<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
FOR THE TRANSITION PERIOD FROM ___________ TO _____________
COMMISSION FILE NUMBER: 0-13857
NOBLE DRILLING CORPORATION
-----------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 73-0374541
- ------------------------ --------------------------------------------
(State of incorporation) (I.R.S. employer identification number)
10370 RICHMOND AVENUE, SUITE 400, HOUSTON, TEXAS 77042
------------------------------------------------------
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (713) 974-3131
------------------------------------------------------------------
Securities registered pursuant to Section 12(b) of the Act:
COMMON STOCK, PAR VALUE $.10 PER SHARE NEW YORK STOCK EXCHANGE
9 1/8% SENIOR NOTES DUE 2006 NEW YORK STOCK EXCHANGE
PREFERRED STOCK PURCHASE RIGHTS NEW YORK STOCK EXCHANGE
--------------------------------- -----------------------------------------
Title of each class Name of each exchange on which registered
Securities registered pursuant to Section 12(g) of the Act:
NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
Aggregate market value of Common Stock held by nonaffiliates as of March 9,
1998: $3,557,930,459
Number of shares of Common Stock outstanding as of March 9, 1998: 131,342,070
DOCUMENTS INCORPORATED BY REFERENCE
Listed below are documents parts of which are incorporated herein by
reference and the part of this report into which the document is incorporated:
(1) Proxy statement for the 1998 annual meeting of stockholders-
Part III
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
PART ITEM 1. BUSINESS........................................................................ 1
I General............................................................................. 1
Business Strategy................................................................... 1
Development of Business During 1997................................................. 2
Modifications and Upgrades..................................................... 2
Redeployments.................................................................. 3
Asset Rationalization Program.................................................. 3
Drilling Contracts.................................................................. 3
Offshore Drilling Operations........................................................ 4
International Contract Drilling................................................ 4
Domestic Contract Drilling..................................................... 5
Labor Contracts................................................................ 5
Turnkey Drilling and Engineering Services........................................... 5
Competition and Risks............................................................... 5
Governmental Regulation and Environmental Matters................................... 7
Employees........................................................................... 7
Financial Information about Foreign and Domestic Operations......................... 8
ITEM 2. PROPERTIES...................................................................... 8
Drilling Fleet...................................................................... 8
Semisubmersibles............................................................... 8
Dynamically Positioned Drillships.............................................. 9
Jackup Rigs.................................................................... 8
Submersibles................................................................... 9
Drilling Fleet...................................................................... 10
Facilities.......................................................................... 11
ITEM 3. LEGAL PROCEEDINGS............................................................... 11
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS............................. 12
EXECUTIVE OFFICERS OF THE REGISTRANT........................................................ 12
- --------------------------------------------------------------------------------------------------------------
PART ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS........... 13
II ITEM 6. SELECTED FINANCIAL DATA......................................................... 14
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS...................................................................... 15
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK............................................................... 23
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA..................................... 23
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE............................................. 49
- --------------------------------------------------------------------------------------------------------------
PART ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.............................. 49
III ITEM 11 EXECUTIVE COMPENSATION.......................................................... 49
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.................. 49
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.................................. 49
- --------------------------------------------------------------------------------------------------------------
PART ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
IV FORM 8-K........................................................................ 50
SIGNATURES.................................................................................. 51
</TABLE>
<PAGE> 3
FORM 10-K
This report on Form 10-K includes "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. All statements
other than statements of historical facts included in this Form 10-K, including,
without limitation, statements contained in "Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations", regarding the
Company's financial position, business strategy, plans and objectives of
management of the Company for future operations, industry conditions, and
indebtedness covenant compliance, are forward-looking statements. Although the
Company believes that the expectations reflected in such forward-looking
statements are reasonable, it can give no assurance that such expectations will
prove to have been correct. Important factors that could cause actual results to
differ materially from the Company's expectations include, but are not limited
to, volatility of oil and gas prices, increasingly heavy backlogs for equipment
and services required to complete on schedule major shipyard refurbishment and
conversion projects which are either planned or in progress, potential decrease
in demand for drilling services in the U.S. Gulf of Mexico where the Company has
a concentration of drilling rigs (which could also result in competitors moving
their rigs to other markets where the Company has drilling rigs), risks
associated with turnkey drilling operations, intense competition in the drilling
industry, political and economic conditions in international markets (including
Nigeria, Venezuela and India), natural disasters (such as hurricanes),
operational risks (such as blowouts, fires and loss of production), early
termination provisions generally found in the Company's drilling contracts,
limitations on insurance coverage, and requirements and potential liability
imposed by governmental regulation of the drilling industry (including
environmental regulation).
PART I
ITEM 1. BUSINESS
GENERAL
Noble Drilling Corporation is a leading provider of diversified
services for the oil and gas industry worldwide. The Company's activities
include offshore drilling services, turnkey drilling services and engineering
and asset management services. The Company's drilling fleet is broadly
diversified, allowing it to work in a variety of operating conditions.
Noble Drilling Corporation ("Noble Drilling") was organized as a
Delaware corporation in 1939. Noble Drilling and its predecessors have been
engaged in the contract drilling of oil and gas wells for others domestically
since 1921 and internationally during various periods since 1939. As used
herein, unless otherwise required by the context, the term "Noble Drilling"
refers to Noble Drilling Corporation and the term "Company" refers to Noble
Drilling and its consolidated subsidiaries.
BUSINESS STRATEGY
The Company's business strategy has been to actively expand its
international and offshore capabilities through acquisitions, rig upgrades and
modifications, and by redeploying assets in important geological areas. In
recent years the Company has included within its strategic objectives a focus on
increasing the number of rigs in its fleet capable of drilling in deeper water
depths.
The offshore contract drilling industry has, in recent years,
experienced a series of asset sales and consolidations among drilling
contractors, and the Company expects this trend to continue as drilling
contractors position themselves strategically in the market. The Company, from
time to time, has discussions with third parties regarding asset acquisitions or
business combinations and intends to continue to consider business opportunities
that it believes promote its business strategy.
1
<PAGE> 4
DEVELOPMENT OF BUSINESS DURING 1997
MODIFICATIONS AND UPGRADES
EVA-4000(TM) SEMISUBMERSIBLE CONVERSIONS
The Company has pursued an extensive rig modification, refurbishment
and upgrade program in recent years, which continued in 1997. In response to the
growth in worldwide demand for drilling rigs capable of operating in water
depths greater than 5,000 feet, the Company is upgrading certain of its shallow
water submersible rigs into Economic Value Advantage ("EVA-4000(TM)") design
semisubmersible rigs. The first EVA-4000(TM) conversion, the Noble Paul Romano,
has been contracted to Shell Deepwater Development Inc. ("Shell"), an affiliate
of Shell Oil Company, for five years. The Noble Paul Romano is expected to be
available for work in the second half of 1998. The second EVA-4000(TM)
conversion, the Noble Paul Wolff, will be capable of operating in up to 8,900
feet of water and has been contracted to Petroleo Brasiliero S.A. ("Petrobras")
for six years. The Noble Paul Wolff is expected to be available for work in late
1998. The Noble Amos Runner has been contracted to a consortium of three
operators, Marathon Oil Company, Oryx Energy Company and Murphy Exploration and
Production Company. The initial term of the drilling contract is five years,
with options to extend at mutually agreed terms and conditions. The Noble Amos
Runner will be capable of operating in up to 6,600 feet of water and is expected
to be available for work in the second quarter of 1999.
The Company has entered into letters of intent for two additional
EVA-4000(TM) conversions. The Noble Jim Thompson will be contracted to Shell for
work in the Gulf of Mexico. The unit will be capable of operating in water
depths up to 6,000 feet in a moored configuration. The initial term of the
drilling contract will be for three years with options to Shell to extend the
contract. The conversion is expected to be completed in late 1998 or the first
quarter of 1999. The Noble Max Smith will be contracted for work in the Gulf of
Mexico by two operators, Amerada Hess Corporation and Union Pacific Resources
Company, and will be capable of drilling in water depths up to 6,000 feet in a
moored configuration. The initial term of the drilling contract will be for five
years with options to the operators to extend. Completion of the conversion and
delivery of the unit is expected for the third quarter of 1999.
OTHER SEMISUBMERSIBLE CONVERSIONS
The Company has entered into a letter of intent with two operators to
utilize the Noble Homer Ferrington in the Gulf of Mexico. The Noble Homer
Ferrington (formerly the Shelf 4) is a semisubmersible rig hull purchased in
late 1996. The rig will be capable of drilling in water depths up to 6,000 feet
in a moored configuration. The initial term of the drilling contract will be for
five years. The Company will be required to make significant capital
expenditures to refurbish and upgrade the rig. Completion of the upgrade and
delivery of the unit is expected for the fourth quarter of 1999.
Additionally, the Company has three other submersible rigs that it
believes could be converted to semisubmersibles. Any such conversion would
require significant capital expenditures. The Company does not plan to make a
conversion unless a long-term contract for the semisubmersible is secured.
OTHER SIGNIFICANT UPGRADES
Other significant upgrades include the Noble Bill Jennings and Noble
Leonard Jones, which were upgraded from independent leg slot rigs to cantilever
drilling units with proprietary extended reach cantilever (ERC(TM)) design and
water depth ratings of 390 feet. The Noble Bill Jennings began working in
October 1997, and the Noble Leonard Jones began working in January 1998. In
addition, the refurbishment of the Noble Al White (formerly the Neddrill Trigon)
for an 18-month contract in the Norwegian sector of the North Sea was completed
in the fourth quarter of 1997. The Company has completed the reactivation of two
idle submersible rigs, the Noble Joe Alford and Noble Lester Pettus, and a third
submersible, the Noble Fri Rodli, is scheduled to be completed in the first
quarter of 1998. The installation and testing of blowout preventers and related
control systems on the Noble Roger Eason (formerly the Neddrill 2) and the Noble
Muravlenko have been delayed pending the delivery of key equipment components.
The Company expects that these components will be installed on the two
drillships during the first half of 1998.
2
<PAGE> 5
See "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations-Liquidity and Capital Resources" for a
discussion of capital expenditures.
REDEPLOYMENTS
From time to time, the Company has strategically redeployed certain
drilling units in its fleet, primarily from the Gulf of Mexico to other drilling
markets worldwide, in order to position assets in important geological areas.
During 1997, the Noble Lewis Dugger and Noble Sam Noble were deployed from the
U.S. Gulf of Mexico to the Bay of Campeche; the Noble Al White was deployed from
Argentina to the North Sea; and the Noble Muravlenko was upgraded and deployed
to Brazil. The Noble Kenneth Delaney has completed a refurbishment in Sharjah,
UAE and is being deployed to Qatar. Additionally, the Company has a letter of
intent to mobilize the Noble John Sandifer from the U.S. Gulf of Mexico to the
Bay of Campeche in the first half of 1998 for a two-year contract.
ASSET RATIONALIZATION PROGRAM
Consistent with the Company's focus on enhancing the deepwater
capability of its fleet, on May 7, 1997, the Company completed the sale of its
12 mat supported jackup rigs for $268,818,000 in cash. See "Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Results of Operations Significant 1997 Events."
DRILLING CONTRACTS
Each of the Company's drilling units is employed under an individual
contract. Although the final terms of such contracts are the result of
negotiations between the Company and its customers, many contracts are awarded
based upon competitive bidding. The Company's drilling contracts generally
contain the following terms:
o a term extending over a specific period of time or the period
necessary to drill one or more wells (in general, the Company seeks to
have a reasonable balance of short- and long-term contracts to minimize
the downside impact of a decline in the market, while obtaining the
benefit of increasing market prices in a rising market);
o early termination by the customer without cause and extension options
to drill additional wells, in each case, generally exercisable by the
customer upon advance notice to the Company;
o early termination by the customer if the unit is lost or destroyed, if
operations are suspended for a specified period of time due to
breakdown of major equipment or if operations are suspended for a
specified period of time due to "force majeure" events beyond the
control of the Company and the customer;
o payment of compensation to the Company (generally in U.S. dollars) on
a "daywork" basis, under which the Company receives a fixed amount per
day that the drilling unit is operating under contract, with lower
rates or no compensation payable during periods of equipment breakdown
and repair or adverse weather or in the event operations are
interrupted by other conditions, some of which may be beyond the
Company's control; and
o payment by the Company of the operating expenses of the drilling unit,
including labor costs and the cost of incidental supplies.
Most contracts allow the Company to recover its mobilization and
demobilization costs associated with moving a drilling unit from one location to
another. If market conditions required the Company to bear these costs, the
Company's operating margins would be reduced. Market conditions prevailing in
1997 and year to date in 1998 have permitted the Company to recover its
mobilization and demobilization costs to move a unit long distances between
operating areas. For shorter moves such as "field moves", the Company's
customers have generally agreed to bear the costs of moving the unit and pay the
Company a reduced dayrate or "move rate" while the unit is being moved.
3
<PAGE> 6
The Company, through Triton Engineering Services Company and its
subsidiaries, also participates in "turnkey" contracts (see "Item 1. Business -
Turnkey Drilling and Engineering Services"). The risk of loss to the Company is
generally higher with respect to the Company's turnkey drilling operations than
it is for daywork contract drilling operations.
OFFSHORE DRILLING OPERATIONS
The Company's offshore contract drilling operations, which accounted
for approximately 66 percent and 63 percent of operating revenues for the years
ended December 31, 1997 and 1996, respectively, are conducted worldwide. The
Company's offshore drilling fleet consists of 45 units. See "Item 2. Properties
- - Drilling Fleet." The Company's principal regions of offshore contract drilling
operations include the North Sea, the Gulf of Mexico, Africa, South America, the
Middle East and India. In 1997, no single customer accounted for more than 10
percent of the Company's total operating revenues.
INTERNATIONAL CONTRACT DRILLING
The Company's international offshore contract drilling operations are
conducted in the North Sea, Mexico, Africa, South America, the Middle East and
India. Offshore contract drilling services from international sources accounted
for approximately 74 percent and 62 percent of the Company's total offshore
contract drilling services revenues for the years ended December 31, 1997 and
1996, respectively. In 1997, approximately 54 percent of the Company's
international offshore contract drilling services revenues was derived from
contracts with major oil and gas companies, 45 percent from contracts with
government-owned companies and the balance from contracts with independent
operators.
The Company's international contract drilling fleet consisted of 30
rigs at January 31, 1998, of which 29 were working under contract and one was
being deployed to begin operating under a new contract.
The Company has six jackup rigs located along the west coast of Africa.
The jackup rigs are contracted to major oil companies for terms extending
through dates that range from March to December 1998.
The Company has four jackup rigs located in Venezuela. The Noble Dick
Favor is under a long-term contract that terminates in the year 2000. The Noble
Charles Copeland is contracted through August 1998, and the Company expects this
contract to be renewed for an additional 12 months. The Noble Earl Frederickson
has been contracted to drill one well, plus additional wells at the option of
the operator, in the first half of 1998. This rig is earning a standby rate
until the commencement of drilling operations on the initial well. The contract
for the Noble Carl Norberg expired in March 1998. This rig is being demobilized
out of Venezuela, a portion of the cost of which is being paid by the former
operator, and currently is available for contract.
The Company has three jackup rigs located in Qatar under contracts
extending through dates ranging from October 1998 to October 1999. The Noble
Kenneth Delaney, which operated in India in 1997, has completed a refurbishment
in Sharjah, UAE and is being deployed to Qatar to begin operating under a
three-year contract.
The Company has two jackup rigs working in India. The Noble Ed Holt is
under a bareboat charter agreement that expires in March 1998. The rig will be
moved to the shipyard upon expiration of the contract for upgrade prior to
commencing a two-year contract. The Noble Jimmy Puckett is under a bareboat
charter agreement until December 1998.
The Company has three jackup rigs operating in the Bay of Campeche,
Mexico under contracts extending through dates ranging from October 1998 to May
1999. All of the rigs have been contracted by Petroleos de Mexico ("Pemex").
Additionally, the Company has a letter of intent to mobilize the Noble John
Sandifer from the U.S. Gulf of Mexico to the Bay of Campeche in the first half
of 1998 for a two-year contract with Pemex.
The Company has three drillships operating offshore Brazil for
Petrobras under contracts extending through dates ranging from October 2001 to
March 2003.
4
<PAGE> 7
The Company has seven jackup rigs and one semisubmersible rig working
in the North Sea under contracts extending through dates ranging from March 1998
to July 2000. The Noble George Savageau is under an agreement which expires in
March 1998. The rig will be moved to the shipyard upon expiration of the
contract for upgrade prior to commencing an 18-month contract.
DOMESTIC CONTRACT DRILLING
The Company's domestic offshore contract drilling fleet consisted of 15
rigs at January 31, 1998, of which nine were working under contracts and six
were being upgraded, modified and/or refurbished.
In 1997, approximately 69 percent of the Company's domestic offshore
contract drilling revenues was derived from contracts with major oil and gas
companies and the remaining 31 percent was derived from contracts with
independent operators.
LABOR CONTRACTS
The Company's offshore operations also include labor contracts for
drilling and workover activities covering 14 rigs operating in the U.K. North
Sea. These rigs are not owned or leased by the Company. Under its labor
contracts, the Company provides the personnel necessary to manage and perform
the drilling operations from drilling platforms owned by the operator. The
contracts are generally renewable no more frequently than on an annual basis.
After drilling operations are completed, workover operations usually become an
important element of each platform's activity. Drilling contractor crews will,
therefore, typically remain on the platform until a field is depleted by
production.
Additionally, the Company maintains and operates the drilling equipment
on the concrete, gravity-based structure known as the Hibernia Project offshore
Nova Scotia in Eastern Canada under a long-term contract for Hibernia Management
and Development Company Ltd. ("Hibernia"). Drilling operations from the
structure commenced in the third quarter of 1997. The Company's five-year
contract with Hibernia extends through August 2002 with an option to Hibernia
for a five-year extension.
TURNKEY DRILLING AND ENGINEERING SERVICES
Through its wholly owned subsidiary, Triton Engineering Services
Company ("Triton"), the Company provides turnkey drilling, drilling project
management, drilling and completion planning and design, specialized drilling
tools and services, and contract engineering and consulting manpower. Turnkey
drilling, Triton's major service, involves the coordination of all equipment,
materials, services and management to drill a well to a specified depth, for a
fixed price. Under turnkey drilling contracts, Triton bears the financial risk
of delays in the completion of the well. In providing its services, Triton can
use drilling rigs owned either by the Company or by a third party, depending on
availability. The drilling of a turnkey well is generally completed within 30 to
50 days. Triton completed 34 wells in 1997 compared to 28 wells in 1996.
Revenues from turnkey drilling services represented 25 percent and 22 percent of
consolidated operating revenues for the years ended December 31, 1997 and 1996,
respectively.
The Company provides engineering services relating primarily to the
design of drilling equipment for offshore development and production services
and to the recertification of oilfield equipment. The Company works, on a
contract basis, with operators and prime construction contractors of drilling
and production platforms in the design of drilling equipment configurations
aimed at optimizing the operational efficiency of developmental drilling by
maximizing platform space utilization and load capability.
COMPETITION AND RISKS
The contract drilling industry is a highly competitive and cyclical
business characterized by high capital and maintenance costs. Management of the
Company believes that competition for drilling contracts will continue to be
intense for the foreseeable future. Certain competitors may have access to
greater financial resources than the Company.
5
<PAGE> 8
Competition in contract drilling involves numerous factors, including
price, rig availability and suitability, the experience of the workforce,
efficiency, condition of equipment, operating integrity, reputation, industry
standing and customer relations. Although price is a major consideration in most
markets, especially with respect to domestic drilling, the increasing demand
for, and limited supply of, deepwater units has made rig availability and
suitability a principal consideration in recent periods. The Company believes it
competes favorably with respect to all these factors. Competition is primarily
on a regional basis and may vary significantly by region at a particular time.
Demand for offshore drilling equipment is also dependent on the exploration and
development programs of oil and gas producers, which are in turn influenced by
the financial condition of such producers, by general economic conditions and
prices of oil and gas, and, from time to time, by political considerations and
policies.
The Company follows a policy of keeping its equipment well maintained
and technologically competitive. However, its equipment could be made obsolete
by the development of new techniques and equipment. In addition, industry-wide
shortages of supplies, services, skilled personnel and equipment necessary to
conduct the Company's business, such as blowout preventers and drill pipe, occur
from time to time. There can be no assurance that any such shortages experienced
in the past would not occur again or that any such shortages, to the extent
currently existing, will not continue or worsen in the future.
The offshore contract drilling industry has experienced a series of
consolidations and acquisitions among drilling contractors as such contractors
have positioned themselves strategically in the market. The Company, from time
to time, has discussions with third parties regarding asset acquisitions or
business combinations and intends to continue to consider business opportunities
that it believes promote its business strategy.
The Company's operations are materially dependent upon the levels of
activity in offshore world oil and U.S. natural gas exploration, development and
production. Such activity levels are affected by both short-term and long-term
trends in oil and natural gas prices. In recent years, crude oil and natural gas
prices, the expenditures by oil and gas companies for exploration and
production, and the availability of drilling rigs, and therefore the level of
offshore drilling and exploration activity, have been extremely volatile. The
domestic price of U.S. benchmark crude oil has recently approached a four-year
low. Weakness and uncertainty in the demand for and price of natural gas in the
Gulf of Mexico, from time to time, contributes to decreased exploration and
production activities. Demand for drilling services outside the United States,
excluding the North Sea, has been less volatile in recent years, but remains
dependent on a variety of political and economic factors beyond the Company's
control, including worldwide demand for oil and natural gas, the ability of the
Organization of Petroleum Exporting Countries ("OPEC") to set and maintain
production levels and pricing, the level of production of non-OPEC countries and
the policies of the various governments regarding exploration and development of
their oil and natural gas reserves.
If the domestic price of natural gas decreases, the Company's dayrates
on new contracts and utilization rates in the U.S. Gulf could be adversely
affected. Similarly, if the prices of crude oil or natural gas decrease in other
world markets, where the Company's international jackup rigs principally
compete, its rates there could be adversely affected. The Company can predict
neither the future level of demand for its drilling services nor the future
conditions in the offshore contract drilling industry.
The Company's operations are subject to the many hazards inherent in
the drilling business, including blowouts, cratering, fires, and collisions or
groundings of offshore equipment, which could cause substantial damage to the
environment. In addition, the Company's operations are subject to damage or loss
from adverse weather and seas. These hazards could cause personal injury and
loss of life, suspend drilling operations or seriously damage or destroy the
property and equipment involved and, in addition to environmental damage, could
cause substantial damage to producing formations and surrounding areas. Although
the Company maintains insurance against many of these hazards, such insurance is
subject to substantial deductibles and provides for premium adjustments based on
claims. It also excludes certain matters from coverage, such as loss of earnings
on certain rigs. Also, while the Company generally obtains indemnification from
its customers for environmental damage with respect to offshore drilling, such
indemnification is generally only in excess of a specified amount, which
typically ranges from $100,000 to $250,000.
In the case of turnkey drilling operations, the Company maintains
insurance against pollution and environmental damage in amounts ranging from
$5,000,000 to $50,000,000 depending on location, subject to
6
<PAGE> 9
self-insured retentions of $25,000 to $1,000,000. Under turnkey drilling
contracts, Triton generally assumes the risk of pollution and environmental
damage, but on occasion receives indemnification from the customer for
environmental and pollution liabilities in excess of Triton's pollution
insurance coverage. Further, Triton is not insured against certain drilling
risks that could result in delays or nonperformance of a turnkey drilling
contract, although it generally maintains insurance against delays related to
loss of well control. Triton typically obtains contractual indemnification from
the drilling contractors that provide the rigs for Triton's turnkey drilling
operations for pollution arising from certain acts of such contractors.
The Company's international operations are also subject to certain
political, economic and other uncertainties including, among others, risks of
war and civil disturbances, expropriation, nationalization, renegotiation or
modification of existing contracts, taxation policies, foreign exchange
restrictions, international monetary fluctuations and other hazards arising out
of foreign governmental sovereignty over certain areas in which the Company
conducts operations. The Company has sought to obtain, where economic, insurance
against certain political risks. However, there can be no assurance that such
insurance would be available to the Company or, if available, would cover all
losses that the Company may incur in respect of foreign operations.
GOVERNMENTAL REGULATION AND ENVIRONMENTAL MATTERS
Many aspects of the Company's operations are affected by domestic and
foreign political developments and are subject to numerous governmental
regulations that may relate directly or indirectly to the contract drilling
industry. The regulations applicable to the Company's operations include certain
provisions that regulate the discharge of materials into the environment or
require remediation of contamination, under certain circumstances. Usually these
environmental laws and regulations impose "strict liability," rendering a person
liable without regard to negligence or fault on the part of such person. Such
environmental laws and regulations may expose the Company to liability for the
conduct of, or conditions caused by, others, or for acts of the Company that
were in compliance with all applicable laws at the time such acts were
performed.
The U.S. Oil Pollution Act of 1990 ("OPA `90") and the subsequent
regulations impose certain additional operational requirements on the Company's
domestic offshore rigs and govern liability for leaks, spills and blowouts.
Regulations under OPA `90 may increase the level of financial assurance required
of owners and operators of rigs in the waters of the United States. The Company
monitors these regulations and does not believe that they are likely to have a
material adverse effect on the Company's financial condition or results of
operations.
The Company has made and will continue to make expenditures to comply
with environmental requirements. The Company has not to date expended material
amounts in connection with such activities and does not believe that compliance
with such requirements will have a material adverse effect upon its capital
expenditures, results of operations or competitive position. Although such
requirements do have a substantial impact upon the energy and energy services
industries, generally they do not appear to affect the Company any differently
or to any greater or lesser extent than other companies in the energy services
industry.
The modification of existing laws or regulations or the adoption of new
laws or regulations curtailing exploratory or development drilling for oil and
gas for economic, environmental or other reasons could materially and adversely
affect the Company's operations by limiting drilling opportunities.
EMPLOYEES
At December 31, 1997, the Company had approximately 2,781 employees, of
which 58 percent were engaged in international operations and 42 percent were
engaged in domestic operations. Over many years, the Company has developed and
maintained a well-trained and experienced workforce.
Depending on location, some employees of Noble Drilling (Nederland)
B.V., a subsidiary of the Company, are covered by a labor agreement or are
represented by labor unions. The Company is not a party to any collective
bargaining agreements that are material to the Company. The Company considers
its employee relations to be satisfactory.
7
<PAGE> 10
Demand for field personnel has increased significantly due to increased
levels of offshore drilling activity in recent periods. A continued increase in
demand for oilfield services could make it more difficult to retain and recruit
qualified rig crew members without significant increases in compensation.
FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS
Information regarding operating revenues, operating income and loss,
and identifiable assets attributable to each of the Company's geographic areas
of operations for the last three fiscal years is presented in Note 13 of Notes
to Consolidated Financial Statements included elsewhere herein.
ITEM 2. PROPERTIES
DRILLING FLEET
The Company's offshore drilling rig fleet at January 31, 1998 consisted
of 45 units comprising seven semisubmersibles (including five submersibles that
will be converted to EVA-4000(TM) semisubmersibles), three drillships, 32 jackup
rigs and three submersibles. The rig counts include one drillship in which the
Company has a 41 percent interest through a joint venture arrangement, one
jackup rig in which the Company has a 50 percent interest through a joint
venture arrangement and one rig currently active as a submersible prior to its
scheduled conversion to an EVA-4000(TM) semisubmersible commencing in 1998. Each
type of rig is described further below. There are several factors that determine
the type of rig most suitable for a particular job, the more significant of
which include the water depth and bottom conditions at the proposed drilling
location, whether the drilling is being done over a platform or other structure,
and the intended well depth.
SEMISUBMERSIBLES
The Company had seven semisubmersibles (including five submersibles
that will be converted to EVA-4000(TM) semisubmersibles) in the fleet at January
31, 1998. Semisubmersibles are floating platforms which, by means of a water
ballasting system, can be submerged to a predetermined depth so that a
substantial portion of the hull is below the water surface during drilling
operations. The Noble Ton van Langeveld maintains its position over the well
through the use of a mooring system, is designed to work in water depths of up
to 1,500 feet and can drill in many areas where the Company's jackup rigs can
also drill. However, semisubmersibles normally require water depth of at least
200 feet in order to conduct operations. Semisubmersibles are typically more
expensive to construct and operate than jackup rigs.
DYNAMICALLY POSITIONED DRILLSHIPS
The Company had three dynamically positioned drillships in the fleet at
January 31, 1998, including one drillship in which the Company owns a 41 percent
interest through a joint venture arrangement. Drillships are ships that are
equipped for drilling and are typically self-propelled and move from one
location to another under their own power. Drillships are positioned over the
well through use of either an anchoring system or a computer controlled thruster
system (dynamic positioning). The Company's two wholly owned drillships, the
Noble Leo Segerius and Noble Roger Eason, are capable of drilling in water
depths up to 4,500 feet and 6,000 feet, respectively. The Noble Muravlenko is
capable of drilling in water depths up to 4,000 feet. Drillships are typically
more expensive to construct and operate than jackup rigs.
JACKUP RIGS
The Company had 32 jackup rigs in the fleet at January 31, 1998,
including one jackup rig in which the Company owns a 50 percent interest through
a joint venture arrangement. Jackup rigs are mobile self-elevating drilling
platforms equipped with legs which can be lowered to the ocean floor until a
foundation is established to support the drilling platform. The rig hull
includes the drilling rig, jacking system, crew quarters, loading and unloading
facilities, storage areas for bulk and liquid materials, helicopter landing deck
and other related equipment. The rig legs may operate independently or have a
mat attached to the bottom of them in order to provide a more stable foundation
in soft bottom areas. All of the Company's jackup rigs are independent leg
cantilevered rigs. A cantilevered jackup has a feature that permits the drilling
platform to be extended out from the hull, allowing it to perform drilling or
workover operations over pre-existing platforms or structures. Moving a rig to
the drill site
8
<PAGE> 11
involves jacking up its legs until the hull is floating on the
surface of the water. The hull is then towed to the drill site by tugs and the
legs are jacked down to the ocean floor. The jacking operation continues until
the hull is raised out of the water and drilling operations are conducted with
the hull in its raised position. The Company's jackup rigs are capable of
drilling to a maximum depth of 25,000 feet in water depths ranging between 8 and
390 feet, depending on the jackup rig.
SUBMERSIBLES
The Company had three submersibles in the fleet at January 31, 1998.
Submersibles are mobile drilling platforms which are towed to the drill site and
submerged to drilling position by flooding the lower hull until it rests on the
sea floor, with the upper deck above the water surface. The Company's
submersibles are capable of drilling to a maximum depth of 30,000 feet in water
depths ranging between 12 and 100 feet, depending on the submersible.
The following table sets forth certain information concerning the
Company's drilling rig fleet at January 31, 1998. The table does not include 14
rigs owned by operators for which the Company had labor contracts as of January
31, 1998. Unless otherwise indicated, the Company owns and operates the rigs
included in the table.
9
<PAGE> 12
DRILLING FLEET
<TABLE>
<CAPTION>
YEAR WATER MAXIMUM
BUILT OR DEPTH DRILLING
NAME MAKE REBUILT (1) RATING DEPTH LOCATION STATUS (2)
---- ---- ----------- ------ ----- -------- ----------
(FEET) (FEET)
<S> <C> <C> <C> <C> <C> <C>
SEMISUBMERSIBLES - 7
Noble Paul Wolff (3) Noble EVA 4000(TM) 1998 R 8,900 30,000 U.S. Gulf Shipyard
Noble Amos Runner (3) Noble EVA 4000(TM) 1999 R 6,600 25,000 U.S. Gulf Shipyard
Noble Paul Romano (3) Noble EVA 4000(TM) 1998 R 6,000 30,000 U.S. Gulf Shipyard
Noble Jim Thompson (3)(4) Noble EVA 4000(TM) 1999 R 6,000 25,000 U.S. Gulf Shipyard
Noble Max Smith (4)(6) Noble EVA 4000(TM) 1999 R 6,000 25,000 U.S. Gulf Active
Noble Homer Ferrington (4) Friede & Goldman 9500 1999 R 6,000 20,000 U.S. Gulf Shipyard
Enhanced Pacesetter
Noble Ton van Langeveld (3)(5) Offshore Co. SCP III 1991 R 1,500 25,000 U.K. Active
DYNAMICALLY POSITIONED
DRILLSHIPS - 3
Noble Roger Eason (3) Nedlloyd 1997 R 6,000 25,000 Brazil Active
Noble Leo Segerius (3) Gusto Engineering 1996 R 4,900 20,000 Brazil Active
Pelican Class
Noble Muravlenko (3)(7) Gusto Engineering 1997 R 4,000 21,000 Brazil Active
Pelican Class
JACKUP RIGS - 32
Noble Bill Jennings (3) MLT 84 - ERC(TM) 1997 R 390 25,000 U.S. Gulf Active
Noble Leonard Jones (3) MLT 53 - ERC(TM) 1998 R 390 25,000 U.S. Gulf Active
Noble Eddie Paul (3) MLT 84 - ERC(TM) 1995 R 390 25,000 U.S. Gulf Active
Noble Al White (3)(5) CFEM T-2005C 1997 R 360 25,000 Norway Active
Noble Kolskaya (3)(5)(8) Gusto Engineering 1997 R 330 25,000 Denmark Active
Noble Johnnie Hoffman (3) Baker Marine BMC 300 1993 R 300 25,000 U.S. Gulf Active
Noble Byron Welliver (3)(5) CFEM T-2005C 1982 300 25,000 Denmark Active
Noble Roy Butler (3)(9) F&G L-780 MOD II 1996 R 300 25,000 Zaire Active
Noble Tommy Craighead (3) F&G L-780 MOD II 1990 R 300 25,000 Nigeria Active
Noble Kenneth Delaney (3)(10) F&G L-780 MOD II 1998 R 300 25,000 Qatar Active
Noble Percy Johns (3) F&G L-780 MOD II 1995 R 300 25,000 Nigeria Active
Noble George McLeod (3) F&G L-780 MOD II 1995 R 300 25,000 Qatar Active
Noble Jimmy Puckett (11) F&G L-780 MOD II 1982 300 25,000 India Active
Noble Gus Androes (3) Levingston 111-C 1996 R 300 25,000 Qatar Active
Noble Lewis Dugger (3) Levingston 111-C 1997 R 300 20,000 Bay of Campeche Active
Noble Ed Holt (3)(11)(12) Levingston 111-C 1994 R 300 25,000 India Active
Noble Sam Noble (3) Levingston 111-C 1982 300 25,000 Bay of Campeche Active
Noble Gene Rosser (3) Levingston 111-C 1996 R 300 20,000 Bay of Campeche Active
Noble John Sandifer (3)(13) Levingston 111-C 1995 R 300 25,000 U.S. Gulf Active
Noble Charles Copeland (3) MLT Class 82-SD-C 1995 R 250 20,000 Venezuela Active
Noble Earl Frederickson (3) MLT Class 82-SD-C 1979 R 250 20,000 Venezuela Active
Noble Tom Jobe (3) MLT Class 82-SD-C 1982 250 25,000 U.S. Gulf Active
Noble Ed Noble (3) MLT Class 82-SD-C 1990 R 250 20,000 Nigeria Active
Noble Lloyd Noble (3) MLT Class 82-SD-C 1990 R 250 20,000 Nigeria Active
Noble Carl Norberg (3)(14) MLT Class 82-C 1996 R 250 20,000 Venezuela Active
Noble Chuck Syring (3) MLT Class 82-C 1996 R 250 20,000 Qatar Active
Noble Ronald Hoope (3)(5)(15) Marine Structure CJ-46 1982 205 25,000 Netherlands Active
Noble Lynda Bossler (3)(5)(15) Marine Structure CJ-46 1982 205 25,000 Netherlands Active
Noble George Savageau (3)(5)(15) NAM Nedlloyd 1981 225 20,000 Netherlands Active
Noble Piet Van Ede (3)(5)(15) Marine Structure CJ-46 1982 205 25,000 Netherlands Active
Noble Dick Favor Baker Marine BMC 150 1993 R 150 20,000 Venezuela Active
Noble Don Walker (3) Baker Marine BMC 150 1992 R 150 20,000 Nigeria Active
SUBMERSIBLES - 3
Noble Joe Alford Pace Marine 85G 1997 R 85 25,000 U.S. Gulf Active
Noble Lester Pettus Pace Marine 85G 1997 R 85 25,000 U.S. Gulf Active
Noble Fri Rodli Transworld 1998 R 70 25,000 U.S. Gulf Active
</TABLE>
10
<PAGE> 13
- ------------------
(1) Rigs designated with an "R" were modified, refurbished or otherwise
upgraded in the year indicated by capital expenditures in an amount
material to the net book value of such rig.
(2) Rigs listed as "active" were operating under contract. Rigs listed as
"shipyard" are in a shipyard for repair, refurbishment or upgrade.
Shipyard work is scheduled to be completed during 1998 except for the
Noble Jim Thompson, Noble Amos Runner, Noble Max Smith and Noble Homer
Ferrington, which are scheduled to be completed in 1999.
(3) Equipped with a top drive unit.
(4) Under letter of intent for long-term contract.
(5) Harsh environment capability.
(6) Currently active as a submersible prior to its scheduled conversion to
an EVA-4000(TM) semisubmersible commencing June 1998.
(7) The Company owns a 41 percent interest in the drillship through a joint
venture arrangement.
(8) The Company owns a 50 percent interest in the rig through a joint
venture arrangement.
(9) Although designed for a water depth rating of 300 feet, the rig is
currently equipped with legs adequate to drill in approximately 250 feet
of water. The Company owns the additional legs required to extend the
drilling depth capability to 300 feet of water.
(10) Recently completed a refurbishment in Sharjah and is being deployed to
Qatar to begin a three-year contract.
(11) Bareboat chartered to a third party under which the Company maintains
operating control of the rig.
(12) Scheduled to enter the shipyard in March 1998 for upgrade.
(13) The rig is expected to be mobilized to the Bay of Campeche, Mexico in
the first half of 1998.
(14) The rig is being demobilized out of Venezuela and currently is available
for contract.
(15) Water depth rating based on North Sea conditions year round.
FACILITIES
The Company's principal executive offices are located in Houston,
Texas, and leased through the year 2000. The Company also leases administrative
and marketing offices, and sites used primarily for storage, maintenance and
repairs for drilling rigs and equipment, in New Orleans and Lafitte, Louisiana;
Leduc and St. Johns, Canada; Warri, Lagos and Port Harcourt, Nigeria, Aberdeen,
Scotland; Maracaibo and Cuidad Ojeda, Venezuela; Doha, Qatar; Rotterdam and
Beverwijk, The Netherlands; Macae, Brazil; and Esjberg, Denmark.
The Company owns certain tracts of land, including office and
administrative buildings, warehouse facilities and a manufacturing facility, in
Harris and Waller Counties, Texas; Lafayette and Bayou Black, Louisiana; and
Aberdeen, Scotland.
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings to which the Company
is a party or of which certain of its property is the subject. The Company is
involved in certain routine litigation incidental to the business of the
Company.
11
<PAGE> 14
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information as of March 9, 1998
with respect to the executive officers of Noble Drilling.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
James C. Day 54 Chairman, President and Chief Executive Officer and Director
Byron L. Welliver 52 Senior Vice President - Finance, Treasurer and Controller
Julie J. Robertson 42 Vice President - Administration and Corporate Secretary
</TABLE>
James C. Day has served as Chairman of Noble Drilling since October 22,
1992, and as President and Chief Executive Officer since January 1, 1984. From
January 1983 until his election as President and Chief Executive Officer, Mr.
Day served as Vice President of Noble Drilling. Prior to 1983, Mr. Day served as
Vice President and Assistant Secretary of Noble Affiliates, Inc. He has been a
director of Noble Drilling since 1984. Mr. Day is also a director of Global
Industries, Ltd. and Noble Affiliates, Inc.
Byron L. Welliver has served as Senior Vice President - Finance of
Noble Drilling since April 1989, as Treasurer of Noble Drilling since July 1986,
and as Controller of Noble Drilling since September 1994. Mr. Welliver had
served as Controller from April 1989 to April 1991. From July 1986 to April
1989, he also served as Vice President - Finance for Noble Drilling. He joined
Noble Drilling in October 1985, as Controller. Prior to joining Noble Drilling,
Mr. Welliver served consecutively as Tax Manager, Controller and Treasurer of
Noble Affiliates, Inc. beginning in March 1981.
Julie J. Robertson has served as Vice President-Administration of Noble
Drilling since April 1996 and as Corporate Secretary of Noble Drilling since
December 1993. In September 1994, Ms. Robertson became Vice
President-Administration of Noble Drilling Services Inc. From January 1989 to
September 1994, Ms. Robertson served consecutively as Manager of Benefits and
Director of Human Resources for Noble Drilling Services Inc. Prior to 1989, Ms.
Robertson served consecutively in the positions of Risk and Benefits Manager and
Marketing Services Coordinator for a predecessor subsidiary of the Company,
beginning in 1979.
12
<PAGE> 15
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Noble Drilling's Common Stock, par value $0.10 per share ("Common
Stock"), is listed and traded on the New York Stock Exchange under the symbol
"NE". The following table sets forth for the periods indicated the high and low
sales prices of the Common Stock.
<TABLE>
<CAPTION>
HIGH LOW
--------- ----------
<S> <C> <C>
1997
First quarter................... $ 24 1/2 $ 15 5/8
Second quarter.................. 23 3/8 15 1/2
Third quarter................... 32 1/2 22 5/8
Fourth quarter.................. 38 3/16 25 9/16
1996
First quarter................... $ 13 $ 8
Second quarter.................. 16 3/8 11 3/4
Third quarter................... 16 3/4 13 1/4
Fourth quarter.................. 22 14 7/8
</TABLE>
The Company has not paid any cash dividends on the Common Stock since
becoming a publicly held corporation in October 1985, and does not anticipate
paying dividends on the Common Stock at any time in the foreseeable future.
Certain provisions of the indenture governing the Company's 9 1/8% Senior Notes
due 2006 restrict the Company's ability to pay cash dividends on the Common
Stock.
At March 9, 1998, there were 2,411 record holders of Common Stock.
13
<PAGE> 16
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------------
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- -----------
(In thousands, except per share amounts)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA (1)
Operating revenues ............................ $ 713,195 $ 514,253 $ 327,968 $ 351,988 $ 264,531
Operating costs (2) ........................... 387,081 331,582 240,102 243,208 178,684
Depreciation and amortization (3) ............. 77,922 52,159 36,492 39,519 28,886
Selling, general and administrative ........... 64,777 54,504 40,139 47,606 28,284
Restructuring charges (4) ..................... -- -- -- 3,661 --
Minority interest (5) ......................... (256) (428) (214) (169) (232)
Gains on sales of property and equipment,
net of impairments (6) ...................... (197,676) (36,115) (829) (8,858) --
----------- ----------- ----------- ----------- -----------
Operating income .............................. 381,347 112,551 12,278 27,021 28,909
Interest expense .............................. (12,894) (18,758) (12,156) (12,351) (8,038)
Interest income ............................... 9,356 6,409 5,323 5,640 2,497
Other income (expense), net ................... 1,804 1,757 (579) 6,885 1,047
----------- ----------- ----------- ----------- -----------
Income before income taxes and
extraordinary charge ........................ 379,613 101,959 4,866 27,195 24,415
Income tax provision .......................... (115,731) (22,662) (3,272) (5,672) (3,333)
----------- ----------- ----------- ----------- -----------
Income before extraordinary charge ............ 263,882 79,297 1,594 21,523 21,082
Extraordinary charge, net of tax (7) .......... (6,685) (660) -- -- 1,770
----------- ----------- ----------- ----------- -----------
Net income .................................... 257,197 78,637 1,594 21,523 22,852
Preferred stock dividends (8) ................. -- (6,040) (7,199) (12,764) (7,936)
----------- ----------- ----------- ----------- -----------
Net income (loss) applicable to
common shares ............................... $ 257,197 $ 72,597 $ (5,605) $ 8,759 $ 14,916
=========== =========== =========== =========== ===========
Net income (loss) applicable to common
shares per share-basic (9)(10) .............. $ 1.95 $ 0.67 $ (0.08) $ 0.11 $ 0.23
Weighted average common shares outstanding .... 131,791 108,290 88,873 76,953 66,066
Net income (loss) applicable to common
shares per share-assuming dilution (9)(10) .. $ 1.93 $ 0.66 $ (0.08) $ 0.11 $ 0.22
Weighted average common shares outstanding .... 133,455 109,581 88,873 77,310 66,469
BALANCE SHEET DATA (AT END OF PERIOD) (1)
Working capital ............................... $ 112,125 $ 236,977 $ 101,623 $ 157,885 $ 150,535
Property and equipment, net ................... $ 1,200,915 $ 957,034 $ 542,978 $ 493,322 $ 482,029
Total assets .................................. $ 1,505,811 $ 1,367,173 $ 742,530 $ 739,889 $ 696,553
Long-term debt ................................ $ 138,139 $ 239,272 $ 129,923 $ 126,546 $ 127,144
Total debt (10)(11) ........................... $ 147,837 $ 242,894 $ 142,133 $ 132,790 $ 127,690
Shareholders' equity .......................... $ 1,149,054 $ 925,249 $ 523,493 $ 527,611 $ 516,770
OTHER DATA (1)
Cash dividends per common share ............... $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00
Capital expenditures .......................... $ 391,065 $ 216,887 $ 91,202 $ 55,834 $ 173,501
</TABLE>
- -----------
(1) The Selected Financial Data present the restatement of the Company's
historical financial statements for 1994 and 1993 to reflect the 1994
merger of Chiles Offshore Corporation into Noble Offshore Corporation
("NOC"), a wholly owned subsidiary of the Company, which was accounted
for as a pooling of interests. The Selected Financial Data also
include the July 1996 acquisition of Neddrill, the acquisition of
Triton in
(footnotes continued on following page)
14
<PAGE> 17
April 1994 and the October 1993 acquisition of nine offshore rigs and
associated assets from The Western Company of North America, all of
which were accounted for under the purchase method.
(2) Consists of operating costs and expenses other than depreciation and
amortization, selling, general and administrative, restructuring
charges, minority interest and gains on sales of property and
equipment, net of impairments.
(3) Effective January 1, 1995, the Company revised its estimates of
salvage values and remaining depreciable lives of certain rigs. The
effect of this change in estimate was a decrease to depreciation and
amortization of $6,160,000, or $0.07 per common share, for the year
ended December 31, 1995.
(4) The amount for 1994 consists of provisions resulting from write-downs
of certain assets, facility consolidation costs and, to a lesser
extent, severance costs.
(5) The 1996 amount includes ($289,000) relating to an impairment charge
of $10,200,000.
(6) The 1997 amount relates to the gain on the sale of the mat-supported
jackup rigs. The 1996 amount includes $45,414,000 and $7,527,000
related to gains on the sale of land drilling assets and posted barge
rigs, respectively, partially offset by impairment charges of
$17,800,000.
(7) Consists of losses on extinguishment of debt in 1997 and 1996 and a
gain on extinguishment of debt in 1993.
(8) In December 1996, the outstanding shares of $1.50 Convertible
Preferred Stock of Noble Drilling were either converted into shares of
Noble Drilling common stock or redeemed.
(9) The 1995 amount includes the $0.02 per share effect of the March 1995
preferred conversion payment related to the conversion of 923,862
shares of Noble Drilling's $2.25 Convertible Exchangeable Preferred
Stock. The payment of $1,524,000 was accounted for as a reduction of
net earnings applicable to common shares when calculating the net loss
applicable to common shares per share.
(10) The Company has adopted SFAS No. 128, Earnings Per Share ("SFAS 128").
All prior period earnings per share data have been restated to conform
to the provisions of SFAS 128.
(11) Consists of long-term debt, short-term debt and current installments
of long-term debt.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion is intended to assist in understanding the
Company's financial position as of December 31, 1997 and 1996, and its results
of operations for each of the three years in the period ended December 31, 1997.
Reference is also made to the Consolidated Financial Statements and the Notes
thereto, included elsewhere herein, which should be read in conjunction with
this discussion.
OUTLOOK
The Company believes that the worldwide utilization of drilling rigs
should remain strong relative to historical levels for the remainder of 1998,
particularly in international markets, assuming that oil prices and the
respective political environments remain stable. Historically, though, the
offshore contract drilling market has been highly competitive and cyclical, and
the Company cannot predict the future level of demand for its drilling services
or future conditions in the offshore contract drilling industry. Since 1995,
demand for offshore drilling equipment has increased substantially, and as a
result, exploration and development costs have risen steadily over the past two
years. Recent trends in commodity prices, particularly crude oil, have been
unfavorable, and further decreases in the prices of oil and natural gas may
adversely affect the demand for drilling equipment and related services. Any
decrease in drilling activity may impact the utilization of the Company's assets
and the dayrates earned on the equipment.
The Company has maintained a strategy in recent years to selectively
expand its international and deepwater drilling capabilities through fleet and
individual asset acquisitions, rig upgrades and enhancements, major conversion
projects and redeployment of assets in important geological areas. The Company
expects to continue with this strategy in the foreseeable future to the extent
that expansions, enhancements and redeployments are economically justified.
15
<PAGE> 18
RESULTS OF OPERATIONS
SIGNIFICANT 1997 EVENTS
The consolidated results of operations for the year ended December 31,
1997 reflect several significant transactions and events. Management believes
these events reflect the Company's efforts to enhance its position within the
offshore contract drilling services industry.
