<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 3, 1998
REGISTRATION NO. 333-39033
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------------
GLOBAL MARINE INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 1381 95-1849298
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification No.)
JAMES L. MCCULLOCH
777 N. ELDRIDGE PARKWAY VICE PRESIDENT AND GENERAL COUNSEL
HOUSTON, TEXAS 77079-4493 777 N. ELDRIDGE PARKWAY
(281) 596-5100 HOUSTON, TEXAS 77079-4493
(Address, including zip code, and telephone number, (281) 596-5100
including area code, of registrant's principal (Name, address, including zip code, and telephone number,
executive offices) including area code, of agent for service)
</TABLE>
Copy to:
J. DAVID KIRKLAND, JR.
BAKER & BOTTS, L.L.P.
3000 ONE SHELL PLAZA
HOUSTON, TEXAS 77002
(713) 229-1234
Approximate date of commencement of proposed sale of the securities to the
public: As soon as practicable following the effectiveness of this
Registration Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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Subject to Completion, Dated February 3, 1998
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
PROSPECTUS
GLOBAL MARINE INC.
OFFER TO EXCHANGE
7 1/8% NOTES DUE 2007
FOR ALL OUTSTANDING 7 1/8% NOTES DUE 2007
($300,000,000 IN PRINCIPAL AMOUNT OUTSTANDING)
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.
NEW YORK CITY TIME, ON MARCH 11, 1998, UNLESS EXTENDED
Global Marine Inc., a Delaware corporation (the "Company"), hereby offers, upon
the terms and subject to the conditions set forth in this Prospectus and the
accompanying letter of transmittal (the "Letter of Transmittal," and together
with this Prospectus, the "Exchange Offer"), to exchange $1,000 principal
amount of its 7 1/8% Notes Due 2007 (the "Exchange Notes"), the issuance of
which has been registered under the Securities Act of 1933, as amended (the
"Securities Act"), pursuant to a registration statement of which this
Prospectus constitutes a part (the "Registration Statement"), for each $1,000
principal amount of its outstanding 7 1/8% Notes Due 2007 (the "Old Notes"), of
which $300,000,000 principal amount is outstanding. The form and terms of the
Exchange Notes will be the same as the form and terms of the Old Notes, except
that (i) the Exchange Notes will be registered under the Securities Act, and
hence will not bear legends restricting the transfer thereof and (ii) the
holders of the Exchange Notes will not be entitled to certain rights of holders
of the Old Notes under the Registration Agreement (as defined herein), which
rights will terminate upon the consummation of the Exchange Offer. The
Exchange Notes will evidence the same debt as the Old Notes and will be
entitled to the benefits of an indenture, dated as of September 1, 1997 (the
"Indenture"), governing the Old Notes and the Exchange Notes. The Indenture
provides for the issuance of both the Exchange Notes and the Old Notes. The
Exchange Notes and the Old Notes are sometimes referred to herein collectively
as the "Notes."
The Exchange Notes will be senior securities of the Company, ranking pari passu
with all other unsubordinated and unsecured indebtedness of the Company.
Interest on the Notes will be payable semiannually on March 1 and September 1 of
each year, commencing March 1, 1998. The Notes may be redeemed at any time
at the option of the Company, in whole or from time to time in part, at a price
equal to 100% of the principal amount thereof plus accrued and unpaid interest,
if any, to the date of redemption, plus a Make-Whole Premium, if any, relating
to the then prevailing Treasury Yield and the remaining life of the Notes. The
Notes are not subject to any sinking fund. See "Description of Exchange Notes."
Prior to the Exchange Offer, there has been no public market for the Old Notes.
The Company does not intend to list the Exchange Notes on any securities
exchange or to seek approval for quotation through any automated quotation
system. There can be no assurance that an active market for the Exchange Notes
will develop. To the extent that a market for the Exchange Notes does develop,
the market value of the Exchange Notes will depend on market conditions (such
as yields on alternative investments), general economic conditions, the
Company's financial condition and other conditions. Such conditions might
cause the Exchange Notes, to the extent that they are actively traded, to trade
at a significant discount from face value.
(cover continued on next page)
This Prospectus, together with the Letter of Transmittal, is first being sent on
or about February 5, 1998 to all Holders of Old Notes known to the Company.
SEE "RISK FACTORS" BEGINNING ON PAGE 16 FOR CERTAIN INFORMATION THAT SHOULD BE
CONSIDERED BY HOLDERS IN DECIDING WHETHER TO TENDER OLD NOTES IN THE EXCHANGE
OFFER.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The date of this Prospectus is February 4, 1998.
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(Cover page continued)
Except as discussed below, the Exchange Notes will be available only in
book-entry form. The Company expects that the Exchange Notes issued pursuant
to the Exchange Offer will be issued in the form of one or more fully
registered global notes that will be deposited with, or on behalf of, The
Depository Trust Company ("DTC" or the "Depositary") and registered in its name
or in the name of Cede & Co., as its nominee. Beneficial interests in the
global notes representing the Exchange Notes will be shown on, and transfers
thereof will be effected only through, records maintained by DTC and its
participants. After the initial issuance of such global notes, Exchange Notes
in certificated form will be issued in exchange for the global notes only in
accordance with the terms and conditions set forth in the Indenture. See
"Description of Exchange Notes--Book-Entry, Delivery and Form" and "Description
of Exchange Notes--Certificated Securities."
The Company will accept for exchange any and all Old Notes which are properly
tendered in the Exchange Offer prior to 5:00 p.m., New York City time, on March
11, 1998 (unless extended) (such expiration date, as it may be extended, is
referred to herein as the "Expiration Date"). Tenders of Old Notes may be
withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration
Date. The Exchange Offer is not conditioned upon any minimum principal amount
of Old Notes being tendered for exchange. Old Notes may be tendered only in
integral multiples of $1,000. The Company may terminate the Exchange Offer in
certain circumstances described herein. See "The Exchange Offer." In the event
the Company terminates the Exchange Offer and does not accept for exchange any
of the Old Notes, the Company will promptly return all previously tendered Old
Notes to the holders thereof.
Based on a previous interpretation by the staff of the Securities and Exchange
Commission (the "Commission") set forth in no-action letters to third parties,
including Exxon Capital Holdings Corporation (available May 13, 1988), Morgan
Stanley & Co. Incorporated (available June 5, 1991), Shearman & Sterling
(available July 2, 1993) and similar no-action letters (the "No-Action
Letters"), the Company believes that the Exchange Notes issued pursuant to the
Exchange Offer in exchange for Old Notes may be offered for resale, resold, and
otherwise transferred by a holder thereof (other than (i) a broker-dealer who
purchases such Exchange Notes directly from the Company to resell pursuant to
Rule 144A or any other available exemption under the Securities Act or (ii) a
person that is an affiliate of the Company (within the meaning of Rule 405
under the Securities Act)) without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that the holder
is acquiring the Exchange Notes in such holder's ordinary course of business
and is not participating, and has no arrangement or understanding with any
person to participate, in the distribution of the Exchange Notes. Holders of
Old Notes wishing to accept any or all of the Exchange Offer must represent to
the Company that such conditions have been met.
Each broker-dealer that receives Exchange Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such Exchange Notes. The Letter of Transmittal
states that by so acknowledging and by delivering a prospectus, a broker-dealer
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act. This Prospectus, as it may be amended or supplemented from
time to time, may be used by a broker-dealer in connection with resales of
Exchange Notes received in exchange for Old Notes where such Exchange Notes
were acquired by such broker-dealer as a result of market-making activities or
other trading activities. The Company has agreed that, starting on the
Expiration Date and ending on the close of business on the 180th day following
the Expiration Date, it will make this Prospectus available to any
broker-dealer for use in connection with any such resale. See "Plan of
Distribution."
The Company believes that none of the registered holders of the Old Notes is an
affiliate (as such term is defined in Rule 405 under the Securities Act) of the
Company. The Company has not entered into any arrangement or understanding
with any person to distribute the Exchange Notes to be received in the Exchange
Offer, and to the best of the Company's information and belief, each person
participating in any or all of the Exchange Offer is acquiring the Exchange
Notes in the ordinary course of business and has no arrangement or
understanding with any person to participate in the distribution of the
Exchange Notes to be received in any or all of the Exchange Offer.
(Cover continued on next page)
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(Cover page continued)
The Company will not receive any proceeds from the Exchange Offer. The Company
has agreed to bear the expenses of the Exchange Offer. No underwriter is being
used in connection with the Exchange Offer.
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE COMPANY ACCEPT SURRENDERS
FOR EXCHANGE FROM, HOLDERS OF OLD NOTES IN ANY JURISDICTION IN WHICH THE
EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE
SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION.
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INCORPORATION BY REFERENCE
The following documents, which have been filed by the Company with the
Commission pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (File No. 1-5471), are incorporated herein by reference and
made a part of this Prospectus: (a) the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1996; (b) the Company's Quarterly
Reports on Form 10-Q for the quarters ended March 31, 1997, June 30, 1997 and
September 30, 1997; and (c) the Company's Current Reports on Form 8-K filed
March 11, 1997, July 7, 1997 and August 4, 1997.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering of the securities covered hereby shall be
deemed to be incorporated by reference into this Prospectus and to be a part
hereof from the date of filing of such documents.
Any statement herein or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for the purposes of this Prospectus to the extent that a statement contained
herein or in any other subsequently filed document which also is or is deemed
to be incorporated by reference herein modifies or supersedes such statement.
Any statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus. As used
herein, the terms "Prospectus" and "herein" mean this Prospectus, including the
documents incorporated or deemed incorporated by reference, as the same may be
amended, supplemented or otherwise modified from time to time. Statements
contained in this Prospectus as to the contents of any contract or other
document referred to herein do not purport to be complete and are qualified in
all respects by reference to all of the provisions of such contract or other
document.
THE COMPANY UNDERTAKES TO PROVIDE, WITHOUT CHARGE, TO EACH PERSON,
INCLUDING ANY BENEFICIAL OWNER, TO WHOM A COPY OF THIS PROSPECTUS IS DELIVERED,
UPON THE WRITTEN OR ORAL REQUEST OF SUCH PERSON, A COPY OF ANY OR ALL OF THE
DOCUMENTS REFERRED TO ABOVE THAT HAVE BEEN OR MAY BE INCORPORATED BY REFERENCE
IN THE PROSPECTUS (EXCLUDING EXHIBITS TO SUCH DOCUMENTS UNLESS SUCH EXHIBITS
ARE SPECIFICALLY INCORPORATED BY REFERENCE). REQUESTS SHOULD BE DIRECTED TO
THE CORPORATE SECRETARY, GLOBAL MARINE INC., 777 N. ELDRIDGE PARKWAY, HOUSTON,
TEXAS 77079-4493, TELEPHONE NUMBER (281) 596-5100.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Exchange
Act, and in accordance therewith files reports, proxy statements and other
information with the Commission. These reports, proxy statements and other
information can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, as well as the regional offices of the Commission at 500 West
Madison Street, Suite 1400, Chicago, Illinois 60621-2511, and Room 1400, 75
Park Place, New York, New York 10007. Copies of such materials also can be
obtained by mail from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. In addition,
the Commission maintains a site on the World Wide Web at http://www.sec.gov
that contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission. The
Company's Common Stock is listed on the New York Stock Exchange, and such
material also can be inspected at the offices of The New York Stock Exchange,
Inc., 20 Broad Street, New York, New York 10005. In addition, so long as any
of the Old Notes are "restricted securities" within the meaning of Rule
144(a)(3) under the Securities Act, the Company will, during any period that
the Company is not subject to and in compliance with Section 13 or 15(d) of the
Exchange Act, provide to each holder of such restricted securities and to each
prospective purchaser (as designated by such holder) of such restricted
securities, upon the request of such holder or prospective purchaser, any
information required to be provided by Rule 144A(d)(4) under the Securities
Act. Any such request and requests for the agreements summarized herein should
be directed to the Corporate Secretary, at the address and telephone number
listed above.
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This Prospectus constitutes a part of the Registration Statement on Form
S-4, as amended, filed by the Company with the Commission under the Securities
Act. This Prospectus omits certain of the information contained in the
Registration Statement in accordance with the rules and regulations of the
Commission. Reference is hereby made to the Registration Statement and related
exhibits for further information with respect to the Company and the Notes.
Statements contained herein concerning the provisions of any documents are not
necessarily complete and, in each instance, reference is made to the copy of
such document filed as an exhibit to the Registration Statement or otherwise
filed with the Commission. Each such statement is qualified in its entirety by
such reference.
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SUMMARY
The following summary is qualified in its entirety by the more detailed
information and consolidated financial statements, including the notes thereto,
appearing elsewhere in or incorporated by reference into this Prospectus. As
used herein and unless the context requires otherwise, "Global Marine Inc." or
the "Company" means Global Marine Inc. and its consolidated subsidiaries.
THE COMPANY
Global Marine Inc. is one of the largest offshore drilling contractors in
the world, with a fleet of 31 mobile offshore drilling rigs worldwide,
including two rigs undergoing conversion for deepwater drilling operations. In
addition, the Company believes it is the industry's largest provider of
offshore turnkey drilling services.
The Company provides offshore drilling services on a day rate basis in the
U.S. Gulf of Mexico and internationally. The Company's fleet consists of 23
cantilevered jackup rigs, four third-generation semisubmersible rigs, one moored
drillship and one special-purpose mobile offshore rig designed for arctic
operations. In addition, the Company has one fourth-generation semisubmersible
and one dynamically-positioned drillship that are currently undergoing
conversion to deepwater drilling operations. Each of the Company's rigs (other
than the Glomar Beaufort Sea I) is equipped with a top drive, which increases
drilling efficiency and safety while lowering costs. Of the Company's rigs, 11
currently operate in the U.S. Gulf of Mexico, 10 currently operate off the coast
of West Africa, four currently operate in the North Sea, and one currently
operates offshore in each of Trinidad, California and Argentina. In addition,
the Glomar Beaufort Sea I concrete island drilling system completed drilling
offshore Alaska under a 30-day contract in late 1997 and will be demobilized at
the customer's expense in summer 1998.
The Company conducts substantially all of its domestic offshore contract
drilling operations through Global Marine Drilling Company ("GMDC"), a wholly
owned subsidiary, and conducts substantially all of its international offshore
contract drilling operations through Global Marine International Services
Corporation ("GMISC"), a wholly owned subsidiary. The Company is headquartered
in Houston, Texas, with other offices in Lafayette, Louisiana; Aberdeen,
Scotland; Abidjan, Ivory Coast; Buenos Aires, Argentina; Cabinda, Angola;
Douala, Cameroon; London, England; Luanda, Angola; New Orleans, Louisiana; Port
Gentil, Gabon; Port Harcourt, Nigeria; Port Hueneme, California; Pointe Noire,
Republic of Congo; and Trinidad, West Indies.
The Company also provides drilling management services on a turnkey basis
through its wholly owned subsidiaries, Applied Drilling Technology Inc.("ADTI")
and Global Marine Integrated Services-International Inc. ("GMIS-I"), and through
Global Marine Integrated Services-Europe ("GMIS-E"), a division of one of the
Company's foreign subsidiaries. For a guaranteed price, the Company will assume
responsibility for the design and execution of a specified offshore drilling
program and the drilling of a loggable hole to an agreed depth. Compensation is
determined on a well-by-well basis and is contingent upon satisfactory
completion of the project. ADTI operates principally in the U.S. Gulf of
Mexico, while GMIS-I and GMIS-E operate internationally.
INDUSTRY CONDITIONS
The condition of the offshore contract drilling industry, and resulting
offshore drilling rig utilization and day rates, have improved substantially
since the beginning of 1995. From the mid-1980s through the early 1990s, demand
for offshore drilling rigs was declining or flat, and the industry fleet of
offshore drilling rigs was reduced, primarily by attrition. In recent years
demand for offshore rigs has improved, but the industry has not increased the
supply of rigs. The industry has emphasized the upgrading and refurbishment of
existing rigs rather than the construction of new rigs, due to the high capital
costs and long lead times associated with new construction. Recently, several
competitors have announced new-build deepwater drillships and semisubmersibles
in response to increased demand for rigs with deepwater capabilities.
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Several trends have increased the demand for offshore drilling rigs.
Rising worldwide energy demand has helped improve fundamentals in the oil and
natural gas markets. In addition, technological advancements, oil company
downsizing, establishment of government-sponsored exploration, development and
production sharing programs, and growing deepwater exploration have increased
drilling activity and the demand for rigs. Consequently, oil companies have
increased their capital expenditures to find and develop new oil and gas
reserves.
Technological advances such as extended reach drilling, multilateral
drilling techniques and new offshore development and production applications
have reduced the costs of developing oil and gas fields. As a result,
previously uneconomic discoveries have become viable, and the industry has
placed increasing emphasis on exploiting existing resources using new
applications. The development of three-dimensional seismic surveys has reduced
exploration risks, thus placing increased emphasis on selective exploratory
drilling. Government-sponsored exploration, development and production sharing
programs are growing in number, and many of those programs require oil
companies to commence drilling within specified time periods. All of these
trends have increased the demand for high quality offshore rigs, and the
Company believes the increased demand will be sustained over the next several
years.
BUSINESS STRATEGY
The Company's strategy is to maximize its operating cash flow and increase
return on capital employed through the following strategic elements:
Deepwater Rigs, Premium Jackup Fleet Focus. The Company seeks to improve
and expand its high quality fleet by upgrading its currently owned rigs and by
acquiring additional rigs, which may be upgraded before being placed in service.
Over the past several years, the Company has focused on increasing its exposure
to the deepwater market by expanding its deepwater fleet. In July 1997, the
Company acquired two deepwater third-generation semisubmersible rigs, the Maersk
Vinlander and the Maersk Jutlander, each of which is capable of being upgraded
for operation in more than 3,000 feet of water, for an aggregate purchase price
of $250 million. The Maersk Vinlander and Maersk Jutlander are both currently
operating under pre-existing bareboat charters to third parties running through
April 1998 and December 2000, respectively. The Maersk Vinlander is then
scheduled to begin work for another customer in the third quarter of 1998 under
a one-year contract with options for an additional four years. In 1996, the
Company purchased the Glomar Celtic Sea, a dynamically-positioned
semisubmersible, which, following upgrade, will be a fourth-generation
semisubmersible capable of drilling in 5,000 feet of water. Also in 1996, the
Company entered into a 30-year lease with the U.S. Government for the use of the
Glomar Explorer, which, following conversion, will be capable of drilling in
7,500 feet of water. The Glomar Celtic Sea and Glomar Explorer are expected to
commence operations in the first quarter of 1998. The Company has also focused
on expanding its premium jackup fleet by acquiring additional Marathon
LeTourneau 116-C class jackup drilling rigs. The Company believes that this
class of rig is the preferred type of equipment for a substantial portion of
wells drilled by jackup rigs worldwide. Since 1993, the Company has acquired
six of these rigs at a total cost of approximately $175 million, making the
Company's current fleet of 11 such rigs the largest in the industry.
In January 1998, the Company entered into an agreement to purchase a
deepwater, third-generation semisubmersible, the Stena Forth, for a purchase
price of $150 million. The Stena Forth is currently operating in the North Sea's
United Kingdom sector under a drilling contract running through November 1999.
The Company will assume operation of the rig at closing, which is expected to
occur in February 1998. The Company will finance the purchase through cash on
hand and borrowings under its Bank Credit Facility (as defined herein).
Diverse Rig Fleet Operations. The diversity of the Company's fleet,
ranging from its smallest jackups with a maximum water depth capability of 250
feet of water to a drillship that will have a maximum water depth capability of
7,500 feet of water, allows the Company to meet the needs of many operators in
a variety of environments worldwide. At December 31, 1997, the Company had 11
rigs in the Gulf of Mexico, 10 rigs
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in West Africa, four rigs in the North Sea, one offshore Trinidad, one offshore
California and one offshore Argentina. All of the Company's rigs have
experienced significant day rate increases in the last two years. The Company
believes that its presence in several major drilling markets affords it exposure
to improving market conditions worldwide, while reducing the potential impact
upon revenues of a major downturn in any single geographic market.
Balanced Long-Term and Short-Term Contract Portfolio. The Company seeks to
maintain a mix of long-term and short-term contracts in an effort to provide
for a certain amount of longer-term, more predictable cash flow, while
maintaining exposure to increasing day rates worldwide. Over the past several
months, the terms of deepwater drilling contracts for semisubmersibles and
drillships have lengthened as operators have attempted to lock in the
availability of rigs to carry out deepwater projects. The drilling market for
jackup rigs in shallow waters, however, particularly in the U.S. Gulf of
Mexico, continues to be characterized by short-term, well-to-well contracts.
The Company's strategy has been to employ its rigs on short-term contracts in
periods of rising day rates, enabling the Company to contract at higher day
rates as existing contracts expire. The Company anticipates that contracts on
11 of the Company's 29 active rigs under contract as of January 31, 1998 will
expire at varying times on or prior to June 30, 1998. The Company considers
its upcoming contract expirations typical of prevailing market conditions and
consistent with both the normal course of business and the Company's strategy.
The Company has a three-year commitment on the Glomar Celtic Sea and a
five-year commitment on the Glomar Explorer, which, as discussed above, are
currently undergoing conversion to deepwater drilling capabilities and are
scheduled to begin drilling under these commitments in the first quarter of
1998. These longer-term contracts are typical in deepwater or international
markets, offer higher day rates, and provide a hedge against market downturns.
Dominant Position in Turnkey Drilling Market. The Company believes it has
a dominant position in turnkey operations worldwide and is the leading turnkey
operator in the Gulf of Mexico. The Company believes turnkey operations can be
quite attractive, as the capital investment required is minimal, although
operating earnings as a percentage of revenues generated by the Company's
turnkey operations are substantially lower than those of its contract drilling
operations. In drilling a well under a turnkey contract, the Company typically
plans the well and supervises the drilling, purchasing all equipment and
services from third parties. Through December 31, 1997, the Company has
drilled a total of 434 turnkey wells since entering the turnkey business in
1979. The Company drilled 107 turnkey wells during 1997, as compared with 82
in 1996. The Company believes that the market for turnkey operations will
continue to improve as exploration and production companies continue to
outsource drilling services and that it is strategically positioned to remain a
dominant player in this market.
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THE EXCHANGE
THE EXCHANGE OFFER . . . . . . . . . . The Company is offering to exchange
$1,000 principal amount of Exchange
Notes for each $1,000 principal
amount of Old Notes that are
properly tendered and accepted.
The Company will issue the Exchange
Notes on or promptly after the
Expiration Date. As of the date
hereof, $300,000,000 aggregate
principal amount of the Old Notes
is outstanding. See "The Exchange
Offer."
Based on an interpretation of the
staff of the Commission set forth
in the No-Action Letters, the
Company believes that Exchange
Notes issued pursuant to the
Exchange Offer in exchange for Old
Notes may be offered for resale,
resold and otherwise transferred by
any holder thereof (other than (i)
a broker-dealer who purchases such
Exchange Notes directly from the
Company to resell pursuant to Rule
144A or any other available
exemption under the Securities Act
or (ii) any such holder which is an
"affiliate" of the Company within
the meaning of Rule 405 under the
Securities Act) without compliance
with the registration and
prospectus delivery provisions of
the Securities Act, provided that
such Exchange Notes are acquired in
the ordinary course of such
holder's business and that such
holder has no arrangement or
understanding with any person to
participate in the distribution of
such Exchange Notes. In the event
that the Company's belief is
inaccurate, holders of Exchange
Notes who transfer Exchange Notes
in violation of the prospectus
delivery provisions of the
Securities Act and without an
exemption from registration
thereunder may incur liability
thereunder. The Company does not
assume, or indemnify holders
against, such liability. The
Exchange Offer is not being made
to, nor will the Company accept
surrenders for exchange from,
holders of Old Notes (i) in any
jurisdiction in which the Exchange
Offer or the acceptance thereof
would not be in compliance with the
securities or blue sky laws of such
jurisdiction or (ii) if any holder
is engaged or intends to engage in
a distribution of Exchange Notes.
Each broker-dealer that receives
Exchange Notes for its own account
in exchange for Old Notes, where
such Old Notes were acquired by
such broker-dealer as a result of
market-making activities or other
trading activities, must
acknowledge that it will deliver a
prospectus in connection with any
resale of such Exchange Notes. See
"Plan of Distribution."
EXPIRATION DATE . . . . . . . . . . . . The Exchange Offer will expire at
5:00 p.m., New York City time, on
March 11, 1998, unless the Exchange
Offer is extended, in which case the
term "Expiration Date" shall mean,
with respect to the Exchange Offer,
the latest date and time to which
the Exchange Offer is extended. The
Company will accept for exchange any
and all Old Notes which are properly
tendered in the Exchange Offer prior
to 5:00 p.m., New York City time, on
the Expiration Date. The Exchange
Notes issued pursuant to the
Exchange Offer will be delivered on
or promptly after the Expiration
Date. See "The Exchange
Offer--General."
9
<PAGE> 11
CONDITIONS TO THE
EXCHANGE OFFER . . . . . . . . . . . . The Exchange Offer is not
conditioned on any minimum
principal amount of Old Notes being
tendered for exchange. The Company
may terminate the Exchange Offer if
it determines that its ability to
proceed with the Exchange Offer
could be materially impaired due to
any legal or governmental action,
any new law, statute, rule or
regulation, any interpretation by
the staff of the Commission of any
existing law, statute, rule or
regulation or the failure to obtain
any necessary approvals of
governmental agencies or holders of
the Old Notes. The Company does
not expect any of the foregoing
conditions to occur, although there
can be no assurances any such
conditions will not occur. The
Exchange Offer is subject to
certain other customary conditions,
each of which may be waived by the
Company. See "The Exchange
Offer--Certain Conditions to the
Exchange Offer."
PROCEDURES FOR TENDERING
OLD NOTES . . . . . . . . . . . . . . Each holder of Old Notes wishing to
accept the Exchange Offer must
complete, sign and date the Letter
of Transmittal, or a facsimile
thereof, in accordance with the
instructions contained herein and
therein, and mail or otherwise
deliver such Letter of Transmittal,
or such facsimile, together with
such Old Notes and any other
required documentation to
Wilmington Trust Company, as
Exchange Agent, at the address set
forth herein, or (in the case of a
book-entry transfer) an Agent's
Message (as defined herein) in lieu
of Letter of Transmittal. In lieu
of physical delivery of the Old
Notes, tendering holders may
transfer notes pursuant to the
procedure for book-entry transfer
as set forth under "The Exchange
Offer--Book-Entry Transfer." By
executing the Letter of Transmittal
or by transmitting an Agent's
Message in lieu thereof, each
holder will represent to the
Company that, among other things,
the holder is not an "affiliate" of
the Company (within the meaning of
Rule 405 under the Securities Act),
the Exchange Notes received
pursuant to the Exchange Offer are
being acquired in the ordinary
course of business of the holder,
and that at the time of the
commencement of the Exchange Offer
the holder had no arrangement
with any other person to
participate in a distribution of
the Exchange Notes. Certain brokers,
dealers, commercial banks, trust
companies and other nominees may
also effect tenders by book-entry
transfer, including an Agent's
Message in lieu of a Letter of
Transmittal.
10
<PAGE> 12
BENEFICIAL OWNERS . . . . . . . . . . . Any beneficial owner whose Old
Notes are registered in the name of
a broker, dealer, commercial bank,
trust company or other nominee and
who wishes to tender such Old Notes
in the Exchange Offer should
contact such registered holder
promptly and instruct such
registered holder to tender on such
beneficial owner's behalf. If such
beneficial owner wishes to tender
on such owner's own behalf, such
owner must, prior to completing and
executing the Letter of Transmittal
and delivering such owner's Old
Notes, either make appropriate
arrangements to register ownership
of the Old Notes in such owner's
name or obtain a properly completed
bond power from the registered
holder. The transfer of registered
ownership may take considerable
time and may not be able to be
completed prior to the Expiration
Date.
GUARANTEED DELIVERY
PROCEDURES . . . . . . . . . . . . . . Holders of Old Notes who wish to
tender their Old Notes and who
cannot deliver their Old Notes or
the Letter of Transmittal to
Wilmington Trust Company, as
Exchange Agent, prior to the
Expiration Date, or for which the
procedures for book-entry transfer
cannot be completed on a timely
basis, must tender their Old Notes
according to the guaranteed
delivery procedures set forth in
"The Exchange Offer--Guaranteed
Delivery Procedures."
WITHDRAWAL RIGHTS . . . . . . . . . . . Tenders of Old Notes may be
withdrawn at any time prior to 5:00
p.m., New York City time, on the
Expiration Date. See "The Exchange
Offer--Withdrawal Rights."
CERTAIN FEDERAL INCOME
TAX CONSEQUENCES . . . . . . . . . . . For a discussion of certain federal
income tax consequences relating to
the exchange of Exchange Notes for
Old Notes, see "Certain Federal
Income Tax Consequences."
EXCHANGE AGENT . . . . . . . . . . . . Wilmington Trust Company is the
Exchange Agent. Its telephone
number is (302) 651-8869. The
address of the Exchange Agent is
set forth in "The Exchange
Offer--Exchange Agent." Wilmington
Trust Company also serves as
trustee (the "Trustee") under the
Indenture.
SHELF REGISTRATION
STATEMENT . . . . . . . . . . . . . . . Under certain circumstances
described in the registration
rights agreement entered into
between the Company and the Initial
Purchasers in connection with the
offering of the Old Notes (the
"Registration Agreement"), certain
holders of Notes (including holders
who are not permitted to
participate in the Exchange Offer
or who may not freely resell
Exchange Notes received in the
Exchange Offer) may require the
Company to file, and use its best
efforts to cause to become
effective, a shelf registration
statement (the "Shelf Registration
Statement") under the Securities
Act, which would cover resales of
Notes by such holders. See
"Registration Rights."
11
<PAGE> 13
SUMMARY DESCRIPTION OF THE EXCHANGE NOTES
The terms of the Exchange Notes and the Old Notes are identical in all
material respects, except for certain transfer restrictions and registration
rights relating to the Old Notes. Whenever defined terms of the Indenture not
otherwise defined herein are referred to, such defined terms are incorporated
herein by reference. In the event that (i) by March 14, 1998, neither the
Registration Statement of which this Prospectus is a part (sometimes referred
to herein as the "Exchange Offer Registration Statement") is declared effective
nor (if a Shelf Registration Statement is required as described above) the
Shelf Registration Statement is filed with the Commission, or (ii) by April 13,
1998, the Exchange Offer is not consummated or the Shelf Registration Statement
is not declared effective with respect thereto (each such event referred to in
clauses (i) or (ii), a "Registration Default"), interest will accrue on the
applicable Old Notes (in addition to stated interest on such Old Notes) from
and including the next day following each such Registration Default. In each
case such additional interest (the "Special Interest") will be payable in cash
semiannually in arrears each March 1 and September 1, at a rate per annum equal
to 0.25% of the principal amount of such Old Notes for each such Registration
Default. The aggregate amount of Special Interest payable pursuant to the
above provisions will in no event exceed 0.25% per annum of the principal
amount of such Old Notes. Upon (a) the Exchange Offer Registration Statement
being declared effective or the filing of the Shelf Registration Statement
after the date set forth in clause (i) above or (b) the consummation of the
Exchange Offer for such Old Notes or a Shelf Registration Statement being
declared effective, as the case may be, after the date set forth in clause (ii)
above, the Special Interest payable on such Old Notes as a result of the
applicable Registration Default will cease to accrue.
The Exchange Notes will bear interest from the most recent date to
which interest has been paid on the Old Notes or, if no interest has been paid
on the Old Notes, from September 15, 1997. Accordingly, registered holders of
Exchange Notes on the relevant record date for the first interest payment date
following the consummation of the Exchange Offer will receive interest accruing
from the most recent date to which interest has been paid on the Old Notes or,
if no interest has been paid, from September 15, 1997. Old Notes accepted for
exchange will cease to accrue interest from and after the date of consummation
of the Exchange Offer. Holders whose Old Notes are accepted for exchange will
not receive any payment in respect of interest on such Old Notes otherwise
payable on any interest payment date, the record date for which occurs on or
after consummation of the Exchange Offer.
THE EXCHANGE NOTES
EXCHANGE NOTES OFFERED . . . . . . . . . . $300,000,000 aggregate
principal amount of 7 1/8%
Notes Due 2007.
MATURITY . . . . . . . . . . . . . . . . . September 1, 2007.
INTEREST PAYMENT DATES . . . . . . . . . . March 1 and September 1 of
each year.
REDEMPTION . . . . . . . . . . . . . . . . The Exchange Notes may be
redeemed at any time at the
option of the Company, in
whole or from time to time in
part, at a price equal to
100% of the principal amount
thereof plus accrued and
unpaid interest, if any, to
the date of redemption, plus
a Make-Whole Premium, if
any, relating to the then
prevailing Treasury Yield and
the remaining life of the
Exchange Notes.
CERTAIN COVENANTS . . . . . . . . . . . . . The Indenture relating to the
Exchange Notes will contain
limitations on the Company's
ability to (1) incur
indebtedness for borrowed
money secured by certain
liens and (2) engage in
12
<PAGE> 14
certain sale/leaseback
transactions. See
"Description of Exchange
Notes."
RANKING . . . . . . . . . . . . . . . . . . The Exchange Notes will be
senior securities of the
Company, ranking pari passu
with all other unsubordinated
and unsecured indebtedness of
the Company and senior in
right of payment to any
future subordinated
indebtedness of the Company.
The Company has a $240
million unsecured revolving
bank credit facility (the
"Bank Credit Facility") that
ranks pari passu with the
Notes. In January, 1998, the
Company entered into a 364-day
$150 million credit facility
(the "Short-term Facility").
The Company recently redeemed
$223.9 million principal
amount of 12 3/4% Senior
Secured Notes Due 1999 (the
"Senior Secured Notes"). See
"Private Placement" and
"Capitalization."
USE OF PROCEEDS . . . . . . . . . . . . . . The Company used approximately
$200 million of the aggregate
net proceeds from the
offering of the Old Notes to
repay all existing
indebtedness under its
then-existing bank credit
facility and invested the
balance of the proceeds in
short-term investments pending
its use for general corporate
purposes. On December 15,
1997, the Company borrowed
$100 million under the Bank
Credit Facility and used the
proceeds of such borrowing,
together with available
funds, to retire all of the
outstanding $223.9 million
principal amount of the
Senior Secured Notes, which
became redeemable at the
option of the Company at such
time at 102% of the principal
amount thereof. See "Private
Placement."
EXCHANGE OFFER; REGISTRATION
RIGHTS . . . . . . . . . . . . . . . . . . Pursuant to the Registration
Agreement relating to the Old
Notes, the Company agreed to
use its best efforts to (1)
cause the Exchange Offer
Registration Statement to
become effective not later
than March 14, 1998. In
certain circumstances, the
Company will file a Shelf
Registration Statement with
respect to the Old Notes in
lieu of effecting the
Exchange Offer. See
"Registration Rights."
ABSENCE OF A PUBLIC MARKET
FOR THE EXCHANGE NOTES . . . . . . . . . . The Exchange Notes will be a
new issue of securities for
which there is currently no
market. Although the Initial
Purchasers have informed the
Company that they each
currently intend to make a
market in the Exchange Notes,
they are not obligated to do
so, and any such market
making may be discontinued at
any time without notice.
Accordingly, there can be no
assurance as to the
development or liquidity of
any market for the Exchange
Notes.
RISK FACTORS
See "Risk Factors" beginning on page 16 for a discussion of certain
factors that should be considered by prospective investors in evaluating an
investment in the Exchange Notes.
13
<PAGE> 15
SUMMARY FINANCIAL AND OPERATING DATA
The following table sets forth certain summary financial and operating
data relating to the Company which has been derived from and should be read in
conjunction with the Company's consolidated financial statements and the notes
thereto included in the Company's 1996 Annual Report on Form 10-K, the
Company's Quarterly Reports on Form 10-Q for the quarters ended March 31, 1997,
June 30, 1997 and September 30, 1997, and other information and data included
herein or incorporated by reference herein. See "Incorporation by Reference."
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------------- -------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
-------- -------- ------- -------- -------- ------- -------
(DOLLARS IN MILLIONS, EXCEPT OPERATIONAL DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
FINANCIAL PERFORMANCE
Revenues:
Contract drilling . . . . . . . . . . . . $ 405.1 $ 262.4 $ 362.5 $ 248.9 $ 211.4 $ 200.3 $ 214.1
Drilling management services . . . . . . 337.0 187.3 305.3 209.3 137.8 57.1 26.9
Oil and gas . . . . . . . . . . . . . . . 5.7 11.1 12.9 9.8 9.8 11.6 19.3
-------- -------- ------- ------- ------- ------- -------
Total revenues . . . . . . . . . . $ 747.8 $ 460.8 $ 680.7 $ 468.0 $ 359.0 $ 269.0 $ 260.3
======== ======== ======= ======= ======= ======= =======
Operating income:
Contract drilling . . . . . . . . . . . . $ 187.3 $ 86.1 $ 125.4 $ 54.6 $ 25.6 $4.5 $17.3
Drilling management services(1) . . . . . 39.5 14.2 27.9 17.3 10.8 7.6 (2.2)
Oil and gas . . . . . . . . . . . . . . . 1.8 5.9 6.8 3.4 3.7 5.3 3.2
Corporate expenses . . . . . . . . . . . (16.6) (13.9) (19.3) (15.0) (14.0) (14.2) (13.5)
-------- -------- ------- ------- ------- ------- -------
Total operating income . . . . . . . . 212.0 92.3 140.8 60.3 26.1 3.2 4.8
Total other income (expense) . . . . . . . (8.1) (17.0) (21.1) (5.2) (20.7) (29.4) 25.8
-------- -------- ------- ------- ------- ------- -------
Income (loss) before income taxes . . 203.9 75.3 119.7 55.1 5.4 (26.2) 30.6
Current tax provision . . . . . . . . . . . 17.6 5.4 9.6 3.2 0.6 0.3 3.1
Deferred tax benefit . . . . . . . . . . . (70.0) -- (70.0) -- -- -- --
-------- -------- ------- ------- ------- ------- -------
Income (loss) before extraordinary item
and cumulative effect of accounting
changes . . . . . . . . . . . . . . . . 256.3 69.9 180.1 51.9 4.8 (26.5) 27.5
Extraordinary gain on extinguishment
of debt . . . . . . . . . . . . . . . . -- -- -- -- -- -- 28.3
Cumulative effect of accounting
changes, net . . . . . . . . . . . . . -- -- -- -- (3.5) -- 1.4
-------- -------- ------- ------- ------- ------- -------
Net income (loss) . . . . . . . . . $ 256.3 $ 69.9 $ 180.1 $ 51.9 $ 1.3 $ (26.5) $ 57.2
======== ======== ======= ======= ======= ======= =======
Capital expenditures . . . . . . . . . . . $ 467.5 $ 36.9 $ 118.3 $ 73.5 $ 75.9 $ 40.6 $ 20.9
Depreciation and amortization . . . . . . . $ 37.6 $ 30.8 $ 40.9 $ 31.0 $ 37.4 $ 35.9 $ 47.1
EBITDA(2) . . . . . . . . . . . . . . . . . $ 249.6 $ 123.1 $ 181.7 $ 91.3 $ 63.5 $ 39.1 $ 51.9
Ratio of EBITDA to interest expense . . . . 9.24 5.35 5.88 3.02 2.10 1.22 1.19
Ratio of earnings to fixed charges(3) . . . 7.76 4.11 4.63 2.56 1.05 0.23 1.67
FINANCIAL POSITION (END OF PERIOD)
Working capital . . . . . . . . . . . . . . $ 219.2 $ 183.9 $ 158.9 $ 116.2 $ 93.4 $ 107.2 $ 30.7
Net properties . . . . . . . . . . . . . . $ 905.9 $ 406.7 $ 477.4 $ 386.6 $ 353.4 $ 314.6 $ 318.0
Total assets . . . . . . . . . . . . . . . $1,429.2 $ 697.1 $ 807.8 $ 563.0 $ 512.4 $ 492.9 $ 479.9
Long-term debt, including capital lease
obligation . . . . . . . . . . . . . . . $ 541.0 $ 225.0 $ 241.8 $ 225.0 $ 225.0 $ 225.0 $ 249.0
Shareholders' equity . . . . . . . . . . . $ 728.2 $ 345.9 $ 459.1 $ 269.0 $ 212.3 $ 205.4 $ 154.5
OPERATIONAL DATA
Average rig utilization(4)(5) . . . . . . . 99% 98% 98% 99% 94% 91% 81%
Fleet average day rate(6) . . . . . . . . . $ 53,400 $ 36,400 $38,000 $28,700 $25,600 $25,600 $27,600
Number of active rigs (end of period)(7) . 29 26 26 26 24 24 23
Turnkey wells completed . . . . . . . . . . 79 57 82 67 52 18 10
Number of employees (end of period) . . . . 2,300 2,100 2,100 2,100 1,700 1,500 1,500
</TABLE>
- ----------
(1) Excludes the aggregate net profit earned on turnkey wells drilled on
oil and gas properties in which the Company has working interests.
(2) EBITDA (earnings before interest, gain on sale, other income, taxes,
depreciation and amortization) is presented here to provide additional
information about the Company's operations. EBITDA is not a generally
accepted accounting principle ("GAAP") financial indicator and should
not be considered as an alternative to net income as an indicator of
the Company's operating performance or as an alternative to cash flow
from operations.
(3) The ratio of earnings to fixed charges has been computed by dividing
earnings available for fixed charges (earnings before income taxes and
cumulative effect of accounting changes plus fixed charges less
capitalized interest) by fixed charges (interest expense plus
capitalized interest and the portion of operating lease rental expense
that represents the interest factor).
(4) The average rig utilization rate for a period is equal to the ratio of
days in the period during which the rigs were under contract to the
total days in the period during which the rigs were available to work.
(5) Excludes the Glomar Beaufort Sea I concrete island drilling system, a
special-purpose mobile offshore rig designed for arctic operations, and
rigs undergoing conversion.
(6) Contract drilling revenues less non-rig related revenues divided by the
aggregate contract days, adjusted to exclude days under contract at
zero day rate.
(7) Excludes rigs during the period in which they were inactive, utilized
as accommodation units or undergoing conversion.
14
<PAGE> 16
SUMMARY QUARTERLY FINANCIAL AND OPERATING DATA
The following table sets forth certain unaudited summary quarterly
financial and operating data relating to the Company which has been derived
from and should be read in conjunction with the Company's consolidated
financial statements and notes thereto and other information and data included
herein or incorporated by reference herein. See "Incorporation by Reference."
<TABLE>
<CAPTION>
Quarter Ended
-------------------------------------------------------------------------------
September 30, June 30, March 31, December 31, September 30, June 30,
1997 1997 1997 1996 1996 1996
-------- -------- ------- ------- ------- -------
(Dollars in millions, except operational data)
<S> <C> <C> <C> <C> <C>
FINANCIAL PERFORMANCE
Revenues:
Contract drilling . . . . . . . . $ 167.3 $ 129.1 $ 108.7 $ 100.1 $ 98.2 $ 85.7
Drilling management services. . . 135.4 102.6 99.0 118.0 75.8 69.3
Oil and gas . . . . . . . . . . . 1.7 1.4 2.6 1.8 3.9 4.9
-------- -------- ------- ------- ------- -------
Total revenues . . . . . . $ 304.4 $ 233.1 $ 210.3 $ 219.9 $ 177.9 $ 159.9
======== ======== ======= ======= ======= =======
Operating income:
Contract drilling . . . . . . . . $ 79.1 $ 61.0 $ 47.2 $ 39.3 $ 36.1 $ 26.7
Drilling management services(1) . 14.6 11.0 13.9 13.7 5.3 8.1
Oil and gas . . . . . . . . . . . 0.2 0.3 1.3 0.9 2.1 3.0
Corporate expenses . . . . . . . (6.2) (5.4) (5.0) (5.4) (4.6) (5.4)
-------- -------- ------- ------- ------- -------
Total operating income . . 87.7 66.9 57.4 48.5 38.9 32.4
Total other income (expense) . . . (3.6) (1.3) (3.2) (4.1) (5.4) (6.2)
-------- -------- ------- ------- ------- -------
Income before income taxes . . . . $ 84.1 $ 65.6 $ 54.2 $ 44.4 $ 33.5 $ 26.2
======== ======== ======= ======= ======= =======
Net income . . . . . . . . . . . . $ 93.4 $ 84.1 $ 78.8 $ 110.2 $ 30.9 $ 24.1
======== ======== ======= ======= ======= =======
Capital expenditures . . . . . . . $ 333.3 $ 78.7 $ 55.5 $ 81.4 $ 9.2 $ 18.5
Depreciation and amortization . . . $ 16.2 $ 10.8 $ 10.6 $ 10.1 $ 10.6 $ 10.5
EBITDA(2) . . . . . . . . . . . . . $ 103.9 $ 77.7 $ 68.0 $ 58.6 $ 49.5 $ 42.9
OPERATIONAL DATA
Average rig utilization(3)(4) . . . 99% 99% 98% 99% 98% 96%
Fleet average day rate(5) . . . . . $ 59,300 $53,100 $47,400 $42,600 $40,400 $36,400
Number of active rigs
(end of quarter)(6) . . . . . . . 29 27 26 26 26 26
Turnkey wells completed . . . . . . 26 26 27 25 22 22
</TABLE>
- ----------
(1) Excludes the aggregate net profit earned on turnkey wells drilled on
oil and gas properties in which the Company has working interests.
(2) EBITDA (earnings before interest, gain on sale, other income, taxes,
depreciation and amortization) is presented here to provide additional
information about the Company's operations. EBITDA is not a GAAP
financial indicator and should not be considered as an alternative to
net income as an indicator of the Company's operating performance or
as an alternative to cash flow from operations.
(3) The average rig utilization rate for a period is equal to the ratio of
days in the period during which the rigs were under contract to the
total days in the period during which the rigs were available to work.
(4) Excludes the Glomar Beaufort Sea I concrete island drilling system, a
special-purpose mobile offshore rig designed for arctic operations,
and rigs undergoing conversion.
(5) Contract drilling revenues less non-rig related revenues divided by
the aggregate contract days, adjusted to exclude days under contract
at zero day rate.
(6) Excludes rigs during the period in which they were inactive, utilized
as accommodation units or undergoing conversion.
15
<PAGE> 17
RISK FACTORS
Holders of Old Notes should carefully review the information contained
elsewhere in this Prospectus and should particularly consider the following
matters.
CONSEQUENCES OF FAILURE TO EXCHANGE OLD NOTES
The Old Notes have not been registered under the Securities Act or any
state securities laws and therefore may not be offered, sold or otherwise
transferred except in compliance with the registration requirements of the
Securities Act and any other applicable securities laws, or pursuant to an
exemption therefrom or in a transaction not subject thereto, and in each case
in compliance with certain other conditions and restrictions. Old Notes which
remain outstanding after consummation of the Exchange Offer will continue to
bear a legend reflecting such restrictions on transfer. In addition, upon
consummation of the Exchange Offer, holders of Old Notes which remain
outstanding will not be entitled to any rights to have such Old Notes
registered under the Securities Act or to any similar rights under the
Registration Agreement (subject to certain limited exceptions as described
herein). See "Registration Rights." The Company does not intend to register
under the Securities Act any Old Notes which remain outstanding after
consummation of the Exchange Offer (subject to such limited exceptions, if
applicable). To the extent that Old Notes are tendered and accepted in the
Exchange Offer, a holder's ability to sell untendered Old Notes could be
adversely affected. See "The Exchange Offer--Consequences of Failure to
Exchange Old Notes."
ABSENCE OF PUBLIC MARKET
The Old Notes were issued to, and the Company believes are currently
owned by, a relatively small number of beneficial owners. The Old Notes have
not been registered under the Securities Act and will be subject to
restrictions on transferability to the extent that they are not exchanged for
the Exchange Notes. Although the Exchange Notes will generally be permitted to
be resold or otherwise transferred by the holders (who are not affiliates of
the Company) without compliance with the registration requirements under the
Securities Act, they will constitute a new issue of securities with no
established trading market. Any market-making activity will be subject to the
limits imposed by the Securities Act and the Exchange Act and may be limited
during the Exchange Offer. Accordingly, no assurance can be given that an
active public or other market will develop for the Exchange Notes or the Old
Notes or as to the liquidity of or the trading market for the Exchange Notes or
the Old Notes. If an active public market does not develop, the market price
and liquidity of the Exchange Notes may be adversely affected.
If a public trading market for the Exchange Notes develops, future
trading prices of such securities will depend on many factors, including, among
other things, prevailing interest rates, results of operations and the market
for similar securities. Depending on prevailing interest rates, the market for
similar securities and other factors, including the financial condition of the
Company, the Exchange Notes may trade at a discount.
Each broker-dealer that receives Exchange Notes for its own account in
exchange for Old Notes, where such Old Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Notes. See "Plan of Distribution."
PRIVATE PLACEMENT
The initial placement of the Old Notes on September 10, 1997 was
consummated on September 15, 1997, by the issuance and sale to the Initial
Purchasers of $300,000,000 principal amount of the Old Notes at a price of
99.199% of the principal amount thereof in a private transaction not registered
under the Securities Act in reliance upon Section 4(2) of the Securities Act.
The Initial Purchasers thereupon offered and resold the Old Notes only to
qualified institutional buyers at an initial price to such purchasers of
99.849% of the principal amount thereof.
16
<PAGE> 18
The net proceeds of the offering of the Old Notes were approximately
$297.3 million (after deduction of the discount and other expenses). The
Company used approximately $200 million of such aggregate net proceeds to repay
all existing indebtedness under its then-existing bank credit facility and, on
December 15, 1997, used the balance of the proceeds, together with $100 million
borrowed under the Bank Credit Facility (which had an interest rate of 6.325%
at December 31, 1997) and other available funds, to retire all of the
outstanding $223.9 million principal amount of the Senior Secured Notes. The
Senior Secured Notes became redeemable at the option of the Company at such
time at 102% of the principal amount thereof.
USE OF PROCEEDS
The Company will not receive any cash proceeds from the issuance of
the Exchange Notes offered hereby. In consideration for issuing the Exchange
Notes as contemplated in this Prospectus, the Company will receive in exchange
a like principal amount of Old Notes, the terms of which are identical in all
material respects to the Exchange Notes. The Old Notes surrendered in exchange
for the Exchange Notes will be retired and canceled and cannot be reissued.
Accordingly, issuance of the Exchange Notes will not result in any change in
capitalization of the Company.
CAPITALIZATION
The following table sets forth the cash and cash equivalents,
short-term borrowings and capitalization of the Company at December 31, 1997,
which includes the Old Notes issued on September 15, 1997.
<TABLE>
<CAPTION>
December 31,
1997
-------------
(in millions)
(unaudited)
<S> <C>
Cash and cash equivalents . . . . . . . . . . . . . . . . . $ 78.9
==========
Short-term borrowings . . . . . . . . . . . . . . . . . . . $ --
==========
Long-term debt:
Bank Credit Facility(1) . . . . . . . . . . . . . . . . . 100.0
7 1/8% Notes Due 2007 . . . . . . . . . . . . . . . . . . 299.4
Capital lease obligation . . . . . . . . . . . . . . . . 18.1
----------
Total long-term debt, including current
maturities . . . . . . . . . . . . . . . . . . 417.5
Shareholders' equity:
Preferred stock, $0.01 par value; 10 million shares
authorized, no shares issued or outstanding . . . . . --
Common stock, $0.10 par value; 300 million shares
authorized, 172,202,785 shares issued and
outstanding . . . . . . . . . . . . . . . . . . . . . 17.2
Additional paid-in capital . . . . . . . . . . . . . . . 310.1
Retained earnings . . . . . . . . . . . . . . . . . . . . 478.3
----------
Total shareholders' equity . . . . . . . . . . . 805.6
----------
Total capitalization . . . . . . . . . . . . . . $ 1,223.1
==========
</TABLE>
(1) The Company's $240 million revolving Bank Credit Facility has a
maturity date of December 9, 2002. At January 31, 1998, $50 million
was outstanding under the Bank Credit Facility and no amount was
outstanding under the Short-term Facility.
17
<PAGE> 19
THE COMPANY
Global Marine Inc. is one of the largest offshore drilling contractors
in the world, with a fleet of 31 mobile offshore drilling rigs worldwide,
including two rigs undergoing conversion for deepwater drilling operations. In
addition, the Company believes it is the industry's largest provider of
offshore turnkey drilling services.
The Company provides offshore drilling services on a day rate basis in
the U.S. Gulf of Mexico and internationally. The Company's fleet consists of 23
cantilevered jackup rigs, four third-generation semisubmersible rigs, one moored
drillship and one special-purpose mobile offshore rig designed for arctic
operations. In addition, the Company has one fourth-generation semisubmersible
and one dynamically-positioned drillship that are currently undergoing
conversion to deepwater drilling operations. Each of the Company's rigs (other
than the Glomar Beaufort Sea I) is equipped with a top drive, which increases
drilling efficiency and safety while lowering costs. Of the Company's rigs, 11
currently operate in the U.S. Gulf of Mexico, 10 currently operate off the coast
of West Africa, four currently operate in the North Sea, and one currently
operates offshore in each of Trinidad, California and Argentina. In addition,
the Glomar Beaufort Sea I concrete island drilling system completed drilling
offshore Alaska under a 30-day contract in late 1997 and will be demobilized at
the customer's expense in summer 1998.
The Company conducts substantially all of its domestic offshore
contract drilling operations through GMDC, a wholly owned subsidiary, and
conducts substantially all of its international offshore contract drilling
operations through GMISC, a wholly owned subsidiary. The Company is
headquartered in Houston, Texas, with other offices in Lafayette, Louisiana;
Aberdeen, Scotland; Abidjan, Ivory Coast; Buenos Aires, Argentina; Cabinda,
Angola; Douala, Cameroon; London, England; Luanda, Angola; New Orleans,
Louisiana; Port Gentil, Gabon; Port Harcourt, Nigeria; Port Hueneme,
California; Pointe Noire, Republic of Congo; and Trinidad, West Indies.
The Company also provides drilling management services on a turnkey
basis through its wholly owned subsidiaries, ADTI and GMIS-I, and through
GMIS-E, a division of one of the Company's foreign subsidiaries. For a
guaranteed price, the Company will assume responsibility for the design and
execution of a specified offshore drilling program and the drilling of a
loggable hole to an agreed depth. Compensation is determined on a well-by-well
basis and is contingent upon satisfactory completion of the project. ADTI
operates principally in the U.S. Gulf of Mexico, while GMIS-I and GMIS-E operate
internationally.
The Company's principal executive offices are located at 777 N.
Eldridge Parkway, Houston, Texas 77079-4493, and its telephone number is (281)
596-5100.
INDUSTRY CONDITIONS
The condition of the offshore contract drilling industry, and resulting
offshore drilling rig utilization and day rates, have improved substantially
since the beginning of 1995. From the mid-1980s through the early 1990s, demand
for offshore drilling rigs was declining or flat, and the industry fleet of
offshore drilling rigs was reduced, primarily by attrition. In recent years
demand for offshore rigs has improved, but the industry has not increased the
supply of rigs. The industry has emphasized the upgrading and refurbishment of
existing rigs rather than the construction of new rigs, due to the high capital
costs and long lead times associated with new construction. Recently, several
competitors have announced new-build deepwater drillships and semisubmersibles
in response to increased demand for rigs with deepwater capabilities.
Several trends have increased the demand for offshore drilling rigs.
Rising worldwide energy demand has helped improve fundamentals in the oil and
natural gas markets. In addition, technological advancements, oil company
downsizing, establishment of government-sponsored exploration, development and
production sharing programs, and growing deepwater exploration have increased
drilling activity and the demand for rigs.
18
<PAGE> 20
Consequently, oil companies have increased their capital expenditures to find
and develop new oil and gas reserves.
Technological advances such as extended reach drilling, multilateral
drilling techniques and new offshore development and production applications
have reduced the costs of developing oil and gas fields. As a result, previously
uneconomic discoveries have become viable, and the industry has placed
increasing emphasis on exploiting existing resources using new applications. The
development of three-dimensional seismic surveys has reduced exploration risks,
thus placing increased emphasis on selective exploratory drilling.
Government-sponsored exploration, development and production sharing programs
are growing in number, and many of those programs require oil companies to
commence drilling within specified time periods. All of these trends have
increased the demand for high quality offshore rigs, and the Company believes
the increased demand will be sustained over the next several years.
BUSINESS STRATEGY
The Company's strategy is to maximize its operating cash flow and
increase return on capital employed through the following strategic elements:
Deepwater Rigs, Premium Jackup Fleet Focus. The Company seeks to
improve and expand its high quality fleet by upgrading its currently owned rigs
and by acquiring additional rigs, which may be upgraded before being placed in
service. Over the past several years, the Company has focused on increasing its
exposure to the deepwater market by expanding its deepwater fleet. In July 1997,
the Company acquired two deepwater third-generation semisubmersible rigs, the
Maersk Vinlander and the Maersk Jutlander, each of which is capable of being
upgraded for operation in more than 3,000 feet of water, for an aggregate
purchase price of $250 million. The Maersk Vinlander and Maersk Jutlander are
both currently operating under pre-existing bareboat charters to third parties
running through April 1998 and December 2000, respectively. The Maersk Vinlander
is then scheduled to begin work for another customer in the third quarter of
1998 under a one-year contract with options for an additional four years. In
1996, the Company purchased the Glomar Celtic Sea, a dynamically-positioned
semisubmersible, which, following upgrade, will be a fourth-generation
semisubmersible capable of drilling in 5,000 feet of water. Also in 1996, the
Company entered into a 30-year lease with the U.S. Government for the use of the
Glomar Explorer, which, following conversion, will be capable of drilling in
7,500 feet of water. The Glomar Celtic Sea and Glomar Explorer are expected to
commence operations in the first quarter of 1998. The Company has also focused
on expanding its premium jackup fleet by acquiring additional Marathon
LeTourneau 116-C class jackup drilling rigs. The Company believes that this
class of rig is the preferred type of equipment for a substantial portion of
wells drilled by jackup rigs worldwide. Since 1993, the Company has acquired six
of these rigs at a total cost of approximately $175 million, making the
Company's current fleet of 11 such rigs the largest in the industry.
In January 1998, the Company entered into an agreement to purchase a
deepwater, third-generation semisubmersible, the Stena Forth, for a purchase
price of $150 million. The Stena Forth is currently operating in the North
Sea's United Kingdom sector under a drilling contract running through November
1999. The Company will assume operation of the rig at closing, which is expected
to occur in February 1998. The Company will finance the purchase through cash
on had and borrowings under the Bank Credit Facility.
Diverse Rig Fleet Operations. The diversity of the Company's fleet,
ranging from its smallest jackups with a maximum water depth capability of 250
feet of water to a drillship that will have a maximum water depth capability of
7,500 feet of water, allows the Company to meet the needs of many operators in
a variety of environments worldwide. At December 31, 1997, the Company had 11
rigs in the Gulf of Mexico, 10 rigs in West Africa, four rigs in the North Sea,
one offshore Trinidad, one offshore California and one offshore Argentina. All
of the Company's rigs have experienced significant day rate increases in the
last two years. The Company believes that its presence in several major
drilling markets affords it exposure to improving market conditions worldwide,
while reducing the potential impact upon revenues of a major downturn in any
single geographic market.
19
<PAGE> 21
Balanced Long-Term and Short-Term Contract Portfolio. The Company seeks
to maintain a mix of long-term and short-term contracts in an effort to provide
for a certain amount of longer-term, more predictable cash flow, while
maintaining exposure to increasing day rates worldwide. Over the past several
months, the terms of deepwater drilling contracts for semisubmersibles and
drillships have lengthened as operators have attempted to lock in the
availability of rigs to carry out deepwater projects. The drilling market for
jackup rigs in shallow waters, however, particularly in the U.S. Gulf of Mexico,
continues to be characterized by short-term, well-to-well contracts. The
Company's strategy has been to employ its rigs on short-term contracts in
periods of rising day rates, enabling the Company to contract at higher day
rates as existing contracts expire. The Company anticipates that contracts on 11
of the Company's 29 active rigs under contract as of January 31, 1998 will
expire at varying times on or prior to June 30, 1998. The Company considers its
upcoming contract expirations typical of prevailing market conditions and
consistent with both the normal course of business and the Company's strategy.
The Company has a three-year commitment on the Glomar Celtic Sea and a five-year
commitment on the Glomar Explorer, which, as discussed above, are currently
undergoing conversion to deepwater drilling capabilities and are scheduled to
begin drilling under these commitments in the first quarter of 1998. These
longer-term contracts are typical in deepwater or international markets, offer
higher day rates, and provide a hedge against market downturns.
Dominant Position in Turnkey Drilling Market. The Company believes it
has a dominant position in turnkey operations worldwide and is the leading
turnkey operator in the Gulf of Mexico. The Company believes turnkey operations
can be quite attractive, as the capital investment required is minimal,
although operating earnings as a percentage of revenues generated by the
Company's turnkey operations are substantially lower than those of its contract
drilling operations. In drilling a well under a turnkey contract, the Company
typically plans the well and supervises the drilling, purchasing all equipment
and services from third parties. Through December 31, 1997, the Company has
drilled a total of 434 turnkey wells since entering the turnkey business in
1979. The Company drilled 107 turnkey wells during 1997, as compared with 82 in
1996. The Company believes that the market for turnkey operations will continue
to improve as exploration and production companies continue to outsource
drilling services and that it is strategically positioned to remain a dominant
player in this market.
OFFSHORE RIG FLEET
The Company's three types of drilling rigs -- jackups,
semisubmersibles and drillships -- are described below:
Jackup rigs have elevating legs which extend to the sea bottom,
providing a stable platform for drilling, and are generally preferred in water
depths of 300 feet or less. All of the Company's jackup units have drilling
equipment that is mounted on cantilevers, which allow the equipment to extend
outward from the rigs' hulls over fixed drilling platforms and enable operators
to drill both exploratory and development wells. The Company's two largest
jackup rigs, the Glomar Labrador I and Glomar Baltic I, are capable of
operating in severe weather environments such as the North Sea and offshore
Eastern Canada.
Semisubmersible rigs are floating offshore drilling units that have
pontoons and columns that, when flooded with water, cause the unit to submerge
to a predetermined depth. Most semisubmersibles are anchored to the sea bottom
with mooring chains, but some are held in position solely by computer
controlled propellers, known as thrusters. Semisubmersibles are divided into
four generations, distinguished mainly by their age, environmental rating and
water depth capability. The Company's Glomar Arctic I, Glomar Arctic III,
Maersk Jutlander and Maersk Vinlander semisubmersibles are third-generation
rigs, suitable for drilling in deepwater, harsh-weather environments. The
Company's Glomar Celtic Sea, which is scheduled to begin operations in the
first quarter of 1998, will be equivalent to a fourth-generation
semisubmersible, capable of drilling in water depths of up to 5,000 feet after
it is converted.
20
<PAGE> 22
Drillships are suitable for deepwater drilling in moderate weather
environments and in remote locations because of their mobility and large load
carrying capability. The Glomar Explorer, which is scheduled to begin
operations in the first quarter of 1998, is being converted into a deepwater
drillship capable of operating in water depths of up to 7,500 feet.
With the exception of the Glomar Explorer, which is leased under a
30-year agreement, all of the rigs in the fleet are owned by the Company.
