SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended September 30, 1995
Commission File Number 0-6352
ATWOOD OCEANICS, INC.
(Exact name of registrant as specified in its charter)
State of Texas
(State or other jurisdiction of incorporation or organization)
74-1611874
(I.R.S. Employer Identification No.)
15835 Park Ten Place Drive
P.O. Box 218350
Houston, Texas 77218
(Address of principal executive offices)
Registrant's telephone number, including area code:
(713) 492-2929
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $1 par value
(Title of Class)
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 in S-K is not contained herein, and will not be contained, to
the best of the registrant's knowledge, in definite proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K [ ]
The aggregate market value of the voting stock held by non-affiliates of the
registrants as of November 30, 1995 is $94,294,000.
The number of shares outstanding of the issuer's class of Common Stock, as of
November 30 , 1995: 6,629,013 shares of Common Stock, $1 par value.
DOCUMENTS INCORPORATED BY REFERENCE
(1) Annual Report to Shareholders for the fiscal year ended September 30,
1995 - Referenced in Parts I, II and IV of this report.
(2) Proxy Statement for Annual Meeting of Shareholders to be held February 8,
1996 - Referenced in Part III of this report.
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PART I
ITEM 1. BUSINESS
Atwood Oceanics, Inc. (which together with its subsidiaries is
identified as the "Company" or "Registrant", unless the context requires
otherwise), a corporation organized in 1968 under the laws of the State of
Texas, is engaged in contract drilling of exploratory and development oil and
gas wells in offshore areas and related support, management and consulting
services. The Company currently owns (i) one jack-up, one "second-generation"
semisubmersible tender-assist vessel, one submersible, three "third-
generation" semisubmersibles, one "second-generation" semisubmersible and one
modular, self-contained platform rig, and (ii) a fifty percent interest in an
Australian company which has been awarded a term contract for the design,
constuction and operation of a new generation platform rig. The Company also
provides labor, supervisory and consulting services to two operator owned
platform rigs in Australia.
Although, activity in the contract drilling industry and related oil
service businesses has improved in recent times, there still exists an
oversupply of drilling equipment and intense competition. During fiscal years
1995 and 1994, the Company had 99 percent utilization of its drilling
equipment which resulted in two consecutive years of profitability. However,
due to the fact that several rigs are currently working under short-term
contracts, there is no assurance in 1996 that the Company can maintain its
equipment utilization rate at its 1995 and 1994 levels.
Most of the Company's drilling operations have been conducted outside
United States waters. The Company is currently involved in active drilling
operations in Australia, Malaysia, Malaysia/Thailand Joint Development Area
and the United States. At the present time, the submersible "RICHMOND" is the
Company's only drilling vessel located in United States waters. Since March
1993 the RICHMOND has had continuous profitable work in the United States Gulf
of Mexico.
For information relating to the revenues, profitability and identifiable
assets attributable to specific geographic area of operations, see Note 13 of
Notes to Consolidated Financial Statements contained in the Company's Annual
Report to shareholders for fiscal year 1995, incorporated by reference herein.
The following table sets forth, for each of the last three fiscal years, the
approximate percentage of contract revenues derived from domestic and foreign
operations:
Fiscal Year Ended
September 30,
1995 1994 1993
Domestic 7% 8% 7%
Foreign 93% 92% 93%
OFFSHORE DRILLING EQUIPMENT
As stated above, the Company's diversified fleet of owned or operated
drilling rigs currently consists of four semisubmersibles, one semisubmersible
tender assist vessel, one jack-up, one submersible, and four modular, self-
contained platform rig. Each type of drilling rig is designed for different
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purposes and applications, for operations in different water depths, bottom
conditions, environments and geographical areas, and for different drilling
and operating requirements. The following descriptions of the various types
of drilling rigs owned or operated by the Company illustrate the diversified
range of application of the rig fleet.
Each semisubmersible drilling unit has two hulls, the lower of which is
capable of being flooded. Drilling equipment is mounted on the main hull.
After the drilling unit is towed to location, the lower hull is flooded,
lowering the entire drilling unit to its operating draft, and the drilling
unit is anchored in place. On completion of operations, the lower hull is
deballasted, raising the entire drilling unit to its towing draft. This type
of drilling unit is designed to operate in greater water depths than a jack-up
and in more severe sea conditions than a drillship. Semisubmersible units are
generally more expensive to operate than jack-up rigs and, compared to a
drillship, are often limited in the amount of supplies that can be stored on
board.
The semisubmersible tender assist vessel operates like a semisubmersible
except that its drilling equipment is temporarily installed on permanently
constructed offshore support platforms. The semisubmersible vessel provides
crew accommodations, storage facilities and other support for the drilling
operations.
A jack-up drilling barge contains all of the drilling equipment on a
single hull designed to be towed to the well site. Once on location, legs are
lowered to the sea floor and the barge is raised out of the water by jacking
up on these legs. On completion of the well, the barge is jacked down, and
towed to the next location. A jack-up drilling unit can operate in more
severe sea and weather conditions than a drillship and is less expensive to
operate than a semisubmersible. However, because it must rest on the sea
floor, a jack-up cannot operate in as deep water as other units.
The submersible drilling unit owned by the Company has two hulls, the
lower being a mat which is capable of being flooded. Drilling equipment and
crew accommodations are located on the main hull. After the drilling unit is
towed to location, the lower hull is flooded, lowering the entire unit to its
operating draft at which it rests on the sea floor. On completion of
operations, the lower hull is deballasted, raising the entire unit to its
towing draft. This type of drilling unit is designed to operate in shallow
water depths ranging from 9 to 70 feet and can operate in moderately severe
sea conditions. Although drilling units of this type are less expensive to
operate, like the jack-up rig, they cannot operate in as deep water as other
units.
A modular platform rig is similar to a land rig in its basic components.
Modular platform rigs are temporarily installed on permanently constructed
offshore support platforms in order to perform the drilling operations. After
the drilling phase is completed, the modular rig is broken down into
convenient packages and moved by work boats. A platform rig usually stays at
a location for several months, if not years, since several wells are typically
drilled from a support platform.
DRILLING CONTRACTS
The contracts under which the Company operates its vessels are obtained
either through individual negotiations with the customer or by submitting
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proposals in competition with other contractors and vary in their terms and
conditions. The initial term of contracts for the Company's owned and/or
operated vessels has ranged from the length of time necessary to drill one
well to several months and is generally subject to early termination in the
event of a total loss of the drilling vessel, excessive equipment breakdown or
failure to meet minimum performance criteria. In the current offshore
drilling market, most contracts for mobile exploration vessels, such as the
Company's semisubmersibles, are for terms of less than one year. However, it
is not unusual for contracts to contain renewal provisions at the option of
the customer.
The rate of compensation specified in each contract depends on the
nature of the operation to be performed, the duration of the work, equipment
and services provided, the areas involved, market conditions and other
variables. Generally, contracts for drilling, management and support services
specify a basic rate of compensation computed on a day rate basis. Such
agreements generally provide for a reduced day rate payable when operations
are interrupted by equipment failure and subsequent repairs, field moves,
adverse weather conditions or other factors beyond the control of the Company.
Some contracts also provide for revision of the specified dayrates in the
event of material changes in certain items of cost. Any period during which a
vessel is not earning a full operating day rate because of the above
conditions or because the vessel is idle and not on contract will have an
adverse effect on operating profit. An over supply of drilling rigs in any
market area can adversely affect the Company's ability to employ its drilling
vessels.
For long moves, the Company attempts to obtain either a lump sum or a
day rate as mobilization compensation for expenses incurred during the period
in transit. A surplus of certain types of units, either worldwide or in
particular operating areas, can result in the Company's acceptance of a
contract which provides only partial or no recovery of relocation costs.
Operation of the Company's drilling equipment is subject to the offshore
drilling requirements of petroleum exploration companies and agencies of
foreign governments. These requirements are, in turn, subject to fluctuations
in government policies, world demand and prices for petroleum products, proved
reserves in relation to such demand and the extent to which such demand can be
met from onshore sources. Some contracts continue to be offered on a per well
basis rather than a fixed time period.
The Company also contracts to provide various types of services to third
party owners of drilling rigs. These contracts are normally for a stated term
or until termination of operations or stages of operation at a particular
facility or location. The services may include, as in the case of contracts
entered into by the Company in connection with operations offshore Australia,
the supply of personnel and rig design, fabrication, installation and
operation. The contracts normally provide for reimbursement to the Company
for all out-of-pocket expenses, plus a service or management fee for all of
the services performed. In most instances, the amount charged for the
services may be adjusted if there are changes in conditions, scope or costs of
operations. The Company generally obtains insurance or a contractual
indemnity from the owner for liabilities which could be incurred in
operations.
OPERATIONAL RISKS AND INSURANCE
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The Company's operations are subject to the usual hazards associated
with the drilling of oil and gas wells, such as blowouts, explosions and
fires. In addition, the Company's vessels are subject to those perils
peculiar to marine operations, such as capsizing, grounding, collision and
damage from severe weather conditions. Any of these risks could result in
damage or destruction of drilling rigs and oil and gas wells, personal injury
and property damage, and suspension of operations or environmental damage
through oil spillage or extensive, uncontrolled fires. Although the Company
believes that it is adequately insured against normal and foreseeable risks in
its operations in accordance with industry standards, such insurance may not
be adequate to protect the Company against liability from all consequences of
well disasters, marine perils, extensive fire damage or damage to the
environment. To date, the Company has not experienced difficulty in obtaining
insurance coverage, although no assurance can be given as to the future
availability of such insurance or cost thereof. The occurrence of a
significant event against which the Company is not fully insured could have a
material adverse effect on the Company's financial position.
ENVIRONMENTAL PROTECTION
Under the Federal Water Pollution Control Act, as amended, operators of
vessels in navigable United States waters and certain offshore areas are
liable to the United States government for the costs of removing oil and
certain other pollutants for which they may be held responsible, subject to
certain limitations, and must establish financial responsibility to cover such
liability. The Company has taken all steps necessary to comply with this law,
and has received a Certificate of Financial Responsibility (Water Pollution)
from the U.S. Coast Guard. The Company's operations in United States waters
are also subject to various other environmental regulations regarding
pollution and control thereof, and the Company has taken steps to ensure
compliance therewith.
CUSTOMERS
During fiscal year 1995, the Company performed operations for 13
customers. Because of the relatively limited number of customers for which
the Company can operate at any give time, sales to each of 3 different
customers amounted to 10% or more of the Company's fiscal 1995 revenues. Esso
Australia Limited/Esso Production Malaysia, Inc., BHP Petroleum Pty. Ltd. and
Woodside Offshore Petroleum Pty. Ltd. accounted for 35%, 22% and 11%,
respectively, of fiscal year 1995 revenues. The Company's business operations
are subject to the risks associated with a business having a limited number of
customers for its products or services, and a decrease in the drilling
programs of these customers in the areas where they employ the Company may
adversely affect the Company's revenues.
COMPETITION
The Company competes with numerous other drilling contractors, some of
which are substantially larger than the Company and possess appreciably
greater financial and other resources. Even though in recent years several
drilling companies have undertaken business combinations with other companies,
which has resulted in a decrease in the total number of competitors, the
drilling industry remains competitive, with no one drilling contractor being
dominant. Thus, there continues to be competition in securing available
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drilling contracts.
Price competition is generally the most important factor in the drilling
industry, but the technical capability of specialized drilling equipment and
personnel at the time and place required by customers are also important.
Other competitive factors include work force experience, rig suitability,
efficiency, condition of equipment, reputation and customer relations. The
Company believes that it competes favorably with respect to these factors. If
demand for drilling rigs increases in the future, rig availability may also
become a competitive factor. Competition usually occurs on a regional basis
and, although drilling rigs are mobile and can be moved from one region to
another in response to increased demand, an oversupply of rigs in any region
may result. Demand for drilling equipment is also dependent on the
exploration and development programs of oil and gas companies, which are in
turn influenced by the financial condition of such companies, by general
economic conditions and by prices of oil and gas, and from time to time by
political considerations and policies.
FOREIGN OPERATIONS
The operations of the Company are conducted primarily in foreign waters
and are subject to certain political, economic and other uncertainties not
encountered by purely domestic drilling contractors, including risks of
expropriation, nationalization, foreign exchange restrictions, foreign
taxation, changing conditions and foreign and domestic monetary policies.
Generally, the Company purchases insurance to protect against some or all loss
due to events of political risk such as nationalization, expropriation, war,
confiscation and deprivation. Occasionally, customers will indemnify the
Company against such losses. Moreover, offshore drilling activity is affected
by government regulations and policies limiting the withdrawal of offshore oil
and gas, by regulations affecting production, by regulations restricting the
importation of foreign petroleum, by environmental regulations and by
regulations which may limit operations in offshore areas by foreign companies
and/or personnel. See Note 13 to Consolidated Financial Statements contained
in the Company's Annual Report to shareholders for fiscal year 1995,
incorporated herein by reference, for a summary of contract revenues,
operating income (loss) and identifiable assets by geographic region.
EMPLOYEES
The Company currently employs approximately 650 persons in its domestic
and worldwide operations. In connection with its foreign drilling operations,
the Company has often been required by the host country to hire substantial
portions of its work force in that country, and in some cases, these employees
may be represented by foreign unions. To date, the Company has experienced
little difficulty in complying with such requirements and the Company's
drilling operations have not been significantly interrupted by strikes or work
stoppages.
ITEM 2. PROPERTIES
Information regarding the location and general character of the
Company's principal assets may be found in the schedule with the caption
heading "Offshore Drilling Operations" in the Company's Annual Report to
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Shareholders for fiscal year 1995, which is incorporated by reference herein.
Effective December 31, 1994, the Company acquired the remaining 50
percent interest in the FALCON, HUNTER and EAGLE (third-generation
semisubmersibles). In fiscal year 1994, the Company increased its rig fleet
with the addition of the SOUTHERN CROSS, a semisubmersible built in 1976.
During fiscal year 1995, construction of RIG-200 (a new generation platform
rig of which the Company has 50 percent ownership) was substantially
completed. For more information concerning these events, see Notes 2, 4 and 5
to Consolidated Financial Statements contained in the Company's Annual Report
to Shareholders for fiscal year 1995, incorporated by reference herein.
ITEM 3. LEGAL PROCEEDINGS
The Company is not currently involved in any material legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS
During the fourth quarter of fiscal 1995, no matters were submitted to a
vote of shareholders through the solicitation of proxies or otherwise.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER
MATTERS
As of September 30, 1995, there were over 400 beneficial owners of the
Company's common stock.
The Company did not pay cash dividends in fiscal years 1994 or 1995 and
the Company does not anticipate paying cash dividends in the foreseeable
future because of the capital intensive nature of its business. Cash reserves
will be utilized to offset any operating cash deficiencies which could occur,
as well as to acquire additional equipment, at the appropriate time, to enable
the company to maintain its high competitive profile in the industry.
Market information concerning the Company's common stock may be found
under the caption heading "Stock Price Information" in the Company's Annual
Report to Shareholders for fiscal 1995, which is incorporated by reference
herein.
ITEM 6. SELECTED FINANCIAL DATA
Information required by this item may be found under the caption "Five
Year Financial Review" in the Company's Annual Report to Shareholders for
fiscal 1995, which is incorporated by reference herein.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Information required by this item may be found in the Company's Annual
Report to Shareholders for fiscal 1995, which is incorporated by reference
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herein.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Information required by this item may be found in the Company's Annual
Report to Shareholders for fiscal 1995, which is incorporated by reference
herein.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
There have been no disagreements with the Company's accountants on
accounting and financial disclosure.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
This information is incorporated by reference from the Company's
definitive Proxy Statement for the Annual Meeting of Shareholders to be held
February 8, 1996, to be filed with the Securities and Exchange Commission (the
Commission) not later than 120 days after the end of the fiscal year covered
by this Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
This information is incorporated by reference from the Company's
definitive Proxy Statement for the Annual Meeting of Shareholders to be held
February 8, 1996, to be filed with the Commission not later than 120 days
after the end of the fiscal year covered by this Form 10-K.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
This information is incorporated by reference from the Company's
definitive Proxy Statement for the Annual Meeting of Shareholders to be held
February 8, 1996, to be filed with the Commission not later than 120 days
after the end of the fiscal year covered by this Form 10-K.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
This information is incorporated by reference from the Company's
definitive Proxy Statement for the Annual Meeting of Shareholders to be held
February 8, 1996, to be filed with the Commission not later than 120 days
after the end of the fiscal year covered by this Form 10-K.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, AND REPORTS ON FORM 8-K
(a) Financial Statements and Exhibits
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1. Financial Statements
The following financial statements, together with the report of Arthur
Andersen LLP dated November 21, 1995 appearing in the Company's Annual Report
to Shareholders, are incorporated by reference herein:
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Cash Flows
Consolidated Statements of Changes in Shareholders' Equity
Report of Independent Public Accountants
Notes to Consolidated Financial Statements
2. Exhibits
Listed below are all of the Exhibits filed as part of this report.
3.1.1 Restated Articles of Incorporation dated January 1972
(Incorporated herein by reference to Exhibit 3.1.1 of the
Company's Form 10-K for the year ended September 30, 1993).
3.1.2 Articles of Amendment dated March 1975 (Incorporated herein
by reference to Exhibit 3.1.2 of the Company's Form 10-K for
the year ended September 30, 1993).
3.1.3 Articles of Amendment dated March 1992 (Incorporated herein
by reference to Exhibit 3.1.3 ofthe Company's Form 10-K for
the year ended September 30, 1993).
3.2 Bylaws, as amended (Incorporated herein by reference to
Exhibit 3.2 of the Company's Form 10-K for the year ended
September 30, 1993).
10.1 Atwood Oceanics, Inc. 1981 Incentive Stock Option Plan
(Incorporated herein by reference to Exhibit 10.1 of the
Company's Form 10-K for the year ended September 30, 1993).
10.2 Atwood Oceanics, Inc. 1990 Stock Option Plan (Incorporated
herein by reference to Exhibit 10.2 of the Company's Form
10-K for the year ended September 30, 1993).
10.3 Joint Venture Letter Agreement dated November 4, 1994
between the Company and Helmerich & Payne, Inc.
(Incorporated herein by reference to Exhibit 10.3 of the
Company's Form 10-K for the year ended September 30, 1994).
10.4.1 Amended and Restated Master Loan Restructuring
Agreement as of March 31, 1995 between Atwood Deep
Seas, Ltd.; Texas Commercen Bank, National
Association; CoMac Partners and Chemical Bank.
10.4.2 Amendment to Second Amended and Restated Master Loan
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Restructuring Agreement dated as of November 28, 1995
between Atwood Deep Seas, Ltd.; Texas Commerce Bank,
National Association; CoMac Partners and Chemical
Bank.
10.5 Asset Purchase Agreement dated February 14, 1995, effective
as of December 31, 1995 between Atwood Falcon I, Ltd. and
Atwood Oceanics Pacific Limited.
10.6 Purchase and Sale Agreement dated February 14, 1995,
effective as of December 31, 1995 among Philadelphia
Investment Corporation of Delaware, Philadelphia Falcon
Drilling Company, Philadelphia Drilling Company, Atwood
Oceanics Drilling Company, Falcon I, Ltd. and Atwood Deep
Seas, Ltd.
13.1 Annual Report to Shareholders
21.1 List of Subsidiaries
23.1 Accountants Consent
27.1 Financial Data Schedule
4. Executive Compensation Plans and Arrangements
Atwood Oceanics, Inc. 1981 Incentive Stock Option Plan - See
Exhibit 10.1 hereof.
Atwood Oceanics, Inc. 1990 Stock Option Plan - See Exhibit 10.2
hereof.
(b) Reports on Form 8-K
During the last quarter of fiscal 1995, the Company did not file
with the Securities and Exchange Commission any reports on Form 8-K.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Company has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
ATWOOD OCEANICS, INC.
/s/ JOHN R. IRWIN /s/ JAMES M. HOLLAND
JOHN R. IRWIN, President JAMES M. HOLLAND, Senior Vice
(Principal Executive Officer) President
Principal Financial and Accounting
Officer)
Date: December 7, 1995 Date: December 7, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities on the dates indicated.
/s/ ROBERT W. BURGESS /s/ GEORGE S. DOTSON
ROBERT W. BURGESS, Director GEORGE S. DOTSON, Director
Date: 7 December 1995 Date: 7 December 1995
/s/ HANS HELMERICH /s/ WILLIAM J. MORRISSEY
HANS HELMERICH, Director WILLIAM J. MORRISSEY, Director
Date: 7 December 1995 Date: 7 December 1995
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EXHIBIT 10.4.1
FIRST AMENDMENT TO
SECOND AMENDED AND RESTATED
MASTER LOAN RESTRUCTURING AGREEMENT
THIS FIRST AMENDMENT TO SECOND AMENDED AND RESTATED MASTER
LOAN RESTRUCTURING AGREEMENT (hereinafter called the "First
Amendment") dated as of November 28, 1995 is by and between
Atwood Deep Seas, Ltd., a Texas limited partnership (the
"Partnership"), Texas Commerce Bank, National Association
("TCB"), CoMac Partners ("CoMac") and Chemical Bank ("Chemical";
collectively with TCB and CoMac, referred to as the "Banks") and
Chemical Bank, as agent (in such capacity, the "Agent").
W I T N E S S E T H:
WHEREAS, the Partnership and the Banks entered into that
certain Second Amended and Restated Master Loan Restructuring
Agreement effective as of March 31, 1995 (the "Agreement")
whereby, upon the terms and conditions therein stated, the Banks
agreed to modify the terms of their loans to the Partnership as
provided in the Agreement; and
WHEREAS, the Partnership desires to re-document the Vessels
(as defined in the Agreement) under the flag of the Republic of
Panama, and the Banks have consented to same; and
WHEREAS, the Partnership and the Banks mutually desire to
amend certain aspects of the Agreement and related documents to
reflect the above;
NOW, THEREFORE, in consideration of the mutual agreements
herein contained, the parties hereto agree as follows:
ARTICLE I
GENERAL TERMS
1.1 Terms Defined in Agreement. As used in this First
Amendment, except as may otherwise be provided in Section 1.02
hereof, all capitalized terms which are defined in the Agreement
shall have the same meaning herein as therein, all of such terms
and their definitions being incorporated herein by reference.
1.2 Amended Definitions. The following terms which are
defined in the Agreement are amended in their entirety as
follows:
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"Agreement" shall mean the Second Amended and Restated
Master Loan Restructuring Agreement dated as of March 31,
1995, as amended by the First Amendment, as may be further
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PAGE 13
amended, supplemented or otherwise modified from time to
time.
"Eagle Mortgage" shall mean the Panamanian Indenture of
First Naval Mortgage dated as of November 28, 1995 by the
Partnership in favor of the Agent, as the same may be
amended, supplemented or otherwise modified from time to
time, substantially in the form of Exhibit C-3, attached to
the First Amendment.
"Eagle Mortgage Amendment" shall mean the Amendment No.
3 to First Preferred Ship Mortgage dated as of March 31,
1995, substantially in the form of Exhibit C-1.
"Eagle Vessel" shall mean that certain semi-submersible
offshore drilling unit named the "ATWOOD EAGLE" (formerly
known as the "Diamond M Eagle" and then the "Eagle"),
Panamanian Provisional Patente No.24449-PEXT.
"EOI" shall mean Eagle Oceanics, Inc., a Delaware
corporation and wholly owned subsidiary of Atwood.
"Existing Eagle Mortgage" shall mean the First
Preferred Ship Mortgage, made and dated August 4, 1982, by
Diamond M Eagle, Ltd., a predecessor in interest to the
Partnership, to Chemical, as amended by the First Amendment
thereto dated April 26, 1988, Amendment No. 2 to First
Preferred Ship Mortgage dated November 12, 1992, and the
Eagle Mortgage Amendment.
"Existing Hunter Mortgage" shall mean the First
Preferred Ship Mortgage, made and dated December 29, 1981,
by Diamond M Hunter, Ltd., a predecessor in interest to the
Partnership, to Chemical, as amended by the First Amendment
thereto dated April 26, 1988, Amendment No. 2 to First
Preferred Ship Mortgage dated November 12, 1992, and the
Hunter Mortgage Amendment.
"Funding Agreement" shall mean the Third Amended and
Restated Funding Agreement dated as of March 31, 1995 among
Atwood, the Partnership and the Partners, as amended by
First Amendment to Third Amended and Restated Funding
Agreement dated November 28, 1995, as may be further
amended, supplemented or otherwise modified from time to
time.
"Hunter Mortgage" shall mean the Panamanian Indenture
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of First Naval Mortgage dated as of November 28, 1995 by the
Partnership in favor of the Agent, as the same may be
amended, supplemented or otherwise modified from time to
time, substantially in the form of Exhibit C-4, attached to
the First Amendment.
"Hunter Mortgage Amendment" shall mean the Amendment
No. 3 to First Preferred Ship Mortgage dated as of
March 31, 1995, substantially in the form of Exhibit C-2.
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"Hunter Vessel" shall mean that certain semi-
submersible offshore drilling unit named the "ATWOOD HUNTER"
(formerly known as the "Diamond M Hunter" and then the
"Eagle"), Panamanian Provisional Patente No. 24452-PEXT.
"Partner Mortgage Amendment" shall mean that certain
Amendment No. 2 to Preferred Fleet Mortgage on the Hunter
Vessel and the Eagle Vessel dated as of March 31, 1995
executed by the Partnership in favor of Atwood.
"Partner Mortgages" shall mean the AOI Mortgage as
defined in the Funding Agreement.
"Security Documents" shall be the collective reference
to the Restructure Security Agreement, the Intercreditor
Agreement, the Mortgages, the Trust Indenture and any
Transfer Notices delivered to the Agent.
1.3 Additional Definitions. The following terms are hereby
added as defined terms in the Agreement:
"Existing Partner Mortgages" shall mean the Existing
AOI Mortgage as defined in the Funding Agreement.
"First Amendment" shall mean that certain First
Amendment to Second Amended and Restated Master Loan
Restructuring Agreement dated as of November 28, 1995.
"Indemnification Agreement" shall mean that certain
Indemnification Agreement dated as of November 28, 1995
executed by Atwood, substantially in the form of Annex A
attached to the First Amendment.
"Trust Indenture" shall mean the Second Amended and
Restated Trust Indenture dated as of March 31, 1995 between
the Partnership and Chemical as Vessel Trustee,
substantially in the form of Exhibit H, as amended by the
First Amendment to the Second Amended and Restated Trust
Indenture dated November 28, 1995, as may be further
amended, supplemented or otherwise modified from time to
time.
1.4 Confirmation and Extent of Changes. All terms which
are defined in the Agreement shall remain unchanged except as
specifically provided in Sections 1.02 and 1.03 of this First
Amendment.
<PAGE>
ARTICLE II
REVISIONS TO AGREEMENT
2.1 Existing Liens. Section 2.1 of the Agreement is hereby
amended to read in its entirety as follows:
"2.1 Existing Liens. Except with respect to the
Existing Eagle Mortgage and the Existing Hunter Mortgage
which have been replaced by the Mortgages, the Partnership
hereby confirms and acknowledges that without the necessity
<PAGE>
PAGE 15
of further action by any party, the Existing Liens (a) are
unimpaired and continue to be fully perfected security
interests in favor of the Agent, and (b) continue to
constitute collateral security for the Partnership's
obligations to the Banks under this Agreement, the Term
Notes and the other Restructuring Documents."
2.2 Existing Documents Superseded. Section 2.3(e) of the
Agreement is hereby amended to read in its entirety as follows:
"(e) On the date of the First Amendment, the Liens
created by the Existing Collateral Documents other than the
Existing Eagle Mortgage and the Existing Hunter Mortgage
shall be continued pursuant to the Restructure Security
Agreement and the other Security Documents."
2.3 Mortgages Superseded. The following provisions are
hereby added as Sections 2.3(f) and (g) of the Agreement to read
in their entirety as follows:
"(f) On the date of the First Amendment, the Existing
Eagle Mortgage shall be superseded by the Eagle Mortgage and
the Existing Hunter Mortgage shall be superseded by the
Hunter Mortgage.
(g) On the date of the First Amendment, the Existing
Partner Mortgages shall be superseded by the Partner
Mortgages."
2.4 Citizen Representation. The last sentence of Section
6.1(a) of the Agreement is hereby deleted.
2.5 Mortgages. Section 6.1(b) of the Agreement is hereby
amended to read in its entirety as follows:
"The Partnership has the power, and has taken all necessary
action (including, without limitation, action under the
Partnership Agreement and the TRLPA), (i) to execute,
deliver and perform its obligations under the Agreement, the
Term Notes, the Security Documents, the Assumption Agreement
and each other Restructuring Document to which it is a
party, and to perform under the Mortgages and the
Restructuring Documents to which it is a party, (ii) to
assign, and grant to the Agent for the benefit of the Banks,
a valid first security interest in, the collateral described
in the Restructure Security Agreement, and (iii) to grant
first priority mortgages on the Vessels under the laws of
<PAGE>
the Republic of Panama pursuant to the Mortgages. Except
for completion of all formalities to convert in due course,
the Provisional Patente on each of the Vessels into a
Permanent Patent, no consent, license, approval or
authorization of, or registration or declaration with, any
Person (including any Governmental Authority) is required in
connection with (x) the execution and delivery of this
Agreement, the Term Notes, the Security Documents, the
Assumption Agreement and the other Restructuring Documents
to which it is a party or (y) the performance of the
<PAGE>
PAGE 16
Mortgages and the Restructuring Documents to which it is a
party (other than those required in connection with the
Mortgages and filings under the Uniform Commercial Code with
respect to the collateral described in the Restructure
Security Agreement) or (z) the validity or enforceability
against the Partnership of the Mortgages, the Assumption
Agreement and the Restructuring Documents to which it is a
party, except such consents, authorizations, licenses,
approvals, registrations and declarations which have been
obtained or made and are in full force and effect."
2.6 Mortgages. Section 6.1(j) of the Agreement is hereby
amended to read in its entirety as follows:
"(j) Mortgages. (i) When each Mortgage has been duly
executed by the Partnership and delivered to the Agent and
duly recorded in the office listed on Schedule 4 hereto,
each of the Mortgages will constitute a first priority
mortgage on such Vessel in favor of the Agent for the
benefit of the Banks named therein, having the effect and
with the priority provided under the laws of the Republic of
Panama."
2.7 Insurance. Section 8.4(c) of the Agreement is hereby
amended to read in its entirety as follows:
"(c) at all times cause each Vessel to be insured to
the extent required by the terms of the applicable
Mortgage."
2.8 Recorded Mortgages. The following provisions are
hereby added as Sections 10.1(o), (p), (q), (r) and (s) of the
Agreement as additional Events of Default to read in their
entirety as follows:
(o) The Agent shall not have received within fifteen
(15) Business Days of the date the First Amendment is
executed (i) an original of each Mortgage bearing evidence
of recordation by the relevant Vessel Recording office
reflected in Schedule 4 to this Agreement, and
(ii) authenticated copies of documentation issued by the
Republic of Panama indicating that each Vessel is owned by
the Partnership free and clear of all mortgages or other
encumbrances other than the relevant Mortgage and Partner
Mortgages; or
(p) The Agent shall not have received within thirty
<PAGE>
(30) Business Days of the date the First Amendment is
executed a Permanent [Reglamentary] Patente on the Eagle
Vessel and the Hunter Vessel; or
(q) The Agent shall not have received by Closing, a
certificate executed by the General Partner attaching a list
of the trade accounts payable of the Partnership as of
September 30, 1995 and certifying that all such accounts
payable will be paid as provided in Section 10.1(s); or
<PAGE>
PAGE 17
(r) The Agent shall not have received by the forty-
fifth (45th) day of the month following the month in which
Closing occurs, a certificate executed by the General
Partner attaching a list of the trade accounts payable of
the Partnership as of the last day of the month in which
Closing occurs and certifying that all such accounts payable
will be paid within sixty (60) days; or
(s) The Agent shall not have received within thirty
(30) days after the expiration of the sixty (60) day period
in Section 10.1(r) above, a certificate executed by the
General Partner certifying that all accounts payable on the
lists delivered pursuant to Sections 10.1(q) and 10.1(r)
above have been paid in full."
2.9 Schedule 4. Schedule 4 of the Agreement is hereby
deleted and replaced with the Schedule 4 attached to this First
Amendment.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations Repeated. The representations and
warranties of Partnership contained in the Agreement (as modified
by this First Amendment) are true and correct in all material
respects at and as of the time of delivery of this First
Amendment, except for such changes in the facts represented and
warranted as are not in violation of the Agreement or this First
Amendment.
3.2 Security Documents. All Security Documents to which
the Partnership is a party shall secure the Term Notes and all of
the indebtedness of Partnership to Banks represented by the Term
Notes as such indebtedness is modified by this First Amendment,
whether or not such Security Documents shall be expressly amended
or supplemented in connection herewith.
3.3 Compliance with Obligations. Partnership has performed
and complied with all agreements and conditions contained in the
Agreement and the Security Documents required to be performed or
complied with by Partnership prior to or at the time of delivery
of this First Amendment.
3.4 No Amendments. Nothing in Article III of this First
Amendment is intended to amend any of the representations or
warranties contained in the Agreement.
<PAGE>
ARTICLE IV
CONDITIONS
4.1 Closing. The closing (the "Closing") of the
transactions contemplated hereby shall take place at the offices
of Simpson Thacher & Bartlett, 425 Lexington Avenue, New York,
New York 10017, commencing at 10:00 A.M., New York time, on
November 28, 1995 or such other place or date as to which the
<PAGE>
PAGE 18
Agent, the Banks and the Partnership shall agree.
4.2 Conditions Precedent. Each of the parties hereto
expressly acknowledges that each of the following conditions is
integral to the effectiveness of the agreements of the Agent and
the Banks herein and that no such agreement shall be effective
until the documents or instruments delivered at the Closing by
the Agent or any Bank prior to the completion of all such
conditions in connection with or in furtherance of any such
agreement shall be so delivered in escrow until each of the
following conditions shall have been satisfied:
(a) Agreements. This First Amendment shall have been
duly executed and delivered by each of the parties hereto,
and each of the following agreements, amendments or
instruments shall have been duly executed and delivered by
the respective parties thereto and shall not have been
terminated and the conditions to the effectiveness of such
agreements, amendments or instruments shall have been
fulfilled:
(i) the Mortgages;
(ii) First Amendment to Third Amended and Restated
Funding Agreement;
(iii) First Amendment to Second Amended and
Restated Trust Indenture; and
(iv) the Indemnification Agreement.
(b) Resolutions. The Agent shall have received
resolutions, certified by the Secretary, Assistant Secretary
or general partner, as the case may be, of each of the
following corporations or limited partnerships, of the Board
of Directors or partners (general and limited), as the case
may be, of each of the following corporations or limited
partnerships as to the following matters:
(i) of the Partnership authorizing the
execution, delivery and performance of this First
Amendment and the documents listed in 4.02(a) of this
First Amendment to which it is a party;
(ii) of Atwood authorizing the execution,
delivery and performance of the Indemnification
Agreement; and
<PAGE>
(iii) of each of AHC, AODC and EOI authorizing the
execution, delivery and performance of the First
Amendment to Third Amended and Restated Funding
Agreement.
(c) Incumbency Certificates. The Agent shall have
received a certificate of the Secretary or general partner,
as the case may be, of each of the Partnership, Atwood, AHC,
AODC and EOI certifying as to the incumbency and signature
<PAGE>
PAGE 19
of each officer of such corporation authorized to sign the
documents and agreements to which such corporation or
limited partnership is a party (and each instrument referred
to in such documents and agreements), together with evidence
of the incumbency and signature of such Secretary or the
person signing on behalf of such general partner, as the
case may be.
(d) Vessel Documents. The Agent shall have received:
(i) an original of each of the Mortgages,
executed and acknowledged by the Partnership;
(ii) authenticated copies of documentation issued
by the Republic of Panama indicating that each Vessel
is owned by the Partnership free and clear of all
mortgages or other encumbrances other than the relevant
Mortgage and Partner Mortgages; and
(iii) an original of the Trust Indenture as
amended, executed by the Partnership.
(e) Legal Opinions. The Agent shall have received the
following legal opinions, each dated as of the date of this
First Amendment:
(i) an opinion of Griggs & Harrison, special
counsel to the Partnership, substantially in the form
of Annex B to this First Amendment;
(ii) an opinion of Griggs & Harrison, counsel to
Atwood, AHC, AODC and EOI substantially in the form of
Annex C to this First Amendment; and
(iii) an opinion of Benedetti & Benedetti,
Panamanian counsel to the Partnership, substantially in
the form of Annex D to this First Amendment.
(f) Financial Information. The Agent shall have
received each of the financial statements referred to in
subsection 6.1(f) of the Agreement, which statements
substantially conform to the requirements of such subsection
and shall be in form and substance satisfactory to the
Agent.
(g) Other Agreements/Matters. The Partnership shall
have duly and validly issued, executed and delivered to
<PAGE>
Banks this First Amendment and such other documents as the
Agent may reasonably request in connection with the
transactions contemplated by the Agreement in form and
substance reasonably satisfactory to the Agent and its
counsel.
4.3 Release of Mortgages. The Partnership acknowledges and
consents that the Agent shall not be required to release the
Existing Eagle Mortgage or the Existing Hunter Mortgage unless
and until the Agent has received the opinion of Panamanian
<PAGE>
PAGE 20
counsel to the Partnership.
ARTICLE V
MISCELLANEOUS
5.1 Amend Loan Documents. The Partnership and the Banks
expressly agree that all documents and instruments executed in
connection with the Term Notes and dated as of March 31, 1995,
are hereby amended to reflect the terms of this First Amendment
and the matters referred to herein.
5.2 Extent of Amendments. Except as otherwise expressly
provided herein, the Agreement, the Security Documents, and the
other instruments and agreements referred to therein are not
amended, modified or affected by this First Amendment. Except as
expressly set forth herein, all of the terms, conditions,
covenants, representations, warranties and all other provisions
of the Agreement are herein ratified and confirmed and shall
remain in full force and effect.
5.3 References. On and after the date on which this First
Amendment becomes effective, the terms, "this Agreement,"
"hereof," "herein," "hereunder" and terms of like import, when
used herein or in the Agreement shall, except where the context
otherwise requires, refer to the Agreement, as amended by this
First Amendment.
5.4 Counterparts. This First Amendment may be executed by
one or more of the parties to this Agreement on any number of
separate counterparts and all of said counterparts taken together
shall be deemed to constitute one and the same instrument. A set
of the copies of this First Amendment signed by all the parties
shall be lodged with the Partnership and the Agent.
