<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM_____TO_____
ROWAN COMPANIES, INC.
---------------------
(Exact name of registrant as specified in its charter)
Delaware 1-5491 75-0759420
- -------------------------------- --------------- -------------------
(State or other jurisdiction of Commission File (I.R.S. Employer
incorporation or organization) Number Identification No.)
5450 Transco Tower, 2800 Post Oak Boulevard, Houston, Texas 77056-6196
- ----------------------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(713) 621-7800
-----------------------------------------------------------
Registrant's telephone number, including area code
Inapplicable
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
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
--- ----
The number of shares of common stock, $.125 par value, outstanding at October
31, 1998 was 83,832,282.
<PAGE> 2
ROWAN COMPANIES, INC.
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C> <C>
PART I. Financial Information:
Consolidated Balance Sheet --
September 30, 1998 and December 31, 1997....................2
Consolidated Statement of Income --
Three and Nine Months Ended September 30, 1998
and 1997....................................................4
Consolidated Statement of Cash Flows --
Nine Months Ended September 30, 1998
and 1997....................................................5
Notes to Consolidated Financial Statements..................6
Management's Discussion and Analysis
of Financial Condition and Results
of Operations...............................................8
PART II. Other Information:
Exhibits and Reports on Form 8-K...........................13
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
ROWAN COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
------------ ------------
ASSETS (Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents ........................... $ 112,775 $ 108,332
Receivables - trade and other ....................... 114,474 133,627
Inventories - at cost:
Raw materials and supplies ........................ 89,588 69,621
Work-in-progress .................................. 38,403 25,974
Finished goods .................................... 824 6,321
Prepaid expenses .................................... 9,050 7,694
Deferred tax assets ................................. 13,898 60,809
------------ ------------
Total current assets ..................... 379,012 412,378
------------ ------------
INVESTMENT IN AND ADVANCES TO 49% OWNED COMPANY ....... 25,737
------------ ------------
PROPERTY, PLANT AND EQUIPMENT - at cost:
Drilling equipment .................................. 989,385 965,292
Aircraft and related equipment ...................... 209,378 202,044
Manufacturing plant and equipment ................... 74,501 60,902
Construction in progress ............................ 317,134 195,996
Other property and equipment ........................ 109,170 94,476
------------ ------------
Total .................................... 1,699,568 1,518,710
Less accumulated depreciation and amortization ...... 875,042 841,550
------------ ------------
Property, plant and equipment - net .... 824,526 677,160
------------ ------------
OTHER ASSETS AND DEFERRED CHARGES ..................... 5,931 6,860
------------ ------------
TOTAL .................................... $ 1,209,469 $ 1,122,135
============ ============
</TABLE>
See Notes to Consolidated Financial Statements.
-2-
<PAGE> 4
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
------------ ------------
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES:
Current maturities of long-term debt ...................................... $ 12,756
Accounts payable - trade .................................................. 22,794 $ 22,839
Deferred revenues ......................................................... 12,290 14,927
Other current liabilities ................................................. 49,097 43,760
------------ ------------
Total current liabilities ......................................... 96,937 81,526
------------ ------------
LONG-TERM DEBT - less current maturities ...................................... 250,335 256,150
------------ ------------
OTHER LIABILITIES ............................................................. 46,696 50,457
------------ ------------
DEFERRED CREDITS:
Income taxes .............................................................. 76,796 74,956
Gain on sale/leaseback transactions ....................................... 3,556 5,948
------------ ------------
Total deferred credits ............................................ 80,352 80,904
------------ ------------
STOCKHOLDERS' EQUITY:
Preferred stock, $1.00 par value:
Authorized 5,000,000 shares issuable in series:
Series A Preferred Stock, authorized 2,300 shares, none outstanding
Series III Preferred Stock, authorized 10,300 shares, none outstanding
Series A Junior Preferred Stock, authorized
1,500,000 shares, none issued
Common stock, $.125 par value:
Authorized 150,000,000 shares; issued 88,731,851
shares at September 30, 1998 and 88,162,101 shares
at December 31, 1997 .................................................... 11,091 11,020
Additional paid-in capital .................................................... 420,011 411,812
Retained earnings ............................................................. 352,394 232,751
Less cost of 4,462,319 and 1,457,919 treasury shares, respectively ............ 48,347 2,485
------------ ------------
Total stockholders' equity ........................................ 735,149 653,098
------------ ------------
TOTAL ............................................................. $ 1,209,469 $ 1,122,135
============ ============
</TABLE>
See Notes to Consolidated Financial Statements.
-3-
<PAGE> 5
ROWAN COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
For The Three Months For The Nine Months
Ended September 30, Ended September 30,
1998 1997 1998 1997
------------ ------------ ------------ ------------
(Unaudited)
<S> <C> <C> <C> <C>
REVENUES:
Drilling services ...................................... $ 103,543 $ 117,114 $ 359,192 $ 309,659
Manufacturing sales and services ....................... 36,727 40,738 119,431 111,976
Aviation services ...................................... 43,200 37,604 93,001 83,371
------------ ------------ ------------ ------------
Total .......................................... 183,470 195,456 571,624 505,006
------------ ------------ ------------ ------------
COSTS AND EXPENSES:
Drilling services ...................................... 56,822 51,471 162,240 165,315
Manufacturing sales and services ....................... 32,484 34,964 102,131 97,478
Aviation services ...................................... 29,728 29,438 78,520 73,235
Depreciation and amortization .......................... 12,571 11,808 36,847 34,598
General and administrative ............................. 4,376 4,061 13,645 12,644
------------ ------------ ------------ ------------
Total .......................................... 135,981 131,742 393,383 383,270
------------ ------------ ------------ ------------
INCOME FROM OPERATIONS ..................................... 47,489 63,714 178,241 121,736
------------ ------------ ------------ ------------
OTHER INCOME (EXPENSE):
Interest expense ....................................... (4,362) (6,601) (12,753) (20,139)
Less interest capitalized .............................. 4,297 2,663 11,682 6,770
Gain on disposals of property, plant and equipment ..... 2,394 127 3,066 1,075
Interest income ........................................ 1,729 1,213 5,179 3,449
Other - net ............................................ 70 21 276 168
------------ ------------ ------------ ------------
Other income (expense) - net ................... 4,128 (2,577) 7,450 (8,677)
------------ ------------ ------------ ------------
INCOME BEFORE INCOME TAXES ................................. 51,617 61,137 185,691 113,059
Provision for income taxes ............................. 19,122 6,850 66,048 10,561
------------ ------------ ------------ ------------
INCOME BEFORE EXTRAORDINARY CHARGE ......................... 32,495 54,287 119,643 102,498
Extraordinary charge from early redemption of debt ..... 3,478
------------ ------------ ------------ ------------
NET INCOME (Note 4) ........................................ $ 32,495 $ 54,287 $ 119,643 $ 99,020
============ ============ ============ ============
PER SHARE OF COMMON STOCK (Note 5):
Basic:
Income before extraordinary charge ................... $ .38 $ .63 $ 1.39 $ 1.19
Extraordinary charge from early redemption of debt ... .04
------------ ------------ ------------ ------------
Net income .......................................... $ .38 $ .63 $ 1.39 $ 1.15
============ ============ ============ ============
Diluted:
Income before extraordinary charge ................... $ .38 $ .61 $ 1.36 $ 1.15
Extraordinary charge from early redemption of debt ... .04
------------ ------------ ------------ ------------
Net income .......................................... $ .38 $ .61 $ 1.36 $ 1.11
============ ============ ============ ============
</TABLE>
See Notes to Consolidated Financial Statements.
-4-
<PAGE> 6
ROWAN COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
For The Nine Months
Ended September 30,
--------------------------
1998 1997
---------- ----------
(Unaudited)
<S> <C> <C>
CASH PROVIDED BY (USED IN):
Operations:
Net income ................................................................. $ 119,643 $ 99,020
Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization ........................................... 36,847 34,598
Gain on disposals of property, plant and equipment ...................... (3,066) (1,075)
Compensation expense .................................................... 3,753 3,496
Change in sale/leaseback payable ........................................ (4,562) (8,019)
Amortization of sale/leaseback gain ..................................... (2,392) (2,392)
Provision for pension and postretirement benefits ....................... 4,599 4,698
Deferred income taxes ................................................... 48,751 8,083
Extraordinary charge from early redemption of debt ...................... 3,478
Other - net ............................................................. 107 1,893
Changes in current assets and liabilities:
Receivables - trade and other............................................ 19,153 (21,757)
Inventories ............................................................. (26,298) (21,584)
Other current assets .................................................... (1,356) 7,756
Current liabilities ..................................................... 2,507 18,861
Net changes in other noncurrent assets and liabilities ..................... (117) (340)
---------- ----------
Net cash provided by operations ............................................... 197,569 126,716
---------- ----------
Investing activities:
Property, plant and equipment additions .................................... (180,136) (116,909)
Proceeds from disposals of property, plant and equipment ................... 4,747 2,958
Proceeds from disposition of investment in 49% owned company ............... 19,550
Repayments from affiliates ................................................. 229
---------- ----------
Net cash used in investing activities ......................................... (155,839) (113,722)
---------- ----------
Financing activities:
Proceeds from borrowings .................................................. 43,097 59,209
Repayments of borrowings ................................................... (36,156) (50,247)
Payments to acquire treasury stock ......................................... (45,862)
Premium on redemption of debt .............................................. (3,000)
Other - net ................................................................ 1,634 1,245
---------- ----------
Net cash provided by (used in) financing activities ........................... (37,287) 7,207
---------- ----------
INCREASE IN CASH AND CASH EQUIVALENTS ............................................ 4,443 20,201
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD ................................... 108,332 97,225
---------- ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD ......................................... $ 112,775 $ 117,426
========== ==========
</TABLE>
See Notes to Consolidated Financial Statements.
-5-
<PAGE> 7
ROWAN COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The consolidated financial statements of the Company included herein
have been prepared without audit pursuant to generally accepted
accounting principles and the rules and regulations of the Securities
and Exchange Commission. Certain information and notes have been
condensed or omitted pursuant to such rules and regulations and the
Company believes that the disclosures included herein are adequate. It
is suggested that these condensed financial statements be read in
conjunction with the financial statements and related notes included in
the Company's 1997 Annual Report to Stockholders incorporated by
reference in the Form 10-K for the year ended December 31, 1997.
2. In the opinion of the Company, the accompanying unaudited consolidated
financial statements contain all adjustments and reclassifications,
which are of a normal recurring nature, necessary to present fairly its
financial position as of September 30, 1998 and December 31, 1997, and
the results of its operations for the three and nine month periods ended
September 30, 1998 and 1997 and its cash flows for the nine months ended
September 30, 1998 and 1997.
3. The results of operations for the three and nine month periods ended
September 30, 1998 are not necessarily indicative of the results to be
expected for the full year.
4. The Company's adoption, effective January 1, 1998, of Statements of
Financial Accounting Standards No. 130, "Reporting Comprehensive
Income", and No. 132, "Employers' Disclosures about Pension and Other
Postretirement Benefits", did not materially affect its financial
statement disclosure. For the periods presented herein, the Company has
no items of "other comprehensive income" as defined in Statement 130.
-6-
<PAGE> 8
5. Computation of basic and diluted earnings per share is as follows (in
thousands except per share amounts):
<TABLE>
<CAPTION>
For The For The
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------- -------------------------
1998 1997 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Weighted average shares of common
stock outstanding ....................................... 85,073 86,500 86,305 86,022
Stock options and related (treasury stock method) .......... 203 1,835 1,061 1,711
Shares issuable from assumed conversion
of floating rate subordinated debentures ................ 664 1,123 899 1,283
---------- ---------- ---------- ----------
Weighted average shares for diluted
earnings per share calculation .......................... 85,940 89,458 88,265 89,016
========== ========== ========== ==========
Income before extraordinary charge ......................... $ 32,495 $ 54,287 $ 119,643 $ 102,498
Extraordinary charge from early redemption of debt ......... 3,478
---------- ---------- ---------- ----------
Net income for basic calculation ........................... 32,495 54,287 119,643 99,020
Subordinated debenture interest, net of
income tax effect ....................................... 14 172
---------- ---------- ---------- ----------
Net income for diluted calculation ......................... $ 32,495 $ 54,301 $ 119,643 $ 99,192
========== ========== ========== ==========
Basic earnings per share:
Income before extraordinary charge ...................... $ .38 $ .63 $ 1.39 $ 1.19
Extraordinary charge .................................... .04
---------- ---------- ---------- ----------
Net income .............................................. $ .38 $ .63 $ 1.39 $ 1.15
========== ========== ========== ==========
Diluted earnings per share:
Income before extraordinary charge ...................... $ .38 $ .61 $ 1.36 $ 1.15
Extraordinary charge .................................... .04
---------- ---------- ---------- ----------
Net income .............................................. $ .38 $ .61 $ 1.36 $ 1.11
========== ========== ========== ==========
</TABLE>
-7-
<PAGE> 9
ROWAN COMPANIES, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
RESULTS OF OPERATIONS
Nine Months Ended September 30, 1998 Compared to
Nine Months Ended September 30, 1997
The Company achieved net income of $119.6 million in the first nine months of
1998 compared to $99.0 million in the same period of 1997 as increased offshore
drilling day rates and improved manufacturing and aviation operations more than
offset higher provisions for income taxes. The prior period results were after
charges of $20 million from concluding the Company's turnkey business and $3.5
million from redeeming early certain 11 7/8% Senior Notes and incurred lower
income tax provisions due to available tax loss and credit carryforwards.
A comparison of the revenues and operating profit from drilling, manufacturing,
aviation and consolidated operations for the first nine months of 1998 and 1997,
respectively, is reflected below (dollars in thousands):
<TABLE>
<CAPTION>
Drilling Manufacturing Aviation Consolidated
---------------------- ---------------------- ---------------------- ----------------------
1998 1997 1998 1997 1998 1997 1998 1997
--------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues $ 359,192 $ 309,659 $ 119,431 $ 111,976 $ 93,001 $ 83,371 $ 571,624 $ 505,006
Percent of Consolidated
Revenues 63% 61% 21% 22% 16% 17% 100% 100%
Operating Profit(1) $ 173,493 $ 121,431 $ 13,376 $ 11,505 $ 5,017 $ 1,444 $ 191,886 $ 134,380
</TABLE>
- -------------------------------------------------------------------------------
(1) Income from operations before deducting general and administrative expenses.
As reflected above, the Company's consolidated operating results increased by
43% to $192 million, or 34% of revenues, when comparing the first nine months of
1998 and 1997. Daywork drilling revenues increased by $49.5 million or 16% as
the Company's offshore fleet achieved 92% utilization during the first nine
months of 1998, compared to 99% in the same period of 1997, and a 24% increase
in average day rates between periods. Related expenses increased by $17.1
million or 12% between periods primarily as a result of higher wages and rig
mobilization costs.
The operating results for the first nine months of 1997 included a loss from
concluding the Company's turnkey drilling operations of approximately $20
million. The Company currently has no turnkey wells in progress nor any plans
for additional turnkey work at this time.
The 7% and 16% improvements shown above in the Company's manufacturing revenues
and profitability between periods primarily reflects the increased contribution
of the marine group. During the first nine months of 1998, the Company provided
design and components (a LeTourneau "kit") toward the construction of two new
Super 116 Class rigs. One kit was completed during the period and the other is
expected to be completed prior to year end. The division's external backlog was
$30.2 million at September 30, 1998. Manufacturing operations exclude
approximately $88 million of products and services provided to
-8-
<PAGE> 10
the Company's drilling division during the first nine months of 1998, most of
which was attributable to construction progress on Rowan Gorillas V and VI,
compared to $49 million in the same period of 1997.
The 12% and 247% increases shown above in the Company's aviation revenues and
profitability between periods primarily reflects a more-than-doubling of forest
fire control services, the continued growth of Alaskan tourism and increased
flying for energy companies in the Gulf of Mexico and in connection with the
Company's commuter airline in Alaska. The Company's disposition in January 1998
of its 49% interest in the Dutch helicopter joint venture KLM ERA did not have a
material impact on its results of operations for the first nine months of 1998.
Three Months Ended September 30, 1998 Compared to
Three Months Ended September 30, 1997
The Company generated net income of $32.5 million in the third quarter of 1998
compared to $54.3 million in the same period of 1997 as reduced offshore rig
utilization, primarily in the Gulf of Mexico, and higher provisions for income
taxes more than offset improved aviation operations. The prior period results
incurred lower income tax provisions due to available tax loss and credit
carryforwards.
A comparison of the revenues and operating profit from drilling, manufacturing,
aviation and consolidated operations for the third quarters of 1998 and 1997,
respectively, is reflected below (dollars in thousands):
<TABLE>
<CAPTION>
Drilling Manufacturing Aviation Consolidated
---------------------- ---------------------- ---------------------- ----------------------
1998 1997 1998 1997 1998 1997 1998 1997
--------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues $ 103,543 $ 117,114 $ 36,727 $ 40,738 $ 43,200 $ 37,604 $ 183,470 $ 195,456
Percent of Consolidated
Revenues 56% 60% 20% 21% 24% 19% 100% 100%
Operating Profit $ 38,522 $ 57,917 $ 2,864 $ 4,688 $ 10,479 $ 5,170 $ 51,865 $ 67,775
</TABLE>
As reflected above, the Company's consolidated operating results declined by
$15.9 million or 23% when comparing the third quarters of 1998 and 1997.
Drilling revenues decreased by $13.6 million or 12% as utilization of the
Company's offshore fleet fell to 84% during the third quarter of 1998, compared
to 99% in the third quarter of 1997, though average day rates increased by 6%
between periods. Related expenses increased by $5.4 million or about 10% between
periods primarily as a result of higher wages for operating personnel.
The decline in the Company's manufacturing revenues and profitability between
periods primarily reflects reduced mining equipment sales as a result of weak
commodity prices. The division's external backlog was $30.2 million at September
30, 1998. Manufacturing operations exclude approximately $37 million of products
and services provided to the Company's drilling division during the third
quarter of 1998, most of which was attributable to construction progress on
Rowan Gorillas V and VI, compared to $17 million in the same period of 1997.
The 15% and 103% increases shown above in the Company's aviation revenues and
profitability between periods primarily reflects increased flying in connection
with forest fire control services, Alaskan tourism, the Company's commuter
airline and for energy companies in the Gulf of Mexico.
-9-
<PAGE> 11
Perceptible trends in the offshore drilling markets in which the Company is
currently operating and the number of Company-operated rigs in each of those
markets are as follows:
<TABLE>
<CAPTION>
AREA RIGS PERCEPTIBLE INDUSTRY TRENDS
- --------------------------- ------------- ------------------------------------------------------------
<S> <C> <C>
Gulf of Mexico 14 Reduced exploration and development activity in the
near-term
North Sea 5 Generally reduced levels of drilling activity for jack-up
rigs
Eastern Canada 2 Generally stable demand
</TABLE>
Perceptible trends in the aviation markets in which the Company is currently
operating and the number of Company-operated aircraft based in each of those
markets are as follows:
<TABLE>
<CAPTION>
AREA AIRCRAFT PERCEPTIBLE INDUSTRY TRENDS
- ------------------------ ------------------- ----------------------------------------------------
<S> <C> <C>
Alaska 69 Normal seasonal decline
Gulf of Mexico 46 Generally stable flight support activity
</TABLE>
The drilling and aviation markets in which the Company competes frequently
experience significant changes in supply and demand. Offshore drilling
utilization and day rates are primarily a function of the demand for drilling
services, as measured by the level of exploration and development expenditures,
and the supply of capable drilling equipment. These expenditures, in turn, are
affected by many factors such as existing and newly discovered oil and natural
gas reserves, political and regulatory policies, seasonal weather patterns,
contractual requirements under leases or concessions, trends in finding and
extraction costs and, probably most influential, oil and natural gas prices. The
Company's aviation operations are also affected by such factors, as flying in
support of offshore energy operations remains a major source of business and
Alaska operations are hampered each winter. The volatile nature of such factors
prevents the Company from being able to accurately predict whether existing
market conditions or the perceptible market trends reflected in the preceding
tables will continue. In response to fluctuating market conditions, the Company
can, as it has done in the past, relocate its drilling rigs and aircraft from
one geographic area to another, but only when such moves are economically
justified.
In recent months, the prolonged weakness in oil prices has led to a reduction in
drilling, primarily impacting jack-ups in the Gulf of Mexico. As some energy
companies have suspended portions of their drilling programs and announced
anticipated reductions in their 1998 and 1999 drilling budgets, the Company has
experienced curtailed drilling assignments and, at least partly due to its
efforts to maintain day rates, lower utilization of its rig fleet. Currently,
only five of the Company's Gulf of Mexico rigs are working and generally at day
rates well below those obtained during the just-completed third quarter. At
current levels, the Company can continue to operate profitably, though at a
level well below that experienced during the first nine months of 1998. There
can be no assurance that the Company's operations will not be more adversely
affected should current market conditions persist or that such conditions will
not deteriorate further.
The Company's manufacturing operations are considerably less volatile than its
drilling and aviation operations and, given current order backlog and barring
unforeseen circumstances, should continue to contribute positive operating
results throughout the remainder of 1998.
-10-
<PAGE> 12
LIQUIDITY AND CAPITAL RESOURCES
A comparison of key balance sheet figures and ratios as of September 30, 1998
and December 31, 1997 is as follows (dollars in thousands):
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
------------- ------------
<S> <C> <C>
Cash and cash equivalents $ 112,775 $ 108,332
Current assets $ 379,012 $ 412,378
Current liabilities $ 96,937 $ 81,526
Current ratio 3.91 5.06
Current maturities of long-term debt $ 12,756 --
Long-term debt $ 250,335 $ 256,150
Stockholders' equity $ 735,149 $ 653,098
Long-term debt/total capitalization .25 .28
</TABLE>
Reflected in the comparison above are the effects in the first nine months of
1998 of net cash provided by operations of $197.6 million, capital expenditures
of $180.1 million, proceeds from borrowings of $43.1 million, repayments of
borrowings of $36.2 million, payments to acquire treasury stock of $45.9 million
and cash proceeds from the disposition of the Company's 49% interest in KLM ERA
Helicopters of $19.6 million.
Capital expenditures during the first nine months of 1998 were primarily related
to construction of Rowan Gorilla V and Rowan Gorilla VI , each being an enhanced
version of the Company's Gorilla Class jack-ups featuring a combination drilling
and production capability. Gorilla V is undergoing final outfitting at the
Company's Sabine Pass, Texas facility and should be completed and commence
operations in the North Sea during the fourth quarter. The Company has financed
$153.1 million of the cost of Gorilla V through two fixed rate bank notes
guaranteed by the Maritime Administration of the U. S. Department of
Transportation under its Title XI Program. The notes require semiannual
repayments beginning in January 1999, with final payments due in July 2010, and
bear interest as follows: $67 million at 6.94% and $86.1 million at 6.15%.
Construction of Gorilla VI is progressing at the Company's Vicksburg,
Mississippi shipyard and should be completed by mid-2000. The Company has
obtained Title XI bank financing for up to $171 million of the cost of Gorilla
VI on terms and conditions similar to those obtained for Gorilla V.
The Company has begun ordering long lead-time items for Rowan Gorilla VII and
expects construction to be completed about one year following delivery of
Gorilla VI. The Company intends to pursue outside financing for Gorilla VII if
necessary, but believes that internally generated working capital may be
sufficient to fund its construction. There can be no assurance that working
capital will be adequate throughout the period required to complete construction
or that outside financing will be available. The Company expects the total
construction cost of Gorillas V, VI and VII will be in the range of $550-600
million.
The Company estimates remaining 1998 capital expenditures will be between $50
million and $60 million, including approximately $35-45 million for Gorillas V,
VI and VII. The Company may also spend amounts to acquire additional aircraft as
market conditions justify and to upgrade existing offshore rigs and
manufacturing facilities.
In March 1998, the Company repaid the balance of $36.2 million of promissory
notes originally issued in February 1994 in connection with the acquisition of
its manufacturing operations.
-11-
<PAGE> 13
At September 30, 1998, the Company had available $45 million under a $155
million bank revolving credit facility maturing in October 2000. The $110
million outstanding under the credit line bore interest at 6.03% on September
30, 1998.
Based upon current operating levels and the previously discussed market trends,
management believes that 1998 operations, together with existing working capital
and available financial resources, will generate sufficient cash flow to sustain
planned capital expenditures and debt service requirements at least through the
remainder of 1998.
At September 30, 1998, approximately $153 million of the Company's retained
earnings was available for the payment of dividends under the most restrictive
provisions of the Company's debt agreements.
On October 22, 1998, the Company expanded its Share Repurchase Program to
include up to eight million shares of its outstanding Common Stock. Since the
Program's inception in June 1998, the Company has repurchased 3,451,400 shares.
The Company believes that its exposure to potential year 2000 ("Y2K")
computer-related problems is limited and the costs associated with readying its
information systems and computer-controlled equipment will not materially impact
its financial position or results of operations. Over the past several years,
the Company has devoted substantial efforts towards upgrading and enhancing its
drilling and aviation information systems as a matter of course. Such
modifications necessarily contemplated Y2K compliance, the cost of which has
been expensed as incurred but is not separately identifiable. These upgrades and
enhancements are substantially complete and the Company's drilling and aviation
information systems should be fully Y2K compliant by the end of this year.
Modifications to the Company's manufacturing information systems have been
undertaken only during the past two to three years. The Company expects the cost
of Y2K compliance for its manufacturing systems will be approximately $2.8
million, $1.3 million of which has been expensed to date, and that all necessary
modifications will be completed by mid-1999. The Company will continue to assess
and test its computer-controlled equipment for Y2K compatibility, but has
heretofore discovered no significant deficiencies. The Company's operations are
not highly dependent upon any single customer or vendor and the Company believes
that the risk of a material interruption in its business as a result of Y2K
software problems associated with a single customer or vendor is extremely
remote. The Company has not yet deemed necessary any Y2K contingency plans, but
will continue to monitor its own Y2K status as well as that of its customers and
vendors and, if warranted, develop any necessary contingency plans.
This report contains forward looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995, including, without limitation,
statements as to the expectations, beliefs and future expected financial
performance of the Company that are based on current expectations and are
subject to certain risks, trends and uncertainties that could cause actual
results to differ materially from those projected by the Company. Among the
factors that could cause actual results to differ materially are the following:
* oil and natural gas prices
* the level of offshore expenditures by energy companies
* the general economy, including inflation
* weather conditions in the Company's principal operating areas
* environmental and other laws and regulations
Other relevant factors have been disclosed in the Company's filings with the
U.S. Securities and Exchange Commission.
