section 1.08 of the Credit Agreement from the
date when such moneys were expended by the Pledgee or such Bank until the
date of actual receipt, whether before or after any relevant judgment.
(b) Any amounts paid by any Indemnitee as to which such
Indemnitee has the right to reimbursement shall constitute Obligations
secured by the Collateral. The indemnity obligations of the Pledgor
contained in this Section 11 shall continue in full force and effect
notwithstanding the full payment of all the Notes issued under the Credit
Agreement and the payment of all other Obligations and notwithstanding the
discharge thereof.
12. THE PLEDGEE AS AGENT. The Pledgee will hold in accordance
with this Agreement all items of the Collateral at any time received under
this Agreement. It is expressly understood and agreed that the
obligations of the Pledgee as holder of the Collateral and interests
therein and with respect to the disposition thereof, and otherwise under
this Agreement, are only those expressly set forth in this Agreement. The
Pledgee shall act hereunder on the terms and conditions set forth herein
and in Section 11 of the Credit Agreement.
13. REPRESENTATIONS, WARRANTIES AND COVENANTS OF PLEDGOR.
(a) The Pledgor represents, warrants and covenants that it is the legal,
record and beneficial owner of, and has good and marketable title to, all
Shares pledged by it hereunder; no consent of any other party (including,
without limitation, any stockholder or creditor of the Pledgor or any of
its Subsidiaries (including the Pledged Company)) and no consent, license,
permit, approval or authorization of, exemption by, notice or report to,
or registration, filing or declaration with, any governmental authority is
required to be obtained by the Pledgor in connection with the execution,
delivery or performance of this Agreement, or in connection with the
exercise of its rights and remedies pursuant to this Agreement, except
those which have been obtained or made or as may be required by laws
affecting the offer and sale of securities generally in connection with
the exercise by the Pledgee of certain of its remedies hereunder and all
Shares have been duly and validly issued, are fully paid and non-
assessable. The Pledgor covenants and agrees that it will defend the
Pledgee's right, title and security interest in and to the Shares and the
proceeds thereof against the claims and demands of all persons whomsoever;
and the Pledgor covenants and agrees that it will have like title to and
right to pledge any other property at any time hereafter pledged to the
Pledgee as Collateral hereunder and will likewise defend the right thereto
and security interest therein of the Pledgee and the other Creditors.
(b) As of the Restatement Effective Date this Agreement creates a
valid and enforceable perfected security interest in and Lien on all of
the Pledged Collateral in favor of the Collateral Agent for the benefit of
the Banks, and no filings or recordings are required to perfect such
security interest except for filings or recordings required in connection
with this Agreement which shall have been made upon or prior to (or are
the subject of arrangements, satisfactory to the Administrative Agent, for<PAGE>
filing on or promptly after the date of) the execution and delivery of
this Agreement.
14. TERMINATION, RELEASE. (a) After the Termination Date (as
defined below), this Agreement shall terminate (provided that all
indemnities set forth herein including, without limitation, in Section 11
hereof shall survive any such termination) and the Pledgee, at the request
and expense of the Pledgor, will promptly execute and deliver to the
Pledgor a proper instrument or instruments acknowledging the satisfaction
and termination of this Agreement, and will duly assign, transfer and
deliver to the Pledgor (without recourse and without any representation or
warranty) such of the Collateral as may be in the possession of the
Pledgee and has not theretofore been sold or otherwise applied or released
pursuant to this Agreement. As used in this Agreement, "Termination Date"
shall mean the date upon which the Total Commitment has been terminated,
no Note or Letter of Credit is outstanding and all other Obligations then
due and payable have been paid in full.
(b) At any time that the Pledgor desires that Collateral be
released as provided in the foregoing Section 14(a), it shall deliver to
the Pledgee a certificate signed by an Authorized Officer of the Pledgor
stating that the release of the Collateral is permitted pursuant to
Section 14(a).
15. NOTICES, ETC. All notices and other communications hereunder
shall be in writing and shall be delivered or mailed by first class mail,
postage prepaid, addressed:
(a) if to the Pledgor, at its address set forth opposite its
signature below;
(b) if to the Pledgee, at:
Christiania Bank og Kreditkasse, New York Branch
11 West 42nd St., 7th Floor
New York, New York 10036
Attention: Martin Lunder
Telephone No.: (212) 827-4800
Telecopier No.: (212) 827-4888
(c) if to any Bank (other than the Pledgee), at such address
as such Bank shall have specified in the Credit Agreement;
or at such other address as shall have been furnished in writing by any
Person described above to the party required to give notice hereunder.
16. WAIVER; AMENDMENT. None of the terms and conditions of this
Agreement may be changed, waived, modified or varied in any manner
whatsoever unless in writing duly signed by the Pledgor and the Pledgee
(with the written consent of the Required Banks (or all the Banks if
required by Section 12.12 of the Credit Agreement)).
17. MISCELLANEOUS. This Agreement shall be binding upon the
successors and assigns of the Pledgor and shall inure to the benefit of
and be enforceable by the Pledgee and its successors and assigns. THIS
AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED
BY THE LAW OF THE STATE OF NEW YORK. The headings in this Agreement are<PAGE>
for purposes of reference only and shall not limit or define the meaning
hereof. This Agreement may be executed in any number of counterparts,
each of which shall be an original, but all of which shall constitute one
instrument.<PAGE>
IN WITNESS WHEREOF, the Pledgor and the Pledgee have caused this
Agreement to be executed by their duly elected officers duly authorized as
of the date first above written.
Address: ENSCO DELAWARE, INC.