5.5 GOVERNING LAW. THIS FIRST AMENDMENT, THE AGREEMENT AND
THE TERM NOTES AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
5.6 Severability. The invalidity of any one or more
covenants, phrases, clauses, sentences or paragraphs of this
First Amendment shall not affect the remaining portions of this
First Amendment or any part hereof, and in case of any such
invalidity, this First Amendment shall be construed as if such
invalid covenants, phrases, clauses, sentences or paragraphs had
not been inserted.
<PAGE>
5.7 Release of Mortgages. By execution of this First
Amendment, each of the Banks hereby authorizes and directs the
Agent to release the Existing Eagle Mortgage and Existing Hunter
Mortgage in connection with the re-documentation of the Vessels
under the flag of the Republic of Panama.
<PAGE>
PAGE 21
IN WITNESS WHEREOF, the parties hereto have caused this
First Amendment to be duly executed and delivered by their proper
and duly authorized officers as of the day and year first above
written.
ATWOOD DEEP SEAS, LTD.
By: ATWOOD HUNTER
CO., General
Partner
By: /s/ James M.
Holland
James M. Holland
Vice President
Address: Same as
Subsection
13.2 of the
Agreement
CHEMICAL BANK
as Agent and as a Bank
By: /s/ Charles O.
Freedgood
Charles O. Freedgood
Vice President
Address: Same as
Subsection
13.2 of the
Agreement
TEXAS COMMERCE BANK,
NATIONAL ASSOCIATION
By: /s/ James A. Flynn
Name: James A.
Flynn
Title: Vice
President
<PAGE>
Texas Commerce
Bank National
Association
712 Main Street
Houston, Texas 77001
Attn.:
Telecopy:
Telephone
Confirmation:
COMAC PARTNERS
By: /s/ Paul J. Coughlin
Name: Paul J.
Coughlin
Title: General
Partner
10 Glenville Street
Greenwich,
Connecticut 06831
<PAGE>
PAGE 20
EXHIBIT 10.4.2
ATWOOD DEEP SEAS, LTD.
____________________________________
SECOND AMENDED AND RESTATED
MASTER LOAN RESTRUCTURING AGREEMENT
Dated as of March 31, 1995
____________________________________
CHEMICAL BANK
as Agent
<PAGE>
PAGE 21
SECOND AMENDED AND RESTATED MASTER LOAN RESTRUCTURING AGREEMENT, dated
as of March 31, 1995 (the "Effective Date"), among ATWOOD DEEP SEAS, LTD.
(formerly known as DIAMOND M DEEP SEAS, LTD.), a Texas limited partnership
(the "Partnership"), Texas Commerce Bank, National Association ("TCB"),CoMac
Partners ("CoMac") and Chemical Bank ("Chemical"; collectively with TCB and
CoMac, referred to as the "Banks") and Chemical Bank, as agent (in such
capacity, the "Agent").
W I T N E S S E T H :
WHEREAS, in April 1988, the Partnership, the banks parties thereto and
the Agent entered into the Master Loan Restructuring Agreement, (the "Original
Credit Agreement"), pursuant to which the obligations of the Partnership were
restructured; and
WHEREAS, in 1990, Diamond M Drilling Company (formerly known as Diamond
M Company) ("DMC") sold 100% of the capital stock of Diamond M Hunter Company
and Diamond M Falcon Company to Atwood Oceanics, Inc. ("Atwood"); and
WHEREAS, simultaneous with or shortly after such sale, Diamond M Hunter
Company changed its name to Atwood Hunter Co. and Diamond M Falcon Company
changed its name to Atwood Falcon Co.; and
WHEREAS, in connection with such sale, Atwood assumed all of DMC's
liability under certain documents executed in connection with the Original
Credit Agreement; and
WHEREAS, effective as of November 12, 1992, the Partnership, the Agent,
the Banks and Atwood (in its prior capacity as a Bank thereunder) entered into
that certain Amended and Restated Master Loan Restructuring Agreement (the
Original Credit Agreement as so amended and restated and as amended through
the date hereof, the "Existing Credit Agreement"); and
WHEREAS, effective as of December 31, 1994, Atwood Oceanics Drilling
Company purchased the fifty percent (50%) limited partnership interest in the
Partnership from Philadelphia Drilling Company, and Philadelphia Drilling
Company sold such interest (the "Sale"); and
WHEREAS, in connection with the transfer of such interest, Atwood
Oceanics Drilling Company and Atwood assumed the obligations of Philadelphia
Drilling Company, Philadelphia Investment Corporation of Delaware, arising
under the Existing Assumed Documents (as defined in subsection 1.1 herein);
and
WHEREAS, due to the Sale and the resulting assignment to and assumption
by Atwood Oceanics Drilling Company and Atwood of the rights and obligations
of Philadelphia Drilling Company and Philadelphia Investment Corporation of
Delaware as indicated above, certain documents are no longer required (herein
referred to as the Terminated Documents, as defined in subsection 1.1); and
<PAGE>
PAGE 22
WHEREAS, the partners in the Partnership have requested that the Banks
and the Agent amend and restate the Existing Credit Agreement and the other
documents executed in connection therewith to reflect certain requested
amendments resulting from the Sale, as well as to incorporate in one document
past amendments and related transactions; and
WHEREAS, the Agent and the Banks are willing to do so on the terms and
subject to the conditions set forth herein and in the other Restructuring
Documents (as defined in subsection 1.1);
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the parties hereto agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used herein, the following capitalized terms
shall have the following meanings, unless the context otherwise requires:
"Acceptable Drilling Contract" shall mean a Drilling Contract
which shall be in conformity with industry standards, in effect on the
date of execution thereof, for "day rate" drilling contracts (including
such day rate contracts coupled with a depth, footage or performance
premium, so long as such premium is not based on a "turn key" or
substantially equivalent arrangement); provided that, the Partnership
shall from time to time, upon the request of the Agent, demonstrate to
the Agent that the party responsible for making payments to the
Partnership under any Drilling Contract has the financial ability to
make the payments required under such Drilling Contract in accordance
with the terms thereof.
"Affiliate" shall mean, as to any Person, any other Person having
control of, controlled by, or under common control with, such first
Person.
"Affiliate Note" shall have the meaning assigned to such term in
subsection 4.2(c).
"Agent" shall have the meaning assigned to it in the Preamble.
"Agreement" shall mean this Second Amended and Restated Master
Loan Restructuring Agreement, as amended, supplemented or otherwise
modified from time to time.
"AHC" shall mean Atwood Hunter Co., a Delaware corporation and
wholly owned subsidiary of Atwood.
"Alternate Base Rate" shall mean for any day, a rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the
greatest of (a) the Prime Rate in effect on such day, (b) the Base CD
Rate in effect on such day plus 1% and (c) the Federal Funds Effective
Rate in effect on such day plus 1/2 of 1%. For purposes hereof: "Prime
<PAGE>
PAGE 23
Rate" shall mean the rate of interest per annum publicly announced from
time to time by the Agent as its prime rate in effect at its principal
office in New York City (each change in the Prime Rate to be effective
on the date such change is publicly announced); "Base CD Rate" shall
mean the sum of (a) the product of (i) the Three-Month Secondary CD Rate
and (ii) a fraction, the numerator of which is one and the denominator
of which is the C/D Reserve Percentage and (b) the C/D Assessment Rate;
"Three-Month Secondary CD Rate" shall mean, for any day, the secondary
market rate for three-month certificates of deposit reported as being in
effect on such day (or, if such day shall not be a Business Day, the
next preceding Business Day) by the Board of Governors of the Federal
Reserve System (the "Board") through the public information telephone
line of the Federal Reserve Bank of New York (which rate will, under the
current practices of the Board, be published in Federal Reserve
Statistical Release H.15(519) during the week following such day), or,
if such rate shall not be so reported on such day or such next preceding
Business Day, the average of the secondary market quotations for three-
month certificates of deposit of major money center banks in New York
City received at approximately 10:00 A.M., New York City time, on such
day (or, if such day shall not be a Business Day, on the next preceding
Business Day) by the Agent from three New York City negotiable
certificate of deposit dealers of recognized standing selected by it;
and "Federal Funds Effective Rate" shall mean, for any day, 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 on the next succeeding 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 the day of such
transactions received by the Agent from three federal funds brokers of
recognized standing selected by it. If for any reason the Agent shall
have determined (which determination shall be conclusive absent manifest
error) that it is unable to ascertain the Base CD Rate or the Federal
Funds Effective Rate, or both, for any reason, including the inability
or failure of the Agent to obtain sufficient quotations in accordance
with the terms thereof, the Alternate Base Rate shall be determined
without regard to clause (b) or (c), or both, of the first sentence of
this definition, as appropriate, until the circumstances giving rise to
such inability no longer exist. Any change in the Alternate Base Rate
due to a change in the Prime Rate, the Three-Month Secondary CD Rate or
the Federal Funds Effective Rate shall be effective on the effective day
of such change in the Prime Rate, the Three-Month Secondary CD Rate or
the Federal Funds Effective Rate, respectively.
"Alternate Base Rate Loans" shall mean any portion of the Term
Loan at such time as it is being maintained at a rate of interest based
upon the Alternate Base Rate.
"AODC" shall mean Atwood Oceanics Drilling Company, a Texas
corporation and wholly owned subsidiary of Atwood.
"Applicable Law" shall mean, as to any Bank or any Transferee, the
law in effect from time to time and applicable to such Bank or such
<PAGE>
PAGE 24
Transferee and the transactions contemplated hereby and to the Term Note
held by such Bank which lawfully permits the charging and collection by
such Bank or such Transferee of the highest permissible lawful, non-
usurious rate of interest in connection with the transactions
contemplated hereby and the Term Notes. To the extent the laws of the
State of Texas are applicable to any Bank or any Transferee, it is
intended that Tex. Rev. Civ. Stat. Ann. 5069-1.04 (Vernon 1987) shall
be included in such laws in determining Applicable Law with respect to
such Bank or such Transferee, except that if at any time the laws of the
United States of America permit such Bank or Transferee to contract for,
take, reserve, charge or receive a higher rate of interest than is
allowed by the laws of the State of Texas (whether such federal laws
directly so provide or refer to the law of the state where such Bank or
Transferee is located), then such federal laws shall to such extent
govern as to the rate of interest which such Bank or Transferee is
allowed to contract for, take, reserve, charge or receive under its Term
Note and this Agreement.
"Assumption Agreement" shall mean that certain Assignment,
Assumption and Termination Agreement dated as of December 31, 1994
between Atwood, AODC, AHC, AFC, EOI, the Partnership, Atwood Falcon I,
Ltd., Philadelphia Investment Corporation of Delaware, Philadelphia
Drilling Company and Philadelphia Falcon Drilling Corporation.
"Atwood" shall mean Atwood Oceanics, Inc., a Texas corporation.
"Atwood Acknowledgement" shall mean the Atwood Acknowledgement and
Consent, substantially in the form of Exhibit W as amended, supplemented
or modified from time to time.
"Atwood Security Documents" shall mean the collective reference to
the AOI Mortgage and the AOI Security Agreement as such terms are
defined in the Funding Agreement.
"Balloon Payment" shall have the meaning assigned to such term in
subsection 3.1(b).
"Banks" shall have the meaning assigned to such term in the
preamble to this Agreement.
"Bankruptcy Code" shall mean the United States Bankruptcy Code, 11
U.S.C. 101 et seq., as in effect from time to time.
"Business Day" shall mean a day other than a Saturday, Sunday or
other day on which banks in New York, New York are authorized or
required by law to close.
"Cash Equivalents" shall mean (i) direct obligations of, or
obligations guaranteed by, the United States or any agency thereof
having maturities of not more than one year from the date of
acquisition, (ii) commercial paper issued by an issuer rated P2 or A2 or
better by Moody's Investors Service, Inc. or Standard & Poor's
<PAGE>
PAGE 25
Corporation and (iii) time deposits with, including certificates of
deposit, repurchase agreements or bankers' acceptances issued by, any
bank or trust company organized under the laws of the United States or
any state thereof and having capital and surplus aggregating at least
$50,000,000.
"Cash Operating Expenses" for any period shall mean the sum of the
following items actually paid during such period: Direct Costs,
workers' compensation costs, mobilization costs, capital expenditures
permitted hereunder, costs of maintaining shore-based field offices and
support services maintained exclusively with and for the benefit of the
Hunter or Eagle Vessels and allocated in accordance with the Management
Agreements and taxes and other operating costs incurred in the normal
course of business. Cash Operating Expenses shall in no event include
Gross Overhead.
"C/D Assessment Rate": for any day, the net annual assessment
rate (rounded upward to the nearest 1/100th of 1%) determined by the
Agent to be payable on such day to the Federal Deposit Insurance
Corporation or any successor ("FDIC") for FDIC's insuring time deposits
made in dollars at offices of the Agent in the United States.
"C/D Reserve Percentage": for any day, that percentage (expressed
as a decimal) which is in effect on such day, as prescribed by the Board
of Governors of the Federal Reserve System (or any successor), for
determining the maximum reserve requirement for a member bank of the
Federal Reserve System in New York City with deposits exceeding one
billion dollars in respect of new non-personal time deposits in dollars
in New York City having a maturity of 90 days and in an amount of
$100,000 or more.
"Chemical Rate" shall mean the Alternate Base Rate.
"Closing" shall have the meaning assigned to such term in
subsection 7.1.
"CoMac" shall have the meaning assigned to such term in the
Preamble.
"Commonly Controlled Entity" shall mean an entity whether or not
incorporated, which is under common control with the Partnership within
the meaning of Section 4001 of ERISA.
"Contingent Obligation" shall mean as to any Person, any
obligation of such Person guaranteeing or in effect guaranteeing 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
<PAGE>
PAGE 26
capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency of the primary obligor, (c) to
purchase property, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of the
primary obligor to make payment of such primary obligation or (d)
otherwise to assure or hold harmless the owner of any 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.
"Contractual Obligation" shall mean, as to any Person, any
provision of any security issued by such Person or of any agreement,
instrument or undertaking to which such Person is a party or by which it
or any of its property is bound.
"Default" shall mean any of the events specified in subsection
10.1, whether or not any requirement for the giving of notice, the lapse
of time, or both, or any other condition, has been satisfied.
"Direct Costs" for any period shall mean the sum of the following
expenses incurred and actually paid by the Partnership during such
period: labor and burden, supplies, purchases of materials for
inventory, travel, freight, catering, fuel, costs associated with work
and crew boats, insurance costs of the Partnership.
"Dollars" and "$" shall mean dollars in lawful currency of the
United States of America.
"Drilling Contract" shall mean any contract engaging the
utilization of a Vessel in contract drilling for third parties under a
lease, charter, sub-contract or service arrangement.
"Eagle Mortgage" shall mean the Existing Eagle Mortgage as amended
by the Eagle Mortgage Amendment, as the same may be amended,
supplemented or otherwise modified from time to time.
"Eagle Mortgage Amendment" shall mean the Amendment to the Eagle
Mortgage, substantially in the form of Exhibit C-1.
"Eagle Vessel" shall mean that certain semi-submersible offshore
drilling unit named the "Eagle" (formerly known as the "Diamond M
Eagle"), Official Number 649432.
"Effective Date" shall have the meaning assigned to such term in
the Preamble.
"Effective Date Certificate" shall mean a certificate of a
Responsible Officer of the Partnership, substantially in the form of
Exhibit F.
"Environmental Laws" shall mean any and all Federal, state, local
or municipal laws, rules, orders, regulations, statutes, ordinances,
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codes, decrees or requirements of any Governmental Authority regulating,
relating to or imposing liability or standards of conduct concerning
environmental protection matters, including, without limitation,
Hazardous Materials, as now or may at any time hereafter be in effect.
"EOI" shall mean Eagle Oceanics, Inc., a Texas corporation and
wholly owned subsidiary of Atwood.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.
"Eurodollar Loans" shall mean any portion of the Term Loans at
such time as they are being maintained at a rate of interest based upon
a Eurodollar Rate.
"Eurodollar Rate" shall mean, with respect to each Interest Period
for the Eurodollar Loans, the rate per annum equal to the quotient of
(a) (i) with respect to Interest Periods having a maturity of less than
12 months, the rate at which the Agent is offered Dollar deposits by
banks two Working Days prior to the beginning of such Interest Period in
the interbank eurodollar market for delivery on the first day of such
Interest Period for a number of days comparable to the duration of such
Interest Period and in an amount comparable to the amount of the
Eurodollar Loan to be outstanding during such Interest Period, and (ii)
with respect to Interest Periods of 12 or 24 months, the highest of the
rates quoted to the Agent as the rate at which each Bank is offered
Dollar deposits by banks two Working Days prior to the beginning of such
Interest Period in the interbank eurodollar market for delivery on the
first day of such Interest Period for a number of days comparable to the
duration of such Interest Period and in an amount comparable to the
amount of the Eurodollar Loan to be maintained by such Bank, to be
outstanding during such Interest Period, divided by (b) a number equal
to 1.00 minus the rate (expressed as a decimal fraction) of reserve
requirement applicable on the date two Working Days prior to the
beginning of such Interest Period (including, without limitation, basic,
supplemental, marginal and emergency reserves under any regulations of
the Board of Governors of the Federal Reserve System or other
Governmental Authority having jurisdiction with respect thereto), as now
and from time to time hereafter in effect, dealing with reserve
requirements prescribed for eurocurrency funding (currently referred to
as "Eurocurrency liabilities" in Regulation D of such Board) maintained
by a member bank of such System (such Eurodollar Rate to be rounded
upwards, if necessary, to the next higher 1/100 of one percent).
"Eurodollar Tranche" shall be the collective reference to
Eurodollar Loans having the same Interest Period (whether or not
originally made on the same day).
"Event of Default" shall mean any of the events specified in
subsection 10.1, provided that any requirement for the giving of notice,
the lapse of time, or both, or any other condition, event or act has
been satisfied.
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"Excess Cash" shall mean for any Fiscal Quarter, an amount equal
to the difference between (i) the sum of (x) Gross Cash Receipts for
such Fiscal Quarter plus (y) the aggregate principal amount of Temporary
Working Capital Loans made during such Fiscal Quarter minus (ii) the sum
of (x) the Cash Operating Expenses of the Partnership actually paid
during such Fiscal Quarter plus (y) the amount of principal and interest
payments actually or scheduled to be paid to the Banks by the
Partnership during such Fiscal Quarter, other than any payments made
pursuant to subsection 4.2 hereof.
"Existing Assumed Documents" shall mean the collective reference
to the documents and agreements as listed on Schedule 11 hereto which
have been assumed as of December 31, 1994 pursuant to the Assumption
Agreement.
"Existing Collateral Documents" shall be the collective reference
to the mortgages, security agreements and the like pursuant to which the
Partnership granted collateral security for its obligations under the
Existing Credit Agreement and related documents, as listed on Schedule 1
hereto.
"Existing Credit Agreement" shall have the meaning assigned to
such term in the fifth WHEREAS clause.
"Existing Documents" shall be the collective reference to the
Existing Credit Agreement and the Existing Collateral Documents.
"Existing Eagle Mortgage" shall mean the First Preferred Ship
Mortgage, made and dated August 4, 1982, by Diamond M Eagle, Ltd., a
predecessor in interest to the Partnership, to Chemical, as amended by
the First Amendment thereto dated April 26, 1988, and Amendment No. 2 to
First Preferred Ship Mortgage dated November 12, 1992.
"Existing Hunter Mortgage" shall mean the First Preferred Ship
Mortgage, made and dated December 29, 1981, by Diamond M Hunter, Ltd., a
predecessor in interest to the Partnership, to Chemical, as amended by
the First Amendment thereto dated April 26, 1988, and Amendment No. 2 to
First Preferred Ship Mortgage dated November 12, 1992.
"Existing Intercreditor Agreement" shall mean the Amended and
Restated Intercreditor and Subordination Agreement dated as of November
12, 1992 among the Agent, Atwood and Philadelphia Investment Corporation
of Delaware in the capacities therein indicated.
"Existing Letter Agreement" shall mean the Letter Agreement dated
as of November 12, 1992 in the form of the document attached as Exhibit
J to the Existing Credit Agreement.
"Existing Liens" shall be the collective reference to the Liens
granted to Chemical by the Partnership pursuant to the Existing
Collateral Documents.
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"Existing Restructure Security Agreement" shall mean the Amended
and Restated Restructure Security Agreement dated as of November 12,
1992 between the Partnership and the Agent.
"Existing Subordination Agreement" shall mean the Amended and
Restated Subordination Agreement dated November 12, 1992 among Atwood,
the Agent, the Partnership and Philadelphia Investment Corporation of
Delaware.
"Existing Term Notes" shall be the collective reference to the
Term Notes referred to in, and defined under, the Existing Credit
Agreement.
"Existing Trust Indenture" shall mean the Amended and Restated
Trust Indenture dated November 12, 1992 between the Partnership and
Chemical.
"Fiscal Quarter" shall mean each period beginning on January 1,
April 1, July 1 and October 1 (each, a "Commencement Date") and ending
on the day before the immediately following Commencement Date.
"Fiscal Year" shall mean the 12-month period ending on
September 30 of each year. Any designation of a particular Fiscal Year
by reference to a calendar year shall mean the Fiscal Year ending during
such calendar year.
"Foreign Operating Accounts" shall be the collective reference to
the operating accounts of the Partnership maintained with banks located
in jurisdictions other than the United States of America or any
political subdivision thereof.
"Funding Agreement" shall mean the Third Amended and Restated
Funding Agreement, dated as of the date hereof, among Atwood, the
Partnership, and the Partners, as amended, supplemented or otherwise
modified from time to time.
"GAAP" shall mean generally accepted accounting principles in the
United States of America in effect from time to time and applicable to
the Partnership.
"General Partner" shall mean, at any time, the general partner of
the Partnership, at such time, which, as of the Effective Date, is AHC.
"Governmental Authority" shall mean any nation or government, any
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions
of or pertaining to government.
"Gross Cash Receipts" shall mean for any period, the total cash
receipts actually received by the Partnership during such period,
whether from operation of the Vessels under Drilling Contracts,
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PAGE 30
ancillary services such as catering revenues, interest income from Cash
Equivalents and other income items yielding cash such as proceeds from
equipment sales or scrap Proceeds; provided that, Gross Cash Receipts
shall not include the proceeds of any loans, capital contributions or
other extensions of credit made by the Partners or Atwood to the
Partnership to the extent permitted hereunder.
"Gross Overhead" shall mean the sum of the following items,
whether directly or indirectly incurred by, or allocated to, the
Partnership: any general and administrative expenses, including,
without limitation, personnel costs, such as salaries, benefit payments
(including cash charges made in connection with employee incentive
programs); insurance premiums; occupancy costs such as rent payments,
property taxes, utilities, etc.; and other shore-based office and
support services; provided that, Gross Overhead shall not include (a)
costs of maintaining shore-based field office(s) and support services
maintained exclusively in connection with, and for the benefit of, the
Hunter Vessel or Eagle Vessel and allocated in accordance with the
Management Agreements and (b) fees and expenses associated with the
negotiation, preparation, execution and delivery of the Restructuring
Documents or the Partnership Documents.
"Hazardous Materials" shall mean any hazardous materials,
hazardous wastes, hazardous constituents, hazardous or toxic substances,
petroleum products (including crude oil or any fraction thereof),
defined or regulated as such in or under any Environmental Law.
"Hunter Mortgage" shall mean the Existing Hunter Mortgage as
amended by the Hunter Mortgage Amendment, as the same may be amended,
supplemented or otherwise modified from time to time.
"Hunter Mortgage Amendment" shall mean the Amendment to the Hunter
Mortgage, substantially in the form of Exhibit C-2, as amended,
supplemented or otherwise modified from time to time.
"Hunter Vessel" shall mean that certain semi-submersible offshore
drilling unit named the "Hunter" (formerly known as the Diamond M
Hunter), Official Number 642738.
"Indebtedness" of a Person, at a particular date, shall mean the
sum (without duplication) at such date of (a) indebtedness for borrowed
money or for the deferred purchase price of property or services in
respect of which such Person is liable, as obligor, (b) obligations of
such Person under any lease of property, the obligations under which are
or in accordance with GAAP should be capitalized on a balance sheet of
the Partnership, (c) obligations of such Person in respect of letters of
credit, acceptances, or similar obligations issued or created for the
account of such Person, and (d) trade accounts payable.
"Intercreditor Agreement" shall mean the Second Amended and
Restated Intercreditor and Subordination Agreement, dated as of the date
hereof, substantially in the form of Exhibit K hereto, as amended,
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PAGE 31
supplemented or otherwise modified from time to time.
"Interest Period" shall mean, with respect to the Eurodollar
Loans: (a) initially, if any of the loans under the Existing Credit
Agreement were Eurodollar Loans on the Effective Date, the period
commencing on the Effective Date and ending on the last day of Interest
Period under the Existing Credit Agreement with respect to such
Eurodollar Loans; and (b) thereafter, each period commencing on, as the
case may be, the last day of the next preceding Interest Period
applicable to such Eurodollar Loans or the conversion date applicable to
such Eurodollar Loans and ending three, six, twelve (if available) or
twenty-four (if available) months thereafter, as selected by the
Partnership in its notice of continuation as provided in subsection 3.3
or its notice of conversion as provided in subsection 3.3, as the case
may be; provided that (A) if any Interest Period would otherwise end on
a day which is not a Working Day, that Interest Period shall be extended
to the next succeeding Working Day unless the result of such extension
would be to carry such Interest Period into another calendar month in
which event such Interest Period shall end on the immediately preceding
Working Day; (B) any Interest Period that would otherwise extend beyond
the date of final payment of the Eurodollar Loans shall end on such
date; (C) if the Partnership shall fail to give a notice of continuation
as provided in subsection 3.3, the Partnership shall be deemed to have
elected to continue all of the Eurodollar Loans as such and to have
selected an Interest Period of three months with respect thereto; and
(D) any Interest Period that begins on the last Working Day of a
calendar month, or on a day for which there is no numerically
corresponding day in the last calendar month in such Interest Period,
shall end on the last Working Day of the last calendar month in such
Interest Period. For purposes of determining the availability of
Interest Periods in respect of Eurodollar Loans, such Interest Periods
shall be deemed available if (a) each Bank quotes a rate to the Agent as
provided in clause (a)(ii) of the definition of Eurodollar Rate and (b)
none of the Banks shall have determined that the Eurodollar Rate
determined by the Agent on the basis of such quotes will not adequately
and fairly reflect the cost to such Bank of maintaining or funding its
loans at the Eurodollar Rate for such Interest Period. If a requested
Interest Period shall be unavailable in accordance with the foregoing
sentence, the Partnership shall be deemed to have requested an Interest
Period of three months.
"Letter Agreement" shall mean the 1995 Letter Agreement, dated as
of the date hereof, substantially in the form of Exhibit J hereto, as
amended, supplemented or otherwise modified from time to time.
"Lien" shall mean any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), security
interest or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including,
without limitation, any conditional sale or other title retention
agreement, any financing lease having substantially the same economic
effect as any of the foregoing, and the filing of any financing
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PAGE 32
statement under the Uniform Commercial Code or comparable law of any
jurisdiction in respect of any of the foregoing).
"Limited Partners" shall mean, at any time, the limited partners
of the Partnership at such time, which, as of the Effective Date, are
EOI and AODC.
"Local Operating Account" shall mean each deposit account of the
Partnership maintained in the United States or any political subdivision
thereof in connection with payroll and other local petty cash needs.
"Management Agreements" shall mean the collective reference to (i)
the two Second Amended and Restated Rig Management Agreements, dated as
of December 31, 1994, between the Partnership and Atwood, as amended,
supplemented or modified from time to time, and any replacement(s)
therefor, and (ii) any other rig management agreements relating to the
operation of either or both of the Vessels.
"Management Fees" shall have the meaning assigned to it in the
Management Agreements.
"Material Adverse Effect" shall mean a material adverse effect on
(a) the business, operations, property, condition (financial or
otherwise) or prospects of the Partnership, (b) the ability of the
Partnership to perform its obligations under this Agreement or the Term
Notes, or (c) the validity or enforceability of this Agreement or any of
the Term Notes or any of the other Restructuring Documents or the rights
or remedies of the Agent or the Banks hereunder or thereunder.
"Maximum Rate" shall mean the maximum lawful non-usurious rate of
interest (if any) which, under any law in effect and applicable to any
Bank, is permitted to be charged by such Bank to the Partnership on the
transactions evidenced by this Agreement and the Term Notes from time to
time in effect, including changes in such Maximum Rate attributable to
changes under such law which permit a greater rate of interest to be
contracted for, charged, collected, received or taken as of the
effective dates of such respective changes.
"Minimum Payment" for any Fiscal Quarter shall mean the product of
(a) the difference between (i) Gross Cash Receipts for such Fiscal
Quarter minus (ii) the sum of (x) Cash Operating Expenses of the
Partnership actually paid during such Fiscal Quarter plus (y) the amount
of principal and interest payments actually or scheduled to be paid to
the Banks by the Partnership during such Fiscal Quarter, other than any
payments made or scheduled to be made pursuant to subsection 4.2 hereof
multiplied by (b) 25%; provided, however, that in no event shall the
Minimum Payment be a number which is less than zero.
"Mortgage Amendments" shall be the collective reference to the
Hunter Mortgage Amendment and the Eagle Mortgage Amendment.
"Mortgages" shall be the collective reference to the (i) Eagle
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Mortgage and (ii) Hunter Mortgage.
"Multiemployer Plan" shall mean a Plan which is a multiemployer
plan as defined in Section 4001(a)(3) of ERISA.
"Non-Qualified Transferee" shall mean any Person which is not a
Qualified Transferee.
"Other Agreement" shall have the meaning assigned to such term in
subsection 13.10.
"Partner Mortgage Amendment" shall mean that certain Amendment No.
2 to Preferred Fleet Mortgage on the Hunter Vessel and the Eagle Vessel
of even date herewith executed by the Partnership in favor of Atwood.
"Partner Mortgages" shall mean the collective reference to
each Atwood Security Document that constitutes a preferred
mortgage on a Vessel.
"Partners" shall be the collective reference to the General
Partner and the Limited Partners.
"Partnership" shall have the meaning assigned to such term in the
preamble to this Agreement.
"Partnership Account" shall mean the account maintained by and in
the name of the Partnership as shall be identified from time to time by
the Partnership to the Agent as the Partnership Account.
"Partnership Account Setoff Letter" shall mean the Partnership
Account Setoff Letter, between Chemical and the Partnership,
substantially in the form of Exhibit O, as amended, supplemented or
otherwise modified from time to time.
"Partnership Advance Note" shall mean a Partnership Advance Note,
as defined in the Funding Agreement.
"Partnership Agreement" shall mean the Fourth Amended and Restated
Agreement of Limited Partnership between the General Partner and the
Limited Partners, dated as of the date hereof, as the same may be
amended, supplemented or otherwise modified from time to time.
"Partnership Documents" shall mean each of the agreements,
instruments and documents listed on Schedule 2 hereto.
"Partnership Group" shall have the meaning assigned to such term
in subsection 12.3.
"Person" shall mean an individual, partnership, corporation,
business trust, joint stock company, trust, unincorporated association,
joint venture, Governmental Authority or other entity of whatever
nature.
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"Plan" shall mean at a particular time, any employee benefit plan
which is covered by ERISA and in respect of which the Partnership or a
Commonly Controlled Entity is (or, if such plan were terminated at such
time, would under Section 4069 of ERISA be deemed to be) an "employer"
as defined in Section 3(5) of ERISA.
"Pro Rata Percentage" shall mean, at any time, for each Bank, the
percentage equivalent of a fraction, the numerator of which is the then
outstanding principal of such Bank's Term Note and the denominator of
which is the aggregate then outstanding principal amount of all of the
Term Notes.
"Purchase Agreement" shall mean that certain Purchase and Sale
Agreement dated as of December 31, 1994 between Atwood, AODC, AHC, AFC,
EOI, the Partnership, Atwood Falcon I, Ltd., Philadelphia Investment
Corporation of Delaware, Philadelphia Drilling Company and Philadelphia
Falcon Drilling Corporation.
"Qualified Account" shall mean an account maintained by and in the
name of the Partnership in which the Banks shall have been granted a
Lien and either (a) is maintained at one of the Banks or (b) with
respect to which the Banks shall have received a Transfer Notice.
"Qualified Transferee" shall mean any of the following which shall
have satisfied the requirements of subsection 13.6(b):
(a) a bank organized under the laws of the United
States or any state thereof and having (x) a rating by Keefe,
Bruyette & Woods or any successor thereof no less than the rating
given by such institution to Chemical and in effect on the
Effective Date and (y) capital and surplus aggregating at least
$250,000,000; or
(b) any Affiliate of Chemical, CoMac or TCB; or
(c) any other financial institution, investment fund
or other Person as Chemical shall, after soliciting the views of
the Partnership and giving due consideration thereto, designate as
a "Qualified Transferee", which designation shall not, upon a
request therefore, be unreasonably withheld.
"Reportable Event" shall mean any of the events set forth in
Section 4043(b) of ERISA, other than those events as to which the thirty
day notice period is waived under subsections .13, .14, .16, .18, .19 or
.20 of PBGC Reg. 2615.
"Required Banks" shall mean
(i) for purposes of amending, modifying and waiving
subsections 8.1, 8.2, 8.3, 8.5, 8.6(b) through 8.6(g), 8.10, 9.9,
9.10, 9.11, 9.12, or 9.14, Banks having an aggregate Pro Rata
Percentage not less than 51%;
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PAGE 35
(ii) for any other purpose, Banks having an aggregate
Pro Rata Percentage no less than 70%, provided, that, if, after
the Effective Date, each of two (2) Banks (other than Chemical) or
Qualified Transferees transfers to any Non-Qualified Transferee
such Bank's or Transferee's right to vote under this Agreement,
the Mortgages or any other Restructuring Document, whether in
connection with an assignment or participation of such Bank's or
Transferee's interest in the Term Notes (or the indebtedness
evidenced by the Term Notes) or otherwise, then, for purposes of
this clause (ii) only, Chemical shall be deemed to have acquired
such Bank's or Transferee's, as the case may be Pro Rata
Percentage; and
(iii) Notwithstanding anything to the contrary contained
herein, if any of the following parties have acquired any Term
Note or a beneficial interest therein, the vote of such party
shall not be considered for purposes of determining Required
Banks: Atwood, Helmerich & Payne, Inc., the Partnership or any
Affiliate of the foregoing. For purposes of the definition of
Required Banks, the Pro Rata Percentages of the Banks shall not be
adjusted to take into account that any of the above parties is at
such time a Bank or that any of such party's vote shall not be
considered for purposes of Required Banks.
"Requirement of Law" shall mean as to any Person, the partnership
agreement, certificate of incorporation, by-laws or other organizational
or governing documents of such Person, and any law, treaty, rule or
regulation or determination of an arbitrator or a court or other
Governmental Authority, in each case applicable to or binding upon such
Person or any of its property or to which such Person or any of its
property is subject.
"Restructure Pledge Agreement" shall mean the Restructure Pledge
Agreement, between the Agent and the Partnership, substantially in the
form of Exhibit Q, as amended, supplemented or otherwise modified from
time to time.
"Restructure Security Agreement" shall mean the Second Amended and
Restated Restructure Security Agreement, dated as of the Effective Date
substantially in the form of Exhibit B, as amended, supplemented or
otherwise modified from time to time.
"Restructuring Documents" shall be the collective reference to
this Agreement, the Term Notes, the Subordination Agreement, the
Security Documents, the Letter Agreement, the Management Agreements, and
the Funding Agreement.
"Sale" shall have the meaning assigned to such term in the sixth
"WHEREAS" clause of this Agreement.
"Security Agreement Supplements" shall mean a Security Agreement
Supplement substantially in the form of Exhibit B to the Restructure
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Security Agreement.
"Security Documents" shall be the collective reference to the
Restructure Security Agreement, the Intercreditor Agreement, the
Mortgage Amendments, the Trust Indenture and any Transfer Notices
delivered to the Agent.
"Senior Indebtedness" shall have the meaning assigned to such term
in the Subordination Agreement.
"Setoff Limitation Agreement" shall mean the Setoff Limitation
Agreement, between the Agent, the Partnership and Atwood, substantially
in the form of Exhibit S, as amended, supplemented or otherwise modified
from time to time.
"Single Employer Plan" shall mean any Plan which is covered by
Title IV of ERISA, but which is not a Multiemployer Plan.
"Subordinated Indebtedness" shall have the meaning assigned to
such term in the Subordination Agreement.
"Subordination Agreement" shall mean the Second Amended and
Restated Subordination Agreement, dated as of the Effective Date,
substantially in the form of Exhibit G, as amended, supplemented or
otherwise modified from time to time.
"Subsidiary" shall mean, as to any Person, a corporation of which
shares of stock having ordinary voting power (other than stock having
such power only by reason of the happening of a contingency) to elect a
majority of the board of directors or other managers of such corporation
are at the time owned, or the management of which is otherwise
controlled, directly or indirectly through one or more intermediaries,
or both, by such Person. Unless otherwise qualified, all references to
a "Subsidiary" or to "Subsidiaries" in this Agreement shall refer to a
Subsidiary or Subsidiaries of the Partnership.
"TCB" shall have the meaning assigned to such term in the
Preamble.
"Temporary Working Capital Loans" shall be the collective
reference to the loans made by Atwood to the Partnership pursuant to
subsection 2.5 of the Funding Agreement and evidenced by Temporary
Working Capital Notes.
"Temporary Working Capital Note" shall mean a Temporary Working
Capital Note, as defined in the Funding Agreement.
"Term Loans" shall mean the term loans made by the Banks to the
Partnership evidenced by the Term Notes, which term loans are the loans
made by the Banks (as defined herein) to the Partnership under the
Existing Credit Agreement and evidenced by the Existing Term Notes in
favor of the Banks (as defined herein). Although Atwood acted in the
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capacity as a "Bank" under the Existing Credit Agreement as evidenced by
the Existing Term Note in favor of Atwood, as of the date hereof, Atwood
has contributed the Existing Term Note in its favor through AHC, AODC
and EOI to the Partnership which has cancelled such Term Note as of the
Effective Date.
"Term Notes" shall have the meaning assigned to such term in
subsection 3.1(b).
"Terminated Documents" shall mean the collective reference to the
documents and agreements as listed on Schedule 10 hereto which have been
terminated as of either December 31, 1994 or March 31, 1995 as set forth
in the Assumption Agreement.
"Termination Date" shall mean March 31, 1998.
"Transfer Notices" shall be the collective reference to the
Transfer Notices, each substantially in the form of Exhibit A to the
Restructure Security Agreement, which have either been previously
delivered to the Agent pursuant to the terms of the Existing Credit
Agreement or may be required to be executed and delivered from time to
time by the Partnership pursuant to the terms of this Agreement.
"Transferee" shall have the meaning assigned to such term in
subsection 13.6(b).