-12-
<PAGE> 14
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 10(a) - Commitment to Guarantee Obligations and First
Preferred Ship Mortgage both dated September 29, 1998 between
the Company and the Maritime Administration of the U. S.
Department of Transportation.
(b) Exhibit 10(b) - Credit Agreement and Trust Indenture both
dated September 29, 1998 between the Company and Citibank,
N.A.
(c) Exhibit 27 - Financial Data Schedule
(d) Reports on Form 8-K
No reports on Form 8-K were filed by the Registrant during the
third quarter of fiscal year 1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ROWAN COMPANIES, INC.
(Registrant)
Date: November 16, 1998 /s/ E. E. THIELE
-----------------------------------
E. E. Thiele
Senior Vice President- Finance,
Administration and Treasurer
(Chief Financial Officer)
Date: November 16, 1998 /s/ W. H. WELLS
-----------------------------------
W. H. Wells
Controller
(Chief Accounting Officer)
-13-
<PAGE> 15
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
------ -----------
Exhibit 10(a) - Commitment to Guarantee Obligations and First Preferred Ship
Mortgage both dated September 29, 1998 between the Company and
the Maritime Administration of the U. S. Department of
Transportation.
Exhibit 10(b) - Credit Agreement and Trust Indenture both dated September 29,
1998 between the Company and Citibank, N.A.
Exhibit 27 - Financial Data Schedule
<PAGE> 1
EXHIBIT 10(a)
Contract No. MA-13440
COMMITMENT TO GUARANTEE OBLIGATIONS
BY
THE UNITED STATES OF AMERICA
UNDER TITLE XI
OF THE MERCHANT MARINE ACT, 1936, AS AMENDED
ACCEPTED BY
ROWAN COMPANIES, INC.
Dated as of September 29, 1998
<PAGE> 2
COMMITMENT TO GUARANTEE OBLIGATIONS
by
THE UNITED STATES OF AMERICA
Accepted by
ROWAN COMPANIES, INC.
Shipowner
(Under Title XI, Merchant Marine Act, 1936,
as amended, and in effect on the
date of this Guarantee Commitment)
------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Document
Number Document
------ --------
<S> <C>
1 Commitment to Guarantee Obligations
2 Appendix I -- Form of Credit Agreement
3 Appendix II -- Form of Trust Indenture
4 Schedule A -- Schedule of Definition to Trust Indenture
5 Exhibit 1 -- General Provisions Incorporated
into the Trust Indenture by Reference
6 Exhibit 2 -- Form of Floating Rate Note
7 Exhibit 3 -- Form of Fixed Rate Note
8 Exhibit 4 -- Form of Authorization Agreement
9 Exhibit 5 -- Form of Secretary's Supplemental Indenture
10 Appendix III -- Security Agreement
11 Exhibit 1 -- General Provisions Incorporated
into the Security Agreement by Reference
12 Schedule X -- Schedule of Definitions
13 Exhibit 2 -- Form of Secretary's Note
14 Exhibit 3 -- Form of First Preferred Ship Mortgage
15 Exhibit 4 -- Amendment No. 1 to Title XI Reserve Fund and
Financial Agreement
16 Exhibit 5 -- Consent of Shipyard
17 Exhibit 6 -- Construction Contract
18 Exhibit 7 -- Depository Agreement
</TABLE>
<PAGE> 3
Contract No.
MA-13440
COMMITMENT TO GUARANTEE OBLIGATIONS
by
THE UNITED STATES OF AMERICA
accepted by
ROWAN COMPANIES, INC.
Shipowner
TABLE OF CONTENTS *
<TABLE>
<CAPTION>
Page
----
<S> <C>
Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Recitals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I Findings and Determinations of Secretary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE II Commitment to Guarantee Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE III The Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE IV Covenants of the Shipowner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE V Conditions to Execution and Delivery of the Authorization
Agreement, and the Security Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE VI Variation of Guarantee Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE VII Termination or Assignment of Guarantee Commitment . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE VIII Conformity To Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE IX Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
</TABLE>
- ---------------
* This Table of Contents is not a part of the Guarantee Commitment
and has no bearing upon the interpretation of any of its terms and provisions.
<PAGE> 4
Table A
Appendix I - Form of Credit Agreement
Appendix II - Form of Trust Indenture
Appendix III - Security Agreement
<PAGE> 5
COMMITMENT TO GUARANTEE OBLIGATIONS
by
THE UNITED STATES OF AMERICA
Accepted by
ROWAN COMPANIES, INC.
Shipowner
-------------
THIS COMMITMENT TO GUARANTEE OBLIGATIONS, dated as of September 29,
1998 (the "Guarantee Commitment"), is made and entered into by the UNITED
STATES OF AMERICA (the "United States"), represented by the SECRETARY OF
TRANSPORTATION, acting by and through the MARITIME ADMINISTRATOR (the
"Secretary"), and accepted on said date by ROWAN COMPANIES, INC., a Delaware
corporation (the "Shipowner").
RECITALS:
A. The Shipowner will be the sole owner of the mobile,
self-contained and elevating drilling platform to be named the GORILLA VI (the
"Vessel") built pursuant to certain construction contract (the "Construction
Contract") with LETOURNEAU, INC., a Texas corporation (the "Shipyard").
B. To aid in financing the construction of the Vessel, the
Shipowner will borrow an aggregate principal amount approximately equal to, but
in no event in excess of, 87 1/2% of the Actual Cost of the Vessel.
C. As one means of such financing, the Shipowner has entered into
a Credit Agreement (said Credit Agreement, as the same may be amended, modified
or supplemented from time to time as permitted thereunder, herein called the
"Credit Agreement"), by and between the Shipowner and CITIBANK, N.A., a
national banking association (the "Lender").
D. The Shipowner will on the Closing Date, execute and deliver a
Trust Indenture (the "Indenture"), between the Shipowner and CITIBANK, N.A., a
national banking association, as Indenture Trustee (the "Indenture Trustee"),
in connection with the Obligations to be issued in respect of the Vessel, in
the aggregate amount, with the maturity and bearing interest at the rate
specified in the Indenture.
E. Under the Authorization Agreement (the "Authorization Agreement"),
Contract MA-13441 to be entered into on the Closing Date between the Secretary
and the Indenture Trustee, the
<PAGE> 6
Indenture Trustee will be authorized to endorse and execute, by means of
facsimile signature of the Secretary and the facsimile seal of the Department
of Transportation, on each of the Obligations issued and to authenticate a
guarantee by the Secretary of the payment in full of all the unpaid interest
on, and the unpaid balance of the principal of, each Obligation, including
interest accruing between the date of default under such Obligation and the
date of payment by the Secretary (individually, a "Guarantee" and,
collectively, the "Guarantees").
F. The Shipowner, as security for the Guarantees, and as security
to the Secretary for the payment to the Secretary of the principal of, and the
interest due or to become due on, the Secretary's Note to be executed in
accordance with the terms thereof, will, on the Closing Date, enter into a
Security Agreement with the Secretary (the "Security Agreement"), Contract
MA-13442, pursuant to which the Shipowner will assign to the Secretary, among
other things, all of the Shipowner's interest in the Construction Contract, and
all other contracts which relate to the construction of the Vessel, as
specified therein, and all property, including the Vessel, in which the
Shipowner has or will have an interest pursuant to the Construction Contract.
G. The Shipowner will as further security to the Secretary,
execute and deliver on the Delivery Date, a First Preferred Ship Mortgage,
Contract MA-13443, created under and pursuant to Chapter 313, Title 46 United
States Code, to the Secretary, as Mortgagee, upon and attaching to the Vessel.
H. In connection with the execution and delivery of the Security
Agreement, the Shipyard will enter into a consent to the assignment of the
Construction Contract (the "Consent of Shipyard").
I. In order to implement certain aspects of the transactions
contemplated by the Security Agreement and the Indenture, the Secretary, the
Shipowner and CITIBANK, N.A., a national banking association, (the
"Depository") will enter into the Depository Agreement, Contract MA-13445 (the
"Depository Agreement").
J. The Shipowner will as further security to the Secretary, enter
into Amendment No. 1 to Title XI Reserve Fund and Financial Agreement,
Contract MA-13261, with the Secretary (the "Title XI Reserve Fund and Financial
Agreement").
-2-
<PAGE> 7
W I T N E S E T H:
That under the provisions of Title XI of the Merchant Marine Act,
1936, as amended and in effect on the date hereof (said provisions, as so
amended and in effect on the date hereof, being called "Title XI") and in
consideration of (i) the covenants of the Shipowner contained herein, (ii) the
payment by the Shipowner to the Secretary of the charges for this Guarantee
Commitment pursuant to Section 1104(f) of Title XI, and (iii) other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Secretary hereby commits itself as herein provided.
The following executed documents are annexed to each counterpart of
this Guarantee Commitment: the Security Agreement, the Title XI Reserve Fund
and Financial Agreement, and the Depository Agreement.
Annexed to each counterpart of this Guarantee Commitment are forms of
the Consent of Shipyard, the Credit Agreement, the Indenture, the Obligations,
the Authorization Agreement, the Mortgage, and the Secretary's Note. As used
herein, the "Closing Date" refers to the date for the execution and delivery of
the Floating Rate Note as provided in the Credit Agreement annexed hereto,
subject to the conditions contained in Article V hereof.
The Consent of Shipyard, the Credit Agreement, the Indenture, the
Obligations, the Authorization Agreement, and the Secretary's Note (except as
otherwise required by the Secretary), shall be executed and delivered
substantially in the respective forms annexed hereto, except that the blanks,
if any, therein shall be filled in as contemplated therein and herein and,
except further that the maturity dates and interest rates of the Obligations
must be further approved by the Secretary. The Mortgage shall be executed and
delivered substantially in the form annexed hereto on the Delivery Date.
ARTICLE I
Findings and Determinations of Secretary
Pursuant to Section 1104(d) of Title XI, the Secretary has found that
the property or project with respect to which the Obligations will be executed
will be, in his opinion, economically sound.
Pursuant to Sections 1101(f), 1101(g) and 1104(b)(2) of Title XI, the
Secretary has determined that the Actual Cost of the Vessel is $195,437,532.
The Actual Cost of the Vessel is comprised of the amounts determined by the
Secretary set forth in
-3-
<PAGE> 8
Table A annexed hereto, and the Secretary has determined that the amounts set
forth in said Table A are itemized as also set forth therein. The Secretary
may, at the request of the Shipowner, make a redetermination of the Actual Cost
of the Vessel to include, in addition to the items set forth or referred to in
said Table A, any other items or any increase in the amounts of the items set
forth or referred to therein.
The aggregate principal amount of the Obligations will not exceed
87-1/2% of the Actual Cost of the Vessel, and the Shipowner may execute the
Obligations in amounts less than 87-1/2% of the Actual Cost during the
Construction Period, provided that on or prior to two years after the Delivery
Date, the Shipowner shall have executed and delivered Obligations equal to
87-1/2% of Actual Cost, subject to the provisions of the preceding paragraph.
Pursuant to Section 1104(b)(3) and 1104(b)(5) of Title XI,
respectively, the Secretary has determined that the maturity date of the
Obligations is satisfactory and that the interest rate to be borne by the
Obligations (exclusive of the charges for the Guarantee Fee and service
charges, if any) to be issued on the Closing Date is reasonable, taking into
account the range of interest rates prevailing in the private market for
similar loans and risks assumed by the Secretary.
Pursuant to Section 1104(b)(4) of Title XI, the Secretary has
determined that payments of principal required by the Obligations are
satisfactory.
ARTICLE II
Commitment to Guarantee Obligations
The United States, represented by the Secretary, HEREBY COMMITS ITSELF
TO GUARANTEE (as provided in the Obligations) the payment of the unpaid
interest on, and the unpaid balance of the principal of, the Obligations,
including interest accruing between the date of default under the Obligations
and the payment in full of the Guarantees, and, to effect this Guarantee
Commitment, hereby commits itself to execute and deliver the Authorization
Agreement, the Security Agreement, the Title XI Reserve Fund and Financial
Agreement, and the Depository Agreement on the Closing Date and the Mortgage on
the Delivery Date.
-4-
<PAGE> 9
ARTICLE III
The Obligations
The Obligations shall be as provided in the Indenture and in the form
of the Floating Rate Note and the form of the Fixed Rate Note annexed as
Exhibits 2 and 3 to the Indenture, respectively. The Obligations shall be
subject to all of the terms and conditions set forth in the Indenture. The
Credit Agreement, the Indenture, the Floating Rate Note, the Security Agreement,
the Secretary's Note, the Title XI Reserve Fund and Financial Agreement, and the
Depository Agreement shall be executed and delivered by the Shipowner on the
Closing Date. The Mortgage shall be executed and delivered by the Shipowner on
the Delivery Date. The forms of the Credit Agreement, the Indenture, the
Obligations, the Authorization Agreement, the Security Agreement, the Mortgage,
the Secretary's Note, the Title XI Reserve Fund and Financial Agreement, and the
Depository Agreement are hereby approved by the Secretary.
ARTICLE IV
Covenants of the Shipowner
The Shipowner represents and, until termination of this Guarantee
Commitment, agrees:
(a) that the Vessel will be constructed substantially in
accordance with the plans and specifications, as applicable, pursuant to the
Construction Contract, as amended, by LETOURNEAU, INC., a shipyard within the
United States approved by the Secretary, and on the Delivery Date will be and
shall remain documented under the laws of the United States;
(b) to furnish to the Secretary, promptly upon written
request, such reasonable, material and pertinent reports, evidence, proof or
information, in addition to that furnished pursuant to the further provisions
of this Guarantee Commitment or in the application for this Guarantee
Commitment under Title XI or otherwise available to the Secretary, as the
Secretary may reasonably deem necessary or appropriate in connection with the
performance by the Secretary of his duties and functions under the Act;
(c) to maintain records of all amounts paid or obligated
to be paid by or for the account of the Shipowner for the construction of the
Vessel;
(d) to permit the Secretary, promptly upon request, to
make such reasonable, material and pertinent examination and audit of the
Shipowner's books, records and accounts and to take
-5-
<PAGE> 10
such information therefrom and make such transcripts or copies thereof, as the
Secretary may reasonably deem necessary or appropriate in connection with the
performance by the Secretary of his duties and functions under the Act;
(e) to execute and deliver on the Closing Date, the
Credit Agreement, the Floating Rate Note, the Indenture, the Security Agreement,
the Secretary's Note, the Title XI Reserve Fund and Financial Agreement, and the
Depository Agreement, and on the Delivery Date, to execute and deliver the
Mortgage.
ARTICLE V
Conditions to Execution and Delivery of the
Authorization Agreement and the Security Agreement
On the Closing Date, the Authorization Agreement shall be executed and
delivered by the United States and the Indenture Trustee; the Security
Agreement, and the Title XI Reserve Fund and Financial Agreement shall be
executed and delivered by the Shipowner and the Secretary; the Credit Agreement
shall be executed and delivered by the Shipowner and the Lender; the
Construction Contract shall be executed and delivered by the Shipowner and the
Shipyard; the Consent of the Shipyard shall be executed and delivered by the
Shipyard; and the Depository Agreement shall be executed and delivered by the
Shipowner, the Secretary and the Depository; and the Secretary's Note shall be
executed and delivered and the Floating Rate Note shall be issued and delivered
by the Shipowner. The obligation of the United States represented by the
Secretary to execute and deliver the Authorization Agreement, the Security
Agreement, the Depository Agreement and the Title XI Reserve Fund and Financial
Agreement on the Closing Date shall be subject to the following conditions
unless waived in writing by the Secretary:
(a) the Closing Date shall occur prior to December 31,
1998;
(b) the Shipowner shall have undertaken to execute and
deliver to the Secretary on the Delivery Date a certification
-6-
<PAGE> 11
that the Vessel shall be free of any claim, lien, charge, mortgage or other
encumbrance of any character (except the Mortgage, the Security Agreement, and
liens otherwise permitted by Section 2.04 of Exhibit 1 to the Security
Agreement); and the Credit Agreement shall have been executed and delivered on
or prior to the Closing Date and the Indenture and the Obligations shall have
been duly executed and delivered on the Closing Date;
(c) (i) there shall have been delivered to the Secretary
two executed counterparts of the Credit Agreement, and two executed
counterparts of the Indenture, (ii) two specimen copies of the Floating Rate
Note issued under the Indenture; and (iii) two originals of all other documents
delivered by the Shipowner or the Indenture Trustee on the Closing Date;
(d) the following representations and warranties shall
have been made to the Secretary in writing and shall be true as of the Closing
Date:
(i) the Shipowner is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware, has not failed to qualify to do business in any
jurisdiction in the United States in which its business or properties
require such qualification, and had and has full legal right,
corporate power and authority to own its own properties and assets and
conduct its business as it is presently conducted;
(ii) the Shipowner had and has legal power and
authority to enter into and carry out the terms of this Guarantee
Commitment, the Construction Contract, the Credit Agreement, the
Obligations, the Indenture, the Security Agreement, the Secretary's
Note, the Title XI Reserve Fund and Financial Agreement, and the
Depository Agreement;
(iii) each and all of the documents and instruments
referred to in clause (ii) hereof have been duly authorized, executed
and delivered by the Shipowner and constitute, in accordance with
their respective terms, legal, valid and binding instruments
enforceable against the Shipowner, except to the extent limited by
applicable bankruptcy, reorganization, insolvency, moratorium or the
-7-
<PAGE> 12
similar laws of general application relating to or affecting the
enforcement of creditors rights as from time to time in effect;
(iv) the consummation of the transactions
contemplated by and compliance by the Shipowner of all the terms and
provisions of the documents and instruments referred to in clause (ii)
hereof will not violate any provisions of the Certificate of
Incorporation or By-laws, as amended, of the Shipowner and will not
result in a breach of the terms and provisions of, or constitute a
default under any other agreement or undertaking by the Shipowner or
by which the Shipowner is bound or any order of any court or
administrative agency entered into in any proceedings to which the
Shipowner is or has been a party;
(v) there is no litigation, proceeding or
investigation pending or, to the best of the Shipowner's knowledge,
threatened, involving the Shipowner or any of its property which could
prevent or jeopardize the performance by the Shipowner of the
documents and instruments referred to in clause (ii) hereof.
(e) there shall have been delivered to the Secretary a
copy of each document and legal opinion delivered to the Lender on the Closing
Date;
(f) the Secretary shall have received the Guarantee Fee
payable under the Security Agreement;
(g) all charges levied or assessed by the Secretary under
Section 1104(f) of Title XI shall have been paid by the Shipowner;
(h) the Shipowner shall have performed without material
breach its agreements under Article IV hereof, and the further terms,
conditions and provisions of this Guarantee Commitment shall have been complied
with in all material respects;
(i) there shall not have occurred any event which
constitutes (or after any period of time or any notice, or both, would
constitute) a "Default" under the Security Agreement;
(j) there shall have been delivered to the Secretary by
the Shipowner an opinion (or opinions) of counsel acceptable to the Secretary,
and in form and substance satisfactory to the Secretary, to the effect that:
(i) by the terms of the Security Agreement, the
Shipowner has granted to the Secretary a fully perfected,
-8-
<PAGE> 13
first priority security interest in each of the assets which
constitutes the Security, as defined therein;
(ii) all filings and recordings required or
available to perfect the Secretary's first priority security interests
in the Security, as defined in the Security Agreement, granted by the
Shipowner in the Security Agreement, and to render such security
interests valid and enforceable under the laws of the States of
Delaware, Texas and Mississippi (including without limitation, all
filings of financing statements under the UCC) have been duly
effected, and no periodic refiling or periodic re-recording is
required to protect and preserve the perfection and first priority of
such security interests, except as provided by the laws of such
States;
(iii) all agreements have been executed and all
action has been taken which are required under the laws of the State of
New York in order to insure that the Secretary has a fully perfected
first priority security interest in the amounts held or to be held by
the Depository under the Depository Agreement, at whatever time,
whether such amounts are cash, instruments, negotiable documents,
chattel paper, proceeds thereof or otherwise (the "Funds");
(k) there shall have been executed and delivered to the
Secretary an opinion of counsel in form and substance satisfactory to the
Secretary;
(l) the Secretary shall have received a letter agreement
from the Shipowner to provide the Secretary within a reasonable time after the
Closing Date, with seven conformed copies of the Guarantee Commitment and each
of the Appendices and Exhibits thereto executed on or prior to such date;
(m) on the Closing Date, the qualifying requirements set
forth in Section 15 of the Title XI Reserve Fund and Financial Agreement shall
have been complied with and certified to as required therein;
(n) at least ten days prior to the Closing Date, there
shall have been delivered to the Secretary, pro forma balance sheets for the
Shipowner as of the last date of the month immediately preceding the Closing
Date, certified by an officer of the Shipowner showing, among other things, all
non-Title XI debt of the Shipowner;
-9-
<PAGE> 14
(o) on the Closing Date, the Shipowner shall certify that
all non-Title XI loans to the Shipowner relating to the vessel have been
discharged;
(p) at least ten days prior to the Closing Date the
Shipowner shall have provided the Secretary with satisfactory evidence of
insurance and at least ten days prior to the Delivery Date the Shipowner shall
have provided the Secretary with satisfactory evidence of marine insurance as
required by the Security Agreement; and
(r) on the Closing Date, the Shipowner shall have
undertaken to execute and deliver the Mortgage to the Secretary on the Delivery
Date.
ARTICLE VI
Variation of Guarantee Commitment
No variation from the terms and conditions hereof shall be permitted
except pursuant to an amendment executed by the Secretary and accepted by the
Shipowner.
ARTICLE VII
Termination or Assignment of Guarantee Commitment
This Guarantee Commitment may terminate and the parties hereto shall
have no further rights or obligations hereunder, upon written notice by the
Secretary, after the earlier of (a) the termination of the obligations of the
United States pursuant to the Shipowner's failure to satisfy one or more
conditions set forth in Article V hereof or (b) the execution and delivery of
the Security Agreement and the Authorization Agreement.
This Guarantee Commitment may not be assigned by the Shipowner without
the prior written approval of the Secretary and any attempt to do so shall be
null and void ab initio.
ARTICLE VIII
Conformity with Regulations
The Secretary hereby affirms that, with respect to the rights of the
Indenture Trustee and the Holders of the Obligations, this Guarantee Commitment
conforms to its existing regulations governing the issuance of commitments to
guarantee and guarantees under Title XI of the Act and that this Guarantee
Commitment contains a complete list of conditions required for
-10-
<PAGE> 15
the execution and delivery of guarantees including the Guarantees.
ARTICLE IX
Miscellaneous
(a) The table of contents and the titles of the Articles are
inserted as a matter of convenient reference and shall not be construed as a
part of this Guarantee Commitment. This Guarantee Commitment may be executed in
any number of counterparts, each of which shall be an original, but such
counterparts shall together constitute but one and the same instrument.
(b) For all purposes of this Guarantee Commitment, unless
otherwise expressly provided or unless the context shall otherwise require:
(i) The terms "hereof," "herein," "hereby,"
"hereto," "hereunder," "hereinafter" and "herewith" refer to this
Guarantee Commitment as the same may be supplemented or amended as
herein provided; and
(ii) Terms defined in Schedule X of the Security
Agreement annexed hereto or by reference therein to other instruments
shall have the respective meanings stated in Schedule X or such other
instruments.
-11-
<PAGE> 16
IN WITNESS WHEREOF, this Commitment to Guarantee Obligations has been
executed by the United States and accepted by the Shipowner, all as of the day
and year first above written.
UNITED STATES OF AMERICA,
SECRETARY OF TRANSPORTATION
BY: MARITIME ADMINISTRATION
[SEAL]
BY: Joel C. Richard
-----------------------------------
Secretary
Maritime Administration
Attest:
Sarah J. Washington
- -----------------------
Assistant Secretary
Maritime Administration
ACCEPTED BY:
ROWAN COMPANIES, INC.
as Shipowner
BY: E. E. Thiele
-----------------------------------
Senior Vice President
[SEAL]
Attest:
BY: Mark H. Hay
-------------------
Secretary
-12-
<PAGE> 17
Document 14
FIRST PREFERRED SHIP MORTGAGE
Covering the whole of the Vessel
listed in the GRANTING CLAUSE
Exhibit 3
to
Security Agreement
<PAGE> 18
Contract No. MA-13443
FIRST PREFERRED SHIP MORTGAGE
$171,007,000
ROWAN COMPANIES, INC.
Shipowner and Mortgagor
-----------------------
-----------------------
to
THE UNITED STATES OF AMERICA
Mortgagee
represented by the Secretary of Transportation
acting by and through the
Maritime Administrator
Maritime Administration, U.S. Department of Transportation
400 Seventh Street, S.W.
Washington, D.C. 20590
Dated as of ____________
-----------------------
Covering the whole of the Vessel
listed in the
GRANTING CLAUSE
<PAGE> 19
FIRST PREFERRED SHIP MORTGAGE
THIS FIRST PREFERRED SHIP MORTGAGE, effective as of _______________,
19__, is made by ROWAN COMPANIES, INC., a Delaware corporation (the "Shipowner"
and "Mortgagor") located at 5450 Transco Tower, 2800 Post Oak Blvd., Houston,
Texas 77056-6196, to the UNITED STATES OF AMERICA (the "United States"),
represented by the Secretary of Transportation, acting by and through the
Maritime Administrator (the "Secretary" and "Mortgagee") located at the U.S.
Department of Transportation, 400 Seventh Street, S.W., Washington, D.C. 20590.