1445 Ross Avenue, Suite 2700
Dallas, Texas 75202-2792
Telephone No.: (214) 922-1500
Telecopier No.: (214) 855-0080
Attention: Treasurer By________________________________
Title:
CHRISTIANIA BANK OG
KREDITKASSE, NEW YORK BRANCH,
as Pledgee
By________________________________
Title: <PAGE>
ANNEX A
to
PLEDGE AGREEMENT
------------------
LIST OF STOCK
-------------<PAGE>
EXHIBIT K
---------
FORM OF SUBSIDIARY GUARANTY
---------------------------
SUBSIDIARY GUARANTY, dated as of February __, 1997 made by the
undersigned (the "Guarantor"). Except as otherwise defined herein, terms
used herein and defined in the Credit Agreement (as hereinafter defined)
shall be used herein as therein defined.
W I T N E S S E T H :
WHEREAS, ENSCO International Incorporated, ENSCO Delaware, Inc.,
ENSCO Offshore Company, ENSCO Offshore U.K. Limited, Dual Holding Company
("Borrower C"), the lending institutions from time to time party thereto
(the "Banks"), Christiania Bank og Kreditkasse, New York Branch and Den
norske Bank ASA, New York Branch, as co-agents and Christiania Bank og
Kreditkasse, New York Branch, as administrative agent and security trustee
(the "Administrative Agent") have entered into a Credit Agreement, dated
as of February __, 1997 (as amended, modified or supplemented from time to
time, the "Credit Agreement"), providing for the making of Tranche C Loans
and the issuance of, and participation in, Tranche C Letters of Credit as
contemplated therein (the Banks, the Co-Agents, the Administrative Agent,
the Letter of Credit Issuer, and the Collateral Agent are herein
collectively called the "Creditors");
WHEREAS, Borrower C owns, directly or indirectly, 100% of the
capital stock of the Guarantor;
WHEREAS, it is a condition to the making of Tranche C Loans and
the issuance of, and participation in, Tranche C Letters of Credit under
the Credit Agreement that the Guarantor shall have executed and delivered
this Guaranty; and
WHEREAS, the Guarantor will obtain benefits from the incurrence of
Tranche C Loans by Borrower C and the issuance of Tranche C Letters of
Credit under the Credit Agreement and, accordingly, desires to execute
this Guaranty in order to satisfy the conditions described in the
preceding paragraph and to induce the Banks to make Tranche C Loans to
Borrower C and the Letter of Credit Issuer to issue Tranche C Letters of
Credit;
NOW, THEREFORE, in consideration of the foregoing and other bene-
fits accruing to the Guarantor, the receipt and sufficiency of which are
hereby acknowledged, the Guarantor hereby makes the following representa-
tions and warranties to the Creditors and hereby covenants and agrees with
each Creditor as follows:
1. The Guarantor irrevocably and unconditionally guarantees, as
primary obligor and not merely as surety, to the Creditors the full and
prompt payment when due (whether at the stated maturity, by acceleration<PAGE>
or otherwise) of (x) the principal of and interest on the Tranche C Notes
issued by, and the Tranche C Loans made to, Borrower C under the Credit
Agreement, and all reimbursement obligations and Unpaid Drawings with
respect to the Tranche C Letters of Credit issued under the Credit
Agreement and (y) all other obligations (including obligations which, but
for the automatic stay under Section 362(a) of the Bankruptcy Code, would
become due) and liabilities owing by Borrower C to the Creditors under the
Credit Agreement (including, without limitation, indemnities, Fees and
interest thereon) now existing or hereafter incurred under, arising out of
or in connection with the Credit Agreement or any other Credit Document
and the due performance and compliance with the terms of the Credit
Documents by Borrower C (all such principal, interest, liabilities and
obligations being herein collectively called the "Guaranteed
Obligations"). The Guarantor understands, agrees and confirms that the
Creditors may enforce this Guaranty up to the full amount of the
Guaranteed Obligations against the Guarantor without proceeding against
Borrower C, against any security for the Guaranteed Obligations, or under
any other guaranty covering all or a portion of the Guaranteed Obliga-
tions. All payments by the Guarantor under this Guaranty shall be made on
the same basis as payments by Borrower C under Sections 4.03 and 4.04 of
the Credit Agreement.
2. Additionally, the Guarantor unconditionally and irrevocably,
guarantees the payment of any and all Guaranteed Obligations of Borrower C
to the Creditors whether or not due or payable by Borrower C upon the
occurrence in respect of Borrower C of any of the events specified in
Section 9.05 of the Credit Agreement, and unconditionally and irrevocably
promises to pay such Guaranteed Obligations to the Creditors, or order, on
demand, in lawful money of the United States. This Guaranty shall
constitute a guaranty of payment, and not of collection.
3. The liability of the Guarantor hereunder is exclusive and
independent of any security for or other guaranty of the indebtedness of
Borrower C whether executed by the Guarantor, any other guarantor or by
any other party, and the liability of the Guarantor hereunder shall not be
affected or impaired by (a) any direction as to application of payment by
Borrower C or by any other party, (b) any other continuing or other
guaranty, undertaking or maximum liability of a guarantor or of any other
party as to the indebtedness of Borrower C, (c) any payment on or in
reduction of any such other guaranty or undertaking, (d) any dissolution,
termination or increase, decrease or change in personnel by Borrower C,
(e) any payment made to any Creditor on the indebtedness which any
Creditor repays Borrower C pursuant to court order in any bankruptcy,
reorganization, arrangement, moratorium or other debtor relief proceeding,
and the Guarantor waives any right to the deferral or modification of its
obligations hereunder by reason of any such proceeding, (f) any action or
inaction by the Creditors as contemplated in Section 6 hereof, or (g) any
invalidity, irregularity or unenforceability of all or part of the
Guaranteed Obligations or of any security therefor.