"TRLPA" shall mean the Texas Revised Limited Partnership Act, as
in effect on the date hereof.
"Trust Indenture" shall mean the Second Amended and Restated Trust
Indenture, dated as of the Effective Date between the Partnership and
Chemical, as Vessel Trustee, substantially in the form of Exhibit H, as
amended, supplemented or otherwise modified from time to time.
"Vessels" shall be the collective reference to the Eagle Vessel
and the Hunter Vessel.
"Working Day" shall mean any day on which dealings in foreign
currencies and exchange between banks may be carried on in London,
England and in New York, New York.
1.2 Other Definitional Provisions. (a) All terms defined herein shall
have their respective defined meanings when used in the Term Notes or any
certificate or other document made or delivered pursuant hereto.
(b) As used herein and in the Term Notes, any certificate or
other document delivered pursuant hereto, accounting terms relating to
the Partnership and its Subsidiaries not defined herein and accounting
terms partly defined herein to the extent not defined, shall have the
respective meanings given to them under GAAP and which are consistent
with those used in the preparation of the financial statements referred
to in subsections 6.1(f) and 8.1.
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(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement
as a whole and not to any particular provision of this Agreement, and
Section, subsection, Schedule and Exhibit references are to this
Agreement unless otherwise specified.
SECTION 2. EXISTING LIENS; INDEBTEDNESS
2.1 Existing Liens. The Partnership hereby confirms and acknowledges
that without the necessity of further action by any party, the Existing Liens
(a) are unimpaired and continue to be fully perfected security interests in
favor of the Agent and (b) continue to constitute collateral security for the
Partnership's obligations to the Banks under this Agreement, the Term Notes
and the other Restructuring Documents.
2.2 Existing Indebtedness. On and as of the Effective Date, and
without the necessity of further action by any party, the Partnership's
obligation to pay to the Banks the principal amount of the Term Loans
outstanding on and after the Effective Date is hereby acknowledged and
confirmed by the Partnership.
2.3 Existing Documents Superseded. On and as of the Effective Date,
(a) (i) the Existing Credit Agreement shall be superseded by this Agreement,
(ii) the Existing Trust Indenture shall be superseded by the Trust Indenture,
(iii) the Existing Letter Agreement shall be superseded by the Letter
Agreement, (iv) the Existing Intercreditor Agreement shall be superseded by
the Intercreditor Agreement, (v) the Existing Subordination Agreement shall be
superseded by the Subordination Agreement, and (vi) the Existing Restructure
Security Agreement shall be superseded by the Restructure Security Agreement.
(b) The Terminated Documents are hereby terminated and/or
acknowledged to be terminated, as applicable, and shall be of no further
force and effect.
(c) The Banks acknowledge and consent to the assumption by
Atwood and AODC of the Existing Assumed Documents.
(d) Notwithstanding anything to the contrary contained herein,
it is not the intention of any of the parties hereto that the amending
and restating of the Existing Credit Agreement shall constitute a
payment or discharge of such Indebtedness under the Term Notes.
(e) On the date hereof, the Liens created by the Existing
Collateral Documents shall be continued pursuant to the Restructure
Security Agreement, the other Security Documents and the Mortgages.
SECTION 3. THE LOANS
3.1 Term Loans and Term Notes. (a) The Term Loan made by each Bank
shall mature in the number of installments having the amounts and dates
determined pursuant to subsection 3.1(b), and shall bear interest on the
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unpaid principal amount thereof from November 12, 1992 until payment or
prepayment in full thereof in accordance with subsection 3.2. The Term Loans
shall initially be Alternate Base Rate Loans and/or Eurodollar Loans in the
same proportions as in effect under the Existing Credit Agreement on the
Effective Date and, in the case of Eurodollar Loans, having the same initial
Interest Period(s) as in effect on the Effective Date under the Existing
Credit Agreement.
(b) Subject to the provisions of subsection 5.1, the Term Loan
made by each Bank shall be evidenced by a promissory note of the
Partnership substantially in the form of Exhibit A (collectively, the
"Term Notes") and payable to the order of such Bank. Each Term Note
shall (i) be dated November 12, 1992, (ii) be in the original principal
amount of the Term Loan made by each Bank, (iii) be stated to mature in
(x) twenty-two (22) consecutive quarterly installments each of which
shall be equal to such Bank's Pro Rata Percentage as on the date of each
such payment in the amount of $750,000 and each of which shall be
payable, on the last day of each March, June, September and December,
commencing on the first such day to occur after November 12, 1992 and
(y) a final payment in an amount equal to the then outstanding principal
amount of the Term Note of such Bank on March 31, 1998 (as to each Bank,
its "Balloon Payment"), (iv) bear interest for the period from the date
thereof until paid in full at the applicable interest rate provided in,
and payable as specified in, subsection 3.2, (v) be subject to optional
and mandatory prepayment as provided in, and payable as specified in,
Section 4, and (vi) be subject to the provisions hereof, including
subsection 12.1.
3.2 Interest. (a) In accordance with subsection 3.3, the Partnership
may elect to have all or any part of the principal amount of the Term Loans
bear interest as either Eurodollar Loans or Alternate Base Rate Loans. The
interest rate applicable to all or any portion of the Term Loan made by any
Bank shall be applicable to a Pro Rata Percentage of the Term Loan made by
each Bank.
(b) (i) The Eurodollar Loans shall bear interest on the
unpaid principal amount thereof for each Interest Period with respect
thereto at a rate per annum equal to the Eurodollar Rate determined for
such Interest Period plus 3/4 of 1%.
(ii) The Alternate Base Rate Loans shall bear interest
for the period from and including the date thereof until maturity on the
unpaid principal amount thereof at a rate per annum equal to the
Alternate Base Rate.
(c) If all or a portion of the principal amount of the Term
Loans shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), such amount, if Eurodollar Loans, shall be
converted to Alternate Base Rate Loans at the end of the last Interest
Period therefor for which the Agent shall have determined, on or prior
to the date such unpaid principal amount became due, a Eurodollar Rate.
Any such overdue principal amount shall bear interest at a rate per
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annum which is 2% above the rate that would otherwise be applicable
pursuant to subsection 3.2(b), from the date of such nonpayment until
paid in full (both before and after judgment).
(d) Interest on the Term Loans shall be payable quarterly in
arrears on the last day of each March, June, September and December,
commencing on the first such date to occur after November 12, 1992, upon
prepayment in full or in part thereof, as provided in subsection 4.1(a),
and upon final payment in full thereof.
3.3 Conversion Options; Minimum Amount of Loans. (a) The Partnership
may elect from time to time to convert any Term Loans or part thereof from
Eurodollar Loans to Alternate Base Rate Loans by giving the Agent at least
three Business Days' prior irrevocable notice of such election, provided that
any such conversion of Eurodollar Loans shall only be made on the last day of
an Interest Period with respect thereto. The Partnership may elect from time
to time to convert any Term Loans or part thereof from Alternate Base Rate
Loans to Eurodollar Loans by giving the Agent at least three Working Days'
prior irrevocable notice of such election. All or any part of such
outstanding Eurodollar Loans and Alternate Base Rate Loans may, subject to the
provisions of subsection 3.2(a), be converted as provided herein, provided
that (i) no Term Loan or part thereof may be converted into a Eurodollar Loan
when any Default or Event of Default has occurred and is continuing, (ii)
partial conversions shall be in an aggregate principal amount of $500,000 or a
whole multiple of $100,000 in excess thereof, and (iii) any such conversion
may only be made if, after giving effect thereto, subsection 3.3(c) shall not
have been contravened.
(b) Any Eurodollar Loans may be continued as such upon the
expiration of an Interest Period with respect thereto by compliance by
the Partnership with the notice provisions contained in subsection
3.3(a) which are applicable to the conversion of Loans to Loans of such
type; provided, that no Eurodollar Loan may be continued as such when
any Default or Event of Default has occurred and is continuing, but
shall be automatically converted to an Alternate Base Rate Loan on the
last day of the then current Interest Period with respect thereto.
(c) All borrowings, conversions, payments, prepayments and
selections of Interest Periods hereunder shall be in such amounts and be
made pursuant to such elections so that, after giving effect thereto,
the aggregate principal amount of the Loans comprising any Eurodollar
Tranche shall not be less than $1,000,000. In no event may there be
more than five (5) Eurodollar Tranches outstanding at any one time.
SECTION 4. PREPAYMENTS; EXCESS CASH
4.1 Optional Prepayments. (a) The Partnership may on the last day of
the relevant Interest Period if the Loans to be prepaid are in whole or in
part Eurodollar Loans, or at any time and from time to time if the Loans to be
prepaid are Alternate Base Rate Loans, prepay the Term Loans, in whole or in
part, without premium or penalty, upon at least four Business Days'
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PAGE 41
irrevocable notice to the Agent specifying (x) the date and amount of
prepayment, (y) whether the prepayment is of Eurodollar Loans or Alternate
Base Rate Loans or a combination thereof, and if of a combination thereof, the
amount of prepayment allocable to each. If such notice is given, the payment
amount specified in such notice shall be due and payable on the date specified
therein, together with accrued interest to such date on the amount prepaid.
Promptly upon receipt of any notice referred to above, the Agent shall inform
each Bank. Except as provided in subsection 4.2(b) hereof, partial
prepayments of the Term Loans shall be applied to installments of principal
thereof in the inverse order of maturity. Partial prepayments shall be in an
aggregate principal amount of $100,000, or a whole multiple thereof, and may
only be made if, after giving effect thereto, subsection 3.3 shall not have
been contravened; provided, however, there shall be no limit on the amount of
the prepayment occurring upon the execution of this Agreement as a result of
Atwood, in its prior capacity as a Bank under the Existing Credit Agreement,
contributing $129,589.63 to the Partnership through AHC, representing its
portion of the principal payment made by the Partnership on March 30, 1995 and
the Partnership making a prepayment of such amount to the Banks.
(b) The Partnership may at any time and from time to time,
prepay any accrued and unpaid interest on the Term Loans, in whole or in
part, without premium or penalty, upon at least four Business Days'
irrevocable notice to the Agent specifying the date and amount of
prepayment. If such notice is given, the payment amount specified
therein shall be due and payable on the date specified therein.
Promptly upon receipt of such notice the Agent shall inform each Bank.
4.2 Excess Cash. (a) Unless the principal of and interest on the Term
Loans have been paid in full, on or before the day which is 30 days after the
last Business Day of each Fiscal Quarter, the Partnership shall deliver to the
Agent a certificate of the General Partner substantially in the form of
Schedule 3 which sets forth the General Partner's calculation of Excess Cash
for such Fiscal Quarter. The Partnership shall promptly thereafter apply and
distribute Excess Cash for a Fiscal Quarter as follows:
First, to the Agent, on behalf of the Banks, an amount
equal to the Minimum Payment; and
Second, to Atwood to be applied against the outstanding principal
of and accrued interest on any Temporary Working Capital
Loans made (x) during such Fiscal Quarter or (y) during
the preceding three Fiscal Quarters; provided that, upon
the occurrence and during the continuance of a Default,
amounts otherwise distributable to Atwood pursuant to this
clause Second, shall instead be promptly distributed to
the Agent, on behalf of the Banks.
Third, remaining Excess Cash for such Fiscal Quarter shall
be divided as follows: (x) until the aggregate
principal amount of the Term Loans shall be reduced
to $20,000,000, 100% to the Agent, on behalf of the
Banks, and (y) after the aggregate principal amount
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PAGE 42
of the Term Loans shall be reduced to $20,000,000,
60% to the Agent on behalf of the Banks and 40% to
be retained by the Partnership.
(b) Excess Cash received by the Agent pursuant to subsection
4.2(a) shall promptly be remitted by the Agent to the Banks based on
their respective Pro Rata Percentages. Such payments shall be applied
by each Bank to its Term Loan as follows: (i) first, to the extent not
previously paid, to pay scheduled principal payment(s) due at the end of
the two Fiscal Quarters immediately succeeding the Fiscal Quarter in
respect of which such Excess Cash was calculated and (ii) second, after
the principal payment(s) referred to in clause (i) above has (have) been
paid in full, to the payment of principal outstanding under the Term
Loans in the inverse order of maturity of the Term Loans.
(c) Simultaneous with or after Excess Cash is distributed to
the Agent pursuant to subsection 4.2(a), Excess Cash retained by the
Partnership pursuant to such subsection may, subject to the below
provisos and subsection 4.2(d) hereof, be loaned by the Partnership to
Atwood; provided that, prior to making any such loans (i) Atwood shall
have executed and delivered a note in favor of the Partnership
substantially in the form of Exhibit P hereto to evidence such loans
(and all future loans by the Partnership pursuant to this Section 4.2)
(each an "Affiliate Note"); (ii) the Partnership shall have executed in
favor of the Agent, for the ratable benefit of the Banks, the
Restructure Pledge Agreement, substantially in the form of Exhibit Q
hereto, and in connection therewith, shall have pledged and delivered to
the Agent the Affiliate Note and taken such other action as shall be
necessary or desirable so that the Agent shall have a first-priority
Lien on such Affiliate Note; (iii) Atwood shall have granted the Banks a
perfected security interest in such collateral as the Banks and Atwood
shall then agree, (iv) the Partnership shall have delivered to the Agent
executed counterparts by each of the parties thereto (other than the
Agent) of (I) the Setoff Limitation Agreement, substantially in the form
of Exhibit S hereto, and (II) the Atwood Acknowledgment, substantially
in the form of Exhibit W, and (v) the Agent shall be satisfied that each
of the documents described above shall have become effective and shall
have such opinions of counsel as the Agent shall reasonably request
regarding such documents and the Liens granted to the Agent pursuant
thereto.
(d) Anything contained herein to the contrary notwithstanding,
upon the occurrence and during the continuance of a Default, amounts
otherwise distributable to Atwood under subsections 4.2(a) and 4.2(c)
shall instead be promptly distributed to the Banks to be applied as
provided in subsection (b) above.
(e) For purposes of the calculations to be made pursuant to
subsection 4.2(a), the certificates required to be delivered by the
Partnership pursuant to such subsection shall constitute prima facie
evidence of the information set forth therein.
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PAGE 43
4.3 Application. Prepayments applied to the outstanding principal
amount of the Term Loans shall be applied first, to the principal amount of
Alternate Base Rate Loans, to the extent thereof, and then to Eurodollar Loans
(in order of next maturing Interest Periods). All payments of principal of
the Term Loans shall be permanent and may not be reborrowed.
SECTION 5. GENERAL PROVISIONS APPLICABLE TO THE
RESTRUCTURED OBLIGATIONS
5.1 Loan Accounts. The Agent shall maintain on its books and records
loan accounts setting forth the amounts of principal, interest and other sums
paid and payable by the Partnership from time to time hereunder with respect
thereto. In case of any dispute, action or proceeding relating to the Term
Loans, the entries in such loan accounts shall constitute a rebuttable
presumption as to the amount thereof and as to such amounts paid and payable.
In case of discrepancy between the entries in the Agent's books and records
and the notations made by any Bank on its Term Note or on its books and
records, there shall be a rebuttable presumption that the Agent's are correct.
5.2 Computation of Interest and Fees. (a) Interest in respect of the
Term Loans and per annum fees shall be calculated on the basis of a 360 day
year, in each case for the actual days elapsed. The Agent shall as soon as
practicable (and in any event not less than two Working Days prior to the
commencement of the relevant Interest Period) notify the Partnership of each
determination of a Eurodollar Rate. Any change in the interest rate on the
Term Loans resulting from a change in the Alternate Base Rate shall become
effective as of the opening of business on the day on which such change in the
Alternate Base Rate is announced. The Agent shall as soon as practicable
notify the Partnership of the effective date and the amount of each such
change.
(b) Each determination of an interest rate by the Agent
pursuant to any provision of this Agreement shall be conclusive and
binding on the Partnership in the absence of manifest error.
5.3 Inability to Determine Interest Rate. In the event that the Agent
shall have determined (which determination shall be conclusive and binding
upon the Partnership) that by reason of circumstances affecting the interbank
eurodollar market, adequate and reasonable means do not exist for ascertaining
the Eurodollar Rate for any requested Interest Period, the Agent shall
forthwith give telex or facsimile notice of such determination, confirmed in
writing, to the Partnership at least one day prior to the last day of the then
current Interest Period. If such notice is given (a) if Alternate Base Rate
Loans were requested to have been converted to Eurodollar Loans, such
Alternate Base Rate Loans shall instead be continued as Alternate Base Rate
Loans and (b) the outstanding Eurodollar Loans, if any, shall be converted, on
the last day of the then current Interest Period with respect thereto, to
Alternate Base Rate Loans. Until such notice has been withdrawn by the Agent,
the Partnership shall not have the right to convert Alternate Base Rate Loans
to Eurodollar Loans. Promptly after the Agent shall once again be able to
ascertain the Eurodollar Rate it shall notify the Partnership thereof.
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PAGE 44
5.4 Pro Rata Treatment and Payments. Each payment (including
prepayments) to be made by the Partnership on account of principal and
interest on the Term Loans (other than as provided in the preceding sentence)
shall be made to the Agent for the account of the Banks according to their Pro
Rata Percentage. All payments (including prepayments) to be made by the
Partnership on account of principal, interest and fees shall be made without
set off or counterclaim and shall be made to the Agent for the benefit of the
appropriate Bank or Banks at the office of the Agent located at 270 Park
Avenue, New York, New York 10017, in lawful money of the United States of
America and in immediately available funds. If any payment hereunder becomes
due and payable on a day other than a Business Day, such payment shall be
extended to the next succeeding Business Day and, with respect to payments of
principal, interest thereon shall be payable at the then applicable rate
during such extension. The Agent shall promptly distribute any payments
required hereunder to the appropriate Bank or Banks entitled thereto in
accordance with this subsection 5.4.
5.5 Illegality. Notwithstanding any other provisions herein, if any
law, rule or regulation or any change therein or in the interpretation or
application thereof, shall make it unlawful for any Bank to maintain
Eurodollar Loans as contemplated by this Agreement, (a) the commitment of such
Bank hereunder that its Term Loan may, at the election of the Partnership,
bear interest at a rate per annum based on the Eurodollar Rate shall forthwith
be suspended until the circumstances causing such suspension no longer exist
and (b) such Bank's Eurodollar Rate Loans, if any, shall be converted
automatically to Alternate Base Rate Loans at the end of the current Interest
Period with respect thereto or at such earlier time as required by law. The
Partnership shall promptly pay such Bank, upon its demand, any additional
amounts necessary to compensate such Bank for any costs incurred by such Bank
in making any conversion in accordance with this subsection 5.5 including, but
not limited to, costs or expenses incurred or which such Bank may sustain by
reason of the liquidation or reemployment of deposits or other funds acquired
by such Bank to fund or maintain its Eurodollar Loans to the Partnership. A
certificate as to any additional amounts payable pursuant to the foregoing
sentence submitted by a Bank to the Partnership shall constitute prima facie
evidence of the information set forth therein.
5.6 Requirements of Law. In the event that any law, rule or
regulation or any change therein or in the interpretation or application
thereof or compliance by any Bank with any request or directive (whether or
not having the force of law) from any central bank or other Governmental
Authority:
(i) does or shall subject any Bank to any tax of any kind
whatsoever with respect to this Agreement, any Term Note or any
Eurodollar Loans made by it, or change the basis of taxation of payments
to any Bank of principal, interest or any other amount payable hereunder
(except for changes in the rate of tax on the overall net income of such
Bank or franchise taxes imposed on it by the jurisdiction under the laws
of which such Bank is organized or by the jurisdiction of such Bank's
lending office with respect thereto, plus penalties and interest
thereon); or
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PAGE 45
(ii) does or shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar requirement against
assets held by, or deposits or other liabilities in or for the account
of, advances or loans by, or other credit extended by, or any other
acquisition of funds by, any office of such Bank which are not otherwise
included in the determination of the Eurodollar Rate hereunder; or
(iii) does or shall impose on such Bank any other condition;
and the result of any of the foregoing is to increase the cost to such Bank of
maintaining extensions of credit or to reduce any amount receivable hereunder,
in each case, in respect of its Eurodollar Loans, then, in any such case, the
Partnership shall promptly pay such Bank, upon its demand, any additional
amounts (based upon a reasonable allocation thereof by such Bank to the
transactions contemplated by this Agreement and affected by this subsection
5.6) necessary to compensate such Bank for such additional cost or reduced
amount receivable which such Bank deems to be material as determined by such
Bank with respect to such Eurodollar Loans. If any Bank becomes entitled to
claim any additional amounts pursuant to this subsection 5.6, it shall
promptly notify the Partnership of the event by reason of which it has become
so entitled. A certificate as to any additional amounts payable pursuant to
the foregoing sentence submitted by such Bank to the Partnership shall
constitute prima facie evidence of the information set forth therein. This
covenant shall survive the termination of this Agreement.
5.7 Indemnity. The Partnership shall indemnify and hold each Bank
harmless from any loss or expense which such Bank may sustain or incur as a
consequence of (a)(i) default by the Partnership in payment of the principal
amount of or interest on any Eurodollar Loans of such Bank, (ii) default by
the Partnership in converting or continuing Term Loans as Eurodollar Loans
after the Partnership has given a notice in accordance with subsection 3.3(a),
3.3(b) or 3.3(c) or (iii) optional or mandatory prepayment of a Eurodollar
Loan on a day which is not the last day of an Interest Period with respect
thereto, in each case including, but not limited to, costs or expenses
incurred or which such Bank may sustain by reason of the liquidation or
reemployment of deposits or other funds acquired by such Bank to fund or
maintain such Bank's Eurodollar Loans to the Partnership.
5.8 Capital Adequacy. In the event that any Bank shall have
determined that the adoption of any law, rule or regulation regarding capital
adequacy, or any change therein or in the interpretation or application
thereof or compliance by such Bank with any request or directive regarding
capital adequacy (whether or not having the force of law) from any central
bank or Governmental Authority, does or shall have the effect of reducing the
rate of return on such Bank's capital as a consequence of its obligations
hereunder to a level below that which such Bank could have achieved but for
such adoption, change or compliance (taking into consideration such Bank's
policies with respect to capital adequacy) by any amount deemed by such Bank
to be material, then from time to time, within 15 days after demand by such
Bank, the Partnership shall pay to such Bank such additional amount or amounts
as are sufficient to compensate such Bank in the light of such circumstances,
to the extent that such Bank reasonably determines such reduction in its rate
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PAGE 46
of return to be allocable to its Term Loan. A certificate as to such amount
or amounts submitted to the Partnership by any Bank shall constitute prima
facie evidence of the information set forth therein.
5.9 Payment of Additional Amounts. (a) Any additional amounts payable
under subsection 5.5, 5.6, 5.7 or 5.8 to any Bank shall, for purposes of
Section 4 hereof, be deemed interest on the Term Loan of such Bank.
(b) If any Bank shall claim additional amounts pursuant to
subsection 5.5, 5.6, 5.7 or 5.8, it shall use its best efforts
(consistent with its internal policies and legal and regulatory
restrictions) to change the jurisdiction of its lending office if such
change would eliminate the amount of any such additional amounts which
may thereafter accrue; provided that no such change shall be made, if in
the reasonable judgment of such Bank, such change would be
disadvantageous to it.
SECTION 6. REPRESENTATIONS AND WARRANTIES
6.1 Representations and Warranties of the Partnership. In order to
induce the Banks and the Agent to enter into this Agreement, the Partnership
represents and warrants to the Agent that:
(a) Partnership Existence; Compliance with Law. The
Partnership is a Texas limited partnership duly existing pursuant to the
TRLPA and has the power to carry on the business in which it is engaged
and proposes to engage as outlined in the Partnership Agreement. The
foregoing business of the Partnership lawfully may be carried on by the
Partners in partnership. AHC, as General Partner under the Partnership
Agreement, is empowered to execute this Agreement, the Term Notes, the
Security Documents, the Assumption Agreement and each other
Restructuring Document to which the Partnership is a party on behalf of
the Partnership and thereby legally bind the Partnership. The
Partnership is a "citizen of the United States" as defined in Section 2
of the Shipping Act, 1916, as amended.
(b) Partnership Power; Authorization. The Partnership has the
power, and has taken all necessary action (including, without
limitation, action under the Partnership Agreement and the TRLPA),
(i) to execute, deliver and perform its obligations under this
Agreement, the Term Notes, the Security Documents, the Assumption
Agreement and each other Restructuring Document to which it is a party,
and to perform under the Mortgages and the Restructuring Documents to
which it is a party, (ii) to assign, and grant to the Agent for the
benefit of the Banks, a valid first security interest in, the collateral
described in the Restructure Security Agreement, and (iii) to grant
first preferred ship mortgages on the Vessels pursuant to the Mortgages.
No consent, license, approval or authorization of, or registration or
declaration with, any Person (including any Governmental Authority) is
required in connection with (x) the execution and delivery of this
Agreement, the Term Notes, the Security Documents, the Assumption
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PAGE 47
Agreement and the other Restructuring Documents to which it is a party
or (y) the performance of the Mortgages and the Restructuring Documents
to which it is a party (other than those required in connection with the
Mortgages and filings under the Uniform Commercial Code with respect to
the collateral described in the Restructure Security Agreement) or
(z) the validity or enforceability against the Partnership of the
Mortgages, the Assumption Agreement and the Restructuring Documents to
which it is a party, except such consents, authorizations, licenses,
approvals, registrations and declarations which have been obtained or
made and are in full force and effect.
(c) No Violation. Neither the execution and delivery of this
Agreement, the Term Notes, the Security Documents, the Assumption
Agreement and each other Restructuring Document to which the Partnership
is a party nor the performance thereof or of the Mortgages does or will
violate any Requirement of Law or any Contractual Obligation of the
Partnership and, except for the Liens under the Mortgages and the
Restructure Security Agreement, will not result in the creation or
imposition of any Lien on any of the assets of the Partnership.
(d) Enforceable Obligations. This Agreement has been, and the
Assumption Agreement and each other Restructuring Document to which the
Partnership is a party will be, duly executed and delivered on behalf of
the Partnership, and, assuming the existence and requisite power and
authority of, and the due authorization, execution and delivery by each
of the other parties thereto, constitutes or will constitute a legal,
valid and binding obligation of the Partnership enforceable against the
Partnership in accordance with its terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors'
rights generally and by general equitable principles.
(e) No Material Litigation. There is no action, suit,
investigation or proceeding (whether or not purportedly on behalf of the
Partnership) pending or, to the knowledge of the Partnership, threatened
(or any basis therefor known to the Partnership) which questions the
validity of this Agreement, the Term Notes, the Assumption Agreement,
the Security Documents or any other Restructuring Document to which the
Partnership is a party or the Mortgages, or any action taken pursuant
hereto or thereto, or which, if adversely determined, could have a
material adverse effect upon the financial condition, business or
operations of the Partnership.
(f) Financial Condition. (i) The audited annual report
previously delivered to the Agent of the Partnership containing a
balance sheet of the Partnership as of September 30, 1994 and statement
of earnings, partners' equity and changes in financial position of the
Partnership for such fiscal year reported on by Arthur Andersen are
complete and correct and fairly present the financial position of the
Partnership as at such date and the results of its operations, changes
in partners' equity and changes in financial position for the period
then ended, all in accordance with GAAP applied on a consistent basis.
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PAGE 48
There are no material liabilities, direct, fixed or contingent, or any
unusual forward or long-term commitments, of the Partnership which are
not reflected therein or in the notes thereto.
(ii) The unaudited quarterly report previously delivered to
the Agent of the Partnership containing a balance sheet of the
Partnership as of December 31, 1994 and statement of earnings,
partners equity and changes in financial position of the
Partnership for such fiscal quarter, certified by a principal
financial or accounting officer of the General Partner, are
complete and correct and fairly present the financial position of
the Partnership as at such date and the results of its operations,
changes in partners' equity and changes in financial position for
the three-month period then ended (subject to normal year-end
adjustments), all in accordance with GAAP applied on a consistent
basis. There are no material liabilities, direct, fixed or
contingent, or any unusual forward or long-term commitments, of
the Partnership which are not reflected therein or in the notes
thereto.
(g) Taxes. The Partnership has filed all Federal and state
income tax returns which are required to be filed, and has paid all
taxes shown on said returns (except such taxes as are being contested in
good faith by appropriate proceedings diligently prosecuted) and all
assessments received by it to the extent that such taxes and assessments
have become due.
(h) Ownership of Property; Liens. The Partnership has good and
marketable title to its properties and assets, subject to no Lien except
such as are permitted under subsection 9.3.
(i) ERISA. The Partnership is not an "employer" or a
"substantial employer", as such terms are defined in Section 3(5) and
4001(a)(2), respectively, of the Employee Retirement Income Security Act
of 1974, in respect of any plan described in Section 4021(a) of such
Act.
(j) Mortgages. (i) When each Mortgage Amendment has been duly
executed by the Partnership and delivered to the Agent and duly recorded
in the office listed on Schedule 4 hereto, each of the Mortgages will
constitute a fully perfected "first preferred" mortgage on such Vessel
in favor of the Agent for the benefit of the Banks named therein, having
the effect and with the priority provided in the Ship Mortgage Act,
1920, as amended.
(ii) [Intentionally Deleted]
(k) Security Documents. The provisions of the Restructure
Security Agreement are effective to create in favor of the Agent, for
the benefit of the Banks, a legal, valid and enforceable Lien on all
right, title and interest of the Partnership in the collateral described
therein, except as enforceability may be limited by applicable
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bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles; and assuming appropriately completed UCC-1
financing statements have been filed in each office listed on Schedule
5, the Restructure Security Agreement will constitute a fully perfected
first Lien on all right, title and interest of the Partnership in the
collateral described therein to the extent the Uniform Commercial Code
is applicable thereto.
(l) Regulation U. The Partnership is not engaged and will not
engage, principally or as one of its important activities, in the
business of extending credit for the purpose of "purchasing" or
"carrying" any "margin stock" within the respective meanings of each of
the quoted terms under Regulation U of the Board of Governors of the
Federal Reserve System as now and from time to time hereafter in effect,
and no part of the loans evidenced by the Term Notes has been used for
the purpose, whether immediate, incidental or ultimate, of purchasing or
carrying any such margin stock or to extend credit to, or invest in,
others for the purpose of purchasing or carrying any such margin stock
or to reduce or retire any indebtedness incurred for any such purpose.
If requested by the Agent, the Partnership will furnish to the Agent a
statement to the foregoing effect in conformity with the requirements of
Federal Reserve Form U referred to in said Registration U.
(m) Subsidiaries; Business. Except for two inactive
Subsidiaries (each of which owns assets with a fair market value of no
more than $1,000), and Deep Seas Drilling Pty Ltd., an Australian
company, the Partnership has no Subsidiaries and its sole business is as
set forth in Section 2.1 of the Partnership Agreement.
(n) No Defaults. The Partnership is not in material default in
the payment or performance of any of its obligations or in the
performance of any Contractual Obligation to which it is a party or by
which it or any of its assets may be bound, and no Default or Event of
Default hereunder has occurred and is continuing. The Partnership is
not in material default under any Requirement of Law binding upon or
affecting it or by which any of its assets may be bound or affected, and
no such Requirement of Law materially adversely affects the ability of
the Partnership to carry out its business or the ability of the
Partnership to perform its obligations under this Agreement, the Term
Notes, the Assumption Agreement, the Security Documents, the Mortgages
and each other Restructuring Document to which it is a party.
(o) Investment Company Act. Neither the Partnership nor any of
its Subsidiaries is an "investment company" or a company "controlled" by
an "investment company" (as each of the quoted terms is defined or used
in the Investment Company Act of 1940, as amended).
(p) Public Utility Holding Company Act. Neither the Partnership
nor any of its Subsidiaries is a "public utility company", or 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
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"holding company", within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
(q) Full Disclosure. The Partnership does not know of any fact
(other than matters of an economic nature of general applicability)
which it has not disclosed to the Agent or its representatives or in
connection with discussions with the Agent or its representatives
regarding the transactions contemplated hereby, which materially affects
adversely the business, operations or properties of the Partnership, or
the ability of the Partnership to perform and discharge its obligations
under the Mortgages or the Restructuring Documents to which it is a
party.
(r) Environmental Matters. Each of the representations and
warranties set forth in paragraphs (i) through (v) of this subsection is
true and correct with respect to each parcel of real property owned or
operated by the Partnership (the "Properties"), except to the extent
that the facts and circumstances giving rise to any such failure to be
so true and correct could not have a Material Adverse Effect:
(i) The Properties do not contain, and have not previously
contained, in, on, or under, including, without limitation, the
soil and groundwater thereunder, any Hazardous Materials.
(ii) The Properties and all operations and facilities at the
Properties are in compliance with all Environmental Laws, and
there is no Hazardous Materials contamination or violation of any
Environmental Law which could interfere with the continued
operation of any of the Properties or impair the fair saleable
value of any thereof.
(iii) Neither the Partnership nor any of its Subsidiaries has
received any complaint, notice of violation, alleged violation,
investigation or advisory action or of potential liability or of
potential responsibility regarding environmental protection
matters or permit compliance with regard to the Properties, nor is
the Partnership aware that any Governmental Authority is
contemplating delivering to the Partnership or to any of its
Subsidiaries any such notice.
(iv) Hazardous Materials have not been generated, treated,
stored, disposed of, at, on or under any of the Properties, nor
have any Hazardous Materials been transferred from the Properties
to any other location.
(v) There are no governmental, administrative actions or
judicial proceedings pending or contemplated under any
Environmental Laws to which the Partnership or any of its
Subsidiaries is or will be named as a party with respect to the
Properties, nor are there any consent decrees or other decrees,
consent orders, administrative orders or other orders, or other
administrative or judicial requirements outstanding under any
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Environmental Law with respect to any of the Properties.
6.2 Representations and Warranties of the General Partner. In
order to induce the Agent and the Banks to enter into this Agreement, the
General Partner by its signature below hereby represents and warrants to the
Agent that:
(a) Corporate Existence. The General Partner is a corporation
duly organized, validly existing and in good standing under the laws of
the State of Delaware.
(b) Corporate Power; Authorization. The General Partner has
full power and authority to execute this Agreement and has taken all
necessary corporate action to authorize its execution of this Agreement,
the Term Notes, the Security Documents, the Assumption Agreement, the
Purchase Agreement and each other Restructuring Document to which it is
a signatory. No consent, except for those that have been obtained, of
any other party (including stockholders of the General Partner) and no
consent, license, approval or authorization of, or registration or
declaration with, any governmental body, authority, bureau or agency is
required in connection with the execution and delivery of this
Agreement, the Term Notes, the Security Documents, the Assumption
Agreement, the Purchase Agreement and any other Restructuring Document
to which the General Partner is a signatory or with respect to the
performance of any thereof or of the Mortgages, except for those that
have been obtained or made.
(c) No Violation. The execution, delivery and performance of
this Agreement, the Term Notes, the Security Documents and each other
Restructuring Document to which the General Partner is a signatory, and
the performance of the Mortgages, will not violate any provision of any
applicable law or regulation or of any writ or decree of any court or
governmental instrumentality or of the Certificate of Incorporation or
By-Laws of the General Partner, and will not violate any provision of or
cause a default under the Partnership Agreement or any Contractual
Obligation to which the General Partner is a party or which purports to
be binding upon the General Partner or upon any of its assets, and will
not result in the creation or imposition of any Lien on any of the
assets of the General Partner.
(d) ERISA. No "prohibited transaction" (as defined in Section
406 of the ERISA or Section 4975 of the Code) or "accumulated funding
deficiency" (as defined in Section 302 of ERISA) or Reportable Event has
occurred with respect to any Plan. The present value of all benefits
vested under all Single Employer Plans maintained by the General Partner
or a Commonly Controlled Entity (based on those assumptions used to fund
the Plans) did not, as of the last annual valuation date, which in the
case of any one Plan was not earlier than January 1, 1987, exceed the
value of the assets of the Plan allocable to such vested benefits.
Neither the General Partner nor any Commonly Controlled Entity would
become subject to any liability under ERISA if the General Partner or
any such Commonly Controlled Entity were to withdraw completely from all
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Multiemployer Plans as of the valuation date most closely preceding the
date hereof. The General Partner will not, prior to the Effective Date,
be an "employer" or a "substantial employer", as such terms are defined
in Sections 3(5) and 4001(a)(2), respectively, of ERISA, in respect of
any plan described in Section 4021(a) of ERISA.
(e) Regulation U. The General Partner is not engaged nor will
it engage, principally or as one of its important activities, in the
business of extending credit for the purpose of "purchasing" or
"carrying" any "margin stock" within the respective meanings of each of
the quoted terms under Regulation U of the Board of Governors of the
Federal Reserve System as now and from time to time hereafter in effect,
and no part of the proceeds of any of the loans evidenced by the Term
Notes have been used for the purpose, whether immediate, incidental or
ultimate, of purchasing, or carrying any such margin stock or to extend
credit to, or invest in, others for the purpose of purchasing or
carrying any such margin stock or to reduce or retire any indebtedness
incurred for any such purpose. If requested by the Agent, the General
Partner will furnish to the Agent a statement to the foregoing effect in
conformity with the requirements of Federal Reserve Form U-1 referred to
in said Regulation U.
(f) No Lien. The General Partner has not created a Lien on its
interest in the Partnership.
(g) No Defaults. The General Partner is not in material default
in the payment or performance of any of its obligations or in the
performance of any Contractual Obligation to which it is a party or by
which it or any of its assets may be bound.
SECTION 7. CLOSING AND CONDITIONS PRECEDENT
7.1 Closing. The closing (the "Closing") of the transactions
contemplated hereby shall take place at the offices of Simpson Thacher &
Bartlett, 425 Lexington Avenue, New York, New York 10017, commencing at 10:00
A.M., New York time, on April ____, 1995 or such other place or date as to
which the Agent, the Banks and the Partnership shall agree.
7.2 Conditions Precedent. The conditions precedent to the Closing are
set forth below. Each of the parties hereto expressly acknowledges that each
of the following conditions is integral to the effectiveness of the agreements
of the Agent and the Banks herein and that no such agreement shall be
effective until the Effective Date and that any documents or instruments
delivered at the Closing by the Agent or any Bank prior to the Effective Date
in connection with or in furtherance of any such agreement shall be so
delivered in escrow until each of the following conditions shall have been
satisfied, the Effective Date Certificate has been delivered and the Effective
Date shall have occurred:
(a) Restructuring Agreements. This Agreement shall have been
duly executed and delivered by each of the parties hereto, and each of
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the following agreements, amendments or instruments shall have been duly
executed and delivered by the respective parties thereto and shall not
have been terminated and the conditions to the effectiveness of such
agreements, amendments or instruments (to the extent provided therein to
have occurred on or prior to the Effective Date) shall have been
fulfilled:
(i) the Restructure Security Agreement;
(ii) the Mortgage Amendments;
(iii) the Subordination Agreement;
(iv) the Term Notes;
(v) the Trust Indenture;
(vi) the Letter Agreement;
(vii) the Intercreditor Agreement;
(viii) the Assumption Agreement;
(ix) the Purchase Agreement; and
(x) the Partner Mortgage Amendments.