WHEREAS, the Shipowner is the sole owner of the whole of the GORILLA VI
more fully described in the Granting Clause below;
WHEREAS, the Shipowner has, in consideration of the issuance of certain
Guarantees (the "Guarantees") by the Secretary, pursuant to Title XI of the
Merchant Marine Act, 1936, as amended ("Title XI"), of the payment of the unpaid
interest on, and the unpaid balance of the principal of, the United States
Government Guaranteed Ship Financing Obligations, GORILLA VI Series issued by
the Shipowner in the aggregate principal amount of $171,007,000 (the
"Obligations"), and pursuant to the terms and provisions of the Security
Agreement, dated September 29, 1998, between the Shipowner and the Secretary
(herein as it may be amended or supplemented, called the "Security Agreement"),
issued and delivered to the Secretary its promissory note dated September 29,
1998, payable to the Secretary in the principal amount of $171,007,000 (said
promissory note in the form attached to the Security Agreement as Exhibit 2
being herein called the "Secretary's Note"); and the Shipowner has agreed to
execute and deliver this First Preferred Ship Mortgage to the Secretary
(hereinafter referred to in this Mortgage as the "Mortgagee") for the purpose of
securing the Shipowner's obligations to the Secretary with respect to the
Guarantees and the payment of the principal of and interest on the Secretary's
Note in accordance with its terms, and the terms of the Security Agreement and
this Mortgage (the Mortgage, as the same may hereafter be amended or
supplemented in accordance with the terms hereof, herein called the "Mortgage");
NOW, THEREFORE, THIS MORTGAGE WITNESSETH:
That, in consideration of the premises and of the additional covenants
herein contained and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, and as security for the Guarantees
and in order to secure the payment of the above-mentioned interest on and
principal of the Secretary's Note and all other sums that may be
<PAGE> 20
secured by the Mortgage and the Security Agreement, and to secure the due
performance and observance of all the agreements and covenants in the
Secretary's Note and herein contained, the Shipowner has granted, conveyed,
mortgaged, pledged, confirmed, assigned, transferred and set over, and by these
presents does grant, convey, mortgage, pledge, confirm, assign, transfer and set
over unto the Mortgagee, the whole of the Vessel described as follows: GORILLA
VI, O.N._______, which Vessel is more fully described in its certificate of
documentation, together with all of its boilers, engines, machinery, masts,
spares, rigging, boats, anchors, cables, chains, tackle, tools, pumps and
pumping equipment, apparel, furniture, fittings and equipment, spare parts and
all other appurtenances to said Vessel appertaining or belonging, whether now
owned or hereafter acquired whether on board or not and all additions,
improvements, renewals and replacements hereafter made in or to said Vessel or
said appurtenances.
TO HAVE AND TO HOLD, all and singular, the above mortgaged and
described property unto the Mortgagee, to its own use, benefit and behoof
forever;
PROVIDED, HOWEVER, and these presents are upon the condition that, if
the above-mentioned principal of and interest on the Secretary's Note are paid
or satisfied in accordance with the terms thereof, the Security Agreement and
this Mortgage, and all other job obligations and liabilities that may be secured
by the Security Agreement and this Mortgage are paid in accordance with their
terms, then this Mortgage and the estate and rights hereunder shall cease,
determine and be void, otherwise to remain in full force and effect.
The Shipowner hereby agrees with the Mortgagee that the Vessel subject
to the lien of this mortgage is to be held subject to the further agreements
and conditions hereinafter set forth.
ARTICLE FIRST
Section 1. The execution and delivery of this Mortgage and the
execution and delivery of the Secretary's Note have each been duly authorized
by the Shipowner and are not in contravention of any indenture or undertaking
to which the Shipowner is a party or by which it is bound.
Section 2. All of the covenants and agreements on the part of the
Shipowner including, without limitation, those relating to maintenance of
United States citizenship; organization and existence of the Shipowner; title
to and possession of the Vessel; sale, transfer or charter of the Vessel;
taxes; liens; documentation of the Vessel; material changes in the Vessel;
2
<PAGE> 21
compliance with applicable laws; maintenance of marine insurance; requisition
of title; and compliance with Chapter 313 of Title 46 of the United States
Code, which are set forth in, and all of the rights, immunities, powers and
remedies of the Secretary which are provided for in the Security Agreement
(including the Special Provisions thereof and the General Provisions of Exhibit
1 thereto), except for the Granting Clause thereof, together with all other
provisions of the Security Agreement, are incorporated herein by reference with
the same force and effect as though set forth at length in this Mortgage, and
true copies of the form of the Special Provisions of and Exhibit 1 to the
Security Agreement are annexed hereto.
Section 3. A Default pursuant to the provisions of the Security
Agreement shall constitute a default hereunder, and shall give the Mortgagee
the rights and remedies established by Chapter 313 of Title 46 of the United
States Code, and as provided in the Security Agreement.
Section 4. This instrument is executed as and shall constitute an
instrument supplemental to the Security Agreement, and shall be construed in
connection with, and as part of, the Security Agreement.
ARTICLE SECOND
Section 1. This Mortgage may be executed in any number of counterparts
and all such counterparts executed and delivered each as an original shall
constitute but one and the same instruments.
Section 2. All the covenants, promises, stipulations and agreements of
the Shipowner in this Mortgage shall bind the Shipowner and its successors and
assigns, and shall inure to the benefit of the Mortgagee and its successors and
assigns, and all the covenants, promises, stipulations and agreements of the
Mortgagee in this Mortgage contained herein, shall bind the Mortgagee and its
successors and assigns, and shall inure to the benefit of the Shipowner and its
successors and assigns, whether so expressed or not.
Section 3. Any term used herein which is defined in the Security
Agreement and which is not specifically defined herein shall have the meaning
specified in the Security Agreement, unless the context otherwise requires.
Section 4. No provision of this Mortgage or of the Security Agreement
shall be deemed to constitute a waiver by the Mortgagee of the preferred status
of the Mortgage given by 46 U.S.C. Section 31305, and any provision of this
Mortgage or of the Security
3
<PAGE> 22
Agreement which would otherwise constitute such a waiver, shall to such extent
be of no force and effect.
Section 5. If the Secretary's Note shall have been satisfied and
discharged, and if the Shipowner shall pay or cause to be paid all other sums
that may have become secured under the Security Agreement and this Mortgage,
then this Mortgage and the estate and rights hereunder shall cease, determine,
and become null and void; and the Secretary, on request of the Shipowner and at
the Shipowner's cost and expense, shall forthwith cause satisfaction and
discharge of this Mortgage to be entered upon its and other appropriate
records, and shall execute and deliver to the Shipowner such instruments as may
be necessary, duly acknowledging the satisfaction and discharge of this
Mortgage.
ARTICLE THIRD
The total principal amount of the obligations that is secured by this
First Preferred Ship Mortgage is ONE HUNDRED SEVENTY ONE MILLION SEVEN THOUSAND
DOLLARS AND NO/100's ($171,007,000) (together with any additional sums owed by
the Shipowner to the Secretary pursuant to the provisions of the Security
Agreement including, but not limited to, sections 2.14 and 6.05), excluding
interest, expenses, and fees (such as custodial costs and attorneys' fees). The
date of maturity is March 15, 2012.
4
<PAGE> 23
IN WITNESS WHEREOF, this instrument has been executed on the date
below indicated, and effective as of the day and year first above written.
ROWAN COMPANIES, INC.,
as Shipowner
[SEAL]
BY:
-----------------------------------
Senior Vice President
Date Signed:
---------------------
Attest:
- -------------------------------
Secretary
CONSENTED TO:
UNITED STATES OF AMERICA
SECRETARY OF TRANSPORTATION
acting by and through the
MARITIME ADMINISTRATOR
By:
-----------------------------------
Secretary
Maritime Administration
5
<PAGE> 24
ACKNOWLEDGEMENT
DISTRICT OF COLUMBIA )
) ss:
CITY OF WASHINGTON )
On this day _____ of ____________, 19__, before me, _________________,
a Notary Public in and for the District of Columbia, personally appeared
______________________, duly known to me to be the Senior Vice President of
ROWAN COMPANIES, INC., a Delaware corporation, the corporation described in and
that executed the instrument hereto annexed and acknowledged to me that the
seal affixed to said instrument is such corporation's seal, that it was so
affixed by authority set forth in the By-laws or said corporation, and that
he/she signed his/her name thereto by like authority.
------------------------------------------------
NOTARY PUBLIC
[NOTARIAL SEAL]
My Commission Expires:
6
<PAGE> 25
ACKNOWLEDGEMENT
DISTRICT OF COLUMBIA )
) ss:
CITY OF WASHINGTON )
I, the undersigned, a Notary Public in and for the District of
Columbia, do hereby certify that _____________, Secretary of the Maritime
Administration, personally appeared before me in said District, the aforesaid
officer being personally well known to me as the person who executed the
Mortgage hereto annexed, and acknowledged the same to be his/her act and deed
as said officer.
Given under my hand and seal this ____ day of ______________.
------------------------------------------------
NOTARY PUBLIC
[NOTARIAL SEAL]
My Commission Expires:
7
<PAGE> 1
EXHIBIT 10(b)
CREDIT AGREEMENT
dated as of September 29, 1998
between
ROWAN COMPANIES, INC.
as Shipowner
and
CITIBANK, N.A.
as the Lender
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
SECTION 1. DEFINITIONS AND PRINCIPLES OF CONSTRUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.01 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Principles of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2. THE CREDIT FACILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.01 Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.02 Availability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.03 Disbursements and Minimum Amount of Utilizations . . . . . . . . . . . . . . . . . . . . . 2
2.04 Relationship of Floating Rate Note and Fixed Rate Note. . . . . . . . . . . . . . . . . . . 2
SECTION 3. DISBURSEMENT REQUIREMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.01 Disbursement Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 4. TERMS OF THE CREDIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4.01 Principal Repayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4.02 Interest Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4.03 Prepayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.04 Recapture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.05 Evidence of Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.06 Limit of United States Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 5. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.01 Conditions Precedent to Lender's Obligations Under this Agreement . . . . . . . . . . . . 7
5.02 Conditions Precedent to Each Disbursement . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 6. FEES AND EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.01 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.02 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.03 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6.04 Additional or Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 7. PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.01 Method of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.02 Application of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 8. REPRESENTATIONS AND WARRANTIES BY THE SHIPOWNER . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
8.01 Representations and Warranties of the Shipowner . . . . . . . . . . . . . . . . . . . . . 13
8.02 Agreements of the Shipowner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 9. CANCELLATION, SUSPENSION AND EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
9.01 Cancellation by the Shipowner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
9.02 [Intentionally Omitted] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
9.03 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 10. GOVERNING LAW AND JURISDICTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
10.01 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
10.02 Submission to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
10.03 Waiver of Security Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
10.04 No Limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
SECTION 11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
11.01 Computations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
11.02 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
11.03 Disposition of Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
11.04 Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
11.05 No Waiver; Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
11.06 Currency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
11.07 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
11.08 Amendment or Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
11.09 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
11.10 Benefit of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
11.11 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
11.12 Execution in Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
11.13 Shipowner Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
11.14 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
</TABLE>
Exhibits
Exhibit 1 Schedule of Definitions
Annexes
Annex A Form of Disbursement Requests
<PAGE> 4
THIS CREDIT AGREEMENT, dated as of September 29, 1998, is made by and
between ROWAN COMPANIES, INC., a Delaware corporation, as the Shipowner, and
CITIBANK, N.A., a national banking association, as the Lender.
BACKGROUND
WHEREAS:
(A) by this Agreement, the Lender has established a credit
facility (the "Credit Facility") in the amount of $171,007,000, pursuant to
which the Lender shall, subject to the terms and conditions hereof, extend
financing to the Shipowner (i) for the manufacture, construction, fabrication,
financing and purchase by the Shipowner of the Vessel; (ii) for the payment of
the related Construction Period Interest; and (iii) for the payment of the
Guarantee Fees;
(B) the establishment of the Credit Facility is in reliance upon
the commitment of the United States to guarantee the payment of the unpaid
interest on, and the unpaid balance of the principal of, the Floating Rate
Note, including interest accruing between the date of an Indenture Default
under the Floating Rate Note and the payment in full of the Guarantee;
(C) a condition to the Lender's extension of the Credit Facility
under this Agreement is the Lender's timely receipt of Certificates Authorizing
Disbursement and issuance of the Guarantee of the Floating Rate Note; and
(D) the Credit Facility may be utilized by the Shipowner in
accordance with the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
SECTION 1. DEFINITIONS AND PRINCIPLES OF CONSTRUCTION
1.01 Defined Terms. For the purposes of this Agreement, unless
otherwise defined herein, defined terms shall have the meanings specified in
Exhibit 1 hereto.
1.02 Principles of Construction.
(a) The meanings set forth for defined terms in this Agreement
shall be equally applicable to both the singular and plural forms of the terms
defined.
(b) Unless otherwise specified, all references in this Agreement
to Annexes or Exhibits are to Annexes or Exhibits in or to this Agreement.
<PAGE> 5
-2-
(c) The headings of the Sections in this Agreement are included
for convenience only and shall not in any way affect the meaning or
construction of any provision of this Agreement.
SECTION 2. THE CREDIT FACILITY
2.01 Amount. The Lender hereby establishes the Credit Facility,
upon the terms and conditions set forth in this Agreement, in favor of the
Shipowner in the maximum amount of $171,007,000 (the "Credit Facility Amount"),
to enable the Shipowner to finance: (i) the manufacture, construction,
fabrication, financing and purchase of the Vessel; (ii) Construction Period
Interest; and (iii) the Guarantee Fees. The Lender will, subject to the terms
and conditions provided herein, be obligated to fund under the Credit Facility
the amount (the "Available Amount") which is equal to the excess, if any, of the
Credit Facility Amount over the outstanding principal amount evidenced by the
Floating Rate Note plus the aggregate outstanding principal amount evidenced by
Fixed Rate Notes ("Outstanding Principal").
2.02 Availability. Disbursements under the Credit Facility may be
made once a calendar month and up to and including the Final Disbursement Date.
"Final Disbursement Date" shall mean either September 1, 2000 or, if earlier,
the date on which the Available Amount under the Credit Facility is cancelled
in accordance with Section 9.01 or reduced to zero.
2.03 Disbursements and Minimum Amount of Utilizations. Upon
satisfaction of Sections 3.01, 5.01 and 5.02, disbursements shall be made by
advances from the Lender to the Shipowner ("Disbursements") in accordance with
Section 3.01. Notwithstanding anything in this Agreement to the contrary, the
Shipowner may not request a Disbursement under the Credit Facility for an
amount (a) less than the smaller of (i) $1,000,000 or (ii) the Available Amount
or (b) more than the Available Amount.
2.04 Relationship of Floating Rate Note and Fixed Rate Note.
Disbursements from the Credit Facility shall become the indebtedness of the
Shipowner to the Lender under the Floating Rate Note. The Shipowner shall
convert indebtedness under the Floating Rate Note to indebtedness under one or
more Fixed Rate Notes no later than the earlier of (i) two years from the
Delivery Date, or (ii) September 15, 2002. At its option, and from time to
time, the Shipowner may convert any portion, or all, of the indebtedness of the
Floating Rate Note to a Fixed Rate Note or series of Fixed Rate Notes at any
time during or after the construction of the Vessel, so long as the conversion
of the Floating Rate Note to the Fixed Rate Note does not occur more than two
years after the Delivery Date or after September 15, 2002, and, except for the
final conversion, each conversion is in a minimum amount of $50,000,000; and the
Shipowner shall have paid any amount payable under Section 4.04(a)(iv) or any
other provision hereof in connection therewith.
SECTION 3. DISBURSEMENT REQUIREMENTS
3.01 Disbursement Procedures. Upon receipt of each Certificate
Authorizing Disbursement at least five Business Days prior to the proposed
disbursement date, the Lender shall disburse funds in accordance with the terms
of such Certificate Authorizing Disbursement to the Shipowner subject to the
terms of this Agreement; provided that, if the Certificate Authorizing
Disbursement and the request for disbursement referred to therein do not
specify a disbursement date, then the disbursement date shall be the fifth
Business Day (or such earlier or later Business Day as is requested by the
Shipowner and is acceptable to the Lender) following the Lender's receipt of
such Certificate Authorizing Disbursement. Promptly following each
Disbursement, the Lender shall transmit to the Indenture Trustee a copy of the
Certificate Authorizing Disbursement, a confirmation that the Disbursement was
made, and a copy of Exhibit A to the Floating Rate Note, updated to reflect
such Disbursement and other intervening, related events.
SECTION 4. TERMS OF THE CREDIT
4.01 Principal Repayment. The Shipowner shall repay all
Outstanding Principal in twenty-four (24) approximately equal, successive
semi-annual installments, with each such installment to be payable on a Payment
Date, provided that, on the last Payment Date, the Shipowner shall repay in
full the remaining Outstanding Principal.
<PAGE> 6
-3-
4.02 Interest Payment.
(a) On each Interest Payment Date the Shipowner shall pay interest
on the Outstanding Principal, calculated at an interest rate per annum equal to
the Applicable Interest Rate therefor, as determined for each successive
Interest Period. The interest rate on such amount shall be determined by the
Indenture Trustee pursuant to the definition of Applicable Interest Rate. From
time to time, the Lender will confirm LIBOR, Base Rate, and Applicable Interest
Rate to the Indenture Trustee, provided, however, such confirmation shall not
relieve the Indenture Trustee of its obligations under the Indenture to
determine the Applicable Interest Rate.
(b) The Shipowner shall pay to the Person entitled to any Unpaid
Amount, on demand, interest on such Unpaid Amount (to the extent permitted by
applicable law) for each Post Maturity Period at an interest rate per annum
equal to the sum (the "Post Maturity Interest Rate") of (1) two percent (2%),
plus (2) the Post Maturity Applicable Interest Rate. With respect to any
Unpaid Amounts, the "Post Maturity Applicable Interest Rate" shall mean either
(i) LIBOR on the Quotation Date therefor plus three tenths of one percent
(0.30%) per annum or (ii) if, for any such Post Maturity Period, LIBOR cannot
be determined, the rate per annum reasonably determined by the Person to whom
such Unpaid Amount is owed before the last day of such Post Maturity Period to
be that which expresses as a percentage rate per annum the cost which such
Person would incur in funding such Unpaid Amount from whatever source it
reasonably deems appropriate for such Post Maturity Period plus three tenths of
one percent (0.30%) per annum or (iii) if any such Unpaid Amount is an
Accelerated Repayment, then during the first Post Maturity Period the rate
which would have been applicable to such Unpaid Amount had it not so fallen
due. In the absence of an Indenture Default, any interest which shall have
accrued under this Section 4.02(b) in respect of an Unpaid Amount shall be due
and payable and shall be paid by the Shipowner on demand on such dates as the
Person to whom such Unpaid Amount is owed may specify by written notice to the
Shipowner, or if there is an Indenture Default, any interest which shall have
accrued under this Section 4.02(b) in respect of an Unpaid Amount shall be due
and payable immediately and shall be paid by the Shipowner without demand and
any payment by, or on behalf of, the Shipowner hereunder shall be governed by
Section 7.02 and the provisions of the last paragraph of Section 9.03.
As used herein, "Unpaid Amount" means all or any part of principal,
accrued interest, fees or other amounts owing to the Lender under this
Agreement or the Floating Rate Note which is not paid in full when and as due
and payable, whether at Stated Maturity, by acceleration or otherwise, or any
sum due and payable by the Shipowner to the Lender under any judgment of any
court or arbitral tribunal in connection with this Agreement which is not paid
on the date of such judgment; provided, however, that it is agreed that Unpaid
Amount shall not include any part of the principal and interest on the Floating
Rate Note, except that Unpaid Amount shall include all such amounts thereof as
are not paid by the Shipowner as and when they are due but are paid by the
Shipowner prior to payment thereof by the Secretary. "LIBOR" shall mean, in
relation to any Post Maturity Period (other than the first Post Maturity Period
contemplated by clause (iii) of Section 4.02(b)), the rate of interest per
annum (rounded upward, if necessary, to the nearest 1/16 of 1%) last quoted by
the principal London office of CITIBANK, N.A. prior to the close of business at
such London office on the Quotation Date for the offering to leading banks in
the London interbank market of U.S. Dollar deposits on an overnight basis and
in an amount comparable to the Unpaid Amount to which LIBOR is to apply.
"Accelerated Repayment" shall mean any part of the principal of the Floating
Rate Note which became due and payable on a day other than its Payment Date.
"Post Maturity Period" shall mean with respect to the period from the date an
Unpaid Amount was due until such amount shall have been paid in full, each
successive period, the first of which shall start on the date such Unpaid
Amount was due (or the date of any such judgment or arbitral award, if earlier)
and each other of which shall start on the last day of the preceding such
period, and the duration of each of which shall be one day, or if LIBOR
applies, then from and including the Quotation Date for such Post Maturity
Period to but excluding the next Quotation Date or such other duration selected
by the Person to whom such Unpaid Amount is due, provided, however, that in the
case of any Accelerated Repayment, the first such Post Maturity Period
applicable thereto shall be of a duration equal to the unexpired portion of its
then applicable Interest Period. "Quotation Date" in relation to any Post
Maturity Period means the day on which quotations would ordinarily be given by
CITIBANK, N.A. in the London interbank market
<PAGE> 7
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for dollar deposits for delivery on the first day of that period, provided,
however, that if, for any such Post Maturity Period, quotations would
ordinarily be given on more than one date, the Quotation Date for that period
shall be the last of those dates.
4.03 Prepayment. (a) The Shipowner may from time to time prepay on
any Interest Payment Date all or part of the Outstanding Principal evidenced by
the Floating Rate Note, provided that: (i) any partial prepayment shall be in a
minimum principal amount of $10,000,000, unless otherwise required by the
Indenture; (ii) the Shipowner shall have given the Lender and the Indenture
Trustee prior written notice of the prepayment (which shall be not less than 40
nor more than 60 days); (iii) the Shipowner shall have paid in full all amounts
due under this Agreement as of the date of such prepayment, including, without
limitation, interest which has accrued to the date of prepayment on the amount
prepaid and all other amounts payable hereunder relating to the prepayment; and
(iv) any amount prepaid hereunder (other than the Outstanding Principal amount
thereof prepaid through the issuance of Fixed Rate Notes, the Outstanding
Principal amount of which is subtracted from the Credit Facility pursuant to the
last sentence of Section 2.01) shall not be considered part of the Available
Amount.
(b) Upon delivery to the Shipowner and the Secretary of the
instrument satisfying and discharging the Indenture contemplated by Section
12.01 of the Exhibit 1 to the Indenture, all of the Shipowner's indebtedness,
liabilities and obligations under this Agreement and the Fee Letter shall
become immediately due and payable without demand upon, or notice to, the
Shipowner.
(c) Notwithstanding any other provision to the contrary herein, the
Shipowner or the Secretary (after the Secretary's assumption of the Floating
Rate Note pursuant to Section 6.09 of Exhibit 1 to the Indenture) may from time
to time prepay all or part of the principal amount of the Floating Rate Note
without any prepayment penalty or premium in accordance with Article III of
Exhibit 1 to the Indenture.
(d) Notwithstanding any other provision to the contrary herein, the
Shipowner shall have the right to prepay any portion of the Floating Rate Note
and convert that Obligation to a Fixed Rate Note so long as it first obtains the
Secretary's consent to the interest rate applicable to the Fixed Rate Note and,
except for the final disbursement, such conversion equals or exceeds $50,000,000
principal; and the Shipowner shall have paid any amount payable under Section
4.04(a)(iv) or any other provision hereof in connection therewith.
4.04 Recapture. (a) The Shipowner shall pay to the Lender, upon
the written request of the Lender, such amounts as shall be sufficient (in the
reasonable judgment of the Lender) to compensate the Lender for any loss,
expense or liability (including, without limitation, any loss, expense or
liability incurred by reason of the liquidation or redeployment of deposits
from third parties or in connection with obtaining funds to make or maintain
any Disbursement) which the Lender reasonably determines is attributable to:
(i) any failure to make scheduled payments on a Payment Date or any
payment due in connection with any Redemption; or
(ii) any failure by the Shipowner to borrow any advance for which a
Certificate Authorizing Disbursement has been issued; or
(iii) any revocation of a notice of prepayment given pursuant to
Section 4.03(a); or
(iv) any prepayment of the Floating Rate Note (including, without
limitation, due to the issuance of any fixed rate notes) other than on an
Interest Payment Date after giving five Business Days prior written notice to
the Lender.
(b) Without prejudice to any other provision hereof (and at the
Shipowner's expense), the Lender shall use such reasonable efforts as it shall
determine in its sole discretion to minimize any loss, expense or liability to
the extent possible.
4.05 Evidence of Debt. The Shipowner agrees that to evidence
further its obligation to repay all amounts disbursed under the Credit
Facility, with interest accrued thereon, it shall issue and deliver to the
Lender the Floating Rate Note. The Floating Rate Note shall (i) be in the form
of Exhibit 2 to the Indenture; (ii) bear the Secretary's Guarantee, and (iii)
be valid and enforceable as to its principal amount at any time only to the
extent of the aggregate amounts then disbursed and outstanding thereunder, and,
as to interest, only to the extent of the interest accrued thereon at the rate
guaranteed by the Secretary; with any interest in excess thereof being
evidenced by this Agreement.
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4.06 Limit of United States Guarantee. None of the interest, fees,
and expenses arising under Section 6 and none of the Indemnified Amounts,
commissions, Taxes, Other Taxes, Post Maturity Interest Rate, interest in excess
of 14% under the Floating Rate Note, the costs of obtaining any interest rate
protection, or any other charges, costs, expenses, or indebtedness owed by the
Shipowner under this Agreement to any Person is guaranteed by the United States.
The Guarantee of the United States extends only to the principal and interest
owed under the obligations and only to the extent specified therein.
SECTION 5. CONDITIONS PRECEDENT
5.01 Conditions Precedent to Lender's Obligations Under this
Agreement. The obligations of the Lender under this Agreement shall be subject
to the delivery to the Lender of the following documents on or before the
Closing Date:
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(a) This Agreement, the Floating Rate Note and the Fee Letter.
This Agreement and the Fee Letter, each fully executed by the parties thereto
in form and substance satisfactory to the Lender, which shall be in full force
and effect and the Floating Rate Note shall have been fully executed by the
Shipowner, endorsed by, or on behalf of, the United States, and delivered to
the Lender and all amounts then payable under the Fee Letter shall have been
paid to the Person entitled thereto.
(b) Existence. Evidence in form and substance satisfactory to the
Lender that the Shipowner is duly organized, validly existing and in good
standing under the laws of the State of Delaware, with full power, authority
and legal right to own its property and to carry on its business as now
conducted.
(c) Authority. Evidence in form and substance satisfactory to the
Lender of the authority of the Shipowner to execute, deliver, perform and
observe the terms and conditions of this Agreement, the Floating Rate Note, and
the Indenture and evidence of authority (including specimen signatures) for
each Person who, on behalf of the Shipowner, signed this Agreement, the
Floating Rate Note, and the Indenture, or will otherwise act as representatives
of the Shipowner in the operation of the Credit Facility.