4. The obligations of the Guarantor hereunder are independent of
the obligations of any other guarantor or Borrower C, and a separate
action or actions may be brought and prosecuted against the Guarantor
whether or not action is brought against any other guarantor or Borrower C
and whether or not any other guarantor or Borrower C be joined in any such
action or actions. Any payment by Borrower C or other circumstance which<PAGE>
operates to toll any statute of limitations as to Borrower C shall operate
to toll the statute of limitations as to the Guarantor.
5. The Guarantor hereby waives notice of acceptance of this
Guaranty and notice of any liability to which it may apply, and waives
promptness, diligence, presentment, demand of payment, protest, notice of
dishonor or nonpayment of any such liabilities, suit or taking of other
action by the Administrative Agent or any other Creditor against, and any
other notice to, any party liable thereon (including the Guarantor, any
other guarantor or Borrower C).
6. Any Creditor may at any time and from time to time without the
consent of, or notice to, the Guarantor, without incurring responsibility
to the Guarantor, without impairing or releasing the obligations of the
Guarantor hereunder, upon or without any terms or conditions and in whole
or in part:
(a) change the manner, place or terms of payment of, and/or
change or extend the time of payment of, renew or alter, any of the
Guaranteed Obligations, any security therefor, or any liability
incurred directly or indirectly in respect thereof, and the guaranty
herein made shall apply to the Guaranteed Obligations as so changed,
extended, renewed or altered;
(b) take and hold security for the payment of the Guaranteed
Obligations and sell, exchange, release, surrender, realize upon or
otherwise deal with in any manner and in any order any property by
whomsoever at any time pledged or mortgaged to secure, or howsoever
securing, the Guaranteed Obligations or any liabilities (including any
of those hereunder) incurred directly or indirectly in respect thereof
or hereof, and/or any offset thereagainst;
(c) exercise or refrain from exercising any rights against
Borrower C or others or otherwise act or refrain from acting;
(d) settle or compromise any of the Guaranteed Obligations, any
security therefor or any liability (including any of those hereunder)
incurred directly or indirectly in respect thereof or hereof, and may
subordinate the payment of all or any part thereof to the payment of
any liability (whether due or not) of Borrower C to creditors of
Borrower C;
(e) apply any sums by whomsoever paid or howsoever realized to
any liability or liabilities of Borrower C to the Creditors regardless
of what liabilities of Borrower C remain unpaid;
(f) release or substitute any one or more endorsers, guarantors,
any Credit Party or other obligors;
(g) consent to or waive any breach of, or any act, omission or
default under, any of the Credit Documents or any of the instruments
or agreements referred to therein, or otherwise amend, modify or
supplement any of the Credit Documents or any of such other
instruments or agreements; and/or
(h) act or fail to act in any manner referred to in this Guaranty
which may deprive the Guarantor of its right to subrogation against<PAGE>
Borrower C to recover full indemnity for any payments made pursuant to
this Guaranty.
7. The Guarantor will not exercise any rights which it may
acquire by way of subrogation under this Guaranty (whether contractual,
under Section 509 of the Bankruptcy Code or otherwise), by any payment
made hereunder or otherwise, until all the Guaranteed Obligations shall
have been irrevocably paid in full. If any amount shall be paid to the
Guarantor on account of such subrogation rights at any time when all the
Guaranteed Obligations shall not have been paid in full, such amount shall
be forthwith paid to the Administrative Agent on behalf of the Secured
Creditors to be credited and applied against the Guaranteed Obligations.
If the Guarantor shall make payment to the Administrative Agent of all or
any part of the Guaranteed Obligations and all the Guaranteed Obligations
shall have been paid in full, the Administrative Agent and the Secured
Creditors will execute and deliver to the Guarantor appropriate documents,
without recourse and without representation or warranty, releasing this
Guaranty and transferring to the Guarantor any and all rights the
Administrative Agent and the Secured Creditors may have against Borrower C
or necessary to evidence the transfer by subrogation to the Guarantor of
any interest in the Guaranteed Obligations resulting from such payment by
the Guarantor.
8. No invalidity, irregularity or unenforceability of all or any
part of the Guaranteed Obligations or of any security therefor shall
affect, impair or be a defense to this Guaranty, and this Guaranty shall
be primary, absolute and unconditional notwithstanding the occurrence of
any event or the existence of any other circumstances which might
constitute a legal or equitable discharge of a surety or guarantor except
payment in full of the Guaranteed Obligations.
9. This Guaranty is a continuing one and all liabilities to which
it applies or may apply under the terms hereof shall be conclusively
presumed to have been created in reliance hereon. No failure or delay on
the part of any Creditor in exercising any right, power or privilege here-
under shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein expressly specified are cumula-
tive and not exclusive of any rights or remedies which any Creditor would
otherwise have. No notice to or demand on the Guarantor in any case shall
entitle the Guarantor to any other further notice or demand in similar or
other circumstances or constitute a waiver of the rights of any Creditor
to any other or further action in any circumstances without notice or
demand. It is not necessary for any Creditor to inquire into the capacity
or powers of Borrower C or any of its Subsidiaries or the officers,
directors, partners or agents acting or purporting to act on its behalf,
and any indebtedness made or created in reliance upon the professed
exercise of such powers shall be guaranteed hereunder.
10. Any indebtedness of Borrower C now or hereafter held by the
Guarantor is hereby subordinated to the indebtedness of Borrower C to the
Creditors; and such indebtedness of Borrower C to the Guarantor, if the
Administrative Agent, after an Event of Default has occurred, so requests,
shall be collected, enforced and received by the Guarantor as trustee for
the Creditors and be paid over to the Creditors on account of the
indebtedness of Borrower C to the Creditors, but without affecting or<PAGE>
impairing in any manner the liability of the Guarantor under the other
provisions of this Guaranty. Prior to the transfer by the Guarantor of
any note or negotiable instrument evidencing any indebtedness of Borrower
C to the Guarantor, the Guarantor shall mark such note or negotiable
instrument with a legend that the same is subject to this subordination.