(b) Resolutions. The Agent shall have received resolutions,
certified by the Secretary, Assistant Secretary or general partner, as
the case may be, of each of the following corporations or limited
partnerships, of the Board of Directors or partners (general and
limited), as the case may be, of each of the following corporations or
limited partnerships as to the following matters:
(i) of the Partnership authorizing the execution,
delivery and performance of the Assumption Agreement, the
Restructuring Documents and the Partnership Documents, in each
case, to which it is a party;
(ii) of each of the Partners authorizing the execution,
delivery and performance of the Assumption Agreement, the
Partnership Documents and the Restructuring Documents, in each
case, to which it is a party; and
(iii) of Atwood authorizing the execution, delivery and
performance of the Assumption Agreement, the Purchase Agreement,
the Management Agreements, and the other Restructuring Documents
to which it is a party.
(iv) [Intentionally Omitted]
(c) Incumbency Certificates. The Agent shall have received a
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PAGE 54
certificate of the Secretary or general partner, as the case may be, of
each of the Partnership, each Partner and Atwood dated the Effective
Date, and certifying as to the incumbency and signature of each officer
of such corporation authorized to sign the documents and agreements to
which such corporation or limited partnership is a party (and each
instrument referred to in such documents and agreements), together with
evidence of the incumbency and signature of such Secretary or the person
signing on behalf of such general partner, as the case may be.
(d) Partnership Documents. (i) The Agent shall have received a
copy of each of the Partnership Documents (other than the Certificate of
Limited Partnership of the Partnership), duly executed by each of the
parties thereto, and each such Partnership Document shall (x) be in form
and substance satisfactory to the Agent and (y) be certified to be
complete and correct on and as of the Effective Date by the Vice
President of the General Partner.
(ii) The Agent shall have received copies of the
Certificate of Limited Partnership of the Partnership, together
with all exhibits, attachments, schedules and supplements thereto
and certified by the Secretary of State of the State of Texas.
(e) Term Notes. Each Bank shall maintain the original Term
Note, in its favor dated November 12, 1992 and duly executed on behalf
of the Partnership.
(f) Financing Statements. Any documents (including, without
limitation, financing statements) required to be filed under any of the
Security Documents in order to create, in favor of the Agent, a
perfected Lien on property with respect to which a Lien may be perfected
by a filing under the Uniform Commercial Code shall have been executed
and delivered to the Agent.
(g) Vessel Documents. The Agent shall have received:
(A) an original of each Mortgage Amendment, executed and
acknowledged by the Partnership;
(B) certified copies of the abstracts of title of the
Eagle Vessel and the Hunter Vessel dated prior to the Effective
Date (the date of which shall be acceptable to the Agent),
indicating that each such Vessel is owned by the Partnership free
and clear of all mortgages or other encumbrances other than as
permitted by the Existing Hunter Mortgage and the Existing Eagle
Mortgage; and
(C) an original of the Trust Indenture, executed by the
Partnership.
(ii) [Intentionally Omitted]
(h) Consents. The Agent shall have received true copies (in
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PAGE 55
each case certified as to authenticity by the General Partner of the
Partnership) of all documents and instruments, including all consents,
authorizations and filings, required or advisable under any Requirement
of Law or by any Contractual Obligation of the Partnership, its Partners
and Atwood in connection with the execution, delivery, performance,
validity and enforceability of this Agreement, the other Restructuring
Documents, the Partnership Documents or the transactions contemplated
hereby or thereby, and the performance, validity and enforceability of
the Mortgages, and all such documents, instruments, consents,
authorizations and filings shall be satisfactory in form and substance
to the Agent and be in full force and effect.
(i) Evidence of Insurance. The Agent shall have received
evidence satisfactory to it that all insurance required to be maintained
pursuant to subsection 8.4 has been obtained and that such insurance
policies shall comply with the provisions of subsection 8.4.
(j) Legal Opinions. The Agent shall have received the following
legal opinions, each dated the Effective Date:
(i) an opinion of Griggs & Harrison, special counsel to
the Partnership, substantially in the form of Exhibit E-1;
(ii) an opinion of Griggs & Harrison, counsel to Atwood,
AHC, AODC and EOI, substantially in the form of Exhibit E-2.
(iii) [Intentionally Omitted]
(k) Representations and Warranties. The representations and
warranties contained in Section 6 and in each of the other Restructuring
Documents shall be true and correct as of the Effective Date as if made
on such date.
(l) No Default. No event shall have occurred as of the
Effective Date, or would result from the transactions contemplated to
occur on the Effective Date, which constitutes a Default or Event of
Default, assuming for purposes of this subsection 7.2(l) that the
Effective Date has occurred.
(m) Payment of Outstanding Amounts and Interest. The
Partnership shall have paid (i) any amount in respect of which it
received at least one Business Day prior to the Effective Date a request
to pay such amount in accordance with subsection 13.5 of the Existing
Credit Agreement, (ii) the principal and interest payment due on
March 31, 1995 and the amount thereof otherwise payable to Atwood on
account of its Existing Term Note shall have been paid to each Bank, pro
rata, and (iii) the $225,000 fee referred to in that certain letter from
the Agent dated March 27, 1995.
(n) Management Agreements. The Agent shall have received a copy
of the Management Agreements duly executed by Atwood and the
Partnership.
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(o) Financial Information. The Agent shall have received each
of the financial statements referred to in subsection 6.1(f), which
statements substantially conform to the requirements of such subsection
and shall be in form and substance satisfactory to the Agent.
(p) Terminated Documents. The Agent shall have received
evidence satisfactory to it that the Terminated Documents have been
terminated and that such documents are of no further force and effect.
(q) Partnership Account Setoff Letter. The Agent shall have
received a counterpart of the Partnership Account Setoff Letter
acknowledged by the Partnership.
(r) Additional Matters. All other documents that the Agent may
reasonably request in connection with the transactions contemplated by
this Agreement shall be reasonably satisfactory in form and substance to
the Agent and its counsel.
7.3 [Intentionally Omitted]
SECTION 8. AFFIRMATIVE COVENANTS
So long as the Term Loans remain outstanding and unpaid or any other
amount is owing to the Agent or any Bank hereunder or under the other
Restructuring Documents or the Mortgages, the Partnership shall:
8.1 Financial Statements and Certificates. Furnish to the Agent:
(a) as soon as available, but in any event no later than January
31 of each year, the annual audit report of the Partnership containing a
balance sheet of the Partnership as at the end of the immediately
preceding fiscal year and statements of earnings, partners' equity and
changes in financial position of the Partnership for such fiscal year,
setting forth in each case in comparative form the figures for the
previous year, reported on without qualification arising out of the
scope of the audit by Arthur Andersen or other independent certified
public accountants of recognized standing selected by the Partnership;
(b) within 60 days after the end of each Fiscal Quarter of the
Partnership, the unaudited balance sheet of the Partnership as at the
end of such quarterly period and statements of earnings, partners'
equity and changes in financial position of the Partnership for such
quarter and for the portion of the fiscal year then ended, certified by
a principal financial or accounting officer of the General Partner; and
(c) promptly, such additional financial and other information as
the Agent may from time to time reasonably request;
all such financial statements to be complete and correct in all material
respects and to be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein (except as
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approved by such accountants or officer, as the case may be, and disclosed
therein).
8.2 Certificates; Other Information. Furnish to the Agent:
(a) concurrently with the delivery of the financial statements
referred to in subsection 8.1(a) above, a certificate of the independent
public accountants reporting on such statements, stating that in making
the examination necessary therefor no knowledge was obtained of any
Default or Event of Default except as specifically indicated;
(b) concurrently with the delivery of the financial statements
referred to in subsections 8.1(a), (b) and (c) above, a certificate of
one of the principal financial officers of the General Partner stating
that to the best of his knowledge the Partnership has observed and
performed each and every covenant and agreement of the Partnership
contained in the Restructuring Documents and the Mortgages and that no
Event of Default or Default has occurred during the period covered by
such financial statements or is then in existence, except as
specifically indicated;
(c) not later than the 30th day after the end of each Fiscal
Quarter a certificate of one of the principal financial officers of the
General Partner setting forth the Excess Cash calculations and
distributions pursuant to subsection 4.2(a); such certificates to be in
a form acceptable to the Agent completed;
(d) as soon as available, but in any event not later than thirty
(30) days after the end of each calendar month (i) a report of the
operating status of each Vessel during such month, showing, among other
things, the location of the Vessel, the day rate, if any, applicable
thereto, the operator, if any, thereof and, if applicable, the stacking
costs therefor, (ii) a report of the cash flow for each Vessel for such
month and for the portion of the Fiscal Year then ended and (iii) a cash
management report with respect to all amounts on deposit in the
Partnership Account and all other bank accounts of the Partnership;
(e) as soon as available, but in any event in accordance with
the provisions of the Partnership Agreement, a copy of the Vessel
utilization and day rate forecast for the next succeeding 6 months;
(f) a copy of the Partnership's capital budget and an operating
budget;
(g) promptly, copies of the amendments, modifications and
waivers permitted under subsection 9.13; and
(h) within ten (10) Business Days after the same are executed, a
copy of each Drilling Contract having a continuous term of one year or
greater (without giving effect to any options).
8.3 Conduct of Business and Maintenance of Existence and Property.
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Maintain all properties necessary in its business in good working order and
condition; continue to engage in business of the same general type as now
conducted by it and preserve, renew and keep in full force and effect its
partnership status and take all reasonable action to maintain all rights,
privileges, licenses, permits and franchises necessary in the normal conduct
of its business; unless otherwise ordered by a court of competent
jurisdiction, comply with all Contractual Obligations and Requirements of Law
except to the extent that failure to comply therewith could not, in the
aggregate, have a Material Adverse Effect.
8.4 Maintenance of Insurance. (a) Maintain with financially sound and
reputable insurance companies insurance on all its property in at least such
amounts and against at least such risks (but including in any event public
liability insurance as has heretofore been maintained by the Partnership) as
it is deemed prudent; (b) furnish to the Agent, upon written request, full
information as to the insurance carried; and (c) at all times cause each
Vessel to be insured to the extent required by Section 12 of the applicable
Mortgage. All such insurance shall (i) contain a loss payable clause in favor
of the Agent as its interest may appear, (ii) except with respect to war-risk
insurance maintained by the Partnership, provide that no cancellation,
reduction in amount or change of coverage thereof shall be effective until at
least ten (10) days after receipt by the Agent of written notice thereof,
(iii) name the Agent on behalf of the Banks as insured, but without liability
for premiums, calls or assessments and (iv) contain a breach of warranty
clause satisfactory to the Agent.
8.5 Inspection of Property; Books and Records; Discussions.
(a) Keep proper books of records and account in which full, true and correct
entries in conformity, in all material respects, with GAAP and all
Requirements of Law shall be made of all dealings and transactions in relation
to its business and activities; and, upon reasonable prior notice, and at the
risk and expense of each Bank, permit representatives of such Bank to visit
and inspect any of its properties and examine and make abstracts from and
photocopies of any of its books and records at any reasonable time and as
often as may reasonably be desired, and to discuss the business, operations,
properties and financial and other condition of the Partnership with the
principal officers of the Partnership, with its independent certified public
accountants and with its financial advisers.
(b) Permit any independent review of the operations and
corporate overhead of the Partnership that may be requested by the Agent
and pay the cost of such review; provided, however, that (i) such a
review shall not occur more than one time in any twelve-month period
commencing after the Effective Date and (ii) the Partnership shall not
be obligated to pay more than $10,000 in respect of any such review.
(c) At the request of the Agent, promptly obtain at the expense
of the Partnership an appraisal of one or both of the Vessels by an
appraisal firm selected by the Agent; provided, however, that the
Partnership shall only be obligated to pay for one appraisal per fiscal
year per Vessel; provided further, that the Partnership's obligations
under this subsection to pay for appraisals shall not exceed $35,000 per
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fiscal year per Vessel. The Agent's right to require the Partnership to
obtain an appraisal of one or both of the Vessels shall be independent
of any appraisal rights provided Partners under the Partnership
Documents.
8.6 Notices. Promptly give written notice to the Agent of:
(a) the occurrence of any Default or Event of Default;
(b) the occurrence of any default or event of default under any
Contractual Obligation of the Partnership;
(c) the occurrence of any damage to any Vessel in an amount
exceeding $250,000;
(d) any litigation, investigation or proceedings affecting the
Partnership or any Vessel or any of the other assets of the Partnership
which, if adversely determined, might have a Material Adverse Effect;
(e) any dispute between the Partnership and any Governmental
Authority or other party which might materially and adversely affect the
normal business operations of the Partnership;
(f) any material dispute or proceeding between or among any of
the parties to the Partnership Agreement, any Drilling Contract or the
Management Agreements or with any governmental agency if the same may
materially adversely affect this Agreement or any other Restructuring
Document, any Vessel, or the insurance on any Vessel; and
(g) any material adverse change in the business, operations,
property or financial or other condition of the Partnership not
otherwise identified in a report, financial statement or other writing
delivered to the Agent.
Each notice pursuant to this subsection 8.6 shall be accompanied by a
statement of the Partnership signed by a principal officer of the General
Partner setting forth details of the occurrence referred to therein and
stating what action the Partnership proposes to take with respect thereto.
8.7 Further Documents and Steps. The Partnership covenants and agrees
that it will (i) at any time or from time to time, upon the written request of
the Agent, execute and deliver, or use its best efforts to cause to be
executed and delivered, such further documents including, without limitation,
any additional consents by interested parties to the granting of the Liens for
which the Security Documents and the Mortgages provide, and (ii) upon written
request of the Agent, take such other steps, including, without limitation,
filing, registering, recording, refiling, and re-recording any and all such
documents as shall be in the opinion of the Agent necessary or desirable to
obtain the full benefits of, and to perfect and protect the Liens created by
the Security Documents and the Mortgages (except that, in no event shall the
Partnership be required prior to the occurrence of an Event of Default, to
obtain the consent of any obligor under any Drilling Contract to the granting
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of a Lien thereon to the Agent), in order to create, preserve and protect the
Liens granted to the Agent under the Security Documents and the Mortgages.
8.8 Indemnification. (a) The Partnership assumes liability for and
agrees to pay, indemnify, protect, save and keep harmless the Agent and its
directors, officers, employees and agents, successors and assigns from and
against any and all liabilities, obligations, losses, damages, penalties,
claims, actions, suits, costs and expenses, including legal expense, of
whatsoever kind and nature, imposed on, incurred by or asserted against the
Agent, its directors, officers, employees, agents, successors or assigns, in
any way relating to or arising out of the operation, charter, condition, sale,
return or other disposition of the Vessels or any part thereof, including,
without limitation, latent and other defects, whether or not discovered or
discoverable by the Partnership or any other Person, claims for patent,
trademark or copyright infringement, tort or damage claims of any kind and
claims or penalties arising from any violation of the laws of any country or
political subdivision thereof.
(b) Notwithstanding any other exception provided for in this
Agreement, the Partnership shall also pay when due, and the Partnership
shall indemnify and hold the Agent and each Bank harmless from and
against, all fees, taxes (whether sale, use, excise, personal property,
income, gross receipts or other taxes), assessments and other
governmental charges of whatever kind or character and however
designated (together with any penalties, fines or interest thereon),
upon or with respect to the Vessels, or upon or with respect to the
purchase, ownership, delivery, possession, use, lease, charter,
operation, return, sale or other disposition of the Vessels or the
receipts or earnings arising therefrom except to the extent that the
Partnership is in good faith contesting any such fee, tax, assessment or
other charge and is, in accordance with GAAP, maintaining appropriate
reserves for the accrual of any of the same; provided, that, if failure
to pay timely any such fee, tax, assessment or other charge could result
in the creation of a Lien on either Vessel, the Partnership shall first
give the Agent, for the benefit of the Banks, such security as the Agent
deems necessary to protect its interests hereunder.
(c) The obligations contained in this subsection 8.8 shall
continue in full force and effect notwithstanding the payment in full of
all amounts owing to the Agent and the Banks hereunder or the
termination of this Agreement for any reason whatsoever.
8.9 Maintenance of Vessels. The Partnership will maintain each Vessel
in such condition as will entitle such Vessel to the highest classification
and rating for vessels of the same age and type of the American Bureau of
Shipping, or such other classification society of like standing which shall
accept such Vessel for classification purposes.
8.10 Discharge of Obligations and Liabilities. The Partnership shall
pay and discharge, at or before maturity, all its obligations and liabilities,
including, without limitation, Cash Operating Expenses and tax liabilities,
except where the same may be contested in good faith, and maintain, in
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accordance with GAAP, appropriate reserves for the accrual of any of the same.
For purposes hereof, payment of trade accounts payable at or before maturity
shall mean payment thereof in accordance with the customary practice of the
obligor thereon.
8.11 Additional Qualified Accounts. (a) On or before the date on which
the Partnership shall deposit funds in any new domestic account, the
Partnership shall deliver to the Agent a Security Agreement Supplement,
appropriately completed and duly executed by the Partnership;
(b) as promptly as practicable, but in any event within seven
days after depositing funds in any new Foreign Operating Account, the
Partnership shall deliver to the Agent a Security Agreement Supplement,
appropriately completed and duly executed by the Partnership; and
(c) The Partnership shall either (x) obtain a Transfer Notice in
favor of the Banks with respect to the Partnership Account substantially
in the form of Exhibit B to the Restructure Security Agreement or (y)
maintain the Partnership Account at one of the Banks.
8.12 Drilling Contracts. Execute all Drilling Contracts, or cause all
Drilling Contracts to be executed, in the name of the Partnership or an agent
on behalf of the Partnership.
8.13 Environmental Laws. The Partnership shall:
(a) comply with, and insure compliance by all tenants and
subtenants, if any, with, all Environmental Laws and obtain and comply
with and maintain, and insure that all tenants and subtenants obtain and
comply with and maintain, any and all licenses, approvals, registrations
or permits required by Environmental Laws, except to the extent that
failure to do so could not have a Material Adverse Effect;
(b) conduct and complete all investigations, studies, sampling
and testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply with all lawful orders and
directives of all Governmental Authorities respecting Environmental
Laws, except to the extent that the same are being contested in good
faith by appropriate proceedings and the pendency of such proceedings
could not have a Material Adverse Effect; and
(c) defend, indemnify and hold harmless the Agent and the Banks,
and their respective employees, agents, officers and directors, from and
against any claims, demands, penalties, fines, liabilities, settlements,
damages, costs and expenses of whatever kind or nature known or unknown,
contingent or otherwise, arising out of, or in any way relating to the
violation of or noncompliance with any Environmental Laws applicable to
the real property owned or operated by the Partnership, or any orders,
requirements or demands of Governmental Authorities related thereto,
including, without limitation, attorney's and consultant's fees,
investigation and laboratory fees, court costs and litigation expenses,
except to the extent that any of the foregoing arise out of the gross
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negligence or willful misconduct of the party seeking indemnification
therefor.
SECTION 9. NEGATIVE COVENANTS
So long as the Term Loans remain outstanding and unpaid or any other
amount is owing to the Agent or the Banks hereunder or under the other
Restructuring Documents or the Mortgages, the Partnership shall not:
9.1 Gross Overhead; Accounts; Subsidiaries.
(a) Accrue or make any payments in respect of Gross Overhead.
(b) At any time, maintain any cash or Cash Equivalents in any
accounts other than (i) the Partnership Account, (ii) the Qualified
Accounts, (iii) up to two other domestic bank accounts in which the
aggregate amount on deposit shall not exceed $20,000 and (iv) Foreign
Operating Accounts; provided that, the Partnership shall in good faith
attempt to promptly obtain and deliver to the Agent Transfer Notices for
each Foreign Operating Account, unless such Foreign Operating Account is
maintained at one of the Banks, in which case no Transfer Notice shall
be required with respect to such Account; provided further, that the
Partnership shall not permit the aggregate amount of funds on deposit in
Foreign Operating Accounts for which no Transfer Notices have been
obtained and delivered to the Agent and which are not maintained at one
of the Banks to exceed $1,000,000 in the aggregate for any five (5)
consecutive Business Days.
(c) Permit any Subsidiary in existence on the Effective Date
(other than Deep Seas Drilling Pty Ltd.) to conduct any business or
engage in any transaction (except a liquidation or dissolution) or own
or possess property or assets having an aggregate fair market value in
excess of $1,000.
(d) Transfer funds to or maintain funds in any Foreign Operating
Account other than as may be reasonably necessary to provide necessary
working capital for operations in the jurisdiction where such Foreign
Operating Account is being maintained.
9.2 Limitation on Indebtedness. Create, incur or assume after the
Effective Date any Indebtedness, except:
(a) Indebtedness constituting the Term Loans;
(b) Indebtedness constituting trade accounts payable incurred in
the ordinary course of business; and
(c) Indebtedness of the Partnership to Atwood (i) evidenced by a
Partnership Advance Note or (ii) for Temporary Working Capital Loans in
an aggregate maximum outstanding amount at any one time of $2,000,000;
provided that any such Indebtedness of the Partnership shall be
subordinated to the repayment of the Term Loans pursuant to the
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Subordination Agreement.
9.3 Limitation on Liens. Create, incur, assume or suffer to exist any
Lien upon any of its property, assets or revenues, whether now owned or
hereafter acquired, except for:
(a) Liens for taxes not due or due but not yet delinquent or
which are being contested in good faith by appropriate proceedings,
provided that adequate reserves with respect thereto are maintained on
the books of the Partnership in conformity with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's, or other like Liens arising in the ordinary course of
business and not overdue for a period of more than 60 days or which are
being contested in good faith by appropriate proceedings and other
nonconsensual Liens arising in the ordinary course of business and
removed within 30 days of attachment or which are being contested in
good faith by appropriate proceedings;
(c) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security
legislation;
(d) deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations, surety
and appeal bonds, performance bonds and other obligations of a like
nature incurred in the ordinary course of business;
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and which do not in any case
materially detract from the value of the property subject thereto or
materially interfere with the ordinary conduct of the business of the
Partnership;
(f) the Liens created or permitted by the Security Documents and
the Mortgages; and
(g) [Intentionally Omitted]
(h) Liens in favor of Atwood created by the Atwood Security
Documents.
9.4 Limitation on Contingent Obligations. Create, incur or assume any
Contingent Obligation, except Contingent Obligations incurred in the ordinary
course of the Partnership's business (including, but not limited to,
obligations incurred under Article 7 of the Partnership Agreement and
obligations incurred in connection with subsection 9.3(d)).
9.5 Limitations on Fundamental Changes. Enter into any transaction of
acquisition or merger or consolidation or amalgamation, or liquidate, wind up
or dissolve itself (or suffer any liquidation or dissolution), or convey,
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sell, lease, assign, transfer or otherwise dispose of, all or substantially
all of its property, business or assets, or engage in any business or activity
other than as contemplated by Section 2.1 of the Partnership Agreement.
9.6 Limitation on Sale of Assets. Convey, sell, lease, assign,
transfer or otherwise dispose of, any of its property, business or assets
(including, without limitation, receivables and leasehold interests) whether
now owned or hereafter acquired except:
(a) the Partnership may lease, as lessor, the Vessels pursuant
to Acceptable Drilling Contracts;
(b) the Partnership may lease, as lessee, any personal property
in the ordinary course of business and for a term not exceeding 5 years;
(c) subject to subsection 9.1(a), the Partnership may lease, as
lessee, its principal office from Atwood provided that in accordance
with subsection 9.11, such lease is on fair and reasonable terms no less
favorable to the Partnership than it would obtain in a comparable arm's-
length transaction with an unaffiliated Person; and
(d) in any Fiscal Year, the Partnership may sell, in the
ordinary course of its business, assets of the Partnership for an
aggregate consideration of not more than $100,000 in the aggregate for
such Fiscal Year; provided that, each such sale is an arms-length
transaction for a purchase price of not less than the fair market value
of the asset being sold, and such sale is to a Person that is not an
Affiliate of the Partnership or of any Partner.
9.7 Limitation on Distributions. Make any distribution of its assets
to the Partners or any Affiliate of the Partners (whether in the form of a
loan, advance or otherwise) or repay any capital contributions of the Partners
except that
(a) the Partnership may make payments of the Management Fee to
Atwood from time to time as described in Article 7 of the Partnership
Agreement; provided that such payments may not be in cash and instead
may only be evidenced by an increase in a Partnership Advance Note;
(b) the Partnership may repay any Temporary Working Capital
Loans in accordance with Section 4 hereof and with the Subordination
Agreement; and
(c) the Partnership may make such other payments to Atwood as
are contemplated by subsection 4.2.
9.8 Limitation on Capital Expenditures. Make (by way of the
acquisition of securities of a Person or otherwise) any expenditures in
respect of the purchase or other acquisition of fixed or capital assets except
(i) any capital expenditure representing the reinvestment of insurance
proceeds in assets similar to those in respect of which the Partnership or any
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Subsidiary has received such proceeds, provided, that such proceeds are so
reinvested as soon as practicable after receipt thereof, (ii) capital
expenditures representing the replacement of drill pipe for the Vessels in an
aggregate amount not to exceed $1,000,000 in any three of the Partnership's
Fiscal Years and (iii) other capital expenditures in an aggregate amount not
to exceed $1,200,000 in any of the Partnership's Fiscal Years.
9.9 Limitation on Investments, Loans and Advances. Make any advance,
loan, extension of credit or capital contribution to, or purchase any stock,
bonds, notes, debentures or other securities of, or make any other investment
in, any Person except:
(a) extensions of trade credit in the ordinary course of
business;
(b) investments in Cash Equivalents; and
(c) advances, loans or extensions of credit permitted by Section
9.7(b) hereof.
9.10 Limitations on Optional Payments of Indebtedness. Make any
optional payment, prepayment or redemption of the principal of any
Indebtedness except any such payment or prepayment of the Term Loans and
except for the prepayment of trade accounts payable during each calendar year
in an aggregate amount which is not, when compared to the total trade accounts
payable for such year, material.
9.11 Transactions with Affiliates. Enter into or suffer to exist any
transaction, including, without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service (but excluding the
Management Agreement, the Funding Agreement and the other Partnership
Documents), with any Affiliate of the Partnership or of any Partner unless
such transactions are otherwise permitted under this Agreement or are in the
ordinary course of the Partnership's business and are upon fair and reasonable
terms no less favorable to the Partnership than it would obtain in a
comparable arm's length transaction with a Person not so related to the
Partnership.
9.12 Sale and Leaseback. Enter into any arrangement with any Person
providing for the leasing by the Partnership of real or personal property
which has been or is to be sold or transferred by the Partnership to such
Person or to any other Person to whom funds have been or are to be advanced by
such Person on the security of such property or rental obligations of the
Partnership or such Subsidiary.
9.13 Modification of Certain Agreements. Amend, modify or waive any of
the provisions of (x) the Assumption Agreement or the Purchase Agreement or
(y) the Funding Agreement, the Management Agreement, or any other Partnership
Document, including, without limitation, changing the identity of the general
partner of the Partnership, if such amendment, modification or waiver would
(i) relieve any Partner or Atwood of any required payment or contribution to
the Partnership, (ii) increase any required payment or distribution from the
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Partnership to any Partner or Atwood, (iii) result in a default under any
Security Document, (iv) result in the failure of the Partnership to perform
its obligations under the Restructuring Documents, the Mortgages or the
Partnership Documents, in each case to which it is a party or (v) have a
material adverse effect on (x) the business, operations, assets, financial or
other condition of the Partnership, or (y) the ability of the Partnership to
perform its obligations under the Restructuring Documents, the Mortgages or
the Partnership Documents, in each case to which it is a party or (z) the
rights, powers and privileges of the Agent, the Trustee or any Bank under the
Restructuring Documents and the Mortgages.
9.14 Treatment of Property, Business and Assets. Other than in the
ordinary course of business as conducted over a period of time, cause or
permit any of the property, business or assets of the Partnership to be
operated in any manner contrary to any material Requirement of Law, or abandon
any of such property, business or assets.
SECTION 10. EVENTS OF DEFAULT
10.1 Events of Default. The occurrence and continuance of the
following shall constitute Events of Default:
(a) The Partnership shall fail to pay (i) any principal of the
Term Loans when due in accordance with the terms hereof or (ii) any
other amount payable hereunder (including interest on the Term Loans),
within five (5) days after any such amount becomes due and payable in
accordance with the terms hereof; or
(b) Any representation or warranty made or deemed made by the
Partnership or any Partner in this Agreement or in any other
Restructuring Document or the Mortgages or in any certificate, financial
or other statement furnished by the Partnership pursuant hereto or
thereto shall prove to have been incorrect in any material respect on or
as of the date made or deemed made and the Agent or any Bank shall have
been adversely affected by such incorrect representation or warranty; or
(c) The Partnership shall default in the observance or
performance of any of the covenants or agreements contained in
subsection 8.4, or in Section 9, or default in any material respect in
the observance or performance of any of the covenants or agreements in
any Drilling Contract (after giving effect to any grace period provided
by such Drilling Contract) or any party to any of the Security Documents
or the Mortgages shall fail to perform the provision of any of the
Security Documents or the Mortgages, as the case may be; or
(d) The Partnership shall default in the observance or
performance of any other agreement contained in this Agreement, and such
default shall continue unremedied for a period of 30 days; or
(e) (i) The Partnership shall commence any case, proceeding or
other action (A) under any existing or future law of any jurisdiction,
domestic or foreign, relating to bankruptcy, insolvency, reorganization
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or relief of debtors, seeking to have an order for relief entered with
respect to it, or seeking to adjudicate it a bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to it
or its debts, or (B) seeking appointment of a receiver, trustee,
custodian or other similar official for it or for all or any substantial
part of its assets, or the Partnership shall make a general assignment
for the benefit of its creditors; or (ii) there shall be commenced
against the Partnership any case, proceeding or other action of a nature
referred to in clause (i) above which (A) results in the entry of an
order for relief or any such adjudication or appointment or (B) remains
undismissed, undischarged or unbonded for a period of 90 days; or (iii)
there shall be commenced against the Partnership any case, proceeding or
other action seeking issuance of a warrant of attachment, execution,
distraint or similar process against all or any substantial part of its
assets which results in the entry of an order for any such relief which
shall not have been vacated, discharged, or stayed or bonded pending
appeal within 90 days from the entry thereof; or (iv) the Partnership
shall take any action in furtherance of, or indicating its consent to,
approval of, or acquiescence in, any of the acts set forth in clause
(i), (ii) or (iii) above; or (v) the Partnership shall generally not, or
shall be unable to, or shall admit in writing its inability to, pay its
debts as they become due; or
(f) One or more judgments or decrees shall be entered by a court
of competent jurisdiction against the Partnership involving in the
aggregate a liability (not paid or fully covered by insurance) of
$1,000,000 or more and all such judgments or decrees shall not have been
vacated, discharged, stayed or bonded pending appeal within 60 days from
the entry thereof; or
(g) (i) The Mortgages, any of the Restructuring Documents or the
Partnership Agreement shall cease, in any case, to be in full force and
effect; (ii) any party to such documents (excluding the Agent or the
Banks) shall seek to disaffirm its obligations thereunder; (iii) Atwood
or any Partner shall fail to perform the provisions of the Partnership
Agreement, or the Funding Agreement and such failure (w) would relieve
any Partner or Atwood of any required payment or contribution to the
Partnership, (x) would increase any required payment or distribution
from the Partnership to any Partner or Atwood, (y) would result in a
default under any Security Document or Mortgage or (z) adversely affects
the ability of the Partnership to perform its obligations under the
Restructuring Documents or the Mortgages to which it is a party and
remains unremedied for a period of 15 days; or (iv) Atwood shall cease
to be the operator of either Vessel or AHC shall cease to be the General
Partner; or
(h) The Partnership shall (i) default in the payment when due of
more than $500,000 principal amount of any Indebtedness (other than the
Term Notes) referred to in clauses (a) and (b) of the definition thereof
and the passage of any grace periods, or (ii) default in the performance
or observance of any other term, condition or agreement contained in any
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such obligation referred to in clause (i) immediately above or in any
agreement relating thereto if the effect of such default is to cause, or
permit the holder or holders of such obligation (or a trustee on behalf
of such holder or holders) to cause, such obligation to become due prior
to its stated maturity; or
(i) Any Vessel or all or any substantial part of the property of
the Partnership as a whole shall be condemned, seized or otherwise
appropriated, or custody or control of such property shall be assumed by
any Government Authority and shall be retained for a period of 30 days
or more; provided, however, that if the taken property is covered by
valid insurance against such taking in an amount sufficient to pay all
principal, interest and fees owing to the Banks under this Agreement,
such occurrence will not constitute an Event of Default; provided,
however, nothing herein shall supersede the requirements of Section
10.1(a); or
(j) An event of default shall occur and be continuing under any
of the Security Documents or the Mortgages; or
(k) Any event or condition shall occur which causes the
liquidation or dissolution of the Partnership; or
(l) The Partnership shall not deposit in the Partnership Account
on or before the Fifth Business Day following each Fiscal Quarter, an
amount, if any, which assuming such amount, if any, had been so
deposited on the last day of such Fiscal Quarter, would cause the
amounts on deposit therein or credited thereto to equal at least
$2,000,000; or
(m) (i) The Partnership shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the
Code) involving any Plan, (ii) any "accumulated funding deficiency" (as
defined in Section 302 of ERISA), whether or not waived, shall exist
with respect to any Plan, (iii) a Reportable Event shall occur with
respect to, or proceedings shall commence to have a trustee appointed,
or a trustee shall be appointed, to administer or to terminate, any
Single Employer Plan, which Reportable Event or commencement of
proceedings or appointment of a trustee is, in the reasonable opinion of
the Required Banks, likely to result in the termination of such Plan for
purposes of Title IV of ERISA, (iv) any Single Employer Plan shall
terminate for purposes of Title IV of ERISA, or (v) any other event or
condition shall occur or exist, with respect to a Plan; and in each case
in clauses (i) through (v) above, such event or condition, together with
all other such events or conditions, if any, could subject the
Partnership to any tax, penalty or other liabilities in the aggregate
material in relation to the business, operations, property or financial
or other condition of the Partnership.
(n) The Agent shall not have received within seven (7) Business
Days of the Effective Date (i) an original of each Mortgage Amendment
bearing evidence of recordation by the relevant U.S. Coast Guard Vessel
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Documentation Office, (ii) certified copies of the abstracts of title of
the Vessels, indicating that each such Vessel is owned by the
Partnership free and clear of all mortgages or other encumbrances other
than the relevant Amended Mortgage and the Partner Mortgages.
SECTION 11. REMEDIES
11.1 Remedies Upon an Event of Default. Upon the occurrence of an
Event of Default then, and in any such event:
(a) If such event is an Event of Default specified in clause (i)
or (ii) of subsection 10.1(e), automatically the Term Loans (with
accrued interest thereon) and all other amounts accrued and owing under
this Agreement and the Term Notes shall immediately become due and
payable.
(b) If such event is any Event of Default other than an Event of
Default specified in clause (i) or (ii) of subsection 10.1(e), the Agent
may, upon the request of the Required Banks and by notice of default to
the Partnership, declare the Term Loans (with accrued interest thereon)
and all other amounts accrued and owing under this Agreement and the
Term Notes to be due and payable forthwith, whereupon the same shall
immediately become due and payable.
(c) Upon the request of the Required Banks, the Agent may
immediately exercise any remedies available to the Agent under the
Security Documents and the Mortgages (including, without limitation,
foreclosing on the Eagle Vessel and the Hunter Vessel pursuant to the
Mortgages).
11.2 Notices. Except as expressly provided above in this Section,
presentment, demand, protest and all other notices of any kind are hereby
expressly waived. Upon the occurrence of an Event of Default, the Agent shall
use reasonable efforts to notify the Partnership and Atwood of the occurrence
thereof provided, the failure to deliver such notice shall not affect the
ability of the Agent to exercise any remedies provided herein, in the Security
Documents and in the Mortgages.
SECTION 12. THE AGENT
12.1 Appointment. Each Bank hereby irrevocably designates and appoints
Chemical Bank as the Agent of such Bank under this Agreement, the Security
Documents and the Mortgages and each such Bank irrevocably authorizes Chemical
Bank, as the Agent for such Bank, to take such action on its behalf under the
provisions of this Agreement and to exercise such powers and perform such
duties as are expressly delegated to the Agent by the terms of this Agreement,
together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement, the
Restructuring Documents and the Mortgages, the Agent shall not have any duties
or responsibilities, except those expressly set forth herein, or any fiduciary
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relationship with any Bank, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or otherwise exist against the Agent. The Agent shall hold all
security under the Security Documents and the Mortgages for the ratable
benefit of the Banks unless otherwise specifically provided in such documents.
12.2 Delegation of Duties. The Agent may execute any of its duties
under this Agreement, the Restructuring Documents and the Mortgages by or
through agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Agent shall not be
responsible for the negligence or misconduct of any agents or attorneys-in-
fact selected by it with reasonable care.
12.3 Exculpatory Provisions. Neither the Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or affiliates shall
be (i) liable for any action lawfully taken or omitted to be taken by it or
such Person under or in connection with this Agreement, the Mortgages or any
other Restructuring Documents (except for its or such Person's own gross
negligence or willful misconduct), or (ii) responsible in any manner to any of
the Banks for any recitals, statements, representations or warranties made by
the Partnership, Atwood, the Partners, or any Affiliate of any of the
foregoing entities (collectively, the "Partnership Group")) or any officer
thereof contained in this Agreement, the Mortgages or any other Restructuring
Document or in any certificate, report, statement or other document referred
to or provided for in, or received by the Agent under or in connection with,
this Agreement, the Mortgages or any other Restructuring Document or for the
value, validity, effectiveness, genuineness, enforceability or sufficiency of
this Agreement, the Mortgages or any other Restructuring Document or for any
failure of any member of the Partnership Group to perform its obligations
under this Agreement, the Mortgages or any other Restructuring Document or
Partnership Document. The Agent shall not be under any obligation to any Bank
to ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement, the Mortgages or
any other Restructuring Document, or to inspect the properties, books or
records of any member of the Partnership Group.