(d) Governmental and Other Authorizations. Copies, certified as
true copies by a duly authorized officer of the Shipowner, of each consent,
license, authorization or approval of, and exemption by, any Governmental
Authority and any governmental authorities within the United States or
elsewhere, which are necessary or advisable (i) for the execution, delivery,
performance and observance by the Shipowner of this Agreement, the Floating
Rate Note and the Indenture; and (ii) for the validity, binding effect and
enforceability of this Agreement, the Floating Rate Note and the Indenture, or
if none is necessary, a written certification from the Shipowner that none is
necessary.
(e) Legal Opinions. (1) Opinion of legal counsel for the
Shipowner concerning this Agreement, the Floating Rate Note, and the Indenture;
(2) Opinion of the Chief Counsel of the Maritime Administration dated the
Closing Date, signed by or on behalf of such Chief Counsel, addressed to the
Lender to the effect that the Guarantees and the Authorization Agreement have
been or will be duly authorized, executed and delivered by the United States of
America, and constitute legal, valid, and binding obligations of the United
States of America enforceable in accordance with their respective terms; and
(3) Opinion of Mayer, Brown & Platt addressed to the Lender and the Indenture
Trustee concerning this Agreement, the Indenture and the Floating Rate Note.
(f) Guarantee Commitment. A copy of the fully executed Guarantee
Commitment, which shall be in full force and effect until completion of the
Closing.
(g) Authorization Agreement. The fully executed Authorization
Agreement, which shall be in full force and effect.
(h) Indenture. The fully executed Indenture, which shall be in
full force and effect.
5.02 Conditions Precedent to Each Disbursement. The obligation of
the Lender to make any Disbursement, including the first Disbursement, shall be
subject only to the Lender's receipt of a Certificate Authorizing Disbursement
and the Lender may conclusively rely thereon.
<PAGE> 10
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SECTION 6. FEES AND EXPENSES
6.01 Fees. The Shipowner shall pay or cause to be paid to the
Person entitled thereto such fees and other amounts as are set forth in that
certain Fee Letter (as amended, restated or otherwise modified from time to time
with the prior written consent of the Secretary, the "Fee Letter") dated as of
September 29, 1998 by the Shipowner and accepted by, among others, the Lender,
in each case when and as due.
6.02 Taxes.
(a) The Shipowner agrees to pay all amounts owing by it under this
Agreement or the Floating Rate Note free and clear of and without deduction for
any and all present and future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding in the case
of the Lender, taxes imposed on its income, and franchise taxes imposed on it
in lieu of income taxes, by either (i) the jurisdiction under the laws of which
the Lender is organized or any political subdivision thereof, or (ii) the
jurisdiction of the Lender's applicable lending office or any political
subdivision thereof (all such non-excluded taxes, levies, imposts, deductions,
charges, withholdings, and liabilities being hereinafter referred to as
"Taxes"). In addition, the Shipowner agrees to pay any present or future stamp
or documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or under the Floating Rate
Note or from the execution, delivery, or registration of, or otherwise with
respect to, this Agreement or the Floating Rate Note (hereinafter referred to
as "Other Taxes").
(b) The Shipowner further agrees:
(i) that, if the Shipowner is prevented by operation of law from
paying any such Taxes or Other Taxes, or if any such Taxes or Other Taxes are
required to be deducted or withheld, then the fees or expenses required to be
paid under this Agreement shall, on an after-tax basis, be increased by the
amount necessary to yield to the Lender fees or expenses in the amounts
provided for in this Agreement after the provision for the payment of all such
Taxes and Other Taxes;
(ii) that the Shipowner shall, at the request of the Lender,
execute and deliver to the Lender such further instruments as may be necessary
or desirable to effect the payment of the increased amounts as provided for in
subsection (i) above, provided, however, that the Shipowner may not amend the
Floating Rate Note without the prior written consent of the Secretary;
(iii) that the Shipowner shall hold the Lender harmless from and
against the full amount of Taxes and Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts
payable under this Section 6.02) and any and all liabilities (including,
without limitation, penalties, interest and expenses) arising from, or with
respect to, any Taxes or Other Taxes (whether or not properly or legally
asserted) and whether paid, or payable, by the Shipowner, the Lender or any
other Person;
(iv) that, at the request of the Lender, the Shipowner shall
provide the Lender within the later of thirty (30) calendar days after such
request or thirty (30) calendar days after the payment of such Taxes or Other
Taxes, a copy evidencing the payment of any Taxes or Other Taxes by the
Shipowner; and
(v) that each payment under this Section 6.02 shall be made within
30 days from the date the Lender makes written demand therefor. Each demand
for payment by the Lender under Section 6.02(b)(v) for amounts paid or incurred
by the Lender shall be accompanied by a certificate (with accompanying
documentation supporting the demand) showing in reasonable detail the basis for
the calculation of the amounts demanded, which certificate, in the absence of
manifest error, shall be conclusive and binding for all purposes.
<PAGE> 11
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(c) Notwithstanding anything to the contrary contained herein, the
agreements in this Section 6.02 shall survive the termination of this Agreement
and the payment of the Floating Rate Note and all other amounts due hereunder.
6.03 Expenses. The Shipowner agrees, whether or not the
transactions hereby contemplated shall be consummated, to pay, or reimburse the
Lender promptly upon demand for the payment of all reasonable and duly
documented costs and expenses arising in connection with the preparation,
printing, execution, delivery, registration, implementation, modification of or
waiver or consent under this Agreement, the Floating Rate Note or the
Indenture, including, without limitation, the reasonable and duly documented
out-of-pocket expenses of the Lender (incurred in respect of
telecommunications, mail or courier service, travel and the like), and the fees
and expenses of counsel for the Lender. The Shipowner shall also pay all of
the costs and expenses (including, without limitation, the fees and expenses of
counsel) incurred by or charged to the Lender in connection with the amendment
or enforcement of this Agreement, the Floating Rate Note or the Indenture or
the protection or preservation of any right or claim of the Lender arising out
of this Agreement, the Floating Rate Note or the Indenture.
6.04 Additional or Increased Costs.
(a) If, due to either (i) the introduction of or any change in or
in the interpretation of any law or regulation or (ii) the compliance with any
guideline or request from any central bank or other governmental authority
(whether or not having the force of law), there shall be any increase in the
cost to the Lender of agreeing to make or making, funding or maintaining the
Disbursements or the Credit Facility, then the Shipowner shall from time to
time, upon demand by the Lender, pay to the Lender additional amounts
sufficient to compensate the Lender for such increased cost.
(b) If the Lender determines that compliance with any law or
regulation or any guideline or request from any central bank or other
governmental authority (whether or not having the force of law) affects or
would affect the amount of capital required to be maintained by the Lender or
any corporation controlling the Lender and that the amount of such capital is
increased by or based upon the existence of the Lender's commitment to lend
hereunder and other commitments of this type, then, upon demand by the Lender,
the Shipowner shall immediately pay to the Lender, from time to time as
specified by the Lender, additional amounts sufficient to compensate the Lender
or such corporation in the light of such circumstances, to the extent that the
Lender reasonably determines such increase in capital to be allocable to the
existence of the Lender's commitment to lend hereunder.
(c) The Lender shall take such reasonable steps as it shall
determine to minimize amounts demanded under this Section 6.04. In the event
that the Lender transfers the booking office of the Credit Facility or the
Floating Rate Note to minimize amounts demanded under this Section 6.04, any
costs and expenses incurred in such transfer shall be paid by the Shipowner.
(d) Each demand for payment by the Lender under this Section 6.04
shall be accompanied by a certificate showing in reasonable detail the basis
for the calculation of the amounts demanded, which certificate, in the absence
of manifest error, shall be conclusive and binding for all purposes.
(e) The Lender shall notify the Shipowner of any event occurring
after the date of this Agreement which entitles the Lender to compensation
pursuant to this Section 6.04, as promptly as practicable, and in any event
within ninety (90) days after it has knowledge of such event and has determined
that a request for compensation hereunder shall be made. The Shipowner shall
not be obligated to reimburse the Lender for any loss or cost incurred more
than ninety (90) days prior to delivery of notice to the Shipowner by the
Lender requesting compensation under this Section 6.04.
<PAGE> 12
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SECTION 7. PAYMENTS
7.01 Method of Payment.
(a) All payments to be made by the Shipowner under this Agreement
and the Floating Rate Note shall be made without set-off or counterclaim in
Dollars in immediately available and freely transferable funds no later than
11:00 A.M. (New York City time) on the date on which due. The Shipowner shall
pay the principal and the guaranteed amount of the Applicable Interest Rate on
the Floating Rate Note to the Indenture Trustee and all other amounts due under
this Agreement directly to the Person entitled thereto, in each case, by wire
transfer in same day and immediately available and freely transferable funds.
Wire transfer instructions shall be provided to the Shipowner.
(b) Except as otherwise provided herein, whenever any payment
would otherwise fall due on a day which is not a Business Day, the due date for
payment shall be the immediately succeeding Business Day, and interest and fees
shall be computed in accordance with Section 11.01.
7.02 Application of Payments. In the absence of an Indenture
Default, the Lender shall apply payments received by it under this Agreement
and the Floating Rate Note (whether at Stated Maturity, by reason of
acceleration, prepayment or otherwise), in the following order of priority:
(i) interest due pursuant to Section 4.02(a); (ii) installments of principal
due; (iii) interest due pursuant to Section 4.02(b) other than the amount
described in clause (i) above; (iv) all amounts due under the Fee Letter; and
(v) all other amounts due under this Agreement and not otherwise provided for
in this Section 7.02. Upon the occurrence of an Indenture Default, the Lender
shall hold any payments it receives after an Indenture Default from, or on
behalf of, the Shipowner under this Agreement, the Fee Letter and any related
agreement (excluding the Floating Rate Note) and shall promptly deliver such
payments to the Secretary if the Secretary has been required to honor a
Guarantee as a result of said Indenture Default. All such amounts received
during an Indenture Default and delivered to the Secretary in accordance with
the preceding sentence shall be applied first to pay, satisfy and discharge all
amounts owed by the Shipowner to the Secretary under the Secretary's Note and
the Mortgage and then to pay, satisfy and discharge any and all amounts owed to
the Lender.
SECTION 8. REPRESENTATIONS AND WARRANTIES BY THE SHIPOWNER
8.01 Representations and Warranties of the Shipowner. The
Shipowner represents and warrants to the Lender that, as of the Closing Date:
(a) Existence and Authority. The Shipowner is duly organized,
validly existing under the laws of the State of Delaware, is in good standing
under the laws of the State of Delaware, has been duly qualified to do business
in, and is in good standing as a foreign corporation in each jurisdiction in
which the conduct of its business or the ownership of its properties requires it
to be so qualified, and has full power, authority and legal right to own its
properties and conduct its business as it is presently now conducted.
The Shipowner has full power, authority and legal right (i) to execute
and deliver this Agreement, the Floating Rate Note and the Indenture, (ii) to
perform and observe the terms and provisions of each of said documents to be
performed or observed by it, (iii) to consummate the transactions contemplated
thereby and (iv) to own its properties (including, without limitation, the
Vessel owned or to be owned by it) and conduct its business as presently
conducted.
(b) Government and Other Authorizations. All consents, licenses,
authorizations and approvals of, and exemptions by, any Governmental Authority
and any governmental authorities within the United States or elsewhere and any
other Persons that are necessary or advisable: (i) for the execution, delivery,
performance and
<PAGE> 13
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observance by the Shipowner of this Agreement, the Floating Rate Note, and the
Indenture; and (ii) for the validity, binding effect and enforceability of this
Agreement, the Floating Rate Note, and the Indenture have been obtained and are
in full force and effect.
(c) Restrictions. The execution, delivery and performance or
observance by the Shipowner of the terms of, and consummation by the Shipowner
of the transactions contemplated by, this Agreement, the Floating Rate Note,
and the Indenture do not and will not conflict with or result in a breach or
violation of: (i) the charter, by-laws or similar documents of the Shipowner;
(ii) any federal or state law of the United States or any other ordinance,
decree, constitutional provision, regulation or other requirement of any
Governmental Authority (including, without limitation, any restriction on
interest that may be paid by the Shipowner); or (iii) any order, writ,
injunction, judgment or decree of any court or other tribunal. Further, the
execution, delivery and performance or observance by the Shipowner of the terms
of, and consummation by the Shipowner of the transactions contemplated by, this
Agreement, the Floating Rate Note, and the Indenture does not and will not
conflict with or result in a breach of any agreement or instrument to which the
Shipowner is a party, or by which it or any of its revenues, properties or
assets may be subject, or result in the creation or imposition of any Lien upon
any of the revenues, properties or assets of the Shipowner pursuant to any such
agreement or instrument. "Lien" shall mean any lien, lease, mortgage, pledge,
hypothecation, preferential arrangement relating to payments, or other
encumbrance or security interest.
(d) Binding Effect. This Agreement, the Floating Rate Note, and
the Indenture which have been executed on or before the date hereof have been
duly executed and delivered by the Shipowner. Each of the Agreement, the
Floating Rate Note, and the Indenture constitutes, and each of the Agreement,
the Floating Rate Note, and the Indenture as it may hereafter be amended will
constitute, a direct, general and unconditional obligation of the Shipowner
which is legal, valid and binding upon the Shipowner and enforceable against
the Shipowner in accordance with its respective terms. All obligations
evidenced by the Floating Rate Note will be entitled to the benefits of the
Guarantees and the Authorization Agreement.
(e) Choice of Law. Under applicable conflict of laws principles,
the choice of law provisions of this Agreement, the Floating Rate Note and the
Indenture are valid, binding and not subject to revocation by the Shipowner,
and, in any proceedings brought for enforcement of this Agreement, the
Indenture or the Floating Rate Note, the choice of the law of the State of New
York as the governing law of such documents will be recognized and such law
will be applied.
(f) Legal Proceedings. No legal proceedings are pending or, to
the best of the Shipowner's knowledge, threatened before any court or
governmental agency which might: (i) materially and adversely affect the
Shipowner's financial condition, business or operations; (ii) restrain or
enjoin or have the effect of restraining or enjoining the performance or
observance of the terms and conditions of any of this Agreement, the Indenture
or the Floating Rate Note; or (iii) in any other manner question the validity,
binding effect or enforceability of any of this Agreement, the Indenture or the
Floating Rate Note.
(g) Use of the Vessel. The Vessel will be used for lawful
purposes.
(h) Shipowner Financial Statements. The Shipowner Financial
Statements present fairly the financial condition of the Shipowner at the date
of such statements and the results of the operations of the Shipowner for such
fiscal year. The Shipowner Financial Statements have been prepared in
accordance with generally accepted accounting principles in the United States
consistently applied. Except as fully reflected in the Shipowner Financial
Statements, there are no liabilities or obligations with respect to the
Shipowner of any nature whatsoever (whether absolute, accrued, contingent or
otherwise and whether or not due) for the period to which the Shipowner
Financial Statements relate that, either individually or in the aggregate,
would be material to the Shipowner. Since the date of the most recent audited
Shipowner Financial Statements, there has been no material adverse change in
the financial condition, business prospects or operations of the Shipowner.
"Shipowner Financial Statements" shall mean the financial statements of the
Shipowner furnished to the Lender prior to the date of this Agreement.
<PAGE> 14
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(i) No Taxes. There is no Tax imposed on or in connection with:
(i) the execution, delivery or performance of this Agreement, the Indenture or
the Floating Rate Note; (ii) the enforcement of this Agreement, the Indenture
or the Floating Rate Note; or (iii) on any payment to be made to the Lender
under this Agreement or the Floating Rate Note.
(j) Laws. None of this Agreement, the Indenture, the Floating
Rate Note, the transactions contemplated thereunder nor any Person party to
this Agreement, the Indenture or the Floating Rate Note is required to qualify
under the Trust Indenture Act or register or qualify under any securities law.
(k) Defaults. No Event of Default has occurred and is continuing
and no event or circumstance has occurred and is continuing which with the
passage of time, the giving of notice or both would constitute an Event of
Default.
8.02 Agreements of the Shipowner. The Shipowner agrees that until
all amounts owing under this Agreement and the Floating Rate Note have been
paid in full, the Shipowner will, unless the Lender shall have consented in
writing:
(a) Interest Rate Protection. At all times that (1) a Floating
Rate Note exists and (2) the Applicable Interest Rate is greater than 13%, the
Shipowner (at its expense) within 15 Business Days thereafter, shall (A) enter
into, and thereafter maintain in full force and effect, an amortizing interest
rate cap agreement with a strike price providing for a cap based on the
Applicable Interest Rate not in excess of 14% per annum and otherwise acceptable
to the Lender, with a counterparty rated "A" or better by any nationally
recognized rating agency or such other counterparty reasonably acceptable to the
Lender, covering the Floating Rate Note and based on the expected amortization
schedule of such Note, and (B) execute such documents and instruments as may be
necessary, or in the opinion of the Lender desirable, to effect the assignment
of its rights thereunder to the Lender in every case with such terms as are
reasonably acceptable to the Lender for the protection of the Lender. If the
Shipowner fails to satisfy the requirements of this Section 8.02(a) within the
15 Business Days set forth above, the Lender may (in its sole discretion) and if
the Lender so elects, the Shipowner hereby authorizes and directs the Lender to,
satisfy the requirements of this Section 8.02(a), all at the expense of the
Shipowner, due on demand.
(b) Notice of Defaults. Promptly, but in no event later than ten
(10) days after the occurrence of an Indenture Default or an Event of Default
of which the Shipowner has knowledge, notify the Lender and the Indenture
Trustee of any report required by the Shipowner Documents (or any other
document entered into by the Shipowner in connection therewith), and send a
copy thereof to the Lender, in each case by telecopier or hand delivery.
(c) Financial Reports. Beginning with the fiscal year in which
this Agreement is executed and continuing until all amounts owing under this
Agreement and the Floating Rate Note have been paid in full, the Shipowner
shall furnish to the Lender a copy of all financial reports furnished to the
Secretary pursuant to the Title XI Reserve Fund and Financial Agreement.
(d) [Intentionally Omitted]
(e) Other Acts. From time to time, do and perform any and all
acts and execute any and all documents as may be necessary or as reasonably
requested by the Lender or the Indenture Trustee in order to effect the
purposes of this Agreement and to protect the interests of the Lender in the
Floating Rate Note and the interests of the Lender in the Guarantee.
(f) Use of Proceeds. Use proceeds from each Disbursement solely
to finance: (i) the manufacture, construction, fabrication, financing and
purchase of the Vessel; (ii) Construction Period Interest; and (iii) the
Guarantee Fees. Use the proceeds from the issuance of any fixed rate notes to
repay amounts owed under the
<PAGE> 15
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Floating Rate Note or to finance: (i) the manufacture, construction,
fabrication, financing and purchase of the Vessel; (ii) Construction Period
Interest; and (iii) the Guarantee Fees.
(g) Successors. Require that any successor to all or
substantially all of its business as a result of any merger or consolidation
with any other entity; dissolution or termination of legal existence; sale,
lease, transfer or other disposal of any substantial part of its properties or
any of its properties essential to the conduct of its business or operations,
as now or hereafter conducted; any change in control; any agreement to do any
of, or any combination of, the foregoing, to assume all of the Shipowner's
indebtedness, liabilities and obligations under this Agreement and the Floating
Rate Note.
SECTION 9. CANCELLATION, SUSPENSION AND EVENTS OF DEFAULT
9.01 Cancellation by the Shipowner. The Shipowner may cancel at
any time all or any part of the Available Amount of the Credit Facility,
provided that (i) thirty (30) days' prior irrevocable written notice is given
to the Lender, the Indenture Trustee, and the Secretary and (ii) the Shipowner
shall have paid to the Lender any commitment fees accrued and unpaid under
Section 6.01 and all other amounts due and payable under this Agreement and the
Floating Rate Note as of the proposed date of cancellation. In the absence of
an Indenture Default, the Lender may not for any reason cancel at any time any
part of the Available Amount of the Credit Facility.
9.02 [Intentionally Omitted]
9.03 Events of Default. Upon the occurrence of any of the
following events or conditions (each, an "Event of Default"):
(a) any failure by the Shipowner to pay when and as due any amount
owing under this Agreement, but which is not guaranteed by the Secretary; or
(b) any failure by the Shipowner to comply with its obligations
under Section 8.02(b) or 8.02(f); or any failure by the Shipowner to perform or
comply with any of its agreements set forth in this Agreement (exclusive of any
events specified as an Event of Default in any other subsection of this Section
9.03 and exclusive of Section 8.02(a)), which failure, if capable of being
cured, remains uncured for a period of thirty (30) days after written notice
thereof has been given to the Shipowner by the Lender; or
(c) the Shipowner shall be unable to pay its debts when and as
they fall due or shall admit in writing its inability to pay its debts as they
fall due or shall become insolvent; or the Shipowner shall apply for or consent
to the appointment of any liquidator, receiver, trustee or administrator for
all or a substantial part of its business, properties, assets or revenues; or a
liquidator, receiver, trustee or administrator shall be appointed for the
Shipowner and such appointment shall continue undismissed, undischarged or
unstayed for a period of thirty (30) days, or the Shipowner shall institute (by
petition, application, answer, consent or otherwise) any bankruptcy,
arrangement, readjustment of debt, dissolution, liquidation or similar
executory or judicial proceeding; or a bankruptcy, arrangement, readjustment of
debt, dissolution, liquidation or similar executory or judicial proceeding
shall be instituted against the Shipowner and shall remain undismissed,
undischarged or unstayed for a period of thirty (30) days; or
(d) an Indenture Default has occurred;
then, and in any such event, and at any time thereafter, if such event is
continuing, and if there is no Indenture Default (or if there is an Indenture
Default, only after the Secretary has received all payments due under the
Secretary's Note and the Mortgage), the Lender (by written notice to the
Shipowner), shall have the right to institute any judicial or other proceedings
under this Agreement to recover all amounts owing under this Agreement. The
Lender agrees that so long as an Indenture Default exists, all amounts received
during such period from, or on
<PAGE> 16
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behalf of, the Shipowner shall be applied in the manner set forth in Section
7.02. Notwithstanding an Event of Default, the Lender may not terminate the
Available Amount of the Credit Facility without the Secretary's consent;
provided, however, that the Shipowner's use of the Available Amount of the
Credit Facility shall remain subject to the requirements of Sections 2.02,
3.01, and 5.02. Except as expressly provided above in this Section 9.03,
presentment, demand, protest and all other notices of any kind are hereby
expressly waived. Notwithstanding any other provision of this Agreement, if
Section 9.03(c) is applicable, the Lender may file appropriate claims in
connection therewith, but shall apply any funds collected as a consequence of
said filings in accordance with the provisions of Section 7.02 of this
Agreement.
SECTION 10. GOVERNING LAW AND JURISDICTION
10.01 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
10.02 Submission to Jurisdiction. Each of the Shipowner and the
Lender hereby irrevocably agrees that any legal suit, action or proceeding
arising out of or relating to this Agreement, or any of the transactions
contemplated hereby, may be instituted by the other parties hereto in the
Courts of the State of New York or the Federal Courts sitting in the Borough of
Manhattan, City of New York, State of New York. Each of the Shipowner and the
Lender hereby irrevocably waives, to the fullest extent permitted by law, any
objection which it may have now or hereafter to the laying of the venue or any
objection based on forum non conveniens, or based on the grounds of
jurisdiction with respect to any such legal suit, action or proceeding and
irrevocably submits generally and unconditionally to the jurisdiction of any
such court in any such suit, action or proceeding. Each of the Shipowner and
the Lender agrees that a judgment, after exhaustion of all available appeals,
in any such action or proceeding shall be conclusive and binding upon it and
may be enforced in any other jurisdiction by suit upon such judgment, a
certified copy of which shall be conclusive evidence of the judgment. Each of
the Shipowner and the Lender waives personal service of any summons, complaint,
or other process, which service may be made by such or any other means
permitted by New York law.
10.03 Waiver of Security Requirements. To the extent the
Shipowner may, in any action or proceeding arising out of or relating to this
Agreement be entitled under applicable law to require or claim that the Lender
post security for costs or take similar action, the Shipowner hereby
irrevocably waives and agrees not to claim the benefit of such entitlement.
10.04 No Limitation. Nothing in this Section 10 shall affect the
right of the Lender to serve process in any manner permitted by law or to
commence legal proceedings or otherwise proceed against the Shipowner in any
jurisdiction; provided, however, that except as provided in Section 9.03, in
the event of an Indenture Default, the Lender may not proceed against the
Shipowner without the Secretary's consent unless the Secretary has received
full payment under the Secretary's Note.
SECTION 11. MISCELLANEOUS
11.01 Computations. Each determination of an interest rate, fee
or other amounts by the Lender or any other Person pursuant to any provision of
this Agreement, the Fee Letter or the Floating Rate Note, in the absence of
manifest error, shall be conclusive and binding on the Shipowner. All
computations of interest and fees hereunder and under the Floating Rate Note
shall be made on the basis of a year of three hundred sixty-five (365) days
and actual days elapsed; provided, however, that LIBOR shall be determined on
the basis of a year of 360 days and actual days elapsed.
11.02 Notices. Except as otherwise specified, all notices given
hereunder shall be in writing, and shall be given by mail, telecopier, tested
telex or personal delivery and shall be deemed to be given for the purposes of
this Agreement on the day that such notice is received by the intended
recipient thereof. Unless otherwise
<PAGE> 17
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specified in a notice delivered in accordance with this Section 11.02, all
notices shall be delivered to the parties hereto and to the Indenture Trustee
and the Secretary at their respective addresses indicated below:
To CITIBANK, N.A., as the Lender
Address: CITIBANK, N.A.
399 Park Avenue
New York, New York 10043
Attention: Structured Trade Finance
Facsimile: (212) 793-2330
Telephone: (212) 559-6787
with a copy to:
Citibank International Plc
335 Strand, 6th Floor
London WC2R1LS England
Attention: Gillian Barnfather
Telephone: 01144171500 0389
Facsimile: 01144171500 0479
To the Shipowner
Address: ROWAN COMPANIES, INC.
5450 Transco Tower
2800 Post Oak Boulevard
Houston, Texas 77056
Attention: Chief Financial Officer
Telephone: (713) 960-7686
Facsimile: (713) 960-7660
To the Secretary
Address: SECRETARY OF TRANSPORTATION
c/o Maritime Administrator
400 Seventh Street, S.W.
Washington, D.C. 20590
Attention: Office of Ship Finance
Telephone: (202) 366-5744
Facsimile: (202) 366-7901
To the Indenture Trustee
Address: CITIBANK, N.A.