11. (a) The Guarantor waives any right (except as shall be
required by applicable law and cannot be waived) to require the Creditors
to (A) proceed against Borrower C, any other guarantor or any other party,
(B) proceed against or exhaust any security held from Borrower C, any
other guarantor or any other party or (C) pursue any other remedy in the
Creditors' power whatsoever. The Guarantor waives any defense based on or
arising out of any defense of Borrower C, any other guarantor or any other
party other than payment in full of the Guaranteed Obligations, including
without limitation any defense based on or arising out of the disability
of Borrower C, any other guarantor or any other party, or the unenforce-
ability of the Guaranteed Obligations or any part thereof from any cause,
or the cessation from any cause of the liability of Borrower C other than
payment in full of the Guaranteed Obligations. The Creditors may, at
their election, foreclose on any security held by the Administrative Agent
or the other Creditors by one or more judicial or nonjudicial sales,
whether or not every aspect of any such sale is commercially reasonable
(to the extent such sale is permitted by applicable law), or exercise any
other right or remedy the Creditors may have against Borrower C or any
other party, or any security, without affecting or impairing in any way
the liability of the Guarantor hereunder except to the extent the
Guaranteed Obligations have been paid in full. The Guarantor waives any
defense arising out of any such election by the Creditors, even though
such election operates to impair or extinguish any right of reimbursement
or subrogation or other right or remedy of the Guarantor against Borrower
C or any other party or any security.
(b) The Guarantor waives all presentments, demands for perfor-
mance, protests and notices, including without limitation notices of
nonperformance, notices of protest, notices of dishonor, notices of
acceptance of this Guaranty, and notices of the existence, creation or
incurring of new or additional indebtedness. The Guarantor assumes all
responsibility for being and keeping itself informed of Borrower C's
financial condition and assets, and of all other circumstances bearing
upon the risk of nonpayment of the Guaranteed Obligations and the nature,
scope and extent of the risks which the Guarantor assumes and incurs
hereunder, and agrees that the Creditors shall have no duty to advise the
Guarantor of information known to them regarding such circumstances or
risks.
12. The Creditors agree that this Guaranty may be enforced only
by the action of the Administrative Agent or the Collateral Agent, in each
case acting upon the instructions of the Required Banks and that no
Creditor shall have any right individually to seek to enforce or to
enforce this Guaranty, it being understood and agreed that such rights and
remedies may be exercised by the Administrative Agent or the Collateral
Agent for the benefit of the Creditors upon the terms of this Guaranty.
The Creditors further agree that this Guaranty may not be enforced against
any director, officer, employee or stockholder of the Guarantor (except to
the extent such stockholder is also a Guarantor hereunder).<PAGE>
13. The Guarantor covenants and agrees that on and after the date
hereof and until the termination of the Total Tranche C Commitment and
when no Tranche C Letter of Credit or Tranche C Note remains outstanding
and all Guaranteed Obligations have been paid in full, the Guarantor shall
take, or will refrain from taking, as the case may be, all actions that
are necessary to be taken or not taken so that no violation of any
provision, covenant or agreement contained in Section 7 or 8 of the Credit
Agreement (to the extent the Guarantor is referenced therein), and so that
no Event of Default, is caused by the actions of the Guarantor or any of
its Subsidiaries.
14. (a) Subject to Section 14(b), the Guarantor hereby agrees to
pay all reasonable out-of-pocket costs and expenses (x), after an Event of
Default shall have occurred and be continuing, of each Creditor in
connection with the enforcement of this Guaranty and the protection of
such Creditor's rights hereunder (including, without limitation, the
reasonable fees and disbursements of counsel employed by any of the
Creditors) and (y) of the Administrative Agent in connection with any
amendment, waiver or consent relating hereto (including, without limita-
tion, the reasonable fees and disbursements of counsel) employed by the
Administrative Agent.
(b) A certificate as to any out-of-pocket costs and expenses
payable to the Administrative Agent or the Banks under this Section 14
shall be submitted to the Guarantor by the Banks, which certificate shall
show in reasonable detail the amount payable and the calculations used to
determine in good faith such amount and shall be conclusive absent
manifest error.
15. This Guaranty shall be binding upon the Guarantor and its
successors and assigns and shall inure to the benefit of the Creditors and
their successors and assigns.
16. Neither this Guaranty nor any provision hereof may be
changed, waived, discharged or terminated except with the written consent
of the Required Banks (or to the extent required by Section 12.12 of the
Credit Agreement, with the written consent of each Bank) and the Guara-
ntor.
17. The Guarantor acknowledges that an executed (or conformed)
copy of each of the Credit Documents has been made available to its
principal executive officers and such officers are familiar with the
contents thereof.
18. Each Creditor shall be entitled to all rights granted under
applicable law (including, without limitation, Section 151 of the New York
Debtor and Creditor Law) to set off and to appropriate and apply any and
all deposits (general or special) and any other indebtedness at any time
held or owing by such Creditor to or for the credit or the account of the
Guarantor, against and on account of the obligations and liabilities of
the Guarantor to such Creditor under this Guaranty, irrespective of
whether or not such Creditor shall have made any demand hereunder.
19. All notices, requests, demands or other communications
pursuant hereto shall be deemed to have been duly given or made when
delivered to the Person to which such notice, request, demand or other
communication is required or permitted to be given or made under this<PAGE>
Guaranty, addressed to such party at (i) in the case of any Creditor, as
provided in the Credit Agreement and (ii) in the case of the Guarantor, at
its address set forth opposite its signature below; or in any case at such
other address as any of the Persons listed above may hereafter notify the
others in writing.