12.4 Reliance by Agent. The Agent shall be entitled to rely, and shall
be fully protected in relying, upon any Term Note, writing, resolution,
notice, consent, certificate, affidavit, letter, cablegram, telegram,
telecopy, telex or teletype message, statement, order or other document or
conversation believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons and upon advice and statements of
legal counsel (including, without limitation, counsel to any member of the
Partnership Group), independent accountants and other experts selected by the
Agent. The Agent may deem and treat the payee of any Term Note as the owner
thereof for all purposes unless a written notice of assignment, negotiation or
transfer in respect thereof shall have been filed with the Agent. The Agent
shall be fully justified in failing or refusing to take any action under this
Agreement, the Mortgages or any other Restructuring Document unless it shall
first receive such advice or concurrence of the Banks as it deems appropriate
or it shall first be indemnified to its satisfaction by the Banks against any
and all liability and expense which may be incurred by it by reason of taking
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or continuing to take any such action. The Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement, the
Mortgages and any other Restructuring Document in accordance with a request of
the Required Banks, and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Banks and their successors and
assigns.
12.5 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Agent has received notice from a Bank or a member of the
Partnership Group referring to this Agreement, describing such Default or
Event of Default and stating that such notice is a "notice of default". In
the event that the Agent receives such a notice, the Agent shall give notice
thereof to the Banks. The Agent shall take such action with respect to such
Default or Event of Default as shall be required hereunder and as may be
directed by Chemical; provided that unless and until the Agent shall have
received such directions, the Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to such Default
or Event of Default as it shall deem advisable in the best interests of the
Banks.
12.6 Non-Reliance on Agent and Other Lenders. Each Bank expressly
acknowledges that neither the Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates has made any
representations or warranties to it and that no act by the Agent hereinafter
taken, including any review of the affairs of any member of the Partnership
Group, shall be deemed to constitute any representation or warranty by the
Agent to any Bank. Each Bank represents to the Agent that it has,
independently and without reliance upon the Agent or any other Bank, and based
on such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Partnership and made
its own decision to enter into this Agreement. Each Bank also represents that
it will, independently and without reliance upon the Agent or any other Bank,
and based on such documents and information as it shall deem appropriate at
the time, continue to make its own credit analysis, appraisals and decisions
in taking or not taking action under this Agreement, the Mortgages and any
other Restructuring Document, and to make such investigation as it deems
necessary to inform itself as to the business, operations, property, financial
and other condition and creditworthiness of the Partnership. Except for
notices, reports and other documents expressly required to be furnished to the
Banks by the Agent hereunder, the Agent shall not have any duty or
responsibility to provide any Bank with any credit or other information
concerning the business, operations, property, financial and other condition
or creditworthiness of any member of the Partnership Group which may come into
the possession of the Agent or any of its officers, directors, employees,
agents, attorneys-in-fact or affiliates.
12.7 Indemnification. The Banks agree to indemnify the Agent in its
capacity as such (to the extent not reimbursed by the Partnership and without
limiting the obligation of the Partnership to do so) ratably according to the
Pro Rata Percentages from and against any and all liabilities, obligations,
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losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind whatsoever which may at any time (including without
limitation at any time following any payment on the Term Loans) be imposed on,
incurred by or asserted against the Agent in any way relating to or arising
out of this Agreement, the Mortgages or any other Restructuring Document, or
any documents contemplated by or referred to herein or therein or the
transactions contemplated hereby or thereby or any action taken or omitted by
the Agent under or in connection with any of the foregoing (each payment made
by a Lender pursuant to the foregoing provisions of this subsection 12.7 being
hereinafter referred to as an "Indemnification Payment"); provided that no
Bank shall be liable for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the Agent's gross negligence or
willful misconduct. The agreements in this subsection shall survive the
payment of the Term Loans and all other amounts payable hereunder.
12.8 Agent in Its Individual Capacity. The Agent and its affiliates
may make loans to, accept deposits from and generally engage in any kind of
business with the members of the Partnership Group as though the Agent were
not the Agent hereunder. With respect to its Term Loans and Term Note, the
Agent shall have the same rights and powers under this Agreement as any Bank
and may exercise the same as though it were not the Agent, and the terms
"Bank" and "Banks" shall include the Agent in its individual capacity.
12.9 Successor Agent. The Agent may resign as Agent upon 10 days'
notice to the Banks. If the Agent shall resign as Agent under this Agreement,
then Chemical shall appoint from among the other Banks a successor agent for
the Banks which successor agent shall be approved by the Partnership,
whereupon such successor agent shall succeed to the rights, powers and duties
of the Agent, and the term "Agent" shall mean such successor agent effective
upon its appointment, and the former Agent's rights, powers and duties as
Agent shall be terminated, without any other or further act or deed on the
part of such former Agent or any of the parties to this Agreement or any
holders of the Term Notes. After any retiring Agent's resignation hereunder
as Agent, the provisions of this subsection 12.9 shall inure to its benefit as
to any actions taken or omitted to be taken by it while it was Agent under
this Agreement.
SECTION 13. MISCELLANEOUS
13.1 Amendments and Waivers. (a) Neither this Agreement, the
Mortgages, any other Restructuring Document, nor any terms hereof or thereof
may be amended, supplemented or modified except in accordance with the
provisions of this subsection.
(b) Except as set forth in subsection 13.1(c), the Agent may,
and at the request of the Required Banks shall, from time to time, enter
into written amendments, supplements or modifications hereto for the
purpose of adding any provisions to this Agreement, the Mortgages or the
other Restructuring Documents or changing in any manner the rights of
the Banks or of the Partnership hereunder or thereunder or waiving, on
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such terms and conditions as may be specified in such instrument, any of
the requirements of this Agreement, the Mortgages or the other
Restructuring Documents or any Default or Event of Default and its
consequences.
(c) No amendment, modification or waiver referred to in
subsection 13.1(b) shall:
(i)(1) extend the maturity of any Term Note or any
installment thereof, or (2) reduce the rate or extend the time of
payment of interest thereon, or (3) reduce the principal amount of
any of the foregoing, or (4) amend, modify or waive any provision
of this subsection or (5) amend, modify or waive (i) any provision
of this Agreement relating to (x) calculations of interest or (y)
payments or prepayments of principal or interest (including any
definitions, other than the definition of "Alternate Base Rate",
relating thereto), (ii) the definitions of "Required Banks" or
"Qualified Transferees", or (iii) subsections 11.1(a) or 13.6, of
this Agreement or definitions used therein for purposes thereof,
or (6) consent to the assignment or transfer by the Partnership of
its rights and obligations under this Agreement, or (7) release
the Lien of the Agent or the Trustee on any collateral granted
under the Security Documents and the Mortgages or amend, modify or
waive any insurance provisions contained therein, or (8) amend or
modify, the definitions of "Senior Indebtedness" or "Subordinated
Indebtedness", or consent to payments or offsets contrary to the
terms of the Subordination Agreement or (9) amend, modify or waive
the provisions of any Restructuring Document or Mortgage to
subordinate any of the Liens created thereby in favor of the Agent
or the Trustee or (10) amend, modify or waive the provisions of
any Restructuring Document or Mortgage to permit the sale by the
Partnership to any Person of either Vessel unless (i) the proposed
cash sale price for such Vessel is no less than an amount equal to
65% of the then outstanding principal of and interest on the Term
Loans and (ii) after consummation of such proposed sale, the
Partnership would continue to own at least one Vessel or
(11) waive compliance with any of the conditions precedent
specified in subsection 7.2 (other than those specified in
subsection 7.2(j), in each case without the written consent of all
the Banks; or
(ii) amend, modify or waive any provision of Section 12
without the written consent of the then Agent.
(d) Any such waiver and any such amendment, supplement or
modification shall be binding upon the Partnership, the Banks, the
Agent, all future assignees of the Term Loans and all future holders of
the Term Notes and the other obligations hereunder. In the case of any
waiver, the Partnership and the Banks shall be restored to their former
position and rights hereunder and under the outstanding Term Loans, and
any Default or Event of Default waived shall be deemed to be cured and
not continuing; but no such waiver shall extend to any subsequent or
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other Default or Event of Default, or impair any right consequent
thereon.
13.2 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
facsimile transmission), and, unless otherwise expressly provided herein,
shall be deemed to have been duly given or made when actually delivered or, in
the case of notice by facsimile transmission, when received and telephonically
confirmed, addressed as follows in the case of the Partnership and the Agent
and, in the case of the Banks, addressed to the addresses set forth on the
signature pages hereto, or to such other address as may be hereafter notified
by the respective parties hereto:
The Partnership: Atwood Deep Seas, Ltd.
15835 Park Ten Place Drive
Houston, Texas 77084
Attention: James M. Holland
Telecopy: (713) 492-0345
Telephone Confirmation: (713) 492-2929
The Agent: Chemical Bank
270 Park Avenue
New York, New York 10017
Attention: Charles O. Freedgood
Telecopy: 212-661-8396
Telephone Confirmation: 212-270-7730
13.3 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Agent or any Bank, any right, remedy,
power or privilege hereunder, shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege. The rights, remedies, powers and
privileges herein provided are cumulative and not exclusive of any rights,
remedies, powers and privileges provided by law.
13.4 Survival of Representations and Warranties. All representations
and warranties made hereunder and in any document, certificate or statement
delivered pursuant hereto or in connection herewith shall survive the
execution and delivery of this Agreement.
13.5 Payment of Expenses and Taxes. (a) The Partnership agrees (i) to
pay or reimburse the Agent for all its out-of-pocket costs and expenses
incurred in connection with the development, preparation, execution, delivery,
filing, recording, administration, modification, restatement or amendment of
this Agreement, the Mortgages and each of the other Restructuring Documents
and any other documents prepared in connection herewith and therewith, and the
consummation of the transactions contemplated hereby and thereby (including,
without limitation, the fees and disbursements of Simpson Thacher & Bartlett
and Gilmartin, Poster & Shafto, counsel for the Agent), and (ii) to pay or
reimburse the Agent for all its out-of-pocket costs and expenses incurred in
connection with the enforcement or preservation of any rights under this
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Agreement, each of the other Restructuring Documents, the Mortgages and any
such other documents (including, without limitation, the fees and
disbursements of Simpson Thacher & Bartlett and/or such other counsel as the
Agent may select); provided, however, the parties acknowledge and agree that
Philadelphia Investment Corporation of Delaware has agreed to pay the above
amounts incurred in connection with the execution of this Second Amended and
Restated Master Loan Restructuring Agreement and the documents executed in
connection therewith, including without limitation, a fee to the Agent in the
amount of $225,000.00.
(b) The Partnership further agrees to pay, indemnify, and hold
the Agent harmless from, any and all recording and filing fees and any
and all liabilities with respect to, or resulting from any delay in
paying, stamp, excise and other taxes, if any, which may be payable or
determined to be payable in connection with the execution and delivery
of, or consummation of any of the transactions contemplated by, or any
amendment, supplement or modification of, or any waiver or consent under
or in respect of, this Agreement, the Mortgages, each of the other
Restructuring Documents and any such other documents.
(c) A request for payment under subsection 13.5(b) shall be
accompanied by supporting documentation thereof, identifying with
reasonable specificity the basis for and the amount of such costs and
expenses. The agreements in this subsection 13.5 shall survive
repayment of the Term Loans and all other amounts payable hereunder.
13.6 Successors and Assigns; Participations; Purchasing Banks.
(a) This Agreement shall be binding upon and inure to the
benefit of the Partnership, the Banks, the Agent, all future holders of
the Term Notes and their respective successors and assigns, except that
the Partnership may not assign or transfer any of its rights or
obligations under this Agreement without the prior written consent of
each Bank.
(b) Any Bank may, in the ordinary course of its commercial
banking business and in accordance with applicable law, at any time sell
to one or more banks or other entities ("Participants") participating
interests in any Term Loan owing to such Bank, any Term Note held by
such Bank, or any other interest of such Bank hereunder and under the
other Restructuring Documents and the Mortgages. In the event of any
such sale by a Bank of participating interests to a Participant, such
Bank's obligations under this Agreement to the other parties to this
Agreement shall remain unchanged, such Bank shall remain solely
responsible for the performance thereof, such Bank shall remain the
holder of any such Term Note for all purposes under this Agreement, the
other Restructuring Documents and the Mortgages, and the Partnership and
the Agent shall continue to deal solely and directly with such Bank in
connection with such Bank's rights and obligations under this Agreement,
the other Restructuring Documents and the Mortgages. The Partnership
agrees that if amounts outstanding under this Agreement and the Term
Notes are due or unpaid, or shall have been declared or shall have
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become due and payable upon the occurrence of an Event of Default, each
Participant shall be deemed to have the right of setoff in respect of
its participating interest in amounts owing under this Agreement and any
Term Note to the same extent as if the amount of its participating
interest were owing directly to it as a Bank under this Agreement or any
Term Note, provided that such Participant shall only be entitled to such
right of setoff if it shall have agreed in the agreement pursuant to
which it shall have acquired its participating interest to share with
the Banks the proceeds thereof as provided in subsection 13.7. The
Partnership also agrees that each Participant shall be entitled to the
benefits of subsections 5.7, 5.8 and 13.5 with respect to its
participation in the Term Loans outstanding from time to time; provided,
that no Participant shall be entitled to receive any greater amount
pursuant to such subsections than the transferor Bank would have been
entitled to receive in respect of the amount of the participation
transferred by such transferor Bank to such Participant had no such
transfer occurred.
(c) Any Bank may, in the ordinary course of its commercial
banking business and in accordance with applicable law, at any time sell
to any Bank or any affiliate thereof and, with the consent of the
Partnership and the Agent (which in each case shall not be unreasonably
withheld), to one or more additional banks or financial institutions
("Purchasing Banks") all or any part of its rights and obligations under
this Agreement and the Term Notes pursuant to a Loan Transfer
Supplement, substantially in the form of Exhibit I, executed by such
Purchasing Bank, such transferor Bank (and, in the case of a Purchasing
Bank that is not then a Bank or an affiliate thereof, by the Partnership
and the Agent) and delivered to the Agent for its acceptance and
recording in the Register. Upon such execution, delivery, acceptance
and recording, from and after the Transfer Effective Date determined
pursuant to such Loan Transfer Supplement, (x) the Purchasing Bank
thereunder shall be a party hereto and, to the extent provided in such
Loan Transfer Supplement, have the rights and obligations of a Bank
hereunder, and (y) the transferor Bank thereunder shall, to the extent
provided in such Loan Transfer Supplement, be released from its
obligations under this Agreement (and, in the case of a Loan Transfer
Supplement covering all or the remaining portion of a transferor Bank's
rights and obligations under this Agreement, such transferor Bank shall
cease to be a party hereto). Such Loan Transfer Supplement shall be
deemed to amend this Agreement to the extent, and only to the extent,
necessary to reflect the addition of such Purchasing Bank. On or prior
to the Transfer Effective Date determined pursuant to such Loan Transfer
Supplement, the Partnership, at its own expense, shall execute and
deliver to the Agent in exchange for the surrendered Term Note a new
Term Note to the order of such Purchasing Bank in an amount equal to the
amount of the Term Loans to be made by it pursuant to such Loan Transfer
Supplement and, if the transferor Bank has remained a Bank hereunder,
new Term Notes to the order of the transferor Bank in an amount equal to
the amount of the Term Loans retained by it hereunder. Such new Term
Notes shall be dated the Effective Date and shall otherwise be in the
form of the Term Notes replaced thereby. The Term Notes surrendered by
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PAGE 77
the transferor Bank shall be returned by the Agent to the Partnership
marked "cancelled".
(d) The Agent shall maintain at its address referred to in
subsection 13.2 a copy of each Loan Transfer Supplement delivered to it
and a register (the "Register") for the recordation of the names and
addresses of the Banks of, and principal amount of the Term Loans owing
to, each Bank from time to time. The entries in the Register shall be
conclusive, in the absence of manifest error, and the Partnership, the
Agent and the Banks may treat each Person whose name is recorded in the
Register as the owner of the Term Loan recorded therein for all purposes
of this Agreement. The Register shall be available for inspection by
the Partnership or any Bank at any reasonable time and from time to time
upon reasonable prior notice.
(e) Upon its receipt of a Loan Transfer Supplement executed by a
transferor Bank and Purchasing Bank (and, in the case of a Purchasing
Bank that is not then a Bank or an affiliate thereof, by the Partnership
and the Agent) together with payment to the Agent of a registration and
processing fee of $3,000, the Agent shall (i) promptly accept such Loan
Transfer Supplement (ii) on the Transfer Effective Date determined
pursuant thereto record the information contained therein in the
Register and give notice of such acceptance and recordation to the Banks
and the Partnership.
(f) The Partnership authorizes each Bank to disclose to any
Participant or Purchasing Bank (each, a "Transferee") and any
prospective Transferee any and all financial information in such Bank's
possession concerning the Partnership and its affiliates which has been
delivered to such Bank by or on behalf of the Partnership pursuant to
this Agreement or which has been delivered to such Bank by or on behalf
of the Partnership in connection with such Bank's credit evaluation of
the Partnership and its affiliates prior to becoming a party to this
Agreement.
(g) If, pursuant to this subsection, any interest in this
Agreement or any Term Note is transferred to any Transferee which is
organized under the laws of any jurisdiction other than the United
States or any state thereof, the transferor Bank shall cause such
Transferee, concurrently with the effectiveness of such transfer, (i) to
represent to the transferor Bank (for the benefit of the transferor
Bank, the Agent and the Partnership) that under applicable law and
treaties no taxes will be required to be withheld by the Agent, the
Partnership or the transferor Bank with respect to any payments to be
made to such Transferee in respect of the Term Loans, (ii) to furnish to
the transferor Bank (and, in the case of any Purchasing Bank registered
in the Register, the Agent and the Partnership) either U.S. Internal
Revenue Service Form 4224 or U.S. Internal Revenue Service Form 1001
(wherein such Transferee claims entitlement to complete exemption from
U.S. federal withholding tax on all interest payments hereunder) and
(iii) to agree (for the benefit of the transferor Bank, the Agent and
the Partnership) to provide the transferor Bank (and, in the case of any
<PAGE>
PAGE 78
Purchasing Bank registered in the Register, the Agent and the
Partnership) a new Form 4224 or Form 1001 upon the expiration or
obsolescence of any previously delivered form and comparable statements
in accordance with applicable U.S. laws and regulations and amendments
duly executed and completed by such Transferee, and to comply from time
to time with all applicable U.S. laws and regulations with regard to
such withholding tax exemption.
(h) Nothing herein shall prohibit any Bank from pledging or
assigning any Term Note to any Federal Reserve Bank in accordance with
applicable law.
13.7 Adjustments; Set-off. (a) If any Bank (a "benefitted Bank") shall
at any time receive any payment of all or part of its Term Loans, or interest
thereon, or receive any collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, pursuant to events or proceedings of the nature
referred to in clause (e) of Section 10.1, or otherwise) in a greater
proportion than any such payment to and collateral received by any other Bank,
if any, in respect of such other Bank's Term Loans, or interest thereon, such
benefitted Bank shall purchase for cash from the other Banks such portion of
each such other Bank's Term Loan, or shall provide such other Banks with the
benefits of any such collateral, or the proceeds thereof, as shall be
necessary to cause such benefitted Bank to share the excess payment or
benefits of such collateral or proceeds ratably with each of the Banks;
provided, however, that if all or any portion of such excess payment or
benefits is thereafter recovered from such benefitted Bank, such purchase
shall be rescinded, and the purchase price and benefits returned, to the
extent of such recovery, but without interest. The Partnership agrees, to the
extent it may do so under applicable law, that each Bank so purchasing a
portion of another Bank's Term Loan may exercise all rights of payment
(including, without limitation, rights of set-off) with respect to such
portion as fully as if such Bank were the direct holder of such portion.
(b) [Intentionally Deleted]
(c) In addition to any rights and remedies of the Banks provided
by law, each Bank shall have the right, without prior notice to the
Partnership, any such notice being expressly waived by the Partnership
to the extent permitted by applicable law, upon the occurrence of any
Event of Default and acceleration of the obligations owing in connection
with this Agreement, to set-off and apply against any indebtedness,
whether matured or unmatured, of the Partnership to such Bank, any
amount owing from such Bank to the Partnership at, or at any time after,
the occurrence of such Event of Default and acceleration of the
obligations owing in connection with this Agreement. Each Bank agrees
promptly to notify the Partnership and the Agent after any such set-off
and application made by such Bank, provided that the failure to give
such notice shall not affect the validity of such set-off and
application.
13.8 Counterparts. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts and all
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of said counterparts taken together shall be deemed to constitute one and the
same instrument. A set of the copies of this Agreement signed by all the
parties shall be lodged with the Partnership and the Agent.
13.9 GOVERNING LAW. THIS AGREEMENT AND THE TERM NOTES AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
13.10 Interest. It is the intent of the Banks and the Partnership in
the execution and performance of this Agreement, all matters incidental and
related hereto, the other Restructuring Documents and the Mortgages or any
agreement or instrument executed in connection herewith or therewith or with
any Indebtedness of the Partnership to the Banks to remain in strict
compliance with all laws applicable to the Banks from time to time in effect,
including, without limitation, usury laws. In furtherance hereof, each Bank
and the Partnership stipulate and agree that none of the terms and provisions
contained in or pertaining to this Agreement or in the other Restructuring
Documents, the Mortgages or any other agreement or instrument ("Other
Agreement") executed in connection herewith or with any Indebtedness of the
Partnership to such Bank shall be construed to create a contract to pay for
the use, forbearance or detention of money with interest at a rate or in an
amount in excess of the Maximum Rate for such Bank or maximum amount of
interest permitted to be charged by such Bank under all laws in effect and
applicable to the Bank. For purposes of this Agreement and the Term Note held
by any Bank, "interest" shall include the aggregate of all amounts which
constitute or are deemed to constitute interest under the respective laws in
effect and applicable to such Bank that are contracted for, chargeable,
receivable (whether received or deemed to have been received) or taken under
this Agreement or such Term Note or any Other Agreement. The Partnership
shall never be required to pay to any Bank unearned interest hereunder or on
the Term Note held by any Bank or any Other Agreement and shall never be
required to pay interest hereunder or on the Term Note held by any Bank or any
Other Agreement at a rate or in an amount in excess of the Maximum Rate for
such Bank or maximum amount of interest that may be lawfully charged by such
Bank under any law which is in effect and applicable to such Bank, and the
provisions of this paragraph shall control over all other provisions of this
Agreement and the Term Notes or any Other Agreement which may be in apparent
conflict herewith. If the effective rate or amount of interest which would
otherwise be payable under this Agreement or the Term Note held by a Bank or
any Other Agreement, or all of them, would exceed the Maximum Rate for such
Bank or the maximum amount of interest such Bank or any holder of such Term
Note or any Other Agreement is allowed by the relevant Applicable Law to
charge, contract for, take or receive, or in the event such Bank or such
holder or any Other Agreement shall charge, contract for, take or receive
monies that are deemed to constitute interest which could, in the absence of
this provision, increase the effective rate or amount of interest payable
under this Agreement or the Term Notes or any Other Agreement, or all of them,
to a rate or amount in excess of that permitted to be charged, contracted for,
taken or received under the Applicable Laws then in effect with respect to
such Bank, then the principal amount of the Term Note held by such Bank or the
obligations of the Partnership to such Bank under this Agreement, such Term
Note or any Other Agreement or the amount of interest which would otherwise be
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payable to or for the account of such Bank under this Agreement or the Term
Note held by such Bank or any Other Agreement, or all of them, shall be
reduced to the maximum amount allowed under said Applicable Laws as now or
hereafter construed by the courts having jurisdiction, and all such monies so
charged, contracted for, or received that are deemed to constitute interest in
excess of the Maximum Rate for such Bank or maximum amount of interest
permitted by the relevant Applicable Laws shall be immediately returned to or
credited to the account of the Partnership upon such determination. All
amounts paid or agreed to be paid in connection with the indebtedness arising
pursuant to this agreement and/or evidenced by the Term Note held by any Bank
which would under any Applicable Law in effect and applicable to such Bank be
deemed "interest" shall, to the extent permitted by such applicable law, be
amortized, prorated, allocated and spread throughout the full term of this
Agreement and such Term Note, as applicable.
13.11 Submission To Jurisdiction; Waivers. The Partnership hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action
or proceeding relating to this Agreement, the Term Notes, the other
Restructuring Documents and the Mortgages to which it is a party, or for
recognition and enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the Courts of the State of New
York, the courts of the United States of America for the Southern
District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be
brought in such courts and waives any objection that it may now or
hereafter have to the venue of any such action or proceeding in any such
court or that such action or proceeding was brought in an inconvenient
court and agrees not to plead or claim the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to the Partnership at its address set forth in subsection 13.2
or at such other address of which the Agent shall have been notified
pursuant thereto;
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or shall
limit the right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or proceeding
referred to in this subsection any special, exemplary, punitive or
consequential damages.
13.12 No Third Party Beneficiary. Nothing herein contained shall be
construed to confer upon any other party, other than the Banks or any
Transferee(s), the rights of a third party beneficiary. No reference to Liens
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permitted in subsection 9.3 shall be deemed to constitute a recognition or
acceptance by the Partnership or any Bank for the benefit of the holders of
such Liens, as to the validity, subsistence or priority of such Liens.
13.13 Severability. The invalidity of any one or more covenants,
phrases, clauses, sentences or paragraphs of this Agreement shall not affect
the remaining portions of this Agreement or any part hereof, and in case of
any such invalidity, this Agreement shall be construed as if such invalid
covenants, phrases, clauses, sentences or paragraphs had not been inserted.
13.14 Entire Agreement. This Agreement, the Mortgages and the other
Restructuring Documents constitute the entire agreement among the parties
hereto and thereto as to the subject
matter hereof and thereof and supersede any previous agreement, oral or
written, as to such subject matter.
13.15 Limited Liability. Notwithstanding anything contained herein
to the contrary, each of the Agent and the Banks acknowledges and agrees that,
except for any obligations of a Partner resulting from the breach of any
agreement, covenant, representation or warranty made by such Partner in this
Agreement, the Mortgages or any other Restructuring Document (other than made
in such Partner's capacity as signatory for the Partnership), each Partner
shall never be held personally liable on any of the obligations contained
herein or in the Term Notes, it being the intention of the parties that the
sole remedy of the Agent and the Banks in enforcing the liability hereunder
and under the Term Notes shall be limited to the Partnership, the Vessels, the
properties, assets and cash flow of the Partnership and any other collateral
security therefor, and no action shall be brought to charge the Partners
personally.
13.16 Decisions By Banks. The Partnership, General Partner and each
Bank understand and agree that there are no agreements, understandings, or
representations by any Bank of any kind as to what such Bank will or will not
do should an Event of Default occur under this Agreement. In deciding to
execute and deliver this Agreement rather than pursuing other remedies and
recourses available to it, each Bank has determined in its sole discretion and
for its own reasons what it believes is in the best interest of such Bank at
this time. Should any Event of Default hereunder occur, it is expected that
each Bank would at that time similarly determine in its sole discretion and
for its own reasons what action to take or not to take at that time. Such
actions may involve, to the extent permitted hereunder or by operation of law,
declaration of a default, acceleration of the Term Loan, realization upon
collateral, filing of a lawsuit, filing of petitions in bankruptcy,
restructuring of the Term Loan, or any other actions. The Partnership
understands and agrees that it is not relying upon any representation by
anyone associated with or representing any Bank that such Bank will, at the
time of an Event of Default, or at any other time, waive, negotiate, "come
back to the table" to discuss, or take or refrain from taking any action with
respect to any Event of Default or any other aspect of this Agreement. The
Partnership understands that the executive management of each Bank has relied
upon the truthfulness of the representations contained in this subsection
13.16 in deciding whether or not to authorize execution of this Agreement by
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the Bank.
13.17 Confidential Communications and Materials. If at any time a
member of the Partnership Group shall also be a Bank hereunder, the Agent and
the other Banks that are not members of the Partnership Group shall be
authorized and permitted to exclude any such Bank that is a member of the
Partnership Group from any and all Confidential Communications and withhold
from any such Bank any and all Confidential Materials. Each Bank that is a
member of the Partnership Group shall be deemed to have consented that,
notwithstanding any duties on or of Agent or any Bank that may be imposed by
or implied under this Agreement, the Mortgages or any other Restructuring
Document, such Bank may be excluded from participating in any Confidential
Communications and denied any Confidential Materials. "Confidential
Communications" means communications of any kind or type, between or among
Agent or any of the Banks, including but not limited to written
communications, telephone conversations and personal meetings, the subject of
which includes any information from which the Agent or the Banks (other than
any Bank that is a member of the Partnership Group) would ordinarily seek to
exclude the Partnership. "Confidential Materials" means any written
information or other tangible materials that Agent or the Banks (other than
any Bank that is a member of the Partnership Group) would ordinarily wish to
withhold from the Partnership. "Confidential Communications" and
"Confidential Materials" include, but are not limited to, communications and
materials respecting strategies in dealing with the Partnership, consideration
of remedies and other options available to the Agent or the Banks upon any
Default and an analysis of the legal and financial position of the
Partnership, Agent, the Banks and/or any other Person.
13.18 Acknowledgments. The Partnership hereby acknowledges that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the Notes and the other
Restructuring Documents;
(b) neither the Agent nor any Bank has any fiduciary
relationship to the Partnership and the relationship between the Agent
and the Banks, on the one hand, and the Partnership, on the other hand,
is solely that of debtor and creditor; and
(c) no joint venture exists among the Banks or among the
Partnership and the Banks.
13.19 WAIVERS OF JURY TRIAL. THE PARTNERSHIP, THE AGENT AND THE
BANKS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR THE NOTES OR ANY OTHER
RESTRUCTURING DOCUMENT OR MORTGAGE AND FOR ANY COUNTERCLAIM THEREIN.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and
duly authorized officers as of the day and year first above
written.
ATWOOD DEEP SEAS, LTD.
By: ATWOOD HUNTER CO.,
General Partner
By: /s/ James M. Holland
James M. Holland
Vice President
Address: Same as
Subsection 13.2
CHEMICAL BANK,
as Agent and as a Bank
By: /s/ Charles O. Freedgood
Name: Charles O. Freedgood
Title: Vice President
Address: Same as subsection
13.2
TEXAS COMMERCE BANK, NATIONAL
ASSOCIATION
By: /s/ James A. Flynn
Name: James A. Flynn
Title: Vice President
Texas Commerce Bank National
Association
712 Main Street
Houston, Texas 77001
Attn.:
Telecopy:
Telephone Confirmation:
COMAC PARTNERS
By: /s/ Paul J. Coughlin
Name: Paul J. Coughlin
Title: General Partner
Address:
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EXHIBIT 10.5
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is entered into and
executed on this 14th day of February, 1995 by and between ATWOOD FALCON I,
LTD. ("Seller") and ATWOOD OCEANICS PACIFIC LTD. ("Buyer"), effective December
31, 1994 (the "Effective Date").
R E C I T A L S:
WHEREAS, Seller owns and operates a U.S. flag, semi-submersible drilling
Vessel (Official No. 653713) known as "Falcon" (the "Vessel") and other assets
that support the drilling operations of the Vessel (all of which is herein
referred to as the "Business"); and
WHEREAS, Buyer desires to purchase and receive from Seller, and Seller
desires to sell and assign to Buyer, any and all of the tangible and
intangible assets, contracts, and any other assets used or involved in the
operation of Seller's Business.
NOW, THEREFORE, in consideration of and subject to the mutual
agreements, terms and conditions herein contained, the parties hereto agree as
follows:
1. Purchase and Sale of Assets.
(a) Assets Conveyed. Upon the terms and subject to all of the
conditions herein and the performance by each of the parties
hereto of their respective obligations hereunder, Buyer hereby
agrees to purchase from Seller, and Seller hereby agrees to sell
and deliver to Buyer, on the Closing Date (as defined below), any
and all of the properties and assets used or involved in Seller's
Business, including, without limitation, the following
(collectively the "Assets"):
(i) The Vessel and all property and other tangible assets used
in the Business, including those described or referred to in
Exhibit A attached hereto and made part of this Agreement ("Vessel
Assets"); and
(ii) All leases, contracts, arrangements, understandings,
bareboat or other charters, or agreements relating to the hire,
use or operation of the Vessel Assets or in the operation of the
Business, including those listed on Exhibit B attached hereto and
made a part of this Agreement ("Contracts"); and
(iii) All licenses, permits, consents, authorizations and orders
of governmental or regulatory authorities as are necessary to
carry on the Business as is presently being conducted, including
those listed on Exhibit C attached hereto and made a part of this
Agreement to the extent assignable ("Licenses and Permits"); and
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(iv) Any and all other assets, whether tangible or intangible,
used in the Business, including all intangible assets essential to
or used in the operation of the Business.
(b) Limitation on Assignment. Notwithstanding anything herein
contained to the contrary, this Agreement shall not constitute nor
require any assignment to Buyer of any claim, lease, easement,
permit, license, contract or other right if an attempted
assignment of the same without the consent of any third party
would constitute a breach thereof, unless and until such consent
shall have been obtained. In the case of any Asset which cannot
effectively be transferred to Buyer without the consent of any
governmental agency or authority or any other person, Seller and
Buyer will each use all reasonable efforts to obtain such consents
promptly and to enter into such reasonable arrangements which as
closely as possible give Buyer the benefits of such matters.
2. Closing. The closing of the purchase and sale of the Assets (the
"Closing") shall take place at the offices of Griggs & Harrison, at 10:00 a.m.
(Houston time) on March 31, 1995, or at such other place, date and time as the
parties may agree (the "Closing Date").
3. Consideration. Subject to the terms and conditions of this Agreement,
and in full consideration for the conveyance, transfer and delivery of the
Assets and Business of Seller to Buyer as provided herein, Buyer shall pay to
Seller the following consideration:
(a) Cash. The cash sums of (i) TEN MILLION SEVEN HUNDRED FIFTY
THOUSAND AND NO/100 DOLLARS ($10,750,000.00) payable by wire
transfer of immediately available funds on the Closing Date ("Cash
Consideration") and (ii) ONE MILLION NINETY-FIVE THOUSAND AND
NO/100 DOLLARS ($1,095,000.00) (both (i) and (ii) shall be
collectively referred to as the "Cash Consideration").
(b) Term Notes. Buyer shall issue three promissory notes to Seller
("Note Consideration") as follows: (i) promissory note in the
original principal amount of THREE MILLION AND NO/100 DOLLARS
($3,000,000.00) payable on or before December 31, 1998 plus
interest at a rate of six percent (6%) per annum with acceleration
provisions upon a Change of Control, among other things, all as
defined and set forth therein, which promissory note is in the
form of Exhibit D-1 attached hereto, and (ii) promissory note in
the original principal amount of THIRTEEN MILLION SEVEN HUNDRED
FIFTY THOUSAND AND NO/100 DOLLARS ($13,750,000.00) payable on or
before December 31, 2010, plus interest at a rate of nine percent
(9%) per annum and (iii) promissory note in the original principal
amount of ONE MILLION NINETY FOUR THOUSAND AND NO/100 DOLLARS
($1,094,000.00) payable on or before December 31, 2010, plus
interest at a rate of nine percent (9%) per annum.
(c) Assumption. Buyer agrees to assume and fulfill Seller's
unfulfilled contractual obligations and certain other liabilities
and obligations as set out in Section 5 hereof ("Assumptions").
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(d) Guaranty of Atwood Oceanics, Inc. The Partnership agrees to use
its best efforts to cause Atwood Oceanics, Inc. to execute a
Guaranty Agreement ("Guaranty") guaranteeing the $3,000,000.00
promissory note comprising a portion of the Note Consideration.
The Guaranty shall be in the form of Exhibit D-2 attached hereto.
(e) Working Capital. Buyer and Seller agree that the total working
capital of the Partnership as of the Effective Date is TWO MILLION
ONE HUNDRED EIGHTY-NINE THOUSAND AND NO/100 DOLLARS
($2,189,000.00) which is reflected as part of the Purchase Price
in clauses (a)(ii) and (b)(iii) above.
The amounts payable (and the Assumptions) in paragraphs (a) through (c) herein
shall be collectively referred to as (the "Purchase Price").
4. Allocation. The Parties understand and agree that the Purchase Price
shall be allocated to comply with Section 1060 of the Internal Revenue Code
of 1986, as amended.
5. Obligations Assumed by Buyer.
(a) Assumed. Buyer agrees to assume, perform and discharge (i) the
unperformed and unfulfilled executory contracts, lease
obligations, and ongoing obligations of the Business accruing from
the Effective Date all as specifically set forth in Exhibit B
hereto, and (ii) all accounts payable and accrued liabilities
which are reflected on that certain Analysis of Liabilities at
December 31, 1994 attached hereto as Exhibit E.
(b) Excluded. Except as set out in paragraph 5(a), Buyer will not
assume and will not discharge or be liable for any debts,
liabilities, or obligations of Seller.
6. Representations and Warranties by Seller. As a material inducement to
Buyer to execute and perform its obligations under this Agreement, Seller
hereby represents and warrants to Buyer as follows, which representations and
warranties shall survive the execution and delivery of this Agreement and the
closing of the transactions contemplated hereby for a period of two (2) years
from the Effective Date:
(a) Partnership Existence. Seller is a limited partnership, duly
organized and validly existing under the laws of the State of
Texas and has all the requisite power and authority to sell the
assets of the Business as it is presently being conducted, to
enter into this Agreement, and to carry out and perform the terms
and provisions of this Agreement.
(b) Assets. Exhibits A, B and C to this Agreement contain a true and
correct list of all assets used or required to be used in the
Business.
(c) Asset Condition. To the extent required by applicable law to be
operative, the disclaimers of certain warranties contained in this
paragraph are "conspicuous" disclaimers for the purposes of any
applicable law, rule, or order. SELLER HEREBY EXPRESSLY DISCLAIMS
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AND NEGATES ANY REPRESENTATION OR WARRANTY, EXPRESSED, IMPLIED, AT
COMMON LAW, BY STATUTE, OR OTHERWISE, RELATING TO THE CONDITION OF
THE VESSEL ASSETS, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED OR
EXPRESSED WARRANTY OF MERCHANTABILITY, OR OF SEAWORTHINESS, OR
VALUE, OF DESIGN, OR OF FITNESS FOR A PARTICULAR PURPOSE OR USE,
OR OF CONFORMITY TO MODELS OR SAMPLES OF MATERIALS. SELLER AND
BUYER AGREE THAT THE VESSEL ASSETS SHALL BE SOLD BY SELLER TO
BUYER "AS IS, WHERE IS".
(d) Documentation. As of the date of this Agreement, the Vessel is
duly and lawfully documented under the laws and flag of the United
States. Between the date of this Agreement and the Closing
hereof, Seller will comply with and satisfy the provisions of the
shipping laws of the United States so that the Vessel shall be
allowed to be documented under the flag of the Republic of Panama
upon conveyance to Buyer at Closing.
(e) Litigation. There are no actions, suits, or proceedings pending
or threatened against Seller which might hinder in any way this
Agreement or affect any of Seller's properties or rights, at law
or in equity or before any federal, state, municipal, or other
governmental agency or instrumentality, domestic or foreign, nor
is Seller aware of any facts which to its knowledge might result
in any such action, suit, or proceeding. Seller is not in default
with respect to any order or decree of any court or of any such
governmental agency or instrumentality which might hinder in any
way this Agreement.