111 Wall Street
5th Floor
New York, New York 10043
Attention: Corporate Agency and Trust Department
Telephone: (212) 412-6243
Facsimile: (212) 480-1614
<PAGE> 18
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11.03 Disposition of Indebtedness. Once the Shipowner has
completely drawn down on the Credit Facility and the Available Amount is zero,
the Lender may sell, assign, transfer, negotiate, or otherwise dispose of all
or any part of its interest in all or any part of the Shipowner's indebtedness
under this Agreement and the Floating Rate Note to any party (collectively, a
"Disposition of Indebtedness"), and any such party shall enjoy all the rights
and privileges of the Lender under this Agreement and the Floating Rate Note;
provided, however, that each Disposition of Indebtedness to any Person other
than a domestic Affiliate of the Lender shall require the prior written consent
of the Shipowner (which consent shall not be unreasonably withheld or delayed);
provided, further, however, that the Lender may pledge or grant participation
in all or any part of its interest in all or any part of the Shipowner's
indebtedness under this Agreement and the Floating Rate Note to any party at
any time without the Secretary's prior written consent so long as the Lender's
commitment to lend the Available Amount under this Agreement is not affected
thereby and without the Shipowner's prior written consent. The Shipowner
shall, at the request of the Lender, execute and deliver to the Lender or to
any party that the Lender may designate, any such further instruments as may be
necessary or desirable to give full force and effect to a Disposition of
Indebtedness by the Lender.
11.04 Disclaimer. The Lender shall not be responsible in any way
for the performance of the Construction Contract or any other Shipowner
Document, and no claim against the Shipbuilder or any other Person with respect
to the performance of the Construction Contract will affect the obligations of
the Shipowner under this Agreement or the Floating Rate Note.
11.05 No Waiver; Remedies Cumulative. No failure or delay on the
part of the Lender in exercising any right, power or privilege under this
Agreement, the Floating Rate Note or the Indenture and no course of dealing
between or among the Shipowner and the Lender shall operate as a waiver of the
rights of the Shipowner and the Lender against each other under this Agreement;
nor shall any single or partial exercise of any right, power or privilege
hereunder or under the Floating Rate Note or the Indenture preclude the
Shipowner and the Lender from exercising against each other any other right,
power or privilege hereunder. The rights and remedies expressly provided
herein are cumulative and not exclusive of any rights or remedies which the
Lender would otherwise have. No notice to or demand on the Shipowner in any
case shall entitle the Shipowner to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the rights of the
Lender under this Agreement to any other or further action in any circumstances
without notice or demand. Notwithstanding any other provision to the contrary
herein, no provision in this Agreement or any other related agreement preserves
any rights in favor of the parties against the Secretary in the event that
either party fails or delays to exercise any rights, powers, or privileges
under this Agreement, the Floating Rate Note or the Indenture or engages in any
particular course of dealing.
11.06 Currency. All payments of principal, interest, fees or
other amounts due hereunder and under the Floating Rate Note shall be made in
Dollars, regardless of any law, rule, regulation or statute, whether now or
hereafter in existence or in effect in any jurisdiction, which affects or
purports to affect such obligations.
11.07 Severability. To the extent permitted by applicable law,
the illegality or unenforceability of any provision of this Agreement shall not
in any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement.
11.08 Amendment or Waiver. This Agreement may not be changed,
discharged or terminated without the written consent of the parties hereto, and
no provision hereof may be waived without the written consent of the party to
be bound thereby. There may be no change, discharge, termination or claim of
waiver of the terms of this Agreement without the prior written consent of the
Secretary, who is entitled to enforce his rights under this Agreement as an
intended third party beneficiary to this Agreement. The parties hereto
acknowledge, however, that nothing in this Agreement creates in either the
Shipowner or the Lender any right whatsoever against the Secretary.
<PAGE> 19
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11.09 Indemnification. Without limiting any other rights that the
Lender may have hereunder or under applicable law, the Shipowner hereby agrees
to indemnify the Lender from and against any and all damages, losses, claims,
liabilities and related costs and expenses, including reasonable attorneys'
fees and disbursements (all the foregoing being collectively referred to as
"Indemnified Amounts") awarded against or incurred by the Lender arising out of
or as a result of this Agreement or the Floating Rate Note excluding, however,
Indemnified Amounts to the extent resulting from gross negligence or willful
misconduct on the part of the Lender. In the event of an Indenture Default,
all amounts received by the Lender pursuant to such indemnification after an
Indenture Default shall be held and paid in the manner required by Section
7.02.
11.10 Benefit of Agreement. This Agreement shall be binding upon
and inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto; provided, however, that the Shipowner may not
assign any of its rights or obligations hereunder without the prior written
consent of the Lender and, to the extent set forth in paragraph 11.03 hereof,
the Secretary.
11.11 Waiver of Jury Trial. Each of the Shipowner and the Lender
waives its respective rights to a trial by jury of any claim or cause of action
based upon or arising out of or related to this Agreement, any assignment or
the transactions contemplated hereby, in any action, proceeding or other
litigation of any type brought by any party against the other parties, whether
with respect to contract claims, tort claims, or otherwise. Each of the
Shipowner and the Lender agrees that any such claim or cause of action shall be
tried by a court trial without a jury. Without limiting the foregoing, the
parties further agree that their respective right to a trial by jury is waived
by operation of this section as to any action, counterclaim or other proceeding
which seeks, in whole or in part, to challenge the validity or enforceability
of this Agreement, any assignment or any provision hereof or thereof. This
waiver shall apply to any subsequent amendments, renewals, supplements or
modifications to this Agreement or any assignment.
11.12 Execution in Counterparts. This Agreement may be executed
in any number of counterparts, each of which when so executed shall be deemed
to be an original and all of which when taken together shall constitute one and
the same Agreement. Delivery of an executed counterpart of a signature page to
this Agreement by facsimile shall be effective as delivery of a manually
executed counterpart of this Agreement.
11.13 Shipowner Documents. Notwithstanding the provisions of this
Agreement, in any conflict between this Agreement and the provisions of the
Shipowner Documents, the Shipowner Documents shall govern the agreement between
the parties hereto, but only with respect to the subject matter thereof.
Notwithstanding the previous sentence, any provision in the Indenture (or any
other agreement the Shipowner has entered into with any other Person)
purporting to release the Shipowner of any indebtedness, liability or
obligation shall not apply to any indebtedness, liability or obligation of the
Shipowner hereunder and no termination of the Indenture (or any other agreement
the Shipowner has entered into with any other Person) shall affect the
continued effectiveness of this Agreement, which shall continue in full force
and effect until the Credit Facility has been terminated and all indebtedness,
liabilities and obligations of the Shipowner have been fully discharged and
satisfied, the Floating Rate Note have been paid, satisfied and discharged in
full, and there has elapsed a year and a day from the last payment received
from, or on behalf, of the Shipowner. However, this Section 11.13 shall have
no affect on the relationships established and the agreements entered into by
the parties to the Shipowner Documents (and such other agreements the Shipowner
has entered into with any other Person), in each case to which the Lender is
not a party in its capacity as the Lender hereunder.
11.14 Entire Agreement. This Agreement, the Fee Letter and the
Floating Rate Note contain the entire agreement among the parties hereto
regarding the Credit Facility.
<PAGE> 20
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed and delivered as of the date first above written.
ROWAN COMPANIES, INC. CITIBANK, N.A., as the Lender
By: E. E. Thiele By: P.A. Botticelli
-------------------------- -------------------------
(Signature) (Signature)
Name: E. E. Thiele Name: P.A. Botticelli
------------------------ -----------------------
(Print) (Print)
Title: Senior Vice President Title: Vice President
----------------------- ----------------------
(Print) (Print)
<PAGE> 21
SCHEDULE OF DEFINITIONS
EXHIBIT 1 to
CREDIT AGREEMENT
<PAGE> 22
Schedule of Definitions to Credit Agreement
Dated as of September 29, 1998
"Accelerated Repayment" shall have the meaning set forth in Section
4.02(b) of the Credit Agreement.
"Act" means the Merchant Marine Act, 1936, as amended, and in effect
on the Closing Date.
"Affiliate" or "Affiliated" means any Person directly or indirectly
controlling, controlled by, or under common control with, another Person.
"Applicable Interest Rate" shall mean a rate per annum equal to LIBOR
plus three tenths of one percent (0.30%) per annum; provided, however, that, if
the Lender shall have determined, prior to the commencement of any Interest
Period that: (A) Dollar deposits of sufficient amount and maturity for funding
a Disbursement are not available to such Lender in the London interbank market
in the ordinary course of business; or (B) by reason of circumstances affecting
the relevant market, adequate and fair means do not exist for ascertaining the
rate of interest to be applicable to a Disbursement; or (C) the relevant rate of
interest referred to in the definition of LIBOR which is to be used to determine
the rate of interest for a Disbursement does not cover the funding cost to the
Lender of making or maintaining the Disbursement, then the Lender shall so
notify the Indenture Trustee, who shall give notice to the Shipowner of such
condition and interest shall, effective as of the date of such notice and so
long as such condition shall exist, accrue during each applicable Interest
Period at the Base Rate; provided, further, however that if, in the Lender's
reasonable judgment, it becomes unlawful at any time for such Lender to make or
maintain Disbursements based upon LIBOR, the Lender shall so notify the
Indenture Trustee, who shall give notice to the Shipowner of such determination
and, effective as of the date of such notice and so long as such condition shall
exist, interest shall thereafter accrue during each applicable Interest Period
at the Base Rate.
"Authorization Agreement" means the Authorization Agreement, Contract
No. MA-13441, dated the Closing Date, between the Secretary and the Indenture
Trustee, whereby the Secretary authorizes the Guarantee of the United States of
America to be endorsed on the Floating Rate Note, as the same is originally
executed, or as modified, amended or supplemented in accordance with the
applicable provisions thereof.
"Available Amount" shall have the meaning set forth in Section 2.01 of
the Credit Agreement.
"Base Rate" means, for any Interest Period or any other period, a
fluctuating interest rate per annum as shall be in effect from time to time
which rate per annum shall at all times be equal to the higher of:
(a) the rate of interest announced publicly by Citibank,
N.A. in New York, New York, from time to time, as Citibank, N.A.'s
base rate; or
(b) 1/2 of one percent per annum above the latest
three-week moving average of secondary market morning offering rates
in the United States for three-month certificates of deposit of major
United States money market banks, such three-week moving average being
determined weekly on each Monday (or, if any such day is not a
Business Day, on the next succeeding Business Day) for the three-week
period ending on the previous Friday by Citibank, N.A. on the basis of
such rates reported by certificate of deposit dealers to and published
by the Federal Reserve Bank of New York, or, if such publication shall
be suspended or terminated, on the basis of quotations for such rates
received by Citibank, N.A. from three New York certificate of deposit
dealers of recognized standing selected by Citibank, N.A., in either
case
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<PAGE> 23
adjusted to the nearest 1/4 of one percent or, if there is no nearest
1/4 of one percent, to the next higher 1/4 of one percent.
"Business Day" shall mean any day on which dealings in Dollar deposits
are carried on in the London interbank market and on which commercial banks in
London and New York City are open for domestic and foreign exchange business.
"Certificate Authorizing Disbursement" shall mean, with respect to a
Disbursement, the United States Certificate Authorizing Disbursement
substantially in the form set forth on page A-4 of Annex A to the Credit
Agreement.
"Closing Date" means September 29, 1998.
"Construction Contract" means that certain Mobile Platform
Construction Agreement (LeTourneau Hull No. 220), dated December 18, 1996, by
and between the Shipowner and the Shipyard, as the same may be amended,
modified or supplemented in accordance with the applicable provisions thereof.
"Construction Period" shall mean the period from the date hereof to
the Delivery Date.
"Construction Period Interest" shall mean all interest that accrues on
the Outstanding Principal during the Construction Period.
"Credit Agreement" or "Agreement" shall mean the Credit Agreement
dated as of the Closing Date, between the Shipowner and CITIBANK, N.A.,
including any Annex, Exhibit, and other attachment thereto, as the same may be
amended, modified or supplemented in accordance with the application provisions
thereof.
"Credit Facility" shall have the meaning set forth in Whereas Clause
(A) of the Credit Agreement.
"Credit Facility Amount" shall have the meaning set forth in Section
2.01 of the Credit Agreement.
"Delivery Date" means the date on which the Vessel is delivered to and
accepted by the Shipowner.
"Depository Agreement" means the Depository Agreement, Contract No.
MA-13445, dated the Closing Date, between the Shipowner, CITIBANK, N.A., as
Depository-Bailee, and the Secretary, as the same is originally executed, or
amended, modified or supplemented in accordance with the applicable provisions
thereof.
"Disbursements" shall have the meaning set forth in Section 2.03 of
the Credit Agreement.
"Disbursement Date" shall mean, in relation to any Disbursement, the
Business Day on which the Lender shall make such Disbursement.
"Disposition of Indebtedness" shall have the meaning set forth in
Section 11.03 of the Credit Agreement.
"Dollars," "U.S. Dollars," "U.S.D.," "U.S.$" or "$" shall mean the
lawful currency of the United States of America.
"Event of Default" shall have the meaning set forth in Section 9.03 of
the Credit Agreement.
- 2 -
<PAGE> 24
"Fee Letter" shall have the meaning set forth in Section 6.01 of the
Credit Agreement.
"Final Disbursement Date" shall have the meaning set forth in Section
2.02 of the Credit Agreement.
"Fixed Rate Note" shall mean an obligation substantially in the
form of Exhibit 3 to the Indenture, appropriately completed.
"Governmental Authority" shall mean the government of any country, any
agency, department or other administrative authority or instrumentality
thereof, and any local or other governmental authority within any such country.
"Guarantee" or "Guarantees" means the guarantee of the Floating Rate
Note by the United States of America pursuant to Title XI of the Act, as
provided in the Authorization Agreement.
"Guarantee Commitment" means the Commitment to Guarantee Obligations,
Contract No. MA-13440, dated as of the Closing Date, executed by the Secretary
and accepted by the Shipowner with respect to the Guarantees, as originally
executed or as modified, amended or supplemented in accordance with the
applicable provisions thereof.
"Guarantee Fees" shall mean the amounts described in the Guarantee
Commitment payable in consideration for the commitment therein described and
payable as provided in such Guarantee Commitment.
"Holder" means each holder of the Floating Rate Note.
"Indemnified Amounts" shall have the meaning set forth in Section
11.09 of the Credit Agreement.
"Indenture" means the Trust Indenture dated as of the Closing Date,
between the Shipowner and the Indenture Trustee, as the same is originally
executed, or as modified, amended or supplemented in accordance with the
applicable provisions thereof.
"Indenture Default" has the meaning specified in Article VI of Exhibit
1 to the Indenture.
"Indenture Trustee" means CITIBANK, N.A., a national banking
association, and any successor trustee permitted under the Indenture.
"Interest Payment Date" means, with respect to the Floating Rate Note,
the date when any installment of interest on such Note is due and payable,
which are March 15 and September 15 of each year, beginning on March 15, 1999
and the date of any prepayment of the Floating Rate Note.
"Interest Period" shall mean, with respect to any Disbursement, (i)
the period commencing on the Disbursement Date and extending up to, but not
including, the next Interest Payment Date; and (ii) thereafter the period
commencing on each Interest Payment Date and extending up to, but not
including, the next Interest Payment Date.
"Lender" shall mean CITIBANK, N.A., a national banking association,
and its permitted successors and assigns.
"LIBOR" shall mean (a) in relation to any Interest Period, the rate of
interest per annum (rounded upward, if necessary, to the nearest 1/16 of 1%)
quoted by the principal London office of CITIBANK, N. A., at
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<PAGE> 25
approximately 11:00 a.m. (London time) two Business Days prior to the first day
of such Interest Period for the offering to leading banks in the London
interbank market of U.S. Dollar deposits for a period and in an amount
comparable to such Interest Period and the principal amount upon which interest
is to be paid during such Interest Period and (b) in relation to any Post
Maturity Period, have the meaning set forth in Section 4.02(b) of the Credit
Agreement.
"Lien" shall have the meaning set forth in Section 8.01(c) of the
Credit Agreement.
"Maturity," when used with respect to any Obligation, means the date
on which the principal of, or interest on, such Obligation becomes due and
payable as therein provided, whether on a Payment Date, at the Stated Maturity
or by prepayment, repayment, redemption or declaration of acceleration or
otherwise.
"Mortgage" means the first preferred ship mortgage on the Vessel,
Contract No. MA-13443, between the Shipowner and the Secretary, as originally
executed or as modified, amended or supplemented in accordance with the
applicable provisions thereof.
"Note" shall mean a Floating Rate Note or a Fixed Rate Note.
"Obligation" or "Obligations" shall mean the Floating Rate
Note or Fixed Rate Note(s) of the Shipowner bearing a Guarantee and
authenticated and delivered pursuant to the Indenture and the Autorization
Agreement.
"Other Taxes" shall have the meaning set forth in Section 6.02(a) of
the Credit Agreement.
"Outstanding Principal" shall have the meaning set forth in Section
2.01 of the Credit Agreement.
"Payment Date" shall mean March 15 and September 15 of each year,
beginning on September 15, 2000.
"Payment Default" has the meaning specified in Section 6.01(a) of
Exhibit 1 to the Indenture.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
"Post Maturity Applicable Interest Rate" shall have the meaning set
forth in Section 4.02(b) of the Credit Agreement.
"Post Maturity Interest Rate" shall have the meaning set forth in
Section 4.02(b) of the Credit Agreement.
"Post Maturity Period" shall have the meaning set forth in Section
4.02(b) of the Credit Agreement.
"Quotation Date" shall have the meaning set forth in Section 4.02(b)
of the Credit Agreement.
"Redemption" means with respect to the redemption of the Floating Rate
Note, the repayment or prepayment of the Floating Rate Note as applicable.
"Redemption Date" means, with respect to the Floating Rate Note, a
date fixed for the prepayment, repayment or redemption of such Note by or
pursuant to Section 4 of the Credit Agreement, Article Fourth of the Indenture,
or Article III of Exhibit 1 to the Indenture.
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<PAGE> 26
"Redemption Price" means, with respect to the Floating Rate Note, the
price at which the Floating Rate Note is to be prepaid, repaid, or redeemed
pursuant to Section 4 of the Credit Agreement, Article Fourth of the Indenture,
or Article III of Exhibit 1 to the Indenture.
"Secretary" means the Secretary of Transportation or any official or
official body from time to time duly authorized to perform the duties and
functions of the Secretary of Transportation under Title XI of the Act
(including the Maritime Administrator, the Acting Maritime Administrator, and
to the extent so authorized, the Deputy Maritime Administrator and other
officials of the Maritime Administration).
"Secretary's Note" means a promissory note issued and delivered by the
Shipowner to the Secretary described in Article Third of the Security Agreement
and shall also mean any promissory note issued in substitution for and
replacement thereof pursuant to the Security Agreement.
"Security Agreement" shall mean that certain security agreement,
Contract No. MA-13442, dated as of the Closing Date, with respect to the
Vessel, executed by the Shipowner and the Secretary relating to the security in
respect to the Guarantees, as originally executed or as modified, amended or
supplemented in accordance with the applicable provisions thereof.
"Shipowner" means ROWAN COMPANIES, INC., a Delaware corporation, and
for purposes of the Indenture and the Floating Rate Note, subject to the
provisions of Sections 6.09, 8.01 and 8.02 of Exhibit 1 to the Indenture, shall
also include its successors and assigns; provided, however, that for purposes
of the Credit Agreement, the term Shipowner shall also include the Shipowner's
permitted successors and assigns under the Credit Agreement.
"Shipowner's Documents" means the Security Agreement, the Mortgage,
the Title XI Reserve Fund and Financial Agreement, the Depository Agreement,
and the Secretary's Note.
"Shipowner Financial Statements" shall have the meaning set forth in
Section 8.01(h) of the Credit Agreement.
"Shipyard" or "Shipbuilder" means LETOURNEAU, INC., a Texas
corporation.
"Stated Maturity," when used with respect to the Floating Rate Note,
means the date determinable as set forth in such Note as the final date on
which the principal of such Note is due and payable, which shall include,
without limitation, each of the Payment Dates.
"Taxes" shall have the meaning set forth in Section 6.02(a) of the
Credit Agreement.
"Title XI Reserve Fund and Financial Agreement" means that certain
Title XI Reserve Fund and Financial Agreement, Contract No. MA-13261, dated as
of December 17, 1996 executed by the Shipowner and the Secretary, as amended,
modified or supplemented in accordance with the applicable provisions thereof.
"United States" means the United States of America.
"Unpaid Amount" shall have the meaning set forth in Section 4.02(b) of
the Credit Agreement.
"Vessel" means the Shipowner's self-elevating mobile offshore
drilling unit to be named the GORILLA VI and constructed by LETOURNEAU, INC. in
accordance with the Construction Contract, including all work and
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<PAGE> 27
material heretofore or hereafter performed upon or installed in or placed on
board such Vessel, together with related appurtenances, additions,
improvements, and replacements.
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<PAGE> 28
FORM OF DISBURSEMENT REQUESTS
Annex A
to
Credit Agreement
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<PAGE> 29
ROWAN COMPANIES, INC.
5450 Transco Tower
2800 Post Oak Boulevard
Houston, Texas 77056
__________, 1998
Secretary of Transportation
c/o Maritime Administrator
Department of Transportation
400 Seventh Street, S.W.
Washington, D.C. 20590
Ladies and Gentlemen:
We are enclosing herewith our disbursement Request No. ___ and
Certificate plus the following documents for disbursement from the Credit which
has been established for LeTourneau Hull No. 220:
1. Shipyard's Certificate of no Liens pursuant to
Section 2.04(d) of Exhibit 1 to the Security
Agreement.
2. Wire transfer instructions for Shipyard, Shipowner,
or Lender.
3. Request for Actual Cost Approval and Reimbursement
(___________) with Supplemental Schedules Nos. __ and
___.
4. Certificate Authorizing Disbursements
The amount requested, U.S.$ __________ represents:
Progress payment No. __ for LeTourneau Hull No. 220.
Very truly yours,
ROWAN COMPANIES, INC.
By:______________________
Title:___________________
A-1
<PAGE> 30
ROWAN COMPANIES, INC.
DISBURSEMENT REQUEST NO. __
AND CERTIFICATE
TO ACCOMPANY DISBURSEMENT
FROM CREDIT FOR
HULL 220
__________, 1998
Secretary of Transportation
c/o Maritime Administration
Department of Transportation
400 Seventh Street, S.W.
Washington, D.C. 20590
Rowan Companies, Inc. (the "Shipowner") hereby requests the
Secretary of Transportation, acting by and through the Maritime Administrator
(the "Secretary") to approve disbursement from the Credit Facility for Hull No.
220 under the Credit Agreement dated September 29, 1998 (the "Agreement"), in
accordance with the accompanying wire transfer instructions. In support of
said request and in order to induce the Secretary to approve said disbursement,
the Shipowner hereby certifies:
I. That the Termination Date of the Credit Facility has
not occurred and that there is no default under the Security Agreement dated
September 29, 1998 Contract No. MA-13442 (the "Security Agreement").
II. That the requested Disbursement is properly due and
payable to the following payee(s), in the following amount(s) and in respect of
the following items(s):
Payee Amount Item
______________ $___________ ____________________________
III. That all prior Disbursements (if any) from the Credit
Facility have been used for the purposes stated in prior certificates furnished
to the Secretary.
IV. That the requested Disbursement is not to be used to
pay, or to reimburse the Shipowner for the payment of, any item(s) or amount(s)
paid or reimbursed from any prior Disbursement(s) from the Credit.
V. That the amount (if any) stated in II above to be
paid to the _____________ for the payment of interest, is the amount of
interest on the Obligations equal to the interest payable on
______________________, 199___.
VI. That the amount(s) (if any) stated in II above to be
paid to the Lender, Shipyard or other persons entitled thereto, or to the
Shipowner as reimbursement for amounts which it shall have paid or have caused
to be paid to said parties, is (are) properly payable from the Credit because:
A-2
<PAGE> 31
A. The total amount paid by or for the account of the
Company on account of the items, amounts and increases set
forth or referred to in Article First of the Special
Provisions of the Security Agreement from sources other than
the proceeds of the Obligations equals at least 12-1/2% of
the Actual Cost of the Vessel stated in the Security
Agreement. 1/
B. The amount(s) (if any) stated in II above to be paid
to the Company would not have the effect of reducing the total
amount paid referred to in A above, below the minimum set
forth in A above;
All terms used herein shall have the same meaning as they have
in the Security Agreement.
ROWAN COMPANIES, INC.
By:
Title:
____________________
1/ If such Actual Cost has been redetermined by the Secretary, add: "as the
same was redetermined by the Secretary on ____________________, 199__.
A-3
<PAGE> 32
CERTIFICATE AUTHORIZING DISBURSEMENT
Date ___________________
CITIBANK, N.A., as Lender
New York, New York
Subject: Credit Agreement dated September 29, 1998
Rowan Companies, Inc.
Certificate Authorizing Disbursement No. ____
Ladies and Gentlemen:
In accordance with the terms and conditions of the Credit
Agreement ("Agreement"), dated as of September 29, 1998 by and among ROWAN
COMPANIES, INC., a Delaware corporation (the "Shipowner" or "Borrower") and
CITIBANK, N.A., a national banking association (the "Lender"), and with the
Shipowner's Request for Disbursement, we hereby authorize the Lender to make a
Disbursement under the Credit Facility in the amount of U.S. $________ on or
after ___________ , 199_, by paying to the Lender from the proceeds of the
Disbursement the Construction Period Interest payable to such Lender in the
amount of U.S. $___________________, and then paying the balance of the
proceeds of the Disbursement to the account of [identify the Shipowner's
account as it is carried on the books of the payee bank] at [complete name and
address of the payee bank].
The defined terms in this Certificate shall have the
respective meanings specified in the Credit Agreement.