20. If claim is ever made upon any Creditor for repayment or
recovery of any amount or amounts received in payment or on account of any
of the Guaranteed Obligations and any of the aforesaid payees repays all
or part of said amount by reason of (a) any judgment, decree or order of
any court or administrative body having jurisdiction over such payee or
any of its property or (b) any settlement or compromise of any such claim
effected by such payee with any such claimant (including Borrower C), then
and in such event the Guarantor agrees that any such judgment, decree,
order, settlement or compromise shall be binding upon the Guarantor,
notwithstanding any revocation hereof or of any other instrument evidenc-
ing any liability of Borrower C, and the Guarantor shall be and remain
liable to the aforesaid payees hereunder for the amount so repaid or
recovered to the same extent as if such amount had never originally been
received by any such payee.
21. (a) THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE
CREDITORS AND OF THE UNDERSIGNED HEREUNDER SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. Any legal
action or proceeding with respect to this Guaranty or any other Credit
Document may be brought in the courts of the State of New York or of the
United States of America for the Southern District of New York, and, by
execution and delivery of this Guaranty, the Guarantor hereby accepts for
itself and in respect of its property, generally and unconditionally, the
jurisdiction of the aforesaid courts and hereby irrevocably waives any
right it may have to object to the laying of venue of any such action or
proceeding in the aforesaid courts and hereby further irrevocably waives
and agrees not to plead or claim that any such action or proceeding has
been brought in an inconvenient forum. The Guarantor hereby irrevocably
designates, appoints and empowers Borrower C, with offices on the date
hereof at 1445 Ross Avenue, Suite 2700, Dallas, Texas 7502-2792 as its
designee, appointee and agent to receive, accept and acknowledge for any
on its behalf, and in respect of its property, service or any and all
legal process, summons, notices and documents which may be served in any
such action or proceeding. If for any reason such designee, appointee and
agent shall cease to be available to act as such, the Guarantor agrees to
designate a new designee, appointee and agent in New York City on the
terms and for the purposes of this provision satisfactory to the
Administrative Agent for the Banks under this Guaranty. The Guarantor
further irrevocably consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to the
Guarantor at its address set forth opposite its signature below. Nothing
herein shall affect the right of any of the Creditors to serve process in
any other manner permitted by law or to commence legal proceedings or
otherwise proceed against the Guarantor in any other jurisdiction.
(b) The Guarantor hereby irrevocably waives any objection which
it may now or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in connection with this
Guaranty or any other credit document brought in the courts referred to in
clause (a) above and hereby further irrevocably waives and agrees not to<PAGE>
plead or claim in any such court that such action or proceeding brought in
any such court has been brought in an inconvenient forum.
22. In the event that all of the capital stock of the Guarantor
is sold or otherwise disposed of or liquidated in compliance with the
requirements of Section 8.02 of the Credit Agreement (or such sale or
other disposition is permitted by the proviso contained in the definition
of "Collateral Disposition" in the Credit Agreement or has been approved
in writing by the Required Banks (or all Banks if required by Section
12.12 of the Credit Agreement)) and the proceeds of such sale, disposition
or liquidation are applied in accordance with the provisions of the Credit
Agreement, to the extent applicable, the Guarantor shall be released from
this Guaranty and this Guaranty shall terminate, and have no further force
or effect (it being understood and agreed that the sale of any Person that
owns, directly or indirectly, the capital stock of the Guarantor shall be
deemed to be a sale of the Guarantor for the purposes of this Section 22).
23. This Guaranty may be executed in any number of counterparts
and by the parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all of which shall
together constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with the Guarantor and
the Administrative Agent.
24. THE GUARANTOR HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO A TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS GUARANTY, THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
25. It is understood and agreed that any Subsidiary of Borrower C
that is required to execute a counterpart of this Guaranty pursuant to the
Credit Agreement shall automatically become a Guarantor hereunder by
executing a counterpart hereof and delivering the same to the
Administrative Agent.
26. All payments made by the Guarantor hereunder will be made
without setoff, counterclaim or other defense.
27. After the date upon which the Total Commitment has been ter-
minated, no Note or Letter of Credit is outstanding and all other
Obligations then due and payable have been paid in full, this Guaranty
shall terminate and the Administrative Agent will promptly execute and
deliver to the Guarantor a proper instrument or instruments acknowledging
the termination of this Guaranty.
* * * *<PAGE>
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be
executed and delivered as of the date first above written.
Address for the Guarantor
- -------------------------
ENSCO OFFSHORE COMPANY II
1445 Ross Avenue
Suite 2700
Dallas, Texas 75202-2792 By________________________
Attention: Chief Financial Officer Title:
Tel: (214) 922-1500
Fax: (214) 855-0080
Accepted and Agreed to:
CHRISTIANIA BANK OG KREDITKASSE,
NEW YORK BRANCH,
as Administrative Agent
By____________________________
Title:
By____________________________
Title:<PAGE>
EXHIBIT L
---------
FORM OF COMPLIANCE CERTIFICATE
-----------------------------
This Compliance Certificate (the "Certificate") is delivered to
you pursuant to Section 7.01(e) of the Credit Agreement, dated as of
February __, 1997 (as amended, supplemented or modified from time to time,
the "Credit Agreement"), among ENSCO International Incorporated
("Holdings"), ENSCO Delaware, Inc., ENSCO Offshore Company, ENSCO Offshore
U.K. Limited, Dual Holding Company, the lending institutions from time to
time party thereto, Christiania Bank og Kreditkasse, New York Branch and
Den norske Bank ASA, New York Branch, as co-agents and Christiania Bank og
Kreditkasse, New York Branch, as administrative agent and security
trustee. Terms defined in the Credit Agreement and not otherwise defined
herein are used herein as therein defined.
1. I am the duly elected, qualified and acting [Chief Financial
Officer/Controller/Authorized Officer] of Holdings.