(f) Enforceable Obligations. Seller is not in violation of any of its
executory contracts and ongoing business obligations to the extent
such a violation would have a material adverse impact on Seller's
ability to fully perform its obligations under this Agreement.
Seller is not in material violation of any term or provision of
its charter or bylaws, or any mortgage, indenture, contract,
agreement, instrument, judgment, decree, order, statute, rule or
regulation the violation of which would have a material adverse
impact on Seller's ability to fully perform its obligations under
this Agreement. The execution and delivery of and performance
under and compliance with this Agreement will not result in a
material violation of or be in conflict with or constitute a
default under any such term or provision or result in the creation
of any mortgage, lien, encumbrance, or charge upon any of the
properties or assets of Seller pursuant to any such term or
provision.
(g) Title. Seller has good and indefeasible title to the Assets being
sold to Buyer pursuant to this Agreement, free and clear of any
and all mortgages, security interests, liens, claims, debts,
charges or encumbrances (except as expressly assumed herein).
(h) Contracts and Agreements. To the best of Seller's knowledge and
subject to obtaining reasonable approvals, Seller's ability to
assign all executory contracts required to operate the Business,
including without limitation, those Assets described or referred
to in Exhibit B hereto, on terms no less favorable than those in
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effect with Seller, is not subject to any lease, mortgage, pledge,
lien, charge, security interest, encumbrance, non-compete agree-
ment, reserved interests of prior owners (including shareholders
and employees or prior owners), restrictions on assignment, or any
other restriction whatsoever.
(i) Claims. Seller has no knowledge or any claim or reason to believe
that performance under the contracts to be assumed is or may be
infringing or otherwise acting adversely to the rights of any
person under or in respect to any patent, trademark, service mark,
trade name, copyright, license, or other similar intangible right.
Seller is not obligated under any liability whatever to make any
payments by way of royalties, fees, or otherwise to any owner or
licensee of or other claimant to the patent, trademark, trade
name, copyright, or other intangible asset with respect to the use
thereof or in connection with the conduct of the Business or
otherwise.
(j) True Statements. No representation or warranty by Seller in this
Agreement or in any writing attached hereto, contains or will
contain any untrue statement of material fact or omits or will
omit to state any material fact required to make the statements
herein or therein contained not misleading.
7. Representations and Warranties by Buyer. As a material inducement to
Seller to execute and perform its obligations under this Agreement, Buyer
hereby represents and warrants to Seller as follows, which representations and
warranties shall survive the execution and delivery of this Agreement and the
closing of the transactions contemplated hereby for a period of two (2) years
from the Effective Date:
(a) Corporate Existence. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the Cayman
Islands and has all the authority to acquire the assets of the
business as it is presently being conducted and to enter into this
Agreement, and to carry out and perform the terms and provisions
of this Agreement.
(b) Litigation. There are no actions, suits, or proceedings pending
or threatened against Buyer which might hinder in any way this
Agreement or affect any of Buyer's properties or rights, at law or
in equity or before any federal, state, municipal, or other
governmental agency or instrumentality, domestic or foreign, nor
is Buyer aware of any facts which to its knowledge might result in
any such action, suit, or proceeding. Buyer is not in default
with respect to any order or decree of any court or of any such
governmental agency or instrumentality which might hinder in any
way this Agreement.
(c) Enforceable Obligations. Buyer is not in material violation of
any term or provision of its charter or bylaws, or any mortgage,
indenture, contract, agreement, instrument, judgment, decree,
order, statute, rule or regulation the violation of which would
have a material adverse impact on Buyer's ability to fully perform
its obligations under this Agreement.
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(d) True Statements. No representation or warranty by Buyer in this
Agreement or in any writing attached hereto, contains or will
contain any untrue statement of material fact or omits or will
omit to state any material fact required to make the statements
herein or therein contained not misleading.
8. Covenants. In addition to the rights and obligations of Buyer and
Seller set forth elsewhere in this Agreement, Buyer and Seller covenant and
agree as follows:
(a) Broker's Fees. Buyer represents that it has incurred no
obligation or liability, contingent or otherwise, for brokers' or
finders' fees with respect to the matters provided for in this
Agreement which will be the responsibility of Seller. Seller
represents that it has incurred no obligation or liability,
contingent or otherwise, for brokers' or finders' fees with
respect to the matters provided for in this Agreement which will
be the responsibility of Buyer.
(b) Government Approval. Promptly following the execution of this
Agreement, Seller shall make all required filings with and prepare
all applications to the United States Department of
Transportation, Maritime Administration, Vessel Transfer Office,
as may be necessary or appropriate for the sale of the Vessel to
Buyer, the deletion of the Vessel from U.S. documentation and the
enrollment of the Vessel under Panamanian flag and registry.
Buyer shall cooperate with Seller and use its best efforts to
assist Seller in its undertakings with respect to such filings and
applications. Buyer agrees to comply in all respects with the
terms and conditions imposed by the Department of Transportation
as set forth in its Approval Notice and Agreement.
(c) Damage to the Vessel. If, after the date of this Agreement and
before the Closing Date, there occurs any casualty, accident or
damage to the Vessel involving an amount in excess of $25,000.00,
Seller will provide written notice thereof to Buyer. At Buyer's
request, Seller shall repair any such damage at Seller's sole
expense. Notwithstanding the preceding provisions of this Section
8(c), if the casualty, accident or damage will require more than
thirty (30) days to repair, or if the Vessel has suffered a total
or constructive total loss, Buyer shall have the right to
terminate this Agreement upon written notice to that effect
addressed to Seller.
9. Conditions to Buyer's Obligations. The obligations of Buyer to effect
the transactions contemplated by this Agreement are subject to the following
conditions:
(a) Conveyance Documents. Seller shall have executed and delivered a
General Conveyance, Bill of Sale, Assignment and Assumption
Agreement.
(b) Bill of Sale. Seller shall have executed and delivered a
Panamanian Bill of Sale for the Vessel.
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(c) Certificates. Seller shall have delivered to Buyer Certificates
of Existence and other documentation as Buyer may reasonably
require to confirm Seller's status.
(d) Authorization. Buyer and Seller shall have received all written
authorization and approvals required by any applicable laws, rules
or regulations including, without limitation, the consent of the
United States Department of Transportation, Maritime
Administration, Vessel Transfer Office, pursuant to Section 9 of
the Shipping Act.
(e) Other Documents. Seller shall have executed and delivered such
other and further documents and instruments as may be reasonably
necessary to give full effect to this Agreement.
(f) Simultaneous Closings. Simultaneous with the Closing hereunder,
(i) Seller shall dissolve in accordance with that certain
Dissolution Agreement dated of even date herewith and distribute
any remaining assets, the Cash Consideration and the Note
Consideration to its partners and (ii) Atwood Oceanics Drilling
Company shall have purchased the limited partnership interest of
Philadelphia Drilling Company in Atwood Deep Seas, Ltd.
(g) Certificate of Deletion. Seller shall have delivered to Buyer
either (i) a Certificate of Deletion issued by the U.S. Coast
Guard indicating that the Vessel has been deleted from U.S.
documentation, or (ii) a letter from Seller advising that it has
forwarded to the Coast Guard all documents and instruments
required for the deletion of the Vessel from U.S. documentation,
including a written request that the Coast Guard delete the Vessel
from documentation, the original Certificate of Documentation
covering the Vessel, the Transfer Order issued by the United
States Department of Transportation, Maritime Administration,
Vessel Transfer Office, satisfaction of any liens covering the
Vessel, and copies of the Bill of Sale covering the Vessel.
(h) Representations and Warranties. All representations and
warranties of Seller shall be true and correct as of the Closing
Date.
10. Conditions to Seller's Obligations. The obligations of Seller to
effect the transactions contemplated by this Agreement are subject to the
following conditions:
(a) Payment of Purchase Price. Buyer shall have paid the Purchase
Price for the Assets to Seller.
(b) Guaranty. Atwood Oceanics, Inc. shall have executed and delivered
the Guaranty.
(c) Bill of Sale. Buyer shall have executed and delivered the General
Conveyance, Bill of Sale, Assignment and Assumption Agreement.
(d) Authorization. Buyer and Seller shall have received all written
authorization and approvals required by any applicable laws, rules
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or regulations including, without limitation, the consent of the
United States Department of Transportation, Maritime
Administration, pursuant to Section 9 of the Shipping Act.
(e) Other Documents. Buyer shall have executed and delivered such
other and further documents and instruments as may be reasonably
necessary to give full effect to this Agreement.
(f) Simultaneous Closings. Simultaneous with the Closing hereunder,
(i) Seller shall dissolve in accordance with that certain
Dissolution Agreement dated of even date herewith and distribute
any remaining assets, the Cash Consideration and the Note
Consideration to its partners and (ii) Atwood Oceanics Drilling
Company shall have purchased the limited partnership interest of
Philadelphia Drilling Company in Atwood Deep Seas, Ltd.
(g) Representations and Warranties. All representations and
warranties of Buyer shall be true and correct as of the Closing
Date.
11. Conduct of Business Prior to the Closing Date. Seller further agrees
that from the date of this Agreement through the Closing Date, except as
contemplated by Section 8(b) hereof or as approved by Buyer in writing, Seller
shall not do any of the following:
(a) make any change in the conduct of the Business;
(b) enter into any transaction other than in the ordinary course of
business;
(c) dispose of any of the Assets, except in the ordinary course of
business;
(d) subject any of the Assets to a lien or other encumbrance, except
in the ordinary course of business;
(e) waive any right of substantial value relating to or affecting the
Assets;
(f) enter into any agreement or make any undertaking which could be
violated, or create obligations which could be accelerated, as a
result of changes or developments or the absence of changes or
developments in, the Business, Assets, earnings, operations or
condition, financial or otherwise, of Seller; or
(g) in any manner whatsoever transfer any interest in Seller to any
person.
12. Post-Closing Obligations of Seller. Promptly after the Closing Date,
Seller shall:
(a) Possession. Take all such steps as may be requisite to put Buyer
in actual possession, operation, and control of the Assets on the
Closing Date of this Agreement.
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(b) Consents to Assignment. Furnish to Buyer all consents, waivers,
and releases then in Seller's possession relating to or permitting
the sale and assignment of any Asset and seek to obtain any other
consent necessary to transfer any Asset to Buyer.
13. Further Assurances. From time to time after the Closing Date at the
request of Buyer, Seller shall execute and deliver to Buyer such other
instruments of assumption and take such other action and Buyer may reasonably
require of Seller to assist Buyer in acquiring full, clear title to the
Assets.
14. Taxes.
(a) Income Taxes. Seller shall assume responsibility for, and shall
bear and pay, all federal income taxes, state income taxes, and
other similar taxes on gross income, net income, or gross receipts
(including any applicable interest or penalties) incurred or
imposed with respect to the conveyance by Seller to Buyer of the
Assets pursuant to this Agreement.
(b) Ad Valorem Taxes. Seller shall be responsible for, and shall bear
and pay, all ad valorem, property, and similar taxes and
assessments (including any applicable penalties and interest)
assessed against the Assets by any taxing authority for any period
prior to the Effective Date. Buyer shall assume responsibility
for, and shall bear and pay, all ad valorem, property, and similar
taxes and assessments (including any applicable penalties and
interest) assessed against the Assets by any taxing authority for
any period that begins on or after the Effective Date.
15. Indemnification.
(a) Indemnity by Seller. Seller shall and hereby agrees to indemnify,
hold harmless, and defend Buyer by counsel mutually acceptable to
Buyer and Seller at all times from and after Effective Date
against and in respect to Damages (as defined below) for a period
of two (2) years from the Effective Date. As used herein,
"Damages" shall include any claims, actions, demands, losses,
costs, expenses, liabilities (joint or several), penalties, and
damages, including reasonable consulting fees incurred in investi-
gation or in attempting to avoid the same or oppose the imposition
thereof, resulting to Buyer from (a) any inaccurate representation
made by Seller in or under this Agreement; (b) breach of any of
the representations and warranties made by Seller in or under this
Agreement; and (c) breach or default in the performance by Seller
of any of the covenants to be performed by it hereunder. In no
event shall Buyer or its affiliates enter into any settlement of
any of the above without Seller's prior written consent. Seller
shall be entitled to join in the defense of any of the foregoing,
at its cost, by counsel of its choice.
(b) Indemnity by Buyer. Buyer shall and hereby agrees to indemnify,
hold harmless, and defend Seller, by counsel mutually acceptable
to Seller and Buyer, at all times from and after the Effective
Date against and in respect to Damages (as defined below) for a
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period of two (2) years from the Effective Date. As used herein,
"Damages" shall include any claims, actions, demands, losses,
costs, expenses, liabilities (joint or several), penalties, and
damages, including reasonable consulting fees incurred in investi-
gation or in attempting to avoid the same or oppose the imposition
thereof, resulting to Seller from (a) any inaccurate represen-
tation made by Buyer in or under this Agreement; (b) breach of any
of the representations and warranties made by Buyer in or under
this Agreement; and (c) breach or default in the performance by
Buyer of any of the covenants to be performed by it hereunder. In
no event shall Seller enter into any settlement of any of the
above without Buyer's prior written consent. Buyer shall be
entitled to join in the defense of any of the foregoing, at its
cost, by counsel of its choice.
16. Termination
(a) Termination by Mutual Consent. This Agreement may be terminated
at any time prior to the Closing Date by the mutual consent of
Buyer and Seller.
(b) Buyer's Termination on Failure of Closing Condition. This
Agreement may be terminated by Buyer at any time after March 31,
1995 if by such date, the conditions set forth in Sections 9 and
11 shall not have been fulfilled or waived, provided however, that
Buyer shall have made a good faith effort to satisfy all of its
conditions as set forth in Section 10.
(c) Seller's Termination on Failure of Closing Condition. This
Agreement may be terminated by Seller at any time after March 31,
1995 if by such date, the conditions set forth in Section 10
hereof shall not have been fulfilled or waived, provided however,
that Seller shall have made a good faith effort to satisfy all of
its conditions as set forth in Sections 9 and 11.
(d) Termination for Other Reasons. This Agreement may be terminated
at any time prior to the Closing Date by Buyer if any
investigation of the Business by Buyer after the date hereof, or
any information or any other document delivered to Buyer after the
date hereof, shall have revealed any facts or circumstances which,
when taken as a whole, are likely to adversely affect the Business
or Seller's financial condition, assets, liabilities (absolute,
contingent or otherwise), reserves, business, operations or
prospects.
17. Attorneys Fees. In the event that any party brings an action to enforce
any provisions of this Agreement, then the reasonable costs and attorney's
fees of the prevailing party shall be reimbursed by the other party.
18. Miscellaneous
(a) Expenses. Each of the parties shall bear all expenses incurred by
it in connection with this Agreement and in consummation of the
transactions contemplated hereby and in preparation thereof.
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(b) Amendment and Waiver. This Agreement may be amended or modified
at any time and in all respects, or any provision may be waived by
an instrument in writing executed by Buyer and Seller.
(c) Notices. Any notice required to be given pursuant to this
Agreement shall be in writing, which shall include, without
limitation, telex, telecopy or other electronic transmission
reduced to written form. Notice given by telex, telecopy or other
electronic transmission shall be deemed to have been given and
received when sent. Notice by mail shall be deemed to have been
given and received three (3) calendar days after the day first
deposited in the United States mail, certified mail, first class
postage prepaid, return receipt requested, and as addressed as
shown below. Notice by overnight service shall be deemed to have
been given and received the next delivery day. Notices shall be
given to the following addresses, unless changed in writing by the
respective addressee:
(i) If to Seller:
Atwood Falcon I, Ltd.
15835 Park Ten Place Drive
P. O. Box 218350
Houston, Texas 77218
Telephone: (713) 492-2929
Facsimile: (713) 492-0345
Attention: Mr. James M. Holland
with a copy to:
Philadelphia Falcon Drilling Corporation
One Beaver Valley Road
P. O. Box 15047
Wilmington, Delaware 19850
Telecopy: (302) 479-6618
Attention: President
and
CIGNA International Finance Inc.
S-215
900 Cottage Grove Road
Hartford, Connecticut 06152-2215
Telecopy: (203) 726-8885
Attention: Secretary
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PAGE 81
(ii) If to Buyer:
Atwood Oceanics Pacific, Ltd.
15835 Park Ten Place Drive
P. O. Box 218350
Houston, Texas 77218
Telephone: (713) 492-2929
Facsimile: (713) 492-0345
Attention: Mr. James M. Holland
or at such other address as shall be given in writing by any party
to the other parties hereto.
(d) Arbitration and Dispute Resolution. Any dispute controversy or
claim arising out of or relating to this Agreement shall be
finally settled by binding arbitration in Houston, Texas in
accordance with the Commercial Arbitration rules of the American
Arbitration Association in effect on the date of this Agreement
and judgment upon the award may be entered in any court having
jurisdiction thereof.
(e) Governing Law. It is the intention of the parties that the laws
of Texas should govern the validity of this Agreement, the
construction of its terms, and the interpretation of the rights
and duties of the parties.
(f) Section and Other Headings. Section, paragraph, and other
headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation
of this Agreement.
(g) Counterpart Execution. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but
all of which together shall constitute but one and the same
instrument.
(h) Parties of Interest. All the terms and provisions of this
Agreement shall be binding upon and inure to the benefit of, and
be enforceable by, Seller and Buyer and their successors and
permitted assigns.
(i) Integrated Agreement. This Agreement and the documents
contemplated herein constitutes the entire understanding and
agreement between the parties hereto with respect to the subject
matter hereof, and there are no agreements, understandings,
restrictions, representations or warranties between such parties
other than those set forth herein or therein, all other agreements
and understandings being superseded hereby.
(j) Bulk Sales Law. Buyer hereby waives compliance by Seller with the
provisions of any bulk sales laws applicable to this transaction,
if any, and Seller hereby agrees to indemnify Buyer for any claims
and demands of whatever nature (other than the liabilities
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expressly assumed by Buyer under this Agreement) asserted against
Buyer by any creditor of Seller for noncompliance by Seller or
Buyer with any Bulk sales laws or similar laws which may be
applicable to the sale or transfer of the Assets hereunder.
IN WITNESS WHEREOF, this Agreement has been executed as of the date
first above written and effective as of December 31, 1994.
BUYER: ATWOOD OCEANICS PACIFIC LTD.
By:/s/ James M. Holland
James M. Holland
Director
SELLER: ATWOOD FALCON I, LTD.
By ATWOOD FALCON CO., its General
Partner
By:/s/ James M. Holland
James M. Holland
Vice President
AGREED AND CONSENTED
this 14th day of February 1995:
ATWOOD FALCON CO.
By: /s/ James M. Holland
James M. Holland
Vice President
PHILADELPHIA FALCON
DRILLING CORPORATION
By CIGNA International Finance Inc., its Agent
By: /s/ David S. Scheibe
Name: David S. Schiebe
Title: Vice President
<PAGE>
PAGE 81
EXHIBIT 10.6
PURCHASE AND SALE AGREEMENT
This Purchase and Sale Agreement (the "Agreement") entered
into as of February 14, 1995, effective December 31, 1994 (the
"Effective Date)" by and among PHILADELPHIA INVESTMENT
CORPORATION OF DELAWARE, a Delaware corporation ("PICD");
PHILADELPHIA DRILLING COMPANY, a Delaware corporation ("Seller");
PHILADELPHIA FALCON DRILLING CORPORATION, a Delaware corporation
and affiliate of Seller ("PFDC"); ATWOOD OCEANICS DRILLING
COMPANY, a Texas corporation ("Buyer"); ATWOOD OCEANICS, INC., a
Texas corporation ("Atwood") and the wholly owning parent of
Buyer; ATWOOD FALCON CO., a Delaware corporation and affiliate of
Buyer ("AFC"); ATWOOD HUNTER CO., a Delaware corporation and
affiliate of Buyer ("AHC"); EAGLE OCEANICS, INC., a Texas
corporation and affiliate of Buyer ("Eagle"); ATWOOD DEEP SEAS,
LTD., a Texas limited partnership ("Deep Seas, Ltd." or the
"Partnership") comprised of Eagle Oceanics, Inc., Atwood Hunter
Co. and PDC; and ATWOOD FALCON I, LTD. ("Falcon, Ltd."), a Texas
limited partnership comprised of AFC and PFDC.
R E C I T A L S :
WHEREAS, Seller owns a fifty percent (50%) limited
partnership interest in Deep Seas, Ltd. ("Deep Seas LP
Interest");
WHEREAS, Atwood is the holder of one promissory note from
Deep Seas, Ltd. as further described in Section 1.01(a) as the
Atwood PAN;
WHEREAS, PICD is the holder of two promissory notes from
Deep Seas, Ltd. as further described in Section 1.01(b) as the
PICD PANS;
WHEREAS, PICD desires to contribute the PICD PANS to Deep
Seas, Ltd. as an equity contribution, and Atwood desires to
contribute the Atwood PAN to Deep Seas, Ltd. as an equity
contribution, all on the terms and subject to the conditions set
forth herein;
WHEREAS, Seller desires to sell, transfer, and assign the
Deep Seas LP Interest to Buyer, and Buyer desires to purchase the
Deep Seas LP Interest from Seller and assume certain of Seller's
obligations under the Ancillary Agreements on the terms and
subject to the conditions set forth herein;
WHEREAS, PFDC, as an affiliate of Seller and a limited
partner in Falcon, Ltd., and PICD as the wholly owning parent of
Seller, have entered into certain of the Ancillary Agreements, as
defined in Section 1.03 hereof to facilitate the Deep Seas, Ltd.
financing and to promote the consistent operations of Deep Seas,
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Ltd. and Falcon Ltd., in consideration of the relationships
between Seller and PICD and PFDC;
WHEREAS, Falcon, Ltd. is dissolving as of the Effective Date
hereunder and will cease to exist;
WHEREAS, upon Seller's sale of the Deep Seas LP Interest
herein and the dissolution of Falcon, Ltd., PICD and PFDC are no
longer willing to facilitate Deep Seas, Ltd. in such a manner;
WHEREAS, the parties hereunder have agreed to assume, amend
or terminate Seller's, PFDC's and PICD's obligations under the
Ancillary Agreements, as appropriate; and
WHEREAS, in connection with and incident to the purchase and
sale of the Deep Seas LP Interest, Seller, PFDC and PICD desire
to transfer, and Buyer and Atwood desire to assume, certain
rights, obligations and liabilities of Seller, PFDC and PICD with
respect to the Partnership, upon the terms and subject to the
conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and of the
respective covenants, agreements, representations, and warranties
hereinafter set forth, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
I. PRE-CLOSING PURCHASE AND SALE; ASSUMPTION OF LIABILITIES
1.01. Pre-Closing Actions. At the Closing (as defined
in Section 1.05 hereof) and subject to the terms and conditions
hereinafter set forth, the following actions shall be deemed to
have occurred immediately prior to the Effective Date:
(a) Atwood shall contribute and deliver to AHC and shall
cause AHC to contribute and deliver to Deep Seas, Ltd.
as an additional contribution to capital pursuant to
the Partnership Agreement the certain Partnership
Advance Note dated April 26, 1988 with an Allonge
thereto dated September 26, 1990 and a Second Allonge
thereto dated February 1, 1991 made by Deep Seas, Ltd.
payable to the order of Atwood ("Atwood PAN") in an
original principal amount of $10,000,000 plus any
accrued interest as set forth in such note, and all
collateral security therefor, as increased from time to
time to reflect additional advances made by Atwood to
Deep Seas, Ltd., including without limitation accrual
of management fees. The Atwood PAN had an outstanding
balance of $19,883,503.48 on the Effective Date.
(b) PICD shall contribute and deliver to Seller which shall
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contribute and deliver to Deep Seas, Ltd., as an
additional contribution to capital pursuant to the
Partnership Agreement those certain promissory notes as
follows: (i) Senior Partnership Advance Note dated
April 26, 1988 with an Allonge thereto dated September
26, 1990 and Second Allonge thereto dated February 1,
1991 ("Senior PICD PAN") made by Deep Seas, Ltd.
payable to the order of PICD in the original principal
amount of $1,037,500 with a balance on the Effective
Date of $4,194,235.15, and (ii) Partnership Advance
Note dated April 26, 1988 with an allonge thereto dated
September 26, 1990 and Second Allonge thereto dated
February 1, 1991 made by Deep Seas, Ltd. payable to the
order of PICD (Junior PICD PAN") in an original
principal amount of $10,000,000 plus any accrued
interest as set forth in each such note, and all
collateral security therefor as increased from time to
time to reflect additional advances made by PICD to
Deep Seas, Ltd. (the Senior PICD PAN and the Junior
PICD PAN are collectively referred to herein the "PICD
PANS"). The Junior PICD PAN has a balance outstanding
on the Effective Date of $13,784,566.45.
1.02. Purchase of Deep Seas LP Interest. Subject to the
terms and conditions hereinafter set forth, the following actions
shall occur at the Closing (as defined in Section 1.05 hereof):
(a) Seller shall sell, transfer, assign, and deliver to
Buyer, and Buyer shall purchase from Seller, all as of
the Effective Date, the Deep Seas LP Interest, free and
clear of any and all liens and encumbrances. Seller
shall deliver to Buyer a certificate evidencing the
Deep Seas LP Interest accompanied by Assignment and
Assumption Agreements transferring the Deep Seas LP
Interest.
(b) Buyer shall deliver to Seller the Cash Consideration,
as defined in Section 1.04 hereof, for such Deep Seas
LP Interest in immediately available funds by wire
transfer to a bank account to be designated by Seller.
1.03. Assumption of Liabilities. In addition to the
Cash Consideration as defined in Section 1.04 hereof, to be paid
for the transfer of the Deep Seas LP Interest to Buyer, Buyer and
Atwood as appropriate, agree to assume at the Closing from the
Effective Date, and thereafter to pay, perform and discharge all
liabilities and obligations of Seller, PFDC and PICD under the
notes, instruments, agreements and undertakings described in
Schedule 2 hereto (the "Assumed Ancillary Agreements") (the
"Ancillary Agreements" are set forth on Schedule 1 hereto).
Concurrently with such assumption, Seller, PFDC or PICD, as
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appropriate, shall assign all of its rights, privileges and
powers under the Assumed Ancillary Agreements to Buyer, AFC or
Atwood as appropriate. Additionally, all of the parties hereto
agree to mutually terminate at the Closing certain agreements and
undertakings of Seller, PICD, PFDC and the other parties thereto
described in Schedule 3 hereto (the "Terminated Ancillary
Agreements"). PICD shall pay all costs and fees through the
Closing Date arising out of the assignment, assumption or
termination of the Ancillary Agreements hereunder (other than
fees of Buyer's counsel).
1.04. Consideration. In consideration for the transfer
of the Deep Seas LP Interest by Seller to Buyer at the Closing:
Buyer shall (i) pay to Seller the amount of ONE MILLION TWO
HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS ($1,250,000.00); (ii)
pay to Seller the amount of ONE HUNDRED EIGHTY THOUSAND AND
NO/100 DOLLARS ($180,000.00) which is agreed to be one-half of
the working capital of the Partnership on the Effective Date
(clauses (i) and (ii) shall be referred to herein as (the "Cash
Consideration")); and (iii) assume from Seller, PFDC and PICD the
obligations under the Assumed Ancillary Agreements in the manner
contemplated by Section 1.03 above, and thereafter pay, perform
and discharge such obligations under the Assumed Ancillary
Agreements.
1.05. Closing Place and Date. The closing of the
transactions contemplated by this Agreement (the "Closing") shall
take place at the offices of Griggs & Harrison, 1301 McKinney,
Suite 3200, Houston, Texas 77010, at 10:00 A.M., Houston time, on
March 31, 1995, or if all conditions of Closing set forth in
Article IV hereof have earlier been satisfied or waived, at such
time within five (5) business days after all such conditions
shall be satisfied or waived as the parties hereto may mutually
agree upon (the "Closing Date").
II. REPRESENTATIONS AND WARRANTIES
2.01. Representations and Warranties of Seller, PICD and
PFDC. PICD, PFDC and Seller jointly and severally represent and
warrant to Buyer and Atwood as of the date of this Agreement and
on the Effective Date, as follows:
(a) Organization, Good Standing, Power. Each of PICD, PFDC
and Seller is a corporation duly organized, validly
existing, and in good standing under the laws of the
State of Delaware with all requisite corporate power
and authority to enter into and perform its obligations
under this Agreement.
(b) Authorization. The execution, delivery, and
performance of this Agreement have been duly authorized
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by all requisite corporate action of each of PICD, PFDC
and Seller. This Agreement is a legal, valid, and
binding obligation of each of PICD, PFDC and Seller,
enforceable against each in accordance with its terms,
subject to applicable bankruptcy, reorganization,
insolvency, and similar laws affecting creditors'
rights generally and subject, as to enforceability, to
general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at
law).
(c) Title. PDC shall transfer to Buyer at Closing, title
to the Deep Seas LP Interest, free and clear of all
liens, pledges, encumbrances, charges, claims, security
interests, and any other adverse claims.
(d) No Conflicts. Neither the execution, delivery, or
performance of this Agreement by Seller, PFDC and PICD,
nor the consummation of the transactions contemplated
hereby by Seller, PFDC and PICD (i) will constitute a
violation of or default under, or conflict with, any
note, bond, mortgage, indenture, deed of trust, lease,
license agreement, or other instrument or obligation to
which each Seller, PFDC or PICD is a party or by which
Seller, PFDC or PICD is bound, or constitute a
violation of, or conflict with, any provision of
Seller's, PFDC's or PICD's respective Certificate of
Incorporation or Bylaws or any order, writ, injunction,
decree, statute, rule, or regulation of any
governmental, administrative, or regulatory body
applicable to Seller, PFDC or PICD or (ii) will require
any consent, approval, notice, or filing with respect
to any of the foregoing.
(e) Finders and Brokers. PICD, or its designated
representatives, has engaged Simmons & Company
International to assist and advise PICD in connection
with the sale of the Deep Seas LP Interest. PICD will
be responsible for all fees of Simmons & Company
International and in this connection, and hereby
indemnifies and agrees to hold Buyer, AFC and Atwood
harmless from any liability for any commission, fee, or
expense payable to Simmons & Company International in
this connection. Except as provided above, no person,
firm, or corporation has or will have, as a result of
any act or omission by Seller, PICD or PFDC, any valid
right, interest, or claim against or upon Buyer, AFC or
Atwood for any commission, fee, or other compensation
as a finder or broker, or in any similar capacity, in
connection with the transactions contemplated by this
Agreement.
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(f) The PICD PANS. (i) PICD is the owner and holder of the
PICD PANS and the indebtedness evidenced thereby;
(ii) on the Effective Date, the principal and all
accrued interest, if applicable, balances outstanding
on the PICD PANS was $4,194,235.15 for the Senior PICD
PAN and $13,784,566.45 for the Junior PICD PAN; and
(iii) the PICD PANS are not presently assigned,
mortgaged or hypothecated to any other party, provided
however, immediately prior to Closing they will be
contributed by PICD to PDC to contribute to Deep Seas,
Ltd. as of the Effective Date.
(g) No Defaults. Neither Seller, PFDC nor PICD is in
violation of any term or provision of the Certificate
or Agreement of Limited Partnership of Deep Seas, Ltd.
(the "Partnership Agreement") of any other of the
Ancillary Agreements to which each of them is a party.
2.02. Representations and Warranties of Buyer and
Atwood. Buyer, AFC, AHC, Eagle and Atwood jointly and severally
represent and warrant to Seller, PFDC and PICD as of the date of
this Agreement and as of the Effective Date, as follows:
(a) Organization, Good Standing, Power. Each of Buyer,
Atwood and Eagle is a corporation duly organized,
validly existing and in good standing under the laws of
the State of Texas with all requisite corporate power
and authority to enter into and perform its obligations
under this Agreement. Each of AFC and AHC is a
corporation duly organized, validly existing and in
good standing under the laws of Delaware.
(b) Authorization. The execution, delivery, and
performance of this Agreement have been duly authorized
by all necessary corporate action of each of Buyer,
AFC, AHC, Eagle and Atwood. This Agreement is a legal,
valid, and binding obligation of each of Buyer, AFC,
AHC, Eagle and Atwood, enforceable against Buyer, AFC,
AHC, Eagle and Atwood in accordance with its terms,
subject to applicable bankruptcy, reorganization,
insolvency, and similar laws affecting creditors'
rights generally and subject, as to enforceability, to
general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at
law).
(c) No Conflicts. Neither the execution, delivery, or
performance of this Agreement by Buyer, AFC, AHC, Eagle
and Atwood, nor the consummation of the transactions
contemplated hereby by Buyer, AFC, AHC, Eagle and
Atwood, will constitute a violation of or default
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PAGE 87
under, or conflict with, any note, bond, mortgage,
indenture, deed of trust, lease, license, agreement, or
other instrument or obligation to which Buyer, AFC or
Atwood is a party or by which Buyer, AFC, AHC, Eagle or
Atwood is bound or constitute a violation of or
conflict with any provision of Buyer's, AFC's, AHC's,
Eagle's or Atwood's Articles of Incorporation, Bylaws,
or similar corporate document, or any order, writ,
injunction, decree, statute, rule, or regulation of any
governmental, administrative or regulatory body
applicable to Buyer, AFC, AHC, Eagle or Atwood or will
require any consent, approval, notice, or filing with
respect to the foregoing.
(d) The Atwood PAN. (i) Atwood is the owner and holder of
the Atwood PAN and the indebtedness evidenced thereby;
(ii) on the Effective Date, the principal balance
outstanding and all accrued interests on the Atwood PAN
was $19,883,503.48; and (iii) the Atwood PAN is not
presently assigned, mortgaged or hypothecated provided,
however, immediately prior to Closing it will be
contributed by Atwood to AHC, general partner of Deep
Seas, Ltd., which will contribute the Atwood PAN to
Deep Seas, Ltd. as of the Effective Date.
(e) Purchase of Deep Seas LP Interest Without View to
Distribution. The Deep Seas LP Interest is being
purchased by Buyer for its own account for investment
and not for the purpose of, or with a view to, the
resale or distribution thereof. Buyer acknowledges
that the sale of the Deep Seas LP Interest hereunder
has not been registered under the Securities Act of
1933, as amended, and that no further sales thereof can
be made unless registration or exemption from
registration under such Act is available.
(f) Finders and Brokers. No person, firm, or corporation
has or will have, as a result of any act or omission by
Buyer, AFC, AHC, Eagle or Atwood, any valid right,
interest, or claim against or upon Seller, PFDC or PICD
for any commission, fee, or other compensation as a
finder or broker, or in any similar capacity, in
connection with the transactions contemplated by this
Agreement.
(g) Qualified Person. Buyer is a Qualified Person as
defined in Section 13.8 of the Partnership Agreement.
III. COVENANTS PENDING CLOSING
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From the date hereof until the earlier of the Closing Date
or the termination of this Agreement pursuant to Article V
hereof, PICD, Seller, PFDC, Buyer, AFC and Atwood agree and
covenant as follows:
3.01. Satisfaction of Closing Conditions. Each of
Buyer, AFC, AHC, Eagle, Atwood, PICD, PFDC and Seller shall use
all reasonable efforts to bring about the satisfaction of the
conditions of Closing specified in Article IV hereof as they
relate to such party, and otherwise to consummate this Agreement
and the transactions contemplated hereby. Each of Buyer, AFC,
AHC, Eagle, Atwood, PICD, PFDC and Seller will cooperate and
furnish such information as may reasonably be required in order
to obtain any necessary consents or approvals of third parties to
such consummation, including without limitation consents required
pursuant to the Ancillary Agreements.
3.02. No Sale or Encumbrance of Deep Seas LP Interest.
Seller and PICD shall not sell, transfer, pledge, or encumber, or
agree to sell, transfer, pledge, or encumber, the Deep Seas LP
Interest or the PICD PANS except pursuant to this Agreement.
3.03. Operations. Seller shall continue to hold Deep
Seas LP Interest in the ordinary course of business at all times
on or prior to the Closing Date, except as otherwise described or
contemplated herein and except in circumstances as to which Buyer
shall concur in writing. By way of amplification and not
limitation, except as provided in the preceding sentence, Seller
shall not cause the Partnership on or prior to the Closing Date
to:
(a) Amend its certificate or agreement of limited
partnership;
(b) Except as otherwise described herein or contemplated
hereby, commit or omit to do any act or omission which
would cause a breach of any agreement, contract, or
commitment, which breach would have a material adverse
effect on the financial condition, results of
operations, or business of the Partnership;
(c) Violate any law, statute, rule, governmental
regulation, or order, which violation would have a
material adverse effect on the financial conditions,
results of operations, or business of the Partnership;
3.04. Press Releases. Atwood, AFC, Buyer, PICD, PFDC
and Seller shall consult with each other with regard to all
publicity or releases proposed to be issued by any of them at or
prior to the Closing concerning this Agreement or the
transactions contemplated hereby. Neither Atwood, AFC, AHC,
Eagle, Buyer, PICD, PFDC nor Seller shall issue any press release
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PAGE 89
or other public statement relating to the transactions
contemplated hereby without the prior consent of the others,
except as otherwise required by law (in which event copies shall
be furnished to the other prior to, or contemporaneously with,
the dissemination thereof).
IV. CONDITIONS OF CLOSING
4.01. Buyer, AFC, AHC, Eagle and Atwood Conditions. The
obligations of Buyer, AFC, AHC, Eagle and Atwood under this
Agreement are subject, at their option, to compliance by Seller,
PFDC and PICD in all material respects with the covenants to be
performed by Seller, PFDC and PICD, respectively, as set forth in
Article III hereof, the contribution of the PICD PANS pursuant to
Section 1.01 hereof, the delivery of Deep Seas LP Interest to
Buyer pursuant to Section 1.02 hereof, and to the satisfaction of
the following conditions:
(a) Each of Seller, PFDC and PICD shall have delivered a
certificate to Buyer, dated as of the Closing Date,
stating that the representations and warranties made by
Seller, PFDC and PICD in Section 2.01 hereof are true
and correct as of the Closing Date.
(b) (i) No action or proceeding shall have been instituted
before a court or other governmental body by any
person, governmental agency, or public authority to
restrain or prohibit the transactions contemplated by
this Agreement; and (ii) no governmental agency shall
have given notice to the effect that consummation of
the transactions contemplated by this Agreement would
constitute a violation of any law or that it intends to
commence proceedings to restrain consummation of the
transactions contemplated hereby.
(c) Atwood, AFC, AHC, Eagle and Buyer shall have received
from Mr. Joel W. Messing, counsel to Seller, PFDC and
PICD, an opinion dated as of the Closing Date in
substantially the form of that attached hereto as
Exhibit A.
