EXHIBIT 4.2
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$200,000,000.00
TERM LOAN AGREEMENT
Among
PRIDE OFFSHORE, INC.,
as Borrower,
PRIDE INTERNATIONAL, INC.,
MEXICO DRILLING LIMITED LLC,
PRIDE CENTRAL AMERICA, LLC,
PRIDE DRILLING, LLC,
PRIDE NORTH AMERICA LLC,
PRIDE OFFSHORE INTERNATIONAL LLC,
and
PRIDE SOUTH PACIFIC LLC
as Guarantors,
THE LENDERS FROM TIME TO TIME PARTY HERETO,
as Term Lenders,
and
CREDIT LYONNAIS NEW YORK BRANCH
as Lead Arranger, Sole Bookrunner, Administrative Agent and Collateral Agent
June 20, 2002
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS AND ACCOUNTING TERMS.......................... 1
Section 1.1 Certain Defined Terms............................... 1
Section 1.2 Computation of Time Periods......................... 25
Section 1.3 Accounting Terms.................................... 25
Section 1.4 Types of Loans...................................... 25
Section 1.5 Miscellaneous....................................... 25
ARTICLE II THE term loan............................................. 25
Section 2.1 Term Commitments.................................... 25
Section 2.2 Method of Borrowing................................. 25
Section 2.3 Fees................................................ 29
Section 2.4 Repayment........................................... 29
Section 2.5 Interest............................................ 29
Section 2.6 Prepayments......................................... 31
Section 2.7 Funding Losses...................................... 35
Section 2.8 Increased Costs..................................... 36
Section 2.9 Payments and Computations........................... 37
Section 2.10 Taxes............................................... 38
Section 2.11 Sharing of Payments, Etc............................ 40
Section 2.12 Applicable Lending Offices.......................... 40
ARTICLE III CONDITIONS OF LENDING..................................... 41
Section 3.1 Conditions Precedent to Term Loans.................. 41
Section 3.3 Determinations Under Section 3.1.................... 46
ARTICLE IV REPRESENTATIONS AND WARRANTIES............................ 46
Section 4.1 Existence; Subsidiaries............................. 46
Section 4.2 Power and Authority................................. 46
Section 4.3 Authorization and Approvals......................... 47
Section 4.4 Enforceable Obligations............................. 47
Section 4.5 Financial Statements................................ 47
Section 4.6 True and Complete Disclosure........................ 48
Section 4.7 Litigation.......................................... 48
Section 4.8 Use of Proceeds..................................... 48
Section 4.9 Investment Company Act.............................. 48
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Section 4.10 Public Utility Holding Company Act.................. 48
Section 4.11 Taxes............................................... 48
Section 4.12 Pension Plans....................................... 49
Section 4.13 Condition of Property; Casualties................... 49
Section 4.14 Insurance........................................... 50
Section 4.15 No Defaults......................................... 50
Section 4.16 Environmental Condition............................. 50
Section 4.17 Title to Property, Etc.............................. 51
Section 4.18 Security Interests.................................. 51
Section 4.19 Subsidiaries; Corporate Structure................... 51
Section 4.20 Labor Relations..................................... 51
Section 4.21 Merger.............................................. 52
Section 4.22 Senior Debt......................................... 52
Section 4.23 Guarantors.......................................... 52
Section 4.24 Citizenship......................................... 52
Section 4.25 Intellectual Property............................... 52
Section 4.26 Solvency............................................ 52
Section 4.27 Compliance with Laws................................ 53
ARTICLE V AFFIRMATIVE COVENANTS..................................... 53
Section 5.1 Compliance with Laws, Etc........................... 53
Section 5.2 Maintenance of Insurance............................ 53
Section 5.3 Preservation of Existence, Etc...................... 57
Section 5.4 Payment of Taxes, Etc............................... 57
Section 5.5 Reporting Requirements.............................. 57
Section 5.6 Maintenance of Property............................. 61
Section 5.7 Inspection.......................................... 61
Section 5.8 Use of Proceeds..................................... 61
Section 5.9 Nature of Business.................................. 61
Section 5.10 Books and Records................................... 61
Section 5.11 Rig Appraisal Reports............................... 62
Section 5.12 Operation of Mortgaged Term Loan Facility Rigs...... 62
Section 5.13 New Subsidiaries; Permitted Holding Company......... 64
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Section 5.14 Additional Rigs..................................... 64
Section 5.15 Further Assurances in General....................... 64
ARTICLE VI NEGATIVE COVENANTS........................................ 65
Section 6.1 Liens, Etc.......................................... 65
Section 6.2 Debts, Guaranties and Other Obligations............. 68
Section 6.3 Merger or Consolidation; Asset Sales................ 70
Section 6.4 Investments......................................... 72
Section 6.5 Transactions With Affiliates........................ 73
Section 6.6 Compliance with ERISA............................... 73
Section 6.7 Restricted Payments................................. 73
Section 6.8 Maintenance of Ownership of Subsidiaries............ 74
Section 6.9 Agreements Restricting Liens and Distributions...... 74
Section 6.10 Subordinated Debt................................... 74
Section 6.11 Financial Contract Obligations...................... 75
Section 6.12 Charter and Leases.................................. 75
Section 6.13 Maintenance Capital Expenditures.................... 75
Section 6.14 Limitation on Changes in Fiscal Periods............. 75
Section 6.15 Mortgaged Term Loan Facility Rigs................... 76
Section 6.16 Leverage Ratio...................................... 77
Section 6.17 Interest Coverage Ratio............................. 77
Section 6.18 Maximum Debt to Capitalization Ratio................ 78
Section 6.19 Minimum Net Worth................................... 78
ARTICLE VII EVENTS OF DEFAULT......................................... 78
Section 7.1 Events of Default................................... 78
Section 7.2 Optional Acceleration of Maturity................... 81
Section 7.3 Automatic Acceleration of Maturity.................. 81
Section 7.4 Non-exclusivity of Remedies......................... 81
Section 7.5 Right of Set-off.................................... 81
Section 7.6 Application of Proceeds............................. 82
ARTICLE VIII GUARANTY.................................................. 82
Section 8.1 Guaranty............................................ 82
Section 8.2 Guaranty Absolute................................... 83
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Section 8.3 Waiver.............................................. 84
Section 8.4 Subrogation......................................... 84
ARTICLE IX THE AGENTS................................................ 85
Section 9.1 Appointment; Nature of Relationship................. 85
Section 9.2 Powers.............................................. 85
Section 9.3 General Immunity.................................... 85
Section 9.4 No Responsibility for Loans, Recitals, etc.......... 85
Section 9.5 Action on Instructions of Term Lenders.............. 86
Section 9.6 Employment of Agents and Counsel.................... 86
Section 9.7 Reliance on Documents; Counsel...................... 86
Section 9.8 Agent's Reimbursement and Indemnification........... 86
Section 9.9 Notice of Default................................... 87
Section 9.10 Rights as a Term Lender............................. 87
Section 9.11 Lender Credit Decision.............................. 87
Section 9.12 Successor Administrative Agent...................... 87
Section 9.13 Collateral Matters.................................. 88
ARTICLE X BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS......... 89
Section 10.1 Successors and Assigns.............................. 89
Section 10.2 Participations...................................... 90
Section 10.3 Assignments......................................... 90
Section 10.4 Dissemination of Information........................ 91
Section 10.5 Tax Treatment....................................... 92
ARTICLE XI MISCELLANEOUS............................................. 92
Section 11.1 Amendments, Etc..................................... 92
Section 11.2 Notices, Etc........................................ 93
Section 11.3 No Waiver; Remedies................................. 93
Section 11.4 Costs and Expenses.................................. 93
Section 11.5 Binding Effect...................................... 94
Section 11.6 Indemnification..................................... 94
Section 11.7 Execution in Counterparts........................... 94
Section 11.8 Survival of Representations, etc.................... 94
Section 11.9 Severability........................................ 95
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Section 11.10 Usury Not Intended.................................. 95
Section 11.11 Judgment Currency................................... 95
Section 11.12 Governing Law....................................... 96
Section 11.13 Consent to Jurisdiction............................. 96
Section 11.14 Waiver of Jury...................................... 97
Section 11.15 Third Party Beneficiaries........................... 97
EXHIBITS:
Exhibit A - Form of Assignment and Acceptance
Exhibit B - Form of Compliance Certificate
Exhibit C - Form of Notice of Borrowing
Exhibit D - Form of Notice of Conversion or Continuation
Exhibit E - Form of Security Agreement
Exhibit F - Form of Term Note
Exhibit G - Form of Rig Mortgage
Exhibit H - Form of the Borrower's Outside Counsel Opinion
Exhibit I - Form of the Borrower's General Counsel Opinion
Exhibit J - Form of the Borrower's Local Counsel Opinion
Exhibit K - Form of Joinder Agreement
SCHEDULES:
Schedule 1 - Notice Information for Term Lenders
Schedule 4.16 - Environmental Disclosures
Schedule 4.17 - Initial Mortgaged Term Loan Facility Rigs
Schedule 4.19 - Subsidiaries/Corporate Structure
Schedule 6.2 - Existing Debt
TERM LOAN AGREEMENT
This Term Loan Agreement dated as of June 20, 2002 is among Pride
Offshore, Inc., a Delaware corporation (the "Borrower"), the Guarantors, the
Term Lenders, and Credit Lyonnais New York Branch, as Administrative Agent for
the Term Lenders.
The Borrower, the Term Lenders, and the Administrative Agent agree as
follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.1 Certain Defined Terms. As used in this Agreement, the terms
defined above shall have the meanings set forth therein and the following terms
shall have the following meanings (unless otherwise indicated, such meanings to
be equally applicable to both the singular and plural forms of the terms
defined):
"Acceptable Security Interest" in any Property means a Lien (a) which
exists in favor of the Collateral Agent for the benefit of the Term Secured
Parties; (b) which is superior to all other Liens except Permitted Liens; (c)
which secures the Obligations; and (d) which is perfected and enforceable
against all Persons in preference to any rights of any Person therein (other
than rights in respect of Permitted Liens).
"Acquisition" means any Going Concern Acquisition or any Asset
Acquisition.
"Additional Appraisal Report" has the meaning set forth in Section
5.11(d).
"Administrative Agent" means CLNY in its capacity as contractual
representative of the Term Lenders pursuant to Article IX, and any successor
administrative agent pursuant to Section 9.12.
"Affiliate" of any Person means any other Person that, directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such Person or any Subsidiary of such Person. The
term "control" (including the terms "controlled by" or "under common control
with") means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person, whether through
ownership of a Control Percentage, by contract or otherwise.
"Agent" means the Administrative Agent or the Collateral Agent, and
"Agents" means all such Persons collectively.
"Agreement" means this Term Loan Agreement dated as of June 20, 2002 among
the Borrower, the Guarantors, the Term Lenders, the Administrative Agent, the
Collateral Agent, and the Arranger, as it may be amended or modified and in
effect from time to time.
"Alternate Base Rate" means, for any day, a fluctuating rate of interest
per annum equal to the higher of (a) the Prime Rate in effect for such day and
(b) the sum of the Federal Funds Rate in effect for such day plus -1/2 of 1% per
annum.
"Applicable Lending Office" means, with respect to any Term Lender, the
office, branch, subsidiary, affiliate or correspondent bank of such Term Lender
listed on Schedule 1 or such other office, branch, subsidiary, affiliate or
correspondent bank as such Term Lender may from time to time specify to the
Borrower and the Administrative Agent from time to time.
"Applicable Margin" means, at any time with respect to each Type of Term
Loan, the percentage rate per annum as set forth below for the Level in effect
at such time:
▇▇▇▇▇ ▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇ ▇▇▇▇▇ ▇▇
------- -------- --------- -------- ------- --------
Eurodollar 2.00% 2.25% 2.50% 2.75% 3.25% 3.75%
Loans
Base Rate 0.50% 0.75% 1.00% 1.25% 1.75% 2.25%
Loans
"Approved Fund" means, with respect to any Term Lender that is a fund that
invests in commercial loans, any other fund that invests in commercial loans and
is managed or advised by the same investment advisor as such Term Lender or by
an Affiliate of such investment advisor.
"Approved Rigbroker" means Normarine Offshore Consultants, Inc., ▇▇▇▇▇ ▇.
▇▇▇▇▇ Shipbrokers A\S or any other first-class, international, independent, sale
and purchase offshore drilling rig broker reasonably acceptable to the
Administrative Agent.
"Arranger" means CLNY.
"Asset Acquisition" means, any transaction, or any series of related
transactions, consummated on or after the date of this Agreement, by which the
Parent Company or any of its Subsidiaries acquires any land or offshore drilling
rig or vessel, or fleet of rigs or vessels, or any other asset the acquisition
of which is not made to maintain or improve an existing asset.
"Assignment and Acceptance" has the meaning set forth in Section 10.3(a).
"Base Rate Loan" means a Term Loan which bears interest as provided in
Section 2.5(a).
"Borrowing" means a borrowing hereunder, (a) made by the Term Lenders on
the Borrowing Date, or (b) Converted or Continued by the Term Lenders on the
same date of Conversion or Continuation, consisting, in either case, of the
aggregate amount of the several Term Loans of the same Type and, in the case of
Eurodollar Loans, for the same Interest Period.
"Borrowing Date" means the date on which the Term Loans are made
hereunder.
"Business Day" means, (a) with respect to any payment or rate selection of
Eurodollar Loans, a day (other than a Saturday or Sunday) on which banks
generally are open in New York for the conduct of substantially all of their
commercial lending activities and on which dealing in
Dollars are carried on in the London interbank market and (b) for all other
purposes, a day (other than a Saturday or Sunday) on which banks generally are
open in New York for the conduct of substantially all of their commercial
lending activities.
"Capital Stock" means any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation)
and any and all warrants, rights or options to purchase any of the foregoing.
"Capitalized Lease" of a Person means any lease of any Property by such
Person as lessee which would, in accordance with GAAP, be required to be
classified and accounted for as a capital lease on the balance sheet of such
Person.
"Capitalized Lease Obligations" of a Person means the amount of the
obligations of such Person under Capitalized Leases which would be shown as a
liability on a balance sheet of such Person prepared in accordance with GAAP.
"Cash Collateral Account" means a special interest bearing cash collateral
account pledged by the Borrower to the Collateral Agent for the ratable benefit
of the Term Secured Parties containing cash deposited pursuant to Section 2.6(c)
to be maintained at the Collateral Agent's office in accordance with Section
2.13 and bear interest or be invested in the Collateral Agent's reasonable
discretion.
"Cash Equivalents" means (a) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States Government or government of a
Participating Member State or issued by any agency thereof and backed by the
full faith and credit of the United States of America or a Participating Member
State, in each case maturing within one year from the date of acquisition; (b)
certificates of deposit, time deposits, eurodollar time deposits or overnight
bank deposits having maturities of six months or less from the date of
acquisition issued by any Revolving Lender or by any commercial bank organized
under the laws of the United States of America or any state thereof or of any
Participating Member State or any province or other jurisdiction thereof having
combined capital and surplus of not less than $500,000,000 (or the equivalent in
any other currency); (c) commercial paper of an issuer rated at least A-2 by S&P
or P-2 by ▇▇▇▇▇'▇, or carrying an equivalent rating by a nationally recognized
rating agency, if both of the two named rating agencies cease publishing ratings
of commercial paper issuers generally, and maturing within six months from the
date of acquisition; (d) repurchase obligations of any Revolving Lender or of
any commercial bank satisfying the requirements of clause (b) or (c) of this
definition, having a term of not more than 30 days with respect to securities
issued or fully guaranteed or insured by the United States government or
government of a Participating Member State; (e) securities with maturities of
one year or less from the date of acquisition issued or fully guaranteed by any
state, commonwealth, territory, province or other jurisdiction of the United
States or any other foreign country, by any political subdivision or taxing
authority of any such state, commonwealth, territory, province or other
jurisdiction, the securities of which state, commonwealth, territory, province,
other jurisdiction, political subdivision or taxing authority (as the case may
be) are rated at least A by S&P or A by ▇▇▇▇▇'▇; (f) securities with maturities
of six months or less from the date of acquisition backed by standby letters of
credit issued by any Revolving Lender or any commercial bank satisfying
the requirements of clause (b) or (c) of this definition; and (g) shares of
money market mutual or similar funds which invest exclusively in assets
satisfying the requirements of clauses (a) through (f) of this definition.
"Casualty Event" means, with respect to any Mortgaged Term Loan Facility
Rig owned by any Person, (a) any loss or damage to, or any condemnation or
taking of, such Mortgaged Term Loan Facility Rig other than a Total Loss of any
Mortgaged Term Loan Facility Rig, for which such Person receives, anticipates
recovering or has filed a claim for Casualty Proceeds or (b) any Lien imposed by
any Governmental Authority pursuant to Environmental Law and that has not been
released or bonded within ten Business Days following the applicable Credit
Party's receipt of notice of such imposition unless such Lien is being contested
in good faith and by appropriate proceedings.
"Casualty Proceeds" means the proceeds of any insurance, condemnation
award or other compensation paid or payable to any Credit Party or the
Collateral Agent in respect of any Casualty Event, less the reasonable fees,
taxes and expenses paid to collect such proceeds.
"CERCLA" means the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended, state and local analogs, and all rules and
regulations and requirements thereunder in each case as now or hereafter in
effect.
"CERCLIS", or the "CERCLA Information System", means the inventory
maintained by the EPA of sites with potential Releases of Hazardous Substances
that have been or may need to be addressed by the CERCLA program.
"Change of Control" means any of (a) any acquisition pursuant to which any
Person or group (as defined in Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) other than a Permitted
Holding Company has become the direct or indirect beneficial owner (as defined
in Rule 13d-3 under the Exchange Act) of more than 35% of the Voting Stock of
the Parent Company; (b) the Parent Company is merged with or into or
consolidated with another Person and, immediately after giving effect to the
merger or consolidation, less than a majority of the outstanding voting
securities entitled to vote generally in the election of directors or persons
who serve similar functions of the surviving or resulting Person are then
beneficially owned (within the meaning of Rule 13d-3 of the Exchange Act) in the
aggregate by (x) the stockholders of the Parent Company immediately prior to
such merger or consolidation, or (y) if the record date has been set to
determine the stockholders of the Parent Company entitled to vote on such merger
or consolidation, the stockholders of the Parent Company as of such record date
or (z) a Permitted Holding Company; (c) the Parent Company, either individually
or in conjunction with one or more of its Subsidiaries, sells, conveys,
transfers or leases, or its Subsidiaries sell, convey, transfer or lease, all or
substantially all of the assets of the Parent Company and its Subsidiaries,
taken as a whole (either in one transaction or a series of related
transactions), including Capital Stock of its Subsidiaries, to any Person except
as otherwise permitted by Section 6.3; (d) the liquidation or dissolution of the
Parent Company, (e) the first day on which a majority of the individuals who
constitute the Board of Directors of the Parent Company are not Continuing
Directors or (f) the Parent Company shall cease to own, directly or indirectly,
100% of the Capital Stock of the Borrower.
"CLNY" means Credit Lyonnais New York Branch.
"Closing Date" means the date on which the conditions precedent set forth
in Section 3.1 shall have been satisfied, which date shall not be later than
June 30, 2002.
"Code" means the United States Internal Revenue Code of 1986, as amended,
reformed or otherwise modified from time to time.
"Collateral" means the Mortgaged Term Loan Facility Rigs and all other
collateral as defined in each of the Security Documents.
"Collateral Agent" means the Administrative Agent acting as collateral
agent and/or mortgagee for the Term Secured Parties.
"Collateral Disposition" means (a) the sale, transfer, contribution or
other disposition by (i) the Borrower to any Person other than a Guarantor or
(ii) any Guarantor to any Person other than the Borrower or any other Guarantor,
of any Mortgaged Term Loan Facility Rig and (b) any Total Loss of any Mortgaged
Term Loan Facility Rig.
"Collateral Disposition Proceeds" means (a) with respect to any Collateral
Disposition involving a sale, transfer, contribution or other disposition of a
Mortgaged Term Loan Facility Rig, the gross proceeds thereof received by any
Credit Party less the reasonable fees, taxes and expenses paid by such Person
that are directly related to such sale and the amount of reserves, if any,
recorded in accordance with GAAP for indemnity or other obligations of the
Parent Company and its Subsidiaries directly related to such sale or the
Mortgaged Term Loan Facility Rig and (b) with respect to any Collateral
Disposition involving a Total Loss of a Mortgaged Term Loan Facility Rig, the
proceeds of any insurance proceeds, condemnation award or other compensation
paid or payable to any Credit Party or the Collateral Agent in respect of such
Total Loss less the reasonable fees, taxes and expenses paid to collect such
proceeds and the amount of reserves, if any, recorded in accordance with GAAP
for indemnity or other obligations of the Parent Company and its Subsidiaries
directly related to such sale or the Mortgaged Term Loan Facility Rig.
"Compliance Certificate" means a Compliance Certificate signed by a
Responsible Officer of the Parent Company in substantially the form of the
attached Exhibit B.
"Confidential Information Memorandum" means the Confidential Information
Memorandum dated May 2002 (together with all amendments and supplements thereto)
and furnished to the initial Term Lenders in connection with the syndication of
(a) the Term Loans made hereunder and (b) the Revolving Commitments made under
the Revolving Credit Agreement.
"Consolidated EBITDA" means, for any period of determination, (a)
Consolidated Operating Income for such period of determination plus (b) to the
extent deducted in determining Consolidated Operating Income, depreciation,
amortization and other non-cash expense for such period of determination, and
cash costs directly related to the Acquisition by the Parent Company of Marine
Drilling Companies, Inc. and its Subsidiaries, each calculated on a consolidated
basis in accordance with GAAP; provided, however, that for each transaction
effected on or prior to the time of calculation of Consolidated EBITDA that is
reasonably expected to have the effect of increasing or decreasing Consolidated
EBITDA by at least $10,000,000 during the twelve month period following the
transaction date, the Pro Forma Consolidated EBITDA of such transaction shall be
included in Consolidated EBITDA.
"Consolidated Net Debt" means, at any time, the Debt of the Parent Company
and its Subsidiaries less Unrestricted Cash, each calculated on a consolidated
basis as of such time; provided, however, that, unless the Parent Company elects
otherwise, the MARAD Financing may be excluded from Consolidated Net Debt if (a)
the MARAD Financing is non-recourse to the Parent Company and its Subsidiaries
(other than Special Purpose Subsidiaries), (b) neither the Parent Company nor
any of its Subsidiaries (other than Special Purpose Subsidiaries) shall have any
liability whatsoever, whether direct or indirect, contingent or otherwise, for
the Debt that constitutes part of the MARAD Financing and (c) the provider of
the MARAD Financing shall have no recourse to any assets of the Parent Company
and its Subsidiaries (other than MARAD Collateral).
"Consolidated Net Income" means, for any period, the net income of the
Parent Company and its Subsidiaries calculated on a consolidated basis for such
period after taxes, as determined in accordance with GAAP.
"Consolidated Net Interest Expense" means, for any period, the cash
interest expense of the Parent Company and its Subsidiaries (and for so long as
the MARAD Financing is excluded from Consolidated Net Debt, including cash
interest expense from the MARAD Financing, if any, to the extent paid by the
Parent Company or one of its Subsidiaries other than the Special Purpose
Subsidiaries associated with the MARAD Financing) that is not funded by further
drawdown on, or other increase in principal amount of, the associated Debt less
cash interest income of the Parent Company and its Subsidiaries, each calculated
on a consolidated basis in accordance with GAAP for such period; provided,
however, that for each transaction effected on or prior to the time of
calculation of Consolidated Net Interest Expense that is reasonably expected to
have the effect of increasing or decreasing Consolidated EBITDA by at least
$10,000,000 per annum, Consolidated Net Interest Expense will be calculated on a
pro forma basis as if any Debt associated with such transaction had been
incurred on the first day of the period of determination at an interest rate
equivalent to the interest rate associated with such Debt on the current date of
determination and giving effect to the amortization schedule starting from the
current date of determination.
"Consolidated Net Worth" means, at any time, the net worth or total
shareholders equity of the Parent Company and its Subsidiaries on a consolidated
basis determined in accordance with GAAP.
"Consolidated Operating Income" means, for any period, the revenues of the
Parent Company and its Subsidiaries for such period after operating costs and
selling, general and administrative expenses but, for the avoidance of doubt,
before taxes and interest, each calculated on a consolidated basis in accordance
with GAAP; provided, however, that the effects of the MARAD Vessels will be
excluded from Consolidated Operating Income for so long as the MARAD Financing
is excluded from Consolidated Net Debt.
"Consolidated Tangible Net Assets" means, as of any date, the assets
(other than the Intangible Assets) which would be reflected on a consolidated
balance sheet of the Parent Company and its Subsidiaries prepared as of such
date in accordance with GAAP.
"Consolidated Tangible Net Worth" means, at any time, the Consolidated Net
Worth less the aggregate book values of the Intangible Assets.
"Contingent Obligation" of a Person means any agreement, undertaking or
arrangement by which such Person assumes, guarantees, endorses, contingently
agrees to purchase or provide funds for the payment of, or otherwise becomes or
is contingently liable upon, the obligation or liability of any other Person, or
agrees to maintain the net worth or working capital or other financial condition
of any other Person, or otherwise assures any creditor of such other Person
against loss, including, without limitation, any comfort letter, operating
agreement, take-or-pay contract or the obligations of any such Person as general
partner of a partnership with respect to the liabilities of the partnership.
"Continue", "Continuation", and "Continued" each refers to a continuation
of Term Loans for an additional Interest Period upon the expiration of the
Interest Period then in effect for such Term Loans.
"Continuing Director" means an individual who (a) is a member of the full
Board of Directors of the Parent Company and (b) either (i) was a member of the
Board of Directors of the Parent Company on the Closing Date or (ii) whose
nomination for election or election to the Board of Directors of the Parent
Company was approved by vote of at least two-thirds of the directors then still
in office who were either directors on the Closing Date or whose election or
nomination for election was previously so approved.
"Control Percentage" means, with respect to any Person, the percentage of
the outstanding Capital Stock (or other ownership interests and including any
options, warrants or similar rights to purchase such Capital Stock) of such
Person having ordinary voting power which gives the direct or indirect holder of
such Capital Stock or ownership interests the power to elect a majority of the
Board of Directors (or other applicable governing body) of such Person.
"Controlled Group" means all members of a controlled group of corporations
or other business entities and all trades (whether or not incorporated) under
common control which, together with the Parent Company or any of its
Subsidiaries, are treated as a single employer under Section 414 of the Code.
"Convert", "Conversion", and "Converted" each refers to a conversion of
Term Loans of one Type into Term Loans of another Type pursuant to Section
2.2(b).
"Credit Documents" means this Agreement, any Term Notes issued pursuant to
Section 2.2(g), the Security Documents, any Joinder Agreement and each other
agreement, instrument or document executed by any Credit Party or any of their
respective officers at any time in connection with this Agreement.
"Credit Party" means the Borrower and any Guarantor.
"Debt," for any Person, means without duplication:
(a) indebtedness of such Person for borrowed money (but, for the
avoidance of doubt, excluding accounts payable arising in the ordinary course of
such Person's business payable on terms customary in the trade which shall not
remain unpaid for a period of more than 90 days after such liabilities become
due and payable);
(b) obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments;
(c) obligations of such Person to pay the deferred purchase price of
property or services (other than accounts payable arising in the ordinary course
of such Person's business payable on terms customary in the trade which shall
not remain unpaid for a period of more than 90 days after such liabilities
become due and payable);
(d) Capitalized Lease Obligations;
(e) all obligations of such Person in respect of financial letters of
credit, bank guarantees, acceptance facilities, bills of exchange or similar
instruments which are issued upon the application of such Person or upon which
such Person is an account party or for which such Person is in any way liable;
(f) Off-Balance Sheet Liabilities;
(g) indebtedness or obligations of others, whether or not assumed,
secured by Liens or payable out of the proceeds or production from Property on
or in respect of any Property now or hereafter owned or acquired by such Person,
the amount of such Debt being deemed to be the lesser of the value of such
Property and the amount of the obligation so secured; and
(h) Contingent Obligations for the Debt of another Person referred to in
clauses (a) through (g) of this definition.
but, for the avoidance of doubt, shall not include bid, surety or appeal bonds,
performance bonds or other obligations of a like nature or performance letters
of credit or similar arrangements issued for the account of the Parent Company
or any of its Subsidiaries.
The amount of Debt of any Person at any date shall be the outstanding balance at
such date of all unconditional obligations as described above and the maximum
liability, upon the occurrence of the contingency giving rise to the obligation,
of any contingent obligations as of such date, less, in each case, the
outstanding balance at such date of cash and Cash Equivalents deposited in
restricted accounts that require the provider of such Debt to consent to
withdrawal.
"Debt Incurrence" means any issuance for cash or Cash Equivalents by the
Parent Company or any of its Subsidiaries of any Debt after the Closing Date not
permitted pursuant to Section 6.2.
"Debt Incurrence Proceeds" means, with respect to any Debt Incurrence, all
cash and Cash Equivalents received by the Parent Company or any of its
Subsidiaries from such Debt
Incurrence after payment of, or provision for, all brokerage commissions and
other reasonable out-of-pocket fees and expenses actually incurred.
"Default" means (a) an Event of Default or (b) any event or condition
which with notice or lapse of time or both would, unless cured or waived, become
an Event of Default.
"Dollars" and "$" means the lawful money of the United States of America.
"Eligible Assignee" means a Term Lender, a Revolving Lender, an Affiliate
or an Approved Fund of a Term Lender or a Revolving Lender, or a fund which is
in the business of purchasing or investing in loans or other securities, a
commercial bank or other financial institution that is approved by the
Administrative Agent, and, so long as no Default exists, is approved by the
Borrower, in either case, such approval not to be unreasonably withheld.
"Environment" or "Environmental" shall have the meanings set forth in 43
U.S.C. Section 9601(8)(1988).
"Environmental Claim" means any third party (including governmental
agencies and employees) action, lawsuit, claim, regulatory action or proceeding,
order, decree, consent agreement or notice of potential or actual responsibility
or violation which seeks to impose liability under any Environmental Law.
"Environmental Law" means all Legal Requirements arising from, relating
to, or in connection with the Environment, including, without limitation,
CERCLA, the Outer Continental Shelf Lands Act, the Federal Water Pollution
Control Act of 1972 and the Oil Pollution Act of 1990 (as applicable), relating
to (a) pollution, contamination, injury, destruction, loss, protection, cleanup,
reclamation or restoration of the air, surface water, groundwater, land surface
or subsurface strata, or other natural resources; (b) solid, gaseous or liquid
waste generation, treatment, processing, recycling, reclamation, cleanup,
storage, disposal or transportation; (c) exposure to pollutants, contaminants,
hazardous, medical, infectious, or toxic substances, materials or wastes; or (d)
the manufacture, processing, handling, transportation, distribution in commerce,
use, storage or disposal of hazardous, medical, infectious, or toxic substances,
materials or wastes.
"Environmental Permit" means any permit, license, order, approval or other
authorization under Environmental Law.
"EPA" means the United States Environmental Protection Agency or any
successor thereto.
"Equity Issuance" means any issuance of equity securities (including any
preferred equity securities) by the Parent Company or any of its Subsidiaries
other than equity securities issued (a) to the Parent Company or one of its
Subsidiaries, (b) pursuant to employee or director and officer stock option
plans in the ordinary course of business, (c) pursuant to the Pride
International, Inc. Direct Stock Purchase Plan or in connection with the Parent
Company's program for the issuance and sale from time to time of the Parent
Company's common stock pursuant to an agency agreement between the Parent
Company and a sales agent providing for sales by means of ordinary brokers'
transactions through the facilities of the New York Stock
Exchange at prices prevailing at the time of sale less a selling commission to
the sales agent, and (d) pursuant to the exercise of conversion rights with
respect to the Parent Company's convertible securities outstanding on the
Closing Date.
"Equity Issuance Proceeds" means, with respect to any Equity Issuance, all
cash and Cash Equivalents received by the Parent Company or any of its
Subsidiaries from such Equity Issuance after payment of, or provision for, all
brokerage commissions and other reasonable out-of-pocket fees and expenses
actually incurred.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time-to-time.
"Eurocurrency Liabilities" has the meaning assigned to that term in
Regulation D.
"Eurodollar Loan" means a Term Loan which bears interest based on the
Eurodollar Rate.
"Eurodollar Rate Reserve Percentage" of any Term Lender for the Interest
Period for any Eurodollar Loan means the reserve percentage applicable during
such Interest Period (or if more than one such percentage shall be so
applicable, the daily average of such percentages for those days in such
Interest Period during which any such percentage shall be so applicable) under
regulations issued from time-to-time by the Federal Reserve Board for
determining the maximum reserve requirement (including, without limitation, any
emergency, supplemental or other marginal reserve requirement) for such Term
Lender with respect to liabilities or assets consisting of or including
Eurocurrency Liabilities having a term equal to such Interest Period.
"Eurodollar Rate" means, with respect to a Eurodollar Loan for the
relevant Interest Period, the applicable British Bankers' Association Interest
Settlement Rate for deposits in Dollars appearing on Reuters Screen FRBD as of
11:00 a.m. (London, England time) two Business Days prior to the first day of
such Interest Period, and having a maturity equal to such Interest Period,
provided that (a) if Reuters Screen FRBD is not available to the Administrative
Agent for any reason, the applicable Eurodollar Rate for the relevant Interest
Period shall instead be the applicable British Bankers' Association Interest
Settlement Rate for deposits in Dollars as reported by any other generally
recognized financial information service as of 11:00 a.m. (London time) two
Business Days prior to the first day of such Interest Period, and having a
maturity equal to such Interest Period, and (b) if no such British Bankers'
Association Interest Settlement Rate for deposits in Dollars is available to the
Administrative Agent, the applicable Eurodollar Rate for the relevant Interest
Period shall instead be the rate determined by the Administrative Agent to be
the rate at which CLNY or one of its Affiliate banks offers to place deposits in
Dollars with first class banks in the London interbank market at approximately
11:00 a.m. (London time) two Business Days prior to the first day of such
Interest Period, in the approximate amount of CLNY's relevant Eurodollar Loan
and having a maturity equal to such Interest Period.
"European Facility" means the Facility Agreement for a U.S.$125,000,000
Secured Revolving Credit Facility to Pride Foramer SAS and Forasub B.V. arranged
by Natexis Banques Populaires, as lead arranger, agent and security agent,
Credit Industriel et Commercial, as
arranger, and BNP Paribas and Credit Lyonnais, as co-arrangers, as the same may
be amended, supplemented, restated or otherwise modified from time to time.
"Events of Default" has the meaning set forth in Section 7.1.
"Existing Bank Facility" means the Amended and Restated Credit Agreement
dated as of August 12, 1998 among Marine Drilling Companies, Inc., the lenders
named therein, ABN AMRO Bank N.V., as administrative agent for such lenders, and
Christiania Bank og Kreditkasse, New York Branch, as syndication agent, as
amended.
"Federal Funds Effective Rate" means, for any day, a fluctuating interest
rate per annum equal to the weighted average of the rates on overnight Federal
funds transactions with members of the Federal Reserve System arranged by
Federal funds brokers on such day, as published for such day (or, if such day is
not a Business Day, for the immediately preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day which
is a Business Day, the average of the quotations at approximately 10:00 a.m.
(New York time) on such day on such transactions received by the Administrative
Agent from three Federal funds brokers of recognized standing selected by it.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System or any of its successors.
"Finance Documents" has the meaning set forth in the Revolving Credit
Agreement.
"Finance Parties" has the meaning set forth in the Revolving Credit
Agreement.
"Financial Contract" of a Person means (a) any exchange-traded or
over-the-counter futures, forward, swap or option contract or other financial
instrument with similar characteristics or (b) any Rate Hedging Agreement.
"Financial Contract Obligations" of a Person means any and all obligations
of such Person, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under (a) any and all
Financial Contracts, and (b) any and all cancellations, buy backs, reversals,
terminations or assignments of any Financial Contract.
"Financial Statements" means (a) audited consolidated balance sheets of
the Parent Company and its Subsidiaries as at December 31, 1999, December 31,
2000 and December 31, 2001 and the related consolidated statements of income,
cash flow, and retained earnings of the Parent Company and its Subsidiaries for
each of the fiscal years then ended, copies of which have been furnished to the
Administrative Agent, and (b) the unaudited consolidated balance sheet of the
Parent Company and its Subsidiaries as at March 31, 2002, and the related
consolidated statements of income, cash flow, and retained earnings of the
Parent Company and its Subsidiaries for the fiscal quarter then ended, copies of
which have been furnished to the Administrative Agent.
"Fund," "Trust Fund," or "Superfund" means the Hazardous Substance
Response Trust Fund, established pursuant to 42 U.S.C. Section 9631 (1988) and
the Post-closure Liability Trust Fund,
established pursuant to 42 U.S.C. Section 9641 (1988), which statutory
provisions have been amended or repealed by the Superfunds Amendments and
Reauthorization Act of 1986, and the "Fund," "Trust Fund," or "Superfund" that
are now maintained pursuant to Section 9507 of the Code.
"GAAP" means with respect to any financial statements of the Parent
Company or any of its Subsidiaries, or calculations related to such financial
statements of the Parent Company or any of its Subsidiaries, United States
generally accepted accounting principles as in effect from time-to-time applied
on a basis consistent with the requirements of Section 1.3.
"Going Concern Acquisition" means, any transaction, or any series of
related transactions, consummated on or after the date of this Agreement, by
which the Parent Company or any of its Subsidiaries (i) acquires any going
business or all or substantially all of the assets of any firm, corporation or
limited liability company, or division thereof, whether through purchase of
assets, merger, or otherwise, or (ii) directly or indirectly acquires (in one
transaction or as the most recent transaction in a series of transactions) at
least a majority (in number of votes) of the securities of a corporation which
have ordinary voting power for the election of directors (other than securities
having such power only by reason of the happening of a contingency) or a
majority (by percentage or voting power) of the outstanding ownership interests
of a partnership or limited liability company (but, for the avoidance of doubt,
except in the case of (ii) above where such acquisition would reasonably be
considered an Asset Acquisition).
"Governmental Authority" means, as to any Person in connection with any
subject, any foreign, supranational, national, state or provincial governmental
authority (or any political subdivision thereof), any governmental or regulatory
agency, department, commission, board, bureau, authority or instrumentality
lawfully entitled to exercise any executive, judicial, legislative, police,
regulatory or taxing authority or power or any government court, in each case,
having jurisdiction over such Person or such Person's Property in connection
with such subject.
"Governmental Proceedings" means any action or proceedings by or before
any Governmental Authority, including, without limitation, the promulgation,
enactment or entry of any Legal Requirement.
"Guarantors" means (a) the Parent Company, (b) Mexico Drilling Limited
LLC, Pride Central America, LLC, Pride Drilling, LLC, Pride North America LLC,
Pride Offshore International LLC and Pride South Pacific LLC; and (c) each
Material Subsidiary of the Borrower that becomes a guarantor of all or a portion
of the Obligations and which has entered into a Joinder Agreement substantially
in the form of the attached Exhibit K.
"Hazardous Substance" means the substances identified as such pursuant to
CERCLA and those regulated under any other Environmental Law, including without
limitation pollutants, contaminants, petroleum, petroleum products,
radionuclides, radioactive materials, and medical and infectious waste.
"Hazardous Waste" means the substances regulated as such pursuant to any
Environmental Law.
"Index Debt" means senior, unsecured, long-term indebtedness for borrowed
money of the Parent Company that is not guaranteed by any other Person or
subject to any other credit enhancement.
"Initial Mortgaged Term Loan Facility Rigs" means each of the vessels
listed on Schedule 4.17.
"Initial Rig Appraisal Report" has the meaning specified in Section
3.1(i).