2. I have reviewed and am familiar with the contents of this
Certificate. I am providing this Certificate solely in my capacity as an
officer of Holdings. The matters set forth herein are true to the best of
my knowledge after diligent inquiry, but I express no personal opinion as
to any conclusions of law or other legal matters.
3. I have reviewed the terms of the Credit Agreement and the
other Credit Documents and have made or caused to be made under my
supervision, a review in reasonable detail of the transactions and
condition of Holdings during the accounting period covered by the
financial statements attached hereto as Annex I. Such financial
statements have been prepared in accordance with the requirements of the
Credit Agreement.
4. Attached hereto as Annex II are the computations showing
compliance with the covenants specified therein. All such computations
are true and correct.
5. On the date hereof, the representations and warranties
contained in the Credit Agreement and in the other Credit Documents are
true and correct in all material respects with the same effect as though
such representations and warranties had been made on the date hereof,
unless stated to relate to a specific earlier date, in which case such
representations and warranties were true and correct in all material
respects as of such earlier date.
6. On the date hereof, no Default or Event of Default has
occurred and is continuing.<PAGE>
IN WITNESS WHEREOF, I execute this Certificate this ___ day of
________, ____.
ENSCO INTERNATIONAL INCORPORATED
By______________________________
Title:<PAGE>
ANNEX I to
COMPLIANCE CERTIFICATE
----------------------
CONSOLIDATED FINANCIAL STATEMENTS
---------------------------------<PAGE>
ANNEX II to
COMPLIANCE CERTIFICATE
----------------------
COMPLIANCE WORKSHEET
--------------------
Part I.
Coverage Ratio
--------------
1. Consolidated Net Income for the
preceding 12 month period ended on
the last day of the fiscal quarter
last ended $__________
2. Provisions for taxes based on income
for the preceding 12 month period
ended on the last day of the fiscal
quarter last ended $__________
3. Consolidated Interest Expense for
the preceding 12 month period ended
on the last day of the fiscal
quarter last ended $__________
4. Amortization or write-off of
deferred financing costs or any
other non-cash charges to the extent
deducted in determining Consolidated
Net Income for the preceding 12
month period ended on the last day
of the fiscal quarter last ended $__________
5. Losses on sales of assets (excluding
sales in the ordinary course of
business, which in any event will
not include sales of drilling rigs)
and other extraordinary losses for
the preceding 12 month period ended
on the last day of the fiscal
quarter last ended $__________
6. Gains on sales of assets (excluding
sales in the ordinary course of
business not involving drilling
rigs) and other extraordinary gains
for the preceding 12 month period
ended on the last day of the fiscal
quarter last ended $__________
7. Consolidated EBIT (sum of Items 1
through 5 minus Item 6) $__________<PAGE>
8. Depreciation expense for the
preceding 12 month period ended on
the last day of the fiscal quarter
last ended $__________
9. Amortization expense for the
preceding 12 month period ended on
the last day of the fiscal quarter
last ended $__________
10. Consolidated EBITDA (sum of Items 7
through 9) $__________
11. Consolidated Interest Expense for
the preceding 12 month period ended
on the last day of the fiscal
quarter last ended $__________
12. Coverage Ratio (Item 10:Item 11) _____:1.00
13. Minimum Coverage Ratio pursuant to
Section 8.07 4.00:1.00<PAGE>
Part II.
Working Capital
---------------
1. Current assets (including cash and
Cash Equivalents) of Holdings and
its Subsidiaries on a consolidated
basis in accordance with GAAP
calculated for the last day of the
fiscal quarter last ended $__________
2. Current liabilities of Holdings and
its Subsidiaries (but excluding the
current liability associated with up
to $88,000,000 of the required
repayment of Loans in connection
with the Scheduled Commitment
Reduction occurring on the Maturity
Date) determined on a consolidated
basis in accordance with GAAP
calculated for the last day of the
fiscal quarter last ended $__________
3. Working Capital Ratio (Item 1:
Item 2) ____:1.00
4. Minimum permitted Working Capital
Ratio pursuant to Section 8.08 1:50:1.00<PAGE>
Part III.
Leverage Ratio
--------------
A. Leverage Ratio for Purposes of Section 8.09
1. Consolidated Funded Indebtedness
determined in accordance with GAAP
calculated for the last day of the
fiscal quarter last ended $__________
2. Consolidated Net Worth calculated
for the last day of the fiscal
quarter last ended $__________
3. Total Capitalization (Item 1 plus
Item 2) $__________
4. Leverage Ratio for purposes of
calculations made pursuant to
Section 8.09 (Item A1:Item A3) ____:1.00
5. Maximum permitted Leverage Ratio
pursuant to Section 8.09: 0.35:1.00
B. Pricing Ratio
1. Consolidated Funded Indebtedness
determined in accordance with GAAP
for the last day of the fiscal
quarter last ended
2. Consolidated EBITDA for the 12 month
period ended on the last day of the
fiscal quarter last ended (see Item
10 of part I of this Annex)
3. Pricing Ratio (Item B1 above:Item B2
above) ____:1.00<PAGE>
Part IV.
Collateral Maintenance
----------------------
1. Total Commitment $__________
2. Market Value of the Mortgaged Rigs
as of the date of the most recent
valuation $__________
3. Minimum permitted Market Value of
the Mortgaged Rigs pursuant to
Section 8.10:
(i) If calculated prior to
October 18, 1999, Item 1
multiplied by 2.0
$__________
(ii) If calculated after
October 18, 1999, Item 1
multiplied by 2.5
$__________
<PAGE>
EXHIBIT M
---------
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
-------------------------------------------
DATE:______________
Reference is made to the Credit Agreement described in Item 2 of
Annex I annexed hereto (as such Credit Agreement may hereafter be amended,
modified or supplemented from time to time, the "Credit Agreement").