On May 7, 1997, the Company completed the sale of its 12 mat supported
jackup rigs to Pride Petroleum Services, Inc. for $268,818,000 in cash,
resulting in a pre-tax gain of $197,676,000, which is included in "Gains on
sales of property and equipment, net of impairments" in the accompanying
Consolidated Statement of Operations for the year ended December 31, 1997.
Revenues, gross margin and operating income generated from the mat rigs were
$35,155,000, $18,585,000 and $15,231,000, respectively, for the period from
January 1, 1997 through May 7, 1997.
The Company purchased $110,885,000 principal amount of its 9 1/4%
Senior Notes Due 2003 ("9 1/4% Senior Notes") during the year ended December 31,
1997, resulting in an extraordinary charge of $6,685,000, net of taxes of
$3,600,000. The extraordinary charge represents the difference between the
acquisition price and the net carrying value of the notes, including unamortized
debt issuance costs.
SIGNIFICANT 1996 EVENTS
On July 1, 1996, the Company completed the acquisition from Royal
Nedlloyd N.V. ("Nedlloyd") and its wholly owned subsidiary, Neddrill Holding
B.V., of Nedlloyd's offshore drilling division, Neddrill ("Neddrill")
for $300,000,000 in cash plus 5,000,000 shares of Noble Drilling common stock.
The cash portion of the purchase price was financed by the Company's issuance
and sale of 21,850,000 shares of its common stock and $125,000,000 principal
amount of 9 1/8% Senior Notes due 2006 (the "9 1/8% Senior Notes"). The net
proceeds from the public offerings of securities in excess of the $300,000,000
cash portion of the purchase price were added to the Company's working capital.
The Company sold two of its posted barge rigs during the first quarter
of 1996. The Gus Androes, located in the U.S. Gulf, was sold for $6,000,000. The
Gene Rosser, located offshore Nigeria, was sold for $13,000,000. The Company
recorded pre-tax gains of $4,815,000 and $2,712,000, respectively, related to
the sales of these posted barge rigs. The Lewis Dugger and Chuck Syring posted
barge rigs, which were also located offshore Nigeria, were sold in August 1996
for $24,500,000 in cash and $7,500,000 in drill pipe credit. These two barges
had been written down at March 31, 1996 to their estimated net realizable values
based on then recent offers received for these assets from third parties,
resulting in a pre-tax charge to earnings of $7,600,000. The gains on the sales
of the four barge rigs net of the write-downs are included in "Gains on sales of
property and equipment, net of impairments" in the accompanying Consolidated
Statement of Operations for the year ended December 31, 1996.
In December 1996, the Company sold its land drilling assets to Nabors
Industries, Inc. for $60,000,000 in cash, resulting in a pre-tax gain of
$45,414,000, which is included in "Gains on sales of property and equipment, net
of impairments" in the accompanying Consolidated Statement of Operations for the
year ended December 31, 1996. Revenues, gross margin and operating income
generated from the land drilling assets were $24,637,000, $6,733,000 and
$3,025,000, respectively, for the year ended December 31, 1996.
As a result of the Company's asset rationalization program and the July
1, 1996 acquisition of Neddrill, during the fourth quarter of 1996, the Company
reviewed the status of its inventories as well as its long-term assets. The
Company determined that certain adjustments were appropriate to properly reflect
the estimated net realizable values of these assets. These adjustments consisted
primarily of write-downs for inventory obsolescence totaling approximately
$14,808,000, an impairment charge of $10,200,000 (excluding a $289,000 reduction
for minority interest) and adjustments to depreciation for assets which were
determined to have shorter economic lives than originally estimated, totaling
approximately $3,350,000. The impairment charge is included in "Gains on sales
of property and equipment, net of impairments" and the inventory write-down is
included in "Contract drilling services" expense in the accompanying
Consolidated Statement of Operations for the year ended December 31, 1996.
16
<PAGE> 19
Results for 1996 also included an extraordinary charge of $660,000, net
of taxes of $355,000, related to the Company's purchase of $11,000,000 principal
amount of its 9 1/4% Senior Notes. The extraordinary charge represents the
difference between the acquisition price and the net carrying value of the
notes, including unamortized debt issuance costs.
1997 COMPARED TO 1996
GENERAL
Net income applicable to common shares for the year ended December 31,
1997 was $257,197,000, or $1.93 per share, on operating revenues of
$713,195,000, compared to net income applicable to common shares of $72,597,000,
or $0.66 per share, on operating revenues of $514,253,000 for the year ended
December 31, 1996. Excluding the effects of non-recurring items, net income
applicable to common shares for the year ended December 31, 1997 increased 89
percent over the 1996 period to $136,896,000, or $1.03 per share.
RIG UTILIZATION, OPERATING DAYS AND AVERAGE DAYRATE
The following table sets forth the average rig utilization rates,
operating days and average dayrate for the Company's offshore rig fleet for the
years ended December 31, 1997 and 1996:
<TABLE>
<CAPTION>
AVERAGE RIG
UTILIZATION RATES (1) OPERATING DAYS AVERAGE DAYRATE
-------------------------- --------------------------- ---------------------------
1997 1996 (2) 1997 1996 (2) 1997 1996 (2)
------------ ------------ ------------ ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Offshore
International.... 95% 95% 9,826 7,372 $ 35,244 $ 27,207
Domestic......... 98% 96% 3,474 5,349 $ 35,313 $ 23,332
</TABLE>
- ------------------
(1) Information reflects the policy of the Company to report utilization
rates based on the number of actively marketed rigs owned in the fleet.
During the periods presented, the Company purchased and sold certain
drilling rigs. Utilization rates for the periods prior to sales and
purchases of such rigs have not been adjusted.
(2) Includes the results of Neddrill from July 1, 1996.
INTERNATIONAL OPERATIONS
The following table sets forth the operating revenues and gross margin
(excluding non-recurring items) for the Company's international operations for
the years ended December 31, 1997 and 1996:
<TABLE>
<CAPTION>
REVENUES GROSS MARGIN
--------------------- ---------------------
1997 1996 1997 1996
-------- -------- -------- --------
(In thousands)
Contract drilling services
<S> <C> <C> <C> <C> <C>
Offshore .......................... $346,304 $200,566 $203,319 $ 81,916 (1)
Land .............................. -- 10,037 -- 3,178
-------- -------- -------- --------
Total contract drilling services ..... 346,304 210,603 203,319 85,094
Turnkey contract drilling services ... 52,765 -- 2,609 --
Labor contract drilling services ..... 49,076 33,425 14,540 9,299 (2)
Engineering and consulting services .. 2,548 2,509 698 611
Other revenue ........................ 8,289 5,675 6,008 4,060
-------- -------- -------- --------
Total ....................... $458,982 $252,212 $227,174 $ 99,064
======== ======== ======== ========
</TABLE>
- --------
(1) Excludes $13,624,000 of non-recurring inventory charges.
(2) Excludes $1,184,000 of non-recurring inventory charges.
OPERATING REVENUES. International offshore contract drilling services
revenues increased $145,738,000 during 1997 as compared to 1996. The increase is
primarily attributable to the acquisitions of the Neddrill fleet,
17
<PAGE> 20
higher average international dayrates and the revenues attributable to the Noble
Jimmy Puckett, Noble Kenneth Delaney, Noble Gus Androes and Noble Chuck Syring
jackup rigs. All of the Company's land assets were sold in December 1996. Labor
contract drilling services revenues increased $15,651,000 in 1997 as compared to
1996 due to higher average dayrates on the North Sea platform contracts and the
startup of the Hibernia project offshore Newfoundland, Canada. Turnkey drilling
services revenues increased $52,765,000 resulting from five completions in West
Africa, two in the North Sea and one in Mexico in 1997, as compared to no
international wells completed in 1996.
GROSS MARGIN. International offshore contract drilling services gross
margin increased $121,403,000 in 1997 as compared to 1996. The increase is
primarily attributable to the contributions from the Neddrill fleet, higher
average international dayrates and contributions from the Noble Jimmy Puckett,
Noble Kenneth Delaney, Noble Gus Androes and Noble Chuck Syring. The increase in
gross margin for labor contract drilling services in 1997, as compared to 1996,
was attributable to higher average dayrates on the North Sea platform contracts
and the start-up of the Hibernia project offshore Newfoundland, Canada. The
increase in gross margin for turnkey drilling services in 1997 as compared to
1996 was attributable to increased turnkey well completions. However, the low
turnkey gross margin in 1997 was due to unexpected drilling difficulty on a well
completed in Mexico.
DOMESTIC OPERATIONS
The following table sets forth the operating revenues and gross margin
for the Company's domestic operations for the years ended December 31, 1997 and
1996:
<TABLE>
<CAPTION>
REVENUES GROSS MARGIN
--------------------- ----------------------
1997 1996 1997 1996
-------- -------- -------- --------
(In thousands)
<S> <C> <C> <C> <C>
Contract drilling services
Offshore ....................... $122,676 $124,805 $ 86,342 $ 58,386
Land ........................... -- 14,600 -- 3,555
-------- -------- -------- --------
Total contract drilling services .. 122,676 139,405 86,342 61,941
Turnkey contract drilling services 128,098 114,948 13,341 34,171
Engineering and consulting services 58 2,445 -- 956
Other revenue ..................... 3,381 5,243 (743) 1,347
-------- -------- -------- --------
Total .................... $254,213 $262,041 $ 98,940 $ 98,415
======== ======== ======== ========
</TABLE>
OPERATING REVENUES. Domestic offshore contract drilling services
revenues decreased $2,129,000 in 1997 as compared to 1996. The decrease was due
primarily to the sale of the Company's mat supported jackup fleet, which reduced
the number of rig operating days in 1997 as compared to 1996. The decrease in
rig operating days was partially offset by a significant increase in the average
domestic contract drilling dayrate. All of the Company's land drilling assets
were sold in December 1996. The increase in turnkey drilling services revenues
is primarily attributable to a higher average revenue per well in 1997 as
compared to 1996.
GROSS MARGIN. Domestic offshore contract drilling services gross margin
increased $27,956,000 in 1997 as compared to 1996. The increase is primarily
attributable to higher average domestic dayrates, which was partially offset by
the sale of the Company's mat supported jackup fleet during 1997. The decrease
in turnkey drilling services gross margin was attributable to several wells that
incurred losses during 1997 as a result of unexpected drilling difficulty. The
negative gross margin for other revenue was primarily attributable to
non-recurring charges of approximately $2,313,000 associated with the
disposition of certain non-core assets of Triton.
OTHER OPERATING ITEMS
DEPRECIATION AND AMORTIZATION EXPENSE. Depreciation and amortization
expense increased $25,763,000 in 1997 as compared to 1996. Of this amount,
$17,294,000 represents depreciation attributable to the Neddrill fleet, and
approximately $7,618,000 relates to the Noble Jimmy Puckett, Noble Kenneth
Delaney, Noble Gus Androes and Noble Chuck Syring, which were acquired in 1996
and placed into service in the latter part of 1996. These increases were
partially offset by lower depreciation on the mat supported jackup rigs, which
were sold in May 1997.
18
<PAGE> 21
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative ("SG&A") expenses increased $10,273,000 in 1997 as compared to
1996. The increase is attributable to the Neddrill acquisition combined with
other general increases resulting from higher activity levels and the costs of
stock-based employee compensation plans, which costs are based solely on changes
in the market price of the Company's common stock.
INTEREST EXPENSE. Interest expense decreased $5,864,000 in 1997 as
compared to 1996 due primarily to the Company's repurchase of its 9 1/4% Senior
Notes and the capitalization of $4,218,000 of interest costs related to
construction in progress on qualifying upgrade projects.
INCOME TAX PROVISION. The effective income tax rate in 1997 increased
to approximately 31 percent from approximately 22 percent in 1996. Income taxes
of $69,187,000 were recorded in 1997 in connection with the gain on the sale of
the mat rigs. 1996 was favorably impacted by the recognition of deferred tax
benefits related to net operating loss carryforwards.
1996 COMPARED TO 1995
GENERAL
For the year ended December 31, 1996, net income applicable to common
shares was $72,597,000, or $0.66 per share, on operating revenues of
$514,253,000 compared to a net loss applicable to common shares of $5,605,000,
or $0.08 per share, on operating revenues of $327,968,000 for the year ended
December 31, 1995. For the year ended December 31, 1996, operating income,
excluding non-recurring items, increased to $95,279,000 from operating income of
$12,278,000 in 1995.
RIG UTILIZATION, OPERATING DAYS AND AVERAGE DAYRATE
The following table sets forth the average rig utilization rates,
operating days and average dayrate for the Company's rig fleet for the years
ended December 31, 1996 and 1995:
<TABLE>
<CAPTION>
AVERAGE RIG
UTILIZATION RATES (1) OPERATING DAYS AVERAGE DAYRATE
-------------------------- --------------------------- ---------------------------
1996 (2) 1995 1996 (2) 1995 1996 (2) 1995
------------ ------------ ------------ ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Offshore
International.... 95% 75% 7,372 4,442 $ 27,207 $ 22,104
Domestic......... 96% 84% 5,349 4,949 $ 23,332 $ 16,376
Land
International.... 39% 53% 1,228 1,746 $ 8,174 $ 7,923
Domestic......... 75% 69% 2,577 2,175 $ 5,666 $ 5,538
</TABLE>
- ------------------
(1) Information reflects the policy of the Company to report utilization
rates based on the number of actively marketed rigs owned in the fleet.
During the periods presented, the Company purchased and sold certain
drilling rigs. Utilization rates for the periods prior to sales and
purchases of such rigs have not been adjusted.
(2) Includes the results of Neddrill from July 1, 1996.
19
<PAGE> 22
INTERNATIONAL OPERATIONS
The following table sets forth the operating revenues and gross margin
(excluding non-recurring items) for the Company's international operations for
the years ended December 31, 1996 and 1995:
<TABLE>
<CAPTION>
REVENUES GROSS MARGIN
--------------------- ---------------------
1996 1995 1996 1995
-------- -------- -------- --------
(In thousands)
<S> <C> <C> <C> <C>
Contract drilling services
Offshore ............................ $200,566 $ 98,187 $ 81,916 (1) $ 36,584
Land ................................ 10,037 13,833 3,178 4,937
-------- -------- -------- --------
Total contract drilling services ....... 210,603 112,020 85,094 41,521
Labor contract drilling services ....... 33,425 35,136 9,299 (2) 8,596
Engineering and consulting services .... 2,509 10,807 611 4,782
Other revenue .......................... 5,675 4,614 4,060 2,089
-------- -------- -------- --------
Total ......................... $252,212 $162,577 $ 99,064 $ 56,988
======== ======== ======== ========
</TABLE>
- -------------
(1) Excludes $13,624,000 of non-recurring inventory charges.
(2) Excludes $1,184,000 of non-recurring inventory charges.
OPERATING REVENUES. International offshore contract drilling services
revenues increased $102,379,000 in 1996 as compared to 1995. The increase is
primarily attributable to the July 1, 1996 acquisition of Neddrill. Neddrill
contributed $70,015,000 in contract drilling services revenues in 1996. The
drilling operations in India and Qatar, which benefited from the addition of the
Noble Gus Androes, Noble Chuck Syring and Noble Kenneth Delaney rigs in 1996,
contributed $20,903,000 of contract drilling services revenues in 1996 as
compared to $4,495,000 in 1995. The remaining increase is attributable to higher
utilization rates and average dayrates in 1996 as compared to 1995.
GROSS MARGIN. International offshore contract drilling services gross
margin (excluding non-recurring items) increased $45,332,000 in 1996 as compared
to 1995. The increase in gross margin is primarily attributable to the July 1,
1996 acquisition of Neddrill, which contributed gross margin of $28,756,000 in
1996. Increased operations in India and Qatar, resulting from the addition of
the Noble Gus Androes, Noble Chuck Syring and Noble Kenneth Delaney rigs,
contributed gross margin of $4,072,000 in 1996 compared to a loss of $143,000 in
1995. The remaining increase is attributable primarily to higher average
dayrates in 1996 as compared to 1995.
DOMESTIC OPERATIONS
The following table sets forth the operating revenues and gross margin
for the Company's domestic operations for the years ended December 31, 1996 and
1995:
<TABLE>
<CAPTION>
REVENUES GROSS MARGIN
--------------------- ---------------------
1996 1995 1996 1995
-------- -------- -------- --------
(In thousands)
<S> <C> <C> <C> <C>
Contract drilling services
Offshore ....................... $124,805 $ 81,045 $ 58,386 $ 22,751
Land ........................... 14,600 12,045 3,555 2,498
-------- -------- -------- --------
Total contract drilling services .. 139,405 93,090 61,941 25,249
Turnkey contract drilling services 114,948 71,273 34,171 6,802
Engineering and consulting services 2,445 457 956 (829)
Other revenue ..................... 5,243 571 1,347 (344)
-------- -------- -------- --------
Total .................... $262,041 $165,391 $ 98,415 $ 30,878
======== ======== ======== ========
</TABLE>
OPERATING REVENUES. Domestic offshore contract drilling services
revenues increased $43,760,000 in 1996 as compared to 1995 due to significantly
higher utilization rates and higher average dayrates. The increases were
attributable to overall increased drilling activity in the U.S. Gulf in 1996 as
compared to 1995. Turnkey contract drilling services revenues increased
$43,675,000 in 1996 as compared to 1995. There were 28 well completions in 1996
as compared to 27 in 1995, combined with contracts of longer duration and
increased prices caused by growing demand for equipment and services in the U.S.
Gulf.
20
<PAGE> 23
GROSS MARGIN. Domestic offshore contract drilling services gross margin
increased $35,635,000 in 1996 as compared to 1995 due to higher average
dayrates. The average dayrate in 1996 was $23,332 compared to $16,376 in 1995.
Turnkey drilling services gross margin increased $27,369,000 in 1996 as compared
to 1995 due to an improved success rate on turnkey wells and increased turnkey
activity. The turnkey gross margin was low in 1995, primarily because of
significant operational problems on two wells which resulted in aggregate losses
of $7,293,000.
OTHER OPERATING ITEMS
DEPRECIATION AND AMORTIZATION EXPENSE. Depreciation and amortization
expense increased $12,317,000 (excluding non-recurring depreciation of
$3,350,000) in 1996 as compared to 1995. Of this amount, $10,142,000 is
attributable to the July 1, 1996 acquisition of Neddrill. The remaining increase
is primarily attributable to increases resulting from rig acquisitions and
refurbishments during late 1995 and 1996.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. SG&A expenses were
$54,504,000 in 1996 as compared to $40,139,000 in 1995. The increase is
primarily attributable to the July 1, 1996 acquisition of Neddrill combined with
other general increases resulting from the higher activity levels for 1996.
GAIN ON SALES OF PROPERTY AND EQUIPMENT, NET OF IMPAIRMENTS. In 1996,
the Company sold its land drilling assets and the Gus Androes and Gene Rosser
posted barge rigs, resulting in pre-tax gains of $45,414,000, $4,815,000 and
$2,712,000, respectively, which have been partially offset by the recognition of
impairment charges totaling $17,800,000. See "Results of Operations -
Significant 1996 Events."
INTEREST EXPENSE. Interest expense increased to $18,758,000 in 1996
from $12,156,000 in 1995 due to the July 1, 1996 issuance of $125,000,000
principal amount of 9 1/8% Senior Notes. The proceeds from the issuance of the 9
1/8% Senior Notes were used to finance the Neddrill acquisition.
OTHER, NET. Other, net increased by $2,336,000 in 1996 as compared to
1995 due primarily to an increase in net realized gains on marketable
investments and unrealized gains on marketable equity investments.
INCOME TAX PROVISION. Provisions for income taxes of $22,662,000 and
$3,272,000 were recorded in 1996 and 1995, respectively. The increase is due
primarily to taxes of $16,259,000 recorded for 1996 in connection with the gain
on the sale of land drilling assets.
LIQUIDITY AND CAPITAL RESOURCES
OVERVIEW
The Company had working capital of $112,125,000 and $236,977,000 as of
December 31, 1997 and December 31, 1996, respectively. Long-term debt as a
percentage of long-term debt plus shareholders' equity was 11 percent at
December 31, 1997, compared to 21 percent at December 31, 1996.
At December 31, 1997, the Company had cash, cash equivalents and
marketable debt securities of $66,388,000 and had $202,603,000 of funds
available under various lines of credit. The Company expects to generate
positive cash flow from operations in 1998, assuming no material decrease in
demand for contract drilling and turnkey drilling services. The Company will
continue to have cash requirements for debt principal and interest payments; for
1998, cash requirements for currently outstanding debt principal and interest
payments are estimated to be approximately $21,392,000. The Company expects to
fund these payments out of cash and short-term investments as well as cash
provided by operations.
Capital expenditures totaled $391,065,000 and $216,887,000 for the
years ended December 31, 1997 and 1996, respectively. Capital expenditures for
1997 included approximately $164,000,000 for the EVA-4000(TM) semisubmersible
rig conversions. Capital expenditures for 1998 are expected to total
approximately $520,000,000, of which the majority relates to upgrades of
existing equipment. This amount includes approximately $422,000,000 for the
EVA-4000(TM) semisubmersible rig conversions, which are in process or planned
for 1998. The Company has entered into contracts for three of these EVA-4000(TM)
semisubmersible rigs, the Noble Paul Romano, Noble Paul Wolff and Noble Amos
Runner, and the Company has commitments for two additional EVA-4000(TM) rigs,
the Noble Jim Thompson and Noble Max Smith. The Company has entered into a
letter of intent with two operators to utilize
21
<PAGE> 24
the Noble Homer Ferrington (formerly the Shelf 4) in the Gulf of Mexico. The
Company will be required to make significant capital expenditures to refurbish
and upgrade the rig. The total cost of these six projects is expected to be
approximately $800,000,000. Further, the Company is marketing additional rigs
for conversion into deepwater design semisubmersible units. Because any such
conversion would require substantial capital expenditures, such projects will
not be completed except in connection with entering into a long-term drilling
contract with an operator. However, given the strong demand for drilling rigs
and related services, increasingly heavy backlogs for equipment and services
required to complete the conversions could constrain the Company's ability to
complete the conversions on a timely basis. The Company has entered into
agreements with several vendors to purchase equipment or for the construction of
equipment for the conversion of rigs, which agreements generally require
non-refundable payments as certain milestones are met. The amount of such
payments totaled $76,600,000 as of December 31, 1997. As of December 31, 1997,
the Company also had purchase commitments of $27,700,000, which are subject to
negotiation upon cancellation. These expenditures will be funded from operating
cash flows, existing cash balances, available lines of credit and possibly from
other sources of project financing. The Company is currently reviewing several
proposals from financial institutions to provide project financing for the
EVA-4000(TM) semisubmersible conversions.
The Noble Paul Romano and Noble Paul Wolff conversions are not expected
to be available for work until the latter part of 1998. The Noble Amos Runner,
Noble Jim Thompson, Noble Max Smith and Noble Homer Ferringon conversions are
not expected to be completed until 1999. Certain conversion projects currently
under consideration could require, if they materialize, capital expenditures or
other cash requirements not included in the above estimate. Factors that could
cause actual capital expenditures to exceed materially the planned capital
expenditures include delays and cost overruns in shipyards, shortages and delays
in the delivery of key rig equipment necessary for conversion projects, latent
damage or deterioration to hulls, requirements for equipment and machinery in
excess of engineering estimates and assumptions, and changes in design criteria
or specifications during repair or construction.
On May 12, 1997, the Company announced that its Board of Directors
authorized the repurchase of up to 10,000,000 shares of the Company's common
stock, or approximately eight percent of its then outstanding common stock. As
of December 31, 1997, the Company had repurchased 2,186,000 shares of common
stock at a total cost of $52,181,000. Additional purchases, if any, would be
made from time to time on the open market or in private transactions at prices
determined by the Company.
Subsequent to December 31, 1997, the Company entered into various
foreign currency exchange contracts in order to reduce its exposure to
fluctuations in foreign exchange rates. These contracts expire monthly
throughout 1998 and require the Company to exchange U.S. Dollars for Dutch
Guilders and British Pounds Sterling totaling $33,800,000 and $24,700,000,
respectively. Gains and losses, if any, on these contracts will be recognized
pursuant to the provisions of Statement of Financial Accounting Standards
("SFAS") No. 52, Foreign Currency Translation.
CREDIT FACILITIES AND LONG-TERM DEBT
The Company entered into a credit agreement dated August 14, 1997 (the
"Credit Agreement") with a group of banks. The Credit Agreement provides for a
five-year unsecured revolving credit facility in the amount of $200,000,000.
Loans under the Credit Agreement bear interest, at the option of the Company, at
a base rate or LIBOR plus a margin (0.40 percent currently). The Credit
Agreement provides for commitment fees of 0.125 percent on the unused portion of
the facility. The interest rate and commitment fee rate vary depending on the
Company's public senior secured debt rating or its funded debt to capital ratio.
The Credit Agreement requires compliance with various covenants, including
minimum consolidated net worth, interest coverage ratios, leverage ratios and
fleet coverage ratios. At December 31, 1997, the Company had lines of credit
totaling $205,000,000 of which $2,397,000 had been used to support outstanding
letters of credit. Additionally, at December 31, 1997, $18,567,745 of
outstanding letters of credit had been supported through a combination of
unsecured letter of credit facilities and surety bonds. As of March 12, 1998,
the Company had an outstanding balance of $60,000,000 under the Credit
Agreement.
On May 14, 1997, the Company commenced a tender offer to purchase for
cash all $84,445,000 principal amount then outstanding of its 9 1/4% Senior
Notes. During 1997, the Company acquired $110,885,000 principal amount of its 9
1/4% Senior Notes, of which $81,330,000 was purchased pursuant to the tender
offer. After giving effect to the purchases, the Company had $3,115,000
principal amount of 9 1/4% Senior Notes outstanding at December 31, 1997.
22
<PAGE> 25
The Company believes that its cash and cash equivalents, cash generated
from operations, borrowings under its lines of credit and access to other
financing sources will be adequate to meet its anticipated short-term and
long-term liquidity requirements, including scheduled debt repayments.
YEAR 2000
In 1996, the Company implemented a major computer software conversion
for its management and accounting information systems. The new system is
generally considered to be year 2000 compliant, however, the Company uses other
systems which have not yet been reviewed to adequately determine whether or not
they will function properly in the year 2000. In 1998, the Company will commence
a project to assess all remaining systems for year 2000 compliance. The Company
expects its year 2000 assessment to be completed on a timely basis and plans to
review the compliance efforts of the entities it does business with. The
discussion of the Company's efforts, and management's expectations, relating to
Year 2000 compliance are forward-looking statements. The Company's ability to
achieve Year 2000 compliance and the level of incremental costs associated
therewith, could be adversely impacted by, among other things, the availability
and cost of programming and testing resources, vendors' ability to modify
proprietary software and unanticipated problems identified in the ongoing
compliance review. The Company has limited or no control over the actions of
proprietary software vendors and other entities with which it interacts.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
For information on certain foreign currency exchange contracts entered
into by the Company after December 31, 1997, see "Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Liquidity and Capital Resources - Overview". For information on the fair value
of the Company's long-term debt at December 31, 1997, see Note 5 of Notes to
Consolidated Financial Statements included elsewhere herein.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following financial statements are filed in this Item 8:
Report of Independent Accountants
Consolidated Balance Sheets at December 31, 1997 and 1996
Consolidated Statements of Operations for each of the three years
in the period ended December 31, 1997
Consolidated Statements of Cash Flows for each of the three years
in the period ended December 31, 1997
Consolidated Statements of Shareholders' Equity for each of the
three years in the period ended December 31, 1997
Notes to Consolidated Financial Statements
23
<PAGE> 26
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of Noble Drilling Corporation
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, of cash flows and of changes in
shareholders' equity present fairly, in all material respects, the financial
position of Noble Drilling Corporation and its subsidiaries (the "Company") at
December 31, 1997 and 1996, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 1997, in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
/s/ Price Waterhouse LLP
Houston, Texas
January 29, 1998
24
<PAGE> 27
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except par value amount)
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1997 1996
----------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents ................................................. $ 49,917 $ 149,632
Restricted cash ........................................................... -- 2,000
Investment in marketable equity securities ................................ -- 2,533
Investment in marketable debt securities .................................. 16,471 19,296
Accounts receivable (net allowance of $1,380 and $1,494) .................. 135,716 101,619
Costs of uncompleted contracts in excess of billings ...................... 941 18,505
Inventories ............................................................... 4,559 3,287
Deferred income taxes ..................................................... 391 39,248
Prepaid expenses .......................................................... 21,569 19,572
Other current assets ...................................................... 35,451 32,785
----------- -----------
Total current assets ........................................................ 265,015 388,477
----------- -----------
PROPERTY AND EQUIPMENT
Drilling equipment and facilities ......................................... 1,433,241 1,176,145
Other ..................................................................... 24,287 27,924
----------- -----------
1,457,528 1,204,069
Accumulated depreciation .................................................. (256,613) (247,035)
----------- -----------
1,200,915 957,034
----------- -----------
INVESTMENT IN AND NOTES RECEIVABLE FROM AFFILIATES .......................... 21,097 9,188
DEFERRED INCOME TAXES ....................................................... 5,947 2,296
OTHER ASSETS ................................................................ 12,837 10,178
----------- -----------
$ 1,505,811 $ 1,367,173
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term debt and current installments of long-term debt ................ $ 9,698 $ 3,622
Accounts payable .......................................................... 77,366 66,906
Accrued payroll and related costs ......................................... 25,858 28,475
Taxes payable ............................................................. 23,708 20,304
Interest payable .......................................................... 6,088 8,557
Other current liabilities ................................................. 10,172 23,636
----------- -----------
Total current liabilities ................................................... 152,890 151,500
LONG-TERM DEBT .............................................................. 138,139 239,272
DEFERRED INCOME TAXES ....................................................... 63,946 50,331
OTHER LIABILITIES ........................................................... 1,782 821
----------- -----------
356,757 441,924
----------- -----------
SHAREHOLDERS' EQUITY
Common stock-par value $0.10; 200,000 shares authorized;
133,335 issued and 130,988 outstanding in 1997; 132,189 issued
and 131,980 outstanding in 1996 ......................................... 13,334 13,219
Capital in excess of par value ............................................ 934,383 916,004
Unrealized gains (losses) on marketable debt securities ................... 16 (35)
Cumulative translation adjustment ......................................... (1,127) (882)
Retained earnings (accumulated deficit) ................................... 255,992 (1,205)
Treasury stock, at cost ................................................... (53,544) (1,852)
----------- -----------
1,149,054 925,249
----------- -----------
COMMITMENTS AND CONTINGENCIES (Note 11) ..................................... -- --
----------- -----------
$ 1,505,811 $ 1,367,173
=========== ===========
</TABLE>
See accompanying notes to the consolidated financial statements.
25
<PAGE> 28
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
OPERATING REVENUES
Contract drilling services ..................... $ 468,980 $ 350,008 $ 205,110
Labor contract drilling services ............... 49,076 33,425 35,136
Turnkey drilling services ...................... 180,863 114,948 71,273
Engineering and consulting services ............ 2,606 4,954 11,264
Other revenue .................................. 11,670 10,918 5,185
---------- ---------- ----------
713,195 514,253 327,968
---------- ---------- ----------
OPERATING COSTS AND EXPENSES
Contract drilling services ..................... 179,319 216,597 138,340
Labor contract drilling services ............... 34,536 25,310 26,540
Turnkey drilling services ...................... 164,913 80,777 64,471
Engineering and consulting services ............ 1,908 3,387 7,311
Other expense .................................. 6,405 5,511 3,440
Depreciation and amortization .................. 77,922 52,159 36,492
Selling, general and administrative ............ 64,777 54,504 40,139
Minority interest .............................. (256) (428) (214)
Gains on sales of property and equipment,
net of impairments .......................... (197,676) (36,115) (829)
---------- ---------- ----------
331,848 401,702 315,690
---------- ---------- ----------
OPERATING INCOME ................................. 381,347 112,551 12,278
OTHER INCOME (EXPENSE)
Interest expense ............................... (12,894) (18,758) (12,156)
Interest income ................................ 9,356 6,409 5,323
Other, net ..................................... 1,804 1,757 (579)
---------- ---------- ----------
INCOME BEFORE INCOME TAXES AND
EXTRAORDINARY CHARGE ........................... 379,613 101,959 4,866
INCOME TAX PROVISION ............................. (115,731) (22,662) (3,272)
---------- ---------- ----------
INCOME BEFORE EXTRAORDINARY CHARGE ............... 263,882 79,297 1,594
EXTRAORDINARY CHARGE, NET OF TAX ................. (6,685) (660) --
---------- ---------- ----------
NET INCOME ....................................... 257,197 78,637 1,594
PREFERRED STOCK DIVIDENDS ........................ -- (6,040) (7,199)
---------- ---------- ----------
NET INCOME (LOSS) APPLICABLE TO
COMMON SHARES .................................. $ 257,197 $ 72,597 $ (5,605)
========== ========== ==========
NET INCOME (LOSS) APPLICABLE TO COMMON
SHARES PER SHARE-BASIC:
Income (loss) before extraordinary charge ...... $ 2.00 $ 0.68 $ (0.08)
Extraordinary charge ........................... (0.05) (0.01) --
---------- ---------- ----------
Net income (loss) applicable to common shares .. $ 1.95 $ 0.67 $ (0.08)
========== ========== ==========
NET INCOME (LOSS) APPLICABLE TO COMMON
SHARES PER SHARE-ASSUMING DILUTION:
Income (loss) before extraordinary charge ...... $ 1.98 $ 0.67 $ (0.08)
Extraordinary charge ........................... (0.05) (0.01) --
---------- ---------- ----------
Net income (loss) applicable to common shares .. $ 1.93 $ 0.66 $ (0.08)
========== ========== ==========
</TABLE>
See accompanying notes to the consolidated financial statements.
26
<PAGE> 29
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income ......................................................... $ 257,197 $ 78,637 $ 1,594
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization .................................... 77,922 52,159 36,492
Gains on sales of property and equipment, net of impairments ..... (197,676) (36,115) (829)
Inventory charge ................................................. -- 14,808 --
Gain on foreign exchange ......................................... -- (310) (206)
Deferred income tax provision (benefit) .......................... 48,821 6,596 (917)
Extraordinary charge, net of tax ................................. 6,685 660 --
Compensation expense from stock-based plans ...................... 7,036 937 --
Other ............................................................ 738 (2,267) 300
Changes in current assets and liabilities:
Accounts receivable ............................................ (38,023) (18,752) (8,480)
Proceeds from sale of marketable equity securities, net ........ 2,353 5,615 3,398
Other assets ................................................... 32,591 (6,783) (17,061)
Accounts payable ............................................... 6,217 16,178 11,356
Other liabilities .............................................. 101 27,016 3,836
---------- ---------- ----------
Net cash provided by operations ............................... 203,962 138,379 29,483
---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment ................................. (391,065) (216,887) (91,202)
Acquisition of Neddrill, net of cash acquired ...................... -- (284,726) --
Proceeds from sale of property and equipment ....................... 271,764 103,500 1,879
Proceeds from sale of (investment in)
marketable debt securities ....................................... 2,870 (2,192) 24,374
Proceeds from insurance settlement ................................. -- 14,142 --
Investment in and advances to unconsolidated affiliates ............ (11,831) (410) --
---------- ---------- ----------
Net cash used by investing activities ......................... (128,262) (386,573) (64,949)
---------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Preferred stock conversion costs ................................... -- (31) (2,406)
Proceeds from long-term debt ....................................... -- 121,470 --
Payment of long-term debt .......................................... (128,787) (26,130) (520)
Proceeds from issuance of common stock, net ........................ 5,774 271,312 356
Dividends paid on preferred stock .................................. -- (7,549) (8,881)
Purchase of shares returned to treasury stock ...................... (52,181) (2,250) --
Payment of short-term debt ......................................... -- -- (6,698)
Other .............................................................. -- -- 898
---------- ---------- ----------
Net cash (used) provided by financing activities .............. (175,194) 356,822 (17,251)
EFFECT OF EXCHANGE RATE CHANGES ON CASH .............................. (221) (303) (1,139)
---------- ---------- ----------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS ..................... (99,715) 108,325 (53,856)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR ......................... 149,632 41,307 95,163
---------- ---------- ----------
CASH AND CASH EQUIVALENTS, END OF YEAR ............................... $ 49,917 $ 149,632 $ 41,307
========== ========== ==========
</TABLE>
See accompanying notes to the consolidated financial statements.
27
<PAGE> 30
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(In thousands)
<TABLE>
<CAPTION>
$2.25 PREFERRED STOCK $1.50 PREFERRED STOCK COMMON STOCK
---------------------- --------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
JANUARY 1, 1995 ....................................... 2,989 $ 2,989 4,025 $ 4,025 78,076 $ 7,808
Net income ............................................ -- -- -- -- -- --
Conversion/redemption of preferred stock .............. (2,989) (2,989) -- -- 16,199 1,620
Preferred stock conversion costs ...................... -- -- -- -- -- --
Net unrealized losses on marketable securities ........ -- -- -- -- -- --
Minimum pension liability ............................. -- -- -- -- -- --
Translation adjustment ................................ -- -- -- -- -- --
Dividends on preferred stock .......................... -- -- -- -- -- --
Issuance of stock:
Exercise of stock options ........................... -- -- -- -- 109 11
Contribution to benefit plans ....................... -- -- -- -- 164 16
Contribution of treasury stock to
restricted stock plan ............................. -- -- -- -- -- --
Restricted stock plan shares returned to treasury ... -- -- -- -- -- --
--------- --------- --------- --------- --------- ---------
DECEMBER 31, 1995 ..................................... -- -- 4,025 4,025 94,548 9,455
Net income ............................................ -- -- -- -- -- --
Conversion/redemption of preferred stock .............. -- -- (4,025) (4,025) 9,836 984
Net unrealized losses on marketable securities ........ -- -- -- -- -- --
Minimum pension liability ............................. -- -- -- -- -- --
Translation adjustment ................................ -- -- -- -- -- --
Dividends on preferred stock .......................... -- -- -- -- -- --
Issuance of stock:
Sale of common stock ................................ -- -- -- -- 21,850 2,185
Purchase of Neddrill ................................ -- 5,000 500
Settlement of Triton purchase contingency ........... -- -- -- -- 67 7
Exercise of stock options ........................... -- -- -- -- 602 60
Contribution to benefit plans ....................... -- -- -- -- 286 28
Contribution of treasury stock to
restricted stock plan ............................. -- -- -- -- -- --
Restricted stock plan shares returned to treasury ... -- -- -- -- -- --
--------- --------- --------- --------- --------- ---------
DECEMBER 31, 1996 ..................................... -- -- -- -- 132,189 13,219
Net income ............................................ -- -- -- -- -- --
Net unrealized losses on marketable securities ........ -- -- -- -- -- --
Translation adjustment ................................ -- -- -- -- -- --
Earned compensation from performance
restricted stock .................................. -- -- -- -- -- --
Issuance of stock:
Settlement of Triton purchase contingency ........... -- -- -- -- 76 8
Exercise of stock options ........................... -- -- -- -- 951 95
Contribution to benefit plans ....................... -- -- -- -- 60 6
Issuance of restricted shares ....................... -- -- -- -- 59 6
Contribution of treasury stock to
restricted stock plan ............................. -- -- -- -- -- --
Restricted stock plan shares returned to treasury ... -- -- -- -- -- --
Repurchase common stock ............................. -- -- -- -- -- --
Directors' fees paid with treasury stock ............ -- -- -- -- -- --
Stock option tax deduction .......................... -- -- -- -- -- --
--------- --------- --------- --------- --------- ---------
DECEMBER 31, 1997 ..................................... -- $ -- -- $ -- 133,335 $ 13,334
========= ========= ========= ========= ========= =========
</TABLE>
See accompanying notes to the consolidated financial statements.
28
<PAGE> 31
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (CONTINUED)
(In thousands)
<TABLE>
<CAPTION>
UNREALIZED
GAINS RETAINED
CAPITAL (LOSSES) ON MINIMUM CUMULATIVE EARNINGS TREASURY STOCK
IN EXCESS OF MARKETABLE PENSION TRANSLATION (ACCUMULATED ----------------------------
PAR VALUE SECURITIES LIABILITY ADJUSTMENT DEFICIT) SHARES AMOUNT
- ------------ ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
$ 590,733 $ (1,847) $ (3,825) $ (2,325) $ (68,197) 250 $ (1,750)
-- -- -- -- 1,594 -- --
1,369 -- -- -- -- -- --
(2,406) -- -- -- -- -- --
-- 1,732 -- -- -- -- --
-- -- 422 -- -- -- --
-- -- -- 244 -- -- --
-- -- -- -- (7,199) -- --
345 -- -- -- -- -- --
1,123 -- -- -- -- -- --
(1,480) -- -- -- -- (211) 1,480
182 -- -- -- -- 26 (182)
- ------------ ------------ ------------ ------------ ------------ ------------ ------------
589,866 (115) (3,403) (2,081) (73,802) 65 (452)
-- -- -- -- 78,637 -- --
3,012 -- -- -- -- -- --
-- 80 -- -- -- -- --
-- -- 3,403 -- -- -- --
-- -- -- 1,199 -- -- --
-- -- -- -- (6,040) -- --
266,261 -- -- -- -- -- --
49,500 -- -- -- -- -- --
1,003 -- -- -- -- -- --
2,806 -- -- -- -- -- --
4,406 -- -- -- -- -- --
(850) -- -- -- -- (109) 850
-- -- -- -- -- 253 (2,250)
- ------------ ------------ ------------ ------------ ------------ ------------ ------------
916,004 (35) -- (882) (1,205) 209 (1,852)
-- -- -- -- 257,197 -- --
-- 51 -- -- -- -- --
-- -- -- (245) -- -- --
3,256 -- -- -- -- -- --
1,335 -- -- -- -- -- --
5,679 -- -- -- -- -- --
1,043 -- -- -- -- -- --
826 -- -- -- -- -- --
(793) -- -- -- -- (88) 793
423 -- -- -- -- 44 (423)
-- -- -- -- -- 2,186 (52,181)
-- -- -- -- -- (4) 119
6,610 -- -- -- -- -- --
============ ============ ============ ============ ============ ============ ============
$ 934,383 $ 16 $ -- $ (1,127) $ 255,992 2,347 $ (53,544)
============ ============ ============ ============ ============ ============ ============
</TABLE>
See accompanying notes to the consolidated financial statements.
29
<PAGE> 32
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise indicated, dollar amounts in tables
are in thousands, except per share amounts)
NOTE 1 -- ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND BUSINESS
Noble Drilling Corporation ("Noble Drilling" or, together with its
consolidated subsidiaries, unless the context requires otherwise, the "Company")
is primarily engaged in domestic and international contract oil and gas drilling
and workover operations. The Company's international operations are conducted in
Canada, the North Sea, Mexico, Africa, South America, the Middle East and India.
CONSOLIDATION
The consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries. All significant intercompany accounts
and transactions have been eliminated in consolidation. The equity method of
accounting is used for investments in affiliates where the Company has a
significant influence but not a controlling interest.
Certain reclassifications have been made in prior year consolidated
financial statements to conform to the classifications used in the 1997
consolidated financial statements. These reclassifications have no impact on net
income or loss.
FOREIGN CURRENCY TRANSLATION
The Company follows a translation policy in accordance with Statement
of Financial Accounting Standards ("SFAS") No. 52, Foreign Currency Translation
("SFAS 52"). The U.S. dollar has been designated as the functional currency
where appropriate based on an evaluation of such factors as the markets in which
the subsidiary operates, generation of cash flow, financing activities and
intercompany arrangements. Assets and liabilities are translated at the rates of
exchange on the balance sheet date. Income and expense items are translated at
average rates of exchange. The resulting gains or losses arising from the
translation of accounts from the functional currency to the U.S. Dollar are
included as a separate component of shareholders' equity designated as
cumulative translation adjustment.
Subsequent to December 31, 1997, the Company entered into various
foreign currency exchange contracts in order to reduce its exposure to
fluctuations in foreign exchange rates. These contracts expire monthly
throughout 1998 and require the Company to exchange U.S. Dollars for Dutch
Guilders and British Pounds Sterling totaling $33,800,000 and $24,700,000,
respectively. Gains and losses, if any, on these contracts will be recognized
pursuant to the provisions of SFAS 52.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash on hand, demand deposits with
banks and all highly liquid investments with original maturities of three months
or less.
In accordance with SFAS No. 95, Statement of Cash Flows, cash flows
from the Company's operations in the United Kingdom are calculated based on its
functional currency. As a result, amounts related to assets and liabilities
reported on the Consolidated Statements of Cash Flows will not necessarily agree
with changes in the corresponding balances on the Consolidated Balance Sheets.
The effect of exchange rate changes on cash balances held in foreign currencies
is reported on a separate line below cash provided (used) by financing
activities.
INVENTORIES
Inventories are stated principally at average cost. As a result of the
Company's asset rationalization program and the July 1, 1996 acquisition of
Neddrill (see Note 2), during the fourth quarter of 1996, the Company
30
<PAGE> 33
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(Unless otherwise indicated, dollar amounts in tables
are in thousands, except per share amounts)
reviewed the status of its inventories. The Company determined certain
adjustments were appropriate to properly reflect the estimated net realizable
value of these assets. These adjustments consisted primarily of write-downs for
inventory obsolescence totaling approximately $14,808,000 and reclassifications
of approximately $16,555,000 to property and equipment to better reflect their
economic lives and to be consistent with other assets owned by the Company. The
inventory write-down is included in "Contract drilling services" expense in the
Consolidated Statement of Operations for the year ended December 31, 1996.
PROPERTY AND EQUIPMENT
Property and equipment is stated at cost, reduced by provisions to
recognize economic impairment in value when management determines that such
impairment has occurred. Maintenance and repair costs are charged to expense as
incurred, while major replacements and improvements are capitalized. Total
maintenance and repair expenses for the years ended December 31, 1997, 1996 and
1995, were approximately $44,100,000, $41,759,000 and $26,189,000, respectively.
Included in costs of drilling equipment and facilities is an allocation of
interest incurred during the period that rigs are under construction or
refurbishment. Interest capitalized for the year ended December 31, 1997 totaled
$4,218,000 and is shown net of interest expense in the Consolidated Statement of
Operations. No interest was capitalized during 1996 and 1995. When assets are
sold, retired or otherwise disposed of, the cost and related accumulated
depreciation are eliminated from the accounts and the gain or loss is
recognized.
Drilling equipment and facilities are depreciated using the
straight-line method over estimated remaining useful lives as of the in-service
date or date of major refurbishment. Estimated useful lives of the Company's
drilling equipment and facilities range from three to twenty five years. Other
property and equipment is depreciated using the straight-line method over useful
lives ranging from two to twenty years.
Effective January 1, 1995, the Company revised its estimates of
salvage values and remaining depreciable lives of certain rigs to better reflect
their economic lives and to be consistent with other similar assets owned by the
Company. The effect of this change in estimates was a reduction in the net loss
applicable to common shares of $6,160,000, or $0.07 per common share, for the
year ended December 31, 1995.
LONG-LIVED ASSETS
The Company evaluates the realizability of its long-lived assets,
including property and equipment and goodwill, whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. An impairment loss is recognized when estimated cash flows expected
to result from the use of the asset and its eventual disposition is less than
its carrying amount.
In the fourth quarter of 1996, the Company reviewed the status of the
NN-1. As of December 31, 1996, the NN-1 had not been under contract since March
of 1993. Given the strength of the international markets in 1996 and the
expected continued strength in 1997, coupled with the Company's unsuccessful
marketing efforts with respect to the NN-1, recoverability of the NN-1 was
considered doubtful. The Company considered expected future cash flows over the
remaining life of the rig and determined that the NN-1 was impaired.
Accordingly, an impairment charge of $10,200,000 (excluding a $289,000 reduction
for minority interest) was recorded in the fourth quarter of 1996. The net book
value of the NN-1 was $1,022,000 at December 31, 1996. The impairment charge is
included in "Gains on sales of property and equipment, net of impairments" in
the Consolidated Statement of Operations for the year ended December 31, 1996.
The NN-1 was sold on May 7, 1997 as part of the mat rig sale to Pride Petroleum
Services, Inc. ("Pride"). See Note 2.
In 1995, a jackup rig lost two legs during mobilization to West
Africa. The third leg of the rig was removed prior to towing to the U.S. Gulf of
Mexico for a complete damage evaluation. A charge of $1,778,000 related to the
cost of mobilization was recorded in the fourth quarter of 1995. After
evaluation of the rig, the Company negotiated a constructive total loss with its
insurance underwriters and received $14,142,000 in net proceeds for the
insurance settlement. There was no material gain or loss recorded as a result of
the insurance settlement.
31
<PAGE> 34
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(Unless otherwise indicated, dollar amounts in tables
are in thousands, except per share amounts)
OTHER ASSETS
The excess of cost over the fair value of net tangible assets acquired
in the acquisition of Triton Engineering Services Company ("Triton") is being
amortized over nine years. Amortization expense for goodwill was $213,000,
$213,000 and $70,000 for the years ended December 31, 1997, 1996 and 1995,
respectively. Accumulated amortization of goodwill was $496,000 and $283,000 at
December 31, 1997 and 1996, respectively. Prepaid insurance is amortized over
the term of the insurance policy. Deferred debt issuance costs, which totaled
$2,766,000 at December 31, 1997, are being amortized over the life of the debt
securities. Amortization related to debt issuance costs was, $493,000, $526,000
and $404,000 for the years ended December 31, 1997, 1996 and 1995, respectively.