"Insurance Policies" includes (a) all insurances (including, without
limitation, all certificates of entry in protection and indemnity and war risks
associations or clubs) in respect of the Mortgaged Term Loan Facility Rigs,
whether heretofore, now or hereafter effected, and all renewals of or
replacements for the same, (b) all claims, returns of premium and other moneys
and claims for moneys due and to become due under or in respect of said
insurances, and (c) all other rights of each owner of a Mortgaged Term Loan
Facility Rig under or in respect of said insurances.
"Intangible Assets" means (a) deferred assets, other than prepaid
insurance and prepaid taxes, (b) patents, copyrights, trademarks, tradenames,
franchises, goodwill, experimental expenses and other similar assets which would
be classified as intangible assets on a balance sheet prepared in accordance
with GAAP, and (c) unamortized debt discount and expense.
"Intercompany Debt" means all Debt owing by any Credit Party to the Parent
Company or any of its Subsidiaries (including any other Credit Party).
"Interest Coverage Ratio" means, for the Parent Company and its
Subsidiaries on a consolidated basis, as of the end of any fiscal quarter, for
the then most-recently ended four fiscal quarters, the ratio of (a) Consolidated
EBITDA to (b) Consolidated Net Interest Expense.
"Interest Period" means, for each Eurodollar Loan comprising part of the
Borrowing, the period commencing on the date of such Eurodollar Loan or the date
of the Conversion of any existing Base Rate Loan into such Eurodollar Loan and
ending on the last day of the period selected by the Borrower pursuant to the
provisions below and Section 2.2 and, thereafter, each subsequent period
commencing on the last day of the immediately preceding Interest Period and
ending on the last day of the period selected by the Borrower pursuant to the
provisions below and Section 2.2. The duration of each such Interest Period
shall be one, two, three, or six months (or such other period that is acceptable
to the Term Lenders), in each case as the Borrower may select; provided,
however, that:
(a) the Borrower may not select any Interest Period for any Term Loan
which ends after any principal repayment date unless, after giving effect to
such selection, the aggregate unpaid principal amount of Term Loans that are
Base Rate Loans and Term Loans having Interest Periods which end on or before
such principal repayment date shall be at least equal to the amount of Term
Loans due and payable on or before such date;
(b) Interest Periods commencing on the same date for Term Loans by each
Term Lender comprising part of the same Borrowing shall be of the same duration;
(c) whenever the last day of any Interest Period would otherwise occur
on a day other than a Business Day, the last day of such Interest Period shall
be extended to occur on the next succeeding Business Day, provided that if such
extension would cause the last day of such Interest Period to occur in the next
following calendar month, the last day of such Interest Period shall occur on
the next preceding Business Day;
(d) any Interest Period which begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period) shall end on the last
Business Day of the calendar month in which it would have ended if there were a
numerically corresponding day in such calendar month;
(e) the Borrower may not select any Interest Period for any Term Loan
which ends after the Term Loan Maturity Date; and
(f) at the Administrative Agent's sole discretion, the Borrower may not
select any Interest Period for any Eurodollar Loan longer than one month until
the satisfactory completion of the syndication of this Agreement by the
Arranger.
"Investment" of any Person means any loan, advance (other than commission,
travel and similar advances to officers and employees, drawing accounts and
similar expenditures or prepayments or deposits made in the ordinary course of
business) or extension of credit that constitutes Debt of the Person to whom it
is extended or contribution of capital by such Person; stocks, bonds, mutual
funds, partnership interests, notes (including structured notes), debentures or
other securities owned by such Person; any deposit accounts and certificates of
deposit owned by such Person (but, for the avoidance of doubt, excluding capital
expenditures of such Person determined in accordance with GAAP).
"ISM Code" has the meaning set forth in Section 4.27.
"Legal Requirement" means, as to any Person, any law, statute, ordinance,
decree, award, requirement, order, writ, judgment, injunction, rule, regulation
(or official interpretation of any of the foregoing) of, and the terms of any
license or permit issued by, any Governmental Authority which is binding on such
Person.
"Level I, Level II, Level III, Level IV, Level V and Level VI", and
individually, a "Level", shall mean the level determined by the senior secured
ratings by ▇▇▇▇▇'▇ or S&P, respectively, applicable on such date to the Term
Loans:
Level Term Loan Facility Ratings
----- --------------------------
Level I BBB+ or higher by S&P
Baa1 or higher by ▇▇▇▇▇'▇
Level II BBB by S&P
Baa2 by ▇▇▇▇▇'▇
Level III BBB- by S&P
Baa3 by ▇▇▇▇▇'▇
Level IV BB+ by S&P
Ba1 by ▇▇▇▇▇'▇
Level V BB by S&P
Ba2 by ▇▇▇▇▇'▇
Level VI BB- or lower by S&P
Ba3 or lower by ▇▇▇▇▇'▇
For purposes of the foregoing, (a) if neither ▇▇▇▇▇'▇ nor S&P shall have
in effect a rating for the Term Loans (other than by reason of the circumstances
referred to in the last sentence of this definition), then the level shall be
based upon the ratings by ▇▇▇▇▇'▇ and S&P, respectively, applicable on such date
to the Index Debt which ratings the Parent Company will maintain until the Term
Loan Maturity Date; (b) if either ▇▇▇▇▇'▇ or S&P (but not both) shall have in
effect a rating for the Term Loans, then the level shall be based upon that
rating; (c) if neither ▇▇▇▇▇'▇ nor S&P shall have in effect a rating for the
Term Loans or the Index Debt (other than by reason of the circumstances referred
to in the last sentence of this definition), then the level shall be deemed to
be Level VI; (d) if the ratings established or deemed to have been established
by ▇▇▇▇▇'▇ and S&P for the Term Loans or the Index Debt, as the case may be,
shall fall within different Levels, the Applicable Margin shall be based on the
higher of the two ratings unless one of the two ratings is two or more Levels
lower than the other, in which case the Applicable Margin shall be determined by
reference to the Level next above that of the lower of the two ratings; and (e)
if the ratings established or deemed to have been established by ▇▇▇▇▇'▇ or S&P
for the Term Loans or the Index Debt, as the case may be, shall be changed
(other than as a result of a change in the rating system of ▇▇▇▇▇'▇ or S&P),
such change shall be effective as of the date on which it is first announced or
published by the applicable rating agency or, in the absence of such
announcement or publication, on the effective date of such rating as determined
by the Administrative Agent. Each change in the Applicable Margin shall apply
during the period commencing on the effective date of such change and ending on
the date immediately preceding the effective date of the next such change. If
the rating system of ▇▇▇▇▇'▇ or S&P shall change, or if both such rating
agencies shall cease to be in the business of rating corporate debt obligations,
the Borrower and the Term Lenders shall negotiate in good faith to amend this
definition to reflect such changed rating system or the unavailability of
ratings from such rating agencies and, pending the effectiveness of any such
amendment, the Applicable Margin shall be determined by reference to the rating
most recently in effect prior to such change or cessation.
"Leverage Ratio" means, for the Parent Company and its Subsidiaries on a
consolidated basis, as of the end of any fiscal quarter, the ratio of (a)
Consolidated Net Debt to (b) Consolidated EBITDA for the then most-recently
ended four fiscal quarters.
"Lien" means any mortgage, lien (statutory or other), pledge, assignment,
charge, deed of trust, security interest, hypothecation, preference, deposit
arrangement, encumbrance, priority or other security arrangement or preferential
arrangement of any kind or nature whatsoever to secure or provide for the
payment of any obligation of any Person, whether arising by contract, operation
of law or otherwise (including, without limitation, the interest of a vendor or
lessor under any conditional sale agreement, synthetic lease, Capitalized Lease
or other title retention agreement having substantially the same economic effect
as the foregoing); provided, however,
for the avoidance of doubt, that negative pledge or similar agreements of a
Person to refrain from permitting Liens and the interest of a Person as owner or
lessor under charters or leases of Property (including, without limitation,
drilling rigs, drillships and other vessels and platforms) shall not constitute
"Liens" on or in respect of the Property of such Person.
"Maintenance Capital Expenditures" means, without duplication for any
period, the aggregate of all expenditures for any purchase, other acquisition or
leasing (pursuant to a Capitalized Lease) of any asset or additions to equipment
(including replacements, capitalized repairs and improvements during such
period) which would be classified as a fixed or capital asset on a consolidated
balance sheet of the Parent Company and its Subsidiaries prepared in accordance
with GAAP, excluding (a) expenditures in respect of Acquisitions, (b)
expenditures of any proceeds of any insurance, condemnation award or other
compensation paid or payable to the Parent Company or any of its Subsidiaries,
in respect of any loss or damage to, or any condemnation or taking of, any land
or offshore drilling rig or vessel or any other asset, less the reasonable fees,
taxes, and expenses paid to collect such proceeds, to rebuild or repair such
land or offshore drilling rig or vessel or such other asset, (c) with respect to
any sale, transfer, contribution or other disposition of a land or offshore
drilling rig or vessel or any other asset, expenditures of the gross proceeds
thereof received by the Parent Company or any of its Subsidiaries less the
reasonable fees, taxes and expenses paid by such Person that are directly
related to such sale, transfer, contribution or other disposition, to replace
such land or offshore drilling rig or vessel or such other asset, and (d)
expenditures for which the Parent Company or its Subsidiaries will be reimbursed
directly or indirectly (including, without limitation, by compensation from a
customer, whether in the form of a lump sum payment, any increase in the day
rate for an offshore drilling rig or vessel or otherwise).
"MARAD" means the Maritime Administration, United States of America.
"MARAD Collateral" means the MARAD Vessels, additions and accessions
thereto, inventory relating thereto, improvements and upgrades thereof, all
reserve and construction funds associated with any MARAD Financing and money and
other instruments therein, MARAD Revenues, insurance and proceeds of any of the
foregoing (including, without limitation, proceeds from associated contracts and
insurances), and the Capital Stock of any Special Purpose Subsidiary that own,
whether directly or indirectly, only the MARAD Vessels.
"MARAD Financing" means any debt obligations of the Parent Company or its
Subsidiaries for the purpose of financing or refinancing the MARAD Vessels
which, pursuant to Title XI of the Merchant Marine Act of 1936, as amended, are
secured by a full faith and credit guaranty of the U.S. government, represented
by the Secretary of Transportation, acting through MARAD.
"MARAD Revenues" means the rights to payments and payments made under any
contracts between the Parent Company or any of its Subsidiaries and one or more
of their customers under which the Parent Company or any of its Subsidiaries
uses a MARAD Vessel to perform any of its obligations under such contract.
"MARAD Vessels" means the Amethyst IV and the Amethyst V.
"Market Value" means, as of any date of determination, the fair market
value (or to the extent that the Rig Appraisal Reports, if two Rig Appraisal
Reports are required to be delivered by this Agreement, provide for different
fair market values, the arithmetical average of such fair market values) of each
Mortgaged Term Loan Facility Rig or other offshore drilling rig or vessel set
forth in the most recent Rig Appraisal Reports covering such Mortgaged Term Loan
Facility Rig or other offshore drilling rig or vessel delivered to the Term
Lenders. Each Market Value shall initially be calculated as of the Closing Date
by reference to the Initial Rig Appraisal Reports. To the extent that any Rig
Appraisal Report provides a range of fair market values for any Mortgaged Term
Loan Facility Rig, then the fair market value for such of Mortgaged Term Loan
Facility Rig shall be the arithmetical average of the highest and lowest fair
market values given for such Rig in such Rig Appraisal Report. Concurrently with
delivery of any subsequent Rig Appraisal Reports, the Administrative Agent shall
calculate the Market Values as of the date of such reports. The recalculated
Market Values shall become effective immediately upon receipt of such subsequent
Rig Appraisal Reports by the Administrative Agent. In addition, each Market
Value shall be adjusted from time to time to reflect any Casualty Event (if the
Casualty Proceeds with respect thereto could reasonably be expected to exceed
U.S.$5,000,000) or any Collateral Disposition occurring with respect to any
Mortgaged Term Loan Facility Rig to reflect the amount set forth in the
Additional Appraisal Report covering such Mortgaged Term Loan Facility Rig to be
delivered by the Borrower to the Term Lenders pursuant to Section 5.11(d). The
cost of such Additional Appraisal Report shall be paid by the Borrower.
"Material Adverse Change" shall mean (a) a material adverse change in the
business, Property, condition (financial or otherwise) or results of operations
of the Parent Company and its Subsidiaries, taken as a whole, (b) the occurrence
and continuance of any event or circumstance which could reasonably be expected
to have a material adverse effect on the Credit Parties' ability to perform
their obligations under this Agreement, any Term Note or the other Credit
Documents, or (c) a material adverse effect on the validity or enforceability
against any Credit Party of any of the Credit Documents or the rights or
remedies of the Administrative Agent or the Term Lenders thereunder.
"Material Subsidiary" means (a) any wholly-owned Subsidiary of the
Borrower that (a) has "net assets" that constitute more than 10% of the combined
GAAP value of the assets of the Borrower and its Subsidiaries, inclusive of the
subject Subsidiary, on a consolidated basis at such time, (b) any
non-wholly-owned Subsidiary of the Borrower if the percentage of such
Subsidiary's "net assets" equal to the Borrower's ownership interest in such
Subsidiary constitutes more than 10% of the combined GAAP value of the assets of
the Borrower and its Subsidiaries, inclusive of the subject Subsidiary, on a
consolidated basis at such time, (c) any Subsidiary of the Parent Company that
owns any Mortgaged Term Loan Facility Rig, or (d) any Person that guarantees the
Borrower's obligations under the Revolving Credit Agreement, and "Material
Subsidiaries" means all such Subsidiaries collectively. As used herein, "net
assets" means the GAAP value of the assets of such Subsidiary less the principal
amount of Debt (i) which is non-recourse to the Borrower and its Subsidiaries
(other than Special Purpose Subsidiaries), (ii) in respect of which neither the
Borrower nor any of its Subsidiaries (other than Special Purpose Subsidiaries)
shall have any liability whatsoever, whether direct or indirect, contingent or
otherwise, and (iii) the provider of which shall have no recourse to any assets
of the Parent Company and its Subsidiaries (other than the assets for which such
Debt was incurred, the proceeds (including, without limitation, proceeds from
associated contracts and insurances) of, and improvements,
accessories and upgrades to, such assets and the Capital Stock of any Special
Purpose Subsidiary that owns, whether directly or indirectly, such assets).
"Maximum Rate" means the maximum nonusurious interest rate under
applicable law (determined under such laws after giving effect to any items
which are required by such laws to be construed as interest in making such
determination, including without limitation if required by such laws, certain
fees and other costs).
"Merger" means the transactions whereby the Delaware corporation formerly
known as Pride Marine, Inc. and its former Subsidiaries are merged with and into
the Borrower and its Subsidiaries.
"Merger Documents" means each of the documents, agreements and instruments
which evidences the Merger.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc. or any successor that is a
national credit rating organization.
"Mortgaged Revolving Credit Facility Rigs" has the meaning set forth in
the Revolving Credit Agreement.
"Mortgaged Term Loan Facility Rigs" means the Initial Mortgaged Term Loan
Facility Rigs and any other offshore drilling rigs or vessels becoming subject
to a Rig Mortgage pursuant to this Agreement, other than any Mortgaged Term Loan
Facility Rig affected by a Casualty Event or Collateral Disposition that results
in a Total Loss.
"Multiemployer Plan" means an employee benefit plan maintained pursuant to
a collective bargaining agreement or any other arrangement to which the Parent
Company or any member of the Controlled Group is a party to which more than one
employer is obligated to make contributions.
"National Priority List" means the list compiled by the EPA of sites with
uncontrolled Hazardous Substance Releases deemed by EPA to be priorities for
further evaluation and cleanup based on the severity of hazards associated with
those Releases.
"Net Cash Proceeds" means, with respect to any Asset Sale, all cash and
Cash Equivalents received by the Parent Company or any of its Subsidiaries from
such Asset Sale after (a) payment of, or provision for, all taxes, commissions
and other reasonable out-of-pocket fees and expenses actually incurred; (b)
payment of any outstanding obligations relating to such Property paid in
connection with, and necessary for, any such Asset Sale; and (c) the amount of
reserves recorded in accordance with GAAP for indemnity or similar obligations
of the Parent Company and its Subsidiaries directly related to such Asset Sale
or the assets sold.
"Notice of Assignment" has the meaning set forth in Section 10.3(b).
"Notice of Borrowing" means a notice of borrowing in the form of the
attached Exhibit C signed by a Responsible Officer of the Borrower.
"Notice of Conversion or Continuation" means a notice of conversion or
continuation in the form of the attached Exhibit D signed by a Responsible
Officer of the Borrower.
"Obligations" means all unpaid principal of the Term Loans, unpaid
interest on the Term Loans, all accrued and unpaid fees and all expenses,
reimbursements, indemnities and other obligations and amounts payable by the
Credit Parties to the Administrative Agent or the Term Lenders under the Credit
Documents.
"Off-Balance Sheet Liability" of a Person means (a) any repurchase
obligation or liability of such Person with respect to accounts or notes
receivable sold by such Person, (b) Synthetic Lease Obligations, or (c) any
obligation arising with respect to any other transaction which is the functional
equivalent of or takes the place of borrowing but which does not constitute a
liability on the balance sheets of such Person (but, for the avoidance of doubt,
excluding any Operating Leases).
"Operating Lease" of a Person means any lease of Property (other than a
Capitalized Lease or an Off-Balance Sheet Liability) by such Person as lessee
which has an original term (including any required renewals and any renewals
effective at the option of the lessor) of one year or more.
"Parent Company" means (a) the U.S. Parent until the creation of a
Permitted Holding Company and (b) thereafter, the Permitted Holding Company that
is not a Subsidiary of another Permitted Holding Company.
"Participants" has the meaning set forth in Section 10.2(a).
"Payment Dates" means the last day of each March, June, September and
December.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permitted Holding Company" means (a) from and after the time the common
stock of the U.S. Parent is not listed on a United States or non-United States
national or regional securities exchange or traded through the National
Association of Securities Dealers Automated Quotation System or similar system,
a Person organized and validly existing under the laws of the United States of
America, any state thereof or the District of Columbia, the Bahamas, Barbados,
Bermuda, the British Virgin Islands, the Cayman Islands, any of the Channel
Islands, France, Luxembourg, the United Kingdom, the Netherlands or the
Netherlands Antilles that, immediately after such time, had substantially the
same stockholders, directly or indirectly, as the U.S. Parent immediately prior
to such time, (b) from and after the sale, conveyance, assignment, transfer,
lease or other disposition of all or substantially all of the U.S. Parent's and
its Subsidiaries' assets, the U.S. Parent and (c) each wholly-owned Subsidiary
of another Permitted Holding Company that directly or indirectly owns the common
stock of the U.S. Parent.
"Permitted Liens" has the meaning set forth in Section 6.1.
"Person" means an individual, partnership, limited liability partnership,
limited liability company, corporation (including a business trust), joint stock
company, enterprise, trust, unincorporated association, joint venture or other
entity, or a government or any political subdivision or agency, department or
instrumentality thereof or any trustee, receiver, custodian or similar official.
"Plan" means an employee benefit plan (other than a Multiemployer Plan)
which is covered by Title IV of ERISA or subject to the minimum funding
standards under Section 412 of the Code as to which the Parent Company or any
member of the Controlled Group may have any liability.
"Prime Rate" means a fluctuating rate of interest per annum as shall be in
effect from time-to-time equal to the prime rate of interest publicly announced
by the Administrative Agent from time to time as its prime rate, whether or not
the Borrower has notice thereof, when and as said prime rate changes.
"Pro Forma Consolidated EBITDA" means, in respect of any transaction, the
increase or decrease in Consolidated EBITDA attributable to such transaction,
assuming the transaction had occurred on the first day of the determination
period, to the extent readily quantifiable by reference to (A) past performance,
existing contractual commitments or otherwise as may be appropriate in the case
of a Going Concern Acquisition and (B) existing contractual commitments in the
case of an Asset Acquisition, in either case as set forth in a certificate from
a Responsible Officer based on information that is reasonably acceptable to the
Administrative Agent.
"Project Finance Debt" means (a) Debt with respect to the two
drilling/workover barge rigs owned by the Parent Company's Venezuelan Subsidiary
as in effect on the date hereof, (b) Debt with respect to the two drillships
owned by Andre Maritime Ltd. and ▇▇▇▇▇▇ Maritime Ltd. as in effect on the date
hereof, (c) Debt with respect to the one ▇▇▇▇-up rig owned by Pride Foramer SAS
as in effect on the date hereof, except for the $10,000,000 portion which is
recourse to the Parent Company, and (d) Debt (i) incurred to finance the
purchase price or construction cost of Property (including the cost of
upgrading, refurbishing or renovating drilling rigs, drillships and other
vessels and platforms) and related items (including interest added to
principal), (ii) which is non-recourse to the Parent Company and its
Subsidiaries, other than a Special Purpose Subsidiary, (iii) for which neither
the Parent Company nor any of its Subsidiaries (other than a Special Purpose
Subsidiary) shall have any liability whatsoever, whether direct or indirect,
contingent or otherwise, and (iv) the provider of which shall have no recourse
to any assets of the Parent Company and its Subsidiaries (other than the assets
for which such Project Finance Debt was incurred, the proceeds (including,
without limitation, proceeds from associated contracts and insurances) of, and
improvements, accessories and upgrades to, such assets and the Capital Stock of
any Special Purpose Subsidiary that owns, whether directly or indirectly, such
assets).
"Property" of any Person means any interest of such Person in any property
or asset (whether real, personal or mixed, tangible or intangible).
"Pro Rata Share" means, at any time with respect to any Term Lender, the
ratio (expressed as a percentage) of such Term Lender's aggregate outstanding
Term Loans at such time to the aggregate outstanding Term Loans of all the Term
Lenders at such time.
"Purchaser" has the meaning set forth in Section 10.3.
"Rate Hedging Agreement" means an agreement, device or arrangement
providing for payments which are related to fluctuations of interest rates,
exchange rates or forward rates, including, but not limited to,
dollar-denominated or cross-currency interest rate exchange agreements, forward
currency exchange agreements, interest rate cap or collar protection agreements,
forward rate currency or interest rate options, puts or warrants.
"Regulations T, U, X and D" means Regulations T, U, X, and D of the
Federal Reserve Board, as the same is from time-to-time in effect, and all
official rulings and interpretations thereunder or thereof.
"Release" shall have the meaning set forth in CERCLA or under any other
Environmental Law.
"Reportable Event" means a reportable event as defined in Section 4043 of
ERISA and the regulations issued under such section.
"Required Revolving Lenders" has the meaning set forth in the Revolving
Credit Agreement.
"Required Term Lenders" means, at any time, Term Lenders having more than
50% of the aggregate unpaid principal amount of the Term Loans.
"Response" shall have the meaning set forth in CERCLA or under any other
Environmental Law.
"Responsible Officer" means, the Chief Executive Officer, President, Chief
Financial Officer, any Executive or Senior Vice President, or Treasurer of the
Parent Company or the Borrower.
"Restricted Cash" means, at any time, any cash and Cash Equivalents of the
Parent Company and its Subsidiaries which are reserved for the payment of
principal and interest under Project Finance Debt of the Parent Company and its
Subsidiaries.
"Restricted Payment" means (a) the declaration or making by the Parent
Company or any of its Subsidiaries of any dividends or other distributions (in
cash, property, or otherwise) on, or any payment for the purchase, redemption or
other acquisition of, any shares of any Capital Stock of such Person, other than
dividends payable in such Person's Capital Stock, (b) the making by the Parent
Company or any of its Subsidiaries of any direct or indirect payment (scheduled
or otherwise) in respect of the principal of any Subordinated Debt, and (c) any
defeasance or covenant defeasance, purchase, redemption, retirement or other
acquisition by the Parent Company or any of its Subsidiaries in respect of
Subordinated Debt of such Person.
"Revolving Commitments" has the meaning set forth in the Revolving Credit
Agreement.
"Revolving Credit Agreement" means the $250,000,000 Facility Agreement
dated as of June 20, 2002 among the Borrower, the Revolving Lenders and CLNY, as
administrative agent for the Revolving Lenders.
"Revolving Lenders" means each lender party to the Revolving Credit
Agreement from time-to-time.
"Rig Appraisal Report" has the meaning set forth in Section 5.11(a).
"Rig Mortgages" means each of the First Preferred Fleet Mortgages (or
other ship mortgage, fleet mortgage, naval mortgage or other agreement, document
or instrument evidencing a grant of liens in a rig or vessel) executed by any
Credit Party which pledges a rig or vessel owned by such Person to the
Collateral Agent for the benefit of the Term Secured Parties as collateral for
all or a portion of the Obligations, in substantially the form of the attached
Exhibit H and as required to create an Acceptable Security Interest, in each
case as the same may be amended, supplemented, restated or otherwise modified
from time to time.
"S&P" means Standard & Poor's Rating Agency Group, a division of ▇▇-▇▇▇▇
▇▇▇▇ Companies, Inc., or any successor that is a national credit rating
organization.
"SEC" means the Securities and Exchange Commission, and any successor
entity.
"Security Agreements" means each of the Security Agreements in
substantially the form of the attached Exhibit E and executed by the Credit
Parties in favor of the Collateral Agent to secure all or a portion of the
Obligations, as same may be amended, supplemented, restated or otherwise
modified from time to time.
"Security Documents" means the Rig Mortgages, the Security Agreements, and
each other document, instrument or agreement executed in connection therewith or
otherwise executed in order to secure all or a portion of the Obligations.
"Security Maintenance Ratio" means, as at any date of determination, the
ratio of (a) the sum of (i) the aggregate Market Value of all Mortgaged Term
Loan Facility Rigs as of such date and (ii) two times the amount of any cash
deposited into the Cash Collateral Account pursuant to Section 2.6 to (b) the
outstanding principal amount of the Term Loans as of such date.
"Senior Indenture" means the Indenture dated as of May 1, 1997 between the
Parent Company and ▇▇ ▇▇▇▇▇▇ Chase Bank, as trustee (the "Senior Trustee"), as
supplemented by (a) the First Supplemental Indenture dated as of May 1, 1997
between the Parent Company and the Senior Trustee relating to $325,000,000
principal amount of 9 3/8% Senior Notes due 2007, (b) the Second Supplemental
Indenture dated as of May 26, 1999 between the Parent Company and the Senior
Trustee relating to $200,000,000 principal amount of 10% Senior Notes due 2009,
(c) the Third Supplemental Indenture dated as of January 16, 2001 between the
Parent Company and the Senior Trustee relating to $431,454,000 principal amount
at maturity of Zero Coupon Convertible Senior Debentures Due 2021, (d) the
Fourth Supplemental Indenture dated as of September 10, 2001 between the Parent
Company and the Senior Trustee relating to the
redomicile of the Parent Company and (e) the Fifth Supplemental Indenture dated
as of March 4, 2002 between the Parent Company and the Senior Trustee relating
to $300,000,000 principal amount of Convertible Senior Notes Due 2007 and as may
be further amended, restated, supplemented or otherwise modified from time to
time.
"Special Purpose Subsidiary" means any Subsidiary of the Parent Company
whose principal purpose is to incur Debt or to become an owner of interests in a
Person created to conduct the business activities for which such Debt was
incurred, and substantially all the fixed assets of which Subsidiary or Person
are those fixed assets being financed (or to be financed) in whole or in part by
such Debt.
"Subordinated Indenture" means the Indenture dated as of April 1, 1998
between the Parent Company and HSBC Bank USA, as trustee (the "Subordinated
Trustee"), as supplemented by the First Supplemental Indenture dated as of April
24, 1998 between the Parent Company and the Subordinated Trustee relating to
$588,145,000 principal amount at maturity of Zero Coupon Convertible
Subordinated Debentures Due 2018 and the Second Supplemental Indenture dated as
of September 10, 2001 between the Parent Company and the Subordinated Trustee
relating to the redomicile of the Parent Company and as may be further amended,
restated, supplemented or otherwise modified from time to time.
"Subordinated Debt" means any Debt (including Debt under the Subordinated
Indentures) of the Parent Company or any of its Subsidiaries which is
subordinated to their respective obligations under the Credit Documents.
"Subsidiary" of a Person means any corporation, association, partnership
or other business entity of which more than 50% of the outstanding shares of
Capital Stock (or other equivalent interests) having by the terms thereof
ordinary voting power under ordinary circumstances to elect a majority of the
board of directors or Persons performing similar functions (or, if there are no
such directors or Persons, having general voting power) of such entity
(irrespective of whether at the time Capital Stock (or other equivalent
interests) of any other class or classes of such entity shall or might have
voting power upon the occurrence of any contingency) is at the time directly or
indirectly owned or controlled by such Person, by such Person and one or more
Subsidiaries of such Person or by one or more Subsidiaries of such Person.
"Synthetic Lease Obligations" means an arrangement treated as an Operating
Lease for financial accounting purposes and a financing lease for tax purposes.
"Tax Group" has the meaning set forth in Section 4.11.
"Taxes" has the meaning set forth in Section 2.10(a).
"Term Commitment" means, for each Term Lender, the amount in Dollars set
opposite such Term Lender's name on the signature pages of this Agreement as its
Term Commitment.
"Term Lenders" means the lenders listed on the signature pages of this
Agreement and each Purchaser that shall become a party to this Agreement
pursuant to Article X.
"Term Loan" means, with respect to a Term Lender, such Term Lender's loan
made pursuant to Article II (or any conversion or continuation thereof).
"Term Loan Maturity Date" means June 20, 2007.
"Term Note" means a promissory note of the Borrower payable to the order
of any Term Lender, in substantially the form of the attached Exhibit F,
evidencing indebtedness of the Borrower to such Term Lender resulting from Term
Loans owing to such Term Lender.
"Term Secured Parties" means the Administrative Agent, the Collateral
Agent and the Term Lenders.
"Termination Event" means (a) the occurrence of a Reportable Event with
respect to a Plan, as described in Section 4043 of ERISA and the regulations
issued thereunder (other than a Reportable Event not subject to the provision
for 30-day notice to the PBGC under such regulations), (b) the withdrawal of any
Credit Party or any of its Affiliates from a Plan during a plan year in which it
was a "substantial employer" as defined in Section 4001(a)(2) of ERISA, (c) the
giving of a notice of intent to terminate a Plan under Section 4041(c) of ERISA,
(d) the institution of proceedings to terminate a Plan by the PBGC, or (e) any
other event or condition which constitutes grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any Plan.
"Total Capitalization" shall mean, at any time, the sum of Consolidated
Net Debt at such time and Consolidated Net Worth at such time.
"Total Loss" shall mean (a) the actual, constructive, arranged, agreed, or
compromised total loss of any Mortgaged Term Loan Facility Rig; (b) the
requisition for title or other compulsory acquisition or forfeiture of any
Mortgaged Term Loan Facility Rig otherwise than by requisition for hire; or (c)
the capture, seizure, arrest, detention or confiscation of any Mortgaged Term
Loan Facility Rig by any Governmental Authority or by Persons acting or
purporting to act on behalf of any Governmental Authority unless such Mortgaged
Term Loan Facility Rig be released from such capture, seizure, arrest, detention
or confiscation within one (1) month after the occurrence thereof.
"Total Revolving Commitments" has the meaning set forth in the Revolving
Credit Agreement.
"Transferee" has the meaning set forth in Section 10.4.
"Type" has the meaning set forth in Section 1.4.
"Unfunded Liabilities" means the amount (if any) by which the present
value of all vested and unvested accrued benefits under all Plans exceeds the
fair market value of all such Plan assets allocable to such benefits, all
determined as of the then most recent valuation date for such Plans using PBGC
actuarial assumptions for single employer plan terminations.
"Unrestricted Cash" means, at any time, any cash and Cash Equivalents of
the Parent Company and its Subsidiaries that is not Restricted Cash.
"U.S. Parent" means Pride International, Inc., a Delaware corporation.
"Voting Stock" means, with respect to any Person, securities of any class
or classes of Capital Stock or other interests (including partnership interests)
in such Person entitling the holders thereof (whether at all times or at the
time that such class of Capital Stock) has voting power by reason of the
happening of any contingency) to vote in the election of members of the board of
directors or comparable body of such Person.
"War Risks" includes the risk of mines, hostile force, confiscation,
nationalization, expropriation, seizure and all risks excluded from the standard
form of English marine policy by the free of capture and seizure clause.
Section 1.2 Computation of Time Periods. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
means "to but excluding".
Section 1.3 Accounting Terms.
(a) Except as otherwise expressly provided herein, all accounting terms
used herein shall be interpreted using GAAP accounting policies and practices
and financial reference periods that are consistent with those used in the
preparation of the Financial Statements; provided, however, that all financial
statements and certificates and reports as to financial matters required to be
delivered to the Term Lenders hereunder shall be prepared, using GAAP accounting
policies and practices and financial reference periods that are in effect at the
time of preparation.
(b) All calculations for the purposes of determining compliance with
Sections 6.16 through 6.19 of this Agreement shall be adjusted to reflect the
basis upon which the Financial Statements were prepared.
(c) In addition, all calculations and defined accounting terms used
herein shall, unless expressly provided otherwise, when referring to any Person,
refer to such Person on a consolidated basis and mean such Person and its
consolidated subsidiaries.
Section 1.4 Types of Loans. Loans are distinguished by "Type". The "Type"
of a Loan refers to the determination whether such Loan is a Eurodollar Loan or
a Base Rate Loan, each of which constitutes a Type.
Section 1.5 Miscellaneous. Article, Section, Schedule and Exhibit
references are to Articles and Sections of and Schedules and Exhibits to this
Agreement, unless otherwise specified. All references to instruments, documents,
contracts, and agreements are references to such instruments, documents,
contracts, and agreements as the same may be amended, supplemented, and
otherwise modified from time to time, unless otherwise specified.
ARTICLE II
THE TERM LOAN
Section 2.1 Term Commitments. Each Term Lender severally agrees, on the
terms and conditions set forth in this Agreement, to make a single Term Loan to
the Borrower in an amount equal to the amount of its Term Commitment on the
Closing Date. Principal payments made after the Closing Date may not be
reborrowed. Unless the Term Loans have been made on or before June 30, 2002, the
Term Commitments shall terminate in full on such date.
Section 2.2 Method of Borrowing.
(a) Notice. The Term Loans shall be made pursuant to a Notice of
Borrowing, given not later than (i) if the Borrowing is comprised of Eurodollar
Loans, 10:00 a.m. (New York time) on the third Business Day before the requested
Borrowing Date and (ii) if the Borrowing is comprised of Base Rate Loans, 10:00
a.m. (New York time) on the requested Borrowing Date, in each case to the
Administrative Agent's Applicable Lending Office. The Administrative Agent shall
give to each Term Lender prompt notice on the day of receipt of a timely Notice
of Borrowing. The Notice of Borrowing shall be in writing specifying (A) the
Borrowing Date (which shall be a Business Day), (B) the requested Type of Loans
comprising such Borrowing, (C) the aggregate amount of such Borrowing, and (D)
if such Borrowing is to be comprised of Eurodollar Loans, the requested Interest
Period. In the case of a requested Borrowing comprised of Eurodollar Loans, the
Administrative Agent shall promptly notify each Term Lender of the applicable
interest rate under Section 2.5(b). Each Term Lender shall make available its
Pro Rata Share of such Borrowing before 12:00 p.m. (New York time) on the
Borrowing Date in immediately available funds to the Administrative Agent at its
Applicable Lending Office or such other location as the Administrative Agent may
specify by notice to the Term Lenders. After the Administrative Agent's receipt
of such funds and upon fulfillment of the applicable conditions set forth in
Article III, the Administrative Agent will promptly make such funds available to
the Borrower not later than 2:00 p.m. (New York time) at such account as the
Borrower shall specify in writing to the Administrative Agent.
(b) Conversions and Continuations. In order to elect to Convert or
Continue the Term Loans under this Section, the Borrower shall deliver an
irrevocable Notice of Conversion or Continuation to the Administrative Agent at
its Applicable Lending Office no later than (i) 10:00 a.m. (New York time) at
least one Business Day in advance of such requested Conversion date in the case
of a Conversion of a Eurodollar Loan to a Base Rate Loan or (ii) 10:00 a.m. (New
York time) at least three Business Days in advance of such requested Conversion
date in the case of a Conversion into or Continuation of a Eurodollar Loan to
another Eurodollar Loan. Each such Notice of Conversion or Continuation shall be
in writing or by telex, telecopier or telephone, confirmed promptly in writing
specifying (A) the requested Conversion or Continuation date (which shall be a
Business Day), (B) the amount and Type of the Term Loan to be Converted or
Continued, (C) whether a Conversion or Continuation is requested, and if a
Conversion, into what Type of Term Loan, and (D) in the case of a Conversion to,
or a Continuation of, a Eurodollar Loan, the requested Interest Period. Promptly
after receipt of a Notice of Conversion or Continuation under this paragraph,
the Administrative Agent shall provide each Term Lender with a copy thereof and,
in the case of a Conversion to or a
Continuation of a Eurodollar Loan, notify each Term Lender of the interest rate
under Sections 2.5(b). Notwithstanding anything in this Agreement to the
contrary, Conversions of Eurodollar Loans may only be made at the end of the
applicable Interest Period for such Term Loans; provided, however, that
Conversions of Base Rate Loans may be made at any time.
(c) Certain Limitations. Notwithstanding anything in paragraphs (a) and
(b) above:
(i) at no time shall there be more than one Interest Period
applicable to outstanding Eurodollar Loans;
(ii) (A) if any Term Lender shall, at least one Business Day before
the date of any requested Borrowing, notify the Administrative Agent that
the introduction of or any change in or in the interpretation of any law
or regulation makes it unlawful, or that any central bank or other
Governmental Authority asserts that it is unlawful, for such Term Lender
or any of its Applicable Lending Offices to perform its obligations under
this Agreement to make Eurodollar Loans, or to fund or maintain Eurodollar
Loans, the right of the Borrower to select Eurodollar Loans from such Term
Lender for such Borrowing or for any subsequent Borrowing shall be
suspended until such Term Lender shall notify the Administrative Agent
that the circumstances causing such suspension no longer exist, and such
Term Lender's Term Loan for such Borrowing shall be a Base Rate Loan and
(B) such Term Lender agrees to use commercially reasonable efforts
(consistent with its internal policies and legal and regulatory
restrictions) to designate a different Applicable Lending Office if the
making of such designation would avoid the effect of this paragraph and
would not, in the reasonable judgment of such Term Lender, be otherwise
disadvantageous to such Term Lender;
(iii) if the Administrative Agent is unable to determine the
Eurodollar Rate for any requested Borrowing and the Administrative Agent
gives telephonic or telecopy notice thereof to the Borrower as soon as
practicable, the right of the Borrower to select Eurodollar Loans or for
any subsequent Borrowing and the obligation of the Term Lenders to make
such Eurodollar Loans shall be suspended until the Administrative Agent
shall notify the Borrower and the Term Lenders that the circumstances
causing such suspension no longer exist, and each Term Loan comprising
such Borrowing shall be a Base Rate Loan;
(iv) if the Required Term Lenders shall, by 11:00 a.m. (New York
time) at least one Business Day before the date of any requested
Borrowing, notify the Administrative Agent that the Eurodollar Rate will
not adequately reflect the cost to such Term Lenders of making or funding
their respective Eurodollar Loans and the Administrative Agent gives
telephonic or telecopy notice thereof to the Borrower as soon as
practicable, the right of the Borrower to select Eurodollar Loans for such
Borrowing or for any subsequent Borrowing and the obligation of the Term
Lenders to make Eurodollar Loans shall be suspended until the
Administrative Agent shall notify the Borrower and the Term Lenders that
the circumstances causing such suspension no longer exist, and each Term
Loan comprising such Borrowing shall be a Base Rate Loan;
(v) if the Borrower shall fail to select the duration or
Continuation of any Interest Period for any Eurodollar Loans in accordance
with the provisions contained in the definition of "Interest Period" in
Section 1.1 and paragraphs (a) and (b) above or shall fail to deliver a
Notice of Conversion or Continuation or to specify the Type of Eurodollar
Loan in a Notice of Conversion or Continuation, the Administrative Agent
will forthwith so notify the Borrower and the Term Lenders and such Term
Loans will be made available to the Borrower on the date of such Borrowing
and will have an Interest Period of one month; and
(vi) no Term Loan may be Converted or Continued as a Eurodollar
Loan at any time when a Default has occurred and is continuing.