21
<PAGE> 23
The following table sets forth, as of January 31, 1998, certain
information concerning the offshore rig fleet operated by the Company:
<TABLE>
<CAPTION>
YEAR MAXIMUM
PLACED WATER DRILLING CONTRACT
IN DEPTH DEPTH CURRENT TERM
SERVICE CAPABILITY CAPABILITY LOCATION CUSTOMER EXPIRES(1)
------- ---------- ---------- ------------- -------------- ----------
<S> <C> <C> <C> <C> <C> <C>
CANTILEVERED JACKUP
Glomar High Island I . . . 1979 250 ft. 20,000 ft. Gulf of Mexico Vastar Resources 6/98
Glomar High Island II . . . 1979 270 ft. 20,000 ft. Gulf of Mexico Unocal 2/98
Glomar High Island III . . 1980 250 ft. 20,000 ft. West Africa Texaco 3/98
Glomar High Island IV . . . 1980 250 ft. 20,000 ft. Gulf of Mexico Stone Energy 8/98
Glomar High Island V . . . 1981 270 ft. 20,000 ft. West Africa CABGOC 9/99
Glomar High Island VII . . 1982 250 ft. 20,000 ft. West Africa Pecten Cameroon 11/98
Glomar High Island VIII . . 1982 250 ft. 20,000 ft. Gulf of Mexico Vastar Resources 6/98
Glomar High Island IX . . . 1983 250 ft. 20,000 ft. West Africa Total 3/98
Glomar Adriatic I . . . . . 1981 300 ft. 25,000 ft. West Africa Elf Serepca 2/98
Glomar Adriatic II . . . . 1981 350 ft. 25,000 ft. Gulf of Mexico NCX 4/98
Glomar Adriatic III . . . . 1982 328 ft. 25,000 ft. Gulf of Mexico CNG Producing 7/98
Glomar Adriatic IV . . . . 1983 350 ft. 25,000 ft. California SWARS 4/98
Glomar Adriatic V . . . . . 1979 300 ft. 20,000 ft. West Africa Elf Gabon 4/99
Glomar Adriatic VI . . . . 1981 350 ft. 20,000 ft. Gulf of Mexico Coastal 7/00
Glomar Adriatic VII . . . . 1983 328 ft. 20,000 ft. Trinidad Amoco 8/98
Glomar Adriatic VIII . . . 1983 300 ft. 25,000 ft. West Africa Mobil 2/99
Glomar Adriatic IX . . . . 1981 300 ft. 20,000 ft. West Africa Hunt 5/99
Glomar Adriatic X . . . . . 1982 300 ft. 20,000 ft. West Africa CABGOC 2/99
Glomar Adriatic XI . . . . 1983 225 ft. 25,000 ft. North Sea Enterprise 11/98
Glomar Main Pass I . . . . 1982 300 ft. 25,000 ft. Gulf of Mexico Pennzoil 2/98
Glomar Main Pass IV . . . . 1982 300 ft. 25,000 ft. Gulf of Mexico Chevron 4/98
Glomar Labrador I . . . . . 1983 300 ft. 25,000 ft. Argentina Total 9/98
Glomar Baltic I . . . . . . 1983 375 ft. 25,000 ft. Gulf of Mexico Mobil 6/98
SEMISUBMERSIBLE
Glomar Arctic I . . . . . . 1983 3,000 ft. 25,000 ft. Gulf of Mexico British Petroleum 9/98
Glomar Arctic III . . . . . 1984 1,800 ft. 25,000 ft. North Sea Ranger 7/98
Maersk Jutlander . . . . . 1982 1,200 ft. 25,000 ft. North Sea Maersk 12/00
Maersk Vinlander . . . . . 1984 1,500 ft. 25,000 ft. North Sea Sedco 8/99
Glomar Celtic Sea (2) . . . -- 5,000 ft. 25,000 ft. Shipyard Elf Exploration 2/01
DRILLSHIP
Glomar Robert F. Bauer . . 1983 2,750 ft. 25,000 ft. West Africa Arco 8/98
Glomar Explorer (3) . . . . -- 7,500 ft. 25,000 ft. Shipyard Texaco/Chevron 2/03
CONCRETE ISLAND DRILLING SYSTEM
Glomar Beaufort Sea I . . . 1984 55 ft. 25,000 ft. Alaska Fairweather 8/98(4)
</TABLE>
- ----------
(1) Expiration dates are the later of the end of the current contract or
new contract in place but not yet commenced and are estimates only.
(2) The Glomar Celtic Sea is currently undergoing conversion to drilling
operations. The maximum water depth and drilling depth capabilities
indicated in the table are the rig's capabilities after conversion.
The rig is excluded from the Company's rig utilization figures while
out of service and is scheduled to be placed in service in the first
quarter of 1998.
(3) The Glomar Explorer is currently undergoing conversion to drilling
operations. The maximum water depth and drilling depth capabilities
indicated in the table are the rig's capabilities after conversion.
The rig is excluded from the Company's rig utilization figures while
out of service and is scheduled to be placed in service in the first
quarter of 1998.
(4) The Glomar Beaufort Sea I completed drilling offshore Alaska in late
1997. The contract provides for demobilization of the rig in 1998 at
the customer's expense.
22
<PAGE> 24
RECENT ACQUISITIONS
On July 22, 1997, the Company completed the acquisition of two
deepwater third-generation semisubmersible drilling rigs, purchasing the Maersk
Vinlander for $150 million and the Maersk Jutlander for $100 million.
The Maersk Vinlander is an Aker H-3.2 design rig currently equipped to
drill in water depths to 1,500 feet and capable of being upgraded for
operations in more than 3,000 feet of water. It was built in Canada at the
Saint John Shipyard in 1984, is certified for operations in Canada, and is
currently operating in the U.K. sector of the North Sea. The rig is currently
operating under a pre-existing bareboat charter through April 1998.
The Maersk Jutlander, a Friede & Goldman L-907 design rig built in
Gotaverken, Sweden, in 1982, is substantially similar to the Glomar Arctic I
and Glomar Arctic III semisubmersibles. It is currently equipped to drill in
water depths to 1,200 feet and is capable of being upgraded for operations in
more than 3,000 feet of water. The Jutlander is currently operating in the
Norwegian sector of the North Sea and is also certified for operations in the
U.K. sector. Concurrent with the purchase, the seller entered into a bareboat
charter with GMDC, under which the seller is continuing to use the rig to
complete previous drilling commitments offshore Norway, agreeing to pay GMDC
$71 million over three and one-half years.
To facilitate the purchase of the Maersk Vinlander and the Maersk
Jutlander, the Company's then-existing bank credit facility was amended to
increase the credit available thereunder from $100 million to $250 million. GMDC
used $200 million available under such amended and restated bank credit facility
plus $50 million of cash on hand to acquire the rigs.
In January 1998, the Company entered into an agreement to purchase a
deepwater, third-generation semisubmersible, the Stena Forth, for a purchase
price of $150 million. The Stena Forth is currently operating in the North
Sea's United Kingdom sector under a drilling contract running through November
1999. The Company will assume operation of the rig at closing, which is expected
to occur in February 1998. The Company will finance the purchase through cash
on had and borrowings under the Bank Credit Facility.
As part of upgrading and expanding its rig fleet and other assets, the
Company considers and pursues the acquisition of suitable additional rigs and
other assets on an ongoing basis. Although the industry has emphasized the
upgrading and refurbishment of existing rigs, the Company would consider the
construction of new rigs if drilling contracts for such rigs would make such a
capital outlay economical. If the Company decides to undertake an acquisition
or the construction of new rigs, the issuance of additional shares of stock or
additional debt could be required.
FORWARD-LOOKING STATEMENTS
The statements regarding future performance and results and the other
statements that are not historical facts contained in this Prospectus are
forward-looking statements. The words "anticipate," "believe," "expect,"
"project," "estimate," "predict" and similar expressions are also intended to
identify forward-looking statements. Such statements involve risks and
uncertainties including, but not limited to, the risks involved in dealing with
other parties, including the risk that other parties' commitments to the
Company and its subsidiaries could be breached, changes in the markets for oil
and gas and for offshore drilling rigs and the risks of doing business in
changing markets, changes in the dates the Company's rigs undergoing conversion
to drilling operations will commence drilling, and changing costs and other
factors discussed herein and in the Company's filings with the Commission.
Should one or more risks or uncertainties materialize or should underlying
assumptions prove incorrect, actual outcomes may vary materially from those
indicated.
23
<PAGE> 25
DESCRIPTION OF EXCHANGE NOTES
The Old Notes were issued under the Indenture and the Exchange Notes
also will be issued under the Indenture. The following discussion of certain
provisions of the Indenture and the terms of the Notes is a summary only and
does not purport to be a complete discussion of the terms and provisions of the
Indenture and the Notes. Accordingly, the following discussion is qualified in
its entirety by reference to the provisions of the Indenture and the Notes
including the definition therein of certain terms used below with their initial
letters capitalized.
The Old Notes and the Exchange Notes will constitute a single series of
debt securities under the Indenture. If the Exchange Offer is consummated,
Holders of Old Notes who do not exchange their Old Notes for Exchange Notes will
vote together with Holders of Exchange Notes for all relevant purposes under the
Indenture. In that regard, the Indenture requires that certain actions by the
Holders thereunder (including acceleration following an Event of Default) must
be taken, and certain rights must be exercised, by specified minimum percentages
of the aggregate principal amount of the outstanding securities issued under the
Indenture or of specified series thereof. In determining whether Holders of the
requisite percentage in principal amount have given any notice, consent or
waiver or taken any other action permitted under the Indenture, any Old Notes
that remain outstanding after the Exchange Offer will be aggregated with the
Exchange Notes, and the Holders of such Old Notes and the Exchange Notes will
vote together as a single series for all such purposes. Accordingly, all
references herein to specified percentages in aggregate principal amount of the
outstanding Notes shall be deemed to mean, at any time after the Exchange Offer
is consummated, such percentages in aggregate principal amount of the Old Notes
and the Exchange Notes then outstanding.
The Indenture does not limit the aggregate principal amount of
securities that can be issued thereunder. Securities may be issued in one or
more series as may be authorized from time to time by the Company. The Old
Notes are the only securities currently outstanding under the Indenture.
GENERAL
Each Note will mature on September 1, 2007 and will bear interest at
the rate of 7 1/8% per annum and will be payable semiannually on March 1 and
September 1 of each year, commencing March 1, 1998, to the person in whose name
the Note is registered at the close of business on the February 15 or August 15
next preceding such interest payment date. Interest will be computed on the
basis of a 360-day year of twelve 30-day months. Principal and interest will be
payable at the offices of the Trustee, provided that, at the option of the
Company, payment of interest will be made by check mailed to the address of the
person entitled thereto as it appears in the register of the Notes (the
"Register") maintained by the Registrar. The Notes will be transferable and
exchangeable at the office of the Registrar and any co-registrar and will be
issued in fully registered form, without coupons, in denominations of $1,000
and any integral multiple thereof. The Company may require payment of a sum
sufficient to cover any transfer tax or other similar governmental charge
payable in connection with certain transfers and exchanges.
The Notes will not be subject to any sinking fund, but are subject to
redemption at the option of the Company.
REDEMPTION
The Notes will be redeemable, at the option of the Company, at any
time in whole or from time to time in part, upon not less than 30 and not more
than 60 days' notice as provided in the Indenture, on any date prior to
maturity (the "Redemption Date") at a price (the "Redemption Price") equal to
100% of the principal amount thereof plus accrued interest to the Redemption
Date (subject to the right of holders of record on the relevant record date to
receive interest due on an interest payment date that is on or prior to
24
<PAGE> 26
the Redemption Date) plus a Make-Whole Premium, if any. In no event will the
Redemption Price ever be less than 100% of the principal amount of the Notes
plus accrued interest to the Redemption Date.
The amount of the Make-Whole Premium with respect to any Note (or
portion thereof) to be redeemed will be equal to the excess, if any, of:
(i) the sum of the present values, calculated as of the Redemption
Date, of:
(A) each interest payment that, but for such redemption, would
have been payable on the Note (or portion thereof) being redeemed on
each Interest Payment Date occurring after the Redemption Date
(excluding any accrued interest for the period prior to the Redemption
Date); and
(B) the principal amount that, but for such redemption, would
have been payable at the final maturity of the Note (or portion
thereof) being redeemed;
over
(ii) the principal amount of the Note (or portion thereof) being
redeemed.
The present values of interest and principal payments referred to in
clause (i) above will be determined in accordance with generally accepted
principles of financial analysis. Such present values will be calculated by
discounting the amount of each payment of interest or principal from the date
that each such payment would have been payable, but for the redemption, to the
Redemption Date at a discount rate equal to the Treasury Yield (as defined
below) plus 20 basis points.
The Make-Whole Premium will be calculated by an independent investment
banking institution of national standing appointed by the Company; provided,
that if the Company fails to make such appointment at least 45 business days
prior to the Redemption Date, or if the institution so appointed is unwilling
or unable to make such calculation, such calculation will be made by Salomon
Brothers Inc or, if such firm is unwilling or unable to make such calculation,
by an independent investment banking institution of national standing appointed
by the Trustee (in any such case, an "Independent Investment Banker").
For purposes of determining the Make-Whole Premium, "Treasury Yield"
means a rate of interest per annum equal to the weekly average yield to
maturity of United States Treasury Notes that have a constant maturity that
corresponds to the remaining term to maturity of the Notes, calculated to the
nearest 1/12th of a year (the "Remaining Term"). The Treasury Yield will be
determined as of the third business day immediately preceding the applicable
Redemption Date.
The weekly average yields of United States Treasury Notes will be
determined by reference to the most recent statistical release published by the
Federal Reserve Bank of New York and designated "H.15(519) Selected Interest
Rates" or any successor release (the "H.15 Statistical Release"). If the H.15
Statistical Release sets forth a weekly average yield for United States
Treasury Notes having a constant maturity that is the same as the Remaining
Term, then the Treasury Yield will be equal to such weekly average yield. In
all other cases, the Treasury Yield will be calculated by interpolation, on a
straight-line basis, between the weekly average yields on the United States
Treasury Notes that have a constant maturity closest to and greater than the
Remaining Term and the United States Treasury Notes that have a constant
maturity closest to and less than the Remaining Term (in each case as set forth
in the H.15 Statistical Release). Any weekly average yields as calculated by
interpolation will be rounded to the nearest 1/100th of 1%, with any figure of
1/200% or above being rounded upward. If weekly average yields for United
States Treasury Notes are not available in the H.15 Statistical Release or
otherwise, then the Treasury Yield will be calculated by interpolation of
comparable rates selected by the Independent Investment Banker.
25
<PAGE> 27
If less than all of the Notes are to be redeemed, the Trustee will
select the Notes to be redeemed by such method as the Trustee shall deem fair
and appropriate. The Trustee may select for redemption Notes and portions of
Notes in amounts of whole multiples of $1,000.
RANKING
The Notes will be senior securities of the Company and the indebtedness
evidenced thereby will rank pari passu with all other unsubordinated and
unsecured indebtedness of the Company and senior in right of payment to any
future subordinated indebtedness of the Company. Each of the Company's $240
million revolving Bank Credit Facility and its $150 million Short-term Facility
is unsecured. The Company recently redeemed the $223.9 million principal amount
of the Senior Secured Notes outstanding, which were collateralized by mortgages
on 22 drilling rigs owned by direct or indirect subsidiaries of the Company and
all the capital stock of most of the Company's direct and indirect subsidiaries.
See "Private Placement" and "Capitalization."
Substantially all of the Company's operating income and cash flow is
generated by its subsidiaries. As a result, funds necessary to meet the
Company's debt service obligations are provided in part by distributions or
advances from its subsidiaries. Under certain circumstances, contractual and
legal restrictions, as well as the financial condition and operating
requirements of the Company's subsidiaries, could limit the Company's ability to
obtain cash from its subsidiaries for the purpose of meeting its debt service
obligations, including the payment of principal and interest on the Notes. The
claims of creditors of the subsidiaries will effectively have priority with
respect to the assets and earnings of such companies over the claims of
creditors of the Company, including the holders of the Notes.
CERTAIN COVENANTS
The Indenture does not limit the amount of indebtedness or other
obligations that may be incurred by the Company and its subsidiaries. The
Indenture does not contain provisions which would give holders of the Notes the
right to require the Company to repurchase their Notes in the event of a
decline in the credit rating of the Company's debt securities resulting from a
takeover, recapitalization or similar restructuring.
Limitation on Liens. The Indenture provides that the Company will not,
and will not permit any of its Subsidiaries to, issue, assume or guarantee any
Indebtedness for borrowed money secured by any Lien upon any Principal Property
or any shares of stock or indebtedness of any Subsidiary that owns or leases a
Principal Property (whether such Principal Property, shares of stock or
indebtedness are now owned or hereafter acquired) without making effective
provision whereby the Notes (together with, if the Company shall so determine,
any other Indebtedness or other obligation of the Company) shall be secured
equally and ratably with (or, at the option of the Company, prior to) the
Indebtedness so secured for so long as such Indebtedness is so secured. The
foregoing restrictions do not, however, apply to Indebtedness secured by
Permitted Liens.
"Permitted Liens" means (i) Liens existing on the date of original
issuance of the Old Notes; (ii) Liens on property or assets of, or any shares
of stock of, or other equity interests in, or indebtedness of, any Person
existing at the time such Person becomes a Subsidiary of the Company or at the
time such Person is merged into or consolidated with the Company or any of its
Subsidiaries or at the time of a sale, lease or other disposition of the
properties of a Person (or a division thereof) as an entirety or substantially
as an entirety to the Company or a Subsidiary; (iii) Liens in favor of the
Company or any of its Subsidiaries; (iv) Liens in favor of governmental bodies
to secure progress or advance payments; (v) Liens securing industrial revenue
or pollution control bonds; (vi) Liens on assets existing at the time of
acquisition thereof, securing all or any portion of the cost of acquiring,
constructing, improving, developing or expanding such assets or securing
Indebtedness incurred prior to, at the time of, or within 24 months after, the
later of the acquisition, the completion of construction, improvement,
development or expansion or the commencement of commercial operation of such
assets, for the purpose of (a) financing all or any part of the purchase price
of
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such assets or (b) financing all or any part of the cost of construction,
improvement, development or expansion of any such assets; (vii) statutory liens
or landlords', carriers', warehouseman's, mechanics', suppliers', materialmen's,
repairmen's or other like Liens arising in the ordinary course of business and
with respect to amounts not yet delinquent or being contested in good faith by
appropriate proceedings; (viii) Liens on current assets of the Company or any
Subsidiary securing Indebtedness of the Company or such Subsidiary,
respectively; (ix) Liens on the stock, partnership or other equity interest of
the Company or any Subsidiary in any Joint Venture or any Subsidiary that owns
an equity interest in such Joint Venture to secure Indebtedness, provided the
amount of such Indebtedness is contributed and/or advanced solely to such Joint
Venture; and (x) any extensions, substitutions, replacements or renewals in
whole or in part of a Lien enumerated in clauses (i) through (ix) above.
Notwithstanding the foregoing, the Company and its Subsidiaries may,
without securing the Notes, issue, assume or guarantee Indebtedness that would
otherwise be subject to the foregoing restrictions in an aggregate principal
amount that, together with all other such Indebtedness of the Company and its
Subsidiaries that would otherwise be subject to the foregoing restrictions (not
including Indebtedness permitted to be secured under the definition of
Permitted Liens) and the aggregate amount of Attributable Indebtedness deemed
outstanding with respect to Sale/Leaseback Transactions (other than those in
connection with which the Company has voluntarily retired any of the Notes, any
Pari Passu Indebtedness or any Funded Indebtedness pursuant to clause (c) below
under the heading "Limitation on Sale/Leaseback Transactions") does not at any
one time exceed 15% of Consolidated Net Tangible Assets of the Company and its
consolidated subsidiaries.
Limitation on Sale/Leaseback Transactions. The Indenture provides that
the Company will not, and will not permit any Subsidiary to, enter into any
Sale/Leaseback Transaction with any person (other than the Company or a
Subsidiary) unless: (a) the Company or such Subsidiary would be entitled to
incur Indebtedness in a principal amount equal to the Attributable Indebtedness
with respect to such Sale/Leaseback Transaction secured by a Lien on the
property subject to such Sale/Leaseback Transaction pursuant to the covenant
described under "Limitation on Liens" above without equally and ratably
securing the Notes pursuant to such covenant; (b) after the date on which the
Notes are originally issued and within a period commencing nine months prior to
the consummation of such Sale/Leaseback Transaction and ending nine months
after the consummation thereof, the Company or such Subsidiary shall have
expended for property used or to be used in the ordinary course of business of
the Company and its Subsidiaries an amount equal to all or a portion of the net
proceeds of such Sale/Leaseback Transaction and the Company shall have elected
to designate such amount as a credit against such Sale/Leaseback Transaction
(with any such amount not being so designated to be applied as set forth in
clause (c) below or as otherwise permitted); or (c) the Company, during the
nine-month period after the effective date of such Sale/Leaseback Transaction,
shall have applied to either (i) the voluntary defeasance or retirement of any
Notes, any Pari Passu Indebtedness or any Funded Indebtedness or (ii) the
acquisition of one or more Principal Properties at fair value, an amount equal
to the greater of the net proceeds of the sale or transfer of the property
leased in such Sale/Leaseback Transaction and the fair value, as determined by
the Board of Directors of the Company, of such property at the time of entering
into such Sale/Leaseback Transaction (in either case adjusted to reflect the
remaining term of the lease and any amount expended by the Company as set forth
in clause (b) above), less an amount equal to the sum of the principal amount
of Notes, Pari Passu Indebtedness and Funded Indebtedness voluntarily defeased
or retired by the Company plus any amount expended to acquire any Principal
Properties at fair value, within such nine-month period and not designated as
a credit against any other Sale/Leaseback Transaction entered into by the
Company or any Subsidiary during such period.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company will not, in any transaction or series of transactions,
consolidate with or merge into any Person, or sell, lease, convey, transfer or
otherwise dispose of all or substantially all of its assets to any Person,
unless: (i) either (a) the Company shall be the continuing corporation or (b)
the Person (if other than the Company) formed by such consolidation or into
which the Company is merged, or the Person which
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acquires, by sale, lease, conveyance, transfer or other disposition, all or
substantially all of the assets of the Company shall be organized and validly
existing under the laws of the United States of America, any political
subdivision thereof or any state thereof or the District of Columbia, and shall
expressly assume, by a supplemental indenture, the due and punctual payment of
the principal of (and premium, if any) and interest on all the Notes and the
performance of the Company's covenants and obligations under the Indenture; and
(ii) immediately after giving effect to such transaction or series of
transactions, no Default or Event of Default shall have occurred and be
continuing or would result therefrom.
DEFINITIONS
"Attributable Indebtedness," when used with respect to any
Sale/Leaseback Transaction, means, as at the time of determination, the present
value (discounted at the rate set forth or implicit in the terms of the lease
included in such transaction) of the total obligations of the lessee for rental
payments (other than amounts required to be paid on account of taxes,
maintenance, repairs, insurance, assessments, utilities, operating and labor
costs and other items which do not constitute payments for property rights)
during the remaining term of the lease included in such Sale/Leaseback
Transaction (including any period for which such lease has been extended). In
the case of any lease which is terminable by the lessee upon the payment of a
penalty, such net amount shall be the lesser of the net amount determined
assuming termination upon the first date such lease may be terminated (in which
case the net amount shall also include the amount of the penalty, but no rent
shall be considered as required to be paid under such lease subsequent to the
first date upon which it may be so terminated) or the net amount determined
assuming no such termination.
"Consolidated Net Tangible Assets" means the total amount of assets
(less applicable reserves and other properly deductible items) after deducting
(1) all current liabilities (excluding the amount of those which are by their
terms extendable or renewable at the option of the obligor to a date more than
12 months after the date as of which the amount is being determined and current
maturities of long-term debt) and (2) all goodwill, trade names, trademarks,
patents, unamortized debt discount and expense and other like intangible
assets, all as set forth on the most recent quarterly balance sheet of the
Company and its consolidated subsidiaries and determined in accordance with
GAAP.
"Funded Indebtedness" means all Indebtedness (including Indebtedness
incurred under any revolving credit, letter of credit or working capital
facility) that matures by its terms, or that is renewable at the option of any
obligor thereon to a date more than one year after the date on which such
Indebtedness is originally incurred.
"Indebtedness" of any Person means, without duplication, (i) all
indebtedness of such Person for borrowed money (whether or not the recourse of
the lender is to the whole of the assets of such Person or only to a portion
thereof), (ii) all obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments, (iii) all obligations of such Person in
respect of letters of credit or other similar instruments (or reimbursement
obligations with respect thereto), other than standby letters of credit,
performance bonds and other obligations issued by or for the account of such
Person in the ordinary course of business, to the extent not drawn or, to the
extent drawn, if such drawing is reimbursed not later than the third Business
Day following demand for reimbursement, (iv) all obligations of such Person to
pay the deferred and unpaid purchase price of property or services, except
trade payables and accrued expenses incurred in the ordinary course of
business, (v) all Capitalized Lease Obligations of such Person, (vi) all
Indebtedness of others secured by a Lien on any asset of such Person, whether
or not such Indebtedness is assumed by such Person (provided that if the
obligations so secured have not been assumed in full by such Person or are not
otherwise such Person's legal liability in full, then such obligations shall be
deemed to be in an amount equal to the greater of (a) the lesser of (1) the
full amount of such obligations and (2) the fair market value of such assets,
as determined in good faith by the Board of Directors of such Person, which
determination shall be evidenced by a Board Resolution, and (b) the amount of
obligations as have been assumed by such Person or which are otherwise such
Person's legal liability), and (vii) all Indebtedness of others (other than
endorsements in the ordinary course of business) guaranteed by such Person to
the extent of such guarantee.
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"Joint Venture" means (1) with respect to properties located in the
United States, any partnership, corporation or other entity, in which up to and
including 50% of the partnership interests, outstanding voting stock or other
equity interests is owned, directly or indirectly, by the Company and/or one or
more subsidiaries, and (2) with respect to properties located outside the United
States, any partnership, corporation or other entity, in which up to and
including 60% of the partnership interests, outstanding voting stock or other
equity interests is owned, directly or indirectly, by the Company and/or one or
more Subsidiaries. A Joint Venture shall not be a Subsidiary.
"Lien" means any mortgage, pledge, lien, encumbrance, charge or
security interest. For purposes of the Indenture, the Company or any Subsidiary
of the Company shall be deemed to own subject to a Lien any asset which it has
acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, Capitalized Lease Obligation or other title
retention agreement relating to such asset.
"Pari Passu Indebtedness" means any Indebtedness of the Company,
whether outstanding on the date on which the Notes are originally issued or
thereafter created, incurred or assumed, unless, in the case of any particular
Indebtedness, the instrument creating or evidencing the same or pursuant to
which the same is outstanding expressly provides that such Indebtedness shall
be subordinated in right of payment to the Notes.
"Principal Property" means any drilling rig or drillship, or integral
portion thereof, owned or leased by the Company or any Subsidiary and used for
drilling offshore oil and gas wells, which, in the opinion of the Board of
Directors, is of material importance to the business of the Company and its
Subsidiaries taken as a whole, but no such drilling rig or drillship, or
portion thereof, shall be deemed of material importance if its net book value
(after deducting accumulated depreciation) is less than 2% of Consolidated Net
Tangible Assets.
"Sale/Leaseback Transaction" means any arrangement with any Person
pursuant to which the Company or any Subsidiary leases any Principal Property
that has been or is to be sold or transferred by the Company or the Subsidiary
to such Person, other than (1) temporary leases for a term, including renewals
at the option of the lessee, of not more than five years, (2) leases between
the Company and a Subsidiary or between Subsidiaries, (3) leases of Principal
Property executed by the time of, or within 12 months after the latest of, the
acquisition, the completion of construction or improvement, or the commencement
of commercial operation of the Principal Property, and (4) arrangements
pursuant to any provision of law with an effect similar to the former Section
168(f)(8) of the Internal Revenue Code of 1954.
EVENTS OF DEFAULT
An Event of Default is defined in the Indenture as being: (i) default
by the Company for 30 days in payment of any interest on the Notes; (ii)
default by the Company in any payment of principal of (and premium, if any, on)
the Notes; (iii) default by the Company in compliance with any of its other
covenants or agreements in, or provisions of, the Notes or the Indenture which
shall not have been remedied within 90 days after written notice by the Trustee
or by the holders of at least 25% in principal amount of the Notes then
outstanding (or, in the event that other securities issued under the Indenture
are also affected by the default, then 25% in principal amount of all
outstanding securities so affected); or (iv) certain events involving
bankruptcy, insolvency or reorganization of the Company. The Indenture provides
that the Trustee may withhold notice to the holders of the Notes of any default
(except in payment of principal of, premium, if any, or interest on the Notes)
if the Trustee considers it in the interest of the holders of the Notes to do
so.
The Indenture provides that if an Event of Default occurs and is
continuing with respect to the Indenture, the Trustee or the holders of not
less than 25% in principal amount of the Notes (or in the event of a default
pursuant to (iii) above, 25% in principal amount of the securities affected)
outstanding may declare the principal of and accrued but unpaid interest on all
the Notes to be due and payable. Upon such a declaration, such principal and
interest will be due and payable immediately. If an Event of Default relating
to certain events of bankruptcy, insolvency or reorganization of the Company
occurs and is continuing, the
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principal of and interest on all the Notes will become and be immediately due
and payable without any declaration or other act on the part of the Trustee or
any holders of the Notes. The amount due and payable on the acceleration of any
Note will be equal to 100% of the principal amount of such Note, plus accrued
interest to the date of payment. Under certain circumstances, the holders of a
majority in principal amount of the Notes may rescind any such acceleration with
respect to the Notes and its consequences.
The Indenture provides that no holder of a Note may pursue any remedy
under the Indenture unless (i) the Trustee shall have received from the holder
written notice of a continuing Event of Default, (ii) the Trustee shall have
received a written request from holders of at least 25% in principal amount of
the then outstanding Notes to pursue such remedy, (iii) the Trustee shall have
been offered indemnity reasonably satisfactory to it and (iv) the Trustee shall
have failed to act for a period of 60 days after receipt of such notice and
offer of indemnity; however, such provision does not affect the right of a
holder of a Note to sue for enforcement of any overdue payment thereon.
The holders of a majority in principal amount of the Notes then
outstanding will have the right to direct the time, method and place of
conducting any proceeding for exercising any remedy available to the Trustee
under the Indenture, subject to certain limitations specified in the Indenture.
The Indenture requires the annual filing by the Company with the Trustee of a
written statement as to compliance with the covenants contained in the
Indenture.
MODIFICATION AND WAIVER
The Indenture provides that modifications and amendments to the
Indenture or the Notes may be made by the Company and the Trustee with the
consent of the holders of a majority in principal amount of the Notes (or of
all securities under the Indenture affected thereby) then outstanding; provided
that no such modification or amendment may, without the consent of the holder
of each Note then outstanding affected thereby, (i) reduce the amount of Notes
(or such securities) whose holders must consent to an amendment, supplement or
waiver; (ii) reduce the rate of or change the time for payment of interest,
including default interest, on any Note; (iii) reduce the principal of or
premium on, or change the stated maturity of any Note; (iv) reduce the premium,
if any, payable upon the redemption of any Note or change the time at which any
Note may or shall be redeemed; (v) make any Note payable in money other than
that stated in the Note; (vi) impair the right to institute suit for the
enforcement of any payment of principal of (or premium if any) or interest on
any Note; (vii) make any change in the percentage of principal amount of Notes
necessary to waive compliance with certain provisions of the Indenture; or
(viii) waive a continuing Default or Event of Default in the payment of
principal of or premium on, or interest on the Notes. The Indenture provides
that amendments and supplements to, or waivers of any provision of, the
Indenture may be made by the Company and the Trustee without the consent of any
holders of Notes in certain circumstances, including (a) to cure any ambiguity,
omission, defect or inconsistency, (b) to provide for the assumption of the
obligations of the Company under the Indenture upon the merger, consolidation
or sale or other disposition of all or substantially all of the assets of the
Company, (c) to provide for uncertificated Notes in addition to or in place of
certificated Notes, (d) to secure the Notes or provide for guarantees of the
Notes, (e) to comply with any requirement in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act of 1939, or (f) to
make any change that does not adversely affect the rights of any holder of
Notes in any material respect.
The Indenture provides that the holders of a majority in aggregate
principal amount of the Notes (or of all securities under the Indenture
affected thereby) then outstanding may waive any existing or past default under
the Indenture, except (a) in the payment of the principal of (or premium, if
any) or interest on any Note or (b) in respect of a provision that under the
proviso to the prior paragraph cannot be amended or supplemented without the
consent of each Holder affected.
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DEFEASANCE
The Company may, at its option, elect (a) to have all of the
obligations of the Company discharged with respect to the Notes (except for
certain obligations to register the transfer or exchange of Notes, replace
stolen, lost or mutilated Notes or maintain paying agencies and hold moneys for
payment in trust) ("legal defeasance") or (b) to have its obligations terminated
with respect to certain restrictive covenants of the Indenture ("covenant
defeasance"), in which event certain Events of Default will no longer constitute
Events of Default with respect to any Notes, upon the deposit with the Trustee,
in trust, of money or U.S. Government Obligations, or a combination thereof,
which through the payment of interest thereon and principal thereof in
accordance with their terms will provide money in an amount sufficient to pay
all the principal of (and premium, if any, on) and interest on such Notes on the
dates such payments are due in accordance with the terms of the Notes on their
stated maturity or any redemption date. The Company is required to deliver to
the Trustee an Opinion of Counsel to the effect that the deposit and related
defeasance would not cause the Holders of the Notes to recognize income, gain or
loss for federal income tax purposes and, in the case of a legal defeasance
pursuant to clause (a), such opinion must be based upon a ruling from the United
Stated Internal Revenue Service or a change in law to that effect.
GOVERNING LAW
The Indenture and the Old Notes provide and the Exchange Notes will
provide that they are governed by and construed in accordance with the laws of
the State of New York, without giving effect to applicable principles of
conflicts of laws to the extent the laws of another jurisdiction would be
required thereby.
THE TRUSTEE
Wilmington Trust Company is the Trustee under the Indenture. The
Company has also appointed the Trustee as the initial Registrar and as the
initial Paying Agent under the Indenture with respect to the Notes. Wilmington
Trust Company also serves as the trustee under the indenture for the Senior
Secured Notes.
The Indenture contains certain limitations on the right of the
Trustee, should it become a creditor of the Company, to obtain payment of
claims in certain cases, or to realize on certain property received in respect
of any such claim as security or otherwise. The Trustee is permitted to engage
in other transactions; however, if it acquires any conflicting interest (as
defined in the Trust Indenture Act of 1939), it must eliminate such conflict or
resign.
The Indenture provides that in case an Event of Default shall occur
(and be continuing), the Trustee will be required to use the degree of care and
skill of a prudent man in the conduct of his own affairs. The Trustee is under
no obligation to exercise any of its powers under the Indenture at the request
of any of the holders of the Notes, unless such holders shall have offered the
Trustee indemnity reasonably satisfactory to it.
BOOK-ENTRY, DELIVERY AND FORM
The Old Notes were issued and the Exchange Notes will be issued in the
form of one or more fully registered Global Notes (each a "Global Note"). Each
Global Note will be deposited with, or on behalf of, the Depositary and
registered in the name of Cede & Co., as nominee of the Depositary (such
nominee being referred to herein as the "Global Note Holder").
The Depositary has advised the Company that it is a limited-purpose
trust company which was created to hold securities for its participating
organizations (collectively, the "Participants" or the "Depositary's
Participants") and to facilitate the clearance and settlement of transactions
in such securities between Participants through electronic book-entry changes
in accounts of its Participants. The Depositary's Participants include
securities brokers and dealers (including the Initial Purchasers), banks and
trust
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companies, clearing corporations and certain other organizations. Access to the
Depositary's system is also available to other entities such as banks, brokers,
dealers and trust companies (collectively, the "Indirect Participants" or the
"Depositary's Indirect Participants") that clear through or maintain a custodial
relationship with a participant, either directly or indirectly. Persons who are
not Participants may beneficially own securities held by or on behalf of the
Depositary only through the Depositary's Participants or the Depositary's
Indirect Participants.
The Company expects that pursuant to procedures established by the
Depositary (i) upon deposit of the Global Note, the Depositary will credit the
accounts of Participants designated by the Initial Purchasers with portions of
the principal amount of the Global Note and (ii) ownership of the Notes will be
shown on, and the transfer of ownership thereof will be effected only through,
records maintained by the Depositary (with respect to the interests of the
Depositary's Participants), the Depositary's Participants and the Depositary's
Indirect Participants. Holders are advised that the laws of some states require
that certain Persons take physical delivery in definitive form of securities
that they own. Consequently, the ability to transfer Notes will be limited to
such extent.
So long as the Global Note Holder is the registered owner of any
Notes, the Global Note Holder will be considered the sole owner or holder of
such Notes outstanding under the Indenture. Except as provided below, owners of
Notes will not be entitled to have Notes registered in their names, will not
receive or be entitled to receive physical delivery of Notes in definitive
form, and will not be considered the owners or holders thereof under the
Indenture for any purpose, including with respect to the giving of any
directions, instructions or approvals to the Trustee thereunder. As a result,
the ability of a Person having a beneficial interest in Notes represented by
the Global Note to pledge such interest to Persons or entities that do not
participate in the Depositary's system or to otherwise take actions in respect
of such interest may be affected by the lack of a physical certificate
evidencing such interest.
Neither the Company, the Trustee, the Paying Agent nor the Notes
Registrar will have any responsibility or liability for any aspect of the
records relating to or payments made on account of Notes by the Depositary, or
for maintaining, supervising or reviewing any records of the Depositary
relating to such Notes.
Payments in respect of the principal, premium, if any, and interest on
any Notes registered in the name of a Global Note Holder on the applicable
record date will be payable by the Trustee to or at the direction of such
Global Note Holder in its capacity as the registered holder under the
Indenture. Under the terms of the Indenture, the Company and the Trustee may
treat the Persons in whose names the Notes, including the Global Notes, are
registered as the owners thereof for the purpose of receiving such payments and
for any and all other purposes whatsoever. Consequently, neither the Company
nor the Trustee has or will have any responsibility or liability for the
payment of such amounts to beneficial owners of Notes (including principal,
premium, if any, and interest).
The Company believes, however, that it is currently the policy of the
Depositary to immediately credit the accounts of the relevant Participants with
such payment, in amounts proportionate to their respective holdings in
principal amount of beneficial interests in the relevant security as shown on
the records of the Depositary. Payments by the Depositary's Participants and
the Depositary's Indirect Participants to the beneficial owner of Notes will be
governed by standing instructions and customary practice and will be the
responsibility of the Depositary's Participants or the Depositary's Indirect
Participants.
As long as the Notes are represented by a Global Note, the
Depositary's nominee will be the holder of the Notes and therefore will be the
only entity that can exercise a right to repayment or repurchase of the Notes.
Notice by Participants or Indirect Participants or by owners of beneficial
interests in a Global Note held through such Participants or Indirect
Participants of the exercise of the option to elect repayment of beneficial
interests in Notes represented by a Global Note must be transmitted to the
Depositary in accordance with its procedures on a form required by the
Depositary and provided to Participants. In order to ensure that the
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Depositary's nominee will timely exercise a right to repayment with respect to a
particular Note, the beneficial owner of such Note must instruct the broker or
the Participant or Indirect Participant through which it holds an interest in
such Note to notify the Depositary of its desire to exercise a right to
repayment. Different firms have cut-off times for accepting instructions from
their customers and, accordingly, each beneficial owner should consult the
broker or other Participant or Indirect Participant through which it holds an
interest in a Note in order to ascertain the cut-off time by which such an
instruction must be given in order for timely notice to be delivered to the
Depositary. The Company will not be liable for any delay in delivery of notices
of the exercise of the option to elect repayment.
CERTIFICATED SECURITIES
Certified Securities shall be transferred to all beneficial owners in exchange
for their beneficial interests in a Global Note if either (i) DTC notifies the
Company that it is unwilling or unable to continue as Depositary for the Global
Note and a successor Depositary is not appointed by the Company within 90 days
of such notice, (ii) an Event of Default has occurred with respect to such
series and is continuing and the Registrar has received a request from the
Depositary to issue Certificated Securities in lieu of all or a portion of the
Global Note (in which case the Company shall deliver Certificated Securities
within 30 days of such request or (3) the Company determines not to have the
Notes represented by a Global Note.
Neither the Company nor the Trustee shall be liable for any delay by
the related Global Note Holder or the Depositary in identifying the beneficial
owners of Notes and each such Person may conclusively rely on and shall be
protected in relying on, instructions from the Global Note Holder or of the
Depositary for all purposes (including with respect to the registration and
delivery, and the respective principal amounts, of the Notes to be issued).
SAME-DAY SETTLEMENT AND PAYMENT
The Indenture requires that payments in respect of the Notes
(including principal, premium, if any, and interest) be made by wire transfer
of immediately available funds to the accounts specified by the Global Note
Holder. Secondary trading in long-term notes and debentures of corporate
issuers is generally settled in clearing-house or next-day funds. In contrast,
the Notes are expected to trade in the Depositary's Same-Day Funds Settlement
System, and any permitted secondary market trading activity in the Notes will
therefore be required by the Depositary to be settled in immediately available
funds. The Company expects that secondary trading in the Certificated Notes
also will be settled in immediately available funds.
TRANSFER AND EXCHANGE
A holder may transfer or exchange the Notes in accordance with the
procedures set forth in the Indenture. The Registrar may require a holder,
among other things, to furnish appropriate endorsements and transfer documents,
and to pay any taxes and fees required by law or permitted by the Indenture.
The Registrar is not required to transfer or exchange any Note selected for
redemption. Also, the Registrar is not required to transfer or exchange any
Note for a period of 15 Business Days before a selection of the Notes to be
redeemed.
The registered Holder of a Note will be treated as the owner of it
for all purposes.
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REGISTRATION RIGHTS
The Company entered into the Registration Agreement with the Initial
Purchasers in connection with the sale of the Old Notes pursuant to which the
Company agreed, for the benefit of the holders of the Old Notes, at the
Company's cost, to (i) file the Exchange Offer Registration Statement, of which
this Prospectus is a part, with the Commission with respect to the Exchange
Offer, within 150 days after the date of original issuance of such Old Notes
(September 15, 1997, the "Issue Date") and (ii) use its best efforts to cause
the Exchange Offer Registration Statement to be declared effective under the
Securities Act within 180 days after the Issue Date. Promptly after the
Exchange Offer Registration Statement is declared effective, the Company will
commence the Exchange Offer. The Company will keep the Exchange Offer open for
not less than 30 days (or longer if required by applicable law) after the date
notice of the Exchange Offer is mailed to the holders of Old Notes.
In the event that any changes in law or applicable interpretations of
the staff of the Commission do not permit the Company to effect the Exchange
Offer or if for any reason the Exchange Offer Registration Statement was not
declared effective within 180 days following the Issue Date, or upon the
request of the Initial Purchasers under certain circumstances, the Company
will, in lieu of effecting the registration of the Exchange Notes pursuant to
the Exchange Offer Registration Statement and at its cost, (i) as promptly as
practicable, file with the Commission a Shelf Registration Statement covering
resales of the Old Notes, (ii) use its best efforts to cause the Shelf
Registration Statement to be declared effective under the Securities Act by the
210th day after the Issue Date (or promptly in the event of a request by the
Initial Purchasers) and (iii) keep effective the Shelf Registration Statement
until the earliest of (x) the second anniversary of the Issue Date (or the
first anniversary of the effective date if such Shelf Registration Statement is
filed at the request of the Initial Purchasers), (y) the time when the Old
Notes registered thereunder can be sold by non-affiliates pursuant to Rule 144
under the Securities Act without limitation under clauses (c), (e), (f) and (h)
of Rule 144, or (z) such time as all the Old Notes registered thereunder have
been sold. During any consecutive 365-day period, the Company will have the
ability to suspend the availability of the Shelf Registration Statement for up
to two periods of up to 45 consecutive days, but no more than an aggregate of
60 days during any 365-day period. The Company will, in the event of the
filing of a Shelf Registration Statement, provide to each holder of the Old
Notes copies of the prospectus which is part of the Shelf Registration
Statement, notify each such holder when the Shelf Registration Statement for
the Old Notes has become effective and take certain other actions as are
required to permit unrestricted resales of the Old Notes. A holder of the Old
Notes that sells such Old Notes pursuant to the Shelf Registration Statement
generally will be required to be named as a selling security holder in the
related prospectus and to deliver a prospectus to the purchaser, will be
subject to certain of the civil liability provisions under the Securities Act
in connection with such sales and will be bound by the provisions of the
Registration Agreement which are applicable to such a holder (including certain
indemnification obligations). In addition, each Holder of such Old Notes will
be required to deliver information to be used in connection with the Shelf
Registration Statement and to provide comments on the Shelf Registration
Statement within the time periods set forth in the Registration Agreement in
order to have their Old Notes included in the Shelf Registration Statement and
to benefit from the provisions regarding Special Interest set forth in the
following paragraph. If the Company has consummated the Exchange Offer, then,
subject to certain limited exceptions, the Company will have no obligation to
file or to maintain the effectiveness of a Shelf Registration Statement with
respect to any Old Notes that are not tendered in the Exchange Offer.
In the event that (i) by the 150th day following the Issue Date, the
Exchange Offer Registration Statement was not filed with the Commission, (ii)
by the 180th day following the Issue Date, neither the Exchange Offer
Registration Statement is declared effective nor (if the Exchange Offer is not
permitted as described above) the Shelf Registration Statement was filed with
the Commission, or (iii) by the 210th day following the Issue Date, the
Exchange Offer is not consummated or the Shelf Registration Statement is not
declared effective (each such event referred to in clauses (i), (ii) or (iii),
a "Registration Default"), interest will accrue on the Old Notes (in addition
to stated interest on the Old Notes) from and including the next day following
each such Registration Default. In each case such additional interest (the
"Special Interest") will
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be payable in cash semiannually in arrears each March 1 and September 1, at a
rate per annum equal to 0.25% of the principal amount of the Old Notes for each
such Registration Default. The aggregate amount of Special Interest payable
pursuant to the above provisions will, however, in no event exceed 0.25% per
annum of the principal amount of the Old Notes. Upon (a) the filing of the
Exchange Offer Registration Statement after the 150-day period described in
clause (i) above, (b) the effectiveness of the Exchange Offer Registration
Statement or the filing of the Shelf Registration Statement after the 180-day
period described in clause (ii) above or (c) the consummation of the Exchange
Offer for the Old Notes or the effectiveness of a Shelf Registration Statement,
as the case may be, after the 210-day period described in clause (iii) above,
the Special Interest payable on the Old Notes as a result of the applicable
Registration Default will cease to accrue. For purposes of the preceding
sentence, the curing of a Registration Default by the means described in clause
(b) above shall constitute the curing of a Registration Default by the means
described in clauses (i) and (ii) above, and the curing of a Registration
Default by the means described in clause (c) above shall constitute a cure of
the Registration Defaults described in clauses (i), (ii) and (iii) above.
In the event that a Shelf Registration Statement is declared effective
pursuant to the paragraph preceding the immediately preceding paragraph, if the
Company fails to keep such Registration Statement continuously effective for
the period required by the Registration Agreement (except as specifically
permitted therein), then from such time as the Shelf Registration Statement is
no longer effective until the earlier of (i) the date that the Shelf
Registration Statement is again deemed effective and (ii) the date that is the
earliest of (x) the second anniversary of the Issue Date (or until the first
anniversary of the effective date if the Shelf Registration Statement is filed
at the request of the Initial Purchasers), (y) the time when the Old Notes
registered thereunder can be sold by non-affiliates pursuant to Rule 144 under
the Securities Act without any limitation under clauses (c), (e), (f) and (h)
of Rule 144, or (z) the date as of which all the Old Notes are sold pursuant to
the Shelf Registration Statement, Special Interest shall accrue at a rate per
annum equal to 0.25% of the principal amount of the Old Notes and shall be
payable in cash semiannually in arrears each March 1 and September 1.
The summary herein of certain provisions of the Registration Agreement
does not purport to be complete and is subject to, and is qualified in its
entirety by reference to, all the provisions of the Registration Agreement, a
copy of which is available upon request to the Company.
THE EXCHANGE OFFER
GENERAL
The Old Notes were sold by the Company on September 15, 1997 to the
Initial Purchasers, who in turn sold the Old Notes to a limited number of
qualified institutional buyers pursuant to Rule 144A under the Securities Act.
In connection with the sale of the Old Notes, the Company and the Initial
Purchasers entered into the Registration Agreement, which requires the Company
to file with the Commission a registration statement under the Securities Act
with respect to the Exchange Notes, which are identical in all material
respects to the Old Notes, and to use its best efforts to cause such
registration statement to become effective under the Securities Act. The
Company is further obligated, upon the Exchange Offer Registration Statement
being declared effective, to offer the holders of the Old Notes the opportunity
to exchange their Old Notes for a like principal amount of Exchange Notes,
which will be issued without a restrictive legend and may be reoffered and
resold by the holder without restrictions or limitations under the Securities
Act. In the event certain circumstances occur which would result in either the
Exchange Notes not becoming freely tradeable or certain holders of the Old
Notes not being eligible to participate in the Exchange Offer, then the Company
is required to file a Shelf Registration Statement and use its best efforts to
cause the Old Notes to be registered under the Securities Act. A copy of the
Registration Agreement has been filed as an exhibit to the Registration
Statement of which this Prospectus is a part. The Exchange Offer is being made
pursuant to the Registration Agreement to satisfy the Company's obligations
thereunder. See "Registration Rights."
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The term "Holder" with respect to the Exchange Offer means any person
in whose name Old Notes are registered on the security registrar's books or any
other person who has obtained a properly completed assignment from the
registered holder or any participant in the DTC system whose name appears on a
security position listing as the holder of such Old Notes and who desires to
deliver such Old Notes by book-entry transfer at DTC.
Upon the terms and subject to the conditions set forth in this
Prospectus and in the accompanying Letter of Transmittal (which together
constitute the Exchange Offer), the Company will accept for exchange Old Notes
which are properly tendered on or prior to the Expiration Date and not withdrawn
as permitted below. As used herein, the term "Expiration Date" means 5:00 p.m.,
New York City time, on March 11, 1998; provided, however, that if the Company,
in its sole discretion, has extended the period of time during which the
Exchange Offer is open, the term "Expiration Date" means the latest time and
date to which the Exchange Offer is extended.
As of the date of this Prospectus, $300,000,000 aggregate principal
amount of the Old Notes are outstanding. This Prospectus, together with the
Letter of Transmittal, is first being sent on or about February 5, 1998 to all
Holders of Old Notes known to the Company. The Company's obligation to accept
Old Notes for exchange pursuant to the Exchange Offer is subject to certain
customary conditions as set forth under "--Certain Conditions to the Exchange
Offer" below.
The Company expressly reserves the right, at any time or from time to
time, to extend the period of time during which the Exchange Offer is open, and
thereby delay acceptance for exchange of any Old Notes, by giving written notice
of such extension to the Holders thereof as described below. During any such
extension, all Old Notes previously tendered will remain subject to the Exchange
Offer and may be accepted for exchange by the Company. Any Old Notes not
accepted for exchange for any reason will be returned without expense to the
tendering Holder thereof as promptly as practicable after the expiration or
termination of the Exchange Offer.
Old Notes tendered in the Exchange Offer must be in denominations of
principal amount of $1,000 or any integral multiple thereof.
The Company reserves the right (i) to delay acceptance of any Old
Notes, to extend the Exchange Offer or to terminate the Exchange Offer and to
refuse to accept Old Notes not previously accepted. If any of the conditions
set forth herein under "--Certain Conditions to "Exchange Offer" shall apply, by
giving notice of such delay, extension or termination to the Holders as
described below, and (ii) to amend the terms of the Exchange offer in any
manner. If the Exchange Offer is amended in a manner determined by the Company
to constitute a material change, the Company will promptly disclose such
amendment in a manner reasonably calculated to inform the holders of the Old
Notes of such amendment. The Company will give oral or written notice of any
extension, amendment, non-acceptance or termination to the Holders of the Old
Notes as promptly as practicable, such notice in the case of any extension to be
issued by means of a press release or other public announcement no later than
9:00 a.m., New York City time, on the next business day after the previously
scheduled Expiration Date.
PROCEDURES FOR TENDERING OLD NOTES
Only a Holder of Old Notes may tender such Old Notes in the Exchange
Offer. The tender to the Company of Old Notes by a Holder thereof as set forth
below and the acceptance thereof by the Company will constitute a binding
agreement between the tendering Holder and the Company upon the terms and
subject to the conditions set forth in this Prospectus and in the accompanying
Letter of Transmittal. A Holder who wishes to tender Old Notes for exchange
pursuant to the Exchange Offer must transmit a properly completed and duly
executed Letter of Transmittal, including all other documents required by such
Letter of Transmittal, to Wilmington Trust Company (the "Exchange Agent") at the
address set forth below under "--Exchange Agent" or (in the case of a book-entry
transfer) an Agent's Message in lieu of the Letter of
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<PAGE> 38
Transmittal, and the Exchange Agent must receive the foregoing, on or prior to
the Expiration Date. In addition, either (i) certificates for such Old Notes
must be received by the Exchange Agent along with the Letter of Transmittal,
(ii) a timely confirmation of a book-entry transfer (a "Book-Entry
Confirmation") of such Old Notes, if such procedure is available, into the
Exchange Agent's account at DTC (the "Book-Entry Transfer Facility") pursuant to
the procedure for book-entry transfer described below, must be received by the
Exchange Agent prior to the Expiration Date, or (iii) the Holder must comply
with the guaranteed delivery procedures described below (see "--Guaranteed
Delivery Procedures").
THE METHOD OF DELIVERY OF OLD NOTES, LETTERS OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF
THE HOLDERS. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE
AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE TIMELY DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION
DATE. NO LETTERS OF TRANSMITTAL OR CERTIFICATES FOR OLD NOTES SHOULD BE SENT
TO THE COMPANY. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS,
COMMERCIAL BANKS, TRUST COMPANIES OF OTHER NOMINEES TO EFFECT THE ABOVE
TRANSACTIONS FOR SUCH HOLDERS.
The term "Agent's Message" means a message, transmitted by the
Book-Entry Transfer Facility to and received by the Exchange Agent and forming a
part of a Book-Entry Confirmation, which states that the Book-Entry Transfer
Facility has received an express acknowledgment from the tendering participant,
which acknowledgment states that such participant has received and agrees to be
bound by the Letter of Transmittal and that the Company may enforce the Letter
of Transmittal against such participant.
Any beneficial owner whose Old Notes are registered in the name of a
broker, dealer, commercial bank, trust company, or other nominee and who wishes
to tender should contact the registered Holder promptly and instruct such
registered Holder to tender on such beneficial owner's behalf. If such
beneficial owner wishes to tender on such owner's own behalf, such owner must,
prior to completing and executing the Letter of Transmittal and delivering such
owner's Old Notes, either make appropriate arrangements to register ownership
of the Old Notes in such beneficial owner's name or obtain a properly completed
bond power from the registered Holder. The transfer of registered ownership
may take considerable time and may not be able to be completed prior to the
Expiration Date.
Signatures on a Letter of Transmittal or a notice of withdrawal
described below (see "--Withdrawal Rights"), as the case may be, must be
guaranteed (see "--Guaranteed Delivery Procedures") unless the Old Notes
surrendered for exchange pursuant thereto are tendered (i) by a registered
Holder of the Old Notes who has not completed the box entitled "Special
Issuance Instructions" or "Special Delivery Instructions" on the Letter of
Transmittal or (ii) for the account of an Eligible Institution (as defined
below). In the event that signatures on a Letter of Transmittal or a notice of
withdrawal, as the case may be, are required to be guaranteed, such guarantees
must be by a financial institution (including most banks, savings and loan
associations and brokerage houses) that is a participant in the Securities
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Program or the Stock Exchanges Medallion Program (collectively, "Eligible
Institutions"). If Old Notes are registered in the name of a person other than
a signer of the Letter of Transmittal, the Old Notes surrendered for exchange
must be endorsed by or be accompanied by a written instrument or instruments of
transfer or exchange, in satisfactory form as determined by the Company in its
sole discretion, duly executed by the registered Holder exactly as the name or
names of the registered Holder or Holders appear on the Old Notes with the
signature thereon guaranteed by an Eligible Institution.
If the Letter of Transmittal or any Old Notes or powers of attorney
are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary or
representative capacity, such person should so indicate when signing and,
unless waived by the Company, proper evidence satisfactory to the Company of
their authority to so act must be submitted with the Letter of Transmittal.
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<PAGE> 39
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of Old Notes tendered for exchange will be determined
by the Company in its sole discretion, which determination shall be final and
binding. The Company reserves the absolute right to reject any and all tenders
of any particular Old Notes not properly tendered or not to accept any
particular Old Notes which acceptance might, in the judgment of the Company or
its counsel, be unlawful. The Company also reserves the absolute right to waive
any defects or irregularities or conditions of the Exchange Offer as to any
particular Old Notes either before or after the Expiration Date (including the
right to waive the ineligibility of any Holder who seeks to tender Old Notes in
the Exchange Offer). The interpretation of the terms and conditions of the
Exchange Offer as to any particular Old Notes either before or after the
Expiration Date (including the Letter of Transmittal and the instructions
thereto) by the Company shall be final and binding on all parties. Unless
waived, any defects or irregularities in connection with tenders of Old Notes
for exchange must be cured within such reasonable period of time as the Company
shall determine. None of the Company, the Exchange Agent or any other person
shall be under any duty to give notification of any defect or irregularity with
respect to any tender of Old Notes for exchange, nor shall any of them incur
any liability for failure to give such notification. Tenders of Old Notes will
not be deemed to have been made until such irregularities have been cured or
waived. Any Old Notes received by the Exchange Agent that are not properly
tendered and as to which the defects or irregularities have not been cured or
waived will be returned without cost by the Exchange Agent to the tendering
holder of such Old Notes unless otherwise provided in the Letter of
Transmittal, as soon as practicable following the Expiration Date. In addition,
the Company reserves the right in its sole discretion to (i) purchase or make
offers for any Old Notes that remain outstanding subsequent to the Expiration
Date and (ii) to the extent permitted by applicable law, purchase Old Notes in
the open market, in privately negotiated transactions or otherwise. The terms
of any such purchases or offers may differ from the terms of the Exchange Offer.
By tendering, each Holder will represent to the Company that, among
other things, the Holder is not an "affiliate" of the Company (within the
meaning of Rule 405 under the Securities Act), that any Exchange Notes to be
received by it will be acquired in the ordinary course of business and that at
the time of the commencement of the Exchange Offer it had no arrangement with
any person to participate in a distribution of the Exchange Notes. Each
broker-dealer that receives Exchange Notes for its own account in exchange for
Old Notes, where such Old Notes were acquired by such broker-dealer as a result
of market-making activities or other trading activities, must acknowledge that
it will deliver a prospectus in connection with any resale of such Exchange
Notes. See "Plan of Distribution." The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF EXCHANGE NOTES; INTEREST
Upon satisfaction or waiver of all of the conditions to the Exchange
Offer, the Company will accept on, or promptly after, the Expiration Date, all
Old Notes properly tendered and will issue the Exchange Notes promptly after
acceptance of the Old Notes. See "--Certain Conditions to the Exchange Offer"
below. For purposes of the Exchange Offer, the Company will be deemed to have
accepted properly tendered Old Notes for exchange when, as and if the Company
has given oral (promptly confirmed in writing) or written notice thereof to the
Exchange Agent.
For each Old Note accepted for exchange, the Holder of such Old Note
will receive as set forth under "Description of Exchange Notes--Book Entry,
Delivery and Form" an Exchange Note having a principal amount equal to that of
the surrendered Old Note. The Exchange Notes will bear interest from the most
recent date to which interest has been paid on the Old Notes or, if no interest
has been paid on the Old Notes, from September 15, 1997. Accordingly, registered
Holders of Exchange Notes on the relevant record date for the first interest
payment date following the consummation of the Exchange Offer will receive
interest accruing from the most recent date to which interest has been paid on
the Old Notes or, if no interest has been paid, from September 15, 1997. Old
Notes accepted for exchange will cease to accrue interest from and after the
date of consummation of the Exchange Offer. Holders whose Old Notes are
accepted for
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<PAGE> 40
exchange will not receive any payment in respect of accrued interest on such Old
Notes otherwise payable on any interest payment date the record date for which
occurs on or after consummation of the Exchange Offer. In the event that (i) by
March 14, 1998, neither the Exchange Offer Registration Statement is declared
effective nor (if the Exchange Offer is not permitted as described above) the
Shelf Registration Statement is filed with the Commission, or (ii) by April 13,
1998, the Exchange Offer is not consummated or the Shelf Registration Statement
is not declared effective (each such event referred to in clauses (i) or (ii), a
"Registration Default"), interest will accrue on the Old Notes (in addition to
stated interest on the Old Notes) from and including the next day following each
such Registration Default. In each case such additional interest (the "Special
Interest") will be payable in cash semiannually in arrears each March 1 and
September 1, at a rate per annum equal to 0.25% of the principal amount of the
Old Notes. The aggregate amount of Special Interest payable pursuant to the
above provisions will in no event exceed 0.25% per annum of the principal amount
of such Old Notes. Upon (a) the effectiveness of the Exchange Offer
Registration Statement or the filing of the Shelf Registration Statement after
the date set forth in clause (i) above or (b) the consummation of the Exchange
Offer or the effectiveness of a Shelf Registration Statement, as the case may
be, after the date set forth in clause (ii) above, the Special Interest payable
on the Old Notes as a result of the applicable Registration Default will cease
to accrue.
In all cases, issuance of Exchange Notes for Old Notes that are
accepted for exchange pursuant to the Exchange Offer will be made only after
timely receipt by the Exchange Agent of certificates for such Old Notes or a
timely Book-Entry Confirmation of such Old Notes into the Exchange Agent's
account at the Book-Entry Transfer Facility, a properly completed and duly
executed Letter of Transmittal or an Agent's Message in lieu thereof and all
other required documents. If any tendered Old Notes are not accepted for any
reason set forth in the terms and conditions of the Exchange Offer or if Old
Notes are submitted for a greater principal amount than the Holder desires to
exchange, such unaccepted or non-exchanged Old Notes will be returned without
expense to the tendering Holder thereof (or, in the cases of Old Notes tendered
by book-entry transfer into the Exchange Agent's account at the Book-Entry
Transfer Facility pursuant to the book-entry procedures described below, such
non-exchanged Old Notes will be credited to an account maintained with such
Book-Entry Transfer Facility) as promptly as practicable after the expiration
or termination of the Exchange Offer.
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with
respect to the Old Notes at the Book-Entry Transfer Facility for purposes of
the Exchange Offer within two business days after the date of this Prospectus
unless the Exchange Agent already has established an account with the
Book-Entry Transfer Facility suitable for the Exchange Offer, and any financial
institution that is a participant in the Book-Entry Transfer Facility's systems
may make book-entry delivery of Old Notes by causing the Book-Entry Transfer
Facility to transfer such Old Notes into the Exchange Agent's account at the
Book-Entry Transfer Facility in accordance with such Book-Entry Transfer
Facility's procedures for transfer. However, although delivery of Old Notes may
be effected through book-entry transfer at the Book-Entry Transfer Facility, the
Letter of Transmittal or a facsimile thereof, with any required signature
guarantees or an Agent's Message in lieu thereof and any other required
documents, must, in any case, be transmitted to and received by the Exchange
Agent at the address set forth below under "--Exchange Agent" on or prior to
5:00 p.m. New York City time, on the Expiration Date or the guaranteed
procedures described below must be complied with. DELIVERY OF DOCUMENTS TO DTC
DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
GUARANTEED DELIVERY PROCEDURES
If a registered Holder of the Old Notes desires to tender such Old
Notes and time will not permit such Holder's Old Notes or other required
documents to reach the Exchange Agent before the Expiration Date, or the
procedure for book-entry transfer cannot be completed on a timely basis, a
tender may be effected if (i) the tender is made through an Eligible
Institution, (ii) on or prior to 5:00 p.m., New York City time, on the
Expiration Date, the Exchange Agent receives from such Eligible Institution a
properly completed and duly
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<PAGE> 41
executed Notice of Guaranteed Delivery, substantially in the form provided by
the Company (by telegram, telex, facsimile transmission, mail or hand delivery),
setting forth the name and address of the Holder of Old Notes and the amount of
Old Notes tendered, stating that the tender is being made thereby and
guaranteeing that within three New York Stock Exchange ("NYSE") trading days
after the date of execution of the Notice of Guaranteed Delivery, the
certificates for all physically tendered Old Notes, in proper form for transfer,
or a Book-Entry Confirmation, as the case may be, together with a properly
completed and duly executed Letter of Transmittal (or facsimile thereof or
Agent's Message in lieu thereof) with any required signature guarantees and any
other documents required by the Letter of Transmittal will be deposited by the
Eligible Institution with the Exchange Agent, and (iii) the certificates for all
physically tendered Old Notes, in proper form for transfer, or a Book-Entry
Confirmation, as the case may be, together with a properly completed and duly
executed Letter of Transmittal (or facsimile thereof or Agent's Message in lieu
thereof) with any required signature guarantees, and any other documents
required by the Letter of Transmittal are deposited by the Eligible Institution
within three NYSE trading days after the date of execution of the Notice of
Guaranteed Delivery.
WITHDRAWAL RIGHTS
Except as otherwise provided herein, tenders of Old Notes may be
withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration
Date. For a withdrawal to be effective, a written notice or facsimile
transmission notice of withdrawal must be received by the Exchange Agent at the
address set forth below under "--Exchange Agent." Any such notice of withdrawal
must (i) specify the name of the person having deposited the Old Notes to be
withdrawn, (the "Depositor"), (ii) identify the Old Notes to be withdrawn
(including, if applicable, the registration number or numbers and total
principal amount of such Old Notes), (iii) be signed by the Depositor in the
same manner as the original signature on the Letter of Transmittal by which such
Old Notes were tendered (including any required signature guarantees) or be
accompanied by documents of transfer sufficient to permit the Trustee with
respect to the Old Notes to register the transfer of such Old Notes into the
name of the Depositor withdrawing the tender, (iv) specify the name in which any
such Old Notes are to be registered, if different from that of the Depositor and
(v) if applicable because the Old Notes have been tendered pursuant to the
book-entry procedures, specify the name and number of the participant's account
at DTC to be credited, if different than that of the Depositor. All questions as
to the validity, form and eligibility (including time of receipt) of such
notices will be determined by the Company, whose determination will be final and
binding on all parties. Any Old Notes so withdrawn will be deemed not to have
been validly tendered for exchange for purposes of the Exchange Offer. Any Old
Notes which have been tendered for exchange but which are not exchanged for any
reason will be returned to the Holder thereof without cost to such Holder (or,
in the case of Old Notes tendered by book-entry transfer into the Exchange
Agent's account at the Book-Entry Transfer Facility pursuant to the book-entry
transfer procedures described above, such Old Notes will be credited to an
account maintained with such Book-Entry Transfer Facility for the Old Notes) as
soon as practicable after withdrawal, rejection of tender or termination of the
Exchange Offer. Properly withdrawn Old Notes may be retendered by following one
of the procedures described under "--Procedures for Tendering Old Notes" above
at any time on or prior to the Expiration Date.