UNITED STATES OF AMERICA
SECRETARY OF TRANSPORTATION
Attest: By: Maritime Administration
By:
- -------------------------- -------------------------
Assistant Secretary Secretary
Maritime Administration Maritime Administration
A-4
<PAGE> 33
CERTIFICATE OF NO LIENS
LeTourneau, Inc., a Texas corporation (the "Shipyard"), does
hereby certify that, on the date hereof, the Vessel being constructed pursuant
to that certain construction contract dated December 18, 1996, as amended,
between the Shipyard and Rowan Companies, Inc., a company organized and
existing under the laws of Delaware, (the "Shipowner") (the "Construction
Contract"), which is identified as Shipbuilder's Hull No. 220, and its
component parts are free of any liens and rights in rem.
IN WITNESS WHEREOF, the Shipyard has caused this Certificate
to be duly executed and delivered this _____ day of ________________________.
LETOURNEAU, INC.
a Texas Corporation
By:
Name:
Title:
A-5
<PAGE> 34
REQUEST FOR ACTUAL COST APPROVAL AND REIMBURSEMENT
SUMMARY SHEET
Shipowner's Name Rowan Companies, Inc.
Shipowner's Address 5450 Transco Tower, 2800 Post Oak Blvd., Houston,
TX 77056
Shipyard's Name LeTourneau, Inc.
Shipyard's Address P. O. Box 2307-57606, Longview, Texas 75606
Name of Vessel GORILLA VI Shipyard Hull No. 220
Type of Vessel Mobile self-contained and elevating drilling Platform
LOA LBP BEAM DEPTH SHP
Submittal No. Date
Period Covered From: ______________ to: ____________ Final Cost Submittal [ ]
Date of Last Previous Submittal: ____________________
A-6
<PAGE> 35
INSTRUCTIONS TO SHIPOWNER
Requests for actual cost approvals and remittances must be submitted on this
form and on the supplemental schedules listed below as applicable. Specific
instructions are included on each supplemental schedule.
<TABLE>
<CAPTION>
===============================================================================================================
Previous Cumulative
Supplemental Cumulative Actual Cost Actual Cost
Remittances to Shipyard Schedule No. Total This Submittal to Date
- ---------------------------------------------------------------------------------------------------------------
<S> <C>
Contract Base Cost 1
Escalation
Changes & Extras
Other Items
------------------------------------------------------------------
1
------------------------------------------------------------------
2 & 2A
------------------------------------------------------------------
3
- ---------------------------------------------------------------------------------------------------------------
1. Subtotal-Actual Construction Cost
- ---------------------------------------------------------------------------------------------------------------
Owner Furnished Items 4
Design, Engineering and Inspection at
Owner's Cost
2. Subtotal-Actual Owner's Cost
------------------------------------------------------------------
5
------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
TOTAL (1&2) ACTUAL CONSTRUCTION
& OUTFITTING COST:
LESS: ITEMS OF FOREIGN COST
------------------------------------------------------------------
6
- ---------------------------------------------------------------------------------------------------------------
3. Subtotal-Actual Construction and
Owner's Outfitting Cost
- ---------------------------------------------------------------------------------------------------------------
Financing Costs: Commitment Fees 7
Interest Fees
Interest Income
------------------------------------------------------------------
------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
4. Subtotal-Financing Costs
- ---------------------------------------------------------------------------------------------------------------
TOTAL-ACTUAL COST
- ---------------------------------------------------------------------------------------------------------------
5. Source of Payments
- ---------------------------------------------------------------------------------------------------------------
Credit
Shipowner
General Fund
TOTAL
------------------------------------------------------------------
------------------------------------------------------------------
------------------------------------------------------------------
===============================================================================================================
</TABLE>
Notes, Comments, Etc.
A-7
<PAGE> 36
CERTIFICATION OF PAYMENT
The undersigned has examined the records of N/A
and certifies the above cost figures and the supplemental schedules to
accurately state the actual costs, both paid and to be paid, of ___ in
accordance with generally accepted accounting practices.
Date:
A-8
<PAGE> 37
U.S. DEPARTMENT OF TRANSPORTATION
MARITIME ADMINISTRATION
TITLE XI
REQUEST FOR ACTUAL COST APPROVAL AND REIMBURSEMENT
SUPPLEMENTAL SCHEDULE NO. 1
CONTRACT BASE COST AND ESCALATION
Shipowner's Name Rowan Companies, Inc.
Shipowner's Address 5450 Transco Tower, 2800 Post Oak Blvd., Houston,
Texas 77056
Shipyard's Name LeTourneau, Inc.
Shipyard's Address P. O. Box 2307-75606, Longview, Texas 75606
Name of Vessel GORILLA VI Shipyard Hull No. 220
Submittal No. Date
INSTRUCTIONS TO SHIPOWNER
List all remittances made to the shipyard for the construction of the vessel as
shown in the contract specifications. Include escalation, if applicable, as
defined in the contract. Do not include the cost of subsequent amendments to
the contract or changes and extras which are to be listed on Schedules 2 and
2A.
<TABLE>
<CAPTION>
DATE OF NOTES OR COMMENTS CONTRACT
PAYMENT (IF REQUIRED) BASE COST ESCALATION TOTAL
- ------- ------------- --------- ---------- -----
<S> <C> <C> <C> <C>
</TABLE>
A-9
<PAGE> 38
U.S. DEPARTMENT OF TRANSPORTATION
MARITIME ADMINISTRATION
TITLE XI
REQUEST FOR ACTUAL COST APPROVAL AND REIMBURSEMENT
SUPPLEMENTAL SCHEDULE NO. 2
INDEX OF CHANGES AND EXTRAS
Shipowner's Name Rowan Companies, Inc.
Shipowner's Address 5450 Transco Tower, 2800 Post Oak Blvd., Houston,
Texas 77056
Shipyard's Name LeTourneau, Inc.
Shipyard's Address P. O. Box 2307-75606, Longview, Texas 75606
Name of Vessel GORILLA VI Shipyard Hull No. 220
Submittal No. Date
INSTRUCTIONS TO SHIPOWNER
List all changes and extras in numerical order as indicated below. Fill in all
information requested. Show total cost claimed at the end of the list. Attach
Schedule 2A with information requested arranged in the same sequence.
If preferred, the Applicant may request the shipyard to forward this schedule
and Schedule 2A directly to Chief, Division of Cost Estimates and Analysis,
Maritime Administration, Code MAR-722, Room 2122, 400 Seventh Street, S.W.,
Washington, D.C. 20590.
<TABLE>
<CAPTION>
CHANGE NO. DESCRIPTION OR IDENTIFICATION SUBCONTRACTOR (IF APPLIC.) COST PER SHIP
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
</TABLE>
A-10
<PAGE> 39
U.S. DEPARTMENT OF TRANSPORTATION
MARITIME ADMINISTRATION
TITLE XI
REQUEST FOR ACTUAL COST APPROVAL AND REIMBURSEMENT
SUPPLEMENTAL SCHEDULE NO. 2A
CHANGE AND EXTRA DETAILS
Shipowner's Name Rowan Companies, Inc.
Shipowner's Address 5450 Transco Tower, 2800 Post Oak Blvd., Houston,
Texas 77056
Shipyard's Name LeTourneau, Inc.
Shipyard's Address P. O. Box 2307-75606, Longview, Texas 75606
Name of Vessel GORILLA VI Shipyard Hull No. 220
Submittal No. Date
INSTRUCTIONS TO SHIPOWNER
Enter below the details requested for each change order in the same sequence as
listed in Schedule 2. The scope of work for each change should be briefly
described. Major items of material and/or labor should be set forth
individually-whether added or deleted. Sufficient detail should be included
to justify the cost added or deleted for each change. Include as many changes
as possible on each sheet.
<TABLE>
<CAPTION>
TITLE OR CHANGE/SCOPE OF NET COST
CHANGE WORK BY PHASES/MATERIAL MATERIAL COST LABOR OF CHANGE
NO. DESCRIPTION/LABOR DESCRIPTION UNIT TOTAL HOURS COST (+)OR(-)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
A-11
<PAGE> 40
U.S. DEPARTMENT OF TRANSPORTATION
MARITIME ADMINISTRATION
TITLE XI
REQUEST FOR ACTUAL COST APPROVAL AND REIMBURSEMENT
SUPPLEMENTAL SCHEDULE NO. 3
OTHER ITEMS
Shipowner's Name Rowan Companies, Inc.
Shipowner's Address 5450 Transco Tower, 2800 Post Oak Blvd., Houston,
Texas 77056
Shipyard's Name LeTourneau, Inc.
Shipyard's Address P. O. Box 2307-75606, Longview, Texas 75606
Name of Vessel GORILLA VI Shipyard Hull No. 220
Submittal No. Date
INSTRUCTIONS TO SHIPOWNER
List below all items paid directly to the shipyard which qualify as
construction cost, but do not belong in the categories of basic contract cost,
changes, extras, and escalation. Example: insurance, storage of owner
furnished items, performance bond; if such items are not provided for in
construction contract.
<TABLE>
<CAPTION>
ITEM NO. DESCRIPTION COST
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
</TABLE>
A-12
<PAGE> 41
U.S. DEPARTMENT OF TRANSPORTATION
MARITIME ADMINISTRATION
TITLE XI
REQUEST FOR ACTUAL COST APPROVAL AND REIMBURSEMENT
SUPPLEMENTAL SCHEDULE NO. 4
OTHER FURNISHED ITEMS
Shipowner's Name Rowan Companies, Inc.
Shipowner's Address 5450 Transco Tower, 2800 Post Oak Blvd., Houston,
Texas 77056
Shipyard's Name LeTourneau, Inc.
Shipyard's Address P. O. Box 2307-75606, Longview, Texas 75606
Name of Vessel GORILLA VI Shipyard Hull No. 220
Submittal No. Date
INSTRUCTIONS TO SHIPOWNER
List below all furnished materials, equipment and services where the total cost
per invoice exceeds $2,500. At the end of the list include all invoices
costing less than $2,500 in a lump sum opposite the description "Miscellaneous
Owner Items." Description of individual items listed should include quantity,
material specification, model No., horse power, capacity, etc., as applicable
to allow review for reasonability of cost and eligibility as Title XI actual
cost. Invoices containing the above information may be submitted in lieu of
filling this form out provided a summary of all such invoices is provided with
each submittal.
<TABLE>
<CAPTION>
ITEM DESCRIPTION OR MANUFACTURE'S NAME VENDOR'S COST PER
NO. QUANTITY IDENTIFICATION CITY AND COUNTY INVOICE NO. SHIPSET
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
</TABLE>
A-13
<PAGE> 42
U.S. DEPARTMENT OF TRANSPORTATION
MARITIME ADMINISTRATION
TITLE XI
REQUEST FOR ACTUAL COST APPROVAL AND REIMBURSEMENT
SUPPLEMENTAL SCHEDULE NO. 5
DESIGN, INSPECTION AND ENGINEERING AT OWNER'S COST
Shipowner's Name Rowan Companies, Inc.
Shipowner's Address 5450 Transco Tower, 2800 Post Oak Blvd., Houston,
Texas 77056
Shipyard's Name LeTourneau, Inc.
Shipyard's Address P. O. Box 2307-75606, Longview, Texas 75606
Name of Vessel GORILLA VI Shipyard Hull No. 220
Submittal No. Date
INSTRUCTIONS TO SHIPOWNER
List below expenditures paid by the Applicant for design, inspection and
engineering in sufficient detail to permit review for Title XI eligibility and
reasonability of cost.
<TABLE>
<CAPTION>
NAMES OF APPLICANT'S EMPLOYEES AND/OR
ITEM NAMES OF SUBCONTRACTORS NO. OR INVOICE NO.
NO. NATURE OF WORK PERFORMED HOURS RATE/HOUR COST
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
</TABLE>
A-14
<PAGE> 43
U.S. DEPARTMENT OF TRANSPORTATION
MARITIME ADMINISTRATION
TITLE XI
REQUEST FOR ACTUAL COST APPROVAL AND REIMBURSEMENT
SUPPLEMENTAL SCHEDULE NO. 6
ITEMS OF FOREIGN MANUFACTURE, GROWTH OR ORIGIN
Shipowner's Name Rowan Companies, Inc.
Shipowner's Address 5450 Transco Tower, 2800 Post Oak Blvd., Houston,
Texas 77056
Shipyard's Name LeTourneau, Inc.
Shipyard's Address P. O. Box 2307-75606, Longview, Texas 75606
Name of Vessel GORILLA VI Shipyard Hull No. 220
Submittal No. Date
INSTRUCTIONS TO SHIPOWNER
Under Maritime Administration policy all items of foreign manufacture, growth
or origin are ineligible as Title XI actual cost. It is the responsibility of
the Applicant to furnish the information listed below for each such item. This
includes both goods and services. The total cost of the items listed will be
deducted from the total actual cost eligible for Title XI Guarantee unless a
waiver has been requested by letter from Maritime and granted by Maritime by
letter.
<TABLE>
<CAPTION>
ITEM DESCRIPTION OR VENDOR'S NAME VENDOR'S COST PER
NO. QUANTITY IDENTIFICATION CITY AND COUNTRY INVOICE NO. SHIP
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
</TABLE>
A-15
<PAGE> 44
U.S. DEPARTMENT OF TRANSPORTATION
MARITIME ADMINISTRATION
TITLE XI
REQUEST FOR ACTUAL COST APPROVAL AND REIMBURSEMENT
SUPPLEMENTAL SCHEDULE NO. 7
INTEREST AND COMMITMENT FEES
Shipowner's Name Rowan Companies, Inc.
Shipowner's Address 5450 Transco Tower, 2800 Post Oak Blvd., Houston,
Texas 77056
Shipyard's Name LeTourneau, Inc.
Shipyard's Address P. O. Box 2307-75606, Longview, Texas 75606
Name of Vessel GORILLA VI Shipyard Hull No. 220
Submittal No. Date
INSTRUCTIONS TO SHIPOWNER
Fill out the information requested below concerning the commitment fees for
which you are requesting reimbursement in the submittal.
<TABLE>
<CAPTION>
PERIOD CHECK WHICH PAID PRINCIPAL INTEREST AMOUNT
COVERED INT. FEE TO AMOUNT RATE PAID
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
A-16
<PAGE> 45
Document 3
TRUST INDENTURE
Relating to United States Government
Guaranteed Ship Financing Obligations
<PAGE> 46
_________________________________________________________
TRUST INDENTURE
Relating to United States Government Guaranteed
Ship Financing Obligations
Between
ROWAN COMPANIES, INC.
Shipowner
AND
CITIBANK, N.A.
Indenture Trustee
Dated as of September 29, 1998
<PAGE> 47
_________________________________________________________
TRUST INDENTURE
Between
ROWAN COMPANIES, INC.
Shipowner
AND
CITIBANK, N.A.
Indenture Trustee
Dated as of September 29, 1998
<PAGE> 48
TABLE OF CONTENTS TO SPECIAL PROVISIONS OF THE INDENTURE (1/)
<TABLE>
<CAPTION>
Page
----
<S> <C>
Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Recitals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE FIRST
Incorporation of General Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE SECOND
The Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE THIRD
Interest Rate Calculations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE FOUR
Certain Redemptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
</TABLE>
__________________
(1) This Table of Contents is not a part of the Indenture and has no bearing
upon the interpretation of any of its terms and provisions.
i
<PAGE> 49
<TABLE>
<S> <C>
ARTICLE FIFTH
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE SIXTH
Additions, Deletions and Amendments to Exhibit 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE SEVENTH
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22-23
</TABLE>
EXHIBITS TO TRUST INDENTURE
SCHEDULE A Schedule of Definitions to Trust Indenture
EXHIBIT 1 General Provisions of the Indenture
Incorporated by Reference
EXHIBIT 2 Form of Floating Rate Note
EXHIBIT 3 Form of Fixed Rate Note
EXHIBIT 4 Authorization Agreement
EXHIBIT 5 Form of Secretary Supplemental Indenture
ii
<PAGE> 50
TRUST INDENTURE
SPECIAL PROVISIONS
THIS TRUST INDENTURE, is dated as of September 29, 1998 (said Trust
Indenture, as the same may be amended, modified or supplemented from time to
time as permitted hereunder, herein called the "Indenture"), is between (i)
ROWAN COMPANIES, INC., a Delaware corporation (herein called the "Shipowner"),
and (ii) CITIBANK, N.A., a national banking association, (said bank, any
successor or assign hereunder, herein called the "Indenture Trustee").
RECITALS:
A. As provided in Article Fifth hereof, the terms defined in Schedule
A to this Indenture shall have the respective meanings stated in said Schedule;
B. The Shipowner has duly executed this Indenture, and duly authorized
the issuance hereunder of $171,007,000 principal amount of its Obligations
pursuant to Section 2.03 of Exhibit 1 to this Indenture (herein together with
any Obligations issued in respect thereof pursuant to Sections 2.09, 2.10, 2.12
and 3.10(b) of said Exhibit 1, called the "Obligations") designated "United
States Government Guaranteed Ship Financing Obligations, GORILLA VI Series;"
C. The Obligations will be issued by the Shipowner to aid in the
financing of the cost of construction of a self-elevating mobile offshore
drilling unit to be named the GORILLA VI (the "Vessel");
D. To aid in financing the construction of the Vessel, the
Shipowner has entered into a credit agreement (the "Credit Agreement") with
CITIBANK, N.A., a national banking association as Lender, providing for the
delivery of no more than $171,007,000 principal amount of note designated
"United States Government Guaranteed Ship Financing Obligations, GORILLA VI
Series";
E. Under the Authorization Agreement in the form set forth as Exhibit
4 hereto, the Secretary, on behalf of the United States, has agreed and will
agree to execute on the Obligations to be issued, a Guarantee of the payment of
the unpaid interest to the date of such payment on, and the unpaid balance of
the principal of, such Obligation under the provisions of Title XI of the Act,
and the Indenture Trustee is authorized to cause the Guarantees, bearing the
facsimile signature of the Secretary, and the facsimile seal of the United
States Department of Transportation, to be imprinted on the Obligations, and to
authenticate and deliver the Obligations and the Guarantees issued on the
Closing Date and from time to time thereafter, such agreements and
authorizations being subject to the conditions set forth in the Authorization
Agreement;
F. Pursuant to Section 1104(b)(5) of the Act, the Secretary will
determine that the interest to be borne by the Obligations (exclusive of
charges for the guarantee fee and service charges, if any) is reasonable; and
G. All actions necessary have been or will be taken in order (1) to
make the Obligations, when executed by the Shipowner, authenticated by the
Indenture Trustee and issued under the Indenture, the valid, binding and legal
obligations of the Shipowner in accordance with their terms, (2) to make the
Guarantees to be endorsed on the
1
<PAGE> 51
Obligations, when executed on behalf of the Secretary, authenticated by the
Indenture Trustee and delivered under this Indenture, the valid, binding and
legal obligations of the United States in accordance with their terms, and (3)
to make this Indenture the valid, binding and legal agreement of the parties
hereto in accordance with its terms.
NOW THEREFORE, in consideration of the premises, of the mutual
covenants herein contained, of the purchase of the Obligations by the Holder
and of other good and valuable consideration, the receipt and adequacy of which
the parties hereby acknowledge, and for the equal and proportionate benefit of
the present and future Holder, the parties hereto agree as follows:
ARTICLE FIRST
INCORPORATION OF GENERAL PROVISIONS
This Indenture shall consist of two parts: the Special Provisions and
the General Provisions attached hereto as Exhibit 1, made a part of this
Indenture and incorporated herein by reference.
2
<PAGE> 52
ARTICLE SECOND
THE OBLIGATIONS
(a) The Obligations issued hereunder shall be designated "United
States Government Guaranteed Ship Financing Obligations, GORILLA VI Series," and
shall be in the forms of Exhibits 2 and 3 to this Indenture; and, the aggregate
principal amount of Obligations which may be issued under this Indenture shall
not exceed $171,007,000 except as provided in Sections 2.09, 2.10, 2.12 and
3.10(b) of Exhibit 1 hereto.
(b) The Obligations shall be in the denominations of $1,000 or any
integral multiple thereof.
(c) The Shipowner shall at all times cause to be maintained in the
City of Houston, State of Texas an office or agency for the purposes specified
in Section 5.03 of Exhibit 1 to this Indenture.
(d) The Indenture Trustee shall at all times have its Corporate Trust
Office in the City of New York, State of New York.
ARTICLE THIRD
INTEREST RATE CALCULATIONS
Upon the terms and subject to the conditions contained in the
Obligations, the Indenture Trustee will calculate the Applicable Interest Rate
on the Obligations in the manner and at the times provided in the Obligations
and shall communicate the same to the Shipowner, the Secretary and any paying
agent identified to it in writing as soon as practicable after each
determination. The Indenture Trustee will, upon the request of the Holder of
the Obligations, determine the Applicable Interest Rate then in effect with
respect to the Obligations.
3
<PAGE> 53
ARTICLE FOURTH
CERTAIN REDEMPTIONS
(a) Scheduled Mandatory Redemption. The Obligations are subject to
redemption at a Redemption Price equal to 100% of the principal amount thereof,
together with interest accrued thereon to the applicable Redemption Date,
through the operation of scheduled repayment providing for the semi-annual
redemption on March 15 and September 15 of each year, commencing September 15,
2000 of $7,126,000 principal amount of Obligations (or such lesser principal
amount of Obligations as shall then be outstanding), which amount represents
approximately one twenty-fourth (1/24) of the Original Principal Amount of
Obligations, plus interest accrued thereon to the Redemption Date. There shall
be a final redemption of the remaining outstanding principal of the Floating
Rate Note on the earlier of (i) September 15, 2002, or (ii) two (2) years after
the Delivery Date, and a final redemption of the remaining outstanding principal
of the Fixed Rate Notes on March 15, 2012.
Notwithstanding the foregoing provisions of this subsection (a), if
the principal amount of Outstanding Obligations shall be reduced by reason of
any redemption pursuant to Section 3.04 of Exhibit 1 to this Indenture, the
principal amount of Obligations to be redeemed pursuant to this subsection (a)
on each subsequent Redemption Date for such Obligations shall be reduced by an
amount equal to the principal amount of such Obligations retired by reason of
such redemption pursuant to Section 3.04 of Exhibit 1 hereto divided by the
number of Redemption Dates (including the Stated Maturity of such Obligations)
scheduled thereafter to September 15, 2002 in the case of the Floating Rate Note
and March 15, 2012 in the case of Fixed Rate Note(s)(subject to such increase
as shall be necessary so that the total principal amount of Obligations to be
redeemed on any such Redemption Date shall be an integral multiple of $1,000);
provided that, the entire unpaid principal amount of the Outstanding Obligations
shall be paid not later than September 15, 2002 in the case of the Floating Rate
Note and March 15, 2012 in the case of each Fixed Rate Note. The Shipowner
shall, in accordance with Section 3.02(d) of Exhibit 1 hereto, promptly after
each redemption pursuant to said Section 3.04, furnish to the Secretary, the
Indenture Trustee and each Holder a revised table of scheduled repayments
reflecting the reductions made pursuant to this subsection (a) as a result of
such redemption.
(b) Optional Redemption of Obligations Without Premium.
At its option, the Shipowner may without premium,
(i) prepay on any Interest Payment Date the Floating Rate Note,
in whole or in part, in a minimum principal amount of $10,000,000, at a
Redemption Price equal to 100% of the principal amount thereof together with
interest accrued thereon to the Redemption Date, or
(ii) redeem or prepay the Floating Rate Note, in whole or in
part, on a Redemption Date designated by the Shipowner, from the proceeds from
the issuance of Fixed Rate Notes.
(c) Optional Redemptions of Obligations at Make-Whole Premium. At
its option, the Shipowner may prepay on any Interest Payment Date the Fixed Rate
Notes, in whole or in part, in a minimum principal amount of $10,000,000, at a
Redemption Price equal to 100% of the principal amount thereof together with
interest accrued thereon to the Redemption Date plus the Make-Whole Premium, if
any. Prepayments shall be applied pro rata against each Fixed Rate Note and
applied against the scheduled principal payments in the inverse order of
scheduled maturity.
(d) Optional Redemptions. If the Shipowner shall elect to make any
such optional redemptions pursuant to this Article, the Shipowner shall, at
least 40 days but not more than 60 days prior to the date fixed for redemption,
deliver to the Indenture Trustee (1) a Request stating that the Shipowner
intends to exercise its rights as above set forth to make such optional
redemptions and specifying the Redemption Date and the principal amount which
the Shipowner intends to redeem on such date, and (2) at least 35 days prior to
the date fixed for redemption in the case of the Fixed Rate Notes, deliver to
the Indenture Trustee an amount equal to the Make Whole Premium estimated by the
Indenture Trustee to be paid on the Redemption Date. The Indenture Trustee shall
give an estimate of the Make Whole Premium to the Shipowner within two (2)
business days of the delivery of the Shipowner's Request. In the event the
amount of the Make Whole Premium deposited by the Shipowner with the Indenture
Trustee pursuant to this section (and interest, if any, accrued thereon, less
any losses incurred on the investment thereof) is insufficient to pay the amount
of the Make Whole Premium, the Shipowner shall pay the amount of the shortfall
to the Indenture Trustee in immediately available funds upon one (1) day's
notice. In the event the amount of the Make Whole Premium deposited by the
Shipowner pursuant to this section (and interest, if any, accrued thereon, less
any losses incurred on the investment thereof) exceeds the Make Whole Premium,
the excess amount shall be refunded to the Shipowner by the Indenture Trustee in
immediately available funds on the Redemption Date.
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ARTICLE FIFTH
DEFINITIONS
For all purposes of this Indenture, unless otherwise expressly
provided or unless the context otherwise requires:
(1) All references herein to Articles, Sections or
other subdivisions, unless otherwise specified, refer to the
corresponding Articles, Sections and other subdivisions of
this Indenture;
(2) The terms "hereof," "herein," "hereby," "hereto,"
"hereunder" and "herewith" refer to this Indenture; and
(3) The terms used herein and defined in Schedule A
to this Indenture shall have the respective meanings stated in
said Schedule.
ARTICLE SIXTH
ADDITIONS, DELETIONS AND AMENDMENTS TO EXHIBIT 1
The following additions, deletions and amendments are hereby made to
Exhibit 1 to this Indenture.
(a) Concerning Citibank, N.A. Citibank, N.A. and its affiliates may
accept deposits from, lend money to, act as trustee under indentures of, accept
investment banking engagements from and generally engage in any kind of
business with, the Shipowner, any of its subsidiaries or affiliates, and any
Person who may do business with or own securities of the Shipowner or any such
subsidiary or affiliates, all as if Citibank, N.A. were not the Indenture
Trustee and without any duty to account therefor to the Holder.