(d) Notices Irrevocable. The Notice of Borrowing and each Notice of
Conversion or Continuation delivered by the Borrower shall be irrevocable and
binding on the Borrower. In the case of the initial Borrowing or any Borrowing
which the related Notice of Conversion or Continuation specifies is to be
comprised of Eurodollar Loans, the Borrower shall indemnify each Term Lender
against any loss, out-of-pocket cost or expense actually incurred by such Term
Lender as a result of any failure to fulfill on or before the Borrowing Date or
the date specified in such Notice of Conversion or Continuation for such
Borrowing the applicable conditions set forth in Article III, including, without
limitation, any loss, cost or expense actually incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by such Term
Lender to fund the Term Loan to be made by such Term Lender as part of such
Borrowing when such Term Loan, as a result of such failure, is not made on such
date.
(e) Administrative Agent Reliance. Unless the Administrative Agent shall
have received notice from a Term Lender before the Borrowing Date that such Term
Lender will not make available to the Administrative Agent such Term Lender's
Pro Rata Share of the Borrowing, the Administrative Agent may assume that such
Term Lender has made its Pro Rata Share of such Borrowing available to the
Administrative Agent on the Borrowing Date in accordance with paragraph (a) of
this Section 2.2 and the Administrative Agent may, in reliance upon such
assumption, make available to the Borrower on the Borrowing Date a corresponding
amount. If and to the extent that such Term Lender shall not have so made its
Pro Rata Share of such Borrowing available to the Administrative Agent, such
Term Lender shall pay to the Administrative Agent, on demand, such amount with
interest thereon at a rate per annum equal to the daily average Federal Funds
Effective Rate for the period until such Term Lender makes such amount
immediately available to the Administrative Agent. If such Term Lender shall
repay to the Administrative Agent such corresponding amount and interest as
provided above, such corresponding amount so repaid shall constitute such Term
Lender's Loan as part of such Borrowing for purposes of this Agreement even
though not made on the same day as the other Term Loans comprising such
Borrowing. If such Term Lender's Term Loan as part of such Borrowing is not made
available by such Term Lender within three Business Days of the Borrowing Date,
the Borrower shall repay such Term Lender's share of such Borrowing (together
with interest thereon at the interest rate applicable during such period to Term
Loans comprising such Borrowing) to the Administrative Agent not later than
three Business Days after receipt of written notice from the Administrative
Agent specifying such Term Lender's share of such Borrowing that was not made
available to the Administrative Agent.
(f) Term Lender Obligations Several. The failure of any Term Lender to
make the Term Loan to be made by it as part of the Borrowing shall not relieve
any other Term Lender of its obligation, if any, to make its Term Loan on the
Borrowing Date. No Term Lender shall be responsible for the failure of any other
Term Lender to make the Term Loan to be made by such other Term Lender on the
Borrowing Date.
(g) Noteless Agreement; Evidence of Indebtedness.
(i) Each Term Lender shall maintain in accordance with its usual
practice an account or accounts evidencing the indebtedness of the
Borrower to such Term Lender resulting from the Term Loan made by such
Term Lender from time to time, including the amounts of principal and
interest payable and paid to such Term Lender from time to time hereunder.
(ii) The Administrative Agent shall also maintain accounts in which
it will record (a) the amount of each Term Loan made hereunder, the Type
thereof and the Interest Period with respect thereto, (b) the amount of
any principal or interest due and payable or to become due and payable
from the Borrower to each Term Lender hereunder and (c) the amount of any
sum received by the Agent hereunder from the Borrower and each Term
Lender's share thereof.
(iii) The entries maintained in the accounts maintained pursuant to
paragraphs (i) and (ii) above shall be prima facie evidence of the
existence and amounts of the Obligations therein recorded; provided,
however, that the failure of the Administrative Agent or any Term Lender
to maintain such accounts or any error therein shall not in any manner
affect the obligation of the Borrower to repay the Obligations in
accordance with their terms.
(iv) Any Term Lender may request that the Term Loan owing to such
Term Lender be evidenced by a Term Note. In such event, the Borrower shall
prepare, execute and deliver to such Term Lender such Term Note payable to
the order of such Term Lender. Thereafter, the Term Loans evidenced by
such Term Note and interest thereon shall at all times (including after
any assignment pursuant to Section 10.3) be represented by one or more
Term Notes payable to the order of the payee named therein or any assignee
pursuant to Section 10.3, except to the extent that any such Term Lender
or assignee subsequently returns any such Term Note for cancellation and
requests that such Loans once again be evidenced as described in
paragraphs (i) and (ii) above.
Section 2.3 Fees.
(a) [Intentionally Omitted]
(b) Agent's Fees. The Borrower agrees to pay to the Administrative Agent
the agent's fees as separately agreed upon by the Borrower and the
Administrative Agent in the letter agreement dated March 28, 2002 from CLNY to
the Borrower on the dates required by such letter.
Section 2.4 Repayment. The aggregate principal amount of the Term Loans
shall be payable in quarterly installments equal to 0.25% of the initial
aggregate principal amount of the Term Loans on each of the first nineteen
Payment Dates occurring after the Borrowing Date**. Any remaining outstanding
Term Loans and all other unpaid Obligations shall be paid in full by the
Borrower on the Term Loan Maturity Date.
Section 2.5 Interest. The Borrower shall pay interest on the unpaid
principal amount of each Term Loan made by each Term Lender to it from the date
of such Term Loan until such principal amount shall be paid in full, at the
following rates per annum:
(a) Base Rate Loans. If such Term Loan is a Base Rate Loan, a rate per
annum equal at all times to the lesser of (i) the Alternate Base Rate in effect
from time-to-time plus the Applicable Margin and (ii) the Maximum Rate, payable
in arrears on the last Business Day of each calendar quarter and on the date
such Base Rate Loan shall be paid in full; provided that, any amount of
principal, interest or fees which is not paid when due (whether at stated
maturity, by acceleration, or otherwise) shall bear interest from the date on
which such amount is due until such amount is paid in full, payable on demand,
at a rate per annum equal at all times to the lesser of (i) the Alternate Base
Rate in effect from time-to-time plus the Applicable Margin plus 2% and (ii) the
Maximum Rate.
(b) Eurodollar Loans. If such Term Loan is a Eurodollar Loan, a rate per
annum equal at all times during the Interest Period for such Term Loan to the
lesser of (i) the Eurodollar Rate for such Interest Period plus the Applicable
Margin in effect on each day of such Interest Period for Eurodollar Loans and
(ii) the Maximum Rate, payable on the last day of such Interest Period, and, in
the case of Interest Periods of greater than three months, on the Business Day
which occurs during such Interest Period three months from the first day of such
Interest Period; provided that, any amount of principal, interest or fees which
is not paid when due (whether at stated maturity, by acceleration, or otherwise)
shall bear interest from the date on which such amount is due until such amount
is paid in full, payable on demand, at a rate per annum equal at all times to
the lesser of (i) the rate required to be paid on such Term Loan immediately
prior to the occurrence of such Default plus 2% and (ii) the Maximum Rate.
(c) Additional Interest on Eurodollar Loans. The Borrower shall pay to
each Term Lender, so long as any such Term Lender shall be required under
regulations of the Federal Reserve Board to maintain reserves with respect to
liabilities or assets consisting of or including Eurocurrency Liabilities,
additional interest on the unpaid principal amount of each Eurodollar Loan of
such Term Lender, from the effective date of such Term Loan until such principal
amount is paid in full, at an interest rate per annum equal at all times to the
remainder obtained by subtracting (A) the Eurodollar Rate for the Interest
Period for such Term Loan from (B) the rate obtained by dividing such Eurodollar
Rate by a percentage equal to 100% minus the Eurodollar Rate Reserve Percentage
of such Term Lender for such Interest Period, payable on each date on which
interest is payable on such Term Loan. Such additional interest payable to any
Term Lender shall be determined by such Term Lender and notified to the Borrower
through the Administrative Agent (such notice to include the calculation of such
additional interest, which calculation shall be conclusive in the absence of
manifest error, and be accompanied by any evidence indicating the need for such
additional interest as the Borrower may reasonably request).
(d) Usury Recapture. In the event the rate of interest chargeable under
this Agreement or the Term Notes at any time (calculated after giving affect to
all items charged which constitute "interest" under applicable laws, including
fees and margin amounts, if applicable) is greater than the Maximum Rate, the
unpaid principal amount of the Term Loans shall bear interest at the Maximum
Rate until the total amount of interest paid or accrued on the Term Loans equals
the amount of interest which would have been paid or accrued on the Term Loans
if the stated rates of interest set forth in this Agreement had at all times
been in effect.
In the event, upon payment in full of the Term Loans, the total
amount of interest paid or accrued under the terms of this Agreement and the
Term Loans is less than the total amount of interest which would have been paid
or accrued if the rates of interest set forth in this Agreement had, at all
times, been in effect, then the Borrower shall, to the extent permitted by
applicable law, pay the Administrative Agent for the account of the Term Lenders
an amount equal to the difference between (i) the lesser of (A) the amount of
interest which would have been charged on its Term Loans if the Maximum Rate
had, at all times, been in effect and (B) the amount of interest which would
have accrued on its Term Loans if the rates of interest set forth in this
Agreement had at all times been in effect and (ii) the amount of interest
actually paid under this Agreement on its Term Loans.
In the event the Term Lenders ever receive, collect or apply as
interest any sum in excess of the Maximum Rate, such excess amount shall, to the
extent permitted by law, be applied to the reduction of the principal balance of
the Term Loans, and if no such principal is then outstanding, such excess or
part thereof remaining shall be paid to the Borrower.
Section 2.6 Prepayments.
(a) Right to Prepay. The Borrower shall have no right to prepay any
principal amount of any Term Loan except as provided in this Section 2.6.
(b) Optional. The Borrower may elect to prepay, in whole or in part, any
of the Term Loans owing by it to the Term Lenders, after giving prior written
notice of such election by (i) 10:00 a.m. (New York time) five days before such
prepayment date in the case of Borrowings which are comprised of Eurodollar
Loans, and (ii) 10:00 a.m. (New York time) on the Business Day of such
prepayment, in case of Borrowings which are comprised of Base Rate Loans, in
each case to the Administrative Agent stating the proposed date and aggregate
principal amount of such prepayment. If any such notice is given, the
Administrative Agent shall give prompt notice thereof to each Term Lender and
the Borrower shall prepay Term Loans comprising part of the same Borrowing in
whole or ratably in part in an aggregate principal amount equal to the amount
specified in such notice, together with accrued interest to the date of such
prepayment on the principal amount prepaid and amounts, if any, required to be
paid pursuant to Section 2.7 as a result of such prepayment being made on such
date; provided, however, that each partial prepayment shall be in an aggregate
principal amount not less than $2,000,000.00 and in integral multiples of
$1,000,000.00 in excess thereof (or such lesser amount as may then be
outstanding).
(c) Mandatory.
(i) Security Maintenance Ratio. If at any time the Borrower shall
fail to maintain a Security Maintenance Ratio of at least 2.0 to 1.0, then
as soon as possible but in any event no later than 30 days after such
failure, to the extent such failure is continuing, either (A) the Borrower
will, or will cause the Parent Company or one of its Subsidiaries
(provided that such Subsidiary becomes a Credit Party pursuant to Section
5.13) to, execute and deliver to the Collateral Agent additional Rig
Mortgages granting an Acceptable Security Interest in such other rigs or
vessels acceptable to the Collateral Agent (acting on the instruction of
the Required Term Lenders) (together with any required amendments to any
applicable Security Agreement and such evidence of corporate authority to
enter into and such legal opinions in relation to such Security Documents
as the Collateral Agent may reasonably request) that have a Market Value
such that the Security Maintenance Ratio is at least 2.0 to 1.0, (B) at
the end of such 30-day period, then the Borrower shall prepay the Term
Loans by an amount necessary so that the Security Maintenance Ratio is at
least 2.0 to 1.0, or (C) the Borrower shall deposit with the Collateral
Agent into the Cash Collateral Account an amount of cash necessary so that
the Security Maintenance Ratio is at least 2.0 to 1.0.
(ii) Collateral Disposition. Without prejudice to Section 2.6(c)(i)
above,
(A) Following any Collateral Disposition, all Collateral
Disposition Proceeds payable to or received by the Credit Parties
shall on the date of receipt by such Credit Party be deposited with
the Collateral Agent as security for the Obligations and applied in
accordance with this Agreement.
(B) If no Event of Default has occurred and is continuing,
then the Collateral Agent shall apply 100% of such Collateral
Disposition Proceeds to prepay the Term Loans unless:
(1) if the Security Maintenance Ratio is at least 2.0
to 1.0 (calculated with respect to the Market Values set forth
in the related Additional Appraisal Report and both with and
without giving effect to or credit for the Mortgaged Term Loan
Facility Rig affected by such Collateral Disposition or any
related Collateral Disposition Proceeds), on or before the
90th day following such Collateral Disposition, either (x) the
Parent Company or one of its Subsidiaries shall replace such
disposed Mortgaged Term Loan Facility Rig with an offshore
drilling rig of the same or superior type, class and value (as
verified by a written appraisal report prepared by an Approved
Rigbroker setting forth the Market Value of such replacement
rig) as the disposed Mortgaged Term Loan Facility Rig or with
another offshore drilling rig reasonably acceptable to the
Collateral Agent (acting on the instruction of the Required
Term Lenders) and for which the Collateral Agent has received
a written appraisal report prepared by an Approved Rigbroker
setting forth the Market Value of such replacement rig and
granted an Acceptable Security Interest pursuant to a Rig
Mortgage in relation thereto (together with any required
amendments to any applicable Security Agreement and such
evidence of corporate authority to enter into and such legal
opinions in relation to such
Security Documents as the Collateral Agent may reasonably
request) or (y) the Borrower shall deposit with the Collateral
Agent into the Cash Collateral Account an amount of cash
(including, without limitation, cash constituting Collateral
Disposition Proceeds) equal to 50% of the Market Value of the
disposed Mortgaged Term Loan Facility Rig;
(2) if the Security Maintenance Ratio is at least 2.0
to 1.0 (calculated with respect to the Market Values set forth
in the Additional Appraisal Report and with giving effect to
or credit for the Mortgaged Term Loan Facility Rig affected by
such Collateral Disposition or any related Collateral
Disposition Proceeds) but the Security Maintenance Ratio is
less than 2.0 to 1.0 (calculated with respect to the Market
Values set forth in the Additional Appraisal Report and
without giving effect to or credit for the Mortgaged Term Loan
Facility Rig affected by such Collateral Disposition or any
related Collateral Disposition Proceeds), on or before the
30th day following such Collateral Disposition, either (x) the
Parent Company or one of its Subsidiaries shall replace such
disposed Mortgaged Term Loan Facility Rig in the manner
described in Section 2.6(c)(ii)(B)(1)(x) and complied with the
ancillary matters referred to therein or (y) the Borrower
shall deposit with the Collateral Agent into the Cash
Collateral Account an amount of cash (including, without
limitation, cash constituting Collateral Disposition Proceeds)
equal to 50% of the Market Value of the disposed Mortgaged
Term Loan Facility Rig;
(3) if the Security Maintenance Ratio is less than 2.0
to 1.0 (calculated with respect to the Market Values set forth
in the Additional Appraisal Report and both with and without
giving effect to or credit for the Mortgaged Term Loan
Facility Rig affected by such Collateral Disposition or any
related Collateral Disposition Proceeds) and the Term Loans
have been prepaid pursuant to Section 2.6(c)(i)(B) above, on
or before the 30th day following such Collateral Disposition,
either (x) the Parent Company or one of its Subsidiaries shall
replace such disposed Mortgaged Term Loan Facility Rig in the
manner described in Section 2.6(c)(ii)(B)(1)(x) and complied
with the ancillary matters referred to therein or (y) the
Borrower shall deposit with the Collateral Agent into the Cash
Collateral Account an amount of cash (including, without
limitation, cash constituting Collateral Disposition Proceeds)
equal to 50% of the Market Value of the disposed Mortgaged
Term Loan Facility Rig.
(C) If (1) no Event of Default has occurred and is
continuing and (2) a replacement for any Mortgaged Term Loan
Facility Rig affected by a Collateral Disposition or other
arrangement permitted by Section 2.6(c)(ii)(B) shall have been made
within the time periods provided for therein following such
Collateral Disposition in accordance with Section 2.6(c)(ii)(B),
then the Collateral Agent shall refund such Collateral Disposition
Proceeds (together with accrued interest thereon) to the Borrower or
any other Credit Party as appropriate.
(D) If an Event of Default has occurred and is continuing,
the Collateral Agent shall apply such Collateral Disposition
Proceeds in accordance with Section 7.6.
(iii) Casualty Event. Without prejudice to Section 2.6(c)(i) above,
(A) Following any Casualty Event (if the Casualty Proceeds
with respect thereto could reasonably be expected to exceed
U.S.$5,000,000), all Casualty Proceeds payable to or received by the
Credit Parties in respect of such Casualty Event shall on the date
of receipt by such Credit Party be deposited with the Collateral
Agent as security for the Obligations and applied in accordance with
this Agreement.
(B) If (1) no Event of Default has occurred and is
continuing, (2) the applicable Credit Party reasonably believes that
all necessary repairs to any Mortgaged Term Loan Facility Rig
affected by a Casualty Event can be completed within 270 days
following such Casualty Event, and (3) during such 270-day period
following such Casualty Event, the applicable Credit Party works
diligently to complete all such repairs, then the Collateral Agent
shall from time to time apply such Casualty Proceeds in payment for
all necessary repairs to the extent that the costs of such repairs
shall have been paid by a Credit Party upon receipt of satisfactory
evidence of such repairs, and following completion of such repairs
within 270 days after the Casualty Event and if no Event of Default
has occurred and is continuing, the Collateral Agent shall refund
the remainder of such Casualty Proceeds (together with accrued
interest thereon), if any, to the Borrower or other appropriate
Credit Party.
(C) If (1) no Event of Default has occurred and is
continuing and (2) all necessary repairs to any Mortgaged Term Loan
Facility Rig affected by a Casualty Event shall not have been made
within 270 days following such Casualty Event, then the Collateral
Agent shall apply 100% of the remaining Casualty Proceeds to prepay
the Term Loans unless:
(x) the Parent Company or one of its Subsidiaries
shall replace such affected Mortgaged Term Loan Facility Rig
with an offshore drilling rig of the same or superior type,
class and value (as verified by a written appraisal report
prepared by an Approved Rigbroker setting forth the Market
Value of such replacement rig) as the affected Mortgaged Term
Loan Facility Rig or with another offshore drilling rig
reasonably acceptable to the Collateral Agent (acting on the
instruction of the Required Term Lenders) and for which the
Collateral Agent has received a written appraisal report
prepared by an Approved Rigbroker setting forth the Market
Value of such replacement rig and granted an Acceptable
Security Interest pursuant to a Rig Mortgage in relation
thereto (together with any required amendments to any
applicable Security Agreement and such evidence of corporate
authority to enter into and such legal opinions
in relation to such Security Documents as the Collateral Agent
may reasonably request); or
(y) the Borrower shall deposit with the Collateral
Agent into the Cash Collateral Account an amount of cash
(including, without limitation, cash constituting Casualty
Proceeds) equal to 50% of the decrease in Market Value of the
affected Mortgaged Term Loan Facility Rig.
(D) If an Event of Default has occurred and is continuing,
the Collateral Agent shall apply such Casualty Proceeds in
accordance with Section 7.6.
(iv) Debt Incurrence. The Borrower shall prepay the Term Loans by
an amount equal to 100% of the Debt Incurrence Proceeds that the Parent
Company or any of its Subsidiaries receives from each Debt Incurrence
after the Closing Date within 30 days after the date of each such Debt
Incurrence.
(d) Application of Prepayments. Each prepayment pursuant to this Section
2.6 shall be accompanied by accrued interest on the amount prepaid to the date
of such prepayment and amounts, if any, required to be paid pursuant to Section
2.7 as a result of such prepayment being made on such date. All prepayments
shall be applied to future scheduled principal payments in the inverse order of
maturity. Notwithstanding the foregoing, any Term Lender may elect, by notice to
the Administrative Agent by telephone (confirmed by telecopy) at least one
Business Day prior to the prepayment date, to decline all or any portion of any
prepayment of its Term Loans pursuant to Section 2.6 above, in which case the
aggregate amount of the prepayment that would have been applied to prepay such
Term Loans but was so declined shall be retained by the Borrower.
(e) Illegality. If any Term Lender shall notify the Administrative Agent
and the Borrower that the introduction of or any change in or in the
interpretation of any law or regulation makes it unlawful, or that any central
bank or other Governmental Authority asserts that it is unlawful for such Term
Lender or its Applicable Lending Office to perform its obligations under this
Agreement or to make or maintain Eurodollar Loans then outstanding hereunder,
the Borrower shall, no later than 10:00 a.m. (New York time) (A) if not
prohibited by law or regulation to maintain such Eurodollar Loans for the
duration of the Interest Period, on the last day of the Interest Period for each
outstanding Eurodollar Loan or (B) if prohibited by law or regulation to
maintain such Eurodollar Loans for the duration of the Interest Period, on the
second Business Day following its receipt of such notice, prepay all Eurodollar
Loans of all of the Term Lenders then outstanding, together with accrued
interest on the principal amount prepaid to the date of such prepayment and
amounts, if any, required to be paid pursuant to Section 2.7 as a result of such
prepayment being made on such date, (ii) each Term Lender shall simultaneously
make a Base Rate Loan or, if not otherwise prohibited, make an Eurodollar Loan
in an amount equal to the aggregate principal amount of the affected Eurodollar
Loans, and (iii) the right of the Borrower to select Eurodollar Loans shall be
suspended until such Term Lender shall notify Administrative Agent that the
circumstances causing such suspension no longer exist. Each Term Lender agrees
to use commercially reasonable efforts (consistent with its
internal policies and subject to legal and regulatory restrictions) to designate
a different Applicable Lending Office if the making of such designation would
avoid the effect of this paragraph and would not, in the reasonable judgment of
such Term Lender, be otherwise disadvantageous to such Term Lender.
(f) Effect of Notice. All notices given pursuant to this Section 2.6
shall be irrevocable and binding upon the Borrower.
Section 2.7 Funding Losses. If (a) any payment of principal of any
Eurodollar Loan is made other than on the last day of the Interest Period for
such Term Loan as a result of any payment pursuant to Section 2.6 or the
acceleration of the maturity of the Term Loans pursuant to Article VII or (b) if
the Borrower fails to make a principal or interest payment with respect to any
Eurodollar Loan on the date such payment is due and payable, the Borrower shall,
within 3 Business Days of any written demand sent by any Term Lender to the
Borrower through the Administrative Agent, pay to Administrative Agent for the
account of such Term Lender any amounts (without duplication of any other
amounts payable in respect of breakage costs) required to compensate such Term
Lender for any additional losses, out-of-pocket costs or expenses which it may
reasonably incur as a result of such payment or nonpayment, including, without
limitation, any loss, cost or expense actually incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by any Term
Lender to fund or maintain such Term Loan. Each Term Lender shall, as soon as
reasonably practicable after a demand by the Administrative Agent , provide a
certificate confirming the amount of its funding losses for any Interest Period
in which they accrue.
Section 2.8 Increased Costs.
(a) Eurodollar Loans. If, due to either (i) the introduction of or any
change (other than any change by way of imposition or increase of reserve
requirements included in the Eurodollar Rate Reserve Percentage) 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 any Term Lender of agreeing to make or making, funding or maintaining
Eurodollar Loans, then the Borrower shall from time-to-time pay within five
Business Days of demand by such Term Lender (with a copy of such demand to the
Administrative Agent) to the Administrative Agent for the account of such Term
Lender additional amounts (without duplication of any other amounts payable in
respect of increased costs) sufficient to compensate such Term Lender for such
increased cost; provided, however, that, before making any such demand, each
Term Lender agrees to use commercially reasonable efforts (consistent with its
internal policy and subject to legal and regulatory restrictions) to designate a
different Applicable Lending Office if the making of such a designation would
avoid the need for, or reduce the amount of, such increased cost and would not,
in the reasonable judgment of such Term Lender, be otherwise economically
disadvantageous to such Term Lender. A certificate indicating the amount of such
increased cost, detailing the calculation of such increased cost and explaining
how and why such increased costs have been suffered by such Term Lender shall be
submitted by such Term Lender to the Borrower and the Administrative Agent and
shall be conclusive and binding for all purposes, absent manifest error.
(b) Capital Adequacy. If any Term Lender determines in good faith 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) implemented or effective after the Closing Date affects or would affect the
amount of capital required or expected to be maintained by such Term Lender or
any corporation controlling such Term Lender and that the amount of such capital
is increased by or based upon the existence of such Term Lender's commitment to
lend and other commitments of this type, then, upon demand by such Term Lender
(with a copy of any such demand to the Administrative Agent), the Borrower shall
within five Business Days of demand pay to the Administrative Agent for the
account of such Term Lender as the case may be, from time-to-time as specified
by such Term Lender, additional amounts (without duplication of any other
amounts payable in respect of increased costs) sufficient to compensate such
Term Lender, in light of such circumstances, with respect to such Term Lender,
to the extent that such Term Lender reasonably determines such increase in
capital to be allocable to the existence of such Term Lender's commitment to
lend under this Agreement. A certificate as to such amount, detailing the
calculation of such costs and explaining how and why such increased costs have
been suffered by such Term Lender shall be submitted to the Borrower by the Term
Lender, such certificate to be conclusive and binding for all purposes, absent
manifest error.
Section 2.9 Payments and Computations.
(a) Payment Procedures. The Borrower shall make each payment under this
Agreement not later than 12:00 p.m. (local time) on the day when due to the
Administrative Agent at the Administrative Agent's address specified in Section
11.2 (or such other location as the Administrative Agent shall designate in
writing to the Borrower) in immediately available funds. Each Term Loan shall be
repaid and each payment of interest thereon shall be paid in Dollars. All
payments shall be made without setoff, deduction, or counterclaim. The
Administrative Agent will promptly thereafter, and in any event prior to the
close of business on the day any timely payment is made, cause to be distributed
like funds relating to the payment of principal, interest or fees ratably (other
than amounts payable solely to the Administrative Agent, or a specific Term
Lender pursuant to Section 2.3(b), 2.7, 2.8 or 2.10, but after taking into
account payments effected pursuant to Section 11.4) in accordance with each Term
Lender's Pro Rata Share to the Term Lenders for the account of their respective
Applicable Lending Offices, and like funds relating to the payment of any other
amount payable to any Term Lender to such Term Lender for the account of its
Applicable Lending Offices, in each case to be applied in accordance with the
terms of this Agreement.
(b) Computations. All computations of interest based on the Base Rate
shall be made by the Administrative Agent on the basis of a year of 365 or 366
days, as the case may be, and all computations of interest based on the
Eurodollar Rate and of fees shall be made by the Administrative Agent, on the
basis of a year of 360 days, in each case for the actual number of days
(including the first day, but excluding the last day) occurring in the period
for which such interest or fees are payable. Each determination by the
Administrative Agent of an interest rate shall be conclusive and binding for all
purposes, absent manifest error.
(c) Non-Business Day Payments. Whenever any payment shall be stated to
be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business
Day, and such extension of time shall in such case be included in the
computation of payment of interest or fees, as the case may be.
(d) Agent Reliance. Unless the Administrative Agent shall have received
written notice from the Borrower prior to the date on which any payment is due
to the Term Lenders that the Borrower will not make such payment in full, the
Administrative Agent may assume that the Borrower has made such payment in full
to the Administrative Agent on such date and the Administrative Agent may, in
reliance upon such assumption, cause to be distributed to each Term Lender on
such date an amount equal to the amount then due to such Term Lender. If and to
the extent the Borrower shall not have so made such payment in full to
Administrative Agent, each Term Lender shall repay to the Administrative Agent
forthwith on demand such amount distributed to such Term Lender, together with
interest, for each day from the date such amount is distributed to such Term
Lender until the date such Term Lender repays such amount to the Administrative
Agent, at the Federal Funds Effective Rate for such day.
Section 2.10 Taxes.
(a) No Deduction for Certain Taxes. Any and all payments by the Borrower
shall be made, in accordance with this Section 2.10, free and clear of and
without deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings and all liabilities with respect thereto,
excluding in the case of each Term Lender and the Administrative Agent, taxes
imposed on or measured by its income or receipts, and franchise taxes imposed on
it by either the jurisdiction under the laws of which such Term Lender or the
Administrative Agent (as the case may be) is organized or any political
subdivision of that jurisdiction or the jurisdiction of such Term Lender's
Applicable Lending Office or any political subdivision of that jurisdiction (all
such nonexcluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If the Borrower shall be
required by law to deduct any Taxes from or in respect of any sum payable to any
Term Lender or the Administrative Agent, (i) the sum payable shall be increased
as may be necessary so that, after making all required deductions, such Term
Lender or the Administrative Agent (as the case may be) receives an amount equal
to the sum it would have received had no such deductions been made; provided,
however, that if the Borrower's obligation to deduct or withhold Taxes is caused
solely by such Term Lender's or Administrative Agent's failure to provide the
forms described in paragraph (e) of this Section 2.10 and such Term Lender or
Administrative Agent could have provided such forms, no such increase shall be
required; (ii) the Borrower shall make such deductions; and (iii) the Borrower
shall pay the full amount deducted to the relevant taxing authority or other
Governmental Authority in accordance with applicable law.
(b) Other Taxes. In addition, the Borrower 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 or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement or the
other Credit Documents (hereinafter referred to as "Other Taxes").
(c) Indemnification. If the Borrower fails to pay any Taxes or Other
Taxes (that it is required to pay under the terms of this Agreement) to the
appropriate taxing authority or other Governmental Authority and the Term Lender
or the Administrative Agent (as the case may be)
pays the amount due, the Borrower shall indemnify each Term Lender and the
Administrative Agent for the full amount of Taxes or Other Taxes (including,
without limitation, any Taxes or Other Taxes imposed by any jurisdiction on
amounts payable under this Section 2.10) paid by such Term Lender or the
Administrative Agent (as the case may be) and any liability (including interest
and expenses) arising therefrom or with respect thereto (whether or not such
Taxes or Other Taxes were correctly or legally asserted). Each payment required
to be made by the Borrower in respect of this indemnification shall be made to
the Administrative Agent for the benefit of any party claiming such
indemnification within five Business Days from the date the Borrower receives
written demand detailing the calculation of such amounts therefor from
Administrative Agent on behalf of itself as Administrative Agent or any such
Term Lender. If any Term Lender or the Administrative Agent receives a refund in
respect of any taxes paid by the Borrower under this paragraph (c), such Term
Lender or Administrative Agent, as the case may be, shall promptly pay to the
Borrower its share of such refund. A certificate indicating the amount of such
Taxes or Other Taxes and detailing the calculation of such Taxes or Other Taxes
shall be submitted by such Term Lender to the Borrower and the Administrative
Agent and shall be conclusive and binding for all purposes, absent manifest
error.
(d) Evidence of Tax Payments. The Borrower will pay prior to delinquency
all Taxes payable in respect of any payment. Within 30 days after the date of
any payment of Taxes, the Borrower will furnish to the Administrative Agent, at
its address referred to in Section 11.2, the original or a certified copy of a
receipt evidencing payment of such Taxes.
(e) Foreign Lender Withholding Exemption. Each Term Lender that is not
incorporated under the laws of the United States of America or a state thereof
agrees that it will deliver to the Borrower and the Administrative Agent on the
Closing Date or upon, the effectiveness of any Assignment and Acceptance (i) two
duly completed copies of United States Internal Revenue Service Form W-8BEN or
W-8ECI or successor applicable form, as the case may be, certifying in each case
that such Term Lender is entitled to receive payments under this Agreement
without deduction or withholding of any United States federal income taxes, (ii)
if applicable, an Internal Revenue Service Form W-8 or W-9 or successor
applicable form, as the case may be, to establish an exemption from United
States backup withholding tax, and (iii) any other governmental forms which are
necessary or required under an applicable tax treaty or otherwise by law to
reduce or eliminate any withholding tax, which have been reasonably requested by
the Borrower. Each Term Lender which delivers to the Borrower and the
Administrative Agent a Form W-8BEN or W-8ECI and Form W-8 or W-9 pursuant to the
next preceding sentence further undertakes to deliver to the Borrower and the
Administrative Agent two further copies of Form W-8BEN or W-8ECI and Form W-8 or
W-9, or successor applicable forms, or other manner of certification, as the
case may be, on or before the date that any such form expires or becomes
obsolete or after the occurrence of any event requiring a change in the most
recent form previously delivered by it to the Borrower and the Administrative
Agent, and such extensions or renewals thereof as may reasonably be requested by
the Borrower and the Administrative Agent certifying in the case of a Form
W-8BEN or W-8ECI that such Term Lender is entitled to receive payments under
this Agreement without deduction or withholding of any United States federal
income taxes. If an event (including without limitation any change in treaty,
law or regulation) has occurred after the date of this Agreement, but prior to
the date on which any delivery required by the preceding sentence would
otherwise be required and the event renders all such forms inapplicable or which
would prevent any Term Lender from duly
completing and delivering any such form with respect to it and such Term Lender
advises the Borrower and the Administrative Agent that it is not capable of
receiving payments without any deduction or withholding of United States federal
income tax, and in the case of a Form W-8 or W-9, establishing an exemption from
United States backup withholding tax, such Term Lender shall not be required to
deliver such forms. The Borrower shall withhold tax at the rate and in the
manner required by the laws of the United States with respect to payments made
to a Term Lender failing to timely provide the requisite Internal Revenue
Service forms.
(f) Repayment under Certain Circumstances. If the Borrower is required
by any law or regulation to make any deduction or withholding from any sum
payable by it under this Agreement and is prevented by law from fulfilling the
related gross-up obligation, upon written notice to the Borrower from the
Administrative Agent (which shall give such notice if, and only if, so requested
by any Term Lender) the relevant Term Loans shall be repaid within 30 days of
the date such notice is received by the Borrower together with accrued interest
and any amounts owing under Section 2.7.
(g) Change of Applicable Lending Office. Each Term Lender agrees to use
commercially reasonable efforts (consistent with its internal policies and
subject to legal and regulatory restrictions) to designate a different
Applicable Lending Office if the making of such designation would avoid the
effect of this paragraph and would not, in the reasonable judgment of such Term
Lender, be otherwise disadvantageous to such Term Lender.
Section 2.11 Sharing of Payments, Etc. If any Term Lender shall obtain any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off or otherwise) on account of the Term Loans made by it in excess of its
Pro Rata Share of payments on account of the Term Loans obtained by all the Term
Lenders, such Term Lender shall notify the Administrative Agent and forthwith
purchase from the other Term Lenders such participations in the Term Loans made
by them as shall be necessary to cause such purchasing Term Lender to share the
excess payment ratably in accordance with the requirements of this Agreement
with each of them; provided, however, that if all or any portion of such excess
payment is thereafter recovered from such purchasing Term Lender, such purchase
from each Term Lender shall be rescinded and such Term Lender shall repay to the
purchasing Term Lender the purchase price to the extent of such Term Lender's
ratable share (according to the proportion of (a) the amount of the
participation sold by such Term Lender to the purchasing Term Lender as a result
of such excess payment to (b) the total amount of such excess payment) of such
recovery, together with an amount equal to such Term Lender's ratable share
(according to the proportion of (i) the amount of such Term Lender's required
repayment to the purchasing Term Lender to (ii) the total amount of all such
required repayments to the purchasing Term Lender) of any interest or other
amount paid or payable by the purchasing Term Lender in respect of the total
amount so recovered. The Borrower agrees that any Term Lender so purchasing a
participation from another Term Lender pursuant to this Section 2.11 may, to the
fullest extent permitted by law, unless and until rescinded as provided above,
exercise all its rights of payment (including the right of set-off) with respect
to such participation as fully as if such Term Lender were the direct creditor
of the Borrower in the amount of such participation.
Section 2.12 Applicable Lending Offices. Each Term Lender may book its
Term Loans at any Applicable Lending Office selected by such Term Lender and may
change its Applicable
Lending Office from time to time. All terms of this Agreement shall apply to any
such Applicable Lending Office and the Term Loans shall be deemed held by each
Term Lender for the benefit of such Applicable Lending Office. Each Term Lender
may, by written notice to the Administrative Agent and the Borrower designate
replacement or additional Applicable Lending Offices through which Term Loans
will be made by it and for whose account repayments are to be made.
Section 2.13 Cash Collateral Account.
(a) If the Borrower elects to deposit funds in the Cash Collateral
Account pursuant to Section 2.6, then the Borrower and the Collateral Agent
shall establish the Cash Collateral Account and the Borrower shall execute any
documents and agreements, including the Collateral Agent's standard form of
assignment of deposit accounts, that the Collateral Agent requests in connection
therewith to establish the Cash Collateral Account and grant the Collateral
Agent a first priority security interest in such account and the funds therein.
(b) So long as no Event of Default exists, the Collateral Agent shall
release to the Borrower at the Borrower's written request any funds held in the
Cash Collateral Account either (i) on the earlier of (A) the date on which the
Borrower would be in compliance with the Security Maintenance Ratio without
giving effect to such funds held in the Cash Collateral Account or (B) the
Parent Company or one of its Subsidiaries shall have replaced such disposed
Mortgaged Term Loan Facility Rig in the manner described in Section
2.6(c)(ii)(B)(1)(x) above and complied with the ancillary matters referred to
therein or (ii) on the earliest of (A) the date on which the Borrower would be
in compliance with the Security Maintenance Ratio without giving effect to such
funds held in the Cash Collateral Account, (B) the Credit Party who owned such
affected Mortgaged Term Loan Facility Rig shall have repaired such affected
Mortgaged Term Loan Facility Rig in the manner described in Section
2.6(c)(iii)(B) above, or (C) the Parent Company or one of its Subsidiaries shall
have replaced such affected Mortgaged Revolving Credit Facility Rig in the
manner described in Section 2.6(c)(iii)(C)(x) above and complied with the
ancillary matters referred to therein. During the existence of any Event of
Default, the Collateral Agent may apply any funds held in the Cash Collateral
Account to the Obligations in the order of priority set out in Section 7.6.