CERTAIN CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provisions of the Exchange Offer, and
subject to its obligations pursuant to the Registration Agreement, the Company
shall not be required to accept for exchange, or to issue Exchange Notes in
exchange for, any Old Notes and may terminate or amend any or all of the
Exchange Offer, if at any time before the acceptance of such Exchange Notes for
exchange, any of the following events shall occur:
(i) any injunction, order or decree shall have been
issued by any court or any governmental agency that would prohibit,
prevent or otherwise materially impair the ability of the Company to
proceed with the Exchange Offer; or
(ii) the Exchange Offer will violate any applicable law or
any applicable interpretation of the staff of the Commission.
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The foregoing conditions are for the sole benefit of the Company and
may be asserted by the Company in whole or in part at any time and from time to
time upon advice of counsel. The failure by the Company at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right and such right shall be deemed an ongoing right which may be asserted at
any time and from time to time.
In addition, the Company will not accept for exchange any Old Notes
tendered and no Exchange Notes will be issued in exchange for any such Old
Notes, if at such time any stop order is threatened by the Commission or in
effect with respect to the Registration Statement of which this Prospectus is a
part or the qualification of the Indenture with respect to the Exchange Notes
under the Trust Indenture Act of 1939, as amended.
The Exchange Offer is not conditioned on any minimum principal amount
of Old Notes being tendered for exchange.
EXCHANGE AGENT
Wilmington Trust Company has been appointed as the Exchange Agent for
the Exchange Offer. All executed Letters of Transmittal should be directed to
the Exchange Agent at the address set forth below. Questions and requests for
assistance, requests for additional copies of this Prospectus or of the Letter
of Transmittal and requests for Notices of Guaranteed Delivery should be
directed to the Exchange Agent addressed as follows:
Wilmington Trust Company, Exchange Agent
By Mail, Overnight Courier or Hand Delivery:
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
Attn: Corporate Trust Operations
By Facsimile: (For Eligible Institutions Only):
(302) 651-1079
Confirm by Telephone:
(302) 651-8869
Executed Letters of Transmittal may also be delivered by mail,
overnight courier or hand delivery to: Wilmington Trust Company, Exchange
Agent, c/o Harris Trust & Savings Bank, 88 Pine Street, Wall Street Plaza, 19th
Floor, New York, New York 10005.
DELIVERY OF THE LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE DOES
NOT CONSTITUTE A VALID DELIVERY OF SUCH LETTER OF TRANSMITTAL.
FEES AND EXPENSES
The Company will not make any payment to brokers, dealers or others
soliciting acceptances of the Exchange Offer.
The expenses to be incurred in connection with the Exchange Offer will
be paid by the Company. Such expenses include registration fees, fees and
expenses of the Exchange Agent and Trustee, accounting and legal fees and
printing costs, among others.
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TRANSFER TAXES
Holders who tender their Old Notes for exchange will not be obligated
to pay any transfer taxes in connection therewith, except that Holders who
instruct the Company to register Exchange Notes in the name of, or request that
Old Notes not tendered or not accepted in the Exchange Offer be returned to, a
person other than the registered tendering Holder will be responsible for the
payment of any applicable transfer tax thereon.
CONSEQUENCES OF FAILURE TO EXCHANGE OLD NOTES
Holders of Old Notes who do not exchange their Old Notes for Exchange
Notes pursuant to the Exchange Offer will continue to be subject to the
provisions in the Old Notes regarding transfer and exchange of the Old Notes and
the restrictions on transfer of such Old Notes as set forth in the legend
thereon as a consequence of the issuance of the Old Notes pursuant to exemptions
from, or in transactions not subject to, the registration requirements of the
Securities Act and applicable state securities laws. In general, the Old Notes
may not be offered or sold unless registered under the Securities Act and
applicable state securities laws. See "Transfer Restrictions on Old Notes" and
"Risk Factors -- Consequences of Failure to Exchange Old Notes." The Company
does not currently anticipate that it will register under the Securities Act Old
Notes not tendered. See "Registration Rights."
RESALES OF EXCHANGE NOTES
Based on interpretations by the staff of the Commission, as set forth
in the No-Action Letters, the Company believes that Exchange Notes issued
pursuant to the Exchange Offer in exchange for Old Notes may be offered for
resale, resold or otherwise transferred by Holders thereof (other than any such
Holder which is an "affiliate" of the Company within the meaning of Rule 405
under the Securities Act) without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that such
Exchange Notes are acquired in the ordinary course of such Holders' business and
such Holders, other than broker-dealers, have no arrangement or understanding
with any person to participate in a distribution of Exchange Notes. However,
the Commission has not considered the Exchange Offer in the context of a
no-action letter and there can be no assurance that the staff of the Commission
would make a similar determination with respect to the Exchange Offer as in such
other circumstances. Each Holder, other than a broker-dealer, must acknowledge
that it is not engaged in, and does not intend to engage in, a distribution of
Exchange Notes and has no arrangement or understanding with any person to
participate in a distribution of Exchange Notes. If any Holder is an affiliate
of the Company or is engaged in or intends to engage in or has any arrangement
or understanding with respect to the distribution of the Exchange Notes to be
acquired pursuant to the Exchange Offer, such Holder (i) may not rely on the
applicable interpretations of the staff of the Commission set forth in the
No-Action Letters and (ii) must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any resale
transaction. Each broker-dealer that receives Exchange Notes for its own account
in exchange for Old Notes that were acquired by such broker-dealer as a result
of market-making activities or other trading activities, must acknowledge that
it will deliver a prospectus in connection with any resale of such Exchange
Notes. The Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act. This Prospectus, as
it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of Exchange Notes received in exchange
for Old Notes where such Old Notes were acquired by such broker-dealer as a
result of market-making activities or other trading activities. The Company has
agreed that for a period of 180 days after the Expiration Date, it will make
this Prospectus available to any broker-dealer for use in connection with any
such laws of certain jurisdictions, if applicable, where the Exchange Notes may
not be offered or sold unless they have been registered or qualified for sale in
such jurisdictions or any exemption from registration or qualification is
available and is complied with. The Company has agreed, pursuant to the
Registration Agreement, subject to certain limitations specified therein, to
register or qualify the Exchange Notes for offer or sale under the securities
laws of such jurisdictions as any Holder reasonably requests in writing. Unless
a Holder so requests, the Company does not currently intend to register or
qualify the sale of the Exchange Notes in any such jurisdictions.
42
<PAGE> 44
In addition, information set forth above concerning certain
interpretations of and positions taken by the staff of the Commission is not
intended to constitute legal advice and prospective investors should consult
their own legal advisors with respect to such matters.
ACCOUNTING TREATMENT
No gain or loss for accounting purposes will be recognized by the
Company upon the consummation of the Exchange Offer. The expenses of the
Exchange Offer will be amortized by the Company over the term of the Exchange
Notes under generally accepted accounting principles.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following summary fairly describes the material United States
federal income tax consequences expected to apply to the exchange of Old Notes
for Exchange Notes and is based upon the provisions of the Internal Revenue
Code of 1986, as amended, the final, temporary and proposed regulations
promulgated thereunder, and administrative rulings and judicial decisions now
in effect, all of which are subject to change or different interpretations
(possibly with retroactive effect). This discussion is for general information
only and does not purport to address all of the possible federal income tax
consequences or any other federal, or any state, local or foreign, tax
consequences of the acquisition, ownership and disposition of the Old Notes or
Exchange Notes. It is limited to investors who hold the Old Notes and the
Exchange Notes as capital assets and does not address the federal income tax
consequences that may be relevant to particular investors in light of their
unique circumstances or to certain types of investors (such as dealers in
securities, insurance companies, financial institutions, foreign corporations,
partnerships or trusts, nonresident alien individuals, and tax-exempt entities)
who may be subject to special treatment under the federal income tax law.
An exchange of the Old Notes for the Exchange Notes pursuant to the
Exchange Offer will not constitute a taxable event for federal income tax
purposes. As a result, holders who exchange their Old Notes for Exchange Notes
will not recognize any income, gain or loss for federal income tax purposes
with respect to such exchange. A cash-basis holder will not recognize in income
any accrued and unpaid interest on the Old Notes by reason of the exchange. An
exchanging holder will have the same adjusted basis and holding period in the
Exchange Notes as it had in the Old Notes immediately before the exchange.
HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISOR AS TO THE PARTICULAR TAX
CONSEQUENCES TO THEM OF EXCHANGING OLD NOTES FOR EXCHANGE NOTES IN THE EXCHANGE
OFFER, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL, OR FOREIGN
TAX LAWS AND OF RECENT AND OF POSSIBLE FUTURE CHANGES IN THE TAX LAWS.
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Notes for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Notes. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of Exchange Notes received in
exchange for Old Notes where such Old Notes were acquired by such broker-dealer
as a result of market-making activities or other trading activities. The
Company has agreed that, starting on the Expiration Date and ending on the
close of business on the 180th day following the Expiration Date, it will make
this Prospectus, as amended or supplemented, available to any broker-dealer for
use in connection with any such resale. A broker-dealer that delivers such a
prospectus to purchasers in connection with such resales will be subject to
certain of the civil liability provisions under the Securities Act and will be
bound by the provisions of the Registration Agreement (including certain
indemnification rights and obligations).
The Company will not receive any proceeds from any sale of Exchange
Notes by broker-dealers. Exchange Notes received by broker-dealers for their
own account pursuant to the Exchange Offer may be sold from time to time in one
or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the Exchange Notes or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or at negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer and/or the purchasers of any such
Exchange Notes. Any broker-dealer that resells Exchange Notes that were
received
43
<PAGE> 45
by it for its own account pursuant to the Exchange Offer and any broker or
dealer that participates in a distribution of such Exchange Notes may be deemed
to be an "underwriter" within the meaning of the Securities Act and any profit
of any such resale of Exchange Notes and any commissions or concessions received
by any such persons may be deemed to be underwriting compensation under the
Securities Act. The Letter of Transmittal states that by acknowledging that it
will deliver and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
For a period of 180 days after the Expiration Date, the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Exchange Offer (including the expenses of one counsel for the
holders of the Old Notes) other than commissions or concessions of any brokers
or dealers and will indemnify the holders of the Old Notes (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
TRANSFER RESTRICTIONS ON OLD NOTES
The Old Notes were not registered under the Securities Act and may not
be offered or sold in the United States or to, or for the account or benefit
of, U.S. persons except in accordance with an applicable exemption from the
registration requirements thereof. Accordingly, the Old Notes were offered and
sold only in the United States to QIBs under Rule 144A under the Securities
Act.
LEGAL MATTERS
Certain legal matters in connection with the Exchange Notes offered
hereby will be passed upon for the Company by Baker & Botts, L.L.P., Houston,
Texas.
EXPERTS
The consolidated balance sheet as of December 31, 1996 and 1995 and
the consolidated statements of operations, shareholders' equity, and cash flows
for each of the three years in the period ended December 31,1996, incorporated
by reference in this registration statement, have been incorporated herein in
reliance on the report of Coopers & Lybrand L.L.P., independent accountants,
given on the authority of that firm as experts in accounting and auditing.
With respect to the unaudited interim financial information included
in the Company's quarterly reports on Form 10-Q for the quarters ended March 31,
1997, June 30, 1997 and September 30, 1997, filed pursuant to the Exchange Act
and incorporated in this Prospectus by reference, the Company's independent
accountants have reported that they have applied limited procedures in
accordance with professional standards for a review of such information.
However, their separate reports included in the Company's quarterly reports on
Form 10-Q for said quarters and incorporated by reference herein state that they
did not audit and that they do not express an opinion on that interim financial
information. With respect to the unaudited interim financial information
included in the Company's quarterly reports on Form 10-Q subsequently filed
pursuant to the Exchange Act and deemed to be incorporated in this Prospectus by
reference, it is anticipated that the Company's independent accountants will
report that they have applied limited procedures in accordance with professional
standards for a review of such information. However, their separate reports
included in the Company's subsequent quarterly reports on Form 10-Q and
incorporated by reference herein will state that they did not audit and do not
express an opinion on that interim financial information. Accordingly, the
degree of reliance on their reports on interim financial information should be
restricted in light of the limited nature of the review procedures applied. The
accountants are not subject to the liability provisions of Section 11 of the
Securities Act of 1933 for their reports on unaudited interim financial
information because these reports are not a "report" or a "part" of a
registration statement prepared or certified by the accountants within the
meaning of Sections 7 and 11 of the Securities Act.
44
<PAGE> 46
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER MADE
HEREBY EXCEPT AS CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS AND
THE ACCOMPANYING LETTER OF TRANSMITTAL, AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY, EXCHANGE AGENT, THE INITIAL PURCHASERS OR ANY OF THEIR RESPECTIVE
AFFILIATES. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE INFORMATION SET FORTH OR INCORPORATED BY REFERENCE HEREIN
OR IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. NEITHER THIS
PROSPECTUS NOR THE ACCOMPANYING LETTER OF TRANSMITTAL CONSTITUTES AN OFFER TO
SELL, OR A SOLICITATION OF AN OFFER TO BUY, BY ANYONE IN ANY JURISDICTION IN
WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON
MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Incorporation by Reference . . . . . . . . . . . . . . . . . . . . . . . 4
Available Information . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Private Placement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
The Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Description of Exchange Notes . . . . . . . . . . . . . . . . . . . . . . 24
Registration Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
The Exchange Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Certain Federal Income Tax Consequences . . . . . . . . . . . . . . . . . 43
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Transfer Restrictions on Old Notes . . . . . . . . . . . . . . . . . . . 44
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
</TABLE>
$300,000,000
EXCHANGE OFFER
GLOBAL MARINE INC.
7 1/8% NOTES DUE 2007
PROSPECTUS
Dated February 4, 1998
<PAGE> 47
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law empowers a
Delaware corporation to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of such corporation) by reason of the
fact that such person is or was a director or officer, employee or agent of
such corporation, or is or was serving at the request of such corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise. The indemnity may include expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such action,
suit or proceeding, provided that he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. A Delaware corporation
may indemnify directors, officers, employees and others in an action by or in
the right of the corporation under the same conditions, except that no
indemnification is permitted without judicial approval if the person to be
indemnified has been adjudged to be liable to the corporation. Where a
director or officer is successful on the merits or otherwise in the defense of
any action referred to above or in defense of any claim, issue or matter
therein, the corporation must indemnify such director or officer against the
expenses (including attorneys' fees) which he or she actually and reasonably
incurred in connection therewith.
Section III-11 of the By-laws of Global Marine Inc. provides for
indemnification of the directors and officers of Global Marine Inc. to the full
extent permitted by law, as now in effect or later amended. Section III-11 of
the By- laws provides that expenses incurred by a director or officer in
defending a suit or other similar proceeding shall be paid by the Company upon
receipt of an undertaking by or on behalf of the director or officer to repay
such amount if it is ultimately determined that such director or officer is not
entitled to be indemnified by the Company.
Additionally, the Company's Restated Certificate of Incorporation (the
"Charter") contains a provision that limits the liability of the Company's
directors to the fullest extent permitted by the Delaware General Corporation
Law. The provision eliminates the personal liability of directors to the
Company or its stockholders for monetary damages for breach of the director's
fiduciary duty of care as a director. As a result, stockholders may be unable
to recover monetary damages against directors for negligent or grossly
negligent acts or omissions in violation of their duty of care. The provision
does not change the liability of a director for breach of his duty of loyalty
to the Company or to stockholders, for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, for the
declaration or payment of dividends in violation of Delaware law, or in respect
of any transaction from which a director receives an improper personal benefit.
In addition to its Charter and By-law provisions, the Company has
taken such other steps as are reasonably necessary to effect its
indemnification policy. Included among such other steps is liability insurance
provided by the Company for its directors and officers for certain losses
arising from claims or charges made against them in their capacities as
directors or officers of the Company. The Company has also entered into
indemnification agreements with individual officers and directors. These
agreements generally provide such officers and directors with a contractual
right to indemnification to the full extent provided by applicable law and the
By-laws of the Company as in effect at the respective dates of such agreements.
Agreements which may be entered into with underwriters, dealers and
agents who participate in the distribution of securities of the Company may
contain provisions relating to the indemnification of the Company's officers
and directors.
The Company has placed in effect insurance which purports (a) to
insure it against certain costs of indemnification which may be incurred by it
pursuant to the aforementioned By-law provision or otherwise and (b) to insure
the officers and directors of the Company and of specified subsidiaries against
certain liabilities incurred by them in the discharge of their functions as
officers and directors except for liabilities arising from their own
malfeasance.
II-1
<PAGE> 48
ITEM 21. EXHIBITS AND FINANCIAL SCHEDULES
The following instruments and documents are included as Exhibits to
this Registration Statement. Exhibits incorporated by reference are so
indicated by parenthetical information.
Exhibit No. Exhibit
4.1* -- Indenture dated as of September 1, 1997,
between Global Marine Inc. and Wilmington
Trust Company, as Trustee.
4.2* -- Purchase Agreement, dated as of September
10, 1997, between Global Marine Inc. and
Salomon Brothers Inc individually and as
representative of the Initial Purchasers.
4.3* -- Registration Rights Agreement dated
September 15, 1997, between Global Marine
Inc. and Salomon Brothers Inc, individually
and as representative of the Initial
Purchasers.
4.4 -- Form of 7 1/8% Exchange Note Due 2007.
4.5* -- Terms of 7 1/8% Notes Due 2007.
5 -- Opinion of Baker & Botts, L.L.P.
12 -- Computation of ratio of earnings to fixed
charges.
15 -- Awareness Letter of Coopers & Lybrand L.L.P.
23.1 -- Consent of Coopers & Lybrand L.L.P.
23.2 -- Consent of Baker & Botts, L.L.P.
(contained in the opinion filed as
Exhibit 5).
24* -- Powers of Attorney
25* -- Form T-1 Statement of Eligibility of
Wilmington Trust Company to act as trustee
under the Indenture.
99.1 -- Form of Letter of Transmittal.
99.2 -- Form of Notice of Guaranteed Delivery.
99.3 -- Second Amended and Restated Credit Agreement
dated as of December 9, 1997, among Global
Marine Inc., Various Lending Institution and
Bankers Trust Company, as Administrative Agent,
Societe Generale, Southwest Agency, as
Documentation Agent and Skandinaviska Enskilda
Banken AB (Publ) and Den Norske Bank ASA, New
York Branch, as Co-Agents.
99.4 -- Credit Agreement dated as of January 29, 1998,
among Global Marine Inc., Various Lending
Institutions, and Bankers Trust Company, as
Administrative Agent, and ABN AMRO Bank, N.V.,
Houston Agency, as Syndication Agent, and
Societe Generale, Southwest Agency, as
Documentation Agent.
- ------------------------------
* Previously filed
II-2
<PAGE> 49
ITEM 22. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or the
most recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the information
set forth in the registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) under the
Securities Act if, in the aggregate, the changes in volume and price
represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table
in the effective registration statement.
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement:
Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
The Company hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the Company's annual report
pursuant to section 13(a) or section 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
section 15(d) of the Exchange Act) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Company pursuant to the provisions described under Item 20 above, or
otherwise, the Company has been advised that, in the opinion of the Securities
and Exchange Commission, such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer
or controlling person of the Company in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Company will, unless,
in the opinion of its counsel, the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the Prospectus pursuant
to Item 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the Registration Statement through
the date of responding to the request.
II-3
<PAGE> 50
The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
II-4
<PAGE> 51
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Houston,
the State of Texas on February 3, 1998.
GLOBAL MARINE INC.
By: /s/ C. RUSSELL LUIGS
---------------------------------
C. Russell Luigs
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Name Title Date
---- ----- ----
<S> <C> <C>
/s/ C. RUSSELL LUIGS Chairman of the Board and Chief February 3, 1998
------------------------------------------ Executive Officer (Principal Executive
C. Russell Luigs Officer and Director)
/s/ GARY L. KOTT Senior Vice President and Chief February 3, 1998
------------------------------------------ Financial Officer
Gary L. Kott (Principal Financial Officer)
/s/ THOMAS R. JOHNSON Vice President and Corporate Controller February 3, 1998
------------------------------------------ (Principal Accounting Officer)
Thomas R. Johnson
* Director
------------------------------------------
Donald B. Brown
* Director
------------------------------------------
Edward J. Campbell
</TABLE>
<PAGE> 52
<TABLE>
<S> <C> <C>
* Director
------------------------------------------
Thomas W. Cason
* Director
------------------------------------------
John M. Galvin
* Director
------------------------------------------
Jerry C. Martin
* Director
------------------------------------------
Edward R. Muller
Director
------------------------------------------
Paul J. Powers
Director
------------------------------------------
John G. Ryan
* Director
------------------------------------------
Ben G. Streetman
*By: /s/ GARY L. KOTT
-------------------------------------- February 3, 1998
Gary L. Kott
Senior Vice President and Chief
Financial Officer
as Attorney-in-Fact
</TABLE>
<PAGE> 53
<TABLE>
<CAPTION>
Exhibit No. Exhibit
----------- -------
<S> <C>
4.1* -- Indenture dated as of September 1, 1997, between Global Marine Inc. and
Wilmington Trust Company, as Trustee.
4.2* -- Purchase Agreement, dated as of September 10, 1997, between Global Marine
Inc. and Salomon Brothers Inc individually and as representative of the
Initial Purchasers.
4.3* -- Registration Rights Agreement dated September 15, 1997, between Global
Marine Inc. and Salomon Brothers Inc, individually and as representative
of the Initial Purchasers.
4.4 -- Form of 7 1/8% Exchange Note Due 2007.
4.5* -- Terms of 7 1/8% Notes Due 2007.
5 -- Opinion of Baker & Botts, L.L.P.
12 -- Computation of ratio of earnings to fixed charges.
15 -- Awareness Letter of Coopers & Lybrand L.L.P.
23.1 -- Consent of Coopers & Lybrand L.L.P.
23.2 -- Consent of Baker & Botts, L.L.P. (contained in the opinion filed as
Exhibit 5).
24* -- Powers of Attorney
25* -- Form T-1 Statement of Eligibility of Wilmington Trust Company to act as
trustee under the Indenture.
99.1 -- Form of Letter of Transmittal.
99.2 -- Form of Notice of Guaranteed Delivery.
99.3 -- Second Amended and Restated Credit Agreement dated as of December 9, 1997,
among Global Marine Inc., Various Lending Institution and Bankers Trust
Company, as Administrative Agent, Societe Generale, Southwest Agency, as
Documentation Agent and Skandinaviska Enskilda Banken AB (Publ) and Den
Norske Bank ASA, New York Branch, as Co-Agents.
99.4 -- Credit Agreement dated as of January 29, 1998, among Global Marine Inc.,
Various Lending Institutions, and Bankers Trust Company, as Administrative
Agent, and ABN AMRO Bank, N.V., Houston Agency, as Syndication Agent, and Societe
Generale, Southwest Agency, as Documentation Agent.
</TABLE>
- -----------------
* Previously filed.
<PAGE> 1
EXHIBIT 4.4
[FACE OF SECURITY]
GLOBAL MARINE INC.
7 1/8% NOTE DUE 2007
Cusip No.
$
Global Marine Inc., a Delaware corporation (the "Company,"
which term includes any successor Person under the Indenture hereinafter
referred to), for value received promises to pay to Cede & Co. or registered
assigns, the principal sum of _____________________________________Dollars [or
such lesser amount as indicated on the schedule of exchanges of definitive
Securities,](1) on September 1, 2007.
Interest Payment Dates: March 1 and September 1
Record Dates: February 15 and August 15
Reference is hereby made to the further provisions of this
Security set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
IN WITNESS WHEREOF, the Company has caused this Security to be
signed manually or by facsimile by its duly authorized officers and its
corporate seal or a facsimile thereof to be affixed hereto or imprinted hereon.
Dated: ____________, 1998
[SEAL] GLOBAL MARINE INC.
By:
--------------------------------
Name:
Title:
By:
-------------------------------
Name:
Title:
- ---------------------
(1) This phrase to be included only if the Security is a Global Security.
1
<PAGE> 2
Certificate of Authentication:
This is one of the Securities of the series
designated therein referred to in the within-
mentioned Indenture.
WILMINGTON TRUST COMPANY, not in
its individual capacity but solely as Trustee
By:
------------------------------
Authorized Officer
[Unless and until it is exchanged in whole or in part for
Securities in definitive form, this Security may not be transferred except as a
whole by the Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary or by the
Depositary or any such nominee to a successor Depositary or a nominee of such
successor Depositary. The Depository Trust Company (55 Water Street, New York,
New York) ("DTC"), shall act as the Depositary until a successor shall be
appointed by the Company and the Registrar. Unless this certificate is
presented by an authorized representative of DTC to the issuer or its agent for
registration of transfer, exchange or payment, and any certificate issued is
registered in the name of Cede & Co. or such other name as may be requested by
an authorized representative of DTC (and any payment is made to Cede & Co. or
such other entity as may be requested by an authorized representative of DTC),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an
interest herein.](2)
- ------------
(2) This paragraph should be included only if the Security is a Global
Security.
2
<PAGE> 3
[REVERSE OF SECURITY]
GLOBAL MARINE INC.
7 1/8% NOTE DUE 2007
This Security is one of a duly authorized issue of 7 1/8%
Notes Due 2007 (the "Securities") of Global Marine Inc., a Delaware corporation
(the "Company").
1. Interest. The Company promises to pay interest on
the principal amount of this Security at 7 1/8% per annum from September 15,
1997 until maturity. The Company will pay interest semiannually on March 1 and
September 1 of each year (each an "Interest Payment Date"), or if any such day
is not a Business Day, on the next succeeding Business Day. Interest on the
Securities will accrue from the most recent Interest Payment Date on which
interest has been paid or, if no interest has been paid, from September 15,
1997; provided that if there is no existing Default in the payment of interest,
and if this Security is authenticated between a record date referred to on the
face hereof and the next succeeding Interest Payment Date, interest shall
accrue from such next succeeding Interest Payment Date; provided, further, that
the first Interest Payment Date shall be March 1, 1998. The Company shall pay
interest on overdue principal from time to time on demand at a rate equal to
the interest rate then in effect; it shall pay interest on overdue installments
of interest (without regard to any applicable grace periods) from time to time
on demand at the same rate to the extent lawful. Interest will be computed on
the basis of a 360-day year of twelve 30-day months.
2. Method of Payment. The Company will pay interest on
the Securities (except defaulted interest) to the Persons who are registered
Holders of Securities at the close of business on the record date next
preceding the Interest Payment Date, even if such Securities are canceled after
such record date and on or before such Interest Payment Date. The Holder must
surrender this Security to a Paying Agent to collect principal payments. The
Company will pay the principal of and interest on the Securities in money of
the United States of America that at the time of payment is legal tender for
payment of public and private debts. The Company, however, may pay such
amounts by check payable in such money. Payments in respect of the Securities
evidenced by a Global Security (including principal, premium, if any, and
interest) shall be made by wire transfer of immediately available funds to the
accounts specified by the Holder of the Global Security. In all other cases,
payment of interest may be made at the option of the Company by check to a
Holder's registered address.
3. Paying Agent and Registrar. Initially, Wilmington
Trust Company (the "Trustee"), the Trustee under the Indenture, will act as
Paying Agent and Registrar. The Company may change any Paying Agent,
Registrar, co- registrar or additional paying agent without notice to any
Holder. The Company may act in any such capacity.
4. Indenture. The Company issued the Securities under
an Indenture dated as of September 1, 1997 (the "Indenture") between the
Company and the Trustee. The terms of the Securities include those stated in
the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (15 U.S. Code Sections 77aaa-77bbbb) (the
"TIA"), as in
3
<PAGE> 4
effect on the date of execution of the Indenture. The Securities are subject
to all such terms, and Holders are referred to the Indenture and such Act for a
statement of such terms. The Securities are unsecured general obligations of
the Company limited to $300,000,000 in aggregate principal amount. The
Indenture provides for the issuance of other series of debt securities
(including the Securities, the "Debt Securities") thereunder.
5. Denominations, Transfer, Exchange. The Securities
are in registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. The transfer of Securities may be registered and
Securities may be exchanged as provided in the Indenture. The Registrar and
the Trustee may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not exchange or register
the transfer of any Securities during the period between a record date and the
corresponding Interest Payment Date or of any Security selected for redemption,
except the unredeemed portion of any Security being redeemed in part.
6. Persons Deemed Owners. The registered Holder of a
Security shall be treated as its owner for all purposes.
7. Redemption. The Securities will be redeemable, at
the option of the Company, at any time in whole or from time to time in part,
upon not less than 30 and not more than 60 days' notice as provided in the
Indenture, on any date prior to maturity (the "Redemption Date") at a price
(the "Redemption Price") equal to 100% of the principal amount thereof plus
accrued and unpaid interest, if any, to the Redemption Date (subject to the
right of holders of record on the relevant record date to receive interest due
on an Interest Payment Date that is on or prior to the Redemption Date) plus
the Make-Whole Premium, if any. In no event will the Redemption Price ever be
less than 100% of the principal amount of the Securities plus accrued interest
to the Redemption Date.
The amount of the Make-Whole Premium with respect to any
Security (or portion thereof) to be redeemed will be equal to the excess, if
any, of:
(i) the sum of the present values, calculated as of the
Redemption Date, of:
(A) each interest payment that, but for such redemption,
would have been payable on the Security (or portion
thereof) being redeemed on each Interest Payment Date
occurring after the Redemption Date (excluding any
accrued interest for the period prior to the
Redemption Date); and
(B) the principal amount that, but for such redemption,
would have been payable at the final maturity of the
Securities (or portion thereof) being redeemed;
over
(ii) the principal amount of the Security (or portion
thereof) being redeemed.
4
<PAGE> 5
The present values of interest and principal payments referred to in clause (i)
above will be determined in accordance with generally accepted principles of
financial analysis. Such present values will be calculated by discounting the
amount of each payment of interest or principal from the date that each such
payment would have been payable, but for the redemption, to the Redemption Date
at a discount rate equal to the Treasury Yield plus 20 basis points.
The Make-Whole Premium shall be calculated by an independent
investment banking institution of national standing appointed by the Company;
provided, that if the Company fails to make such appointment at least 45
business days prior to the Redemption Date, or if the institution so appointed
is unwilling or unable to make such calculation, such calculation shall be made
by Salomon Brothers Inc or, if such firm is unwilling or unable to make such
calculation, by an independent investment banking institution of national
standing appointed by the Trustee (in any such case, an "Independent Investment
Banker").
For purposes of determining the Make-Whole Premium, "Treasury
Yield" means a rate of interest per annum equal to the weekly average yield to
maturity of United States Treasury Notes that have a constant maturity that
corresponds to the remaining term to maturity of the Securities, calculated to
the nearest 1/12th of a year (the "Remaining Term"). The Treasury Yield shall
be determined as of the third Business Day (as defined in the Indenture)
immediately preceding the applicable Redemption Date. The weekly average
yields of United States Treasury Notes shall be determined by reference to the
most recent statistical release published by the Federal Reserve Bank of New
York and designated "H.15 (519) Selected Interest Rates" or any successor
release (the "H.15 Statistical Release"). If the H.15 Statistical Release sets
forth a weekly average yield for United States Treasury Notes having a constant
maturity that is the same as the Remaining Term, then the Treasury Yield shall
be equal to such weekly average yield. In all other cases, the Treasury Yield
shall be calculated by interpolation, on a straight-line basis, between the
weekly average yields on the United States Treasury Notes that have a constant
maturity closest to and greater than the Remaining Term and the United States
Treasury Notes that have a constant maturity closest to and less than the
Remaining Term (in each case as set forth in the H.15 Statistical Release).
Any weekly average yields as calculated by interpolation shall be rounded to
the nearest 1/100th of 1%, with any figure of 1/200% or above being rounded
upward. If weekly average yields for United States Treasury Notes are not
available in the H.15 Statistical Release or otherwise, then the Treasury Yield
shall be calculated by interpolation of comparable rates selected by the
Independent Investment Banker.
8. Amendments and Waivers. Subject to certain
exceptions and limitations, the Indenture or the Securities may be amended or
supplemented with the consent of the Holders of at least a majority in
principal amount of the then outstanding Debt Securities of all series of Debt
Securities affected by such amendment or supplement (acting as one class), and
any existing or past Default or Event of Default under, or compliance with any
provision of, the Indenture may be waived (other than any continuing Default or
Event of Default in the payment of the principal of or interest on the
Securities) by the Holders of at least a majority in principal amount of the
then outstanding Debt Securities of any series or of all series (acting as one
class) in accordance with the terms of the Indenture. Without the consent of
any Holder, the Company and the Trustee may amend or supplement the Indenture
or the Securities or waive any provision of either, to cure any ambiguity,
omission, defect or inconsistency; to comply with the provisions of the
Indenture relating
5
<PAGE> 6
to merger, consolidation and certain other transactions; to provide for
uncertificated Securities in addition to or in place of certificated
Securities; to provide any security for the Securities or to add guarantees of
the Securities; to comply with any requirement in order to effect or maintain
the qualification of the Indenture under the TIA; to add to the covenants of
the Company for the benefit of the Holders of the Securities, or to surrender
any right or power conferred by the Indenture upon the Company; to add any
additional Events of Default with respect to all or any series of the Debt
Securities; to change or eliminate any of the provisions of the Indenture,
provided that no Security is adversely affected in any material respect; to
supplement any of the provisions of the Indenture to such extent as shall be
necessary to permit or facilitate the defeasance and discharge of the
Securities pursuant to the Indenture; or to evidence and provide for the
acceptance of appointment hereunder by a successor Trustee with respect to the
Securities and to add to or change any of the provisions of this Indenture as
shall be necessary to provide for or facilitate the administration of the
trusts thereunder by more than one Trustee, pursuant to the requirements of the
Indenture.
The right of any Holder to participate in any consent required
or sought pursuant to any provision of the Indenture (and the obligation of the
Company to obtain any such consent otherwise required from such Holder) may be
subject to the requirement that such Holder shall have been the Holder of
record of any Securities with respect to which such consent is required or
sought as of a date fixed in accordance with the terms of the Indenture.
Without the consent of each Holder affected, the Company may
not (i) reduce the amount of Debt Securities whose Holders must consent to an
amendment, supplement or waiver, (ii) reduce the rate of or change the time for
payment of interest, including default interest, on any Security, (iii) reduce
the principal of or premium on, or change the Stated Maturity of, any Security,
(iv) reduce the premium, if any, payable upon the redemption of any Security or
change the time at which any Security may or shall be redeemed, (v) change the
coin or currency in which any Security or any premium or interest with respect
thereto are payable, (vi) impair the right to institute suit for the
enforcement of any payment of principal of or premium (if any) or interest on
any Security, (vii) make any change in the percentage of principal amount of
Debt Securities necessary to waive compliance with certain provisions of the
Indenture or (viii) waive a continuing Default or Event of Default in the
payment of principal of or premium (if any) or interest on the Securities.
A supplemental indenture that changes or eliminates any
covenant or other provision of the Indenture which has expressly been included
solely for the benefit of one or more particular series of Debt Securities
under the Indenture, or which modifies the rights of the Holders of Debt
Securities of such series with respect to such covenant or other provision,
shall be deemed not to affect the rights under the Indenture of the Holders of
Debt Securities of any other series.
9. Defaults and Remedies. Events of Default are defined
in the Indenture and generally include: (i) default by the Company for 30 days
in payment of any interest on the Securities; (ii) default by the Company in
any payment of principal of (or premium, if any, on) the Securities; (iii)
default by the Company in compliance with any of its other covenants or
agreements in, or provisions of, the Securities or in the Indenture which shall
not have been remedied within 90 days after written notice by the Trustee or by
the holders of at least 25% in principal amount of the Securities then
outstanding (or, in the event that other Debt Securities issued under the
Indenture are also affected by the default, then 25% in principal amount of all
outstanding Debt Securities so
6
<PAGE> 7
affected); or (iv) certain events involving bankruptcy, insolvency or
reorganization of the Company. If an Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in principal amount of
the then outstanding Securities of the series affected by such default (or, in
the case of an Event of Default described in clause (iii) above, if outstanding
Debt Securities of other series are affected by such Default, then at least 25%
in principal amount of the then outstanding Debt Securities so affected), may
declare the principal of and interest on all the Securities to be immediately
due and payable, except that in the case of an Event of Default arising from
certain events of bankruptcy, insolvency or reorganization of the Company, all
outstanding Securities become due and payable immediately without further
action or notice. The amount due and payable upon the acceleration of any
Security is equal to 100% of the principal amount thereof plus accrued interest
to the date of payment. Holders may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee may require
indemnity reasonably satisfactory to it before it enforces the Indenture or the
Securities. Subject to certain limitations, Holders of a majority in principal
amount of the then outstanding Securities (or affected Debt Securities) may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders notice of any continuing default (except a default in
payment of principal or interest) if it determines that withholding notice is
in their interests. The Company must furnish an annual compliance certificate
to the Trustee.
10. Discharge Prior to Maturity. The Indenture with
respect to the Securities shall be discharged and canceled upon the payment of
all of the Securities and shall be discharged except for certain obligations
upon the irrevocable deposit with the Trustee of funds or U.S. Government
Obligations sufficient for such payment.
11. Trustee Dealings with Company. The Trustee, in its
individual or any other capacity, may make loans to, accept deposits from, and
perform services for the Company or its Affiliates, and may otherwise deal with
the Company or its Affiliates, as if it were not Trustee.
12. No Recourse Against Others. A director, officer,
employee or stockholder, as such, of the Company shall not have any liability
for any obligations of the Company under the Securities or the Indenture or for
any claim based on, in respect of or by reason of such obligations or their
creation. Each Holder by accepting a Security waives and releases all such
liability. The waiver and release are part of the consideration for the
issuance of the Securities.
13. Authentication. This Security shall not be valid
until authenticated by the manual signature of the Trustee or an authenticating
agent.
14. CUSIP Numbers. Pursuant to a recommendation
promulgated by the Committee on Uniform Security Identification Procedures, the
Company has caused CUSIP numbers to be printed on the Securities as a
convenience to the Holders of the Securities. No representation is made as to
the accuracy of such numbers as printed on the Securities and reliance may be
placed only on the other identification numbers printed thereon.
15. Abbreviations. Customary abbreviations may be used
in the name of a Holder or an assignee, such as: TEN COM (= tenants in
common), TEN ENT (= tenants by the entireties),
7
<PAGE> 8
JT TEN (= joint tenants with right of survivorship and not as tenants in
common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
16. Restrictions on Transfer; Additional Rights of
Holders of Transfer Restricted Securities. By its acceptance of any Security
bearing a legend restricting transfer, each Holder of such a Security
acknowledges the restrictions on transfer of such Security set forth in the
officers' certificate executed pursuant to Section 2.04 of the Indenture in
respect of the Securities and such legend and agrees that it will transfer such
Security only as provided in such officers' certificate and in the Indenture.
THE COMPANY WILL FURNISH TO ANY HOLDER UPON WRITTEN REQUEST
AND WITHOUT CHARGE A COPY OF THE INDENTURE. REQUEST MAY BE MADE TO:
GLOBAL MARINE INC.
777 N. ELDRIDGE PARKWAY
HOUSTON, TEXAS 77079-4493
TELEPHONE: (281) 596-5100
ATTENTION: GENERAL COUNSEL
8
<PAGE> 9
SCHEDULE OF EXCHANGES OF DEFINITIVE SECURITY
The following exchanges of a part of this Global Security for Definitive
Securities have been made:
<TABLE>
<CAPTION>
Principal Amount
Amount of Amount of of this Global Signature of
decrease in increase in Security following authorized officer
Principal Amount Principal Amount such decrease of Trustee or
Date of Exchange of this Global Security of this Global Security (or increase) Security Custodian
- ---------------- ----------------------- ----------------------- ---------------------- ------------------
<S> <C> <C> <C> <C>
</TABLE>
9
<PAGE> 10
ASSIGNMENT FORM
To assign this Security, fill in the form below: (I) or (we) assign and
transfer this Security to ______ (Insert assignee's social security or tax I.D.
number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
---------------------------------------------------------
as agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
- --------------------------------------------------------------------------------
Date: Your Signature:
------------------------- -----------------------------
(Sign exactly as your name
appears on the face of this
Security)
Signature Guarantee:
-----------------------------------------------------------
(Participant in a Recognized Signature Guaranty
Medallion Program)
10
<PAGE> 1
EXHIBIT 5
[BAKER & BOTTS LETTERHEAD]
February 3, 1998
004598.0160
Global Marine Inc.
777 N. Eldridge Parkway
Houston, Texas 77079
Gentlemen:
As set forth in the Registration Statement on Form S-4 (the
"Registration Statement") (Registration No. 333-39033) filed by Global Marine
Inc., a Delaware corporation (the "Company"), with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, relating to up to $300
million aggregate principal amount of the Company's 7 1/8% Notes Due 2007 (the
"Notes"), certain legal matters in connection with the Notes are being passed
upon for the Company by us. We understand that the Notes are to be issued
pursuant to an exchange offer on the terms set forth in the Registration
Statement (the "Exchange Offer") that is to be made pursuant to the terms of
the Registration Rights Agreement dated as of September 15, 1997 (the
"Registration Rights Agreement"). The Notes are to be issued under an
Indenture dated as of September 1, 1997 (the "Indenture"). At your request,
this opinion is being furnished to you for filing as Exhibit 5 to the
Registration Statement.
In our capacity as your counsel in the connection referred to
above, we have examined the Company's Restated Certificate of Incorporation and
Bylaws, each as amended to date, and the originals, or copies certified or
otherwise identified, of corporate records of the Company, certificates of
public officials and of representatives of the Company, statutes and other
instruments and documents as a basis for the opinions hereinafter expressed.
In giving such opinions, we have relied upon certificates of officers of the
Company with respect to the accuracy of the material factual matters contained
in such certificates.
On the basis of the foregoing, we are of the opinion that the
Notes, when duly executed, authenticated and delivered in accordance with the
Indenture and issued pursuant to, and in accordance with the terms of, the
Exchange Offer and the Registration Rights Agreement, will constitute legal,
valid and binding obligations of the Company, enforceable against the Company,
except as the enforceability thereof is subject to the effect of (i)
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other laws relating to or affecting creditors' rights generally and (ii)
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
<PAGE> 2
Global Marine Inc. -2- February 3, 1998
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and to the reference to us under "Legal Matters"
in the prospectus forming a part of the Registration Statement.
Very truly yours,
BAKER & BOTTS, L.L.P.
:2071
JDK/RH
<PAGE> 1
Exhibit No. 12
RATIO OF EARNINGS BEFORE FIXED CHARGES TO FIXED CHARGES
(In millions)
<TABLE>
<CAPTION>
First Nine Months of Year Ended December 31,
-------------------- ----------------------------------------
1997 1996 1996 1995 1994 1993 1992
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
FIXED CHARGES:
Interest expense 27.0 23.0 30.9 30.2 30.2 32.1 43.6
Portion of rental expense attributable to interest 1.1 1.0 1.4 1.6 2.3 2.0 2.3
---- ---- ---- ---- ---- ---- ----
Total Fixed Charges 28.1 24.0 32.3 31.8 32.5 34.1 45.9
EARNINGS BEFORE FIXED CHARGES:
Income before taxes and cumulative effect of
accounting changes 203.9 75.3 119.7 55.1 5.4 (26.2) 30.6
Plus fixed charges 28.1 24.0 32.3 31.8 32.5 34.1 45.9
Less capitalized interest (13.9) (0.7) (2.6) (5.6) (3.7) -- --
----- ---- ----- ---- ---- ---- ----
Earnings Before Fixed Charges 218.1 98.6 149.4 81.3 34.2 7.9 76.5
RATIO OF EARNINGS BEFORE FIXED CHARGES TO
FIXED CHARGES:
Earnings before fixed charges 218.1 98.6 149.4 81.3 34.2 7.9 76.5
Fixed Charges 28.1 24.0 32.3 31.8 32.5 34.1 45.9
----- ---- ----- ---- ---- ---- ----
Ratio of Earnings Before Fixed Charges to
Fixed Charges 7.76 4.11 4.63 2.56 1.05 0.23 1.67
===== ==== ===== ==== ==== ==== ====
</TABLE>
<PAGE> 1
EXHIBIT 15
ACCOUNTANTS' AWARENESS LETTER
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Global Marine Inc.
Registration Statement on Form S-4
We are aware that our reports dated May 7, August 6, and November 7, 1997, on
our reviews of the consolidated interim financial information of Global Marine
Inc. and subsidiaries for the periods ended March 31, June 30, and September 30,
1997, respectively, and included in the Quarterly Reports on Form 10-Q of Global
Marine Inc. (File No. 1-5471) for the quarters ended March 31, June 30, and
September 30, 1997, respectively, are incorporated by reference in the
Prospectus constituting part of the Company's Amendment No. 1 to Registration
Statement on Form S-4 (Registration No. 333-39033), pertaining to the exchange
offer of 7 1/8% Notes of the Company. Pursuant to Rule 436(c) under the
Securities Act of 1933, said reports should not be considered a part of said
Amendment No. 1 to Registration Statement prepared or certified by us within the
meaning of Sections 7 and 11 of that Act.
/s/ COOPERS & LYBRAND L.L.P.
Houston, Texas
February 3, 1998
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this amendment no. 1 to
registration statement (registration no. 333-39033) on Form S-4 of our report
dated February 7, 1997, on our audits of the consolidated financial statements
and the consolidated financial statement schedules of Global Marine Inc. and
subsidiaries. We also consent to the reference to our firm under the caption
"Experts."
/s/ Coopers & Lybrand L.L.P.
Houston, Texas
February 3, 1998
<PAGE> 1
EXHIBIT 99.1
GLOBAL MARINE INC.
LETTER OF TRANSMITTAL
FOR
TENDER OF ALL OUTSTANDING
7 1/8% NOTES DUE 2007
IN EXCHANGE FOR REGISTERED
7 1/8% NOTES DUE 2007
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON MARCH 11, 1998, UNLESS EXTENDED (THE "EXPIRATION DATE")
OLD NOTES TENDERED IN THE EXCHANGE OFFER MAY BE WITHDRAWN
AT ANY TIME PRIOR TO 5:00 P.M., NEW YORK CITY TIME,
ON THE EXPIRATION DATE
- --------------------------------------------------------------------------------
DELIVER TO THE EXCHANGE AGENT:
WILMINGTON TRUST COMPANY
<TABLE>
<S> <C> <C>
By Mail: By Facsimile Transmission: By Hand/Overnight Delivery:
Rodney Square North (for Eligible Institutions Only) Rodney Square North
1100 North Market Street (302) 651-1079 1100 North Market Street
Wilmington, Delaware 19890 Confirm by telephone: Wilmington, Delaware 19890
ATTN: CORPORATE TRUST OPERATIONS (302) 651-8869 ATTN: CORPORATE TRUST OPERATIONS
</TABLE>
Executed Letters of Transmittal may also be delivered by mail,
overnight courier or hand delivery to: Wilmington Trust Company, Exchange
Agent, c/o Harris Trust & Savings Bank, 88 Pine Street, Wall Street Plaza, 19th
Floor, New York, New York 10005.
___________________
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN THE ONE
LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS
ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS
LETTER OF TRANSMITTAL IS COMPLETED.
The undersigned hereby acknowledges receipt and review of the
Prospectus dated February 4, 1998 (the "Prospectus") of Global Marine Inc., a
Delaware corporation (the "Company"), and this Letter of Transmittal (the
"Letter of Transmittal"), which together constitute the Company's offer (the
"Exchange Offer") to exchange its 7 1/8% Notes Due 2007 (the "Exchange Notes"),
the issuance of which has been registered under the Securities Act of 1933, as
amended (the "Securities Act"), pursuant to a Registration Statement of which
the Prospectus is a part, for a like principal amount of its outstanding 7 1/8%
Notes Due 2007 (the "Old Notes"). Capitalized terms used but not defined
herein have the respective meaning given to them in the Prospectus.
The Company reserves the right, at any time or from time to time, to
extend the period of time during which the Exchange Offer is open, at its
discretion, in which event the term "Expiration Date" shall mean the latest
date to which the Exchange Offer is extended. The Company shall make a public
announcement of any extension prior to 9:00 a.m., New York City time, on the
next business day after the previously scheduled Expiration Date.
<PAGE> 2
Registered Holders of Exchange Notes on the relevant record date for
the first interest payment date following the consummation of the Exchange
Offer will receive interest accruing from the most recent date to which
interest has been paid on the Old Notes or, if no interest has been paid, from
September 15, 1997. Old Notes accepted for exchange will cease to accrue
interest from and after the date of consummation of the Exchange Offer. Holders
whose Old Notes are accepted for exchange will not receive any payment in
respect of accrued interest on such Old Notes otherwise payable on any interest
payment date the record date for which occurs on or after consummation of the
Exchange Offer.
This Letter of Transmittal is to be completed by a Holder of Old Notes
either if certificates for such Old Notes are to be forwarded herewith or if a
tender of Old Notes is to be made by book-entry transfer to the account
maintained by Wilmington Trust Company (the "Exchange Agent") at The Depository
Trust Company (the "Book-Entry Transfer Facility" or "DTC") pursuant to the
procedures set forth in "The Exchange Offer--Book-Entry Transfer" section of
the Prospectus and an Agent's Message is not delivered. Tenders by book-entry
transfer may also be made by delivering an Agent's Message in lieu of this
Letter of Transmittal. The term "Agent's Message" means a message, transmitted
by the Book-Entry Transfer Facility to and received by the Exchange Agent and
forming a part of a Book-Entry Confirmation (as defined below), which states
that the Book-Entry Transfer Facility has received an express acknowledgment
from the tendering participant, which acknowledgment states that such
participant has received and agrees to be bound by the Letter of Transmittal
and that the Company may enforce the Letter of Transmittal against such
participant. Holders of Old Notes whose certificates for such Old Notes are
not immediately available, or who are unable to deliver their certificates or
confirmation of the book-entry tender of their Old Notes into the Exchange
Agent's account at the Book-Entry Transfer Facility (a "Book-Entry
Confirmation") and all other documents required by this Letter of Transmittal
to the Exchange Agent on or prior to the Expiration Date, must tender their Old
Notes according to the guaranteed delivery procedures set forth in "The
Exchange Offer--Guaranteed Delivery Procedures" section of the Prospectus. See
Instruction 2.
DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY
DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
The term "Holder" with respect to the Exchange Offer means any person
in whose name Old Notes are registered on the security registrar's books or any
other person who has obtained a properly completed assignment from the
registered holder or any participant in the DTC system whose name appears on a
security position listing as the holder of such Old Notes and who desires to
deliver the Old Notes by book-entry transfer at DTC. The undersigned has
completed, executed and delivered this Letter of Transmittal to indicate the
action the undersigned desires to take with respect to the Exchange Offer.
Holders who wish to tender their Old Notes must complete this Letter of
Transmittal in its entirety (unless the Old Notes are to be tendered by
book-entry transfer and an Agent's Message is delivered in lieu hereof).
PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL AND THE PROSPECTUS
CAREFULLY BEFORE CHECKING ANY BOX BELOW.
THE INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE
FOLLOWED. QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF
THE PROSPECTUS AND THIS LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE EXCHANGE
AGENT.
List below the Old Notes to which this Letter of Transmittal relates.
If the space below is inadequate, list the registered numbers and principal
amounts on a separate signed schedule and affix the list to this Letter of
Transmittal.
2
<PAGE> 3
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
DESCRIPTION OF OLD NOTES TENDERED
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Name(s) and Address(es) of Registered Old Note(s) Tendered
Holder(s) Exactly as Name(s) -------------------------------------------------------------
Appear(s) on Old Notes Aggregate Principal Principal
(Please Fill In, If Blank) Registered Amount Represented Amount
Number(s)* by Note(s) Tendered**
- -------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------
-------------------------------------------------------------
Total
- -------------------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by book-entry holders.
** Unless otherwise indicated, any tendering holder of Old Notes will be
deemed to have tendered the entire aggregate principal amount
represented by such Old Notes. All tenders must be in integral
multiples of $1,000.
- --------------------------------------------------------------------------------
[ ] CHECK HERE IF TENDERED OLD NOTES ARE ENCLOSED HEREWITH.
[ ] CHECK HERE AND COMPLETE THE FOLLOWING IF TENDERED OLD NOTES ARE BEING
DELIVERED BY BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE
EXCHANGE AGENT WITH THE BOOK-ENTRY TRANSFER FACILITY (FOR USE BY
ELIGIBLE INSTITUTIONS (AS HEREINAFTER DEFINED) ONLY):
Name of Tendering
Institution:
--------------------------------------------------------------------
DTC Account
Number:
-------------------------------------------------------------------------
Transaction Code
Number:
-------------------------------------------------------------------------
[ ] CHECK HERE AND ENCLOSE A PHOTOCOPY OF THE NOTICE OF GUARANTEED
DELIVERY IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT
AND COMPLETE THE FOLLOWING (FOR USE BY ELIGIBLE INSTITUTIONS ONLY):
Name(s) of Registered holder(s)
of Old Notes:
-------------------------------------------------------------------
Date of Execution of Notice of
Guaranteed Delivery:
------------------------------------------------------------
Window Ticket Number
(if available):
-----------------------------------------------------------------
3
<PAGE> 4
Name of Eligible Institution that
Guaranteed Delivery:
------------------------------------------------------------
DTC Account Number (if delivered
by book-entry transfer):
--------------------------------------------------------
Transaction Code Number (if delivered
by book-entry transfer):
--------------------------------------------------------
Name of Tendering Institution (if
delivered by book-entry transfer):
----------------------------------------------
[ ] CHECK HERE IF TENDERED BY BOOK-ENTRY TRANSFER AND NON-EXCHANGED OLD
NOTES ARE TO BE RETURNED BY CREDITING THE DTC ACCOUNT NUMBER SET FORTH
ABOVE (FOR USE BY ELIGIBLE INSTITUTIONS ONLY).
[ ] CHECK HERE AND COMPLETE THE FOLLOWING IF YOU ARE A BROKER-DEALER AND
WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES
OF ANY AMENDMENTS OR SUPPLEMENTS THERETO:
Name:
---------------------------------------------------------------------------
Address:
-----------------------------------------------------------------------
4
<PAGE> 5
SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Subject to the terms and conditions of the Exchange Offer, the
undersigned hereby tenders to the Company for exchange the principal amount of
Old Notes indicated above. Subject to and effective upon the acceptance for
exchange of the principal amount of Old Notes tendered in accordance with this
Letter of Transmittal, the undersigned hereby exchanges, assigns and transfers
to, or upon the order of, the Company all right, title and interest in and to
the Old Notes tendered for exchange hereby, including all rights to accrued and
unpaid interest thereon as of the Expiration Date. The undersigned hereby
irrevocably constitutes and appoints the Exchange Agent the true and lawful
agent and attorney-in-fact for the undersigned (with full knowledge that said
Exchange Agent also acts as the agent for the Company in connection with the
Exchange Offer) with respect to the tendered Old Notes with full power of
substitution to (i) deliver such Old Notes, or transfer ownership of such Old
Notes on the account books maintained by the Book-Entry Transfer Facility, to
the Company and deliver all accompanying evidences of transfer and
authenticity, and (ii) present such Old Notes for transfer on the books of the
Company and receive all benefits and otherwise exercise all rights of
beneficial ownership of such Old Notes, all in accordance with the terms of the
Exchange Offer. The power of attorney granted in this paragraph shall be
deemed to be irrevocable and coupled with an interest.
The undersigned hereby represents and warrants that the undersigned
has full power and authority to tender, exchange, assign and transfer the Old
Notes tendered hereby and to acquire the Exchange Notes issuable upon the
exchange of such tendered Old Notes, and that the Company will acquire good and
unencumbered title thereto, free and clear of all liens, restrictions, charges
and encumbrances and not subject to any adverse claim, when the same are
accepted for exchange by the Company. The undersigned hereby further
represents that it is not an "affiliate," as defined in Rule 405 under the
Securities Act of 1933, as amended (the "Securities Act"), of the Company, that
any Exchange Notes to be received by it will be acquired in the ordinary course
of business and that at the time of the commencement of the Exchange Offer it
had no arrangement with any person to participate in a distribution of the
Exchange Notes.
The undersigned also acknowledges that the Exchange Offer is being
made in reliance on interpretations by the staff of the Securities and Exchange
Commission (the "SEC"), as set forth in no-action letters issued to third
parties, including Exxon Capital Holdings Corporation (available May 13, 1988),
Morgan Stanley & Co. Incorporated (available June 5, 1991), Sherman & Sterling
(available July 2, 1993) and similar no-action letters (the "Prior No-Action
Letters"), that the Exchange Notes issued pursuant to the Exchange Offer in
exchange for the Old Notes may be offered for resale, resold and otherwise
transferred by Holders thereof (other than any such Holder which is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act), without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that such Exchange Notes are
acquired in the ordinary course of such Holders' business and such Holders have
no arrangement with any person to participate in a distribution of such
Exchange Notes. However, the SEC has not considered the Exchange Offer in the
context of a no-action letter and there can be no assurance that the staff of
the SEC would make a similar determination with respect to the Exchange Offer
as in other circumstances. If the undersigned is not a broker-dealer, the
undersigned represents that it is not engaged in, and does not intend to engage
in, a distribution of Exchange Notes. If the undersigned is a broker-dealer
that is receiving the Exchange Notes for its own account in exchange for Old
Notes that were acquired as a result of market-making activities or other
trading activities, it acknowledges that it will deliver a prospectus in
connection with any resale of such Exchange Notes; however, by so acknowledging
and by delivering a prospectus, the undersigned will not be deemed to admit
that it is an "underwriter" within the meaning of the Securities Act. The
undersigned and any such other person acknowledge that, if they are
participating in the Exchange Offer for the purpose of distributing the
Exchange Notes, (i) they cannot rely on the position of the staff of the SEC
enunciated in the Prior No-Action Letters and, in the absence of an exemption
therefrom, must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with the resale transaction,
in which case the registration statement must contain the selling security
holder information required by Item 507 or Item 508, as applicable, of
Regulation S-K of the SEC, and (ii) a broker-dealer that delivers such a
prospectus to purchasers in connection with such resales will be subject to
certain
5
<PAGE> 6
of the civil liability provisions under the Securities Act and will be bound by
the provisions of the Registration Agreement (including certain indemnification
rights and obligations). If the undersigned or the person receiving the
Exchange Notes covered by this letter is an "affiliate" (as defined under Rule
405 of the Securities Act) of the Company, the undersigned represents to the
Company that the undersigned understands and acknowledges that neither the
undersigned nor any such other person may rely on the position of the staff of
the SEC enunciated in the Prior No-Action Letters, and that such Exchange Notes
may not be offered for resale, resold or otherwise transferred by the
undersigned or such other person without registration under the Securities Act
or an exemption therefrom.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Exchange Agent or the Company to be necessary or
desirable to complete the exchange, assignment and transfer of the Old Notes
tendered hereby, including the transfer of such Old Notes on the account books
maintained by the Book-Entry Transfer Facility.
For purposes of the Exchange Offer, the Company shall be deemed to
have accepted for exchange validly tendered Old Notes when, as and if the
Company gives oral or written notice thereof to the Exchange Agent. Any
tendered Old Notes that are not accepted for exchange pursuant to the Exchange
Offer for any reason will be returned, without expense, to the undersigned at
the address shown below or at a different address as may be indicated herein
under "Special Delivery Instructions" as promptly as practicable after the
Expiration Date.
All authority conferred or agreed to be conferred by this Letter of
Transmittal shall survive the death, incapacity or dissolution of the
undersigned, and every obligation of the undersigned under this Letter of
Transmittal shall be binding upon the successors, assigns, heirs, executors,
administrators, trustees in bankruptcy and legal representatives of the
undersigned and shall not be affected by, and shall survive, the death or
incapacity of the undersigned. This tender may be withdrawn only in accordance
with the procedures set forth in "The Exchange Offer--Withdrawal Rights"
section of the Prospectus.
The undersigned acknowledges that the Company's acceptance of properly
tendered Old Notes pursuant to the procedures described under the caption "The
Exchange Offer--Procedures for Tendering" in the Prospectus and in the
instructions hereto will constitute a binding agreement between the undersigned
and the Company upon the terms and subject to the conditions of the Exchange
Offer. The undersigned further agrees that acceptance of any tendered Old
Notes by the Company and the issuance of Exchange Notes in exchange therefor
shall constitute performance in full by the Company of its obligations under
the Registration Agreement and that the Company shall have no further
obligations or liabilities thereunder for the registration of the Old Notes or
the Exchange Notes.
The Exchange Offer is subject to certain conditions set forth in the
Prospectus under the caption "The Exchange Offer--Certain Conditions to the
Exchange Offer." The undersigned recognizes that as a result of these
conditions (which may be waived, in whole or in part, by the Company), the
Company may not be required to exchange any of the Old Notes tendered hereby
and, in such event, the Old Notes not exchanged will be returned to the
undersigned at the address shown below the signature of the undersigned.
Unless otherwise indicated under "Special Issuance Instructions,"
please issue the Exchange Notes issued in exchange for the Old Notes accepted
for exchange and return any Old Notes not tendered or not exchanged, in the
name(s) of the undersigned. Similarly, unless otherwise indicated under
"Special Delivery Instructions," please mail or deliver the Exchange Notes
issued in exchange for the Old Notes accepted for exchange and any Old Notes
not tendered or not exchanged (and accompanying documents, as appropriate) to
the undersigned at the address shown below the undersigned's signature(s) (or,
in the case of a book-entry delivery of Old Notes, please credit the account
indicated above maintained at the Book-Entry Transfer Facility). In the event
that both "Special Issuance Instructions" and "Special Delivery Instructions"
are completed, please issue the Exchange Notes issued in exchange for the Old
Notes accepted for exchange in the name(s) of, and return any Old Notes not
tendered or not exchanged to, the person(s) so indicated. The undersigned
recognizes that the Company has no obligation pursuant to the "Special Issuance
Instructions" and "Special Delivery Instructions" to transfer any Old Notes
from the name of the registered holder(s) thereof if the Company does not
accept for exchange any of the Old Notes so tendered for exchange.
6
<PAGE> 7
<TABLE>
<CAPTION>
- ---------------------------------------------------- ---------------------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTION 6) (SEE INSTRUCTION 6)
<S> <C>
To be completed ONLY (i) if Old Notes in a To be completed ONLY if Old Notes in a principal
principal amount not tendered, or Exchange Notes amount not tendered, or Exchange Notes issued, in
issued in exchange for Old Notes accepted for exchange for Old Notes accepted for exchange, are
exchange, are to be issued in the name of someone to be mailed or delivered to someone other than the
other than the undersigned, or (ii) if Old Notes undersigned, or to the undersigned at an address
tendered by book-entry transfer which are not other than that shown below the undersigned's
exchanged are to be returned by credit to an signature.
account maintained at the Book-Entry Transfer
Facility other than the DTC Account Number set
forth above. Issue Exchange Notes and/or Old Mail or deliver Exchange Notes and/or Old Notes to:
Notes to:
Name: Name:
---------------------------------------------- ----------------------------------------------
Address: Address:
------------------------------------------- -------------------------------------------
- --------------------------------------------------- ---------------------------------------------------
(include Zip Code) (include Zip Code)
- --------------------------------------------------- ---------------------------------------------------
(Tax Identification or Social Security Number) (Tax Identification or Social Security Number)
(Please Type or Print) (Please Type or Print)
- ---------------------------------------------------- ---------------------------------------------------
</TABLE>
[ ] Credit unexchanged Old Notes delivered by book-entry transfer to the
Book-Entry Transfer Facility set forth below:
Book-Entry Transfer Facility Account Number:
- --------------------------------------------------------------------------------
IMPORTANT
PLEASE SIGN HERE WHETHER OR NOT
OLD NOTES ARE BEING PHYSICALLY TENDERED HEREBY
(Complete Accompanying Substitute Form W-9 Below)
X
- --------------------------------------------------------------------------------
X
- --------------------------------------------------------------------------------
(Signature(s) of Registered Holders of Old Notes)
Dated , 1998
-----------------------------------------------
(The above lines must be signed by the registered holder(s) of Old Notes as
your name(s) appear(s) on the Old Notes or on a security position listing, or
by person(s) authorized to become registered holder(s) by endorsements and
documents transmitted herewith. If Old Notes to which this Letter of
Transmittal relate are held of record by two or more joint holders, then all
such holders must sign this Letter of Transmittal. If signature is by a
trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
then such person must (i) set forth his or her full title below and (ii) unless
waived by the Company, submit evidence satisfactory to the Company of such
person's authority so to act. See Instruction 5 regarding the completion of
this Letter of Transmittal, printed below.)
7
<PAGE> 8
Name(s):
------------------------------------------------------------------------
(Please Type or Print)
Capacity (Full Title):
----------------------------------------------------------
Address:
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Include Zip Code)
Area Code and Telephone Number:
-------------------------------------------------
Taxpayer Identification or Social Security Number:
------------------------------
MEDALLION SIGNATURE GUARANTEE
(IF REQUIRED BY INSTRUCTION 5)
Certain signatures must be Guaranteed by an Eligible Institution.