REVENUE RECOGNITION
Revenues generated from the Company's dayrate-basis drilling contracts
are recognized as services are performed. The Company's turnkey drilling
contracts are of a short-term, fixed fee nature, and accordingly, revenues and
expenses are recognized using the completed contract method. The Company may
receive lump-sum fees for the mobilization of equipment and personnel. The net
of mobilization fees received and costs incurred to mobilize an offshore rig
from one market to another is recognized over the term of the related drilling
contract. Absent a contract, mobilization costs are recognized currently.
Lump-sum payments received from customers relating to specific contracts are
deferred and amortized to income over the term of the drilling contract.
Provisions for future losses on turnkey contracts are recognized when it becomes
apparent that expenses to be incurred on a specific contract will exceed the
revenue from the contract.
CONCENTRATION OF CREDIT RISK
The primary market for the Company's services is the offshore oil and
gas industry, and the Company's customers consist primarily of major oil
companies, independent oil and gas producers and government-owned oil companies.
The Company performs ongoing credit evaluations of its customers and generally
does not require material collateral. The Company maintains reserves for
potential credit losses when necessary. Results of operations and financial
condition of the Company should be considered in light of the fluctuations in
demand experienced by drilling contractors as changes in oil and gas producers'
expectations and budgets occur. These fluctuations can impact the Company's
results of operations and financial condition as supply and demand factors
directly affect utilization and dayrates, which are the primary determinants of
cash flow from the Company's operations.
There were no customers that accounted for more than 10 percent of the
Company's consolidated operating revenues during 1997 and 1996. One customer
accounted for approximately 11 percent of the Company's consolidated operating
revenues during 1995.
NET INCOME (LOSS) APPLICABLE TO COMMON SHARES PER SHARE
The Company has adopted SFAS No. 128, Earnings Per Share ("SFAS 128"),
which established new guidelines for computing and presenting earnings per
share. All prior period earnings per share data have been restated to conform to
the provisions of SFAS 128. Net income (loss) applicable to common shares per
share has been computed on the basis of the weighted average number of common
shares and, where dilutive, common share equivalents, outstanding during the
indicated periods.
32
<PAGE> 35
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(Unless otherwise indicated, dollar amounts in tables
are in thousands, except per share amounts)
The following table reconciles the basic and diluted earnings per
share computations for income before extraordinary charge for the years ended
December 31, 1997, 1996 and 1995:
<TABLE>
<CAPTION>
INCOME
(LOSS)
INCOME BEFORE PREFERRED PREFERRED APPLICABLE
EXTRAORDINARY STOCK CONVERSION TO COMMON BASIC BASIC DILUTED DILUTED
CHARGE DIVIDENDS PAYMENT SHARES SHARES EPS SHARES EPS
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1997 $ 263,882 $ -- $ -- $ 263,882 131,791 $ 2.00 133,455 $ 1.98
1996 $ 79,297 $ (6,040) $ -- $ 73,257 108,290 $ 0.68 109,581 $ 0.67
1995 $ 1,594 $ (7,199) $ (1,524) $ (7,129) 88,873 $ (0.08) 88,873 $ (0.08)
</TABLE>
Included in diluted shares are common stock equivalents relating to
outstanding stock options of 1,664,000 and 1,291,000 for the years ended
December 31, 1997 and 1996, respectively.
Since the numerator of the basic earnings per share computation for
the year ended December 31, 1995 is a loss applicable to common shares of
$7,129,000, no potential common shares are included in the computation of
diluted earnings per share because the effect is antidilutive. In March 1995, an
aggregate of 923,862 shares of $2.25 Preferred Stock were converted into
5,006,830 shares of Noble Drilling common stock. The Company paid approximately
$1,524,000 in cash ("Preferred Conversion Payment") in the first quarter of 1995
in connection with this conversion. The Preferred Conversion Payment was
accounted for as a reduction of net earnings applicable to common shares for
purposes of computing the net loss applicable to common shares per share for the
year ended December 31, 1995.
SUPPLEMENTAL CASH FLOW INFORMATION
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Cash paid during the period for:
Interest (net of amounts capitalized) ..... $ 15,363 $ 13,061 $ 11,738
Income taxes .............................. $ 49,737 $ 6,471 $ 3,946
Noncash investing and financing activities:
Insurance financing agreement ............. $ 26,120 $ 1,214 $ 14,838
Neddrill acquisition with common stock .... $ -- $ 50,000 $ --
</TABLE>
CERTAIN SIGNIFICANT ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amount of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
ACCOUNTING PRONOUNCEMENTS
In June 1997, the FASB issued SFAS No. 130, Reporting Comprehensive
Income ("SFAS 130") and SFAS No. 131, Disclosure about Segments of an Enterprise
and Related Information ("SFAS 131"). SFAS 130 established standards for
reporting and displaying comprehensive income and its components in
general-purpose financial statements. Comprehensive income includes net income
and several other items that current accounting standards require to be
recognized outside of the Statement of Operations. SFAS 131 requires public
business enterprises to report certain information about their operating
segments; report certain enterprise-wide information about their products and
services, their activities in different geographic areas, and their reliance on
major customers; and disclose certain segment information in their interim
financial statements. These statements are effective for fiscal years beginning
after December 15, 1997 and will not have an effect on the Company's results of
operations or financial position.
33
<PAGE> 36
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(Unless otherwise indicated, dollar amounts in tables
are in thousands, except per share amounts)
NOTE 2 -- ACQUISITIONS, MERGERS AND DISPOSITIONS
On July 1, 1996, the Company completed the agreement of sale and
purchase with Royal Nedlloyd N.V. ("Nedlloyd") and its wholly owned subsidiary,
Neddrill Holding B.V., to acquire the assets utilized in the offshore contract
drilling, accommodation and other gas exploration and production related service
businesses of Nedlloyd's offshore drilling division ("Neddrill"), including the
acquisition of $28,000,000 in net working capital, and the personnel employed by
Neddrill. The purchase price was $300,000,000 in cash plus 5,000,000 shares of
Noble Drilling common stock. The cash portion of the purchase price was financed
by the issuance and sale of 21,850,000 shares of Noble Drilling common stock and
$125,000,000 principal amount of 9 1/8% Senior Notes due 2006 (the "9 1/8%
Senior Notes"). The net proceeds from the public offerings of securities in
excess of the $300,000,000 cash portion of the purchase price were added to the
Company's working capital.
The Neddrill acquisition was accounted for using the purchase method
of accounting and Neddrill's results of operations are included in the
Consolidated Statements of Operations from the date of the acquisition. The
respective assets and liabilities have been recorded at their estimated fair
value at the date of acquisition, and the allocation of the purchase price is
based on the best estimates of the Company.
The following table provides selected consolidated financial
information for the Company on a pro forma basis assuming that the Neddrill
acquisition, the issuance of 21,850,000 shares of common stock and $125,000,000
principal amount of the 9 1/8% Senior Notes and the application of the net
proceeds therefrom had occurred on January 1, 1995. The unaudited pro forma
information set forth below is not necessarily indicative of what the Company's
results of operations would have been had the transactions been consummated as
of January 1, 1995, nor is such information necessarily indicative of the
Company's future results of operations.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------
1996 1995
-------- --------
(Unaudited)
<S> <C> <C>
Operating revenues ....................................... $596,090 $449,493
Net income applicable to common shares ................... $ 83,705 $ 2,524
Net income applicable to common shares per share-Diluted.. $ 0.68 $ 0.01
</TABLE>
The Company purchased the Noble Homer Ferrington (formerly the Shelf
4), a Friede & Goldman 9500 Enhanced Pacesetter semisubmersible rig, in December
1996 for $6,000,000 in cash. The rig is currently located in the U.S. Gulf of
Mexico. The Company has entered into a letter of intent with two operators to
utilize the unit in the Gulf of Mexico. Upon completion of an upgrade, the rig
will be capable of drilling in water depths up to 6,000 feet in a moored
configuration. The initial term of the drilling contract would be for five
years. The Company will be required to make significant capital expenditures to
refurbish and upgrade the rig. Completion of the upgrade and delivery of the
unit is expected for the fourth quarter of 1999.
In December 1996, the Company purchased the Noble Jimmy Puckett
(formerly the Essar Explorer), a 300-foot Friede & Goldman L-780 Mod II
independent leg cantilevered unit built in 1982, for $35,400,000 in cash. The
rig is currently operating under a charter agreement with the Oil and Natural
Gas Corporation Ltd. of India through December 1998.
In September 1996, the Company purchased the Noble Kenneth Delaney
(formerly the Miss Kitty), a Friede & Goldman L-780 Mod II independent leg
cantilevered unit rated for a water depth of 300 feet, for $26,250,000 in cash.
At December 31, 1997, the rig was undergoing refurbishment and upgrade prior to
commencing work under a three-year contract for Qatar General Petroleum
Corporation ("QGPC") in Qatar.
The Company purchased the Noble Chuck Syring (formerly the Dana), a
Marathon LeTourneau 82-C independent leg cantilevered rig capable of drilling in
250 feet of water, in March 1996, for $15,800,000 in cash. The rig is currently
operating under a long-term contract through October 1999 for QGPC in Qatar.
34
<PAGE> 37
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(Unless otherwise indicated, dollar amounts in tables
are in thousands, except per share amounts)
In February 1996, the Company purchased the Noble Gus Androes
(formerly the Odin Explorer), a Levingston III-C independent leg cantilevered
unit rated for a water depth of 300 feet, for $15,300,000 in cash. The rig has
been refurbished and is under contract offshore Qatar with an international oil
and gas company through October 1998.
On May 7, 1997, the Company completed the sale to Pride of its 12 mat
supported jackup rigs for $268,818,000 in cash. The Company recognized a pre-tax
gain of $197,676,000 in connection with the sale, which has been included in
"Gains on asset sales, net of impairments" in the accompanying Consolidated
Statement of Operations for the year ended December 31, 1997. Revenues, gross
margin and operating income generated from the mat rigs were $35,155,000,
$18,585,000 and $15,231,000, respectively, for the period from January 1, 1997
through May 7, 1997.
In December 1996, the Company completed the sale of its land drilling
assets for $60,000,000 in cash to Nabors Industries, Inc. The assets sold
consisted principally of ( i) 19 marketed land drilling rigs and 28 mothballed
land drilling rigs, (ii) certain inventory related to the maintenance and
operation of the rigs, (iii) leasehold interest and real property interest
related to the maintenance and operation of the rigs and (iv) drilling contracts
for the employment of the rigs in existence on the closing date. The Company
recognized a pre-tax gain of $45,414,000 in connection with the sale which has
been included in "Gains on sales of property and equipment, net of impairments"
in the Consolidated Statement of Operations for the year ended December 31,
1996. Revenues, gross margin and operating income generated from the land
drilling assets were $24,637,000, $6,733,000 and $3,025,000, respectively, for
the year ended December 31, 1996.
The Company sold two of its posted barge rigs during the first quarter
of 1996. The Gus Androes, located in the U.S. Gulf, was sold for $6,000,000. The
Gene Rosser, located offshore Nigeria, was sold for $13,000,000. The Company
recorded pre-tax gains of $4,815,000 and $2,712,000, respectively, related to
the sales of these posted barge rigs. The Lewis Dugger and Chuck Syring posted
barge rigs, which were located offshore Nigeria, were sold in August 1996 for
$24,500,000 in cash and $7,500,000 in drill pipe credit. These two barges had
been written down at March 31, 1996 to their estimated net realizable values
based on then recent offers received for these assets from third parties,
resulting in a pre-tax charge to earnings of $7,600,000. The gains on the sales
of the four barge rigs net of the write-downs are included in "Gains on sales of
property and equipment, net of impairments" in the Consolidated Statement of
Operations for the year ended December 31, 1996.
NOTE 3 -- MARKETABLE SECURITIES
As of December 31, 1997, the Company classified all of its debt
securities with original maturities of more than three months as available for
sale. These investments are classified as marketable securities within current
assets on the Consolidated Balance Sheets. The following table highlights
information applicable to the Company's investments classified as available for
sale as of December 31, 1997 and 1996:
<TABLE>
<CAPTION>
DECEMBER 31, 1997
---------------------------------------------------------
AMORTIZED NET UNREALIZED
DEBT SECURITY/MATURITY COST FAIR VALUE GAINS
- --------------------------------------------------- -------------- --------------- -------------------
<S> <C> <C> <C>
U.S. Government Obligations
Mature within 1 year.......................... $ 16,455 $ 16,471 $ 16
============== =============== ===================
<CAPTION>
DECEMBER 31, 1996
---------------------------------------------------------
AMORTIZED NET UNREALIZED
DEBT SECURITY/MATURITY COST FAIR VALUE GAINS (LOSSES)
- --------------------------------------------------- -------------- --------------- -------------------
<S> <C> <C> <C>
Corporate Obligations
Mature within 1 year.......................... $ 3,067 $ 3,069 $ 2
U.S. Government Obligations
Mature within 1 year.......................... 16,264 16,227 (37)
============== =============== ===================
Total........................................... $ 19,331 $ 19,296 $ (35)
============== =============== ===================
</TABLE>
35
<PAGE> 38
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(CONTINUED)
(Unless otherwise indicated, dollar amounts in tables are in thousands,
except per share amounts)
The net unrealized gains (losses) on debt securities of $16,000 and
($35,000) as of December 31, 1997 and 1996, respectively, are included as a
reduction of shareholders' equity. Total realized losses related to short-term
investments for the years ended December 31, 1997 and 1996 were $6,000 and
$7,000, respectively.
The Company categorizes its investments in marketable equity
securities as trading securities. There were no investments in marketable equity
securities at December 31, 1997. Total proceeds from the sale of these
securities were $2,353,000 and $5,615,000 for the years ended December 31, 1997
and 1996, respectively. Total realized gains on these equity investments for the
years ended December 31, 1997 and 1996 were $1,168,000 and $669,000,
respectively. Total net unrealized gains related to marketable equity
investments for the year ended December 31, 1996, were $1,348,000.
NOTE 4 -- INVESTMENTS IN AFFILIATES
At December 31, 1997, the Company's investments in affiliates consisted
of a 41 percent interest in Arktik Drilling Limited, Inc. ("Arktik") and a 50
percent interest in Noble Kvaerner Drilling Limited ("Noble Kvaerner"). The
Company accounts for these investments using the equity method. Arktik is a
Bahamian joint venture company that owns and operates the drillship Noble
Muravlenko. Noble Kvaerner is a Bahamian joint venture company that operates an
offshore jackup rig, the Noble Kolskaya. The total investment balance at
December 31, 1997 was $688,000 and at December 31, 1996 was $410,000; equity in
earnings was $78,000 and $0 for the years ended December 31, 1997 and 1996,
respectively. There were no distributions or dividends received during the years
ended December 31, 1997 and 1996.
The Noble Muravlenko refurbishment has been completed, with the
exception of installing a blowout preventer, and it commenced operations as a
workover unit in the fourth quarter of 1997 for Petroleo Brasiliero S.A.
("Petrobras"). Upon installation of a blowout preventer, the Noble Muravlenko
will begin drilling operations with Petrobras under a five-year contract, with a
one-year option to Petrobras. The total cost of the refurbishment is expected to
be approximately $59,500,000. As of December 31, 1997, the Company had notes
receivable from Arktik of $12,000,000 which are included in "Investment in and
notes receivable from affiliates" in the accompanying Consolidated Balance
Sheet. Such amount is expected to be repaid by Arktik over the term of the
Petrobras contract.
The Noble Kolskaya was converted from accommodation mode into drilling
mode during the second quarter of 1997, and it began working under a three-year
contract in July 1997. The total cost of the conversion was approximately
$18,800,000. As of December 31, 1997, the Company had notes receivable from
Noble Kvaerner of $8,409,000 which are included in "Investment in and notes
receivable from affiliates" in the accompanying Consolidated Balance Sheet.
Noble Kvaerner is currently negotiating a credit agreement to provide for a
$10,000,000 loan, the proceeds of which will be used to repay the Company's note
receivable. Additionally, as of December 31, 1997, the Company had paid
$3,900,000 of upgrade costs on behalf of one of the other Noble Kvaerner joint
venturers. Such amount is included in "Other current assets" in the accompanying
Consolidated Balance Sheet.
NOTE 5 -- DEBT
On July 1, 1996, in connection with the Neddrill acquisition and the
issuance of 21,850,000 shares of Noble Drilling common stock in an underwritten
public offering (the "1996 Stock Offering") (see Note 7), the Company issued
$125,000,000 principal amount of 9 1/8% Senior Notes (the 1996 Stock Offering
and the issuance of the 9 1/8% Senior Notes are collectively referred to as the
"1996 Public Offerings"). The 9 1/8% Senior Notes will mature on July 1, 2006.
Interest on the 9 1/8% Senior Notes is payable semi-annually on January 1 and
July 1 of each year. The 9 1/8% Senior Notes are redeemable at the option of the
Company, in whole or in part, at any time on or after July 1, 2001 at 104.56
percent of principal amount, declining ratably to par on or after July 1, 2004,
plus accrued interest. The indenture governing the 9 1/8% Senior Notes contains
certain restrictive covenants, including restrictions on dividends and certain
investments and limitations on certain sale and lease-back transactions,
transactions with affiliates, and mergers or consolidations.
36
<PAGE> 39
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(CONTINUED)
(Unless otherwise indicated, dollar amounts in tables are in thousands,
except per share amounts)
In 1997, the Company entered into financing agreements with
Transamerica Insurance Finance Corporation related to the renewal of its Marine
Package, Protection and Indemnity and General Liability insurance policies for
periods of 33 months, nine months and 21 months, respectively. Over the course
of 1997, the Company financed a total of $26,120,000 related to these insurance
polices. The fixed annual interest rates on the debt related to the Marine
Package, Protection and Indemnity and General Liability insurance policies are
5.94 percent, 4.85 percent and 5.68 percent, respectively. The amount
outstanding at December 31, 1997 includes $10,222,000, which is included in
"Long-term debt", and $9,698,000, which is included in "Short-term debt and
current installments of long-term debt", in the accompanying Consolidated
Balance Sheet.
On October 7, 1993, the Company issued $125,000,000 principal amount
of 9 1/4% Senior Notes Due 2003 (the "9 1/4% Senior Notes"). The 9 1/4% Senior
Notes will mature on October 1, 2003. Interest on the 9 1/4% Senior Notes is
payable semi-annually on April 1 and October 1 of each year. The 9 1/4% Senior
Notes are redeemable at the option of the Company, in whole or in part, on or
after October 1, 1998 at 103.47 percent of principal amount, declining ratably
to par on or after October 1, 2001, plus accrued interest.
In November 1996, the Company purchased $11,000,000 principal amount of
its 9 1/4% Senior Notes, which resulted in an extraordinary charge of $660,000,
net of taxes of $355,000. The extraordinary charge represents the difference
between the acquisition price and the net carrying value of the notes, including
unamortized debt issuance costs. After giving effect to the purchase, the
Company had $114,000,000 principal amount of 9 1/4% Senior Notes outstanding at
December 31, 1996. During the first quarter of 1997, the Company purchased
$29,555,000 principal amount of its 9 1/4% Senior Notes, which resulted in an
extraordinary charge of $1,704,000, net of taxes of $918,000. On May 14, 1997,
the Company announced a tender offer to purchase for cash all $84,445,000
principal amount then outstanding of its 9 1/4% Senior Notes. Pursuant to the
tender offer, the Company purchased $81,330,000 principal amount of 9 1/4%
Senior Notes during the second quarter of 1997, which resulted in an
extraordinary charge of $4,981,000, net of taxes of $2,682,000. After giving
effect to the purchases, the Company had $3,115,000 principal amount of 9 1/4%
Senior Notes outstanding at December 31, 1997.
In connection with the initial construction of the jackup rig, NN-1,
the predecessor of NN-1 Limited Partnership issued U.S. Government Guaranteed
Ship Financing Sinking Fund Bonds, of which $1,026,000 principal amount was
outstanding at December 31, 1996. On March 31, 1997, the Company redeemed the
remaining $1,026,000 principal amount of U.S. Government Guaranteed Ship
Financing Sinking Fund Bonds.
Annual maturities of long-term debt are $8,195,000 due in 1998,
$7,991,000 due in 1999, $2,231,000 due in 2000, $3,115,000 due in 2003 and
$125,000,000 due in 2006.
The following table summarizes the Company's long-term debt:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1997 1996
--------- ---------
<S> <C> <C>
9 1/4% Senior Notes Due 2003 ................................... $ 3,115 $ 114,000
9 1/8% Senior Notes due 2006, net of unamortized discount of
$198 in 1997 and $234 in 1996 ............................... 124,802 124,766
U.S. Government Guaranteed Ship Financing Sinking Fund Bonds ... -- 1,026
Insurance financing ............................................ 18,417 3,102
--------- ---------
146,334 242,894
Current installments ........................................... (8,195) (3,622)
--------- ---------
$ 138,139 $ 239,272
========= =========
</TABLE>
37
<PAGE> 40
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(CONTINUED)
(Unless otherwise indicated, dollar amounts in tables are in thousands,
except per share amounts)
The fair value of the Company's long-term debt at December 31, 1997
was $145,286,000, based on the quoted market prices for similar issues or on the
current rates offered to the Company for debt of similar remaining maturities.
NOTE 6 -- CREDIT FACILITIES
The Company entered into a credit agreement dated August 14, 1997 (the
"Credit Agreement") with a group of banks. The Credit Agreement provides for a
five-year unsecured revolving credit facility in the amount of $200,000,000.
Loans under the Credit Agreement bear interest, at the option of the Company, at
either a base rate or LIBOR plus a margin (0.40 percent currently). The Credit
Agreement provides for commitment fees of 0.125 percent on the unused portion of
the facility. The interest rate and commitment fee rate vary depending on the
Company's public senior secured debt rating or its funded debt to capital ratio.
The Credit Agreement requires compliance with various covenants, including
minimum consolidated net worth, interest coverage ratios, leverage ratios and
fleet coverage ratios. At December 31, 1997, the Company had lines of credit
totaling $205,000,000 of which $2,397,000 had been used to support outstanding
letters of credit. Additionally, at December 31, 1997, $18,567,745 of
outstanding letters of credit had been supported through a combination of
unsecured letter of credit facilities and surety bonds. As of March 12, 1998,
the Company had an outstanding balance of $60,000,000 under the Credit
Agreement.
NOTE 7 -- SHAREHOLDERS' EQUITY
On July 1, 1996, the Company issued and sold 21,850,000 shares of
common stock in the 1996 Stock Offering (see Note 5) at an initial price to the
public of $13.00 per share. This resulted in net proceeds of $272,033,000, after
deducting the underwriting discount and other related costs. The net proceeds of
the 1996 Public Offerings (see Note 5) were used to purchase Neddrill as
discussed previously in Note 2, with the balance of the proceeds, approximately
$89,916,000, used for general corporate purposes.
On September 14, 1994, Chiles Offshore Corporation ("Chiles") merged
with Noble Offshore Corporation ("NOC"), a wholly owned subsidiary of Noble
Drilling (the "Chiles Merger"). In the Chiles Merger, 4,025,000 shares of $1.50
convertible preferred stock of Chiles were converted into and exchanged for an
equivalent number of shares of $1.50 Convertible Preferred Stock of Noble
Drilling ("$1.50 Preferred Stock") having substantially the same rights,
privileges, preferences and voting power as the Chiles preferred stock. Holders
of the $1.50 Preferred Stock received a cash dividend at an annual rate of $1.50
per share. In December 1996, 4,023,779 shares of $1.50 Preferred Stock were
converted into 9,836,475 shares of Noble Drilling common stock. The remaining
1,221 shares of $1.50 Preferred Stock were redeemed at $26.05 per share, plus
accrued dividends.
NOTE 8 -- STOCK-BASED COMPENSATION PLANS
The Company has several stock-based compensation plans, which are
described below. The Company applies APB Opinion 25 and related Interpretations
in accounting for its stock-based compensation plans. In 1995, SFAS No. 123,
Accounting for Stock-Based Compensation ("SFAS 123") was issued which, if fully
adopted by the Company, would change the methods the Company applies in
recognizing the cost of its stock-based compensation plans. Adoption of the cost
recognition provisions of SFAS 123 is optional and the Company has decided not
to elect these provisions. However, pro forma disclosures as if the Company
adopted the cost recognition provisions of SFAS 123 are required and are
presented below.
NONQUALIFIED STOCK OPTIONS
1991 STOCK OPTION AND RESTRICTED STOCK PLAN
The Company's 1991 Stock Option and Restricted Stock Plan, as amended
(the "1991 Plan"), provides for the granting of options to purchase the
Company's common stock, with or without stock appreciation rights ("SAR's"), and
the awarding of shares of restricted stock to selected employees. Options may be
either incentive stock options (intended to qualify under Section 422 of the
Internal Revenue Code of 1986, as amended) or
38
<PAGE> 41
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(CONTINUED)
(Unless otherwise indicated, dollar amounts in tables are in thousands,
except per share amounts)
nonqualified stock options. The 1991 Plan provides that the exercise price of
any nonqualified stock option may not be less than 50 percent of the fair market
value of the common stock on the date of grant and the exercise price of any
incentive stock option may not be less than the fair market value of the common
stock on the date of grant. At December 31, 1997, 5,330,944 shares were
available for grant under the 1991 Plan.
In 1997 and 1996, the Company granted only nonqualified stock options
under the 1991 Plan. All such options have a term of 10 years and an exercise
price equal to the fair market value of the common stock on the date of grant
and vest at the rate of 33 1/3 percent on each anniversary of the date of grant,
commencing on the first anniversary of the date of grant. The Company granted
options on 1,787,000 shares in 1997, 1,358,600 shares in 1996 and 1,240,400
shares in 1995. In accordance with APB 25, the Company has not recognized any
compensation cost for the options granted in 1997, 1996 and 1995 under the 1991
Plan.
OTHER PLANS AND AGREEMENTS
In 1987 the Company granted nonqualified stock options on 300,000
shares of common stock to certain non-employee directors of the Company pursuant
to stock option agreements which were approved by stockholders. The exercise
price of these options was the fair market value of the common stock on the date
of grant. At December 31, 1997, all options to purchase shares under these
agreements had been exercised or expired.
The Company's 1992 Nonqualified Stock Option Plan for Non-Employee
Directors (the "1992 Plan") provides for the granting of nonqualified stock
options to non-employee directors. Under the 1992 Plan, non-employee directors
of the Company receive an annual grant of an option to purchase 3,500 shares of
common stock. New non-employee directors receive a one-time grant of an option
to purchase 10,000 shares of common stock immediately after the date of their
first annual meeting of stockholders. The options are granted at fair market
value on the grant date and are exercisable from time to time over a period
commencing one year from the grant date and ending on the expiration of ten
years from the grant date, unless terminated sooner as described in the 1992
Plan. Under the 1992 Plan, at December 31, 1997, options to purchase 140,000
shares were outstanding, of which 105,000 shares were exercisable. The Company
granted options on 17,500 shares in 1997.
A summary of the status of the Company's stock options under the 1991
Plan as of December 31, 1997, 1996 and 1995 and the changes during the year
ended on those dates is presented below (actual amounts):
<TABLE>
<CAPTION>
1997 1996 1995
------------------------ ----------------------- -----------------------
NUMBER OF WEIGHTED NUMBER OF WEIGHTED NUMBER OF WEIGHTED
SHARES AVERAGE SHARES AVERAGE SHARES AVERAGE
UNDERLYING EXERCISE UNDERLYING EXERCISE UNDERLYING EXERCISE
OPTIONS PRICE OPTIONS PRICE OPTIONS PRICE
---------- -------- ---------- -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of
the year..................... 3,484,903 $ 7.11 2,799,747 $ 5.38 1,810,472 $ 5.45
Granted ....................... 1,787,000 23.21 1,358,600 9.91 1,240,400 5.19
Exercised ..................... (858,213) 6.28 (515,281) 5.05 (109,150) 3.25
Forfeited ..................... (243,994) 11.97 (158,163) 7.36 (141,975) 6.30
--------- ---------- --------- ---------- --------- ----------
Outstanding at end of year .... 4,169,696 $ 13.88 3,484,903 $ 7.11 2,799,747 $ 5.38
========= ========== ========= ========== ========= ==========
Exercisable at end of year .... 1,373,789 $ 6.40 1,432,250 $ 5.56 1,273,505 $ 3.33
========= ========== ========= ========== ========= ==========
Weighted average fair value
per share of the options
granted during the year ..... $ 10.60 $ 4.36 $ 2.52
========== ========== ==========
</TABLE>
The fair value of each stock option granted is estimated on the date of
grant using the Black-Scholes option-pricing model with the following
weighted-average assumptions for grants in 1997, 1996 and 1995, respectively:
dividend yield of 0.0 percent for both years; expected volatility of 41.27
percent for 1997, 40.85 percent for 1996 and 42.19 percent for 1995,
respectively; different risk-free interest rates for each grant, ranging from
5.27 percent to 7.59 percent; and an expected life of the options of five years
for all years.
39
<PAGE> 42
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(CONTINUED)
(Unless otherwise indicated, dollar amounts in tables are in thousands,
except per share amounts)
The following table summarizes information about stock options
outstanding at December 31, 1997 (actual amounts):
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
----------------------------------------------------- -------------------------------------
WEIGHTED
NUMBER AVERAGE WEIGHTED NUMBER WEIGHTED
RANGE OF EXERCISE OUTSTANDING REMAINING AVERAGE EXERCISABLE AT AVERAGE
PRICES AT 12/31/97 LIFE (YEARS) EXERCISE PRICE 12/31/97 EXERCISE PRICE
- ------------------------ ---------------- ---------------- ------------------ ----------------- ------------------
<S> <C> <C> <C> <C> <C>
$ 1.72 to $ 4.81 302,200 3.90 $ 3.44 302,200 $ 3.44
$ 5.19 to $ 7.69 1,131,119 6.44 6.00 805,722 6.33
$ 9.81 to $ 14.00 1,024,127 8.09 9.94 265,867 9.96
$ 20.88 to $ 25.94 1,712,250 9.31 23.39 -- --
- -------------------- --------- ---- ----------- --------- ------------
$ 1.72 to $ 25.94 4,169,696 7.84 $ 13.88 1,373,789 $ 6.40
========= ==== =========== ========= ============
</TABLE>
STOCK APPRECIATION RIGHTS
Effective as of July 25, 1996, a subsidiary of Noble Drilling granted
stock appreciation rights covering 309,500 shares of Noble Drilling common
stock. The stock appreciation rights, which are payable solely in cash, have a
term of five years and an exercise price of fair market value on the date of
grant and vested fully on July 25, 1997. There were 252,000 stock appreciation
rights outstanding as of December 31, 1997, which had an intrinsic aggregate
value of $4,158,000. In accordance with APB 25, the Company recognized
compensation expense of approximately $3,500,000 and $776,000 for the years
ended December 31, 1997 and 1996, respectively.
RESTRICTED STOCK
The Company has awarded restricted (i.e., nonvested) shares of Noble
Drilling common stock pursuant to the 1991 Plan. A total of 58,863 shares of
restricted common stock were awarded in July 1996 ("July 1996 Award") to
selected employees. These shares will vest (subject only to future employment)
50 percent each year on a cumulative basis commencing one year from the date of
award. In accordance with APB 25, the Company recognized compensation expense
relating to the shares of the July 1996 Award in the amount of $468,000 and
$161,000 for the years ended December 31, 1997 and 1996, respectively. The share
price at date of grant for such 58,863 restricted shares was $14.13.
Additionally, in December 1994, January 1996 and January 1997, the
Company awarded 185,500, 105,250 and 90,500 performance restricted shares,
respectively. The share price at date of grant was $5.75, $8.88 and $21.00,
respectively, for the December 1994, January 1996 and January 1997 awards. The
vesting of these shares is dependent, among other things, on the achievement of
certain specified corporate performance criteria. For the performance restricted
shares awarded in 1994, the level of actual performance will be determined as of
December 31, 1997 relative to the specified criteria, and the number of the
performance restricted shares available for vesting will be determined under a
schedule relating vesting to performance. The number of shares as so determined
will then vest (subject only to future employment) at the rate of 33 1/3 percent
thereof on March 31, 1998, March 31, 1999 and March 31, 2000. Nonvested shares
will be forfeited. The vesting of the performance restricted shares awarded in
1996 and 1997 will be determined in a similar manner, substituting December 31,
1998 and 1999, respectively, as the performance evaluation dates and March 31,
1999 and 2000 as the first vesting dates. The number of shares available for
vesting relating to the December 1994 award was 85,000 based on actual
performance determined as of December 31, 1997. In accordance with APB 25, the
Company recognized compensation expense of $3,068,000 for the year ended
December 31, 1997 relating to all of the performance restricted share awards.
PRO FORMA NET INCOME AND NET INCOME PER COMMON SHARE
Pursuant to APB 25, the Company recognized charges of $7,036,000,
$937,000 and $0 as compensation expense for equity-based compensation awarded in
1997, 1996 and 1995, respectively. Had the compensation cost
40
<PAGE> 43
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(CONTINUED)
(Unless otherwise indicated, dollar amounts in tables are in thousands,
except per share amounts)
for the Company's stock-based compensation plans been determined consistent with
SFAS 123, the Company would have recognized compensation expense of $13,374,000,
$3,325,000 and $908,000 in 1997, 1996 and 1995, respectively. The Company's net
income applicable to common shares and net income applicable to common shares
per share for 1997 and 1996 would have approximated the pro forma amounts below
(in millions except per share data):
<TABLE>
<CAPTION>
As Reported Pro Forma As Reported Pro Forma As Reported Pro Forma
12/31/97 12/31/97 12/31/96 12/31/96 12/31/95 12/31/95
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net Income Applicable
to Common Shares .... $ 257,197 $ 253,077 $ 72,597 $ 71,045 $ (5,605) $ (6,195)
Net Income Applicable
to Common Shares
per Share-Diluted ... $ 1.93 $ 1.90 $ 0.66 $ 0.65 $ (0.08) $ (0.09)
</TABLE>
The effects of applying SFAS 123 in this pro forma disclosure are not
indicative of future amounts. SFAS 123 does not apply to awards prior to 1995,
and the Company anticipates making awards in the future under its stock-based
compensation plans.
STOCKHOLDER RIGHTS PLAN
The Company adopted a stockholder rights plan on June 28, 1995,
designed to assure that the Company's stockholders receive fair and equal
treatment in the event of any proposed takeover of the Company and to guard
against partial tender offers and other abusive takeover tactics to gain control
of the Company without paying all stockholders a fair price. The rights plan was
not adopted in response to any specific takeover proposal. Under the rights
plan, the Company declared a dividend of one right ("Right") on each share of
Noble Drilling common stock. Each Right will entitle the holder to purchase one
one-hundredth of a share of a new Series A Junior Participating Preferred Stock,
par value $1.00 per share, at an exercise price of $120.00. The rights plan was
amended on September 3, 1997 to increase the exercise price from $35.00 to
$120.00. The Rights are not currently exercisable and will become exercisable
only in the event a person or group acquires beneficial ownership of 15 percent
or more of Noble Drilling common stock. The dividend distribution was made on
July 10, 1995 to stockholders of record at the close of business on that date.
The Rights will expire on July 10, 2005.
NOTE 9 -- INCOME TAXES
The Company follows SFAS No. 109, Accounting for Income Taxes, which
requires the use of the liability method of accounting for deferred income
taxes. Under SFAS No. 109, deferred tax assets and liabilities are recognized
based upon differences between the financial statement and tax bases of assets
and liabilities using presently enacted tax rates. If it is more likely than not
that some portion or all of a deferred tax asset will not be realized, a
valuation allowance is recognized.
Amounts of deferred tax assets and liabilities are as follows at:
DECEMBER 31,
----------------------
1997 1996
-------- --------
[S] [C] [C]
Deferred tax assets, net of valuation allowance of
$0 in both 1997 and 1996 ......................... $ 6,338 $ 41,544
Deferred tax liabilities ........................... (64,231) (50,616)
-------- --------
Net deferred tax liabilities ....................... $(57,893) $ (9,072)
======== ========
41
<PAGE> 44
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(CONTINUED)
(Unless otherwise indicated, dollar amounts in tables are in thousands,
except per share amounts)
The components of and changes in the net deferred taxes were as
follows:
<TABLE>
<CAPTION>
DEFERRED
DECEMBER 31, (EXPENSE) DECEMBER 31,
1997 CREDIT 1996
------------ -------- ------------
<S> <C> <C> <C>
Deferred tax assets:
Domestic
Net operating loss carryforwards .................... $ -- $(32,989) $ 32,989
Investment tax credit carryforward .................. -- (699) 699
Other ............................................... -- (2,928) 2,928
Book basis of assets in excess of tax basis ......... -- (2,241) 2,241
International
Net operating loss carryforwards .................... 4,580 3,208 1,372
Tax basis of assets in excess of book basis ......... 1,758 443 1,315
-------- -------- --------
Net deferred tax assets ................................. $ 6,338 $(35,206) $ 41,544
======== ======== ========
Deferred tax liabilities:
Domestic
Excess of net book basis over remaining tax basis ... $(54,768) $(11,834) $(42,934)
Other, net .......................................... (1,951) (89) (1,862)
International
Excess of net book basis over remaining tax basis ... (7,512) (1,692) (5,820)
-------- -------- --------
Deferred tax liabilities ................................ $(64,231) $(13,615) $(50,616)
======== ======== ========
</TABLE>
Income before income taxes and extraordinary items consisted of the
following:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
1997 1996 1995
------------------ ------------------ -----------------
<S> <C> <C> <C>
Domestic............................................. $ 265,122 $ 94,096 $ (9,578)
International........................................ 114,491 7,863 14,444
------------- ------------- -------------
Total................................................ $ 379,613 $ 101,959 $ 4,866
============= ============= =============
</TABLE>
The income tax provision consisted of the following:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------
1997 1996 1995
----------------- ----------------- -----------------
<S> <C> <C> <C>
Current - domestic................................... $ 50,153 $ 2,322 $ (2,093)
Current - international.............................. 16,757 13,744 6,282
Deferred - domestic.................................. 50,780 3,288 --
Deferred - international............................. (1,959) 3,308 (917)
============= ============= =============
Total ............................................... $ 115,731 $ 22,662 $ 3,272
============= ============= =============
</TABLE>
Included in the current domestic tax benefit for the year ended
December 31, 1995, is $2,100,000 related to a separate return year loss
carryback benefit recorded by Triton.
42
<PAGE> 45
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(CONTINUED)
(Unless otherwise indicated, dollar amounts in tables are in thousands,
except per share amounts)
A reconciliation of Federal statutory and effective income tax rates is
shown below:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Statutory rate ................................................... 35.0% 35.0% 35.0%
Effect of:
U.S. operating loss generating no current tax benefit .......... -- -- 68.9
U.S. operating loss carryforward/ carryback benefit ............ -- (29.1) (43.1)
Canadian operating loss carryforward benefit ................... -- (0.7) --
International tax rates which are different than the U.S. rate . (6.2) 14.7 6.4
Other .......................................................... 1.7 2.3 --
---- ---- ----
Effective rate ................................................... 30.5% 22.2% 67.2%
==== ==== ====
</TABLE>
The Company had available at December 31, 1996, unused investment tax
credits of $669,000, which were used to offset 1997 U.S. taxes payable. In
addition, Noble Drilling had net operating loss carryforwards ("NOL's") for tax
purposes of approximately $94,253,000 at December 31, 1996, which were fully
utilized in 1997.
Applicable U.S. income and foreign withholding taxes have not been
provided on undistributed earnings of the Company's international subsidiaries.
Management does not intend to repatriate such undistributed earnings for the
foreseeable future except for distributions upon which incremental income taxes
would not be material. At December 31, 1997, it was not practicable to estimate
the deferred tax liability associated with the undistributed earnings of the
Company's international subsidiaries.
NOTE 10 -- EMPLOYEE BENEFIT PLANS
The Company has a noncontributory defined benefit plan which covers
substantially all salaried employees and a noncontributory defined benefit
pension plan which covers certain field employees. The benefits from these plans
are based primarily on years of service and employees' compensation near
retirement. The Company's funding policy is consistent with funding requirements
of applicable laws and regulations. The assets of these plans consist of
corporate equity securities, municipal and government bonds, and cash
equivalents. The Company, when required, makes contributions to the domestic
plan in the form of Noble Drilling common stock. As of September 30, 1997, the
domestic plan assets included $20,599,000 of Noble Drilling's common stock
valued at fair value at that date. The Company changed the measurement date of
the plan to September 30 beginning in 1995. This change did not have a material
impact to the financial results of the Company.
Each of Noble Drilling (U.K.) Limited, Nedstaff Europe Ltd. and Noble
Drilling (Nederland) B.V., wholly owned subsidiaries of Noble Drilling,
maintains pension plans which cover all of its salaried, nonunion employees.
Benefits are based on credited service and the average of the highest three
years of qualified salary within the past ten years of participation.
43
<PAGE> 46
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(CONTINUED)
(Unless otherwise indicated, dollar amounts in tables are in thousands,
except per share amounts)
Pension cost includes the following components:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------------------
1997 1996 1995
------------------------ ------------------------ ------------------------
INTERNATIONAL DOMESTIC INTERNATIONAL DOMESTIC INTERNATIONAL DOMESTIC
------------- -------- ------------- -------- ------------- --------
<S> <C> <C> <C> <C> <C> <C>
Service costs (benefits
earned during the year) ... $ 2,881 $ 1,520 $ 523 $ 1,589 $ 581 $ 1,201
Interest cost on projected
benefit obligation ........ 1,087 2,094 726 2,023 702 1,890
Actual return on assets ..... (1,291) (11,690) (928) (4,500) (870) (2,439)
Amortization of net loss
(gain) at January 1 ....... 158 8,971 (55) 2,607 (44) 757
-------- -------- -------- -------- -------- --------
Net pension expense ......... $ 2,835 $ 895 $ 266 $ 1,719 $ 369 $ 1,409
======== ======== ======== ======== ======== ========
</TABLE>
The funded status of the plans is as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------------
1997 1996
------------------------ ------------------------
INTERNATIONAL DOMESTIC INTERNATIONAL DOMESTIC
------------- -------- ------------- --------
<S> <C> <C> <C> <C>
Actuarial present value of benefit obligations
Vested benefits ................................. $(14,002) $(23,850) $ (8,756) $(21,869)
Nonvested benefits .............................. (2,799) (1,524) -- (988)
-------- -------- -------- --------
Accumulated benefits ............................ (16,801) (25,374) (8,756) (22,857)
Effect of projected future compensation levels .. (3,175) (5,636) (1,389) (4,269)
-------- -------- -------- --------
Projected benefits ................................ (19,976) (31,010) (10,145) (27,126)
Plan assets at fair value ......................... 18,401 38,382 11,880 27,856
-------- -------- -------- --------
Plan assets in (shortfall) excess of
projected benefit obligations ................... (1,575) 7,372 1,735 730
Unrecognized net (loss) gain ...................... (2,401) (3,051) (2,169) 5,431
Unrecognized prior service cost ................... -- 801 -- (59)
Unrecognized transition obligation (asset) ........ 3,184 (597) 95 (1,053)
Additional liability .............................. (1,389) (588) -- --
======== ======== ======== ========
(Accrued liability) prepaid asset ................. $ (2,181) $ 3,937 $ (339) $ 5,049
======== ======== ======== ========
</TABLE>
The projected benefit obligations for the international and domestic
plans were determined using an assumed discount rate of 6.75 percent and 7.25
percent, respectively, in 1997, 8.25 percent and 7.5 percent, respectively, in
1996 and 8.5 percent and 7.5 percent, respectively, in 1995. Assumed long-term
rate of return on international plan assets was 7.5 percent, 9.0 percent and
9.25 percent for 1997, 1996 and 1995, respectively. Assumed long-term rate of
return on domestic plan assets was 9.0 percent in each of the years presented.
The projected benefit obligations for the international plan assume a
compensation increase of 4.5 percent, 6.0 percent and 6.25 percent for 1997,
1996 and 1995, respectively, and 6.0 percent per annum for the domestic plan in
each of the years presented.
The Company presently sponsors medical and other plans for the benefit
of its employees. The cost of maintaining these plans aggregated $11,868,000,
$8,912,000 and $6,628,000 in 1997, 1996 and 1995, respectively.
The Company does not provide post-retirement benefits (other than
pensions) or any post-employment benefits to its employees.
44
<PAGE> 47
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(CONTINUED)
(Unless otherwise indicated, dollar amounts in tables are in thousands,
except per share amounts)
NOTE 11 -- COMMITMENTS, CONTINGENCIES AND OBLIGATIONS
On October 25, 1993, the Company purchased two submersible offshore
drilling rigs from Portal Rig Corporation ("Portal") for 626,410 shares of Noble
Drilling common stock. The Company acquired the rigs subject to certain federal
income tax "safe harbor leases" and a related preferred ship mortgage relating
to a tax benefit transaction entered into in 1982 by a predecessor of Portal.
Portal has agreed to indemnify the Company for any potential liabilities as a
result of this earlier tax benefit transaction.
The Company is a defendant in certain claims and litigation arising out
of operations in the normal course of business. In the opinion of management,
uninsured losses, if any, will not be material to the Company's financial
position or results of operations.
The Company has entered into contracts for three EVA-4000(TM)
semisubmersible rigs, the Noble Paul Romano, Noble Paul Wolff and Noble Amos
Runner, and the Company has commitments for two additional EVA-4000(TM) rigs,
the Noble Jim Thompson and Noble Max Smith. The Company has also entered into a
letter of intent with two operators to utilize the Noble Homer Ferrington
(formerly the Shelf 4) in the Gulf of Mexico. The Company will be required to
make significant capital expenditures to refurbish and upgrade the rig. The
total cost of these six projects is expected to be approximately $800,000,000.
Further, the Company is marketing additional rigs for conversion into deepwater
design semisubmersible units. Because any such conversion would require
substantial capital expenditures, such projects will not be completed except in
connection with entering into a long-term drilling contract with an operator.
However, given the strong demand for drilling rigs and related services,
increasingly heavy backlogs for equipment and services required to complete the
conversions could constrain the Company's ability to complete the conversions on
a timely basis. The Company has entered into agreements with several vendors to
purchase equipment or for the construction of equipment for the conversion of
rigs, which agreements generally require non-refundable payments as certain
milestones are met. The amount of such payments totaled $76,600,000 as of
December 31, 1997. As of December 31, 1997, the Company also had purchase
commitments of $27,700,000, which are subject to negotiation upon cancellation.
These expenditures will be funded from operating cash flows, existing cash
balances, available lines of credit and possibly from other sources of project
financing. The Company is currently reviewing several proposals from financial
institutions to provide project financing for the EVA-4000(TM) semisubmersible
conversions.
At December 31, 1997, the Company had certain noncancellable long-term
operating leases, principally for office space and facilities, with various
expiration dates. Future minimum rentals under such leases aggregate $6,640,000
for 1998, $5,952,000 for 1999, $5,468,000 for 2000, $4,998,000 for 2001, and
$26,876,000 thereafter.
45
<PAGE> 48
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(CONTINUED)
(Unless otherwise indicated, dollar amounts in tables are in thousands,
except per share amounts)
NOTE 12 -- UNAUDITED INTERIM FINANCIAL DATA
Unaudited interim financial information for the years ended December
31, 1997 and 1996 is as follows:
<TABLE>
<CAPTION>
QUARTER ENDED
-----------------------------------------------------
MAR. 31 JUNE 30 SEPT. 30 DEC. 31
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
1997
Operating revenues .................................. $ 168,715 $ 184,992 $ 171,636 $ 187,852
Operating income (1)(2) ............................. $ 35,062 $ 242,877 $ 43,647 $ 59,761
Income before extraordinary charge .................. $ 23,648 $ 161,700 $ 33,481 $ 45,053
Extraordinary charge, net of tax (3) ................ $ (1,704) $ (4,981) $ -- $ --
Net income (5)(6) ................................... $ 21,944 $ 156,719 $ 33,481 $ 45,053
Net income per share-basic (1)(2)(3)(4)(5)(6)(7) .... $ 0.17 $ 1.18 $ 0.25 $ 0.34
Net income per share-diluted (1)(2)(3)(4)(5)(6)(7) .. $ 0.16 $ 1.17 $ 0.25 $ 0.34
</TABLE>
<TABLE>
<CAPTION>
QUARTER ENDED
------------------------------------------------------
MAR. 31 JUNE 30 SEPT. 30 DEC. 31
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
1996
Operating revenues ....................... $ 104,757 $ 109,686 $ 158,072 $ 141,738
Operating income (8)(9) .................. $ 14,097 $ 20,413 $ 30,549 $ 47,492
Income before extraordinary charge ....... $ 10,726 $ 16,253 $ 25,221 $ 27,097
Extraordinary charge, net of tax (10) .... -- -- -- $ (660)
Net income (11) .......................... $ 10,726 $ 16,253 $ 25,221 $ 26,437
Preferred stock dividends ................ $ (1,511) $ (1,509) $ (1,509) $ (1,511)
Net income applicable to common shares ... $ 9,215 $ 14,744 $ 23,712 $ 24,926
Net income applicable to common shares
per share-basic (7)(8)(9)(10)(11) ..... $ 0.10 $ 0.16 $ 0.19 $ 0.20
Net income applicable to common shares
per share-diluted (7)(8)(9)(10)(11) ... $ 0.10 $ 0.15 $ 0.19 $ 0.20
</TABLE>
- ------------------
(1) Included in the quarter ended June 30, 1997 were non-recurring items
consisting of $197,676,000 ($1.48 per share) of gain relating to the
sale of the Company's 12 mat supported jackup rigs (plus the hull of
one additional mat supported unit).
(2) Included in the quarter ended December 31, 1997, was a non-recurring
charge of $2,313,000 ($0.02 per share) related to the disposition of
certain non-core assets.