Unless defined in Annex I attached hereto, terms defined in the Credit
Agreement are used herein as therein defined. ___________ (the
"Assignor") and ___________ (the "Assignee") hereby agree as follows:
1. The Assignor hereby sells and assigns to the Assignee
without recourse and without representation or warranty (other than as
expressly provided herein), and the Assignee hereby purchases and assumes
from the Assignor, that interest in and to all of the Assignor's rights
and obligations under the Credit Agreement as of the date hereof which
represents the percentage interest specified in Item 4 of Annex I (the
"Assigned Share") of all of Assignor's outstanding rights and obligations
under the Credit Agreement indicated in Item 4 of Annex I, including,
without limitation, all rights and obligations with respect to the
Assigned Share of the Total Commitment and of the outstanding Tranche A,
Tranche B and Tranche C Loans and Tranche A and Tranche C Letters of
Credit. After giving effect to such sale and assignment, the Assignee's
Commitment will be as set forth in Item 4 of Annex I.
2. The Assignor (i) represents and warrants that it is the
legal and beneficial owner of the interest being assigned by it hereunder
and that such interest is free and clear of any liens or security
interests; (ii) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with the Credit Agreement or the
other Credit Documents or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Credit Agreement
or the other Credit Documents or any other instrument or document
furnished pursuant thereto; and (iii) makes no representation or warranty
and assumes no responsibility with respect to the financial condition of
any Credit Party or the performance or observance by any Credit Party of
any of its obligations under the Credit Agreement or the other Credit
Documents or any other instrument or document furnished pursuant thereto.
3. The Assignee (i) represents and warrants that it is duly
authorized to enter into and perform the terms of this Assignment
Agreement; (ii) confirms that it has received a copy of the Credit
Agreement and the other Credit Documents, together with copies of the
financial statements referred to therein and such other documents and
information as it has deemed appropriate to make its own credit analysis
and decision to enter into this Assignment Agreement; (iii) agrees that it
will, independently and without reliance upon the Administrative Agent,
the Assignor or any other Bank and based on such documents and information<PAGE>
as it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under the Credit Agreement; (iv)
appoints and authorizes the Administrative Agent, the Collateral Agent and
the Security Trustee to take such action as agent on its behalf and to
exercise such powers under the Credit Agreement and the other Credit
Documents as are delegated to the Administrative Agent, the Collateral
Agent and the Security Trustee by the terms thereof, together with such
powers as are reasonably incidental thereto; (v) agrees that it will
perform in accordance with their terms all of the obligations which by the
terms of the Credit Agreement are required to be performed by it as a Bank
[; and (vi) attaches the forms prescribed by the Internal Revenue Service
of the United States certifying as to the Assignee's status for purposes
of determining exemption from United States withholding taxes with respect
to all payments to be made to the Assignee under the Credit Agreement or
such other documents as are necessary to indicate that all such payments
are subject to such rates at a rate reduced by an applicable tax
treaty]<F1>.
4. Following the execution of this Assignment and Assumption
Agreement by the Assignor and the Assignee, an executed original hereof
(together with all attachments) will be delivered to the Administrative
Agent. The effective date of this Assignment and Assumption Agreement
shall be the date of execution hereof by the Assignor and the Assignee
(and if required by the terms of the Credit Agreement, the consent of the
Administrative Agent, each Letter of Credit Issuer and [Borrower A]
[Borrower B] [Borrower C], which consent will not be unreasonably
withheld) and the receipt by the Administrative Agent of the
administrative fee referred to in Section 12.04(b) of the Credit
Agreement, unless otherwise specified in Item 5 of Annex I hereto (the
"Settlement Date").
5. Upon the delivery of a fully executed original hereof to the
Administrative Agent, as of the Settlement Date, (i) the Assignee shall be
a party to the Credit Agreement and, to the extent provided in this
Assignment and Assumption Agreement, have the rights and obligations of a
Bank thereunder and under the other Credit Documents and (ii) the Assignor
shall, to the extent provided in this Assignment and Assumption Agreement,
relinquish its rights and be released from its obligations under the
Credit Agreement and the other Credit Documents.
6. It is agreed that upon the effectiveness hereof, the
Assignee shall be entitled to (x) all interest on the Assigned Share of
the Tranche A, Tranche B and Tranche C Loans at the rates specified in
Item 6 of Annex I, (y) all Commitment Commission (if applicable) on the
Assigned Share of the Total Commitment at the rate specified in Item 7 of
Annex I, and (z) all Letter of Credit Fees (if applicable) on the
Assignee's participation in all Tranche A and Tranche C Letters of Credit
at the rate specified in Item 8 of Annex I hereto, which, in each case,
accrue on and after the Settlement Date, such interest and, if applicable,
Commitment Commission and Letter of Credit Fees, to be paid by the
Administrative Agent, upon receipt thereof from Borrower A and Borrower C,
directly to the Assignee. It is further agreed that all payments of
principal made by Borrower A, Borrower B and Borrower C on the respective
Assigned Share of the Tranche A, Tranche B and Tranche C Loans which occur
on and after the Settlement Date will be paid directly by the
Administrative Agent to the Assignee. Upon the Settlement Date, the
Assignee shall pay to the Assignor an amount specified by the Assignor in<PAGE>
writing which represents the Assigned Share of the principal amount of the
respective Tranche A, Tranche B and Tranche C Loans made by the Assignor
pursuant to the Credit Agreement which are outstanding on the Settlement
Date, net of any closing costs, and which are being assigned hereunder.
The Assignor and the Assignee shall make all appropriate adjustments in
payments under the Credit Agreement for periods prior to the Settlement
Date directly between themselves.