Signature(s) Guaranteed by an
Eligible Institution:
-----------------------------------------------------------
(Authorized Signature)
- --------------------------------------------------------------------------------
(Title)
- --------------------------------------------------------------------------------
(Name of Firm)
- --------------------------------------------------------------------------------
(Address, Include Zip Code)
- --------------------------------------------------------------------------------
(Area Code and Telephone Number)
Dated: , 1998
--------------------------------------------------
8
<PAGE> 9
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND OLD NOTES OR
AGENT'S MESSAGE AND BOOK-ENTRY CONFIRMATIONS. This Letter of Transmittal is to
be completed by Holders of Old Notes either if certificates for such Old Notes
are to be forwarded herewith or if tenders are to be made pursuant to the
procedures for delivery by book-entry transfer set forth in "The Exchange
Offer--Book-Entry Transfer" section of the Prospectus and an Agent's Message is
not delivered. Tenders by book-entry transfer may also be made by delivering
an Agent's Message in lieu of this Letter of Transmittal. The term "Agent's
Message" means a message, transmitted by the Book-Entry Transfer Facility to
and received by the Exchange Agent and forming a part of a Book-Entry
Confirmation, which states that the Book-Entry Transfer Facility has received
an express acknowledgment from the tendering participant, which acknowledgment
states that such participant has received and agrees to be bound by the Letter
of Transmittal and that the Company may enforce the Letter of Transmittal
against such participant. Certificates for all physically tendered Old Notes,
or Book-Entry Confirmation, as the case may be, as well as a properly completed
and duly executed Letter of Transmittal (or facsimile hereof or Agent's Message
in lieu thereof) and any other documents required by this Letter of
Transmittal, must be received by the Exchange Agent at the address set forth
herein on or prior to 5:00 p.m. New York City time, on the Expiration Date, or
the tendering holder must comply with the guaranteed delivery procedures set
forth below. Old Notes tendered hereby must be in denominations of principal
amount of $1,000 and any integral multiple thereof. THE METHOD OF DELIVERY OF
THE TENDERED OLD NOTES, THIS LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED
DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF THE HOLDER AND,
EXCEPT AS OTHERWISE PROVIDED BELOW, THE DELIVERY WILL BE DEEMED MADE ONLY WHEN
ACTUALLY RECEIVED OR CONFIRMED BY THE EXCHANGE AGENT. INSTEAD OF DELIVERY BY
MAIL, IT IS RECOMMENDED THAT THE HOLDER USE AN OVERNIGHT OR HAND DELIVERY
SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO
THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR OLD
NOTES SHOULD BE SENT TO THE COMPANY.
All questions as to the validity, form, eligibility (including time of
receipt) or acceptance of tendered Old Notes and withdrawal of tendered Old
Notes will be determined by the Company in its sole discretion, which
determination will be final and binding. The Company reserves the absolute
right to reject any and all Old Notes not properly tendered or any Old Notes
the Company's acceptance of which would, in the opinion of counsel for the
Company, be unlawful. The Company also reserves the right to waive any
defects, irregularities or conditions of tender as to particular Old Notes.
The Company's interpretation of the terms and conditions of the Exchange Offer
(including the instructions in this Letter of Transmittal) shall be final and
binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Old Notes must be cured within such time as the
Company shall determine. Neither the Company, the Exchange Agent nor any other
person shall be under any duty to give notification of defects or
irregularities with respect to tenders of Old Notes, nor shall any of them
incur any liability for failure to give such notification. Tenders of Old
Notes will not be deemed to have been made until such defects or irregularities
have been cured or waived. Any Old Notes received by the Exchange Agent that
are not properly tendered and as to which the defects or irregularities have
not been cured or waived will be returned by the Exchange Agent to the
tendering Holders of Old Notes, unless otherwise provided in this Letter of
Transmittal, as soon as practicable following the Expiration Date.
See "The Exchange Offer" section of the Prospectus.
2. GUARANTEED DELIVERY PROCEDURES. Holders who wish to tender
their Old Notes and whose Old Notes are not immediately available or who cannot
deliver their Old Notes, this Letter of Transmittal or any other documents
required hereby to the Exchange Agent prior to the Expiration Date or who
cannot complete the procedure for book-entry transfer on a timely basis, must
tender their Old Notes according to the guaranteed delivery procedures set
forth in the Prospectus. Pursuant to such procedures: (i) such tender must be
made by or through a financial institution (including most banks, savings and
loan associations and brokerage houses) that is a participant in the Securities
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Program or the Stock Exchanges Medallion Program (an "Eligible Institution");
(ii) prior to 5:00 p.m., New York City time, on the Expiration Date, the
9
<PAGE> 10
Exchange Agent must have received from the Eligible Institution a properly
completed and duly executed Notice of Guaranteed Delivery, substantially in the
form provided by the Company (by telegram, telex, facsimile transmission, mail
or hand delivery) setting forth the name and address of the holder of the Old
Notes, the registration number(s) of such Old Notes and the total principal
amount of Old Notes tendered, stating that the tender is being made thereby and
guaranteeing that, within three New York Stock Exchange ("NYSE") trading days
after the date of execution of the Notice of Guaranteed Delivery, the
certificates for all physically tendered Old Notes, in proper form for
transfer, or a Book-Entry Confirmation, as the case may be, together with a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof or Agent's Message in lieu thereof) with any required signature
guarantees and any other documents required by this Letter of Transmittal will
be deposited by the Eligible Institution with the Exchange Agent; and (iii) the
certificates for all physically tendered Old Notes, in proper form for
transfer, or Book-Entry Confirmation, as the case may be, together with a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof or Agent's Message in lieu thereof) with any required signature
guarantees and all other documents required by this Letter of Transmittal, are
deposited with the Exchange Agent by the Eligible Institution within three NYSE
trading days after the date of execution of the Notice of Guaranteed Delivery.
Any holder of Old Notes who wishes to tender Old Notes pursuant to the
guaranteed delivery procedures described above must ensure that the Exchange
Agent receives the Notice of Guaranteed Delivery prior to 5:00 p.m., New York
City time, on the Expiration Date. Upon request of the Exchange Agent, a
Notice of Guaranteed Delivery will be sent to holders who wish to tender their
Old Notes according to the guaranteed delivery procedures set forth above.
See "The Exchange Offer--Guaranteed Delivery Procedures" section of the
Prospectus.
3. TENDER BY HOLDER. Only a Holder of Old Notes may tender such
Old Notes in the Exchange Offer. Any beneficial holder of Old Notes who is not
the registered holder and who wishes to tender should arrange with the
registered holder to execute and deliver this Letter of Transmittal on his
behalf or must, prior to completing and executing this Letter of Transmittal
and delivering his Old Notes, either make appropriate arrangements to register
ownership of the Old Notes in such holder's name or obtain a properly completed
bond power from the registered holder.
4. PARTIAL TENDERS (NOT APPLICABLE TO HOLDERS WHO TENDER BY
BOOK-ENTRY TRANSFER). Tenders of Old Notes will be accepted only in integral
multiples of $1,000. If less than the entire principal amount of any Old Notes
is tendered, the tendering holder should fill in the principal amount tendered
in the third column of the box entitled "Description of Old Notes Tendered"
above. The entire principal amount of Old Notes delivered to the Exchange
Agent will be deemed to have been tendered unless otherwise indicated. If the
entire principal amount of all Old Notes is not tendered, then Old Notes for
the principal amount of Old Notes not tendered and Exchange Notes issued in
exchange for any Old Notes accepted will be sent to the holder at his or her
registered address, unless a different address is provided in the appropriate
box on this Letter of Transmittal, promptly after the Old Notes are accepted
for exchange.
5. SIGNATURES ON THIS LETTER OF TRANSMITTAL; BOND POWERS AND
ENDORSEMENTS; MEDALLION GUARANTEE OF SIGNATURES. If this Letter of Transmittal
(or facsimile hereof) is signed by the Holder(s) of the Old Notes tendered
hereby, the signature must correspond exactly with the name(s) as written on
the face of the Old Notes without alteration, enlargement or any change
whatsoever. If this Letter of Transmittal (or facsimile hereof) is signed by a
participant in the Book-Entry Transfer Facility, the signature must correspond
with the name as it appears on the security position listing as the holder of
the Old Notes.
If any tendered Old Notes are owned of record by two or more joint
owners, all of such owners must sign this Letter of Transmittal.
If this Letter of Transmittal (or facsimile hereof) is signed by the
registered holder or holders of Old Notes listed and tendered hereby and the
Exchange Notes issued in exchange therefor are to be issued (and any untendered
10
<PAGE> 11
principal amount of Old Notes is to be reissued) to the registered holder, the
said holder need not and should not endorse any tendered Old Notes, nor provide
a separate bond power. In any other case, such holder must either properly
endorse the Old Notes tendered or transmit a properly completed separate bond
power with this Letter of Transmittal, with the signatures on the endorsement
or bond power guaranteed by an Eligible Institution.
If this Letter of Transmittal (or facsimile hereof) is signed by a
person other than the registered holder or holders of any Old Notes listed,
such Old Notes must be endorsed or accompanied by appropriate bond powers, in
each case signed as the name of the registered holder or holders appears on the
Old Notes, and such signature(s) on such certificates or bond powers must be
guaranteed by an Eligible Institution.
If this Letter of Transmittal (or facsimile hereof) or any Old Notes
or bond powers are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary or
representative capacity, such persons should so indicate when signing, and,
unless waived by the Company, evidence satisfactory to the Company of their
authority to act must be submitted with this Letter of Transmittal.
Endorsements on Old Notes or signatures on bond powers required by
this Instruction 5 must be guaranteed by an Eligible Institution.
NO SIGNATURE GUARANTEE IS REQUIRED IF (I) THIS LETTER OF TRANSMITTAL
(OR FACSIMILE HEREOF) IS SIGNED BY THE REGISTERED HOLDER(S) OF THE OLD NOTES
TENDERED HEREIN (OR BY A PARTICIPANT IN THE BOOK-ENTRY TRANSFER FACILITY WHOSE
NAME APPEARS ON A SECURITY POSITION LISTING AS THE OWNER OF THE TENDERED OLD
NOTES) AND THE EXCHANGE NOTES ARE TO BE ISSUED DIRECTLY TO SUCH REGISTERED
HOLDER(S) (OR, IF SIGNED BY A PARTICIPANT IN THE BOOK-ENTRY TRANSFER FACILITY,
DEPOSITED TO SUCH PARTICIPANT'S ACCOUNT AT SUCH BOOK-ENTRY TRANSFER FACILITY)
AND NEITHER THE BOX ENTITLED "SPECIAL DELIVERY INSTRUCTIONS" NOR THE BOX
ENTITLED "SPECIAL REGISTRATION INSTRUCTIONS" HAS BEEN COMPLETED, OR (II) SUCH
OLD NOTES ARE TENDERED FOR THE ACCOUNT OF AN ELIGIBLE INSTITUTION. IN ALL
OTHER CASES, ALL SIGNATURES ON THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF)
MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION.
6. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. Tendering holders
should indicate, in the applicable box or boxes, the name and address (or
account at the Book-Entry Transfer Facility) to which Exchange Notes or
substitute Old Notes for principal amounts not tendered or not accepted for
exchange are to be issued or sent (or deposited), if different from the name
and address of the person signing this Letter of Transmittal. In the case of
issuance in a different name, the taxpayer identification or social security
number of the person named must also be indicated. Holders tendering Old Notes
by book-entry transfer may request that Old Notes not exchanged be credited to
such account maintained at the Book-Entry Transfer Facility as such noteholder
may designate hereon. If no such instructions are given, such Old Notes not
exchanged will be returned to the name and address of the person signing this
Letter of Transmittal.
7. TRANSFER TAXES. The Company will pay all transfer taxes, if
any, applicable to the exchange of Old Notes pursuant to the Exchange Offer.
If, however, Exchange Notes or Old Notes for principal amounts not tendered or
accepted for exchange are to be delivered to, or are to be registered or issued
in the name of, any person other than the registered holder of the Old Notes
tendered hereby, or if tendered Old Notes are registered in the name of any
person other than the person signing this Letter of Transmittal, or if a
transfer tax is imposed for any reason other than the exchange of Old Notes
pursuant to the Exchange Offer, then the amount of any such transfer taxes
(whether imposed on the registered holder or any other persons) will be payable
by the tendering holder. If satisfactory evidence of payment of such taxes or
exemption therefrom is not submitted with this Letter of Transmittal, the
amount of such transfer taxes will be billed directly to such tendering holder
and the Exchange Agent will retain possession of an amount of Exchange Notes
with a face amount equal to the amount of such transfer taxes due by such
tendering holder pending receipt by the Exchange Agent of the amount of such
taxes.
Except as provided in this Instruction 7, it will not be necessary for
transfer tax stamps to be affixed to the Old Notes specified in this Letter of
Transmittal.
11
<PAGE> 12
8. TAX IDENTIFICATION NUMBER. Federal income tax law requires
that a holder of any Old Notes or Exchange Notes must provide the Company (as
payor) with its correct taxpayer identification number ("TIN"), which, in the
case of a holder who is an individual is his or her social security number. If
the Company is not provided with the correct TIN, the holder or payee may be
subject to a $50 penalty imposed by Internal Revenue Service and backup
withholding of 31% on interest payments on the Exchange Notes.
To prevent backup withholding, each tendering holder and each
prospective holder must provide such holder's correct TIN by completing the
Substitute Form W-9 set forth herein, certifying that the TIN provided is
correct (or that such holder is awaiting a TIN), and that (i) the holder has
not been notified by the Internal Revenue Service that such holder is subject
to backup withholding as a result of failure to report all interest or
dividends or (ii) the Internal Revenue Service has notified the holder that
such holder is no longer subject to backup withholding. If the Exchange Notes
will be registered in more than one name or will not be in the name of the
actual owner, consult the instructions on Internal Revenue Service Form W-9,
which may be obtained from the Exchange Agent, for information on which TIN to
report.
Certain foreign individuals and entities will not be subject to backup
withholding or information reporting if they submit a Form W-8, signed under
penalties of perjury, attesting to their foreign status. A Form W-8 can be
obtained from the Exchange Agent.
If such holder does not have a TIN, such holder should consult the
instructions on Form W-9 concerning applying for a TIN, check the box in Part 3
of the Substitute Form W-9, write "applied for" in lieu of its TIN and sign and
date the form and the Certificate of Awaiting Taxpayer Identification Number.
Checking this box, writing "applied for" on the form and signing such
certificate means that such holder has already applied for a TIN or that such
holder intends to apply for one in the near future. If such holder does not
provide its TIN to the Company within 60 days, backup withholding will begin
and continue until such holder furnishes its TIN to the Company.
The Company reserves the right in its sole discretion to take whatever
steps are necessary to comply with the Company's obligations regarding backup
withholding.
9. VALIDITY OF TENDERS. All questions as to the validity, form,
eligibility (including time of receipt), acceptance and withdrawal of tendered
Old Notes will be determined by the Company in its sole discretion, which
determination will be final and binding. The Company reserves the absolute
right to reject any and all Old Notes not properly tendered or any Old Notes
the Company's acceptance of which would, in the opinion of the Company or its
counsel, be unlawful. The Company also reserves the absolute right to waive
any conditions of the Exchange Offer or defects or irregularities in tenders as
to particular Old Notes. The Company's interpretation of the terms and
conditions of the Exchange Offer (including this Letter of Transmittal and the
instructions hereto) shall be final and binding on all parties. Unless waived,
any defects or irregularities in connection with tenders of Old Notes must be
cured within such time as the Company shall determine. Neither the Company,
the Exchange Agent nor any person shall be under any duty to give notification
of defects or irregularities with regard to tenders of Old Notes nor shall any
of them incur any liability for failure to give such notification.
10. WAIVER OF CONDITIONS. The Company reserves the absolute right
to waive, in whole or part, any of the conditions to the Exchange Offer set
forth in the Prospectus.
11. NO CONDITIONAL TENDER. No alternative, conditional, irregular
or contingent tender of Old Notes will be accepted.
12. MUTILATED, LOST, STOLEN OR DESTROYED OLD NOTES. Any holder
whose Old Notes have been mutilated, lost, stolen or destroyed should contact
the Exchange Agent at the address indicated above for further instructions.
This Letter of Transmittal and related documents cannot be processed until the
procedures for replacing lost, stolen or destroyed Old Notes have been
followed.
12
<PAGE> 13
13. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for
assistance or for additional copies of the Prospectus or this Letter of
Transmittal may be directed to the Exchange Agent at the address or telephone
number set forth on the cover page of this Letter of Transmittal. Holders may
also contact their broker, dealer, commercial bank, trust Company or other
nominee for assistance concerning the Exchange Offer.
14. WITHDRAWAL. Tenders may be withdrawn only pursuant to the
limited withdrawal rights set forth in the Prospectus under the caption "The
Exchange Offer--Withdrawal Rights."
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A MANUALLY SIGNED FACSIMILE HEREOF
(TOGETHER WITH THE OLD NOTES DELIVERED BY BOOK-ENTRY TRANSFER OR IN ORIGINAL
HARD COPY FORM) MUST BE RECEIVED BY THE EXCHANGE AGENT, OR THE NOTICE OF
GUARANTEED DELIVERY MUST BE RECEIVED BY THE EXCHANGE AGENT, PRIOR TO THE
EXPIRATION DATE.
13
<PAGE> 14
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN IN THE BOX ------------------------------
FORM W-9 AT RIGHT AND CERTIFY BY SIGNING AND DATING SOCIAL SECURITY NUMBER
BELOW OR
------------------------------
EMPLOYER IDENTIFICATION NUMBER
- -----------------------------------------------------------------------------------------------------------------------------
PART 2 -- CERTIFICATION -- UNDER PENALTIES OF PART 3 --
PERJURY, I CERTIFY THAT:
(1) THE NUMBER SHOWN ON THIS FORM IS MY AWAITING TIN [ ]
CORRECT TAXPAYER IDENTIFICATION
NUMBER (OR I HAVE CHECKED THE BOX IN
PART 3 AND EXECUTED THE CERTIFICATE
OF AWAITING TAXPAYER IDENTIFICATION
NUMBER BELOW) AND
(2) I AM NOT SUBJECT TO BACK WITHHOLDING PLEASE COMPLETE THE CERTIFICATE OF
- ------------------------------------- EITHER BECAUSE I HAVE NOT BEEN AWAITING TAXPAYER IDENTIFICATION
NAME NOTIFIED BY THE INTERNAL REVENUE NUMBER BELOW.
SERVICE ("IRS") THAT I AM SUBJECT TO
- ------------------------------------- BACKUP WITHHOLDING AS A RESULT OF
ADDRESS (NUMBER AND STREET) FAILURE TO REPORT ALL INTEREST OR
DIVIDENDS, OR THE IRS HAS NOTIFIED ME
- ------------------------------------- THAT I AM NO LONGER SUBJECT TO BACKUP
CITY, STATE AND ZIP CODE WITHHOLDING.
-------------------------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
PAYOR'S REQUEST FOR TAXPAYER CERTIFICATE INSTRUCTIONS -- YOU MUST CROSS OUT ITEM (2) IN PART 2 ABOVE IF YOU HAVE
IDENTIFICATION NUMBER (TIN) BEEN NOTIFIED BY THE IRS THAT YOU ARE SUBJECT TO BACKUP WITHHOLDING BECAUSE OF
UNDERREPORTING INTEREST OR DIVIDENDS ON YOUR TAX RETURN. HOWEVER, IF AFTER BEING
NOTIFIED BY THE IRS THAT YOU ARE SUBJECT TO BACKUP WITHHOLDING YOU RECEIVED ANOTHER
NOTIFICATION FROM THE IRS STATING THAT YOU ARE NO LONGER SUBJECT TO BACKUP
WITHHOLDING, DO NOT CROSS OUT ITEM (2).
SIGNATURE DATE , 1998
--------------------------------- -------------------------
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU WITH RESPECT TO THE
EXCHANGE NOTES.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED
THE BOX IN PART 3 OF THE SUBSTITUTE FORM W-9
14
<PAGE> 15
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I CERTIFY UNDER PENALTIES OF PERJURY THAT A TAXPAYER IDENTIFICATION
NUMBER HAS NOT BEEN ISSUED TO ME, AND EITHER (A) I HAVE MAILED OR DELIVERED AN
APPLICATION TO RECEIVE A TAXPAYER IDENTIFICATION NUMBER TO THE APPROPRIATE
INTERNAL REVENUE SERVICE CENTER OR SOCIAL SECURITY ADMINISTRATION OFFICE OR (B)
I INTEND TO MAIL OR DELIVER AN APPLICATION IN THE NEAR FUTURE. I UNDERSTAND
THAT IF I DO NOT PROVIDE A TAXPAYER IDENTIFICATION NUMBER TO THE PAYOR WITHIN 60
DAYS, 31% OF ALL REPORTABLE PAYMENTS MADE TO ME THEREAFTER WILL BE WITHHELD
UNTIL I PROVIDE A NUMBER.
, 1998
------------------------------ -------------------
SIGNATURE DATE
15
<PAGE> 1
EXHIBIT 99.2
GLOBAL MARINE INC.
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF
7 1/8% NOTES DUE 2007
IN EXCHANGE FOR REGISTERED
7 1/8% NOTES DUE 2007
This form, or one substantially equivalent hereto, must be used by a holder
of the 7 1/8% Notes Due 2007 (the "Old Notes") of Global Marine Inc., a Delaware
corporation (the "Company"), who wishes to tender the Old Notes pursuant to the
guaranteed delivery procedures described in "The Exchange Offer--Guaranteed
Delivery Procedures" of the Company's Prospectus, dated February 4, 1998 (the
"Prospectus"), relating to the Exchange Offer and in Instruction 2 to the
related Letter of Transmittal. Any holder who wishes to tender Old Notes
pursuant to such guaranteed delivery procedures must ensure that Wilmington
Trust Company, as exchange agent (the "Exchange Agent"), receives this Notice of
Guaranteed Delivery, properly completed and duly executed, prior to 5:00 p.m.,
New York City time, on March 11, 1998, unless extended (the "Expiration Date").
This form, properly completed and executed, may be delivered by telegram,
telex, facsimile transmission, mail or hand delivery to the Exchange Agent. In
addition, to use the guaranteed delivery procedures to tender Old Notes
pursuant to the Exchange Offer, tender must be made through an Eligible
Institution. The certificates for all physically tendered Old Notes, in proper
form for transfer, or a Book-Entry Confirmation, as the case may be, together
with a properly completed and duly executed Letter of Transmittal (or facsimile
thereof or Agent's Message in lieu thereof) with any required signature
guarantees, and any other documents required by the Letter of Transmittal, must
be deposited by the Eligible Institution with the Exchange Agent within three
New York Stock Exchange trading days after the date of execution of the Notice
of Guaranteed Delivery. Capitalized terms used but not defined herein have the
meanings ascribed to them in the Prospectus or the Letter of Transmittal.
To Wilmington Trust Company
By Mail or Hand/Overnight Delivery: By Facsimile Transmission:
Rodney Square North (for Eligible Institutions only)
1100 North Market Street (302) 651-1079
Wilmington, Delaware 19890 Confirm by telephone:
Attn: Corporate Trust Operations (302) 651-8869
Notice of Guaranteed Delivery may also be delivered by mail, overnight
courier or hand delivery to: Wilmington Trust Company, Exchange Agent, c/o
Harris Trust & Savings Bank, 88 Pine Street, Wall Street Plaza, 19th Floor, New
York, New York 10005.
_____________________
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER
THAN AS SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TO A
NUMBER OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an Eligible Institution under the instructions thereto, such
signature guarantee must appear in the applicable space in the box provided on
the Letter of Transmittal for guarantee of signatures.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to the Company, in accordance with the
Company's offer, upon the terms and subject to the conditions set forth in the
Prospectus and the related Letter of Transmittal, receipt of which is hereby
acknowledged, the principal amount of Old Notes set forth below pursuant to the
guaranteed delivery procedures set forth in the Prospectus under the caption
"The Exchange Offer--Guaranteed Delivery Procedures" and in Instruction 2 of
the Letter of Transmittal.
Name(s) of registered holder(s):
------------------------------------------------
(Please Type or Print)
Address:
-----------------------------------------------------------------------
- --------------------------------------------------------------------------------
Area Code and Telephone No.:
----------------------------------------------------
Principal Amount of Old Notes Tendered:
-----------------------------------------
Certificate Number(s) or Account
Number(s) at Book-Entry Facility
for Old Notes (if available):
---------------------------------------------------
Aggregate Principal Amount
Represented by Old Note(s):
-----------------------------------------------------
- --------------------------------------------------------------------------------
All authority herein conferred or agreed to be conferred shall survive
the death or incapacity of the undersigned and every obligation of the
undersigned hereunder shall be binding upon the heirs, personal
representatives, successors and assigns of the undersigned.
- --------------------------------------------------------------------------------
Signature of Holder(s):
---------------------------------------------------------
- --------------------------------------------------------------------------------
Date:
---------------------------------------------------------------------------
2
<PAGE> 3
THIS NOTICE OF GUARANTEED DELIVERY MUST BE SIGNED BY THE REGISTERED
HOLDER(S) OF OLD NOTES EXACTLY AS THE NAME(S) OF SUCH PERSON(S) APPEAR(S) ON
THE OLD NOTES OR ON A SECURITY POSITION LISTING AS THE OWNER OF OLD NOTES, OR
BY PERSON(S) AUTHORIZED TO BECOME REGISTERED HOLDER(S) BY ENDORSEMENTS AND
DOCUMENTS TRANSMITTED WITH THIS NOTICE OF GUARANTEED DELIVERY. IF SIGNATURE IS
BY A TRUSTEE, EXECUTOR, ADMINISTRATOR, GUARDIAN, ATTORNEY-IN-FACT, OFFICER OF A
CORPORATION OR OTHER PERSON ACTING IN A FIDUCIARY OR REPRESENTATIVE CAPACITY,
SUCH PERSON MUST PROVIDE THE FOLLOWING INFORMATION.
PLEASE PRINT NAME(S) AND ADDRESS(ES)
Name(s):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Capacity:
- --------------------------------------------------------------------------------
Address(es):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THE GUARANTEE ON THE FOLLOWING PAGE MUST BE COMPLETED
3
<PAGE> 4
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, a financial institution (including most banks,
savings and loan associations and brokerage houses) that is a participant in
the Securities Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Program or the Stock Exchanges Medallion Program, hereby
guarantees deposit with the Exchange Agent of the Letter of Transmittal (or
facsimile thereof or Agent's Message in lieu thereof), together with the Old
Notes tendered hereby in proper form for transfer (or confirmation of the
book-entry transfer of such Old Notes into the Exchange Agent's account at the
Book-Entry Transfer Facility described in the Prospectus under the caption "The
Exchange Offer--Book-Entry Transfer" and in the Letter of Transmittal) and any
other required documents, all by 5:00 p.m., New York City time, within three
New York Stock Exchange trading days after the date of execution of this Notice
of Guaranteed Delivery.
Name of Firm:
---------------------- -------------------------------------
(AUTHORIZED SIGNATURE)
Address:
-----------------------------
(INCLUDE ZIP CODE) Name:
------------------------------
Area Code and Tel. Number: Title:
-----------------------------
- ------------------------------------- (PLEASE TYPE OR PRINT)
Date: , 1998
--------------------
DO NOT SEND CERTIFICATES FOR OLD NOTES WITH THIS FORM. ACTUAL
SURRENDER OF OLD NOTES MUST BE MADE PURSUANT TO, AND BE ACCOMPANIED BY, A
PROPERLY COMPLETED AND DULY EXECUTED LETTER OF TRANSMITTAL AND ANY OTHER
REQUIRED DOCUMENTS.
4
<PAGE> 1
EXHIBIT 99.3
SECOND AMENDED AND RESTATED
CREDIT AGREEMENT
AMONG
GLOBAL MARINE INC.
VARIOUS LENDING INSTITUTIONS,
AND
BANKERS TRUST COMPANY,
AS ADMINISTRATIVE AGENT,
SOCIETE GENERALE, SOUTHWEST AGENCY,
AS DOCUMENTATION AGENT
AND
SKANDINAVISKA ENSKILDA BANKEN AB (PUBL)
AND
DEN NORSKE BANK ASA, NEW YORK BRANCH,
AS CO-AGENTS
$240,000,000.00 REVOLVING CREDIT LOAN
DATED AS OF DECEMBER 9, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
SECTION 1 AMOUNT AND TERMS OF CREDIT....................................................................1
1.01 Commitment....................................................................................1
1.02 Minimum Borrowing Amounts, etc................................................................4
1.03 Notice of Borrowing...........................................................................4
1.04 Disbursement of Funds.........................................................................7
1.05 Notes.........................................................................................8
1.06 Conversions...................................................................................9
1.07 Pro Rata Borrowings...........................................................................9
1.08 Interest.....................................................................................10
1.09 Interest Periods.............................................................................11
1.10 Increased Costs, Illegality, etc.............................................................11
1.11 Compensation.................................................................................13
1.12 Change of Lending Office.....................................................................14
1.13 Replacement of Banks.........................................................................14
SECTION 2 LETTERS OF CREDIT............................................................................16
2.01 Letters of Credit............................................................................16
2.02 Minimum Stated Amount........................................................................17
2.03 Letter of Credit Requests; Request for Issuance of Letter of Credit..........................17
2.04 Agreement to Repay Letter of Credit Payments.................................................17
2.05 Letter of Credit Participations..............................................................18
2.06 Increased Costs..............................................................................20
2.07 Indemnities..................................................................................21
SECTION 3 FEES; COMMITMENTS............................................................................22
3.01 Fees.........................................................................................22
3.02 Voluntary Reduction of Commitments...........................................................23
3.03 Termination of Commitments...................................................................23
SECTION 4 PAYMENTS.....................................................................................24
4.01 Voluntary Prepayments........................................................................24
4.02 Mandatory Repayments.........................................................................24
4.03 Method and Place of Payment..................................................................26
4.04 Net Payments.................................................................................26
SECTION 5 CONDITIONS PRECEDENT.........................................................................29
5.01 Consent of Banks.............................................................................29
5.02 Execution of Notes...........................................................................29
5.03 No Default; Representations and Warranties...................................................29
5.04 Officer's Certificate........................................................................29
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C> <C>
5.05 Opinions of Counsel..........................................................................29
5.06 Corporate Proceedings........................................................................30
5.07 Litigation...................................................................................30
5.08 Approvals....................................................................................30
5.09 Fees.........................................................................................30
5.10 Margin Rules.................................................................................31
5.11 Notice of Borrowing..........................................................................31
5.12 Fulfillment of Conditions....................................................................31
SECTION 6 REPRESENTATIONS, WARRANTIES AND AGREEMENTS...................................................32
6.01 Status.......................................................................................32
6.02 Power and Authority..........................................................................32
6.03 No Violation.................................................................................32
6.04 Litigation...................................................................................33
6.05 Use of Proceeds; Margin Regulations..........................................................33
6.06 Governmental Approvals.......................................................................34
6.07 Investment Company Act.......................................................................34
6.08 Public Utility Holding Company Act...........................................................34
6.09 True and Complete Disclosure.................................................................34
6.10 Financial Condition; Financial Statements....................................................35
6.11 Tax Returns and Payments.....................................................................35
6.12 Employee Benefit Plans.......................................................................35
6.13 Subsidiaries.................................................................................36
6.14 Patents, etc.................................................................................36
6.15 Environmental Matters........................................................................37
6.16 Properties...................................................................................38
6.17 Labor Relations..............................................................................38
6.18 Insurance....................................................................................38
SECTION 7 AFFIRMATIVE COVENANTS........................................................................39
7.01 Information Covenants........................................................................39
7.02 Books, Records and Inspections...............................................................40
7.03 Maintenance of Insurance.....................................................................40
7.04 Payment of Taxes.............................................................................41
7.05 Consolidated Corporate Franchises............................................................41
7.06 Compliance with Statutes, etc................................................................41
7.07 Good Repair..................................................................................41
7.08 Use of Proceeds..............................................................................41
7.09 ERISA........................................................................................42
SECTION 8 NEGATIVE COVENANTS...........................................................................43
8.01 Changes in Business..........................................................................43
8.02 Consolidation, Merger, Sale of Assets, etc...................................................43
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<S> <C> <C>
8.03 Indebtedness and Liens.......................................................................43
8.04 Restrictions on Subsidiaries.................................................................44
8.05 Transactions with Affiliates.................................................................45
8.06 Limitation on Sale/Leaseback Transactions....................................................45
8.07 Cash Interest Coverage Ratio.................................................................46
8.08 Debt to Capitalization Ratio.................................................................46
8.09 Tangible Net Worth...........................................................................46
SECTION 9 EVENTS OF DEFAULT............................................................................48
9.01 Payments.....................................................................................48
9.02 Representations, etc.........................................................................48
9.03 Covenants....................................................................................48
9.04 Default Under Other Agreements...............................................................48
9.05 Bankruptcy, etc..............................................................................48
9.06 Senior Secured Notes Redemption..............................................................49
9.07 Judgments....................................................................................49
9.08 Change of Control............................................................................49
9.09 Employee Benefit Plans.......................................................................49
SECTION 10 DEFINITIONS..................................................................................51
SECTION 11 THE AGENTS...................................................................................71
11.01 Appointment..................................................................................71
11.02 Nature of Duties.............................................................................71
11.03 Lack of Reliance on the Agents...............................................................71
11.04 Certain Rights of the Administrative Agent...................................................72
11.05 Reliance.....................................................................................72
11.06 Indemnification..............................................................................72
11.07 The Agents in Their Individual Capacity......................................................72
11.08 Holders......................................................................................73
11.09 Resignation by the Administrative Agent......................................................73
SECTION 12 MISCELLANEOUS................................................................................74
12.01 Indemnification, Payment of Expenses, etc....................................................74
12.02 Right of Setoff..............................................................................75
12.03 Notices......................................................................................75
12.04 Benefit of Agreement.........................................................................75
12.05 No Waiver; Remedies Cumulative...............................................................77
12.06 Payments Pro Rata............................................................................77
12.07 Calculations; Computations...................................................................78
12.08 Governing Law; Submission to Jurisdiction; Venue; Waiver of Jury Trial.......................78
12.09 Counterparts.................................................................................79
12.10 Effectiveness................................................................................79
</TABLE>
-iii-
<PAGE> 5
<TABLE>
<S> <C> <C>
12.11 Headings Descriptive.........................................................................79
12.12 Amendment or Waiver..........................................................................80
12.13 Survival.....................................................................................80
12.14 Domicile of Loans............................................................................80
12.15 Confidentiality..............................................................................80
12.16 Registry.....................................................................................81
12.17 Effect on the First Restated Credit Agreement
and Other Credit Documents...................................................................81
</TABLE>
-iv-
<PAGE> 6
Annex I Commitments
Annex II Bank Addresses
Exhibit 1.03 Form of Notice of Borrowing
Exhibit 1.03(c)(i)A Form of Notice of Competitive Borrowing
Exhibit 1.03(c)(i)B Form of Invitation to Bid
Exhibit 1.03(c)(ii) Form of Competitive Bid
Exhibit 1.03(c)(iv) Form of Competitive Bid Accept/Reject Letter
Exhibit 1.05(a) Form of Note
Exhibit 1.05(b) Form of Swing Line Note
Annex 2.01(d) Existing Letters of Credit
Exhibit 2.03 Form of Letter of Credit Request
Exhibit 4.04(b)(ii) Form of Section 4.04(b)(ii) Certificate
Exhibit 5.05-A Form of Opinion of Baker & Botts, L.L.P.
Exhibit 5.05-B Form of Opinion of James L. McCulloch
Exhibit 5.05-C Form of Opinion of Andrews & Kurth L.L.P.
Exhibit 5.06 Form of Officers' Certificate
Annex 6.13 Subsidiaries
Annex 6.16(b) Offshore Drilling Rigs Owned or Leased
Exhibit 7.01(c) Form of Compliance Certificate
Exhibit 8.04(b) Form of Guaranty
Exhibit 10.01A Form of Assignment and Assumption Agreement
-v-
<PAGE> 7
THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this
"Agreement"), is entered into as of December 9, 1997, among GLOBAL MARINE INC.
("Borrower"), a Delaware corporation, the lending institutions listed on Annex
1.1 hereto (each a "Bank" and, collectively, the "Banks"), BANKERS TRUST
COMPANY, as Administrative Agent (the "Administrative Agent" and, together with
the hereafter named Documentation Agent or Co-Agent, the "Agents"), Societe
Generale, Southwest Agency, as Documentation Agent, and Den Norske Bank ASA,
New York Branch and Skandinaviska Enskilda Banken AB (publ), as Co-Agents,
Bankers Trust Company as Letter of Credit Issuer and Bankers Trust Company as
Swing Line Bank, all as provided herein. Unless otherwise defined herein, all
capitalized terms used herein and defined in Section 10 are used herein as so
defined.
WHEREAS, Borrower, Banks, Administrative Agent and various
Banks named therein originally entered into that certain Credit Agreement dated
as of February 12, 1997 (as amended from time to time, the "Original Credit
Agreement") as amended and restated by agreement dated as of July 15, 1997 (as
amended from time to time, the "First Restated Credit Agreement") and are
entering into this Agreement in order to amend and restate the First Restated
Credit Agreement, to add the Swing Line Commitment and to effect the other
changes and terms set forth herein.
WHEREAS, Borrower, Banks and the Agents intend that (a) all
obligations of the parties under the Original Credit Agreement and the First
Restated Credit Agreement shall continue to exist under and be evidenced by
this Agreement and other Credit Documents, as amended and restated hereby and
(b) except as expressly stated herein or amended hereby, the First Restated
Credit Agreement and other Credit Documents are ratified and confirmed as
remaining unmodified and in full force and effect with respect to all
obligations.
NOW, THEREFORE, in consideration of the mutual agreements,
provisions and covenants contained herein, the parties agree that the First
Restated Credit Agreement is hereby amended and restated in its entirety as
follows:
SECTION 1
AMOUNT AND TERMS OF CREDIT
1.01 Commitment. (a) Subject to and upon the terms and
conditions herein set forth, each Bank severally agrees to make a revolving
credit loan or loans (each a "Revolving Credit Loan" and, collectively with all
other Loans (including the Swing Line Loans and the Competitive Bid Loans), the
"Loans") under the Facility to Borrower, which Revolving Credit Loans (i) shall
be made at any time and from time to time on and after the Initial Borrowing
Date and prior to the Maturity Date, (ii) except as hereinafter provided, may,
at the option of Borrower, be incurred and maintained as, and/or converted
into, Base Rate Loans or Eurodollar Loans; provided, however, that all
Revolving Credit Loans made as part of the same Borrowing shall, unless
otherwise specifically
<PAGE> 8
provided herein, consist of Loans of the same Type, (iii) may be repaid and
reborrowed in accordance with the provisions hereof, (iv) together with all
other Loans and all Letter of Credit Outstandings, shall not exceed in the
aggregate for all Banks at any time outstanding, the Total Commitment and (v)
shall not exceed for any Bank at any time outstanding the aggregate principal
amount which, when combined with the aggregate outstanding principal amount of
all other Loans (excluding Competitive Bid Loans) of such Bank and with such
Bank's Adjusted Percentage of the Letter of Credit Outstandings (exclusive of
Unpaid Drawings which are repaid with the proceeds of, and simultaneously with
the incurrence of, the respective incurrence of Loans) at such time, equals (A)
if such Bank is a Non-Defaulting Bank, the Adjusted Commitment of such Bank at
such time and (B) if such Bank is a Defaulting Bank, the Commitment of such
Bank at such time, provided, the Commitment of the Swing Line Bank shall be
calculated independently of its Commitment to make Revolving Credit Loans.
(b) (i) Subject to and upon the terms and conditions herein
set forth, the Swing Line Bank hereby severally agrees to make a loan or loans
(the "Swing Line Loans") under the Facility to Borrower, which Swing Line Loan
shall be subject to the terms contained in paragraph (a) of this Section 1.01,
but shall not be subject to the Minimum Borrowing Amount requirements. All
Swing Line Loans, in the aggregate, shall not exceed the total Swing Line
Commitment, and shall be held by the Swing Line Bank, subject to subparagraph
(b)(ii). Borrowings under the Swing Line Loan may be repaid and reborrowed in
accordance with the provisions hereof. Except as otherwise set forth herein,
any Loans or Borrowings made under the Swing Line Commitment shall count as a
Loan for all purposes hereunder (except for the calculation of the Fees payable
under Section 3.01(a) hereof), and, specifically, such Loans or Borrowings
shall reduce the amount available to Borrower under the Total Commitment,
provided, such Loans or Borrowings shall not reduce the Available Unutilized
Commitment of the Swing Line Bank. The total amount of all Loans outstanding,
including all Swing Line Loans, plus all Letter of Credit Outstandings shall
never exceed the Total Commitment.
(ii) At any time before or after a Default or Event of
Default, the Swing Line Bank, in its sole and absolute discretion, may give
notice to the Administrative Agent to request each Bank, including the Swing
Line Bank, to make a Loan as a Base Rate Revolving Credit Loan in an amount
equal to such Bank's Percentage times the outstanding principal balance of any
Swing Line Loan outstanding on the date such notice is given; provided that the
provision of this subsection shall not affect the obligation of the Borrower to
prepay Swing Line Loans in accordance with the terms hereof. Unless the
Commitments shall have expired or terminated, each Bank shall make the proceeds
of its Revolving Credit Loan available to the Administrative Agent for the
account of the Swing Line Bank on the next Business Day following such request,
in immediately available funds. The proceeds of such Revolving Credit Loans
shall be immediately applied to repay the Swing Line Loan.
(iii) At any time before or after a Default or Event of
Default, if the Commitments shall have expired or be terminated while any Swing
Line Loan is outstanding, each Bank, at the sole option of the Swing Line Bank,
shall either (A) notwithstanding the expiration or termination of the
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<PAGE> 9
Commitments, make a Revolving Credit Loan as a Base Rate Loan which such Loan
shall be deemed a Loan for all purposes of this Agreement and the other Credit
Documents or (B) be deemed, without further action by any Person, to have
purchased from the Swing Line Bank a participation in such Swing Line Loan in
either case in an amount equal to such Bank's Percentage times the outstanding
principal balance of such Swing Line Loan. The Administrative Agent shall
notify each such Bank of the amount of such Revolving Credit Loan or
participation and such Bank will transfer to the Administrative Agent for the
account of the Swing Line Bank on the next Business Day following such notice,
in immediately available funds, the amount of its Revolving Credit Loan or
participation.
(iv) If any such Bank shall not have so made its Revolving
Credit Loans or its percentage participation available to the Administrative
Agent pursuant to this Section 1.01(b), such Bank agrees to pay interest
thereon for each day from such date until the date such amount is paid at the
Federal Funds Effective Rate on the date payment is to be made to the
Administrative Agent. Whenever, at any time after the Administrative Agent has
received from any Bank such Revolving Credit Loan or participating interest in
a Swing Line Loan, the Administrative Agent receives any payment on account
thereof, the Administrative Agent will pay to such Bank its Percentage in such
amount (appropriately adjusted, in the case of interest payments, to reflect
the period of time during which such Bank's Percentage interest was outstanding
and funded) which payment shall be subject to repayment by such Bank if such
payment received by the Administrative Agent is required to be returned. Each
Bank's obligation to make the Revolving Credit Loans or purchase such
participating interests pursuant to this Section 1.01(b) shall be absolute and
unconditional and shall not be affected by any circumstance, including, without
limitation, (A) any set-off, counterclaim, recoupment, defense or other right
which such Bank or any other Person may have against the Swing Line Bank, the
Administrative Agent or any other Person for any reason whatsoever; (B) the
occurrence or continuance of a Default or an Event of Default or the
termination of Commitments; (C) the occurrence of any Material Adverse Effect;
(D) any breach of this Agreement by the Borrower or any other Bank; or (E) any
other circumstance, happening or event whatsoever, whether or not similar to
any of the foregoing. Each Swing Line Loan, once so participated by any Bank,
shall cease to be a Swing Line Loan with respect to that amount for purposes of
this Agreement but shall continue to be a Revolving Credit Loan and be
evidenced by such Bank's Note.
(c) No Bank shall be committed to make a Competitive Bid
Loan, and any such Loan shall be made pursuant to the procedures and agreements
set forth in Section 1.03(c). Except as otherwise set forth herein, Competitive
Bid Loans, if made, shall count as a Loan for all purposes (except for
calculation of the Fees payable under Section 3.01(a) hereof and the limitation
of any Bank's aggregate Loans outstanding under its Commitment). Specifically,
such Loans or Borrowings shall reduce the amount available to Borrower under
the Total Commitment (except for calculation of the Fees due under Section
3.01(a)), provided, such Loans or Borrowings shall not reduce the Available
Unutilized Commitment of any Bank making such Loans. The total amount of all
Loans outstanding, including all Competitive Bid Loans, plus all Letter of
Credit Outstandings, shall never exceed the Total Commitment.
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<PAGE> 10
(d) In no event shall the total of all Loans and Letter of
Credit Outstandings hereunder exceed the Total Commitment.
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 (other than Swing Line Loans) constituting such Borrowing. More
than one Borrowing may be incurred on any day; provided, however, that at no
time shall there be outstanding more than ten Borrowings of Eurodollar Loans.
1.03 Notice of Borrowing. (a) Whenever Borrower desires to
incur Revolving Credit Loans under the Facility, it shall give the
Administrative Agent at its Notice Office, prior to 11:00 a.m. (New York time),
at least three Business Days' prior written notice (or telephonic notice
promptly confirmed in writing) of each Borrowing of Eurodollar Loans and at
least one Business Day's prior written notice (or telephonic notice promptly
confirmed in writing) of each Borrowing of Base Rate Loans to be made
hereunder. Each such written notice (each a "Notice of Borrowing") shall be in
the form of Exhibit 1.03(a) hereto and shall be irrevocable and shall specify
(a) the aggregate principal amount of the Loans to be made pursuant to such
Borrowing, (b) the date of Borrowing (which shall be a Business Day) and (c)
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. The Administrative Agent shall
promptly give each Bank written notice (or telephonic notice promptly confirmed
in writing) of each proposed Borrowing, of such Bank's proportionate share
thereof and of the other matters covered by the Notice of Borrowing.
(b) Whenever the Borrower requires a Borrowing under the
Swing Line Loans, it shall give written notice thereof (or telephonic notice
promptly confirmed in writing) to the Swing Line Bank not later than 11:00 a.m.
(New York time) on the date of such Borrowing. Each notice shall be irrevocable
and shall specify the aggregate principal amount of such Borrowing and the date
of such Borrowing (which shall be a Business Day).
(c) (i) Whenever Borrower requests a Competitive Borrowing,
Borrower shall hand deliver or telecopy to the Administrative Agent a duly
completed request for Competitive Bids in the form of Exhibit 1.03(c)(i)A
hereto (a "Notice of Competitive Borrowing"), to be received by the
Administrative Agent (i) in the case of a Eurodollar Rate Competitive
Borrowing, not later than 10:00 a.m., New York City time, five (5) Business
Days before the Borrowing Date specified for a proposed Eurodollar Competitive
Borrowing and (ii) in the case of a Base Rate Competitive Borrowing, not later
than 10:00 a.m., New York City time, one Business Day before the Borrowing Date
specified for a proposed Base Rate Competitive Borrowing. A Notice of
Competitive Borrowing that does not conform substantially to the format of
Exhibit 1.03(c)(i)A may be rejected in the Administrative Agent's sole
discretion, and the Administrative Agent shall promptly notify the Borrower of
such rejection by telecopier. Each Notice of Competitive Borrowing shall in
each case refer to this Agreement and specify (x) whether the Competitive
Borrowing then being requested is to be a Eurodollar Rate Borrowing or a Base
Rate Borrowing, (y) the Borrowing Date
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<PAGE> 11
of such Borrowing and the aggregate principal amount thereof being requested
(which shall not be less than $10,000,000.00 or greater than the unused Total
Commitment on such Borrowing Date and shall be an integral multiple of
$5,000,000.00), and (z) the Interest Period with respect thereto (which may not
end after the Maturity Date). If a Notice of Competitive Borrowing is received
by the Administrative Agent and is not rejected as aforesaid, the
Administrative Agent shall invite by telecopier (substantially in the form set
forth in Exhibit 1.03(c)(i)B hereto) the Banks to bid (an "Invitation to Bid"),
on the terms and conditions of this Agreement, to make Competitive Loans in
response to such Notice of Competitive Borrowing. The Invitation to Bid with
respect to any proposed Competitive Borrowing shall be given to the Banks
promptly, and in no event later than 1:00 p.m., New York City time (i) in the
case of a Eurodollar Rate Competitive Borrowing, five (5) Business Days before
the Borrowing Date specified for such proposed Competitive Borrowing, and (ii)
in the case of a Base Rate Competitive Borrowing, one Business Day before the
Borrowing Date specified for such proposed Competitive Borrowing.
(ii) Each Bank may, in its sole discretion, make a
Competitive Bid or Competitive Bids to the Administrative Agent responsive to
the Notice of Competitive Borrowing. Each Competitive Bid by a Bank must be
received by the Administrative Agent by telecopier, in the form of Exhibit
1.03(c)(ii) hereto, (i) in the case of a Eurodollar Rate Competitive Borrowing,
not later than 9:30 a.m., New York City time, four (4) Business Days before the
Borrowing Date specified for the proposed Eurodollar Rate Competitive Borrowing
and (ii) in the case of a Base Rate Competitive Borrowing, not later than 10:00
a.m., New York City time, on the Borrowing Date specified for the proposed Base
Rate Competitive Borrowing. Multiple bids may be accepted by the Administrative
Agent. Competitive Bids that do not conform substantially to the format of
Exhibit 1.03(c)(ii) may be rejected by the Administrative Agent after
conferring with, and upon the instruction of, Borrower, and the Administrative
Agent shall notify the Bank of such rejection as soon as practicable. Each
Competitive Bid shall refer to this Agreement and (x) specify the principal
amount which shall be in a minimum principal amount and in integral multiples
set forth in the preceding paragraph and which may equal the entire aggregate
principal amount of the Competitive Borrowing requested by Borrower of the
Competitive Loan that the Bank is willing to make to the Borrower requesting
such Competitive Bid which may exceed such Bank's Commitment, (y) specify the
Competitive Bid Rate or Competitive Bid Rates at which the Bank is prepared to
make the Competitive Loan and (z) confirm the Interest Period with respect
thereto specified by Borrower in its Notice of Competitive Borrowing. If any
Bank shall elect not to make a Competitive Bid, such Bank shall so notify the
Administrative Agent by telecopier (i) in the case of a Eurodollar Rate
Competitive Borrowing, not later than 10:00 a.m., New York City time, three
Business Days before the Borrowing Date specified for such proposed Competitive
Borrowing and (ii) in the case of a Base Rate Competitive Borrowing, not later
than 10:00 a.m., New York City time, on the Borrowing Date specified for a
proposed Base Rate Competitive Borrowing; provided, however, that failure by
any Bank to give such notice shall not cause such Bank to be obligated to make
any Competitive Loan as part of such Competitive Borrowing. Once accepted, a
Competitive Bid submitted by a Bank pursuant to this paragraph (ii) shall be
irrevocable.
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(iii) Promptly, and in no event later than (i) in the case of
a Eurodollar Rate Competitive Borrowing, 11:00 a.m., New York City time, four
(4) Business Days before the Borrowing Date specified for such proposed
Competitive Borrowing and (ii) in the case of a Base Rate Competitive
Borrowing, 11:00 a.m., New York City time, on the Borrowing Date specified for
such proposed Competitive Borrowing, the Administrative Agent shall notify
Borrower by telecopier of all the Competitive Bids made, the Competitive Bid
Rate and the principal amount of each Competitive Loan in respect of which a
Competitive Bid was made and the identity of the Bank that made each bid. The
Administrative Agent shall send a copy of all Competitive Bids to Borrower for
its records as soon as practicable after completion of the bidding process.
(iv) Borrower may in its sole and absolute discretion,
subject only to the provisions of this paragraph (iv), accept or reject any
Competitive Bid referred to in paragraph (iii) above. Borrower shall notify the
Administrative Agent by telecopier in the form of a Competitive Bid
Accept/Reject Letter whether and to what extent it has decided to accept or
reject any or all of the bids referred to in paragraph (iii) above, (i) in the
case of a Eurodollar Rate Competitive Borrowing, not later than 12:00 noon, New
York City time, four (4) Business Days before the Borrowing Date specified for
such proposed Competitive Borrowing and (ii) in the case of a Base Rate
Competitive Borrowing, not later than 12:00 noon, New York City time, on the
Borrowing Date specified for such proposed Competitive Borrowing; provided,
however, that (w) the failure by Borrower to accept or reject any bid referred
to in paragraph (iii) above within the time period specified herein shall be
deemed to be a rejection of such bid, (x) the aggregate amount of the
Competitive Bids accepted by Borrower shall not exceed the principal amount
specified in the Notice of Competitive Borrowing, (y) if Borrower shall accept
a bid or bids made at a particular Competitive Bid Rate but the amount of such
bid or bids shall cause the total amount of bids to be accepted by Borrower to
exceed the amount specified in the Notice of Competitive Borrowing, then
Borrower shall accept a portion of such bid or bids in an amount equal to the
amount specified in the Notice of Competitive Borrowing less the amount of all
other Competitive Bids accepted with respect to such Notice of Competitive
Borrowing, which acceptance, in the case of multiple bids at such Competitive
Bid Rate, shall be made pro rata in accordance with the amount of each such bid
at such Competitive Bid Rate, and (z) no bid shall be accepted for a
Competitive Loan from any Bank unless such Competitive Loan is in the minimum
principal amount and integral multiples set forth in the preceding paragraph
(c)(ii) provided further, however, that if a Competitive Loan must be in a
lesser amount because of the provisions of clause (y) above, such Competitive
Loan may be for such minimums and integral multiples thereof as agreed to by
the Borrower and the relevant Bank, and in calculating the pro rata allocation
of acceptances or portions of multiple bids at a particular Competitive Bid
Rate pursuant to clause (y) the amounts shall be rounded to integral multiples
in a manner which shall be in the discretion of Borrower and the relevant Bank.
Each acceptance of a Competitive Bid shall be irrevocable and binding on
Borrower.
(v) Promptly, and in no event later than 1:00 p.m., New York
City time, on each date Borrower accepts a Competitive Bid pursuant to Section
1.03(c)(iv), the Administrative Agent shall notify each Bank whether or not its
Competitive Bid has been accepted (and if so, in what amount and at what
Competitive Bid Rate) by telecopier sent by the Administrative Agent, and each
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successful bidder will thereupon become bound, subject to the other applicable
conditions hereof, to make the Competitive Loan in respect of which its bid has
been accepted. After completing the notifications referred to in the
immediately preceding sentence, the Administrative Agent shall notify each Bank
of the aggregate principal amount of all Competitive Bids accepted.
(vi) Upon receipt from the Administrative Agent of the
Eurodollar Rate applicable to any Eurodollar Rate Advances to be made by any
Bank pursuant to a Competitive Bid that has been accepted by Borrower pursuant
to Section 1.03(c)(ii), the Administrative Agent shall notify such Bank and
Borrower of (i) the applicable Eurodollar Rate and (ii) the sum of the
applicable Eurodollar Rate plus the Margin bid by such Bank.
(vii) No Competitive Borrowing shall be made within five (5)
Business Days of the date of any other Competitive Borrowing, unless Borrower
and the Administrative Agent shall mutually agree otherwise.
(viii) If the Administrative Agent or any of its Affiliates
shall at any time have a Commitment hereunder and shall elect to submit a
Competitive Bid in its capacity as a Bank, it shall submit such bid directly to
the Borrower requesting such Competitive Bid one quarter of an hour earlier
than the latest time at which the other Banks are required to submit their bids
to the Administrative Agent pursuant to paragraph (c)(ii) above.
1.04 Disbursement of Funds. (a) No later than 1:00 P.M. (New
York time) on the date specified in each Notice of Borrowing (other than
Borrowings under the Swing Line Commitment), each Bank will make available its
pro rata share (or, in the case of Competitive Bid Loans, its portion of such
Loans accepted by Borrower pursuant to Section 1.03(c)(iv)) 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 Dollars and
immediately available funds at the Payment Office, and the Administrative Agent
promptly will make available to Borrower by depositing to its account at the
Payment Office the aggregate of the amounts so made available in Dollars 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 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 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 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 three Business Days from the date the
Administrative Agent made such funds available to Borrower) notify Borrower,
and Borrower shall (within two Business Days of receiving such demand) pay such
corresponding amount to the Administrative Agent. The Administrative Agent
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<PAGE> 14
shall also be entitled to recover on demand from such Bank or 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 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 Federal Funds Effective Rate or (y) if paid by Borrower, the then
applicable rate of interest, calculated in accordance with Section 1.08, for
the respective Loans.
(b) With respect to any Loan to be made under the Swing Line
Commitment, no later than 2:00 p.m. (New York time) on the date requested in
the Notice of Borrowing, the Swing Line Bank shall make available to Borrower
in immediately available funds the amount of such Loan at the Borrower's
account maintained at the Payment Office.
(c) Nothing herein shall be deemed to relieve any Bank from
its obligation to fulfill its commitments hereunder or to prejudice any rights
which Borrower may have against any Bank as a result of any default by such
Bank hereunder.
1.05 Notes. (a) Borrower's obligation to pay the Loans made
to it by each Bank shall be evidenced by a promissory note substantially in the
form of Exhibit 1.05(a) hereto with blanks appropriately completed in
conformity herewith (each a "Note" and, together with the Swing Line Note,
collectively, the "Notes").
(b) Borrower's obligation to repay the Swing Line Loans made
by the Swing Line Bank shall be evidenced by a promissory note duly executed
and delivered by the Borrower to the Swing Line Bank substantially in the form
of Exhibit 1.05(b) hereto (the "Swing Line Note"), and shall (i) be in a stated
principal amount equal to the Swing Line Commitment, (ii) be payable as
provided herein and mature on the Maturity Date, (iii) bear interest as
provided in the appropriate clause of Section 1.08 and (iv) be entitled to the
benefits of this Agreement and the other Loan Documents.
(c) Borrower's obligation to repay the Competitive Bid Loan
shall be evidenced by the Competitive Bid Notes payable to the order of the
Bank or Banks making such Loans.
(d) Each Bank that was a party to the First Restated
Agreement, shall surrender its notes issued in connection with the execution
and delivery of the First Restated Credit Agreement in exchange for a new Note
reflecting both its amended Commitment under this Agreement as of the Second
Amended and Restated Effectiveness Date in accordance with the procedures
described in clause (c) below.
(e) The Note issued to each Bank shall (i) be executed by
Borrower, (ii) be payable to the order of such Bank and be dated the Second
Amended and Restated Effectiveness Date, (iii) be in a stated principal amount
equal to the Commitment of such Bank on such date, (iv) be payable in the
aggregate unpaid principal amount of the Loans evidenced thereby, (v) mature on
the Maturity Date, (vi) bear interest as provided in the appropriate clause of
Section 1.08 in
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respect of the Base Rate Loans and Eurodollar Loans, as the case may be,
evidenced thereby, (vii) be subject to mandatory prepayment as provided in
Section 4.02 and (viii) be entitled to the benefits of this Agreement and the
other Credit Documents.
(f) 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 Borrower's obligations in respect of such Loans.
1.06 Conversions. Borrower shall have the option to convert
on any Business Day all or a portion (which portion shall be at least equal to
the applicable Minimum Borrowing Amount) of the outstanding principal amount of
the Loans owing pursuant to the Facility (other than Swing Line Loans which
must be maintained as Prime Lending Rate Loans) into a Borrowing or Borrowings
pursuant to the Facility of another Type of Loan; provided, however, that (a)
if any Eurodollar Loan is converted into Base Rate Loans other than on the last
day of an Interest Period applicable thereto Borrower shall pay to the Banks
all amounts related to such conversion that are due pursuant to Section 1.11,
(b) 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, (c) 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 reasonably determined that
such a conversion would be disadvantageous to the Banks and (d) 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 Borrower by
giving the Administrative Agent at its Notice Office, prior to 12:00 Noon (New
York time), at least three Business Days' (or one Business Day's, in the case
of a conversion into Base Rate Loans) 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 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. (a) All Revolving Credit Loans
under this Agreement shall be made by the Banks pro rata on the basis of their
Commitments computed independently of, and without regard to, the Swing Line
Commitment. It is understood that no Bank shall be responsible for any default
by any other Bank in its obligation to make Loans hereunder and that each Bank
shall be obligated to make the Loans provided to be made by it hereunder,
regardless of the failure of any other Bank to fulfill its commitments
hereunder.
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<PAGE> 16
(b) All Swing Line Loans shall be made by the Swing Line
Bank.
(c) All Competitive Bid Loans shall be made by the Banks
whose bids for such Loans are accepted in the amounts agreed to by such Banks
and Borrower in accordance with the provisions of Section 1.03(c).
1.08 Interest. (a) The unpaid principal amount of each Base
Rate Loan shall bear interest at a rate per annum which shall be equal to the
sum of the Base Rate in effect from time to time, plus the Applicable Base Rate
Margin.
(b) The unpaid principal amount of each Eurodollar Loan that
is a Revolving Credit Loan shall bear interest at a rate per annum which shall
be equal to the sum of the relevant Eurodollar Rate, plus the Applicable
Eurodollar Margin in effect from time to time.
(c) The unpaid principal amount of all Competitive Bid Loans
shall bear interest at the Competitive Bid Rate specified by the Bank making
such Competitive Bid Loan and agreed to by the Borrower pursuant to Section
1.03(c).
(d) 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 the greater
of (x) 2% per annum in excess of the rate otherwise applicable to Base Rate
Loans from time to time or (y) the rate which is 2% in excess of the rate
(including any applicable margin) then borne by such Loans, in each case with
such interest payable on demand; provided, however, 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;
provided, further, however, that in no event shall any amount payable hereunder
bear interest in excess of the maximum amount permitted by applicable law.
(e) Interest shall accrue from and including the date of any
Borrowing to but excluding the date of any repayment thereof (whether by
acceleration or otherwise) and shall be payable (i) in respect of each Base
Rate Loan, quarterly in arrears on the first Business Day of each March, June,
September and December, (ii) in respect of each Eurodollar Loan, in arrears on
the last day of each Interest Period applicable thereto and, in the case of an
Interest Period of six months, on the date occurring three 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.
(f) All computations of interest hereunder shall be made in
accordance with Section 12.07(b).
(g) The Administrative Agent, upon determining the interest
rate for any Borrowing of Eurodollar Loans for any Interest Period, shall
promptly notify Borrower and the Banks thereof.
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<PAGE> 17
1.09 Interest Periods. (a) At the time Borrower gives a
Notice of Borrowing, Notice of Competitive 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, Borrower
shall have the right to elect by giving the Administrative Agent or, in the
case of Competitive Loans, the Bank or Banks making said Loans, 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
Borrower, be a one, two, three or six month period or, in the case of
Competitive Bid Loans, as otherwise agreed to between Borrower and the relevant
Bank(s). 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 next 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 in which such
Interest Period ends, 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, however, 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 month, such Interest Period
shall expire on the next preceding Business Day;
(iv) no Interest Period shall extend beyond the Maturity Date
except as otherwise mutually agreed in the case of Competitive Bid Loans; and
(v) 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 reasonably determined that such an election at such
time would be disadvantageous to the Banks.
(b) If upon the third Business Day prior to the expiration of
any Interest Period, 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, Borrower shall be deemed to have elected to convert such
Borrowing into a Borrowing of Base Rate Loans 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) below, the Administrative Agent or (y) in the
case of clauses (ii) and (iii) below, any Bank (including any Bank making a
Eurodollar Competitive Bid Loan) shall have reasonably determined
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<PAGE> 18
(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 net income taxes, franchise 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 adoption of any new law or
governmental rule, regulation, guideline or order) (such as, for example, but
not 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;
or
(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);
then, and in any such event, such Bank (or the Administrative Agent in the case
of clause (i) above) shall (x) on such date and (y) within ten Business Days of
the date on which such event no longer exists, give notice (by telephone
confirmed in writing) to Borrower and, in the case of clauses (ii) and (iii)
above, to the Administrative Agent of such determination (which notice the
Administrative Agent shall promptly transmit to each of the other Banks).
Thereafter (x) in the case of clause (i) above, Eurodollar Loans shall no
longer be available until such time as the Administrative Agent notifies
Borrower and the Banks that the circumstances giving rise to such notice by the
Administrative Agent no longer exist, which notice the Administrative Agent
agrees to promptly deliver to Borrower as soon as practicable after becoming
aware of the absence of such circumstances, and any Notice of Borrowing or
Notice of Conversion given by Borrower with respect to Eurodollar Loans which
have not yet been incurred shall be deemed rescinded by Borrower, (y) in the
case of clause (ii) above, 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 reasonable 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 Borrower
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by such Bank shall, absent manifest error, be final and conclusive and binding
upon all parties hereto) and (z) in the case of clause (iii) above, Borrower
shall take one of the actions specified in Section 1.10(b) as promptly as
possible and, in any event, within the time period required by law.
(b) At any time that any Eurodollar Loan is affected by the
circumstances described in Section 1.10(a)(ii) or (iii), Borrower may (and in
the case of a Eurodollar Loan affected pursuant to Section 1.10(a)(iii),
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 telephonic notice (confirmed promptly in writing) thereof on the same
date that 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 Business Days' notice to the Administrative Agent, require the
affected Bank to convert each such Eurodollar Loan into a Base Rate Loan;
provided, however, that if more than one Bank is affected at any time, then all
affected Banks must be treated the same pursuant to this Section 1.10(b).