ARTICLE III
CONDITIONS OF LENDING
Section 3.1 Conditions Precedent to Term Loans. The obligation of each
Term Lender to make its Term Loans is subject to the conditions precedent that:
(a) Documentation. On or before the day on which the initial Borrowing
is made, the Administrative Agent and the Term Lenders shall have received the
following, each dated on or before such day, duly executed by all the parties
thereto, in form and substance satisfactory to the Administrative Agent and the
Term Lenders:
(i) this Agreement and all attached Exhibits and Schedules;
(ii) any Term Note requested by a Term Lender pursuant to Section
2.2(g) payable to the order of such requesting Term Lender in the amount
of its Term Commitment;
(iii) the Security Agreements executed by each Credit Party that
owns or operates one or more vessels granting to the Collateral Agent for
the benefit of the Term Secured Parties a Lien in earnings and the
Insurance Policies with respect to the Mortgaged Term Loan Facility Rigs
to secure the Obligations, in each case together with UCC-1 financing
statements and any other documents, agreements or instruments necessary to
create an Acceptable Security Interest in such collateral;
(iv) the Rig Mortgages executed by each Credit Party that owns one
or more vessels granting a Lien to the Collateral Agent in the Initial
Mortgaged Term Loan Facility Rigs to secure the Obligations, together with
any other documents, agreements or instruments necessary to create an
Acceptable Security Interest in such Initial Mortgaged Term Loan Facility
Rigs and the revenues therefrom;
(v) certificates from the appropriate Governmental Authority
certifying as to the good standing, existence and authority of each of the
Credit Parties in all jurisdictions where required by the Administrative
Agent;
(vi) certificates from a Responsible Officer of the Borrower
stating that (A) all representations and warranties of such Person set
forth in this Agreement and in the other Credit Documents to which it is a
party are true and correct in all material respects; (B) no Default has
occurred and is continuing; and (C) the conditions in this Section 3.1
have been met;
(vii) copies, certified as of the Closing Date by a Secretary or an
Assistant Secretary of the appropriate Person of (A) the resolutions of
the Board of Directors of each Credit Party approving the Credit Documents
to which it is a party and the transactions contemplated thereby, (B) the
organizational documents of each Credit Party, and (C) all other documents
evidencing other necessary corporate action and governmental approvals, if
any, with respect to this Agreement and the other Credit Documents;
(viii) certificates of a Secretary or an Assistant Secretary of each
of the Credit Parties certifying the names and true signatures of officers
of the Credit Parties authorized to sign this Agreement, the Notice of
Borrowing and the other Credit Documents to which such Credit Parties are
a party;
(ix) a detailed report from the Parent Company's independent
maritime insurance broker with respect to all Insurance Policies in effect
with respect to the Initial Mortgaged Term Loan Facility Rigs, specifying
for each such Insurance Policy the amount thereof, the risks insured
against thereby, the name of the insurer and each insured party thereunder
and the policy or other identification number thereof, together with a
certificate from such broker certifying that all such Insurance Policies
are (A) in full force and effect, (B) are placed with such insurance
companies, underwriters or
associations, in such amounts, against such risks, and in such form, as
are normally issued against by Persons of similar size and established
reputation engaged in the same or similar businesses and similarly
situated and as are necessary or advisable for the protection of the
Collateral Agent as mortgagee and (C) conform with the requirements of
this Agreement;
(x) a favorable opinion of ▇▇▇▇▇ ▇▇▇▇▇ L.L.P., counsel to the
Borrower, substantially in the form of the attached Exhibit H;
(xi) a favorable opinion of the general counsel of the Parent
Company substantially in the form of the attached Exhibit I;
(xii) favorable opinions reasonably satisfactory to the
Administrative Agent covering the items in the attached Exhibit J from
local counsel located in Panama and Vanuatu;
(xiii) a certificate from the chief financial officer of the Parent
Company addressed to the Administrative Agent and each of the Term
Lenders, which shall be in form and in substance reasonably satisfactory
to the Administrative Agent, regarding the matters set forth in Section
4.26;
(xiv) a certificate from the chief financial officer of the Parent
Company addressed to the Administrative Agent and each of the Term
Lenders, which shall be in form and in substance reasonably satisfactory
to the Administrative Agent and shall reaffirm that as of the Closing Date
the projections prepared by the Borrower and included in the Confidential
Information Memorandum are true and correct in all material respects based
upon the assumptions stated therein and the best information reasonably
available to such officer at the time such projections were made and shall
describe any changes therein and state that such changes shall not,
individually or in the aggregate, reasonably be expected to cause a
Material Adverse Change to occur;
(xv) copies of each of the Merger Documents certified by a
Secretary or an Assistant Secretary of the Borrower (A) as being true and
correct copies of such documents as of the Closing Date, and (B) as being
in full force and effect and no material term or condition thereof shall
have been amended, modified or waived after the execution thereof without
the prior written consent of the Administrative Agent;
(xvi) copies of each promissory note evidencing Intercompany Debt;
(xvii) a copy of the formal report or "management letter" submitted
to the Parent Company by its independent accountants in connection with
the annual audit made by it of the books of the Parent Company for the
fiscal year ending 2001;
(xviii) acknowledgment from CT Corporation System with respect to
its irrevocable appointment by each Credit Party pursuant to Section
11.13(b); and
(xix) such other documents, governmental certificates and agreements
as the Administrative Agent or any Term Lender may reasonably request.
(b) Merger. The Merger shall have been consummated by the Borrower and
its Subsidiaries, and all other conditions to the Merger shall have been
satisfied in form and substance satisfactory to the Administrative Agent. All
legal, financial, accounting, governmental, tax and regulatory matters, and
fiduciary aspects of the Merger and the terms, conditions and structure of the
proposed financing must be reasonably acceptable to the Administrative Agent.
(c) Rating. The Administrative Agent shall have received a letter from
S&P or ▇▇▇▇▇'▇ confirming its rating of Index Debt as BB+ or higher or Ba2 or
higher, as applicable.
(d) Due Diligence. The Administrative Agent and the Term Lenders shall
have completed satisfactory due diligence review of the assets, liabilities,
business, operations and condition (financial or otherwise) of the Parent
Company and its Subsidiaries, including, but not limited, to a review of their
Contingent Obligations, product liabilities, intellectual property, and all
legal, financial, accounting, governmental, tax and regulatory matters, and
fiduciary aspects of the proposed financing.
(e) Payment of Fees. On the Closing Date, the Borrower shall have paid
the fees required to be paid to the Agents, the Arranger, and the Term Lenders
and all costs and expenses which have been invoiced and are payable pursuant to
Section 10.4.
(f) Other Indebtedness. The Administrative Agent shall be reasonably
satisfied with the terms, conditions and amounts of any other Debt of the Parent
Company and its Subsidiaries. All Intercompany Debt required to be subordinated
pursuant to Section 6.2 shall have been subordinated to the Obligations on terms
and conditions satisfactory in form and substance to the Administrative Agent.
(g) Termination of Existing Bank Facility. The Administrative Agent and
the Term Lenders shall have received sufficient evidence indicating that
simultaneously with the making of the Term Loans, the obligations of the
Borrower and its Subsidiaries under the Existing Bank Facility will be repaid
with the proceeds of such Term Loans and all obligations of the Borrower and its
lenders under the Existing Bank Facility shall be terminated (including, without
limitation, any obligations of any Subsidiary of the Borrower in respect of
guaranties and security agreements executed in connection with such Existing
Bank Facility but excluding any obligations which expressly survive the
repayment of the amounts owing under the Existing Bank Facility) such that the
Liens existing in respect of the Existing Bank Facility shall be terminated and
replaced with the Liens for the benefit of the Term Secured Parties or the
Finance Parties (as applicable) and encumbering the same Property.
(h) Business Plan; Financial Statements. The Administrative Agent and
the Term Lenders shall have received true and correct copies of the Credit
Parties and their Affiliates' business and financial plan for the years 2002
through 2007, together with a written analysis of such business and financial
plan, in form and substance satisfactory to the Administrative Agent. The
Administrative Agent and the Term Lenders shall have received true and correct
copies of the Financial Statements and such other financial information as the
Administrative Agent may reasonably request. The actual results of operations
for such periods shall not, individually or in the aggregate, differ from the
results of operations projected for such period in the financial
projections previously supplied to the Administrative Agent or included in the
Confidential Information Memorandum in any respect that would cause a Material
Adverse Change to occur.
(i) Initial Rig Appraisal Reports. The Administrative Agent shall have
received two satisfactory appraisals (on a fair market value basis) of the
Initial Mortgaged Term Loan Facility Rigs dated no more than 90 days prior to
the Closing Date. Such appraisals shall be in form and substance reasonably
satisfactory to the Administrative Agent and shall be prepared by Approved
Rigbrokers. Such appraisals shall affirm that the Security Maintenance Ratio is
greater than or equal to 2.0 to 1.0 on the Closing Date.
(j) Security Documents. The Collateral Agent shall have received all
appropriate evidence required by the Collateral Agent in its sole discretion
necessary to determine that arrangements have been made for the Collateral Agent
for the benefit of Term Secured Parties to have an Acceptable Security Interest
in the Collateral, including, without limitation, (i) the delivery to the
Collateral Agent of such financing statements under the Uniform Commercial Code
for filing in such jurisdictions as the Collateral Agent may require, (ii) the
delivery to the Collateral Agent of the Rig Mortgages for filing in such
jurisdictions as the Collateral Agent may require, (iii) lien, tax and judgment
searches conducted on the Credit Parties reflecting no Liens other than
Permitted Liens against any of the Collateral as to which perfection of a Lien
is accomplished by the filing of a financing statement and (iv) lien releases
with respect to any Collateral currently subject to a Lien other than Permitted
Liens.
(k) No Default. No Default shall have occurred and be continuing or
would result from such Term Loan or from the application of the proceeds
therefrom.
(l) Representations and Warranties. The representations and warranties
contained in Article IV hereof and in each other Credit Document shall be true
and correct before and after giving effect to the Term Loans and to the
application of the proceeds from such Term Loans from the date of the Term
Loans, as though made on and as of such date.
(m) No Material Adverse Change. No event or events which, individually
or in the aggregate, has had or is reasonably likely to cause a Material Adverse
Change shall have occurred.
(n) No Proceeding or Litigation; No Injunctive Relief. No action, suit,
investigation or other proceeding (including, without limitation, the enactment
or promulgation of a statute or rule) by or before any arbitrator or any
Governmental Authority shall be threatened or pending and no preliminary or
permanent injunction or order by a state or federal court shall have been
entered (i) in connection with this Agreement or any transaction contemplated
hereby or (ii) which, in any case, in the reasonable judgment of the
Administrative Agent, could reasonably be expected to cause a Material Adverse
Change.
(o) Consents, Licenses, Approvals, etc. The Administrative Agent shall
have received true copies (certified to be such by the Borrower or other
appropriate party) of all consents, licenses and approvals required in
accordance with applicable law in connection with the execution, delivery,
performance, validity and enforceability of the Merger, this Agreement and the
other Credit Documents. In addition, the Parent Company and Subsidiaries shall
have all
such material consents, licenses and approvals required in connection with the
continued operation of the Parent Company and its Subsidiaries, and such
approvals shall be in full force and effect, and all applicable waiting periods
shall have expired without any action being taken or threatened by any competent
authority which would restrain, prevent or otherwise impose adverse conditions
on this Agreement and the actions contemplated hereby.
(p) Environmental Certificates. The Administrative Agent shall have
received copies of Certificates of Inspection, Certificates of Compliance,
Vessel Certificates of Financial Responsibility (Water Pollution) or
International Oil Pollution Prevention Certificate, each issued by the United
States Coast Guard (or the substantial equivalent in the case of foreign assets
if available) for each of the Initial Mortgaged Term Loan Facility Rigs and
shall be reasonably satisfied with the contents thereof.
(q) Revolving Credit Agreement. The conditions precedent to the
effectiveness of the Revolving Credit Agreement shall have been satisfied or
waived in form and substance satisfactory to the Administrative Agent prior to
or contemporaneously with the Closing Date.
Section 3.2 Determinations Under Section 3.1. For purposes of determining
compliance with the conditions specified in Section 3.1, each Term Lender shall
be deemed to have consented to, approved or accepted or to be satisfied with
each document or other matter required thereunder to be consented to or approved
by or acceptable or satisfactory to the Term Lenders unless an officer of the
Administrative Agent responsible for the transactions contemplated by the Credit
Documents shall have received written notice from such Term Lender prior to the
Borrowings hereunder specifying its objection thereto and such Term Lender shall
not have made available to the Administrative Agent such Term Lender's ratable
portion of such Borrowings.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Each Credit Party jointly and severally represents and warrants as
follows:
Section 4.1 Existence; Subsidiaries. Each of the Credit Parties is duly
formed, validly existing, and in good standing (to the extent the concept of
good standing is applicable in such jurisdiction) under the laws of the
jurisdiction of its formation and in good standing (to the extent the concept of
good standing is applicable in such jurisdiction) and qualified to do business
in each jurisdiction where its ownership or lease of Property or conduct of its
business requires such qualification and where a failure to be qualified could
reasonably be expected to cause a Material Adverse Change.
Section 4.2 Power and Authority. Each of the Credit Parties has the
organizational power and authority to execute and deliver the Credit Documents
to which it is a party and to perform its obligations thereunder. The execution,
delivery, and performance by the Credit Parties of this Agreement and the other
Credit Documents to which each is a party and the consummation of the
transactions contemplated hereby (a) have been duly authorized by all necessary
organizational action, (b) do not contravene (i) such Credit Party's
organizational
documents, (ii) any material Legal Requirement binding on or affecting such
Credit Party, or (iii) the provisions of any indenture or material instrument or
agreement to which such Credit Party is a party or is subject, or by which it,
or its Property, is bound, or conflict with or constitute a default thereunder,
except, in the case of clauses (ii) and (iii), for which a prior consent,
waiver, authorization or approval has been (or will timely be) obtained, and (c)
will not result in or require the creation or imposition of any Lien prohibited
by this Agreement. At the time of the making of the Term Loans, the Term Loans
and the use of the proceeds of the Term Loan will (a) be within the Borrower's
corporate powers, (b) have been duly authorized by all necessary corporate
action, (c) not contravene (i) the Borrower's certificate of incorporation or
bylaws or (ii) any material Legal Requirement binding on or affecting the
Borrower, except for which a prior consent, waiver, authorization or approval
has been (or will timely be) obtained, and (d) not result in or require the
creation or imposition of any Lien prohibited by this Agreement.
Section 4.3 Authorization and Approvals. No authorization or approval or
other action by, and no notice to or filing with, any Governmental Authority is
required on the part of the Credit Parties for the due execution, delivery and
performance by the Credit Parties of this Agreement and the other Credit
Documents to which each is a party or the consummation of the transactions
contemplated thereby, except actions by, and notices to or filings with,
Governmental Authorities (including, without limitation, the SEC) that may be
required in the ordinary course of business from time to time or that may be
required to comply with the express requirements of the Credit Documents
(including, without limitation, to effect the Merger, to release existing Liens
on the Collateral or to comply with requirements to perfect, and/or maintain the
perfection of, Liens created for the benefit of the Term Secured Parties). At
the time of the making of the Term Loan, no authorization or approval or other
action by, and no notice to or filing with, any Governmental Authority will be
required on the part of the Credit Parties for the borrowing of the Term Loans
or the use of the proceeds of such Term Loans, except actions by, and notices to
or filings with, Governmental Authorities (including, without limitation, the
SEC) that may be required in the ordinary course of business from time to time
or that may be required to comply with the express requirements of the Credit
Documents (including, without limitation, to effect the Merger, to release
existing Liens on the Collateral or to comply with requirements to perfect,
and/or maintain the perfection of, Liens created for the benefit of the Term
Secured Parties).
Section 4.4 Enforceable Obligations. This Agreement and the other Credit
Documents to which each of the Credit Parties is a party have been duly executed
and delivered by such Credit Party. Assuming that each has been duly authorized,
executed and delivered by the other parties thereto, each Credit Document to
which each Credit Party is a party is the legal, valid, and binding obligation
of such Credit Party and is enforceable against such Credit Party in accordance
with its terms, except as such enforceability may be limited by any applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium, or
similar law affecting creditors' rights generally or general principles of
equity (regardless of whether enforcement is considered in a proceeding in
equity or at law or under applicable legal codes).
Section 4.5 Financial Statements.
(a) The Parent Company has delivered to the Administrative Agent the
Financial Statements, and the Financial Statements are accurate and complete in
all material respects and
present fairly in all material respects the consolidated financial condition of
the Parent Company and its Subsidiaries as of their respective dates and for
their respective periods in accordance with GAAP. As of the date of the
Financial Statements, there were no material contingent obligations, liabilities
for taxes, unusual forward or long-term commitments, or unrealized or
anticipated losses of the Parent Company or any of its Subsidiaries, except as
disclosed therein and adequate reserves for such items have been made in
accordance with GAAP.
(b) Since December 31, 2001, no Material Adverse Change has occurred.
Section 4.6 True and Complete Disclosure. All factual information (whether
delivered before or after the Closing Date) furnished by or on behalf of the
Credit Parties in writing to the Administrative Agent and the Term Lenders for
purposes of or in connection with this Agreement, any other Credit Document or
any transaction contemplated hereby or thereby is true and accurate in all
material respects as of the date as of which such information is dated or
certified (or, if not dated and certified, as of the date as of which such
information is provided) and not incomplete by omitting to state any material
fact necessary to make such information (taken as a whole) not misleading as of
such time (in light of circumstances and facts known at such time).
Section 4.7 Litigation. There is no pending or, to the knowledge of any
Responsible Officer, threatened action or proceeding affecting the Parent
Company or any of its Subsidiaries before any court, Governmental Authority or
arbitrator, that could reasonably be expected to cause a Material Adverse Change
or which purports to affect the legality, validity, binding effect or
enforceability of this Agreement, any Term Note or any other Credit Document.
Additionally, there is no pending or, to the knowledge of any Responsible
Officer of the Parent Company, threatened action or proceeding instituted
against the Parent Company or any of its Subsidiaries which seeks to adjudicate
the Parent Company or any of its Subsidiaries as bankrupt or insolvent, or
seeking liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a receiver, trustee or other
similar official for it or for any substantial part of its Property.
Section 4.8 Use of Proceeds. The proceeds of the Term Loans will be used
by the Borrower and its Subsidiaries for the purposes described in Section 5.8.
The Parent Company and its Subsidiaries are not engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulation U). No proceeds of any Term Loan will be used to
purchase or carry any margin stock in violation of Regulation T, U or X.
Section 4.9 Investment Company Act. None of the Parent Company or any of
its Subsidiaries is an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
Section 4.10 Public Utility Holding Company Act. None of the Parent
Company or any of its Subsidiaries is a "holding company", or a "subsidiary
company" of a "holding company", or an "affiliate" of a "holding company" or of
a "subsidiary company" of a "holding company",
or a "public utility", as such terms are used in the Public Utility Holding
Company Act of 1935, as amended.
Section 4.11 Taxes. All material federal, state, local and foreign tax
returns, reports and statements required to be filed (after giving effect to any
extension granted in the time for filing) by the Parent Company or any member of
the Controlled Group (hereafter collectively called the "Tax Group") have been
filed with the appropriate Governmental Authorities in all jurisdictions in
which such returns, reports and statements are required to be filed (except
where any obligation to so file is being contested in good faith and by
appropriate proceedings and after adequate reserves for such items have been
made in accordance with GAAP), and all taxes (which are material in amount) and
other impositions due and payable have been timely paid prior to the date on
which any fine, penalty, interest, late charge or loss may be added thereto for
non-payment thereof except where contested in good faith and by appropriate
proceedings and after providing adequate reserves therefor. Except as disclosed
in writing to the Administrative Agent from time to time, none of the Parent
Company or any member of the Tax Group has given, or been requested to give, a
waiver of the statute of limitations relating to the payment of any federal,
state, local or foreign taxes or other impositions. None of the Property owned
by the Parent Company or any other member of the Tax Group is Property which the
Parent Company or any member of the Tax Group is required to treat as being
owned by any other Person pursuant to the provisions of Section 168(f)(8) of the
Code. Proper and accurate amounts have been withheld by the Parent Company and
all other members of the Tax Group from their employees for all periods to
comply in all material respects with the tax, social security and unemployment
withholding provisions of applicable federal, state, local and foreign law.
Timely payment of all material sales and use taxes required by applicable law
have been made by the Parent Company and all other members of the Tax Group.
Section 4.12 Pension Plans. No Termination Event has occurred with respect
to any Plan, and each Plan has complied in all material respects with and been
administered in all material respects in accordance with applicable provisions
of ERISA and the Code. No "accumulated funding deficiency" (as defined in
Section 302 of ERISA) has occurred and there has been no excise tax imposed
under Section 4971 of the Code. To the extent either any such action or inaction
could reasonably be attributable to the Parent Company or to the knowledge of a
Responsible Officer of the Parent Company, no Reportable Event has occurred with
respect to any Multiemployer Plan, and each Multiemployer Plan has complied in
all material respects with and been administered in all material respects with
applicable provisions of ERISA and the Code. The present value of all benefits
vested under each Plan (based on the assumptions used to fund such Plan) did
not, as of the last annual valuation date applicable thereto, exceed the value
of the assets of such Plan allocable to such vested benefits in any amount that
could reasonably be expected to cause a Material Adverse Change. None of the
Parent Company or any member of the Controlled Group has had a complete or
partial withdrawal from any Multiemployer Plan for which there is any material
withdrawal liability. As of the most recent valuation date applicable thereto,
none of the Parent Company or any member of the Controlled Group has received
notice that any Multiemployer Plan is insolvent or in reorganization. Based upon
GAAP existing as of the Closing Date and current factual circumstances, the
Parent Company has no reason to believe that the annual cost during the term of
this Agreement to the Parent Company or any of its Subsidiaries for
post-retirement benefits to be provided to the current and former employees of
the Parent Company or any of its Subsidiaries under welfare
benefit plans (as defined in Section 3(1) of ERISA) could, in the aggregate,
reasonably be expected to cause a Material Adverse Change.
Section 4.13 Condition of Property; Casualties. (a) Except as otherwise
permitted by this Agreement, including, without limitation, Section 4.16 and the
requirements of Section 2.6, the material Property necessary for the conduct of
business of the Parent Company and its Subsidiaries are in good repair and
working condition, normal wear and tear excepted and (b) none of the Parent
Company or any of its Subsidiaries has knowingly or willfully permitted the
commission of waste or other injury or released Hazardous Substances on or about
owned or operated property in violation of applicable Environmental Laws.
Section 4.14 Insurance. Each of the Parent Company and its Subsidiaries
carries the insurance required to be carried under Section 5.2 of this
Agreement. The amount of acceptance of first loss in lieu of paying premiums on
the Closing Date is not more than $10,000,000. As of the Closing Date, all of
the Mortgaged Term Loan Facility Rigs have insurance covering War Risks.
Section 4.15 No Defaults. None of the Parent Company or any of its
Subsidiaries is in default under or has received any notice of default with
respect to any contract, agreement, lease or other instrument to which the
Parent Company or any of its Subsidiaries is a party and which is continuing
and, if not cured, could reasonably be expected to cause a Material Adverse
Change.
Section 4.16 Environmental Condition. Except as disclosed on the attached
Schedule 4.16:
(a) The Parent Company and its Subsidiaries (i) have obtained all
material Environmental Permits necessary for the ownership and operation of
their respective material Properties and the conduct of their respective
businesses; (ii) have been and are in compliance with all material terms and
conditions of such Environmental Permits and with all other material
requirements of applicable Environmental Laws; (iii) have not received notice of
any material violation or alleged violation of any Environmental Law or
Environmental Permit; and (iv) are not subject to any material actual or
contingent Environmental Claim.
(b) None of the present or previously owned or operated Properties of
the Parent Company or of any of its present or former Subsidiaries, wherever
located, (i) has been placed on or proposed to be placed on the National
Priorities List, CERCLIS, or, to the knowledge of any Responsible Officer, their
state or local analogs, nor has the Parent Company or any of its Subsidiaries
been otherwise notified of the designation, listing or identification of any
Property of the Parent Company or any of its present or former Subsidiaries as a
potential site for material removal, remediation, cleanup, closure, restoration,
reclamation, or other material response activity under any Environmental Laws
(except as such activities may be required by permit conditions); (ii) is
subject to a material Lien, arising under or in connection with any
Environmental Laws, that attaches to any revenues or to any Property owned or
operated by the Parent Company or any of its present or former Subsidiaries,
wherever located; or (iii) has been the site of any Release of Hazardous
Substances or Hazardous Wastes from present or past operations which has caused
at the site or at any third-party site any condition that has resulted in
or could reasonably be expected to result in the need for Response that could
cause a Material Adverse Change and none of the Parent Company or any of its
present or former Subsidiaries has generated or transported or has caused to be
generated or transported Hazardous Substances to any third party site which
could reasonably be expected to result in the need for Response that could cause
a Material Adverse Change.
(c) Without limiting the foregoing, the present and future liability, if
any, of the Parent Company or any of its Subsidiaries, which could reasonably be
expected to arise in connection with requirements under Environmental Laws could
not reasonably be expected to cause a Material Adverse Change.
Section 4.17 Title to Property, Etc.
(a) Each of the Parent Company and its Subsidiaries has good and
marketable title in all its Property, except where the failure to have such good
and marketable title could not reasonably be expected to cause a Material
Adverse Change, and none of such Property is subject to any Lien, except
Permitted Liens.
(b) Schedule 4.17 sets forth the Initial Mortgaged Term Loan Facility
Rigs of the Credit Parties on the Closing Date and identifies the registered
owner, flag, official or patent number, as the case may be, the home port,
class, location and operating status on the Closing Date after giving effect to
the Merger.
Section 4.18 Security Interests. On the Closing Date, all governmental
actions and all other filings, recordings, registrations, third party consents,
and other actions which are necessary to create and perfect the Liens provided
for in the Security Documents will have been made, obtained, and taken in all
relevant jurisdictions, or satisfactory arrangements will have been made for all
governmental actions and all other filings, recordings, registrations, third
party consents, and other actions which are necessary to create and perfect the
Liens provided for in the Security Documents to be made, obtained, or taken in
all relevant jurisdictions. Upon the filing of the Security Documents referred
to in this Section 4.18, each of the Security Documents creates, as security for
the Obligations purported to be secured thereby, a valid and enforceable
perfected security interest in and Lien on all of the Collateral subject
thereto, to the extent perfection of a security interest or Lien is governed by
Article 9 of the UCC (as defined in the applicable Security Documents) or the
Ship Mortgage Act (as defined in the Rig Mortgages), and subject to no other
Liens (other than Permitted Liens) in favor of the Collateral Agent for the
ratable benefit of the Term Secured Parties. Except with respect to filings or
recordings required in order to perfect the security interests in earnings, no
filings or recordings are required in order to perfect the security interests
created under any Security Document except for filings or recordings required in
connection with any such Security Document which shall have been made upon or
prior to (or are the subject of arrangements, satisfactory to the Collateral
Agent, for filing on or promptly after the date of) the execution and delivery
thereof.
Section 4.19 Subsidiaries; Corporate Structure. The Subsidiaries of the
Borrower listed on Schedule 4.19 constitute all of the Subsidiaries of the
Borrower on the Closing Date after giving effect to the Merger. Schedule 4.19
correctly lists the names, ownership and jurisdictions
of incorporation or formation of each of the Borrower's Subsidiaries as of the
Closing Date after giving effect to the Merger.
Section 4.20 Labor Relations. None of the Parent Company nor its
Subsidiaries is engaged in any unfair labor practice that could reasonably be
expected to have a Material Adverse Change. There is (a) no unfair labor
practice complaint pending against the Parent Company or any of its Subsidiaries
or, to the knowledge of any Responsible Officer, threatened against any of them,
before the National Labor Relations Board (or any successor United States
federal agency that administers the National Labor Relations Act), and no
grievance or arbitration proceeding arising out of or under any collective
bargaining agreement is so pending against the Parent Company or any of its
Subsidiaries or, to the knowledge of any Responsible Officer, threatened against
any of them, (b) no strike, labor dispute, slowdown or stoppage pending against
the Parent Company or any of its Subsidiaries or, to the knowledge of any
Responsible Officer, threatened against the Parent Company or any of its
Subsidiaries and (c) no union representation petition existing with respect to
the employees of the Parent Company or any of its Subsidiaries and no union
organizing activities are taking place, except with respect to any matter
specified in clause (a), (b) or (c) above, either individually or in the
aggregate, such as could not reasonably be expected to have a Material Adverse
Change.
Section 4.21 Merger. The Borrower has delivered to the Administrative
Agent true, correct, and complete copies of the Merger Documents as in effect on
the Closing Date.
Section 4.22 Senior Debt. The Obligations of the Parent Company under
Article VIII of this Agreement constitute "Senior Indebtedness" as defined in
the Subordinated Indenture.
Section 4.23 Guarantors. All of the Borrower's Material Subsidiaries are
Guarantors under Article VIII hereof.
Section 4.24 Citizenship. Each Credit Party which owns a Mortgaged Term
Loan Facility Rig is qualified to own and operate such Mortgaged Term Loan
Facility Rig under the laws of the jurisdiction in which any such Mortgaged Term
Loan Facility Rig is flagged, if such qualification is required.
Section 4.25 Intellectual Property. The Parent Company and each of its
Subsidiaries has obtained all material patents, trademarks, service marks, trade
names, copyrights, licenses and other intellectual property rights, that are
necessary for the operation of their businesses taken as a whole as presently
conducted.
Section 4.26 Solvency.
(a) Immediately after the consummation of the transactions to occur on
the Closing Date and after giving effect to the Borrowing contemplated under
this Agreement and the application of the proceeds thereof, (i) the fair value
of the assets of the Parent Company and its Subsidiaries on a consolidated
basis, at a fair valuation, will exceed the debts and liabilities, subordinated,
contingent or otherwise, of the Parent Company and its Subsidiaries on a
consolidated basis; (ii) the present fair saleable value of the Property of the
Parent Company and its Subsidiaries on a consolidated basis will be greater than
the amount that will be required to pay the probable liability of the Parent
Company and its Subsidiaries on a consolidated basis on
their debts and other liabilities, subordinated, contingent or otherwise, as
such debts and other liabilities become absolute and matured; (iii) the Parent
Company and its Subsidiaries on a consolidated basis will be able to pay their
debts and liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured; and (iv) the Parent Company and its
Subsidiaries on a consolidated basis will not have unreasonably small capital
with which to conduct the businesses in which they are engaged as such
businesses are now conducted and are proposed to be conducted after the date
hereof.
(b) The Parent Company does not intend to, or to permit any of its
Subsidiaries to, and does not believe that it or any of its Subsidiaries will,
on a consolidated basis, incur debts beyond its ability to pay such debts as
they mature, taking into account the timing of and amounts of cash to be
received by it or any such Subsidiary and the timing of the amounts of cash to
be payable on or in respect of its Debt or the Debt of such Subsidiary.
Section 4.27 Compliance with Laws. The Parent Company and its Subsidiaries
have complied with all applicable statutes, rules, regulations, orders and
restrictions of any Governmental Authority having jurisdiction over the conduct
of their respective businesses or the ownership of their respective Property
except for any failure to comply with any of the foregoing which could not
reasonably be expected to cause a Material Adverse Change. The Parent Company
and its Subsidiaries are in compliance in all material respects with the
International Maritime Organization's International Management Code for the Safe
Operation of Ships and Pollution Prevention ("ISM Code"), to the extent
applicable, and have established and implemented a safety management system and
such other procedures as required by the ISM Code, to the extent applicable.
ARTICLE V
AFFIRMATIVE COVENANTS
So long as the Term Loans or any amount under any Credit Document shall
remain unpaid, the Borrower agrees, unless the Consolidated Required Lenders
otherwise consent in writing, to comply with the following covenants.
Section 5.1 Compliance with Laws, Etc. The Parent Company shall, and shall
cause each of its Subsidiaries to, comply with all Legal Requirements except
where the failure to so comply could not reasonably be expected to cause a
Material Adverse Change. Without limiting the generality and coverage of the
foregoing, the Parent Company shall, and shall cause each of its Subsidiaries
to, comply with all applicable Environmental Laws, and all Legal Requirements
with respect to equal employment opportunity and employee safety in all
jurisdictions in which the Parent Company and its Subsidiaries do business
including, if applicable, the ISM Code, except where the failure to so comply
could not reasonably be expected to cause a Material Adverse Change.
Section 5.2 Maintenance of Insurance.
(a) Generally.
(i) Except as otherwise specifically provided below, the Parent
Company shall, and shall cause each of its Subsidiaries to, at their own
expense, maintain insurance with financially sound and reputable insurance
companies or associations in such amounts (and with co-insurance and
deductibles) as are usually insured against by Persons of similar size and
established reputation engaged in the same or similar businesses and
similarly situated, including insurance against fire, casualty, business
interruption, injury to Persons or property and other normal hazards
normally insured against.
(ii) The Parent Company shall, and shall cause each of its
Subsidiaries to, renew all such insurance, including, without limitation,
the Insurance Policies, as they expire and so as to ensure that there is
no gap in coverage, keep the Collateral Agent advised of the progress of
such renewals, and shall provide evidence of such renewal in writing to
the Collateral Agent as and when each such renewal is effected.
(iii) The Parent Company shall, and shall cause each of its
Subsidiaries to, punctually pay all premiums, calls, contributions or
other sums payable in respect of such insurance, including, without
limitation, the Insurance Policies, and produce all relevant receipts when
so required by the Collateral Agent and all Insurance Policies shall
provide that there shall be no recourse against the Collateral Agent or
any other Term Secured Party for unpaid premiums or calls.
(iv) The Parent Company shall, and shall cause each of its
Subsidiaries to, upon the written request of the Collateral Agent, deliver
to the Collateral Agent true and complete copies of all such insurance
policies, including, without limitation, the Insurance Policies.
(v) Upon the written request of the Collateral Agent, provided no
such request shall be made more frequently than once per year, the Parent
Company shall deliver to the Collateral Agent copies of all cover notes,
binders and certificates of entry and all endorsements and riders
supplemental thereto in respect of Insurance Policies maintained pursuant
to this Section 5.2.
(vi) None of the Credit Parties shall declare or agree with the
underwriters that a Mortgaged Term Loan Facility Rig is a Total Loss
without the prior written consent of the Collateral Agent.
(b) Hull and Machinery/Increased Value Insurance. With respect to hull
and machinery/increased value insurance each of the Credit Parties shall insure
or shall cause that the Parent Company or the relevant Subsidiary of the Parent
Company owning the same insures each Mortgaged Term Loan Facility Rig, or cause
each Mortgaged Term Loan Facility Rig to be insured, against loss, damage, fire
and such other perils as are customary in the industry, for an amount which is
at least the Market Value of such Mortgaged Term Loan Facility Rig and when such
amount is aggregated with the amount of such insurance coverage on the other
Mortgaged Term Loan Facility Rigs, such aggregate amount shall be at least 200%
of the aggregate Term Loans (less any deductible). In addition, the Credit
Parties shall, at their own expense, obtain, for and on behalf of the Collateral
Agent, a mortgagee's single interest policy providing coverage
which, when aggregated with the amount of such insurance coverage on the other
Mortgaged Term Loan Facility Rigs, shall be at least 200% of the aggregate Term
Loans. Such insurance shall cover marine perils on hull and machinery, and shall
be maintained in the broadest forms available (on reasonable commercial terms as
the Credit Parties shall see fit and reasonably acceptable to the Collateral
Agent) in the American and British insurance markets or in such other major
international markets acceptable to the Collateral Agent.
(c) Comprehensive Third Party Liability. The Credit Parties shall
maintain insurance (or its equivalent) covering comprehensive third party
liability on the Mortgaged Term Loan Facility Rigs in an aggregate amount not
less than 100% of the Term Loans. The Credit Parties shall arrange for the
execution of such guarantees as may from time to time be required by any
protection and indemnity (or its equivalent).
(d) War Risks. The Credit Parties shall at all times maintain insurance
(or its equivalent) covering War Risks on all of the Mortgaged Term Loan
Facility Rigs; provided, however, that (i) if the premiums associated therewith
increase by more than 30% above the premiums in effect on the Closing Date, as
certified in writing by the Parent Company's independent maritime insurance
broker, then the Credit Parties shall only be obligated to maintain insurance
(or its equivalent) covering War Risks on Mortgaged Term Loan Facility Rigs, so
that the aggregate amount of War Risk coverage is not less than 150% of the Term
Loans, and including, in any event, the Pride North America and each of the
Mortgaged Term Loan Facility Rigs that have a Market Value equal to or greater
than $40,000,000 (as set forth in the most recent Rig Appraisal Reports covering
such Mortgaged Term Loan Facility Rig) located outside of the Gulf of Mexico
shall remain at all times covered against War Risks by insurance (or its
equivalent) by the Credit Parties; and (ii) if from time to time, insurance (or
its equivalent) covering War Risks becomes unavailable in certain geographical
areas, as certified in writing by the Parent Company's independent maritime
insurance broker, then the Credit Parties shall maintain insurance (or its
equivalent) covering War Risks on such other unaffected Mortgaged Term Loan
Facility Rigs so that the aggregate amount of War Risk coverage is not less than
150% of the Term Loans. Promptly after such insurance (or its equivalent)
covering War Risks becomes available again, then the Credit Parties shall
reinstate the coverage set forth in clause (i) above. The Credit Parties shall
arrange for the execution of such guarantees as may from time to time be
required by any war risks association.
(e) Mortgagee Right Insurance. If the Parent Company's Index Debt is
rated less than BB- by S&P or Ba3 by ▇▇▇▇▇'▇, the Credit Parties shall maintain
insurance (or its equivalent) covering the risks of repossession on the
Mortgaged Term Loan Facility Rigs operating under charters or in jurisdiction
implying potential repossession risks, as determined by the Collateral Agent or
acting under the instruction of the Required Term Lenders.
(f) United States Operations. At all times during which one or more
Mortgaged Term Loan Facility Rigs is operating within the jurisdiction of the
United States of America, the Credit Parties shall maintain with respect to such
Mortgaged Term Loan Facility Rigs:
(i) insurance or post bonds or maintain approved evidence of
financial responsibility (including, without limitation, qualification as
a "qualified self-insurer" by the United States Coast Guard) with respect
to such Mortgaged Term Loan Facility Rigs
to cover the actual cost of removal of discharged oil for which such
Credit Party or the Collateral Agent may be held strictly liable (or held
liable due to negligence of such Credit Party or any other Person) under
the Clean Water Act of 1977, as amended, the Oil Pollution ▇▇▇ ▇▇▇▇ (33
U.S.C. Section 2701 et seq.), as amended, or the Outer Continental Shelf
Lands Act, as amended, or under any other Legal Requirement, including,
without limitation, any Environmental Law, of any Governmental Authority
that, now or in the future, may apply to such Mortgaged Term Loan Facility
Rigs or to the Credit Parties, such Mortgaged Term Loan Facility Rigs or
their operations; and
(ii) such worker's compensation or longshoremen's and harbor
workers' insurance as shall be required by applicable law, including
endorsements for foreign and Outer Continental Shelf operations, borrowed
servant, voluntary compensation and in rem claims.
(g) Self Insurance. The Parent Company and its Subsidiaries may maintain
acceptance of first loss in lieu of paying premiums compatible with the
standards set forth herein in an amount which is the lesser of (i)
U.S.$25,000,000 or (ii) 5% of the Market Value of the Mortgaged Term Loan
Facility Rigs (as set forth in the most recent Rig Appraisal Reports covering
such Mortgaged Revolving Credit Facility Rigs) in the aggregate on an annualized
basis after deductibles and self insurance retention.
(h) Collateral Agent as Additional Insured. Other than with respect to
worker's compensation policies, each Insurance Policy maintained in compliance
with this Section 5.2 shall be endorsed showing the Collateral Agent as an
additional insured, or a loss payee, as applicable. All Insurance Policies
required by the terms of this Section 5.2 shall provide that at least 30 days'
(except 48 hours for War Risk) prior written notice be given to the Collateral
Agent by the underwriters or association of any termination, cancellation,
reduction or other modification of such Insurance Policy or the failure of the
Credit Parties to pay any premium or call which could suspend coverage under the
Insurance Policy or the payment of a claim thereunder. If such Insurance
Policies are not maintained in full force and effect, then the Collateral Agent,
at its option, may procure such insurance at the Borrower's expense. With
respect to any potential claims under any Insurance Policy, the Collateral Agent
may, but shall not be required to, make proof of loss under, settle and adjust
any claims under, or direct the Borrower to take such actions at the reasonable
direction of the Collateral Agent, and the expenses incurred by the Collateral
Agent in the adjustment and collection of such proceeds shall be paid by the
Borrower, provided, that if no Event of Default exists, the Collateral Agent
shall give the applicable Credit Party written notice and opportunity to perform
prior to itself performing or causing to perform. The Collateral Agent shall not
be liable or responsible for failure to collect or exercise diligence in the
collection of any proceeds, unless directly caused by its gross negligence or
willful misconduct.
(i) Application of Payments under Insurance Policies.