(3) Included in the quarter ended December 31, 1997, is an extraordinary
charge of $1,704,000 (0.01 per share) related to the Company's purchase
of $29,555,000 principal amount of it 9 1/4% Senior Notes. (4) Included
in the quarter ended June 30, 1997, is an extraordinary charge of
$4,981,000 ($0.04 per share) related to the Company's purchase of
$81,330,000 principal amount of its 9 1/4% Senior Notes.
(5) Included in the quarter ended June 30, 1997 were taxes of $69,187,000
($0.52 per share) related to the gain on the sale of mat rigs.
(6) Included in the quarter ended December 31, 1997, was a tax benefit of
$810,000 ($0.01 per share) related to the disposition of non-core
assets.
(7) The Company has adopted SFAS No. 128, Earnings Per Share ("SFAS 128").
All prior period earnings per share data have been restated to conform
to the provisions of SFAS 128.
(8) Included in the quarter ended March 31, 1996, were non-recurring items
consisting of $7,600,000 ($0.08 per share) of impairment charges and
$7,527,000 ($0.08 per share) of gains on sales of posted barge rigs.
(9) Included in the quarter ended December 31, 1996, were non-recurring
items consisting of $45,414,000 ($0.36 per share) of gain on the sale
of the land drilling assets partially offset by $10,200,000 ($0.08 per
share) of impairment charges, excluding a reduction of $289,000
relating to minority interest, $14,808,000 ($0.12 per share) of
inventory charges and $3,350,000 ($0.03 per share) of adjustments to
depreciation.
(10) Included in the quarter ended December 31, 1996, is an extraordinary
charge of $660,000 ($0.01 per share) related to the Company's purchase
of $11,000,000 principal amount of its 9 1/4% Senior Notes.
(11) Included in the quarter ended December 31, 1996, were taxes of
$16,259,000 ($0.13 per share) related to the gain on the sale of the
land drilling assets.
46
<PAGE> 49
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(CONTINUED)
(Unless otherwise indicated, dollar amounts in tables are in thousands,
except per share amounts)
NOTE 13 - GEOGRAPHICAL INFORMATION
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Operating revenues
Domestic ........... $254,213 $262,041 $165,391
International
Argentina ........ -- 4,617 --
Brazil ........... 33,312 8,722 --
Canada ........... 8,153 10,107 13,929
Congo ............ -- 2,353 --
Denmark .......... 23,513 11,414 --
India ............ 14,413 5,443 3,771
Mexico ........... 44,373 9,807 9,398
Nigeria .......... 82,067 57,158 45,860
Qatar ............ 34,951 15,825 2,452
The Netherlands .. 57,179 29,350 --
United Kingdom ... 71,120 52,297 37,891
Venezuela ........ 77,427 36,427 40,223
Zaire ............ 12,474 8,692 8,860
Other ............ -- -- 193
-------- -------- --------
Total ......... $713,195 $514,253 $327,968
======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Operating income (loss)
Domestic ............ $ 253,873 $ 90,413 $ (5,239)
International
Argentina ......... -- (1,755) --
Brazil ............ 4,168 (1,183) --
Canada ............ 2,190 9,899 2,521
Congo ............. -- (835) --
Denmark ........... 1,469 1,831 --
India ............. 6,674 882 283
Mexico ............ 24,286 1,894 94
Nigeria ........... 25,068 (6,703) 3,597
Qatar ............. 7,112 (6,756) (2,455)
The Netherlands ... 22,117 8,313 --
United Kingdom .... 17,320 12,132 4,766
Venezuela ......... 13,074 5,819 7,178
Zaire ............. 3,996 68 2,139
Other ............. -- (1,468) (606)
--------- --------- ---------
Total .......... $ 381,347 $ 112,551 $ 12,278
========= ========= =========
</TABLE>
47
<PAGE> 50
NOBLE DRILLING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS --(CONTINUED)
(Unless otherwise indicated, dollar amounts in tables are in thousands,
except per share amounts)
DECEMBER 31,
----------------------------------------
1997 1996 1995
---------- ---------- ----------
[S] [C] [C] [C]
Identifiable assets
Domestic ........... $ 519,079 $ 515,576 $ 313,237
International
Argentina ........ -- 48,936 --
Brazil ........... 146,613 57,833 --
Canada ........... 12,489 8,077 13,206
Congo ............ -- 40,038 --
Denmark .......... 81,543 43,375 --
India ............ 85,037 81,749 21,104
Mexico ........... 78,849 30,817 32,328
Nigeria .......... 103,217 110,357 179,934
Qatar ............ 80,780 85,358 37,506
The Netherlands .. 198,298 153,479 --
United Kingdom ... 70,613 70,565 15,051
Venezuela ........ 93,337 85,988 84,042
Zaire ............ 22,542 25,571 25,023
Other ............ 13,414 9,454 21,099
---------- ---------- ----------
Total .......... $1,505,811 $1,367,173 $ 742,530
========== ========== ==========
48
<PAGE> 51
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The sections entitled "Election of Directors" and "Section 16(a)
Beneficial Ownership Reporting Compliance" appearing in Noble Drilling's proxy
statement for the annual meeting of stockholders to be held on April 23, 1998
(the "1998 Proxy Statement"), set forth certain information with respect to the
directors of Noble Drilling and with respect to reporting under Section 16(a) of
the Securities Exchange Act of 1934, and are incorporated herein by reference.
Certain information with respect to the executive officers of Noble
Drilling is set forth under the caption "Executive Officers of the Registrant"
in Part I of this report.
ITEM 11. EXECUTIVE COMPENSATION
The section entitled "Executive Compensation" appearing in the 1998
Proxy Statement sets forth certain information with respect to the compensation
of management of Noble Drilling, and, except for the report of the compensation
committee of the board of directors of Noble Drilling on executive compensation
and the information therein under "Performance Graph," is incorporated herein by
reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The sections entitled "Security Ownership of Certain Beneficial Owners"
and "Security Ownership of Management" appearing in the 1998 Proxy Statement set
forth certain information with respect to the ownership of voting securities and
equity securities of Noble Drilling, and are incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Not applicable.
49
<PAGE> 52
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report:
(1) A list of the financial statements filed as a part of
this report is set forth in Item 8 on page 23 and is
incorporated herein by reference.
(2) Financial Statement Schedules:
All schedules are omitted because they are either not
applicable or the required information is shown in
the financial statements or notes thereto.
(3) Exhibits:
The information required by this Item 14(a)(3) is set
forth in the Index to Exhibits accompanying this
Annual Report on Form 10-K and is incorporated herein
by reference.
(4) Financial Statements required by Form 11-K for the
fiscal year ended December 31, 1997, with respect to
the Noble Drilling Corporation Thrift Plan (to be
filed by amendment).
(b) No reports on Form 8-K were filed by the Company during the
quarter ended December 31, 1997.
50
<PAGE> 53
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
NOBLE DRILLING CORPORATION
Date: March 19, 1998
By: JAMES C. DAY
---------------------------------
James C. Day, Chairman, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following individuals on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY IN WHICH SIGNED DATE
- ----------------------------------- -------------------------------------------------- --------------------
<S> <C> <C>
JAMES C. DAY Chairman, President and Chief
- ----------------------------------- Executive Officer and Director March 19, 1998
James C. Day
BYRON L. WELLIVER Senior Vice President - Finance,
- ----------------------------------- Treasurer and Controller March 19, 1998
Byron L. Welliver (Principal Financial and Accounting Officer)
MICHAEL A. CAWLEY Director March 19, 1998
- -----------------------------------
Michael A. Cawley
LAWRENCE J. CHAZEN Director March 19, 1998
- -----------------------------------
Lawrence J. Chazen
TOMMY C. CRAIGHEAD Director March 19, 1998
- -----------------------------------
Tommy C. Craighead
WILLIAM J. DORE Director March 19, 1998
- -----------------------------------
William J. Dore
JAMES L. FISHEL Director March 19, 1998
- -----------------------------------
James L. Fishel
MARC E. LELAND Director March 19, 1998
- -----------------------------------
Marc E. Leland
WILLIAM A. SEARS Director March 19, 1998
- -----------------------------------
William A. Sears
</TABLE>
51
<PAGE> 54
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- -------------- -----------------------------------------------------------
<S> <C>
2.1 - Agreement of Sale and Purchase dated as of April 25, 1996
between the Registrant and Royal Nedlloyd N.V. and Neddrill
Holding B.V. (filed as Exhibit 2.1 to the Registrant's
Registration Statement on Form S-3 (No. 333-2927) and
incorporated herein by reference).
2.2 - Asset Purchase Agreement dated November 15, 1996 by and
between the Registrant, Noble Properties, Inc. and Noble
Drilling (Canada) Ltd. and Nabors Industries, Inc. (filed
as Exhibit 2.1 to the Registrant's Form 8-K dated December
27, 1996 (date of event: December 13, 1996) and
incorporated herein by reference).
2.3 - Agreement dated December 13, 1996 by and among the
Registrant, Noble Properties, Inc., Noble Drilling (Canada)
Ltd., Noble Drilling (U.S.) Inc., and Noble Drilling Land
Limited and Nabors Industries, Inc., Nabors Drilling USA,
Inc. and Nabors Drilling Limited (filed as Exhibit 2.2 to
the Registrant's Form 8-K dated December 27, 1996 (date of
event: December 13, 1996) and incorporated herein by
reference).
2.4 - Asset Purchase Agreement dated as of February 19, 1997
between the Registrant, Noble Drilling (U.S.) Inc., Noble
Offshore Corporation, Noble Drilling (Mexico) Inc. and NN-1
Limited Partnership and Pride Petroleum Services, Inc.
(filed as Exhibit 2.10 in the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1996 and
incorporated herein by reference.)
2.5 - Agreement dated April 10, 1997 by and between Noble
Drilling Corporation, Noble Drilling (U.S.) Inc., Noble
Offshore Corporation, Noble Drilling (Mexico) Inc. and NN-1
Limited Partnership, and Pride Petroleum Services, Inc.
(filed as Exhibit 2.2 to the Registrant's Form 8-K dated
May 21, 1997 (date of event: May 7, 1997) and incorporated
herein by reference).
2.6 - First Amendment to Asset Purchase Agreement dated as of May
7, 1997 by and between Noble Drilling Corporation, Noble
Drilling (U.S.) Inc., Noble Offshore Corporation, Noble
Drilling (Mexico) Inc., NN-1 Limited Partnership and Mexico
Drilling Partners Inc., and Pride Petroleum Services, Inc.,
Pride Offshore, Inc. and Forasol S.A. (filed as Exhibit 2.3
to the Registrant's Form 8-K dated May 21, 1997 (date of
event: May 7, 1997) and incorporated herein by reference).
3.1 - Restated Certificate of Incorporation of the Registrant
dated August 29, 1985 (filed as Exhibit 3.7 to the
Registrant's Registration Statement on Form 10 (No.
0-13857) and incorporated herein by reference).
3.2 - Certificate of Amendment of Restated Certificate of
Incorporation of the Registrant dated May 5, 1987 (filed as
Exhibit 4.2 to the Registrant's Registration Statement on
Form S-3 (No. 33-67130) and incorporated herein by
reference).
</TABLE>
52
<PAGE> 55
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- -------------- -----------------------------------------------------------
<S> <C>
3.3 - Certificate of Amendment of Certificate of Incorporation of
the Registrant dated July 31, 1991 (filed as Exhibit 3.16
to the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1991 and incorporated herein by
reference).
3.4 - Certificate of Amendment of Certificate of Incorporation of
the Registrant dated September 15, 1994 (filed as Exhibit
3.1 to the Registrant's Quarterly Report on Form 10-Q for
the three-month period ended March 31, 1995 and
incorporated herein by reference).
3.5 - Certificate of Designations of Series A Junior
Participating Preferred Stock, par value $1.00 per share,
of the Registrant dated as of June 29, 1995 (filed as
Exhibit 3.2 to the Registrant's Quarterly Report on Form
10-Q for the three-month period ended June 30, 1995 and
incorporated herein by reference).
3.6 - Certificate of Amendment of Certificate of Designations of
Series A Junior Participating Preferred Stock of Registrant
dated September 5, 1997.
3.7 - Composite copy of the Bylaws of the Registrant as currently
in effect.
3.8 - Amendment of Articles IV and VI of the Bylaws of the
Registrant adopted January 29, 1998.
4.1 - Indenture dated as of October 1, 1993 governing the 9 1/4%
Senior Notes due 2003 (filed as Exhibit 4.1 to the
Registrant's Quarterly Report on Form 10-Q for the
three-month period ended September 30, 1993 and
incorporated herein by reference).
4.2 - First Supplemental Indenture dated as of May 30, 1997 to
Indenture dated as of October 1, 1993 governing the 9 1/4%
Senior Notes due 2003.
4.3 - Indenture dated as of July 1, 1996 governing the 9-1/8%
Senior Notes due 2006 (including form of Note) (filed as
Exhibit 4.1 to the Registrant's Form 8-K dated July 16,
1996 (date of event: July 1, 1996) and incorporated herein
by reference).
4.4 - Credit Agreement, dated as of August 14, 1997, among Noble
Drilling Corporation, the lending institutions listed from
time to time on Annex I thereto, Credit Lyonnais New York
Branch, as Documentation Agent and Christiania Bank Og
Kreditkasse ASA, New York Branch, as Arranger and
Administrative Agent.
4.5 - Rights Agreement dated as of June 28, 1995 between the
Registrant and Liberty Bank and Trust Company of Oklahoma
City, N.A. (filed as Exhibit 4 to the Registrant's Form 8-K
dated June 29, 1995 (date of event: June 28, 1995) and
incorporated herein by reference).
</TABLE>
53
<PAGE> 56
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- -------------- -----------------------------------------------------------
<S> <C>
4.6 - Amendment No. 1 to Rights Agreement, dated September 3,
1997, between Noble Drilling Corporation and Liberty Bank
and Trust Company of Oklahoma City, N.A. (filed as Exhibit
4.2 to the Registrant's Form 8-A/A (Amendment No. 1) dated
September 3, 1997 and incorporated herein by reference).
4.7 - Summary of Rights to Purchase Preferred Shares, as amended
as of September 3, 1997 to conform with Amendment No. 1 to
Rights Agreement, dated September 3, 1997 (filed as Exhibit
4.3 to the Registrant's Form 8-K dated September 3, 1997
(date of event: September 3, 1997) and incorporated herein
by reference).
10.1 - Assets Purchase Agreement dated as of August 20, 1993 (the
"Portal Assets Purchase Agreement"), between the Registrant
and Portal Rig Corporation (filed as Exhibit 2.3 to the
Registrant's Registration Statement on Form S-3 (No.
33-67130) and incorporated herein by reference).
10.2 - Agreement dated as of October 25, 1993, among the
Registrant, Noble (Gulf of Mexico) Inc. and Portal Rig
Corporation, amending the Portal Assets Purchase Agreement
(filed as Exhibit 2.5 to the Registrant's Quarterly Report
on Form 10-Q for the three-month period ended September 30,
1993 and incorporated herein by reference).
10.3 - Amended and Restated Letter of Credit Agreement, dated as
of October 25, 1993, among Portal Rig Corporation, Noble
(Gulf of Mexico) Inc., NationsBank of Texas, N.A., as agent
and as one of the "Banks" thereunder, and Marine Midland
Bank, N.A., Bank of America National Trust and Savings
Association, and Norwest Bank Minnesota, National
Association (collectively, the "Banks") (filed as Exhibit
10.1 to the Registrant's Quarterly Report on Form 10-Q for
the three-month period ended September 30, 1993 and
incorporated herein by reference).
10.4 - Assignment, Assumption and Amended and Restated Preferred
Ship Mortgage, dated October 25, 1993, by Noble (Gulf of
Mexico) Inc. to the Banks (filed as Exhibit 10.2 to the
Registrant's Quarterly Report on Form 10-Q for the
three-month period ended September 30, 1993 and
incorporated herein by reference).
10.5 - Security Agreement and Assignment, dated October 25, 1993,
by Noble (Gulf of Mexico) Inc. to the Banks (filed as
Exhibit 10.3 to the Registrant's Quarterly Report on Form
10-Q for the three-month period ended September 30, 1993
and incorporated herein by reference).
10.6 - Noble Support Agreement, dated October 25, 1993, among the
Registrant and the Banks (filed as Exhibit 10.4 to the
Registrant's Quarterly Report on Form 10-Q for the
three-month period ended September 30, 1993 and
incorporated herein by reference).
10.7 - Stock Purchase Agreement dated April 22, 1994 among Joseph
E. Beall, George H. Bruce, Triton Engineering Services
Company and the Registrant (filed as Exhibit 2.1 to the
Registrant's Form 8-K dated May 6, 1994 (date of event:
April 22, 1994) and incorporated herein by reference).
</TABLE>
54
<PAGE> 57
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- -------------- -----------------------------------------------------------
<S> <C>
10.8 - Employment Agreement dated April 22, 1994 between Triton
Engineering Services Company and Joseph E. Beall (filed as
Exhibit 10.2 to the Registrant's Form 8-K dated May 6, 1994
(date of event: April 22, 1994) and incorporated herein by
reference).
10.9* - Noble Drilling Corporation 1987 Stock Option Plan (filed as
Exhibit 10.7 to the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1986, as amended, and
incorporated herein by reference).
10.10* - Noble Drilling Corporation 1991 Stock Option and Restricted
Stock Plan (as amended and restated on January 30, 1997
(filed as Exhibit 10.2 to the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1996 and
incorporated herein by reference).
10.11* - Noble Drilling Corporation 1992 Nonqualified Stock Option
Plan for Non-Employee Directors (filed as Exhibit 4.1 to
the Registrant's Registration Statement on Form S-8 (No.
33-62394) and incorporated herein by reference).
10.12* - Amendment No. 1 to the Noble Drilling Corporation 1992
Nonqualified Stock Option Plan for Non-Employee Directors
dated as of July 28, 1994 (filed as Exhibit 10.44 to the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1994 and incorporated herein by reference).
10.13* - Noble Drilling Corporation Equity Compensation Plan for
Non-Employee Directors (filed as Exhibit 10.1 to the
Registrant's Quarterly Report on Form 10-Q for the
three-month period ended September 30, 1996 and
incorporated herein by reference).
10.14* - Noble Drilling Corporation Short-Term Incentive Plan
(revised July 1997).
10.15* - Noble Drilling Corporation Amended and Restated Thrift
Restoration Plan (filed as Exhibit 10.46 to the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1994 and incorporated herein by reference).
10.16* - Amendment No. 1 to the Noble Drilling Corporation Amended
and Restated Thrift Restoration Plan dated January 29,
1998.
10.17* - Noble Drilling Corporation Retirement Restoration Plan
dated April 27, 1995 (filed as Exhibit 10.2 to the
Registrant's Quarterly Report on Form 10-Q for the
three-month period ended March 31, 1995 and incorporated
herein by reference).
10.18* - Amendment No. 1 to the Noble Drilling Corporation
Retirement Restoration Plan dated January 29, 1998.
</TABLE>
55
<PAGE> 58
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- -------------- -----------------------------------------------------------
<S> <C>
10.19* - Form of Indemnity Agreement entered into between the
Registrant and each of the Registrant's directors and bylaw
officers (filed as Exhibit 10.46 to the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1995
and incorporated herein by reference).
10.20 - Guarantee dated August 26, 1994 between the Registrant and
Hibernia Management and Development Company Ltd. (filed as
Exhibit 10.45 to the Registrant's Annual Report on Form
10-K for the year ended December 31, 1994 and incorporated
herein by reference).
10.21 - Registration Rights Agreement dated as of July 1, 1996
between the Registrant and Royal Nedlloyd N.V. (filed as
Exhibit 10.25 to the Registrant's Annual Report on Form
10-K for the year ended December 31, 1996 and incorporated
herein by reference).
21.1 - Subsidiaries of the Registrant.
23.1 - Consent of Price Waterhouse LLP.
27.1 - Financial Data Schedule.
</TABLE>
- -------
* Management contract or compensatory plan or arrangement required to be
filed as an exhibit hereto.
56
<PAGE> 1
EXHIBIT 3.6
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
DESIGNATION OF "NOBLE DRILLING CORPORATION", FILED IN THIS OFFICE ON THE FIFTH
DAY OF SEPTEMBER, A.D. 1997, AT 10 O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW
CASTLE COUNTY RECORDER OF DEEDS FOR RECORDING.
[SEAL] /s/ EDWARD J. FREEL
-----------------------------------------
Edward J. Freel, Secretary of State
AUTHENTICATION: 8637469
DATE: 09-05-97
<PAGE> 2
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF DESIGNATIONS
OF
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
OF
NOBLE DRILLING CORPORATION
----------------------
PURSUANT TO SECTION 151 OF THE
GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
----------------------
NOBLE DRILLING CORPORATION, a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"),
DOES HEREBY CERTIFY:
FIRST: That, pursuant to the authority conferred on the Board of
Directors of the Corporation by the Restated Certificate of Incorporation, as
amended, of the Corporation (the "Certificate of Incorporation") and in
accordance with Section 151 of the General Corporation Law of the State of
Delaware, the Certificate of Designations ("Certificate of Designations")
establishing and creating a series of Preferred Stock, par value $1.00 per
share, of the Corporation designated as Series A Junior Participating Preferred
Stock became effective on June 29, 1995.
SECOND: That, pursuant to the authority conferred on the Board of
Directors of the Corporation by the Certificate of Incorporation and in
accordance with Section 151 of the General Corporation Law of the State of
Delaware, at a meeting of the Board of Directors of the Corporation, a
resolution was duly adopted authorizing and directing an amendment of the
Certificate of Designations to increase the number of shares of Series A Junior
Participating Preferred Stock of the Corporation. The resolution setting forth
the amendment is as follows:
RESOLVED, that the Certificate of Designations of Series A
Junior Participating Preferred Stock of the Corporation be amended by
changing Section 1 thereof so that, as amended, said Section shall be
and read as follows:
<PAGE> 3
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
"Section 1. Designation and Amount. The shares of such series shall
be designated as "Series A Junior Participating Preferred Stock" (the "Series A
Preferred Stock"). The number of shares constituting the Series A Preferred
Stock shall be 1,500,000; provided, however, that if more than a total of
1,500,000 shares of Series A Preferred Stock shall be issuable upon the
exercise of Rights (the "Right") issued pursuant to the Rights Agreement dated
as of June 28, 1995 between the Corporation and Liberty Bank and Trust Company
of Oklahoma City, N.A., as Rights Agent (as the same may be amended from time
to time in accordance with its terms, the "Rights Agreement"), the Board of
Directors of the Corporation, pursuant to Section 151(g) of the General
Corporation Law of the State of Delaware, shall direct by resolution or
resolutions that a certificate be properly executed, acknowledged, filed and
recorded, in accordance with the provisions of Section 103 thereof, providing
for the total number of shares of Series A Preferred Stock authorized to be
issued to be increased (to the extent that the Certificate of Incorporation
then permits) to the largest number of whole shares (rounded up to the nearest
whole share) issuable upon exercise of such Rights."
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment of Certificate of Designations to be duly executed in its corporate
name on this 3rd day of September, 1997.
NOBLE DRILLING CORPORATION
By /s/ JAMES C. DAY
----------------------------------
James C. Day
Chairman, President and
Chief Executive Officer
2
<PAGE> 1
EXHIBIT 3.7
BYLAWS
OF
NOBLE DRILLING CORPORATION
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of Noble
Drilling Corporation (hereinafter called the "Corporation") in the State of
Delaware shall be at Corporation Trust Center, 1209 Orange Street, in the City
of Wilmington, County of New Castle, and the registered agent in charge thereof
shall be The Corporation Trust Company.
Section 2. Other Offices. The Corporation may also have an office or
offices, and keep the books and records of the Corporation, except as may
otherwise be required by law, at such other place or places, either within or
without the State of Delaware, as the Board of Directors may from time to time
determine or the business of the Corporation require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meeting. All meetings of the stockholders of the
Corporation shall be held at the office of the Corporation or at such other
places, within or without the State of Delaware, as may from time to time be
fixed by the Board of Directors, the Chairman of the Board or the President.
Section 2. Annual Meetings. The annual meeting of the stockholders
of the Corporation for the election of directors and for the transaction of
such other business as may properly come before the meeting shall be held on
the fourth Thursday in April in each year, if not a legal holiday under the
laws of the place where the meeting is to be held, and, if a legal holiday,
then on the next succeeding day not a legal holiday under the laws of such
place, or on such other date and at such hour as may from time to time be fixed
by the Board of Directors, the Chairman of the Board or the President.
In order for business to be properly brought before the meeting by a
stockholder, the business must be legally proper and written notice thereof
must have been filed with the Secretary of the Corporation not less than 60 nor
more than 120 days prior to the meeting. Each such notice shall set forth: (a)
the name and address of the stockholder who intends to make the proposal as the
same appear in the Corporation's records; (b) the class and number of shares of
stock of the Corporation that are beneficially owned, directly or indirectly,
by such stockholder; and (c) a clear and concise statement of the proposal and
the stockholder's reasons for supporting it.
The filing of a stockholder notice as required above shall not, in and
of itself, constitute the making of the proposal described therein.
Article II, Section 2 amended
effective as of January 31, 1991
-1-
<PAGE> 2
If the chairman of the meeting determines that any proposed business
has not been properly brought before the meeting, he shall declare such
business out of order; and such business shall not be conducted at the meeting.
Section 3. Special Meetings. Except as otherwise required by law and
subject to the rights of the holders of any class or series of stock having a
preference over the Common Stock as to dividends or upon liquidation, special
meetings of the stockholders for any purpose or purposes may be called only by
(i) the Chairman of the Board, (ii) the President, or (iii) a majority of the
entire Board of Directors. Only such business as is specified in the notice of
any special meeting of the stockholders shall come before such meeting.
Section 4. Notice of Meetings. Except as otherwise provided by law,
written notice of each meeting of the stockholders, whether annual or special,
shall be given, either by personal delivery or by mail, not less than 10 nor
more than 60 days before the date of the meeting to each stockholder of record
entitled to notice of the meeting. If mailed, such notice shall be deemed
given when deposited in the United States mail, postage prepaid, directed to
the stockholder at such stockholder's address as it appears on the records of
the Corporation. Each such notice shall state the place, date and hour of the
meeting, and the purpose or purposes for which the meeting is called. Notice
of any meeting of stockholders shall not be required to be given to any
stockholder who shall attend such meeting in person or by proxy without
protesting, prior to or at the commencement of the meeting, the lack of proper
notice to such stockholder, or who shall waive notice thereof as provided in
Article X of these Bylaws. Notice of adjournment of a meeting of stockholders
need not be given if the time and place to which it is adjourned are announced
at such meeting, unless the adjournment is for more than 30 days or, after
adjournment, a new record date is fixed for the adjourned meeting.
Section 5. Quorum. Except as otherwise provided by law or by the
Certificate of Incorporation of the Corporation, the holders of a majority of
the votes entitled to be cast by the stockholders entitled to vote, which if
any vote is to be taken by classes shall mean the holders of a majority of the
votes entitled to be cast by the stockholders of each such class, present in
person or represented by proxy, shall constitute a quorum for the transaction
of business at any meeting of the stockholders.
Section 6. Adjournments. In the absence of a quorum, the holders of
a majority of the votes entitled to be cast by the stockholders, present in
person or represented by proxy, may adjourn the meeting from time to time. At
any such adjourned meeting at which a quorum may be present, any business may
be transacted which might have been transacted at the meeting as originally
called.
Section 7. Order of Business. At each meeting of the stockholders,
the Chairman of the Board, or, in the absence of the Chairman of the Board, the
President, shall act as chairman. The order of business at each such meeting
shall be as determined by the chairman of the meeting. The chairman of the
meeting shall have the right and authority to prescribe such rules, regulations
and procedures and to do all such acts and things as are necessary or desirable
for the proper conduct of the meeting, including, without limitation, the
establishment of procedures for the maintenance of order and safety,
limitations on the time allotted to questions or comments on the affairs of the
Corporation, restrictions on entry to such meeting after the time prescribed
for the commencement thereof, and the opening and closing of the voting polls.
The chairman of the meeting shall announce at each such meeting the date and
time of the opening and the closing of the voting polls for each matter upon
which the stockholders will vote at such meeting.
Section 8. List of Stockholders. It shall be the duty of the
Secretary or other officer of the Corporation who has charge of the stock
ledger to prepare and make, at least 10 days before each meeting of the
Article II, Section 7 amended
effective as of January 31, 1991
-2-
<PAGE> 3
stockholders, a complete list of the stockholders entitled to vote thereat,
arranged in alphabetical order, and showing the address of each stockholder and
the number of shares registered in such stockholder's name. Such list shall be
produced and kept available at the times and places required by law.
Section 9. Voting. Except as otherwise provided by law or by the
Certificate of Incorporation of the Corporation, each stockholder of record of
any class or series of stock having a preference over the Common Stock of the
Corporation as to dividends or upon liquidation shall be entitled at each
meeting of stockholders to such number of votes for each share of such stock as
may be fixed in the Certificate of Incorporation or in the resolution or
resolutions adopted by the Board of Directors providing for the issuance of
such stock, and each stockholder of record of Common Stock shall be entitled at
each meeting of stockholders to one vote for each share of such stock, in each
case, registered in such stockholder's name on the books of the Corporation:
(a) on the date fixed pursuant to Section 6 of Article
VII of these Bylaws as the record date for the determination of
stockholders entitled to notice of and to vote at such meeting; or
(b) if no such record date shall have been so fixed, then
at the close of business on the day next preceding the date on which
notice of such meeting is given, or, if notice is waived, at the close
of business on the day next preceding the day on which the meeting is
held.
Each stockholder entitled to vote at any meeting of stockholders may
authorize not in excess of three persons to act for such stockholder by a proxy
signed by such stockholder or such stockholder's attorney-in-fact. Any such
proxy shall be delivered to the secretary of such meeting at or prior to the
time designated for holding such meeting but, in any event, not later than the
time designated in the order of business for so delivering such proxies. No
such proxy shall be voted or acted upon after three years from its date, unless
the proxy provides for a longer period.
At each meeting of the stockholders, all corporate actions, other than
the election of directors, to be taken by vote of the stockholders (except as
otherwise required by law and except as otherwise provided in the Certificate
of Incorporation) shall be authorized by a majority of the votes cast by the
stockholders entitled to vote thereon, present in person or represented by
proxy. Directors shall be elected by a plurality of the votes of the shares
present in person or represented by proxy at the meeting and entitled to vote
on the election of the directors. Where a separate vote by a class or classes
is required, the affirmative vote of the majority of shares of such class or
classes present in person or represented by proxy at the meeting shall be the
act of such class.
Unless required by law or determined by the chairman of the meeting to
be advisable, the vote on any matter, including the election of directors, need
not be by written ballot. In the case of a vote by written ballot, each ballot
shall be signed by the stockholder voting, or by such stockholder's proxy, and
shall state the number of shares voted.
Section 10. Inspectors of Election. Either the Board of Directors
or, in the absence of an appointment of inspectors by the Board, the Chairman
of the Board or the President shall, in advance of each meeting of the
stockholders, appoint one or more inspectors to act at such meeting and make a
written report thereof. In connection with any such appointment, one or more
persons may, in the discretion of the body or person making such appointment,
be designated as alternate inspectors to replace any inspector who fails to
act. If no inspector or alternate is able to act at any meeting of
stockholders, the chairman of such meeting shall appoint
Article II, Section 9 amended
effective as of October 29, 1987;
Article II, Section 10 amended
effective as of January 31, 1991
-3-
<PAGE> 4
one or more inspectors to act at such meeting. Each such inspector shall
perform such duties as are required by law and as shall be specified by the
Board, the Chairman of the Board, the President or the chairman of the meeting.
Each such inspector, before entering upon the discharge of his duties, shall
take and sign an oath faithfully to execute the duties of inspector with strict
impartiality and according to the best of his ability. Inspectors need not be
stockholders. No director or nominee for the office of director shall be
appointed such an inspector.
ARTICLE III
BOARD OF DIRECTORS
Section 1. General Powers. The business and affairs of the
Corporation shall be managed by or under the direction of the Board of
Directors, which may exercise all such powers of the Corporation and do all
such lawful acts and things as are not by law or by the Certificate of
Incorporation of the Corporation directed or required to be exercised or done
by the stockholders.
Section 2. Number, Qualification and Election. Except as otherwise
provided in any resolution or resolutions adopted by the Board of Directors
pursuant to the provisions of Article IV of the Certificate of Incorporation of
the Corporation relating to the rights of the holders of any class or series of
stock having a preference over the Common Stock as to dividends or upon
liquidation, the number of directors of the Corporation shall be fixed from
time to time by resolution adopted by vote of a majority of the entire Board of
Directors, provided that the number so fixed shall not be less than three.
The directors, other than those who may be elected by the holders of
shares of any class or series of stock having a preference over the Common
Stock as to dividends or upon liquidation pursuant to the terms of any
resolution or resolutions providing for the issuance of such stock adopted by
the Board, shall be classified, with respect to the time for which they
severally hold office, into three classes as follows: one class of one
director shall be originally elected for a term expiring at the annual meeting
of stockholders to be held in 1986, another class of two directors shall be
originally elected for a term expiring at the annual meeting of stockholders to
be held in 1987, and another class of two directors shall be originally elected
for a term expiring at the annual meeting of stockholders to be held in 1988,
with each class to hold office until its successors are elected and qualified.
Any newly created directorships resulting from any increase in the number of
directors shall be allocated to the classes of directors described in the
immediately preceding sentence in such manner so as to maintain, as nearly as
possible, the equality in number of the directors in each class. At each
annual meeting of the stockholders of the Corporation, the successors of the
class of directors whose term expires at that meeting shall be elected to hold
office for a term expiring at the annual meeting of stockholders held in the
third year following the year of their election.
Each director shall be at least 21 years of age. A person shall be
eligible to be elected a director of the Corporation until the annual meeting
of stockholders of the Corporation next succeeding such person's 70th
Article III, Section 2 amended
December 28, 1987, but effective
as of January 29, 1988; amended
effective as of February 4, 1988;
amended January 30, 1992;
amended effective as of
February 10, 1993; amended
effective as of July 29, 1993
-4-
<PAGE> 5
birthday, and any person serving as a director on such director's 70th birthday
shall be eligible to complete such director's term as such. Directors need not
be stockholders of the Corporation.
Subject to the rights of the holders of any class or series of stock
having a preference over the Common Stock as to dividends or upon liquidation,
at each annual meeting of the stockholders, there shall be elected the
directors of the class the term of office of which shall then expire.
In any election of directors, the persons receiving a plurality of the
votes cast, up to the number of directors to be elected in such election, shall
be deemed elected.
Section 3. Notification of Nominations. Subject to the rights of the
holders of any class or series of stock having a preference over the Common
Stock as to dividends or upon liquidation, nominations for the election of
directors may be made by the Board of Directors or by any stockholder entitled
to vote for the election of directors. Any stockholder entitled to vote for
the election of directors at a meeting may nominate persons for election as
directors only if written notice of such stockholder's intent to make such
nomination is given, either by personal delivery or by United States mail,
postage prepaid, to the Secretary of the Corporation not later than (i) with
respect to an election to be held at an annual meeting of stockholders, 90 days
in advance of such meeting, and (ii) with respect to an election to be held at
a special meeting of stockholders for the election of directors, the close of
business on the seventh day following the date on which notice of such meeting
is first given to stockholders. Each such notice shall set forth: (a) the
name and address of the stockholder who intends to make the nomination of the
person or persons to be nominated; (b) a representation that the stockholder is
a holder of record of stock of the Corporation entitled to vote at such meeting
and intends to appear in person or by proxy at the meeting to nominate the
person or persons specified in the notice; (c) a description of all
arrangements or understandings between the stockholder and each nominee and any
other person or persons (naming such person or persons) pursuant to which the
nomination or nominations are to be made by the stockholder; (d) such other
information regarding each nominee proposed by such stockholder as would have
been required to be included in a proxy statement filed pursuant to the proxy
rules of the Securities and Exchange Commission had each nominee been
nominated, or intended to be nominated, by the Board of Directors; and (e) the
consent of each nominee to serve as a director of the Corporation if so
elected. The chairman of the meeting may refuse to acknowledge the nomination
of any person not made in compliance with the foregoing procedure.
Section 4. Quorum and Manner of Acting. Except as otherwise provided
by law, the Certificate of Incorporation of the Corporation or these Bylaws, a
majority of the entire Board of Directors shall constitute a quorum for the
transaction of business at any meeting of the Board, and, except as so
provided, the vote of a majority of the directors present at any meeting at
which a quorum is present shall be the act of the Board. In the absence of a
quorum, a majority of the directors present may adjourn the meeting to another
time and place. At any adjourned meeting at which a quorum is present, any
business that might have been transacted at the meeting as originally called
may be transacted.
Section 5. Place of Meeting. The Board of Directors may hold its
meetings at such place or places within or without the State of Delaware as the
Board may from time to time determine or as shall be specified or fixed in the
respective notices or waivers of notice thereof.
Section 6. Regular Meetings. Regular meetings of the Board of
Directors shall be held at such times and places as the Board shall from time
to time by resolution determine. If any day fixed for a regular meeting shall
be a legal holiday under the laws of the place where the meeting is to be held,
the meeting that would otherwise be held on that day shall be held at the same
hour on the next succeeding business day.
Section 7. Special Meetings. Special meetings of the Board of
Directors shall be held whenever called by the Chairman of the Board or the
President or by a majority of the directors.
-5-
<PAGE> 6
Section 8. Notice of Meetings. Notice of regular meetings of the
Board of Directors or of any adjourned meeting thereof need not be given.
Notice of each special meeting of the Board shall be mailed or transmitted by
delivery service to each director, addressed to such director at such
director's residence or usual place of business, at least two days before the
day on which the meeting is to be held or shall be sent to such director at
such place by telegraph or facsimile telecommunication or be given personally
or by telephone, not later than the day before the meeting is to be held, but
notice need not be given to any director who shall, either before or after the
meeting, submit a signed waiver of such notice or who shall attend such meeting
without protesting, prior to or at its commencement, the lack of notice to such
director. Every such notice shall state the time and place but need not state
the purpose of the meeting.
Section 9. Rules and Regulations. The Board of Directors may adopt
such rules and regulations not inconsistent with the provisions of law, the
Certificate of Incorporation of the Corporation or these Bylaws for the conduct
of its meetings and management of the affairs of the Corporation as the Board
may deem proper.
Section 10. Participation in Meeting by Means of Communication
Equipment. Any one or more members of the Board of Directors or any committee
thereof may participate in any meeting of the Board or of any such committee by
means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other, and such
participation in a meeting shall constitute presence in person at such meeting.
Section 11. Action Without Meeting. Any action required or permitted
to be taken at any meeting of the Board of Directors or any committee thereof
may be taken without a meeting if all of the members of the Board or of any
such committee consent thereto in writing and the writing or writings are filed
with the minutes of proceedings of the Board or of such committee.
Section 12. Resignations. Any director of the Corporation may at any
time resign by giving written notice to the Board of Directors, the Chairman of
the Board, the President or the Secretary of the Corporation. Such resignation
shall take effect at the time specified therein or, if the time be not
specified, upon receipt thereof; and unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
Section 13. Removal of Directors. Directors may be removed only as
provided in Section 4 of Article VI of the Certificate of Incorporation of the
Corporation.
Section 14. Vacancies. Subject to the rights of the holders of any
class or series of stock having a preference over the Common Stock as to
dividends or upon liquidation, any vacancies on the Board of Directors
resulting from death, resignation, removal or other cause shall be filled only
in the manner provided in Section 3 of Article VI of the Certificate of
Incorporation of the Corporation, and newly created directorships resulting
from any increase in the number of directors shall be filled in the manner
provided in Section 3 of Article VI of the Certificate of Incorporation of the
Corporation or, if not so filled, by the stockholders at the next annual
meeting thereof or at a special meeting called for that purpose in accordance
with Section 3 of Article II of these Bylaws.
Section 15. Compensation. Each director who shall not at the time
also be a salaried officer or employee of the Corporation or any of its
subsidiaries (hereinafter referred to as an "outside director"), in
consideration of such person serving as a director, shall be entitled to
receive from the Corporation such amount per annum and such fees for attendance
at meetings of the Board of Directors or of committees of the Board, or both,
as the Board shall from time to time determine. In addition, each director,
whether or not an outside director, shall be entitled to receive from the
Corporation reimbursement for the reasonable expenses incurred
Article III, Section 8
amended January 30, 1992
-6-
<PAGE> 7
by such person in connection with the performance of such person's duties as a
director. Nothing contained in this Section 15 shall preclude any director
from serving the Corporation or any of its subsidiaries in any other capacity
and receiving proper compensation therefor.
Section 16. Directors Emeritus. The Board of Directors may appoint
one or more directors emeritus as it shall from time to time determine. Each
director emeritus appointed shall hold office at the pleasure of the Board of
Directors. A director emeritus shall be entitled, but shall have no
obligation, to attend and be present at the meetings of the Board of Directors,
although a meeting of the Board of Directors may be held without notice to any
director emeritus and no director emeritus shall be considered in determining
whether a quorum of the Board of Directors is present. A director emeritus
shall advise and counsel the Board of Directors on the business and operations
of the Corporation as requested by the Board of Directors; however, a director
emeritus shall not be entitled to vote on any matter presented to the Board of
Directors. A director emeritus, in consideration of such person serving as a
director emeritus, shall be entitled to receive from the Corporation such fees
for attendance at meetings of the Board of Directors as the Board shall from
time to time determine. In addition, a director emeritus shall be entitled to
receive from the Corporation reimbursement for the reasonable expenses incurred
by such person in connection with the performance of such person's duties as a
director emeritus.
ARTICLE IV
EXECUTIVE AND OTHER COMMITTEES
Section 1. Executive Committee. The Board of Directors may designate
an Executive Committee which shall consist of three or more of the directors of
the Corporation. The Board may designate one or more directors as alternate
members of the Executive Committee, who may replace any absent or disqualified
member at any meeting of the Executive Committee. In the absence or
disqualification of a member of the Executive Committee, the member or members
present at any meeting and not disqualified from voting, whether or not such
member or members constitute a quorum, may unanimously appoint another member
of the Board of Directors to act at the meeting in the place of any such absent
or disqualified member. The Executive Committee shall have and may exercise
all the powers and authority of the Board in the management of the business and
affairs of the Corporation, and may authorize the seal of the Corporation to be
affixed to all papers that may require it, except that neither the Executive
Committee nor any other committee of the Board shall have the power or
authority in reference to:
(a) approving or adopting, or recommending to the
stockholders, any action or matter expressly required by the Delaware
General Corporation Law to be submitted to stockholders for approval;
or
(b) adopting, amending or repealing any Bylaw.
The Board shall have power at any time to change the membership of the
Executive Committee, to fill all vacancies in it and to discharge it, either
with or without cause.
Section 2. Other Committees. The Board of Directors may designate
one or more committees other than the Executive Committee, each of which shall
consist of one or more of the directors of the Corporation. The Board may
designate one or more directors as alternate members of any such committee, who
may replace any absent or disqualified member at any meeting of such committee.
In addition, in the absence or
Article III, Section 16 added
effective as of February 12, 1987;
Article IV amended effective
as of January 29, 1998
-7-
<PAGE> 8
disqualification of a member of any such committee, the member or members
present at any meeting and not disqualified from voting, whether or not such
member or members constitute a quorum, may unanimously appoint another member
of the Board of Directors to act at the meeting in the place of any such absent
or disqualified member. Each such committee of the Board, except as otherwise
provided by law, the Certificate of Incorporation of the Corporation or these
Bylaws, shall have and may exercise such authority of the Board as may be
specified in the resolution or resolutions of the Board designating such
committee. The Board shall have power at any time to change the membership of,
to fill all vacancies in and to discharge any such committee, either with or
without cause.
Section 3. Procedure; Meetings; Quorum. Regular meetings of any
committee of the Board of Directors (including the Executive Committee), of
which no notice shall be necessary, may be held at such times and places as
shall be fixed by resolution adopted by a majority of the members thereof.
Special meetings of any committee of the Board of Directors (including the
Executive Committee) shall be called at the request of any member thereof.
Notice of each special meeting of any committee of the Board of Directors
(including the Executive Committee) shall be sent by mail, delivery service,
facsimile telecommunication, telegraph or telephone, or be delivered personally
to each member thereof not later than the day before the day on which the
meeting is to be held, but notice need not be given to any member who shall,
either before or after the meeting, submit a signed waiver of such notice or
who shall attend such meeting without protesting, prior to or at its
commencement, the lack of such notice to such member. Any special meeting of
any committee of the Board (including the Executive Committee) shall be a legal
meeting without any notice thereof having been given, if all the members
thereof shall be present thereat. Notice of any adjourned meeting of any
committee of the Board (including the Executive Committee) need not be given.
Any committee of the Board (including the Executive Committee) may adopt such
rules and regulations not inconsistent with the provisions of law, the
Certificate of Incorporation of the Corporation or these Bylaws for the conduct
of its meetings as such committee may deem proper. A majority of the members
of any committee of the Board (including the Executive Committee) shall
constitute a quorum for the transaction of business at any meeting, and the
vote of a majority of the members thereof present at any meeting at which a
quorum is present shall be the act of such committee. Each committee of the
Board of Directors (including the Executive Committee) shall keep written
minutes of its proceedings and shall report on such proceedings to the Board.
ARTICLE V
OFFICERS
Section 1. Number; Term of Office. The officers of the Corporation
shall be a Chairman of the Board, a President, one or more Vice Presidents, a
Treasurer, a Secretary, a Controller, and such other officers or agents with
such titles and such duties as the Board of Directors may from time to time
determine, each to have such authority, functions or duties as in these Bylaws
provided or as the Board may from time to time determine, and each to hold
office for such term as may be prescribed by the Board and until such person's
successor shall have been chosen and shall qualify, or until such person's
death or resignation, or until such person's removal in the manner hereinafter
provided. The Chairman of the Board and the President shall be elected from
among the directors. One person may hold the offices and perform the duties of
any two or more of said officers; provided, however, that no officer shall
execute, acknowledge or verify any instrument in more than one capacity if such
instrument is required by law, the Certificate of Incorporation of the
Corporation or these Bylaws to be executed, acknowledged or verified by two or
more officers. The Board may from time to time authorize any officer to
appoint and remove any such other officers and agents and to prescribe their
powers and duties. The Board may require any officer or agent to give security
for the faithful performance of such person's duties.
Article IV, Section 3
amended January 30, 1992
-8-
<PAGE> 9
Section 2. Removal. Any officer may be removed, either with or
without cause, by the Board of Directors at any meeting thereof called for that
purpose, or, except in the case of any officer elected by the Board, by any
committee or superior officer upon whom such power may be conferred by the
Board.
Section 3. Resignation. Any officer may resign at any time by giving
notice to the Board of Directors, the President or the Secretary of the
Corporation. Any such resignation shall take effect at the date of receipt of
such notice or at any later date specified therein; and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
Section 4. Vacancies. A vacancy in any office because of death,
resignation, removal or any other cause may be filled for the unexpired portion
of the term in the manner prescribed in these Bylaws for election to such
office.
Section 5. The President. The President shall be the chief executive
officer of the Corporation and as such shall have general supervision and
direction of the business and affairs of the Corporation, subject to the
control of the Board of Directors. The President shall, if present and in the
absence of the Chairman of the Board, preside at meetings of the stockholders,
meetings of the Board and meetings of the Executive Committee. The President
shall perform such other duties as the Board may from time to time determine.
The President may sign and execute in the name of the Corporation deeds,
mortgages, bonds, contracts or other instruments authorized by the Board or any
committee thereof empowered to authorize the same.
Section 6. Chairman of the Board. The Chairman of the Board shall,
if present, preside at meetings of the stockholders, meetings of the Board and
meetings of the Executive Committee. The Chairman of the Board shall counsel
with and advise the President and perform such other duties as the President or
the Board or the Executive Committee may from time to time determine.
Section 7. Vice Presidents. Each Vice President shall have such
powers and duties as shall be prescribed by the President, the Chairman of the
Board or the Board of Directors. Any Vice President may sign and execute in
the name of the Corporation deeds, mortgages, bonds, contracts or other
instruments authorized by the Board or any committee thereof empowered to
authorize the same.
Section 8. Treasurer. The Treasurer shall perform all duties
incident to the office of Treasurer and such other duties as from time to time
may be assigned to the Treasurer by the President, the Chairman of the Board or
the Board of Directors.
Section 9. Secretary. It shall be the duty of the Secretary to act
as secretary at all meetings of the Board of Directors, of the Executive
Committee and of the stockholders and to record the proceedings of such
meetings in a book or books to be kept for that purpose; the Secretary shall
see that all notices required to be given by the Corporation are duly given and
served; the Secretary shall be custodian of the seal of the Corporation and
shall affix the seal or cause it to be affixed to all certificates of stock of
the Corporation (unless the seal of the Corporation on such certificates shall
be a facsimile, as hereinafter provided) and to all documents, the execution of
which on behalf of the Corporation under its seal is duly authorized in
accordance with the provisions of these Bylaws. The Secretary shall have
charge of the stock ledger and also of the other books, records and papers of
the Corporation and shall see that the reports, statements and other documents
required by law are properly kept and filed; and the Secretary shall in general
perform all the duties incident to the office of Secretary and such other
duties as from time to time may be assigned to such person by the President,
the Chairman of the Board or the Board of Directors.
Section 10. Controller. The Controller shall perform all of the
duties incident to the office of the Controller and such other duties as from
time to time may be assigned to such person by the President, the Chairman of
the Board or the Board of Directors.