(c) If any Bank shall have reasonably determined that after
the date of this Agreement, the adoption or effectiveness of any applicable
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 consequence 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), Borrower shall, subject to Section 1.12(b) (to the
extent applicable), 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 prompt written notice thereof to Borrower, which notice
shall set forth the basis of the calculation of such additional amounts,
although, subject to Section 1.12(b), the failure to give any such notice shall
not release or diminish any of Borrower's obligations to pay additional amounts
pursuant to this Section 1.10(c) upon the subsequent receipt of such notice.
1.11 Compensation. 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 or other consequential damages) which such Bank may
sustain: (a) 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
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Borrower or deemed withdrawn pursuant to Section 1.10(a)); (b) if any
prepayment, repayment or conversion of any of its Eurodollar Loans occurs on a
date which is not the last day of an Interest Period applicable thereto; (c) if
any prepayment of any of its Eurodollar Loans is not made on any date specified
in a notice of prepayment given by Borrower; or (d) as a consequence of (x) any
other default by 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. (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), 2.06 or 4.04 with respect to such Bank, it will,
if requested by Borrower, use reasonable efforts (subject to overall policy
considerations of such Bank) to designate another lending office for any Loan,
Letters of Credit or Commitments affected by such event; provided, however,
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 Borrower or the right of any Bank provided in any of Sections
1.10, 2.06 or 4.04.
(b) Notwithstanding anything in this Agreement to the
contrary, to the extent any notice required by any of Sections 1.10, 1.11, 2.06
or 4.04 is given by any Bank more than 180 days after 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 any of Sections
1.10, 1.11, 2.06 or 4.04 for any amounts incurred or accruing prior to 180 days
prior to the giving of such notice to Borrower.
1.13 Replacement of Banks. (a) Upon the occurrence of any
event giving rise to the operation of Section 1.10(a)(ii) or (iii), Section
1.10(c), Section 2.06 or Section 4.04 with respect to any Bank which results in
such Bank charging to Borrower increased costs in excess of those being
generally charged by the other Banks or becoming incapable of making Eurodollar
Loans, (b) if a Bank becomes a Defaulting Bank and/or (c) 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, Borrower 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 Eligible 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, however, 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 connection
therewith, shall pay to (x) the Replaced Bank in respect thereof an amount
equal to the sum of (A) an amount equal to the principal of, and all accrued
interest on, all outstanding Loans of the Replaced Bank, (B) an amount equal to
all Unpaid Drawings that have been funded by (and not reimbursed to) such
Replaced Bank,
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<PAGE> 21
together with all then unpaid interest with respect thereto at such time and
(C) an amount equal to 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 of 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. 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 a Note executed by Borrower, 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.
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<PAGE> 22
SECTION 2
LETTERS OF CREDIT
2.01 Letters of Credit. (a) Subject to and upon the terms and
conditions herein set forth, Borrower may request a Letter of Credit Issuer to
issue, at any time and from time to time on and after the Initial Borrowing
Date and prior to the Maturity Date, and subject to and upon the terms and
conditions herein set forth, such Letter of Credit Issuer agrees to issue from
time to time, (x) for the account of Borrower and for the benefit of any holder
(or any trustee, agent or other similar representative for any such holders) of
L/C Supportable Obligations of Borrower or any Subsidiary, an irrevocable sight
standby letter of credit, in a form customarily used by such Letter of Credit
Issuer or in such other form as has been approved by such Letter of Credit
Issuer (each such standby letter of credit, a "Standby Letter of Credit") in
support of such L/C Supportable Obligations and/or (y) for the account of
Borrower and for the benefit of sellers of goods or materials or providers of
services to Borrower or any Subsidiary, an irrevocable sight letter of credit
in a form customarily used by such Letter of Credit Issuer or in such other
form as has been approved by such Letter of Credit Issuer (each such letter of
credit, a "Trade Letter of Credit", and each such Trade Letter of Credit and
each Standby Letter of Credit, a "Letter of Credit") in support of commercial
transactions of Borrower or any Subsidiary.
(b) Notwithstanding the foregoing, (i) no Letter of Credit
shall be issued, the Stated Amount of which, when added to the 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 the lesser of (x) $100,000,000.00 or (y) when added to the aggregate
principal amount of all Loans made by Non-Defaulting Banks then outstanding,
the Adjusted Total Commitment at such time; (ii) each Standby Letter of Credit
shall have an expiry date occurring not later than one year after such Standby
Letter of Credit's date of issuance although any Standby Letter of Credit may
be extendible for successive periods of up to 12 months, but not beyond the
Business Day next preceding the Maturity Date, on terms reasonably acceptable
to the respective Letter of Credit Issuer and in no event shall any Standby
Letter of Credit have an expiry date occurring later than the Business Day
immediately preceding the Maturity Date;(iii) each Letter of Credit shall be
denominated in Dollars; and (iv) each Trade Letter of Credit shall have an
expiry date occurring not later than the earlier of (x) the 30th day prior to
the Maturity Date and (y) the date which is 180 days from the date of issuance
of such Trade Letter of Credit, on terms acceptable to the respective Letter of
Credit Issuer.
(c) To the extent that any provision of any application for
any Letter of Credit is inconsistent with or in addition to the terms of this
Agreement, the terms of this Agreement shall control.
(d) Any letters of credit issued by the Letter of Credit
Issuer under the First Restated Credit Agreement a description of which are
contained on Annex 2.01(d) hereto, shall continue to be outstanding and shall
be considered Letters of Credit hereunder for all purposes, and
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<PAGE> 23
each Bank shall be deemed to be a Participant therein on the Initial Borrowing
Date pursuant to the provisions of Section 2.05.
2.02 Minimum Stated Amount. The initial Stated Amount of each
Letter of Credit shall be not less than $10,000 or such lesser amount
reasonably acceptable to the respective Letter of Credit Issuer.
2.03 Letter of Credit Requests; Request for Issuance of
Letter of Credit. (a) Whenever it desires that a Letter of Credit be issued,
Borrower shall give the Administrative Agent and the respective Letter of
Credit Issuer written notice (including by way of telecopier) in the form of
Exhibit 2.03 hereto prior to 1:00 P.M. (New York time) at least one Business
Day (or such shorter period as may be acceptable to such 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 such Letter of Credit Issuer customarily requires in
connection therewith.
(b) In the case of Standby Letters of Credit, the Letter of
Credit Issuer shall, without cost to Borrower, promptly after the issuance of
or amendment to any such Standby Letter of Credit, give the Administrative
Agent, each Bank and Borrower written notice of such issuance or amendment
accompanied by a copy of such issuance or amendment. In the case of Trade
Letters of Credit, the Letter of Credit Issuer will furnish the Administrative
Agent, by facsimile transmission, promptly on the first Business Day of each
week a report of its daily aggregate Letter of Credit Outstandings with respect
to Trade Letters of Credit for the previous week. The Administrative Agent
shall deliver to each Bank upon each calendar month end and upon each Letter of
Credit fee payment a report setting forth for such period the daily aggregate
Stated Amount available to be drawn under Trade Letters of Credit issued by all
Letter of Credit Issuers during such period.
2.04 Agreement to Repay Letter of Credit Payments. (a)
Borrower hereby agrees to reimburse each Letter of Credit Issuer, by making
payment to the Administrative Agent at the Payment Office, for any payment or
disbursement made by such Letter of Credit Issuer under any Letter of Credit
(each such amount so paid or disbursed until reimbursed, an "Unpaid Drawing")
within one Business Day of the date on which Borrower is notified by such
Letter of Credit Issuer of such payment or disbursement with interest on the
amount so paid or disbursed by such 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
disbursement, from and including the date paid or disbursed to but not
including the date such Letter of Credit Issuer is reimbursed therefor at a
rate per annum which shall be equal to the sum of the Base Rate as in effect
from time to time plus the Applicable Base Rate Margin (plus an additional 2%
per annum if not reimbursed by the fourth Business Day after the date of such
notice of payment or disbursement), such interest also to be payable on demand.
(b) Borrower's obligation under this Section 2.04 to
reimburse the respective Letter of Credit Issuer with respect to Unpaid
Drawings (including, in each case, interest thereon)
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<PAGE> 24
shall be absolute and unconditional under any and all circumstances and
irrespective of any setoff, counterclaim or defense to payment which Borrower
may have or have had against such Letter of Credit Issuer, the Administrative
Agent 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 respective 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 Borrower shall not be obligated to reimburse
any Letter of Credit Issuer for any wrongful payment made by such 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 such Letter
of Credit Issuer as determined by a court of competent jurisdiction.
2.05 Letter of Credit Participations. (a) Immediately upon
the issuance by any Letter of Credit Issuer of any Letter of Credit, such
Letter of Credit Issuer shall be deemed to have sold and transferred to each
other Bank, and each such Bank (each a "Participant") shall be deemed
irrevocably and unconditionally to have purchased and received from such Letter
of Credit Issuer, without recourse or warranty, an undivided interest and
participation, to the extent of such Bank's Adjusted Percentage, in such Letter
of Credit, each substitute letter of credit, each drawing made thereunder and
the obligations of Borrower 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 Banks as provided in Section 3.01(b) and the
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
Commitments or Adjusted 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 Letters of Credit and Unpaid Drawings, there shall be an automatic
adjustment to the participations pursuant to this Section 2.05 to reflect the
new Adjusted Percentages of the assigning and assignee Bank or of all Banks, as
the case may be.
(b) In determining whether to pay under any Letter of Credit,
the respective Letter of Credit Issuer shall not have any obligation relative
to the 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 any 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 as determined by a court of
competent jurisdiction, shall not create for such Letter of Credit Issuer any
resulting liability to the Participants.
(c) In the event that the respective Letter of Credit Issuer
makes any payment under any Letter of Credit and Borrower shall not have
reimbursed such amount in full to such Letter of Credit Issuer pursuant to
Section 2.04(a), such Letter of Credit Issuer shall promptly notify the
Administrative Agent, and the Administrative Agent shall promptly notify each
Participant of such failure, and each Participant shall promptly and
unconditionally pay to the Administrative Agent for
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the account of such Letter of Credit Issuer, the amount of such Participant's
Adjusted Percentage of such payment in Dollars and in same day funds; provided,
however, that no Participant shall be obligated to pay to the Administrative
Agent its Adjusted Percentage of such unreimbursed amount for any wrongful
payment made by such 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 such 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 12:00 Noon (New York time) on any Business Day, such
Participant shall make available to the Administrative Agent for the account of
the respective Letter of Credit Issuer such Participant's Adjusted Percentage
of the amount of such payment on such Business Day in same day funds. If and to
the extent such Participant shall not have so made its Adjusted Percentage of
the amount of such Unpaid Drawing available to the Administrative Agent for the
account of such Letter of Credit Issuer, such Participant agrees to pay to the
Administrative Agent for the account of such 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 Administrative Agent for the
account of such Letter of Credit Issuer at the overnight Federal Funds
Effective Rate. The failure of any Participant to make available to the
Administrative Agent for the account of the respective Letter of Credit Issuer
its Adjusted Percentage of any Unpaid Drawing under any Letter of Credit shall
not relieve any other Participant of its obligation hereunder to make available
to the Administrative Agent for the account of such respective Letter of Credit
Issuer its Adjusted Percentage 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 Administrative
Agent for the account of such Letter of Credit Issuer such other Participant's
Adjusted Percentage of any such payment.
(d) Whenever the respective Letter of Credit Issuer receives
a payment of a reimbursement obligation as to which the Administrative Agent
has received for the account of such Letter of Credit Issuer any payments from
the Participants pursuant to clause (c) above, such Letter of Credit Issuer
shall pay to the Administrative Agent and the Administrative Agent shall
promptly pay to each Participant which has paid its Adjusted Percentage
thereof, in Dollars and in same day funds, an amount equal to such
Participant's Adjusted Percentage of the principal amount thereof and interest
thereon accruing at the overnight Federal Funds Effective Rate after the
purchase of the respective participations.
(e) The obligations of the Participants to make payments to
the Administrative Agent for the account of the respective 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, however, that no Participant shall be required
to make payments resulting from such Letter of Credit Issuer's gross negligence
or willful misconduct) and shall be made in accordance with the terms and
conditions of this Agreement 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;
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(ii) the existence of any claim, set-off, defense or other
right which 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, the
respective Letter of Credit Issuer, 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 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.
2.06 Increased Costs. If at any time after the date of the
Agreement, the adoption or effectiveness of any new applicable law, rule or
regulation, or any change therein, or any change in the interpretation or
administration thereof or any existing law, rule or regulation by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by the respective
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 such Letter of Credit Issuer or such Bank's
participation therein, or (ii) shall impose on such Letter of Credit Issuer 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 such 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 such Letter of Credit Issuer or such Bank
hereunder (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
net income taxes, franchise taxes or similar charges), then, upon demand to
Borrower by such Letter of Credit Issuer or such Bank (a copy of which notice
shall be sent by such Letter of Credit Issuer or such Bank to the
Administrative Agent), Borrower shall, subject to Section 1.12(b) (to the
extent applicable), pay to such Letter of Credit Issuer or such Bank such
additional amount or amounts as will compensate such Letter of Credit Issuer or
such Bank for such increased cost or reduction. A certificate submitted to
Borrower by the respective Letter of Credit Issuer or such Bank, as the case
may be (a copy of which certificate shall be sent by such Letter of Credit
Issuer or such Bank to the Administrative Agent), setting forth the basis for
the determination of such additional amount or amounts necessary to compensate
such Letter of Credit Issuer or such Bank as aforesaid shall be conclusive and
binding on Borrower absent manifest error, although the failure to deliver any
such certificate shall not, subject to
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<PAGE> 27
Section 1.12(b), release or diminish any of Borrower's obligations to pay
additional amounts pursuant to this Section 2.06 upon the subsequent receipt
thereof.
2.07 Indemnities. Borrower hereby agrees to reimburse and
indemnify the respective 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 such 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, however, that Borrower
shall not be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from such Letter of Credit Issuer's gross negligence or willful
misconduct or the failure of the respective 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. To the extent the respective
Letter of Credit Issuer is not indemnified by Borrower, the Participants will
reimburse and indemnify such Letter of Credit Issuer, in proportion to their
respective Percentages, 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 such 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, however, 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 such
Letter of Credit Issuer's gross negligence or willful misconduct.
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SECTION 3
FEES; COMMITMENTS
3.01 Fees. (a) Borrower agrees to pay to the Administrative
Agent a commitment commission ("Commitment Commission") pro rata for the
account of each Non-Defaulting Bank with respect to its Commitment in effect
from the Second Amended and Restated Effectiveness Date to, but not including,
the date the Total Commitment has been terminated, which Commitment Commission
shall be equal to the Applicable Commitment Commission Percentage, computed at
such rate for each day, on the daily amount of such Bank's Available Unutilized
Commitment. Such Commitment Commission shall be due and payable in arrears on
the first Business Day of each March, June, September and December and on the
date upon which the Total Commitment is terminated.
(b) Borrower agrees to pay to the Administrative Agent for
the account of each Non-Defaulting Bank pro rata on the basis of their
respective Adjusted Percentages, a fee in respect of each Letter of Credit (the
"Letter of Credit Fee"), for the period from and including the date of issuance
of such Letters of Credit to and including the termination of such Letter of
Credit, computed at a rate per annum equal to the Applicable Eurodollar Margin
then in effect 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 Business Day of each March, June, September and December of each year and
on the date after the Total Commitment is terminated and no Letters of Credit
remain outstanding.
(c) Borrower agrees to pay to the Administrative Agent for
the account of each Letter of Credit Issuer a fee in respect of each Letter of
Credit issued by it (the "Facing Fee") computed at the rate of 1/8 of 1.00% per
annum on the daily Stated Amount of such Letter of Credit; provided, however,
that in no event shall the annual Facing Fee to any Letter of Credit Issuer be
less than $500 per Letter of Credit. Accrued Facing Fees shall be due and
payable quarterly in arrears on the first Business Day of each March, June,
September and December of each year and on the date after the Total Commitment
is terminated and no Letters of Credit remain outstanding.
(d) Borrower agrees to pay directly to the respective Letter
of Credit Issuer upon each issuance of, payment under, and/or amendment of, a
Letter of Credit issued by it such amount as shall at the time of such
issuance, payment or amendment be the administrative charge and expenses which
such Letter of Credit Issuer is customarily charging for issuances of, payments
under, or amendments of, letters of credit issued by it.
(e) Borrower shall pay to the Administrative Agent for its
own account and/or for distribution to the Banks such Fees as heretofore agreed
in writing by Borrower and the Administrative Agent.
(f) All computations of Fees shall be made in accordance with
Section 12.07(b).
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3.02 Voluntary Reduction of Commitments. Upon at least three
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 Banks), Borrower
shall have the right, without premium or penalty, to terminate or partially
reduce the Total Unutilized Commitment; provided, however, that (a) any such
termination shall apply to proportionately and permanently reduce the
Commitment of each Bank, (b) no such reduction shall reduce any Non-Defaulting
Bank's Commitment to an amount that is less than the sum of (i) the outstanding
Loans of such Bank plus (ii) such Bank's Adjusted Percentage of Letter of
Credit Outstandings and (c) any partial reduction pursuant to this Section 3.02
shall be in the amount of at least $500,000 and in integral multiples of
$100,000 in excess thereof.
3.03 Termination of Commitments. The Total Commitment shall
terminate on the Maturity Date.
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SECTION 4
PAYMENTS
4.01 Voluntary Prepayments. (a) Borrower shall have the right
to prepay Revolving Credit Loans and Swing Line Loans in whole or in part,
without premium or penalty, from time to time on the following terms and
conditions: (i) Borrower shall give the Administrative Agent at the Payment
Office (or the Swing Line Bank, as applicable) 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
Borrower at least one Business Day prior to the date of such prepayment with
respect to Base Rate Loans and two Business Days prior to the date of such
prepayment with respect to Eurodollar Loans, which notice shall promptly be
transmitted by the Administrative Agent to each of the Banks; (ii) each partial
prepayment of any Borrowing shall be in an aggregate principal amount of at
least $500,000 (or the outstanding balance of such Loans, if less) and, if
greater, in an integral multiple of $100,000; provided, however, 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 applicable
thereto; (iii) if any Eurodollar Loan is prepaid pursuant to this Section 4.01
other than on the last day of the Interest Period applicable thereto Borrower
shall pay to the Banks all amounts due under Section 1.11 with respect to such
prepayment; and (iv) each prepayment in respect of any Loans made pursuant to a
Borrowing shall be applied pro rata among the Banks which made such Loans;
provided, however, that at 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.
(b) Borrower shall have such prepayment rights in regard to a
Competitive Bid Loan as are agreed to by Borrower and the Bank making said
Loan.
4.02 Mandatory Repayments.
(A) Requirements:
(a) (i) If on any date the sum of the aggregate outstanding
principal amount of Revolving Credit Loans made by Non-Defaulting Banks and the
Letter of Credit Outstandings exceeds the Adjusted Total Commitment as then in
effect, Borrower shall repay on such date the principal of Loans of
Non-Defaulting Banks, in an aggregate amount equal to such excess. If, after
giving effect to the repayment of all outstanding Revolving Credit Loans of
Non-Defaulting Banks, the aggregate amount of Letter of Credit Outstandings
exceeds the Adjusted Total Commitment then in effect, Borrower 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 Letter of Credit Outstandings at such
time) and the Administrative Agent shall hold such payment as security for the
obligations of Borrower hereunder pursuant to a cash collateral agreement to be
entered into in form and substance reasonably satisfactory to the
Administrative Agent (which shall permit certain investments in Cash
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Equivalents satisfactory to the Administrative Agent, until the proceeds are
applied to the secured obligations).
(ii) If on any date the aggregate outstanding principal
amount of the Revolving Credit Loans made by a Defaulting Bank exceeds the
Commitment of such Defaulting Bank, Borrower shall repay the principal of 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) All Borrowings under the Swing Line Loan shall be repaid
within thirty (30) days of such Borrowing. All accrued, unpaid interest and any
outstanding principal under the Swing Line Loan shall be repaid in full on the
Maturity Date.
(d) All Borrowings under a Competitive Bid Loan shall be paid
in accordance with the term therefor contained in any Competitive Bid accepted
by Borrower.
(e) At any time Borrower is required to make a mandatory
repayment under this Section 4.02(A), Borrower shall first repay all
outstanding Swing Line Loans, and, following the full repayment thereof, all
outstanding Revolving Credit Loans, and, only after the repayment of all of
said Loans, the Competitive Bid Loans.
(B) Application:
With respect to each prepayment of Revolving Credit Loans
required by Section 4.02, Borrower may designate the Types of Revolving Credit
Loans which are to be prepaid and the specific Borrowing or Borrowings under
the Facility pursuant to which made; provided, however, that (i) Eurodollar
Loans may only be prepaid if no Base Rate Revolving Credit Loans of
Non-Defaulting Banks remain outstanding; (ii) if any prepayment of Eurodollar
Loans made pursuant to a single Borrowing shall reduce the outstanding
Revolving Credit 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
Revolving Credit Loans made by Non-Defaulting Banks pursuant to a Borrowing
shall be applied pro rata among the Non-Defaulting Banks which made such
Revolving Credit Loans. In the absence of a designation by 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 Revolving Credit Loans pursuant to Section
4.02(A) above would result, after giving effect to the procedures set forth
above, in 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 Borrower may in its
sole discretion initially deposit a portion (up to 100%) of the amounts that
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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 Borrower hereunder pursuant to a cash
collateral agreement to be entered into in form and substance reasonably
satisfactory to the Administrative Agent and shall provide for investments
satisfactory to the Administrative Agent and 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
Revolving Credit Loans that are Eurodollar Loans (or such earlier date or dates
as shall be requested by Borrower) to repay an aggregate principal amount of
such Revolving Credit 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 Revolving Credit 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.
4.03 Method and Place of Payment. Except as otherwise
specifically provided herein, all payments under this Agreement in respect of
Revolving Credit Loans shall be made to the Administrative Agent for the
ratable (based on its pro rata share) account of the Banks entitled thereto, or
to the Administrative Agent for the benefit of the Swing Line Bank if payment
is made under any Swing Line Loan, not later than 1:00 P.M. (New York time) on
the date when due and shall be made in immediately available funds and in
lawful money of the United States of America at the Payment Office, it being
understood that written notice by Borrower to the Administrative Agent to make
a payment from the funds in Borrower's account at the Payment Office shall
constitute the making of such payment to the extent of such funds held in such
account. Solely for purposes of calculating interest due on any amount owing
hereunder, any payments under this Agreement which are made later than 1:00
P.M. (New York 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. Payments made in respect of
Competitive Bid Loans shall be made in accordance with the agreement between
Borrower and the Bank making such Loan.
4.04 Net Payments. (a) All payments made by Borrower
hereunder or under any Note will be made without setoff, counterclaim or other
defense. Except as provided in Section 4.04(b), 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 franchise or similar tax imposed on or measured by the net income
or net profits of a Bank pursuant to the laws of the jurisdiction in which
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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 (other than interest, penalties, levies,
imposts, duties, fees, assessments or other charges imposed or payable as a
result of any action or inaction of such Bank not timely or properly taken by
such Bank or non-compliance by such Bank with applicable law) (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, 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 Note. If any amounts are payable in respect of
Taxes pursuant to the preceding sentence, 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. 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
Borrower. 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. These provisions contained in Sections
1.10, 1.11, 2.06, 4.04, and elsewhere shall be interpreted in the broadest
possible terms to include any increased costs, payments or reduced income for
any reason, including, but specifically not by way of limitation, due to taxes,
capital adequacy provisions, reserve requirements, withholding obligations,
costs due to the payment of any sums on a date other than the regularly
scheduled date or for any other reason, and Borrower does hereby indemnify and
hold harmless each Bank, for all such costs and does agree to pay same or cover
any Bank's expenses or losses in regard to same. Borrower shall immediately pay
such sums to any Bank as are necessary to mitigate all such items. This
obligation is in addition to all other obligations of Borrower contained
herein.
(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
Borrower 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 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
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4224 pursuant to clause (i) above, (x) a certificate substantially in the form
of Exhibit 4.04(b)(ii) hereto (any such certificate, a "Section 4.04(b)(ii)
Certificate") and (y) two 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 certification obsolete or inaccurate in any material respect, it will
deliver to Borrower and the Administrative Agent two 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 establish 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 Borrower and the Administrative Agent of its
inability to deliver any such Form or Certificate. Notwithstanding anything to
the contrary contained in Section 1.10, 2.06 or 4.04(a), but subject to Section
12.04(b) and the immediately succeeding sentence, (x) Borrower shall be
entitled, to the extent it is required to do so by law, to deduct or withhold
income or similar taxes imposed by the United States (or any political
subdivision or taxing authority thereof or therein) from interest, fees or
other amounts payable hereunder for the account of any Bank which is not a
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 Borrower U.S. Internal Revenue Service Forms that establish a
complete exemption from such deduction or withholding and (y) Borrower shall
not be obligated pursuant to Section 1.10, 2.06 or 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 (I) if such Bank has not provided to Borrower the Internal
Revenue Service Forms required to be provided to Borrower 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), Borrower agrees
to pay additional amounts and to indemnify each Bank in the manner set forth in
Section 1.10, 2.06 or 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, however, such Bank shall provide to Borrower and the
Administrative Agent any reasonably available applicable Internal Revenue
Service tax form (reasonably similar in its simplicity and lack of detail to
Internal Revenue Service Form 1001) necessary or appropriate for the exemption
or reduction in the rate of such U.S. federal withholding tax.
(c) The provisions of this Section 4.04 shall be subject to
Section 1.12(b) (to the extent applicable).
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SECTION 5
CONDITIONS PRECEDENT
The obligation of the Banks to make each Loan hereunder, and
the obligation of the Letter of Credit Issuers to issue Letters of Credit
hereunder, is subject, at the time of each such Credit Event (except as
otherwise hereinafter indicated), to the satisfaction of each of the following
conditions:
5.01 Consent of Banks. On or prior to the Second Amended and
Restated Effectiveness Date, each of Borrower and the Banks shall have duly
executed and delivered this Agreement.
5.02 Execution of Notes. (a) On or prior to the Second
Amended and Restated Effectiveness Date, there shall have been delivered to the
Administrative Agent (i) for the account of each Bank a Note executed by
Borrower in the amount of each Bank's commitment, containing terms as provided
herein and (ii) for the account of the Swing Line Bank, the Swing Line Note in
the original principal amount equal to the Swing Line Commitment and;
(b) On or prior to the date of any Competitive Bid Loan,
Borrower shall execute and deliver to the appropriate Bank(s), a Competitive
Bid Note in an original principal amount at least equal to the principal amount
of such Competitive Bid Loan.
5.03 No Default; Representations and Warranties. On the
Second Amended and Restated Effectiveness Date and 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 each of 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 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, and except to the
extent that such representations and warranties are no longer true and correct
due to any action or inaction permitted or required to be taken under the
Credit Documents by Borrower or any Subsidiary).
5.04 Officer's Certificate. On the Second Amended and
Restated Effectiveness Date, the Administrative Agent shall have received a
certificate dated as of such date signed by the President, any Vice President
or the Treasurer of Borrower stating that all of the applicable conditions set
forth in Sections 5.03 and 5.09 have been satisfied as of such date.
5.05 Opinions of Counsel. On the Second Amended and Restated
Effectiveness Date, the Administrative Agent shall have received opinions,
addressed to the Administrative Agent and each of the Banks and dated the
Second Amended and Restated Effectiveness Date, from (a) Baker & Botts, L.L.P.,
counsel to Borrower, which opinion shall cover the matters contained in Exhibit
5.05-A hereto, (b) James L. McCulloch, Vice President and General Counsel of
Borrower,
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which opinion shall cover the matters contained in Exhibit 5.05-B hereto, and
(c) Andrews & Kurth L.L.P., special counsel to the Administrative Agent, which
opinion shall cover the matters contained in Exhibit 5.05-C hereto.
5.06 Corporate Proceedings. (a) On the Second Amended and
Restated Effectiveness Date, the Administrative Agent shall have received from
the Borrower a certificate, dated the Second Amended and Restated Effectiveness
Date, signed by the President, any Vice President or the Treasurer or other
appropriate representative in the form of Exhibit 5.06 hereto with appropriate
insertions and deletions, together with copies of the certificate of formation
or organization, the by-laws, or other organizational documents, and the
resolutions, or such other administrative approval, of the Borrower.
(b) On the Second Amended and Restated Effectiveness Date,
all corporate and legal proceedings and all instruments and agreements in
connection with the execution and delivery of the Credit Documents shall be
reasonably satisfactory in form and substance to the Administrative Agent, and
the Administrative Agent shall have received all information and copies of all
certificates, documents and papers, including good standing certificates and
any other records of corporate proceedings and governmental approvals, if any,
which the Administrative Agent may have reasonably requested in connection
therewith.
5.07 Litigation. On the Second Amended and Restated
Effectiveness Date, there shall be no actions, suits or proceedings by any
administrative, governmental or other public authority or other Person pending
or threatened (a) with respect to this Agreement or any other Credit Document
or the transactions contemplated hereby or thereby or (b) which the
Administrative Agent or the Required Banks shall reasonably determine is
reasonably likely to, individually or in the aggregate, (i) have a Material
Adverse Effect or (ii) have a Material Adverse Effect on the rights or remedies
of the Banks or the Administrative Agent under the Credit Documents, taken as a
whole, or on the ability of the Borrower to perform its obligations to the
Banks and the Administrative Agent under the Credit Documents.
5.08 Approvals. On the Second Amended and Restated
Effectiveness Date, all material necessary governmental and third party
approvals and consents in connection with the transactions contemplated by the
Credit Documents and otherwise referred to therein shall have been obtained and
remain in effect, and all applicable waiting periods shall have expired without
any action being taken by any competent authority which restrains or prevents
such transactions or imposes, in the reasonable judgment of the Required Banks
or the Administrative Agent, materially adverse conditions upon the
consummation of such transactions.
5.09 Fees. On the Second Amended and Restated Effectiveness
Date, 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.
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5.10 Margin Rules. On the date of each Credit Event, neither
the making of a 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.
5.11 Notice of Borrowing. On the date of each Credit Event,
Borrower shall have delivered to the Administrative Agent or the Swing Line
Bank the appropriate Notice of Borrowing or Notice of Competitive Borrowing, as
applicable, in accordance with the provisions hereof.
5.12 Fulfillment of Conditions. The acceptance of the
benefits of each Credit Event shall constitute a representation and warranty by
Borrower to the Administrative Agent and each of the Banks that all of the
applicable conditions specified above exist as of that time. 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 reasonably satisfactory in form and substance to the Administrative Agent.
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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, Borrower makes 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, and except to the
extent that such representations and warranties are no longer true and correct
due to any action or inaction permitted or required to be taken under the
Credit Documents by Borrower or any Subsidiary):
6.01 Status. Borrower and each Subsidiary (a) is a duly
organized and validly existing corporation, partnership, association, limited
liability company or other business entity in good standing under the laws of
the jurisdiction of its organization, (b) has the power and authority and has
obtained all requisite governmental licenses, authorizations, consents and
approvals (i) to own its property and assets and (ii) to transact the business
in which it is engaged, except in such case where the failure to have such
power and authority or to obtain such governmental licenses, authorizations,
consents and approvals, individually and in the aggregate, (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 and remedies of the
Banks or the Administrative Agent under the Credit Documents, taken as a whole,
or on the ability of the Borrower to perform its obligations to the Banks and
the Administrative Agent under the Credit Documents, and (c) is duly qualified
and is authorized to do business and is in good standing in all jurisdictions
where it is required to be so qualified and where the failure to be so
qualified, individually and in the aggregate, is not reasonably likely to have
a Material Adverse Effect.
6.02 Power and Authority. The Borrower has the power and
authority to execute, deliver and carry out the terms and provisions of each
Credit Document and has taken all necessary action to authorize the execution,
delivery and performance of each Credit Document. The Borrower has duly
executed and delivered each Credit Document and each such Credit Document
constitutes the legal, valid and binding obligation of the Borrower,
enforceable against it in accordance with its terms, except to the extent that
the enforceability thereof may be limited by applicable bankruptcy, insolvency,
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. (a) Neither the execution, delivery or
performance by the Borrower of the Credit Documents nor compliance with the
terms and provisions thereof (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,
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(ii) will result in any breach of any of the terms, covenants, conditions or
provisions of, or constitute a default under (or with notice or lapse of time
or both would constitute a default under), or result in the creation or
imposition of (or the obligation to create or impose) any Lien upon any of the
property or assets of Borrower or any Subsidiary pursuant to the terms of, any
indenture, mortgage, deed of trust, agreement or other instrument to which
Borrower or any subsidiary is a party or by which it or any of its properties
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 Borrower or any
Subsidiary (except for, in the case of clauses (i) and (ii) above only,
contraventions, breaches, defaults, creations or impositions which individually
and in the aggregate, (x) are not reasonably likely to have a Material Adverse
Effect and (y) are not reasonably likely to have a material adverse effect on
the rights or remedies of the Banks or the Administrative Agent under the
Credit Documents, taken as a whole, or on the ability of the Borrower to
perform its obligations to the Banks and the Administrative Agent under the
Credit Documents).
(b) Neither Borrower nor any Subsidiary is (i) in
contravention of 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, (ii) in breach of
any of the terms, covenants, conditions or provisions of, or in default under
(or with notice or lapse of time or both would be in default under), any
indenture, mortgage, deed of trust, agreement or other instrument to which
Borrower or any Subsidiary is a party or by which it or any of its properties
or assets are bound or to which it is subject or (iii) in violation of any
provision of the Certificate of Incorporation or By-Laws of Borrower or any
Subsidiary (except for, in the case of clauses (i) and (ii) above only,
contraventions, breaches or defaults which, individually and in the aggregate,
(x) are not reasonably likely to have a Material Adverse Effect and (y) are not
reasonably likely to have a material adverse effect on the rights or remedies
of the Banks or the Administrative Agent under the Credit Documents, taken as a
whole, or on the ability of the Borrower to perform its obligations to the
Banks and the Administrative Agent under the Credit Documents).
6.04 Litigation. There are no actions, suits or proceedings
by an administrative, governmental or other public authority or other Person
pending or, to the best of Borrower's knowledge, threatened against or with
respect to Borrower or any Subsidiary or any of their respective properties or
assets which, individually or in the aggregate, (a) are reasonably likely to
have a Material Adverse Effect or (b) are reasonably likely to have a material
adverse effect on the rights or remedies of the Banks or the Administrative
Agent under the Credit Documents, taken as a whole, or on the ability of the
Borrower to perform its obligations to the Banks and the Administrative Agent
under the Credit Documents.
6.05 Use of Proceeds; Margin Regulations. (a) The proceeds of
all Loans shall be utilized to repay existing Indebtedness evidenced by the
Senior Secured Notes and the First Restated Credit Agreement, to support
Borrower's ongoing working capital needs or to provide for the general
corporate purposes of Borrower.
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(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, recording or registration with, or exemption by, any
foreign or domestic governmental or public body or authority, or any
subdivision thereof, is necessary or 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. Neither Borrower nor any
Subsidiary 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 Public Utility Holding Company Act. Neither Borrower nor
any Subsidiary is a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company," within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
6.09 True and Complete Disclosure. All factual information
(taken as a whole) heretofore or contemporaneously furnished for purposes of or
in connection with this Agreement or any transaction contemplated herein by or,
to Borrower's knowledge, on behalf of Borrower or any Subsidiary in writing to
(i) the Administrative Agent or any Bank or (ii) any Person providing
information to the Administrative Agent or any Bank on behalf of Borrower or
any Subsidiary is, and all other such factual information (taken as a whole)
hereafter furnished by or, to Borrower's knowledge, on behalf of Borrower or
any Subsidiary in writing to (i) the Administrative Agent or any Bank or (ii)
any Person providing information to the Administrative Agent or any Bank on
behalf of Borrower or any Subsidiary will be, true and accurate in all material
respects on the date as of which such information is dated or certified and not
incomplete by omitting to state any material fact necessary to make such
information (taken as a whole) not misleading at such time in light of the
circumstances under which such information was provided. The projections
contained in such materials are based on supporting estimates and assumptions
believed by such Persons in good faith to be reasonable at the time made as to
the future financial performance of Borrower and the Subsidiaries for the
period covered, it being recognized by the Administrative Agent and the Banks
that such projections as to future events are not to be viewed as facts and
that actual results during the period or periods covered by any such
projections may differ from the projected results. There is no fact known to
Borrower or any Subsidiary which is reasonably likely to have a Material
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Adverse Effect which has not been disclosed herein or in such other documents,
certificates and statements furnished to the Banks for use in connection with
the transactions contemplated hereby.
6.10 Financial Condition; Financial Statements. (a) (i) The
consolidated balance sheet of Borrower and the Subsidiaries at December 31,
1996 and the related consolidated statements of operations and cash flows of
Borrower and the Subsidiaries for the fiscal year ended as of such date, which
have been examined by Coopers & Lybrand L.L.P., independent certified public
accountants, who delivered an unqualified opinion in respect thereof, and (ii)
the consolidated balance sheet of Borrower and the Subsidiaries as of September
30, 1997 and the related consolidated statements of operations and cash flows
for Borrower and the Subsidiaries for the three-month period then ended, copies
of which have heretofore been furnished to each Bank, present fairly in all
material respects 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, 1997 statements, subject to normal and
recurring year-end audit adjustments and the exclusion of detailed footnotes.
All such financial statements have been prepared in accordance with generally
accepted accounting principles consistently applied except to the extent
provided in the notes to said financial statements. Nothing has occurred since
December 31, 1995 that has had or is reasonably likely to have a Material
Adverse Effect.
(b) There are, as of the Second Amended and Restated
Effectiveness Date, no liabilities or obligations with respect to Borrower or
any Subsidiary of a nature (whether absolute, accrued, contingent or otherwise
and whether or not due) which, either individually or in aggregate, are
reasonably likely to have a Material Adverse Effect.
6.11 Tax Returns and Payments. Borrower and each Subsidiary
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 and for which
adequate reserves have been established as is required by GAAP or which if
unfiled or unpaid would not reasonably be likely to have a Material Adverse
Effect. Borrower and each Subsidiary has paid, or has provided adequate
reserves (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 Second Amended and Restated Effectiveness Date. Neither
Borrower nor any Subsidiary knows of any proposed tax assessment against any
such Person that is reasonably likely to have a Material Adverse Effect and
which is not being actively contested in good faith by such Person to the
extent affected thereby by appropriate proceedings; provided, however, that
such reserves or other appropriate provisions, if any, as shall be required in
conformity with GAAP shall have been made or provided therefor.
6.12 Employee Benefit Plans. (a) Each member of the ERISA
Group is in compliance in all material respects with the presently applicable
provisions of ERISA and the Code with respect to each Plan other than any
failure to so comply that is not reasonably likely to have a
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Material Adverse Effect. No member of the ERISA Group has (i) failed to make
any contribution or payment to any Plan or Multiemployer Plan or in respect of
any Benefit Arrangement, or made any amendment to any Plan or Benefit
Arrangement, which has resulted or is reasonably likely to result in the
imposition of a Lien or the posting of a bond or other security under ERISA or
the Code or (ii) incurred any liability under Title IV of ERISA within the
preceding six years (other than a liability to the PBGC for premiums under
Section 4007 of ERISA) that has not been satisfied. The amount of Unfunded
Liabilities in the aggregate for all Plans (excluding for purposes of such
computation any Plans which have a negative amount of Unfunded Liabilities)
could not reasonably be expected to result in a Material Adverse Effect.
(b) Each Foreign Pension Plan has been maintained in
compliance with its terms and with the requirements of any and all applicable
laws, statutes, rules, regulations and orders and has been maintained, where
required, in good standing with applicable regulatory authorities other than
any failure to so comply that could not reasonably be expected to have a
Material Adverse Effect. Neither Borrower nor any Subsidiary has incurred any
material obligation in connection with the termination of or withdrawal from
any Foreign Pension Plan. The present value of the accrued benefit liabilities
(whether or not vested) under each Foreign Pension Plan, determined as of the
end of Borrower's most recently ended fiscal year on the basis of actuarial
assumptions, each of which is reasonable, did not exceed the current value of
the assets of such Foreign Pension Plan allocable to such benefit liabilities
by an amount that could reasonably be expected to have a Material Adverse
Effect.
6.13 Subsidiaries. Annex 6.13 hereto lists each Subsidiary
(and the direct and indirect ownership interest of Borrower therein), in each
case existing on the Second Amended and Restated Effectiveness Date. All the
outstanding shares of Capital Stock of each Subsidiary owning or leasing
Principal Properties have been duly authorized and validly issued, are fully
paid and non-assessable and (except for any directors' qualifying shares) are
owned by Borrower free and clear of all Liens, other than Permitted Liens, and
so long as the Senior Secured Notes remain outstanding, Liens created by the
Security Documents and Permitted Liens.
6.14 Patents, etc. Borrower and each Subsidiary has obtained
all patents, trademarks, service marks, trade names, copyrights, licenses and
other rights (collectively, the "Intellectual Property"), free from burdensome
restrictions, that are necessary for the operation of their respective
businesses as presently conducted and the failure to obtain which is reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect. No
claim is pending or, to the best of Borrower's knowledge, threatened to the
effect that the actions of Borrower or any Subsidiary infringe upon or conflict
with the asserted rights of any other Person under any Intellectual Property,
except for such claims which are not, individually or in the aggregate,
reasonably likely to have a Material Adverse Effect, and, to the best of
Borrower's knowledge, there is no basis for any such claim (whether or not
pending or threatened). No claim is pending or, to the best of Borrower's
knowledge, threatened to the effect that any such Intellectual Property owned
or licensed by Borrower or any Subsidiary or which Borrower or any Subsidiary
otherwise has the right to use is invalid or unenforceable by Borrower or such
Subsidiary, except for such claims which are not,
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individually or in the aggregate, reasonably likely to have a Material Adverse
Effect, and, to the best of Borrower's knowledge, there is no reasonable basis
for any such claim (whether or not pending or threatened).
6.15 Environmental Matters. (a) Borrower and each Subsidiary
is in compliance with all Environmental Laws and is not subject to any
liability under any Environmental Law except as would not, individually or in
the aggregate, reasonably be likely to have a Material Adverse Effect. All
licenses, permits, registrations, or approvals required for the business
conducted and for the operations and facilities owned, leased or operated by
Borrower and each Subsidiary under any Environmental Law have been obtained and
Borrower and each Subsidiary is in compliance therewith, except such licenses,
permits, registrations or approvals the failure to obtain or to comply
therewith is not, individually or in the aggregate, reasonably likely to have a
Material Adverse Effect. Neither Borrower nor any Subsidiary is in any respect
in noncompliance with, breach of or default under any applicable writ, order,
judgment, injunction, or decree to which Borrower or such Subsidiary is a party
or which would affect the ability of Borrower or such Subsidiary to operate any
Real Property, offshore drilling rig or other facility 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 of or default
thereunder, except in each such case, such noncompliance, breaches or defaults
which are not, individually or in the aggregate, reasonably likely to have a
Material Adverse Effect. There are no Environmental Claims pending or, to the
best knowledge of Borrower, threatened, against Borrower or any Subsidiary
wherein an unfavorable decision, ruling or finding is, individually or in the
aggregate, reasonably likely to have a Material Adverse Effect. Neither
Borrower nor any Subsidiary has received notice that it has been identified as
a potentially responsible party under CERCLA or any comparable foreign or state
law, nor has Borrower or any Subsidiary received any written notification that
any Hazardous Materials that it or any of their respective predecessors in
interest has used, generated, stored, treated, handled, transported or disposed
of, or arranged for disposal or treatment of, have been found at any location
at which any Person is conducting or plans to conduct any action pursuant to
any Environmental Law except as would not, individually or in the aggregate,
reasonably be likely to have a Material Adverse Effect. No properties now or
formerly owned, leased or operated by Borrower or any Subsidiary or, to the
knowledge of Borrower or any Subsidiary, any of their respective predecessors
in interest, are (x) listed or proposed for listing on the National Priorities
List under CERCLA or (y) listed on the Comprehensive Environmental Response,
Compensation and Liability Information System List promulgated pursuant to
CERCLA or (z) included on any comparable lists maintained by any Governmental
Authority except as would not, individually or in the aggregate, reasonably be
likely to have a Material Adverse Effect. There are no past or present events,
conditions, activities, practices or actions, or any agreements, judgments,
decrees or orders by which Borrower or any Subsidiary is bound, which would
reasonably be expected to prevent Borrower's or any Subsidiary's compliance
with any Environmental Law, or which would reasonably be expected to give rise
to any liability of Borrower or any Subsidiary under any Environmental Law, or
to cause any Real Property, offshore drilling rig or other facility owned,
leased or operated by Borrower or any Subsidiary to be subject to any
restriction on its ownership, occupancy, use or transferability under any
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Environmental Law, except in each such case, such noncompliance, liability or
restriction which is, individually or in the aggregate, not reasonably likely
to have a Material Adverse Effect.
(b) Hazardous Materials have not at any time been (i)
generated, used, processed, treated, stored or disposed of on, at or under or
transported to or from, any Real Property, offshore drilling rig or other
facility at any time owned, leased or operated by Borrower or any Subsidiary or
(ii) Released on, at, under or from any such Real Property, offshore drilling
rig or other such facility, in each case where such occurrence, or event is,
individually or in the aggregate, reasonably likely to have a Material Adverse
Effect.
6.16 Properties. (a) Borrower and each Subsidiary has title
to all Principal Properties owned by them including all such properties
reflected in the consolidated balance sheets of Borrower and the Subsidiaries
as referred to in Section 6.10(a), 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 6.16(b) hereto sets forth all the offshore drilling
rigs owned or leased for more than two years by Borrower or any Subsidiary on
the Second Amended and Restated Effectiveness Date, and identifies the
registered owner, flag, official or patent number, as the case may be, and the
location thereof on the Second Amended and Restated Effectiveness Date.
6.17 Labor Relations. Neither Borrower nor any Subsidiary is
engaged in any unfair labor practice that is, individually or in the aggregate,
reasonably likely to have a Material Adverse Effect. There is (i) no unfair
labor practice complaint pending against Borrower or any Subsidiary or
threatened against any of them, before the National Labor Relations Board, and
no grievance or arbitration proceeding arising out of or under any collective
bargaining agreement is so pending against any of them or, to the best of
Borrower's knowledge, threatened against any of them, (ii) no strike, labor
dispute, slowdown or stoppage pending against Borrower or any Subsidiary or, to
the best of Borrower's knowledge, threatened against Borrower or any Subsidiary
and (iii) no union representation petition existing with respect to the
employees of and of them and no union organizing activities are taking place,
except with respect to any matter specified in clauses (i), (ii) or (iii)
above, either individually or in the aggregate, such as is not reasonably
likely to have a Material Adverse Effect.
6.18 Insurance. Borrower and each Subsidiary has insured its
properties and assets against such risks and in such amounts as are customary
for companies engaged in similar businesses.
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SECTION 7
AFFIRMATIVE COVENANTS
Borrower covenants and agrees that on the Second Amended and
Restated Effectiveness Date and thereafter for so long as this Agreement is in
effect and until the 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 or under any other Credit
Document, are paid in full:
7.01 Information Covenants. Borrower will furnish to each
Bank:
(a) Annual Financial Statements. Within 95 days after the
close of each fiscal year of Borrower during the term hereof, the consolidated
balance sheet of Borrower and the Subsidiaries as at the end of such fiscal
year, and the related consolidated statements of operations and stockholders'
equity and 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 not be qualified as to the scope of audit and as to the status of
Borrower and the Subsidiaries as a going concern.
(b) Quarterly Financial Statements. As soon as available and
in any event within 60 days after the close of each of the first three (3)
fiscal quarters of each fiscal year during the term hereof, the consolidated
balance sheet of Borrower and the Subsidiaries as at the end of such quarterly
period, and the related consolidated statements of operations and, if included
in Borrower's reports filed with the SEC pursuant to the Exchange Act,
stockholders' equity for such quarterly period and for the elapsed portion of
the fiscal year ended with the last day of such quarterly period, and the
consolidated statement of cash flows for the elapsed portion of the fiscal year
ended with the last day of such quarterly period, and in each case setting
forth comparative consolidated figures for the related period in the prior
fiscal year, except with respect to the consolidated balance sheet, which shall
be as of the end of the prior fiscal year, all of which shall be certified by
the chief financial officer or controller of Borrower as fairly presenting in
all material respects the financial conditions and results of operations of
Borrower and the Subsidiaries in accordance with GAAP, subject to changes
resulting from audit and normal year-end audit adjustments and the exclusion of
detailed footnotes.
(c) Compliance Certificate. At the time of the delivery of
the financial statements provided for in Sections 7.01(a) and (b), a
certificate of Borrower signed by its chief financial officer, controller,
treasurer or other Authorized Officer in the form of Exhibit 7.01(c) hereto 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
Borrower and the Subsidiaries were in compliance with the provisions of Section
8 as at the end of such fiscal period or year, as the case may be.
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(d) Notice of Default or Litigation. Promptly, and in any
event within (i) five Business Days after an executive officer of Borrower
obtains knowledge thereof, notice of; (y) 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 Borrower proposes to
take with respect thereto and (z) notice of any change in any Rating of
Borrower, and (ii) ten Business Days after an executive officer of Borrower
obtains knowledge thereof, notice of the commencement of or any significant
development in any litigation or governmental proceeding pending against
Borrower or any Subsidiary (other than to the extent that disclosure of the
details thereof would, in the opinion of counsel to Borrower, compromise
attorney-client privilege) (i) which is reasonably likely to have a Material
Adverse Effect or (ii) which is reasonably likely to have a material adverse
effect on the ability of the Borrower to perform its obligations under the
Credit Documents.
(e) Auditors' Reports. Promptly upon receipt thereof, a copy
of each formal written report or management letter submitted to Borrower by its
independent accountants in connection with any annual, interim or special audit
made by it of the books of Borrower.
(f) SEC Reports. Promptly upon transmission thereof, copies
of any material filings and registrations with, and reports to, the SEC by
Borrower or any Subsidiary (other than registrations on Form S-8 under the
Securities Act, registrations of equity securities pursuant to Rule 415 under
the Securities Act which do not involve an underwritten public offering and
reports on Form 11-K or pursuant to Section 16(a) under the Exchange Act) and
copies of all financial statements, proxy statements, notices and reports as
Borrower shall generally send to analysts or all holders of its Capital Stock
in their capacity as such holders (in each case to the extent not theretofore
delivered to the Banks pursuant to this Agreement).
(g) Other Information. From time to time, such other
information or documents (financial or otherwise) as the Administrative Agent
or any Bank may reasonably request.
7.02 Books, Records and Inspections. Borrower will, and will
cause each Subsidiary to, keep books of records and accounts in which entries
will be made of all its business transactions to enable Borrower to prepare
financial statements in accordance with GAAP, and will reflect in its financial
statements adequate accruals and appropriations to reserves, all in accordance
with GAAP. Borrower will, and will cause each Subsidiary to, permit, upon
reasonable notice to the chief financial officer, controller or any other
Authorized Officer of Borrower, officers and designated representatives of the
Administrative Agent or any Bank (at the expense of Borrower if after an Event
of Default) to visit and inspect any of the properties or assets of Borrower or
any Subsidiary, and to examine the books of account of Borrower or any
Subsidiary and discuss the affairs, finances and accounts of Borrower or of any
Subsidiary with, and be advised as to the same by, its and their officers and
independent accountants, all at such reasonable times and intervals as the
Administrative Agent or any Bank may desire.
7.03 Maintenance of Insurance. Borrower will, and will cause
each Subsidiary to, at all times maintain in full force and effect insurance in
such amounts and of such types with such
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financially sound and reputable insurers covering such risks and liabilities
and with such deductibles or self-insured retentions as are in accordance with
normal industry practice for similarly situated insureds.
7.04 Payment of Taxes. Borrower will pay and discharge, and
will cause each Subsidiary 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 could reasonably be
expected to become a Lien or charge upon any properties of Borrower or any
Subsidiary other than a Permitted Lien; provided, however, that neither
Borrower 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 or which if unpaid would not reasonably be likely to have
a Material Adverse Effect.
7.05 Consolidated Corporate Franchises. Borrower will do, and
will cause each Subsidiary 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 would not have a Material Adverse
Effect; provided, however, that any transaction permitted by Section 8.02 will
not constitute a breach of this Section 7.05.
7.06 Compliance with Statutes, etc. Borrower will, and will
cause each Subsidiary to, comply with all applicable statutes, regulations and
orders of, and all applicable restrictions imposed by, all governmental bodies,
domestic or foreign, including without limitation all Environmental Laws and
ERISA and the rules and regulations thereunder, other than those the
non-compliance with which is not, individually or in the aggregate, reasonably
likely to have a Material Adverse Effect or is not, individually or in the
aggregate, reasonably likely to have a material adverse effect on the ability
of the Borrower to perform its obligations under the Credit Documents.
7.07 Good Repair. Borrower will, and will cause each
Subsidiary to, keep its properties and equipment (including all Fleet Rigs)
used or useful in its business, 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 and the occurrence of a force majeure, see that from
time to time there are made in such properties and equipment all needful and
proper repairs, renewals, replacements, extensions, additions, betterments and
improvements thereto, (i) to the extent and in the manner useful or customary
for companies in similar businesses and (ii) to the extent where the failure to
do so is, individually or in the aggregate, reasonably likely to have a
Material Adverse Effect. For purposes of this Section 7.07, any Fleet Rig shall
be deemed to be in good repair, working order and condition if such Fleet Rig
is classified in the highest class available for rigs of its age and type with
the American Bureau of Shipping, Inc. or another internationally recognized
classification society acceptable to the Administrative Agent.
7.08 Use of Proceeds. All proceeds of the Loans shall be
used as provided in Section 6.05.
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7.09 ERISA. As soon as possible and, in any event, within 30
days after an executive officer of Borrower knows or has reason to know that
any member of the ERISA Group (i) gives or is required to give notice to the
PBGC of any "reportable event" (as defined in Section 4043 of ERISA) with
respect to any Plan which would reasonably be expected to constitute grounds
for a termination of such Plan under Title IV of ERISA, or knows that the plan
administrator of any Plan has given or is required to give notice of any such
reportable event, a copy of the notice of such reportable event given or
required to be given to the PBGC; (ii) receives notice of complete or partial
withdrawal liability under Title IV of ERISA or notice that any Multiemployer
Plan is in reorganization, is insolvent or has been terminated, a copy of such
notice; (iii) receives notice from the PBGC under Title IV of ERISA of an
intent to terminate, impose liability (other than for premiums under Section
4007 of ERISA) in respect of, or appoint a trustee to administer any Plan, a
copy of such notice; (iv) applies for a waiver of the minimum funding standard
under Section 412 of the Code, a copy of such application; (v) gives notice of
intent to terminate any Plan under Section 4041(c) of ERISA, a copy of such
notice and other information filed with the PBGC; (vi) gives notice of
withdrawal from any Plan pursuant to Section 4063 of ERISA that would
reasonably be expected to result in a Material Adverse Effect, a copy of such
notice; or (vii) fails to make any payment or contribution to any Plan or
Multiemployer Plan or in respect of any Benefit Arrangement or makes any
amendment to any Plan or Benefit Arrangement which has resulted or could
reasonably be expected to result in the imposition of a Lien or the posting of
a bond or other security under ERISA or the Code, Borrower will deliver to each
of the Banks a certificate of the chief financial officer of Borrower setting
forth details as to such occurrence and the action, if any, that Borrower, such
Subsidiary or such member of the ERISA Group is required or proposes to take,
together with any notices required or proposed to be given to or filed with or
by Borrower, such Subsidiary, the member of the ERISA Group, a plan participant
or the plan administrator. Upon written request Borrower will deliver to each
of the Banks a complete copy of the annual report (Form 5500) of each Plan (as
defined in Section 3(2) of ERISA) (including, to the extent required, the
related financial statements and opinions and other supporting statements,
certifications, schedules and information) required to be filed with the
Internal Revenue Service, if any.
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SECTION 8
NEGATIVE COVENANTS
Borrower covenants and agrees that as of the Second Amended
and Restated Effectiveness Date and thereafter for so long as this Agreement is
in effect and until the 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 or under any other
Credit Document, are paid in full:
8.01 Changes in Business. Borrower shall not materially alter
the character of the business of Borrower and the Subsidiaries taken as a whole
from that conducted at the Second Amended and Restated Effectiveness Date
(including any material expansion outside of the offshore contract drilling and
production services, drilling management services and oil and gas exploration
and production businesses).
8.02 Consolidation, Merger, Sale of Assets, etc. Borrower
shall not directly or indirectly, wind up, liquidate or dissolve its affairs,
or enter into any transaction of merger or consolidation, sell or otherwise
dispose of all or any part of its property or assets (other than inventory or
worn-out or obsolete equipment in the ordinary course of business) or agree
(unless such agreement is conditioned upon a waiver of this provision by the
Banks hereunder) to do any of the foregoing at any future time, except that
each of the following shall be permitted:
(a) (i) any Subsidiary may be merged or consolidated with or
into, or be liquidated or dissolved into, Borrower (so long as Borrower is the
surviving corporation) or any other Person so long as a Subsidiary or Borrower
is the surviving Person (including a surviving Person that becomes a Subsidiary
as a result of such transaction) and (ii) all or any part of the business,
properties and assets of any Subsidiary may be conveyed, leased, sold or
transferred to Borrower or any Subsidiary;
(b) any sale or disposition of assets (including the stock of
Subsidiaries) provided, however, that all proceeds of such sales shall be used
without violating the provisions of Section 8.01 and each such sale or
disposition shall be in an amount at least equal to the fair market value
thereof; or
(c) the existence or foreclosure (or transfer in lieu of) of
any Lien permitted hereunder or the consummation of any transaction permitted
under the Credit Documents.
8.03 Indebtedness and Liens. (a) The Borrower shall not, and
shall not permit any of its Subsidiaries to, issue, assume or guarantee any
Indebtedness for borrowed money secured by any Lien upon any Principal Property
or any shares of stock or indebtedness of any Subsidiary that owns or leases a
Principal Property (whether such Principal Property, shares of stock or
indebtedness are now owned or hereafter acquired) without making effective
provision whereby the Obligations (together with, if the Borrower shall so
determine, any other Indebtedness or other obligation of the
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<PAGE> 50
Borrower or Subsidiaries) shall be secured equally and ratably with (or, at the
option of the Borrower, prior to) the Indebtedness so secured for so long as
such Indebtedness is so secured. The foregoing restrictions will not, however,
apply to Indebtedness secured by Permitted Liens, provided all such
Indebtedness must comply with any applicable provisions of Section 8.04(b).
(b) Notwithstanding the foregoing, the Borrower and its
Subsidiaries may, without securing the Obligations, issue, assume or guarantee
Indebtedness that would otherwise be subject to the foregoing restrictions in
an aggregate principal amount that, together with all other such Indebtedness
of the Borrower and its Subsidiaries that would otherwise be subject to the
foregoing restrictions (not including Indebtedness permitted to be secured
under the definition of Permitted Liens) and the aggregate amount of
Attributable Indebtedness deemed outstanding with respect to Sale/Leaseback
Transactions (other than those in connection with which the Borrower has
voluntarily retired any of the Obligations, any Pari Passu Indebtedness or any
Funded Indebtedness pursuant to Section 8.06(c)) does not at any one time
exceed 10% of Consolidated Net Tangible Assets of the Borrower and its
consolidated subsidiaries.
8.04 Restrictions on Subsidiaries. (a) Borrower shall not
create or suffer to exist or allow any Subsidiary to create or suffer to exist,
any encumbrance or restriction which, directly or indirectly, prohibits or
otherwise restricts the ability of any Subsidiary to (i) pay Dividends or make
other distributions or pay any Indebtedness owed to Borrower or any Subsidiary,
(ii) make loans or advances to Borrower or any Subsidiary or (iii) transfer any
of its properties or assets to Borrower or any Subsidiary, other than
encumbrances or restrictions existing under or by reason of:
(A) the Credit Documents;
(B) applicable law;
(C) customary non-assignment provisions entered into in the
ordinary course of business and consistent with past practices;
(D) any restriction or encumbrance with respect to a
Subsidiary imposed pursuant to (i) 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, so long as such sale or
disposition is permitted under this Agreement or (ii) as required by
any bare boat charter;
(E) the Senior Secured Notes and the Security Documents or
any other encumbrance or restriction in effect on the Second Amended
and Restated Effectiveness Date, each as in effect on the Second
Amended and Restated Effectiveness Date, and any refinancing,
extension or renewal thereof so long as such refinancing, extension or
renewal is no more restrictive than (x) with respect to the Senior
Secured Notes and all documents related thereto, including, without
limitation, the Security Documents, this Agreement or (y) with respect
to any other encumbrance or restriction, that existing on the Second
Amended and Restated Effectiveness Date;
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<PAGE> 51
(F) Permitted Liens and other Liens permitted to exist under
the Credit Documents and any documents or instruments governing the
terms of any Indebtedness or other obligations secured by any such
Liens; provided, however, that such prohibitions or restrictions apply
only to the assets subject to such Liens;
(G) encumbrances or restrictions on property of any
Subsidiary which do not restrict the ability of such Subsidiary to
transfer the property subject to such encumbrances or restrictions;
and
(H) any encumbrances or restrictions pursuant to an agreement
in effect on the date on which such Subsidiary was acquired by
Borrower or any Subsidiary (provided that such encumbrance or
restriction was not incurred in connection with or in contemplation of
such acquisition).
(b) Borrower shall not permit any Subsidiary to incur, or
become liable for, directly or indirectly, any Indebtedness for borrowed money
unless (i) such Indebtedness is non-recourse to the Borrower and all other
Subsidiaries, (ii) such Indebtedness is permitted under Section 8.03(b) hereof;
or (iii) such Subsidiary guarantees the Obligations equally and ratably with
such Indebtedness of the Subsidiary by executing a guaranty agreement in the
form of Exhibit 8.04(b).
8.05 Transactions with Affiliates. Borrower shall not,
directly or indirectly, enter into any transaction or series of transactions
after the Second Amended and Restated Effectiveness Date whether or not in the
ordinary course of business, with any Affiliate other than on terms and
conditions substantially as favorable to Borrower as would be obtainable by
Borrower at the time in a comparable arm's length transaction with a Person
other than an Affiliate; provided, however, that the foregoing restrictions
shall not apply to (a) employment arrangements entered into in the ordinary
course of business with officers of Borrower, (b) customary fees paid to
members of the Board of Directors of Borrower and (c) all transactions between
or among Borrower and one or more Wholly-Owned Subsidiaries.
8.06 Limitation on Sale/Leaseback Transactions. The Borrower
shall not, and shall not permit any Subsidiary to, enter into any
Sale/Leaseback Transaction with any Person (other than the Borrower or a
Subsidiary) unless:
(a) the Borrower or such Subsidiary would be entitled to
incur Indebtedness in a principal amount equal to the Attributable Indebtedness
with respect to such Sale/Leaseback Transaction secured by a Lien on the
property subject to such Sale/Leaseback Transaction pursuant to Section 8.03 or
8.04 without equally and ratably securing the Loans pursuant to such covenant;
(b) after the Second Amended and Restated Effectiveness Date
and within a period commencing nine (9) months prior to the consummation of
such Sale/Leaseback Transaction and ending nine (9) months after the
consummation thereof, the Borrower or such Subsidiary shall
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<PAGE> 52
have expended for property used or to be used in the ordinary course of
business of the Borrower and its Subsidiaries an amount equal to all or a
portion of the net proceeds of such Sale/Leaseback Transaction and the Borrower
shall have elected to designate such amount as a credit against such
Sale/Leaseback Transaction (with any such amount not being so designated to be
applied as set forth in clause (c) below or as otherwise permitted); or
(c) the Borrower, during the nine (9) month period after the
effective date of such Sale/Leaseback Transaction, shall have applied to either
(i) the voluntary defeasance or retirement of any Obligations, any Pari Passu
Indebtedness or any Funded Indebtedness or (ii) the acquisition of one or more
Principal Properties at fair value, an amount equal to the greater of the net
proceeds of the sale or transfer of the property leased in such Sale/Leaseback
Transaction and the fair value, as determined by the Board of Directors of the
Borrower and evidenced by a Board Resolution, of such property at the time of
entering into such Sale/Leaseback Transaction (in either case adjusted to
reflect the remaining term of the lease and any amount expended by the Borrower
as set forth in clause (b) above), less an amount equal to the sum of the
principal amount of the Obligations, Pari Passu Indebtedness and Funded
Indebtedness voluntarily defeased or retired by the Borrower plus any amount
expended to acquire any Principal Properties at fair value, within such
nine-month period and not designated as a credit against any other
Sale/Leaseback Transaction entered into by the Borrower or any Subsidiary
during such period.
8.07 Cash Interest Coverage Ratio. Borrower shall not permit
the ratio of (a) Consolidated EBITDA for any four consecutive complete fiscal
quarters then last ended to (b) Consolidated Cash Interest Expense of Borrower
for such period to be less than 3.00:1.00.