(i) Except as otherwise provided in Section 5.2(h)(iii) below, all
Insurance Policies shall provide that all insurance payments in respect of
any Casualty Event shall be paid to the Collateral Agent or, upon the
prior written consent of the Collateral Agent, the underwriter may pay
such amounts directly to the applicable Credit Party or such
Person as may be designated by the Credit Parties for the repair, salvage
or other charges relating to such Casualty Event.
(ii) All Casualty Proceeds or Collateral Disposition Proceeds
received by such Credit Party or the Collateral Agent as a result of a
Casualty Event or Collateral Disposition shall be applied in accordance
with the requirements of Sections 2.6(c)(i) and 5.6.
(iii) Notwithstanding anything to the contrary in the other Credit
Documents, all insurance payments in respect of any liability of the
Credit Parties to third Persons or damage to Property of third Persons by
any Credit Party shall be paid by the underwriter of such Insurance Policy
directly to the Person to whom such liability is owed or directly to the
applicable Credit Party to reimburse it for any loss, damage or expense
incurred by it in connection with the event or condition giving rise to
such liability.
(j) Operation of Mortgaged Term Loan Facility Rigs.
(i) Each Mortgaged Term Loan Facility Rig shall not operate in or
proceed into any area then excluded by trading warranties under its marine
or War Risk Insurance Policies (including protection and indemnity or its
equivalent) without satisfying the conditions of the relevant Insurance
Policies, evidence of which shall be furnished to the Collateral Agent.
(ii) The Credit Parties shall not employ any Mortgaged Term Loan
Facility Rig or suffer any Mortgaged Term Loan Facility Rig to be employed
otherwise than in conformity with the terms of the Insurance Policies
relative to the Mortgaged Term Loan Facility Rig (including any
warranties, express or implied, therein) without first obtaining the
consent to such employment of the insurers and complying with such
requirements as to extra premium or otherwise as the insurers may
prescribe.
(iii) To the extent any of the following could reasonably be
expected to cause a Material Adverse Change, each of the Credit Parties
agrees that it will not commit any act, nor voluntarily suffer nor permit
any act to be done, whereby any Insurance Policy required hereunder shall
or may be suspended, impaired or defeated and will not suffer nor permit
any Mortgaged Term Loan Facility Rig to engage in any voyage, nor to
engage in any employment not permitted under the Insurance Policies then
in effect, without first covering any Mortgaged Term Loan Facility Rig
with insurance satisfactory in all respects, including the amount thereof,
to the Collateral Agent for the voyage or the employment.
Section 5.3 Preservation of Existence, Etc. Except as permitted by Section
6.3, each of the Credit Parties shall preserve and maintain its corporate
existence, rights, franchises and privileges in the jurisdiction of its
incorporation, and qualify and remain qualified as a foreign corporation in each
jurisdiction in which qualification is necessary in view of its business and
operations or the ownership of its Properties to the extent the failure to
qualify could reasonably be expected to cause a Material Adverse Change.
Section 5.4 Payment of Taxes, Etc. The Parent Company shall, and shall
cause each of its Subsidiaries to, pay and discharge before the same shall
become delinquent, (a) all taxes, assessments and governmental charges or levies
imposed upon it or upon its income or profits or Property that are material in
amount, prior to the date on which penalties attach thereto and (b) all lawful
claims that are material in amount which, if unpaid, might by law become a Lien
upon its Property; provided, however, that neither the Parent Company nor any of
its Subsidiaries shall be required to pay or discharge any such tax, assessment,
charge, levy, or claim which is being contested in good faith and by appropriate
proceedings, and with respect to which reserves in conformity with GAAP have
been provided.
Section 5.5 Reporting Requirements. The Borrower will furnish, or will
cause the applicable Credit Party to furnish, to the Administrative Agent (with
sufficient copies for the Administrative Agent to distribute to the Term
Lenders):
(a) Defaults. As soon as possible after the occurrence of a Default
known to any Responsible Officer which is continuing on the date of such
statement, a statement of a Responsible Officer setting forth the details of
such Default and the actions which the Credit Parties have taken and propose to
take with respect thereto;
(b) Quarterly Financials. (i) As soon as available and in any event not
later than 45 days after the end of each of the first three fiscal quarters of
each fiscal year of the Parent Company, the unaudited consolidated balance sheet
of the Parent Company, as of the end of such quarter, and the consolidated
statements of income and cash flows of the Parent Company, each for the fiscal
quarter then ended and for the period commencing at the end of the previous year
and ending with the end of such fiscal quarter, all in reasonable detail and
duly certified with respect to such statements (subject to year-end audit
adjustments) by an authorized financial officer of the Parent Company as having
been prepared in accordance with GAAP, except for the absence of footnotes
(provided that the requirements of this Section 5.5(b) with respect to
consolidated financial statements of the Parent Company shall be deemed
satisfied by delivery of the Parent Company's Form 10-Q for such fiscal quarter)
and (ii) as soon as available and in any event not later than 45 days after the
end of each of the first three fiscal quarters of each fiscal year of the
Borrower, the unaudited consolidated balance sheet of the Borrower, as of the
end of such quarter, and the consolidated statements of income of the Borrower,
each for the fiscal quarter then ended and for the period commencing at the end
of the previous year and ending with the end of such fiscal quarter, all in
reasonable detail and duly certified with respect to such statements (subject to
year-end audit adjustments) by an authorized financial officer of the Parent
Company as having been prepared in accordance with GAAP, except for the absence
of footnotes;
(c) Audited Annual Financials. (i) As soon as available and in any event
not later than 90 days after the end of each fiscal year of the Borrower, copies
of the annual audit report for such year for the Borrower, including therein the
consolidated balance sheet of the Borrower as of the end of such fiscal year,
consolidated statements of income, changes in owners' equity and cash flows for
such fiscal year, and (ii) as soon as available and in any event not later than
90 days after the end of each fiscal year of the Parent Company, copies of the
annual audit report for such year for the Parent Company, including therein the
consolidated balance sheet of the Parent Company as of the end of such fiscal
year, consolidated statements of income, changes in
owners' equity and cash flows for such fiscal year, in each case certified by
independent certified public accountants of nationally recognized standing
reasonably acceptable to the Administrative Agent and the Required Term Lenders
(provided that the requirements of this Section 5.5(c) with respect to
consolidated financial statements of the Parent Company shall be deemed
satisfied by delivery of the Parent Company's Form 10-K for such fiscal year);
(d) Compliance Certificates. (i) Within 45 days after the end of each of
the first three fiscal quarters of each fiscal year of the Parent Company and
(ii) within 90 days after the end of each fiscal year of the Parent Company, a
Compliance Certificate for the fiscal quarter or fiscal year then ended
indicating compliance with Section 5.14 and Sections 6.16 through 6.19;
(e) Management Letters. Promptly upon receipt thereof and following such
time as the appropriate officers of the Parent Company shall have had reasonable
time to respond thereto, a copy of each formal report or "management letter"
submitted to the Parent Company by its independent accountants in connection
with any annual, interim or special audit made by it of the books of the Parent
Company;
(f) Budgets. On or before 45 days after the commencement of each fiscal
year of the Parent Company, (i) a consolidated budget of the Parent Company and
its Subsidiaries which includes consolidated income statements, balance sheets
and cash flow statements of the Parent Company and its Subsidiaries for each of
the four fiscal quarters of such fiscal year and (ii) a breakdown of projected
revenues, operating expenses, utilizations and capital expenditures for each
offshore drilling rig owned or leased by the Parent Company and its
Subsidiaries;
(g) Rig Report. On or before 45 days after the end of each of fiscal
quarter of each fiscal year of the Parent Company, a report detailing (i) the
then current location of each of the Mortgaged Term Loan Facility Rigs and each
other offshore drilling rigs and other vessels owned or leased by the Borrower
and its Subsidiaries, and the then current term of and parties to any contract
of any such vessels and (ii) for the previous fiscal quarter, the average day
rates and utilization for each such rig or vessel.
(h) Other Creditors. Promptly after the giving or receipt thereof,
copies of any material notices given or received by any Credit Party pursuant to
the terms of any indenture, loan agreement, credit agreement, or similar
agreement;
(i) Securities Law Filings and other Public Information. Promptly and in
any event within 10 days after the sending or filing thereof, copies of all
proxy material, reports and other information which the Parent Company or any of
its Subsidiaries sends to the holders of its respective public securities
generally, files with the SEC, or otherwise makes available to the public or the
financial community generally;
(j) Termination Events. As soon as possible and in any event within 10
days after a Responsible Officer knows or has reason to know that any
Termination Event with respect to any Plan has occurred, a statement of a senior
financial officer of the Parent Company or such Subsidiary describing such
Termination Event and the action, if any, which the Parent Company or such
Subsidiary proposes to take with respect thereto;
(k) Termination of Plans. Promptly and in any event within 10 days after
receipt thereof by the Parent Company or any member of the Controlled Group from
the PBGC, copies of each notice received by the Parent Company or any such
member of the Controlled Group of the PBGC's intention to terminate any Plan or
to have a trustee appointed to administer any Plan;
(l) Other ERISA Notices. Promptly and in any event within 10 days after
receipt thereof by the Parent Company or any member of the Controlled Group from
a Multiemployer Plan sponsor, a copy of each notice received by the Parent
Company or any member of the Controlled Group concerning the imposition of
withdrawal liability pursuant to Section 4202 of ERISA in an amount that could
reasonably be expected to cause a Material Adverse Change;
(m) Disputes, etc. Promptly and in any event within 10 days after a
Responsible Officer becomes aware thereof, written notice of any claims,
proceedings, or disputes, or to the knowledge of a Responsible Officer
threatened, or affecting the Parent Company or any of its Subsidiaries which, if
adversely determined, could reasonably be expected to cause a Material Adverse
Change;
(n) Material Changes. Prompt written notice of any condition or event of
which the Parent Company or any of its Subsidiaries has knowledge, which
condition or event has resulted or may reasonably be expected to result in a
Material Adverse Change;
(o) Environmental Notices. Promptly upon the receipt thereof by the
Parent Company or any of its Subsidiaries, a copy of any form of notice, summons
or citation received from the EPA, or any other Governmental Authority or any
other third party, concerning (i) material violations or alleged violations of
Environmental Laws, which seeks to impose liability therefor, (ii) any material
action or omission on the part of the Parent Company or any of its Subsidiaries
in connection with Hazardous Waste or Hazardous Substances, (iii) any notice of
potential responsibility under CERCLA or any analogous law, or (iv) concerning
the filing of a Lien other than a Permitted Lien upon, against or in connection
with the Parent Company or any of its Subsidiaries, or any of their leased or
owned material Property, wherever located;
(p) Collateral. Promptly upon obtaining knowledge thereof by any
Responsible Officer, notice of:
(i) any Casualty Event if the Casualty Proceeds with respect
thereto could reasonably be expected to exceed U.S.$5,000,000 (or the
equivalent in any other currency) with respect to any Mortgaged Term Loan
Facility Rig;
(ii) any Collateral Disposition;
(iii) any occurrence in respect of any Mortgaged Term Loan Facility
Rig that is or is likely, by the passing of time or otherwise, to become a
Total Loss;
(iv) any material requirement made by any insurer or classification
society or by any competent authority which is not complied with within a
reasonable time; and
(v) any arrest of any Mortgaged Term Loan Facility Rig or the
exercise or purported exercise of any Lien on any Mortgaged Term Loan
Facility Rig.
(q) Insurance Broker Reports. As soon as available and in any event not
later than 90 days after the end of each fiscal year of the Parent Company, a
report prepared by the Parent Company's independent maritime insurance broker
which report (i) lists all Insurance Policies then in effect with respect to the
Mortgaged Term Loan Facility Rigs, (ii) specifies for each such Policy (A) the
amount thereof, (B) the risks insured against thereby, (C) the name of the
insurer and each insured party thereunder and (D) the policy or other
identification number thereof and (iii) certifies that all such Insurance
Policies are (A) in full force and effect, (B) placed with such insurance
companies, underwriters or associations, in such amounts, against such risks,
and in such form, as are normally issued against by Persons of similar size and
established reputation engaged in the same or similar businesses and similarly
situated and as are necessary or advisable for the protection of the Collateral
Agent as mortgagee, and (C) conforming to the requirements of this Agreement;
(r) Safety Management Manual. Upon request by the Administrative Agent,
a copy of the safety management manual used to describe and implement the Parent
Company's safety management system developed, implemented and maintained in
compliance with the ISM Code, if applicable;
(s) Indentures. Prompt written notice of any material amendments,
modifications, or terminations of the Senior Indenture, the Subordinated
Indenture or any other indenture, note or other agreement evidencing or
governing any Subordinated Debt; and
(t) Other Information. Such other information respecting the business or
Properties, or the condition or operations, financial or otherwise, of the
Parent Company and its Subsidiaries as the Administrative Agent or any Term
Lender may from time-to-time reasonably request.
Section 5.6 Maintenance of Property. The Parent Company shall, and shall
cause each of its Subsidiaries to, (a) maintain their material Property
necessary for the conduct of its business in good repair and working condition,
except for normal wear and tear and as otherwise permitted by this Agreement,
and (b) not knowingly or willfully permit the commission of waste or other
injury, or the release of Hazardous Substances on or about the owned or operated
property in violation of applicable Environmental Laws. Notwithstanding the
foregoing, if a Mortgaged Term Loan Facility Rig is affected by a Casualty Event
or a Collateral Disposition, the Borrower shall, or shall cause the Guarantor
who owns such affected Mortgaged Term Loan Facility Rig, to either make all
necessary repairs and replacements to such affected Mortgaged Term Loan Facility
Rig or apply the Casualty Proceeds or Collateral Disposition Proceeds therefrom
as provided in Section 2.6(c)(ii) or (iii), as the case may be.
Section 5.7 Inspection. From time-to-time during regular business hours
upon reasonable prior notice (and subject to the requirements of applicable
insurance policies), the Parent Company shall, and shall cause each of its
Subsidiaries to, (a) permit the Administrative Agent (at the request of any Term
Lender) to examine and copy their books and records, (b) permit the
Administrative Agent and the Term Lenders to visit and inspect their Properties,
and (c) permit the Administrative Agent and Term Lenders to discuss the business
operations and Properties of the Parent Company and its Subsidiaries with their
officers and directors.
Section 5.8 Use of Proceeds. The Borrower shall use the proceeds of the
Term Loans to refinance existing Debt of the Credit Parties and to pay related
fees and expenses. The Borrower will not engage in the business of extending
credit for the purpose of purchasing or carrying margin stock (within the
meaning of Regulation U). No proceeds of any Term Loan will be used to purchase
or carry any margin stock in violation of Regulation T, U, or X.
Section 5.9 Nature of Business. The Parent Company shall, and shall cause
each of its Subsidiaries to, not engage in any business if, as a result, the
general nature of the business of the Parent Company and its Subsidiaries, taken
on a consolidated basis, would then be substantially changed from the general
nature of the business engaged in by the Parent Company and its Subsidiaries on
the Closing Date.
Section 5.10 Books and Records. The Parent Company will keep, and will
cause each of its Subsidiaries to keep, adequate records and books of account in
which complete entries will be made in accordance with GAAP (subject to year-end
adjustments), reflecting all financial transactions of such Person. The Parent
Company shall maintain or cause to be maintained a system of accounting
established and administered in accordance with sound business practices to
permit preparation of financial statements in conformity with GAAP, and each of
the financial statements described herein shall be prepared from such system and
records.
Section 5.11 Rig Appraisal Reports.
(a) Within 45 days after each anniversary date of the Closing Date, the
Borrower shall deliver to the Administrative Agent and the Term Lenders two
written appraisal reports prepared by two independent Approved Rigbrokers
setting forth the Market Value of each of the Mortgaged Term Loan Facility Rigs
as of the date appraised (each a "Rig Appraisal Report"). The cost of each such
Rig Appraisal Report shall be paid by the Borrower.
(b) If the Market Value of either (i) the Mortgaged Revolving Credit
Facility Rigs is less than 205% of the Total Revolving Commitments or (ii) the
Mortgaged Term Loan Facility Rigs is less than 205% of the outstanding principal
amount of the Term Loans, then the Borrower shall deliver to the Administrative
Agent and the Term Lenders an additional set of Rig Appraisal Reports no less
than 175 days and no more than 225 days after each anniversary date of the
Closing Date until such time as (A) the Market Value of the Mortgaged Revolving
Credit Facility Rigs is equal to or greater than 205% of the Total Revolving
Commitments and (B) the Market Value of the Mortgaged Term Loan Facility Rigs is
equal to or greater than 205% of the outstanding principal amount of the Term
Loans. The cost of each such additional Rig Appraisal Report shall be paid by
the Borrower.
(c) At any time the Administrative Agent, at the request of the Required
Term Lenders, may request that the Borrower deliver an additional Rig Appraisal
Report to the Term Lenders. Upon receipt of such request by the Borrower, the
Borrower shall deliver such Rig Appraisal Report to the Administrative Agent and
the Term Lenders within 30 days after receipt of such request. Unless a Default
is in existence at the time of such request, the Term Lenders shall pay the
costs of any subsequent Rig Appraisal Reports requested by the Administrative
Agent under this Section 5.11(c) during such calendar year.
(d) Within 30 days of the occurrence of any Casualty Event (if the
Casualty Proceeds with respect thereto could reasonably be expected to exceed
U.S.$5,000,000) or any Collateral Disposition occurring with respect to any
Mortgaged Term Loan Facility Rig, the Borrower shall deliver to the
Administrative Agent and the Term Lenders an additional Rig Appraisal Report
setting forth the Market Values of the Mortgaged Term Loan Facility Rigs
immediately prior to such Casualty Event or Collateral Disposition and the
Market Values giving effect to such Casualty Event or Collateral Disposition (an
"Additional Appraisal Report"). The cost of each such Rig Appraisal Report shall
be paid by the Borrower.
(e) Each Rig Appraisal Report delivered under this Section 5.11 shall be
in form, scope and substance reasonably satisfactory to the Administrative
Agent.
Section 5.12 Operation of Mortgaged Term Loan Facility Rigs. Each
Subsidiary of the Parent Company that owns or operates a Mortgaged Term Loan
Facility Rig shall:
(a) (i) Comply with and satisfy all Legal Requirements of the
jurisdiction of such Mortgaged Term Loan Facility Rig's home port, now or
hereafter from time to time in effect, in order that such Mortgaged Term Loan
Facility Rig shall continue to be documented pursuant to the laws of the
jurisdiction of its home port with such endorsements as shall qualify such
Mortgaged Term Loan Facility Rigs for participation in the trades and services
to which it may be dedicated from time to time or (ii) not do or allow to be
done anything whereby such documentation is or could reasonably be expected be
forfeited;
(b) keep such Mortgaged Term Loan Facility Rig in a good and sufficient
state of repair consistent with first-class ship-ownership and management
practice employed by owners of vessels of similar size and type and so as to (i)
maintain the present class of such Mortgaged Term Loan Facility Rig at its
current classification by any first-class, recognized rating agency, including,
without limitation, the American Bureau of Shipping, free of recommendations
affecting class and qualifications and change of class, save those notified to
the Collateral Agent in writing prior to the date of this Agreement and (ii)
comply with all Legal Requirements from time to time applicable to such
Mortgaged Term Loan Facility Rig and such Credit Party's operations except where
such non-compliance will not reasonably be expected to cause a material adverse
change on the Mortgaged Term Loan Facility Rigs, the applicable Credit Party or
the Lien created by the Rig Mortgage;
(c) with respect to such Mortgaged Term Loan Facility Rig, (i) make or
cause to be made all repairs to or replacement of any damaged, worn or lost
parts or equipment such that the value of such Mortgaged Term Loan Facility Rig
will not be materially impaired and (ii) except as otherwise contemplated by
this Agreement, not remove any material part of, or item of equipment owned by
the Credit Parties installed on, such Mortgaged Term Loan Facility Rig except in
the ordinary course of the operation and maintenance of such Mortgaged Term Loan
Facility Rig or unless (A) the part or item so removed is forthwith replaced by
a suitable part or item which is in the same condition as or better condition
than the part or item removed, is free from any Lien (other than Permitted
Liens) in favor of any Person other than the Collateral Agent and becomes, upon
installation on such Mortgaged Term Loan Facility Rig the property of the Credit
Parties and subject to the security constituted by the Rig Mortgage or the
Security Agreement or (B) the removal will not materially diminish the value of
such Mortgaged Term
Loan Facility Rig (provided, however, that this Section 5.12(c) shall be deemed
satisfied in the event of a Casualty Event if the Credit Parties comply with
Section 2.6);
(d) submit such Mortgaged Term Loan Facility Rig to such periodical or
other surveys as may be required for classification purposes and, upon the
request of the Collateral Agent supply to the Collateral Agent copies of all
survey reports and classification certificates issued in respect thereof;
(e) promptly pay and discharge all debts, damages and liabilities
whatsoever which have given or may give rise to maritime or possessory Liens
(other than Permitted Liens) on or claims enforceable against such Mortgaged
Term Loan Facility Rig and all tolls, dues, taxes, assessments, governmental
charges, fines and penalties that are material in amount and lawfully charged on
or in respect of each Mortgaged Term Loan Facility Rig other than any of the
foregoing being contested in good faith and diligently by appropriate
proceedings, and, in the event of arrest of any Mortgaged Term Loan Facility Rig
pursuant to legal process, or in the event of her detention in exercise or
purported exercise of any such Lien or claim as aforesaid, procure, if possible,
the release of such Mortgaged Term Loan Facility Rig from such arrest or
detention forthwith upon receiving notice thereof by providing bail or otherwise
as the circumstances may require; and
(f) if the Person operating such Mortgaged Term Loan Facility Rig is not
the Borrower or a Guarantor, promptly remit all earnings received by such Person
from any Mortgaged Term Loan Facility Rig back to the appropriate Credit Party.
For the avoidance of doubt, "earnings" does not include operating costs and
reasonable management fees as are customary in the industry and which are set
forth and supported by a budget for such Mortgaged Term Loan Facility Rigs which
will be delivered to the Administrative Agent on or before such time as the
subject Rig begins operations for such Person.
Section 5.13 New Subsidiaries; Permitted Holding Company.
(a) Within 10 days after (i) the date of the creation of any new
Material Subsidiary of the Borrower, (ii) the date that any Subsidiary of the
Borrower that was not a Material Subsidiary becomes a Material Subsidiary, (iii)
the purchase by the Borrower or any of its Subsidiaries of the Capital Stock of
any Person, which purchase results in such Person becoming a Material Subsidiary
of the Borrower permitted by this Agreement, or (iv) the transfer of a Mortgaged
Term Loan Facility Rig to any wholly-owned Subsidiary of the Parent Company that
is not a Guarantor, the Borrower shall, in each case, cause such Person to
execute and deliver to the Collateral Agent (with sufficient originals for each
applicable Term Lender) a Joinder Agreement in substantially the form of the
attached Exhibit K, together with evidence of corporate authority to enter into
and such legal opinions in relation to such Joinder Agreement as the Collateral
Agent may reasonably request.
(b) Within 10 days after the date of the creation of any Permitted
Holding Company, the Borrower shall cause such Permitted Holding Company to
execute and deliver to the Collateral Agent (with sufficient originals for each
applicable Term Lender) a Joinder Agreement in substantially the form of the
attached Exhibit K, together with evidence of
corporate authority to enter into and such legal opinions in relation to such
Joinder Agreement as the Collateral Agent may reasonably request.
Section 5.14 Security Maintenance Ratio. The Borrower shall at all times
maintain a Security Maintenance Ratio of at least 2.0 to 1.0; provided, however,
that this Section 5.14 shall be deemed satisfied during any period in which this
Section 5.14, but for a Collateral Disposition or Casualty Event, would have
been satisfied if, during such period, the Credit Parties are in compliance with
Section 2.6(c)(ii) or (iii), as the case may be. Notwithstanding the foregoing,
if the Borrower is in compliance with this Section 5.14, the Collateral Agent
shall, at the request of the Borrower, release any Lien granted to or held by
the Collateral Agent on or relating to the Mortgaged Term Loan Facility Rigs
(other than Liens on or relating to the Initial Mortgaged Term Loan Facility
Rigs) if the Borrower would be in compliance with this Section 5.14 after giving
effect to such release of Lien and no other Default exists or would be caused
thereby.
Section 5.15 Further Assurances in General. The Parent Company shall, and
shall cause each of the Credit Parties to, protect and perfect the Liens
contemplated by the Security Documents. The Parent Company at its expense shall,
and shall cause each of the Credit Parties to, promptly execute and deliver all
such other and further documents, agreements and instruments in compliance with
or accomplishment of the covenants and agreements of the Parent Company or any
of its Subsidiaries in the Credit Documents, including, without limitation, the
accomplishment of any condition precedent that may have been temporarily waived
by the Term Lenders prior to the Closing Date.
ARTICLE VI
NEGATIVE COVENANTS
So long as the Term Loans or any amount under any Credit Document shall
remain unpaid, the Borrower agrees, unless the Consolidated Required Lenders
otherwise consent in writing, to comply with the following covenants.
Section 6.1 Liens, Etc. The Parent Company shall not, nor shall it permit
any of its Subsidiaries to, create, assume, incur or suffer to exist, any Lien
on or in respect of any of its Property whether now owned or hereafter acquired,
or assign any right to receive income therefrom, except that the Parent Company
and its Subsidiaries may create, incur, assume and suffer to exist the following
which are permitted liens ("Permitted Liens"):
(a) Liens for taxes, assessments or governmental charges or levies on
its Property if the same shall not at the time be delinquent or thereafter can
be paid without penalty, or are being contested in good faith and by appropriate
proceedings and for which adequate reserves in accordance with GAAP shall have
been set aside on its books;
(b) Liens imposed by law, or arising by operation of law, including,
without limitation, carriers', warehousemen's, mechanics' liens, maritime Liens
and other similar liens arising in the ordinary course of business which secure
payment of obligations not more than 60 days past due or which are being
contested in good faith by appropriate proceedings and for which adequate
reserves shall have been set aside on the books of the applicable Person;
(c) Liens incurred and pledges and deposits made in the ordinary course
of business in connection with worker's compensation, unemployment insurance,
old age pensions, or other social security or retirement benefits, or similar
legislation, other than any Lien imposed by ERISA;
(d) Liens to secure the performance of bids, trade contracts and leases
(other than Debt), statutory obligations, surety bonds, performance bonds and
other obligations of a like nature incurred in the ordinary course of business
not to exceed in the aggregate 25% of Unrestricted Cash determined at the time
such deposits, statutory obligations, bonds or other obligations are incurred;
(e) zoning restrictions, easements, licenses, covenants, reservations,
restrictions on the use of Property, defects, irregularities and deficiencies in
title to Property and such other encumbrances or charges against real property
as are of a nature generally existing with respect to Property of a similar
character and which, in the aggregate, are not substantial in amount, and which
do not in any material way affect the marketability of the same or interfere
with the use thereof in the business of the Parent Company or its Subsidiaries;
(f) Liens existing on the Closing Date that either (i) secure Debt and
other obligations that do not exceed $25,000,000 in the aggregate or (ii) are
disclosed in writing to the Administrative Agent on or before the Closing Date;
(g) Liens created by Capital Leases provided that the Liens created by
any such Capital Lease attach only to the Property leased pursuant thereto and
proceeds (including, without limitation, proceeds from associated contracts and
insurances) of, and improvements, accessories and upgrades to, the Property
leased pursuant thereto;
(h) Liens to secure Debt, including, without limitation, Project Finance
Debt, incurred for the purpose of financing all or a part of the purchase price
or construction cost of Property (including the cost of upgrading, refurbishing
or renovating drilling rigs, drillships and other vessels and platforms) if (A)
the principal amount of the Debt secured by such Liens does not exceed the cost
of the Property so acquired, constructed, upgraded, refurbished or renovated
plus transaction costs related thereto, (B) such Liens do not encumber any other
Property (other than the proceeds (including, without limitation, proceeds from
associated contracts and insurances) of, and improvements, accessories and
upgrades to, the Property so acquired, constructed, upgraded, refurbished or
renovated and the Capital Stock of Special Purpose Subsidiaries that own,
whether directly or indirectly, only the Property so acquired, constructed,
upgraded, refurbished or renovated) and (C) such Liens attach no later than 12
months after the later of (x) commencement of commercial operation of the
Property so acquired, constructed, upgraded, refurbished or renovated, (y)
completion of the construction, acquisition, upgrade, improvement or renovation
of such Property and (z) acquisition of such Property;
(i) Liens created for the benefit of the Term Secured Parties or the
Finance Parties;
(j) Liens on Property of a Person existing at the time such Person is
merged or consolidated with or into, or otherwise acquired by, the Parent
Company or one of its Subsidiaries; provided that, (i) such Liens are in
existence at the time the respective Persons
become Subsidiaries of the Parent Company and were not created or incurred in
anticipation thereof and (ii) the Debt secured by such Liens (A) is permitted
under Section 6.2, (B) secured only by such Property and the proceeds thereof
(including, without limitation, proceeds from associated contracts and
insurances) of, and improvements, accessories and upgrades to, such Property and
not by any other assets of the Parent Company and its Subsidiaries, and (C) is
not increased in amount;
(k) Liens on Property existing at the time of the acquisition thereof;
provided that, (i) such Liens are in existence at the time such Property is
acquired and were not created or incurred in anticipation thereof and (ii) the
Debt secured by such Liens (A) is permitted under Section 6.2, (B) does not
exceed the fair market value of such Property, (C) is secured only by such
Property and the proceeds thereof (including, without limitation, proceeds from
associated contracts and insurances) of, and improvements, accessories and
upgrades to, such Property and not by any other assets of the Parent Company and
its Subsidiaries, and (D) is not increased in amount;
(l) judgment, attachment, sequestration, distress and similar Liens
(including bonds related to judgment or litigation) not giving rise to an Event
of Default so long as any appropriate legal proceedings which may have been
initiated for the review of such judgment, attachment, sequestration, distress
or similar action shall not have been finally terminated or the period within
which such proceedings may be initiated shall not have expired;
(m) rights of set-off of banks and other Persons in the ordinary course
of banking and trading arrangements;
(n) Liens securing reimbursement obligations under financial letters of
credit;
(o) Liens securing any MARAD Financing, provided that each such Lien
encumbers only the property financed in connection with the creation of any such
Debt and any other MARAD Collateral;
(p) Liens on Property of any Affiliate of the Parent Company or any of
its Subsidiaries or any other joint venture in favor of the Parent Company or
any of its Subsidiaries;
(q) Liens securing Debt permitted by subsections (d), (e) and (n) of
Section 6.2;
(r) Liens on Property of any Credit Party in favor of the Parent
Company, the Borrower or any Guarantor that is a wholly-owned Subsidiary of the
Parent Company;
(s) Liens incurred in the ordinary course of business to secure
liabilities to insurance carriers under insurance or other self-insurance
arrangements in an amount not to exceed $25,000,000; and
(t) Liens to secure any extension, renewal, refinancing, refunding or
replacement (or successive extensions, renewals, refinancings, refundings or
replacements), in whole or in part, of any Debt or other obligation secured by
any Permitted Lien referred to in clauses (a) through (s) above, provided that
the principal amount of the Debt or other obligation secured thereby is no
greater than the greater of (i) the outstanding principal amount of such Debt or
other obligation immediately before such extension, renewal, refinancing,
refunding or replacement
and (ii) the maximum commitment of such Debt or other obligation immediately
before such extension, renewal, refinancing, refunding or replacement and that
any such Liens are limited to the Property originally encumbered thereby (and
any proceeds (including, without limitation, proceeds from associated contracts
and insurance) of and improvements, accessories and upgrades to, such Property).
Notwithstanding the foregoing, the Parent Company shall not, nor shall it permit
any of its Subsidiaries to, create, assume, incur or suffer to exist, any Lien
on or in respect of (i) any assets relating to or arising from the Mortgaged
Term Loan Facility Rigs whether now owned or hereafter acquired, including,
without limitation, any accounts receivable, inventory, equipment, and general
intangibles (each as defined in Article 9 of the UCC) other than Liens in favor
of the Collateral Agent for the benefit of the Term Secured Parties, (ii) the
Pride Oklahoma or (iii) the Capital Stock of the Borrower or any of its
Subsidiaries, except in each case, Permitted Liens under clauses (a) through
(d), (l) and, to the extent relating to any of the foregoing, clause (t) above.
Section 6.2 Debts, Guaranties and Other Obligations. The Parent Company
shall not, nor shall it permit any of its Subsidiaries to, create, assume,
suffer to exist or in any manner become or be liable, in respect of any Debt
except:
(a) Debt under the Credit Documents;
(b) Debt under the Revolving Credit Agreement and related documents;
(c) Debt existing on the date hereof that either (i) does not exceed
$25,000,000 in the aggregate or (ii) is described in Schedule 6.2;
(d) Intercompany Debt, provided that if such Debt is owing to any Credit
Party that is not a wholly-owned Subsidiary of the Parent Company or any other
Person other than a Credit Party, (i) then such Debt shall be subordinated to
the Obligations and the Obligations (as defined in the Revolving Credit
Agreement) on terms reasonably acceptable to the Administrative Agent and (ii)
and if such Intercompany Debt is secured, then the Obligations will be secured
by such Liens equally and ratably with such secured Intercompany Debt so long as
such Intercompany Debt shall be so secured;
(e) Debt owing by any Subsidiary of the Parent Company (other than a
Credit Party) to the Parent Company or any of other Subsidiary of the Parent
Company;
(f) Debt in connection with any guarantees in favor of any protection
and indemnity or War Risk associations to the extent such guarantees are
required in connection with any insurance policies;
(g) unsecured Debt of the Borrower and its Subsidiaries in the aggregate
amount not to exceed $15,000,000 (or the equivalent in any other currency) in
addition to all other Debt permitted by this Section 6.2;
(h) unsecured Debt of the Parent Company and its Subsidiaries (other
than the Borrower and its Subsidiaries), in addition to all other Debt permitted
by this Section 6.2 other
than Debt permitted under Section 6.2(h), provided, that (i) if the maturity of
such Debt is after the Term Loan Maturity Date, then the amortization of such
Debt may not exceed the greater of 10% of the principal amount of such Debt or
$25,000,000 in any fiscal year prior to the Term Loan Maturity Date or (ii) to
the extent that such Debt is not permitted under subclause (i) above, then such
Debt is in an aggregate amount not to exceed the greater of $200,000,000 (or the
equivalent in any other currency) and 5% of Consolidated Tangible Net Assets;
(i) Project Finance Debt;
(j) unsecured Debt under the Subordinated Indenture and any other
Subordinated Debt, provided, that either (i) such Subordinated Debt is on
subordination terms and conditions reasonably satisfactory to the Administrative
Agent and the Required Term Lenders or as contemplated by Section 6.7 or (ii)
the amortization of such Subordinated Debt may not exceed the greater of 10% of
the principal amount of such Subordinated Debt or $25,000,000 in any fiscal year
prior to the Term Loan Maturity Date;
(k) Debt of a Subsidiary of the Parent Company that existed at the time
such Person became a Subsidiary of the Parent Company; provided that, (i) such
Debt is in existence at the time the respective Persons become Subsidiaries of
the Parent Company and were not created or increased in anticipation thereof,
(ii) no Event of Default exists or no Default would be caused thereby and (iii)
after giving effect to the transaction by which such Person became a Subsidiary
of the Parent Company on a pro forma basis, the Parent Company would have been
in compliance with Sections 6.16 through 6.19 as of the end of the most recent
fiscal quarter;
(l) Debt of the Parent Company or any of its Subsidiaries that
represents the assumption by the Parent Company or that Subsidiary of Debt of
another Person (including, without limitation, another Subsidiary of the Parent
Company) in connection with a merger of the Parent Company or that Subsidiary
with such other Person; provided that, (i) such Debt is in existence at the time
the respective Persons are merged with the Parent Company or that Subsidiary and
were not created or increased in anticipation thereof, (ii) no Event of Default
exists or no Default would be caused thereby and (iii) after giving effect to
such transaction on a pro forma basis, the Parent Company would have been in
compliance with Sections 6.16 through 6.19 as of the end of the most recent
fiscal quarter;
(m) Debt of the Parent Company or any of its Subsidiaries incurred for
the purpose of financing all or a part of the purchase price or construction
cost of Property (including the cost of upgrading, refurbishing or renovating
drilling rigs, drillships and other vessels and platforms) if (i) the principal
amount of such Debt does not exceed the cost of the Property so acquired,
constructed, upgraded, refurbished or renovated plus transaction costs related
thereto, and (ii) such Debt is incurred no later than 12 months after the latest
of (A) commencement of commercial operation of the Property so acquired,
constructed, upgraded, refurbished or renovated, (B) completion of the
construction, acquisition, upgrade, improvement or renovation of such Property
and (C) acquisition of such Property; provided, however, that, if payment of the
principal, interest, fees or other costs payable with respect to such Debt is
required before the Term Loan Maturity Date, then, to the extent that the
payment of such principal, interest, fees or other costs are not offset, in the
aggregate, by payments under a contract dependent on such Property, the
remaining aggregate principal balance (the "Uncovered Portion") shall not be
permitted under this Section 6.2(m) (but may be permitted under another clause
of this Section 6.2); and provided further, for the avoidance of doubt, that if
any part of the Uncovered Portion is, subsequent to incurrence, offset by
payments to be made prior to the Term Loan Maturity Date under a contract that
is dependent on such Property, such part shall no longer be part of the
Uncovered Portion and shall be permitted under this Section 6.2(m);
(n) Debt of the Parent Company and its Subsidiaries (other than the
Borrower and its Subsidiaries), in addition to all other Debt permitted by this
Section 6.2, provided, that (i) if the maturity of such Debt is after the Term
Loan Maturity Date, then the amortization of such Debt may not exceed the
greater of 10% of the principal amount of such Debt or $25,000,000 in any fiscal
year prior to the Term Loan Maturity Date or (ii) to the extent that such Debt
is not permitted under subclause (i) above, then such Debt is in an aggregate
amount not to exceed the greater of $350,000,000 (or the equivalent in any other
currency) and 10% of Consolidated Tangible Net Assets as of the most recent
fiscal quarter of the Parent Company;
(o) unsecured Debt of the Parent Company and its Subsidiaries in
addition to all other Debt permitted by this Section 6.2, the proceeds of which
are used to refinance Subordinated Debt existing on the Closing Date;
(p) the MARAD Financing; and
(q) any extension, renewal, refinancing, refunding or replacement (or
successive extensions, renewals, refinancings, refundings or replacements), in
whole or in part, of any Debt referred to in clauses (a) through (p) of this
Section 6.2, provided that (i) the principal amount of such Debt is not thereby
increased (other than by the reasonable fees, expenses and any premium incurred
in connection with the extension, renewal, refinancing, refunding or replacement
(except that in connection with any refinancing, refunding or replacement of the
European Facility, the principal amount thereof may be increased to, but may not
exceed, $125,000,000)) and (ii) with respect to Subordinated Debt, except as
otherwise permitted by Section 6.2(p), such Subordinated Debt shall not be
extended, renewed, refinanced, refunded or replaced except on subordination
terms at least as favorable to the Term Lenders and no more restrictive on the
Parent Company than the Subordinated Debt being extended, renewed, refinanced,
refunded or replaced.
Section 6.3 Merger or Consolidation; Asset Sales.