-9-
<PAGE> 10
Section 11. Assistant Treasurers, Secretaries and Controllers. The
Assistant Treasurers, the Assistant Secretaries and the Assistant Controllers
shall perform such duties as shall be assigned to them by the Treasurer,
Secretary or Controller, respectively, or by the President, the Chairman of the
Board or the Board of Directors.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS
Section 1. Third Party Actions. The Corporation shall 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 the Corporation), by reason of the fact that such person is or was a
director, officer, employee or agent of the Corporation, or is or was serving
at the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against 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 if such person acted in good faith and in
a manner such person 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 such person's conduct was
unlawful. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which such person 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 reasonable cause to believe that such
person's conduct was unlawful.
Section 2. Derivative Actions. The Corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact that such
person is or was a director, officer, employee or agent of the Corporation, or
is or was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection with the defense or settlement
of such action or suit if such person acted in good faith and in a manner such
person reasonably believed to be in or not opposed to the best interests of the
Corporation, except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the Corporation unless and only to the extent that the Court of
Chancery of Delaware or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability
but in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Court of Chancery
of Delaware or such other court shall deem proper.
Section 3. Determination of Indemnification. Any indemnification
under Section 1 or 2 of this Article VI (unless ordered by a court) shall be
made by the Corporation only as authorized in the specific case upon a
determination that indemnification of the present or former director, officer,
employee or agent is proper in the circumstances because such person has met
the applicable standard of conduct set forth in Section 1 or 2 of this Article
VI. Such determination shall be made, with respect to a person who is a
director or officer at
Article VI amended
effective as of July 31, 1986;
Article VI, Section 3 amended
effective as of July 27, 1995;
Article VI amended effective
as of January 29, 1998
-10-
<PAGE> 11
the time of such determination, (i) by a majority vote of the directors who are
not parties to such action, suit or proceeding, even though less than a quorum,
or (ii) by a committee of such directors designated by majority vote of such
directors, even though less than a quorum, or (iii) if there are not such
directors, or if such directors so direct, by independent legal counsel in a
written opinion, or (iv) by the stockholders.
Section 4. Right to Indemnification. Notwithstanding the other
provisions of this Article VI, to the extent that a present or former director
or officer of the Corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in Section 1 or 2 of this
Article VI, or in defense of any claim, issue or matter therein, such person
shall be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection therewith.
Section 5. Advancement of Expenses. Expenses (including attorneys'
fees) incurred by a present or former officer or director in defending any
civil, criminal, administrative or investigative action, suit or proceeding
shall be paid by the Corporation in advance of the final disposition of such
action, suit or proceeding upon receipt by the Corporation of an undertaking by
or on behalf of such officer or director to repay all such amounts advanced if
it shall ultimately be determined that such person is not entitled to be
indemnified by the Corporation under this Article VI or otherwise. Such
expenses (including attorneys' fees) incurred by present or former employees or
agents of the Corporation other than officers or directors may be so paid upon
such terms and conditions, if any, as the Corporation deems appropriate.
Section 6. Indemnification and Advancement of Expenses Not Exclusive.
The indemnification and advancement of expenses provided by, or granted
pursuant to, the other Sections of this Article VI shall not be deemed
exclusive of any other rights to which any person seeking indemnification or
advancement of expenses may be entitled under any law, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in such
person's official capacity and as to action in another capacity while holding
such office. All rights to indemnification and advancement of expenses under
this Article VI shall be deemed to be provided by a contract between the
Corporation and the director, officer, employee or agent, as the case may be,
who served in such capacity at any time while these Bylaws and other relevant
provisions of the Delaware General Corporation Law and other applicable law, if
any, are in effect. Any repeal or modification thereof shall not affect any
rights or obligations then existing.
Section 7. Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee
or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against any liability
asserted against such person and incurred by such person in any such capacity,
or arising out of such person's status as such, whether or not the Corporation
would have the power to indemnify such person against such liability under the
applicable provisions of the Delaware General Corporation Law.
Section 8. Definitions of Certain Terms. For purposes of this
Article VI, references to "the Corporation" shall include, in addition to the
resulting corporation, any constituent corporation (including any constituent
of a constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, employees or agents, so that any person who is or was a
director, officer, employee or agent of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position under the
provisions of this Article VI with respect to the resulting or surviving
corporation as such person would have with respect to such constituent
corporation if its separate existence had continued.
Article VI, Section 5 amended
effective as of January 31, 1991;
amended effective as of
October 22, 1992
-11-
<PAGE> 12
For purposes of this Article VI, references to "other enterprise"
shall include employee benefit plans; references to "fines" shall include any
excise tax assessed on a person with respect to any employee benefit plan; and
references to "serving at the request of the Corporation" shall include any
service as a director, officer, employee or agent of the Corporation that
imposes duties on, or involves services by, such director, officer, employee or
agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner such person
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the Corporation" as referred to in this
Article VI.
Section 9. Continuation and Successors. The indemnification and
advancement of expenses provided by, or granted pursuant to, this Article VI
shall, unless otherwise provided when authorized or ratified, continue as to a
person who has ceased to be a director, officer, employee or agent and shall
inure to the benefit of the heirs, executors and administrators of such a
person.
Section 10. Exclusive Jurisdiction. The Delaware Court of Chancery
is vested with exclusive jurisdiction to hear and determine all actions for
advancement of expenses or indemnification brought under this Article VI or
under any statute, agreement, vote of stockholders or disinterested directors,
or otherwise. The Delaware Court of Chancery may summarily determine the
Corporation's obligation to advance expenses (including attorneys' fees).
ARTICLE VII
CAPITAL STOCK
Section 1. Certificates for Shares. Certificates representing shares
of stock of each class of the Corporation, whenever authorized by the Board of
Directors, shall be in such form as shall be approved by the Board. The
certificates representing shares of stock of each class shall be signed by, or
in the name of, the Corporation by the Chairman of the Board or the President
or a Vice President and by the Secretary or an Assistant Secretary or the
Treasurer or an Assistant Treasurer of the Corporation, and sealed with the
seal of the Corporation, which may be by a facsimile thereof. Any or all such
signatures may be facsimiles if countersigned by a transfer agent or registrar.
Although any officer, transfer agent or registrar whose manual or facsimile
signature is affixed to such a certificate ceases to be such officer, transfer
agent or registrar before such certificate has been issued, it may nevertheless
be issued by the Corporation with the same effect as if such officer, transfer
agent or registrar were still such at the date of its issue.
The stock ledger and blank share certificates shall be kept by the
Secretary or by a transfer agent or by a registrar or by any other officer or
agent designated by the Board.
Section 2. Transfer of Shares. Transfer of shares of stock of each
class of the Corporation shall be made only on the books of the Corporation by
the holder thereof, or by such holder's attorney thereunto authorized by a
power of attorney duly executed and filed with the Secretary of the Corporation
or a transfer agent for such stock, if any, and on surrender of the certificate
or certificates for such shares properly endorsed or accompanied by a duly
executed stock transfer power and the payment of all taxes thereon. The person
in whose name shares stand on the books of the Corporation shall be deemed the
owner thereof for all purposes as regards the Corporation; provided, however,
that whenever any transfer of shares shall be made for collateral security and
not absolutely, and written notice thereof shall be given to the Secretary or
to such transfer agent, such fact shall be stated in the entry of the transfer.
No transfer of shares shall be valid as against the Corporation, its
stockholders and creditors for any purpose, except to render the transferee
liable for the debts of the Corporation to the extent provided by law, until it
shall have been entered in the stock records of the Corporation by an entry
showing from and to whom transferred.
Article VI, Section 10 added
effective as of July 27, 1995
-12-
<PAGE> 13
Section 3. Address of Stockholders. Each stockholder shall designate
to the Secretary or transfer agent of the Corporation an address at which
notices of meetings and all other corporate notices may be served or mailed to
such person, and, if any stockholder shall fail to designate such address,
corporate notices may be served upon such person by mail directed to such
person at such person's post office address, if any, as the same appears on the
share record books of the Corporation or at such person's last known post
office address.
Section 4. Lost, Destroyed and Mutilated Certificates. The holder of
any share of stock of the Corporation shall immediately notify the Corporation
of any loss, theft, destruction or mutilation of the certificate therefor; the
Corporation may issue to such holder a new certificate or certificates for
shares, upon the surrender of the mutilated certificate or, in the case of
loss, theft or destruction of the certificate, upon satisfactory proof of such
loss, theft or destruction; the Board of Directors, or a committee designated
thereby, or the transfer agents and registrars for the stock, may, in their
discretion, require the owner of the lost, stolen or destroyed certificate, or
such person's legal representative, to give the Corporation a bond in such sum
and with such surety or sureties as they may direct to indemnify the
Corporation and said transfer agents and registrars against any claim that may
be made on account of the alleged loss, theft or destruction of any such
certificate or the issuance of such new certificate.
Section 5. Regulations. The Board of Directors may make such
additional rules and regulations as it may deem expedient concerning the issue
and transfer of certificates representing shares of stock of each class of the
Corporation and may make such rules and take such action as it may deem
expedient concerning the issue of certificates in lieu of certificates claimed
to have been lost, destroyed, stolen or mutilated.
Section 6. Fixing Date for Determination of Stockholders of Record.
In order that the Corporation may determine the stockholders entitled to notice
of or to vote at any meeting of stockholders or any adjournment thereof, or
entitled to receive payment of any dividend or other distribution or allotment
of any rights, or entitled to exercise any rights in respect of any change,
conversion or exchange of stock or for the purpose of any other lawful action,
the Board of Directors may fix a record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted by
the Board of Directors, and which record date shall not be more than 60 nor
less than 10 days before the date of such meeting, nor more than 60 days prior
to any other action. A determination of stockholders entitled to notice of or
to vote at a meeting of the stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
ARTICLE VIII
SEAL
The Board of Directors shall provide a corporate seal, which shall be
in the form of a circle and shall bear the full name of the Corporation and the
words and figures "Corporate Seal Delaware 1939", or such other words or
figures as the Board of Directors may approve and adopt. The seal may be used
by causing it or a facsimile thereof to be impressed or affixed or in any other
manner reproduced.
ARTICLE IX
FISCAL YEAR
The fiscal year of the Corporation shall be fixed by resolution of the
Board of Directors.
Article VII, Section 6 amended
effective as of October 29, 1987
-13-
<PAGE> 14
ARTICLE X
WAIVER OF NOTICE
Whenever any notice whatsoever is required to be given by these
Bylaws, by the Certificate of Incorporation of the Corporation or by law, the
person entitled thereto may, either before or after the meeting or other matter
in respect of which such notice is to be given, waive such notice in writing,
which writing shall be filed with or entered upon the records of the meeting or
the records kept with respect to such other matter, as the case may be, and in
such event such notice need not be given to such person and such waiver shall
be deemed equivalent to such notice.
ARTICLE XI
AMENDMENTS
Any Bylaw (other than this Article XI) may be adopted, repealed,
altered or amended by a majority of the entire Board of Directors at any
meeting thereof, provided that such proposed action in respect thereof shall be
stated in the notice of such meeting. The stockholders of the Corporation
shall have the power to adopt, repeal, alter or amend any provision of these
Bylaws only to the extent and in the manner provided in the Certificate of
Incorporation of the Corporation.
ARTICLE XII
MISCELLANEOUS
Section 1. Execution of Documents. The Board of Directors or any
committee thereof shall designate the officers, employees and agents of the
Corporation who shall have power to execute and deliver deeds, contracts,
mortgages, bonds, debentures, notes, checks, drafts and other orders for the
payment of money and other documents for and in the name of the Corporation and
may authorize such officers, employees and agents to delegate such power
(including authority to redelegate) by written instrument to other officers,
employees or agents of the Corporation. Such delegation may be by resolution
or otherwise and the authority granted shall be general or confined to specific
matters, all as the Board or any such committee may determine. In the absence
of such designation referred to in the first sentence of this Section 1, the
officers of the Corporation shall have such power so referred to, to the extent
incident to the normal performance of their duties.
Section 2. Deposits. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the Corporation
or otherwise as the Board of Directors or any committee thereof or any officer
of the Corporation to whom power in that respect shall have been delegated by
the Board or any such committee shall select.
Section 3. Checks. All checks, drafts and other orders for the
payment of money out of the funds of the Corporation, and all notes or other
evidence of indebtedness of the Corporation, shall be signed on behalf of the
Corporation in such manner as shall from time to time be determined by
resolution of the Board of Directors or of any committee thereof.
Section 4. Proxies in Respect of Stock or Other Securities of Other
Corporations. The Board of Directors or any committee thereof shall designate
the officers of the Corporation who shall have authority from time to time to
appoint an agent or agents of the Corporation to exercise in the name and on
behalf of the Corporation the powers and rights that the Corporation may have
as the holder of stock or other securities in
-14-
<PAGE> 15
any other corporation, and to vote or consent in respect of such stock or
securities; such designated officers may instruct the person or persons so
appointed as to the manner of exercising such powers and rights; and such
designated officers may execute or cause to be executed in the name and on
behalf of the Corporation and under its corporate seal, or otherwise, such
written proxies, powers of attorney or other instruments as they may deem
necessary or proper in order that the Corporation may exercise its said powers
and rights.
-15-
<PAGE> 1
EXHIBIT 3.8
AMENDED BYLAWS
OF
NOBLE DRILLING CORPORATION
ARTICLE IV
EXECUTIVE AND OTHER COMMITTEES
Section 1. Executive Committee. The Board of Directors may designate
an Executive Committee which shall consist of three or more of the directors of
the Corporation. The Board may designate one or more directors as alternate
members of the Executive Committee, who may replace any absent or disqualified
member at any meeting of the Executive Committee. In the absence or
disqualification of a member of the Executive Committee, the member or members
present at any meeting and not disqualified from voting, whether or not such
member or members constitute a quorum, may unanimously appoint another member
of the Board of Directors to act at the meeting in the place of any such absent
or disqualified member. The Executive Committee shall have and may exercise
all the powers and authority of the Board in the management of the business and
affairs of the Corporation, and may authorize the seal of the Corporation to be
affixed to all papers that may require it, except that neither the Executive
Committee nor any other committee of the Board shall have the power or
authority in reference to:
(a) approving or adopting, or recommending to the
stockholders, any action or matter expressly required by the Delaware
General Corporation Law to be submitted to stockholders for approval;
or
(b) adopting, amending or repealing any Bylaw.
The Board shall have power at any time to change the membership of the
Executive Committee, to fill all vacancies in it and to discharge it, either
with or without cause.
Section 2. Other Committees. The Board of Directors may designate
one or more committees other than the Executive Committee, each of which shall
consist of one or more of the directors of the Corporation. The Board may
designate one or more directors as alternate members of any such committee, who
may replace any absent or disqualified member at any meeting of such committee.
In addition, in the absence or disqualification of a member of any such
committee, the member or members present at any meeting and not disqualified
from voting, whether or not such member or members constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member. Each such
committee of the Board, except as otherwise provided by law, the Certificate of
Incorporation of the Corporation or these Bylaws, shall have and may exercise
such authority of the Board as may be specified in the resolution or
resolutions of the Board designating such committee. The Board shall have
power at any time to change the membership of, to fill all vacancies in and to
discharge any such committee, either with or without cause.
<PAGE> 2
Section 3. Procedure; Meetings; Quorum. Regular meetings of any
committee of the Board of Directors (including the Executive Committee), of
which no notice shall be necessary, may be held at such times and places as
shall be fixed by resolution adopted by a majority of the members thereof.
Special meetings of any committee of the Board of Directors (including the
Executive Committee) shall be called at the request of any member thereof.
Notice of each special meeting of any committee of the Board of Directors
(including the Executive Committee) shall be sent by mail, delivery service,
facsimile telecommunication, telegraph or telephone, or be delivered personally
to each member thereof not later than the day before the day on which the
meeting is to be held, but notice need not be given to any member who shall,
either before or after the meeting, submit a signed waiver of such notice or
who shall attend such meeting without protesting, prior to or at its
commencement, the lack of such notice to such member. Any special meeting of
any committee of the Board (including the Executive Committee) shall be a legal
meeting without any notice thereof having been given, if all the members
thereof shall be present thereat. Notice of any adjourned meeting of any
committee of the Board (including the Executive Committee) need not be given.
Any committee of the Board (including the Executive Committee) may adopt such
rules and regulations not inconsistent with the provisions of law, the
Certificate of Incorporation of the Corporation or these Bylaws for the conduct
of its meetings as such committee may deem proper. A majority of the members
of any committee of the Board (including the Executive Committee) shall
constitute a quorum for the transaction of business at any meeting, and the
vote of a majority of the members thereof present at any meeting at which a
quorum is present shall be the act of such committee. Each committee of the
Board of Directors (including the Executive Committee) shall keep written
minutes of its proceedings and shall report on such proceedings to the Board.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS
Section 1. Third Party Actions. The Corporation shall 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 the Corporation), by reason of the fact that such person is or was a
director, officer, employee or agent of the Corporation, or is or was serving
at the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against 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 if such person acted in good faith and in
a manner such person 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 such person's conduct was
unlawful. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which such person reasonably believed to be
in or not opposed to the best interests of the Corporation, and, with
2
<PAGE> 3
respect to any criminal action or proceeding, had reasonable cause to believe
that such person's conduct was unlawful.
Section 2. Derivative Actions. The Corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact that such
person is or was a director, officer, employee or agent of the Corporation, or
is or was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection with the defense or settlement
of such action or suit if such person acted in good faith and in a manner such
person reasonably believed to be in or not opposed to the best interests of the
Corporation, except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the Corporation unless and only to the extent that the Court of
Chancery of Delaware or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability
but in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Court of Chancery
of Delaware or such other court shall deem proper.
Section 3. Determination of Indemnification. Any indemnification
under Section 1 or 2 of this Article VI (unless ordered by a court) shall be
made by the Corporation only as authorized in the specific case upon a
determination that indemnification of the present or former director, officer,
employee or agent is proper in the circumstances because such person has met
the applicable standard of conduct set forth in Section 1 or 2 of this Article
VI. Such determination shall be made, with respect to a person who is a
director or officer at the time of such determination, (i) by a majority vote
of the directors who are not parties to such action, suit or proceeding, even
though less than a quorum, or (ii) by a committee of such directors designated
by majority vote of such directors, even though less than a quorum, or (iii) if
there are not such directors, or if such directors so direct, by independent
legal counsel in a written opinion, or (iv) by the stockholders.
Section 4. Right to Indemnification. Notwithstanding the other
provisions of this Article VI, to the extent that a present or former director
or officer of the Corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in Section 1 or 2 of this
Article VI, or in defense of any claim, issue or matter therein, such person
shall be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection therewith.
Section 5. Advancement of Expenses. Expenses (including attorneys'
fees) incurred by a present or former officer or director in defending any
civil, criminal, administrative or investigative action, suit or proceeding
shall be paid by the Corporation in advance of the final disposition of such
action, suit or proceeding upon receipt by the Corporation of an undertaking by
or on behalf of such officer or director to repay all such amounts advanced if
it shall ultimately be determined that such person is not entitled to be
indemnified by the Corporation under this Article VI or otherwise. Such
expenses (including attorneys' fees) incurred by present or former
3
<PAGE> 4
employees or agents of the Corporation other than officers or directors may be
so paid upon such terms and conditions, if any, as the Corporation deems
appropriate.
Section 6. Indemnification and Advancement of Expenses Not Exclusive.
The indemnification and advancement of expenses provided by, or granted
pursuant to, the other Sections of this Article VI shall not be deemed
exclusive of any other rights to which any person seeking indemnification or
advancement of expenses may be entitled under any law, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in such
person's official capacity and as to action in another capacity while holding
such office. All rights to indemnification and advancement of expenses under
this Article VI shall be deemed to be provided by a contract between the
Corporation and the director, officer, employee or agent, as the case may be,
who served in such capacity at any time while these Bylaws and other relevant
provisions of the Delaware General Corporation Law and other applicable law, if
any, are in effect. Any repeal or modification thereof shall not affect any
rights or obligations then existing.
Section 7. Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee
or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against any liability
asserted against such person and incurred by such person in any such capacity,
or arising out of such person's status as such, whether or not the Corporation
would have the power to indemnify such person against such liability under the
applicable provisions of the Delaware General Corporation Law.
Section 8. Definitions of Certain Terms. For purposes of this
Article VI, references to "the Corporation" shall include, in addition to the
resulting corporation, any constituent corporation (including any constituent
of a constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, employees or agents, so that any person who is or was a
director, officer, employee or agent of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position under the
provisions of this Article VI with respect to the resulting or surviving
corporation as such person would have with respect to such constituent
corporation if its separate existence had continued.
For purposes of this Article VI, references to "other enterprise"
shall include employee benefit plans; references to "fines" shall include any
excise tax assessed on a person with respect to any employee benefit plan; and
references to "serving at the request of the Corporation" shall include any
service as a director, officer, employee or agent of the Corporation that
imposes duties on, or involves services by, such director, officer, employee or
agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner such person
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the Corporation" as referred to in this
Article VI.
4
<PAGE> 5
Section 9. Continuation and Successors. The indemnification and
advancement of expenses provided by, or granted pursuant to, this Article VI
shall, unless otherwise provided when authorized or ratified, continue as to a
person who has ceased to be a director, officer, employee or agent and shall
inure to the benefit of the heirs, executors and administrators of such a
person.
Section 10. Exclusive Jurisdiction. The Delaware Court of Chancery
is vested with exclusive jurisdiction to hear and determine all actions for
advancement of expenses or indemnification brought under this Article VI or
under any statute, agreement, vote of stockholders or disinterested directors,
or otherwise. The Delaware Court of Chancery may summarily determine the
Corporation's obligation to advance expenses (including attorneys' fees).
5
<PAGE> 1
EXHIBIT 4.2
================================================================================
NOBLE DRILLING CORPORATION
to
TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
Trustee
FIRST SUPPLEMENTAL INDENTURE
Dated as of May 30, 1997
to
INDENTURE
Dated as of October 1, 1993
$125,000,000
9 1/4% Senior Notes Due 2003
================================================================================
<PAGE> 2
FIRST SUPPLEMENTAL INDENTURE (the "Supplemental
Indenture"), dated as of May 30, 1997, between NOBLE DRILLING
CORPORATION, a Delaware corporation (the "Company"), and TEXAS
COMMERCE BANK NATIONAL ASSOCIATION, as trustee (the "Trustee"),
under an Indenture dated as of October 1, 1993 (the
"Indenture").
WITNESSETH:
WHEREAS, Section 9.02 of the Indenture provides, among other things,
that, with the consent of the Holders of not less than a majority in principal
amount of the Outstanding Notes, by Act of said Holders delivered to the
Company and the Trustee, the Company, when authorized by a Board Resolution,
and the Trustee may enter into an indenture or indentures supplemental to the
Indenture for the purpose of adding any provisions to or changing in any manner
or eliminating any of the provisions of the Indenture or of modifying in any
manner the rights of the Holders;
WHEREAS, all things necessary to make this Supplemental Indenture a
valid supplement to the Indenture in accordance with its terms have been done;
WHEREAS, all capitalized terms used in this Supplemental Indenture
which are defined in the Indenture, either directly or by reference therein,
have the meanings ascribed to them therein, except to the extent such terms are
defined in this Supplemental Indenture or the context clearly requires
otherwise;
NOW, THEREFORE, the parties hereto hereby agree as follows:
Section 1.1. Amendment of SECTION 5.01. SECTION 5.01 of the
Indenture is amended by deleting subsections (5) and (6) thereof and by
deleting as "Events of Default" thereunder any default in the performance or
breach of any of the provisions of the Indenture deleted by Section 1.2 of this
Supplemental Indenture.
Section 1.2. Deletion of Certain Sections. SECTION 8.01, SECTIONS
10.07 through and including 10.11, SECTIONS 10.14 and 10.15, SECTIONS 10.17 and
10.18 and SECTIONS 12.01 through and including 12.03 of the Indenture are
deleted in their entirety.
Section 2. Effectiveness of Supplemental Indenture. Pursuant to an
Offer to Purchase and Consent Solicitation Statement dated May 14, 1997 (the
"Offer to Purchase"), the Company has offered (the "Offer") to purchase for
cash all $84,445,000 principal amount of the Outstanding Notes at a purchase
price determined in the manner described therein. The Company shall pay to the
Trustee for the account of each Holder ("Eligible Payment Recipient") who has
tendered and not duly withdrawn its Notes in the Offer as of June 12, 1997,
unless extended (such time and date, as the same may be extended, the
"Expiration Date"), an amount equal to the Total Purchase Price or the Purchase
Price (each as defined in the Offer to Purchase), as the case may be, plus
accrued but unpaid interest to (but excluding) the Payment Date (as defined in
the next sentence) (the "Tender Payments"). Notes purchased pursuant to the
Offer will be paid for in immediately available funds on the third Business Day
after the Expiration Date (or as soon as practicable thereafter) (the "Payment
Date"), and the Trustee shall pay the aggregate Tender Payments to the Eligible
Payment Recipients in accordance with their respective interests. The
provisions of this Supplemental Indenture will not become operative until
validly tendered Notes are accepted for payment by the Company. If the Offer
is terminated or withdrawn, or the Notes not purchased pursuant to the Offer,
the Supplemental Indenture will never become operative.
Section 3. Governing Law. THIS SUPPLEMENTAL INDENTURE SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE
EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY.
Section 4. Counterparts. This Supplemental Indenture may be signed
in any number of counterparts, each of which shall be an original, with the
same effect as if the signature thereto and hereto were upon the same
instrument.
1
<PAGE> 3
Section 5. Severability Clause. In case any provision in this
Supplemental Indenture shall be invalid, illegal or unenforceable, to the
extent permitted by law, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
Section 6. Ratification. Except as expressly amended by this
Supplemental Indenture, each provision of the Indenture shall remain in full
force and effect, and, as amended hereby, the Indenture is in all respects
agreed to, ratified and confirmed by each of the Company and the Trustee.
* * *
IN WITNESS WHEREOF, the Company and the Trustee have caused this
Supplemental Indenture to be duly executed by their respective officers
thereunto duly authorized and their respective seals duly attested to be
hereunto affixed all as of the day and year first above written.
"COMPANY"
NOBLE DRILLING CORPORATION
[SEAL]
Attest: By: /s/ BYRON L. WELLIVER
-----------------------------------
Byron L. Welliver
Senior Vice President - Finance
and Treasurer
/s/ JULIE J. ROBERTSON
- --------------------------------
Julie J. Robertson
Secretary
"TRUSTEE"
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, as Trustee
By: /s/ BRUCE C. BOYD
-----------------------------------
Name: Bruce C. Boyd
Title: Vice President
2
<PAGE> 4
STATE OF TEXAS )
)
COUNTY OF HARRIS )
BEFORE ME, the undersigned authority, a Notary Public in and for said
state, on this day personally appeared Byron L. Welliver and Julie J.
Robertson, known to me to be the persons and officers whose names are
subscribed to the foregoing instrument and acknowledged to me that the same was
the act of the said NOBLE DRILLING CORPORATION, a Delaware corporation, and
that they executed the same as the act of said corporation for the purposes and
consideration therein expressed, and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 30th day of May, 1997.
/s/ SYLVANA M. BROWNE
-------------------------------------------
Notary Public in and for the State of Texas
My commission expires: Sylvana M. Browne
-------------------------------------------
Printed Name of Notary Public
July 29, 1997
- ----------------------------------
STATE OF TEXAS )
)
COUNTY OF HARRIS )
BEFORE ME, the undersigned authority, a Notary Public in and for said
state, on this day personally appeared Bruce C. Boyd known to me to be the
persons and officers whose names are subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said TEXAS COMMERCE BANK
NATIONAL ASSOCIATION, as trustee, a national banking association, and that they
executed the same as the act of said national banking association for the
purposes and consideration therein expressed, and in the capacity therein
stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 30th day of May, 1997.
/s/ LEAN E. FOSHEE
-------------------------------------------
Notary Public in and for the State of Texas
My commission expires: Lean E. Foshee
-------------------------------------------
Printed Name of Notary Public
4/20/98
- ----------------------------------
3
<PAGE> 1
EXHIBIT 4.4
================================================================================
CREDIT AGREEMENT
among
NOBLE DRILLING CORPORATION,
VARIOUS LENDING INSTITUTIONS,
CREDIT LYONNAIS NEW YORK BRANCH,
as DOCUMENTATION AGENT
and
CHRISTIANIA BANK OG KREDITKASSE ASA,
NEW YORK BRANCH,
as ARRANGER
and ADMINISTRATIVE AGENT
-----------------------------------------------------------
Dated as of August 14, 1997
-----------------------------------------------------------
$200,000,000
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<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. . . . . . . . . . . . . . . 6
1.11 Compensation . . . . . . . . . . . . . . . . . . . . . . . . 8
1.12 Change of Lending Office; Limitation on Indemnities . . . . . 8
1.13 Replacement of Banks . . . . . . . . . . . . . . . . . . . . 9
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.04 Agreement to Repay Letter of Credit Payments . . . . . . . . 11
2.05 Letter of Credit Participations . . . . . . . . . . . . . . . 11
2.06 Increased Costs . . . . . . . . . . . . . . . . . . . . . . . 14
2.07 Indemnities . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 3. Fees; Commitments . . . . . . . . . . . . . . . . . . . . . . . 15
3.01 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.02 Voluntary Reduction of Commitments . . . . . . . . . . . . . 16
3.03 Mandatory Adjustments of Commitments, etc. . . . . . . . . . 16
SECTION 4. Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.01 Voluntary Prepayments . . . . . . . . . . . . . . . . . . . . 17
4.02 Mandatory Prepayments . . . . . . . . . . . . . . . . . . . . 17
4.03 Method and Place of Payment . . . . . . . . . . . . . . . . . 19
4.04 Net Payments . . . . . . . . . . . . . . . . . . . . . . . . 19
</TABLE>
(i)
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 5. Conditions Precedent . . . . . . . . . . . . . . . . . . . . . 21
5.01 Execution of Agreement . . . . . . . . . . . . . . . . . . . 22
5.02 No Default; Representations and Warranties . . . . . . . . . 22
5.03 Officer's Certificate . . . . . . . . . . . . . . . . . . . . 22
5.04 Opinions of Counsel . . . . . . . . . . . . . . . . . . . . . 22
5.05 Corporate Proceedings . . . . . . . . . . . . . . . . . . . . 22
5.06 Existing Indebtedness Agreements . . . . . . . . . . . . . . 23
5.07 Adverse Change, etc. . . . . . . . . . . . . . . . . . . . . 23
5.08 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.09 Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.10 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.11 Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.12 Rig Reports . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.13 Insurance Report . . . . . . . . . . . . . . . . . . . . . . 24
5.14 Projections . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.15 Offshore Drilling Contracts . . . . . . . . . . . . . . . . . 24
SECTION 6. Representations, Warranties and Agreements . . . . . . . . . . 25
6.01 Corporate Status . . . . . . . . . . . . . . . . . . . . . . 25
6.02 Corporate Power and Authority . . . . . . . . . . . . . . . . 25
6.03 No Violation . . . . . . . . . . . . . . . . . . . . . . . . 26
6.04 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.05 Use of Proceeds; Margin Regulations . . . . . . . . . . . . . 26
6.06 Governmental Approvals . . . . . . . . . . . . . . . . . . . 26
6.07 Investment Company Act . . . . . . . . . . . . . . . . . . . 27
6.08 Public Utility Holding Company Act . . . . . . . . . . . . . 27
6.09 True and Complete Disclosure . . . . . . . . . . . . . . . . 27
6.10 Financial Condition; Financial Statements; Projections . . . 27
6.11 Tax Returns and Payments . . . . . . . . . . . . . . . . . . 28
6.12 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . 28
6.13 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . 29
6.14 Patents, etc. . . . . . . . . . . . . . . . . . . . . . . . . 29
6.15 Pollution and Other Regulations . . . . . . . . . . . . . . . 29
6.16 Properties . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.17 Labor Relations . . . . . . . . . . . . . . . . . . . . . . . 30
6.18 Existing Indebtedness . . . . . . . . . . . . . . . . . . . . 31
6.19 Rig Classification . . . . . . . . . . . . . . . . . . . . . 31
SECTION 7. Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . 31
7.01 Information Covenants . . . . . . . . . . . . . . . . . . . . 31
</TABLE>
(ii)
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
7.02 Books, Records and Inspections . . . . . . . . . . . . . . . 34
7.03 Maintenance of Property; Insurance . . . . . . . . . . . . . 34
7.04 Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . 34
7.05 Consolidated Corporate Franchises . . . . . . . . . . . . . . 35
7.06 Compliance with Statutes, etc. . . . . . . . . . . . . . . . 35
7.07 Good Repair . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.08 End of Fiscal Years; Fiscal Quarters . . . . . . . . . . . . 35
7.09 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . 35
7.10 Rig Valuations . . . . . . . . . . . . . . . . . . . . . . . 36
7.11 Additional Guarantors . . . . . . . . . . . . . . . . . . . . 36
7.12 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 8. Negative Covenants . . . . . . . . . . . . . . . . . . . . . . 36
8.01 Changes in Business . . . . . . . . . . . . . . . . . . . . . 36
8.02 Consolidation, Merger, Sale of Assets, etc. . . . . . . . . . 37
8.03 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . 37
8.04 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
8.05 Restricted Payments . . . . . . . . . . . . . . . . . . . . . 40
8.06 Restrictions on Subsidiaries . . . . . . . . . . . . . . . . 41
8.07 Transactions with Affiliates . . . . . . . . . . . . . . . . 42
8.08 Fleet Rig Management . . . . . . . . . . . . . . . . . . . . 42
8.09 Interest Coverage Ratio . . . . . . . . . . . . . . . . . . . 43
8.10 Leverage Ratio . . . . . . . . . . . . . . . . . . . . . . . 43
8.11 Fleet Market Value . . . . . . . . . . . . . . . . . . . . . 43
8.12 Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 9. Events of Default . . . . . . . . . . . . . . . . . . . . . . . 43
9.01 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . 43
9.02 Representations, etc. . . . . . . . . . . . . . . . . . . . . 43
9.03 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . 43
9.04 Default Under Other Agreements . . . . . . . . . . . . . . . 44
9.05 Bankruptcy, etc. . . . . . . . . . . . . . . . . . . . . . . 44
9.06 Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . 44
9.07 Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . 45
9.08 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . 45
9.09 Change of Control . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 10. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 46
</TABLE>
(iii)
<PAGE> 5
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 11. The Administrative Agent . . . . . . . . . . . . . . . . . . . 67
11.01 Appointment . . . . . . . . . . . . . . . . . . . . . . . . 67
11.02 Nature of Duties . . . . . . . . . . . . . . . . . . . . . . 67
11.03 Lack of Reliance on the Administrative Agent . . . . . . . . 68
11.04 Certain Rights of the Administrative Agent . . . . . . . . . 68
11.05 Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . 68
11.06 Indemnification . . . . . . . . . . . . . . . . . . . . . . 69
11.07 The Administrative Agent in Its Individual Capacity . . . . 69
11.08 Holders . . . . . . . . . . . . . . . . . . . . . . . . . . 69
11.09 Resignation by the Administrative Agent . . . . . . . . . . 69
SECTION 12. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . 70
12.01 Payment of Expenses, etc. . . . . . . . . . . . . . . . . . 70
12.02 Right of Setoff . . . . . . . . . . . . . . . . . . . . . . 71
12.03 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 72
12.04 Benefit of Agreement . . . . . . . . . . . . . . . . . . . . 72
12.05 No Waiver; Remedies Cumulative . . . . . . . . . . . . . . . 74
12.06 Payments Pro Rata . . . . . . . . . . . . . . . . . . . . . 74
12.07 Calculations; Computations . . . . . . . . . . . . . . . . . 75
12.08 Governing Law; Submission to Jurisdiction; Venue;
Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . 75
12.09 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 76
12.10 Effectiveness . . . . . . . . . . . . . . . . . . . . . . . 76
12.11 Headings Descriptive . . . . . . . . . . . . . . . . . . . . 76
12.12 Amendment or Waiver . . . . . . . . . . . . . . . . . . . . 76
12.13 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . 77
12.14 Domicile of Loans . . . . . . . . . . . . . . . . . . . . . 77
12.15 Confidentiality . . . . . . . . . . . . . . . . . . . . . . 77
12.16 Registry . . . . . . . . . . . . . . . . . . . . . . . . . . 77
</TABLE>
ANNEX I -- Commitments
ANNEX II -- Bank Addresses
ANNEX III -- Certain Non-Essential Rigs
ANNEX IV -- Offshore Drilling Contracts
ANNEX V -- Subsidiaries
ANNEX VI -- Real Property
ANNEX VII -- Rigs and Vessels
ANNEX VIII -- Existing Indebtedness
ANNEX IX -- Existing Liens
ANNEX X -- Approved Rig Brokers
ANNEX XI -- Subsidiary Guarantors
(iv)
<PAGE> 6
EXHIBIT A -- Form of Notice of Borrowing
EXHIBIT B -- Form of Note
EXHIBIT C -- Form of Letter of Credit Request
EXHIBIT D -- Form of Section 4.04(b)(ii) Certificate
EXHIBIT E-1 -- Form of Opinion of Thompson & Knight, P.C.
EXHIBIT E-2 -- Form of Opinion of White & Case
EXHIBIT F -- Form of Officers' Certificate
EXHIBIT G -- Form of Guaranty
EXHIBIT H -- Form of Compliance Certificate
EXHIBIT I -- Form of Assignment and Assumption Agreement
(v)
<PAGE> 7
CREDIT AGREEMENT, dated as August 14, 1997, among NOBLE DRILLING
CORPORATION (the "Borrower"), a Delaware corporation, the lending institutions
listed from time to time on Annex I hereto (each a "Bank" and, collectively,
the "Banks"), CREDIT LYONNAIS NEW YORK BRANCH, as Documentation Agent and
CHRISTIANIA BANK OG KREDITKASSE ASA, NEW YORK BRANCH, as Arranger and
Administrative Agent (the "Administrative Agent"). Unless otherwise defined
herein, all capitalized terms used herein and defined in Section 10 are used
herein as so defined.
W I T N E S S E T H :
WHEREAS, subject to the terms and conditions set forth herein,
the Banks are willing to make available to the Borrower the credit facilities
provided for herein:
NOW, THEREFORE, it is agreed:
SECTION 1. Amount and Terms of Credit.
1.01 Commitment. Subject to and upon the terms and conditions
herein set forth, each Bank severally agrees to make a loan or loans (each a
"Loan" and, collectively, the "Loans") under the Facility to the Borrower,
which Loans (i) shall be made at any time and from time to time on and after
the Effective Date and prior to the Maturity Date, (ii) except as hereinafter
provided, may, at the option of the Borrower, be incurred and maintained as,
and/or converted into, Base Rate Loans or Eurodollar Loans, provided that all
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) 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 that 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 (1) if such Bank is a Non-
Defaulting Bank, the Adjusted Commitment of such Bank at such time and (2) if
such Bank is a Defaulting Bank, the Commitment of such Bank at such time.
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
<PAGE> 8
constituting such Borrowing. More than one Borrowing may be incurred on any
day, provided that at no time shall there be outstanding more than eight
Borrowings of Eurodollar Loans.
1.03 Notice of Borrowing. Whenever the Borrower desires to
incur Loans under the Facility, it shall give the Administrative Agent at its
Notice Office, prior to 12:00 Noon (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 notice (each a
"Notice of Borrowing") shall be in the form of Exhibit A and shall be
irrevocable and shall specify (i) the aggregate principal amount of the Loans
to be made pursuant to such Borrowing, (ii) the date of Borrowing (which shall
be a Business Day) and (iii) 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 the 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 the 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 the Borrower, the
Administrative Agent shall be entitled to recover such corresponding amount
from such Bank. If such Bank does not pay such corresponding amount forthwith
upon the Administrative Agent's demand therefor, the Administrative Agent shall
promptly (and in any event within two Business Days from the date the
Administrative Agent made such funds available to the Borrower) notify the
Borrower, and the 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 the Borrower, as the case may be, interest on such corresponding amount
-2-
<PAGE> 9
in respect of each day from the date such corresponding amount was made
available by the Administrative Agent to the Borrower to the date such
corresponding amount is recovered by the Administrative Agent, at a rate per
annum equal to (x) if paid by such Bank, the overnight Federal Funds Effective
Rate or (y) if paid by the 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 the Borrower may have against any Bank as a result of any default by such
Bank hereunder.
1.05 Notes. (a) The Borrower's obligation to pay the principal
of, and interest on, the Loans made to it by each Bank shall be evidenced by a
promissory note substantially in the form of Exhibit B 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 the
Borrower, (ii) be payable to the order of such Bank and be dated the Effective
Date, (iii) be in a stated principal amount equal to the Commitment of such
Bank on such date and be payable in the outstanding principal amount of the
Loans evidenced thereby, (iv) mature on the Maturity Date, (v) bear interest as
provided in the appropriate clause of Section 1.08 in respect of the
outstanding Base Rate Loans and Eurodollar Loans, as the case may be, evidenced
thereby, (vi) be subject to mandatory repayment as provided in Section 4.02 and
(vii) be entitled to the benefits of 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 the Borrower's obligations in respect of such
Loans.
1.06 Conversions. The Borrower shall have the option to convert
on any Business Day all or a portion at least equal to the applicable Minimum
Borrowing Amount of the outstanding principal amount of the Loans owing
pursuant to the Facility into a Borrowing or Borrowings pursuant to the
Facility of another Type of Loan, provided that (i) except as otherwise
provided in Section 1.10(b), Eurodollar Loans may be converted into Base Rate
Loans only on the last day of an Interest Period applicable thereto and no
partial conversion of a Borrowing of Eurodollar Loans shall reduce the
outstanding principal amount of the Eurodollar Loans made pursuant to such
Borrowing to less than the Minimum Borrowing Amount applicable thereto, (ii) no
Base Rate Loans may be converted into Eurodollar Loans at any time when a
Default or Event of Default is in existence on the date of the conversion if
the Administrative Agent or the Required Banks have determined that such a
conversion would be disadvantageous to the Banks and (iii) Borrowings of
Eurodollar
-3-
<PAGE> 10
Loans resulting from this Section 1.06 shall be limited in number as provided
in Section 1.02. Each such conversion shall be effected by the Borrower 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 a Borrowing of Eurodollar Loans, the Interest Period to be
initially applicable thereto. The Administrative Agent shall give prompt
notice of any such proposed conversion to each Bank with Loans affected
thereby.
1.07 Pro Rata Borrowings. All 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 from the date of the Borrowing thereof until
maturity (whether by acceleration or otherwise) at a rate per annum which shall
at all times be the Base Rate in effect from time to time.
(b) The unpaid principal amount of each Eurodollar Loan shall
bear interest from the date of the Borrowing thereof until maturity (whether by
acceleration or otherwise) at a rate per annum which shall at all times be the
Eurodollar Rate plus the Applicable Eurodollar Margin.
(c) All overdue principal and, to the extent permitted by law,
overdue interest in respect of each Loan and any other overdue amount payable
hereunder shall bear interest at a rate per annum equal to 2% per annum in
excess of the rate otherwise applicable to such Loans from time to time, with
such interest payable on demand, provided that no Loan shall bear interest
after maturity (whether by acceleration or otherwise) at a rate per annum less
than 2% plus the rate of interest applicable thereto at maturity.
(d) Interest shall accrue from and including the date of any
Borrowing to but excluding the date of any repayment thereof and shall be
payable (i) in respect of each Base Rate Loan, quarterly in arrears on the
first day of each January, April, July and October, (ii) in respect of each
Eurodollar Loan, on the last day of each Interest Period applicable thereto
and, in the case of an Interest Period of six months, on the date occurring
three months after the first day of such Interest Period, (iii) in respect of
each Eurodollar Loan, on any prepayment or conversion (on the amount prepaid or
converted) and (iv) in respect of each Loan, at maturity (whether by
acceleration or otherwise) and, after such maturity, on demand.
-4-
<PAGE> 11
(e) All computations of interest hereunder shall be made in
accordance with Section 12.07(b).
(f) The Administrative Agent, upon determining the interest rate
for any Borrowing of Eurodollar Loans for any Interest Period, shall promptly
notify the Borrower and the Banks thereof.
1.09 Interest Periods. (a) At the time the 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 an outstanding Borrowing of Eurodollar Loans, it shall have the right to
elect by giving the Administrative Agent written notice (or telephonic notice
promptly confirmed in writing) of the Interest Period applicable to such
Borrowing, which Interest Period shall, at the option of the 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 immediately preceding Interest Period
expires;
(ii) if any Interest Period begins on a day for which there is
no numerically corresponding day in the calendar month at the end of
such Interest Period, such Interest Period shall end on the last
Business Day of such calendar month;
(iii) if any Interest Period would otherwise expire on a day
which is not a Business Day, such Interest Period shall expire on the
next succeeding Business Day, provided that if any Interest Period would
otherwise expire on a day which is not a Business Day but is a day of
the month after which no further Business Day occurs in such month, such
Interest Period shall expire on the immediately preceding Business Day;
(iv) no Interest Period shall extend beyond the Maturity Date;
(v) no Interest Period may be elected at any time when a
Default or Event of Default is then in existence if the Administrative
Agent or the Required Banks have determined that such an election at
such time would be disadvantageous to the Banks; and
-5-
<PAGE> 12
(b) If upon the expiration of any Interest Period, the 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, the 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 have determined (which
determination shall, absent demonstrable 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 actual increased
costs or reductions in the amounts received or receivable hereunder with
respect to any Eurodollar Loans (other than any increased cost or
reduction in the amount received or receivable resulting from the
imposition of or a change in the rate or basis of taxes or similar
charges) because of (x) any change since the date of this Agreement in
any applicable law, governmental rule, regulation, guideline or order
(or in the interpretation or administration thereof and including the
introduction of any new law or governmental rule, regulation, guideline
or order) (such as, for example, but not 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 the Borrower and 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)
-6-
<PAGE> 13
above, Eurodollar Loans shall no longer be available until such time as the
Administrative Agent notifies the Borrower and the Banks that the circumstances
giving rise to such notice by the Administrative Agent no longer exist, and any
Notice of Borrowing or Notice of Conversion given by the Borrower with respect
to Eurodollar Loans which have not yet been incurred shall be deemed rescinded
by the Borrower, (y) in the case of clause (ii) above, the Borrower shall,
subject to Section 1.12(b) (to the extent applicable), pay to such Bank, upon
written demand therefor, such additional amounts (in the form of an increased
rate of, or a different method of calculating, interest or otherwise as such
Bank in its sole discretion shall determine) as shall be required to compensate
such Bank for such increased costs or reductions in amounts receivable
hereunder (a written notice as to the additional amounts owed to such Bank,
showing the basis for the calculation thereof, submitted to the Borrower by
such Bank shall, absent demonstrable error, be final and conclusive and binding
upon all parties hereto) and (z) in the case of clause (iii) above, the
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), the Borrower may (and
in the case of a Eurodollar Loan affected pursuant to Section 1.10(a)(iii), the
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 the 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 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 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), the 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
-7-
<PAGE> 14
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 the
Borrower, which notice shall set forth the basis of the calculation of such
additional amounts, although the failure to give any such notice shall not
release or diminish any of the Borrower's obligations to pay additional amounts
pursuant to this Section 1.10(c) upon the subsequent receipt of such notice.
1.11 Compensation. The Borrower shall compensate each Bank,
upon its written request (which request shall set forth the basis for
requesting such compensation), for all reasonable losses, expenses and
liabilities (including, without limitation, any loss, expense or liability
incurred by reason of the liquidation or reemployment of deposits or other
funds required by such Bank to fund its Eurodollar Loans but excluding in any
event the loss of anticipated profits) which such Bank may sustain: (i) if for
any reason (other than a default by such Bank or the Administrative Agent) a
Borrowing of Eurodollar Loans does not occur on a date specified therefor in a
Notice of Borrowing or Notice of Conversion (whether or not withdrawn by the
Borrower or deemed withdrawn pursuant to Section 1.10(a)); (ii) 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; (iii)
if any prepayment of any of its Eurodollar Loans is not made on any date
specified in a notice of prepayment given by the Borrower; or (iv) as a
consequence of (x) any other default by the Borrower to repay its Eurodollar
Loans when required by the terms of this Agreement or (y) an election made
pursuant to Section 1.10(b).
1.12 Change of Lending Office; Limitation on Indemnities. (a)
Each Bank agrees that, upon the occurrence of any event giving rise to the
operation of Section 1.10(a)(ii) or (iii), 1.10(c), 2.06 or 4.04 with respect
to such Bank, it will, if requested by the 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 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 the Borrower or the right of any Bank
provided in Section 1.10, 2.06 or 4.04.
(b) Notwithstanding anything in this Agreement to the contrary,
to the extent any notice required by Section 1.10, 2.06 or 4.04 is given by any
Bank more than 180 days after such Bank obtained, or reasonably should have
obtained, knowledge of the occurrence of the event giving rise to the
additional costs of the type described in such Section, such Bank shall not be
entitled to compensation under Section 1.10, 2.06 or 4.04 for any amounts
incurred or accruing prior to the giving of such notice to the Borrower.