8.08 Debt to Capitalization Ratio. Borrower shall not permit
the ratio of its Consolidated Indebtedness to its Consolidated Total
Capitalization measured at the end of each fiscal quarter, to be greater at any
time than the following ratio for the periods indicated:
<TABLE>
<CAPTION>
Through End of Through End of
Calendar Year 1998 Calendar Year 1999 All Other Periods
------------------ ------------------ -----------------
<S> <C> <C>
.50 to 1.0 .45 to 1.0 .40 to 1.0
</TABLE>
8.09 Tangible Net Worth. Borrower shall not permit
Consolidated Tangible Net Worth, measured at the end of each fiscal quarter
after January 1, 1998 to be less than the sum of (a) $525.0 million, plus (b)
an amount (added at the end of each fiscal quarter) equal to the greater of (x)
$0 and (y) (A) 50% of Consolidated Net Income from January 1, 1998 to the end
of such quarter (without giving effect to the proviso thereto) and (B) 75% of
the value of any consideration received (net of issuance costs) (other than
from the Borrower or any Subsidiary) in connection with the issuance of any
capital stock by the Borrower or any subsidiary subsequent to the Execution
Date at any time during the term hereof. In the case of any such issuance for
non-cash consideration, the value of the consideration received shall be deemed
to be the net increase in Consolidated Tangible
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<PAGE> 53
Net Worth resulting from the issuance (after giving effect to, without
limitation, any goodwill or other intangibles created by the transaction or any
writedown or writeoff in connection with the transaction).
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<PAGE> 54
SECTION 9
EVENTS OF DEFAULT
Upon the occurrence of any of the following specified events
(each an "Event of Default"):
9.01 Payments. Borrower shall (i) default in the payment when
due of any principal of the Loans or (ii) default, and such default shall
continue for one (1) or more Business Days after notice (written or oral) from
the Administrative Agent or any Bank directed to the Chief Executive Officer,
Chief Financial Officer, Treasurer or Controller of the Borrower, in the
payment when due of any Unpaid Drawing, any interest on the Loans or any Fees
or any other amounts owing under any Credit Document; or
9.02 Representations, etc. Any material representation,
warranty or statement made by the Borrower in any Credit Document or in any
statement or certificate delivered or required to be delivered pursuant thereto
shall prove to be untrue in any material respect on the date as of which made
or deemed made; or
9.03 Covenants. (a) Borrower or any Subsidiary shall default
in the due performance or observance by it of any term, covenant or agreement
contained in Sections 7.08, 8.01, 8.02, 8.07, 8.08, or 8.09 or (b) Borrower
shall 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 any Credit Document and such default shall
continue unremedied for a period of at least thirty (30) days after notice to
any of the officers of Borrower named in Section 9.01(a) by the Administrative
Agent or the Required Banks; or
9.04 Default Under Other Agreements. (a) Borrower or any
Subsidiary shall (i) default in any payment with respect to any Indebtedness
(other than the Obligations and any non-recourse indebtedness permitted to be
incurred hereunder) 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 is to
cause, or to permit the holder or holders of such Indebtedness (or a trustee or
agent on behalf of such holder or holders) to cause, any such Indebtedness to
become due prior to its stated maturity; or (b) any Indebtedness of Borrower
(other than the Obligations and any non-recourse indebtedness permitted to be
incurred hereunder) 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, however, that it shall not constitute an
Event of Default pursuant to this Section 9.04 unless any such event referred
to in clause (a) or (b) occurs with respect to one or more issues of
Indebtedness aggregating at least $25.0 million or more; or
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<PAGE> 55
9.05 Bankruptcy, etc. Borrower or any significant Subsidiary
(as such term is defined in Article 1, Rule 1-02 of Regulation S-X of the
Securities and Exchange Commission as in effect on the date hereof) 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
Borrower or any significant Subsidiary and the petition is not dismissed within
60 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 Borrower or any significant Subsidiary; or Borrower or any
significant Subsidiary 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 Borrower or such significant Subsidiary; or there is
commenced against Borrower or any significant Subsidiary any such case or
proceeding which remains undismissed for a period of sixty (60) days; or
Borrower or any significant Subsidiary is adjudicated insolvent or bankrupt; or
any order of relief or other order approving any such case or proceeding is
entered; or Borrower or any significant Subsidiary 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 sixty (60) days; or Borrower
or any significant Subsidiary makes a general assignment for the benefit of
creditors; or any corporate action is taken by Borrower or any significant
Subsidiary for the purpose of effecting any of the foregoing; or
9.06 Senior Secured Notes Redemption. Borrower shall fail to
repay and retire the Senior Secured Notes in their entirety on or before
January 15, 1998.
9.07 Judgments. One or more judgments or decrees shall be
entered against Borrower or any Subsidiary involving a liability of $10.0
million or more in the aggregate (not paid or to the extent not covered by
insurance) and any such judgments or decrees shall not have been vacated,
discharged, stayed or bonded pending appeal within sixty (60) days from the
entry thereof; or
9.08 Change of Control. There shall have occurred a
Change of Control; or
9.09 Employee Benefit Plans. (a) Any member of the ERISA
Group shall fail to pay when due an amount or amounts which it shall have
become liable to pay under Title IV of ERISA; or(b) notice of intent to
terminate a Plan shall be filed under Section 4041(c) of ERISA by any member of
the ERISA Group, any plan administrator or any combination of the foregoing; or
(c) the PBGC shall institute proceedings under Title IV of ERISA to terminate,
to impose liability (other than for premiums under Section 4007 of ERISA) in
respect of, or to cause a trustee to be appointed to administer any Plan; or
(d) there shall occur a complete or partial withdrawal from, or a default,
within the meaning of Section 4219(c)(5) of ERISA, with respect to, one or more
Multiemployer Plans or (e) any "accumulated funding deficiency" (as defined in
Section 302 of ERISA), whether or not waived, shall exist with respect to any
Plan; or (f) any Lien in favor of the PBGC or a Plan shall arise on the assets
of any member of the ERISA Group or a Subsidiary; and
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<PAGE> 56
in each case in items (a) through (f) above, such event or condition, together
with all other events or conditions, if any, could reasonably be expected to
result in a Material Adverse Effect;
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 Borrower, 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 Borrower, except
as otherwise specifically provided for in this Agreement (provided, however,
that, if an Event of Default specified in Section 9.05 shall occur with respect
to Borrower, 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, whereupon the Commitment of each Bank shall forthwith
terminate immediately and any Commitment Commission and any earned, unpaid 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
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by Borrower; (iii) terminate any Letter of Credit which may be
terminated in accordance with its terms; (iv) direct Borrower to pay (and
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 Borrower, it will
pay) to the Administrative Agent at the Payment Office such additional amounts
of cash, to be held as security for Borrower's reimbursement obligations in
respect of Letters of Credit then outstanding equal to the aggregate Stated
Amount of all Letters of Credit then outstanding; and (v) apply any amounts
held as cash collateral pursuant to Section 4.02 or this Section 9 to repay
Obligations.
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<PAGE> 57
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 Commitment" for each Non-Defaulting Bank shall mean
at any time the product of such Bank's Adjusted Percentage and the Adjusted
Total Commitment.
"Adjusted Percentage" shall mean (x) at a time when no Bank
Default exists, for each Bank such Bank's 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 Commitment at such time by the Adjusted Total Commitment
at such time, it being understood that all references herein to Commitments and
the Adjusted Total Commitment at a time when the Total Commitment or Adjusted
Total Commitment, as the case may be, has been terminated shall be references
to the Commitments or Adjusted Total Commitment, as the case may be, in effect
immediately prior to such termination; provided, however, that (A) no Bank's
Adjusted 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 Loans at such time pursuant to
Section 4.02(A)(a) or otherwise, the sum of (i) the aggregate outstanding
principal amount of Revolving Credit Loans of all Non-Defaulting Banks plus
(ii) the Letter of Credit Outstandings, exceeds the Adjusted Total Commitment;
(B) the changes to the Adjusted 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 Revolving Credit Loans of all
Non-Defaulting Banks plus (ii) the Letter of Credit Outstandings is equal to or
less than the Adjusted Total Commitment; and (C) if (i) a Non-Defaulting Bank's
Adjusted Percentage is changed pursuant to the preceding clause (B) and (ii)
any repayment of such Bank's Revolving Credit Loans, or of Unpaid Drawings with
respect to 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 Percentage must be returned to Borrower as a preferential or
similar payment in any bankruptcy or similar proceeding of Borrower, then the
change to such Non-Defaulting Bank's Adjusted Percentage effected pursuant to
said clause (B) shall be reduced to that positive change, if any, as would have
been made to its Adjusted Percentage if (x) such repayments had not been made
and (y) the maximum change to its Adjusted Percentage would have resulted in
the sum of the outstanding principal of Revolving Credit Loans made by such
Bank plus such Bank's new Adjusted Percentage of the outstanding principal
amount of Letter of Credit Outstandings equaling such Bank's Commitment at such
time.
"Adjusted Total Commitment" shall mean at any time the Total
Commitment less the aggregate Commitments of all Defaulting Banks.
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<PAGE> 58
"Administrative Agent" - see the first paragraph of this
Agreement; this term shall include any successor to the Administrative Agent
appointed pursuant to Section 11.09.
"Affected Eurodollar Loan" - see Section 4.02(B).
"Affiliate" shall mean, with respect to any Person, any other
Person directly or indirectly controlling, 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.
"Agents" see the first paragraph of this Agreement.
"Agreement" shall mean this Second Amended and Restated
Credit Agreement, as the same may be from time to time further modified,
amended and/or supplemented.
"Applicable Base Rate Margin" shall be equal to zero, as of
the Second Amended and Restated Effective Date.
"Applicable Commitment Commission Percentage" shall be equal
to the percentage per annum set forth below opposite Borrower's applicable
Rating calculated changing in the same manner as the Applicable Eurodollar
Margin, as set forth in the definition of Applicable Eurodollar Margin:
<TABLE>
<CAPTION>
COMMITMENT
COMMISSION
RATING PERCENTAGE
------ ----------
<S> <C>
A-/A3 .085%
BBB+/Baa1 .100%
BBB/Baa2 .120%
BBB-/Baa3 .150%
BB+/Ba1 .200%
</TABLE>
"Applicable Eurodollar Margin" shall be equal to the
percentage per annum set forth below opposite Borrower's applicable Rating,
effective as of the date such Rating is published or announced and shall be
applicable to all Loans outstanding from such date forward, even if such change
occurs during an Interest Period. Such change shall not cause any retroactive
change in the
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<PAGE> 59
amount of interest accruing during existent Interest Rate Periods prior thereto
but shall cause a change in the interest accruing during the remainder of such
Interest Period:
<TABLE>
<CAPTION>
EURODOLLAR
RATING MARGIN
------ ----------
<S> <C>
A-/A3 .250%
BBB+/Baa1 .285%
BBB/Baa2 .325%
BBB-/Baa3 .425%
BB+/Ba1 .625%
</TABLE>
"Approved Bank" see the definition of "Cash Equivalents."
"Approved Company" see the definition of "Cash Equivalents."
"Assignment and Assumption Agreement" shall mean the
Assignment and Assumption Agreement substantially in the form of Exhibit 10.01A
hereto (appropriately completed).
"Attributable Indebtedness," when used with respect to any
Sale/Leaseback Transaction, means, as at the time of determination, the present
value (discounted at the rate set forth or implicit in the terms of the lease
included in such transaction) of the total obligations of the lessee for rental
payments (other than amounts required to be paid on account of taxes,
maintenance, repairs, insurance, assessments, utilities, operating and labor
costs and other items which do not constitute payments for property rights)
during the remaining term of the lease included in such Sale/Leaseback
Transaction (including any period for which such lease has been extended). In
the case of any lease which is terminable by the lessee upon the payment of a
penalty, such net amount shall be the lesser of the net amount determined
assuming termination upon the first date such lease may be terminated (in which
case the net amount shall also include the amount of the penalty, but no rent
shall be considered as required to be paid under such lease subsequent to the
first date upon which it may be so terminated) or the net amount determined
assuming no such termination.
"Authorized Officer" shall mean any senior officer of
Borrower designated as such in writing to the Administrative Agent by Borrower.
"Available Unutilized Commitment" for each Bank, shall mean
the excess of (a) the Commitment of such Bank over (b) the sum of (x) the
aggregate outstanding principal amount of Revolving Credit Loans made by such
Bank, plus (y) an amount equal to such Bank's Adjusted Percentage of the Letter
of Credit Outstandings at such time.
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<PAGE> 60
"Bank" see the first paragraph of this Agreement.
"Bank Default" shall mean (a) the refusal (which has not been
retracted) of a Bank to make available its portion of any incurrence of Loans
or to fund its portion of any unreimbursed payment under Section 2.05(c) or (b)
a Bank having notified the Administrative Agent and/or Borrower that it does
not intend to comply with the obligations under Section 1.01 or under Section
2.05(c), in the case of either (a) or (b) 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" - see Section 9.05.
"Base Rate" at any time shall mean the higher of (a) the rate
which is 1/2 of 1% in excess of the Federal Funds Effective Rate and (b) the
Prime Lending Rate.
"Base Rate Loan" shall mean each Loan bearing interest at the
rates provided in Section 1.08(a).
"Benefit Arrangement" shall mean at any time an employee
benefit plan with the meaning of Section 3(3) of ERISA which is not a Plan or a
Multiemployer Plan and which is maintained or otherwise contributed to by any
member of the ERISA Group.
"Board Resolution" means a copy of a resolution certified by
the Secretary or an Assistant Secretary of the Borrower to have been duly
adopted by the Board of Directors and to be in full force and effect on the
date of such certification, and delivered to the Administrative Agent.
"Borrower" - see the first paragraph of this Agreement.
"Borrowing" shall mean the incurrence of one Type of Loan
pursuant to the Facility by Borrower from other than a Defaulting Bank: (a) in
the case of a Revolving Credit Borrowing, all of the Banks on a pro rata basis,
(b) in the case of a Borrowing under the Swing Line Loan, the Swing Line Bank
and (c) in the case of a Competitive Bid Borrowing, any Bank agreeing to make a
Competitive Bid Loan on any given date (or resulting from conversions on a
given date), having in the case of Eurodollar Loans the same Interest Period;
provided, however, that Base Rate Loans incurred pursuant to Section 1.10(b)
shall be considered part of any related Borrowing of Eurodollar Loans.
"BTCo" shall mean Bankers Trust Company.
"Business Day" shall mean (a) for all purposes other than as
covered by clause (b) below, any day excluding Saturday, Sunday and any day
which shall be in the City of New York a legal holiday or a day on which
banking institutions are authorized by law or other governmental
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<PAGE> 61
actions to close and (b) with respect to all notices and determinations in
connection with, and payments of principal and interest on, Eurodollar Loans,
any day which is a Business Day described in clause (a) and which is also a day
for trading by and between banks in U.S. dollar deposits in the interbank
Eurodollar market in London.
"Capital Expenditures" shall mean, with respect to any
Person, without duplication, all expenditures by such Person which should be
capitalized in accordance with GAAP, including, without duplication, all such
expenditures with respect to fixed or capital assets (including, without
limitation, expenditures for maintenance and repairs which should be
capitalized in accordance with GAAP) and the amount of all Capitalized Lease
Obligations incurred by such Person.
"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.
"Capital Stock" shall mean any and all shares, interests,
rights to purchase, warrants, options, participants or other equivalents of or
interests in (however designated) corporate stock or other equity
participations, including partnership interests, whether general or limited,
including any Preferred Stock.
"Capitalized Lease Obligations" shall mean all obligations
under Capital Leases of Borrower or any Subsidiary in each case taken at the
amount thereof accounted for as liabilities in accordance with GAAP.
"Cash Equivalents" shall mean (a) securities issued or
directly and fully guaranteed or insured by the United States of America or any
agency or instrumentality thereof (provided that the full faith and credit of
the United States of America is pledged in support thereof) having maturities
of not more than one year from the date of acquisition, (b) 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
capital and surplus in excess of $500.0 million or (z) any Bank or bank (or the
parent company of such bank) whose short-term commercial paper rating from S&P
is at least A-1 or the equivalent thereof or from Moody's is at least P-1 or
the equivalent thereof (any such bank, an "Approved Bank"), in each case with
maturities of not more than one year from the date of acquisition, (c)
repurchase obligations with a term of not more than seven days for underlying
securities of the types described in clause (a) above entered into with any
bank meeting the qualifications specified in clause (b) above, (d) 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 one year after
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<PAGE> 62
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 (a) through (d) above.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, 42 U.S.C. ss. 9601 et seq.
"Change of Control" shall mean an event or series of events
by which (a) any person (as defined in Section 13(d)(3) of the Exchange Act) is
or becomes the beneficial owner (as defined in Rule 13d-3 of the Exchange Act),
directly or indirectly, of more than 35% of the voting power of the then
outstanding Voting Stock of Borrower; or (b) during any period of two
consecutive years, individuals who at the beginning of such period constituted
the Board of Directors of Borrower (together with any new or replacement
directors whose election by the Board of Directors of Borrower or whose
nomination for election by Borrower's stockholders, was approved by a vote of
at least 66-2/3% of the directors then still in office who were either
directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors of Borrower then in office.
"Claims" - see the definition of "Environmental Claims."
"Co-Agent" - see 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 Second Amended and Restated Effectiveness Date and any subsequent
provisions of the Code, amendatory thereof, supplemental thereto or substituted
therefor.
"Commitment" shall mean, with respect to each Bank, the
amount set forth opposite such Bank's name in Annex I hereto as the same may be
(x) reduced from time to time pursuant to Sections 3.02, and/or 9 or (y)
adjusted from time to time as a result of assignments to or from such Bank
pursuant to Section 12.04.
"Commitment Commission" - see Section 3.01(a).
"Competitive Bid" means an offer by a Bank to make a
Competitive Bid Loan pursuant to Section 1.03(c).
"Competitive Bid Accept/Reject Letter" shall mean a
notification made by Borrower pursuant to Section 1.03(c)(iv) in the form of
Exhibit 1.03(c)(iv).
"Competitive Bid Loan" shall mean a Loan made pursuant to a
Competitive Bid by the Bank or Banks accepting said bid.
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"Competitive Bid Note(s)" shall mean the Note or Notes
executed by Borrower to evidence a Competitive Bid Loan pursuant to Section
1.03(c) and Section 1.05.
"Competitive Bid Rate" means, as to any Competitive Bid made
by a Bank pursuant to Section 1.03(c), (a) in the case of a Eurodollar Rate
Loan, the total Eurodollar rate and (b) in the case of a Base Rate Loan, the
per-annum rate of interest, offered in each case, by the Bank making such
Competitive Bid.
"Competitive Borrowing" means a Borrowing, which may be
either a Eurodollar Rate Competitive Borrowing or a Base Rate Competitive
Borrowing, consisting of a Loan or Loans from the Bank or Banks whose
Competitive Bids for such Borrowing have been accepted by Borrower under the
bidding procedure described in Section 1.03(c)(i).
"Consolidated Cash Interest Expense" shall mean, for any
period, total cash interest expense (including that attributable to Capital
Leases, whether or not the Capitalized Lease Obligations under such Capitalized
Leases is included in Indebtedness) of Borrower and the Subsidiaries on a
consolidated basis during such period, including, without limitation, (i) all
commissions, discounts and other fees and charges owed with respect to letters
of credit and bankers' acceptance financing during such period and (ii) all
capitalized cash interest during such period.
"Consolidated EBITDA" 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 to the extent deducted in
determining Consolidated Net Income, (v) depreciation expense of Borrower and
the Subsidiaries, (vi) amortization expense of Borrower and the Subsidiaries,
and (vii) losses on sales of assets (excluding sales in the ordinary course of
business) and other extraordinary losses, less (b) the amount for such period
of gains on sales of assets (excluding sales in the ordinary course of
business) and other extraordinary gains, all as determined on a consolidated
basis in accordance with GAAP.
"Consolidated Indebtedness" shall mean, as at any date of
determination, the aggregate stated balance sheet amount of all Indebtedness
(including the Loans) of Borrower and the Subsidiaries on a consolidated basis
as determined in accordance with GAAP, excluding (i) all Contingent Obligations
relating to the Indebtedness of any Person which such Indebtedness is included
in the calculation of Consolidated Indebtedness of Borrower and the
Subsidiaries and (ii) all Capitalized Lease Obligations under the Capitalized
Lease (as in effect on the Second Amended and Restated Effectiveness Date) of
the Glomar Explorer Fleet Rig (Official No. 547257).
"Consolidated Interest Expense" shall mean, for any period,
total interest expense (including that attributable to Capital Leases whether
or not the Capitalized Lease Obligations under such Capitalized Lease is
included in Indebtedness) of Borrower and the Subsidiaries in accordance with
GAAP on a consolidated basis with respect to all outstanding Indebtedness of
Borrower and
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the 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 Borrower and the Subsidiaries on a consolidated basis for
such period taken as a single accounting period determined in conformity with
GAAP; provided, however, that there shall be excluded therefrom (i) except to
the extent of the amount of cash dividends or other cash distributions in
respect of Capital Stock paid to Borrower or a Subsidiary by any other Person
during such period out of funds legally available therefor, the net income (or
loss) of such other Person other than a Subsidiary and, (ii) except to the
extent included pursuant to clause (i) hereof, the net income (or loss) of any
other Person accrued or attributable to any period prior to the date it becomes
a Subsidiary or is merged into or consolidated with Borrower or any Subsidiary
or such other Person's property or Capital Stock (or a portion thereof) is
acquired by Borrower or any Subsidiary.
"Consolidated Net Tangible Assets" means the total amount of
assets (less applicable reserves and other properly deductible items) after
deducting (a) all current liabilities (excluding the amount of those which are
by their terms extendable or renewable at the option of the obligor to a date
more than 12 months after the date as of which the amount is being determined
and current maturities of long-term debt) and (b) all goodwill, tradenames,
trademarks, patents, unamortized debt discount and expense and other like
intangible assets, all as set forth on the most recent quarterly balance sheet
of the Borrower and its consolidated subsidiaries and determined in accordance
with GAAP.
"Consolidated Tangible Net Worth" shall mean, at any time,
the net tangible worth of Borrower and the Subsidiaries on a consolidated basis
determined in accordance with GAAP.
"Consolidated Total Capitalization" shall mean, at any time,
the consolidated total Indebtedness plus shareholders equity of Borrower and
its Subsidiaries.
"Contingent Obligations" shall mean as to any Person any
obligation of such Person guaranteeing or intending to guarantee any
Indebtedness, leases, Dividends or other obligations ("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 obligation 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
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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.
"Credit Documents" shall mean this Agreement, the Notes and
any document executed in connection therewith, and as the context requires, the
First Restated Credit Agreement.
"Credit Event" shall mean and include the making of a Loan or
the issuance of a Letter of Credit.
"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.
"Disqualified Capital Stock" means any Capital Stock which,
by its terms (or by the terms of any security into which it is convertible or
for which it is exchangeable at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable, at the option of the
holder thereof, in whole or in part, or exchangeable into Indebtedness on or
prior to the Maturity Date.
"Dividends" shall mean to declare or pay on the part of
Borrower or any Subsidiary any dividends (other than dividends payable solely
in Qualified Capital Stock of such Person (including pursuant to a
shareholders' rights plan)) or return any capital to, its stockholders or
authorize or make any other distribution, payment or delivery of property or
cash to its stockholders as such, or redeem, retire, purchase or otherwise
acquire, directly or indirectly, for a consideration, any shares of any class
of its Capital Stock outstanding on the Second Amended and Restated
Effectiveness Date or thereafter (or any warrants for or options or stock
appreciation rights in respect of any of such shares), or set aside any funds
for any of the foregoing purposes, or permit any Subsidiary to purchase or
otherwise acquire for consideration any shares of any class of the Capital
Stock of Borrower or any other Subsidiary, as the case may be, outstanding on
the Second Amended and Restated Effectiveness Date or thereafter; provided,
however, that Dividends shall not include the redemption of rights issued
pursuant to a shareholders' rights agreement in an amount per right not to
exceed a de minimis amount.
"Dollars" shall mean freely transferable lawful money of the
United States.
"Eligible Transferee" shall mean a commercial bank, financial
institution or other "accredited investor" (as defined by Regulation D of the
Securities Act).
"Environmental Claims" shall mean any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, claims, liens,
notices of noncompliance or violation,
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investigations of Governmental Authorities or third parties 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 damage or injury or threat of
injury or damage to health, safety or the environment.
"Environmental Law" shall mean any applicable Federal, state,
foreign or local statute, law, rule, regulation, ordinance, code, guide,
policy, treaty or convention and rule of common law now or hereafter in effect
and in each case as amended and having legally binding effect on, and
enforceable against, private parties, and any judicial or administrative
interpretation thereof, including, without limitation, any judicial or
administrative order, consent decree or judgment, relating to pollution or
protection of the environment or health or safety or Release or threat of
Release or treatment, storage, transport, generation, handling or disposal of
any Hazardous Materials, including, without limitation, CERCLA; RCRA; the
Deepwater Port Act, as amended, 33 U.S.C. sections 1501 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,
as amended, 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 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.
"ERISA Group" shall mean Borrower, any Subsidiary and all
members of a controlled group of corporations and all trades or businesses
(whether or not incorporated) under common control which, together with
Borrower or any Subsidiary, are treated as a single employer under Section 414
of the Code.
"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 Eurodollar Loan, (i) the offered quotation to first-class banks in
the interbank Eurodollar market by the Administrative Agent or, in the case of
Competitive Bid Loans, by each of the Banks making such Loans for dollar
deposits of amounts in same day funds comparable to the outstanding principal
amount of the Eurodollar Loan of the Administrative Agent (or Bank making such
Competitive Bid Loan) for which an interest rate is then being determined with
maturities comparable to the Interest Period to be applicable to such
Eurodollar Loan, determined as of 10:00 A.M. (New York time) on the date which
is two Business Days prior to the commencement of such Interest Period divided
(and rounded upward to the next whole multiple of 1/16 of 1%) by (ii) a
percentage equal to 100% minus the then stated maximum rate of all reserve
requirements (including, without limitation, any
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marginal, emergency, supplemental, special or other reserves) applicable to any
member bank of the Federal Reserve System in respect of Eurocurrency
liabilities as defined in Regulation D (or any successor category of
liabilities under Regulation D).
"Event of Default" - see Section 9.
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended from time to time, and the regulations promulgated and the
rulings issued thereunder.
"Execution Date" shall mean the date this Agreement is
executed as shown on page 1 hereof.
"Facility" shall mean all Loans (including the Swing Line
Loan), Letter of Credit and other accommodations available under the credit
facility established under this Agreement, evidenced and limited by the Total
Commitment.
"Facing Fee" - see 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 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.
"First Restated Credit Agreement" - see the recitals hereto.
"Fleet Rigs" shall mean the Glomar Explorer (Official No.
547527) and any offshore drilling rig or drilling vessel owned from time to
time by Borrower or any subsidiary.
"Foreign Pension Plan" shall mean any plan, fund (including,
without limitation, any superannuation fund) or other similar program
established or maintained outside the United States of America by Borrower or
any one or more of its Subsidiaries primarily for the benefit of employees of
Borrower or such Subsidiaries residing outside the United States of America,
which plan, fund or other similar program provides, or results in, retirement
income, a deferral of income in contemplation of retirement or payments to be
made upon termination of employment, and which plan is not subject to ERISA.
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"Funded Indebtedness" means all Indebtedness (including
Indebtedness incurred under any revolving credit, letter of credit or working
capital facility) that matures by its terms, or that is renewable at the option
of any obligor thereon to a date more than one year after the date on which
such Indebtedness is originally incurred.
"GAAP" shall mean generally accepted accounting principles in
the United States of America as in effect on the Second Amended and Restated
Effectiveness Date; 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).
"Governmental Authority" shall mean any government or
political subdivision or any agency, authority, board, bureau, central bank,
commission, department or instrumentality of either, or any court, tribunal,
grand jury or arbitrator, in each case whether foreign or domestic, or any
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Hazardous Materials" shall mean any pollutant, contaminant,
toxic, hazardous, extremely hazardous or radioactive substance, constituent or
waste, or any other constituent, waste, chemical material, compound or
substance including, without limitation, petroleum including without limitation
crude oil or any fraction thereof, or any petroleum product, subject to
regulation under any Environmental Law.
"Indebtedness" of any Person means, without duplication, (a)
all indebtedness of such Person for borrowed money (whether or not the recourse
of the lender is to the whole of the assets of such Person or only to a portion
thereof), (b) all obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments, (c) all obligations of such Person in
respect of letters of credit or other similar instruments (or reimbursement
obligations with respect thereto), other than standby letters of credit,
performance bonds, surety bonds and other obligations issued by or for the
account of such Person in the ordinary course of business, to the extent not
drawn or, to the extent drawn, if such drawing is reimbursed not later than the
third Business Day following demand for reimbursement, (d) all obligations of
such Person to pay the deferred and unpaid purchase price of property or
services, except trade payables and accrued expenses incurred in the ordinary
course of business, (e) all Capitalized Lease Obligations of such Person, (f)
all Indebtedness of others secured by a Lien on any asset of such Person,
whether or not such Indebtedness is assumed by such Person (provided that if
the obligations so secured have not been assumed in full by such Person or are
not otherwise such Person's legal liability in full, then such obligations
shall be deemed to be in an amount equal to the greater of (i) the lesser of
(A) the full amount of such obligations and (B) the fair market value of such
assets, as determined in good faith by the Board of Directors of such Person,
which determination shall be evidenced by a Board Resolution, and (ii) the
amount of obligations as have been assumed by such Person or which are
otherwise such Person's legal liability), and (g) all Indebtedness of others
(other than endorsements in the ordinary course of business) guaranteed by such
Person to the extent of such guarantee.
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"Indenture" shall mean the Indenture dated as of September 1,
1997 between Borrower and Wilmington Trust Company, as trustee, under which the
issuance of $300,000,000.00 of Senior Unsecured Notes by the Borrower was
authorized, as the same may be amended, modified or supplemented from time to
time.
"Initial Borrowing Date" shall mean the date upon which the
initial Borrowing of Loans occurs.
"Intellectual Property" - see Section 6.14.
"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 Borrower or any
Subsidiary against interest rate risk.
"Invitation to Bid" - see Section 1.03(c)(i).
"Joint Venture" means (a) with respect to properties located
in the United States, any partnership, corporation or other entity, in which up
to and including 50% of the partnership interests, outstanding voting stock or
other equity interests is owned, directly or indirectly, by the Borrower and/or
one or more Subsidiaries, and (b) with respect to properties located outside
the United States, any partnership, corporation or other entity, in which up to
and including 60% of the partnership interests, outstanding voting stock or
other equity interests is owned, directly or indirectly, by the Borrower and/or
one or more Subsidiaries.
"Leasehold" of any Person shall mean 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.
"L/C Supportable Obligations" shall mean such obligations of
Borrower or any Subsidiary as are not inconsistent with the policies of the
Letter of Credit Issuer determined reasonably and in good faith.
"Letter of Credit" - see Section 2.01(a).
"Letter of Credit Fee" - see Section 3.01(b).
"Letter of Credit Issuer" shall mean BTCo.
"Letter of Credit Outstandings" shall mean, at any time, the
sum of, without duplication, (a) the aggregate Stated Amount of all outstanding
Letters of Credit and (b) the aggregate amount of all Unpaid Drawings in
respect of all Letters of Credit.
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"Letter of Credit Request" - see Section 2.03(a).
"Lien" means any mortgage, pledge, lien, encumbrance, charge
or security interest (including any agreement to give any of the foregoing).
For purposes of this Agreement, the Borrower or any Subsidiary of the Borrower
shall be deemed to own, subject to a Lien, any asset which it has acquired or
holds subject to the interest of a vendor or lessor under any conditional sale
agreement, Capitalized Lease Obligation or other title retention agreement
relating to such asset.
"Loan" - see Section 1.01(a). Loans shall include Revolving
Credit Loans, Swing Line Loans and Competitive Bid Loans, except as otherwise
specifically set forth herein.
"Margin Stock" shall have the meaning provided in Regulation
U.
"Material Adverse Effect" shall mean a material adverse
effect on the performance, business, properties, assets, operations, nature of
assets, liabilities, condition (financial or otherwise) or prospects of
Borrower and the Subsidiaries taken as a whole.
"Maturity Date" shall mean five (5) years from the Execution
Date.
"Minimum Borrowing Amount" shall mean (a) for Loans
maintained as Base Rate Loans, $1.0 million and increments of $500,000 over
such amount, and (b) for Loans maintained as Eurodollar Loans, $5.0 million and
increments of $1.0 million over such amount.
"Moody's" shall mean Moody's Investors Service, Inc. and its
successors.
"Multiemployer Plan" shall mean at any time an employee
pension benefit plan within the meaning of Section 4001(a)(3) of ERISA to which
any member of the ERISA Group is then making or accruing an obligation to make
contributions or has within the preceding five plan years made contributions,
including for these purposes any Person which ceased to be a member of the
ERISA Group during such five year period.
"Non-Defaulting Bank" shall mean each Bank other than a
Defaulting Bank.
"Note" or "Notes" - see Sections 1.05(a) and 1.05(b).
"Notice of Borrowing" - see Section 1.03.
"Notice of Competitive Borrowing" - see Section 1.03(c).
"Notice of Conversion" - see Section 1.06.
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"Notice Office" shall mean the office of the Administrative
Agent at 130 Liberty Street, New York, New York or such other office as the
Administrative Agent may designate to Borrower 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 or any Bank pursuant to the terms of any
Credit Document.
"Original Credit Agreement" - see the recitals hereto.
"Pari Passu Indebtedness" means any Indebtedness of the
Borrower, whether outstanding on the Second Amended and Restated Effectiveness
Date or thereafter created, incurred or assumed, unless, in the case of any
particular Indebtedness, the instrument creating or evidencing the same or
pursuant to which the same is outstanding expressly provides that such
Indebtedness shall be subordinated in right of payment to the Loans.
"Participant" - see Section 2.05(a).
"Payment Office" shall mean the office of the Administrative
Agent at 130 Liberty Street, New York, New York or such other office as the
Administrative Agent may designate to Borrower from time to time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or
any successor thereto.
"Percentage" shall mean for each Bank the percentage obtained
by dividing such Bank's Commitment by the Total Commitment; provided, however,
that if the Total Commitment has been terminated, the Percentage of each Bank
shall be determined by dividing such Bank's Commitment immediately prior to
such termination by the Total Commitment immediately prior to such termination.
"Permitted Liens" shall mean (a) Liens existing on the Second
Amended and Restated Effectiveness Date; (b) Liens on property or assets of, or
any shares of stock of, or other equity interests in, or indebtedness of, any
Person existing at the time such Person becomes a Subsidiary of the Borrower or
at the time such Person is merged into or consolidated with the Borrower or any
of its Subsidiaries or at the time of a sale, lease or other disposition of the
properties of a Person (or a division thereof) as an entirety or substantially
as an entirety to the Borrower or a Subsidiary; (c) Liens in favor of the
Borrower or any of its Subsidiaries; (d) Liens in favor of governmental bodies
to secure progress or advance payments; (e) Liens securing industrial revenue
or pollution control bonds; (f) Liens on assets existing at the time of
acquisition thereof, securing all or any portion of the cost of acquiring,
constructing, improving, developing or expanding such assets or securing
Indebtedness incurred prior to, at the time of, or within twelve (12) months
after, the later of the acquisition, the completion of construction,
improvement, development or expansion
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or the commencement of commercial operation of such assets, for the purpose of
(i) financing all or any part of the purchase price of such assets or (ii)
financing all or any part of the cost of construction, improvement, development
or expansion of any such assets; (g) Liens on contracts, agreements or
instruments of a Subsidiary entered into in connection with a transaction
referred to in clause (f); (h) statutory liens or landlords', carriers',
warehouseman's, mechanics', suppliers', materialmen's, repairmen's or other
like Liens arising in the ordinary course of business and with respect to
amounts not yet delinquent or being contested in good faith by appropriate
proceedings; (i) Liens on the stock, partnership or other equity interest of
the Borrower or any Subsidiary in any Joint Venture or any Subsidiary that owns
an equity interest in such Joint Venture to secure Indebtedness, provided the
amount of such Indebtedness is contributed and/or advanced solely to such Joint
Venture; and (j) any extensions, substitutions, replacements or renewals in
whole or in part of a Lien enumerated in clauses (a) through (i) above.
"Person" shall mean any individual, partnership, joint
venture, limited liability company, firm, corporation, association, trust or
other enterprise or any government or political subdivision or any agency,
department or instrumentality thereof.
"Plan" shall mean at any time an employee pension benefit
plan (other than a Multiemployer Plan) which is covered by Title IV of ERISA or
subject to the minimum funding standards under Section 412 of the Code and
either (a) is maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group or (b) has at any time within
the preceding five years been maintained, or contributed to, by any Person
which was at such time a member of the ERISA Group for employees of any Person
which was at such time a member of the ERISA Group.
"Preferred Stock" in any Person, means Capital Stock of any
class or classes (however designated) which is preferred as to the payment of
Dividends or distributions, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such Person, over
Capital Stock of any other class in such Person.
"Prime Lending Rate" shall mean the rate which Bankers Trust
Company announces from time to time as its prime lending rate, the Prime
Lending Rate to change when and as such prime lending rate changes. The Prime
Lending Rate is a reference rate and does not necessarily represent the lowest
or best rate actually charged to any customer. Bankers Trust Company may make
commercial loans or other loans at rates of interest at, above or below the
Prime Lending Rate.
"Principal Property" means any drilling rig or drillship, or
integral portion thereof, owned or leased by the Borrower or any Subsidiary and
used for drilling offshore oil and gas wells, which, in the opinion of the
Board of Directors, is of material importance to the business of the Borrower
and its Subsidiaries taken as a whole, but no such drilling rig or drillship,
or portion thereof, shall be deemed of material importance if its net book
value (after deducting accumulated depreciation) is less than 2% of
Consolidated Net Tangible Assets.
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"Qualified Capital Stock" in any Person means any Capital
Stock in such Person other than any Disqualified Capital Stock.
"Rating" shall mean the Indebtedness quality rating most
recently published in respect of the Borrower's long-term Indebtedness by
Moody's or S&P; provided, in the event that Moody's and S&P provide different
Ratings of the Borrower, all calculations of Fees and Applicable Margins shall
utilize the higher Rating, provided, further, if the Ratings are two (2) or
more grades apart, the Rating one level above the lowest shall be utilized for
all calculations and computations.
"RCRA" shall mean the Resource Conservation and Recovery Act,
as amended, 42 U.S.C. ss. 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" - see 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.
"Release" shall mean any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, leaching or migration into
the environment or into, out of or through any structure, property, pipeline,
air, soil, subsurface strata, surface water, or groundwater or wetlands.
"Replaced Bank" - see Section 1.13.
"Replacement Bank" - see Section 1.13.
"Required Banks" shall mean Non-Defaulting Banks whose
outstanding Commitments (or, if after the Total Commitment has been terminated,
outstanding Loans and Adjusted Percentage of Letter of Credit Outstandings)
constitute greater than 50% of the sum of the Adjusted Total Commitment (or, if
after the Total Commitment has been terminated, the total outstanding Loans of
Non-Defaulting Banks and the aggregate Adjusted Percentages of all
Non-Defaulting Banks of the total Letter of Credit Outstandings at such time).
"Revolving Credit Loan" - see Section 1.01(a).
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"S&P" shall mean Standard & Poor's Ratings Group and its
successors.
"Sale/Leaseback Transaction" means any arrangement with any
Person pursuant to which the Borrower or any Subsidiary leases any Principal
Property that has been or is to be sold or transferred by the Borrower or the
Subsidiary to such Person, other than (a) temporary leases for a term,
including renewals at the option of the lessee, of not more than five years,
(b) leases between the Borrower and a Subsidiary or between Subsidiaries, (c)
leases of Principal Property executed by the time of, or within 12 months after
the latest of, the acquisition, the completion of construction or improvement,
or the commencement of commercial operation of the Principal Property, and (d)
arrangements pursuant to any provision of law with an effect similar to the
former Section 168(f)(8) of the Internal Revenue Code of 1954.
"SEC" shall mean the Securities and Exchange Commission or any
successor thereto.
"Second Amended and Restated Effectiveness Date" - see Section
12.10.
"Section 4.04(b) (ii) Certificate" - see Section 4.04(b)(ii).
"Securities Act" shall mean the Securities Act of 1933, as
amended from time to time, and the regulations promulgated and the rulings
issued thereunder.
"Security Documents" shall mean any documents evidencing,
governing or securing the Senior Secured Notes as in effect on the Second
Amended and Restated Effectiveness Date, including, without limitation, the
indenture governing said Senior Secured Notes dated December 23, 1992.
"Senior Secured Notes" shall mean the 12-3/4% senior Secured
Notes Due 1999 issued pursuant to the Security Documents.
"Standby Letter of Credit" - see Section 2.01(a).
"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 (a) 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 (b) any partnership,
association, joint venture or other entity in which such Person directly or
indirectly through Subsidiaries, has an equity interest in excess of that for
the respective type of entity referenced in the definition of Joint Ventures at
the time. Unless otherwise expressly provided, all references herein to
"Subsidiary" shall mean a Subsidiary of Borrower.
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"Swing Line Bank" shall mean BTCo or such other Bank as is so
designated from time to time in accordance with the provisions hereof.
"Swing Line Commitment" shall mean the commitment of the
Swing Line Bank to make the Swing Line Loan up to a maximum principal amount of
$10,000,000.00 as reduced from time to time pursuant to the terms hereof.
"Swing Line Loan" shall mean the loan or loans made by the
Swing Line Bank in the maximum principal amount of the Swing Line Commitment.
"Swing Line Note" - see Section 1.05(b).
"Taxes" - see Section 4.04(a).
"Total Commitment" shall mean, at any time, the sum of the
Commitments of each of the Banks, which shall equal a maximum of
$240,000,000.00, subject to reductions as herein provided.
"Total Unutilized Commitment" shall mean, at any time, (a)
the Total Commitment at such time less (b) the sum of the aggregate principal
amount of all Loans at such time, plus the Letter of Credit Outstandings at
such time.
"Trade Letter of Credit" - see Section 2.01(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.
"Unfunded Liabilities" shall mean, with respect to any Plan
at any time, the amount (if any) by which (i) the value of all benefit
liabilities under such Plan, determined on a current liability basis under
Section 412(l)(7) of the Code, exceeds (ii) the fair market value of all Plan
assets allocable to such liabilities under Title I of ERISA (excluding any
accrued but unpaid contributions), all determined as of the then most recent
valuation date for such Plan.
"Unpaid Drawing" - see Section 2.04(a).
"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
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directors' qualifying shares, is owned directly or indirectly by such Person.
Unless otherwise expressly provided, all references herein to "Wholly-Owned
Subsidiary" shall mean a Wholly-Owned Subsidiary of Borrower.
"Working Capital" shall mean an amount determined on a
consolidated basis in accordance with GAAP) determined for Borrower and the
Subsidiaries equal to the sum of all current assets (other than cash) less the
sum of all current liabilities (other than the current portion of any
Indebtedness that was long-term Indebtedness when incurred).
"Written" or "in writing" shall mean any form of written
communication or a communication by means of telex or facsimile transmission.
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SECTION 11
THE AGENTS
11.01 Appointment. The Banks hereby designate Bankers Trust
Company 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 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.
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 Agents. Independently and
without reliance upon the Agents, each Bank and the holder of each Note, to the
extent it deems appropriate, has made and shall continue to make all of its own
independent investigation of the financial condition and affairs of Borrower
and the 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 (b) its own appraisal of
the creditworthiness of Borrower and the Subsidiaries and, except as expressly
provided in this Agreement, the Agents shall not have any 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 Agents 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, priority or
sufficiency of this Agreement or any other Credit Document or the financial
condition of Borrower and the Subsidiaries or be required to make any inquiry
concerning either the performance or observance of any of the terms, provisions
or conditions of this
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Agreement or any other Credit Document, or the financial condition of Borrower
and the 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 Borrower).
11.06 Indemnification. To the extent the Agents are not
reimbursed and indemnified by Borrower, the Banks will reimburse and indemnify
the Agents, 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, costs,
expenses or disbursements of whatsoever kind or nature which may be imposed on,
asserted against or incurred by the Agents in performing their 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, however,
that no Bank shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from either of the Agents' gross negligence or willful
misconduct.
11.07 The Agents in Their Individual Capacity. With respect
to its obligation to make Loans under this Agreement, the Agents 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 Agents in
their individual capacity. The Agents may accept deposits from, lend money to,
and generally engage in any kind of banking, trust or other business with
Borrower 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 Borrower or any Subsidiary for services in connection with
this Agreement and otherwise without having to account for the same to the
Banks.
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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 Borrower 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 Borrower.
(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 Borrower, 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 successor 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.
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SECTION 12
MISCELLANEOUS.
12.01 Indemnification, Payment of Expenses, etc. Borrower
agrees 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 all counsel to the
Administrative Agent, and of the Administrative Agent itself, and, after the
occurrence 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 liabilities with respect to or resulting from any delay or omission
(other than to the extent attributable to the Administrative Agent or such
Bank) to pay such taxes; and (iii) indemnify each Bank (including in its
capacity as the Administrative Agent or a Letter of Credit Issuer), its
officers, directors, employees, representatives and agents from and hold each
of them harmless against any and all losses, liabilities, claims, damages,
expenses, fines or penalties 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 Borrower
or any other Person (other than the Office of the Comptroller of Currency, the
FDIC or other regulatory authority having jurisdiction over any Bank if not
related to any action or inaction by Borrower or any Subsidiary or any other
event or occurrence relating to Borrower or any Subsidiary), including, without
limitation, the actual reasonable fees and disbursements of counsel incurred 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 or location at any time owned or
operated by Borrower or any Subsidiary, the generation, storage,
transportation, treatment, release or disposal of Hazardous Materials at on,
under or from any Real Property, offshore drilling rig, facility or location at
any time owned or operated by Borrower or any Subsidiary, the noncompliance of
Borrower or any Subsidiary, or of any Real Property, offshore drilling rig,
facility or location at any time owned or operated by Borrower or any
Subsidiary with any Environmental Law or any Environmental Claim asserted
against Borrower or any Subsidiary with any Environmental Law or any Real
Property, offshore drilling rig, facility or location at any time owned or
operated by Borrower or any Subsidiary, 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
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losses, liabilities, claims, damages or expenses to the extent incurred by
reason of the gross negligence or wilful 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, 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 has occurred and is
continuing, each Bank is hereby authorized at any time or from time to time,
without presentment, demand, protest or other notice of any kind to Borrower or
to any other Person, any such notice being hereby expressly waived, to the
extent permitted by applicable 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 Bank (including without limitation by branches and
agencies of such Bank wherever located) to or for the credit or the account of
Borrower against and on account of the Obligations and liabilities of Borrower
to such Bank under any Credit Document, including, without limitation, all
interests in Obligations of 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 any 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, telexed,
telecopied or delivered, if to Borrower or any Subsidiary, 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 hereto; 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 and, in the case of notice
by telecopier, after confirmation of such receipt has been given by the
recipient, excluding by way of automatic receipt produced by telecopier.
(b) Without in any way limiting the obligation of Borrower to
confirm in writing any telephonic notice permitted to be given hereunder, the
Administrative Agent or any Letter of Credit Issuer, as the case may be, may
prior to receipt of written confirmation act without liability upon the basis
of such telephonic notice, believed by the Administrative Agent or such Letter
of Credit Issuer in good faith to be from an Authorized Officer of Borrower. In
each such case, Borrower hereby waives the right to dispute the Administrative
Agent's or such Letter of Credit Issuer'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, however, that Borrower
may not assign or transfer any of its rights or obligations
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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, however, 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 be those set forth in the
agreement executed by such Bank in favor of the participant relating thereto)
and all amounts payable by Borrower hereunder shall be determined as if such
Bank had not sold such participation, except that the participant shall he
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; provided, further, however, 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 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 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) or (ii) consent to the assignment or transfer
by Borrower of any of its rights and obligations under this Agreement.
(b) Notwithstanding the foregoing, (i) 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 (ii) with the consent of the
Administrative Agent, each Letter of Credit Issuer and Borrower (which consent
shall not be unreasonably withheld or delayed and which consent of Borrower
need not be obtained at any time that a Default or Event of Default shall have
occurred and be continuing), any Bank may assign all or a portion of its
outstanding Commitment and its rights and obligations hereunder to one or more
Eligible Transferees. Unless otherwise agreed to by Borrower, 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 $5.0 million 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
Administrative Agent a nonrefundable assignment fee of $1,500, and at the time
of any assignment pursuant to this Section 12.04(b), (A) Annex I hereto shall
be deemed to be amended to reflect the Commitment of
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the respective assignee, and of the other Banks, and (B) if any such assignment
occurs after the Initial Borrowing Date, if requested by the assigning Bank and
the assignee Bank, Borrower will issue new Notes to the respective assignee and
to the assigning Bank in conformity with the requirements of Section 1.05. Each
Bank and Borrower 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 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 if 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 if it will make or acquire
Loans for its own account in the ordinary course of such business; provided,
however, 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 under any Credit Document and no course of dealing between
Borrower or any Subsidiary 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 under any 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 Borrower or
any Subsidiary in any case shall entitle Borrower or any Subsidiary 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 Borrower
or any Subsidiary in respect of any Obligations of Borrower or any Subsidiary
hereunder, if 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.
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(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 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 Borrower or any Subsidiary, respectively, to such Banks in such
amount as shall result in a proportional participation by all of the Banks in
such amount; provided, however, 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 and unless otherwise
specified herein all calculations made hereunder shall be made and prepared in
accordance with GAAP consistently applied throughout the periods involved for
Borrower and its Subsidiaries on a consolidated basis (except as set forth in
the notes thereto or as otherwise disclosed in writing by Borrower to the
Banks); provided, however, that (x) 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, 1997 historical financial statements of Borrower
delivered to the Banks and (y) that if at any time the computations determining
compliance with Section 8 utilize accounting principles different from those
utilized in the financial statements furnished to the Banks, such financial
statements shall be accompanied by reconciliation worksheets.
(b) All computations of interest and Fees hereunder shall be
made 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; USURY SAVINGS CLAUSE. (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, BORROWER HEREBY
IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE
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<PAGE> 85
AFORESAID COURTS. TO THE EXTENT PERMITTED BY APPLICABLE LAW, BORROWER 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 BORROWER LOCATED OUTSIDE NEW
YORK CITY AND BY HAND DELIVERY TO BORROWER 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 TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED
BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST BORROWER
IN ANY OTHER JURISDICTION.
(b) TO THE EXTENT PERMITTED BY APPLICABLE LAW, BORROWER
HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IF 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 AGREEMENT OR ANY OTHER CREDIT DOCUMENT
BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (A) ABOVE AND HEREBY FURTHER
IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY
SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.
(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
(d) NOTWITHSTANDING ANYTHING ELSE HEREIN CONTAINED, BORROWER
SHALL NEVER BE REQUIRED TO PAY ANY SUMS HEREUNDER THAT CONSTITUTE INTEREST AND
THAT WOULD REQUIRE OR PERMIT PAYMENT OF INTEREST AT A RATE HIGHER THAN THE
MAXIMUM NON-USURIOUS RATE ALLOWED BY APPLICABLE LAW.
12.09 Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, which may be delivered in original or facsimile form, 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 Borrower and the
Administrative Agent.
12.10 Effectiveness. This Agreement shall become effective on
the date (the "Second Amended and Restated Effectiveness Date") on which (a)
Borrower and each of the Required Banks shall have signed and delivered to the
Agent a copy hereof, whether the same or different copies and whether delivered
in original form or by facsimile and (b) each of the conditions listed in
Section 5 shall have been fulfilled to the reasonable satisfaction of the
Administrative Agent.
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.
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<PAGE> 86
12.12 Amendment or Waiver. 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 Borrower and the Required Banks; provided, however,
that no such change, waiver, discharge or termination shall, without the
consent of each Bank (other than a Defaulting Bank) affected thereby and, with
respect to clause (vi) below, the consent of the Administrative Agent (i)
extend the Maturity Date, or reduce the rate or extend the time of payment of
interest (other than as a result of waiving the applicability or any
postdefault increase in interest rates) or Fees thereon, or reduce the
principal amount thereof, (ii) increase the Commitment of such Bank over the
amount thereof then in effect (if it being understood that a waiver of any
Default or Event of Default or of a mandatory reduction in the Total Commitment
shall not constitute a change in the terms of any Commitment of any Bank),
(iii) amend, modify or waive any provision of this Section, (iv) reduce the
percentage specified in the definition of Required Banks (if it being
understood that, with the consent of the Required Banks, additional extensions
of credit pursuant to this Agreement may be included in the determination of
the Required Banks on substantially the same basis as the Commitments are
included on the Second Amended and Restated Effectiveness Date), or (v) consent
to the assignment or transfer by Borrower of any of its rights and obligations
under this Agreement. No provision of Section 2 or 11, or any other provisions
relating to any Letter of Credit Issuer or the Administrative Agent may be
modified without the consent of such Letter of Credit Issuer or the
Administrative Agent, respectively.
(b) If, in connection with any proposed change, waiver,
discharge or termination to any of the provisions of this Agreement as
contemplated by clause (i), (iii), (iv), (v) or (vi) 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
Borrower 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, however, that Borrower 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 clause (ii) of the proviso to Section 12.12(a).
12.13 Survival. All indemnities set forth herein including,
without limitation, in Section 1.10, 1.11, 4.04, 11.07 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, however, that Borrower 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. The Banks shall hold all non-public
information obtained pursuant to the requirements of this Agreement
confidential and in any event may make disclosure
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<PAGE> 87
reasonably required by any bona fide transferee or participant in connection
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 process; provided, however, that,
unless specifically prohibited by applicable law or court order, each Bank
shall notify Borrower 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; provided, however, that in no event shall any Bank be
obligated or required to return any materials furnished by Borrower or any
Subsidiary.
12.16 Registry. Borrower hereby designates the Administrative
Agent to serve as Borrower's agent, solely for purposes of this Section 12.16,
to maintain a register (the "Register") on which if it will record the
Commitments from time to rime 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 Borrower's 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 Effect on the First Restated Credit Agreement and Other
Credit Documents. Upon the execution and delivery by the parties hereto of this
Agreement and the satisfaction (or waiver) of the conditions set forth in
Section 5, (i) this Agreement shall be deemed to amend, restate and supersede
the First Restated Credit Agreement and the Credit Documents (as defined
therein), (ii) all Obligations under the First Restated Credit Agreement and
other Credit Documents shall continue to be outstanding as modified by this
Agreement and shall be governed in all respects by this Agreement and the other
Credit Documents, it being agreed and understood that this Agreement does not
constitute a novation, satisfaction, payment or reborrowing of any Obligation
under the First Restated Credit Agreement or any other Credit Document except
as expressly modified by the Agreement, nor does if it operate as a waiver of
any right, power or remedy of any Bank under any Credit Document (other than
the First Restated Credit Agreement), and (iii) all references to the First
Restated Credit Agreement in any Credit Document or other document or
instrument delivered in
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<PAGE> 88
connection therewith shall be deemed to refer to this Agreement and the
provisions hereof, provided, notwithstanding the above, it is expressly agreed
that the Guaranties have been and hereby are released in their entirety and are
of no further force or effect and the former Guarantors have no further
liability under said Guaranties.
[Signature Pages Follow]
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<PAGE> 89
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: GLOBAL MARINE INC.
777 N. Eldridge Road
Houston, Texas 77079-4416 By: /s/ W. MATT RALLS
Telecopy: (281)____________ -------------------------------------
Telephone: (281)____________ W. Matt Ralls
Attention:____________________ Vice President and Treasurer
BANKERS TRUST COMPANY,
Individually and as Administrative Agent
By: /s/ MARCUS M. TARKINGTON
-------------------------------------
Name: Marcus M. Tarkington
Title: Vice President
<PAGE> 90
ABN AMRO BANK, N.V.
By: /s/ W. BRYAN CHAPMAN
-------------------------------------
Name: W. Bryan Chapman
Title: Group Vice President
By: /s/ H. GENE SHIELS
-------------------------------------
Name: H. Gene Shiels
Title: Vice President
<PAGE> 91
THE BANK OF NOVA SCOTIA
By: /s/ A.S. NORSWORTHY
-------------------------------------
Name: A.S. Norsworthy
Title: Sr. Team Leader-Loan Operations
<PAGE> 92
THE BANK OF TOKYO - MITSUBISHI, LTD.
HOUSTON AGENCY
By: /s/ JOHN W. MCGHEE
-------------------------------------
Name: John W. McGhee
Title: Vice President and Manager
<PAGE> 93
CHRISTIANIA BANK og KREDITKASSE
ASA NEW YORK BRANCH
By: /s/ WILLIAM J. ABER
-------------------------------------
Name: William J. Aber
Title: Senior Vice President
By: /s/ WILLIAM S. PHILLIPS
-------------------------------------
Name: William S. Phillips
Title: Vice President
<PAGE> 94
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ PHILLIPPE SOUSTRA
-------------------------------------
Name: Phillippe Soustra
Title: Senior Vice President
<PAGE> 95
DEN NORSKE BANK ASA, NEW YORK
BRANCH, individually and as Co-Agent
By: /s/ THEODORE S. JADICK, JR.
-------------------------------------
Name: Theodore S. Jadick, Jr.
Title: Senior Vice President
By: /s/ BARBARA GRONQUIST
-------------------------------------
Name: Barbara Gronquist
Title: First Vice President
<PAGE> 96
THE FUJI BANK, LIMITED
By: /s/ KENICHI TATARA
-------------------------------------
Name: Kenichi Tatara
Title: Vice President & Manager
<PAGE> 97
SKANDINAVISKA ENSKILDA BANKEN AB
(PUBL), individually and as Co-Agent
By: [signature illegible]
-------------------------------------
Name:
Title:
By: [signature illegible]
-------------------------------------
Name:
Title:
<PAGE> 98
SOCIETE GENERALE, SOUTHWEST AGENCY,
individually and as Documentation Agent
By: /s/ RICHARD A. GOULD
-------------------------------------
Name: Richard A. Gould
Title: Vice President
<PAGE> 99
TORONTO DOMINION (TEXAS), INC.
By: /s/ DARLENE REIDEL
-------------------------------------
Name: Darlene Reidel
Title: Vice President
<PAGE> 100
ANNEX I
COMMITMENTS
<TABLE>
<CAPTION>
SWING LINE
BANK COMMITMENT COMMITMENT
---- ---------- ----------
<S> <C> <C>
Bankers Trust Company $ 71,916,666.67 $ 10,000,000.00
ABN AMRO Bank, N.V. 10,000,000.00
The Bank of Nova Scotia 15,000,000.00
The Bank of Tokyo-Mitsubishi, 15,000,000.00
Ltd., Houston Agency
Christiania Bank og Kreditkasse
ASA, New York Branch 10,000,000.00
Credit Lyonnais New York
Branch 10,000,000.00
Den Norske Bank ASA, New 21,000,000.00
York Branch
The Fuji Bank, Limited 10,000,000.00
Skandinaviska Enskilda Banken
AB (publ) 25,000,000.00
Societe Generale, Southwest
Agency 33,333,333.33
Toronto Dominion (Texas), Inc. 18,750,000.00
--------------- ----------------
Total $240,000,000.00 $ 10,000,000.00
=============== ================
</TABLE>
<PAGE> 101
ANNEX II
BANK ADDRESSES
Bankers Trust Company 130 Liberty Street
New York, New York 10006
Attention: Patricia Hogan
Tel. No.: (212) 250-5175
Fax No.: (212) 250-7218
ABN AMRO Bank, N.V. Three Riverway
Suite 1700
Houston, Texas 77056
Attention: Cheryl I. Lipshutz
Tel. No.: (713) 629-7533
Fax No.: (713) 964-3351
The Bank of Nova Scotia 1100 Louisiana Street
Suite 3000
Houston, TX 77002
Attention: Jamie Conn
Tel. No.: (713) 752-0900
Fax No.: (713) 752-2425
The Bank of Tokyo - Mitsubishi, Ltd., 1100 Louisiana Street
Houston Agency Suite 2800
Houston, Texas 77002
Attention: John W. McGhee
Tel. No.: (713) 655-3811
Fax No.: (713) 658-0116
Christiania Bank og Kreditkasse ASA, New 11 West 42nd Street
York Branch 7th Floor
New York, NY 10036
Attention: Martin Lunder
Tel. No.: (212) 827-4800
Fax No.: (212) 827-4888
Credit Lyonnais New York Branch 1000 Louisiana Street
Suite 5360
Houston, TX 77002
Attention: Tom Byargeon
Tel. No.: (713) 753-8706
Fax No.: (713) 751-0307
<PAGE> 102
Den Norske Bank ASA, New York Branch 200 Park Avenue
31st Floor
New York, New York 10016
Attention: Ted Jadick
Tel. No.: (212) 681-3860
Fax No.: (212) 681-3900
The Fuji Bank, Limited 1 Houston Center
Suite 4100
1211 McKinney Street
Houston, TX 77010
Attention: Mark Polasek
Tel. No.: (713) 650-7863
Fax No.: (713) 759-0048
Skandinaviska Enskilda Banken AB Rosenkrantz GT22
(publ) P. O. Box 18432 Vika
0123 Oslo
Norway
Attention: Bjarte Boe
Tel. No.: 011-47-22-827004
Fax No.: 011-47-22-827124
Societe Generale, Southwest Agency 1111 Bagby Street
Suite 2020
Houston, Texas 77002
Attention: Paul Cornell
Tel. No.: (713) 650-1777
Fax No.: (713) 650-0824
Toronto Dominion (Texas), Inc. 909 Fannin
Suite 1700
Houston, Texas 77010
Attention: George McCormick
Tel. No.: (713) 653-8213
Fax No.: (713) 652-2647
<PAGE> 1
EXHIBIT 99.4
CREDIT AGREEMENT
AMONG
GLOBAL MARINE INC.
VARIOUS LENDING INSTITUTIONS,
AND
BANKERS TRUST COMPANY,
AS ADMINISTRATIVE AGENT,
AND
ABN AMRO BANK, N.V., HOUSTON AGENCY
AS SYNDICATION AGENT,
AND
SOCIETE GENERALE, SOUTHWEST AGENCY
AS DOCUMENTATION AGENT
$150,000,000.00 REVOLVING CREDIT LOAN
DATED AS OF JANUARY 29, 1998
<PAGE> 2
<TABLE>
TABLE OF CONTENTS
<S> <C> <C>
SECTION 1 AMOUNT AND TERMS OF CREDIT .............................................................1
1.01 Commitment..............................................................................1
1.02 Minimum Borrowing Amounts, etc..........................................................1
1.03 Notice of Borrowing.....................................................................2
1.04 Disbursement of Funds...................................................................2
1.05 Notes...................................................................................3
1.06 Conversions.............................................................................3
1.07 Pro Rata Borrowings.....................................................................4
1.08 Interest................................................................................4
1.09 Interest Periods........................................................................5
1.10 Increased Costs, Illegality, etc........................................................5
1.11 Compensation............................................................................7
1.12 Change of Lending Office................................................................8
1.13 Replacement of Banks....................................................................8
SECTION 2 LETTERS OF CREDIT .....................................................................10
2.01 Letters of Credit......................................................................10
2.02 Minimum Stated Amount..................................................................10
2.03 Letter of Credit Requests; Request for Issuance of Letter of Credit....................11
2.04 Agreement to Repay Letter of Credit Payments...........................................11
2.05 Letter of Credit Participations........................................................12
2.06 Increased Costs........................................................................14
2.07 Indemnities............................................................................14
SECTION 3 FEES; COMMITMENTS .....................................................................16
3.01 Fees...................................................................................16
3.02 Voluntary Reduction of Commitments.....................................................16
3.03 Termination of Commitments.............................................................17
SECTION 4 PAYMENTS ..............................................................................18
4.01 Voluntary Prepayments..................................................................18
4.02 Mandatory Repayments...................................................................18
4.03 Method and Place of Payment............................................................20
4.04 Net Payments...........................................................................20
SECTION 5 CONDITIONS PRECEDENT ..................................................................23
5.01 Consent of Banks.......................................................................23
5.02 Execution of Notes.....................................................................23
5.03 No Default; Representations and Warranties.............................................23
5.04 Officer's Certificate..................................................................23
5.05 Opinions of Counsel....................................................................23
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C> <C>
5.06 Corporate Proceedings..................................................................23
5.07 Litigation.............................................................................24
5.08 Approvals..............................................................................24
5.09 Fees...................................................................................24
5.10 Margin Rules...........................................................................24
5.11 Notice of Borrowing....................................................................24
5.12 Fulfillment of Conditions..............................................................24
SECTION 6 REPRESENTATIONS, WARRANTIES AND AGREEMENTS.............................................26
6.01 Status.................................................................................26
6.02 Power and Authority....................................................................26
6.03 No Violation...........................................................................26
6.04 Litigation.............................................................................27
6.05 Use of Proceeds; Margin Regulations....................................................27
6.06 Governmental Approvals.................................................................28
6.07 Investment Company Act.................................................................28
6.08 Public Utility Holding Company Act.....................................................28
6.09 True and Complete Disclosure...........................................................28
6.10 Financial Condition; Financial Statements..............................................29
6.11 Tax Returns and Payments...............................................................29
6.12 Employee Benefit Plans.................................................................29
6.13 Subsidiaries...........................................................................30
6.14 Patents, etc...........................................................................30
6.15 Environmental Matters..................................................................31
6.16 Properties.............................................................................32
6.17 Labor Relations........................................................................32
6.18 Insurance..............................................................................32
SECTION 7 AFFIRMATIVE COVENANTS .................................................................33
7.01 Information Covenants..................................................................33
7.02 Books, Records and Inspections.........................................................34
7.03 Maintenance of Insurance...............................................................34
7.04 Payment of Taxes.......................................................................35
7.05 Consolidated Corporate Franchises......................................................35
7.06 Compliance with Statutes, etc..........................................................35
7.07 Good Repair............................................................................35
7.08 Use of Proceeds........................................................................35
7.09 ERISA..................................................................................36
SECTION 8 NEGATIVE COVENANTS.....................................................................37
8.01 Changes in Business....................................................................37
8.02 Consolidation, Merger, Sale of Assets, etc.............................................37
8.03 Indebtedness and Liens.................................................................37
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<S> <C> <C>
8.04 Restrictions on Subsidiaries...........................................................38
8.05 Transactions with Affiliates...........................................................39
8.06 Limitation on Sale/Leaseback Transactions..............................................39
8.07 Cash Interest Coverage Ratio...........................................................40
8.08 Debt to Capitalization Ratio...........................................................40
8.09 Tangible Net Worth.....................................................................40
SECTION 9 EVENTS OF DEFAULT .....................................................................41
9.01 Payments...............................................................................41
9.02 Representations, etc...................................................................41
9.03 Covenants..............................................................................41
9.04 Default Under Other Agreements.........................................................41
9.05 Bankruptcy, etc........................................................................42
9.06 Default Under Other Senior Indebtedness................................................42
9.07 Judgments..............................................................................42
9.08 Change of Control......................................................................42
9.09 Employee Benefit Plans.................................................................42
SECTION 10 DEFINITIONS............................................................................44
SECTION 11 THE AGENTS.............................................................................63
11.01 Appointment............................................................................63
11.02 Nature of Duties.......................................................................63
11.03 Lack of Reliance on the Agents.........................................................63
11.04 Certain Rights of the Administrative Agent.............................................64
11.05 Reliance...............................................................................64
11.06 Indemnification........................................................................64
11.07 The Agents in Their Individual Capacity................................................64
11.08 Holders................................................................................65
11.09 Resignation by the Administrative Agent................................................65
SECTION 12 MISCELLANEOUS..........................................................................66
12.01 Indemnification, Payment of Expenses, etc..............................................66
12.02 Right of Setoff........................................................................67
12.03 Notices................................................................................67
12.04 Benefit of Agreement...................................................................67
12.05 No Waiver; Remedies Cumulative.........................................................69
12.06 Payments Pro Rata......................................................................69
12.07 Calculations; Computations.............................................................70
12.08 Governing Law; Submission to Jurisdiction; Venue; Waiver of Jury Trial.................70
12.09 Counterparts...........................................................................71
12.10 Effectiveness..........................................................................71
12.11 Headings Descriptive...................................................................71
</TABLE>
-iii-
<PAGE> 5
<TABLE>
<S> <C> <C>
12.12 Amendment or Waiver....................................................................71
12.13 Survival...............................................................................72
12.14 Domicile of Loans......................................................................72
12.15 Confidentiality........................................................................72
12.16 Registry...............................................................................73
12.17 Intentionally Omitted .................................................................73
</TABLE>
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<PAGE> 6
Annex I Commitments
Annex II Bank Addresses
Exhibit 1.03 Form of Notice of Borrowing
Exhibit 1.05(a) Form of Note
Exhibit 2.03 Form of Letter of Credit Request
Exhibit 4.04(b)(ii) Form of Section 4.04(b)(ii) Certificate
Exhibit 5.05-A Form of Opinion of Baker & Botts, L.L.P.