(a) The Borrower shall not, nor shall it permit any Subsidiary to,
merge, dissolve, liquidate or consolidate with or into any other Person or to
transfer all or substantially all of its Property to any other Person, except
that (i) a Subsidiary of the Borrower may merge with or into the Borrower or a
wholly-owned Subsidiary of the Borrower (provided that if either of such
Subsidiaries is a Guarantor, the surviving entity shall be a Guarantor), and
(ii) a Subsidiary of the Borrower may transfer all or substantially all of its
assets (upon voluntary liquidation or otherwise) to the Borrower or to another
wholly-owned Subsidiary of the Borrower (provided that if the transferor in such
a transaction is a Guarantor, then the transferee must either be the Borrower or
a Guarantor), provided in each case that (A) no Event of Default exists or no
Default would be caused thereby, and (B) if any Collateral is transferred
pursuant to this Section 6.3, the Borrower shall provide the Collateral Agent
with ten Business Days' written notice prior
to such transfer, and the Borrower or such Guarantor, as the case may be, owning
the Collateral after such transfer shall ratify and confirm the Lien on such
Collateral and shall take all action reasonably requested by the Collateral
Agent in respect of the continued priority and perfection of the Lien over such
Collateral.
(b) The Parent Company shall not, in any transaction or series of
transactions, consolidate with or merge into any other Person (other than a
merger of a Subsidiary into the Parent Company in which the Parent Company is
the continuing corporation), or sell, convey, assign, transfer, lease or
otherwise dispose of all or substantially all of the assets of the Parent
Company and its Subsidiaries, taken as a whole, to any Person unless (i) either
(A) the Parent Company shall be the continuing Person or (B) the Person (if
other than the Parent Company) formed by such consolidation or into which the
Parent Company is merged, or the Person which acquires, by sale, assignment,
conveyance, transfer, lease or other disposition, all or substantially all of
the assets of the Parent Company and the Subsidiaries, taken as a whole, shall
(1) be a Permitted Holding Company and (2) comply with the provisions of Section
5.13, (ii) no Event of Default exists or no Default would be caused thereby, and
(iii) after giving effect to such transaction on a pro forma basis, the Parent
Company would have been in compliance with the financial covenants set forth in
Sections 6.16 through 6.19 as of the end of the most recent fiscal quarter.
(c) The Parent Company shall not, nor shall it permit any of its
Subsidiaries to, sell, transfer, assign or otherwise dispose of its Property to
any other Person, except:
(i) Sales of inventory in the ordinary course of business;
(ii) Dispositions of obsolete or worn out property, whether now
owned or hereafter acquired, in the ordinary course of business;
(iii) Dispositions of equipment to the extent that (A) such property
is exchanged for credit against the purchase price of similar replacement
property, (B) the proceeds of such disposition are reasonably promptly
applied to the purchase price of such replacement property or (C) with
respect to equipment relating to Mortgaged Term Loan Facility Rigs, such
dispositions are in compliance with Section 5.12(c);
(iv) to the extent not otherwise permitted by this Section 6.3, so
long as no Event of Default exists and after giving effect to such
transaction on a pro forma basis, no Default would be caused thereby,
sales, transfers, assignments or other dispositions of Property to a
Person other than the Parent Company or any of its Subsidiaries (an "Asset
Sale") that, together with all other Asset Sales (other than sales,
transfers, assignments or other dispositions permitted by subsections (i),
(ii) and (iii) above) as permitted by this Section during the twelve-month
period ending with the month in which any such Asset Sale occurs, does not
exceed $100,000,000 (or the equivalent in any other currency) for the
Parent Company and its Subsidiaries of which no more than $10,000,000 (or
the equivalent in any other currency) may be attributable to the Borrower
and its Subsidiaries; provided, however, that the requirements set forth
in this Section 6.3(c)(iv) shall not apply if the Net Cash Proceeds from
each Asset Sale are used to acquire one or more replacement assets or to
repurchase or repay existing Debt (with a permanent
reduction of availability in the case of revolving credit borrowings)
within 180 days after the consummation of such Asset Sale;
(v) sales, transfers, assignments or other dispositions of any
Property, other than Mortgaged Revolving Credit Facility Rigs or Mortgaged
Term Loan Facility Rigs, to the Parent Company or any of its Subsidiaries;
(vi) sales, transfers, assignments or other dispositions of any
Mortgaged Term Loan Facility Rig or Mortgaged Revolving Credit Facility
Rig to the Borrower or any other Guarantor; provided, that (A) with
respect to sales, transfers, assignments or other dispositions of any
Mortgaged Term Loan Facility Rig, the Borrower or such Guarantor shall
ratify, grant and confirm the Liens on such Mortgaged Term Loan Facility
Rig (and other related Collateral) pursuant to such Security Documents and
deliver such legal opinions in relation thereto as may be reasonably
requested by the Collateral Agent and (B) such sale, transfer, assignment
or other disposition of any Mortgaged Revolving Credit Facility Rig is
made in accordance with the Revolving Agreement; and
(vii) sales, transfers, assignments or other dispositions of any
Mortgaged Revolving Credit Facility Rig or Mortgaged Term Loan Facility
Rig to the Parent Company or any of its wholly-owned Subsidiaries;
provided, that (A) with respect to sales, transfers, assignments or other
dispositions of any Mortgaged Term Loan Facility Rig, (1) such Subsidiary
shall (x) comply with the terms of Section 5.13, (y) execute and deliver a
Security Agreement and (z) ratify, grant and confirm the Liens on such
Mortgaged Term Loan Facility Rig (and other related Collateral) pursuant
to such Security Documents and deliver such legal opinions in relation
thereto as may be reasonably requested by the Collateral Agent and (2) at
all times, at least 50% of the Market Value of the Mortgaged Term Loan
Facility Rigs must be owned by either the Borrower or a Guarantor that is
a wholly-owned Subsidiary of the Borrower and (B) such sale, transfer,
assignment or other disposition of any Mortgaged Revolving Credit Facility
Rig is made in accordance with the Revolving Credit Agreement; and
(viii) any Collateral Disposition; provided that (A) both before and
immediately after giving effect to such proposed Collateral Disposition,
the Borrower is in compliance with the Security Maintenance Ratio and (B)
the Borrower complies with the prepayment provisions of Section
2.6(c)(ii).
Section 6.4 Investments. The Parent Company shall not, nor shall it permit
any of its Subsidiaries to, make or suffer to exist any Investments, or
commitments therefor, except:
(a) Cash Equivalents;
(b) Existing Investments in Subsidiaries and other Investments in
existence on the date hereof and disclosed in writing to the Administrative
Agent on or before the Closing Date;
(c) Debt to the extent permitted by Sections 6.2(d) and (e);
(d) Investments, the consideration for which is Capital Stock of the
Parent Company or any of its Subsidiaries or cash funded by the issuance of
Capital Stock of the Parent Company
or any of its Subsidiaries; provided that (i) no Event of Default exists or no
Default would be caused thereby and (ii) after giving effect to such Investment
on a pro forma basis, the Parent Company would have been in compliance with all
of the covenants contained in this Agreement, including, without limitation,
Sections 6.16 through 6.19 as of the end of the most recent fiscal quarter;
(e) Investments made by the Parent Company or by any of its Subsidiaries
in a Subsidiary of the Parent Company (or in any Person that will become a
Subsidiary as a result of such Investment); and
(f) Investments not otherwise permitted by this Section 6.4 in an
aggregate amount not to exceed 10% of the Consolidated Tangible Net Worth as of
the date of the most recent financial statement delivered pursuant to Section
5.5(b) or (c).
Section 6.5 Transactions With Affiliates. The Parent Company shall not,
nor shall it permit any of its Subsidiaries to, directly or indirectly, enter
into or permit to exist any transaction or series of transactions (including,
but not limited to, the purchase, sale, lease or exchange of Property, the
making of any investment, the giving of any guaranty or the rendering of any
service) with any of their Affiliates other than the Parent Company or a
wholly-owned Subsidiary of the Parent Company unless such transaction or series
of transactions is on terms no less favorable to the Parent Company or such
Subsidiary than those that could be obtained in a comparable arm's length
transaction with a Person that is not such an affiliate; provided that this
Section 6.5 shall not apply to reasonable compensation (including amounts paid
pursuant to Plans) and indemnification paid or made available to an officer,
director or employee of the Parent Company or any of its Subsidiaries for
services rendered in that person's capacity as an officer, director or employee
or the making of any Restricted Payment or Investment otherwise permitted by
this Agreement.
Section 6.6 Compliance with ERISA. The Parent Company shall not, nor shall
it permit any of its Subsidiaries to, (a) terminate, or permit any Subsidiary to
terminate, any Plan so as to result in any material (in the opinion of the
Consolidated Required Lenders) liability of the Parent Company or such
Subsidiary or (b) permit to exist any occurrence of any Reportable Event (as
defined in Title IV of ERISA), or any other event or condition, which presents a
material (in the reasonable opinion of the Consolidated Required Lenders) risk
of such a termination by the PBGC of any Plan.
Section 6.7 Restricted Payments. The Parent Company shall not, nor shall
it permit any of its Subsidiaries to, make any Restricted Payment except that:
(a) any Subsidiary of the Parent Company may declare and pay dividends
or make distributions to the Parent Company or to a wholly-owned Subsidiary of
the Parent Company (and, in the case of a Restricted Payment by a
non-wholly-owned Subsidiary, to the Parent Company and any Subsidiary and to
each other owner of capital stock or other equity interests of such Subsidiary
in an amount not greater than their applicable ownership interests or based on
any relevant joint venture, shareholders' or similar agreement);
(b) so long as no Event of Default exists and after giving effect
to such transaction on a pro forma basis, no Default would be caused thereby,
the Parent Company or any Subsidiary may repurchase up to $100,000,000 of its
Capital Stock or Subordinated Debt (in the aggregate in the period prior to the
Term Loan Maturity Date) if, immediately after giving effect to such repurchase,
the aggregate amount of Unrestricted Cash and any unused availability under the
Revolving Commitments and the European Facility shall exceed U.S.$150,000,000;
(c) so long as no Event of Default exists and after giving effect
to such transaction on a pro forma basis, no Default would be caused thereby,
the Parent Company or any Subsidiary may repurchase or redeem Subordinated Debt
in exchange for or out of the net cash proceeds from the substantially
concurrent issuance or sale of new Subordinated Debt so long as the new
Subordinated Debt is subordinated in right of payment to the Term Loans to the
same extent as the Subordinated Debt being repurchased or redeemed;
(d) so long as no Event of Default exists and after giving effect
to such transaction, no Default would be caused thereby, the Parent Company or
any Subsidiary may repurchase or redeem Subordinated Debt in exchange for or out
of the net cash proceeds from the substantially concurrent issuance or sale of
Capital Stock; and
(e) the Parent Company may make any scheduled payment on
Subordinated Debt and may make any payment (scheduled or otherwise) in respect
of, and may repurchase, Subordinated Debt issued pursuant to the Subordinated
Indenture.
Section 6.8 Maintenance of Ownership of Subsidiaries. Except as
permitted by Section 6.3, the Parent Company shall not sell or otherwise dispose
of any shares of Capital Stock of the Borrower, the Borrower will not sell or
otherwise dispose of any shares of Capital Stock of any of its Material
Subsidiaries, and neither the Borrower nor any of its Material Subsidiaries
shall issue, sell or otherwise dispose of (other than to the Borrower or the
Parent Company) any shares of its Capital Stock. Upon the sale or disposition of
any Guarantor pursuant to the terms of this Agreement to any Person other than
the Borrower or any other Guarantor, provided that such Guarantor does not own a
Mortgaged Term Loan Facility Rig or receive any earnings from any Mortgaged Term
Loan Facility Rig, the Collateral Agent shall, at the Borrower's expense,
execute and deliver to such Guarantor such documents as such Guarantor shall
reasonably require and take any other actions reasonably required to evidence or
effect the release of such Guarantor from this Agreement and the other Credit
Documents.
Section 6.9 Agreements Restricting Liens and Distributions. The
Parent Company shall not, nor shall it permit any of its Subsidiaries to, create
or otherwise cause or suffer to exist any prohibition, encumbrance or
restriction which prohibits or otherwise restricts (a) the ability of any
Subsidiary to (i) pay dividends or make other distributions or pay any Debt owed
to the Parent Company or any Subsidiary of the Parent Company, (ii) make loans
or advances to the Parent Company or any Subsidiary of the Parent Company, or
(iii) transfer any of its Properties to the Parent Company or any Subsidiary of
the Parent Company or (b) the ability of the Parent Company or any Subsidiary of
the Parent Company to create, incur, assume or suffer to exist any Lien upon its
Property to secure the Obligations or to become a guarantor of the Obligations,
other than prohibitions or restrictions existing under or by reason of: (i) this
Agreement and the other Credit Documents; (ii) the Revolving Credit Agreement
and the other Finance Documents;
(iii) the Senior Indenture; (iv) applicable Legal Requirements; (v) customary
non-assignment provisions entered into in the ordinary course of business and
consistent with past practices; (vi) any restriction or encumbrance with respect
to a Subsidiary of the Borrower imposed pursuant to an agreement which has been
entered into for the sale or disposition of all or substantially all of the
Capital Stock or assets of such Subsidiary, so long as such sale or disposition
is permitted under this Agreement; (vii) Liens, prohibitions or restrictions
permitted by Section 6.1 and any documents or instruments governing the terms of
any Debt or other obligations secured by any such Liens, provided that such
prohibitions or restrictions apply only to the Property subject to such Liens;
(viii) European Facility; (ix) Project Finance Debt and (x) MARAD Financing.
Section 6.10 Other Debt.
(a) The Parent Company will not, and will not permit any
Subsidiary to, make any amendment or modification to the subordination
provisions of the Subordinated Indenture or any other indenture, note or other
agreement evidencing or governing any Subordinated Debt if such subordination
provisions are required to be approved by the Administrative Agent pursuant to
Section 6.2(j)(i) unless such approval has been obtained.
(b) If any Intercompany Debt is required to be subordinated
pursuant to Section 6.2 and is not evidenced by a promissory note, then the
Parent Company shall procure that each Credit Party will enter into a written
subordination agreement on terms reasonably acceptable to the Administrative
Agent.
Section 6.11 Financial Contract Obligations. The Parent Company
shall not, and shall not permit any of its Subsidiaries to, enter into any
Financial Contract Obligations unless (a) such obligations are (or were) entered
into by such Person in the ordinary course of business for the purpose of
directly mitigating risks associated with liabilities, commitments, investments,
assets, or property held or reasonably anticipated by such Person, or changes in
the value of securities issued by such Person, and not for purposes of
speculation or taking a "market view;" and (b) such Financial Contract
Obligation does not contain any provision exonerating the non-defaulting party
from its obligation to make payments on outstanding transactions to the
defaulting party.
Section 6.12 Charter and Leases. The Parent Company shall not, nor
shall it permit any of its Subsidiaries to, incur, assume or suffer to exist,
any obligation for payments under Operating Leases (including, without
limitation, rental payments and payments of taxes thereunder) with respect to
any Property, except that the following shall be permitted: (a) obligations with
respect to Operating Leases of offshore drilling rigs or other equipment having
terms of twelve months or less (including options); (b) obligations disclosed in
writing to the Administrative Agent, and amendments, renewals or extensions
thereof on terms that are not materially less favorable, but in no event for a
period longer, than those obligations disclosed in writing to the Administrative
Agent on or before the Closing Date; (c) Operating Leases having in the
aggregate rental payment obligations for any 12 month period prior to the Term
Loan Maturity Date of less than $50,000,000 (or the equivalent in any other
currency) for the Parent Company and its Subsidiaries of which no more than
$2,000,000 (or the equivalent in any other currency) may be attributable to the
Borrower and its Subsidiaries, in each case exclusive of any Synthetic Lease
Obligations; (d) obligations with respect to operating charters or leases
between
Subsidiaries of the Parent Company; or (e) obligations as have been approved in
writing by the Administrative Agent with the consent of the Required Term
Lenders.
Section 6.13 Maintenance Capital Expenditures. The Parent Company
shall not, nor shall it permit any of its Subsidiaries to, expend, or be
committed to expend, in excess of 5% of Consolidated Tangible Net Assets for
Maintenance Capital Expenditures during any one fiscal year on a non-cumulative
basis in the aggregate for the Parent Company and its Subsidiaries.
Section 6.14 Limitation on Changes in Fiscal Periods. The Parent
Company shall not, nor shall it permit any of its Subsidiaries to, permit the
fiscal year of the Parent Company or any of its Subsidiaries to end on a day
other than December 31 or change the Parent Company's method of determining
fiscal quarters.
Section 6.15 Mortgaged Term Loan Facility Rigs. The Parent Company
shall not, nor shall it permit any of its Subsidiaries to,
(a) without the previous consent in writing of the Collateral
Agent, make any modification to any Mortgaged Term Loan Facility Rig which would
materially or adversely alter the structure, type or performance characteristics
of such Mortgaged Term Loan Facility Rig or which would materially reduce the
value of such Mortgaged Term Loan Facility Rig;
(b) employ any Mortgaged Term Loan Facility Rig or allow her
employment in any trade or business which is unlawful under the laws of any
relevant jurisdiction in which it is located or subject or in carrying illicit
or prohibited goods or in any manner whatsoever which can reasonably be expected
to render her liable to destruction, seizure or confiscation; and in the event
of hostilities in any part of the world (whether war be declared or not) not
employ any Mortgaged Term Loan Facility Rig or suffer her employment in carrying
any contraband goods or to enter or trade to any zone which is declared a war
zone by any Government Authority or by the War Risks insurers of such Mortgaged
Term Loan Facility Rig unless there shall have been effected by the Credit
Parties (at their expense) such special, additional or modified insurance cover
as the Collateral Agent may reasonably require;
(c) if an Event of Default has occurred and is continuing, not
without the previous consent of the Collateral Agent (such consent not to be
unreasonably withheld or delayed), undertake or commence upgrades or
improvements on any Mortgaged Term Loan Facility Rig in an amount exceeding or
likely to exceed $5,000,000 (or the equivalent in any other currency) in the
aggregate unless the Person to provide such upgrades or improvements shall first
have given to the Collateral Agent a written waiver or subordination of its
Liens or its equivalent, such waiver or subordination to be in form and
substance reasonably satisfactory to the Collateral Agent;
(d) charter any Mortgaged Term Loan Facility Rig to, or permit the
Mortgaged Term Loan Facility Rig to serve under any contract with, a Person
included within the definition of (i) "national" of a "designated foreign
country," or "specially designated national" of a "designated foreign country,"
in the Foreign Assets Control Regulations or the Cuban Assets Control
Regulations of the United States Treasury Department, 31 C.F.R. Parts 500 and
515, in each case as amended, (ii) "Government of Libya", "entity of the
Government of Libya" or "Libyan entity"
in the Libyan Sanctions Regulations of the United States Treasury Department, 31
C.F.R. Part 550, as amended, or (iii) "Government of Iraq", "entity of the
Government of Iraq" or "Iraqi Government entity" in the Iraqi Sanctions
Regulations, 56 Fed. Reg. 2112 (1991) to be codified at 31 C.F.R. Part 575, as
amended, all within the meaning of said Regulations or of any regulations,
interpretations or rulings issued thereunder, or engage in any transaction that
violates any provision of said Regulations or that violates any provision of the
Iranian Transactions Regulations, 31 C.F.R. Part 560, as amended, the Foreign
Funds Control Regulations, 31 C.F.R. Part 520, as amended, the Transaction
Control Regulations, 31 C.F.R. Part 505, as amended, the Haitian Transaction
Regulations, 31 C.F.R. Part 580, as amended, the Foreign Assets Control
Regulations, 31 C.F.R. Part 500, as amended, or Executive Orders 12810 and 12831
if such transaction or violation would (A) expose the Collateral Agent or any
Term Secured Party to any penalty, sanction or investigation or (B) jeopardize
the Lien created by the Rig Mortgages or (C) might reasonably be expected to
have a material adverse effect on the Credit Parties or the operation of the
Mortgaged Term Loan Facility Rigs, or call at a Cuban port to load or discharge
cargo or to effect repairs on the Mortgaged Term Loan Facility Rigs;
(e) cause or permit any Mortgaged Term Loan Facility Rig to be
operated in any manner contrary to law (except where the failure to operate in
compliance with any law would not have a material adverse effect on the Credit
Parties, such Mortgaged Term Loan Facility Rig or the Lien created by the
applicable Rig Mortgage);
(f) abandon any Mortgaged Term Loan Facility Rig in a port outside
the United States of America;
(g) engage in any unlawful trade or violate any law or carry any
cargo that shall expose any Mortgaged Term Loan Facility Rig to forfeiture or
capture;
(h) operate any Mortgaged Term Loan Facility Rig in any
jurisdiction or in any manner which could cause the Lien created by the
applicable Rig Mortgage to be rendered unenforceable or the Collateral Agent's
foreclosure or enforcement rights to be materially impaired or hindered; or
(i) without giving prior written notice thereof to the Collateral
Agent, change the registered owner, name, flag, official or patent number, as
the case may be, the home port or class of any Mortgaged Term Loan Facility Rig.
Section 6.16 Leverage Ratio. The Parent Company shall not permit
its Leverage Ratio at the end of any fiscal quarter to be greater than the
following ratios for the following fiscal quarters:
Fiscal Quarters Ending Maximum Ratio
---------------------- -------------
June 30, 2002, September 30, 2002 and 4.75 to 1.00
December 31, 2002
March 31, 2003, June 30, 2003, 4.00 to 1.00
September 30, 2003 and December 31, 2003
March 31, 2004, June 30, 2004, 3.50 to 1.00
September 30, 2004 and December 31, 2004
March 31, 2005 and thereafter 3.00 to 1.00
Section 6.17 Interest Coverage Ratio. The Parent Company shall not
permit the Interest Coverage Ratio as of the end of any fiscal quarter to be
less than the following ratios for the following fiscal quarters:
Fiscal Quarters Ending Minimum Ratio
---------------------- -------------
June 30, 2002, September 30, 2002 and 3.00 to 1.00
December 31, 2002
March 31, 2003, June 30, 2003, 3.25 to 1.00
September 30, 2003 and December 31, 2003
March 31, 2004, June 30, 2004, 4.00 to 1.00
September 30, 2004 and December 31, 2004
March 31, 2005 and thereafter 4.50 to 1.00
Section 6.18 Maximum Debt to Capitalization Ratio. The Parent
Company shall not permit the ratio of (a) Consolidated Net Debt to (b) Total
Capitalization as of the end of any fiscal quarter to be greater than the
following ratios for the following fiscal quarters:
Fiscal Quarters Ending Maximum Ratio
---------------------- -------------
June 30, 2002, September 30, 2002 and 55%
December 31, 2002
March 31, 2003, June 30, 2003, 50%
September 30, 2003 and December 31, 2003
March 31, 2004, June 30, 2004, 45%
September 30, 2004 and December 31, 2004
March 31, 2005 and thereafter 35%
Section 6.19 Minimum Net Worth. The Parent Company shall not
permit its Consolidated Net Worth as of the last day of any fiscal quarter to be
less than the sum of (i) 80%
of Consolidated Net Worth at the end of the fiscal quarter immediately preceding
the Closing Date plus (ii) 50% of Consolidated Net Income (if positive) earned
in each fiscal quarter beginning with the first fiscal quarter after the Closing
Date and (iii) 100% of the Equity Issuance Proceeds from any Equity Issuance on
or after the Closing Date.
ARTICLE II
EVENTS OF DEFAULT
Section 7.1 Events of Default. The occurrence of any of the
following events shall constitute an "Event of Default" under any Credit
Document:
(a) Payment. The Borrower shall fail to pay any principal of any
Term Loan (including, without limitation, any mandatory prepayment required by
Section 2.6) when the same becomes due and payable, or any interest on the Term
Loans or any fee or other amount payable hereunder or under any other Credit
Document within five Business Days after the same becomes due and payable;
(b) Representation and Warranties. Any representation or statement
made or deemed to be made by the Borrower or any other Credit Party (or any of
their respective officers) in this Agreement, in any other Credit Document, or
in any certificate delivered in connection with this Agreement or any other
Credit Document shall prove to have been incorrect in any material respect when
made or deemed to be made;
(c) Covenant Breaches. The Borrower or any other Credit Party
shall (i) fail to perform or observe any covenant contained in Section 5.2 and
Article VI of this Agreement or (ii) fail to perform or observe any other term
or covenant set forth in this Agreement or in any other Credit Document which is
not covered by clause (i) above or any other provision of this Section 7.1 if
such failure shall remain unremedied for 30 days after the earlier of (A)
written notice of such default shall have been given to the Borrower by the
Administrative Agent or any Term Lender or (B) any actual knowledge of such
default by a Responsible Officer;
(d) Cross-Default. (i) Any Credit Party shall fail to pay any
principal of or premium or interest on its Debt which is outstanding in a
principal amount of at least $30,000,000.00 (or the equivalent in any other
currency) when aggregated with all such Debt of the Person so in default (but
excluding Debt evidenced by the Term Loans) when the same becomes due and
payable (whether by scheduled maturity, required prepayment, acceleration,
demand or otherwise), (ii) any other event shall occur or condition shall exist
under any agreement or instrument relating to Debt which is outstanding in a
principal amount of at least $30,000,000.00 (or the equivalent in any other
currency) when aggregated with all such Debt of the Person so in default (but
excluding Debt evidenced by the Term Loans), and shall continue after the
applicable grace period, if any, specified in such agreement or instrument, if
the effect of such event or condition is to accelerate, or to permit the
acceleration of, the maturity of such Debt; or (iii) any such Debt shall be
declared to be due and payable, or required to be prepaid (other than by a
regularly scheduled required prepayment), prior to the stated maturity thereof;
(e) Insolvency. Any Credit Party shall generally not pay its debts
as such debts become due, or shall admit in writing its inability to pay its
debts generally, commences negotiations with one or more of its creditors with a
view to rescheduling any of its indebtedness which it would not otherwise be
able to pay as it falls due or shall make a general assignment for the benefit
of creditors; or any proceeding shall be instituted by or against any Credit
Party seeking to adjudicate it as a bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief, or composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry of an
order for relief or the appointment of a receiver, trustee or other similar
official for it or for any substantial part of its property and, in the case of
any such proceeding instituted against any Credit Party, either such proceeding
shall remain undismissed for a period of 60 days or any of the actions sought in
such proceeding shall occur; or any Credit Party shall take any corporate action
to authorize any of the actions set forth above in this paragraph (e) or any
analogous procedure or step is taken in any jurisdiction.
(f) Judgments. Any judgment, decree or order for the payment of
money shall be rendered against any Credit Party in an amount in excess of
$20,000,000.00 (or the equivalent in any other currency) (to the extent not paid
or fully covered by insurance less any deductible) if rendered solely against
any Credit Party, or for which any Credit Party's allocated portion of which
exceeds $20,000,000.00 (or the equivalent in any other currency) (to the extent
not paid or fully covered by insurance less any deductible) and either (i) such
judgment, decree or order remains unsatisfied and in effect for a period of 60
consecutive days or more without being vacated, discharged, satisfied or stayed
or bonded pending appeal or (ii) enforcement proceedings shall have been
commenced by any creditor upon such judgment, decree or order;
(g) Termination Events. Any Termination Event with respect to a
Plan shall have occurred, and, 30 days after notice thereof shall have been
given to the Borrower by the Administrative Agent, (i) such Termination Event
shall not have been corrected and (ii) the then present value of such Plan's
vested benefits exceeds the then current value of assets accumulated in such
Plan by an amount that would reasonably be expected to cause or to have a
Material Adverse Change (or in the case of a Termination Event involving the
withdrawal of a "substantial employer" (as defined in Section 4001(a)(2) of
ERISA), the withdrawing employer's proportionate share of such excess shall
exceed such amount);
(h) Plan Withdrawals. The Parent Company or any member of the
Controlled Group as employer under a Multiemployer Plan shall have made a
complete or partial withdrawal from such Multiemployer Plan and the plan sponsor
of such Multiemployer Plan shall have notified such withdrawing employer that
such employer has incurred a withdrawal liability in an annual amount that could
reasonably be expected to cause or to have a Material Adverse Change;
(i) Credit Documents. Any material provision of the Credit
Documents, including, without limitation, the provisions in Article VIII shall
for any reason cease to be valid and binding on the Credit Parties or any of the
Credit Parties shall so state in writing;
(j) Security Documents. (i) The Administrative Agent and the Term
Lenders shall fail to have an Acceptable Security Interest in the Collateral or
(ii) any material provision of any
Security Document shall for any reason cease to be valid and binding on the
Borrower or other Credit Parties executing such Security Document, or any such
Person shall so state in writing;
(k) Change in Control. A Change of Control shall occur;
(l) Qualified Operator. Any owner of a Mortgaged Term Loan
Facility Rig shall cease to be qualified to own and operate such Mortgaged Term
Loan Facility Rig under the laws of the United States or the jurisdiction in
which such Mortgaged Term Loan Facility Rig is flagged; or
(m) Creditors' process. Any expropriation, attachment,
sequestration, distress or execution affects any asset or assets of the Parent
Company or any of its Subsidiaries having an aggregate value (to the extent not
paid or fully covered by insurance less any deductible) of the greater of
$200,000,000 (or the equivalent in one or more currencies) or 5% of Consolidated
Tangible Net Assets as of the end of the most recent fiscal quarter of the
Parent Company and such expropriation, attachment, sequestration, distress or
execution remains in effect for a period of 30 consecutive Business Days or more
without being vacated, discharged, satisfied or stayed or bonded.
Section 7.2 Optional Acceleration of Maturity. If any Event of
Default (other than an Event of Default pursuant to paragraph (e) of Section
7.1) shall have occurred and be continuing, then, and in any such event:
(a) the Administrative Agent (i) shall at the request of, or may
with the consent of, the Consolidated Required Lenders, by notice to the
Borrower, declare the obligation of each Term Lender to make Term Loans to be
terminated, whereupon the same shall forthwith terminate, and (ii) shall at the
request of, or may with the consent of, the Consolidated Required Lenders, by
notice to the Borrower, declare the Term Loans, all interest thereon, and all
other amounts payable under this Agreement to be forthwith due and payable,
whereupon the Term Loans, all such interest, and all such amounts shall become
and be forthwith due and payable in full, without presentment, demand, protest
or further notice of any kind (including, without limitation, any notice of
intent to accelerate or notice of acceleration), all of which are hereby
expressly waived by the Borrower; and
(b) the Administrative Agent and the Term Secured Parties may
exercise all rights and remedies available under the Security Documents and
applicable law.
Section 7.3 Automatic Acceleration of Maturity. If any Event of
Default pursuant to paragraph (e) of Section 7.1 shall occur:
(a) the obligation of each Term Lender to make Term Loans shall
immediately and automatically be terminated and the Term Loans, and all other
amounts payable under this Agreement shall immediately and automatically become
and be due and payable in full, without presentment, demand, protest or any
notice of any kind (including, without limitation, any notice of intent to
accelerate or notice of acceleration), all of which are hereby expressly waived
by the Borrower; and
(b) the Administrative Agent and the Term Lenders may exercise all
rights and remedies available under the Security Documents and applicable law.
Section 7.4 Non-exclusivity of Remedies. No remedy conferred upon
the Administrative Agent is intended to be exclusive of any other remedy, and
each remedy shall be cumulative of all other remedies existing by contract, at
law, in equity, by statute or otherwise.
Section 7.5 Right of Set-off. Upon (a) the occurrence and during
the continuance of any Event of Default and (b) the making of the request or the
granting of the consent, if any, specified by Section 7.2 to authorize the
Administrative Agent upon the consent of the Consolidated Required Lenders to
declare the Term Loans and any other amount payable hereunder due and payable
pursuant to the provisions of Section 7.2 or the automatic acceleration of the
Term Loans and all amounts payable under this Agreement pursuant to Section 7.3,
each Term Lender is hereby authorized at any time and from time-to-time, to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Term Lender to or for the credit or
the account of any Credit Party against any and all of the obligations of any
Credit Party now or hereafter existing under this Agreement and the other Credit
Documents, irrespective of whether or not such Term Lender shall have made any
demand under this Agreement or such other Credit Documents, and although such
obligations may be unmatured. Each Term Lender agrees to promptly notify the
applicable Credit Party after any such set-off and application made by it,
provided that the failure to give such notice shall not affect the validity of
such set-off and application. The rights of each Term Lender under this Section
are in addition to any other rights and remedies (including, without limitation,
other rights of set-off) which such Term Lender may have.
Section 7.6 Application of Proceeds. All proceeds received after
or held at the time of maturity of the Obligations, whether by acceleration or
otherwise shall be applied in the following order:
(a) First, to payment of the reasonable expenses, liabilities,
losses, costs, duties, fees, charges or other moneys whatsoever (together with
interest payable thereon) as may have been paid or incurred in, about or
incidental to any sale or other realization of Collateral, including reasonable
compensation to the Collateral Agent and its agents and counsel, and to the
ratable payment of any other unreimbursed reasonable expenses and indemnities
for which the Collateral Agent, the Administrative Agent or any Term Secured
Party is to be reimbursed pursuant to this Agreement or any other Credit
Document, in each case that are then due and payable;
(b) Second, to the ratable payment of accrued but unpaid agent's
fees then due and payable to the Administrative Agent under this Agreement;
(c) Third, to the ratable payment of accrued but unpaid interest
on the Term Loans then due and payable under this Agreement;
(d) Fourth, to the ratable payment of accrued but unpaid
commitment fees then due and payable to the Term Lenders in respect of the Term
Loans under this Agreement;
(e) Fifth, to the ratable payment of all outstanding Obligations
then due and payable; and
(f) Sixth, any excess after payment in full of all Obligations
shall be paid to the Borrower or any Credit Party as appropriate or to such
other Person who may be lawfully entitled to receive such excess.
ARTICLE III
THE GUARANTY
Section 8.1 Guaranty. Each Guarantor, joint and severally, hereby
unconditionally and irrevocably guarantees the punctual payment of the
Obligations (but, in the case of each Guarantor other than the Parent Company,
excluding the Obligations of the Parent Company) when due, whether at stated
maturity, by acceleration or otherwise, and agrees to pay any and all expenses
(including reasonable counsel fees and expenses) incurred by the Administrative
Agent and the Term Lenders in enforcing any rights under this Section 8.1.
Without limiting the generality of the foregoing, each Guarantor's liability
shall extend to all amounts which constitute part of the Obligations and are
owed by the Borrower even if they are declared unenforceable or not allowable
due to the existence of a bankruptcy, reorganization or similar proceeding
involving the Borrower. Each Guarantor will pay to the Administrative Agent for
the benefit of the Term Lenders all amounts due and payable under this Section
8.1 in Dollars in immediately available funds one Business Day after demand from
the Administrative Agent.
Section 8.2 Limitation of Liability. Notwithstanding the
foregoing, any Person that becomes a Guarantor after the Closing Date (an
"Additional Guarantor") (other than an Additional Guarantor that is either a
Permitted Holding Company or a Subsidiary of the Borrower) shall be liable under
this Agreement with respect to the Obligations only for an amount equal to (a)
the aggregate Market Value of the Mortgaged Term Loan Facility Rigs owned by
such Additional Guarantor determined as of the date of the most recent Rig
Appraisal Reports divided by (b) the Total Commitments multiplied by (c) the
Obligations.
Section 8.3 Guaranty Absolute. Each Guarantor guarantees that the
Obligations (but, in the case of each Guarantor other than the Parent Company,
excluding the Obligations of the Parent Company) will be paid strictly in
accordance with the terms of this Agreement, regardless of any Legal Requirement
now or hereafter in effect in any jurisdiction affecting any of such terms or
the rights of any Term Lender with respect thereto. The guaranty provided for in
Section 8.1 is a guaranty of payment, not of collection and each Guarantor's
obligations hereunder are primary, not secondary. The obligations of each
Guarantor under Section 8.1 are independent of the Obligations, joint and
several with any other Guarantor in each and every particular (except that the
obligations of each Guarantor other than the Parent Company under Section 8.1 do
not extend to the Obligations of the Parent Company), and a separate action or
actions may be brought and prosecuted against any Guarantor to enforce such
obligations, irrespective of whether any action is brought against the Borrower
or any other Person or whether the Borrower or any other Person is joined in any
such action or actions. The liability of the Guarantors under Section 8.1 shall
be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of any other provision
of this Agreement or any other Credit Document;
(b) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Obligations or any other liabilities, or
any other amendment or waiver of or any consent to departure from this Agreement
or any other Credit Document, including, without limitation, any increase in the
Obligations or any other liabilities resulting from the extension of additional
credit to the Borrower or otherwise (provided that the guarantee under this
Article VIII will apply to such Credit Documents or other document or security
as amended or replaced);
(c) any taking, exchange, release or non-perfection of any
collateral (if any), or any taking, release, amendment or waiver of or consent
to departure from any other guaranty for all or any of the Obligations or any
other liabilities;
(d) any manner of application of collateral (if any), or proceeds
thereof or of collections on account of any other guaranty to all or any of the
Obligations or any other liabilities, or any manner of sale or other disposition
of any collateral for all or any of the Obligations or any other liabilities or
any other assets of the Borrower;
(e) any change, restructuring or termination of the corporate
structure or existence of the Borrower; or
(f) any other circumstances which might otherwise constitute a
defense available to, or a discharge of, the Borrower or a guarantor (other than
the defense of prior payment).
Notwithstanding the foregoing, each of the Guarantors shall be liable under this
Article VIII only for amounts aggregating up to the largest amount that would
not render its obligations hereunder subject to avoidance under Section 548 of
the United States Bankruptcy Code or any comparable provisions of any state law.
Section 8.4 Waiver. Each Guarantor hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to any of the
Obligations and the guaranty provided for in Section 8.1 and any requirement
that the Administrative Agent or any Term Lender protect, secure, perfect or
insure any security interest or other Lien or any property subject thereto or
exhaust any right to take any action against any Guarantor or any other Person
or any collateral.
Section 8.5 Subrogation.
(a) Until such time as the Obligations are paid in full, each
Guarantor irrevocably waives any and all rights to which it may be entitled, by
operation of law or otherwise, by making any payment hereunder or otherwise to
be subrogated to the rights of the Administrative Agent and the Term Lenders
against the Borrower or any other Person with respect to such payment or
otherwise to be reimbursed, indemnified or exonerated by the Borrower or any
other Person in respect thereof. If any amount shall be paid to any Guarantor on
account of such subrogation in violation of the preceding sentence, such amount
shall be held in trust for the benefit of the Administrative Agent and the Term
Lenders and shall forthwith be paid to the
Administrative Agent to be credited against and applied upon the Obligations,
whether matured or unmatured, in such order as may be determined by the Term
Lenders.
(b) Each Guarantor agrees that, to the extent that the Borrower
makes payment to the Administrative Agent or any Term Lender, or the
Administrative Agent or any Term Lender receives any proceeds of collateral, and
such payments or proceeds or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside, or otherwise required to
be repaid, then to the extent of such repayment the Obligations shall be
reinstated and continued in full force and effect as of the date such initial
payment or collection of proceeds occurred. Each Guarantor shall defend and
indemnify the Administrative Agent and the Term Lenders from and against any
claim or loss under this subsection 8.4 (including reasonable attorneys' fees
and expenses) in the defense of any such action or suit, but excluding any such
losses, liabilities, claims, damages, or expenses incurred by reason of the
gross negligence, bad faith or willful misconduct of the Administrative Agent or
any Term Lender.
Section 8.6 No Guarantee of Indenture Issuer Obligations. No
provision of this Agreement or any other Credit Document shall require any
Guarantor that is a Subsidiary of the Person that is the issuer of the existing
Debt under the Senior Indenture and the Subordinated Indenture (on the Closing
Date, such Person being the U.S. Parent) or any successor or assign of such
Person with respect to such Debt to guarantee or otherwise be liable, directly
or indirectly, for any obligation of such Person under any Credit Document.