1.13 Replacement of Banks. (x) Upon the occurrence of any
event giving rise to the operation of Section 1.10(a)(ii) or (iii), Section
1.10(c), Section 2.06 or Section
-8-
<PAGE> 15
4.04 with respect to any Bank which results in such Bank charging to the
Borrower increased costs in excess of those being generally charged by the
other Banks or becoming incapable of making Eurodollar Loans, (y) if a Bank
becomes a Defaulting Bank and/or (z) as provided in Section 12.12(b), in the
case of a refusal by a Bank to consent to a proposed change, waiver, discharge
or termination with respect to this Agreement which has been approved by the
Required Banks, the 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 Transferees reasonably acceptable to the
Administrative Agent, none of which Transferees shall constitute a Defaulting
Bank at the time of such replacement (collectively, the "Replacement Bank"),
provided that (i) at the time of any replacement pursuant to this Section 1.13,
the Replacement Bank shall enter into one or more Assignment and Assumption
Agreements pursuant to Section 12.04(b) (and with all fees payable pursuant to
said Section 12.04(b) to be paid by the Replacement Bank) pursuant to which the
Replacement Bank shall acquire all of the Commitments and outstanding Loans of,
and in each case participations in Letters of Credit by, the Replaced Bank and,
in 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, 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 the 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 the
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.
SECTION 2. Letters of Credit.
2.01 Letters of Credit. (a) Subject to and upon the terms and
conditions herein set forth, the Borrower may request the Letter of Credit
Issuer to issue, at any time and from time to time on and after the Effective
Date and prior to the Maturity Date, and subject to and upon the terms and
conditions herein set forth, the Letter of Credit Issuer agrees to issue from
time to time, (x) for the account of the Borrower and for the benefit of any
holder (or any trustee, agent or other similar representative for any such
holders) of L/C
-9-
<PAGE> 16
Supportable Obligations of the Borrower or any of its Subsidiaries, an
irrevocable standby letter of credit, in a form customarily used by the Letter
of Credit Issuer or in such other form as has been approved by the 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 the Borrower and for the benefit of sellers of goods or materials to
the Borrower or any of its Subsidiaries, an irrevocable sight documentary
letter of credit in a form customarily used by the Letter of Credit Issuer or
in such other form as has been approved by the Letter of Credit Issuer (each
such documentary 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 the Borrower and its Subsidiaries.
(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 either (x) $40,000,000 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; and (ii) each Letter of Credit shall have an
expiry date occurring not later than three years after such Letter of Credit's
date of issuance although any Letter of Credit may be extendable for successive
periods of up to 12 months, but not beyond the Business Day next preceding the
Maturity Date, on terms acceptable to the Letter of Credit Issuer and in no
event shall any Letter of Credit have an expiry date occurring later than the
Business Day immediately preceding the Maturity Date.
2.02 Minimum Stated Amount. The initial Stated Amount of each
Letter of Credit shall be not less than $50,000 or such lesser amount
reasonably acceptable to the 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, the
Borrower shall give the Administrative Agent and the Letter of Credit Issuer
written notice (including by way of telecopier) in the form of Exhibit C prior
to 2:00 P.M. (New York time) at least three Business Days (or such shorter
period as may be acceptable to the Letter of Credit Issuer) prior to the
proposed date of issuance (which shall be a Business Day) (each a "Letter of
Credit Request"), which Letter of Credit Request shall include any documents
that the Letter of Credit Issuer customarily requires in connection therewith.
The Administrative Agent shall promptly notify each Bank of each Letter of
Credit Request.
(b) The Letter of Credit Issuer shall, on the date of each
issuance of a Letter of Credit by it, give each Bank and the Borrower written
notice of the issuance of such Letter of Credit.
-10-
<PAGE> 17
2.04 Agreement to Repay Letter of Credit Payments. (a) The
Borrower hereby agrees to reimburse the Letter of Credit Issuer, by making
payment to the Administrative Agent at the Payment Office, for any payment or
disbursement made by the Letter of Credit Issuer under any Letter of Credit
(each such amount so paid or disbursed until reimbursed, an "Unpaid Drawing")
promptly on the date on which the Borrower is notified by the Letter of Credit
Issuer of such payment or disbursement, with interest on the amount so paid or
disbursed by the Letter of Credit Issuer, to the extent not reimbursed prior to
1:00 P.M. (New York time) on the date of such payment or disbursement, from and
including the date paid or disbursed to but not including the date the Letter
of Credit Issuer is reimbursed therefor at a rate per annum which shall be the
Base Rate as in effect from time to time (plus an additional 2% per annum if
not reimbursed by the third Business Day after the date of such notice of
payment or disbursement), such interest also to be payable on demand.
(b) The Borrower's obligation under this Section 2.04 to
reimburse the Letter of Credit Issuer with respect to Unpaid Drawings
(including, in each case, interest thereon) shall be absolute and unconditional
under any and all circumstances and irrespective of any setoff, counterclaim or
defense to payment which the Borrower may have or have had against the 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 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 the Letter of
Credit) or any non-application or misapplication by the beneficiary of the
proceeds of such drawing; provided, however, that the Borrower shall not be
obligated to reimburse the Letter of Credit Issuer for any wrongful payment
made by the Letter of Credit Issuer under a Letter of Credit as a result of
acts or omissions constituting willful misconduct or gross negligence on the
part of the Letter of Credit Issuer.
2.05 Letter of Credit Participations. (a) Immediately upon the
issuance by the Letter of Credit Issuer of any Letter of Credit, the 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 the 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 the 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,
-11-
<PAGE> 18
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 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 the Letter of Credit Issuer
under or in connection with any Letter of Credit, if taken or omitted in the
absence of gross negligence or willful misconduct, shall not create for the
Letter of Credit Issuer any resulting liability to the Participants.
(c) In the event that the Letter of Credit Issuer makes any
payment under any Letter of Credit and the Borrower shall not have reimbursed
such amount in full to the Letter of Credit Issuer pursuant to Section 2.04(a),
the 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 the 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 the Letter of Credit Issuer under a
Letter of Credit as a result of acts or omissions constituting willful
misconduct or gross negligence on the part of the Letter of Credit Issuer. If
the Administrative Agent so notifies any Participant required to fund an Unpaid
Drawing under a Letter of Credit prior to 12:00 Noon (New York time) on any
Business Day, such Participant shall make available to the Administrative Agent
for the account of the 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 the Letter of Credit Issuer, such
Participant agrees to pay to the Administrative Agent for the account of the
Letter of Credit Issuer, forthwith on demand such amount, together with
interest thereon, for each day from such date until the date such amount is
paid to the Administrative Agent for the account of the 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 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 the 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
-12-
<PAGE> 19
Agent for the account of the Letter of Credit Issuer such other Participant's
Adjusted Percentage of any such payment.
(d) Whenever the Letter of Credit Issuer receives a payment of a
reimbursement obligation as to which the Administrative Agent has received for
the account of the Letter of Credit Issuer any payments from the Participants
pursuant to clause (c) above, the 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 Letter of Credit Issuer with
respect to Letters of Credit shall be irrevocable and not subject to
counterclaim, set-off or other defense or any other qualification or exception
whatsoever (provided that no Participant shall be required to make payments
resulting from the Letter of Credit Issuer's gross negligence or willful
misconduct) and shall be made in accordance with the terms and conditions of
this 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 the 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 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 the 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.
-13-
<PAGE> 20
2.06 Increased Costs. If at any time after the date of the
Agreement, the adoption or effectiveness of any applicable law, rule or
regulation, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by the Letter of Credit Issuer or any Bank with any request or
directive (whether or not having the force of law but with which such Bank
customarily complies even though the failure to comply therewith would not be
unlawful) by any such authority, central bank or comparable agency shall either
(i) impose, modify or make applicable any reserve, deposit, capital adequacy or
similar requirement against Letters of Credit issued by the Letter of Credit
Issuer or such Bank's participation therein, or (ii) shall impose on the Letter
of Credit Issuer or any Bank any other conditions affecting this Agreement, any
Letter of Credit or such Bank's participation therein; and the result of any of
the foregoing is to increase the cost to the Letter of Credit Issuer or such
Bank of issuing, maintaining or participating in any Letter of Credit, or to
reduce the amount of any sum received or receivable by the Letter of Credit
Issuer or such Bank hereunder (other than any increased cost or reduction in
the amount received or receivable resulting from the imposition of or a change
in the rate or basis of taxes or similar charges), then, upon demand to the
Borrower by the Letter of Credit Issuer or such Bank (a copy of which notice
shall be sent by the Letter of Credit Issuer or such Bank to the Administrative
Agent), the Borrower shall, subject to Section 1.12(b) (to the extent
applicable), pay to the Letter of Credit Issuer or such Bank such additional
amount or amounts as will compensate the Letter of Credit Issuer or such Bank
for such increased cost or reduction. A certificate submitted to the Borrower
by the Letter of Credit Issuer or such Bank, as the case may be (a copy of
which certificate shall be sent by the Letter of Credit Issuer or such Bank to
the Administrative Agent), setting forth the basis for the determination of
such additional amount or amounts necessary to compensate the Letter of Credit
Issuer or such Bank as aforesaid shall be conclusive and binding on the
Borrower absent demonstrable error, although the failure to deliver any such
certificate shall not release or diminish any of the Borrower's obligations to
pay additional amounts pursuant to this Section 2.06 upon the subsequent
receipt thereof.
2.07 Indemnities. The Borrower hereby agrees to reimburse and
indemnify the Letter of Credit Issuer for and against any and all liabilities,
obligations, losses, damages, penalties, claims, actions, judgments, suits,
costs, expenses or disbursements of whatsoever kind or nature which may be
imposed on, asserted against or incurred by the Letter of Credit Issuer in
performing its respective duties in any way relating to or arising out of its
issuance of Letters of Credit; provided that the Borrower shall not be liable
for any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from the
Letter of Credit Issuer's gross negligence or willful misconduct. To the
extent the Letter of Credit Issuer is not indemnified by the Borrower, the
Participants will reimburse and indemnify the Letter of Credit Issuer, in
proportion to their respective "percentages" of the Total Commitment, for and
against any and all liabilities, obligations, losses, damages, penalties,
claims, actions, judgments, suits, costs,
-14-
<PAGE> 21
expenses or disbursements of whatsoever kind or nature which may be imposed on,
asserted against or incurred by the Letter of Credit Issuer in performing its
respective duties in any way relating to or arising out of its issuance of
Letters of Credit; provided that no Participants shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the Letter of
Credit Issuer's gross negligence or willful misconduct.
SECTION 3. Fees; Commitments.
3.01 Fees. (a) The Borrower agrees to pay to the
Administrative Agent a commitment commission ("Commitment Commission") pro rata
for the account of each Non-Defaulting Bank for the period from and including
the Effective 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 day of each
January, April, July and October and on the date upon which the Total
Commitment is terminated.
(b) The Borrower agrees to pay to the Administrative Agent for
the account of the Non-Defaulting Banks pro rata on the basis of their
respective Adjusted Percentages, a fee in respect of each Letter of Credit (the
"Letter of Credit Fee") 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 day of each January, April, July and October of each year
and on the date after the Total Commitment is terminated and no Letters of
Credit remain outstanding.
(c) The Borrower agrees to pay to the Administrative Agent for
the account of the Letter of Credit Issuer a fee in respect of each Letter of
Credit issued by it (the "Facing Fee") computed at the rate of 1/10 of 1% per
annum on the daily Stated Amount of such Letter of Credit, provided that in no
event shall the annual Facing Fee to the Letter of Credit Issuer be less than
$500. Accrued Facing Fees shall be due and payable quarterly in arrears on the
first day of each January, April, July and October of each year and on the date
after the Total Commitment is terminated and no Letters of Credit remain
outstanding.
(d) The Borrower agrees to pay directly to the 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 have been agreed to between the
Borrower and the Letter of Credit Issuer.
(e) The Borrower shall pay to the Administrative Agent (x) on
the Effective Date for its own account and/or for distribution to the Banks
such Fees as heretofore agreed in writing by the Borrower and the
Administrative Agent and (y) for its own account such
-15-
<PAGE> 22
other fees as agreed to in writing between the Borrower and the Administrative
Agent, when and as due.
(f) All computations of Fees shall be made in accordance with
Section 12.07(b).
3.02 Voluntary Reduction of Commitments. 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), the
Borrower shall have the right, without premium or penalty, to terminate or
partially reduce the Total Unutilized Commitment, provided that (w) any such
termination shall apply to proportionately and permanently reduce the
Commitment of each Bank, (x) no such reduction shall reduce any Non-Defaulting
Bank's Commitment to an amount that is less than the sum of (A) the outstanding
Loans of such Bank plus (B) such Bank's Adjusted Percentage of Letter of Credit
Outstandings and (y) any partial reduction pursuant to this Section 3.02 shall
be in the amount of at least $500,000 or integral multiples of $100,000 in
excess thereof.
3.03 Mandatory Adjustments of Commitments, etc. (a) The Total
Commitment shall terminate on the earlier of (i) the Maturity Date and (ii)
unless the Required Banks otherwise consent, the date on which any Change of
Control occurs.
(b) In addition to any other mandatory commitment reductions
pursuant to this Section 3.03, on the Business Day following the date of
receipt thereof by the Borrower and/or any of its Subsidiaries of the Cash
Proceeds and/or other consideration from any Fleet Rig Disposition, the Total
Commitment shall be permanently reduced by an amount equal to 30% of the
combined fair market value of the Net Cash Proceeds and other consideration
arising from such Fleet Rig Disposition; provided that to the extent such
proceeds are (i) reinvested within six months of such Fleet Rig Disposition in
replacement assets owned by the Borrower or its Subsidiaries and/or (ii)
applied within six months of such Fleet Rig Disposition to permanently reduce
the outstanding principal balance under the Borrower's 9-1/8% Senior Notes
and/or 9-1/4% Senior Notes, such proceeds shall not be required to be so
applied to reduce the Total Commitment on such date.
(c) Each reduction of the Total Commitment pursuant to this
Section 3.03 shall apply proportionately to the Commitment of each Bank.
SECTION 4. Payments.
4.01 Voluntary Prepayments. The Borrower shall have the right
to prepay Loans in whole or in part, without premium or penalty, from time to
time on the following terms and conditions: (i) the Borrower shall give the
Administrative Agent at the Payment
-16-
<PAGE> 23
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 the Borrower at least one Business Day
prior to the date of such prepayment with respect to Base Rate Loans and five
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 and, if greater in an
integral multiple of $100,000, provided that no partial prepayment of
Eurodollar Loans made pursuant to a Borrowing shall reduce the aggregate
principal amount of the Loans outstanding pursuant to such Borrowing to an
amount less than the Minimum Borrowing Amount applicable thereto; (iii)
Eurodollar Loans may only be prepaid pursuant to this Section 4.01 on the last
day of the Interest Period applicable thereto, unless prior prepayment is
accompanied by all breakage costs owing pursuant to Section 1.11 in connection
therewith; 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 that at the Borrower's election in connection with any prepayment of
Loans pursuant to this Section 4.01, such prepayment shall not be applied to
any Loans of a Defaulting Bank.
4.02 Mandatory Prepayments.
(A) Requirements:
(a) (i) If on any date the sum of the aggregate outstanding
principal amount of Loans made by Non-Defaulting Banks (other than amounts made
available by the Administrative Agent, on behalf of another Bank, pursuant to
Section 1.04(a) for which the Administrative Agent does not receive
reimbursement due from such Bank, with repayment of such amounts to be governed
by the provisions of Section 1.04(a) until the third Business Day after the
failure of such Bank or the Borrower to repay such amount, whereupon such
amounts shall be included in calculations made pursuant to this Section
4.02(A)(a)(i)) and the Letter of Credit Outstandings exceeds the Adjusted Total
Commitment as then in effect, the 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 Loans
of Non-Defaulting Banks, the aggregate amount of Letter of Credit Outstandings
exceeds the Adjusted Total Commitment then in effect, the 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 the 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).
-17-
<PAGE> 24
(ii) If on any date the aggregate outstanding principal amount
of the Loans made by a Defaulting Bank exceeds the Commitment of such
Defaulting Bank, the 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) On the date on which any Change of Control occurs, unless
otherwise agreed by the Required Banks, the outstanding principal amount of the
Loans, if any, shall become due and payable in full.
(B) Application:
With respect to each prepayment of Loans required by Section
4.02, the Borrower may designate the Types of Loans which are to be prepaid and
the specific Borrowing or Borrowings under the Facility pursuant to which made,
provided that (i) Eurodollar Loans may only be repaid if no Base Rate Loans of
Non-Defaulting Banks remain outstanding; (ii) if any prepayment of Eurodollar
Loans made pursuant to a single Borrowing shall reduce the outstanding Loans
made pursuant to such Borrowing to an amount less than the Minimum Borrowing
Amount for such Borrowing, such Borrowing shall be immediately converted into
Base Rate Loans; and (iii) each prepayment of any Loans made by Non-Defaulting
Banks pursuant to a Borrowing shall be applied pro rata among the Non-
Defaulting Banks which made such Loans. In the absence of a designation by the
Borrower as described in the preceding sentence, the Administrative Agent
shall, subject to the above, make such designation in its sole discretion with
a view, but no obligation, to minimize breakage costs owing under Section 1.11.
Notwithstanding the foregoing provisions of this Section 4.02(B), if at any
time the mandatory prepayment of Loans pursuant to Section 4.02(A) above would
result, after giving effect to the procedures set forth above, in the 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 the 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 the 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 the Borrower, with such cash
collateral to be directly applied upon the first occurrence (or occurrences)
thereafter of the last day of an Interest Period applicable to the relevant
Loans that are Eurodollar Loans (or such earlier date or dates as shall be
requested by the Borrower), to repay an aggregate principal amount of such
Loans equal to the Affected Eurodollar Loans not initially prepaid pursuant to
this sentence. Notwithstanding anything to the contrary
-18-
<PAGE> 25
contained in the immediately preceding sentence, all amounts deposited as cash
collateral pursuant to the immediately preceding sentence shall be held for the
sole benefit of the Banks whose Loans would otherwise have been immediately
prepaid with the amounts deposited and upon the taking of any action by the
Administrative Agent or the Banks pursuant to the remedial provisions of
Section 9, any amounts held as cash collateral pursuant to this Section 4.02(B)
shall, subject to the requirements of applicable law, be immediately applied to
the Loans.
4.03 Method and Place of Payment. Except as otherwise
specifically provided herein, all payments under this Agreement shall be made
to the Administrative Agent for the ratable (based on its pro rata share)
account of the Banks entitled thereto, not later than 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 the Borrower to the Administrative Agent to
make a payment from the funds in the Borrower's account at the Payment Office
shall constitute the making of such payment to the extent of such funds held in
such account. Any payments under this Agreement which are made later than 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 the 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 tax imposed on or measured by the net income or net profits of a
Bank pursuant to the laws of the jurisdiction in which it is organized or
managed and controlled or the jurisdiction in which the principal office or
applicable lending office of such Bank is located or any subdivision thereof or
therein) and all interest, penalties or similar liabilities with respect
thereto (all such non-excluded taxes, levies, imposts, duties, fees,
assessments or other charges being referred to collectively as "Taxes"). If
any Taxes are so levied or imposed, the 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, the 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
-19-
<PAGE> 26
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.
The 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 the Borrower. The Borrower
agrees to indemnify and hold harmless each Bank, and reimburse such Bank upon
its written request, for the amount of any Taxes so levied or imposed and paid
by such Bank.
(b) Each Bank that is not a United States person (as such term
is defined in Section 7701(a)(30) of the Code) agrees to deliver to the
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 D (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 the 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 the Borrower and the Administrative Agent of its inability to deliver
any such Form or Certificate. Notwithstanding anything to the contrary
contained in Section 4.04(a), but subject to Section 12.04(b) and the
immediately succeeding sentence, (x) the 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
-20-
<PAGE> 27
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 the Borrower U.S. Internal Revenue Service
Forms that establish a complete exemption from such deduction or withholding
and (y) the Borrower shall not be obligated pursuant to Section 4.04(a) hereof
to gross-up payments to be made to a Bank in respect of income or similar taxes
imposed by the United States if (I) such Bank has not provided to the Borrower
the Internal Revenue Service Forms required to be provided to the 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), the
Borrower agrees to pay additional amounts and to indemnify each Bank in the
manner set forth in Section 4.04(a) (without regard to the identity of the
jurisdiction requiring the deduction or withholding) in respect of any amounts
deducted or withheld by it as described in the immediately preceding sentence
as a result of any changes after the date of this Agreement in any applicable
law, treaty, governmental rule, regulation, guideline or order, or in the
interpretation thereof, relating to the deducting or withholding of income or
similar Taxes, provided such Bank shall provide to the Borrower and the
Administrative Agent any reasonably available applicable IRS tax form
(reasonably similar in its simplicity and lack of detail to IRS Form 1001)
necessary or appropriate for the exemption or reduction in the rate of such
U.S. federal withholding tax.
(c) The provisions of this Section 4.04 shall be subject to
Section 1.12(b) (to the extent applicable).
SECTION 5. Conditions Precedent. The occurrence of the
Effective Date pursuant to Section 12.10 and the obligation of the Banks to
make each Loan hereunder, and the obligation of the Letter of Credit Issuer to
issue Letters of Credit hereunder, is subject, at the time of each such Credit
Event (except as otherwise hereinafter indicated), to the satisfaction of each
of the following conditions:
5.01 Execution of Agreement. (i) The Effective Date shall have
occurred as provided in Section 12.10 and (ii) there shall have been delivered
to the Administrative Agent for the account of each Bank the appropriate Note
executed by the Borrower, and in the amount, maturity and as otherwise provided
herein.
5.02 No Default; Representations and Warranties. At the time of
each Credit Event and also after giving effect thereto, (i) there shall exist
no Default or Event of Default and (ii) all representations and warranties
contained herein or in the other Credit Documents in effect at such time shall
be true and correct in all material respects with the same effect as though
such representations and warranties had been made on and as of the
-21-
<PAGE> 28
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).
5.03 Officer's Certificate. On the Effective Date, the
Administrative Agent shall have received a certificate dated such date signed
by the President, any Vice President or the Treasurer of the Borrower stating
that all of the applicable conditions set forth in Sections 5.02 and 5.08(a)
exist as of such date.
5.04 Opinions of Counsel. On the Effective Date, the
Administrative Agent shall have received opinions, addressed to the
Administrative Agent and each of the Banks and dated the Effective Date, from
(i) Thompson & Knight, P.C., counsel to the Borrower, which opinion shall cover
the matters contained in Exhibit E-1 and (ii) White & Case, special counsel to
the Administrative Agent, which opinion shall cover the matters contained in
Exhibit E-2.
5.05 Corporate Proceedings. (a) On the Effective Date, the
Administrative Agent shall have received from each Credit Party a certificate,
dated the Effective Date, signed by the President, any Vice-President, the
Treasurer or the Secretary or other appropriate representative of such Credit
Party in the form of Exhibit F with appropriate insertions and deletions,
together with copies of the resolutions, or such other administrative approval,
of such Credit Party referred to in such certificate and all of the foregoing
(including each such certificate of formation, certificate of incorporation and
by-laws) shall be reasonably satisfactory to the Administrative Agent.
(b) On the Effective Date, all corporate and legal proceedings
and all instruments and agreements in connection with the transactions
contemplated by this Agreement and the other 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, such documents and papers, where appropriate, to be certified by
proper corporate or governmental authorities.
5.06 Existing Indebtedness Agreements. On or prior to the
Effective Date, there shall have been delivered to the Administrative Agent
copies, certified as true and correct by an appropriate officer of the Borrower
of all agreements evidencing or relating to Existing Indebtedness (the
"Existing Indebtedness Agreements") all of which Existing Indebtedness
Agreements shall be in form and substance reasonably satisfactory to the
Administrative Agent.
-22-
<PAGE> 29
5.07 Adverse Change, etc. On the Effective Date, nothing shall
have occurred since March 31, 1997 (and neither the Banks nor the
Administrative Agent shall have become aware of any facts or conditions not
previously known) which the Administrative Agent or the Required Banks shall
determine (a) has, or is reasonably likely to have, a material adverse effect
on the rights or remedies of the Banks hereunder or under any other Credit
Document, or on the ability of the Borrower or any of the Guarantors to perform
their respective obligations to them, or (b) has, or is reasonably likely to
have, a Material Adverse Effect.
5.08 Litigation. On the Effective Date, there shall be no
actions, suits or proceedings 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
determine is reasonably likely to (i) have a Material Adverse Effect or (ii)
have a material adverse effect on the rights or remedies of the Banks hereunder
or under any other Credit Document or on the ability of the Borrower or any of
the Guarantors to perform their respective obligations to the Banks hereunder
or under any other Credit Document.
5.09 Approvals. On the Effective Date, all material necessary
governmental and third party approvals in connection with the transactions
contemplated by the Credit Documents and otherwise referred to herein or
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.
5.10 Fees. On the Effective Date, the 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.
5.11 Guaranty. On the Effective Date, each Guarantor shall have
duly authorized, executed and delivered a counterpart to the Guaranty in the
form of Exhibit G (as modified, amended or supplemented from time to time in
accordance with the terms hereof and thereof, the "Guaranty"), and the Guaranty
shall be in full force and effect.
5.12 Rig Reports. On or prior to the Effective Date, the
Administrative Agent shall have received:
(i) evidence satisfactory to the Administrative Agent that
each Fleet Rig (other than those appearing on Annex III hereto) 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
-23-
<PAGE> 30
Administrative Agent, free of any requirements or recommendations, other
than such requirements or recommendations which if not cured by the
owner thereof would not materially diminish such Fleet Rig's value; and
(ii) a report of recent date from an Approved Rig Broker
setting forth the Market Value of each Fleet Rig.
5.13 Insurance Report. On or prior to the Effective Date, the
Administrative Agent shall have received a detailed report from Aon or another
firm of independent marine insurance brokers reasonably acceptable to the
Administrative Agent with respect to the insurance maintained by the Borrower
and its Subsidiaries in connection with the Fleet Rigs, together with a
certificate from such broker certifying that such insurances are placed with
such insurance companies and/or underwriters and/or clubs, in such amounts,
against such risks, and in such form, as are normally insured against by
similarly situated insureds.
5.14 Projections. On or prior to the Effective Date, the
Administrative Agent shall have received (with sufficient copies for each of
the Banks, and the Administrative Agent will promptly forward to each of the
Banks) the Projections for the next four fiscal years beginning with the year
ending December 31, 1997, which Projections, and the supporting assumptions and
explanations thereto, shall be reasonably satisfactory in form and substance to
the Administrative Agent and the Required Banks.
5.15 Offshore Drilling Contracts. On the Effective Date, all of
the offshore drilling contracts described on Annex IV (which Annex IV sets
forth each offshore drilling contract expiring on or after the second
anniversary of the Effective Date) shall be in full force and effect.
The acceptance of the benefits of each Credit Event shall
constitute a representation and warranty by the 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 satisfactory in form
and substance to the Administrative Agent.
SECTION 6. Representations, Warranties and Agreements. In order
to induce the Banks to enter into this Agreement and to make the Loans and
issue and/or participate in Letters of Credit provided for herein, the 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
-24-
<PAGE> 31
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):
6.01 Corporate Status. Each Credit Party (i) is a duly
organized and validly existing corporation in good standing under the laws of
the jurisdiction of its organization and has the corporate power and authority
to own its property and assets and to transact the business in which it is
engaged, except in such case where the failure to be so duly organized and
validly existing in good standing and to have such corporate power and
authority (x) is not reasonably likely to have a Material Adverse Effect and
(y) is not reasonably likely to have a material adverse effect on the rights or
remedies of the Banks or on the ability of the Borrower or any Guarantor to
perform its obligations to them hereunder and under the other Credit Documents
to which it is a party, and (ii) has duly qualified and is authorized to do
business and is in good standing in all jurisdictions where it is required to
be so qualified and where the failure to be so qualified would have a Material
Adverse Effect.
6.02 Corporate Power and Authority. Each Credit Party has the
corporate power and authority to execute, deliver and carry out the terms and
provisions of the Credit Documents to which it is a party and has taken all
necessary corporate action to authorize the execution, delivery and performance
of the Credit Documents to which it is a party. Each Credit Party has duly
executed and delivered each Credit Document to which it is a party and each
such Credit Document constitutes the legal, valid and binding obligation of
such Credit Party enforceable against such Person in accordance with its terms,
except to the extent that the enforceability thereof may be limited by
applicable bankruptcy, 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. Neither the execution, delivery and
performance by any Credit Party of the Credit Documents to which it is a party
nor compliance with the terms and provisions thereof, nor the consummation of
the transactions contemplated therein (i) will contravene any applicable
provision of any law, statute, rule, regulation, order, writ, injunction or
decree of any court or governmental instrumentality of the United States or any
State thereof, (ii) will result in any breach of any of the terms, covenants,
conditions or provisions of, or 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 the Borrower or any of its Subsidiaries
pursuant to the terms of, any indenture, mortgage, deed of trust, agreement or
other instrument to which the Borrower or any of its Subsidiaries is a party or
by which it or any of its property or assets are bound or to which it is
subject or (iii) will violate any provision of the Certificate of Incorporation
or By-Laws of the Borrower or any of its Subsidiaries.
-25-
<PAGE> 32
6.04 Litigation. There are no actions, suits or proceedings
pending or, to the Borrower's knowledge, after due inquiry, threatened in
writing with respect to the Borrower or any of its Subsidiaries (i) that are
likely to have a Material Adverse Effect or (ii) that are reasonably likely to
have a material adverse effect on the rights or remedies of the Banks or on the
ability of the Borrower or any Guarantor to perform its obligations to them
hereunder and under the other Credit Documents to which it is a party.
6.05 Use of Proceeds; Margin Regulations. (a) The proceeds of
all Loans shall be utilized to provide for the general corporate purposes of
the Borrower and its Subsidiaries.
(b) Neither the making of any Loan hereunder, nor the use of the
proceeds thereof, will violate or be inconsistent with the provisions of
Regulation G, T, U or X of the Board of Governors of the Federal Reserve System
and no part of the proceeds of any Loan will be used to purchase or carry any
Margin Stock in violation of Regulation U or to extend credit for the purpose
of purchasing or carrying any Margin Stock.
6.06 Governmental Approvals. Except for the orders, consents,
approvals, licenses, authorizations, validations, recordings, registrations and
exemptions that have already been duly made or obtained and remain in full
force and effect, no order, consent, approval, license, authorization, or
validation of, or filing, recording or registration with, or exemption by, any
foreign or domestic governmental or public body or authority, or any
subdivision thereof, is required to authorize or is required in connection with
(i) the execution, delivery and performance of any Credit Document or (ii) the
legality, validity, binding effect or enforceability of any Credit Document.
6.07 Investment Company Act. Neither the Borrower nor any of
its Subsidiaries is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended.
6.08 Public Utility Holding Company Act. Neither the Borrower
nor any of its Subsidiaries is a "holding company," or a "subsidiary company"
of a "holding company," or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company," within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
6.09 True and Complete Disclosure. All factual information
(taken as a whole) heretofore or contemporaneously furnished by or on behalf of
the Borrower or any of its Subsidiaries in writing to the Administrative Agent
or any Bank for purposes of or in connection with this Agreement or any
transaction contemplated herein is, and all other such factual information
(taken as a whole) hereafter furnished by or on behalf of any such Person in
writing to any Bank will be, true and accurate in all material respects on the
date as of
-26-
<PAGE> 33
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 good faith estimates and assumptions believed by such Persons to be
reasonable at the time made, it being recognized by 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 the Borrower 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 Administrative Agent and the Banks for use in connection with
the transactions contemplated hereby.
6.10 Financial Condition; Financial Statements; Projections.
(a) On and as of the Effective Date, on a pro forma basis after giving effect
to all Indebtedness incurred, and to be incurred, by the Borrower and its
Subsidiaries in connection therewith, (x) the sum of the assets, at a fair
valuation, of the Borrower and its Subsidiaries taken as a whole will exceed
its debts, (y) the Borrower and its Subsidiaries taken as a whole will not have
incurred or intended to, or believe that they will, incur debts beyond their
ability to pay such debts as such debts mature and (z) the Borrower and its
Subsidiaries taken as a whole will not have unreasonably small capital with
which to conduct its business.
(b) (i) The consolidated balance sheet of the Borrower at
December 31, 1996 and the related consolidated statements of operations and
cash flows of the Borrower for the fiscal year, as the case may be, ended as of
said date, which have been examined by Price Waterhouse LLP, independent
certified public accountants, who delivered an unqualified opinion in respect
therewith, and (ii) the consolidated balance sheet of the Borrower as of March
31, 1997, copies of which have heretofore been furnished to each Bank, present
fairly the financial position of such entities at the dates of said statements
and the results for the period covered thereby in accordance with GAAP, except
to the extent provided in the notes to said financial statements and, in the
case of the March 31, 1997 statements, subject to normal and recurring year-end
audit adjustments. All such financial statements have been prepared in
accordance with generally accepted accounting principles and practices
consistently applied except to the extent provided in the notes to said
financial statements. Nothing has occurred since December 31, 1996 that (x)
has had or is reasonably likely to have a material adverse effect on the rights
or remedies of the Banks hereunder or under any other Credit Document, or on
the ability of the Borrower or any of the Guarantors to perform their
respective obligations to them, or (y) has had or is reasonably likely to have
a Material Adverse Effect.
(c) Except as reflected in the financial statements and the
notes thereto described in Section 6.10(b) or in Annex VIII, there were as of
the Effective Date no liabilities or obligations with respect to the Borrower
or any of its Subsidiaries of a nature
-27-
<PAGE> 34
(whether absolute, accrued, contingent or otherwise and whether or not due)
which, either individually or in aggregate, would be material to the Borrower
and its Subsidiaries taken as a whole, except as incurred subsequent to
December 31, 1996 in the ordinary course of business consistent with past
practices.
(d) On and as of the Effective Date, the Projections previously
delivered to the Administrative Agent have been prepared on a basis consistent
with the financial statements referred to in Section 6.10(a) (other than as set
forth or presented in such Projections), and there are no statements or
conclusions in any of the Projections which are based upon or include
information known to the Borrower to be misleading in any material respect or
which fail to take into account material information not otherwise disclosed in
writing to the Administrative Agent and the Banks regarding the matters
reported therein. On the Effective Date, the Borrower believed that the
Projections were reasonable and attainable.
6.11 Tax Returns and Payments. Each of the Borrower and each of
its Subsidiaries 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. The Borrower and each of its Subsidiaries has paid, or has provided
adequate reserves (in the good faith judgment of the management of the
Borrower) for the payment of, all federal, state and foreign income taxes
applicable for all prior fiscal years and for the current fiscal year to the
date hereof.
6.12 Employee Benefit Plans. (a) Neither the Borrower nor any
Subsidiary nor any ERISA Affiliate has ever maintained or contributed to (or
had an obligation to contribute to) any Plan or any Foreign Pension Plan where
any current or reasonably foreseeable liability of the Borrower with respect to
such Plan or such Foreign Pension Plan would be reasonably likely to have a
Material Adverse Effect. All contributions required to be made with respect to
(i) any employee pension benefit plan (as defined in Section 3(2) of ERISA)
maintained or contributed to by (or to which there is an obligation to
contribute of) the Borrower or a Subsidiary or an ERISA Affiliate and (ii) any
Foreign Pension Plan have been timely made except any such failures to
contribute which would not individually or in the aggregate be reasonably
likely to have a Material Adverse Effect. The Borrower and its Subsidiaries
may cease contributions to or terminate any employee benefit plan (within the
meaning of Section 3(3) of ERISA) maintained or contributed to by (or to which
there is an obligation to contribute of) any of them without incurring any
liability which, individually or in the aggregate would be reasonably likely to
have a Material Adverse Effect.
(b) Each Foreign Pension Plan has been maintained in substantial
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.
-28-
<PAGE> 35
6.13 Subsidiaries. Annex V lists each Subsidiary of the
Borrower (and the direct and indirect ownership interest of the Borrower
therein), in each case existing on the Effective Date.
6.14 Patents, etc. The Borrower and each of its Subsidiaries
has obtained all material patents, trademarks, service marks, trade names,
copyrights, licenses and other rights, free from burdensome restrictions, that
are necessary for the operation of their businesses taken as a whole as
presently conducted.
6.15 Pollution and Other Regulations. (a) Each of the Borrower
and its Subsidiaries is in compliance with all applicable Environmental Laws
governing its business for which failure to comply is reasonably likely to have
a Material Adverse Effect, and neither the Borrower nor any of its Subsidiaries
is liable for any material penalties, fines or forfeitures for failure to
comply with any of the foregoing. All licenses, permits, registrations or
approvals required for the business of the Borrower and each of its
Subsidiaries, as conducted as of the Effective Date, under any Environmental
Law have been secured and the Borrower and each of its Subsidiaries is in
substantial compliance therewith, except such licenses, permits, registrations
or approvals the failure to secure or to comply therewith is not likely to have
a Material Adverse Effect. Neither the Borrower nor any of its Subsidiaries is
in any respect in noncompliance with, breach of or default under any applicable
writ, order, judgment, injunction, or decree to which the Borrower or such
Subsidiary is a party or which would affect the ability of the Borrower or such
Subsidiary to operate any Real Property, Fleet 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
as are not likely to, in the aggregate, have a Material Adverse Effect. There
are as of the Effective Date no Environmental Claims pending or, to the
knowledge, after due inquiry, of the Borrower, threatened, against the Borrower
or any of its Subsidiaries wherein an unfavorable decision, ruling or finding
would be reasonably likely to have a Material Adverse Effect. There are no
facts, circumstances, conditions or occurrences on any Real Property, Fleet Rig
or other facility owned or operated by the Borrower or any of its Subsidiaries
that is reasonably likely (i) to form the basis of an Environmental Claim
against the Borrower, any of its Subsidiaries or any Real Property, Fleet Rig
or other facility owned by the Borrower or any of its Subsidiaries, or (ii) to
cause such Real Property, Fleet Rig or other facility to be subject to any
restrictions on its ownership, occupancy, use or transferability under any
Environmental Law, except in each such case, such Environmental Claims or
restrictions that individually or in the aggregate are not reasonably likely to
have a Material Adverse Effect.
(b) Hazardous Materials have not at any time been (i) generated,
used, treated or stored on, or transported to or from, any Real Property, Fleet
Rig or other facility at any time owned or operated by the Borrower or any of
its Subsidiaries or (ii) released on
-29-
<PAGE> 36
or from any such Real Property, Fleet Rig or other facility, in each case
where, to the Borrower's knowledge, after due inquiry, such occurrence or event
individually or in the aggregate is reasonably likely to have a Material
Adverse Effect.
6.16 Properties. (a) The Borrower and each of its Subsidiaries
has title to all material properties owned by them including all property
reflected in the consolidated balance sheet of the Borrower and its
Subsidiaries as referred to in Section 6.10(b), free and clear of all Liens,
other than (i) as referred to in the consolidated balance sheet or in the notes
thereto or (ii) Permitted Liens.
(b) Annex VI sets forth all the Real Property owned or leased by
the Borrower and each of its Subsidiaries on the Effective Date and identifies
each such property by its street address.
(c) Annex VII sets forth all the Fleet Rigs owned or chartered
by the Borrower and each of its Subsidiaries on the Effective Date, and
identifies the registered owner, flag, official or patent number, as the case
may be, the home port, class, location and operating status on the Effective
Date, indicates which of such Fleet Rigs are Unencumbered Rigs, and, if
chartered-in by the Borrower or any of its Subsidiaries, the name and address
of the owner of such chartered-in vessel.
6.17 Labor Relations. Neither the Borrower nor its Subsidiaries
is engaged in any unfair labor practice that is reasonably likely to have a
Material Adverse Effect. There is (i) no unfair labor practice complaint
pending against the Borrower or any of its Subsidiaries 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 the Borrower or any of its Subsidiaries or, to
the Borrower's knowledge, after due inquiry, threatened against any of them,
(ii) no strike, labor dispute, slowdown or stoppage pending against the
Borrower or any of its Subsidiaries or, to the best of the Borrower's
knowledge, threatened against the Borrower or any of its Subsidiaries and (iii)
no union representation petition existing with respect to the employees of the
Borrower or any of its Subsidiaries and no union organizing activities are
taking place, except with respect to any matter specified in clause (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 Existing Indebtedness. Annex VIII sets forth a true and
complete list of all Indebtedness of the Borrower and each of its Subsidiaries
on the Effective Date and which is to remain outstanding after the Effective
Date (excluding the Loans and the Letters of Credit, the "Existing
Indebtedness"), in each case showing the aggregate principal amount thereof and
the name of the respective borrower (or issuer) and any other entity which
directly or indirectly guaranteed such debt.
-30-
<PAGE> 37
6.19 Rig Classification. Each Fleet Rig (except for such Fleet
Rigs listed on Annex III) owned or leased by the Borrower and its Subsidiaries
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 reasonably acceptable to the Administrative Agent, free
of any material requirements or recommendations, provided that (i) the
Submersible Rigs may be out of class as a result of, and pending the completion
of, capital upgrades to such Submersible Rigs and (ii) Fleet Rigs acquired
after the Effective Date which are scheduled to be upgraded may change class as
a result of such upgrades and may be out of class as a result of, and pending
the completion of, such upgrades.
SECTION 7. Affirmative Covenants. The Borrower covenants and
agrees that on the Effective 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, are paid in full:
7.01 Information Covenants. The Borrower will furnish to the
Administrative Agent (with sufficient copies for each of the Banks, and the
Administrative Agent will promptly forward to each of the Banks):
(a) Annual Financial Statements. Within 120 days after the
close of each fiscal year of the Borrower, the consolidated balance
sheet of the Borrower and its Subsidiaries, as at the end of such fiscal
year and the related consolidated statements of income and retained
earnings and of cash flows for such fiscal year, 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 the Borrower and its Subsidiaries as a
going concern, together with a certificate of such accounting firm
stating that in the course of its regular audit of the business of the
Borrower, which audit was conducted in accordance with generally
accepted auditing standards, such accounting firm has obtained no
knowledge of any Default or Event of Default which has occurred and is
continuing or, if in the opinion of such accounting firm such a Default
or Event of Default has occurred and is continuing, a statement as to
the nature thereof.
(b) Quarterly Financial Statements. As soon as available and in
any event within 60 days after the close of each of the first three
quarterly accounting periods in each fiscal year, the consolidated
balance sheet of the Borrower and its Subsidiaries, as at the end of
such quarterly period and the related consolidated statements of income
and retained earnings and of cash flows for such quarterly period and
for the elapsed portion of the fiscal year ended with the last day of
such quarterly period, including the amount of consolidated capital
expenditures made during such period,
-31-
<PAGE> 38
and in each case setting forth comparative consolidated figures for the
related period in the prior fiscal year, all of which shall be certified
by the Senior Vice President-Finance or Controller of the Borrower,
subject to changes resulting from audit and normal year-end audit
adjustments.
(c) Rig Status Report. As soon as available and in any event
within 60 days after the close of each quarterly accounting period, a
report detailing (i) the then current location of each of the offshore
drilling rigs owned or leased by the Borrower and its Subsidiaries, (ii)
the then current term of and parties to any contract of any such Fleet
Rigs and (iii) the day rate for each Fleet Rig on the date of such
report.
(d) Annual Rig Valuation Report. At the time of the delivery of
the financial statements provided for in Section 7.01(a), an updated rig
valuation report from an Approved Rig Broker setting forth the current
Market Value of each Fleet Rig.
(e) Budgets; Projections; etc. Not more than 60 days after the
commencement of each fiscal year of the Borrower, (i) a budget,
certified by the Senior Vice President-Finance or Controller of the
Borrower, which includes an income statement, balance sheet and cash
flow statement of the Borrower and its Subsidiaries for each of the four
fiscal quarters of such fiscal year, including a breakdown of revenues,
operating expenses, utilizations and capital expenditures by class of
rig for the Fleet Rigs, and a general statement of allocations of
revenues, expenses and capital expenditures to turnkey drilling
operations, engineering and production management services operations
and Small Scale Field Development activities and (ii) updated
Projections for the four succeeding fiscal years, beginning with the
then current fiscal year, in substantially the same form as the
Projections delivered pursuant to Section 5.14.
(f) Compliance Certificate. At the time of the delivery of the
financial statements provided for in Sections 7.01(a) and (b), a
certificate of the Borrower signed by its Senior Vice President-Finance,
Controller or other Authorized Officer in the form of Exhibit H 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 the Borrower and its 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.
(g) At the time of the delivery of the financial statements
provided for in Sections 7.01(a) and (b), a statement of the Borrower,
signed by the Senior Vice President-Finance or Controller setting forth
for each Project Finance Subsidiary, the then outstanding principal
amount of Project Finance Indebtedness of such Subsidiary and the Fleet
Rigs pledged in support of such Project Finance Indebtedness, including
-32-
<PAGE> 39
a statement of the Market Value of such Fleet Rigs (calculated as of the
Effective Date for each such Fleet Rig owned on the Effective Date)
pledged in support of such Project Finance Indebtedness and the then
remaining unused portion of Permitted Liens allowed pursuant to Section
8.04(h).
(h) Notice of Default or Litigation. Promptly, and in any event
within (x) seven Business Days after the Borrower obtains knowledge
thereof, notice of the occurrence of any event which constitutes a
Default or Event of Default, which notice shall specify the nature
thereof, the period of existence thereof and what action the Borrower
proposes to take with respect thereto and (y) ten Business Days after
the Borrower obtains knowledge thereof, notice of the commencement of or
any significant development in any litigation or governmental proceeding
pending against the Borrower or any of its Subsidiaries which is likely
to have a Material Adverse Effect or is likely to have a material
adverse effect on the ability of the Borrower or any Guarantor to
perform its obligations hereunder or under any other Credit Document.
(i) SEC Reports. Promptly upon transmission thereof, copies of
any material filings and registration with, and reports to, the SEC by
the Borrower or any of its Subsidiaries and copies of all financial
statements, proxy statements, notices and reports as the Borrower or any
of its Subsidiaries shall generally send to analysts or all holders of
their capital stock in their capacity as such holders (in each case to
the extent not theretofore delivered to the Administrative Agent
pursuant to this Agreement).
(j) Credit Rating. As soon as possible and in any event within
10 days after any change in (i) the credit rating assigned by Moody's or
S&P to any long-term unsecured debt of the Borrower (including, without
limitation, any change in the Moody's Credit Rating or the S&P Credit
Rating) and/or (ii) the stated implied senior debt rating assigned by
Moody's or S&P with respect to the Borrower; notice of such change and
the date on which it was first announced by the applicable rating
agency.
(k) Other Information. From time to time, such other
information or documents (financial or otherwise) as the Administrative
Agent on its own behalf or on behalf of the Required Banks may
reasonably request.
7.02 Books, Records and Inspections. The Borrower will, and
will cause its Subsidiaries to, permit, upon reasonable notice to the Senior
Vice President-Finance, Controller or any other Authorized Officer of the
Borrower, officers and designated representatives of the Administrative Agent
(at the expense of the Administrative Agent, but after the occurrence and
during the continuance of an Event of Default, at the expense of the Borrower)
or the Required Banks (at the expense of such Banks), to the extent necessary,
to
-33-
<PAGE> 40
examine the books of account of the Borrower and any of its Subsidiaries and
discuss the affairs, finances and accounts of the Borrower and of any of its
Subsidiaries with, and be advised as to the same by, its and their officers and
independent accountants, all at such reasonable times and intervals and to such
reasonable extent as the Administrative Agent or the Required Banks may desire.
7.03 Maintenance of Property; Insurance. The Borrower will, and
will cause each of its Subsidiaries to, at all times maintain in full force and
effect insurance in such amounts with carriers of such insurance industry
ratings, 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. The Borrower will, and will cause each of its
Subsidiaries to, furnish to the Administrative Agent on or before August 30th
of each year, beginning with calendar year 1998, a summary of the insurance
carried together with certificates of insurance and other evidence of such
insurance.
7.04 Payment of Taxes. The Borrower will pay and discharge, and
will cause each of its Subsidiaries to pay and discharge, all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits, or upon any properties belonging to it, prior to the date on
which penalties attach thereto, and all lawful claims which, if unpaid, might
become a Lien or charge upon any properties of the Borrower or any of its
Subsidiaries, provided that neither the 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 (in the good faith judgment of the management of the Borrower) with
respect thereto in accordance with GAAP.
7.05 Consolidated Corporate Franchises. The 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 corporate existence, material
rights and authority, unless the failure to do so is not reasonably likely to
have a Material Adverse Effect, provided that any transaction permitted by
Section 8.02 will not constitute a breach of this Section 7.05.
7.06 Compliance with Statutes, etc. The 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, in respect of the conduct of its business and the
ownership of its property other than those the non- compliance with which would
not have a Material Adverse Effect or would not have a material adverse effect
on the ability of the Borrower or any Guarantor to perform its obligations
under any Credit Document to which it is party.
7.07 Good Repair. Except for the Fleet Rigs currently under or
scheduled to be repaired or which have been damaged or have suffered a casualty
as to which (within a reasonable period of time) the Borrower has not made a
determination whether to replace
-34-
<PAGE> 41
or repair, or if the determination to replace or repair has been made, as to
which such replacement or repairs are being undertaken, subject to availability
of equipment, materials and/or repair facilities, the Borrower will, and will
cause each of its Subsidiaries to, keep its properties and equipment 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, 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 reasonably likely to cause a Material
Adverse Effect.
7.08 End of Fiscal Years; Fiscal Quarters. The Borrower will,
for financial reporting purposes, cause (i) each of its fiscal years to end on
December 31 of each year and (ii) each of its fiscal quarters to end on March
31, June 30, September 30 and December 31 of each year.
7.09 Use of Proceeds. All proceeds of the Loans shall be used
as provided in Section 6.05.