Exhibit 5.05-B Form of Opinion of James L. McCulloch
Exhibit 5.05-C Form of Opinion of Andrews & Kurth L.L.P.
Exhibit 5.06 Form of Officers' Certificate
Annex 6.13 Subsidiaries
Annex 6.16(b) Offshore Drilling Rigs Owned or Leased
Exhibit 7.01(c) Form of Compliance Certificate
Exhibit 8.04(b) Form of Guaranty
Exhibit 10.01A Form of Assignment and Assumption Agreement
-v-
<PAGE> 7
THIS CREDIT AGREEMENT (this "Agreement"), is entered into as
of January 29, 1998, among GLOBAL MARINE INC. ("Borrower"), a Delaware
corporation, the lending institutions listed on Annex 1.1 hereto (each a "Bank"
and, collectively, the "Banks"), BANKERS TRUST COMPANY, as Administrative Agent
(the "Administrative Agent"), ABN AMRO BANK, N.V., HOUSTON AGENCY, as
Syndication Agent (the "Syndication Agent") and SOCIETE GENERALE, SOUTHWEST
AGENCY, as Documentation Agent (the "Documentation Agent," and together with the
Administrative Agent, the Syndication Agent and any Co-Agents, the "Agents") and
Bankers Trust Company as Letter of Credit Issuer, all as provided herein. Unless
otherwise defined herein, all capitalized terms used herein and defined in
Section 10 are used herein as so defined.
NOW, THEREFORE, in consideration of the mutual agreements,
provisions and covenants contained herein, the parties hereto agree as follows:
SECTION 1
AMOUNT AND TERMS OF CREDIT
1.01 Commitment. (a) Subject to and upon the terms and
conditions herein set forth, each Bank severally agrees to make a revolving
credit loan or loans (each a "Loan" or "Revolving Credit Loan") under the
Facility to Borrower, which Revolving Credit Loans (i) shall be made at any time
and from time to time on and after the Initial Borrowing Date and prior to the
Maturity Date, (ii) except as hereinafter provided, may, at the option of
Borrower, be incurred and maintained as, and/or converted into, Base Rate Loans
or Eurodollar Loans; provided, however, that all Revolving Credit Loans made as
part of the same Borrowing shall, unless otherwise specifically provided herein,
consist of Loans of the same Type, (iii) may be repaid and reborrowed in
accordance with the provisions hereof, (iv) together with all other Loans and
all Letter of Credit Outstandings, shall not exceed in the aggregate for all
Banks at any time outstanding, the Total Commitment and (v) shall not exceed for
any Bank at any time outstanding the aggregate principal amount which, when
combined with the aggregate outstanding principal amount of all other Loans of
such Bank and with such Bank's Adjusted Percentage of the Letter of Credit
Outstandings (exclusive of Unpaid Drawings which are repaid with the proceeds
of, and simultaneously with the incurrence of, the respective incurrence of
Loans) at such time, equals (A) if such Bank is a Non- Defaulting Bank, the
Adjusted Commitment of such Bank at such time and (B) if such Bank is a
Defaulting Bank, the Commitment of such Bank at such time.
(b) In no event shall the total of all Loans and Letter of
Credit Outstandings hereunder exceed the Total Commitment.
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
<PAGE> 8
Borrowing. More than one Borrowing may be incurred on any day; provided,
however, that at no time shall there be outstanding more than ten Borrowings of
Eurodollar Loans.
1.03 Notice of Borrowing. Whenever Borrower desires to incur
Revolving Credit Loans under the Facility, it shall give the Administrative
Agent at its Notice Office, prior to 11:00 a.m. (New York time), at least three
Business Days' prior written notice (or telephonic notice promptly confirmed in
writing) of each Borrowing of Eurodollar Loans and at least one Business Day's
prior written notice (or telephonic notice promptly confirmed in writing) of
each Borrowing of Base Rate Loans to be made hereunder. Each such written notice
(each a "Notice of Borrowing") shall be in the form of Exhibit 1.03(a) hereto
and shall be irrevocable and shall specify (a) the aggregate principal amount of
the Loans to be made pursuant to such Borrowing, (b) the date of Borrowing
(which shall be a Business Day) and (c) 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. The
Administrative Agent shall promptly give each Bank written notice (or telephonic
notice promptly confirmed in writing) of each proposed Borrowing, 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 1:00 P.M. (New
York time) on the date specified in each Notice of Borrowing, each Bank 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 Dollars and immediately available funds at the
Payment Office, and the Administrative Agent promptly will make available to
Borrower by depositing to its account at the Payment Office the aggregate of the
amounts so made available in Dollars 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 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 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
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 three Business
Days from the date the Administrative Agent made such funds available to
Borrower) notify Borrower, and Borrower shall (within two 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 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 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
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Federal Funds Effective Rate or (y) if paid by 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 Borrower may have against any Bank as a result of any default by such Bank
hereunder.
1.05 Notes. (a) Borrower's obligation to pay the Loans made
to it by each Bank shall be evidenced by a promissory note substantially in the
form of Exhibit 1.05(a) hereto with blanks appropriately completed in
conformity herewith (each a "Note" and, collectively, the "Notes").
(b) The Note issued to each Bank shall (i) be executed by
Borrower, (ii) be payable to the order of such Bank and be dated the Closing
Date, (iii) be in a stated principal amount equal to the Commitment of such Bank
on such date, (iv) be payable in the aggregate unpaid principal amount of the
Loans evidenced thereby, (v) mature on the Maturity Date, (vi) 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, (vii) be
subject to mandatory prepayment as provided in Section 4.02 and (viii) be
entitled to the benefits of this Agreement and the other Credit Documents.
(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 Borrower's obligations in respect of such Loans.
1.06 Conversions. Borrower shall have the option to convert
on any Business Day all or a portion (which portion shall be at least equal to
the applicable Minimum Borrowing Amount) of the outstanding principal amount of
the Loans owing pursuant to the Facility into a Borrowing or Borrowings
pursuant to the Facility of another Type of Loan; provided, however, that (a)
if any Eurodollar Loan is converted into Base Rate Loans other than on the last
day of an Interest Period applicable thereto Borrower shall pay to the Banks
all amounts related to such conversion that are due pursuant to Section 1.11,
(b) 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, (c) 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 reasonably determined that
such a conversion would be disadvantageous to the Banks and (d) 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 Borrower by
giving the Administrative Agent at its Notice Office, prior to 12:00 Noon (New
York time), at least three Business Days' (or one Business Day's, in the case
of a conversion into Base Rate Loans) prior written notice (or telephonic
notice promptly confirmed in writing) (each a "Notice of Conversion")
specifying the
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Loans to be so converted, the Type of Loans to be converted into and, if to be
converted into 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 Revolving Credit Loans under
this Agreement shall be made by the Banks pro rata on the basis of their
Commitments. It is understood that no Bank shall be responsible for any default
by any other Bank in its obligation to make Loans hereunder and that each Bank
shall be obligated to make the Loans provided to be made by it hereunder,
regardless 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 at a rate per annum which shall be equal to the
sum of the Base Rate in effect from time to time, plus the Applicable Base Rate
Margin.
(b) The unpaid principal amount of each Eurodollar Loan that
is a Revolving Credit Loan shall bear interest at a rate per annum which shall
be equal to the sum of the relevant Eurodollar Rate, plus the Applicable
Eurodollar Margin in effect from time to time.
(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 the greater
of (x) 2% per annum in excess of the rate otherwise applicable to Base Rate
Loans from time to time or (y) the rate which is 2% in excess of the rate
(including any applicable margin) then borne by such Loans, in each case with
such interest payable on demand; provided, however, 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;
provided, further, however, that in no event shall any amount payable hereunder
bear interest in excess of the maximum amount permitted by applicable law.
(d) Interest shall accrue from and including the date of any
Borrowing to but excluding the date of any repayment thereof (whether by
acceleration or otherwise) and shall be payable (i) in respect of each Base Rate
Loan, quarterly in arrears on the first Business Day of each March, June,
September and December, (ii) in respect of each Eurodollar Loan, in arrears on
the last day of each Interest Period applicable thereto and, in the case of an
Interest Period of six months, on the date occurring three 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).
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(f) The Administrative Agent, upon determining the interest
rate for any Borrowing of Eurodollar Loans for any Interest Period, shall
promptly notify Borrower and the Banks thereof.
1.09 Interest Periods. (a) At the time 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, Borrower 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 Borrower, be a one, two, three or six
month 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 next 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 in which such Interest
Period ends, 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, however, 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 month, such Interest Period
shall expire on the next preceding Business Day;
(iv) no Interest Period shall extend beyond the Maturity
Date; and
(v) 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 reasonably determined that such an election at such time
would be disadvantageous to the Banks.
(b) If upon the third Business Day prior to the expiration
of any Interest Period, 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, Borrower shall be deemed to have elected to convert such
Borrowing into a Borrowing of Base Rate Loans 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) below, the Administrative Agent or (y) in the case
of clauses (ii) and (iii) below, any Bank shall
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have reasonably 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 net income taxes, franchise 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 adoption of any new law or governmental
rule, regulation, guideline or order) (such as, for example, but not 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; or
(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);
then, and in any such event, such Bank (or the Administrative Agent in the case
of clause (i) above) shall (x) on such date and (y) within ten Business Days of
the date on which such event no longer exists, give notice (by telephone
confirmed in writing) to Borrower and, in the case of clauses (ii) and (iii)
above, to the Administrative Agent of such determination (which notice the
Administrative Agent shall promptly transmit to each of the other Banks).
Thereafter (x) in the case of clause (i) above, Eurodollar Loans shall no longer
be available until such time as the Administrative Agent notifies Borrower and
the Banks that the circumstances giving rise to such notice by the
Administrative Agent no longer exist, which notice the Administrative Agent
agrees to promptly deliver to Borrower as soon as practicable after becoming
aware of the absence of such circumstances, and any Notice of Borrowing or
Notice of Conversion given by Borrower with respect to Eurodollar Loans which
have not yet been incurred shall be deemed rescinded by Borrower, (y) in the
case of clause (ii) above, 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 reasonable 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 Borrower
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by such Bank shall, absent manifest error, be final and conclusive and binding
upon all parties hereto) and (z) in the case of clause (iii) above, Borrower
shall take one of the actions specified in Section 1.10(b) as promptly as
possible and, in any event, within the time period required by law.
(b) At any time that any Eurodollar Loan is affected by the
circumstances described in Section 1.10(a)(ii) or (iii), Borrower may (and in
the case of a Eurodollar Loan affected pursuant to Section 1.10(a)(iii),
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 telephonic notice (confirmed promptly in writing) thereof on the same date
that 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
Business Days' notice to the Administrative Agent, require the affected Bank to
convert each such Eurodollar Loan into a Base Rate Loan; provided, however, that
if more than one Bank is affected at any time, then all affected Banks must be
treated the same pursuant to this Section 1.10(b).
(c) If any Bank shall have reasonably determined that after
the date of this Agreement, the adoption or effectiveness of any applicable 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 consequence 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),
Borrower shall, subject to Section 1.12(b) (to the extent applicable), 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 prompt
written notice thereof to Borrower, which notice shall set forth the basis of
the calculation of such additional amounts, although, subject to Section
1.12(b), the failure to give any such notice shall not release or diminish any
of Borrower's obligations to pay additional amounts pursuant to this Section
1.10(c) upon the subsequent receipt of such notice.
1.11 Compensation. 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 or other consequential damages) which such Bank may sustain: (a) 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
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Borrower or deemed withdrawn pursuant to Section 1.10(a)); (b) if any
prepayment, repayment or conversion of any of its Eurodollar Loans occurs on a
date which is not the last day of an Interest Period applicable thereto; (c) if
any prepayment of any of its Eurodollar Loans is not made on any date specified
in a notice of prepayment given by Borrower; or (d) as a consequence of (x) any
other default by 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. (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), 2.06 or 4.04 with respect to such Bank, it will,
if requested by Borrower, use reasonable efforts (subject to overall policy
considerations of such Bank) to designate another lending office for any Loan,
Letters of Credit or Commitments affected by such event; provided, however,
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 Borrower or the right of any Bank provided in any of Sections
1.10, 2.06 or 4.04.
(b) Notwithstanding anything in this Agreement to the
contrary, to the extent any notice required by any of Sections 1.10, 1.11, 2.06
or 4.04 is given by any Bank more than 180 days after 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 any of Sections 1.10,
1.11, 2.06 or 4.04 for any amounts incurred or accruing prior to 180 days prior
to the giving of such notice to Borrower.
1.13 Replacement of Banks. (a) Upon the occurrence of any
event giving rise to the operation of Section 1.10(a)(ii) or (iii), Section
1.10(c), Section 2.06 or Section 4.04 with respect to any Bank which results in
such Bank charging to Borrower increased costs in excess of those being
generally charged by the other Banks or becoming incapable of making Eurodollar
Loans, (b) if a Bank becomes a Defaulting Bank and/or (c) 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, Borrower 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 Eligible 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, however, 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 connection therewith, shall pay to (x)
the Replaced Bank in respect thereof an amount equal to the sum of (A) an amount
equal to the principal of, and all accrued interest on, all outstanding Loans of
the Replaced Bank, (B) an amount equal to all Unpaid Drawings that have been
funded by (and not reimbursed to) such Replaced Bank,
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<PAGE> 15
together with all then unpaid interest with respect thereto at such time and (C)
an amount equal to 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 of 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. 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 a Note executed by Borrower, 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.
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SECTION 2
LETTERS OF CREDIT
2.01 Letters of Credit. (a) Subject to and upon the terms and
conditions herein set forth, Borrower may request a Letter of Credit Issuer to
issue, at any time and from time to time on and after the Initial Borrowing Date
and prior to the Maturity Date, and subject to and upon the terms and conditions
herein set forth, such Letter of Credit Issuer agrees to issue from time to
time, (x) for the account of Borrower and for the benefit of any holder (or any
trustee, agent or other similar representative for any such holders) of L/C
Supportable Obligations of Borrower or any Subsidiary, an irrevocable sight
standby letter of credit, in a form customarily used by such Letter of Credit
Issuer or in such other form as has been approved by such Letter of Credit
Issuer (each such standby letter of credit, a "Standby Letter of Credit") in
support of such L/C Supportable Obligations and/or (y) for the account of
Borrower and for the benefit of sellers of goods or materials or providers of
services to Borrower or any Subsidiary, an irrevocable sight letter of credit in
a form customarily used by such Letter of Credit Issuer or in such other form as
has been approved by such Letter of Credit Issuer (each such letter of credit, a
"Trade Letter of Credit", and each such Trade Letter of Credit and each Standby
Letter of Credit, a "Letter of Credit") in support of commercial transactions of
Borrower or any Subsidiary.
(b) Notwithstanding the foregoing, (i) no Letter of Credit
shall be issued, the Stated Amount of which, when added to the 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 the lesser of (x) $100,000,000.00 or (y) when added to the aggregate
principal amount of all Loans made by Non-Defaulting Banks then outstanding, the
Adjusted Total Commitment at such time; (ii) each Standby Letter of Credit shall
have an expiry date occurring not later than one year after such Standby Letter
of Credit's date of issuance although any Standby Letter of Credit may be
extendible for successive periods of up to 12 months, but not beyond the
Business Day next preceding the Maturity Date, on terms reasonably acceptable to
the respective Letter of Credit Issuer and in no event shall any Standby Letter
of Credit have an expiry date occurring later than the Business Day immediately
preceding the Maturity Date;(iii) each Letter of Credit shall be denominated in
Dollars; and (iv) each Trade Letter of Credit shall have an expiry date
occurring not later than the earlier of (x) the 30th day prior to the Maturity
Date and (y) the date which is 180 days from the date of issuance of such Trade
Letter of Credit, on terms acceptable to the respective Letter of Credit Issuer.
(c) To the extent that any provision of any application for
any Letter of Credit is inconsistent with or in addition to the terms of this
Agreement, the terms of this Agreement shall control.
2.02 Minimum Stated Amount. The initial Stated Amount of each
Letter of Credit shall be not less than $10,000 or such lesser amount reasonably
acceptable to the respective Letter of Credit Issuer.
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2.03 Letter of Credit Requests; Request for Issuance of
Letter of Credit. (a) Whenever it desires that a Letter of Credit be issued,
Borrower shall give the Administrative Agent and the respective Letter of
Credit Issuer written notice (including by way of telecopier) in the form of
Exhibit 2.03 hereto prior to 1:00 P.M. (New York time) at least one Business
Day (or such shorter period as may be acceptable to such 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 such Letter of Credit Issuer customarily requires in
connection therewith.
(b) In the case of Standby Letters of Credit, the Letter of
Credit Issuer shall, without cost to Borrower, promptly after the issuance of or
amendment to any such Standby Letter of Credit, give the Administrative Agent,
each Bank and Borrower written notice of such issuance or amendment accompanied
by a copy of such issuance or amendment. In the case of Trade Letters of Credit,
the Letter of Credit Issuer will furnish the Administrative Agent, by facsimile
transmission, promptly on the first Business Day of each week a report of its
daily aggregate Letter of Credit Outstandings with respect to Trade Letters of
Credit for the previous week. The Administrative Agent shall deliver to each
Bank upon each calendar month end and upon each Letter of Credit fee payment a
report setting forth for such period the daily aggregate Stated Amount available
to be drawn under Trade Letters of Credit issued by all Letter of Credit Issuers
during such period.
2.04 Agreement to Repay Letter of Credit Payments. (a)
Borrower hereby agrees to reimburse each Letter of Credit Issuer, by making
payment to the Administrative Agent at the Payment Office, for any payment or
disbursement made by such Letter of Credit Issuer under any Letter of Credit
(each such amount so paid or disbursed until reimbursed, an "Unpaid Drawing")
within one Business Day of the date on which Borrower is notified by such Letter
of Credit Issuer of such payment or disbursement with interest on the amount so
paid or disbursed by such 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 disbursement,
from and including the date paid or disbursed to but not including the date such
Letter of Credit Issuer is reimbursed therefor at a rate per annum which shall
be equal to the sum of the Base Rate as in effect from time to time plus the
Applicable Base Rate Margin (plus an additional 2% per annum if not reimbursed
by the fourth Business Day after the date of such notice of payment or
disbursement), such interest also to be payable on demand.
(b) Borrower's obligation under this Section 2.04 to
reimburse the respective 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 Borrower may have or have had against
such Letter of Credit Issuer, the Administrative Agent 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 respective 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
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<PAGE> 18
non-application or misapplication by the beneficiary of the proceeds of such
drawing; provided, however, that Borrower shall not be obligated to reimburse
any Letter of Credit Issuer for any wrongful payment made by such 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 such Letter
of Credit Issuer as determined by a court of competent jurisdiction.
2.05 Letter of Credit Participations. (a) Immediately upon
the issuance by any Letter of Credit Issuer of any Letter of Credit, such
Letter of Credit Issuer shall be deemed to have sold and transferred to each
other Bank, and each such Bank (each a "Participant") shall be deemed
irrevocably and unconditionally to have purchased and received from such Letter
of Credit Issuer, without recourse or warranty, an undivided interest and
participation, to the extent of such Bank's Adjusted Percentage, in such Letter
of Credit, each substitute letter of credit, each drawing made thereunder and
the obligations of Borrower 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 Banks as provided in Section 3.01(b) and the
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
Commitments or Adjusted 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 Letters of Credit and Unpaid Drawings, there shall be an automatic
adjustment to the participations pursuant to this Section 2.05 to reflect the
new Adjusted Percentages of the assigning and assignee Bank or of all Banks, as
the case may be.
(b) In determining whether to pay under any Letter of
Credit, the respective Letter of Credit Issuer shall not have any obligation
relative to the 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 any 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 as determined
by a court of competent jurisdiction, shall not create for such Letter of
Credit Issuer any resulting liability to the Participants.
(c) In the event that the respective Letter of Credit
Issuer makes any payment under any Letter of Credit and Borrower shall not have
reimbursed such amount in full to such Letter of Credit Issuer pursuant to
Section 2.04(a), such Letter of Credit Issuer shall promptly notify the
Administrative Agent, and the Administrative Agent shall promptly notify each
Participant of such failure, and each Participant shall promptly and
unconditionally pay to the Administrative Agent for the account of such Letter
of Credit Issuer, the amount of such Participant's Adjusted Percentage of such
payment in Dollars and in same day funds; provided, however, that no
Participant shall be obligated to pay to the Administrative Agent its Adjusted
Percentage of such unreimbursed amount for any wrongful payment made by such
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
such 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 12:00 Noon (New York time) on any Business Day, such
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<PAGE> 19
Participant shall make available to the Administrative Agent for the account of
the respective Letter of Credit Issuer such Participant's Adjusted Percentage of
the amount of such payment on such Business Day in same day funds. If and to the
extent such Participant shall not have so made its Adjusted Percentage of the
amount of such Unpaid Drawing available to the Administrative Agent for the
account of such Letter of Credit Issuer, such Participant agrees to pay to the
Administrative Agent for the account of such 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 Administrative Agent for the
account of such Letter of Credit Issuer at the overnight Federal Funds Effective
Rate. The failure of any Participant to make available to the Administrative
Agent for the account of the respective Letter of Credit Issuer its Adjusted
Percentage of any Unpaid Drawing under any Letter of Credit shall not relieve
any other Participant of its obligation hereunder to make available to the
Administrative Agent for the account of such respective Letter of Credit Issuer
its Adjusted Percentage 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 Administrative Agent
for the account of such Letter of Credit Issuer such other Participant's
Adjusted Percentage of any such payment.
(d) Whenever the respective Letter of Credit Issuer
receives a payment of a reimbursement obligation as to which the Administrative
Agent has received for the account of such Letter of Credit Issuer any payments
from the Participants pursuant to clause (c) above, such Letter of Credit
Issuer shall pay to the Administrative Agent and the Administrative Agent shall
promptly pay to each Participant which has paid its Adjusted Percentage
thereof, in Dollars and in same day funds, an amount equal to such
Participant's Adjusted Percentage of the principal amount thereof and interest
thereon accruing at the overnight Federal Funds Effective Rate after the
purchase of the respective participations.
(e) The obligations of the Participants to make payments to
the Administrative Agent for the account of the respective 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, however, that no Participant shall be required to make
payments resulting from such Letter of Credit Issuer's gross negligence or
willful misconduct) and shall be made in accordance with the terms and
conditions of this Agreement 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 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, the respective
Letter of Credit Issuer, any Bank or other Person, whether in connection with
this Agreement, any Letter of Credit, the transactions contemplated herein or
any unrelated transactions
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(including any underlying transaction between 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.
2.06 Increased Costs. If at any time after the date of the
Agreement, the adoption or effectiveness of any new applicable law, rule or
regulation, or any change therein, or any change in the interpretation or
administration thereof or any existing law, rule or regulation by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by the respective 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 such Letter of Credit Issuer or such Bank's
participation therein, or (ii) shall impose on such Letter of Credit Issuer 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 such 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 such Letter of Credit Issuer or such Bank
hereunder (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
net income taxes, franchise taxes or similar charges), then, upon demand to
Borrower by such Letter of Credit Issuer or such Bank (a copy of which notice
shall be sent by such Letter of Credit Issuer or such Bank to the Administrative
Agent), Borrower shall, subject to Section 1.12(b) (to the extent applicable),
pay to such Letter of Credit Issuer or such Bank such additional amount or
amounts as will compensate such Letter of Credit Issuer or such Bank for such
increased cost or reduction. A certificate submitted to Borrower by the
respective Letter of Credit Issuer or such Bank, as the case may be (a copy of
which certificate shall be sent by such Letter of Credit Issuer or such Bank to
the Administrative Agent), setting forth the basis for the determination of such
additional amount or amounts necessary to compensate such Letter of Credit
Issuer or such Bank as aforesaid shall be conclusive and binding on Borrower
absent manifest error, although the failure to deliver any such certificate
shall not, subject to Section 1.12(b), release or diminish any of Borrower's
obligations to pay additional amounts pursuant to this Section 2.06 upon the
subsequent receipt thereof.
2.07 Indemnities. Borrower hereby agrees to reimburse and
indemnify the respective Letter of Credit Issuer for and against any and all
liabilities, obligations, losses, damages,
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penalties, claims, actions, judgments, suits, costs, expenses or disbursements
of whatsoever kind or nature which may be imposed on, asserted against or
incurred by such 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, however, that Borrower shall not be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from such Letter of Credit Issuer's
gross negligence or willful misconduct or the failure of the respective 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. To the extent the
respective Letter of Credit Issuer is not indemnified by Borrower, the
Participants will reimburse and indemnify such Letter of Credit Issuer, in
proportion to their respective Percentages, 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 such 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, however, 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 such Letter of Credit Issuer's gross negligence or willful
misconduct.
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<PAGE> 22
SECTION 3
FEES; COMMITMENTS
3.01 Fees. (a) Borrower agrees to pay to the Administrative
Agent a commitment commission ("Commitment Commission") pro rata for the account
of each Non-Defaulting Bank with respect to its Commitment in effect from the
Closing Date to, but not including, the date the Total Commitment has been
terminated, which Commitment Commission shall be equal to 0.1% of such Bank's
Available Unutilized Commitment. Such Commitment Commission shall be due and
payable in arrears on the first Business Day of each March, June, September and
December and on the date upon which the Total Commitment is terminated.
(b) Borrower agrees to pay to the Administrative Agent for
the account of each Non-Defaulting Bank pro rata on the basis of their
respective Adjusted Percentages, a fee in respect of each Letter of Credit (the
"Letter of Credit Fee"), for the period from and including the date of issuance
of such Letters of Credit to and including the termination of such Letter of
Credit, computed at a rate per annum equal to the Applicable Eurodollar Margin
then in effect 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 Business Day of each March, June, September and December of each year and
on the date after the Total Commitment is terminated and no Letters of Credit
remain outstanding.
(c) Borrower agrees to pay to the Administrative Agent for
the account of each Letter of Credit Issuer a fee in respect of each Letter of
Credit issued by it (the "Facing Fee") computed at the rate of 1/8 of 1.00% per
annum on the daily Stated Amount of such Letter of Credit; provided, however,
that in no event shall the annual Facing Fee to any Letter of Credit Issuer be
less than $500 per Letter of Credit. Accrued Facing Fees shall be due and
payable quarterly in arrears on the first Business Day of each March, June,
September and December of each year and on the date after the Total Commitment
is terminated and no Letters of Credit remain outstanding.
(d) Borrower agrees to pay directly to the respective Letter
of Credit Issuer upon each issuance of, payment under, and/or amendment of, a
Letter of Credit issued by it such amount as shall at the time of such issuance,
payment or amendment be the administrative charge and expenses which such Letter
of Credit Issuer is customarily charging for issuances of, payments under, or
amendments of, letters of credit issued by it.
(e) Borrower shall pay to the Administrative Agent for its
own account and/or for distribution to the Banks such Fees as heretofore agreed
in writing by Borrower and the Administrative Agent.
(f) All computations of Fees shall be made in accordance
with Section 12.07(b).
3.02 Voluntary Reduction of Commitments. Upon at least
three Business Days' prior written notice (or telephonic notice confirmed in
writing) to the Administrative Agent at its
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<PAGE> 23
Notice Office (which notice the Administrative Agent shall promptly transmit to
each of the Banks), Borrower shall have the right, without premium or penalty,
to terminate or partially reduce the Total Unutilized Commitment; provided,
however, that (a) any such termination shall apply to proportionately and
permanently reduce the Commitment of each Bank, (b) no such reduction shall
reduce any Non-Defaulting Bank's Commitment to an amount that is less than the
sum of (i) the outstanding Loans of such Bank plus (ii) such Bank's Adjusted
Percentage of Letter of Credit Outstandings and (c) any partial reduction
pursuant to this Section 3.02 shall be in the amount of at least $500,000 and in
integral multiples of $100,000 in excess thereof.
3.03 Termination of Commitments. The Total Commitment shall
terminate on the Maturity Date.
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<PAGE> 24
SECTION 4
PAYMENTS
4.01 Voluntary Prepayments. Borrower shall have the right to
prepay Revolving Credit Loans in whole or in part, without premium or penalty,
from time to time on the following terms and conditions: (i) Borrower shall give
the Administrative Agent at the Payment 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
Borrower at least one Business Day prior to the date of such prepayment with
respect to Base Rate Loans and two Business Days prior to the date of such
prepayment with respect to Eurodollar Loans, which notice shall promptly be
transmitted by the Administrative Agent to each of the Banks; (ii) each partial
prepayment of any Borrowing shall be in an aggregate principal amount of at
least $500,000 (or the outstanding balance of such Loans, if less) and, if
greater, in an integral multiple of $100,000; provided, however, 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 applicable thereto; (iii) if
any Eurodollar Loan is prepaid pursuant to this Section 4.01 other than on the
last day of the Interest Period applicable thereto Borrower shall pay to the
Banks all amounts due under Section 1.11 with respect to such prepayment; and
(iv) each prepayment in respect of any Loans made pursuant to a Borrowing shall
be applied pro rata among the Banks which made such Loans; provided, however,
that at 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 Repayments.
(A) Requirements:
(a) (i) If on any date the sum of the aggregate outstanding
principal amount of Revolving Credit Loans made by Non-Defaulting Banks and the
Letter of Credit Outstandings exceeds the Adjusted Total Commitment as then in
effect, Borrower shall repay on such date the principal of Loans of
Non-Defaulting Banks, in an aggregate amount equal to such excess. If, after
giving effect to the repayment of all outstanding Revolving Credit Loans of
Non-Defaulting Banks, the aggregate amount of Letter of Credit Outstandings
exceeds the Adjusted Total Commitment then in effect, Borrower 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 Letter of Credit Outstandings at such
time) and the Administrative Agent shall hold such payment as security for the
obligations of Borrower hereunder pursuant to a cash collateral agreement to be
entered into in form and substance reasonably satisfactory to the Administrative
Agent (which shall permit certain investments in Cash Equivalents satisfactory
to the Administrative Agent, until the proceeds are applied to the secured
obligations).
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<PAGE> 25
(ii) If on any date the aggregate outstanding principal
amount of the Revolving Credit Loans made by a Defaulting Bank exceeds the
Commitment of such Defaulting Bank, Borrower shall repay the principal of 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.
(B) Application:
With respect to each prepayment of Revolving Credit Loans
required by Section 4.02, Borrower may designate the Types of Revolving Credit
Loans which are to be prepaid and the specific Borrowing or Borrowings under the
Facility pursuant to which made; provided, however, that (i) Eurodollar Loans
may only be prepaid if no Base Rate Revolving Credit Loans of Non-Defaulting
Banks remain outstanding; (ii) if any prepayment of Eurodollar Loans made
pursuant to a single Borrowing shall reduce the outstanding Revolving Credit
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 Revolving
Credit Loans made by Non-Defaulting Banks pursuant to a Borrowing shall be
applied pro rata among the Non-Defaulting Banks which made such Revolving Credit
Loans. In the absence of a designation by 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
Revolving Credit Loans pursuant to Section 4.02(A) above would result, after
giving effect to the procedures set forth above, in 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 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 Borrower
hereunder pursuant to a cash collateral agreement to be entered into in form and
substance reasonably satisfactory to the Administrative Agent and shall provide
for investments satisfactory to the Administrative Agent and 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 Revolving Credit Loans that are Eurodollar Loans (or such earlier date
or dates as shall be requested by Borrower) to repay an aggregate principal
amount of such Revolving Credit 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 Revolving Credit 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
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<PAGE> 26
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.
4.03 Method and Place of Payment. Except as otherwise
specifically provided herein, all payments under this Agreement in respect of
Revolving Credit Loans 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 1:00 P.M. (New York time) on the date when due and shall be made in
immediately available funds and in lawful money of the United States of America
at the Payment Office, it being understood that written notice by Borrower to
the Administrative Agent to make a payment from the funds in Borrower's account
at the Payment Office shall constitute the making of such payment to the extent
of such funds held in such account. Solely for purposes of calculating interest
due on any amount owing hereunder, any payments under this Agreement which are
made later than 1:00 P.M. (New York 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 Borrower
hereunder or under any Note will be made without setoff, counterclaim or other
defense. Except as provided in Section 4.04(b), 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
franchise or similar 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
(other than interest, penalties, levies, imposts, duties, fees, assessments or
other charges imposed or payable as a result of any action or inaction of such
Bank not timely or properly taken by such Bank or non-compliance by such Bank
with applicable law) (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, 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 Note. If any amounts are payable in
respect of Taxes pursuant to the preceding sentence, 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
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<PAGE> 27
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. 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 Borrower. 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.
These provisions contained in Sections 1.10, 1.11, 2.06, 4.04, and elsewhere
shall be interpreted in the broadest possible terms to include any increased
costs, payments or reduced income for any reason, including, but specifically
not by way of limitation, due to taxes, capital adequacy provisions, reserve
requirements, withholding obligations, costs due to the payment of any sums on a
date other than the regularly scheduled date or for any other reason, and
Borrower does hereby indemnify and hold harmless each Bank, for all such costs
and does agree to pay same or cover any Bank's expenses or losses in regard to
same. Borrower shall immediately pay such sums to any Bank as are necessary to
mitigate all such items. This obligation is in addition to all other obligations
of Borrower contained herein.
(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
Borrower 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 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 4.04(b)(ii) hereto (any such
certificate, a "Section 4.04(b)(ii) Certificate") and (y) two 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 certification obsolete or
inaccurate in any material respect, it will deliver to Borrower and the
Administrative Agent two 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 establish 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 Borrower and the Administrative Agent of its inability to deliver any
such Form or Certificate. Notwithstanding anything to the contrary contained in
Section 1.10, 2.06 or 4.04(a), but subject to Section 12.04(b) and the
immediately succeeding sentence, (x) Borrower shall be entitled, to the extent
it is required to do so by law, to deduct or withhold income or similar taxes
imposed by the United States (or any political subdivision or taxing authority
thereof or therein) from interest, fees
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<PAGE> 28
or other amounts payable hereunder for the account of any Bank which is not a
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 Borrower U.S. Internal Revenue Service Forms that establish a
complete exemption from such deduction or withholding and (y) Borrower shall not
be obligated pursuant to Section 1.10, 2.06 or 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 (I) if such Bank has not provided to Borrower the Internal
Revenue Service Forms required to be provided to Borrower 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), Borrower agrees to pay
additional amounts and to indemnify each Bank in the manner set forth in Section
1.10, 2.06 or 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, however, such Bank shall provide to Borrower and the Administrative
Agent any reasonably available applicable Internal Revenue Service tax form
(reasonably similar in its simplicity and lack of detail to Internal Revenue
Service Form 1001) necessary or appropriate for the exemption or reduction in
the rate of such U.S. federal withholding tax.
(c) The provisions of this Section 4.04 shall be subject to
Section 1.12(b) (to the extent applicable).
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SECTION 5
CONDITIONS PRECEDENT
The obligation of the Banks to make each Loan hereunder, and
the obligation of the Letter of Credit Issuers to issue Letters of Credit
hereunder, is subject, at the time of each such Credit Event (except as
otherwise hereinafter indicated), to the satisfaction of each of the following
conditions:
5.01 Consent of Banks. On or prior to the Closing Date, each
of Borrower and the Banks shall have duly executed and delivered this Agreement.
5.02 Execution of Notes. On or prior to the Closing Date,
there shall have been delivered to the Administrative Agent for the account of
each Bank a Note executed by Borrower in the amount of each Bank's commitment,
containing terms as provided herein.
5.03 No Default; Representations and Warranties. On the
Closing Date and 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 each of 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 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, and except to the extent that such representations and warranties
are no longer true and correct due to any action or inaction permitted or
required to be taken under the Credit Documents by Borrower or any Subsidiary).
5.04 Officer's Certificate. On the Closing Date, the
Administrative Agent shall have received a certificate dated as of such date
signed by the President, any Vice President or the Treasurer of Borrower stating
that all of the applicable conditions set forth in Sections 5.03 and 5.08 have
been satisfied as of such date, which certificate may be contained in the
certificate delivered under Section 5.06.
5.05 Opinions of Counsel. On the Closing Date, the
Administrative Agent shall have received opinions, addressed to the
Administrative Agent and each of the Banks and dated the Closing Date, from (a)
Baker & Botts, L.L.P., counsel to Borrower, which opinion shall cover the
matters contained in Exhibit 5.05-A hereto and (b) James L. McCulloch, Vice
President and General Counsel of Borrower, which opinion shall cover the matters
contained in Exhibit 5.05-B hereto.
5.06 Corporate Proceedings. (a) On the Closing Date, the
Administrative Agent shall have received from the Borrower a certificate, dated
the Closing Date, signed by the President, any Vice President or the Treasurer
or other appropriate representative in the form of Exhibit 5.06 hereto with
appropriate insertions and deletions, together with copies of the certificate of
formation
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or organization, the by-laws, or other organizational documents, and the
resolutions, or such other administrative approval, of the Borrower.
(b) On the Closing Date, all corporate and legal proceedings
and all instruments and agreements in connection with the execution and delivery
of the Credit Documents shall be reasonably satisfactory in form and substance
to the Administrative Agent, and the Administrative Agent shall have received
all information and copies of all certificates, documents and papers, including
good standing certificates and any other records of corporate proceedings and
governmental approvals, if any, which the Administrative Agent may have
reasonably requested in connection therewith.
5.07 Litigation. On the Closing Date, there shall be no
actions, suits or proceedings by any administrative, governmental or other
public authority or other Person pending or threatened (a) with respect to this
Agreement or any other Credit Document or the transactions contemplated hereby
or thereby or (b) which the Administrative Agent or the Required Banks shall
reasonably determine is reasonably likely to, individually or in the aggregate,
(i) have a Material Adverse Effect or (ii) have a Material Adverse Effect on the
rights or remedies of the Banks or the Administrative Agent under the Credit
Documents, taken as a whole, or on the ability of the Borrower to perform its
obligations to the Banks and the Administrative Agent under the Credit
Documents.
5.08 Approvals. On the Closing Date, all material necessary
governmental and third party approvals and consents in connection with the
transactions contemplated by the Credit Documents and otherwise referred to
therein shall have been obtained and remain in effect, and all applicable
waiting periods shall have expired without any action being taken by any
competent authority which restrains or prevents such transactions or imposes, in
the reasonable judgment of the Required Banks or the Administrative Agent,
materially adverse conditions upon the consummation of such transactions.
5.09 Fees. On the Closing Date, 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.
5.10 Margin Rules. On the date of each Credit Event, neither
the making of a 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.
5.11 Notice of Borrowing. On the date of each Credit Event,
Borrower shall have delivered to the Administrative Agent, the appropriate
Notice of Borrowing in accordance with the provisions hereof.
5.12 Fulfillment of Conditions. The acceptance of the
benefits of each Credit Event shall constitute a representation and warranty by
Borrower to the Administrative Agent and
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each of the Banks that all of the applicable conditions specified above exist as
of that time. 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 reasonably satisfactory in form and
substance to the Administrative Agent.
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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, Borrower makes 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, and except to the extent
that such representations and warranties are no longer true and correct due to
any action or inaction permitted or required to be taken under the Credit
Documents by Borrower or any Subsidiary):
6.01 Status. Borrower and each Subsidiary (a) is a duly
organized and validly existing corporation, partnership, association, limited
liability company or other business entity in good standing under the laws of
the jurisdiction of its organization, (b) has the power and authority and has
obtained all requisite governmental licenses, authorizations, consents and
approvals (i) to own its property and assets and (ii) to transact the business
in which it is engaged, except in such case where the failure to have such power
and authority or to obtain such governmental licenses, authorizations, consents
and approvals, individually and in the aggregate, (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 and remedies of the Banks or the
Administrative Agent under the Credit Documents, taken as a whole, or on the
ability of the Borrower to perform its obligations to the Banks and the
Administrative Agent under the Credit Documents, and (c) is duly qualified and
is authorized to do business and is in good standing in all jurisdictions where
it is required to be so qualified and where the failure to be so qualified,
individually and in the aggregate, is not reasonably likely to have a Material
Adverse Effect.
6.02 Power and Authority. The Borrower has the power and
authority to execute, deliver and carry out the terms and provisions of each
Credit Document and has taken all necessary action to authorize the execution,
delivery and performance of each Credit Document. The Borrower has duly executed
and delivered each Credit Document and each such Credit Document constitutes the
legal, valid and binding obligation of the Borrower, enforceable against it in
accordance with its terms, except to the extent that the enforceability thereof
may be limited by applicable bankruptcy, insolvency, 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. (a) Neither the execution, delivery or
performance by the Borrower of the Credit Documents nor compliance with the
terms and provisions thereof (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,
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(ii) will result in any breach of any of the terms, covenants, conditions or
provisions of, or constitute a default under (or with notice or lapse of time or
both would constitute a default under), or result in the creation or imposition
of (or the obligation to create or impose) any Lien upon any of the property or
assets of Borrower or any Subsidiary pursuant to the terms of, any indenture,
mortgage, deed of trust, agreement or other instrument to which Borrower or any
subsidiary is a party or by which it or any of its properties 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 Borrower or any Subsidiary (except
for, in the case of clauses (i) and (ii) above only, contraventions, breaches,
defaults, creations or impositions which individually and in the aggregate, (x)
are not reasonably likely to have a Material Adverse Effect and (y) are not
reasonably likely to have a material adverse effect on the rights or remedies of
the Banks or the Administrative Agent under the Credit Documents, taken as a
whole, or on the ability of the Borrower to perform its obligations to the Banks
and the Administrative Agent under the Credit Documents).
(b) Neither Borrower nor any Subsidiary is (i) in
contravention of 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, (ii) in breach of any of the terms,
covenants, conditions or provisions of, or in default under (or with notice or
lapse of time or both would be in default under), any indenture, mortgage, deed
of trust, agreement or other instrument to which Borrower or any Subsidiary is a
party or by which it or any of its properties or assets are bound or to which it
is subject or (iii) in violation of any provision of the Certificate of
Incorporation or By-Laws of Borrower or any Subsidiary (except for, in the case
of clauses (i) and (ii) above only, contraventions, breaches or defaults which,
individually and in the aggregate, (x) are not reasonably likely to have a
Material Adverse Effect and (y) are not reasonably likely to have a material
adverse effect on the rights or remedies of the Banks or the Administrative
Agent under the Credit Documents, taken as a whole, or on the ability of the
Borrower to perform its obligations to the Banks and the Administrative Agent
under the Credit Documents).
6.04 Litigation. There are no actions, suits or proceedings
by an administrative, governmental or other public authority or other Person
pending or, to the best of Borrower's knowledge, threatened against or with
respect to Borrower or any Subsidiary or any of their respective properties or
assets which, individually or in the aggregate, (a) are reasonably likely to
have a Material Adverse Effect or (b) are reasonably likely to have a material
adverse effect on the rights or remedies of the Banks or the Administrative
Agent under the Credit Documents, taken as a whole, or on the ability of the
Borrower to perform its obligations to the Banks and the Administrative Agent
under the Credit Documents.
6.05 Use of Proceeds; Margin Regulations. (a) The proceeds of
all Loans shall be used to support Borrower's ongoing working capital needs,
including acquisition of rigs, or to provide for the general corporate purposes
of Borrower.
(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
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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, recording or registration with, or exemption by, any foreign or
domestic governmental or public body or authority, or any subdivision thereof,
is necessary or 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. Neither Borrower nor any
Subsidiary 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 Public Utility Holding Company Act. Neither Borrower nor
any Subsidiary is a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company," within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
6.09 True and Complete Disclosure. All factual information
(taken as a whole) heretofore or contemporaneously furnished for purposes of or
in connection with this Agreement or any transaction contemplated herein by or,
to Borrower's knowledge, on behalf of Borrower or any Subsidiary in writing to
(i) the Administrative Agent or any Bank or (ii) any Person providing
information to the Administrative Agent or any Bank on behalf of Borrower or any
Subsidiary is, and all other such factual information (taken as a whole)
hereafter furnished by or, to Borrower's knowledge, on behalf of Borrower or any
Subsidiary in writing to (i) the Administrative Agent or any Bank or (ii) any
Person providing information to the Administrative Agent or any Bank on behalf
of Borrower or any Subsidiary will be, true and accurate in all material
respects on the date as of which such information is dated or certified and not
incomplete by omitting to state any material fact necessary to make such
information (taken as a whole) not misleading at such time in light of the
circumstances under which such information was provided. The projections
contained in such materials are based on supporting estimates and assumptions
believed by such Persons in good faith to be reasonable at the time made as to
the future financial performance of Borrower and the Subsidiaries for the period
covered, it being recognized by the Administrative Agent and the Banks that such
projections as to future events are not to be viewed as facts and that actual
results during the period or periods covered by any such projections may differ
from the projected results. There is no fact known to Borrower or any Subsidiary
which is reasonably likely to have a Material Adverse Effect which has not been
disclosed herein or in such other documents, certificates and statements
furnished to the Banks for use in connection with the transactions contemplated
hereby.
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6.10 Financial Condition; Financial Statements. (a) (i) The
consolidated balance sheet of Borrower and the Subsidiaries at December 31, 1996
and the related consolidated statements of operations and cash flows of Borrower
and the Subsidiaries for the fiscal year ended as of such date, which have been
examined by Coopers & Lybrand L.L.P., independent certified public accountants,
who delivered an unqualified opinion in respect thereof, and (ii) the
consolidated balance sheet of Borrower and the Subsidiaries as of September 30,
1997 and the related consolidated statements of operations and cash flows for
Borrower and the Subsidiaries for the three-month period then ended, copies of
which have heretofore been furnished to each Bank, present fairly in all
material respects 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, 1997 statements, subject to normal and
recurring year-end audit adjustments and the exclusion of detailed footnotes.
All such financial statements have been prepared in accordance with generally
accepted accounting principles consistently applied except to the extent
provided in the notes to said financial statements. Nothing has occurred since
December 31, 1995 that has had or is reasonably likely to have a Material
Adverse Effect.
(b) There are, as of the Closing Date, no liabilities or
obligations with respect to Borrower or any Subsidiary of a nature (whether
absolute, accrued, contingent or otherwise and whether or not due) which, either
individually or in aggregate, are reasonably likely to have a Material Adverse
Effect.
6.11 Tax Returns and Payments. Borrower and each Subsidiary
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 and for which adequate
reserves have been established as is required by GAAP or which if unfiled or
unpaid would not reasonably be likely to have a Material Adverse Effect.
Borrower and each Subsidiary has paid, or has provided adequate reserves (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 Second Amended and Restated Effectiveness Date. Neither Borrower nor any
Subsidiary knows of any proposed tax assessment against any such Person that is
reasonably likely to have a Material Adverse Effect and which is not being
actively contested in good faith by such Person to the extent affected thereby
by appropriate proceedings; provided, however, that such reserves or other
appropriate provisions, if any, as shall be required in conformity with GAAP
shall have been made or provided therefor.
6.12 Employee Benefit Plans. (a) Each member of the ERISA
Group is in compliance in all material respects with the presently applicable
provisions of ERISA and the Code with respect to each Plan other than any
failure to so comply that is not reasonably likely to have a Material Adverse
Effect. No member of the ERISA Group has (i) failed to make any contribution or
payment to any Plan or Multiemployer Plan or in respect of any Benefit
Arrangement, or made any amendment to any Plan or Benefit Arrangement, which has
resulted or is reasonably likely to
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result in the imposition of a Lien or the posting of a bond or other security
under ERISA or the Code or (ii) incurred any liability under Title IV of ERISA
within the preceding six years (other than a liability to the PBGC for premiums
under Section 4007 of ERISA) that has not been satisfied. The amount of Unfunded
Liabilities in the aggregate for all Plans (excluding for purposes of such
computation any Plans which have a negative amount of Unfunded Liabilities)
could not reasonably be expected to result in a Material Adverse Effect.
(b) Each Foreign Pension Plan has been maintained in
compliance with its terms and with the requirements of any and all applicable
laws, statutes, rules, regulations and orders and has been maintained, where
required, in good standing with applicable regulatory authorities other than any
failure to so comply that could not reasonably be expected to have a Material
Adverse Effect. Neither Borrower nor any Subsidiary has incurred any material
obligation in connection with the termination of or withdrawal from any Foreign
Pension Plan. The present value of the accrued benefit liabilities (whether or
not vested) under each Foreign Pension Plan, determined as of the end of
Borrower's most recently ended fiscal year on the basis of actuarial
assumptions, each of which is reasonable, did not exceed the current value of
the assets of such Foreign Pension Plan allocable to such benefit liabilities by
an amount that could reasonably be expected to have a Material Adverse Effect.
6.13 Subsidiaries. Annex 6.13 hereto lists each Subsidiary
(and the direct and indirect ownership interest of Borrower therein), in each
case existing on the Closing Date. All the outstanding shares of Capital Stock
of each Subsidiary owning or leasing Principal Properties have been duly
authorized and validly issued, are fully paid and non-assessable and (except for
any directors' qualifying shares) are owned by Borrower free and clear of all
Liens, other than Permitted Liens.
6.14 Patents, etc. Borrower and each Subsidiary has obtained
all patents, trademarks, service marks, trade names, copyrights, licenses and
other rights (collectively, the "Intellectual Property"), free from burdensome
restrictions, that are necessary for the operation of their respective
businesses as presently conducted and the failure to obtain which is reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect. No
claim is pending or, to the best of Borrower's knowledge, threatened to the
effect that the actions of Borrower or any Subsidiary infringe upon or conflict
with the asserted rights of any other Person under any Intellectual Property,
except for such claims which are not, individually or in the aggregate,
reasonably likely to have a Material Adverse Effect, and, to the best of
Borrower's knowledge, there is no basis for any such claim (whether or not
pending or threatened). No claim is pending or, to the best of Borrower's
knowledge, threatened to the effect that any such Intellectual Property owned or
licensed by Borrower or any Subsidiary or which Borrower or any Subsidiary
otherwise has the right to use is invalid or unenforceable by Borrower or such
Subsidiary, except for such claims which are not, individually or in the
aggregate, reasonably likely to have a Material Adverse Effect, and, to the best
of Borrower's knowledge, there is no reasonable basis for any such claim
(whether or not pending or threatened).
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<PAGE> 37
6.15 Environmental Matters. (a) Borrower and each Subsidiary
is in compliance with all Environmental Laws and is not subject to any liability
under any Environmental Law except as would not, individually or in the
aggregate, reasonably be likely to have a Material Adverse Effect. All licenses,
permits, registrations, or approvals required for the business conducted and for
the operations and facilities owned, leased or operated by Borrower and each
Subsidiary under any Environmental Law have been obtained and Borrower and each
Subsidiary is in compliance therewith, except such licenses, permits,
registrations or approvals the failure to obtain or to comply therewith is not,
individually or in the aggregate, reasonably likely to have a Material Adverse
Effect. Neither Borrower nor any Subsidiary is in any respect in noncompliance
with, breach of or default under any applicable writ, order, judgment,
injunction, or decree to which Borrower or such Subsidiary is a party or which
would affect the ability of Borrower or such Subsidiary to operate any Real
Property, offshore drilling rig or other facility 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 of or default thereunder, except in each
such case, such noncompliance, breaches or defaults which are not, individually
or in the aggregate, reasonably likely to have a Material Adverse Effect. There
are no Environmental Claims pending or, to the best knowledge of Borrower,
threatened, against Borrower or any Subsidiary wherein an unfavorable decision,
ruling or finding is, individually or in the aggregate, reasonably likely to
have a Material Adverse Effect. Neither Borrower nor any Subsidiary has received
notice that it has been identified as a potentially responsible party under
CERCLA or any comparable foreign or state law, nor has Borrower or any
Subsidiary received any written notification that any Hazardous Materials that
it or any of their respective predecessors in interest has used, generated,
stored, treated, handled, transported or disposed of, or arranged for disposal
or treatment of, have been found at any location at which any Person is
conducting or plans to conduct any action pursuant to any Environmental Law
except as would not, individually or in the aggregate, reasonably be likely to
have a Material Adverse Effect. No properties now or formerly owned, leased or
operated by Borrower or any Subsidiary or, to the knowledge of Borrower or any
Subsidiary, any of their respective predecessors in interest, are (x) listed or
proposed for listing on the National Priorities List under CERCLA or (y) listed
on the Comprehensive Environmental Response, Compensation and Liability
Information System List promulgated pursuant to CERCLA or (z) included on any
comparable lists maintained by any Governmental Authority except as would not,
individually or in the aggregate, reasonably be likely to have a Material
Adverse Effect. There are no past or present events, conditions, activities,
practices or actions, or any agreements, judgments, decrees or orders by which
Borrower or any Subsidiary is bound, which would reasonably be expected to
prevent Borrower's or any Subsidiary's compliance with any Environmental Law, or
which would reasonably be expected to give rise to any liability of Borrower or
any Subsidiary under any Environmental Law, or to cause any Real Property,
offshore drilling rig or other facility owned, leased or operated by Borrower or
any Subsidiary to be subject to any restriction on its ownership, occupancy, use
or transferability under any Environmental Law, except in each such case, such
noncompliance, liability or restriction which is, individually or in the
aggregate, not reasonably likely to have a Material Adverse Effect.
(b) Hazardous Materials have not at any time been (i)
generated, used, processed, treated, stored or disposed of on, at or under or
transported to or from, any Real Property, offshore
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<PAGE> 38
drilling rig or other facility at any time owned, leased or operated by Borrower
or any Subsidiary or (ii) Released on, at, under or from any such Real Property,
offshore drilling rig or other such facility, in each case where such
occurrence, or event is, individually or in the aggregate, reasonably likely to
have a Material Adverse Effect.
6.16 Properties. (a) Borrower and each Subsidiary has title
to all Principal Properties owned by them including all such properties
reflected in the consolidated balance sheets of Borrower and the Subsidiaries as
referred to in Section 6.10(a), 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 6.16(b) hereto sets forth all the offshore
drilling rigs owned or leased for more than two years by Borrower or any
Subsidiary on the Closing Date, and identifies the registered owner, flag,
official or patent number, as the case may be, and the location thereof on the
Closing Date.
6.17 Labor Relations. Neither Borrower nor any Subsidiary is
engaged in any unfair labor practice that is, individually or in the aggregate,
reasonably likely to have a Material Adverse Effect. There is (i) no unfair
labor practice complaint pending against Borrower or any Subsidiary or
threatened against any of them, before the National Labor Relations Board, and
no grievance or arbitration proceeding arising out of or under any collective
bargaining agreement is so pending against any of them or, to the best of
Borrower's knowledge, threatened against any of them, (ii) no strike, labor
dispute, slowdown or stoppage pending against Borrower or any Subsidiary or, to
the best of Borrower's knowledge, threatened against Borrower or any Subsidiary
and (iii) no union representation petition existing with respect to the
employees of and of them and no union organizing activities are taking place,
except with respect to any matter specified in clauses (i), (ii) or (iii) above,
either individually or in the aggregate, such as is not reasonably likely to
have a Material Adverse Effect.
6.18 Insurance. Borrower and each Subsidiary has insured its
properties and assets against such risks and in such amounts as are customary
for companies engaged in similar businesses.
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SECTION 7
AFFIRMATIVE COVENANTS
Borrower covenants and agrees that on the Closing Date and
thereafter for so long as this Agreement is in effect and until the 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 or under any other Credit Document, are paid in full:
7.01 Information Covenants. Borrower will furnish to each
Bank:
(a) Annual Financial Statements. Within 95 days after the
close of each fiscal year of Borrower during the term hereof, the consolidated
balance sheet of Borrower and the Subsidiaries as at the end of such fiscal
year, and the related consolidated statements of operations and stockholders'
equity and 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 not be qualified as to the scope of audit and as to the status of
Borrower and the Subsidiaries as a going concern.
(b) Quarterly Financial Statements. As soon as available and
in any event within 60 days after the close of each of the first three (3)
fiscal quarters of each fiscal year during the term hereof, the consolidated
balance sheet of Borrower and the Subsidiaries as at the end of such quarterly
period, and the related consolidated statements of operations and, if included
in Borrower's reports filed with the SEC pursuant to the Exchange Act,
stockholders' equity for such quarterly period and for the elapsed portion of
the fiscal year ended with the last day of such quarterly period, and the
consolidated statement of cash flows for the elapsed portion of the fiscal year
ended with the last day of such quarterly period, and in each case setting forth
comparative consolidated figures for the related period in the prior fiscal
year, except with respect to the consolidated balance sheet, which shall be as
of the end of the prior fiscal year, all of which shall be certified by the
chief financial officer or controller of Borrower as fairly presenting in all
material respects the financial conditions and results of operations of Borrower
and the Subsidiaries in accordance with GAAP, subject to changes resulting from
audit and normal year-end audit adjustments and the exclusion of detailed
footnotes.
(c) Compliance Certificate. At the time of the delivery of
the financial statements provided for in Sections 7.01(a) and (b), a certificate
of Borrower signed by its chief financial officer, controller, treasurer or
other Authorized Officer in the form of Exhibit 7.01(c) hereto 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 Borrower and the
Subsidiaries were in compliance with the provisions of Section 8 as at the end
of such fiscal period or year, as the case may be.
(d) Notice of Default or Litigation. Promptly, and in any
event within (i) five Business Days after an executive officer of Borrower
obtains knowledge thereof, notice of; (y) the
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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 Borrower proposes to take with respect thereto and (z) notice of any
change in any Rating of Borrower, and (ii) ten Business Days after an executive
officer of Borrower obtains knowledge thereof, notice of the commencement of or
any significant development in any litigation or governmental proceeding pending
against Borrower or any Subsidiary (other than to the extent that disclosure of
the details thereof would, in the opinion of counsel to Borrower, compromise
attorney-client privilege) (i) which is reasonably likely to have a Material
Adverse Effect or (ii) which is reasonably likely to have a material adverse
effect on the ability of the Borrower to perform its obligations under the
Credit Documents.
(e) Auditors' Reports. Promptly upon receipt thereof, a copy
of each formal written report or management letter submitted to Borrower by its
independent accountants in connection with any annual, interim or special audit
made by it of the books of Borrower.
(f) SEC Reports. Promptly upon transmission thereof, copies
of any material filings and registrations with, and reports to, the SEC by
Borrower or any Subsidiary (other than registrations on Form S-8 under the
Securities Act, registrations of equity securities pursuant to Rule 415 under
the Securities Act which do not involve an underwritten public offering and
reports on Form 11-K or pursuant to Section 16(a) under the Exchange Act) and
copies of all financial statements, proxy statements, notices and reports as
Borrower shall generally send to analysts or all holders of its Capital Stock in
their capacity as such holders (in each case to the extent not theretofore
delivered to the Banks pursuant to this Agreement).
(g) Other Information. From time to time, such other
information or documents (financial or otherwise) as the Administrative Agent or
any Bank may reasonably request.
7.02 Books, Records and Inspections. Borrower will, and will
cause each Subsidiary to, keep books of records and accounts in which entries
will be made of all its business transactions to enable Borrower to prepare
financial statements in accordance with GAAP, and will reflect in its financial
statements adequate accruals and appropriations to reserves, all in accordance
with GAAP. Borrower will, and will cause each Subsidiary to, permit, upon
reasonable notice to the chief financial officer, controller or any other
Authorized Officer of Borrower, officers and designated representatives of the
Administrative Agent or any Bank (at the expense of Borrower if after an Event
of Default) to visit and inspect any of the properties or assets of Borrower or
any Subsidiary, and to examine the books of account of Borrower or any
Subsidiary and discuss the affairs, finances and accounts of Borrower or of any
Subsidiary with, and be advised as to the same by, its and their officers and
independent accountants, all at such reasonable times and intervals as the
Administrative Agent or any Bank may desire.
7.03 Maintenance of Insurance. Borrower will, and will cause
each Subsidiary to, at all times maintain in full force and effect insurance in
such amounts and of such types with such financially sound and reputable
insurers covering such risks and liabilities and with such deductibles
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<PAGE> 41
or self-insured retentions as are in accordance with normal industry practice
for similarly situated insureds.
7.04 Payment of Taxes. Borrower will pay and discharge, and
will cause each Subsidiary 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 could reasonably be expected to
become a Lien or charge upon any properties of Borrower or any Subsidiary other
than a Permitted Lien; provided, however, that neither Borrower 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 or
which if unpaid would not reasonably be likely to have a Material Adverse
Effect.
7.05 Consolidated Corporate Franchises. Borrower will do, and
will cause each Subsidiary 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 would not have a Material Adverse Effect;
provided, however, that any transaction permitted by Section 8.02 will not
constitute a breach of this Section 7.05.
7.06 Compliance with Statutes, etc. Borrower will, and will
cause each Subsidiary to, comply with all applicable statutes, regulations and
orders of, and all applicable restrictions imposed by, all governmental bodies,
domestic or foreign, including without limitation all Environmental Laws and
ERISA and the rules and regulations thereunder, other than those the
non-compliance with which is not, individually or in the aggregate, reasonably
likely to have a Material Adverse Effect or is not, individually or in the
aggregate, reasonably likely to have a material adverse effect on the ability of
the Borrower to perform its obligations under the Credit Documents.
7.07 Good Repair. Borrower will, and will cause each
Subsidiary to, keep its properties and equipment (including all Fleet Rigs) used
or useful in its business, 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 and the occurrence of a force majeure, see that from time to
time there are made in such properties and equipment all needful and proper
repairs, renewals, replacements, extensions, additions, betterments and
improvements thereto, (i) to the extent and in the manner useful or customary
for companies in similar businesses and (ii) to the extent where the failure to
do so is, individually or in the aggregate, reasonably likely to have a Material
Adverse Effect. For purposes of this Section 7.07, any Fleet Rig shall be deemed
to be in good repair, working order and condition if such Fleet Rig is
classified in the highest class available for rigs of its age and type with the
American Bureau of Shipping, Inc. or another internationally recognized
classification society acceptable to the Administrative Agent.
7.08 Use of Proceeds. All proceeds of the Loans shall be
used as provided in Section 6.05.