ARTICLE IV
THE AGENTS
Section 9.1 Appointment; Nature of Relationship. CLNY is hereby
appointed by the Term Lenders as the Administrative Agent hereunder and under
each other Credit Document (other than the Security Documents), and to act as
the Collateral Agent under each of the Security Documents, and each of the Term
Lenders irrevocably authorizes the Agents to act as the contractual
representatives of such Term Lender with the rights and duties expressly set
forth herein and in the other Credit Documents. The Agents agree to act as such
contractual representative upon the express conditions contained in this Article
IX. Notwithstanding the use of the defined term "Agent," it is expressly
understood and agreed that neither of the Agents shall have any fiduciary
responsibilities to any Term Lender by reason of this Agreement or any other
Credit Document and that the Agents are merely acting as the representatives of
the Term Lenders with only those duties as are expressly set forth in this
Agreement and the other Credit Documents. In its capacity as the Term Lenders'
contractual representative, the Agents (a) do not hereby assume any fiduciary
duties to any of the Term Lenders, (b) are "representatives" of the Term Lenders
within the meaning of Section 9-105 of the Uniform Commercial Code as adopted in
the State of New York and (c) are acting as independent contractors, the rights
and duties of which are limited to those expressly set forth in this Agreement
and the other Credit Documents. Each of the Term Lenders hereby agrees to assert
no claim against either of the Agents on any agency theory or any other theory
of liability for breach of fiduciary duty, all of which claims each Term Lender
hereby waives.
Section 9.2 Powers. The Agents shall have and may exercise such
powers under the Credit Documents as are specifically delegated to such Agent by
the terms of each thereof, together with such powers as are reasonably
incidental thereto. Neither of the Agents shall have any implied duties to the
Term Lenders, or any obligation to the Term Lenders to take any action
thereunder except any action specifically provided by the Credit Documents to be
taken by such Agent.
Section 9.3 General Immunity. None of the Agents, the Arranger or
any of their respective directors, officers, agents or employees shall be liable
to any Credit Party or any Term Lender for any action taken or omitted to be
taken by it or them hereunder or under any other Credit Document or in
connection herewith or therewith except for its or their own gross negligence or
willful misconduct.
Section 9.4 No Responsibility for Loans, Recitals, etc. None of
the Agents, the Arranger or any of their respective directors, officers, agents
or employees shall be responsible for or have any duty to ascertain, inquire
into, or verify (i) any statement, warranty or representation made in connection
with any Credit Document or any borrowing hereunder; (ii) the performance or
observance of any of the covenants or agreements of any obligor under any Credit
Document, including, without limitation, any agreement by an obligor to furnish
information directly to each Term Lender; (iii) the satisfaction of any
condition specified in Article III, except receipt of items required to be
delivered to any Agent; (iv) the validity, enforceability, effectiveness,
sufficiency or genuineness of any Credit Document or any other instrument or
writing furnished in connection therewith; or (v) the value, sufficiency,
creation, perfection or priority of any interest in any collateral security.
Neither of the Agents shall have any duty to disclose to the Term Lender
information that is not required to be furnished by the Parent Company or any of
its Subsidiaries to such Agent at such time, but is voluntarily furnished by the
Parent Company or any of its Subsidiaries to such Agent (either in its capacity
as Agent or in its individual capacity).
Section 9.5 Action on Instructions of Term Lenders. Each Agent
shall in all cases be fully protected in acting, or in refraining from acting,
hereunder and under any other Credit Document in accordance with written
instructions signed by the Required Term Lenders, and such instructions and any
action taken or failure to act pursuant thereto shall be binding on all of the
Term Lenders and on all holders of Term Loans. The Term Lenders hereby
acknowledge that the Agents shall be under no duty to take any discretionary
action permitted to be taken by it pursuant to the provisions of this Agreement
or any other Credit Document unless it shall be requested in writing to do so by
the Required Term Lenders. Each Agent shall be fully justified in failing or
refusing to take any action hereunder and under any other Credit Document unless
it shall first be indemnified to its satisfaction by the Term Lenders pro rata
against any and all liability, cost and expense that it may incur by reason of
taking or continuing to take any such action.
Section 9.6 Employment of Agents and Counsel. Each Agent may
execute any of its duties as Agent hereunder and under any other Credit Document
by or through employees, agents, and attorneys-in-fact and shall not be
answerable to the Term Lenders, except as to money or securities received by it
or its authorized agents, for the default or misconduct of such Agent or
attorneys-in-fact selected by it with reasonable care. Each Agent shall be
entitled to
advice of their respective counsels concerning all matters pertaining to the
agency hereby created and its duties hereunder and under any other Credit
Document.
Section 9.7 Reliance on Documents; Counsel. Each Agent shall be
entitled to rely upon any Term Note, notice, consent, certificate, affidavit,
letter, telegram, statement, paper or document believed by it to be genuine and
correct and to have been signed or sent by the proper person or persons, and, in
respect to legal matters, upon the opinion of counsel selected by such Agent,
which counsel may be employees of such Agent.
Section 9.8 Agent's Reimbursement and Indemnification. The Term
Lenders agree to reimburse and indemnify the Agents ratably in proportion to
their respective Pro Rata Shares (a) for any amounts not reimbursed by any
Credit Party for which such Agent is entitled to reimbursement under the Credit
Documents, (ii) for any other expenses incurred by the Agents on behalf of the
Term Lenders, in connection with the preparation, execution, delivery,
administration and enforcement of the Credit Documents and (iii) for any
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind and nature whatsoever which may be
imposed on, incurred by or asserted against any Agent in any way relating to or
arising out of the Credit Documents or any other document delivered in
connection therewith or the transactions contemplated thereby, or the
enforcement of any of the terms thereof or of any such other documents, provided
that no Term Lender shall be liable for any of the foregoing to the extent they
arise from the gross negligence or willful misconduct of such Agent. The
obligations of the Term Lenders under this Section 9.8 shall survive payment of
the obligations and termination of this Agreement.
Section 9.9 Notice of Default. Neither of the Agents shall be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default hereunder unless such Agent have received written notice from a Term
Lender or a Credit Party referring to this Agreement describing such Default or
Event of Default and stating that such notice is a "notice of default". In the
event that an Agent receives such a notice, such Agent shall give prompt notice
thereof to the Term Lenders.
Section 9.10 Rights as a Term Lender. In the event that an Agent
is a Term Lender, such Agent shall have the same rights and powers hereunder and
under any other Credit Document as any Term Lender and may exercise the same as
though it were not an Agent and the term "Term Lender" or "Term Lenders" shall,
at any time when such Agent is a Term Lender, unless the context otherwise
indicates, include such Agent in its individual capacity. Any Agent may accept
deposits from, lend money to, and generally engage in any kind of trust, debt,
equity or other transaction, in addition to those contemplated by this Agreement
or any other Credit Document, with the Parent Company or any of its Subsidiaries
in which the Parent Company or such Subsidiary is not restricted hereby from
engaging with any other Person. Each Agent, in its individual capacities, is not
obligated to remain a Term Lender.
Section 9.11 Lender Credit Decision. Each Term Lender acknowledges
that it has, independently and without reliance upon any Agent or any other Term
Lender and based on the financial statements prepared by the Parent Company and
such other documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement and the other Credit
Documents. Each Term Lender also acknowledges that it will,
independently and without reliance upon any Agent or any Term Lender and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement and the other Credit Documents.
Section 9.12 Successor Agents. Either Agent may resign at any time
by giving prior written notice thereof to the Term Lenders and the Borrower,
such resignation to be effective upon the appointment of a successor Agent or,
if no successor Agent has been appointed, 45 days after the retiring Agent gives
notice of its intention to resign. Upon any such resignation, the Required Term
Lenders shall have the right to appoint, on behalf of the Borrower and the Term
Lenders, a successor Agent. If no successor Agent shall have been so appointed
by the Required Term Lenders within thirty days after the resigning Agent's
giving notice of its intention to resign, then the resigning Agent may appoint,
on behalf of the Borrower and the Term Lenders, a successor Agent. If the Agent
has resigned and no successor Agent has been appointed, the Term Lenders may
perform all the duties of the Agent hereunder and the Borrower shall make all
payments in respect of the Obligations to the applicable Term Lender and for all
other purposes shall deal directly with the Term Lenders. No successor Agent
shall be deemed to be appointed hereunder until such successor Agent has
accepted the appointment. Any such successor Agent shall be a commercial bank
organized under the laws of the United States or any state thereof having
combined capital and retained earnings of at least $100,000,000 (or the
equivalent in any other currency). Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the resigning. Upon the effectiveness of the resignation of an Agent, the
resigning Agent shall be discharged from its duties and obligations hereunder
and under the Credit Documents. After the effectiveness of the resignation of an
Agent, the provisions of this Article IX shall continue in effect for the
benefit of Agent in respect of any actions taken or omitted to be taken by it
while it was acting as an Agent hereunder and under the other Credit Documents.
Section 9.13 Collateral Matters.
(a) The Collateral Agent is authorized on behalf of the Term
Secured Parties, without the necessity of any notice to or further consent from
the Term Secured Parties, from time to time, to take any actions with respect to
any Collateral or Security Documents which may be necessary to perfect and
maintain Acceptable Security Interests in and Liens upon the Collateral granted
pursuant to the Security Documents. The Collateral Agent is further authorized
on behalf of the Term Secured Parties, without the necessity of any notice to or
further consent from the Term Secured Parties, from time to time, to take any
action in exigent circumstances as may be reasonably necessary to preserve any
rights or privileges of the Term Secured Parties under the Credit Documents or
applicable Legal Requirements.
(b) Each of the Term Secured Parties irrevocably authorize the
Collateral Agent to release any Lien granted to or held by the Collateral Agent
upon any Collateral (i) upon termination of the Term Commitments and payment in
full of all outstanding Term Loan and all other Obligations payable under this
Agreement and under any other Credit Document; (ii) constituting property sold
or to be sold or disposed of as part of or in connection with any disposition
permitted under this Agreement or the other Credit Documents; (iii) constituting
property in which any Credit Party owned no interest at the time the Lien was
granted or at any time thereafter; (iv) constituting property leased to any
Credit Party under a lease which has expired or has been terminated in a
transaction permitted under this Agreement or is about to expire and which has
not been, and is not intended by such Credit Party to be, renewed or extended;
(v) if approved, authorized or ratified in writing by the Required Term Lenders
or all the Term Lenders, as the case may be, as required by Section 11.1 or (vi)
as otherwise permitted by this Agreement. Upon the request of the Collateral
Agent at any time, the Term Lenders will confirm in writing the Collateral
Agent's authority to release particular types or items of Collateral pursuant to
this Section 9.13.
(c) In the event that any claim or Lien is asserted against any
Mortgaged Term Loan Facility Rig for loss, damage or expense which is covered by
an Insurance Policy, and it is necessary for any Credit Party to obtain a bond
or supply other security to prevent the arrest of such Mortgaged Term Loan
Facility Rig or to release the Mortgaged Term Loan Facility Rig from arrest on
account of such claim or Lien, the Collateral Agent may, in the sole discretion
of the Collateral Agent, and upon notice to the applicable Credit Party, assign
to any Person executing a surety or guaranty bond or other agreement to save or
release any such Mortgaged Term Loan Facility Rig from such arrest, all right,
title and interest of the Collateral Agent and the other Secured Parties in and
to the applicable Insurance Policies covering said loss, damage or expense, as
collateral security to indemnify against liability under said bond or other
agreement.
(d) Each Credit Party hereby irrevocably appoints the Collateral
Agent as such Credit Party's attorney-in-fact, with full authority to, after the
occurrence of a Default, act for such Credit Party and in the name of such
Credit Party to, in the Collateral Agent's discretion upon the occurrence and
during the continuance of Default, file one or more financing or continuation
statements, and amendments thereto, relative to all or any part of the
Collateral without the signature of such Credit Party where permitted by law, to
receive, endorse, and collect any drafts or other instruments, documents, and
chattel paper which are part of the Collateral, and to ask, demand, collect, ▇▇▇
for, recover, compromise, receive, and give acquittance and receipts for moneys
due and to become due under or in respect of any of the Collateral and to file
any claims or take any action or institute any proceedings which the Collateral
Agent may reasonably deem necessary or desirable for the collection of any of
the Collateral or otherwise to enforce the rights of the Collateral Agent with
respect to any of the Collateral. The power of attorney granted hereby is
coupled with an interest and is irrevocable.
(e) If any Credit Party fails to perform any covenant contained in
this Agreement or the other Security Documents, the Collateral Agent may itself
perform, or cause performance of, such covenant, and such Credit Party shall pay
for the expenses of the Collateral Agent incurred in connection therewith in
accordance with Section 11.4.
(f) The powers conferred on the Collateral Agent under this
Agreement and the other Security Documents are solely to protect its interest in
the Collateral and shall not impose any duty upon it to exercise any such
powers. Except for the reasonable care of any Collateral in its possession and
the accounting for monies or other property actually received by it hereunder,
the Collateral Agent shall have no duty as to any Collateral or as to the taking
of any necessary steps to preserve rights against prior parties or any other
rights pertaining to any Collateral. The
Collateral Agent shall be deemed to have exercised reasonable care as to the
custody and preservation of the Collateral in its possession if the Collateral
is accorded treatment substantially equal to that which the Collateral Agent
accords its own property, provided that the Collateral Agent shall have no
responsibility for taking any necessary steps to preserve rights against any
parties with respect to any Collateral.
ARTICLE X
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
Section 10.1 Successors and Assigns. The terms and provisions of
the Credit Documents shall be binding upon and inure to the benefit of the
Borrower and the Term Lenders and their respective successors and assigns,
except that (a) the Borrower shall not have the right to assign its rights or
obligations under the Credit Documents and (b) any assignment by any Term Lender
must be made in compliance with Section 10.3. Notwithstanding clause (b) of this
Section, any Term Lender may at any time, without the consent of the Borrower or
the Administrative Agent, pledge or assign all or any portion of its rights
under this Agreement to secure obligations of such Term Lender including without
limitation any pledge or assignment to secure obligations to a Federal Reserve
Bank; provided, however, that no such pledge or assignment shall release the
transferor Term Lender from its obligations hereunder. The Administrative Agent
may treat the payee of any Term Note as the owner thereof for all purposes
hereof unless and until such payee complies with Section 10.3 in the case of an
assignment thereof or, in the case of any other transfer, a written notice of
the transfer is filed with the Administrative Agent. Any assignee or transferee
of the Term Loans agrees by acceptance thereof to be bound by all the terms and
provisions of the Credit Documents. Any request, authority, or consent of any
Person, who at the time of making such request or giving such authority or
consent is the holder of any Term Loan, shall be conclusive and binding on any
subsequent holder, transferee, or assignee of such Term Loan.
Section 10.2 Participations.
(a) Permitted Participants; Effect. Any Term Lender may, in the
ordinary course of its business and in accordance with applicable law, at any
time sell to one or more banks or other entities ("Participants") participating
interests in any Term Loans owing to such Term Lender, any Term Note held by
such Term Lender, any Term Commitment of such Term Lender, if any, or any other
interest of such Term Lender under the Credit Documents. In the event of any
such sale by a Term Lender of participating interests to a Participant, such
Term Lender's obligations under the Credit Documents shall remain unchanged,
such Term Lender shall remain solely responsible to the other parties hereto for
the performance of such obligations, such Term Lender shall remain the holder of
any such Term Note for all purposes under the Credit Documents, all amounts
payable by the Credit Parties under this Agreement shall be determined as if
such Term Lender had not sold such participating interests, and the Credit
Parties and the Administrative Agent shall continue to deal solely and directly
with such Term Lender in connection with such Term Lender's rights and
obligations under the Credit Documents.
(b) Voting Rights. Each Term Lender shall retain the sole right to
approve, without the consent of any Participant, any amendment, modification, or
waiver of any provision of the
Credit Documents other than any amendment, modification, or waiver which effects
any of the amendments, modifications or waivers referenced in Section 11.1
(other than with respect to the proviso at the end of Section 11.1).
(c) Benefit of Setoff. The Borrower agree that each Participant
shall be deemed to have the right of setoff provided in Section 7.5 in respect
of its participating interest in amounts owing under the Credit Documents to the
same extent as if the amount of its participating interest were owing directly
to it as a Term Lender under the Credit Documents; provided, that each Term
Lender shall retain the right of setoff provided in Section 7.5 with respect to
the amount of participating interests sold to each Participant; and provided
further that such right of setoff shall not be exercisable until five Business
Days after the date upon which the Borrower receives written notice of the fact
that such Participant is a Participant (it being understood that neither the
Administrative Agent, the Term Lender granting such participation nor the
Participant shall be obligated to give such notice). The Term Lenders agree to
share with each Participant, and each Participant, by exercising the right of
setoff provided in Section 7.5, agrees to share with each Term Lender, any
amount received pursuant to the exercise of its right of setoff, such amounts to
be shared as if each Participant were a Term Lender.
Section 10.3 Assignments.
(a) Permitted Assignments. Any Term Lender may, in the ordinary
course of its business and in accordance with applicable law, at any time assign
to one or more Eligible Assignees ("Purchasers") all or any part of its rights
and obligations under the Credit Documents; provided, however, that in the case
of an assignment to an Eligible Assignee which is not a Term Lender or an
Affiliate or an Approved Fund of a Term Lender, such assignment shall be in a
minimum amount of (i) $1,000,000.00 or (ii) all of such Term Lender's Term
Commitments, if any, and Term Loans. Such assignment shall be made pursuant to
an Assignment and Acceptance substantially in the form of Exhibit A or in such
other form as may be agreed to by the parties thereto ("Assignment and
Acceptance"). The consent of the Administrative Agent and, so long as no Default
is continuing, the Borrower shall be required prior to an assignment becoming
effective, unless the assignment or transfer is (A) by CLNY connection with the
syndication of the Term Commitments and the Term Loans made hereunder, or (B) to
another Term Lender, Revolving Lender or an Affiliate or Approved Fund of such
Lender. Such consent shall not be unreasonably withheld or delayed.
(b) Effect; Effective Date. Upon such execution, delivery,
acceptance and recording, from and after the effective date specified in each
Assignment and Acceptance, which effective date shall be at least three Business
Days after the execution thereof, (i) the Purchaser thereunder shall be a party
hereto for all purposes and, to the extent that rights and obligations hereunder
have been assigned to it pursuant to such Assignment and Acceptance, have the
rights and obligations of a Term Lender hereunder and (ii) such Term Lender
thereunder shall, to the extent that rights and obligations hereunder have been
assigned by it pursuant to such Assignment and Acceptance, relinquish its rights
and be released from its obligations under this Agreement (and, in the case of
an Assignment and Acceptance covering all or the remaining portion of such Term
Lender's rights and obligations under this Agreement, such Term Lender shall
cease to be a party hereto). Upon the consummation of any assignment to a
Purchaser pursuant to this Section 12.3.2, the transferor Term Lender, the
Administrative Agent and the Borrower shall, if the
transferor Term Lender or the Purchaser desires that its Term Loans be evidenced
by Term Notes, make appropriate arrangements so that new Term Notes or, as
appropriate, replacement Term Notes are issued to such transferor Term Lender
and new Term Notes or, as appropriate, replacement Term Notes, are issued to
such Purchaser, in each case in principal amounts reflecting their respective
Term Loans, as adjusted pursuant to such assignment.
Section 10.4 Dissemination of Information. Each of the Agents and
the Term Lenders agrees to maintain the confidentiality of the Information (as
defined below), except that Information may be disclosed (a) to its and its
Affiliates' or Approved Funds' directors, officers, employees and agents,
including accountants, legal counsel and other advisors (it being understood
that the Persons to whom such disclosure is made will be informed of the
confidential nature of such Information and instructed to keep such Information
confidential); (b) to the extent requested by any regulatory authority; (c) to
the extent required by applicable laws or regulations or by any subpoena or
similar legal process; (d) to any other party to this Agreement; (e) to the
extent required, in connection with the exercise of any remedies hereunder or
any suit, action or proceeding relating to this Agreement or the enforcement of
rights hereunder; (f) subject to an agreement for the benefit of the Credit
Parties containing provisions substantially the same as those of this Section
10.4 or any other confidentiality obligation referred to herein, to (i) any
Participant or Purchaser or any other Person acquiring an interest in the Credit
Documents (each a "Transferee") and any prospective Transferee or (ii) any
direct or indirect contractual counterparty or prospective counterparty (or such
contractual counterparty's or prospective counterparty's professional advisor)
to any credit derivative transaction relating to obligations of the Parent
Company and its Subsidiaries; (g) with the prior written consent of the Parent
Company or the Borrower; (h) to the extent such Information (i) becomes publicly
available other than as a result of a breach of this Section or (ii) becomes
available to any Agent or Term Lender on a nonconfidential basis from a source
other than the Parent Company or any of its Subsidiaries; or (i) to the National
Association of Insurance Commissioners or any other similar organization. In
addition, any Agent or any Term Lender may disclose the existence of this
Agreement and information about this Agreement to market data collectors,
similar service providers to the lending industry, and service providers to the
Agents and the Term Lenders in connection with the administration and management
of this Agreement, the other Credit Documents, and the Term Loans. For the
purposes of this Section, "Information" means all information received from, or
on behalf of, the Parent Company or any of its Subsidiaries relating to the
Parent Company, any of its Subsidiaries or their business, other than any such
information that is available to any Agent or any Term Lender on a
nonconfidential basis prior to disclosure by the Parent Company or any of its
Subsidiaries; provided that, in the case of information received from the Parent
Company or any of its Subsidiaries after the date hereof, such information is
clearly identified in writing at the time of delivery as confidential. Any
Person required to maintain the confidentiality of Information as provided in
this Section shall be considered to have complied with its obligation to do so
if such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own
confidential information.
Section 10.5 Tax Treatment. If any interest in any Credit Document
is transferred to any Transferee which is organized under the laws of any
jurisdiction other than the United States or any State thereof, the transferor
Term Lender shall cause such Transferee, concurrently with the effectiveness of
such transfer, to comply with the provisions of Section 2.10.
ARTICLE X
MISCELLANEOUS
Section 11.1 Amendments, Etc. No amendment or waiver of any
provision of this Agreement or any other Credit Document, nor consent to any
departure by any Credit Party therefrom, shall in any event be effective unless
the same shall be in writing and signed by the Required Term Lenders and the
Borrower, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided,
however, that no amendment, waiver or consent shall, unless in writing and
signed by each Term Lender directly affected thereby and the Borrower, do any of
the following: (a) increase the Term Commitments of the Term Lenders, (b) reduce
the principal of, or interest on, the Term Loans or any fees or other amounts
payable hereunder or under any other Credit Document, (c) postpone any date
fixed for any scheduled payment or prepayment of principal of, or interest on,
the Term Loans for any fees or other amounts payable hereunder, (d) change the
number of Term Lenders which shall be required to take any action hereunder or
under any other Credit Document, (e) amend Section 2.11 or this Section 11.1,
(f) except as expressly permitted by this Agreement, release any Guarantor from
its obligations under its Guaranty, or (g) release all or any substantial
portion of the Collateral; provided, further, that (i) no amendment, waiver or
consent shall, unless in writing and signed by the Administrative Agent in
addition to the Term Lenders required above to take such action, affect the
rights or duties of the Administrative Agent under this Agreement or any other
Credit Document and (ii) no waiver of any of the conditions specified in Article
III shall be effective against any Term Lender not executing such waiver;
provided, further that the Borrower may not amend, alter, vary, supplement,
terminate, revise, waive or otherwise modify any of the terms or provisions of,
or add any new or additional terms or provisions to, this Agreement or any other
Credit Document without the prior written consent of the Required Revolving
Lenders; provided, however, that the Borrower may, without the prior written
consent of the Required Revolving Lenders, (i) amend, alter, vary, supplement,
revise or waive any of the terms or provisions of, or add any new or additional
terms or provisions to (A) any of the Security Documents or (B) Section 2.6 of
this Agreement, (ii) release all or any portion of the Collateral or any
Guarantor or (iii) make any amendment, supplement, consent or waiver which is
administrative, immaterial or nonsubstantive in nature, not adverse to the
Revolving Lenders and has been consented to by the Administrative Agent.
Notwithstanding the foregoing, the consent of the Required Required Lenders is
not required for the Term Lenders to accelerate, or to permit the acceleration
of, the maturity of the Term Loans or to exercise any rights and remedies
available under the Security Documents, the guaranties provided by the
Guarantors or applicable law.
Section 11.2 Notices, Etc. All notices and other communications
shall be in writing (including telecopy or telex) and mailed, telecopied,
telexed, hand delivered or delivered by a nationally recognized overnight
courier, if to any Credit Party, at its address as set forth on Schedule 1; if
to any Term Lender, at its specified Applicable Lending Office specified
opposite its name on Schedule 1; if to the Administrative Agent, at its address
for notices set forth in Schedule 1; and if a Notice of Borrowing or a Notice of
Conversion or Continuation to the Administrative Agent at the specified
Applicable Lending Office of Administrative Agent and, if different, the
specified Applicable Lending Office for Administrative Agent specified opposite
its name on Schedule 1 or, as to each party, at such other address or
teletransmission number as
shall be designated by such party in a written notice to the other parties. All
such notices and communications shall, when mailed, telecopied, telexed or hand
delivered or delivered by overnight courier be effective: upon receipt, if
mailed, when telecopy transmission is completed, when confirmed by telex
answer-back or when delivered, respectively, except that notices and
communications to the Administrative Agent pursuant to Article II or IX shall
not be effective until received by the Administrative Agent.
Section 11.3 No Waiver; Remedies. No failure on the part of any
Term Lender or the Administrative Agent to exercise, and no delay in exercising,
any right hereunder or under any Term Note shall operate as a waiver thereof;
nor shall any single or partial exercise of any such right preclude any other or
further exercise thereof or the exercise of any other right. The remedies
provided in this Agreement are cumulative and not exclusive of any remedies
provided by law.
Section 11.4 Costs and Expenses. The Borrower agree to pay within
five Business Days of on demand (a) all out-of-pocket costs and expenses of the
Agents and reasonable fees and out-of-pocket expenses of in-house counsel and
outside counsel for the Agents, in connection with the preparation, execution,
delivery, administration, modification and amendment of this Agreement and the
other Credit Documents, (b) all out-of-pocket costs and expenses of the Agents
and reasonable fees and out-of-pocket expenses of in-house counsel and outside
counsel for the Agents in connection with advising the Agents with respect to
its rights and responsibilities under this Agreement, and (c) all out-of-pocket
costs and expenses of the Agents and each Term Lender and reasonable fees and
out-of-pocket expenses of in-house counsel and outside counsel for the Agents
and each Term Lender in connection with the enforcement (whether through
negotiations, legal proceedings or otherwise) of this Agreement and the other
Credit Documents.
Section 11.5 Binding Effect. This Agreement shall become effective
when it shall have been executed by the Credit Parties, the Agents, and when the
Administrative Agent shall have, as to each Term Lender, either received a
counterpart hereof executed by such Term Lender or been notified by such Term
Lender that such Term Lender has executed it.
Section 11.6 Indemnification. The Borrower shall indemnify the
Agent, the Arranger, the Term Lenders and each affiliate thereof and their
respective directors, officers, employees and agents from, and discharge,
release, and hold each of them harmless against, any and all losses,liabilities,
claims or damages to which any of them may become subject, insofar as such
losses, liabilities, claims or damages arise out of or result from (i) any
actual or proposed use by the Borrower or any Affiliate of the Borrower of the
proceeds of any Term Loan, (ii) any breach by any Credit Party of any provision
of this Agreement or any other Credit Document, (iii) any investigation,
litigation or other proceeding (including any threatened investigation or
proceeding) relating to the foregoing, or (iv) any Environmental Claim or
requirement of Environmental Laws concerning or relating to the present or
previously-owned or operated Properties, or the operations or business, of the
Parent Company or any of its Subsidiaries, and the Borrower shall reimburse the
Agents, the Arranger, and each Term Lender, and each Affiliate thereof and their
respective directors, officers, employees and agents, upon demand for any
reasonable out-of-pocket expenses (including legal fees) incurred in connection
with any such investigation, litigation or other proceeding; and expressly
including any such losses,
liabilities, claims, damages, or expense incurred by reason of the Person being
indemnified's own negligence, but excluding any such losses, liabilities,
claims, damages or expenses incurred by reason of the gross negligence, bad
faith or willful misconduct of the person to be indemnified, or in the case of
clause (iv) above, caused by the affirmative act of such Agent, the Arranger or
such Term Lender.
Section 11.7 Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.
Section 11.8 Survival of Representations, etc. All representations
and warranties contained in this Agreement or made in writing by or on behalf of
the Credit Parties in connection herewith shall survive the execution and
delivery of this Agreement and the Credit Documents, the making of the Term
Loans and any investigation made by or on behalf of the Term Lenders, none of
which investigations shall diminish any Term Lender's right to rely on such
representations and warranties. All obligations of the Borrower provided for in
Sections 2.7, 2.8, 2.10(c), 11.4 and 11.6 shall survive any termination of this
Agreement and repayment in full of the Obligations.
Section 11.9 Severability. In case one or more provisions of this
Agreement or the other Credit Documents shall be invalid, illegal or
unenforceable in any respect under any applicable law, the validity, legality
and enforceability of the remaining provisions contained herein or therein shall
not be affected or impaired thereby.
Section 11.10 Usury Not Intended. It is the intent of the Credit
Parties and each Term Lender in the execution and performance of this Agreement
and the other Credit Documents to contract in strict compliance with applicable
usury laws, including conflicts of law concepts, governing the Term Loans of
each Term Lender including such applicable laws of the State of New York and the
United States of America from time-to-time in effect. In furtherance thereof,
the Term Lenders and the Borrower stipulate and agree that none of the terms and
provisions contained in this Agreement or the other Credit Documents shall ever
be construed to create a contract to pay, as consideration for the use,
forbearance or detention of money, interest at a rate in excess of the Maximum
Rate and that for purposes hereof "interest" shall include the aggregate of all
charges which constitute interest under such laws that are contracted for,
charged or received under this Agreement; and in the event that, notwithstanding
the foregoing, under any circumstances the aggregate amounts taken, reserved,
charged, received or paid on the Term Loans, include amounts which by applicable
law are deemed interest which would exceed the Maximum Rate, then such excess
shall be deemed to be a mistake and each Term Lender receiving same shall credit
the same on the principal of its Term Loans (or if such Term Loans shall have
been paid in full, refund said excess to the Borrower). In the event that the
maturity of the Term Loans are accelerated by reason of any election of the
holder thereof resulting from any Event of Default under this Agreement or
otherwise, or in the event of any required or permitted prepayment, then such
consideration that constitutes interest may never include more than the Maximum
Rate and excess interest, if any, provided for in this Agreement or otherwise
shall be canceled automatically as of the date of such acceleration or
prepayment and, if theretofore paid, shall be credited on the applicable Term
Loans (or, if the applicable Term Loans shall have been
paid in full, refunded to the Borrower of such interest). In determining whether
or not the interest paid or payable under any specific contingencies exceeds the
Maximum Rate, the Borrower and the Term Lenders shall to the maximum extent
permitted under applicable law amortize, prorate, allocate and spread in equal
parts during the period of the full stated term of the Term Loans all amounts
considered to be interest under applicable law at any time contracted for,
charged, received or reserved in connection with the Obligations. The provisions
of this Section shall control over all other provisions of this Agreement or the
other Credit Documents which may be in apparent conflict herewith.
Section 11.11 Judgment Currency. If for the purposes of obtaining
judgment in any court it is necessary to convert a sum due from any Credit Party
hereunder in the currency expressed to be payable herein (the "specified
currency") into another currency, the parties hereto agree, to the fullest
extent that they may effectively do so, that the rate of exchange used shall be
that at which in accordance with normal banking procedures the Administrative
Agent could purchase the specified currency with such other currency at the
Administrative Agent's main New York office on the Business Day preceding that
on which final, non-appealable judgment is given. The obligations of the Credit
Parties in respect of any sum due to any Term Lender or any Agent hereunder
shall, notwithstanding any judgment in a currency other than the specified
currency, be discharged only to the extent that on the Business Day following
receipt by such Term Lender or such Agent (as the case may be) of any sum
adjudged to be so due in such other currency such Term Lender or such Agent (as
the case may be) may in accordance with normal, reasonable banking procedures
purchase the specified currency with such other currency. If the amount of the
specified currency so purchased is less than the sum originally due to such Term
Lender or such Agent, as the case may be, in the specified currency, each Credit
Party agrees, to the fullest extent that it may effectively do so, as a separate
obligation and notwithstanding any such judgment, to indemnify such Term Lender
or such Agent, as the case may be, against such loss, and if the amount of the
specified currency so purchased exceeds (a) the sum originally due to any Term
Lender or such Agent, as the case may be, in the specified currency and (b) any
amounts shared with other Term Lenders as a result of allocations of such excess
as a disproportionate payment to such Term Lender under Section 2.11, such Term
Lender or such Agent, as the case may be, agrees to remit such excess to the
applicable Credit Party.
Section 11.12 Governing Law. This Agreement and each of the other
Credit Documents shall be governed by and construed in accordance with the laws
of the State of New York and the applicable laws of the United States of
America.
Section 11.13 Consent to Jurisdiction.
(a) Each Credit Party hereby irrevocably submits to the
non-exclusive jurisdiction of any United States Federal or New York state court
sitting in New York in any action or proceeding arising out of or relating to
any Credit Documents and each Credit Party hereby irrevocably agrees that all
claims in respect of such action or proceeding may be heard and determined in
any such court and irrevocably waives any objection it may now or hereafter have
as to the venue of any such suit, action or proceeding brought in such court or
that such court is an inconvenient forum. Any judicial proceeding by any Credit
Party against any Agent, any Term Lender or any Affiliate or Approved Fund of
any Agent or any Term Lender involving,
directly or indirectly, any matter in any way arising out of, related to, or
connected with any Credit Document shall be brought only in a court in New York,
New York.
(b) Each Credit Party has irrevocably appointed CT Corporation
System (the "Process Agent"), with an office on the date hereof at ▇▇▇ ▇▇▇▇▇▇
▇▇▇., ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇, as its agent to receive on its behalf and on
behalf of its property service of copies of any summons or complaint or any
other process which may be served in any action. Such service may be made by
mailing or delivering a copy of such process to such Credit Party in care of the
Process Agent at the Process Agent's above address, and each Credit Party hereby
irrevocably authorizes and directs the Process Agent to accept such service on
its behalf. As an alternative method of service, each Credit Party also
irrevocably consents to the service of any and all process in any such action or
proceeding by the mailing of copies of such process to it at the address
specified for it on the signature pages of this Agreement.
(c) Nothing in this Section 11.13 shall affect the right of any
Agent or any other Term Lender to serve legal process in any other manner
permitted by law or affect the right of any Agent or any Term Lender to bring
any action or proceeding against any Credit Party (as a Borrower or as a
Guarantor) in the courts of any other jurisdiction.
Section 11.14 Waiver of Jury. Each Credit Party, Term Lender and
Agent hereby irrevocably waives any and all right to trial by jury in respect of
any legal proceeding, directly or indirectly, (whether sounding in tort,
contract or otherwise) arising out of or relating to this Agreement, any other
Credit Document, any of the transactions contemplated hereby, or the
relationship established hereunder.
Section 11.15 Third Party Beneficiaries. For the purposes of
Section 11.1, the Revolving Lenders are intended third party beneficiaries of
this Agreement.
EXECUTED as of the 20th day of June, 2002.
BORROWER:
PRIDE OFFSHORE, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇
Treasurer
GUARANTORS:
PRIDE INTERNATIONAL, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Financial Officer
MEXICO DRILLING LIMITED LLC
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇
Treasurer
PRIDE CENTRAL AMERICA, LLC
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇
Treasurer
PRIDE DRILLING, LLC
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇
Treasurer
PRIDE NORTH AMERICA LLC
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇
Treasurer
PRIDE OFFSHORE INTERNATIONAL LLC
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇
Treasurer
PRIDE SOUTH PACIFIC LLC
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇
Treasurer
ADMINISTRATIVE AGENT:
CREDIT LYONNAIS NEW YORK BRANCH,
as Administrative Agent
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------------
Title: Senior Vice President
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TERM LENDERS:
TERM COMMITMENT CREDIT LYONNAIS NEW YORK BRANCH
$200,000,000
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Title: Senior Vice President
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EXHIBIT A
ASSIGNMENT AND ACCEPTANCE
Dated ________________, 200_
Reference is made to the Term Loan Agreement dated as of June 20, 2002
(as the same may be amended or modified from time to time, the "Term Loan
Agreement") among Pride Offshore, Inc., a Delaware corporation (the "Borrower"),
the Term Lenders and Credit Lyonnais New York Branch, as Administrative Agent
for the Term Lenders. Capitalized terms not otherwise defined in this Assignment
and Acceptance shall have the meanings assigned to them in the Term Loan
Agreement.
Pursuant to the terms of the Term Loan Agreement, _______________
wishes to assign and delegate ___% (1) of its rights and obligations under the
Term Loan Agreement. Therefore, _______________ ("Assignor"), _______________
("Assignee"), and the Administrative Agent agree as follows:
1. As of the Effective Date (as defined below), the Assignor hereby
sells and assigns and delegates to the Assignee, and the Assignee hereby
purchases and assumes from the Assignor, without recourse to the Assignor and
without representation or warranty except for the representations and warranties
specifically set forth in clauses (i), (ii), and (iii) of Section 2, a ___%
interest in and to all of the Assignor's rights and obligations under the Term
Loan Agreement, including, without limitation, the Term Loans owing to the
Assignor and the Term Note, if any, held by the Assignor.
2. The Assignor (i) represents and warrants that, prior to executing
this Assignment and Acceptance, the aggregate outstanding principal amount of
Term Loans owed to it by the Borrower is $ ; (ii) represents and warrants that
it is the legal and beneficial owner of the interest being assigned by it
hereunder and that such interest is free and clear of any adverse claim; (iii)
makes no representation or warranty and assumes no responsibility with respect
to any statements, warranties, or representations made in or in connection with
the Term Loan Agreement or any other Credit Document or the execution, legality,
validity, enforceability, genuineness, sufficiency, or value of the Term Loan
Agreement or any other Credit Document or any other instrument or document
furnished pursuant thereto; (iv) makes no representation or warranty and assumes
no responsibility with respect to the financial condition of the Borrower or any
Guarantor, or the performance or observance by the Borrower or any Guarantor of
any of their obligations under the Term Loan Agreement or any other Credit
Document or any other instrument or document furnished pursuant thereto; [and]
(v) represents and warrants that it is an Eligible Assignee[; and (vi) attaches
the Term Note referred to in paragraph 1 above and requests that the
Administrative Agent exchange such Term Note for a new Term Note dated the
Effective Date in the principal amount of $__________ payable to the order of
the Assignee [and a new Term Note dated the Effective Date in the principal
amount of $__________ payable to the order of Assignor]].
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(1) Specify percentage in no more than 5 decimal points.
3. The Assignee (i) confirms that it has received a copy of the Term
Loan Agreement, together with copies of the financial statements referred to in
Section 4.5 thereof and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Acceptance; (ii) agrees that it will, independently and without
reliance upon the Administrative Agent, the Assignor, or any other Lender and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under the Term Loan Agreement or any other Credit Document; (iii) appoints and
authorizes the Administrative Agent and the Collateral Agent to take such action
as agent on its behalf and to exercise such powers under the Term Loan Agreement
and any other Credit Document as are delegated to the Administrative Agent or
the Collateral Agent by the terms thereof, together with such powers as are
reasonably incidental thereto; (iv) agrees that it will perform in accordance
with their terms all of the obligations which by the terms of the Term Loan
Agreement or any other Credit Document are required to be performed by it as a
Term Lender; (v) specifies as its Applicable Lending Office (and address for
notices), the office(s) set forth beneath its name on the signature pages
hereof; and (vi) attaches the forms prescribed by the appropriate Governmental
Authority certifying as to the Assignee's status for purposes of determining
exemption from withholding taxes with respect to all payments to be made to the
Assignee under the Term Loan Agreement [and its Term Note] or such other
documents as are necessary to indicate that all such payments are subject to
such rates at a rate reduced by an applicable tax treaty (2).
4. The effective date for this Assignment and Acceptance shall be
__________ __, 200_ (the "Effective Date") and following the execution of this
Assignment and Acceptance, the Administrative Agent will record it.