(d) All necessary consents (in form and substance
satisfactory to Seller and Buyer) to the transaction
contemplated hereby required to have been obtained from
the parties to the Ancillary Agreements, the
Partnership Agreement and the Amended and Restated
Master Loan Restructuring Agreement ("ARMLRA") dated
November 12, 1992 by and among Deep Seas, Ltd., Texas
Commerce Bank National Association, Federal Deposit
Insurance Corporation, Chemical Bank and Atwood (and
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PAGE 90
any assignee thereof) shall have been obtained and PICD
shall have paid the reasonable fees and expenses of
counsel to Chemical Bank, as Agent, in connection
therewith.
(e) Simultaneous with the Closing hereunder (i) Falcon,
Ltd. shall have sold its assets to Atwood Oceanics
Pacific Ltd. and (ii) Falcon, Ltd. shall have dissolved
and distributed its assets in accordance with that
certain Partnership Dissolution Agreement dated of even
date herewith, effective December 31, 1994.
(f) The Terminated Ancillary Agreements shall be terminated
without liability to the parties thereunder.
4.02. Seller Conditions. The obligations of Seller,
PFDC and PICD under this Agreement are subject, at its option, to
compliance by Buyer, AFC, AHC, Eagle and Atwood in all material
respects with the covenants to be performed by Buyer, AFC, AHC,
Eagle and Atwood as set forth in Article III hereof, the
contribution of the Atwood PAN pursuant to Section 1.01 hereof,
the assumption of the Assumed Ancillary Agreements and the
payment of the Cash Consideration pursuant to Sections 1.03 and
1.04, respectively, and to the satisfaction of each of the
following conditions:
(a) Each of Buyer, AFC, AHC, Eagle and Atwood shall have
delivered a certificate to Seller, dated as of the
Closing Date, stating that the representations and
warranties made by Buyer, AFC, AHC, Eagle and Atwood
under this Agreement are true and correct as of the
Closing Date.
(b) (i) No action or proceeding shall have been instituted
before a court or other governmental body by any
person, governmental agency, or public authority to
restrain or prohibit the transactions contemplated by
this Agreement; and (ii) no governmental agency shall
have given notice to the effect that consummation of
the transactions contemplated by this Agreement would
constitute a violation of any law or that it intends to
commence proceedings to restrain consummation of the
transactions contemplated hereby.
(c) PICD, PFDC and Seller shall have received from Griggs &
Harrison, P.C., counsel to Buyer, AFC, AHC, Eagle and
Atwood, an opinion dated as of the Closing Date in
substantially the form attached hereto as Exhibit B.
(d) All necessary consents (in form and substance
satisfactory to Seller and Buyer) to the transactions
contemplated hereby required to have been obtained from
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PAGE 91
the parties to the Ancillary Agreements, the
Partnership Agreement and ARMLRA (or any assignee
thereof) shall have been obtained.
(e) Simultaneous with the Closing hereunder (i) Falcon,
Ltd. shall have sold its assets to Atwood Oceanics
Pacific Ltd. and (ii) Falcon, Ltd. shall have dissolved
and distributed its assets in accordance with that
certain Partnership Dissolution Agreement dated of even
date herewith, effective December 31, 1994.
(f) The Assumed Ancillary Agreements shall be assumed by
Buyer, AFC, AHC, Eagle or Atwood, as appropriate.
(g) The Terminated Ancillary Agreements shall be terminated
as of the Effective Date without liability to the
parties thereunder.
4.03. Conditions Satisfied. If the Closing takes place,
all conditions precedent thereto shall be deemed to have been
waived or satisfied.
V. TERMINATION
5.01. Events of Termination. This Agreement may be
terminated on or prior to the Closing Date as follows, and in no
other manner:
(a) By mutual written agreement of Buyer and Seller; or
(b) By Buyer, AFC, AHC, Eagle or Atwood by written notice
to Seller, PFDC and PICD, if the conditions set forth
in Section 4.01 hereof shall not have been complied
with or performed in any material respect, or by Seller
or PICD by written notice to Buyer, AFC, AHC, Eagle and
Atwood, if the conditions set forth in Section 4.02
hereof shall not have been complied with or performed
in any material respect, and, in either case, such
noncompliance or nonperformance shall not have been
cured or eliminated (or by its nature cannot be cured
or eliminated) on or before March 31, 1995 or such
later date, if any, as Seller, PFDC and PICD and Buyer,
AFC, AHC, Eagle and Atwood may agree to in writing.
5.02. Effect of Termination; Expenses. In the event
that this Agreement shall be terminated pursuant to Section 5.01
hereof, all further obligations of the parties hereto under this
Agreement (other than pursuant to this Section 5.02) shall
terminate without further liability or obligation of either party
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PAGE 92
to the other party hereunder. Except as specifically set forth
in Section 1.03 hereof, each party hereto will pay all costs and
expenses incident to its negotiation and preparation of this
Agreement and to its performance of and compliance with all
provisions hereof to be performed or complied with by such party,
including the fees, expenses, and disbursements of its counsel
and accountants and any fees or disbursements payable to brokers
or other entities retained by or on behalf of such party.
VI. OTHER COVENANTS OF THE PARTIES
6.01. Indemnification by Buyer, AFC, AHC, Eagle and
Atwood. Buyer, AFC, AHC, Eagle and Atwood, jointly and
severally, agree for a period of two (2) years after the Closing
Date to indemnify, defend and hold Seller, PFDC and PICD harmless
from and against any and all losses, liabilities, claims,
demands, lawsuits, damages, costs and expenses (including
reasonable attorneys' fees and disbursements) of every kind,
nature and description (collectively, "Claims") as to which
Seller, PFDC or PICD has given Buyer or Atwood notice, sustained
by Seller, PFDC or PICD, based upon, arising out of or otherwise
in respect of (i) the material inaccuracy of any representation
or warranty, or the breach of any covenant or agreement of Buyer
or Atwood contained in this Agreement; and (ii) Buyer's, AFC's,
AHC's, Eagle's or Atwood's performance or non-performance after
the Closing of, or under, any Assumed Ancillary Agreement. The
foregoing indemnifications are given solely for the purpose of
protecting Seller, PFDC and PICD and shall not be deemed to be
extended to, or interpreted in a manner to confer any benefit,
right or cause of action upon, any third party and nothing
contained in this Section 6.01 shall expand or enlarge any
representation, warranty, covenant, agreement or other
undertaking of Buyer, AFC, AHC, Eagle or Atwood, or limit or
restrict any exception to or disclaimer of any such
representation, warranty, covenant, agreement or undertaking,
made or provided for elsewhere in this Agreement.
6.02. Indemnification by Seller. Seller, PFDC and PICD,
jointly and severally, agree for a period of two (2) years after
the Closing Date to indemnify, defend and hold Buyer, AFC, AHC,
Eagle and Atwood harmless from and against any and all Claims as
to which Buyer, AFC, AHC, Eagle or Atwood has given Seller, PFDC
or PICD notice, sustained by Buyer, AFC, AHC, Eagle or Atwood,
based upon, arising out of or otherwise in respect of (i) the
material inaccuracy of any representation or warranty, or the
breach of any covenant or agreement of Seller, PFDC or PICD
contained in this Agreement; and (ii) Seller's, PFDC's or PICD's
performance or nonperformance prior to the Closing of, or under,
any Assumed Ancillary Agreement transferred to Buyer, AFC, AHC,
Eagle or Atwood hereunder. The foregoing indemnifications are
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given solely for the purpose of protecting Buyer, AFC and Atwood
and shall not be deemed to be extended to, or interpreted in a
manner to confer any benefit, right or cause of action upon, any
third party and nothing contained in this Section 6.02 shall
expand or enlarge any representation, warranty, covenant,
agreement or other undertaking of Seller, PFDC and PICD, or limit
or restrict any exception to or disclaimer of any such
representation, warranty, covenant, agreement or undertaking,
made or provided for elsewhere in this Agreement.
6.03. Expiration of Representations, Warranties and
Covenants. Notwithstanding anything in Sections 6.01 or 6.02 to
the contrary, and except as provided in this sentence, the
representations and warranties set forth in Sections 2.01 and
2.02 hereof shall expire and terminate two years after the
Closing Date, following which date no party may bring an action
or notify the other of a Claim with respect thereto under this
Agreement or otherwise.
VII. MISCELLANEOUS
7.01. Notices. Any notice, communication, request,
reply, or advice (hereinafter a "notice") in this Agreement
provided or permitted to be given or made by either party to the
other party hereunder must be in writing (including by facsimile
transmission) and may be given or served by depositing the same
in the United States mail, postage prepaid, and registered or
certified with return receipt requested, by delivering the same
in person to the person or entity to be notified, by sending the
same by a recognized courier service for next day delivery, or by
facsimile transmission when received and electronically
confirmed. Notice deposited in the mail in the manner
hereinabove described shall be effective on the third business
day after such deposit. Notice given in any other manner
permitted hereunder shall be effective upon receipt. For
purposes of notice, the addresses of the parties shall be as
follows:
If to Buyer, AFC, AHC, Eagle or Atwood:
Atwood Oceanics, Inc.
15835 Park Ten Place Drive
P.O. Box 218350
Houston, Texas 77218
Telecopy: (713) 492-0345
Attention: Mr. James M. Holland
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With a copy to:
Griggs & Harrison
1301 McKinney, Suite 3200
Houston, Texas 77010-3033
Telecopy: (713) 651-1944
Attention: Suzanne B. Kean, Esq.
or to such other addresses as to which Buyer may have advised
Seller in writing.
If to Seller, PFDC or PICD:
One Beaver Valley Road
P. O. Box 15047
Wilmington, Delaware 19850
Telecopy: (302) 479-6618
Attention: President
With a copy to:
CIGNA International Finance Inc.
S-215
900 Cottage Grove Road
Hartford, Connecticut 06152-2215
Telecopy: (203) 726-8885
Attention: Secretary
or to such other addresses as to which the Seller may have
advised Buyer in writing.
7.02. Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of
Texas.
7.03. Headings. Section and other headings contained in
this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this
Agreement.
7.04. Waivers. Except as otherwise provided herein, the
failure by any party to enforce any of its rights hereunder shall
not be deemed to be a waiver of such rights, unless such waiver
is an express written waiver which has been signed by the waiving
party. Waiver of any one breach shall not be deemed to be a
waiver of any other breach of the same or any other provisions
hereof.
<PAGE>
PAGE 95
7.05. Complete Agreement. This Agreement and the
Schedules and Exhibits hereto constitute the entire understanding
and agreement between the parties hereto with respect to the
subject matter hereof, and there are no agreements,
understandings, restrictions, representations, or warranties
between such parties other than those set forth herein or
therein, all other agreements and understandings being superseded
hereby.
7.06. Successors and Assigns. This Agreement shall bind
and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. This Agreement may
not be transferred or assigned by either party without the prior
written consent of the other party, and shall not be construed to
confer upon or to give any person other than the parties hereto
any rights or remedies under or by reason of this Agreement.
7.07. Amendments; Severability. The parties hereto may
amend, modify, or supplement this Agreement or any Schedule or
Exhibit hereto only in such manner as may be mutually agreed upon
in writing and executed by the parties hereto. Any provision
hereof which is prohibited by or unlawful or unenforceable under
the applicable law of any jurisdiction shall as to such
jurisdiction be ineffective, without affecting any other
provision of this Agreement, or shall be deemed to be severed or
modified to conform with such law, and the remaining provisions
of this Agreement shall remain in full force, provided that the
purpose of this Agreement thereby can be effected.
7.08. Gender and Number. All personal pronouns used in
this Agreement shall include the other gender and the neuter
gender, and the singular shall include the plural, and vice
versa, whenever and as often as may be appropriate.
7.09. Counterparts. This Agreement may be executed in
one or more counterparts and by different parties in separate
counterparts, with the same effect as if all parties hereto had
executed the same document. Each counterpart so executed and
delivered shall be deemed to be an original, and all such
counterparts shall be construed together and shall constitute one
and the same Agreement.
<PAGE>
PAGE 96
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
PHILADELPHIA INVESTMENT
CORPORATION OF DELAWARE
By CIGNA International Finance
Inc., its Agent
By: /s/ David S. Scheibe
Name: David S. Scheibe
Title: Vice President
PHILADELPHIA DRILLING COMPANY
By CIGNA International Finance
Inc., its Agent
By: /s/ David S. Scheibe
Name: David S. Scheibe
Title: Vice President
PHILADELPHIA FALCON DRILLING
COMPANY
By CIGNA International Finance
Inc., its Agent
By:/s/ David S. Scheibe
Name: David S. Scheibe
Title: Vice President
ATWOOD OCEANICS DRILLING
COMPANY
By: /s/ James M. Holland
James M. Holland
Vice President
ATWOOD OCEANICS, INC.
By: /s/ James M. Holland
<PAGE>
PAGE 97
James M. Holland
Vice President
ATWOOD FALCON CO.
By: /s/ James M. Holland
James M. Holland
Vice President
ATWOOD HUNTER CO.
By: /s/ James M. Holland
James M. Holland
Vice President
EAGLE OCEANICS, INC.
By: /s/ James M. Holland
James M. Holland
Vice President
ATWOOD DEEP SEAS, LTD.
By Atwood Hunter Co., its General
Partner
By: /s/ James M. Holland
James M. Holland
Vice President
ATWOOD FALCON I, LTD.
By Atwood Falcon Co., its General
Partner
By: /s/ James M. Holland
James M. Holland
Vice President
<PAGE>
PAGE 96
EXHIBIT 13.1
THE COMPANY
Atwood Oceanics, Inc. is engaged in the business of international offshore
drilling of exploratory and developmental oil and gas wells and related
support, management and consulting services. Presently, the Company owns
and operates a modern fleet of seven mobile offshore rigs and one modular
platform rig, as well as manages the operations of two operator-owned
platform rigs in Northwest Australia. The Company also owns a fifty
percent interest in an Australian company which has a term contract for the
design, construction and operation of a new generation platform rig. The
Company supports its operations from headquarters in Houston and affiliated
offices in Australia, Malaysia, and Indonesia.
FINANCIAL HIGHLIGHTS
(In thousands)
1995 1994
FOR THE YEAR
REVENUES FROM CONTRACT DRILLING AND
MANAGEMENT $ 72,231 $ 65,975
NET INCOME 7,060 6,209
CAPITAL EXPENDITURES (including investment in
joint venture) 25,692 6,722
RIG UTILIZATION 99% 99%
AT YEAR END
CASH AND SECURITIES HELD FOR INVESTMENT 37,922 41,047
PROPERTY AND EQUIPMENT 91,427 82,845
TOTAL ASSETS 152,853 153,460
TOTAL SHAREHOLDERS' EQUITY 94,892 85,959
<PAGE>
Page 97
TO OUR SHAREHOLDERS AND EMPLOYEES:
Operating results for 1995 represent the second consecutive year of
profitability, with net income of $7.1 million being the Company's best
financial performance since 1983. The key factor in the Company achieving
profitable results has been its ability to maintain high equipment
utilization. Excluding the SOUTHERN CROSS (which has not been placed in
service), the Company has achieved 99 percent equipment utilization in
both 1994 and 1995. Contract revenues increased nine percent from $66.0
million in 1994 to $72.2 million in 1995, while earnings before
depreciation, interest and taxes increased by 36 percent from 1994. These
improvements in operating results over the last two years were achieved
without significant improvement in dayrate levels.
Although the Company to-date has achieved its results without significant
underlying improvements in its market areas, there are positive factors
influencing the worldwide drilling market which could enhance dayrates,
revenues and profitability in 1996 and beyond. Worldwide demand for
semisubmersibles has increased as major oil companies turn to deeper water
in their search for new discoveries. Virtually all third and fourth-
generation semisubmersible rigs are currently under contract. Utilization
rates in the Asia/Pacific market should begin to rise as drilling activity
increases, and as rigs are relocated to areas such as the North Sea, the
Gulf of Mexico and West Africa, which require greater water-depth
capabilities and currently offer higher dayrates. The Company is currently
exploring opportunities that could result in contracting one or more of its
four semisubmersibles at higher margins during 1996.
Engineering studies have recently been undertaken which established the
feasibility of upgrading the water depth and variable deck load
capabilities of the Company's four semisubmersibles. The ATWOOD FALCON,
ATWOOD EAGLE and ATWOOD HUNTER have been offered for 3,000 ft. water-depth
work and the ATWOOD SOUTHERN CROSS is being offered for work in 2,000 ft.
water depths. Additionally, preliminary engineering will be undertaken
during 1996 with regard to upgrading the jack-up VICKSBURG to extended
reach cantilever mode, increased water-depth capability and enhanced
performance and drilling characteristics.
Currently, the Company's three active semisubmersibles have contract
commitments which should keep those units employed at improving dayrate
levels until the third or fourth quarter of fiscal year 1996. The
RICHMOND has a contract extension until March 1996 with an increase in
dayrate. Current contract commitments for the SEAHAWK and VICKSBURG should
keep those units fully employed through fiscal year 1996. RIG 19, which is
expected to remain occupied on its current platform until the fourth
quarter of fiscal year 1996, is also under consideration for ongoing work
in its current operating area. The Goodwyn 'A' and North Rankin 'A'
management contracts have progressed satisfactorily; it is anticipated that
Phase I of the Goodwyn 'A' drilling program will be completed sometime
during fiscal year 1996.
Fabrication and onshore commissioning of RIG 200 has been successfully
Page 98
completed on time and within budgeted cost levels. Due to delays in
platform construction outside the Company's control, RIG 200 drilling
operations are currently not scheduled to commence until early calendar
1997. We are optimistic that agreement will be reached for a dayrate to
commence January 1996 for the delay period which will contribute to the
Company's 1996 financial results.
In keeping with the Company's commitment to the safety and quality of its
operations, there has been significant planning and effort during 1995
focusing on the enhancement of the Company's fleetwide quality-based
management systems and preparation of safety cases for its mobile offshore
drilling units operating in Australian waters. This work is currently
proceeding on schedule and implementation should proceed during 1996.
We believe that significant progress has been made during 1995 in enhancing
the Company's value. We remain committed to continuing this momentum of
improvement through 1996 and beyond. Accordingly, we extend our
appreciation to our shareholders and employees whose support is so
important to those efforts.
/s/ John R. Irwin
John R. Irwin
<PAGE>
Page 99
Atwood Oceanics, Inc. and Subsidiaries
FIVE YEAR FINANCIAL REVIEW
<TABLE>
<CAPTION>
At or For the
Years Ended September 30,
(In thousands, except per share amounts, fleet data and ratios)
<S> <C> <C> <C> <C> <C>
1995 1994 1993 1992 1991
STATEMENTS OF OPERATIONS DATA:
Operating revenues $72,231 $65,975 $51,775 $44,772 $54,476
Drilling costs and general
and administrative expenses (55,311) (48,652) (41,797) (40,144) (51,141)
OPERATING MARGIN, before adjustment
for minority interest 16,920 17,323 9,978 4,628 3,335
Depreciation (11,134) (13,618) (13,045) (15,398) (15,123)
Interest expense (2,936) (2,892) (3,067) (3,523) (4,795)
Minority interest in loss of
Partnerships 908 3,303 4,821 4,862 6,034
OPERATING INCOME (LOSS) 3,758 4,116 (1,313) (9,431) (10,549)
Other income 5,174 2,819 2,470 3,092 3,857
Write-down of drilling vessels
and other assets --- --- --- (17,000) ---
Tax benefit (provision) (1,872) (726) (2,948) 2,402 (350)
NET INCOME (LOSS) $ 7,060 $ 6,209 $(1,791) $(20,937) $(7,042)
PER SHARE DATA:
Net earnings (loss) $ 1.07 $ .94 $ (.27) $(3.18) $(1.07)
Weighted average shares
outstanding 6,591 6,582 6,582 6,582 6,594
FLEET DATA:
Number of rigs owned or
managed, at end of period 10 9 10 9 9
Utilization rate 99% 99% 88% 75% 81%
BALANCE SHEETS DATA:
Cash and securities held for
investment $37,922 $41,047 $35,044 $33,877 $45,535
Working capital 13,761 25,171 14,703 12,236 29,389
Net property and equipment 91,427 82,845 90,150 98,033 113,635
Total assets 152,853 153,460 149,853 65,942 188,283
Total long-term debt 39,319 53,294 58,409 63,016 64,032
Shareholders' equity 94,892 85,959 79,750 81,541 102,478
Ratio of current assets to
current liabilities 1.67 2.89 2.24 1.68 4.02
(The Company has not paid any cash dividends on its common stock.)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Page 100
OFFSHORE DRILLING OPERATIONS
MAXIMUM
PERCENTAGE OF WATER
NAME OF RIG TYPE OF RIG 1995 REVENUES YEAR BUILT DEPTH
DRILLING RIGS WHOLLY OR PARTIALLY OWNED
<S> <C> <C> <C> <C>
ATWOOD FALCON THIRD-GENERATION 15% 1983 2,500 FT.
SEMISUBMERSIBLE
ATWOOD HUNTER THIRD-GENERATION 14% 1981 1,500 FT.
SEMISUBMERSIBLE
ATWOOD EAGLE THIRD-GENERATION 21% 1982 2,500 FT.
SEMISUBMERSIBLE
SEAHAWK SECOND-GENERATION 15% 1974/1992 N/A
SEMISUBMERSIBLE
TENDER ASSIST
VICKSBURG JACK-UP 7% 1976 300 FT
RIG-19 MODULAR PLATFORM 10% 1988 N/A
RICHMOND SUBMERSIBLE 7% 1982 75 FT.
ATWOOD SECOND-GENERATION 0% 1976 1,500 FT
SOUTHERN CROSS SEMISUBMERSIBLE
RIG-200 MODULAR 0% UNDER N/A
PLATFORM CONSTR-
UCTION
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
CONTRACT STATUS
NAME OF RIG LOCATION CUSTOMER AT NOVEMBER 21, 1995
ATWOOD FALCON MALAYSIA/ CARIGALI- Drilling the third of
THAILAND TRITON four firm wells (with
JOINT OPERATING three option well.)
DEVELOPMENT COMPANY
AREA SDB BHD
ATWOOD HUNTER MALAYSIA ESSO Drilling the 38th of 44
PRODUCTION firm wells (with eight
MALAYSIA, INC. option wells).
ATWOOD EAGLE WESTERN WEST Drilling the first of
AUSTRALIA AUSTRALIA two firm wells (with
PETROLEUM one option well).
PTY. LTD.
SEAHAWK MALAYSIA ESSO Term contract (estimated
PRODUCTION completion 1997).
MALAYSIA, INC.
VICKSBURG AUSTRALIA WESTERN MINING Under contract until
CORPORATION February 1997, subject
LIMITED to early termination
under certain limited
circumstances (with a
one year option).
RIG-19 AUSTRALIA ESSO Term contract (estimated
AUSTRALIA completion august 1996).
LIMITED
RICHMOND UNITED STATES SHELL Drilling the second of
OFFSHORE, three firm wells (have
INC. received letter of intent
to extend the contract
term by three months from
completion of the third
well).
ATWOOD AUSTRALIA (NOT PLACED Idle while the Company
SOUTHERN CROSS IN SERVICE pursues future contract
opportunities.
RIG-200 UNITED STATES ESSO Term contract.
AUSTRALIA
LIMITED
</TABLE>
PAGE 101
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
MAXIMUM
PERCENTAGE OF WATER
NAME OF RIG TYPE OF RIG 1995 REVENUES YEAR BUILT DEPTH
MANAGEMENT/LABOR CONTRACTS
GOODWYN 'A' MODULAR PLATFORM 10% N/A N/A
NORTH RANKIN 'A' MODULAR PLATFORM 1% N/A N/A
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
CONTRACT STATUS AT
NAME OF RIG LOCATION CUSTOMER NOVEMBER 21, 1995
GOODWYN 'A' AUSTRALIA WOODSIDE Term contract (estimated
OFFSHORE completion mid-1996.
PETROLEUM
PTY. LTD.
("WOODSIDE")
NORTH RANKIN 'A' AUSTRALIA WOODSIDE Term contract (estimated
completion mid-1996.
</TABLE>
<PAGE>
Page 102
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Fiscal Year 1995 Versus Fiscal Year 1994
Fiscal year 1995 was the second consecutive year in which the Company had
99 percent utilization of its equipment. Contract revenues in 1995
increased 9 percent to $72.2 million from $66.0 million. This increase is
primarily attributable to increases in revenues from the EAGLE and GOODWYN
'A' of $3.1 million and $5.1 million, respectively, offset somewhat by a
$1.7 million decrease in revenues from NORTH RANKIN 'A'. An analysis of
fleet utilization of wholly owned rigs and contract revenues by rig for
fiscal year 1995 and 1994 are as follows:
<TABLE>
<CAPTION>
FLEET UTILIZATION
OF WHOLLY OWNED RIGS 1995 1994
<S> <C> <C> <C> <C>
Idle Rig Utilization Idle Rig Utilization
Days Percentage Days Percentage
Falcon --- 100% --- 100%
Hunter --- 100% --- 100%
Eagle 15 96% 11 97%
Seahawk --- 100% --- 100%
Vicksburg --- 100% --- 100%
Rig-19 --- 100% --- 100%
Richmond 14 96% --- 100%
Average for year 99% 99%
</TABLE>
<TABLE>
<CAPTION>
CONTRACT REVENUES BY RIG In millions
Variance
Increase
1995 1994 (Decrease)
<S> <C> <C> <C>
Falcon $ 10.9 $11.1 $ (.2)
Hunter 10.2 10.2 ---
Eagle 15.1 12.0 3.1
Seahawk 10.8 10.9 (.1)
Vicksburg 4.9 4.4 .5
Rig-19 7.1 6.9 .2
Richmond 5.0 5.5 (.5)
Goodwyn 'A' 7.3 2.2 5.1
North Rankin 'A' .9 2.6 (1.7)
Other --- .2 (.2)
$ 72.2 $66.0 $ 6.2
</TABLE>
The FALCON started fiscal year 1995 working in Korea; however, in the
second quarter of the year, the rig was relocated to China, and during the
last quarter, it was relocated to the Malaysia/Thailand Joint Development
Area. The reduced revenues during the relocation periods account for the
Page 103
small decrease in revenues with respect to the FALCON. The HUNTER has
worked continuously in Malaysia for the same customer since April 1993.
During the first quarter of fiscal year 1994, the EAGLE was relocated from
Malaysia to the Australia/Indonesia "Zone of Cooperation", where the rig
worked continuously until it was moved in the middle of September 1995 to
sheltered water to undergo certain planned surveys and repairs. Even with
four more days of idle time in 1995, revenues for the EAGLE were higher due
to the rig working at a higher dayrate level in 1995 compared to 1994.
Relatively long-term, stable contracts for the SEAHAWK, VICKSBURG and RIG-
19 continue to provide consistency to these operations. The $500,000
increase in VICKSBURG revenues is due to an increase in the dayrate in
February 1995. In August 1995, the RICHMOND was moved to sheltered water
to undergo certain planned surveys and repairs. This required downtime
accounts for the RICHMOND's decrease in revenues. During 1994, the Company
received a standby fee related to GOODWYN 'A' while awaiting commencement
of drilling operations, which commenced during the first quarter of 1995.
The Company receives substantially higher revenues from GOODWYN 'A' during
drilling operations, resulting in an increase of revenues in 1995 over
1994. The reduction in revenues from NORTH RANKIN 'A" is due to the
Company providing less labor services to this operation in 1995.
Contract drilling and management costs increased from $44.3 million in 1994
to $50.8 million in 1995 (an increase of 15 percent). This increase is
primarily attributable to increased costs on the EAGLE and GOODWYN 'A'. An
analysis of contract drilling and management costs by rig is as follows:
<TABLE>
<CAPTION>
In millions
Variance
Increase
1995 1994 (Decrease)
<S> <C> <C> <C>
Falcon $ 6.4 $7.0 $ (.6)
Hunter 7.2 7.0 .2
Eagle 12.7 9.9 2.8
Seahawk 5.9 6.1 (.2)
Vicksburg 3.0 2.2 .8
Rig-19 5.1 4.6 .5
Richmond 4.1 3.6 .5
Goodwyn 'A' 5.2 1.5 3.7
North Rankin 'A' .6 1.8 (1.2)
Other .6 .6 ---
$ 50.8 $44.3 $ 6.5
</TABLE>
The reduction in FALCON costs is due to the rig working a portion of 1994
in Australia where costs are significantly higher than in most countries of
Southeast Asia. The HUNTER's costs have been relatively unchanged due to
its stable contract status. Cost increases for the EAGLE are attributed to
the EAGLE working the entire year in the Australia/Indonesia "Zone of
Cooperation" where costs are higher than in Malaysia and to costs incurred
in performing certain required surveys and repairs during the last two
weeks of September 1995. In 1994, the VICKSBURG and RIG-19 received some
personnel tax refunds which accounts for the increase in costs as no such
refunds were received in 1995. Like the EAGLE, the RICHMOND had to undergo
certain surveys and repairs in August 1995 which accounts for its operating
Page 104
cost increases. The increase in GOODWYN 'A' operating costs directly
relates to the commencement of drilling operations. Even though the
Company does not own this facility, the Company does provide personnel and
other operating support services. The decline in NORTH RANKIN "A' costs is
due to a reduction in personnel services provided to this operation.
When the Company acquired the remaining 50 percent interest in the FALCON,
HUNTER and EAGLE, it did so on the basis that these facilities are "state-
of-the-art" drilling rigs and will remain long-term productive assets.
Effective January 1, 1995, management increased its estimated depreciable
lives on these rigs by an additional five years. An analysis of
depreciation expense by rig is as follows:
<TABLE>
<CAPTION>
In millions
1995 1994
<S> <C> <C>
Falcon, Hunter and Eagle $ 7.1 $ 9.9
Seahawk 2.3 2.2
Rig-19 1.2 1.2
Richmond .3 ---
Other .2 .3
$ 11.1 $13.6
In 1995, the Company sold 33,000 shares of Mobil Corporation common stock
at a realized gain of $2.4 million. The Company continues to own 32,000
shares of Mobil common stock. Foreign tax expense increased from $500,000
in 1994 to $1.6 million in 1995, which accounts for the increase in the
provision for income taxes.
Fiscal Year 1994 Versus Fiscal Year 1993
Contract revenues in 1994 increased 27 percent from contract revenues in
1993. This increase is primarily attributable to higher utilization of the
FALCON, HUNTER and RICHMOND, coupled with a full year of operations of the
SEAHAWK and the relocation of the EAGLE from Malaysia to Australia, where
the dayrate level is higher. Analysis of fleet utilization and contract
revenues by rig for fiscal years 1994 and 1993 are as follows:
</TABLE>
<TABLE>
<CAPTION>
FLEET UTILIZATION
1994 1993
Idle Rig Utilization Idle Rig Utilization
Days Percentage Days Percentage
<S> <C> <C> <C> <C>
Falcon --- 100% 105 71%
Hunter --- 100% 110 70%
Eagle 11 97% --- 100%
Seahawk --- 100% --- 100%
Vicksburg --- 100% --- 100%
Rig-19 --- 100% --- 100%
Richmond --- 100% 149 59%
Average for year 99% 88%
</TABLE>
Page 105
<TABLE>
<CAPTION>
CONTRACT REVENUES BY RIG
In millions
Variance
Increase
1994 1993 (Decrease)
<S> <C> <C> <C>
Falcon $11.1 $10.5 $ .6
Hunter 10.2 6.9 3.3
Eagle 12.0 9.2 2.8
Seahawk 10.9 6.3 4.6
Vicksburg 4.4 4.4 ---
Rig-19 6.9 6.4 .5
Richmond 5.5 3.8 1.7
Goodwyn 'A' 2.2 1.7 .5
North Rankin 'A' 2.6 --- 2.6
Other .2 2.6 (2.4)
Total $66.0 $ 51.8 $14.2
</TABLE>
Page 106
The FALCON started fiscal year 1994 working in Australia; however, in the
second quarter of the year, the rig was relocated to Malaysia, and during
the last quarter, it was relocated to Korea. Even though the FALCON was
100 percent utilized in 1994, its revenues did not reflect any significant
increase over 1993 because the rig was relocated to work in Malaysia and
Korea where dayrate levels are lower than in Australia due to lower
operating costs. The HUNTER worked the entire year in Malaysia. During
the first quarter of fiscal year 1994, the EAGLE was relocated from
Malaysia to the Australia/Indonesia "Zone of Cooperation". The impact of
higher dayrate levels for the EAGLE more than offset the slight reduction
in rig utilization in 1994 compared to 1993. The SEAHAWK has worked
continuously since its commencement of operations in February 1993.
Relatively long-term stable contracts for the VICKSBURG and RIG-19 have
provided consistency to these operations. The RICHMOND has worked
continuously since March 1993. In 1994, the Company commenced providing
labor services to the North Rankin 'A' platform rig. In October 1993, the
Company sold its forty percent interest in an Indian joint venture company,
realizing a gain of $201,000. The termination of the Company's involvement
in India primarily accounts for the $2.4 million decline in other contract
revenues.
Increases in rig utilization, coupled with a full year of operations of the
SEAHAWK and the relocation of the EAGLE to the "Zone of Cooperation"
accounts for the 18 percent increase in contract drilling and management
costs in 1994 compared to 1993. An analysis of contract drilling and
management costs by rig is as follows:
<TABLE>
<CAPTION>
In millions
Variance
Increase
1994 1993 (Decrease)
<S> <C> <C> <C>
Falcon $ 7.0 $ 7.9 $ (.9)
Hunter 7.0 6.3 .7
Eagle 9.7 6.1 3.6
Seahawk 6.1 4.1 2.0
Vicksburg 2.2 2.8 (.6)
Rig-19 4.6 4.3 .3
Richmond 3.6 2.7 .9
Other 4.1 3.5 .6
Total $44.3 $37.7 $ 6.6
</TABLE>
Because of increased labor costs, operating costs in Australia are
significantly higher than in Malaysia. Hence, the relocation of the FALCON
out of Australia and the EAGLE out of Malaysia affected the level of
drilling costs for these two rigs. The increase in drilling costs for the
HUNTER is due to its 100 percent utilization in 1994 compared to 70% in
1993. Likewise, the increase in RICHMOND's drilling cost is due to
increased utilization. The SEAHAWK had a full year of operations in 1994
compared to approximately eight months in 1993 which accounts for its
increase in drilling costs.
An analysis of depreciation expense by rig is as follows:
Page 107
<TABLE>
<CAPTION>
In millions
1994 1993
<S> <C> <C>
Falcon, Hunter and Eagle $ 9.9 $10.1
Seahawk 2.2 1.4
Rig-19 1.2 1.2
Other .3 .3
$ 13.6 $13.0
</TABLE>
The Company's effective income tax rate for 1994 and 1993 was 10 percent
and 255 percent, respectively. The high tax rate in 1993 was primarily due
to the write-off of certain tax refund claims to foreign tax expense.
Page 108
LIQUIDITY AND CAPITAL RESOURCES
In 1995, the Company acquired the remaining 50 percent interest in the
FALCON, HUNTER and EAGLE (third generation semisubmersibles) for a
combined aggregate price of approximately $36 million. Currently,
virtually all fourth and third generation semisubmersible rigs are under
contract, especially those rigs that can drill in water depths in excess of
2,500 feet. The FALCON, HUNTER and EAGLE are capable of drilling in water
depths of 2,500, 1,500 and 2,500 feet, and can be upgraded to drill in
water depths up to 4,000 feet. In 1996, the Company will pursue profitable
rig upgrade opportunities which, if successful, could require an upgrade
investment of between $10 and $15 million per rig to drill in 3,000 feet of
water and a significantly higher investment to reach 4,000 feet water depth
drilling capacity.
The SOUTHERN CROSS (a second-generation semisubmersible), which was
purchased by the Company in 1993, remains idle in Australia as the Company
continues to pursue a future contract opportunity. Before this unit can be
placed in service, an additional capital investment, estimated to range
from $6 to $30 million depending upon the extent of modification, will be
required. This rig can be upgraded to drill in water depths up to 2,000
feet.
The Company and Helmerich & Payne, Inc. (H&P), current owner of 24 percent
of the Company's common stock, is in the process of completing the joint
construction in the United States of a new generation platform rig (named
"Rig-200"). Rig-200 was originally scheduled to commence operating
offshore Australia in early 1996; however, due to certain delays unrelated
to the Company's and H&P's activities, the rig will remain stacked in the
United States for up to one year before being transported to Australia.
Under terms of the rig contract, a holding rate is payable during any delay
period. At September 30, 1995, the Company had invested approximately $8.2
million in this project with a remaining commitment of approximately $4
million.
At September 30, 1995, the Company continued to have $22.4 million invested
in United States treasury bonds with maturities in the years 2000 and 2001
and $1.5 million invested in equity securities. At November 21, 1995,
these investments had an aggregate market value of approximately $28
million. In 1995, the Company adopted Statement of Financial Accounting
Standards No. 115, ("SFAS") Accounting for Certain Investments in Debt and
Equity Securities; which had an immaterial effect on the consolidated
balance sheet and had no effect on reporting earnings. The Company's
portfolio of accounts receivable is comprised of major international
corporate entities with stable payment experiences. Thus, the Company
continues to experience no difficulties in receivable collections and
anticipates no problems in collecting the $13.4 million of accounts
receivable at September 30, 1995.
At September 30, 1995, long-term notes payable consist of $36.3 million
payable to a bank group which is secured by preferred mortgages on the
HUNTER and EAGLE and an unsecured $3 million term note. In conjunction
with the acquisition of the remaining 50 percent interest in the FALCON,
HUNTER and EAGLE, approximately $6 million of long-term notes payable to
the limited partner were cancelled; and, approximately $8 million of the
Page 109
bank group debt owned by the Company was contributed as equity in the rigs,
with a corresponding reduction in outstanding bank group debt. The bank
debt is being repaid in quarterly installments of $750,000, with a balloon
payment of $29.7 million payable in March 1998. The Company has a $10
million short-term line of credit (used to satisfy short-term working
capital requirements) with a bank, the outstanding balance of which was
$1.5 million as of September 30, 1995.
As of September 30, 1995, the Company, under the provision of SFAS No. 109,
had net current deferred tax assets of $1.2 million (after applying a
valuation reserve of $6.7 million) and net noncurrent deferred tax
liabilities of $1.3 million, including $.7 million relating to unrealized
holding gains. Working capital at September 30, 1995 was $13.8 million
which is $11.4 million lower than at September 30, 1994. This reduction in
working capital in 1995 is attributable to capital additions.