7.10 Rig Valuations. In addition to the valuation reports
delivered pursuant to Section 7.01(d), at any time when in the reasonable
judgment of the Administrative Agent or the Required Banks, there has been an
adverse development in the market for offshore drilling rigs which is likely to
adversely affect the aggregate Market Value of the Fleet Rigs, the Borrower, at
the request of the Administrative Agent, or the Required Banks, will obtain an
updated appraisal of the Fleet Rigs from an Approved Rig Broker, substantially
in the form of the reports delivered pursuant to Section 5.12 and confirming
compliance with Section 8.11 (a) and (b), provided that only one such
additional Fleet appraisal per calendar year shall be obtained at the expense
of the Borrower, with any subsequent appraisals during such calendar year to be
for the account of the Banks pro rata according to their Commitments.
7.11 Additional Guarantors. The Borrower shall cause each
Domestic Subsidiary (other than a Project Finance Subsidiary for so long as
such Subsidiary remains a Project Finance Subsidiary) established or created
after the Effective Date to execute and deliver a guaranty of all Obligations
and all obligations under Interest Rate Agreements in substantially the form of
the Guaranty.
7.12 ERISA. As soon as possible and, in any event, within 10
days after the Borrower, any Subsidiary or any ERISA Affiliate knows or has
reason to know that: (a) a material contribution required to be made with
respect to (i) any employee pension benefit plan (as defined in Section 3(2) of
ERISA) maintained or contributed to by (or to which there is an obligation to
contribute of) the Borrower or a Subsidiary or an ERISA Affiliate or (ii)
-35-
<PAGE> 42
any Foreign Pension Plan has not been timely made or (b) the Borrower or any
Subsidiary may incur any material liability pursuant to any employee welfare
benefit plan (as defined in Section 3(1) of ERISA) that provides benefits to
retired employees or other former employees (other than as required by Section
601 of ERISA) or any employee pension benefit plan (as defined in Section 3(2)
of ERISA), the Borrower will deliver to each of the Banks a certificate of the
Senior Vice President-Finance or Controller of the Borrower setting forth
details as to such occurrence and the action, if any, that the Borrower, such
Subsidiary or such ERISA Affiliate is required or proposes to take, together
with any notices required or proposed to be given to or filed with or by the
Borrower, the Subsidiary, the ERISA Affiliate, a plan participant or the plan
administrator.
SECTION 8. Negative Covenants. The Borrower hereby covenants
and agrees that as of the Effective 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, are paid in
full:
8.01 Changes in Business. The Borrower will not, and will not
permit any of its Subsidiaries to, materially alter the character of the
business of the Borrower and its Subsidiaries taken as a whole from that
conducted at the Effective Date (including any material expansion outside of
the offshore contract drilling, turnkey drilling and engineering and production
management services business), provided that this Section 8.01 shall not
restrict the making of any investment expressly permitted by Section 8.05 or
the engaging in or acquisition of any business or assets substantially
ancillary to the offshore contract drilling, turnkey drilling and engineering
and production management services business which shall in any event include
floating production systems, well construction management, field management,
multi-service vessels, joint venture engineering companies, Small Scale Field
Development and floating production and storage operations.
8.02 Consolidation, Merger, Sale of Assets, etc. The Borrower
will not, and will not permit any Subsidiary to, 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 obsolete equipment or excess equipment no longer needed in the
conduct of the business in the ordinary course of business) or agree to do any
of the foregoing at any future time, except that the following shall be
permitted:
(a) (i) any Subsidiary of the Borrower may be merged or
consolidated with or into, or be liquidated into, the Borrower (so long
as the Borrower is the surviving corporation) or any Guarantor (so long
as such Guarantor is the surviving corporation) or any other Person (so
long as such Subsidiary is the surviving corporation or, if such
Subsidiary is a Guarantor and is not the surviving corporation, the
surviving corporation becomes a Guarantor hereunder), (ii) all or any
part of the business,
-36-
<PAGE> 43
properties and assets of the Borrower or any of its Subsidiaries may be
conveyed, leased, sold or transferred to the Borrower or any Guarantor,
(iii) so long as no Default or Event of Default exists or would result
therefrom, the Borrower or any of its Subsidiaries may, subject to the
provisions of Section 3.03(b), sell or dispose of any Fleet Rig which is
not pledged in support of Project Finance Indebtedness pursuant to
clause 8.04(h);
(b) Restricted Payments permitted pursuant to Section 8.05; and
(c) other sales or dispositions of assets, provided that (x) (A)
the Total Commitment shall be reduced to the extent required by Section
3.03(b) upon the receipt of any Net Cash Proceeds and/or other
consideration received from all such sales and dispositions and (B) all
proceeds thereof shall be used without violating the provisions of
Section 8.01 and (y) each such sale or disposition shall be in an amount
at least equal to the fair market value thereof (as determined by the
Board of Directors of the Borrower in the case of sales in excess of
$100,000,000).
8.03 Indebtedness. The Borrower will not, and will not permit
any of its Subsidiaries to contract, create, incur, assume or suffer to exist
any Indebtedness, except:
(a) Indebtedness incurred pursuant to this Agreement and the
other Credit Documents;
(b) Indebtedness existing on the Effective Date and listed on
Annex VIII, without giving effect to any subsequent extensions,
refinancings or renewals thereof;
(c) Indebtedness consisting of intercompany loans and advances
(i) from the Borrower or any of its Subsidiaries to the Borrower or any
Guarantor or from any Subsidiary which is not a Guarantor to another
Subsidiary which is not a Guarantor, provided that all such Indebtedness
is unsecured and expressly subordinate to any Obligations of the debtor
with respect to such intercompany Indebtedness and (ii) from the
Borrower or any Guarantor to a Subsidiary which is not a Guarantor,
provided that such Indebtedness pursuant to this clause (ii) shall not
exceed $294,000,000 in the aggregate at any time outstanding;
(d) Capitalized Lease Obligations and Purchase Money
Indebtedness relating to assets other than Fleet Rigs in an aggregate
amount not to exceed $5,000,000 at any one time.
(e) other Project Finance Indebtedness in an amount not to
exceed at any one time $400,000,000 in the aggregate and guaranties by
the Borrower of such Project Finance Indebtedness;
-37-
<PAGE> 44
(f) the Transamerica Financing, provided that such
Indebtedness shall not exceed $20,000,000 in the aggregate at any time
outstanding;
(g) the Triton Financing, provided that such Indebtedness
shall not exceed $10,000,000 in the aggregate at any time outstanding;
and
(h) other unsecured Indebtedness of the Borrower and its
Subsidiaries not described in clauses (a) through (e) above in an
aggregate outstanding amount not to exceed $1,000,000 at any one time.
8.04 Liens. The Borrower will not, and will not permit any of
its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or
with respect to any property or assets (real or personal, tangible or
intangible) of the Borrower or any of its Subsidiaries, whether now owned or
hereafter acquired or sell any such property or assets subject to an
understanding or agreement, contingent or otherwise, to repurchase such
property or assets (including sales of accounts receivable or notes with
recourse to the Borrower or any Subsidiary of the Borrower) or assign any right
to receive income, or file or permit the filing of any financing statement
under the UCC or any other similar notice of Lien under any similar recording
or notice statute, except:
(a) Liens for taxes not yet due or Liens for taxes being
contested in good faith and by appropriate proceedings for which
adequate reserves (in the good faith judgment of the management of the
Borrower) have been established;
(b) Liens imposed by law or arising by operation of law which
were incurred in the ordinary course of business, such as carriers',
warehousemen's and mechanics' Liens, statutory landlord's Liens,
maritime Liens and other similar Liens arising in the ordinary course of
business, and (x) which do not in the aggregate materially detract from
the value of the Borrower's or any Subsidiary's property or assets or
materially impair the use thereof in the operation of the business of
the Borrower or any Subsidiary or (y) which are being contested in good
faith by appropriate proceedings (including the providing of bail),
which proceedings have the effect of preventing the forfeiture or sale
of the property or assets subject to such Lien or procuring the release
of the property or assets subject to such Lien from arrest or detention;
(c) Liens created in favor of the Banks;
(d) Liens existing on the Effective Date and listed on Annex IX,
without giving effect to any subsequent extensions, refinancings or
renewals thereof;
(e) Liens arising from judgments, decrees or attachments (or
securing of appeal bonds with respect thereto) to the extent not covered
by insurance, so long as
-38-
<PAGE> 45
the obligations in connection therewith do not exceed $5,000,000 and
otherwise in circumstances not constituting an Event of Default under
Section 9.07;
(f) any interest or title of a lessor or charterer under any
lease permitted by this Agreement;
(g) immaterial Liens on any assets of the Borrower or any of its
Subsidiaries other than the Fleet Rigs; or
(h) Liens on (i) Submersible Fleet Rigs and the earnings and
insurances relating thereto, (ii) up to $400,000,000 in aggregate Market
Value of additional Fleet Rigs owned on the Effective Date (without
giving effect to any losses, sales or other dispositions with respect to
such pledged assets), the earnings and insurances relating thereto and
any replacement assets purchased solely with the Cash Proceeds of any
sale and/or loss of any such pledged Fleet Rig; provided that Liens
permitted by this clause (h) shall secure Project Finance Indebtedness
permitted by Section 8.03(e).
(i) Liens existing on the Effective Date on accounts receivable
of Triton to secure up to $10,000,000 in the aggregate of Indebtedness
of Triton.
(j) Liens attaching to specific assets at the time acquired by
the Borrower or any of its Subsidiaries (and not to all such assets
generally), provided that (x) any such Liens, and the Indebtedness
secured thereby, were not created at the time of or in contemplation of
the acquisition of such assets by the Borrower or its Subsidiaries, (y)
the Indebtedness secured by any such Lien does not exceed 100% of the
fair market value of the asset to which such Lien is attached,
determined at the time of the acquisition of such asset, and (z) the
Indebtedness (if any) secured thereby is permitted by Section 8.03;
(k) Liens (other than any Lien imposed by ERISA) incurred or
deposits made in the ordinary course of business consistent with past
practices and securing obligations not to exceed $25,000,000 in the
aggregate (i) in connection with workers' compensation, unemployment
insurance and other types of social security or retirement benefits, or
(ii) to secure the performance of tenders, statutory obligations, surety
bonds, appeal bonds, bids, leases (other than Capital Leases),
performance bonds, purchase, construction or sales contracts and other
similar obligations, in each case not incurred or made in connection
with (x) the borrowing of money, (y) the obtaining of advances or credit
or (z) the payment of the deferred purchase price of property;
-39-
<PAGE> 46
(l) leases or subleases granted to others, easements, rights-
of-way, restrictions and other similar charges, encumbrances or minor
title defects, in each case incidental to, and not interfering with, or
reasonably likely to interfere with, the ordinary conduct of the
business of the Borrower or any of its Subsidiaries;
(m) Liens securing Capitalized Lease Obligations and Purchase
Money Indebtedness permitted by Section 8.03(d), provided such Liens
shall extend solely to the property (or improvement thereon) financed;
and
(n) Liens under the Safe Harbor Leases, the Letter of Credit
Agreement and the Mortgage, as such terms are defined in, and as
contemplated by, the Asset Purchase Agreement dated August 20, 1993
between the Borrower and Portal Rig Corporation, with respect to the
property acquired pursuant thereto;
8.05 Restricted Payments. The Borrower will not, and will not
permit any of its Subsidiaries to, make any Restricted Payments, except:
(a) So long as no Default or Event of Default exists or would
result therefrom, the Borrower and its Subsidiaries may pay Dividends in
an amount not to exceed in the aggregate $275,000,000 plus the
Cumulative Net Income Amount then in effect, provided that the Borrower
and its Subsidiaries may not pay any Dividend which, when combined with
all previous Dividends paid by the Borrower and its Subsidiaries, the
proceeds of which were not used to repurchase outstanding shares of
common stock of the Borrower, would exceed the Cumulative Net Income
Amount, except to the extent the proceeds of such Dividend are used
solely to repurchase outstanding common stock of the Borrower;
(b) any Subsidiary of the Borrower may pay Dividends to the
Borrower or to any Guarantor and any Subsidiary which is not a Guarantor
may pay Dividends to any other Subsidiary which is not a Guarantor; and
(c) in addition to any dividends paid pursuant to clauses (a)
and (b) above, the Borrower may redeem or repurchase common stock of the
Borrower (or options to purchase such common stock) from (1) present or
former officers, employees and directors (or their estates) upon the
death, permanent disability, retirement or termination of employment of
any such Person or otherwise in accordance with any stock option plan or
any employee stock ownership plan, or (2) stockholders of the Borrower
so long as the purpose of such purchase is to acquire common stock of
the Borrower for reissuance to new officers, employees and directors (or
their estates) of the Borrower to the extent so reissued within 6 months
of any such purchase, provided that in all such cases (x) no Default or
Event of Default is then in existence or would arise therefrom, (y) the
aggregate amount of all
-40-
<PAGE> 47
cash paid in respect of all such shares so redeemed or repurchased in
any calendar year does not exceed $1,000,000 plus proceeds of key man
life insurance used for the purpose of repurchasing such common stock
owned by such Person and, provided further, that in the event that the
Borrower subsequently resells to any member of its, or any Subsidiary's
management, any shares redeemed or repurchased pursuant to this clause
(ii), the amount of repurchases the Borrower may make from officers,
employees and directors pursuant to this clause (ii) shall be increased
by an amount equal to any cash received by the Borrower upon the resale
of such shares.
8.06 Restrictions on Subsidiaries. The Borrower will not, and
will not permit any of its Subsidiaries to, create or otherwise cause or suffer
to exist any encumbrance or restriction which prohibits or otherwise restricts
(A) the ability of any Subsidiary to (a) pay dividends or make other
distributions or pay any Indebtedness owed to the Borrower or any Subsidiary,
(b) make loans or advances to the Borrower or any Subsidiary, (c) transfer any
of its properties or assets to the Borrower or any Subsidiary or (B) the
ability of the Borrower or any other Subsidiary of the Borrower to create,
incur, assume or suffer to exist any Lien upon its property or assets to secure
the Obligations, other than prohibitions or restrictions existing under or by
reason of:
(i) this Agreement and the other Credit Documents;
(ii) applicable law;
(iii) customary non-assignment provisions entered into in the
ordinary course of business and consistent with past practices;
(iv) any restriction or encumbrance with respect to a
Subsidiary of the Borrower imposed pursuant to an agreement which has
been entered into for the sale or disposition of all or substantially
all of the capital stock or assets of such Subsidiary, so long as such
sale or disposition is permitted under this Agreement; and
(v) Permitted Liens and any documents or instruments governing
the terms of any Indebtedness or other obligations secured by any such
Liens, provided that such prohibitions or restrictions apply only to the
assets subject to such Liens.
8.07 Transactions with Affiliates. (a) The Borrower will not,
and will not permit any Subsidiary to, enter into any transaction or series of
transactions after the Effective Date whether or not in the ordinary course of
business, with any Affiliate other than on terms and conditions substantially
as favorable to the Borrower or such Subsidiary as would be obtainable by the
Borrower or such Subsidiary at the time in a comparable arm's-length
transaction with a Person other than an Affiliate, provided that the foregoing
restrictions shall not apply to (i) employment arrangements entered into in the
ordinary
-41-
<PAGE> 48
course of business with officers of the Borrower and its Subsidiaries, (ii)
customary fees paid to members of the Board of Directors of the Borrower and of
its Subsidiaries, (iii) immaterial transactions with the officers or members of
the Board of Directors of the Borrower or its Subsidiaries and (iv) immaterial
transactions with Affiliates; and
(b) the Borrower will not and will not permit any Guarantor to
transfer any Fleet Rig to any Subsidiary which is not a Guarantor, provided
that (i) any Guarantor may transfer any Submersible Rig or a Fleet Rig acquired
after the Effective Date which does not constitute a replacement asset pursuant
to Section 3.03(b)(i) to a Subsidiary which is not a Guarantor so long as any
such transferred Fleet Rig is promptly thereafter pledged in support of Project
Finance Indebtedness pursuant to Sections 8.03(e) and 8.04(h).
8.08 Fleet Rig Management. The Borrower shall not, and shall
not permit any of its Subsidiaries to, contract out the management of Fleet
Rigs with an aggregate Market Value exceeding 10% of the aggregate Market Value
of the Fleet.
8.09 Interest Coverage Ratio. The Borrower shall not permit the
ratio of (i) Adjusted Consolidated EBITDA to (ii) Consolidated Interest Expense
for any period of four consecutive fiscal quarters of the Borrower to be less
than 3.00:1.00.
8.10 Leverage Ratio. The Borrower shall not permit the Leverage
Ratio at any time to be more than 0.40:1.00.
8.11 Fleet Market Value. (a) The Borrower shall not permit the
aggregate Market Value of the Fleet at any time to be less than (i) 2.5 times
the sum of (x) Consolidated Indebtedness plus (y) the Available Unutilized
Total Commitment.
(b) The Borrower shall not permit the aggregate Market Value of
the Unencumbered Fleet Rigs at any time to be less than 2.5 times the sum of
(x) Consolidated Unsecured Indebtedness and (y) the Available Unutilized Total
Commitment.
8.12 Net Worth. The Borrower shall not permit Consolidated Net
Worth at any time to be less than $750,000,000 plus 50% of Consolidated Net
Income (determined on a cumulative basis) for all Cumulative Net Income Periods
ending prior to the date of determination for which Consolidated Net Income was
a positive number.
SECTION 9. Events of Default. Upon the occurrence of any of the
following specified events (each an "Event of Default"):
9.01 Payments. The Borrower shall default in the payment when
due of any principal of the Loans or default in the payment when due, and such
default shall continue
-42-
<PAGE> 49
for more than two Business Days, of any interest, Fees, Unpaid Drawings or
other amounts owing hereunder or under any other Credit Document; or
9.02 Representations, etc. Any representation, warranty or
statement made by the Borrower herein or in any other Credit Document or in any
statement or certificate delivered or required to be delivered pursuant hereto
or thereto shall prove to be untrue in any material respect on the date as of
which made or deemed made; or
9.03 Covenants. The Borrower shall (a) default in the due
performance or observance by it of any term, covenant or agreement contained in
Section 7.08 or Section 8 or (b) default in the due performance or observance
by it of any term, covenant or agreement (other than those referred to in
Section 9.01, 9.02 or clause (a) of this Section 9.03) contained in this
Agreement and such default shall continue unremedied for a period of at least
30 days after notice to the Borrower by the Administrative Agent or the
Required Banks; or
9.04 Default Under Other Agreements. (a) The Borrower or any
of its Subsidiaries shall (i) default in any payment with respect to any
Indebtedness (other than the Obligations) beyond the period of grace, if any,
applicable thereto or (ii) default in the observance or performance of any
agreement or condition relating to any such Indebtedness or contained in any
instrument or agreement evidencing, securing or relating thereto, or any other
event shall occur or condition exist, the effect of which default or other
event or condition 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 such Indebtedness of the Borrower or any of its Subsidiaries shall be
declared to be due and payable, or required to be prepaid other than by a
regularly scheduled required prepayment, prior to the stated maturity thereof,
provided that it shall not constitute an Event of Default pursuant to this
Section 9.04 unless the aggregate amount of all Indebtedness referred to in
clauses (a) and (b) above exceeds $25,000,000 at any one time; or
9.05 Bankruptcy, etc. The Borrower or any Subsidiary 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
the Borrower or any other Credit Party and the petition is not controverted
within 10 days, or 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 the Borrower or
any other Credit Party; or the Borrower or any other Credit Party commences any
other proceeding under any reorganization, arrangement, adjustment of debt,
relief of debtors, dissolution, insolvency or liquidation or similar law of any
jurisdiction whether now or hereafter in effect relating to the Borrower or any
other Credit Party; or there is commenced against the Borrower or any other
Credit Party any such case or proceeding which remains undismissed
-43-
<PAGE> 50
for a period of 60 days; or the Borrower or any other Credit Party is
adjudicated insolvent or bankrupt; or any order of relief or other order
approving any such case or proceeding is entered; the Borrower or any other
Credit Party suffers any appointment of any custodian or the like for it or any
substantial part of its property to continue undischarged or unstayed for a
period of 60 days; or the Borrower or any other Credit Party makes a general
assignment for the benefit of creditors; or any corporate action is taken by
the Borrower or any other Credit Party for the purpose of effecting any of the
foregoing; or
9.06 Guaranty. The Guaranty or any provision thereof shall
cease to be in full force and effect, or any Guarantor or any Person acting by
or on behalf of such Guarantor shall deny or disaffirm all or any portion of
such Guarantor's obligation thereunder, or any Guarantor shall default in the
observance of any term, covenant or agreement on its part to be performed or
observed pursuant thereto and such default (other than any default arising from
a failure to make any payment thereunder) shall continue unremedied for a
period of at least 30 days after notice to the Borrower by the Administrative
Agent or the Required Banks; or
9.07 Judgments. One or more judgments or decrees shall be
entered against the Borrower or any Subsidiary involving a liability of
$10,000,000 or more in the aggregate for all such judgments and decrees for the
Borrower and the other Credit Parties (not paid or to the extent not covered by
insurance) and any such judgments or decrees shall not have been vacated,
discharged or stayed or bonded pending appeal within 60 days from the entry
thereof; or
9.08 Employee Benefit Plans. Each of the following shall occur:
(a)(i) A contribution required to be made with respect to any (x) employee
pension benefit plan (as defined in Section 3(2) of ERISA) maintained or
contributed to by (or to which there is an obligation to contribute of) the
Borrower or a Subsidiary or an ERISA Affiliate or (y) Foreign Pension Plan has
not been timely made or (ii) the Borrower or any Subsidiary has incurred or is
likely to incur liabilities pursuant to one or more employee welfare benefit
plans (as defined in Section 3(1) of ERISA) that provide benefits to retired
employees or other former employees (other than as required by Section 601 of
ERISA) or employee pension benefit plans (as defined in Section 3(2) of ERISA);
and (b) there shall result from any such event or events the imposition of a
Lien, the granting of a security interest, or a liability or a material risk of
incurring a liability; and (c) which Lien, security interest or liability,
individually, and/or in the aggregate, in the opinion of the Required Banks,
will have a Material Adverse Effect;
-44-
<PAGE> 51
9.09 Change of Control. Any Change of Control shall occur;
then, and in any such event, and at any time thereafter, if any Event of
Default shall then be continuing, the Administrative Agent shall, upon the
written request of the Required Banks, by written notice to the 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 the Borrower,
except as otherwise specifically provided for in this Agreement (provided that,
if an Event of Default specified in Section 9.05 shall occur with respect to
the Borrower or any Subsidiary, 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 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 the Borrower; (iii) terminate any Letter of Credit which may
be terminated in accordance with its terms; (iv) direct the Borrower to pay
(and the 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 the
Borrower, it will pay) to the Administrative Agent at the Payment Office such
additional amounts of cash, to be held as security for the 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.
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 Consolidated EBITDA" shall mean for any period
Consolidated EBITDA for such period, less cash Dividends and cash taxes paid
during such period, plus cash payments for the repurchase of common stock made
pursuant to Section 8.05(a) and (b).
"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
-45-
<PAGE> 52
the Commitments or Adjusted Total Commitment, as the case may be, in effect
immediately prior to such termination, provided 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 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 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 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 the Borrower
as a preferential or similar payment in any bankruptcy or similar proceeding of
the 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 Loans
made by such Bank plus such Bank's new Adjusted Percentage of the outstanding
principal amount of Letter of Credit Outstandings equalling 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.
"Administrative Agent" shall have the meaning provided in the
first paragraph of this Agreement and shall include any successor to the
Administrative Agent appointed pursuant to Section 11.09.
"Affected Eurodollar Loan" shall have the meaning provided in
Section 4.02(B).
"Affiliate" shall mean, with respect to any Person, any other
Person directly or indirectly controlling (including but not limited to all
directors and officers of such Person), controlled by, or under direct or
indirect common control with such Person. A Person shall be deemed to control
a corporation if such Person possesses, directly or indirectly, the power (i)
to vote 10% or more of the securities having ordinary voting power for the
election of directors of such corporation or (ii) to direct or cause the
direction of the
-46-
<PAGE> 53
management and policies of such corporation, whether through the ownership of
voting securities, by contract or otherwise.
"Agreement" shall mean this Credit Agreement, as the same may be
from time to time further modified, amended and/or supplemented.
"Applicable Commitment Commission Percentage" shall be (i) at all
times during which the Borrower's Credit Rating falls in category 1, 2 or 3,
equal to the percentage per annum set forth below opposite the Borrowers'
applicable Credit Rating:
<TABLE>
<CAPTION>
Applicable Commitment
Credit Rating Commission Percentage
------------- ----------------------
<S> <C>
Category 1 0.100% per annum
Category 2 0.125% per annum
Category 3 0.150% per annum
</TABLE>
and (ii) at all times during which the Borrowers Credit Rating falls in
category 4, the percentage per annum set forth below opposite the Borrower's
then applicable Pricing Ratio:
<TABLE>
<CAPTION>
Applicable Commitment
Pricing Ratio Commissions Percentage
------------- ----------------------
<S> <C>
Less than 1.00:1.00 0.175% per annum
Greater than or equal to
1.00:1.00 and less than 1.75:1 0.200% per annum
Greater than or equal
to 1.75:1.00 0.250% per annum
</TABLE>
-47-
<PAGE> 54
"Applicable Eurodollar Margin" shall be equal to (i) at all times
during which the Borrower's Credit Rating falls in category 1, 2 or 3, the
percentage per annum set forth below opposite the Borrowers' applicable Credit
Rating:
<TABLE>
<CAPTION>
Applicable
Credit Rating Eurodollar Margin
------------- -----------------
<S> <C>
Category 1 0.350% per annum
Category 2 0.400% per annum
Category 3 0.450% per annum
</TABLE>
and (ii) at all times during which the Borrowers Credit Rating falls in
category 4, the percentage per annum set forth below opposite the Borrower's
then applicable Pricing Ratio:
<TABLE>
<CAPTION>
Applicable
Pricing Ratio Eurodollar Margin
------------- -----------------
<S> <C>
Less than 1.00:1.00 0.500% per annum
Greater than or equal to
1.00:1.00 and less than
1.75:1 0.700% per annum
Greater than or equal
to 1.75:1.00 0.900% per annum
</TABLE>
"Approved Bank" shall have the meaning provided in the definition
of "Cash Equivalents."
"Approved Company" shall have the meaning provided in the
definition of "Cash Equivalents."
"Approved Rig Broker" shall mean each of the international,
independent, sale-and-purchase brokers of offshore drilling rigs listed on
Annex X, as such Annex may be revised from time to time at the request of the
Required Banks with the consent of the Borrower, which consent shall not be
unreasonably withheld.
"Assignment and Assumption Agreement" shall mean the Assignment
and Assumption Agreement substantially in the form of Exhibit I (appropriately
completed).
-48-
<PAGE> 55
"Authorized Officer" shall mean any senior officer of the
Borrower designated as such in writing to the Administrative Agent by the
Borrower.
"Available Unutilized Commitment" for each Bank, shall mean the
excess of (i) the Commitment of such Bank over (ii) the sum of (x) the
aggregate outstanding principal amount of 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.
"Available Unutilized Total Commitment" shall mean the excess of
(i) the Total Commitment over (ii) the sum of (x) the aggregate outstanding
principal amount of Loans plus (y) the Letter of Credit Outstandings at such
time.
"Bank" shall have the meaning provided in the first paragraph of
this Agreement.
"Bank Default" shall mean (i) the refusal (which has not been
retracted) of a Bank to make available its portion of any incurrence of Loans
or to fund its portion of any unreimbursed payment under Section 2.05(c) or
(ii) a Bank having notified the Administrative Agent and/or the 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 (i) or (ii) as a result of the
appointment of a receiver or conservator with respect to such Bank at the
direction or request of any regulatory agency or authority.
"Bankruptcy Code" shall have the meaning provided in Section
9.05.
"Base Rate" at any time shall mean the higher of, (i) the rate
which is 1/2 of 1% in excess of the Federal Funds Effective Rate, and (ii) the
Prime Lending Rate.
"Base Rate Loan" shall mean each Loan bearing interest at the
rates provided in Section 1.08(a).
"Borrower" shall have the meaning provided in the first paragraph
of this Agreement.
"Borrowing" shall mean the incurrence of one Type of Loan
pursuant to the Facility by the Borrower from all of the Banks with respect to
such Facility on a pro rata basis on a given date (or resulting from
conversions on a given date), having in the case of Eurodollar Loans the same
Interest Period; provided that Base Rate Loans incurred pursuant to Section
1.10(b) shall be considered part of any related Borrowing of Eurodollar Loans.
"Business Day" shall mean (i) for all purposes other than as
covered by clause (ii) below, any day excluding Saturday, Sunday and any day
which shall be in the City of New York a legal holiday or a day on which
banking institutions are authorized by law or
-49-
<PAGE> 56
other governmental actions to close and (ii) 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 (i) and
which is also a day for trading by and between banks in U.S. dollar deposits in
the interbank Eurodollar market.
"Capital Lease" as applied to any Person shall mean any lease of
any property (whether real, personal or mixed) by that Person as lessee which,
in conformity with GAAP, is accounted for as a capital lease on the balance
sheet of that Person.
"Capitalized Lease Obligations" shall mean all obligations under
Capital Leases of the Borrower or any of its Subsidiaries in each case taken at
the amount thereof accounted for as liabilities in accordance with GAAP.
"Cash Equivalents" shall mean (i) securities issued or directly
and fully guaranteed or insured by the United States of America or any agency
or instrumentality thereof (provided that the full faith and credit of the
United States of America is pledged in support thereof) having maturities of
not more than four years from the date of acquisition, or repurchase
obligations with respect thereto, (ii) U.S. dollar denominated time deposits,
certificates of deposit, bankers' acceptances and Eurocurrency deposits of (x)
any Bank, (y) any domestic commercial bank of recognized standing having
capital and surplus in excess of $100,000,000 or (z) any bank (or the parent
company of such bank) whose short-term commercial paper rating from Standard &
Poor's Corporation ("S&P") is at least A-1 or the equivalent thereof or from
Moody's Investors Service, Inc. ("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, (iii) repurchase
obligations with a term of not more than seven days for underlying securities
of the types described in clause (i) above entered into with any bank meeting
the qualifications specified in clause (ii) above, (iv) commercial paper issued
by any Bank or Approved Bank or by the parent company of any Bank or Approved
Bank and commercial paper issued by, or guaranteed by, any corporation 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 mutual
funds having assets in excess of $100,000,000.
"Cash Proceeds" shall mean, with respect to any Fleet Rig
Disposition, the aggregate cash payments (including any cash received by way of
deferred payment pursuant to a note receivable issued in connection with such
Fleet Rig Disposition, other than the portion of such deferred payment
constituting interest, but only as and when so received) received by the
Borrower and/or any Subsidiary from such Fleet Rig Disposition.
-50-
<PAGE> 57
"CBK" shall mean Christiania Bank og Kreditkasse ASA, New York
Branch, in its individual capacity.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section 9601 et
seq.
"Change of Control" shall mean (a) any "person" (as such term is
used in Sections 13(d) and 14(d) of the Exchange Act), is or becomes the
beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act),
directly or indirectly, of more than 50% of the total voting power of the
Voting Stock of the Borrower or (b) during any period of two consecutive years
individuals who at the beginning of such period constituted the Board of
Directors of the Borrower (together with any new directors whose election by
such Board of Directors or whose nomination for election by the stockholders of
the Borrower was approved by a vote of a majority of the directors of the
Borrower 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 the Borrower then in office.
"Claims" shall have the meaning provided in the definition of
"Environmental Claims."
"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 on
the Effective 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 directly below the column
entitled "Commitment," as the same may be (x) reduced from time to time
pursuant to Sections 3.02, 3.03 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" shall have the meaning provided in
Section 3.01(a).
"Consolidated EBIT" shall mean, for any period, (A) the sum of
the amounts for such period of (i) Consolidated Net Income, (ii) provisions for
taxes based on income, (iii) Consolidated Interest Expense, (iv) amortization
or write-off of deferred financing costs to the extent deducted in determining
Consolidated Net Income and (v) 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.
-51-
<PAGE> 58
"Consolidated EBITDA" shall mean, for any period, the sum of the
amounts for such period of (i) Consolidated EBIT, (ii) depreciation expense of
the Borrower and its Subsidiaries and (iii) amortization expense of the
Borrower and its Subsidiaries, 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 the Borrower and its Subsidiaries on a consolidated
basis as determined in accordance with GAAP, excluding all Contingent
Obligations relating to the Indebtedness of any Person which is included in the
calculation of Consolidated Indebtedness of the Borrower and its Subsidiaries.
"Consolidated Interest Expense" shall mean, for any period, total
interest expense (including that attributable to Capital Leases) of the
Borrower and its Subsidiaries in accordance with GAAP on a consolidated basis
with respect to all outstanding Indebtedness of the Borrower and its
Subsidiaries.
"Consolidated Net Income" shall mean for any period, the net
income (or loss) of the Borrower and its Subsidiaries on a consolidated basis
for such period taken as a single accounting period determined in conformity
with GAAP.
"Consolidated Net Worth" shall mean, at any time, shareholder's
equity of the Borrower and its Subsidiaries on a consolidated basis determined
in accordance with GAAP.
"Consolidated Unsecured Indebtedness" shall mean, as at any date
of determination, the aggregate stated balance sheet amount of all unsecured
Indebtedness (including the Loans) of the Borrower and its Subsidiaries on a
consolidated basis as determined in accordance with GAAP, excluding all
Contingent Obligations relating to the unsecured Indebtedness of any Person
which is included in the calculation of Consolidated Indebtedness of the
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
-52-
<PAGE> 59
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 each
Guaranty and any documents executed in connection therewith.
"Credit Event" shall mean and include the making of a Loan or the
issuance of a Letter of Credit.
"Credit Party" shall mean the Borrower and each Guarantor.
"Credit Rating" shall mean the Borrowers credit rating in respect
of its senior unsecured long term debt obligations as determined by S&P and
Moody's, there being four categories for purposes of this Agreement:
<TABLE>
<CAPTION>
S&P Credit Rating Moody's Credit Rating
----------------- ---------------------
<S> <C> <C>
Category 1 BBB+, or higher Baa1, or higher
Category 2 BBB Baa2
Category 3 BBB- Baa3
Category 4 lower than BBB- lower than Baa3
</TABLE>
In the event that none of the Borrower's senior unsecured debt is rated by the
Rating Agencies, the Borrower shall be deemed to have a category 4 Credit
Rating. If only one of a Moody's Credit Rating or an S&P Credit Rating exists
at any time, then such Credit Rating shall be utilized. In the event of a
split rating of two or more rating levels, the rating level one below the
higher rating will apply. In the event that the ratings as determined by S&P
and Moody's differ by one rating category, the higher of the two shall apply.
In the event that either S&P or Moody's revises its rating system as in effect
on the Effective Date, the Borrower's Credit Rating shall be determined based
on the rating which is most analogous to the applicable rating set forth above.
If any credit rating shall be downgraded by Moody's or S&P, such change shall
be effective for purposes of this definition as of the Business Day on which
such change in credit rating is announced by Moody's and/or S&P, as the case
may be, provided that nothing herein shall relieve the Borrower of its
obligation to notify the Banks of any such change pursuant to
-53-
<PAGE> 60
Section 7.01(j). If any credit rating shall be upgraded by Moody's or S&P,
such change shall be effective for purposes of this definition as of the
Business Day upon which the Banks receive notice of any such change pursuant to
Section 7.01(j).
"Cumulative Net Income Amount" shall mean on any date of
determination, an amount equal to, (i) 50% of Consolidated Net Income
(determined on a cumulative basis) for all Cumulative Net Income Periods ending
prior to such date of determination for which Consolidated Net Income was a
positive number, minus (ii) 100% of Consolidated Net Income (determined on a
cumulative basis) for all Cumulative Net Income Periods ending prior to such
date of determination for which Consolidated Net Income was a negative number.
"Cumulative Net Income Period" shall mean each period consisting
of a fiscal quarter of the Borrower ending after June 30, 1997.
"Default" shall mean any event, act or condition which with
notice or lapse of time, or both, would constitute an Event of Default.
"Defaulting Bank" shall mean any Bank with respect to which a
Bank Default is in effect.
"Dividends" shall mean to declare or pay on the part of the
Borrower or any of its Subsidiaries any dividends (other than dividends payable
solely in capital stock of such Person) 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 now or hereafter outstanding (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 of its
Subsidiaries to purchase or otherwise acquire for consideration any shares of
any class of the capital stock of the Borrower or any other Subsidiary, as the
case may be, now or hereafter outstanding (or any options or warrants or stock
appreciation rights issued by such Person with respect to its capital stock).
"Dollars" shall mean freely transferable lawful money of the
United States.
"Domestic Subsidiary" shall mean, as to any Person, any
Subsidiary that is incorporated under the laws of the United States of America,
any State thereof or any territory thereof.
"Effective Date" shall have the meaning provided in Section
12.10.
-54-
<PAGE> 61
"Eligible Transferee" shall mean and include a commercial bank,
financial institution or other "accredited investor" (as defined by Regulation
D of the Securities Act of 1933).
"Environmental Claims" means any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, claims, liens,
notices of noncompliance or violation, investigations (other than internal
reports prepared by the Borrower or any of its Subsidiaries solely in the
ordinary course of such Person's business and not in response to any third
party action or request of any kind) or proceedings relating in any way to any
Environmental Law or any permit issued, or any approval given, under any such
Environmental Law (hereafter, "Claims"), including, without limitation, (a) any
and all Claims by governmental or regulatory authorities for enforcement,
cleanup, removal, response, remedial or other actions or damages pursuant to
any applicable Environmental Law, and (b) any and all Claims by any third party
seeking damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from Hazardous Materials arising from alleged
injury or threat of injury to health, safety or the environment.
"Environmental Law" means any applicable Federal, state, foreign
or local statute, law, rule, regulation, ordinance, code, guide, policy and
rule of common law now or hereafter in effect and in each case as amended, and
any judicial or administrative interpretation thereof, including any judicial
or administrative order, consent decree or judgment, relating to the
environment, or Hazardous Materials, including, without limitation, CERCLA;
RCRA; the Federal Water Pollution Control Act, as amended, 33 U.S.C. Section
1251 et seq.; the Toxic Substances Control Act, 15 U.S.C. Section 7401 et
seq.; the Clean Air Act, 42 U.S.C. Section 7401 et seq.; the Safe Drinking
Water Act, 42 U.S.C. Section 3808 et seq.; the Oil Pollution Act of 1990, 33
U.S.C. Section 2701 et seq. and any applicable state and local or foreign
counterparts or equivalents.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and rulings
issued thereunder. Section references to ERISA are to ERISA, as in effect at
the Effective Date and any subsequent provisions of ERISA, amendatory thereof,
supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in Section
3(9) of ERISA) which together with the Borrower or any Subsidiary would be
deemed to be a "single employer" (i) within the meaning of Sections 414(b),
(c), (m) and (o) of the Code or (ii) as a result of the Borrower or any
Subsidiary being or having been a general partner of such person.
"Eurodollar Loans" shall mean each Loan bearing interest at the
rates provided in Section 1.08(b).
-55-
<PAGE> 62
"Eurodollar Rate" shall mean with respect to each Interest Period
for a Loan, the offered rate (rounded upward to the nearest 1/16 of one
percent) for deposits of Dollars for a period equivalent to such period at or
about 11:00 A.M. (London time) on the second London Banking Day before the
first day of such period as is displayed on Telerate page 3750 (British
Bankers' Association Interest Settlement Rates) (or such other page as may
replace such page 3750 on such system or on any other system of the information
vendor for the time being designated by the British Bankers' Association to
calculate the BBA Interest Settlement Rate (as defined in the British Bankers'
Association's Recommended Terms and Conditions ("BBAIRS" terms) dated August
1985)), provided that if on such date no such rate is so displayed, the
Eurodollar Rate for such period shall be the rate quoted to the Administrative
Agent as the offered rate for deposits of Dollars in an amount approximately
equal to the amount in relation to which the Eurodollar Rate is to be
determined for a period equivalent to such period by prime banks in the London
Interbank Market at or about 11:00 A.M. (London time) on the second Banking Day
before the first day of such period.
"Event of Default" shall have the meaning provided in Section 9.
"Existing Indebtedness" shall have the meaning provided in
Section 6.18.
"Existing Indebtedness Agreements" shall have the meaning
provided in Section 5.06(i).
"Facility" shall mean the credit facility established under this
Agreement, evidenced by the Notes.
"Facing Fee" shall have the meaning provided in Section 3.01(c).
"Federal Funds Effective Rate" shall mean for any period, a
fluctuating interest rate equal for each day during such period to the weighted
average of the rates on overnight Federal Funds transactions with members of
the Federal Reserve System arranged by Federal Funds brokers, as published for
such day (or, if such day is not a Business Day, for the next preceding
Business Day) by the Federal Reserve Bank of New York, or, if such rate is not
so published for any day which is a Business Day, the average of the quotations
for such day on such transactions received by the Administrative Agent from
three 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" shall mean all Fleet Rigs taken as a whole.
"Fleet Rig" shall mean any offshore drilling rig or vessel
wholly-owned from time to time by the Borrower and its Wholly-Owned
Subsidiaries.
-56-
<PAGE> 63
"Fleet Rig Disposition" shall mean (i) the sale, transfer or
other voluntary disposition (x) by the Borrower or any Guarantor to any Person
other than the Borrower or any Guarantor or (y) by any Subsidiary which is not
a Guarantor to any Person other than the Borrower or a Subsidiary, of any Fleet
Rig of the Borrower or such Subsidiary not subject to a first priority Lien
permitted pursuant to Section 8.04(h) or (ii) any Recovery Event arising as a
result of a Total Loss.
"Foreign Pension Plan" means any plan, fund (including, without
limitation, any superannuation fund) or other similar program established or
maintained outside the United States of America by the Borrower or any one or
more of its Subsidiaries primarily for the benefit of employees of the 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 or the Code.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect on the date of this Agreement; it being
understood and agreed that determinations in accordance with GAAP for purposes
of Section 8, including defined terms as used therein, are subject (to the
extent provided therein) to Section 12.07(a).
"Guarantor" shall mean each Domestic Subsidiary of the Borrower
from time to time party to the Guaranty.
"Guaranty" shall have the meaning provided in Section 5.11.
"Hazardous Materials" means (a) any petroleum or petroleum
products, radioactive materials, asbestos in any form that is or could become
friable, urea formaldehyde foam insulation, transformers or other equipment
that contained electric fluid containing levels of polychlorinated biphenyls,
and radon gas; (b) any chemicals, materials or substances defined as or
included in the definition of "hazardous substances," "hazardous waste,"
"hazardous materials," "extremely hazardous waste," "restricted hazardous
waste," "toxic substances," "toxic pollutants," "contaminants," or
"pollutants," or words of similar import, under any applicable Environmental
Law; and (c) any other chemical, material or substance, exposure to which is
prohibited, limited or regulated by any governmental authority.
"Indebtedness" of any Person shall mean without duplication (i)
all indebtedness of such Person for borrowed money, (ii) the deferred purchase
price of assets or services which in accordance with GAAP would be shown on the
liability side of the balance sheet of such Person, (iii) the face amount of
all letters of credit issued for the account of such Person and, without
duplication, all drafts drawn thereunder, (iv) all Indebtedness of a second
Person secured by any Lien on any property owned by such first Person, whether
or not such indebtedness has been assumed, (v) all Capitalized Lease
Obligations of such Person, (vi) all obligations of such Person to pay a
specified purchase price for goods or
-57-
<PAGE> 64
services whether or not delivered or accepted, i.e., take-or-pay and similar
obligations, (vii) all net obligations of such Person under Interest Rate
Agreements and (viii) all Contingent Obligations of such Person (other than
Contingent Obligations arising from the guaranty by such Person of Permitted
Indebtedness of the Borrower and/or its Subsidiaries) provided that
Indebtedness shall not include trade payables and accrued expenses, in each
case arising in the ordinary course of business.
"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 the Borrower or
any Subsidiary against interest rate risk.
"Investments" shall mean and include (i) lending money or credit
or making advances to any Person (net of any repayments or returns thereof),
(ii) purchasing or acquiring any stock, obligations or securities of, or any
other interest in, or making capital contributions to any Person, or (iii)
guaranteeing the debt or obligations of any other Person.
"Kolskaya" shall mean the offshore drilling vessel "Kolskaya",
official no. 8752207.
"Leasehold" of any Person means all of the right, title and
interest of such Person as lessee or licensee in, to and under leases or
licenses of land, improvements and/or fixtures.
"L/C Supportable Obligations" shall mean such obligations of the
Borrower or its Subsidiaries as are not inconsistent with the policies of the
Letter of Credit Issuer.
"Letter of Credit" shall have the meaning provided in Section
2.01(a).
"Letter of Credit Fee" shall have the meaning provided in Section
3.01(b).
"Letter of Credit Issuer" shall mean Christiania Bank og
Kreditkasse ASA, New York Branch.
"Letter of Credit Outstandings" shall mean, at any time, the sum
of, without duplication, (i) the aggregate Stated Amount of all outstanding
Letters of Credit and (ii) the aggregate amount of all Unpaid Drawings in
respect of all Letters of Credit.
"Letter of Credit Request" shall have the meaning provided in
Section 2.03(a).
-58-
<PAGE> 65
"Leverage Ratio" shall mean, at any date of determination, the
ratio of Consolidated Indebtedness on such date to Total Capitalization on such
date.
"Lien" shall mean any mortgage, pledge, security interest,
security title, encumbrance, lien or charge of any kind (including any
agreement to give any of the foregoing, any conditional sale or other title
retention agreement or any lease in the nature thereof).
"Loan" shall have the meaning provided in Section 1.01.
"Margin Stock" shall have the meaning provided in Regulation U.
"Market Value" shall mean as of any date of calculation (unless
otherwise indicated) the value as of such date of any Fleet Rig provided in the
most recent valuation report delivered in connection with Section 5.12(ii) or
Section 7.10.
"Material Adverse Effect" shall mean a material adverse effect on
the business, property, assets, liabilities, operations, financial condition or
prospects of the Borrower and its Subsidiaries taken as a whole.
"Maturity Date" shall mean the date that is the fifth anniversary
of the Effective Date.
"Minimum Borrowing Amount" shall mean (i) for Loans maintained as
Base Rate Loans, $1,000,000, and (ii) for Loans maintained as Eurodollar Loans,
$5,000,000.
"Moody's" shall mean Moody's Investors Service, Inc. and its
successors.
"Moody's Credit Rating" shall mean the rating level (it being
understood that a rating level shall include numerical modifiers and (+) and (-
) modifiers) assigned by Moody's to the senior unsecured long term debt of the
Borrower.
"Muravlenko" shall mean the offshore drilling vessel
"Muravlenko", official no. 7907178.
"Net Cash Proceeds" shall mean, with respect to any Fleet Rig
Disposition, the Cash Proceeds resulting therefrom net of expenses of sale or
disposition and net of taxes payable as a result thereof.
"9-1/4% Senior Note Indenture" shall mean the Indenture, dated as
of October 1, 1993, among the Borrower and Texas Commerce Bank National
Association, as Trustee, governing the 9-1/4%% Senior Notes, as supplemented by
the First Supplemental
-59-
<PAGE> 66
Indenture dated as of May 30, 1997, as the same may be amended, modified,
restated or supplemented from time to time in accordance with the provisions
thereof and hereof.
"9-1/4% Senior Notes" shall mean the Borrower's 9-1/4% Senior
Notes due 2003 issued pursuant to the 9-1/4% Senior Note Indenture.
"9-1/8% Senior Note Indenture" shall mean the Indenture, dated as
of July 1, 1996 between the Borrower and Texas Commerce Bank National
Association, as Trustee, governing the 9-1/8% Senior Notes, as the same may be
amended, modified, restated or supplemented from time to time in accordance
with the provisions thereof and hereof.
"9-1/8% Senior Notes" shall mean the Borrower's 9-1/8% Senior
Notes due 2006 issued pursuant to the 9-1/8% Senior Note Indenture.
"Non-Defaulting Bank" shall mean each Bank other than a
Defaulting Bank.
"Note" shall have the meaning provided in Section 1.05(a).
"Notice of Borrowing" shall have the meaning provided in Section
1.03.
"Notice of Conversion" shall have the meaning provided in Section
1.06.
"Notice Office" shall mean the office of the Administrative Agent
at 11 West 42nd Street, New York, New York or such other office as the
Administrative Agent may designate to the 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 this
Agreement or any other Credit Document.
"Participant" shall have the meaning provided in Section 2.05(a).
"Payment Office" shall mean the office of the Administrative
Agent at 11 West 42nd Street, New York, New York or such other office as the
Administrative Agent may designate to the Borrower from time to time.
"Percentage" shall mean for each Bank the percentage obtained by
dividing such Bank's Commitment by the Total Commitment, provided 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.
-60-
<PAGE> 67
"Permitted Indebtedness" shall mean Indebtedness described in
Section 8.03 (a) through (h).