(b) Concerning Immediately Available Funds. Notwithstanding any
provision in Exhibit 1 to this Indenture to the contrary, all payments are to
be made in immediately available funds.
(c) Concerning Mandatory Scheduled Redemptions. The terms "sinking
fund payment" and "sinking fund redemption" in Exhibit 1 to this Indenture
refer to the mandatory scheduled redemption.
(d) Concerning Section 2.02. Section 2.02(c) is revised to read as
follows:
(c) If the Maturity of any Obligation or an Interest Payment Date for
any Obligation shall be a day other than a Business Day, then such
payment may be made on the next succeeding Business Day, with the same
force and effect as if made on the Interest Payment Date for such
payment, provided, however, that interest shall accrue thereon for the
period after said Interest Payment Date (whether or not such next
succeeding Business Day occurs in a succeeding month).
(e) Concerning Section 2.04. Prior to the earlier of (i)
September 15, 2002 or (ii) two (2) years from the Delivery Date, the Shipowner
and the Indenture Trustee may enter into a Supplemental Indenture, and the
Indenture Trustee may enter into a supplement to the Authorization Agreement,
pursuant to Section 2.04 of Exhibit 1 to this Indenture, to provide for the
issuance of fixed rate obligations in the form of Exhibit 3 hereto for the
purpose of repaying the Floating Rate Note, provided however, that the Shipowner
and Indenture Trustee have obtained the prior written consent of the Secretary,
and further provided, that (a) except for the final issuance, each issuance of a
Fixed Rate Note must be in a minimum aggregate principal amount of $50,000,000,
and (b) the proceeds from the issuance of Fixed Rate Notes shall be used to pay
off, satisfy and cancel the Floating Rate Note, provided, however, that during
the Construction Period, the Floating Rate Note need not be paid off in its
entirety and need only be reduced by the net proceeds from the issuance of the
Fixed Rate Notes.
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(f) Concerning Section 2.06. Interest at the Applicable Interest
Rate shall be due on each Disbursement at the end of each Interest Period. The
Indenture Trustee will determine the Applicable Interest Rate for each Interest
Period.
(g) Concerning Section 2.10. Section 2.10(c) is revised to read as
follows:
(c) The Shipowner or the Indenture Trustee shall not be required to
register transfers or make exchanges of (1) Obligations for a period
of 15 days immediately prior to (A) an Interest Payment Date or (B)
any selection of Obligations to be redeemed, (2) Obligations after
demand for payment of the Guarantees and prior to the payment thereof
or rescission of such demand pursuant to Section 6.02(a), or (3) any
Obligation which has been selected for redemption in whole or in part,
except as to the unredeemed portion of any Obligation being redeemed
in part.
(h) Concerning Section 2.12. With respect to clause (1) of the
proviso to Section 2.12 of Exhibit 1 to the Indenture, a written agreement of
indemnity which is satisfactory in form and substance to the Secretary, the
Shipowner, and the Indenture Trustee, executed and delivered by an
institutional Holder having a capital and surplus of at least $100,000,000
shall be considered sufficient indemnity to the Secretary, the Shipowner, and
the Indenture Trustee in connection with the execution, authentication and
delivery of any new Obligations or the making of any payment as contemplated by
said Section 2.12.
(i) Concerning Payment of the Obligations. Notwithstanding
anything to the contrary in Exhibit 1 hereto, the Obligations to be issued
hereunder shall be payable as to principal, premium (if any), and interest, at
an office or agency maintained by the Shipowner for such purpose at the
Corporate Trust Office of the Indenture Trustee, or at the option of the
Shipowner, as to payments of principal, premium (if any), or interest by wire,
in immediately available funds, by such Corporate Trust Office to the Obligees
as appear in the Obligation Register, subject in any event to the provisions
hereof concerning home office payment and subject to the Indenture Trustee's
prior receipt of funds sufficient for the payment of principal, premium (if
any) or interest by wire or other immediately available funds. The Indenture
Trustee shall have no obligation to determine whether such wires or payments
were received by the Obligees.
(j) Concerning Section 3.02. Section 3.02(c) and (d) are revised to
read as follows:
(c) Scheduled Redemptions. If the Obligations of any series and
Stated Maturity or the Special Provisions hereof or the Supplemental
Indenture establishing such series shall so provide, such Obligations
shall be subject to (i) scheduled redemption through the operation of
a mandatory redemption schedule, in such amounts, at such times and
subject to such credits (if any) as may be specified therein, and (ii)
redemption at the option of the Shipowner, in connection with the
operation of any such mandatory redemption schedule, in such
additional amounts and subject to such conditions as may be specified
therein.
(d) Adjustments of Redemption Payments. If the Obligations of any
series and Stated Maturity or the Special Provisions hereof or of the
Supplemental Indenture establishing such series provide for an
adjustment in scheduled redemption payments as a result of any
redemption or cancellation of Obligations, the Shipowner shall
recompute the remaining scheduled redemption payments pursuant to such
provisions and shall, at least 60 days prior to the next Interest
Payment Date which occurs at least 60 days following any such
redemption or cancellation of Obligations of such series requiring
such recomputation, submit to the Secretary for his review such
recomputation to ascertain compliance with the provisions of such
Obligations or the Special Provisions hereof or such Supplemental
Indenture, and table of revised
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mandatory redemption schedule payments on the Obligations of such
series reflecting the adjustments made pursuant to such provisions as
a result of such redemption or cancellation. Upon advice by the
Secretary that he finds such recomputation to comply with such
provisions, the Shipowner shall submit said table to the Indenture
Trustee and the Indenture Trustee shall promptly submit a copy thereof
to each Holder of an Obligation of such series.
(k) Concerning Section 3.03. The date required by Section 3.03 of
Exhibit 1 hereto for the Floating Rate Note is the earlier of September 15,
2002, or (ii) two (2) years from the Delivery Date. The date required by Section
3.03 of Exhibit 1 hereto for the Fixed Rate Notes is March 15, 2012.
(l) Concerning Section 3.06. Section 3.06 of Exhibit 1 hereto is
hereby amended in its entirety to read as follows:
SECTION 3.06. Redemption After Assumption by the Secretary. Upon
receipt by the Indenture Trustee of written instructions from the
Secretary stating that the principal amount of Obligations specified
in such instructions are required to be redeemed on the date specified
therein (which shall be not less than 40 nor more than 60 days from
the receipt of such instructions by the Indenture Trustee) at the
option of the Secretary at any time after the Secretary's assumption
of the Obligations pursuant to Section 6.09, the Indenture Trustee
shall promptly give notice as provided in Section 3.08 of the
redemption on the Redemption Date of the principal amount of
Obligations specified in such instructions and the Indenture Trustee
shall, on such Redemption Date, redeem such Obligations together with
interest accrued thereon to such Redemption Date; provided that, the
Secretary shall redeem at the principal amount thereof and interest
accrued thereon the Outstanding Obligations relating to the Vessel if
the Vessel has been sold pursuant to Section 8.02 to a purchaser or
purchasers who have not assumed such Obligations by notice to the
Indenture Trustee in accordance with this Section 3.06 within 40 days
of the nonassumption of the Obligations by such purchaser.
(m) Concerning Section 3.07. Section 3.07(a) of Exhibit 1 to this
Indenture is revised to delete the phrase "or 3.05."
(ii) Notwithstanding the provisions of Section 3.07(b) of
Exhibit 1 to this Indenture, if less than all of the Obligations are to be
redeemed under any of the provisions contained or referred to in Article Fourth
hereof (excluding Article Fourth (c) or Article III of said Exhibit 1, the
Indenture Trustee shall select such Obligations to be redeemed on the Redemption
Date by allocating the principal amount to be redeemed first between each
maturity of Obligations in proportion to the Outstanding Obligations and second
among the holders of each maturity of Obligations in proportion to the aggregate
principal amount of such maturity of Obligations registered in their respective
names; provided that, the Indenture Trustee may select for redemption portions
of the principal amount of the Obligations of a denomination larger that $1,000;
but the portions of the principal amount of the Obligations so selected shall be
equal to $1,000 or an integral multiple thereof.
(n) Concerning Section 3.09. Section 3.09 of Exhibit 1 to this
Indenture is revised to read as follows:
SECTION 3.09. Deposit of Redemption Moneys. No later than 11:00 a.m.
in New York City on any Redemption Date, the Shipowner shall, except as
contemplated by Section 3.08(b) or Article Fourth (d) of the Special
Provisions, deposit or cause to be deposited with the Indenture Trustee
or with any Paying Agent an amount in immediately available funds
sufficient for such redemption (after taking into account any amounts
then held by the Indenture Trustee or such Paying Agent and available
for such redemption) with irrevocable directions to it to so apply the
same.
(o) Concerning Section 4.01. Section 4.01(b) of Exhibit 1 hereto
is hereby amended in its entirety to read as follows:
"(b) Cash held by the Indenture Trustee or any Paying Agent
(other than the Shipowner) under this Indenture -
(i) need not be segregated;
(ii) shall not be invested except as permitted by
clause (iv) of this Section 4.01(b);
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(iii) shall not bear interest except as the
Shipowner and the Indenture Trustee (or such Paying
Agent) may agree in writing; and
(iv) if the Shipowner shall have deposited or caused
to be deposited with the Indenture Trustee funds
sufficient for the payment of the Obligations at
their Maturity, including interest to the date of
Maturity, and the date of Maturity is more than one
(1) Business Days after the deposit of such funds,
the Indenture Trustee upon the Request of the
Shipowner shall invest such funds, as directed by the
Shipowner in writing, in direct obligations of the
United States Government maturing at or prior to the
date of Maturity of such Obligations and having a
principal amount equal to not less than the amount of
the funds so invested. Such investments shall be
held in trust for the purpose for which the funds so
invested were held. After the Obligations in respect
of which the funds were deposited have been paid in
full (except as to unclaimed amounts as referred to
in Section 4.03) any of such funds (including
interest received in respect of such investments and
gain on matured investments purchased at a discount)
held by the Indenture Trustee in excess of amounts to
which Holders of such Obligations are entitled shall
upon the Request of the Shipowner be paid by the
Indenture Trustee to the Shipowner but only in the
absence of a Default hereunder."
(p) Concerning Section 4.02. The appointment of a Paying Agent by
the Shipowner is subject to the prior consent of the Secretary and Indenture
Trustee, which consent shall not be unreasonably withheld.
(q) Concerning Section 4.03. Section 4.03 is revised to read as
follows:
SECTION 4.03. Unclaimed Amounts. Any moneys received by the
Indenture Trustee or a Paying Agent, for the payment of Obligations or
Guarantees and remaining unclaimed by the Holders thereof for 6 years
after the date of the Maturity of said Obligations or the date of
payment by the Secretary of the Guarantees shall, upon delivery to the
Indenture Trustee of a Request by the Shipowner, be paid to the
Shipowner; provided that, not less than 30 days prior to such payment,
the Shipowner shall publish notice thereof to the Obligees at least
once in the Authorized Newspapers. In such event, such Holders shall
thereafter be entitled to look only to the Shipowner (and the settlor
or settlors of any trust for which the Shipowner is trustee, to the
extent paid over to it or them) for the payment thereof, and the
Indenture Trustee or such Paying Agent, as the case may be, shall
thereupon be relieved from all responsibility to such Holders
therefor. No such Request, publication or payment shall be construed
to extend any statutory period of limitations which would have been
applicable in the absence of such Request, publication or payment.
(r) Concerning Sections 5.01 and 5.02. Sections 5.01 and 5.02 are
revised to read as follows:
SECTION 5.01. Authorization, Execution and Delivery of Indenture and
Performance. The Shipowner has duly authorized the execution, delivery
and performance of this Indenture.
SECTION 5.02. Payment and Procedure for Payment of Obligations. The
Shipowner will duly and punctually pay the principal of (and premium,
if any) and interest on the Obligations according to the terms thereof
and of this Indenture. The Shipowner will deposit with the Indenture
Trustee or (subject to Section 3.09) a Paying Agent no later than
11:00 a.m. in New York City on each date fixed for such payment or as
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otherwise provided by the Special Provisions hereof an amount in
immediately available funds sufficient for such payment (after taking
into account any amounts then held by the Indenture Trustee or such
Paying Agent and available for such payment) with irrevocable
directions to it to so apply the same; provided that, payments of
interest may be made as provided in Section 2.02(b)(4) as modified by
Article Sixth (b) of the Special Provisions; and provided further, that
except with the consent of the Secretary the Shipowner shall not
deposit any such amount more than ten days prior to the date of the
payment for which such amount is deposited, unless otherwise provided
by the Special Provisions hereof.
(s) Concerning Section 6.06. Section 6.06(a) revised to read as
follows:
SECTION 6.06. (a) Obligees' Right to Direct Indenture Trustee after
Indenture Default. During the continuance of any Indenture Default,
the Holders of a majority in principal amount of the Outstanding
Obligations shall have the right, by an Act of Obligees, to direct the
Indenture Trustee:
(1) to exercise or to refrain from exercising any
right or to enforce any remedy granted to it by this
Indenture; and
(2) to direct the time, method and place of the
exercise of any such right or the enforcement of any such
remedy;
provided that, subject to Section 7.03, the Indenture Trustee shall
have the right not to take any such action if it shall determine in
good faith that the action would involve it in personal liability, or
would be unjustly prejudicial to the Obligees not parties to such
direction.
Anything in this Section 6.06(a) to the contrary notwithstanding, the
Indenture Trustee shall be obligated to demand payment of the
Guarantees as provided in Section 6.02(a) unless the Holders of all
Outstanding Obligations shall have elected to terminate the Guarantees
as provided in Section 6.04(a)(2), in which case the Indenture Trustee
shall be obligated to refrain from making such demand.
(t) Concerning Section 6.09. The reference to "Exhibit 4" in Section
6.09 is revised to read "Exhibit 5" and the following paragraph is added at the
end of Section 6.09:
In the event that the Obligations are registered in the name
of The Depository Trust Company ("DTC"), Cede & Co. ("Cede") or another nominee
of DTC or Cede pursuant to a Letter of Representations ("LOR") which is executed
among the Shipowner, the Indenture Trustee and DTC, and (i) if the Secretary
assumes the Obligations pursuant to Section 6.09(a) hereof, or (ii) if the
Secretary instructs the Shipowner and the Indenture Trustee to terminate the
LOR, the Shipowner and the Indenture Trustee, immediately upon receipt of notice
of such assumption or upon receipt of notice of such termination, shall
terminate or cause the termination of the LOR in accordance with Section 11
thereof. The Indenture Trustee shall within 30 days from receipt of either such
notice from the Secretary also instruct DTC to notify its direct and indirect
participants of the need to re-register the Obligations in the names of the
beneficial owners. Upon surrender by DTC of the Obligations issued in its name,
the name of Cede or another nominee, the Shipowner shall issue at its sole
expense, and the Indenture Trustee shall authenticate Obligations in the names
provided to the Indenture Trustee by DTC.
(u) Concerning Section 7.02. The reference to "$3,000,000" in
Section 7.02 is revised to read "$75,000,000."
(v) Concerning Section 7.03. Section 7.03(h) and (o) are revised to
read as follows:
(h) In all cases where this Indenture does not make express provision
as to the evidence on which the Indenture Trustee may act or refrain
from acting, the Indenture Trustee shall be entitled to receive and
shall be protected (subject to paragraph (c) of this Section) in
acting or refraining from acting hereunder in reliance upon an
Officer's Certificate as to the existence or nonexistence of any fact.
(o) No provision of this Indenture shall require the Indenture Trustee
to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers.
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(w) Concerning Section 7.04. Section 7.04 is revised to read as
follows:
SECTION 7.04. Compensation, Expenses and Indemnification of Indenture
Trustee. The Shipowner shall (1) pay such compensation to the
Indenture Trustee as they may agree upon in writing from time to time
and reimburse it for its reasonable expenses and disbursements
(including counsel fees and expenses) and (2) indemnify the Indenture
Trustee for, and hold it harmless against, any loss, liability or
expense which it may incur or suffer without negligence or bad faith
in acting under this Indenture or the Authorization Agreement. The
compensation of the Indenture Trustee shall not be limited to the
compensation provided by law for a trustee acting under an express
trust. The obligations of the Shipowner under this Section 7.04 shall
survive the termination of the Indenture and resignation or removal of
the Indenture Trustee.
(x) Concerning Sections 8.01 and 8.02. Sections 8.01 and 8.02 are
revised to read as follows:
SECTION 8.01. Consolidation, Merger or Sale by Shipowner. Nothing in
this Indenture shall prevent any lawful consolidation or merger of the
Shipowner with or into any other Person, or any sale of the Vessel to
any other Person lawfully entitled to acquire and operate the Vessel
or any sale by the Shipowner of all or substantially all of its assets
to any other Person; provided that, except where the Shipowner shall
be the Person surviving a merger or consolidation, the Person formed
by or surviving such consolidation or merger, or to which the sale of
the Vessel shall be made, shall, by Supplemental Indenture, expressly
assume the payment of the principal of and interest (and premium, if
any) on the Outstanding Obligations relating to the Vessel in
accordance with the terms of the Obligations and of the Indenture and
shall expressly assume the performance of the agreements of the
Shipowner in the Indenture; provided further, that to the extent the
Outstanding Obligations are not so assumed, the Shipowner shall redeem
or cause to be redeemed the Outstanding Obligations, such redemption
to be in accordance with the terms of the Obligations and of the
Indenture. When a Person so assumes this Indenture and the
Outstanding Obligations, the Supplemental Indenture shall discharge
and release the Shipowner from any and all obligations thereunder
relating to the Outstanding Obligations. In the event of such an
assumption by a Person to whom the Vessel has been sold (a) such
Person shall succeed to, and be substituted for, and may exercise
every right and power of the original Shipowner with the same effect
as if such successor Shipowner had been named as the Shipowner herein
and (b) the Outstanding Obligations shall be surrendered to the
Indenture Trustee for appropriate notation or for the issuance of new
Obligations in exchange for the Outstanding Obligations in the name of
the successor Shipowner, as required by the Secretary.
SECTION 8.02. Sale of the Vessel by the Secretary. Nothing contained
in this Indenture shall prevent the sale of the Vessel to any other
Person by the Secretary, by a court of law or by the Shipowner
following, in connection with or in lieu of a foreclosure or similar
action. Following any such sale (1) the Person to whom the Vessel has
been sold may, by Supplemental Indenture, expressly assume the payment
of principal and interest (and premium, if any) on all of the
Outstanding Obligations in accordance with the terms of the
Obligations and the Indenture and shall expressly assume the
performance of the agreements of the Shipowner in the Indenture; and
(2) in the event such Person does not so assume, the Secretary shall
prepay or redeem all of the Outstanding Obligations without premium
pursuant to Section 3.06 hereof; provided that, the Secretary shall
allow or permit the sale of the Vessel to the original Shipowner or to
any affiliate of the original Shipowner only if (i) the Secretary has
not prepaid or redeemed such Obligations prior to such sale, and (ii)
such purchaser assumes all of the Outstanding Obligations as
contemplated by the preceding clause (1). When a Person so assumes
this Indenture and all of the Outstanding Obligations, the
Supplemental Indenture shall discharge and release the Secretary from
any and all obligations
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thereunder in the Secretary's capacity as Shipowner relating to the
Outstanding Obligations. In the event of such an assumption by a
Person to whom the Vessel has been sold (a) such Person shall succeed
to, and be substituted for, and may exercise every right and power of
the original Shipowner with the same effect as if such successor
Shipowner had been named as the Shipowner herein and (b) the
Outstanding Obligations shall be surrendered to the Indenture Trustee
for appropriate notation or for the issuance of new Obligations in
exchange for the Outstanding Obligations in the name of the successor
Shipowner, as required by the Secretary. Any such sale or the
execution of a Supplemental Indenture by an successor Shipowner shall
not discharge or in any manner affect the obligation of the United
States to pay the Guarantees pursuant to the terms thereof.
(y) Concerning Notices. Subject to the provisions of Section 13.01
of Exhibit 1 to this Indenture, any notice, request, demand, direction, consent,
waiver, approval or other communication to be given to a party hereto or
the Secretary, shall be deemed to have been sufficiently given or made when
addressed to:
The Indenture Trustee as: CITIBANK, N.A.
111 Wall Street, 5th Floor
New York, New York 10043
Attn: Corporate Agency and
Trust Department
The Shipowner as: ROWAN COMPANIES, INC.
5450 Transco Tower
2800 Post Oak Boulevard
Houston, Texas 77056-6196
Attn: Chief Financial Officer
The Secretary as: SECRETARY OF TRANSPORTATION
c/o Maritime Administrator
Department of Transportation
400 Seventh Street, SW
Washington, D.C. 20590
Attention: Office of the Chief Counsel
(z) Concerning Applicable Law. This Indenture and each Obligation
shall be governed by the laws of the State of New York, and to the extent
applicable, the laws of the United States.
(aa) Execution of Counterparts. This Indenture may be executed in any
number of counterparts. All such counterparts shall be deemed to be originals,
and shall constitute but one and the same instrument.
(bb) Concerning Disbursement Notations. Upon receipt from the Lender
of documents confirming Disbursements, the Indenture Trustee shall review
Exhibit A of the Floating Rate Note (The "Grid"), and calculate principal and
applicable interest thereon. If the Indenture Trustee's calculations are not
consistent with those of the Lender, the calculations of the former shall
prevail. The Indenture Trustee shall promptly thereafter send a copy of the
Grid bearing its calculations to the Holder, who shall endorse the Indenture
Trustee's calculations on the original Exhibit A to the Floating Rate Note, and
send a copy thereof, so noted, to the Indenture Trustee, who, in turn, shall
promptly send a copy thereof to the Secretary.
(cc) Concerning Registered and Beneficial Ownership of the
Obligations; Legends.
(i) The Fixed Rate Notes may be issued initially in the form
of one or more permanent global Notes in definitive, fully registered
form without interest coupons (each, a "Global Obligation"). Except as
provided in paragraph (iii) below, owners of beneficial interests in
Global Obligations ("Obligation Owners") will not be entitled to
receive separate certificated Notes ("Definitive Obligation") and will
not be considered the holders thereof. Each such Global Obligation
shall be deposited with the Depository Trust Company (the "DTC") or the
Indenture Trustee, as custodian for DTC, registered in the name of DTC
or a nominee of DTC, and duly executed by the Shipowner and
authenticated by the Indenture Trustee as provided in the Indenture.
Each Global Obligation shall bear such legend as DTC may require.
(ii) Members of, or participants in, DTC shall have no rights
under the Indenture with respect to any Global Obligation held on
their behalf by DTC or by the Indenture Trustee as the custodian of DTC
or under such Global Obligation, and DTC may be treated by the
Shipowner, the Indenture Trustee and any agent of the Shipowner or the
Indenture Trustee as the absolute owner of such Global Obligation for
all purposes whatsoever. Notwithstanding the foregoing, nothing herein
shall prevent the Shipowner, the Indenture Trustee or any agent of the
Shipowner or the Indenture Trustee from giving effect to any written
certification, proxy or other authorization furnished by DTC or impair,
as between DTC and its members and participants, the operation of
customary practices of DTC governing the exercise of the rights of an
owner of a beneficial interest in any Global Obligation.
(iii) (1) The transfer and exchange of Global Obligations
or beneficial interests therein shall be effected through DTC or the
Indenture Trustee, as the custodian for DTC, in accordance with the
Indenture and the procedures of DTC therefor.
(2) A Global Obligation shall be exchangeable for
Definitive Obligations registered in the names of persons owning
beneficial interest in such Global Obligation only if any of the
following events shall have occurred: (1) DTC notifies the Shipowner
that it is unwilling or unable to continue as depositary for such
Global Obligation or DTC ceases to be a clearing agency registered
under the Securities Exchange Act of 1934, as amended, at a time when
DTC is required to be so registered in order to act as depositary, and
a successor depositary is not appointed by the Shipowner within 90 days
thereafter, (2) the Shipowner or the Indenture Trustee elects to
terminate DTC's services or the book entry system, (3) the Secretary
assumes the Obligations or (4) the Secretary instructs the Shipowner
and Indenture Trustee to terminate the Letter of Representations.
(3) Any Global Obligation that is exchangeable for
Definitive Obligations registered in the name of the owners of
beneficial interests therein pursuant to this paragraph (iii) shall be
surrendered by DTC to the Indenture Trustee to be so exchanged, without
charge, and the Shipowner shall execute and the Indenture Trustee shall
authenticate and deliver, upon such exchange of such Global Obligation,
an equal aggregate principal amount of Definitive Obligations of
authorized denominations. Definitive Obligations issued in exchange for
a beneficial interest in a Global Obligation pursuant hereto shall be
registered in such names and in such authorized denominations as DTC,
pursuant to instructions from its direct or indirect participants or
otherwise, shall instruct the Indenture Trustee in writing. The
Indenture Trustee shall deliver such Definitive Obligations to the
Obligation Owners in whose names such Obligations are so registered in
accordance with the instructions of DTC.
(4) The registered holder of a Global Obligation may
grant proxies and otherwise authorize any Obligation Owner, including
DTC's members and participants and Obligation Owners that may hold
interest through such members and participants, to take any action
which a Holder is entitled to take under the Indenture or the
Obligations.
(5) In the event of the occurrence of any of the events
specified in paragraph (iii)(2), the Shipowner will promptly make
available to the Indenture Trustee a reasonable supply of Definitive
Obligations.
(6) Notwithstanding any other provision of the
Indenture, a Global Obligation may not be transferred except as a whole
by DTC for such Global Obligation to a nominee of DTC or by a nominee
of DTC to DTC or another nominee of DTC.
(iv) At such time as all beneficial interests in a Global
Obligations have either been exchanged for Definitive Obligations,
redeemed, repurchased or canceled, such Global Obligation shall be
returned to the Indenture Trustee for cancellation or retained and
canceled by the Indenture Trustee.
(v) The Indenture Trustee shall have no responsibility or
obligation to any owner of a beneficial interest in a Global
Obligation, a member of, or a participant in DTC or any other
Obligation Owner with respect to the accuracy of the records of DTC or
its nominee or of any participant or member thereof, with respect to
any ownership interest in the Obligations or with respect to the
delivery to any participant, member, beneficial owner or other
Obligation Owner (other than DTC) of any notice (including any notice
of redemption) or the payment of any amount or delivery of any
Obligations (or other security or property) under or with respect to
such Obligations. All notices and communications to be given to the
Holders and all payments to be made to Holders in respect to the
Obligations shall be given or made only to or upon the order of the
registered Holders (which shall be DTC or its nominee in the case of a
Global Obligation). The rights of owners of beneficial interests in any
Global Obligation shall be exercised only through DTC subject to the
applicable rules and procedures of DTC. The Indenture Trustee may rely
and shall be fully protected in relying upon information furnished by
DTC with respect to its members, participants and any beneficial
owners.