7. THIS ASSIGNMENT AND ASSUMPTION AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO A TRIAL BY JURY
IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
THIS ASSIGNMENT, THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
* * * *
IN WITNESS WHEREOF, the parties hereto have caused this
Assignment and Assumption Agreement to be executed by their duly elected
officers duly authorized, as of the date first above written.
[NAME OF ASSIGNOR],
as Assignor
By___________________________
Title:
[NAME OF ASSIGNEE],
as Assignee
By___________________________
Title:
Acknowledged and Agreed:
CHRISTIANIA BANK OG KREDITKASSE,
as Administrative Agent and
Letter of Credit Issuer
By_____________________________
Title:
By_____________________________
Title:<PAGE>
[[ENSCO OFFSHORE COMPANY]<F2> [ENSCO OFFSHORE U.K. LIMITED]<F3> [DUAL
HOLDING COMPANY]<F4>
By_____________________________
Title:]<F5>
_________________
<F1> Include if the Assignee is organized under the laws of
a jurisdiction outside the United States.
<F2> Include bracketed language if assigning an interest in
the Tranche A Facility.
<F3> Include bracketed language if assigning an interest in
the Tranche B Facility.
<F4> Include bracketed language if assigning an interest in
the Tranche C Facility.
<F5> Include bracketed language if assignment is not being
made to the Assignor's Affiliate or to another Bank.
<PAGE>
ANNEX 1
-------
ANNEX FOR ASSIGNMENT AND ASSUMPTION AGREEMENT
ANNEX I
1. The Borrower: [ENSCO OFFSHORE COMPANY]<F1> [ENSCO OFFSHORE U.K.
LIMITED]<F2> [DUAL HOLDING COMPANY]<F3>
2. Name and Date of Credit Agreement:
Credit Agreement, dated as of February ___, 1997,
among ENSCO International Incorporated, ENSCO
Delaware, Inc., ENSCO Offshore Company, ENSCO
Offshore U.K. Limited, Dual Holding Company, the
lending institutions from time to time party
thereto, Christiania Bank og Kreditkasse, New
York Branch and Den norske Bank ASA, New York
Branch, as co-agents and Christiania Bank og
Kreditkasse, New York Branch, as administrative
agent and security trustee.
3. Date of Assignment Agreement:
_______________ ___, _______
4. Amounts (as of date of item #3 above):
Total Tranche Total Tranche Total Tranche
A Commitment B Commitment C Commitment
------------- ------------- -------------
a. Aggregate Amount
for all Banks $_________ $_________ $_________
b. Assigned Share ____% ____% ____%
c. Amount of
Assigned Share $_________ $_________ $_________
5. Settlement Date:
_______________ ___, _______
6. Rate of Interest As set forth in Section 1.08 of the Credit
Agreement
to the Assignee: (unless otherwise agreed to by the Assignor and
the Assignee).F4
<PAGE>
7. Commitment As set forth in Section 3.01(a) of the Credit
Commission: Agreement (unless otherwise agreed to by the
Assignor and the Assignee).<F5>
[8. Letter of As set forth in Section 3.01(b) of the Credit
Credit Fees: Agreement (unless otherwise agreed to by the
Assignor and the Assignee).<F6>]<F7>
[8.][9.] Notices:
ASSIGNOR:
________________
________________
________________
________________
Attention:
Telephone No.:
Facsimile No.:
ASSIGNEE:
________________
________________
________________
________________
Attention:
Telephone No.:
Facsimile No.:
[9.][10.] Payment Instructions:
ASSIGNOR:
________________
________________
________________
________________
ABA No.:
Account No.:
Reference:
Attention:
ASSIGNEE:
________________
________________
________________
________________
Attention:
Telephone No.:
Facsimile No.:
Attention:<PAGE>
____________________
<F1> Insert bracketed language if assigning an interest in the Tranche A
Facility.
<F2> Insert bracketed language if assigning an interest in the Tranche B
Facility.
<F3> Insert bracketed language if assigning an interest in the Tranche C
Facility.
<F4> The Borrower and the Administrative Agent shall direct the entire
amount of the interest to the Assignee at the rate set forth in
Section 1.08 of the Credit Agreement, with the Assignor and
Assignee effecting any agreed upon sharing of interest through
payments by the Assignee to the Assignor.
<F5> The Borrower and the Administrative Agent shall direct the entire
amount of the Commitment Commission to the Assignee at the rate set
forth in Section 3.01(a) of the Credit Agreement, with the Assignor
and the Assignee effecting any agreed upon sharing of Commitment
Commission through payment by the Assignee to the Assignor.
<F6> The Borrower and the Administrative Agent shall direct the entire
amount of the Letter of Credit Fees to the Assignee at the rate set
forth in Section 3.01(b) of the Credit Agreement, with the Assignor
and the Assignee effecting any agreed upon sharing of the Letter of
Credit Fees through payment by the Assignee to the Assignor.
<F7> Applicable only to assignments of interests in the Tranche A
Facility or The Tranche C Facility.
<PAGE>
<PAGE>
EXHIBIT NO. 15.1
April 28, 1997
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Dear Ladies and Gentlemen:
We are aware that ENSCO International Incorporated has included our
report dated April 28, 1997 (issued pursuant to the provisions of
Statement of Auditing Standards No. 71) in the Company's Registration
Statements on Form S-3 (Nos. 33-42965, 33-46500, 33-49590, 33-43756,
33-64642 and 333-3575), and any existing amendments thereto, and Form
S-8 (Nos. 33-14714, 33-32447, 33-35862, 33-40282 and 33-41294). We
are also aware of our responsibilities under the Securities Act of
1933.
Yours very truly,
/s/ PRICE WATERHOUSE LLP
- ------------------------
Price Waterhouse LLP
Dallas, Texas<PAGE>