Currently, the Company continues to have all of its drilling equipment
(except the SOUTHERN CROSS which has not been placed in service) under
contract. The key factor in the Company's profitable operating results in
1995 and 1994 was its ability to maintain a high level of equipment
utilization. Based upon current contract commitments and market outlook,
the Company anticipates that it will be able to maintain a high level of
equipment utilization in 1996. Future enhancement of operating results in
the immediate term will depend upon continuing improvements in dayrate
levels, obtaining a contract for the SOUTHERN CROSS and possible upgrades
of existing equipment.
PAGE 110
Atwood Oceanics, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30,
(In thousands) 1995 1994
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 11,984 $ 16,119
Accounts receivable 13,425 13,915
Current maturities of long-term
note receivable --- 400
Inventories of materials and
supplies, 4,904 4,194
at lower of average cost or market 1,200 1,800
Deferred tax assets 2,753 2,044
Prepaid expenses 34,266 38,472
Total Current Assets
SECURITIES HELD FOR INVESTMENT:
Held-to-maturity, at amortized cost 22,422 22,451
Available-for-sale, at fair value 3,516 2,477
in 1995 25,938 24,928
LONG-TERM NOTE RECEIVABLE,
net of current maturities --- 5,985
PROPERTY AND EQUIPMENT, at cost:
Drilling vessels, equipment and
drill pipe 174,989 187,525
Investment in joint venture 8,182 310
Other 4,569 4,169
187,740 192,004
Less - accumulated depreciation 96,313 109,159
Net Property and Equipment 91,427 82,845
DEFERRED COSTS AND OTHER ASSETS 1,222 1,230
$152,853 $153,460
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
Page 111
Atwood Oceanics, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30,
(In thousands, except share data) 1995 1994
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
<S> <C> <C>
Current maturities of long-term notes $ 3,750 $ 3,000
payable 1,500 ---
Short-term note payable 6,260 3,728
Accounts payable 8,995 6,573
Accrued liabilities 20,505 13,301
Total Current Liabilities
LONG-TERM NOTES PAYABLE,
net of current maturities 35,569 50,294
DEFERRED CREDITS:
Income taxes 1,334 1,650
Other 553 639
1,887 2,289
MINORITY INTEREST IN PARTNERSHIPS --- 1,617
SHAREHOLDERS' EQUITY:
Preferred stock, no par value;
1,000,000 shares authorized,
none outstanding --- ---
Common stock, $1 par value; 10,000,000
shares authorized with 6,629,000 and
6,582,000 issued and outstanding in
1995 and 1994, respectively 6,629 6,582
Paid-in capital 54,771 54,273
Net unrealized holding gain on available-
for-sale securities 1,328 ---
Retained earnings 32,164 25,104
Total Shareholders' Equity 94,892 85,959
$152,853 $153,460
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
Page 112
Atwood Oceanics, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For Years Ended September 30,
(In thousands, except per share amounts) 1995 1994 1993
<S> <C> <C> <C>
REVENUES:
Contract drilling $71,452 $ 63,640 $ 50,083
Contract management 779 2,335 1,692
72,231 65,975 51,775
COSTS AND EXPENSES:
Contract drilling 50,241 42,799 36,380
Contract management 585 1,529 1,314
Depreciation 11,134 13,618 13,045
General and administrative 4,485 4,324 4,103
66,445 62,270 54,842
OPERATING INCOME (LOSS) 5,786 3,705 (3,067)
OTHER INCOME (EXPENSE)
Interest expense (2,936) (2,892) (3,067)
Investment income 2,804 2,819 2,470
Realized gain on sale of securities 2,370 --- ---
2,238 (73) (597)
INCOME (LOSS) BEFORE MINORITY INTEREST
AND INCOME TAXES 8,024 3,632 (3,664)
MINORITY INTEREST IN LOSS OF PARTNERSHIPS 908 3,303 4,821
INCOME BEFORE INCOME TAXES 8,932 6,935 1,157
PROVISION FOR INCOME TAXES 1,872 726 2,948
NET INCOME (LOSS) $ 7,060 $ 6,209 $ (1,791)
EARNINGS (LOSS) PER COMMON SHARE $ 1.07 $ .94 $ (.27)
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 6,591 6,582 6,582
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
Page 113
Atwood Oceanics, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For Years Ended September 30,
(In thousands) 1995 1994 1993
<S> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net income (loss) $ 7,060 $ 6,209 $ (1,791)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation 11,134 13,618 13,045
Amortization of deferred items 429 531 (104)
Deferred federal income tax benefit (400) (150) ---
Write off of foreign tax refund claims --- --- 1,736
Gain on sale of securities (2,370) --- ---
Gain on sale of equity in Indian joint
venture --- (201) ---
Minority interest in loss of partnerships (908) (3,303) (4,821)
Changes in assets and liabilities:
Decrease (increase) in accounts receivable 490 (3,147) 5,009
Increase (decrease) in accounts payable 2,532 670 (3,057)
Increase in accrued liabilities 2,422 731 1,870
Other (1,192) (358) (1,078)
12,137 8,391 12,600
Net Cash Provided by Operating Activities 19,197 14,600 10,809
CASH FLOW FROM INVESTING ACTIVITIES:
Proceeds from sale of securities 3,343 --- ---
Capital expenditures (4,545) (6,412) (5,302)
Proceeds from sale of equity in Indian joint
venture --- 1,300 ---
Investment in joint venture (7,872) (310) ---
Acquisition of interest in partnerships (13,275) --- ---
Payments received on notes receivable 202 404 1,948
Net Cash Used by Investing Activities (22,147) (5,018) (3,354)
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from exercises of stock options 545 --- ---
Principal payments on long-term notes (3,130) (3,000) (3,000)
Net advances by (payments to) limited partner (100) (550) 1,773
Proceeds (repayment) of short-term note
payable 1,500 --- (5,000)
Net Cash Used by Financing Activities (1,185) (3,550) (6,227)
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (4,135) 6,032 1,228
CASH AND CASH EQUIVALENTS, at beginning
of period 16,119 10,087 8,859
CASH AND CASH EQUIVALENTS, at end of period $ 11,984 $16,119 $10,087
__________________________
Supplemental disclosure of cash flow information:
Cash paid during the year for domestic and $ 1,558 $ 1,657 $ 1,038
foreign income taxes
Cash paid during the year for interest $ 2,552 $ 2,380 $ 2,793
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
Page 114
Atwood Oceanics, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CHANGES IN
SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock Paid-in Unrealized Retained
(In thousands) Shares Amount Capital Holding Gain Earnings
<S> <C> <C> <C> <C> <C>
September 30, 1992 6,582 $6,582 $54,273 $ --- $ 20,686
Net loss --- --- --- --- (1,791)
September 30, 1993 6,582 6,582 54,273 --- 18,895
Net income --- --- --- --- 6,209
September 30, 1994 6,582 6,582 54,273 --- 25,104
Unrealized holding gain --- --- --- 1,328 ---
Exercises of employees'
stock options 47 47 498 --- ---
Net income --- --- --- --- 7,060
September 30, 1995 6,629 $ 6,629 $54,771 $ 1,328 $ 32,164
----------------------
Preferred stock, no par value, of 1,000,000 shares was authorized in 1975 and
no shares have been issued.
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
Page 115
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Board of Directors of Atwood Oceanics, Inc.:
We have audited the accompanying consolidated balance sheets of Atwood
Oceanics, Inc. (a Texas corporation) and subsidiaries as of September 30,
1995 and 1994, and the related consolidated statements of operations, cash
flows and changes in shareholders' equity for each of the three years in
the period ended September 30, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Atwood Oceanics, Inc.
and subsidiaries as of September 30, 1995 and 1994, and the results of
their operations and their cash flows for each of the three years in the
period ended September 30, 1995, in conformity with generally accepted
accounting principles.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Houston, Texas
November 21, 1995
<PAGE>
Page 116
Atwood Oceanics, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Consolidation -
The consolidated financial statements include the accounts of Atwood
Oceanics, Inc. ("AOI") and all of its wholly owned domestic and foreign
subsidiaries (all of such entities being collectively referred to herein as
the "Company"). Prior to December 31, 1994, AOI owned a 50 percent interest
in two Texas Limited Partnerships, Atwood Deep Seas, Ltd. ("Deep Seas") and
Atwood Falcon I, Ltd. ("Falcon Ltd."), the accounts of which were included
in the Company's consolidated financial statements. The limited partner's
interest in the net assets and loss of the two partnerships was reflected
in the Company's financial statement as "minority interest in
partnerships". (See Note 2 regarding AOI's acquisition of the minority
partner's interest.) All significant intercompany accounts and transactions
have been eliminated in consolidation.
Foreign exchange -
The U.S. dollar is the functional currency for all areas of operations of
the Company. Accordingly, monetary assets and liabilities denominated in
foreign currency are translated to U.S. dollars at the rate of exchange in
effect at the end of the year, items of income and expense are translated
at average monthly rates, and property and equipment and other amounts are
translated at historical rates. Gains and losses on foreign currency
transactions and translations are included in drilling costs in the
consolidated statements of operations. The Company incurred foreign
exchange losses of $155,000, $417,000 and $140,000 in 1995, 1994 and 1993,
respectively.
Depreciation, maintenance and retirement policies -
Depreciation is provided on the straight-line method over the following
estimated useful lives of the various classifications of assets:
Years
Drilling vessels and related equipment 8-15
Drill pipe 3
Furniture and Other 3-10
Maintenance, repairs and minor replacements are charged against income as
incurred; major replacements and betterments are capitalized and
depreciated over the remaining useful life of the asset as determined upon
completion of the work. The cost and related accumulated depreciation of
assets sold, retired or otherwise disposed are removed from the accounts at
the time of disposition, and any resulting gain or loss is reflected in the
consolidated statements of operations for the applicable period.
Deferred costs -
The Company defers and amortizes the costs of moving a drilling vessel to a
<PAGE>
Page 117
new area on a straight-line basis over the life of the applicable drilling
contract. There were no unamortized mobilization costs at September 30,
1995 or 1994.
The Company defers the cost of scheduled drydocking and the cost is charged
to expense over the period to the next scheduled drydocking (normally 30
months).
Federal income taxes -
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 109 "Accounting for Income
Taxes". Under SFAS No. 109, deferred income taxes are recorded to reflect
the tax consequences on future years of differences between the tax basis
of assets and liabilities and their financial reporting amounts at each
year-end.
Page 118
Revenue recognition -
The Company accounts for drilling and management contracts using the
percentage of completion method of accounting, under which revenues are
recognized on a daily basis as earned.
Cash and cash equivalents -
Cash and cash equivalents consist of cash in banks and certificates of
deposit which mature within three months of the date of purchase.
Receivables -
Based upon the Company's historical collection of accounts receivable, the
Company has not established an allowance for doubtful accounts.
Investments -
Investments in held-to-maturity securities are stated at the amortized cost
at the balance sheet date. The Company has the ability and intent to hold
such securities to maturity. At September 30, 1995, investments in
available-for-sale securities are carried at fair value with the net
unrealized holding gain included in shareholders' equity. At September 30,
1994, such securities were carried at the lower of cost or market.
Earnings (Loss) per common share -
Earnings (loss) per common share was computed by dividing net income (loss)
by the weighted average number of shares of common stock outstanding during
each period. The dilutive effect of stock options is immaterial.
Reclassifications -
Certain reclassifications have been made to 1994 and 1993 financial
statements to conform to the 1995 classifications.
NOTE 2 - ACQUISITION OF LIMITED PARTNER'S INTEREST IN THREE SEMISUBMERSIBLE
DRILLING VESSELS
Effective as of December 31, 1994, the Company acquired one third-
generation semisubmersible drilling rig, the FALCON, from Falcon Ltd. and
the other 50 percent limited partner's interest in Deep Seas which owned
two third-generation semisubmersible drilling rigs, the HUNTER and the
EAGLE. By combination of approximately $13 million of cash remitted, the
issuance of a $3 million note and the assumption of approximately $20
million of long-term notes payable to a bank group (previously
consolidated), which aggregates to approximately $36 million, the Company
became the sole owner of the three semisubmersible rigs.
Since the Company's consolidated balance sheet prior to the acquisition of
the limited partner's interest reflected 100 percent of the historical cost
basis of the HUNTER, EAGLE and FALCON, 50 percent of the historical cost
basis of these rigs (approximately $51 million) and the related accumulated
Page 119
depreciation (approximately $23 million) were retired from the balance
sheet, with the historical cost basis increased by the Company's $36
million acquisition price of the limited partner's interest.
In conjunction with the acquisition, approximately $5 million of long-term
notes payable to the limited partner by Deep Seas were cancelled. Also,
the approximately $8 million portion of Deep Seas bank group debt owned by
AOI, with an approximate discounted basis of $6 million, was contributed as
equity in Deep Seas with a corresponding reduction in outstanding Deep Seas
bank group debt. (See Note 6.) The effect on the Company's balance sheet
of the above transactions is as follows:
Page 120
</TABLE>
<TABLE>
<CAPTION>
(In millions)
<S> <C>
Increase (decrease) in assets:
Cash $ (13)
Long-term notes receivable (6)
Property and Equipment -
Drilling vessels, equipment and drill pipe -
Removal of limited partner's historical cost basis (51)
- Reduction in accumulated depreciation related to 23
historical cost 36
- Acquisition price of 50 percent limited partner's
interest (2)
- Discount on long-term note receivable 6
contributed as equity in Deep Seas $ (13)
Net decrease in consolidated assets
Decrease (increase) in liability:
Note issued in conjunction with acquisition $ (3)
Cancellation of liabilities to limited partner 8
Reduction in bank group debt 8
Net decrease in consolidated liabilities $ 13
</TABLE>
NOTE 3 - SECURITIES HELD FOR INVESTMENT
Effective October 1, 1994, the Company adopted Statement of Financial
Accounting Standards No. 115, Accounting for Certain Investments in Debt
and Equity Securities ("SFAS No. 115"); which had an immaterial effect on
the consolidated balance sheet and had no effect on reported earnings. All
of the Company's investments in equity securities are classified as
"available-for-sale" and accordingly, are reflected in the September 30,
1995 Consolidated Balance Sheet at fair value, with the aggregate
unrealized gain, net of related deferred tax liability, included in
shareholders' equity. All of the Company's investments in United States
Treasury Bonds (which mature in 2000 and 2001) are classified as "held-to-
maturity" and accordingly, are reflected in the September 30, 1995
Consolidated Balance Sheet at amortized cost. SFAS No. 115 may not be
applied to prior periods, therefore the Company's marketable securities
portfolio at September 30, 1994 is reported in the Consolidated Balance
Sheet at amortized cost. An analysis of the Company's investments in
marketable securities at September 30, 1995 and 1994 is as follows:
<TABLE>
<CAPTION>
(In thousands)
Amortized Unrealized Fair
Cost Gain Value
<S> <C> <C> <C>
1995 -
Equity Securities $ 1,504 $ 2,012 $ 3,516
United States Treasury Bonds 22,422 2,204 24,626
$ 23,926 $ 4,216 $ 28,142
1994 -
Equity Securities $ 2,477 $ 2,981 $ 5,458
United States Treasury Bonds 22,451 819 23,270
$ 24,928 $ 3,800 $ 28,728
</TABLE>
During 1995, 33,000 shares of Mobil Corporation common stock were sold at a
realized gain of $2.4 million. The Company used the specific
identification method in determining the basis of the securities sold.
There were no sales of marketable securities in fiscal year 1994.
At November 21, 1995, the fair value of equity securities was $3.8 million
and the fair value of the treasury bonds was $24.9 million resulting in
combined unrealized gains of $4.8 million at such date.
NOTE 4 - PROPERTY AND EQUIPMENT
In October 1993, the Company purchased for $1.5 million the SOUTHERN CROSS,
a semisubmersible built in 1976 which has been idle in Australia since the
end of 1992. For the rig to be placed in service, additional capital
investment (estimated to range from $6 to $30 million depending upon extent
of modification) will be required. At September 30, 1995 the Company had
incurred approximately $1.1 million in additional costs related to
evaluating and preparing the rig for possible utilization alternatives.
The Company has received unsolicited purchase offers for the rig that have
been significantly in excess of the rig's current cost basis. The vessel
will remain idle in Australia for an indefinite period of time as the
Company pursues future profitable contract opportunities.
When the Company acquired its initial interest in the HUNTER, EAGLE and
FALCON in 1990, estimated useful lives for these rigs of ten years were
adopted for depreciation purposes. However, since these facilities remain
"state-of-the art" drilling rigs and since the Company acquired the 50
percent limited partner's interest on the basis that these rigs will remain
long-term productive assets, effective January 1, 1995 management increased
its estimated lives on these rigs by an additional five years. The effect
of the change in depreciable lives was an approximate $3 million reduction
in depreciation for 1995.
In 1995, the Company adopted the Financial Accounting Standards Board
Statement No. 121, Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to Be Disposed Of. The adoption had no impact on the
Company's financial statements.
NOTE 5 - INVESTMENT IN JOINT VENTURE
In August 1994, Atwood Oceanics West Tuna Pty. Ltd ("West Tuna"), an
Australian company owned 50 percent by the Company and 50 percent by
Helmerich & Payne, Inc. ("H&P") (current owner of 24 percent of the
Company's outstanding common stock), was awarded a term contract for the
design, construction and operation of a new generation platform rig. The
Company and H&P entered into a joint venture agreement to construct the rig
whereby H&P would manage the design, construction, testing and mobilization
of the new rig; and the Company would manage the initial installation and
daily operations of the new rig. The rig (named "Rig-200") is under
construction in the United States and is currently undergoing various
acceptance testing procedures. Rig-200 was originally scheduled to
commence operating offshore Australia in early 1996; however, due to
project delays in Australia unrelated to the Company's and H&P's
activities, West Tuna has been advised to delay shipment of the rig to
Australia until early 1997. Under terms of the contract, a holding rate is
payable during any delay period. A holding rate (the amount of which is
currently under negotiation) should commence on or before January 1, 1996.
The rig is currently scheduled to commence operations in offshore Australia
in early 1997.
Page 123
NOTE 6 - NOTES PAYABLE
Long-Term Notes Payable -
A summary of long-term notes payable is as follows:
<TABLE>
<CAPTION>
(In thousands)
1995 1994
<S> <C> <C>
Notes payable to bank group by Deep Seas, bearing
interest (market adjustable) at approximately 7 percent
per annum at September 30, 1995 $ 36,319 $ 47,375
Term note, bearing interest at 6 percent per annum 3,000 ---
Notes payable to limited partner by Deep Seas:
Non-interest bearing, net of
$3.2 million discount in 1994 --- 800
Bearing interest at prime rate --- 5,119
39,319 53,294
Less - current maturities 3,750 3,000
$ 35,569 $ 50,294
</TABLE>
Principal payments on the bank group debt are $750,000 per quarter, with a
balloon payment of $29.7 million payable in March 1998. The bank group's
collateral for the long-term notes consists principally of preferred
mortgages on the HUNTER and EAGLE. The loan documents with the bank group
prohibit the cash payment of management fees, partnership profits and
certain other cost disbursements by Deep Seas prior to the time the notes
are paid in full. There is also an annual limit on the amount of capital
expenditures that can be incurred by Deep Seas. In 1995, Deep Seas
obtained a waiver from the Bank Group with respect to expenditures which
exceeded the capital expenditures limit.
A portion of the purchase price of the limited partner's interest included
the issuance of a $3 million unsecured note payable in four annual $750,000
installments. Effective December 31, 1994, all notes payable to the
limited partner were cancelled in conjunction with the Company's purchase
of the limited partner's interest.
The maturities of long-term debt are as follows:
(In
thousands)
YEAR AMOUNT
1996 $ 3,750
1997 3,750
1998 31,069
1999 750
$39,319
Short-Term Note Payable -
At September 30, 1995, the Company has a $ 10 million short-term line of
credit with a bank that is secured by the pledge of a portion of the
Company's U.S. treasury bonds. This line of credit is used to satisfy
short-term working capital requirements. At September 30, 1995, $1.5
million, bearing interest at 6 percent (with maturity on October 23, 1995)
was borrowed under this line of credit. The maturity date has subsequently
been extended to December 14, 1995.
NOTE 7 - INCOME TAXES
Domestic and foreign income (loss) before income taxes and minority
interest for the three years in the period ended September 30, 1995 are as
follows:
<TABLE>
<CAPTION>
(In thousands)
1995 1994 1993
<S> <C> <C> <C>
Domestic income (loss) $ 6,237 $ (2,869) $ (149)
Foreign income (loss) 1,787 6,501 (3,515)
$ 8,024 $ 3,632 $ (3,664)
</TABLE>
The provision (benefit) for domestic and foreign taxes on income consists
of the following:
<TABLE>
<CAPTION>
(In thousands)
1995 1994 1993
<S> <C> <C> <C>
Current domestic provision $ 700 $ 400 $ 460
Deferred domestic benefit (400) (150) ---
Current foreign provision 1,572 476 2,488
$ 1,872 $ 726 $ 2,948
</TABLE>
Effective October 1, 1993, the Company adopted the provision of SFAS No.
109, "Accounting for Income Taxes". As of October 1, 1993, there was no
cumulative effect of the accounting change for income taxes reflected in
the Company's statement of operations. The components of the deferred
income tax assets (liabilities) as of September 30, 1995 and 1994 are
summarized as follows:
<PAGE>
<TABLE>
<CAPTION>
(In thousands)
September 30,
1995 1994
<S> <C> <C>
Deferred tax assets -
Net operating loss carryforwards $ 4,570 $ 9,090
Investment tax credit carryforwards 3,620 4,290
Foreign tax credits carryforwards --- 1,810
Book reserves 1,730 1,370
Difference in book and tax basis of equipment 5,590 (200)
15,510 16,360
Deferred tax liabilities -
Income recognized for tax in excess of book 7,870 8,400
Deferred charges 430 140
Unrealized holding gains on available-for-sale
securities 684 ---
8,984 8,540
Net deferred tax assets before valuation allowance 6,526 7,820
Valuation allowances (6,660) (7,670)
Net deferred tax asset (liability) (134) 150
Net current deferred tax assets 1,200 1,800
Net noncurrent deferred tax liabilities (1,334) (1,650)
Net deferred tax asset (liability) $ (134) $ 150
</TABLE>
U.S. deferred taxes have not been provided on foreign earnings totaling
$8.8 million which are permanently invested abroad. Foreign tax credits
totaling approximately $1.2 million are available to reduce the U.S. taxes
on such amounts.
The differences between the statutory and the effective income tax rate are
as follows:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Statutory income tax rate 34% 34% 34%
Increase (decrease) in tax rate resulting
from -
Foreign tax rate differentials 11 (18) ---
Book depreciation on partnerships' assets
with no tax basis --- 19 113
Foreign taxes not creditable against
domestic income taxes --- --- 96
Investment tax credits (10) (14) 23
Change in valuation allowance (10) --- ---
Financial income not subject to domestic
income taxes (1) (2) (16)
Other, net (3) (9) 5
Effective income tax rate 21% 10% 255%
</TABLE>
At September 30, 1995, the Company had approximately $1.0 million in
investment tax credits (which commence expiration in 1997) available to
reduce future tax obligations. The Company also has available
approximately $12 million in net operating loss carryforwards (which expire
in the years 2000 through 2003) and approximately $3 million in investment
tax credits (which expire primarily in 1997 and 1998). These tax
attributes are subject to various limitations, thereby restricting their
availability to reduce future tax obligations.
Page 128
As the result of the Company's unsuccessful efforts to collect $3.4 million
of previously paid foreign taxes considered refundable, the receivable for
these taxes was written-off in the fourth quarter of 1993. Legal action
is currently being pursued; however, it will take several years to
ultimately resolve this issue. This additional foreign income tax expense,
after adjustment for minority interest, added $1.7 million ($.25 per share)
to the Company's fiscal year 1993 net loss.
For several years, the Company has pursued legal action to collect certain
tax refund claims in India. As a result of favorable court decisions in
India, and upon the Company providing a letter of guarantee, the Company
received a tax refund in 1994 of $639,000 (net of taxes on interest and
other related expense), which is reflected in the balance sheet as other
deferred credits, pending ultimate resolution of the issue by the Indian
High Court.
NOTE 8 - CAPITAL STOCK
The Company has a stock option plan ("Stock Plan") under which non-
qualified and incentive stock options may be granted to officers and key
employees through December 5, 2000. The maximum number of shares of common
stock that may be granted under the Stock Plan is 330,000. The Company
also has options outstanding to purchase 28,250 shares (at prices ranging
from $12.25 to $14.75 per share) under an incentive stock option plan
("Incentive Plan") which expired for future grant purposes on November 17,
1991. Under the Stock Plan, the Compensation Committee of the Board of
Directors determines the option exercise period, which cannot be less than
six months or more than ten years from the date of grant, and the option
prices, which cannot be less than the fair market value on the date of the
grant. The rights to exercise options under the Stock Plan currently vest
over a period of five years and do not expire until ten years after the
date of grant. At September 30, 1995, there were 75,500 shares available
for grant under the Stock Plan.
Total option activity for the years ended September 30, 1995, 1994 and 1993
was as follows:
<TABLE>
<CAPTION>
1995 1994 1993
Number Weighted- Number Weighted- Number Weighted-
of Average of Average of Average
Options Exercise Options Exercise Options Exercise
Price Price Price
<S> <C> <C> <C> <C> <C> <C>
Outstanding,
beginning
of year 254,500 $12.19 258,800 $12.44 242,300 $14.00
Granted 32,000 13.13 44,000 13.38 54,000 10.75
Exercised (46,400) 11.75 --- --- --- ---
Forfeited --- --- (18,000) 12.79 (13,000) 15.00
Expired --- --- (30,300) 16.25 (24,500) 23.25
Outstanding,
end of
year 240,100 12.29 254,500 12.19 258,800 12.44
Exercisable,
end of
year 79,987 $12.12 58,300 $12.48 45,905 $14.30
</TABLE>
NOTE 9 - RETIREMENT PLAN
The Company has a contributory retirement plan (the "Plan") under which
qualified participants may make contributions of up to 5% of their
compensation, as defined (the basic contribution). The Company makes a
contribution to the Plan equal to twice the basic contribution. Company
contributions vest 100 percent to each participant beginning with the
fourth year of participation. If a participant terminates his employment
before becoming fully vested, the unvested portion is credited to the
Company's account and can be used only to offset Company contribution
requirements. The Company used $112,000 of forfeitures in 1995 and
$195,000 of forfeitures in 1993 to reduce its cash contribution
requirements which resulted in actual contributions of $637,000 in 1995 and
$477,000 in 1993. In 1994, the Company made cash contributions of $702,000
and did not utilize any forfeitures to reduce its contribution
requirements. As of September 30, 1995, there remains approximately
$80,000 of contribution forfeitures which can be utilized to reduce future
Company cash contribution requirements.
NOTE 10 - COMMITMENTS
The terms of some drilling contracts require that the Company provide
standby letters of guarantee. To support these requirements and the Indian
tax guarantee, the Company has a $3 million unsecured short-term line of
credit with a bank. At September 30, 1995, the Company had approximately
$1 million in commitments relating to standby letters of guarantee.
NOTE 11 - FAIR VALUE OF FINANCIAL INSTRUMENTS
Due to the short maturity of these instruments, the carrying values of cash
and cash equivalents, accounts receivable, short-term note payable,
accounts payable and accrued liabilities included in the accompanying
Consolidated Balance Sheets approximated fair value. Since the $36.3
million notes payable to the bank group has a market adjustable interest
rate, the carrying value of this instrument approximates fair value.
Although the $3 million term note has a fixed 6 percent interest rate at
September 30, 1995, it also approximates fair value. The Company's only
financial instruments at September 30, 1995 with a fair value different
from carrying value are marketable securities; the difference of which is
shown in Note 3.
Page 130
NOTE 12 - CONCENTRATION OF MARKET AND CREDIT RISK
All of the Company's customers are in the oil and gas offshore exploration
and production industry. This industry concentration has the potential to
impact the Company's overall exposure to market and credit risks, either
positively or negatively, in that the Company's customers could be affected
by similar changes in economic, industry or other conditions. However, the
Company believes that the credit risk posed by this industry concentration
is offset by the creditworthiness of the Company's customer base. The
Company's portfolio of accounts receivable is comprised of major
international corporate entities and government organizations with stable
payment experience. Historically, the Company's uncollectible accounts
receivable have been immaterial, and typically, the Company does not
require collateral for its receivables.
Contract drilling revenues for 1995 include $24,811,000, $16,000,000 and
$7,482,000 in revenues received from three individual companies. Drilling
revenues for 1994 include $24,777,000 and $6,683,000 in revenues received
from two individual companies. Drilling revenues for 1993 include
$19,972,000 and $5,329,000 in revenues received from two individual
companies.
NOTE 13 - OPERATIONS BY GEOGRAPHIC AREAS
The Company is engaged in offshore contract drilling. The contract
drilling operations consist of contracting Company owned or managed
offshore drilling equipment primarily to major oil and gas exploration
companies. Operating income (loss) is contract revenues less operating
expenses. In computing operating income (loss) for each geographic area,
none of the following items were considered: investment income or gains on
sale of securities, general corporate expenses, interest expense, minority
interest in loss of partnerships and domestic and foreign income taxes.
Identifiable assets are those assets that are used by the Company in
operations in each geographic area. General corporate assets are
principally investments in marketable securities.
<PAGE>
Page 131
A summary of revenues, operating income (loss) and identifiable assets by
geographic areas is as follows:
<TABLE>
<CAPTION>
(In thousands)
1995 1994 1993
<S> <C> <C> <C>
CONTRACT REVENUES:
United States $ 4,981 $ 5,483 $ 3,842
Australia 35,314 31,192 23,497
Southeast Asia 31,936 28,935 22,004
India/Middle East --- 365 2,432
$ 72,231 $ 65,975 $ 51,775
OPERATING INCOME (LOSS)
United States $ (603) $ 1,160 $ 602
Australia 6,562 6,013 1,671
Southeast Asia 4,318 902 (1,968)
India/Middle East (6) (46) 731
General corporate expense (4,485) (4,324) (4,103)
$ 5,786 $ 3,705 $ (3,067)
IDENTIFIABLE ASSETS:
United States $ 22,599 $ 19,132 $ 10,890
Australia 42,143 39,182 43,386
Southeast Asia 62,166 63,024 62,470
India/Middle East 7 9 1,361
General corporate 25,938 32,113 31,746
$152,853 $ 153,460 $ 149,853
</TABLE>
NOTE 14 - QUARTERLY FINANCIAL DATA (UNAUDITED)
Summarized quarterly results for fiscal years 1995 and 1994 are as follows:
QUARTERS ENDED
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31, JUNE 30, SEPTEMBER 30,
(In thousands, except per share amounts)
<S> <C> <C> <C> <C>
1995
Revenues $ 18,306 $ 18,314 $ 18,548 $ 17,063
Income before income taxwa 1,933 2,132 3,912 955
Net income 1,743 1,287 3,191(a) 839
Earnings per common share .26 .20 .48 .13
1994
Revenues $ 15,858 $ 16,519 $ 16,761 $ 16,837
Income before income taxes 1,883 1,553 1,661 1,838
Net income 1,600 1,305 1,626 1,678
Earnings per common share .24 .20 .25 .25
(a) The Company sold 33,000 shares of Mobil Corporation common stock
which resulted in a $2.4 million positive effect on 1995 third quarter
results.
DIRECTORS
ROBERT W. BURGESS (3)
Senior Vice President
CIGNA Investment Division
CIGNA Companies
Bloomfield, Connecticut
GEORGE S. DOTSON (1, 2, 3)
Vice President
Helmerich & Payne, Inc.
President
Helmerich & Payne, International
Drilling Co.
Tulsa, Oklahoma
W. H. HELMERICH, III
Chairman
Helmerich & Payne, Inc.
Tulsa, Oklahoma
HANS HELMERICH (1, 3)
President, Chief Executive Officer
Helmerich & Payne, Inc.
Tulsa, Oklahoma
JOHN R. IRWIN (1)
President, Chief Executive Officer
Atwood Oceanics, Inc.
Houston, Texas
WILLIAM J. MORRISSEY (2)
Bank Executive, Retired
Elkhorn, Wisconsin
(1) Executive Committee
(2) Audit Committee
(3) Compensation Committee
ANNUAL MEETING
The annual meeting of stockholders will be held on February 8, 1996
at the Company's principal office: 15835 Park Ten Place Drive,
Houston, Texas. A formal notice of the meeting together with a
proxy statement and form of proxy will be mailed to stockholders
about January 12, 1996.
<PAGE>
Page 133
OFFICERS
JOHN R. IRWIN
President, Chief Executive Officer
JAMES M. HOLLAND
Senior Vice President and Secretary
GLEN P. KELLEY
Vice President - Contracts and Administration
LARRY P. TILL
Vice President - Operations
TRANSFER AGENT AND REGISTRAR
Liberty Bank & Trust of Oklahoma City, N.A.
P. O. Box 25848
100 N. Broadway, 7th Floor (73102)
Oklahoma City, OK 73125
FORM 10-K
A copy of Form 10-K as filed with the Securities and Exchange Commission,
is available free on request by writing to:
Secretary, Atwood Oceanics, Inc.
P. O. Box 218350
Houston, Texas 77218
STOCK PRICE INFORMATION -
Atwood Oceanics, Inc. stock is traded over-the-counter with the NASDAQ/NMS
Symbol "ATWD". No cash dividends on common stock were paid in fiscal year
1994 or 1995, and none are anticipated in the foreseeable future. As of
September 30, 1995, there were over 400 beneficial owners of the common
stock of Atwood Oceanics, Inc. As of November 21, 1995, the closing sale
price of the common stock of Atwood Oceanics, Inc., as reported by NASDAQ,
was $16 7/8 per share. The following table sets forth the range of high
and low closing sale prices per share of common stock as reported by NASDAQ
for the periods indicated.
1994 1995
QUARTERS ENDED LOW HIGH LOW HIGH
December 31 10 3/4 12 12 5/8 14 1/4
March 31 11 13 12 1/2 14 3/8
June 30 12 1/2 14 13 5/8 16 1/2
September 12 1/2 14 7/8 15 1/4 22 3/8
Page 135
APPENDIX
The following graphic and image information in the form of "Bar Charts" are
located in the Annual Report immediately following "Highlights".
BAR CHART - CONTRACT REVENUES ($ MILLIONS)
1991 1992 1993 1994 1995
$58.3 $47.9 $51.8 $66.0 $72.2
BAR CHART - EARNINGS, BEFORE DEPRECIATION, INTEREST AND TAXES ($
MILLIONS)
1991 1992 1993 1994 1995
$4.3 $4.3 $9.3 $15.3 $20.8
BAR CHART - OPERATING CASH FLOW ($ MILLIONS)
1991 1992 1993 1994 1995
$1.2 $2.9 $8.1 $16.8 $14.9
BAR CHART - NET INCOME (LOSS) ($ MILLIONS)
1991 1992 1993 1994 1995
$(7.0) $(20.9) $(1.8) $6.2 $7.1
BAR CHART - CAPITAL EXPENDITURES ($ MILLIONS)
1991 1992 1993 1994 1995
$5.2 $15.5 $5.3 $6.4 $25.7
BAR CHART - CASH AND AVAILABLE FOR SALE SECURITIES ($ MILLIONS)
1991 1992 1993 1994 1995
$45.5 $33.9 $35.0 $41.0 $37.9
<PAGE>
</TABLE>
PAGE 125
EXHIBIT 21.1
SUBSIDIARY COMPANIES AND STATE OR
JURISDICTION OF INCORPORATION
Atwood Drilling Inc. Delaware 100%
All Oceans Drilling B.V. Netherlands 100%
Atwood Falcon Co. Delaware 100%
Atwood Hunter Co. Delaware 100%
Atwood Oceanics Australia Pty. Ltd. Australia 100%
Atwood Oceanics Drilling Company Texas 100%
Atwood Oceanics Drilling Pty. Ltd. Australia 100%
Atwood Oceanics International, S.A. Panama 100%
Atwood Oceanics (M) Sdn. Bhd. Malaysia 100%
Atwood Oceanics (NZ) Limited New Zealand 100%
Atwood Oceanics Pacific Limited Cayman Island 100%
B.W.I.
twood Oceanics Platforms Pty. Ltd. Australia 100%
Atwood Oceanics Services Singapore 100%
Atwood Oceanics Service Pty. Ltd. Australia 100%
Atwood Oceanics West Tuna Pty. Ltd. Australia 50%
Aurora Offshore Services GmbH Germany 100%
Clearways Drilling (M) Sdn. Bhd. Malaysia 30%
Clearways Offshore Development Drilling Sdn. Bhd. Malaysia 30%
Deep Seas Drilling Pty. Ltd. Australia 100%
Eagle Oceanics, Inc. Texas 100%
Oceandrill (M) Sdn. Bhd. Malaysia 90%
PT Pentawood Offshore Drilling Indonesia 80%
Swiftdrill, Inc. Texas 100%
Swiftdrill Nigeria Limited Nigeria 60%
PAGE 126
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our report dated November 21, 1995, incorporated by reference in this Form 10-
K, into the Company's previously filed Registration Statement No. 33-39993 on
Form S-3 and previously filed Registration Statement Nos. 33-36921 and 33-
522065 on Form S-8.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Houston, Texas
December 21, 1995
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS DESCRIBED IN ITEM 14 OF THE COMPANY'S ANNUAL REPORT ON FORM
10-K FOR THE YEAR ENDED SEPTEMBER 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000008411
<NAME> ATWOOD OCEANICS, INC.
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> SEP-30-1995 SEP-3-1994
<PERIOD-START> OCT-01-1994 OCT-01-1993
<PERIOD-END> SEP-30-1995 SEP-30-1994
<CASH> 11,984 16,119
<SECURITIES> 25,938 24,928
<RECEIVABLES> 13,425 20,300
<ALLOWANCES> 0 0
<INVENTORY> 4,904 4,194
<CURRENT-ASSETS> 34,266 38,472
<PP&E> 187,740 192,004
<DEPRECIATION> 96,313 109,159
<TOTAL-ASSETS> 152,853 153,460
<CURRENT-LIABILITIES> 20,505 13,301
<BONDS> 35,569 50,294
<COMMON> 6,629 6,582
0 0
0 0
<OTHER-SE> 56,009 54,273
<TOTAL-LIABILITY-AND-EQUITY> 152,853 153,460
<SALES> 72,231 66,176
<TOTAL-REVENUES> 77,405 68,794
<CGS> 55,311 48,652
<TOTAL-COSTS> 55,311 48,652
<OTHER-EXPENSES> 11,134 13,618
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 2,936 2,892
<INCOME-PRETAX> 8,932 6,935
<INCOME-TAX> 1,872 726
<INCOME-CONTINUING> 7,060 6,209
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 7,060 6,209
<EPS-PRIMARY> 1.07 .94
<EPS-DILUTED> 1.07 .94
</TABLE>