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<PAGE> 42
7.09 ERISA. As soon as possible and, in any event, within 30
days after an executive officer of Borrower knows or has reason to know that any
member of the ERISA Group (i) gives or is required to give notice to the PBGC of
any "reportable event" (as defined in Section 4043 of ERISA) with respect to any
Plan which would reasonably be expected to constitute grounds for a termination
of such Plan under Title IV of ERISA, or knows that the plan administrator of
any Plan has given or is required to give notice of any such reportable event, a
copy of the notice of such reportable event given or required to be given to the
PBGC; (ii) receives notice of complete or partial withdrawal liability under
Title IV of ERISA or notice that any Multiemployer Plan is in reorganization, is
insolvent or has been terminated, a copy of such notice; (iii) receives notice
from the PBGC under Title IV of ERISA of an intent to terminate, impose
liability (other than for premiums under Section 4007 of ERISA) in respect of,
or appoint a trustee to administer any Plan, a copy of such notice; (iv) applies
for a waiver of the minimum funding standard under Section 412 of the Code, a
copy of such application; (v) gives notice of intent to terminate any Plan under
Section 4041(c) of ERISA, a copy of such notice and other information filed with
the PBGC; (vi) gives notice of withdrawal from any Plan pursuant to Section 4063
of ERISA that would reasonably be expected to result in a Material Adverse
Effect, a copy of such notice; or (vii) fails to make any payment or
contribution to any Plan or Multiemployer Plan or in respect of any Benefit
Arrangement or makes any amendment to any Plan or Benefit Arrangement which has
resulted or could reasonably be expected to result in the imposition of a Lien
or the posting of a bond or other security under ERISA or the Code, Borrower
will deliver to each of the Banks a certificate of the chief financial officer
of Borrower setting forth details as to such occurrence and the action, if any,
that Borrower, such Subsidiary or such member of the ERISA Group is required or
proposes to take, together with any notices required or proposed to be given to
or filed with or by Borrower, such Subsidiary, the member of the ERISA Group, a
plan participant or the plan administrator. Upon written request Borrower will
deliver to each of the Banks a complete copy of the annual report (Form 5500) of
each Plan (as defined in Section 3(2) of ERISA) (including, to the extent
required, the related financial statements and opinions and other supporting
statements, certifications, schedules and information) required to be filed with
the Internal Revenue Service, if any.
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<PAGE> 43
SECTION 8
NEGATIVE COVENANTS
Borrower covenants and agrees that as of the Closing Date and
thereafter for so long as this Agreement is in effect and until the 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 or under any other Credit Document, are paid in full:
8.01 Changes in Business. Borrower shall not materially alter
the character of the business of Borrower and the Subsidiaries taken as a whole
from that conducted at the Closing Date (including any material expansion
outside of the offshore contract drilling and production services, drilling
management services and oil and gas exploration and production businesses).
8.02 Consolidation, Merger, Sale of Assets, etc. Borrower
shall not directly or indirectly, wind up, liquidate or dissolve its affairs, or
enter into any transaction of merger or consolidation, sell or otherwise dispose
of all or any part of its property or assets (other than inventory or worn-out
or obsolete equipment in the ordinary course of business) or agree (unless such
agreement is conditioned upon a waiver of this provision by the Banks hereunder)
to do any of the foregoing at any future time, except that each of the following
shall be permitted:
(a) (i) any Subsidiary may be merged or consolidated with or
into, or be liquidated or dissolved into, Borrower (so long as Borrower is the
surviving corporation) or any other Person so long as a Subsidiary or Borrower
is the surviving Person (including a surviving Person that becomes a Subsidiary
as a result of such transaction) and (ii) all or any part of the business,
properties and assets of any Subsidiary may be conveyed, leased, sold or
transferred to Borrower or any Subsidiary;
(b) any sale or disposition of assets (including the stock
of Subsidiaries) provided, however, that all proceeds of such sales shall be
used without violating the provisions of Section 8.01 and each such sale or
disposition shall be in an amount at least equal to the fair market value
thereof; or
(c) the existence or foreclosure (or transfer in lieu of) of
any Lien permitted hereunder or the consummation of any transaction permitted
under the Credit Documents.
8.03 Indebtedness and Liens. (a) The Borrower shall not, and
shall not permit any of its Subsidiaries to, issue, assume or guarantee any
Indebtedness for borrowed money secured by any Lien upon any Principal Property
or any shares of stock or indebtedness of any Subsidiary that owns or leases a
Principal Property (whether such Principal Property, shares of stock or
indebtedness are now owned or hereafter acquired) without making effective
provision whereby the Obligations (together with, if the Borrower shall so
determine, any other Indebtedness or other obligation of the Borrower or
Subsidiaries) shall be secured equally and ratably with (or, at the option of
the Borrower, prior to) the Indebtedness so secured for so long as such
Indebtedness is so secured. The
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<PAGE> 44
foregoing restrictions will not, however, apply to Indebtedness secured by
Permitted Liens, provided all such Indebtedness must comply with any applicable
provisions of Section 8.04(b).
(b) Notwithstanding the foregoing, the Borrower and its
Subsidiaries may, without securing the Obligations, issue, assume or guarantee
Indebtedness that would otherwise be subject to the foregoing restrictions in an
aggregate principal amount that, together with all other such Indebtedness of
the Borrower and its Subsidiaries that would otherwise be subject to the
foregoing restrictions (not including Indebtedness permitted to be secured under
the definition of Permitted Liens) and the aggregate amount of Attributable
Indebtedness deemed outstanding with respect to Sale/Leaseback Transactions
(other than those in connection with which the Borrower has voluntarily retired
any of the Obligations, any Pari Passu Indebtedness or any Funded Indebtedness
pursuant to Section 8.06(c)) does not at any one time exceed 10% of Consolidated
Net Tangible Assets of the Borrower and its consolidated subsidiaries.
8.04 Restrictions on Subsidiaries. (a) Borrower shall not
create or suffer to exist or allow any Subsidiary to create or suffer to exist,
any encumbrance or restriction which, directly or indirectly, prohibits or
otherwise restricts the ability of any Subsidiary to (i) pay Dividends or make
other distributions or pay any Indebtedness owed to Borrower or any Subsidiary,
(ii) make loans or advances to Borrower or any Subsidiary or (iii) transfer any
of its properties or assets to Borrower or any Subsidiary, other than
encumbrances or restrictions existing under or by reason of:
(A) the Credit Documents;
(B) applicable law;
(C) customary non-assignment provisions entered into in the
ordinary course of business and consistent with past practices;
(D) any restriction or encumbrance with respect to a
Subsidiary imposed pursuant to (i) 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, so long as such sale or
disposition is permitted under this Agreement or (ii) as required by
any bare boat charter;
(E) Any other encumbrance or restriction in effect on the
Closing Date and any refinancing, extension or renewal thereof, so long
as such refinancing, extension or renewal is no more restrictive than
that existing on the Closing Date;
(F) Permitted Liens and other Liens permitted to exist under
the Credit Documents and any documents or instruments governing the
terms of any Indebtedness or other obligations secured by any such
Liens; provided, however, that such prohibitions or restrictions apply
only to the assets subject to such Liens;
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<PAGE> 45
(G) encumbrances or restrictions on property of any
Subsidiary which do not restrict the ability of such Subsidiary to
transfer the property subject to such encumbrances or restrictions; and
(H) any encumbrances or restrictions pursuant to an
agreement in effect on the date on which such Subsidiary was acquired
by Borrower or any Subsidiary (provided that such encumbrance or
restriction was not incurred in connection with or in contemplation of
such acquisition).
(b) Borrower shall not permit any Subsidiary to incur, or
become liable for, directly or indirectly, any Indebtedness for borrowed money
unless (i) such Indebtedness is non-recourse to the Borrower and all other
Subsidiaries, (ii) such Indebtedness is permitted under Section 8.03(b) hereof;
or (iii) such Subsidiary guarantees the Obligations equally and ratably with
such Indebtedness of the Subsidiary by executing a guaranty agreement in the
form of Exhibit 8.04(b).
8.05 Transactions with Affiliates. Borrower shall not,
directly or indirectly, enter into any transaction or series of transactions
after the Closing Date whether or not in the ordinary course of business, with
any Affiliate other than on terms and conditions substantially as favorable to
Borrower as would be obtainable by Borrower at the time in a comparable arm's
length transaction with a Person other than an Affiliate; provided, however,
that the foregoing restrictions shall not apply to (a) employment arrangements
entered into in the ordinary course of business with officers of Borrower, (b)
customary fees paid to members of the Board of Directors of Borrower and (c) all
transactions between or among Borrower and one or more Wholly-Owned
Subsidiaries.
8.06 Limitation on Sale/Leaseback Transactions. The Borrower
shall not, and shall not permit any Subsidiary to, enter into any Sale/Leaseback
Transaction with any Person (other than the Borrower or a Subsidiary) unless:
(a) the Borrower or such Subsidiary would be entitled to
incur Indebtedness in a principal amount equal to the Attributable Indebtedness
with respect to such Sale/Leaseback Transaction secured by a Lien on the
property subject to such Sale/Leaseback Transaction pursuant to Section 8.03 or
8.04 without equally and ratably securing the Loans pursuant to such covenant;
(b) after the Closing Date and within a period commencing
nine (9) months prior to the consummation of such Sale/Leaseback Transaction and
ending nine (9) months after the consummation thereof, the Borrower or such
Subsidiary shall have expended for property used or to be used in the ordinary
course of business of the Borrower and its Subsidiaries an amount equal to all
or a portion of the net proceeds of such Sale/Leaseback Transaction and the
Borrower shall have elected to designate such amount as a credit against such
Sale/Leaseback Transaction (with any such amount not being so designated to be
applied as set forth in clause (c) below or as otherwise permitted); or
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<PAGE> 46
(c) the Borrower, during the nine (9) month period after the
effective date of such Sale/Leaseback Transaction, shall have applied to either
(i) the voluntary defeasance or retirement of any Obligations, any Pari Passu
Indebtedness or any Funded Indebtedness or (ii) the acquisition of one or more
Principal Properties at fair value, an amount equal to the greater of the net
proceeds of the sale or transfer of the property leased in such Sale/Leaseback
Transaction and the fair value, as determined by the Board of Directors of the
Borrower and evidenced by a Board Resolution, of such property at the time of
entering into such Sale/Leaseback Transaction (in either case adjusted to
reflect the remaining term of the lease and any amount expended by the Borrower
as set forth in clause (b) above), less an amount equal to the sum of the
principal amount of the Obligations, Pari Passu Indebtedness and Funded
Indebtedness voluntarily defeased or retired by the Borrower plus any amount
expended to acquire any Principal Properties at fair value, within such
nine-month period and not designated as a credit against any other
Sale/Leaseback Transaction entered into by the Borrower or any Subsidiary during
such period.
8.07 Cash Interest Coverage Ratio. Borrower shall not permit
the ratio of (a) Consolidated EBITDA for any four consecutive complete fiscal
quarters then last ended to (b) Consolidated Cash Interest Expense of Borrower
for such period to be less than 3.00:1.00.
8.08 Debt to Capitalization Ratio. Borrower shall not permit
the ratio of its Consolidated Indebtedness to its Consolidated Total
Capitalization measured at the end of each fiscal quarter, to be greater at any
time than the following ratio for the periods indicated:
<TABLE>
<CAPTION>
Through End of Through End of
Calendar Year 1998 Calendar Year 1999 All Other Periods
- ------------------ ------------------ ------------------
<S> <C> <C>
.50 to 1.0 .45 to 1.0 .40 to 1.0
</TABLE>
8.09 Tangible Net Worth. Borrower shall not permit
Consolidated Tangible Net Worth, measured at the end of each fiscal quarter
after January 1, 1998 to be less than the sum of (a) $525.0 million, plus (b) an
amount (added at the end of each fiscal quarter) equal to the greater of (x) $0
and (y) (A) 50% of Consolidated Net Income from January 1, 1998 to the end of
such quarter (without giving effect to the proviso thereto) and (B) 75% of the
value of any consideration received (net of issuance costs) (other than from the
Borrower or any Subsidiary) in connection with the issuance of any capital stock
by the Borrower or any subsidiary subsequent to December 9, 1997, and at any
time during the term hereof. In the case of any such issuance for non-cash
consideration, the value of the consideration received shall be deemed to be the
net increase in Consolidated Tangible Net Worth resulting from the issuance
(after giving effect to, without limitation, any goodwill or other intangibles
created by the transaction or any writedown or writeoff in connection with the
transaction).
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<PAGE> 47
SECTION 9
EVENTS OF DEFAULT
Upon the occurrence of any of the following specified events
(each an "Event of Default"):
9.01 Payments. Borrower shall (i) default in the payment when
due of any principal of the Loans or (ii) default, and such default shall
continue for one (1) or more Business Days after notice (written or oral) from
the Administrative Agent or any Bank directed to the Chief Executive Officer,
Chief Financial Officer, Treasurer or Controller of the Borrower, in the payment
when due of any Unpaid Drawing, any interest on the Loans or any Fees or any
other amounts owing under any Credit Document; or
9.02 Representations, etc. Any material representation,
warranty or statement made by the Borrower in any Credit Document or in any
statement or certificate delivered or required to be delivered pursuant thereto
shall prove to be untrue in any material respect on the date as of which made or
deemed made; or
9.03 Covenants. (a) Borrower or any Subsidiary shall default
in the due performance or observance by it of any term, covenant or agreement
contained in Sections 7.08, 8.01, 8.02, 8.07, 8.08, or 8.09 or (b) Borrower
shall 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 any Credit Document and such default shall
continue unremedied for a period of at least thirty (30) days after notice to
any of the officers of Borrower named in Section 9.01(a) by the Administrative
Agent or the Required Banks; or
9.04 Default Under Other Agreements. (a) Borrower or any
Subsidiary shall (i) default in any payment with respect to any Indebtedness
(other than the Obligations and any non-recourse indebtedness permitted to be
incurred hereunder) 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 is to
cause, or to permit the holder or holders of such Indebtedness (or a trustee or
agent on behalf of such holder or holders) to cause, any such Indebtedness to
become due prior to its stated maturity; or (b) any Indebtedness of Borrower
(other than the Obligations and any non-recourse indebtedness permitted to be
incurred hereunder) 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, however, that it shall not constitute an
Event of Default pursuant to this Section 9.04 unless any such event referred to
in clause (a) or (b) occurs with respect to one or more issues of Indebtedness
aggregating at least $25.0 million or more; or
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<PAGE> 48
9.05 Bankruptcy, etc. Borrower or any significant Subsidiary
(as such term is defined in Article 1, Rule 1-02 of Regulation S-X of the
Securities and Exchange Commission as in effect on the date hereof) 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
Borrower or any significant Subsidiary and the petition is not dismissed within
60 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 Borrower or any significant Subsidiary; or Borrower or any
significant Subsidiary 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 Borrower or such significant Subsidiary; or there is
commenced against Borrower or any significant Subsidiary any such case or
proceeding which remains undismissed for a period of sixty (60) days; or
Borrower or any significant Subsidiary is adjudicated insolvent or bankrupt; or
any order of relief or other order approving any such case or proceeding is
entered; or Borrower or any significant Subsidiary 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 sixty (60) days; or Borrower
or any significant Subsidiary makes a general assignment for the benefit of
creditors; or any corporate action is taken by Borrower or any significant
Subsidiary for the purpose of effecting any of the foregoing; or
9.06 Default Under Other Senior Indebtedness. Borrower shall
default under its Second Amended and Restated Credit Agreement dated December 9,
1997 with the Administrative Agent, as Agent and the syndicate of banks named
therein.
9.07 Judgments. One or more judgments or decrees shall be
entered against Borrower or any Subsidiary involving a liability of $10.0
million or more in the aggregate (not paid or to the extent not covered by
insurance) and any such judgments or decrees shall not have been vacated,
discharged, stayed or bonded pending appeal within sixty (60) days from the
entry thereof; or
9.08 Change of Control. There shall have occurred a Change
of Control; or
9.09 Employee Benefit Plans. (a) Any member of the ERISA
Group shall fail to pay when due an amount or amounts which it shall have become
liable to pay under Title IV of ERISA; or(b) notice of intent to terminate a
Plan shall be filed under Section 4041(c) of ERISA by any member of the ERISA
Group, any plan administrator or any combination of the foregoing; or (c) the
PBGC shall institute proceedings under Title IV of ERISA to terminate, to impose
liability (other than for premiums under Section 4007 of ERISA) in respect of,
or to cause a trustee to be appointed to administer any Plan; or (d) there shall
occur a complete or partial withdrawal from, or a default, within the meaning of
Section 4219(c)(5) of ERISA, with respect to, one or more Multiemployer Plans or
(e) any "accumulated funding deficiency" (as defined in Section 302 of ERISA),
whether or not waived, shall exist with respect to any Plan; or (f) any Lien in
favor of the PBGC or a Plan shall arise on the assets of any member of the ERISA
Group or a Subsidiary; and
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<PAGE> 49
in each case in items (a) through (f) above, such event or condition, together
with all other events or conditions, if any, could reasonably be expected to
result in a Material Adverse Effect;
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 Borrower, 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 Borrower, except as otherwise
specifically provided for in this Agreement (provided, however, that, if an
Event of Default specified in Section 9.05 shall occur with respect to Borrower,
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, whereupon the Commitment of each Bank shall forthwith
terminate immediately and any Commitment Commission and any earned, unpaid 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
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by Borrower; (iii) terminate any Letter of Credit which may be
terminated in accordance with its terms; (iv) direct Borrower to pay (and
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 Borrower, it will
pay) to the Administrative Agent at the Payment Office such additional amounts
of cash, to be held as security for Borrower's reimbursement obligations in
respect of Letters of Credit then outstanding equal to the aggregate Stated
Amount of all Letters of Credit then outstanding; and (v) apply any amounts held
as cash collateral pursuant to Section 4.02 or this Section 9 to repay
Obligations.
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<PAGE> 50
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 Commitment" for each Non-Defaulting Bank shall mean
at any time the product of such Bank's Adjusted Percentage and the Adjusted
Total Commitment.
"Adjusted Percentage" shall mean (x) at a time when no Bank
Default exists, for each Bank such Bank's 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 Commitment at such time by the Adjusted Total Commitment at
such time, it being understood that all references herein to Commitments and the
Adjusted Total Commitment at a time when the Total Commitment or Adjusted Total
Commitment, as the case may be, has been terminated shall be references to the
Commitments or Adjusted Total Commitment, as the case may be, in effect
immediately prior to such termination; provided, however, that (A) no Bank's
Adjusted 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 Loans at such time pursuant to Section
4.02(A)(a) or otherwise, the sum of (i) the aggregate outstanding principal
amount of Revolving Credit Loans of all Non-Defaulting Banks plus (ii) the
Letter of Credit Outstandings, exceeds the Adjusted Total Commitment; (B) the
changes to the Adjusted 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 Revolving Credit Loans of all Non-Defaulting
Banks plus (ii) the Letter of Credit Outstandings is equal to or less than the
Adjusted Total Commitment; and (C) if (i) a Non-Defaulting Bank's Adjusted
Percentage is changed pursuant to the preceding clause (B) and (ii) any
repayment of such Bank's Revolving Credit Loans, or of Unpaid Drawings with
respect to 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 Percentage must be returned to Borrower as a preferential or
similar payment in any bankruptcy or similar proceeding of Borrower, then the
change to such Non-Defaulting Bank's Adjusted Percentage effected pursuant to
said clause (B) shall be reduced to that positive change, if any, as would have
been made to its Adjusted Percentage if (x) such repayments had not been made
and (y) the maximum change to its Adjusted Percentage would have resulted in the
sum of the outstanding principal of Revolving Credit Loans made by such Bank
plus such Bank's new Adjusted Percentage of the outstanding principal amount of
Letter of Credit Outstandings equaling such Bank's Commitment at such time.
"Adjusted Total Commitment" shall mean at any time the Total
Commitment less the aggregate Commitments of all Defaulting Banks.
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<PAGE> 51
"Administrative Agent" - see the first paragraph of this
Agreement; this term shall include any successor to the Administrative Agent
appointed pursuant to Section 11.09.
"Affected Eurodollar Loan" - see Section 4.02(B).
"Affiliate" shall mean, with respect to any Person, any other
Person directly or indirectly controlling, 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.
"Agents" see the first paragraph of this Agreement.
"Agreement" shall mean this Credit Agreement, as the same may
be from time to time further modified, amended and/or supplemented.
"Applicable Base Rate Margin" shall be equal to zero, as of
the Closing Date.
"Applicable Eurodollar Margin" shall mean the following: if
the total Loans outstanding (including issued Letters of Credit) equal or exceed
20% of the Total Commitment, the Applicable Eurodollar Margin shall be equal to
the percentage per annum set forth below opposite Borrower's applicable Rating,
effective as of the date such rating is published or announced:
<TABLE>
<CAPTION>
APPLICABLE
EURODOLLAR
RATING MARGIN
------------ ----------
<S> <C>
A- / A3 .325%
BBB+ / Baa1 .36%
BBB / Baa2 .40%
BBB- / Baa3 .50%
BB+ / Ba1 .70%
</TABLE>
If the total Loans outstanding are less than 20% of the Total Commitment, the
Applicable Eurodollar Margin shall be equal to the percentage per annum set
forth below opposite Borrower's applicable Rating, effective as of the date such
Rating is published or announced:
<TABLE>
<CAPTION>
EURODOLLAR
RATING MARGIN
------------ ----------
<S> <C>
A- / A3 .250%
BBB+ / Baa1 .285%
BBB / Baa2 .325%
BBB- / Baa3 .425%
BB+ / Ba1 .625%
</TABLE>
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<PAGE> 52
In all cases, the relevant Rating shall be applicable to all Loans
outstanding from such date forward, even if such change occurs during an
Interest Period. Such change shall not cause any retroactive change in the
amount of interest accruing during existent Interest Rate Periods prior thereto
but shall cause a change in the interest accruing during the remainder of such
Interest Period.
"Approved Bank" see the definition of "Cash Equivalents."
"Approved Company" see the definition of "Cash Equivalents."
"Assignment and Assumption Agreement" shall mean the
Assignment and Assumption Agreement substantially in the form of Exhibit 10.01A
hereto (appropriately completed).
"Attributable Indebtedness," when used with respect to any
Sale/Leaseback Transaction, means, as at the time of determination, the present
value (discounted at the rate set forth or implicit in the terms of the lease
included in such transaction) of the total obligations of the lessee for rental
payments (other than amounts required to be paid on account of taxes,
maintenance, repairs, insurance, assessments, utilities, operating and labor
costs and other items which do not constitute payments for property rights)
during the remaining term of the lease included in such Sale/Leaseback
Transaction (including any period for which such lease has been extended). In
the case of any lease which is terminable by the lessee upon the payment of a
penalty, such net amount shall be the lesser of the net amount determined
assuming termination upon the first date such lease may be terminated (in which
case the net amount shall also include the amount of the penalty, but no rent
shall be considered as required to be paid under such lease subsequent to the
first date upon which it may be so terminated) or the net amount determined
assuming no such termination.
"Authorized Officer" shall mean any senior officer of Borrower
designated as such in writing to the Administrative Agent by Borrower.
"Available Unutilized Commitment" for each Bank, shall mean
the excess of (a) the Commitment of such Bank over (b) the sum of (x) the
aggregate outstanding principal amount of Revolving Credit Loans made by such
Bank, plus (y) an amount equal to such Bank's Adjusted Percentage of the Letter
of Credit Outstandings at such time.
"Bank" see the first paragraph of this Agreement.
"Bank Default" shall mean (a) the refusal (which has not been
retracted) of a Bank to make available its portion of any incurrence of Loans or
to fund its portion of any unreimbursed payment under Section 2.05(c) or (b) a
Bank having notified the Administrative Agent and/or Borrower that it does not
intend to comply with the obligations under Section 1.01 or under Section
2.05(c), in the case of either (a) or (b) as a result of the appointment of a
receiver or
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<PAGE> 53
conservator with respect to such Bank at the direction or request of any
regulatory agency or authority.
"Bankruptcy Code" - see Section 9.05.
"Base Rate" at any time shall mean the higher of (a) the rate
which is 1/2 of 1% in excess of the Federal Funds Effective Rate and (b) the
Prime Lending Rate.
"Base Rate Loan" shall mean each Loan bearing interest at the
rates provided in Section 1.08(a).
"Benefit Arrangement" shall mean at any time an employee
benefit plan with the meaning of Section 3(3) of ERISA which is not a Plan or a
Multiemployer Plan and which is maintained or otherwise contributed to by any
member of the ERISA Group.
"Board Resolution" means a copy of a resolution certified by
the Secretary or an Assistant Secretary of the Borrower to have been duly
adopted by the Board of Directors and to be in full force and effect on the date
of such certification, and delivered to the Administrative Agent.
"Borrower" - see the first paragraph of this Agreement.
"Borrowing" shall mean the incurrence of one Type of Loan
pursuant to the Facility by Borrower from all of the Banks other than a
Defaulting Bank on a pro rata basis.
"BTCo" shall mean Bankers Trust Company.
"Business Day" shall mean (a) for all purposes other than as
covered by clause (b) below, any day excluding Saturday, Sunday and any day
which shall be in the City of New York a legal holiday or a day on which banking
institutions are authorized by law or other governmental actions to close and
(b) with respect to all notices and determinations in connection with, and
payments of principal and interest on, Eurodollar Loans, any day which is a
Business Day described in clause (a) and which is also a day for trading by and
between banks in U.S. dollar deposits in the interbank Eurodollar market in
London.
"Capital Expenditures" shall mean, with respect to any Person,
without duplication, all expenditures by such Person which should be capitalized
in accordance with GAAP, including, without duplication, all such expenditures
with respect to fixed or capital assets (including, without limitation,
expenditures for maintenance and repairs which should be capitalized in
accordance with GAAP) and the amount of all Capitalized Lease Obligations
incurred by such Person.
"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.
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<PAGE> 54
"Capital Stock" shall mean any and all shares, interests,
rights to purchase, warrants, options, participants or other equivalents of or
interests in (however designated) corporate stock or other equity
participations, including partnership interests, whether general or limited,
including any Preferred Stock.
"Capitalized Lease Obligations" shall mean all obligations
under Capital Leases of Borrower or any Subsidiary in each case taken at the
amount thereof accounted for as liabilities in accordance with GAAP.
"Cash Equivalents" shall mean (a) securities issued or
directly and fully guaranteed or insured by the United States of America or any
agency or instrumentality thereof (provided that the full faith and credit of
the United States of America is pledged in support thereof) having maturities of
not more than one year from the date of acquisition, (b) 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 capital and
surplus in excess of $500.0 million or (z) any Bank or bank (or the parent
company of such bank) whose short-term commercial paper rating from S&P is at
least A-1 or the equivalent thereof or from Moody's is at least P-1 or the
equivalent thereof (any such bank, an "Approved Bank"), in each case with
maturities of not more than one year from the date of acquisition, (c)
repurchase obligations with a term of not more than seven days for underlying
securities of the types described in clause (a) above entered into with any bank
meeting the qualifications specified in clause (b) above, (d) 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 one year 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 (a) through (d) above.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, 42 U.S.C. ss. 9601 et seq.
"Change of Control" shall mean an event or series of events by
which (a) any person (as defined in Section 13(d)(3) of the Exchange Act) is or
becomes the beneficial owner (as defined in Rule 13d-3 of the Exchange Act),
directly or indirectly, of more than 35% of the voting power of the then
outstanding Voting Stock of Borrower; or (b) during any period of two
consecutive years, individuals who at the beginning of such period constituted
the Board of Directors of Borrower (together with any new or replacement
directors whose election by the Board of Directors of Borrower or whose
nomination for election by Borrower's stockholders, was approved by a vote of at
least 66-2/3% of the directors then still in office who were either directors at
the beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
Board of Directors of Borrower then in office.
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<PAGE> 55
"Claims" - see the definition of "Environmental Claims."
"Closing Date" shall mean the date this Agreement is executed
as shown on page 1 hereof.
"Co-Agent" - see 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
Second Amended and Restated Effectiveness Date and any subsequent provisions of
the Code, amendatory thereof, supplemental thereto or substituted therefor.
"Commitment" shall mean, with respect to each Bank, the amount
set forth opposite such Bank's name in Annex I hereto as the same may be (x)
reduced from time to time pursuant to Sections 3.02, and/or 9 or (y) adjusted
from time to time as a result of assignments to or from such Bank pursuant to
Section 12.04.
"Commitment Commission" - see Section 3.01(a).
"Consolidated Cash Interest Expense" shall mean, for any
period, total cash interest expense (including that attributable to Capital
Leases, whether or not the Capitalized Lease Obligations under such Capitalized
Leases is included in Indebtedness) of Borrower and the Subsidiaries on a
consolidated basis during such period, including, without limitation, (i) all
commissions, discounts and other fees and charges owed with respect to letters
of credit and bankers' acceptance financing during such period and (ii) all
capitalized cash interest during such period.
"Consolidated EBITDA" 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 to the extent deducted in
determining Consolidated Net Income, (v) depreciation expense of Borrower and
the Subsidiaries, (vi) amortization expense of Borrower and the Subsidiaries,
and (vii) losses on sales of assets (excluding sales in the ordinary course of
business) and other extraordinary losses, less (b) the amount for such period of
gains on sales of assets (excluding sales in the ordinary course of business)
and other extraordinary gains, all as determined on a consolidated basis in
accordance with GAAP.
"Consolidated Indebtedness" shall mean, as at any date of
determination, the aggregate stated balance sheet amount of all Indebtedness
(including the Loans) of Borrower and the Subsidiaries on a consolidated basis
as determined in accordance with GAAP, excluding (i) all Contingent Obligations
relating to the Indebtedness of any Person which such Indebtedness is included
in the calculation of Consolidated Indebtedness of Borrower and the Subsidiaries
and (ii)
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<PAGE> 56
all Capitalized Lease Obligations under the Capitalized Lease (as in effect on
the Second Amended and Restated Effectiveness Date) of the Glomar Explorer Fleet
Rig (Official No. 547257).
"Consolidated Interest Expense" shall mean, for any period,
total interest expense (including that attributable to Capital Leases whether or
not the Capitalized Lease Obligations under such Capitalized Lease is included
in Indebtedness) of Borrower and the Subsidiaries in accordance with GAAP on a
consolidated basis with respect to all outstanding Indebtedness of Borrower and
the 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 Borrower and the Subsidiaries on a consolidated basis for
such period taken as a single accounting period determined in conformity with
GAAP; provided, however, that there shall be excluded therefrom (i) except to
the extent of the amount of cash dividends or other cash distributions in
respect of Capital Stock paid to Borrower or a Subsidiary by any other Person
during such period out of funds legally available therefor, the net income (or
loss) of such other Person other than a Subsidiary and, (ii) except to the
extent included pursuant to clause (i) hereof, the net income (or loss) of any
other Person accrued or attributable to any period prior to the date it becomes
a Subsidiary or is merged into or consolidated with Borrower or any Subsidiary
or such other Person's property or Capital Stock (or a portion thereof) is
acquired by Borrower or any Subsidiary.
"Consolidated Net Tangible Assets" means the total amount of
assets (less applicable reserves and other properly deductible items) after
deducting (a) all current liabilities (excluding the amount of those which are
by their terms extendable or renewable at the option of the obligor to a date
more than 12 months after the date as of which the amount is being determined
and current maturities of long-term debt) and (b) all goodwill, tradenames,
trademarks, patents, unamortized debt discount and expense and other like
intangible assets, all as set forth on the most recent quarterly balance sheet
of the Borrower and its consolidated subsidiaries and determined in accordance
with GAAP.
"Consolidated Tangible Net Worth" shall mean, at any time, the
net tangible worth of Borrower and the Subsidiaries on a consolidated basis
determined in accordance with GAAP.
"Consolidated Total Capitalization" shall mean, at any time,
the consolidated total Indebtedness plus shareholders equity of Borrower and its
Subsidiaries.
"Contingent Obligations" shall mean as to any Person any
obligation of such Person guaranteeing or intending to guarantee any
Indebtedness, leases, Dividends or other obligations ("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 obligation or
(ii) to maintain Working Capital or equity capital of the primary obligor or
otherwise
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<PAGE> 57
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.
"Credit Documents" shall mean this Agreement, the Notes and
any document executed in connection therewith.
"Credit Event" shall mean and include the making of a Loan or
the issuance of a Letter of Credit.
"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.
"Disqualified Capital Stock" means any Capital Stock which, by
its terms (or by the terms of any security into which it is convertible or for
which it is exchangeable at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable, at the option of the holder
thereof, in whole or in part, or exchangeable into Indebtedness on or prior to
the Maturity Date.
"Dividends" shall mean to declare or pay on the part of
Borrower or any Subsidiary any dividends (other than dividends payable solely in
Qualified Capital Stock of such Person (including pursuant to a shareholders'
rights plan)) or return any capital to, its stockholders or authorize or make
any other distribution, payment or delivery of property or cash to its
stockholders as such, or redeem, retire, purchase or otherwise acquire, directly
or indirectly, for a consideration, any shares of any class of its Capital Stock
outstanding on the Closing Date or thereafter (or any warrants for or options or
stock appreciation rights in respect of any of such shares), or set aside any
funds for any of the foregoing purposes, or permit any Subsidiary to purchase or
otherwise acquire for consideration any shares of any class of the Capital Stock
of Borrower or any other Subsidiary, as the case may be, outstanding on the
Closing Date or thereafter; provided, however, that Dividends shall not include
the redemption of rights issued pursuant to a shareholders' rights agreement in
an amount per right not to exceed a de minimis amount.
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<PAGE> 58
"Documentation Agent" - see the first paragraph of this
Agreement, this term shall include any successor to the current Documentation
Agent.
"Dollars" shall mean freely transferable lawful money of the
United States.
"Eligible Transferee" shall mean a commercial bank, financial
institution or other "accredited investor" (as defined by Regulation D of the
Securities Act).
"Environmental Claims" shall mean any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, claims, liens,
notices of noncompliance or violation, investigations of Governmental
Authorities or third parties 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 damage
or injury or threat of injury or damage to health, safety or the environment.
"Environmental Law" shall mean any applicable Federal, state,
foreign or local statute, law, rule, regulation, ordinance, code, guide, policy,
treaty or convention and rule of common law now or hereafter in effect and in
each case as amended and having legally binding effect on, and enforceable
against, private parties, and any judicial or administrative interpretation
thereof, including, without limitation, any judicial or administrative order,
consent decree or judgment, relating to pollution or protection of the
environment or health or safety or Release or threat of Release or treatment,
storage, transport, generation, handling or disposal of any Hazardous Materials,
including, without limitation, CERCLA; RCRA; the Deepwater Port Act, as amended,
33 U.S.C. ss.ss. 1501 et seq.; the Federal Water Pollution Control Act, as
amended, 33 U.S.C. ss. 1251 et seq.; the Toxic Substances Control Act, 15 U.S.C.
ss. 7401 et seq.; the Clean Air Act, as amended, 42 U.S.C. ss. 7401 et seq.; the
Safe Drinking Water Act, 42 U.S.C. ss. 3808 et seq.; the Oil Pollution Act of
1990, 33 U.S.C. ss. 2701 et seq. and any 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.
"ERISA Group" shall mean Borrower, any Subsidiary and all
members of a controlled group of corporations and all trades or businesses
(whether or not incorporated) under common control which, together with Borrower
or any Subsidiary, are treated as a single employer under Section 414 of the
Code.
"Eurodollar Loans" shall mean each Loan bearing interest at
the rates provided in Section 1.08(b).
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<PAGE> 59
"Eurodollar Rate" shall mean with respect to each Interest
Period for a Eurodollar Loan, (i) the offered quotation to first-class banks in
the interbank Eurodollar market by the Administrative Agent for dollar deposits
of amounts in same day funds comparable to the outstanding principal amount of
the Eurodollar Loan of the Administrative Agent for which an interest rate is
then being determined with maturities comparable to the Interest Period to be
applicable to such Eurodollar Loan, determined as of 10:00 A.M. (New York time)
on the date which is two Business Days prior to the commencement of such
Interest Period divided (and rounded upward to the next whole multiple of 1/16
of 1%) by (ii) a percentage equal to 100% minus the then stated maximum rate of
all reserve requirements (including, without limitation, any marginal,
emergency, supplemental, special or other reserves) applicable to any member
bank of the Federal Reserve System in respect of Eurocurrency liabilities as
defined in Regulation D (or any successor category of liabilities under
Regulation D).
"Event of Default" - see Section 9.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended from time to time, and the regulations promulgated and the rulings
issued thereunder.
"Facility" shall mean all Loans, Letter of Credit and other
accommodations available under the credit facility established under this
Agreement, evidenced and limited by the Total Commitment.
"Facing Fee" - see 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 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.
"Fleet Rigs" shall mean the Glomar Explorer (Official No.
547527) and any offshore drilling rig or drilling vessel owned from time to time
by Borrower or any subsidiary.
"Foreign Pension Plan" shall mean any plan, fund (including,
without limitation, any superannuation fund) or other similar program
established or maintained outside the United States of America by Borrower or
any one or more of its Subsidiaries primarily for the benefit of employees of
Borrower or such Subsidiaries residing outside the United States of America,
which
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<PAGE> 60
plan, fund or other similar program provides, or results in, retirement income,
a deferral of income in contemplation of retirement or payments to be made upon
termination of employment, and which plan is not subject to ERISA.
"Funded Indebtedness" means all Indebtedness (including
Indebtedness incurred under any revolving credit, letter of credit or working
capital facility) that matures by its terms, or that is renewable at the option
of any obligor thereon to a date more than one year after the date on which such
Indebtedness is originally incurred.
"GAAP" shall mean generally accepted accounting principles in
the United States of America as in effect on the Closing Date; 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).
"Governmental Authority" shall mean any government or
political subdivision or any agency, authority, board, bureau, central bank,
commission, department or instrumentality of either, or any court, tribunal,
grand jury or arbitrator, in each case whether foreign or domestic, or any
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Hazardous Materials" shall mean any pollutant, contaminant,
toxic, hazardous, extremely hazardous or radioactive substance, constituent or
waste, or any other constituent, waste, chemical material, compound or substance
including, without limitation, petroleum including without limitation crude oil
or any fraction thereof, or any petroleum product, subject to regulation under
any Environmental Law.
"Indebtedness" of any Person means, without duplication, (a)
all indebtedness of such Person for borrowed money (whether or not the recourse
of the lender is to the whole of the assets of such Person or only to a portion
thereof), (b) all obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments, (c) all obligations of such Person in
respect of letters of credit or other similar instruments (or reimbursement
obligations with respect thereto), other than standby letters of credit,
performance bonds, surety bonds and other obligations issued by or for the
account of such Person in the ordinary course of business, to the extent not
drawn or, to the extent drawn, if such drawing is reimbursed not later than the
third Business Day following demand for reimbursement, (d) all obligations of
such Person to pay the deferred and unpaid purchase price of property or
services, except trade payables and accrued expenses incurred in the ordinary
course of business, (e) all Capitalized Lease Obligations of such Person, (f)
all Indebtedness of others secured by a Lien on any asset of such Person,
whether or not such Indebtedness is assumed by such Person (provided that if the
obligations so secured have not been assumed in full by such Person or are not
otherwise such Person's legal liability in full, then such obligations shall be
deemed to be in an amount equal to the greater of (i) the lesser of (A) the full
amount of such obligations and (B) the fair market value of such assets, as
determined in good faith by the Board of Directors of such Person, which
determination shall be evidenced by a Board Resolution, and (ii)
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<PAGE> 61
the amount of obligations as have been assumed by such Person or which are
otherwise such Person's legal liability), and (g) all Indebtedness of others
(other than endorsements in the ordinary course of business) guaranteed by such
Person to the extent of such guarantee.
"Indenture" shall mean the Indenture dated as of September 1,
1997 between Borrower and Wilmington Trust Company, as trustee, under which the
issuance of $300,000,000.00 of Senior Unsecured Notes by the Borrower was
authorized, as the same may be amended, modified or supplemented from time to
time.
"Initial Borrowing Date" shall mean the date upon which the
initial Borrowing of Loans occurs.
"Intellectual Property" - see Section 6.14.
"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 Borrower or any
Subsidiary against interest rate risk.
"Invitation to Bid" - see Section 1.03.
"Joint Venture" means (a) with respect to properties located
in the United States, any partnership, corporation or other entity, in which up
to and including 50% of the partnership interests, outstanding voting stock or
other equity interests is owned, directly or indirectly, by the Borrower and/or
one or more Subsidiaries, and (b) with respect to properties located outside the
United States, any partnership, corporation or other entity, in which up to and
including 60% of the partnership interests, outstanding voting stock or other
equity interests is owned, directly or indirectly, by the Borrower and/or one or
more Subsidiaries.
"Leasehold" of any Person shall mean 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.
"L/C Supportable Obligations" shall mean such obligations of
Borrower or any Subsidiary as are not inconsistent with the policies of the
Letter of Credit Issuer determined reasonably and in good faith.
"Letter of Credit" - see Section 2.01(a).
"Letter of Credit Fee" - see Section 3.01(b).
"Letter of Credit Issuer" shall mean BTCo.
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"Letter of Credit Outstandings" shall mean, at any time, the
sum of, without duplication, (a) the aggregate Stated Amount of all outstanding
Letters of Credit and (b) the aggregate amount of all Unpaid Drawings in respect
of all Letters of Credit.
"Letter of Credit Request" - see Section 2.03(a).
"Lien" means any mortgage, pledge, lien, encumbrance, charge
or security interest (including any agreement to give any of the foregoing). For
purposes of this Agreement, the Borrower or any Subsidiary of the Borrower shall
be deemed to own, subject to a Lien, any asset which it has acquired or holds
subject to the interest of a vendor or lessor under any conditional sale
agreement, Capitalized Lease Obligation or other title retention agreement
relating to such asset.
"Loan" - see Section 1.01(a). Loans shall mean the Revolving
Credit Loans, except as otherwise specifically set forth herein.
"Margin Stock" shall have the meaning provided in Regulation
U.
"Material Adverse Effect" shall mean a material adverse effect
on the performance, business, properties, assets, operations, nature of assets,
liabilities, condition (financial or otherwise) or prospects of Borrower and the
Subsidiaries taken as a whole.
"Maturity Date" shall mean the date that is three hundred
sixty-four (364) days from the Closing Date.
"Minimum Borrowing Amount" shall mean (a) for Loans maintained
as Base Rate Loans, $1.0 million and increments of $500,000 over such amount,
and (b) for Loans maintained as Eurodollar Loans, $5.0 million and increments of
$1.0 million over such amount.
"Moody's" shall mean Moody's Investors Service, Inc. and its
successors.
"Multiemployer Plan" shall mean at any time an employee
pension benefit plan within the meaning of Section 4001(a)(3) of ERISA to which
any member of the ERISA Group is then making or accruing an obligation to make
contributions or has within the preceding five plan years made contributions,
including for these purposes any Person which ceased to be a member of the ERISA
Group during such five year period.
"Non-Defaulting Bank" shall mean each Bank other than a
Defaulting Bank.
"Note" or "Notes" - see Sections 1.05(a) and 1.05(b).
"Notice of Borrowing" - see Section 1.03.
"Notice of Conversion" - see Section 1.06.
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"Notice Office" shall mean the office of the Administrative
Agent at 130 Liberty Street, New York, New York or such other office as the
Administrative Agent may designate to Borrower 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 or any Bank pursuant to the terms of any
Credit Document.
"Pari Passu Indebtedness" means any Indebtedness of the
Borrower, whether outstanding on the Closing Date or thereafter created,
incurred or assumed, unless, in the case of any particular Indebtedness, the
instrument creating or evidencing the same or pursuant to which the same is
outstanding expressly provides that such Indebtedness shall be subordinated in
right of payment to the Loans.
"Participant" - see Section 2.05(a).
"Payment Office" shall mean the office of the Administrative
Agent at 130 Liberty Street, New York, New York or such other office as the
Administrative Agent may designate to Borrower from time to time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or
any successor thereto.
"Percentage" shall mean for each Bank the percentage obtained
by dividing such Bank's Commitment by the Total Commitment; provided, however,
that if the Total Commitment has been terminated, the Percentage of each Bank
shall be determined by dividing such Bank's Commitment immediately prior to such
termination by the Total Commitment immediately prior to such termination
"Permitted Liens" shall mean (a) Liens existing on the Closing
Date; (b) Liens on property or assets of, or any shares of stock of, or other
equity interests in, or indebtedness of, any Person existing at the time such
Person becomes a Subsidiary of the Borrower or at the time such Person is merged
into or consolidated with the Borrower or any of its Subsidiaries or at the time
of a sale, lease or other disposition of the properties of a Person (or a
division thereof) as an entirety or substantially as an entirety to the Borrower
or a Subsidiary; (c) Liens in favor of the Borrower or any of its Subsidiaries;
(d) Liens in favor of governmental bodies to secure progress or advance
payments; (e) Liens securing industrial revenue or pollution control bonds; (f)
Liens on assets existing at the time of acquisition thereof, securing all or any
portion of the cost of acquiring, constructing, improving, developing or
expanding such assets or securing Indebtedness incurred prior to, at the time
of, or within twelve (12) months after, the later of the acquisition, the
completion of construction, improvement, development or expansion or the
commencement of commercial operation of such assets, for the purpose of (i)
financing all or any part of the purchase price of such assets or (ii) financing
all or any part of the cost of construction, improvement, development or
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expansion of any such assets; (g) Liens on contracts, agreements or instruments
of a Subsidiary entered into in connection with a transaction referred to in
clause (f); (h) statutory liens or landlords', carriers', warehouseman's,
mechanics', suppliers', materialmen's, repairmen's or other like Liens arising
in the ordinary course of business and with respect to amounts not yet
delinquent or being contested in good faith by appropriate proceedings; (i)
Liens on the stock, partnership or other equity interest of the Borrower or any
Subsidiary in any Joint Venture or any Subsidiary that owns an equity interest
in such Joint Venture to secure Indebtedness, provided the amount of such
Indebtedness is contributed and/or advanced solely to such Joint Venture; and
(j) any extensions, substitutions, replacements or renewals in whole or in part
of a Lien enumerated in clauses (a) through (i) above.
"Person" shall mean any individual, partnership, joint
venture, limited liability company, firm, corporation, association, trust or
other enterprise or any government or political subdivision or any agency,
department or instrumentality thereof.
"Plan" shall mean at any time an employee pension benefit plan
(other than a Multiemployer Plan) which is covered by Title IV of ERISA or
subject to the minimum funding standards under Section 412 of the Code and
either (a) is maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group or (b) has at any time within the
preceding five years been maintained, or contributed to, by any Person which was
at such time a member of the ERISA Group for employees of any Person which was
at such time a member of the ERISA Group.
"Preferred Stock" in any Person, means Capital Stock of any
class or classes (however designated) which is preferred as to the payment of
Dividends or distributions, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such Person, over Capital
Stock of any other class in such Person.
"Prime Lending Rate" shall mean the rate which Bankers Trust
Company announces from time to time as its prime lending rate, the Prime Lending
Rate to change when and as such prime lending rate changes. The Prime Lending
Rate is a reference rate and does not necessarily represent the lowest or best
rate actually charged to any customer. Bankers Trust Company may make commercial
loans or other loans at rates of interest at, above or below the Prime Lending
Rate.
"Principal Property" means any drilling rig or drillship, or
integral portion thereof, owned or leased by the Borrower or any Subsidiary and
used for drilling offshore oil and gas wells, which, in the opinion of the Board
of Directors, is of material importance to the business of the Borrower and its
Subsidiaries taken as a whole, but no such drilling rig or drillship, or portion
thereof, shall be deemed of material importance if its net book value (after
deducting accumulated depreciation) is less than 2% of Consolidated Net Tangible
Assets.
"Qualified Capital Stock" in any Person means any Capital
Stock in such Person other than any Disqualified Capital Stock.
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"Rating" shall mean the Indebtedness quality rating most
recently published in respect of the Borrower's long-term Indebtedness by
Moody's or S&P; provided, in the event that Moody's and S&P provide different
Ratings of the Borrower, all calculations of Fees and Applicable Margins shall
utilize the higher Rating, provided, further, if the Ratings are two (2) or more
grades apart, the Rating one level above the lowest shall be utilized for all
calculations and computations.
"RCRA" shall mean the Resource Conservation and Recovery Act,
as amended, 42 U.S.C. ss. 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" - see 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.
"Release" shall mean any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, leaching or migration into the
environment or into, out of or through any structure, property, pipeline, air,
soil, subsurface strata, surface water, or groundwater or wetlands.
"Replaced Bank" - see Section 1.13.
"Replacement Bank" - see Section 1.13.
"Required Banks" shall mean Non-Defaulting Banks whose
outstanding Commitments (or, if after the Total Commitment has been terminated,
outstanding Loans and Adjusted Percentage of Letter of Credit Outstandings)
constitute greater than 50% of the sum of the Adjusted Total Commitment (or, if
after the Total Commitment has been terminated, the total outstanding Loans of
Non-Defaulting Banks and the aggregate Adjusted Percentages of all Non-
Defaulting Banks of the total Letter of Credit Outstandings at such time).
"Revolving Credit Loan" - see Section 1.01(a).
"S&P" shall mean Standard & Poor's Ratings Group and its
successors.
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"Sale/Leaseback Transaction" means any arrangement with any
Person pursuant to which the Borrower or any Subsidiary leases any Principal
Property that has been or is to be sold or transferred by the Borrower or the
Subsidiary to such Person, other than (a) temporary leases for a term, including
renewals at the option of the lessee, of not more than five years, (b) leases
between the Borrower and a Subsidiary or between Subsidiaries, (c) leases of
Principal Property executed by the time of, or within 12 months after the latest
of, the acquisition, the completion of construction or improvement, or the
commencement of commercial operation of the Principal Property, and (d)
arrangements pursuant to any provision of law with an effect similar to the
former Section 168(f)(8) of the Internal Revenue Code of 1954.
"SEC" shall mean the Securities and Exchange Commission or
any successor thereto.
"Section 4.04(b) (ii) Certificate" - see Section 4.04(b)(ii).
"Securities Act" shall mean the Securities Act of 1933, as
amended from time to time, and the regulations promulgated and the rulings
issued thereunder.
"Standby Letter of Credit" - see Section 2.01(a).
"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 (a) 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 (b) any partnership, association, joint
venture or other entity in which such Person directly or indirectly through
Subsidiaries, has an equity interest in excess of that for the respective type
of entity referenced in the definition of Joint Ventures at the time. Unless
otherwise expressly provided, all references herein to "Subsidiary" shall mean a
Subsidiary of Borrower.
"Syndication Agent" - see the first paragraph to this
Agreement, this term shall include any successor to the current Syndication
Agent.
"Taxes" - see Section 4.04(a).
"Total Commitment" shall mean, at any time, the sum of the
Commitments of each of the Banks, which shall equal a maximum of
$150,000,000.00, subject to reductions as herein provided.
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"Total Unutilized Commitment" shall mean, at any time, (a) the
Total Commitment at such time less (b) the sum of the aggregate principal amount
of all Loans at such time, plus the Letter of Credit Outstandings at such time.
"Trade Letter of Credit" - see Section 2.01(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.
"Unfunded Liabilities" shall mean, with respect to any Plan at
any time, the amount (if any) by which (i) the value of all benefit liabilities
under such Plan, determined on a current liability basis under Section 412(l)(7)
of the Code, exceeds (ii) the fair market value of all Plan assets allocable to
such liabilities under Title I of ERISA (excluding any accrued but unpaid
contributions), all determined as of the then most recent valuation date for
such Plan.
"Unpaid Drawing" - see Section 2.04(a).
"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,
is owned directly or indirectly by such Person. Unless otherwise expressly
provided, all references herein to "Wholly-Owned Subsidiary" shall mean a
Wholly-Owned Subsidiary of Borrower.
"Working Capital" shall mean an amount determined on a
consolidated basis in accordance with GAAP) determined for Borrower and the
Subsidiaries equal to the sum of all current assets (other than cash) less the
sum of all current liabilities (other than the current portion of any
Indebtedness that was long-term Indebtedness when incurred).
"Written" or "in writing" shall mean any form of written
communication or a communication by means of telex or facsimile transmission.
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SECTION 11
THE AGENTS
11.01 Appointment. The Banks hereby designate the Agents named
in the first paragraph on page one hereof as Agents 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, BTCo as the Administrative Agent to take such action
on its behalf under the provisions of this Agreement, the other Credit 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.
11.02 Nature of Duties. None of the Agents shall have any
duties or responsibilities except those expressly set forth in this Agreement
and the other Credit Documents. Specifically, without limitation, 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 Agents. Independently and
without reliance upon the Agents, each Bank and the holder of each Note, to the
extent it deems appropriate, has made and shall continue to make all of its own
independent investigation of the financial condition and affairs of Borrower and
the 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 (b) its own appraisal of the
creditworthiness of Borrower and the Subsidiaries and, except as expressly
provided in this Agreement, the Agents shall not have any 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 Agents 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, priority or
sufficiency of this Agreement or any other Credit Document or the financial
condition of Borrower and the Subsidiaries or be required to make any inquiry
concerning either the performance or observance of any of the terms, provisions
or conditions of this
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Agreement or any other Credit Document, or the financial condition of Borrower
and the 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 Borrower).
11.06 Indemnification. To the extent the Agents are not
reimbursed and indemnified by Borrower, the Banks will reimburse and indemnify
the Agents, 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, costs,
expenses or disbursements of whatsoever kind or nature which may be imposed on,
asserted against or incurred by the Agents in performing their 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, however, that no
Bank shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from either of the Agents' gross negligence or willful misconduct.
11.07 The Agents in Their Individual Capacity. With respect to
its obligation to make Loans under this Agreement, the Agents 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 Agents in their
individual capacity. The Agents may accept deposits from, lend money to, and
generally engage in any kind of banking, trust or other business with Borrower
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
Borrower or any Subsidiary for services in connection with this Agreement and
otherwise without having to account for the same to the Banks.
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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 Borrower 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 Borrower.
(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 Borrower, 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 successor 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.
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SECTION 12
MISCELLANEOUS.
12.01 Indemnification, Payment of Expenses, etc. Borrower
agrees 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 all counsel to the
Administrative Agent, and of the Administrative Agent itself, and, after the
occurrence 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 liabilities with respect to or resulting from any delay or omission (other
than to the extent attributable to the Administrative Agent or such Bank) to pay
such taxes; and (iii) indemnify each Bank (including in its capacity as the
Administrative Agent or a Letter of Credit Issuer), its officers, directors,
employees, representatives and agents from and hold each of them harmless
against any and all losses, liabilities, claims, damages, expenses, fines or
penalties 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 Borrower or any other Person (other than
the Office of the Comptroller of Currency, the FDIC or other regulatory
authority having jurisdiction over any Bank if not related to any action or
inaction by Borrower or any Subsidiary or any other event or occurrence relating
to Borrower or any Subsidiary), including, without limitation, the actual
reasonable fees and disbursements of counsel incurred 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 or location at any time owned or operated by
Borrower or any Subsidiary, the generation, storage, transportation, treatment,
release or disposal of Hazardous Materials at on, under or from any Real
Property, offshore drilling rig, facility or location at any time owned or
operated by Borrower or any Subsidiary, the noncompliance of Borrower or any
Subsidiary, or of any Real Property, offshore drilling rig, facility or location
at any time owned or operated by Borrower or any Subsidiary with any
Environmental Law or any Environmental Claim asserted against Borrower or any
Subsidiary with any Environmental Law or any Real Property, offshore drilling
rig, facility or location at any time owned or operated by Borrower or any
Subsidiary, 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
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losses, liabilities, claims, damages or expenses to the extent incurred by
reason of the gross negligence or wilful 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, 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 has occurred and is
continuing, each Bank is hereby authorized at any time or from time to time,
without presentment, demand, protest or other notice of any kind to Borrower or
to any other Person, any such notice being hereby expressly waived, to the
extent permitted by applicable 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 Bank (including without limitation by branches and
agencies of such Bank wherever located) to or for the credit or the account of
Borrower against and on account of the Obligations and liabilities of Borrower
to such Bank under any Credit Document, including, without limitation, all
interests in Obligations of 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 any 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, telexed,
telecopied or delivered, if to Borrower or any Subsidiary, 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 hereto; 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 and, in the case of notice by
telecopier, after confirmation of such receipt has been given by the recipient,
excluding by way of automatic receipt produced by telecopier.
(b) Without in any way limiting the obligation of Borrower
to confirm in writing any telephonic notice permitted to be given hereunder, the
Administrative Agent or any Letter of Credit Issuer, as the case may be, may
prior to receipt of written confirmation act without liability upon the basis of
such telephonic notice, believed by the Administrative Agent or such Letter of
Credit Issuer in good faith to be from an Authorized Officer of Borrower. In
each such case, Borrower hereby waives the right to dispute the Administrative
Agent's or such Letter of Credit Issuer'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, however, that Borrower
may not assign or transfer any of its rights or obligations
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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, however, 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 be those set forth in the
agreement executed by such Bank in favor of the participant relating thereto)
and all amounts payable by Borrower hereunder shall be determined as if such
Bank had not sold such participation, except that the participant shall he
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; provided, further, however, 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 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 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) or (ii) consent to the assignment or transfer by
Borrower of any of its rights and obligations under this Agreement.
(b) Notwithstanding the foregoing, (i) 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 (ii) with the consent of the
Administrative Agent, each Letter of Credit Issuer and Borrower (which consent
shall not be unreasonably withheld or delayed and which consent of Borrower need
not be obtained at any time that a Default or Event of Default shall have
occurred and be continuing), any Bank may assign all or a portion of its
outstanding Commitment and its rights and obligations hereunder to one or more
Eligible Transferees. Unless otherwise agreed to by Borrower, 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 $5.0 million 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 Administrative Agent
a nonrefundable assignment fee of $1,500, and at the time of any assignment
pursuant to this Section 12.04(b), (A) Annex I hereto shall be deemed to be
amended to reflect the Commitment of
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the respective assignee, and of the other Banks, and (B) if any such assignment
occurs after the Initial Borrowing Date, if requested by the assigning Bank and
the assignee Bank, Borrower will issue new Notes to the respective assignee and
to the assigning Bank in conformity with the requirements of Section 1.05. Each
Bank and Borrower 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 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 if 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 if it will make or acquire Loans
for its own account in the ordinary course of such business; provided, however,
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 under any Credit Document and no course of dealing between Borrower
or any Subsidiary 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 under any 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 Borrower or any Subsidiary
in any case shall entitle Borrower or any Subsidiary 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 Borrower or
any Subsidiary in respect of any Obligations of Borrower or any Subsidiary
hereunder, if 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.
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(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 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 Borrower or any Subsidiary, respectively, to such Banks in such amount as
shall result in a proportional participation by all of the Banks in such amount;
provided, however, 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 and unless otherwise specified
herein all calculations made hereunder shall be made and prepared in accordance
with GAAP consistently applied throughout the periods involved for Borrower and
its Subsidiaries on a consolidated basis (except as set forth in the notes
thereto or as otherwise disclosed in writing by Borrower to the Banks);
provided, however, that (x) 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, 1997 historical financial statements of Borrower delivered to the
Banks and (y) that if at any time the computations determining compliance with
Section 8 utilize accounting principles different from those utilized in the
financial statements furnished to the Banks, such financial statements shall be
accompanied by reconciliation worksheets.
(b) All computations of interest and Fees hereunder shall be
made 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; USURY SAVINGS CLAUSE. (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, BORROWER HEREBY IRREVOCABLY ACCEPTS FOR ITSELF
AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION
OF THE
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<PAGE> 76
AFORESAID COURTS. TO THE EXTENT PERMITTED BY APPLICABLE LAW, BORROWER 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 BORROWER LOCATED OUTSIDE NEW
YORK CITY AND BY HAND DELIVERY TO BORROWER 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 TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST BORROWER IN
ANY OTHER JURISDICTION.
(b) TO THE EXTENT PERMITTED BY APPLICABLE LAW, BORROWER
HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IF 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 AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN
THE COURTS REFERRED TO IN CLAUSE (A) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES
AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
(d) NOTWITHSTANDING ANYTHING ELSE HEREIN CONTAINED, BORROWER
SHALL NEVER BE REQUIRED TO PAY ANY SUMS HEREUNDER THAT CONSTITUTE INTEREST AND
THAT WOULD REQUIRE OR PERMIT PAYMENT OF INTEREST AT A RATE HIGHER THAN THE
MAXIMUM NON-USURIOUS RATE ALLOWED BY APPLICABLE LAW.
12.09 Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, which may be delivered in original or facsimile form, 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 Borrower and the
Administrative Agent.
12.10 Effectiveness. This Agreement shall become effective on
the date (the "Closing Date") on which (a) Borrower and each of the Required
Banks shall have signed and delivered to the Agent a copy hereof, whether the
same or different copies and whether delivered in original form or by facsimile
and (b) each of the conditions listed in Section 5 shall have been fulfilled to
the reasonable satisfaction of the Administrative Agent.
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. Neither this Agreement nor any
other Credit Document nor any terms hereof or thereof may be changed, waived,
discharged or terminated unless
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such change, waiver, discharge or termination is in writing signed by Borrower
and the Required Banks; provided, however, that no such change, waiver,
discharge or termination shall, without the consent of each Bank (other than a
Defaulting Bank) affected thereby and, with respect to clause (vi) below, the
consent of the Administrative Agent (i) extend the Maturity Date, or reduce the
rate or extend the time of payment of interest (other than as a result of
waiving the applicability or any post-default increase in interest rates) or
Fees thereon, or reduce the principal amount thereof, (ii) increase the
Commitment of such Bank over the amount thereof then in effect (if it being
understood that a waiver of any Default or Event of Default or of a mandatory
reduction in the Total Commitment shall not constitute a change in the terms of
any Commitment of any Bank), (iii) amend, modify or waive any provision of this
Section, (iv) reduce the percentage specified in the definition of Required
Banks (if it being understood that, with the consent of the Required Banks,
additional extensions of credit pursuant to this Agreement may be included in
the determination of the Required Banks on substantially the same basis as the
Commitments are included on the Second Amended and Restated Effectiveness Date),
or (v) consent to the assignment or transfer by Borrower of any of its rights
and obligations under this Agreement. No provision of Section 2 or 11, or any
other provisions relating to any Letter of Credit Issuer or the Administrative
Agent may be modified without the consent of such Letter of Credit Issuer or the
Administrative Agent, respectively.
(b) If, in connection with any proposed change, waiver,
discharge or termination to any of the provisions of this Agreement as
contemplated by clause (i), (iii), (iv), (v) or (vi) 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
Borrower 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, however, that Borrower 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 clause
(ii) of the proviso to Section 12.12(a).
12.13 Survival. All indemnities set forth herein including,
without limitation, in Section 1.10, 1.11, 4.04, 11.07 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, however, that Borrower 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. The Banks shall hold all non-public
information obtained pursuant to the requirements of this Agreement confidential
and in any event may make disclosure reasonably required by any bona fide
transferee or participant in connection with the contemplated transfer of any
Loans or participation therein (so long as such transferee or participant agrees
to be
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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 process;
provided, however, that, unless specifically prohibited by applicable law or
court order, each Bank shall notify Borrower 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; provided, however, that in no event shall any Bank be
obligated or required to return any materials furnished by Borrower or any
Subsidiary.
12.16 Registry. Borrower hereby designates the Administrative
Agent to serve as Borrower's agent, solely for purposes of this Section 12.16,
to maintain a register (the "Register") on which if it will record the
Commitments from time to rime 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 Borrower's 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 Intentionally Omitted.
[Signature Pages Follow]
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<PAGE> 79
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: GLOBAL MARINE INC.
777 N. Eldridge Road
Houston, Texas 77079-4416
Telecopy: (281) 596-5826 By: /s/ W. MATT RALLS
--------------------- ------------------------------
Telephone: (281) 596-5810 W. Matt Ralls
--------------------- Vice President and Treasurer
Attention: W. Matt Ralls
------------------------------
<PAGE> 80
BANKERS TRUST COMPANY,
Individually and as
Administrative Agent
By: /s/ MARCUS W. TARKINGTON
------------------------------
Name: Marcus M. Tarkington
Title: Principal
<PAGE> 81
ABN AMRO BANK, N.V., HOUSTON
AGENCY, Individually and as a
Co-Agent
By: /s/ CHERYL I. LIPSHUTZ
------------------------------
Name: Cheryl I. Lipshutz
Title: Group Vice President
By: /s/ CHARLES W. RANDALL
------------------------------
Name: Charles W. Randall
Title: Senior Vice President
<PAGE> 82
SOCIETE GENERALE, SOUTHWEST
AGENCY,
Individually and as a Co-Agent
By: /s/ RICHARD A. GOULD
------------------------------
RICHARD A. GOULD
Vice President
<PAGE> 83
ANNEX I
COMMITMENTS
<TABLE>
<CAPTION>
BANK COMMITMENT
---- ----------
<S> <C>
Bankers Trust Company $ 50,000,000.00
ABN AMRO Bank, N.V. 50,000,000.00
Societe Generale, Southwest
Agency 50,000,000.00
----------------
Total $ 150,000,000.00
================
</TABLE>
<PAGE> 84
ANNEX II
BANK ADDRESSES
Bankers Trust Company 130 Liberty Street
New York, New York 10006
Attention: Brian McBride
Tel. No.: (212) 250-2853
Fax No.: (212) 250-2923
ABN AMRO Bank, N.V., Houston Agency Three Riverway
Suite 1700
Houston, Texas 77056
Attention: Cheryl I. Lipshutz
Tel. No.: (713) 964-3351
Fax No.: (713) 621-5801
Societe Generale, Southwest Agency 1111 Bagby Street
Suite 2020
Houston, Texas 77002
Attention: Richard Gould
Tel. No.: (713) 759-6300
Fax No.: (713) 650-0824