ARTICLE SEVENTH
MISCELLANEOUS
(a) Notwithstanding any provision herein, in the event there are
any inconsistencies between the original of this document held by the
Secretary, and an original held by any other party to this transaction,
the provisions of the original held by the Secretary shall prevail.
(b) This Indenture may be executed in several counterparts, each
of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
11
<PAGE> 61
IN WITNESS WHEREOF, this Trust Indenture has been duly executed by the
parties hereto as of the day and year first above written.
[SEAL] ROWAN COMPANIES, INC.
Shipowner
ATTEST:
Mark H. Hay By: E.E. Thiele
- -------------------- -----------------------------------
Secretary Senior Vice President
CITIBANK, N.A.
Indenture Trustee
[SEAL]
ATTEST:
Carol Ng By: Authur Aslasian
- -------------------- -----------------------------------
Vice President Vice President
12
<PAGE> 62
DISTRICT OF COLUMBIA )
) SS:
CITY OF WASHINGTON )
On this 29th day of September, 1998 before me personally appeared
Edward E. Thiele to me known, who being by me duly sworn, did depose and say
that he is the Senior Vice President of ROWAN COMPANIES, INC., that he knows
the seal affixed to said instrument is such corporation's seal; that it was so
affixed by authority of the Board of Directors of said corporation, and that he
signed his name thereto by like authority.
In testimony whereof, I have hereunto set my hand and seal this 29th
day of September, 1998.
Noralyn Russell
---------------
NOTARY PUBLIC
[NOTARIAL STAMP AND SEAL]
13
<PAGE> 63
STATE OF NEW YORK )
) SS:
COUNTY OF NEW YORK )
Be it known this 29th day of September, 1998 personally
appeared before me, Arthur W. Aslanian, who after being duly sworn, deposed and
said that he is a Vice President of CITIBANK, N.A., a national banking
association, which is described in and executed the instrument hereto annexed,
and that he signed the instrument hereto annexed by order of the Board of
Directors of the said national banking association, and acknowledged the annexed
instrument to be the free act and deed of the said national banking association.
In testimony whereof, I have hereunto set my hand and seal this 29th
day of September, 1998 .
Noralyn Russell
-------------
NOTARY PUBLIC
[NOTARIAL STAMP AND SEAL]
<PAGE> 64
Document 4
SCHEDULE OF DEFINITIONS
SCHEDULE A to
Trust Indenture
<PAGE> 65
Schedule of Definitions to Trust Indenture
Dated as of September 29, 1998
"Act" means the Merchant Marine Act, 1936, as amended, and in
effect on the Closing Date.
"Act of Obligees" means any request, demand, authorization,
direction, notice, consent, waiver or other action to be given or taken by the
Obligees and embodied in one or more documents of the type, and executed in the
manner, required by the Indenture.
"Actual Cost" means the actual cost of the Vessel as
determined and re-determined by the Secretary pursuant to Sections 1101(f) and
1104(b)(2) of the Act.
"Actual Knowledge" means actual knowledge of a Responsible
Officer of a Person.
"Affiliate" or "Affiliated" means any Person directly or
indirectly controlling, controlled by, or under common control with, another
Person.
"Applicable Interest Rate" shall mean (a) with respect to
Obligations which are the Floating Rate Note, the rate per annum equal to the
lesser of (i) 14% per annum, or (ii) LIBOR plus three tenths of one percent
(0.30%) per annum; provided, however, that, if the Lender shall have determined,
prior to the commencement of any Interest Period that: (A) Dollar deposits of
sufficient amount and maturity for funding a Disbursement are not available to
such Lender in the London interbank market in the ordinary course of business;
or (B) by reason of circumstances affecting the relevant market, adequate and
fair means do not exist for ascertaining the rate of interest to be applicable
to a Disbursement; or (C) the relevant rate of interest referred to in the
definition of LIBOR which is to be used to determine the rate of interest for a
Disbursement does not cover the funding cost to the Lender of making or
maintaining the Disbursement, then the Lender shall so notify the Indenture
Trustee, who shall give notice to the Shipowner of such condition and interest
shall, effective as of the date of such notice and so long as such condition
shall exist, accrue during each applicable Interest Period at the Base Rate;
provided, further, however that if, in the Lender's reasonable judgment, it
becomes unlawful at any time for such Lender to make or maintain Disbursements
based upon LIBOR, the Lender shall so notify the Indenture Trustee, who shall
give notice to the Shipowner of such determination and, effective as of the date
of such notice and so long as such condition shall exist, interest shall
thereafter accrue during each applicable Interest Period at the Base Rate.
(b) with respect to Obligations which are Fixed Rate Notes, the
interest rate set forth in each such Obligation, which interest rate shall be as
approved by the Secretary as reasonable pursuant to Section 1104A (b)(5) of the
Act.
"Authorization Agreement" means the Authorization Agreement,
Contract No. MA-13441, dated the Closing Date, between the Secretary and the
Indenture Trustee, whereby the Secretary authorizes the Guarantee of the United
States of America to be endorsed on each of the Obligations, as the same is
originally executed, or as modified, amended or supplemented in accordance with
the applicable provisions thereof.
"Authorized Newspapers" means The Wall Street Journal (all
editions) and The Journal of Commerce. Whenever successive weekly publications
in the Authorized Newspapers are required under any agreement or other
document, such publications may be made (unless otherwise expressly provided
under any agreement or other document) on the same or different days of the
week and in the same or in different Authorized Newspapers. If it is impossible
or impractical to publish any notice required under any agreement or other
document in the manner therein provided, then such publication in lieu thereof
as shall be made with the approval of the
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Secretary (in the case of notice under the Authorization Agreement or Security
Agreement), or approval of the Indenture Trustee (in the case of notice under
this Indenture), shall constitute a sufficient publication of such notice.
"Base Rate" means, for any Interest Period or any other
period, a fluctuating interest rate per annum as shall be in effect from time
to time which rate per annum shall at all times be equal to the higher of:
(a) the rate of interest announced publicly by
Citibank, N.A. in New York, New York, from time to time, as
Citibank, N.A.'s base rate; or
(b) 1/2 of one percent per annum above the latest
three-week moving average of secondary market morning offering
rates in the United States for three-month certificates of
deposit of major United States money market banks, such
three-week moving average being determined weekly on each
Monday (or, if any such day is not a Business Day, on the next
succeeding Business Day) for the three-week period ending on
the previous Friday by Citibank, N.A. on the basis of such
rates reported by certificate of deposit dealers to and
published by the Federal Reserve Bank of New York, or, if such
publication shall be suspended or terminated, on the basis of
quotations for such rates received by Citibank, N.A. from
three New York certificate of deposit dealers of recognized
standing selected by Citibank, N.A., in either case adjusted
to the nearest 1/4 of one percent or, if there is no nearest
1/4 of one percent, to the next higher 1/4 of one percent
but in neither event shall the Base Rate exceed 14% per annum.
"Borrower" means the Shipowner.
"Business Day" shall mean any day on which dealings in Dollar
deposits are carried on in the London interbank market and on which commercial
banks in London and New York City are open for domestic and foreign exchange
business.
"Cede" means Cede & Company.
"Certificate Authorizing Disbursement" shall mean, with
respect to a Disbursement, the United States Certificate Authorizing
Disbursement substantially in the form set forth in Annex A to the Credit
Agreement.
"Closing Date" means September 29, 1998.
"Construction Contract" means that certain Mobile Platform
Construction Agreement (LeTourneau Hull No. 220), dated December 18, 1996, by
and between the Shipowner and the Shipyard, as the same may be amended,
modified or supplemented in accordance with the applicable provisions thereof.
"Construction Period" shall mean the period from the date
hereof to the Delivery Date.
"Construction Period Interest" shall mean all interest that
accrues on the Outstanding Principal during the Construction Period.
"Corporate Trust Office" means the principal corporate trust
office of the Indenture Trustee at which, at any time, its corporate trust
business shall be principally administered, which office at the date of
execution of the Indenture is located at 111 Wall Street, 5th Floor, New York,
New York, 10043, Attention: Corporate Agency and Trust Department.
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<PAGE> 67
"Credit Agreement" or "Agreement" shall mean the Credit
Agreement dated as of the Closing Date between the Shipowner and CITIBANK,
N.A., including any Annex, Exhibit, and other attachment thereto, as the same
may be amended, modified or supplemented in accordance with the applicable
provisions thereof.
"Credit Facility" shall have the meaning set forth in Whereas
Clause (A) of the Credit Agreement.
"DTC" means The Depository Trust Company.
"Definitive Obligation" has the meaning specified in Article
Sixth, paragraph (cc) of the Special Provisions of the Indenture.
"Delivery Date" means the date on which the Vessel is
delivered to and accepted by the Shipowner.
"Depreciated Actual Cost" means the depreciated actual cost of
the Vessel as determined and redetermined by the Secretary pursuant to
Sections 1101(g) and 1104(b)(2) of the Act.
"Disbursement" shall have the meaning set forth in Section
2.03 of the Credit Agreement.
"Disbursement Date" shall mean, in relation to any
Disbursement, the Business Day on which the Lender shall make such
Disbursement.
"Dollars," "U.S. Dollars," "U.S.D.," "U.S.$" or "$" shall
mean the lawful currency of the United States of America.
"Final Disbursement Date" shall have the meaning set forth in
Section 2.02 of the Credit Agreement.
"Fixed Rate Note" shall mean an Obligation substantially in the
form of Exhibit 3 to the Indenture, appropriately completed.
"Floating Rate Note" shall mean the Obligation substantially
in the form of Exhibit 2 to the Indenture, appropriately completed.
"Global Obligation" has the meaning specified in Article Sixth,
paragraph (cc) of the Special Provisions of the Indenture.
"Governmental Authority" shall mean the government of any
country, any agency, department or other administrative authority or
instrumentality thereof, and any local or other governmental authority within
any such country.
"Guarantee" or "Guarantees" means the guarantee of an
Obligation by the United States of America pursuant to Title XI of the Act, as
provided in the Authorization Agreement.
"Guarantee Commitment" means the Commitment to Guarantee
Obligations, Contract No. MA-13440, dated as of the Closing Date, executed by
the Secretary and accepted by the Shipowner with respect to the Guarantees, as
originally executed or as modified, amended or supplemented in accordance with
the applicable provisions thereof.
"Guarantee Fees" shall mean the amounts described in the
Guarantee Commitment payable in consideration for the commitment therein
described and payable as provided in such Guarantee Commitment.
"Holder" means the holder of an Obligation.
"Indenture" means the Trust Indenture dated as of the Closing
Date, between the Shipowner and the Indenture Trustee, as the same is
originally executed, or as modified, amended or supplemented in accordance with
the applicable provisions thereof.
"Indenture Default" has the meaning specified in Article VI of
Exhibit 1 to the Indenture.
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<PAGE> 68
"Indenture Trustee" means CITIBANK, N.A., a national banking
association, and any successor trustee permitted under the Indenture.
"Interest Payment Date" means, with respect to any Obligation,
the date when any installment of interest on such Obligation is due and
payable, which are March 15 and September 15 of each year, beginning on
March 15, 1999, and the date of any prepayment of any Obligation.
"Interest Period" shall mean, with respect to any
Disbursement, (i) the period commencing on the Disbursement Date and extending
up to, but not including, the next Interest Payment Date; and (ii) thereafter
the period commencing on each Interest Payment Date and extending up to, but
not including, the next Interest Payment Date.
"Lender" shall mean CITIBANK, N.A., a national banking
association, and its successors and assigns.
"Letter of Representations" means the Letter of
Representations between the Shipowner and the Indenture Trustee and other
documentation necessary or desirable to effectuate the issuance of the Fixed
Rate Notes as Global Obligations.
"LIBOR" shall mean, in relation to any Interest Period, the
rate of interest per annum (rounded upward, if necessary, to the nearest 1/16
of 1%) quoted by the principal London office of CITIBANK, N. A., at
approximately 11:00 a.m. (London time) two Business Days prior to the first day
of such Interest Period for the offering to leading banks in the London
interbank market of U.S. Dollar deposits for a period and in an amount
comparable to such Interest Period and the principal amount upon which interest
is to be paid during such Interest Period.
"Make-Whole Premium" means an amount equal to the excess, if
any, between (i) the sum of the respective Payment Values of each Prospective
Payment, over (ii) 100% of the aggregate principal amount being prepaid on the
Redemption Date.
"Make-Whole Premium Determination Date" means the second
Business Day before the applicable Redemption Date.
"Maturity," when used with respect to any Obligation, means
the date on which the principal of, or interest on, such Obligation becomes due
and payable as therein provided, whether on a Payment Date, at the Stated
Maturity or by prepayment, repayment, redemption or declaration of acceleration
or otherwise.
"Mortgage" means the first preferred ship mortgage on the
Vessel, Contract No. MA-13443, between the Shipowner and the Secretary, as
originally executed or as modified, amended or supplemented in accordance with
the applicable provisions thereof.
"Note" shall mean a Floating Rate Note or a Fixed Rate Note.
"Obligation" or "Obligations" shall mean the Floating Rate Note
or Fixed Rate Note(s) of the Shipowner bearing a Guarantee and authenticated and
delivered pursuant to the Indenture and the Authorization Agreement.
"Obligation Owners" has the meaning specified in Article
Sixth, paragraph (cc) of the Special Provisions of the Indenture.
"Obligation Register" has the meaning specified in Section
2.10 of Exhibit 1 to the Indenture.
"Obligee" means each Holder.
"Original Principal Amount" shall mean the maximum principal
amount of the Obligations.
"Officer's Certificate" means a certificate conforming to
Section 1.02 of Exhibit 1 to the Indenture and signed by a Responsible Officer
of the Person giving such certificate.
"Opinion of Counsel" means an opinion of counsel conforming to
Section 1.02 of Exhibit 1 to the Indenture.
"Outstanding," when used with reference to the Obligations,
shall mean all Obligations theretofore issued under the Indenture, except:
(1) Obligations Retired or Paid; and
(2) Obligations in lieu of which other
Obligations have been issued under the
Indenture.
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For the purposes of Articles VI and X of Exhibit 1 to the Indenture, and also
in determining whether the Holders of a stated percentage of the principal
amount of Outstanding Obligations have taken any Act of Obligees required or
permitted by the Indenture, Obligations owned by the Shipowner or by any
Affiliate of the Shipowner (excluding (a) Obligations held by an Affiliate of
the Shipowner when such Affiliate is acting in a fiduciary capacity if it is
established to the satisfaction of the Indenture Trustee that neither the
Shipowner nor another Affiliate has a beneficial interest therein and (b)
Obligations pledged in good faith by the Shipowner or by any Affiliate of the
Shipowner, if the pledgee (i) is not an Affiliate of the pledgor and (ii)
establishes to the satisfaction of the Indenture Trustee that the pledgee has
the right to vote such Obligations) shall be disregarded and deemed not to be
Outstanding; provided however that, for the purpose of determining whether the
Indenture Trustee shall be protected in relying on any such Act of Obligees,
only Obligations which the Indenture Trustee has actual knowledge are so owned
shall be so disregarded and deemed not to be Outstanding. Obligations which
are not Outstanding shall not be entitled to any rights or benefits provided in
the Indenture.
"Outstanding Principal" shall have the meaning set forth in
Section 2.01 of the Credit Agreement.
"Paying Agent" means any bank or trust company having the
qualifications set forth in clauses (1), (3), (4) and (5) of Section 7.02(a) of
Exhibit 1 to the Indenture, which shall be appointed by the Shipowner in
accordance with Section 4.02 of Exhibit 1 to the Indenture to pay the principal
of (and premium, if any) or interest on the Obligations on behalf of the
Shipowner.
"Payment Date" shall mean March 15 and September 15 of each
year, beginning on September 15, 2000.
"Payment Default" has the meaning specified in Section 6.01(a)
of Exhibit 1 to the Indenture.
"Payment Value" of each Prospective Payment shall be
determined by discounting such Prospective Payment at the Reinvestment Rate for
the period from the Payment Date on which such Prospective Payment was
scheduled to be paid to the applicable Redemption Date.
"Person" means any individual, corporation, partnership,
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Place of Payment" means the place at which an Obligation is
to be redeemed pursuant to Article III of Exhibit 1 to the Indenture.
"Principal Office," when used with respect to the Shipowner,
means the office of the Shipowner at which, at any particular time, its
corporate business is principally administered, which office at the date of
execution of the Indenture is located at 5450 Transco Tower, 2800 Post Oak
Boulevard, Houston, Texas 77056.
"Prospective Payment" means, with respect to the Fixed Rate
Notes: (i) each scheduled interest payment on each scheduled principal amount
to be prepaid; and (ii) the scheduled principal amount to be prepaid.
"Redeem" means with respect to the redemption of Obligations,
to repay or prepay.
"Redemption" means with respect to the redemption of
Obligations, the repayment or prepayment of Obligations as applicable.
"Redemption Date" means, with respect to any Obligation, a
date fixed for the prepayment, repayment or redemption of such Obligation by or
pursuant to Article Fourth of the Indenture or Article III of Exhibit 1 to the
Indenture.
"Redemption Price" means, with respect to any Obligation, the
price at which an Obligation is to be prepaid, repaid, or redeemed pursuant to
Article Fourth of the Indenture or Article III of Exhibit 1 to the Indenture.
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"Reinvestment Rate" means the yield determined by the
Indenture Trustee to be the yield of the issue of actively traded United States
Treasury securities having a maturity equal to the Weighted Average Life to
Final Maturity; provided, however, that if such Weighted Average Life to Final
Maturity is not equal to the maturity of an actively traded United States
Treasury security (rounded to the nearest one-twelfth of a year) such yield
shall be obtained by linear interpolation from the yields of actively traded
United States Treasury securities having the greater maturity closest to and
the lesser maturity closest to such Weighted Average Life to Final Maturity.
The yields shall be determined by reference to the yields as indicated by
Telerate Access Service (page 8003 or the relevant page at the date of
determination indicating such yields) (or, if such data ceases to be available,
any publicly available sources of similar market data) at approximately 11:00
a.m. (New York City time) on the Make-Whole Premium Determination Date.
"Remaining Dollar Years" means the sum of the amounts obtained
by multiplying: (i) the amount of each remaining scheduled payment of principal
of the Fixed Rate Notes (without giving effect to such Redemption) by (ii) the
number of years (rounded to the nearest one-twelfth) which will elapse between
the Redemption Date and the Payment Date for such scheduled principal amount.
"Request" means a written request to a Person for the action
therein specified, signed by the Person making such request or a Responsible
Officer thereof.
"Responsible Officer" means (i) in the case of any business
corporation, the chairman of the board of directors, the president, any
vice-president, the secretary, assistant secretary, the treasurer or assistant
treasurer thereof, (ii) in the case of any commercial bank, the chairman or
vice-chairman of the executive committee of the board of directors or trustees,
the president, any vice president, the secretary, the treasurer, any trust
officer, any executive, senior, second or assistant vice president or any
officer or assistant officer customarily performing functions similar to those
performed by the persons who at the time shall be such officers or to whom any
related matter is referred because of his/her knowledge of and familiarity with
the particular subject thereof, (iii) in the case of the Indenture Trustee,
any senior trust officer or trust officer, or any vice president associated
with the Corporate Agency and Trust Department, and (iv) with respect to the
signing or authentication of Obligations and Guarantees by the Indenture
Trustee, any person specifically authorized by the Indenture Trustee to sign or
authenticate Obligations.
"Retired or Paid," as applied to Obligations and the
indebtedness evidenced thereby, means that such Obligations shall be deemed to
have been retired or paid and shall no longer be entitled to any rights or
benefits provided in the Indenture if:
(1) such Obligations shall have been paid in full
in immediately available funds;
(2) such Obligations shall have been cancelled by
the Indenture Trustee or shall have been
delivered to the Indenture Trustee for
cancellation; or
(3) such Obligations shall have become due and
payable at Maturity and funds sufficient for
the payment of such Obligations (including
interest to the date of Maturity, or in the
case of a payment after Maturity, to the date
of payment, together with any premium thereon)
and available for such payment (whether as a
result of payment pursuant to the Guarantees
or otherwise) shall be held by the Indenture
Trustee or any Paying Agent pursuant to
Section 4.02 of Exhibit 1 to the Indenture (or
shall have been so held and shall thereafter
have been paid to the Shipowner pursuant to
Section 4.03 of Exhibit 1 to the Indenture) in
trust for the purpose or with irrevocable
directions, to apply the same;
provided that, the foregoing definition is subject to the provisions of Section
6.08 of Exhibit 1 to the Indenture.
"Secretary" means the Secretary of Transportation or any
official or official body from time to time duly authorized to perform the
duties and functions of the Secretary of Transportation under Title XI of the
Act (including the Maritime Administrator, the Acting Maritime Administrator,
and to the extent so authorized, the Deputy Maritime Administrator and other
officials of the Maritime Administration).
"Secretary's Note" means a promissory note or promissory notes
issued and delivered by the Shipowner to the Secretary described in Article
Third of the Special Provisions of the Security Agreement and shall also mean
any promissory note issued in substitution for and replacement thereof pursuant
to the Security Agreement.
"Secretary's Notice" means a notice from the Secretary to the
Indenture Trustee to the effect that (a) a default, within the meaning of
Section 1105(b) of the Act, has occurred under a mortgage, loan agreement, or
other security agreement that has been entered into between the Secretary, the
Shipowner and any other parties in order to protect the interests of the
United States of America in connection with the Guarantees, (b) such notice is
given for the purposes of Section 6.01(b) of Exhibit 1 to the Indenture in
order to protect the security interests of the
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United States of America under such mortgage, loan agreement or other security
agreement, and (c) the Guarantees will terminate upon the expiration of 60 days
from the date of such notice if the Indenture Trustee and each Obligee shall
have failed to demand payment of the Guarantees as provided in the Indenture,
the Guarantees or the Act. Such notice shall be given (i) in writing, by
registered mail, return receipt requested, deposited in the United States Mail
on the date of such notice and addressed to a Responsible Officer in the
Corporate Trust Office of the Indenture Trustee in accordance with the Special
Provisions of the Indenture, (ii) by telegram, telex, telecopy or similar means
of transmission dispatched on such date and addressed to the Responsible
Officer in the Corporate Trust Office of the Indenture Trustee, as aforesaid,
and (iii) by collect telephone call made on such date to a Responsible Officer
in the Corporate Trust Office of the Indenture Trustee. A Secretary's Notice
shall not be deemed to have been given unless it shall have been given in
accordance with all the provisions of this definition, and the date of any
Secretary's Notice shall be deemed to be the last date on which it is so given
pursuant to clauses (i) through (iii) above.
"Secretary's Supplemental Indenture" means a Supplemental
Indenture evidencing the succession, pursuant to Section 6.09 of Exhibit 1 to
the Indenture, of the Secretary to the Shipowner, and the assumption by the
Secretary of the obligations of the Shipowner under the Indenture.
"Section 1104" means Section 1104A of the Act, and when used
with reference to subsections of Section 1104, means subsections of Section
1104A.
"Security Agreement" shall mean that certain security
agreement, Contract No. MA-13442, dated as of the Closing Date, with respect to
the Vessel, executed by the Shipowner and the Secretary relating to the
security in respect to the Guarantees, as originally executed or as modified,
amended or supplemented in accordance with the applicable provisions thereof.
"Shipowner" means ROWAN COMPANIES, INC., a Delaware
corporation, and subject to the provisions of Sections 6.09, 8.01 and 8.02 of
Exhibit 1 to the Indenture, shall also include its successors and assigns.
"Shipyard" or "Shipbuilder" means LETOURNEAU, INC., a Texas
corporation.
"Stated Maturity," when used with respect to any Obligation,
means the date determinable as set forth in such Obligation as the final date
on which the principal of such Obligation is due and payable, which shall
include, without limitation, each of the Payment Dates.
"Supplemental Indenture" shall mean any indenture supplement
to the Indenture entered into pursuant to Article X thereof.
"Title XI" means Title XI of the Act.
"Title XI Reserve Fund and Financial Agreement" means that
certain Title XI Reserve Fund and Financial Agreement, Contract No. MA-13261,
dated as of December 17, 1996, executed by the Shipowner and the Secretary, as
amended, modified or supplemented in accordance with the applicable provisions
thereof.
"United States" means the United States of America.
"Vessel" means the Shipowner's self-elevating mobile offshore
drilling unit to be named the GORILLA VI and constructed by LETOURNEAU, INC. in
accordance with the Construction Contract, including all work and material
heretofore or hereafter performed upon or installed in or placed on board such
Vessel, together with related appurtenances, additions, improvements, and
replacements.
"Weighted Average Life to Final Maturity" means the number of
years (rounded up to the nearest one-twelfth of a year) obtained by dividing:
(i) the then Remaining Dollar Years by (ii) the total amount of the then
remaining aggregate unpaid principal amount of such Fixed Rate Notes (without
giving effect to the subject Redemption).
-7-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF ROWAN COMPANIES, INC. FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 1998 INCLUDED IN ITS FORM 10-Q FOR THE QUARTERLY PERIOD THEN
ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 112,775
<SECURITIES> 0
<RECEIVABLES> 114,474
<ALLOWANCES> 0
<INVENTORY> 128,815
<CURRENT-ASSETS> 379,012
<PP&E> 1,699,568
<DEPRECIATION> 875,042
<TOTAL-ASSETS> 1,209,469
<CURRENT-LIABILITIES> 96,937
<BONDS> 250,335
0
0
<COMMON> 11,091
<OTHER-SE> 724,058
<TOTAL-LIABILITY-AND-EQUITY> 1,209,469
<SALES> 114,727
<TOTAL-REVENUES> 571,624
<CGS> 83,269
<TOTAL-COSTS> 393,383
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,071
<INCOME-PRETAX> 185,691
<INCOME-TAX> 66,048
<INCOME-CONTINUING> 119,643
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 119,643
<EPS-PRIMARY> 1.39
<EPS-DILUTED> 1.36
</TABLE>