"Permitted Investments" shall mean and include the following:
(a) the Borrower or any Subsidiary may make Investments in cash
and Cash Equivalents;
(b) the Borrower and any Subsidiary may acquire and hold
receivables owing to them, if created or acquired in the ordinary course
of business and payable or dischargeable in accordance with customary
trade terms;
(c) the Borrower and its Subsidiaries may make loans and
advances (i) to employees in the ordinary course of business or in
connection with employee relocation in an aggregate principal amount not
to exceed $500,000 at any time outstanding and (ii) to management
employees to finance their purchases of common stock of the Borrower in
an aggregate amount not to exceed $750,000 at any time outstanding;
(d) the Borrower and each Subsidiary may acquire and own
investments (including debt obligations) received in connection with the
bankruptcy or reorganization of suppliers and customers and in
settlement of delinquent obligations of, and other disputes with,
customers and suppliers arising in the ordinary course of business;
(e) the Borrower may hold treasury stock received by it in
connection with the repurchase of stock from employees pursuant to
Section 8.05;
(f) the Borrower may make contributions to an employee stock
ownership plan provided such contributions are made solely in the form
of the Borrower's common stock;
(g) the Borrower and its subsidiaries may make intercompany
loans permitted by Section 8.03(c);
(h) the Borrower and any Subsidiary may make Investments in
Guarantors and Persons which, after giving effect to such Investments,
become Guarantors;
(i) the Borrower and any Subsidiary may collectively maintain a
41% interest in Arktik Drilling Company, Ltd., provided such Investment
does not exceed $15,000,000 in the aggregate;
-61-
<PAGE> 68
(j) the Borrower and its Subsidiaries may lend (A) up to
$20,000,000 in the aggregate to any Subsidiary for the purpose of
financing capital improvements to the Muravlenko and (B) up to
$20,000,000 in the aggregate to any Subsidiary for the purpose of
financing improvements to the Kolskaya; provided that such loans shall
mature and the principal amount thereof shall be repaid or converted
into investments permitted by preceding clause (i) not later than (x) in
the case of clause (A) above, December 31, 1997 and (y) in the case of
clause (B) above, December 31, 1998.
(k) the Borrower and any Subsidiary may invest in other non
Wholly-Owned Subsidiaries and joint ventures, provided that such
Investments do not exceed in the aggregate 10% of Consolidated Net
Worth;
(l) the Borrower and its Subsidiaries may maintain Investments
existing on the Effective Date in foreign Subsidiaries, without giving
effect to any increases in the amount thereof;
(m) the Borrower and any Subsidiary may make investments in
Persons to the extent that such investments shall be made solely with
the capital stock of the Borrower.
"Permitted Liens" shall mean Liens described in Section 8.04(a)
through (i).
"Person" shall mean any individual, partnership, joint venture,
firm, corporation, association, limited liability company, trust or other
enterprise or any government or political subdivision or any agency, department
or instrumentality thereof.
"Plan" shall mean any multiemployer or single-employer plan as
defined in Section 4001 of ERISA, which is maintained or contributed to by (or
to which there is an obligation to contribute of) the Borrower or a Subsidiary
of the Borrower or an ERISA Affiliate.
"Pricing Ratio" shall mean, at any date of determination, the
ratio of Consolidated Indebtedness on such date to EBITDA for the four
consecutive fiscal quarters then last ended.
"Prime Lending Rate" shall mean the rate which CBK 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. CBK may make commercial loans or other loans at rates
of interest at, above or below the Prime Lending Rate.
"Project Finance Indebtedness" shall mean any Indebtedness the
proceeds of which will be used solely to make capital expenditures to
construct, repair, refurbish, upgrade or improve one or more Fleet Rigs owned
or acquired (or to be owned or acquired)
-62-
<PAGE> 69
by the Borrower and any Subsidiary, provided that such Indebtedness shall only
be incurred by one or more Project Finance Subsidiaries of the Borrower.
"Project Finance Subsidiary" shall mean a special purpose
Subsidiary of the Borrower whose only material assets are Fleet Rigs pledged
pursuant to Section 8.04(h) in support of Project Finance Indebtedness,
provided that (i) the Indebtedness of such Subsidiary shall not be guaranteed
by any other Subsidiary or, except in the case of Project Finance Indebtedness,
the Borrower and (ii) such Subsidiary shall be a Project Finance Subsidiary for
purposes of this definition only for so long as such Project Finance
Indebtedness of such Subsidiary remains outstanding.
"Projections" shall mean detailed consolidated financial
projections (including, but not limited to, forecasted statements of net
income, cash flow, balance sheets and financial covenants), for the Borrower
and its Subsidiaries to be delivered pursuant to Sections 5.14 and 7.01(e).
"Purchase Money Indebtedness" shall mean purchase money
Indebtedness not in excess of the purchase price of the asset acquired
therewith, which may be secured only with such acquired asset.
"Rating Agencies" shall mean each of Moody's and S&P.
"RCRA" shall mean the Resource Conservation and Recovery Act, as
amended, 42 U.S.C. Section 6901 et seq.
"Real Property" of any Person shall mean all of the right, title
and interest of such Person in and to land, improvements and fixtures,
including Leaseholds.
"Recovery Event" shall mean the receipt by the Borrower or any of
its Subsidiaries of any cash insurance proceeds or condemnation award
(excluding the proceeds of any business interruption insurance) payable (i) by
reason of theft, loss, physical destruction or damage or any other similar
event with respect to any property or asset of the Borrower or any of its
Subsidiaries or (ii) by reason of any condemnation, taking, seizing or similar
event with respect to any property or asset of the Borrower or any of its
Subsidiaries.
"Register" shall have the meaning provided in Section 12.16.
"Regulation D" shall mean Regulation D of the Board of Governors
of the Federal Reserve System as from time to time in effect and any successor
to all or a portion thereof establishing reserve requirements.
"Regulation U" shall mean Regulation U of the Board of Governors
of the Federal Reserve System as from time to time in effect and any successor
to all or a portion thereof establishing margin requirements.
-63-
<PAGE> 70
"Replaced Bank" shall have the meaning provided in Section 1.13.
"Replacement Bank" shall have the meaning provided in 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).
"Restricted Payments" shall mean any Dividend or Investment,
other than Permitted Investments.
"S&P" shall mean Standard & Poor's Ratings Group and its
successors.
"S&P Credit Rating" shall mean the rating level (it being
understood that a rating level shall include numerical modifiers and (+) and (-
) modifiers) assigned by S&P to the senior unsecured long-term debt of the
Borrower.
"SEC" shall mean the Securities and Exchange Commission or any
successor thereto.
"Section 4.04(b)(ii) Certificate" shall have the meaning provided
in Section 4.04(b)(ii).
"Senior Indebtedness" shall mean Indebtedness of the Borrower or
any of its Subsidiaries which ranks pari-passu in repayment priority with
Indebtedness of the Borrower and the Guarantors under the Facility.
"Small Scale Field Development" shall mean field development
activities which involve an aggregate field cost to the Borrower and its
Subsidiaries for all such fields not to exceed $50,000,000.
"Standby Letter of Credit" shall have the meaning provided in
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).
"Submersible Fleet Rigs" shall mean and include each of the
following submersible Fleet Rigs owned on the Effective Date: Amos Runner
(official no. CG000268), Jim Thompson (official no. CG000245), Max Smith
(official no. CG027797), Joe Alford
-64-
<PAGE> 71
(official no. 652439), Lester Pettus (official no. 650227), Fri Rodli (official
no. CG000082), Paul Wolff (official no. CG000108) and Paul Romano (official no.
CG000103).
"Subsidiary" of any Person shall mean and include (i) any
corporation more than 50% of whose stock of any class or classes having by the
terms thereof ordinary voting power to elect a majority of the directors of
such corporation (irrespective of whether or not at the time stock of any class
or classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) is at the time owned by such Person
directly or indirectly through Subsidiaries and (ii) any partnership,
association, joint venture, a limited liability company or other entity in
which such Person directly or indirectly through Subsidiaries, has more than a
50% equity interest at the time. Unless otherwise expressly provided, all
references herein to "Subsidiary" shall mean a Subsidiary of the Borrower.
"Taxes" shall have the meaning provided in Section 4.04(a).
"Total Capitalization" shall mean, at any time, the sum of
Consolidated Indebtedness and Consolidated Net Worth at such time.
"Total Commitment" shall mean, at any time, the sum of the
Commitments of each of the Banks.
"Total Loss" shall mean (i) the actual, constructive, arranged,
agreed, or compromised total loss of any Unencumbered Fleet Rig; (ii) the
requisition for title or other compulsory acquisition or forfeiture of any
Unencumbered Fleet Rig otherwise than by requisition for hire; (iii) the
capture, seizure, arrest, detention or confiscation of any Unencumbered Fleet
Rig by any government or by persons acting or purporting to act on behalf of
any government unless such Unencumbered Fleet Rig is released from such
capture, seizure, arrest or detention within 60 days after the occurrence
thereof.
"Total Unutilized Commitment" shall mean, at any time, (i) the
Total Commitment at such time less (ii) the sum of the aggregate principal
amount of all Loans at such time plus the Letter of Credit Outstandings at such
time.
"Trade Letter of Credit" shall have the meaning provided in
Section 2.01(a).
"Transamerica Financing" shall mean the insurance financing
provided to the Borrower by Transamerica, or another nationally recognized
insurance company, so long as such financing is provided on substantially the
same terms as in effect on the Effective Date.
"Triton" shall mean Triton Engineering Services Company, a Texas
corporation.
-65-
<PAGE> 72
"Triton Financing" shall mean the line of credit issued by
Southwest Bank of Texas in favor of Triton, as the same may be extended on
substantially the same terms as in effect on the Effective Date.
"Type" shall mean any type of Loan determined with respect to the
interest option applicable thereto, i.e., a Base Rate Loan or Eurodollar Loan.
"UCC" shall mean the Uniform Commercial Code.
"Unencumbered Fleet Rig" shall mean each Fleet Rig which is not
subject to a first priority Lien permitted pursuant to Section 8.04.
"Unpaid Drawing" shall have the meaning provided in 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 Domestic Subsidiary" of any Person shall mean each
Wholly-Owned Subsidiary which is organized under the laws of the United States
of America, any state thereof or any territory thereof.
"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.
"Written" or "in writing" shall mean any form of written
communication or a communication by means of telex or facsimile transmission.
SECTION 11. The Administrative Agent.
11.01 Appointment. The Banks hereby designate Christiania Bank
og Kreditkasse ASA, New York Branch as Administrative Agent to act as specified
herein and in the other Credit Documents. Each Bank hereby irrevocably
authorizes, and each holder of any Note by the acceptance of such Note shall be
deemed irrevocably to authorize, the Administrative Agent to take such action
on its behalf under the provisions of this Agreement, the other Credit
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.
-66-
<PAGE> 73
11.02 Nature of Duties. The Administrative Agent shall not have
any duties or responsibilities except those expressly set forth in this
Agreement and the other Credit Documents. Neither the Administrative Agent nor
any of its respective officers, directors, agents, employees or Affiliates
shall be liable for any action taken or omitted by it or them hereunder or
under any other Credit Document or in connection herewith or therewith, unless
caused by its or their gross negligence or willful misconduct. The duties of
the Administrative Agent shall be mechanical and administrative in nature; the
Administrative Agent shall not have by reason of this Agreement or any other
Credit Document a fiduciary relationship in respect of any Bank or the holder
of any Note; and nothing in this Agreement or any other Credit Document,
expressed or implied, is intended to or shall be so construed as to impose upon
the Administrative Agent any obligations in respect of this Agreement or any
other Credit Document except as expressly set forth herein or therein.
11.03 Lack of Reliance on the Administrative Agent.
Independently and without reliance upon the Administrative Agent, each Bank and
the holder of each Note, to the extent it deems appropriate, has made and shall
continue to make (i) its own independent investigation of the financial
condition and affairs of the Borrower and its Subsidiaries in connection with
the making and the continuance of the Loans and issuance and/or participation
in Letters of Credit and the taking or not taking of any action in connection
herewith and (ii) its own appraisal of the creditworthiness of the Borrower and
its Subsidiaries and, except as expressly provided in this Agreement, the
Administrative Agent 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 Administrative Agent shall not be responsible to any Bank or
the holder of any Note for any recitals, statements, information,
representations or warranties herein or in any document, certificate or other
writing delivered in connection herewith or for the execution, effectiveness,
genuineness, validity, enforceability, perfection, collectibility, priority or
sufficiency of this Agreement or any other Credit Document or the financial
condition of the Borrower and its Subsidiaries or be required to make any
inquiry concerning either the performance or observance of any of the terms,
provisions or conditions of this Agreement or any other Credit Document, or the
financial condition of the Borrower and its Subsidiaries or the existence or
possible existence of any Default or Event of Default.
11.04 Certain Rights of the Administrative Agent. If the
Administrative Agent shall request instructions from the Required Banks with
respect to any act or action (including failure to act) in connection with this
Agreement or any other Credit Document, the Administrative Agent shall be
entitled to refrain from such act or taking such action unless and until the
Administrative Agent shall have received instructions from the Required Banks;
and the Administrative Agent shall not incur liability to any Person by reason
of so refraining. Without limiting the foregoing, neither any Bank nor the
holder of any Note shall have any right of action whatsoever against the
Administrative Agent as a result of the Administrative Agent acting or
refraining from acting hereunder or under any other Credit Document in
accordance with the instructions of the Required Banks.
-67-
<PAGE> 74
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, including, without limitation, counsel to the Borrower and
its Subsidiaries, and, with respect to all legal matters pertaining to this
Agreement and any other Credit Document and its duties hereunder and
thereunder, upon advice and statements of legal counsel.
11.06 Indemnification. To the extent the Administrative Agent
is not reimbursed and indemnified by the Borrower, the Banks will reimburse and
indemnify the Administrative Agent, in proportion to their respective
"percentages" as used in determining the Required Banks, for and against any
and all liabilities, obligations, losses, damages, penalties, claims, actions,
judgments, costs, expenses or disbursements of whatsoever kind or nature which
may be imposed on, asserted against or incurred by the Administrative Agent in
performing its respective duties hereunder or under any other Credit Document,
in any way relating to or arising out of this Agreement or any other Credit
Document; provided that no Bank shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the Administrative
Agent's gross negligence or willful misconduct.
11.07 The Administrative Agent in Its Individual Capacity. With
respect to its obligation to make Loans under this Agreement, the
Administrative Agent shall have the rights and powers specified herein for a
"Bank" and may exercise the same rights and powers as though it were not
performing the duties specified herein; and the term "Banks," "Required Banks,"
"holders of Notes" or any similar terms shall, unless the context clearly
otherwise indicates, include the Administrative Agent in its individual
capacity. The Administrative Agent may accept deposits from, lend money to,
and generally engage in any kind of banking, trust or other business with the
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 the Borrower or any of its Subsidiaries for services in
connection with this Agreement and otherwise without having to account for the
same to the Banks.
11.08 Holders. The Administrative Agent may deem and treat the
payee of any Note as the owner thereof for all purposes hereof unless and until
a written notice of the assignment, transfer or endorsement thereof, as the
case may be, shall have been filed with the Administrative Agent. Any request,
authority or consent of any Person who, at the time of making such request or
giving such authority or consent, is the holder of any Note shall be conclusive
and binding on any subsequent holder, transferee, assignee or indorsee, as the
case may be, of such Note or of any Note or Notes issued in exchange therefor.
11.09 Resignation by the Administrative Agent. (a) The
Administrative Agent may resign from the performance of all its functions and
duties hereunder and/or under the other Credit Documents at any time by giving
15 Business Days' prior written notice to
-68-
<PAGE> 75
the 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 the
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 the 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.
SECTION 12. Miscellaneous.
12.01 Payment of Expenses, etc. The Borrower agrees to (and to
cause each other Credit Party, in respect of the Credit Document to which it is
a party, to): (i) whether or not the transactions herein contemplated are
consummated, pay all reasonable out-of-pocket costs and expenses of the
Administrative Agent in connection with the negotiation, preparation, execution
and delivery of the Credit Documents and the documents and instruments referred
to therein and any amendment, waiver or consent relating thereto (including,
without limitation, the reasonable fees and disbursements of White & Case) and
of the Administrative Agent 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),
provided that to the extent it is feasible and a conflict of interest does not
exist in the reasonable discretion of the Administrative Agent, the Banks and
their counsel, the Banks shall use the same counsel in connection with the
foregoing; (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 such Bank) to pay such taxes; and (iii)
indemnify each Bank (including in its capacity as the Administrative Agent or
Letter of Credit Issuer), its officers, directors, employees, representatives
and agents from and hold each of them harmless against
-69-
<PAGE> 76
any and all losses, liabilities, claims, damages or expenses 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 the Borrower or any other Person, 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, willful misconduct, unlawful act or material
breach of the terms of this Agreement 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, Fleet Rig,
facility or location at any time owned or operated by the Borrower or any of
its Subsidiaries, the generation, storage, transportation or disposal of
Hazardous Materials at any Real Property, Fleet Rig, facility or location at
any time owned or operated by the Borrower or any of its Subsidiaries, the non-
compliance of any Real Property, Fleet Rig, facility or location at any time
owned or operated by the Borrower or any of its Subsidiaries with federal,
state and local laws, regulations, and ordinances (including applicable permits
thereunder) applicable to any such Real Property, Fleet Rig, facility or
location, or any Environmental Claim asserted against the Borrower, any of its
Subsidiaries, or any Real Property, Fleet Rig, facility or location at any time
owned or operated by the Borrower or any of its Subsidiaries, including, in
each case, without limitation, the actual reasonable fees and disbursements of
counsel and other consultants incurred in connection with any such
investigation, litigation or other proceeding (but excluding any losses,
liabilities, claims, damages or expenses to the extent incurred by reason of
the gross negligence, willful misconduct, unlawful act or material breach of
the terms of this Agreement 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, the Borrowers shall make
the maximum contribution to the payment and satisfaction of each of the
indemnified liabilities which is permissible under applicable law.
12.02 Right of Setoff. In addition to any rights now or
hereafter granted under applicable law or otherwise, and not by way of
limitation of any such rights, if an Event of Default then exists, each Bank is
hereby authorized at any time or from time to time, without presentment,
demand, protest or other notice of any kind to the Borrower or to any other
Person, any such notice being hereby expressly waived, to set off and to
appropriate and apply any and all deposits (general or special) and any other
Indebtedness at any time held or owing by such Bank (including without
limitation by branches and agencies of such Bank wherever located) to or for
the credit or the account of the Borrower against and on account of the
Obligations and liabilities of the Borrower to such Bank under this Agreement
or under any of the other Credit Documents, including, without limitation, all
interests in Obligations of the 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
-70-
<PAGE> 77
this Agreement or any other Credit Document, irrespective of whether or not
such Bank shall have made any demand hereunder and although said Obligations,
liabilities or claims, or any of them, shall be contingent or unmatured.
Without limiting the foregoing, each Bank agrees to use reasonable efforts to
notify the Borrower of any exercise of such Bank's right of setoff granted
hereby.
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 the Borrower or its Subsidiaries, at the address
specified opposite its signature below or in the other relevant Credit
Documents, as the case may be; if to any Bank, at its address specified for
such Bank on Annex II; or, at such other address as shall be designated by any
party in a written notice to the other parties hereto. All such notices and
communications shall be effective when received 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 the Borrower
to confirm in writing any telephonic notice permitted to be given hereunder,
the Administrative Agent or the 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 the
Letter of Credit Issuer in good faith to be from an Authorized Officer of the
Borrower. In each such case, the Borrower hereby waives the right to dispute
the Administrative Agent's or the 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 that the Borrower may
not assign or transfer any of its rights or obligations hereunder without the
prior written consent of the Banks. Each Bank may at any time grant
participations in any of its rights hereunder or under any of the Notes to
another financial institution, provided that in the case of any such
participation, the participant shall not have any rights under this Agreement
or any of the other Credit Documents (the participant's rights against such
Bank in respect of such participation to be those set forth in the agreement
executed by such Bank in favor of the participant relating thereto) and all
amounts payable by the Borrower hereunder shall be determined as if such Bank
had not sold such participation, except that the participant shall be entitled
to the benefits of Sections 1.10 and 4.04 of this Agreement to the extent that
such Bank would be entitled to such benefits if the participation had not been
entered into or sold, and, provided further, that no Bank shall transfer, grant
or assign any participation under which the participant shall have rights to
approve any amendment to or waiver of this Agreement or any other Credit
Document except to the extent such amendment or waiver would (i) extend the
final scheduled maturity of any Loan or Note in which such participant is
participating or reduce the rate or extend the time of payment of interest or
Fees thereon (except in connection with a waiver of the
-71-
<PAGE> 78
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 the Borrower of any of its rights and obligations under this Agreement.
(b) Notwithstanding the foregoing, (x) any Bank may assign all
or a portion of its outstanding Commitment and its rights and obligations
hereunder to its Affiliate or to another Bank, and (y) with the consent of the
Administrative Agent, the Letter of Credit Issuer and the Borrower (which
consent shall not be unreasonably withheld), any Bank may assign all or a
portion of its outstanding Commitment and its rights and obligations hereunder
to one or more Eligible Transferees. No assignment pursuant to the immediately
preceding sentence shall to the extent such assignment represents an assignment
to an institution other than one or more Banks hereunder, be in an aggregate
amount less than $10,000,000 unless the entire Commitment of the assigning Bank
is so assigned. If any Bank so sells or assigns all or a part of its rights
hereunder or under the Notes, any reference in this Agreement or the Notes to
such assigning Bank shall thereafter refer to such Bank and to the respective
assignee to the extent of their respective interests and the respective
assignee shall have, to the extent of such assignment (unless otherwise
provided therein), the same rights and benefits as it would if it were such
assigning Bank. Each assignment pursuant to this Section 12.04(b) shall be
effected by the assigning Bank and the assignee Bank executing an Assignment
and Assumption Agreement. In the event of any such assignment (x) to a
commercial bank or other financial institution not previously a Bank hereunder,
either the assigning or the assignee Bank shall pay to the Administrative Agent
a nonrefundable assignment fee of $3,500 and (y) to a Bank, either the
assigning or assignee Bank shall pay to Administrative Agent a nonrefundable
assignment fee of $1,500, and at the time of any assignment pursuant to this
Section 12.04(b), (i) Annex I shall be deemed to be amended to reflect the
Commitment of the respective assignee (which shall result in a direct reduction
to the Commitment of the assigning Bank) and of the other Banks, and (ii) if
any such assignment occurs after the Effective Date, if requested by the
assigning Bank and the assignee Bank, the 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 the 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 the
-72-
<PAGE> 79
Borrower to file a registration statement with the SEC or to qualify the Loans
under the "Blue Sky" laws of any State.
(d) Each Bank initially party to this Agreement hereby
represents, and each Person that became a Bank pursuant to an assignment
permitted by this Section 12 will, upon its becoming party to this Agreement,
represent that it is a commercial lender, other financial institution or other
"accredited" investor (as defined in SEC Regulation D) which makes loans in the
ordinary course of its business and that it will make or acquire Loans for its
own account in the ordinary course of such business, provided that subject to
the preceding clauses (a) and (b), the disposition of any promissory notes or
other evidences of or interests in Indebtedness held by such Bank shall at all
times be within its exclusive control.
12.05 No Waiver; Remedies Cumulative. No failure or delay on
the part of the Administrative Agent or any Bank in exercising any right, power
or privilege hereunder or under any other Credit Document and no course of
dealing between the Borrower or any of its Subsidiaries and the Administrative
Agent or any Bank shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, power or privilege hereunder or under any other
Credit Document preclude any other or further exercise thereof or the exercise
of any other right, power or privilege hereunder or thereunder. The rights and
remedies herein expressly provided are cumulative and not exclusive of any
rights or remedies which the Administrative Agent or any Bank would otherwise
have. No notice to or demand on the Borrower or any of its Subsidiaries in any
case shall entitle the Borrower or any of its Subsidiaries 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 the
Borrower or any of its Subsidiaries in respect of any Obligations of the
Borrower or any of its Subsidiaries hereunder, it shall distribute such payment
to the Banks (other than any Bank that has expressly waived its right to
receive its pro rata share thereof) pro rata based upon their respective
shares, if any, of the Obligations with respect to which such payment was
received.
(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 the Borrower or any of its Subsidiaries, respectively, to such
Banks in such amount as shall result in a proportional participation by all of
the
-73-
<PAGE> 80
Banks in such amount, provided that if all or any portion of such excess amount
is thereafter recovered from such Bank, such purchase shall be rescinded and
the purchase price restored to the extent of such recovery, but without
interest.
(c) Notwithstanding anything to the contrary contained herein,
the provisions of the preceding Sections 12.06(a) and (b) shall be subject to
the express provisions of this Agreement which require, or permit, differing
payments to be made to Non-Defaulting Banks as opposed to Defaulting Banks.
12.07 Calculations; Computations. (a) The financial statements
to be furnished to the Banks pursuant hereto shall be made and prepared in
accordance with GAAP consistently applied throughout the periods involved
(except as set forth in the notes thereto or as otherwise disclosed in writing
by the Borrower to the Banks), provided 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 December 31, 1996 and March 31, 1997
historical financial statements of the Borrower delivered to the Banks pursuant
to Section 6.10(b), 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 work-sheets.
(b) All computations of interest relating to Eurodollar Loans
shall be made on the actual number of days elapsed over a year of 360 days.
All other computations of interest hereunder and Fees shall be made on the
actual number of days elapsed over a year of 365 days.
12.08 Governing Law; Submission to Jurisdiction; Venue; Waiver
of Jury Trial. (a) This Agreement and the other Credit Documents and the
rights and obligations of the parties hereunder and thereunder shall be
construed in accordance with and be governed by the law of the state of New
York. Any legal action or proceeding with respect to this Agreement or any
other Credit Document may be brought in the courts of the state of New York or
of the United States for the Southern District of New York, and, by execution
and delivery of this Agreement, the Borrower hereby irrevocably accepts for
itself and in respect of its property, generally and unconditionally, the non-
exclusive jurisdiction of the aforesaid courts. The 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 the Borrower located outside
New York City and by hand delivery to the 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 the Borrower in any other jurisdiction.
-74-
<PAGE> 81
(b) The Borrower hereby irrevocably waives any objection which
it may now or hereafter have to the laying of venue of any of the aforesaid
actions or proceedings arising out of or in connection with this 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.
12.09 Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an
original, but all of which shall together constitute one and the same
instrument. A set of counterparts executed by all the parties hereto shall be
lodged with the Borrower and the Administrative Agent.
12.10 Effectiveness. This Agreement shall become effective on
the date (the "Effective Date") on which (i) the Borrower and each of the Banks
shall have signed a copy hereof (whether the same or different copies) and
shall have delivered the same to the Administrative Agent at the Payment Office
of the Administrative Agent or, in the case of the Banks, shall have given to
the Administrative Agent telephonic (confirmed in writing), written telex or
facsimile transmission notice (actually received) at such office that the same
has been signed and mailed to it and (ii) the Borrower shall have fully
complied with each of the conditions set forth in Section 5.
12.11 Headings Descriptive. The headings of the several
sections and subsections of this Agreement are inserted for convenience only
and shall not in any way affect the meaning or construction of any provision of
this Agreement.
12.12 Amendment or Waiver. (a) Neither this Agreement nor any
other Credit Document nor any terms hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or termination
is in writing signed by the Borrower and the Required Banks, provided that no
such change, waiver, discharge or termination shall, without the consent of
each Bank (other than a Defaulting Bank) affected thereby, (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 of any post-default
increase in interest rates) or Fees thereon, or reduce the principal amount
thereof, (ii) increase the Commitment of any Bank over the amount thereof then
in effect (it being understood that a waiver of any 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 or (v) consent to the assignment or transfer
by the Borrower of any of its rights and obligations under this Agreement. No
provision of Sections 2 or 11, or any other
-75-
<PAGE> 82
provisions relating to the Letter of Credit Issuer or the Administrative Agent
may be modified without the consent of the 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 clauses (i) through (v), inclusive, of the first proviso to
Section 12.12(a), the consent of the Required Banks is obtained but the consent
of one or more of such other Banks whose consent is required is not obtained,
then the 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 that the 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
Section 12.12(a)(ii).
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 that the 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. Subject to Section 12.04, the Banks
shall hold all non-public information obtained pursuant to the requirements of
this Agreement in accordance with its customary procedure for handling
confidential information of this nature and in accordance with safe and sound
banking practices and in any event may make disclosure reasonably required by
any bona fide transferee or participant in connection with the contemplated
transfer of any Loans or participation therein (so long as such transferee or
participant agrees in writing 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 that, unless specifically
prohibited by applicable law or court order, each Bank shall notify the
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, and provided
further that in no event shall any Bank be obligated or required to return any
materials furnished by the Borrower or any Subsidiary.
12.16 Registry. The Borrower hereby designates the
Administrative Agent to serve as the Borrower's agent, solely for purposes of
this Section 12.16, to maintain a
-76-
<PAGE> 83
register (the "Register") on which it will record the Commitments from time to
time of each of the Banks, the Loans made by each of the Banks and each
repayment in respect of the principal amount of the Loans of each Bank.
Failure to make any such recordation, or any error in such recordation shall
not affect the 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.
* * *
-77-
<PAGE> 84
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: NOBLE DRILLING CORPORATION
10370 Richmond Avenue
Suite 400 By /s/ BYRON L. WELLIVER
-------------------------------------
Houston, TX 77042
Attn: Byron S. Welliver, Title: Sr. Vice President
Senior Vice President-
Finance, Treasurer
and Controller
Telephone: (713) 974-3131
Facsimile: (713) 974-3181
<PAGE> 85
CHRISTIANIA BANK OG KREDITKASSE ASA,
NEW YORK BRANCH,
Individually and as Administrative Agent
By /s/ Carl-Peter Svendsen
----------------------------------------
Title: First Vice President
By /s/ Hans Chr Kjelsrud
----------------------------------------
Title: First Vice President
<PAGE> 86
THE BANK OF NOVA SCOTIA
By /s/ E.C.H. Ashby
----------------------------------------
Title: Sr. Manager
<PAGE> 87
THE BANK OF TOKYO-MITSUBISHI, LTD., HOUSTON
AGENCY
By /s/ John W. McGhee
----------------------------------------
Title: Vice President
<PAGE> 88
CREDIT LYONNAIS NEW YORK BRANCH
By /s/ Pascal Poupelle
----------------------------------------
Title: Executive Vice President
<PAGE> 89
THE FUJI BANK, LIMITED, HOUSTON AGENCY
By /s/ Nate Ellis
----------------------------------------
Title: Vice President
<PAGE> 90
KREDIETBANK N.V., GRAND CAYMAN BRANCH
By /s/ Tod R. Angus
----------------------------------------
Title: Vice President
By /s/ Kurt Barkley
----------------------------------------
Title: Vice President
<PAGE> 91
FIRST NATIONAL BANK OF COMMERCE
By /s/ JOSHUA CUMMINGS
----------------------------------------
Title: Assistant Vice President
<PAGE> 92
MEESPIERSON CAPITAL CORPORATION
By /s/ JOHN T. CONNORS
----------------------------------------
Title: Executive Vice President
By /s/ SVEIN ENGH
----------------------------------------
Title: Vice President
<PAGE> 93
ROYAL BANK OF CANADA
By /s/ LINDA M. STEPHENS
----------------------------------------
Title: Manager
<PAGE> 94
THE SANWA BANK, LIMITED
By /s/ MATTHEW G. PATRICK
----------------------------------------
Title: Vice President
<PAGE> 95
SKANDINAVISKA ENSKILDA BANKEN AB (Publ.)
By /s/ MAGNE HAGA
----------------------------------------
Title: Head of Unit
By /s/ BJARTE BOE
----------------------------------------
Title: Authorized Signatory
<PAGE> 96
WELLS FARGO BANK (TEXAS) NATIONAL
ASSOCIATION
By /s/ FRANK SCHAGEMAN
----------------------------------------
Title: Vice President
<PAGE> 97
WESTDEUTSCHE LANDESBANK GIROZENTRALE, NEW
YORK BRANCH
By /s/ ALAN S. BOOKSPAN
----------------------------------------
Title: Vice President
By /s/ THOMAS LEE
----------------------------------------
Title: Associate
<PAGE> 98
ANNEX I
COMMITMENTS
<TABLE>
<CAPTION>
Bank Commitment
---- ----------
<S> <C>
Christiania Bank og Kreditkasse, $29,000,000
New York Branch
Credit Lyonnais New York Branch $17,000,000
Bank of Tokyo-Mitsubishi, Ltd., $16,500,000
Houston Agency
The Fuji Bank Limited, Houston $16,500,000
Agency
Kredietbank N.V., Grand Cayman Branch $16,500,000
MeesPierson Capital Corporation $16,500,000
Royal Bank of Canada $16,500,000
Wells Fargo Bank (Texas) National $16,500,000
Association
Westdeutsche Landesbank Girozentrale, $16,500,000
New York Branch
The Bank of Nova Scotia $11,500,000
Skandinaviska Enskilda Banken AB (Publ.) $11,500,000
The Sanwa Bank, Limited $8,500,000
First National Bank of Commerce $7,000,000
------------
TOTAL $200,000,000
</TABLE>
<PAGE> 99
ANNEX II
BANK ADDRESSES
Christiania Bank og 11 West 42nd Street
Kreditkasse ASA, New York Branch 7th Floor
New York, New York 10036
Attention: Loan Administration
Tel: (212) 827-4800
Fax: (212) 827-4888
Credit Lyonnais Houston 1000 Louisiana, Suite 5360
Representative Office Houston, TX 77002
W. Thomas Byargeon
T: (713) 753-8706
F: (713) 751-0307/0421
<PAGE> 100
The Bank of Tokyo-Mitsubishi, Ltd 1100 Louisiana Street, 2800
Houston Agency Houston, TX 77002-5216
Jason York
Tel: (713) 655-3809
Fax: (713) 658-0116
The Fuji Bank Limited One Houston Center, Suite 4100
Houston Agency 1221 McKinney
Houston, TX 77010
Mark Polasek
Tel: (713) 650-7863
Fax: (713) 759-0048
Kredietbank N.V. 1349 West Peachtree Street
Suite 1750
Atlanta, GA 30309
Michael Sawicki/Kojo Asakura
T: (404) 876-2556
F: (404) 876-3212
Mees Pierson Capital Corporation 445 Park Avenue
New York, NY 10022
Svein Engh
T: (212) 801-0415
F: (212) 801-0420
Royal Bank of Canada 12450 Greenspoint Drive,
Suite 1450
Houston, TX 77060
Linda M. Stephens
T: (281) 874-5669
F: (281) 874-0081
<PAGE> 101
Wells Fargo Bank (TX) National 1000 Louisiana, 3rd Floor
Association Houston, TX 77002
Frank W. Schageman
T: (713) 250-4352
F: (713) 250-7912
Westdeutsche Landesbank 1211 Avenue of the Americas
Girozentrale New York, NY 10036
Richard Newman
T: (212) 852-6120
F: (212) 852-6307
The Bank of Nova Scotia 1100 Louisiana, Suite 3000
Houston, TX 77002
Jamie Conn
T: (713) 752-0900
F: (713) 752-2425
Skandinaviska Enskilda Rosenkrantzgate 22
Banken AB (publ.) N-0123 Oslo, NORWAY
Bjarte Bee
T: (47) 22-82-70-04
F: (47) 22-82-71-31
<PAGE> 102
The Sanwa Bank, Limited 2200 Ross Avenue, Suite 4100W
Dallas, TX 75201
Matthew Patrick,
Vice President
T: (214) 665-0217
F: (214) 953-3936
First National Bank of Commerce 201 St. Charles Avenue
28th Floor
New Orleans, LA 70170
Joshua C. Cummings
T: (504) 623-1497
F: (504) 623-1497
<PAGE> 1
EXHIBIT 10.14
NOBLE DRILLING CORPORATION
SHORT TERM INCENTIVE PLAN
Revised: July 1997*
PURPOSE
The success of Noble Drilling Corporation ("Noble Drilling") and its
subsidiaries (collectively, unless the context otherwise requires, the
"Company") is a result of the collective efforts of all employees. Each
position within the Company has the ability to make a positive contribution to
key factors making up the components used to measure a successful year. Those
components include factors such as increase in shareholder value and increase
in net income, year to year. In order to intensify each employee's attention
on available opportunities to increase revenues, control costs and seek out
profitable ventures, the Company maintains a bonus program that rewards
employees for successful achievement of specific goals. It is management's
belief that shareholders will benefit from the creation of an environment that
ties employee compensation to the success of the Company.
PARTICIPATION AND ELIGIBILITY
The bonus plan covers all full-time employees in salary
classifications 18 and higher who have completed one year of service at the
close of the bonus plan year, which will be a calendar year. The bonus earned
by employees with less than two full years of service will be adjusted based
upon the number of full months employed compared to twenty-four months.
Additionally, no bonus payments will be made for a partial year of service.
Eligibility will be determined from the employee roster at close of the bonus
plan year and employees must be actively employed with the Company on the day
which bonus payments are made to receive a bonus payment.
STRUCTURE
TARGET BONUS
The target bonus amount shall be determined on an aggregate basis for
each operating region and department. The target bonus shall be the base
salary at year end of eligible employees multiplied times the appropriate
percentage factor assigned to the salary classification. Salary
classifications and target bonus factors are as follows:
*Established 1977
- 1 -
<PAGE> 2
Salary Classification1 Target Factor
--------------------- -------------
18N through 19N 10%
20N through 23N* 15%
24N through 25N 25%
26N through 27N 30%
28N through 32N 35%
30C through 32C 45%
33C through 36C 55%
37C 75%
There is some grade classification variance by division.
GOALS
At the end of each year, the total bonus pool will be determined by
the Board of Directors, considering target bonus levels, the Board's assessment
of overall company results, and attainment of specific, predetermined division
or corporate goals. Goals in the following categories will be recommended each
year by the Chief Executive Officer of Noble Drilling Corporation and approved
by the Board of Directors for the Corporation and for each hemisphere and
operating region. The percentage weighting assigned to each goal shall be as
follows subject to annual review by the Board of Directors.
Corporate Goals Assigned Weight
--------------- ---------------
1. Total shareholder return 50%
2. Return on invested capital 50%
Division Goals Assigned Weight
-------------- ---------------
(Gulf Coast Marine, Middle East, Venezuela,
Nigeria, Angola, Nedscan, Brazil and Hibernia)
1. Return on invested capital 35%
2. Budgeted total daily operating costs 35%
3. Budgeted capital expenditures 10%
4. Safety results 10%
5. Rig maintenance and appearance 10%
* Toolpushers in all divisions, except the U.K., will be in a 10% bonus
category. Platform Superintendents and Toolpushers in the U.K. division will
be in a special 5% bonus category.
- 2 -
__________________
<PAGE> 3
U.K. and Triton Goals Assigned Weight
--------------------- ---------------
1. Net income improvement 80%
2. Safety results 20%
The goal weighting percentage will be used in measuring overall
performance, considering measurement of actual results measured against the
goal for each factor. The adjustment to the goal weighting will be based upon
the following schedule.
Goal Achievement Range Adjustment Factor
---------------------- -----------------
Greater than 135% 2.00
126--135% 1.75
116--125% 1.50
106--115% 1.25
96--105% 1.00
86-- 95% .75
76-- 85% .50
Less than 75% .00
The target bonus for corporate employees will be adjusted to reflect
the combined percentage of achievement of all assigned corporate goals. The
target bonus for operating region employees will be adjusted to reflect the
combined percentage of achievement of all assigned goals using the ratio of 50
percent for operating region goal achievement and 50 percent for corporate goal
achievement. Accordingly, the bonus payable to operating region employees is
dependent on the level of achievement of both hemisphere, operating region and
corporate goals. The dollar amount of the bonus payable, if any, will be
calculated using the target bonus amount times the applicable multiplier
determined under the following adjustment schedule:
Combined Target Bonus
Goal Achievement Payable
---------------- -------
Greater than 160% 2.00
141--160% 1.75
131--140% 1.50
121--130% 1.40
106--120% 1.20
96--105% 1.00
76-- 95% .75
66-- 75% .25
Below 65% .00
- 3 -
<PAGE> 4
BONUS ALLOCATION
All employees in salary classifications 18N through 37C shall receive
a bonus (assuming a bonus is payable) as calculated using the target bonus
times the applicable multiplier. The remaining bonus pool shall be allocated
to eligible employees within the hemispheres, regions or departments based upon
merit. Deviation above or below the target bonus percent must be justified in
writing by the employee's supervisor. Hemisphere Managing Directors, Region
Managers and department heads shall submit the allocated bonus listing to the
Chief Executive Officer of Noble Drilling for review and approval. All bonus
calculations, allocations and recommendations are subject to review and
approval by the Compensation Committee of the Board of Directors. The
Committee and the Chief Executive Officer have the ability to adjust individual
bonus calculations as deemed to be appropriate for any reason.
GOAL FLEXIBILITY
It is intended that the total bonus pool will reflect the best
judgment of the Board of Directors in determining overall Company performance
for the year. In determining overall Company performance, the Board will
consider the Company's performance in relation to the pre-determined goals and
market conditions. However, because the goals are established in
November/December of the preceding plan year, some consideration to subsequent
budget revisions may be given. It is expected that the Company will prepare
budgets and forecasts in October/November of the plan year. If such budgets
have substantially changed due to subsequent events, then the Chief Executive
Officer of Noble Drilling Corporation shall, at his discretion, submit revised
goals to the Board of Directors of Noble Drilling for its approval.
Revision(s) to the goals can be considered subsequent to April at the Board's
discretion.
- 4 -
<PAGE> 1
EXHIBIT 10.16
AMENDMENT NO. 1 TO THE
NOBLE DRILLING CORPORATION
AMENDED AND RESTATED THRIFT RESTORATION PLAN
Pursuant to the provisions of Section 4.1 thereof, the Noble Drilling
Corporation Amended and Restated Thrift Restoration Plan as executed on March
17, 1995, to be effective as of April 5, 1994 (the "Plan"), is hereby amended in
the following respects only:
FIRST: Section 1.1(h) of the Plan is hereby amended by restatement in
its entirety to read as follows:
(h) "Eligible Employee" means, with respect to a Plan Year,
any employee of an Employer (i) whose annual base salary as of the
first day of such year (as estimated by the Committee during the
Election Period for such year) will be at least equal to the greater of
$80,000 or the compensation threshold amount applicable in determining
a highly compensated employee for such year under Section 414(q)(1) of
the Internal Revenue Code, and (ii) who is designated by the Committee
as an Eligible Employee for such year for the purposes of this Plan.
SECOND: The reference to "10%" in Section 3.1(ii) of the Plan is hereby
amended to refer to "12%".
THIRD: Section 4.1 of the Plan is hereby amended by restatement in its
entirety to read as follows:
Section 4.1 Amendment and Termination. The Board of Directors
of the Company shall have the right and power at any time and from time
to time to amend this Plan, in whole or in part, on behalf of all
Employers, and at any time to terminate this Plan or any Employer's
participation hereunder; provided, however, that no such amendment or
termination shall reduce the amounts actually credited to a
Participant's Accounts as of the date of such amendment or termination,
or further defer the dates for the payment of such amounts, without the
consent of the affected Participant. Any amendment to or termination of
this Plan shall be made by or pursuant to a resolution duly adopted by
the Board of Directors of the Company, and shall be evidenced by such
resolution or by a written instrument executed by such person as the
Board of Directors of the Company shall authorize for such purpose.
<PAGE> 2
IN WITNESS WHEREOF, this Amendment has been executed this 29th day of
January, 1998, to be effective as of January 1, 1998.
NOBLE DRILLING CORPORATION
By /s/ James C. Day
--------------------------------
Title: Chairman, President and
Chief Executive Officer
<PAGE> 1
EXHIBIT 10.18
AMENDMENT NO. 1 TO THE
NOBLE DRILLING CORPORATION
RETIREMENT RESTORATION PLAN
Pursuant to the provisions of Section 7 thereof, the Noble Drilling
Corporation Retirement Restoration Plan as executed on April 27, 1995 (the
"Plan"), is hereby amended in the following respect only:
Section 1.1(e) of the Plan is hereby amended by restatement in its
entirety to read as follows:
(e) "Participant" means any employee of an Employer (i) who is
a participant in the Retirement Plan, (ii) whose annual base salary
from an Employer at the time such employee is designated by the
Committee to be a Participant in this Plan is at least equal to the
greater of $150,000 or the maximum amount of compensation that may be
taken into account under the compensation limitation imposed under the
Retirement Plan in order to comply with Section 401(a)(17) of the Code,
and (iii) who has been designated by the Committee to be a Participant
in this Plan.
IN WITNESS WHEREOF, this Amendment has been executed this 29th day of
January, 1998, to be effective as of January 1, 1998.
NOBLE DRILLING CORPORATION
By /s/ James C. Day
-------------------------------------
Title: Chairman, President and
Chief Executive Officer
<PAGE> 1
EXHIBIT 21.1
SUBSIDIARIES
The following table sets forth the subsidiaries of Noble Drilling
Corporation as of March 13, 1998 (excluding certain subsidiaries that, if
considered in the aggregate as a single subsidiary, would not constitute a
significant subsidiary (as defined in Rule 1-02(w) of Regulation S-X) as of
December 31, 1997):
<TABLE>
<CAPTION>
SUBSIDIARY NAME INCORPORATED OR ORGANIZED IN:
- --------------- -----------------------------
<S> <C>
Noble Drilling International Inc. (1) Delaware
Noble Drilling Land Inc. (1) Nevada
Noble Drilling Services Inc. (1) Delaware
Noble Drilling (U.S.) Inc. (1) Delaware
Noble Offshore Corporation (1) Delaware
Triton Engineering Services Company (1) Delaware
Noble Drilling International (Cayman) Ltd. (2) Cayman Islands
Noble Drilling (Canada) Ltd. (2) Alberta
Mexico Drilling Partners Inc. (3) Nevada
Noble Drilling Land Ltd. (3) Texas Limited Partnership
Noble Drilling (Mexico) Inc. (3) Delaware
Noble (Gulf of Mexico) Inc. (3) Delaware
Noble Offshore Africa Inc. (4) Cayman Islands
Triton International, Inc. (5) Delaware
Triton Tool & Supply, Inc. (5) Texas
Triton USA, Inc. (5) Delaware
International Directional Services Ltd. (6) Bermuda
Neddrill do Brasil S/C Ltda. (6) Brazil
Noble Asset Company Limited (6) Cayman Islands
Noble Asset (U.K.) Limited (6) Cayman Islands
Noble Contracting GmbH (6) Switzerland
Noble Drilling (Nederland) B.V. (6) The Netherlands
Noble Drilling (Nigeria) Ltd. (6) Nigeria
Noble Drilling (TVL) Ltd. (6) Cayman Islands
Noble Drilling (U.K.) Ltd. (6) U.K.
Noble Drilling (West Africa) Ltd. (6) Cayman Islands
Noble Drilling de Venezuela C.A. (6) Venezuela
Noble Enterprises Limited (6) Cayman Islands
Noble International Limited (6) Cayman Islands
Noble Mexico Limited (6) Cayman Islands
Noble-Neddrill International Limited (6) Cayman Islands
Bawden Drilling Inc. (7) Delaware
Bawden Drilling International Ltd. (7) Bermuda
Triton Drilling (Nigeria) Ltd. (8) Nigeria
Triton International de Mexico, S.A. de C.V. (8) Mexico
Arktik Drilling Limited, Inc. (10) Bahamas
Noble Kvaerner Drilling Limited (11) Bahamas
Noble Drilling (Europe) Ltd. (12) Bermuda
Noble Land Support Limited (12) U.K.
Rigquip Ltd. (12) U.K.
Noble Drilling International Ltd. (13) Bermuda
Noble Drilling International Services Pte. Ltd. (13) Singapore
Noble Drilling (Malaysia) Sdn. Bhd. (13) Malaysia
Noble Drilling Arabia Limited (14) Saudi Arabia
Resolute Insurance Group Ltd. (15) Bermuda
</TABLE>
<PAGE> 2
(1) 100% owned by Noble Drilling Corporation
(2) 100% owned by Noble Drilling International Inc.
(3) 100% owned by Noble Drilling (U.S.) Inc.
(4) 100% owned by Noble Offshore Corporation
(5) 100% owned by Triton Engineering Services Company
(6) 100% owned by Noble Drilling International (Cayman) Ltd.
(7) 100% owned by Noble Drilling (Canada) Ltd.
(8) 100% owned by Triton International, Inc.
(9) 100% owned by Noble Asset Company Limited
(10) Joint venture (owned 41% by Noble Drilling (Nederland) B.V.)
(11) Joint venture (owned 50% by Noble Drilling (Nederland) B.V.)
(12) 100% owned by Noble Drilling (U.K.) Ltd.
(13) 100% owned by Noble Enterprises Limited (70% in the case of Noble
Drilling Malaysia Sdn. Bhd.)
(14) 100% owned by Noble International Limited
(15) 100% owned by Bawden Drilling International Ltd.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (No. 33-3289), Form S-8 (33-15269), Form S-8 (No.
33-18966), Form S-8 (33-46724), Form S-8 (33-50270), Form S-8 (33-50272), Form
S-8 (33-62394) and Form S-3 (333-43183) of Noble Drilling Corporation of our
report dated January 29, 1998, appearing on page 24 of this Form 10-K.
/s/ PRICE WATERHOUSE LLP
Houston, Texas
March 25, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 49,917
<SECURITIES> 16,471
<RECEIVABLES> 137,096
<ALLOWANCES> 1,380
<INVENTORY> 4,559
<CURRENT-ASSETS> 265,015
<PP&E> 1,457,528
<DEPRECIATION> 256,613
<TOTAL-ASSETS> 1,505,811
<CURRENT-LIABILITIES> 152,890
<BONDS> 138,139
0
0
<COMMON> 13,334
<OTHER-SE> 1,135,720
<TOTAL-LIABILITY-AND-EQUITY> 1,505,811
<SALES> 0
<TOTAL-REVENUES> 713,195
<CGS> 0
<TOTAL-COSTS> 387,081
<OTHER-EXPENSES> (55,233)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12,894
<INCOME-PRETAX> 379,613
<INCOME-TAX> 115,731
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> (6,685)
<CHANGES> 0
<NET-INCOME> 257,197
<EPS-PRIMARY> 1.95
<EPS-DILUTED> 1.93
</TABLE>