5. Upon such recording, and as of the Effective Date, (i) the Assignee
shall be a party to the Term Loan Agreement as a "Term Lender" thereunder for
all purposes, and, to the extent provided in this Assignment and Acceptance,
have the rights and obligations of a Term Lender thereunder and (ii) the
Assignor shall, to the extent provided in this Assignment and Acceptance,
relinquish its rights (other than rights against the Borrower pursuant to
Sections 2.7, 2.8, 2.10(c) and 11.4 of the Term Loan Agreement, which shall
survive this assignment) and be released from its obligations under the Term
Loan Agreement (except for its obligations and agreements under Section 9.8,
10.4 and 11.14, which shall survive this assignment).
6. Upon such recording, from and after the Effective Date, the
Administrative Agent shall make all payments under the Term Loan Agreement and
the Term Notes in respect of the interest assigned hereby (including, without
limitation, all payments of principal, interest, and commitment fees) to the
Assignee. The Assignor and Assignee shall make all appropriate adjustments in
payments under the Term Loan Agreement [and the Term Notes] for periods prior to
the Effective Date directly between themselves.
7. This Assignment and Acceptance shall be governed by, and construed
and enforced in accordance with, the laws of the State of New York.
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(2) If the Assignee is organized under the laws of a jurisdiction outside the
United States or France.
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The parties hereto have caused this Assignment and Acceptance to be
duly executed as of the date first above written.
[ASSIGNOR]
By:
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Name:
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Title:
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Address:
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Attention:
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Telecopy:
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Telephone:
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[ASSIGNEE]
By:
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Name:
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Title:
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Applicable Lending Office:
Address:
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Attention:
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Telecopy:
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Telephone:
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CREDIT LYONNAIS NEW YORK BRANCH,
as Administrative Agent
By:
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Name:
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Title:
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EXHIBIT B
COMPLIANCE CERTIFICATE
This certificate dated as of __________ ___, 200__ for the fiscal
quarter ending __________ ___, 200__ is prepared pursuant to Section 5.5(d) of
the Credit Agreement dated as of June 20, 2002 (as it may be amended in
accordance with its terms, the "Credit Agreement") among Pride Offshore, Inc., a
Delaware corporation (the "Borrower"), the Term Lenders party thereto, and
Credit Lyonnais New York Branch, as Administrative Agent for the Term Lenders.
Unless otherwise defined in this certificate, capitalized terms used herein that
are defined in the Credit Agreement shall have the meanings set forth in the
Credit Agreement.
The Borrower hereby certifies (a) that no Default has occurred or is
continuing, (b) that all of the representations and warranties made by the
Credit Parties in Article IV of the Credit Agreement and in each other Credit
Document are true and correct on and as of the date hereof, and (c) that as of
the last day of the fiscal quarter ending immediately preceding the date of this
Certificate the following amounts and calculations were true and correct:
SECTION 5.14. SECURITY MAINTENANCE RATIO.
(a) Market Value of the Mortgaged Term Loan
Facility Rigs
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(b) outstanding principal amount of the Term
Loans
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Security Maintenance Ratio
(a) divided by (b)
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Compliance 2.0 to 1.0
SECTION 6.16. LEVERAGE RATIO.
(a) Consolidated Net Debt
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(i) Debt of the Parent Company and
its Subsidiaries
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(ii) Unrestricted Cash
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(iii) Consolidated Net Debt
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(i) minus (ii)
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(b) Consolidated EBITDA
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(i) Consolidated Operating Income
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(ii) depreciation, amortization and
other non-cash expenses
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(iii)cash costs directly related
to the Acquisition by the
Parent Company of Marine
Drilling Companies, Inc. and
its Subsidiaries
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(iv) Pro Forma Consolidated EBITDA*
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(v) Consolidated EBITDA
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(i) plus (ii) plus (iii) plus (iv)
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Leverage Ratio
(a) divided by (b)
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Compliance
For the fiscal quarters ending June 30, 2002,
September 30, 2002 and December 31, 2002 4.75 to 1.00
For the fiscal quarters ending March 31, 2003,
June 30, 2003, September 30, 2003, and
December 31, 2003 4.00 to 1.00
For the fiscal quarters ending March 31, 2004,
June 30, 2004, September 30, 2004, and
December 31, 2004 3.50 to 1.00
March 31, 2005 and thereafter 3.00 to 1.00
SECTION 6.17. INTEREST COVERAGE RATIO.
(a) Consolidated EBITDA
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(i) Consolidated Operating Income
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(ii) depreciation, amortization and
other non-cash expenses
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(iii) cash costs directly related
to the
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* Attach certificate setting forth calculation of Pro Forma Consolidated
EBITDA.
Acquisition by the Parent Company of
Marine Drilling Companies, Inc. and its
Subsidiaries
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(iv) Pro Forma Consolidated EBITDA*
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(v) Consolidated EBITDA
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(i) plus (ii) plus (iii) plus (iv)
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(b) Consolidated Net Interest Expense
(i) cash interest expense of the
Parent Company and its
Subsidiaries
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(ii) cash interest income of the Parent
Company and its Subsidiaries
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(iii) pro forma adjustment, if any*
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(iv) Consolidated Net Interest Expense
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(i) minus (ii) plus (iii)
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Interest Coverage Ratio
(a) divided by (b)
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Compliance
For the fiscal quarters ending June 30, 2002,
September 30, 2002 and December 31, 2002 3.00 to 1.00
For the fiscal quarters ending March 31, 2003,
June 30, 2003, September 30, 2003, and
December 31, 2003 3.25 to 1.00
For the fiscal quarters ending March 31, 2004,
June 30, 2004, September 30, 2004, and
December 31, 2004 4.00 to 1.00
March 31, 2005 and thereafter 4.50 to 1.00
SECTION 6.18. MAXIMUM DEBT TO CAPITALIZATION RATIO.
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* Attach certificate setting forth calculation of Pro Forma Consolidated
EBITDA.
(a) Consolidated Net Debt
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(i) Debt of the Parent Company and
its Subsidiaries
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(ii) Unrestricted Cash
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(iii) Consolidated Net Debt
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(i) minus (ii)
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(b) Total Capitalization
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(i) Consolidated Net Debt
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(ii) Consolidated Net Worth
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(iii) Total Capitalization
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(i) plus (ii)
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Maximum Debt to Capitalization Ratio
(a) divided by (b)
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Compliance
For the fiscal quarters ending June 30, 2002,
September 30, 2002 and December 31, 2002 55%
For the fiscal quarters ending March 31, 2003,
June 30, 2003, September 30, 2003, and
December 31, 2003 50%
For the fiscal quarters ending March 31, 2004,
June 30, 2004, September 30, 2004, and
December 31, 2004 45%
March 31, 2005 and thereafter 35%
SECTION 6.19. MINIMUM NET WORTH.
Consolidated Net Worth
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Compliance
(i) 80% of Consolidated Net Worth
at the end of the fiscal
quarter immediately
preceding the Closing Date
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(ii) 50% of Consolidated Net Income
(if positive)
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(iii) Equity Issuance Proceeds
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Minimum Net Worth
(i) plus (ii) plus (iii)
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Executed this day of , 200 .
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PRIDE INTERNATIONAL, INC.
By:
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Name:
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Title:
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EXHIBIT C
FORM OF
NOTICE OF BORROWING
[Date]
Credit Lyonnais New York Branch, as Administrative Agent
1301 Avenue of the Americas
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Attention: ____________________
Ladies and Gentlemen:
The undersigned, Pride Offshore, Inc., a Delaware corporation (the "Borrower"),
refers to the Term Loan Agreement dated as of June 20, 2002 (as the same may be
amended or modified from time to time, the "Term Loan Agreement," the defined
terms of which are used in this Notice of Borrowing unless otherwise defined in
this Notice of Borrowing) among the Borrower, the Term Lenders, and the
Administrative Agent, and hereby gives you irrevocable notice pursuant to
Section 2.2(a) of the Term Loan Agreement that the undersigned hereby requests
the Borrowing, and in connection with that request sets forth below the
information relating to such Borrowing (the "Proposed Borrowing") as required by
Section 2.2(a) of the Credit Agreement:
(a) The Business Day of the Proposed Borrowing is ________________.
(b) The Proposed Borrowing will consist of [Eurodollar Loans] [Base
Rate Loans].
(c) The aggregate amount of the Proposed Borrowing is $200,000,000.00.
(d) [The Interest Period for each Eurodollar Loan is made as part of
the Proposed Borrowing is [_____ month[s] commencing on ____________ and
ending on ____________]].
The undersigned hereby certifies that the following statements are true on the
date hereof, and will be true on the date of the Proposed Borrowing:
(a) the representations and warranties contained in Article IV of the
Term Loan Agreement and in each other Credit Document are correct in all
material respects on and as of the date of the Proposed Borrowing before
and after giving effect to such Proposed Borrowing and to the application
of the proceeds therefrom, as though made on and as of such date; and
(b) no Default has occurred and is continuing or would result from
such Proposed Borrowing or from the application of the proceeds therefrom.
Very truly yours,
PRIDE OFFSHORE, INC.
By:______________________________
Name:____________________________
Title: __________________________
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EXHIBIT D
FORM OF
NOTICE OF CONVERSION OR CONTINUATION
[Date]
Credit Lyonnais New York Branch, as Administrative Agent
1301 Avenue of the Americas
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Attention: _____________________
Ladies and Gentlemen:
The undersigned, Pride Offshore, Inc., a Delaware corporation (the "Borrower"),
refers to the Term Loan Agreement dated as of June 20, 2002 (as the same may be
amended or modified from time to time, the "Term Loan Agreement," the defined
terms of which are used in this Notice of Conversion or Continuation unless
otherwise defined in this Notice of Conversion or Continuation) among the
Borrower, the Term Lenders, and the Administrative Agent, and hereby gives you
irrevocable notice pursuant to Section 2.2(b) of the Term Loan Agreement that
the undersigned hereby requests a Continuation or Conversion ("Proposed
Borrowing") of an outstanding Borrowing, and in connection with that request
sets forth below the information relating to the Proposed Borrowing as required
by Section 2.2(b) of the Credit Agreement:
(a) The Business Day of the Proposed Borrowing is _______________.
(b) The aggregate amount of the Borrowing to be Converted or Continued
is $ _______.
(c) The Proposed Borrowing consists of [a Conversion to [Eurodollar
Loans][a Continuation].
(d) [The Interest Period for each Proposed Borrowing is [____ month[s]
commencing on ____________ and ending on _____________].]
Very truly yours,
PRIDE OFFSHORE, INC.
By:______________________________
Name:____________________________
Title: __________________________
EXHIBIT E
FORM OF SECURITY AGREEMENT
This Security Agreement dated as of June 20, 2002 ("Security
Agreement") is between _______________________________, a __________________
(the "Debtor"), and Credit Lyonnais New York Branch, as collateral agent
("Collateral Agent") for the Term Secured Parties (as defined below).
INTRODUCTION
A. Pride Offshore, Inc., a Delaware corporation (the "Borrower"), has
entered into a Term Loan Agreement dated as of June 20, 2002 (as amended,
modified, supplemented or restated from time to time, the "Term Loan Agreement,"
the defined terms of which are used in this Security Agreement unless otherwise
defined herein) together with the lenders party thereto (the "Term Lenders"),
and Credit Lyonnais New York Branch, as administrative agent ("Administrative
Agent") for the Term Lenders, providing for the making of Term Loans by the Term
Lenders.
[B. The Debtor has guaranteed the Borrower's obligations owing to the
Term Secured Parties under the Credit Documents pursuant to Article VIII of the
Term Loan Agreement (the "Guaranty").](1)
C. Under the Term Loan Agreement, it is required that the Debtor shall
secure its obligations under the [Credit Documents][Guaranty] by entering into
this Security Agreement.
Therefore, the Debtor hereby agrees with the Collateral Agent for its
benefit and the benefit of the other Term Secured Parties as follows:
Section 1. Definitions.
Any terms used in this Security Agreement that are defined in the
Uniform Commercial Code as in effect on the date hereof in the State of New York
("UCC") shall have the meanings assigned to those terms by the UCC as of the
date of this Security Agreement, unless otherwise defined in this Security
Agreement.
Section 2. Security Interest.
2.1 Grant of Security Interest. The Debtor hereby grants to the
Collateral Agent for its benefit and the ratable benefit of the Term Secured
Parties a security interest in the Collateral (as defined in Section 2.2 below)
to secure the performance and payment of the Obligations of the Debtor now and
hereafter existing under the Term Loan Agreement and any other Credit Documents,
whether for principal, interest, fees, expenses, indemnification or otherwise,
(all such obligations being the "Secured Obligations").
(1) To be inserted in Security Agreements executed by Material Subsidiaries
of the Borrower.
2.2 Collateral. "Collateral" shall mean all of Debtor's right, title,
and interest in the following, whether now owned or hereafter created or
acquired or arising:
(a) Earnings. (i) (A) All rent, charterhire, day rates and
fees and other moneys and rights and claims to moneys payable to the Debtor
arising from the Mortgaged Term Loan Facility Rigs listed on Schedule 2.2
attached hereto (the "Debtor Rigs"); (B) all rights of the Debtor to payment
under, and any moneys whatsoever payable to the Debtor under, any bareboat or
time charter, drilling contract, or other contract for the use or employment of
the Debtor Rigs, and all other rights and benefits whatsoever accruing to the
Debtor thereunder, including (but without prejudice to the generality of the
foregoing) all claims for damages for any breach by any charterer or other party
thereto of such bareboat or time charter, drilling contract, or other contract
for the use or employment of the Debtor Rigs; and (C) all freights, passage
moneys, hire moneys, compensation payable to the Debtor in the event of the
requisition of any Debtor Rig for hire, remuneration for salvage and towage
services, demurrage and detention moneys, and any other earnings whatsoever due
or to become due to the Debtor and all insurance proceeds payable to the Debtor
with respect to any third party liability for any loss of or damage to all or
any part of any Debtor Rig and (ii) all moneys or other compensation payable by
reason of requisition of title or for hire or other compulsory acquisition of
any Debtor Rig or its capture, seizure, arrest, detention or confiscation by any
Governmental Authority or Persons acting on behalf of any Governmental Authority
("Earnings");
(b) Insurance Policies. (i) All insurances (including, without
limitation, all certificates of entry in protection and indemnity and war risks
associations or clubs) in respect of the Debtor Rigs and all renewals of and
replacements for the same, (ii) all claims, returns of premium and other moneys
due and to become due under or in respect of said insurances and (iii) all other
rights of the Debtor under or in respect of said insurances; and
(c) Proceeds. Any proceeds of any of the foregoing Collateral.
2.3 Debtor Remains Liable. Anything herein to the contrary
notwithstanding: (a) the Debtor shall remain liable under any contracts and
agreements included in the Collateral to the extent set forth therein to perform
its obligations thereunder to the same extent as if this Agreement had not been
executed; (b) as between the Debtor and the Collateral Agent, the exercise by
the Collateral Agent of any rights hereunder shall not release the Debtor from
any obligations under any contracts and agreement included in the Collateral;
and (c) Collateral Agent shall not have any obligation under any contracts and
agreements included in the Collateral by reason of this Agreement, nor shall
Collateral Agent be obligated to perform or fulfill any of the obligations of
the Debtor thereunder, including any obligation to make any inquiry as to the
nature or sufficiency of any payment the Debtor may be entitled to receive
thereunder, to present or file any claim, or to take any action to collect or
enforce any claim for payment thereunder.
Section 3. Representations and Warranties. The Debtor hereby represents
and warrants the following to the Collateral Agent and the Term Secured Parties:
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3.1 Debtor's Name. The true and correct name of the Debtor, is the name
of the Debtor as listed on the signature pages to this Security Agreement or as
most recently notified to the Collateral Agent pursuant to Section 4.5 hereof.
3.2 Lien Priority and Perfection. The security interest in the
Collateral created pursuant to this Security Agreement creates a valid and
binding security interest in the Collateral, securing the performance and
payment of the Secured Obligations, and such security interests will be
perfected first priority security interests upon the filing of appropriate
financing statements naming the Debtor as debtor and Collateral Agent as
collateral agent in the jurisdictions set forth on the attached Schedule 3.2, or
as otherwise notified to the Collateral Agent, to the extent such interest may
be perfected under the UCC.
Section 4. Debtors' Covenants.
4.1 Further Assurances. The Debtor agrees that at any time, at the
Debtor's expense, the Debtor shall promptly execute and deliver all further
instruments and documents and take all further action that may be necessary and
that the Collateral Agent may reasonably request in order to perfect and protect
any security interest granted or purported to be granted hereby or to enable the
Collateral Agent to exercise and enforce its rights and remedies hereunder with
respect to any Collateral, provided, however, that, to the extent this Agreement
states that the Collateral Agent may direct the Debtor to take an action during
the occurrence and continuance of an Event of Default (including, without
limitation, under Section 5 hereof), the Collateral Agent shall not be entitled
to request the Debtor to take such action unless an Event of Default shall have
occurred and be continuing. Without limiting the generality of the foregoing,
each Debtor will at the Collateral Agent's request, (a) deliver and pledge to
the Collateral Agent duly indorsed or accompanied by duly executed instruments
of transfer or assignment, all in form and substance reasonably satisfactory to
the Collateral Agent any instrument, document or chattel paper representing any
Earnings or right to receive Earnings or arising as a result of the disposition
of any Collateral, and (b) execute and file such financing or continuation
statements, or amendments thereto, and such other instruments or notices as may
be reasonably necessary, and as the Collateral Agent may reasonably request, in
order to perfect and preserve the security interests granted or purported to be
granted hereby. The Debtor shall furnish to the Collateral Agent from time to
time any statements and schedules further identifying and describing the
Collateral and such other reports in connection with the Collateral as the
Collateral Agent may reasonably request.
4.2 Insurance. Upon the request of the Collateral Agent, after the
occurrence and during the continuance of an Event of Default, the Debtor shall
execute and deliver to the Collateral Agent any additional assignments and other
documents as may be necessary or desirable to enable the Collateral Agent to
directly collect any insurance proceeds.
4.3 Transfer of Collateral; Release of Security Interest. The Debtor
shall not sell, assign (by operation of law or otherwise), or otherwise dispose
of any of the Collateral, except as permitted by the Term Loan Agreement
(including, without limitation but for the avoidance of doubt, by merger
permitted under the Term Loan Agreement). The Collateral Agent shall promptly,
at the Debtor's expense, execute and deliver all further instruments and
documents, and take all further action, that the Debtor may reasonably request
in order to release (for itself
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and on behalf of the other Term Secured Lenders) its security interest in (a)
any Collateral which is disposed of in accordance with the terms of the Term
Loan Agreement or (b) any Collateral the release of which is contemplated by the
Term Loan Agreement or this Security Agreement (including, without limitation,
in the case of termination of this Security Agreement according to Section 7.4
hereof).
4.4 Change of Name, State of Incorporation. The Debtor will notify the
Collateral Agent in writing 15 days prior to any change in the Debtor's name or
jurisdiction of formation.
Section 5. Remedies. If any Event of Default shall have occurred and remain
uncured:
5.1 UCC Remedies. To the extent permitted by law, the Collateral Agent
may exercise in respect of the Collateral, in addition to other rights and
remedies provided for in this Security Agreement or otherwise available to it,
all the rights and remedies of a collateral agent under the UCC (whether or not
the UCC applies to the affected Collateral).
5.2 Assembly of Collateral. The Collateral Agent may require the Debtor
to, at the Debtor's expense, promptly assemble all or part of the Collateral and
make it available to the Collateral Agent at a place to be designated by the
Collateral Agent which is reasonably convenient to all parties. The Collateral
Agent may occupy any premises owned or leased by the Debtor where the Collateral
or any part thereof is assembled for a reasonable period in order to effectuate
its rights and remedies hereunder or under law, without obligation to the Debtor
in respect of such occupation. The Collateral Agent shall have no obligation to
take any action to assemble or otherwise take control of the Collateral, whether
for the purposes of sale or otherwise.
5.3 Sale of Collateral. Upon at least ten Business Days prior written
notice to the Debtor of the time and place of any proposed sale or other
disposition, the Collateral Agent may sell all or part of the Collateral at a
public or private sale, at any of the Collateral Agent's offices or elsewhere,
for cash, on credit, or for future delivery, and upon such other terms as the
Collateral Agent deems commercially reasonable. The Collateral Agent shall not
be obligated to make any sale of Collateral regardless of notice of sale having
been given. The Collateral Agent may adjourn any public or private sale from
time-to-time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it was so
adjourned in such announcement.
5.4 Earnings. The Collateral Agent may, or may direct any Debtor to,
take any action the Collateral Agent deems necessary or advisable to enforce
collection of the Earnings including, without limitation, notifying the
corresponding account debtors or obligors of the assignment of such Earnings to
the Collateral Agent and directing such account debtors or obligors to make
payment of all amounts due or to become due directly to the Collateral Agent.
Upon such notification and direction, and at the expense of the Debtor, the
Collateral Agent may enforce collection of any such Earnings, and adjust, settle
or compromise the amount or payment thereof, in the same manner and to the same
extent as the Debtor might have done. After receipt by the Debtor of notice that
the Collateral Agent has so notified and directed an account debtor or obligor,
all amounts and proceeds (including instruments) received by the Debtor in
respect of the corresponding Earnings shall be received in trust for the benefit
of the Collateral Agent
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hereunder, shall be segregated from other funds of the Debtor, and shall
promptly be paid over to the Collateral Agent in the same form as so received
(with any necessary endorsement) to be held as Collateral. The Debtor shall not
adjust, settle, or compromise the amount or payment of any receivable, or
release wholly or partly any account debtor or obligor thereof, or allow any
credit or discount thereon.
5.5 Application of Collateral. The proceeds of any sale or other
realization upon all or any part of the Collateral shall be applied by the
Collateral Agent in order set forth in Section 7.6 of the Term Loan Agreement.
Section 6. Collateral Agent as Attorney-in-Fact for Debtor.
6.1 Attorney-In-Fact. The Debtor hereby irrevocably appoints the
Collateral Agent as the Debtor's attorney-in-fact, with full authority to, if an
Event of Default shall have occurred and be continuing (a) act for the Debtor
and in the name of the Debtor to, in the Collateral Agent's discretion if an
Event of Default shall have occurred and be continuing, file one or more
financing or continuation statements, and amendments thereto, relative to all or
any part of the Collateral without the signature of the Debtor where permitted
by law, (b) receive, endorse, and collect any drafts or other instruments,
documents, and chattel paper which are part of the Collateral, and (c) ask,
demand, collect, ▇▇▇ for, recover, compromise, receive, and give acquittance and
receipts for moneys due and to become due under or in respect of any of the
Collateral and (d) file any claims or take any action or institute any
proceedings which the Collateral Agent may reasonably deem necessary or
desirable for the collection of any of the Collateral or otherwise to enforce
the rights of the Collateral Agent with respect to any of the Collateral.
The power of attorney granted hereby is coupled with an interest and is
irrevocable.
6.2 Collateral Agent Performance. If the Debtor fails to perform any
covenant contained herein, the Collateral Agent may itself perform, or cause
performance of, such covenant, and the Debtor shall pay for the expenses of the
Collateral Agent incurred in connection therewith in accordance with Section
7.1, provided that if no Event of Default exists, the Collateral Agent shall
give the Debtor written notice and opportunity to perform prior to itself
performing or causing to perform.
6.3 Collateral Agent's Duties. The powers conferred on the Collateral
Agent under this Security Agreement are solely to protect its interest in the
Collateral and shall not impose any duty upon it to exercise any such powers.
Except for the reasonable care of any Collateral in its possession and the
accounting for monies or other property actually received by it hereunder, the
Collateral Agent shall have no duty as to any Collateral or as to the taking of
any necessary steps to preserve rights against prior parties or any other rights
pertaining to any Collateral. The Collateral Agent shall be deemed to have
exercised reasonable care as to the custody and preservation of the Collateral
in its possession if the Collateral is accorded treatment substantially equal to
that which the Collateral Agent accords its own property, provided that the
Collateral Agent shall have no responsibility for taking any necessary steps to
preserve rights against any parties with respect to any Collateral.
-5-
Section 7. Miscellaneous.
7.1 Expenses. The Debtor shall upon demand pay to the Collateral Agent
for its benefit and the benefit of the other Term Secured Parties the amount
without duplication of any reasonable expenses, including the reasonable fees
and disbursements of its counsel and of any experts and agents, which the
Collateral Agent and the other Term Secured Parties may incur in connection with
(a) the custody, preservation, use, or operation of, or the sale, collection, or
other realization of, any of the Collateral, (b) the exercise or enforcement of
any of the rights of the Collateral Agent or any Term Secured Party hereunder,
and (c) the failure by the Debtor to perform or observe any of the provisions
hereof.
7.2 Amendments; Etc. No amendment or waiver of any provision of this
Security Agreement nor consent to any departure by the Debtor from the terms of
this Security Agreement shall be effective unless the same shall be in writing
and authenticated by the Debtor, the Collateral Agent, and either, as required
by the Term Loan Agreement, the Required Term Lenders or all the Lenders, and
then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given.
7.3 Addresses for Notices. All notices and other communications
provided for hereunder shall be made as provided in the Term Loan Agreement. All
such notices and other communications shall be effective as provided in the Term
Loan Agreement.
7.4 Continuing Security Interest; Transfer of Interest. Unless earlier
terminated according to Section 4.3 hereof, this Security Agreement shall create
a continuing security interest in the Collateral and shall (a) remain in full
force and effect until indefeasible payment in full and termination of the
Secured Obligations, (b) be binding upon the Debtor, the Collateral Agent, the
Term Secured Parties and their respective successors, and assigns, and (c)
inure, together with the rights and remedies of the Collateral Agent hereunder,
to the benefit of, and be binding upon, the Collateral Agent, the Term Secured
Parties, and their respective successors, transferees, and assigns. Without
limiting the generality of the foregoing clause, when any Term Secured Party
assigns or otherwise transfers any interest held by it under the Term Loan
Agreement or other Credit Document to any other Person pursuant to the terms of
the Term Loan Agreement or other Credit Document, that other Person shall
thereupon become vested with all the benefits held by such Term Secured Party
under this Security Agreement. Upon the indefeasible payment in full and
termination of the Secured Obligations, the security interest granted hereby
shall terminate and all rights to the Collateral shall revert to the Debtor to
the extent such Collateral shall not have been sold or otherwise applied
pursuant to the terms hereof.
7.5 Choice of Law. This Security Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New York,
except to the extent that the validity or perfection of the security interests
hereunder, or remedies hereunder, in respect of any particular Collateral are
governed by the laws of a jurisdiction other than the State of New York.
-6-
The parties hereto have caused this Security Agreement to be duly
executed as of the date first above written.
DEBTOR:
[DEBTOR]
By:______________________________
Name:____________________________
Title: __________________________
-7-
COLLATERAL AGENT:
CREDIT LYONNAIS NEW YORK BRANCH,
as Collateral Agent
By:______________________________
Name:____________________________
Title: __________________________
-8-
SCHEDULE 2.2
Debtor Rigs
SCHEDULE 3.2
List of UCC Filing Jurisdictions
EXHIBIT F
FORM OF
TERM NOTE
$________________ ________ __, 2002
For value received, the undersigned, Pride Offshore, Inc., a Delaware
corporation ("Borrower"), hereby promises to pay to the order of
_________________________ ("Term Lender") the principal amount of
_______________ and __/100 Dollars ($________________) or, if less, the
aggregate outstanding principal amount of the Term Loan (as defined in the Term
Loan Agreement referred to below) made by the Term Lender to the Borrower,
together with interest on the unpaid principal amount of such Term Loan from the
date of such Term Loan until such principal amount is paid in full, at such
interest rates, and at such times, as are specified in the Term Loan Agreement.
This Term Note is one of the Term Loan referred to in, and is entitled
to the benefits of, and is subject to the terms of, the Term Loan Agreement
dated as of June 20, 2002 (as the same may be amended or modified from time to
time, the "Term Loan Agreement"), among the Borrower, the Term Lenders and
Credit Lyonnais New York Branch, as Administrative Agent for the Term Lenders.
Capitalized terms used in this Term Note that are defined in the Term Loan
Agreement and not otherwise defined in this Term Note have the meanings assigned
to such terms in the Term Loan Agreement. The Term Loan Agreement, among other
things, (a) provides for the making of a Term Loan by the Term Lender to the
Borrower in an aggregate amount not to exceed at any time outstanding the Dollar
amount first above mentioned, the indebtedness of the Borrower resulting from
such Term Loan being evidenced by this Term Note and (b) contains provisions for
acceleration of the maturity of this Term Note upon the happening of certain
events stated in the Term Loan Agreement and for prepayments of principal prior
to the maturity of this Term Note upon the terms and conditions specified in the
Term Loan Agreement.
Both principal and interest are payable in lawful money of the United
States of America to the Administrative Agent at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (or at such other location or address as may be
specified by the Administrative Agent in writing to the Borrower) in same day
funds. The Term Lender shall record its Term Loan and payments of principal made
under this Term Note, but no failure of the Term Lender to make such recordings
shall affect the Borrower's repayment obligations under this Term Note.
Except as specifically provided in the Term Loan Agreement, the
Borrower hereby waives presentment, demand, protest, notice of intent to
accelerate, notice of acceleration, and any other notice of any kind. No failure
to exercise, and no delay in exercising, any rights hereunder on the part of the
holder of this Term Note shall operate as a waiver of such rights.
The Obligations evidenced by this Term Note are guaranteed by the
Guarantors pursuant to the terms of the Term Loan Agreement and secured pursuant
to the terms of the Security Documents.
This Note shall be governed by and construed in accordance with the
laws of the State of New York.
PRIDE OFFSHORE, INC.
By:______________________________
Name:____________________________
Title: __________________________
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EXHIBIT G
FORM OF
RIG MORTGAGE
UNITED STATES
FIRST PREFERRED FLEET MORTGAGE
[OWNER]
and
CREDIT LYONNAIS NEW YORK BRANCH,
as Collateral Agent
For the Term Secured Parties
Named Herein
Dated June 20, 2002
INDEX
Subject Matter Page
-------------- ----
ARTICLE I DEFINITIONS AND INTERPRETATION............................................................ 3
ARTICLE II THE MORTGAGE.............................................................................. 4
ARTICLE III PAYMENT COVENANTS......................................................................... 5
ARTICLE IV PRESERVATION OF SECURITY.................................................................. 6
ARTICLE V COVENANTS; REPRESENTATIONS AND WARRANTIES................................................. 8
ARTICLE VI PROTECTION OF SECURITY.................................................................... 9
ARTICLE VII ENFORCEABILITY AND MORTGAGEE'S POWERS..................................................... 9
ARTICLE VIII FURTHER ASSURANCES........................................................................ 12
ARTICLE IX POWER OF ATTORNEY......................................................................... 12
ARTICLE X EXPENSES AND INDEMNITIES.................................................................. 13
ARTICLE XI COMMUNICATIONS............................................................................ 14
ARTICLE XII ASSIGNMENTS............................................................................... 15
ARTICLE XIII WAIVER; AMENDMENT......................................................................... 15
ARTICLE XIV MISCELLANEOUS............................................................................. 15
ARTICLE XV JURISDICTION.............................................................................. 16
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FIRST PREFERRED FLEET MORTGAGE
This FIRST PREFERRED FLEET MORTGAGE (this "Mortgage") dated as of June
20, 2002 is by [OWNER, a _____________________] having its principal offices at
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (the "Owner"), in favor of
CREDIT LYONNAIS NEW YORK BRANCH, a French banking association having offices at
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, as Collateral Agent and
mortgagee (in such capacity, the "Mortgagee") for the benefit of the Term
Secured Parties (as defined in the Term Loan Agreement referred to below).
RECITALS
A. The Owner is the sole owner of the whole (100%) of the vessels
described on Exhibit A attached hereto and made a part hereof.
B. Pursuant to the terms of the Term Loan Agreement dated as of
June 20, 2002 (as the same may be amended or supplemented from time to time, the
"Term Loan Agreement") and made by and among [the Owner][Pride Offshore, Inc., a
Delaware corporation (the "Borrower")], Credit Lyonnais New York Branch, as
Administrative Agent and the lenders identified in Exhibit B attached hereto and
who hereafter may become a party thereto ("Term Lenders"), the Term Lenders
agree to make available to the [Owner][Borrower] a term loan facility in the
maximum principal amount at any one time outstanding of Two Hundred Million
United States Dollars (US$200,000,000) (the loans made pursuant thereto, the
"Term Loans"). The Term Loans, and interest, fees and commissions thereon, are
to be paid as provided in the Term Loan Agreement. The Term Loans are evidenced
by the Term Loan Agreement and the other Credit Documents (as defined in the
Term Loan Agreement).
[C. The Owner has guaranteed the Borrower's obligations owing to
the Term Lenders under the Credit Documents pursuant to Article VIII of the Term
Loan Agreement (the "Guaranty").]
D. It is required under the terms of the Term Loan Agreement that
the Owner shall grant and execute this Mortgage as security for its obligations
under the [Guaranty and the Borrower's obligations under the] Term Loan
Agreement.
E. Therefore, the Owner, in order to secure its obligations under
the [Guaranty and the Borrower's obligations under the] Term Loan Agreement and
the Credit Documents, and the performance and observance of and compliance with
all of the covenants, terms and conditions contained in this Mortgage, has duly
authorized the execution and delivery of this Mortgage under and pursuant to 46
U.S.C. Section 31301 et seq., as amended (the "Ship Mortgage Act"), which is
entered into by the Owner in consideration of the Term Lenders agreeing, at the
request of the Owner [and the Borrower], to make the Term Loans available to the
[Owner][Borrower] and as a condition thereto and for other good and valuable
consideration provided by the Term Lenders (the sufficiency of which the Owner
hereby acknowledges).
NOW, THEREFORE, the Owner and the Mortgagee agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
Section 1.1 In this Mortgage unless the context otherwise requires, the
following expressions shall have the following meanings:
["Borrower" has the meaning set forth in the Recitals hereof.]
"Credit Documents" has the meaning set forth in the Term Loan
Agreement.
"Credit Party" has the meaning set forth in the Term Loan Agreement.
"Effective Date" means the date of this Mortgage.
"Excepted Liens" has the meaning set forth in Section 5.1(b) hereof.
["Guaranty" has the meaning set forth in the Recitals hereof.]
"Hazardous Materials" shall mean, collectively, "Hazardous Substance"
and "Hazardous Waste" as those terms are defined in the Term Loan Agreement.
"Lien" has the meaning set forth in the Term Loan Agreement.
"Mortgage" has the meaning set forth in the first paragraph hereof.
"Mortgagee" has the meaning set forth in the first paragraph hereof.
"Owner" has the meaning set forth in the first paragraph hereof.
"Rigs" means the whole of each of the offshore drilling rigs described
on Exhibit A hereto, and includes any share or interest therein, and their
engines, generators, drilling machinery and equipment, anchors, chains, pumps
and pumping equipment, furniture and fittings, boats, tackle, outfit, spare
gear, fuel, consumable or other stores, belongings and appurtenances whether on
board or ashore and whether now owned or hereafter acquired and all additions,
improvements and replacements hereafter made in or to said rigs or any part
thereof and all of their freight, hires and earnings.
"Secured Indebtedness" means all obligations and liabilities of the
Owner and the other Credit Parties except for the U.S. Parent (whether for
principal, interest, fees, expenses or any other charges whatsoever), now
existing or hereafter incurred under, arising out of or in connection with any
Credit Document to which it is a party [including, without limitation, in the
case of the Owner, the Guaranty,] and the due performance and compliance by the
Owner and the other Credit Parties except for the U.S. Parent with the terms of
each such Credit Document.
"Ship Mortgage Act" has the meaning set forth in the Recitals hereof.
"Term Loan Agreement" has the meaning set forth in the Recitals hereof.
-2-
"Term Loan Facility Period" means the period commencing on the
Effective Date and ending on the date upon which all amounts owing under the
Term Loan Agreement and all other amounts due to the Term Secured Parties
pursuant to the Term Loan Agreement and the other Credit Documents have been
repaid in full and the Term Loan Agreement has terminated.
"Term Loans" has the meaning set forth in the Recitals hereof.
"Term Secured Parties" has the meaning set forth in the Term Loan
Agreement.
"United States Dollars" and "US$" means the lawful currency of the
United States of America.
Section 1.2 Except where otherwise expressly provided or unless the
context otherwise requires, words and expressions defined in the Term Loan
Agreement shall bear the same meanings when used but not otherwise defined in
this Mortgage.
Section 1.3 In this Mortgage:
(a) section headings are inserted for convenience only and
shall not affect the construction of this Mortgage and, unless otherwise
specified, all references to Sections are to sections of this Mortgage;
(b) unless the context otherwise requires, words denoting the
singular number shall include the plural and vice versa;
(c) references to Persons include bodies corporate and
unincorporated;
(d) references to assets include property, rights and assets
of every description;
(e) references to any document are to be construed as
references to such document as amended or supplemented from time to time; and
(f) references to any enactment include re-enactments,
amendments and extensions thereof.
ARTICLE II
THE MORTGAGE
Section 2.1 Granting Clause. In order to secure the payment of the
Secured Indebtedness and to secure the performance and observance of and
compliance with the covenants, terms and conditions contained in this Mortgage
and the other Credit Documents to which it is a party, the Owner has GRANTED,
CONVEYED and MORTGAGED and does by these presents GRANT, CONVEY and MORTGAGE
unto the Mortgagee for the benefit of the Term Secured Parties and their
respective successors and assigns, the whole (100%) of each Rig; TO HAVE AND TO
HOLD the same unto the Mortgagee for the benefit of the Term Secured Parties and
their respective successors and assigns forever, upon the terms herein set
forth.
-3-
Section 2.2 Termination. If the Owner[, the Borrower] or [its][their]
respective successors and assigns shall pay or cause to be paid to the Mortgagee
and the other Term Secured Parties and their respective successors or assigns
the Secured Indebtedness in full as and when the same shall become due and
payable in accordance with the terms of the Term Loan Agreement, [the Guaranty,]
this Mortgage and the other Credit Documents; then these presents and the rights
hereunder shall cease, determine and be void and, in such event, the Mortgagee
agrees by accepting this Mortgage to furnish, execute and record, at the expense
of the Owner, all such documents as the Owner may reasonably require to
discharge this Mortgage, otherwise to be and remain in full force and effect.
Section 2.3 Partial Release; No Waiver. If any Rig is sold,
transferred, conveyed or otherwise disposed of in accordance with the Term Loan
Agreement, such Rig shall be released in writing by the Mortgagee from the lien
of this Mortgage, and such release shall not affect the Mortgagee's lien on the
remaining Rigs. Notwithstanding anything to the contrary herein, it is not
intended that any provision of this Mortgage shall waive the preferred status of
this Mortgage and that if any provision or part thereof herein shall be
construed as waiving the preferred status of this Mortgage then such provision
shall to such extent be void and of no effect.
Section 2.4 Owner Liable. The Owner shall remain liable to perform all
the obligations assumed by it in relation to each Rig; and until such time as
the Mortgagee or any Term Secured Party shall become the owner thereof following
foreclosure, neither the Mortgagee nor any other Term Secured Party shall be
under any obligation of any kind whatsoever in respect thereof or be under any
liability whatsoever in event of any failure by the Owner to perform its
obligations in respect thereof.
Section 2.5 Recordation under the Ship Mortgage Act. For the purpose
of this Mortgage and its filing and recordation as required by the Ship Mortgage
Act, (i) the total amount of the Secured Indebtedness is $200,000,000.00 of
principal, plus interest, expenses and fees thereon plus the performance of
mortgage covenants; (ii) the interest of the Owner (mortgagor) in the Rigs is
100% and the interest mortgaged to the Mortgagee is 100%; (iii) the respective
addresses of the Owner (mortgagor) and Mortgagee are as set forth on the first
page of this Mortgage; and (iv) subject to the partial release provisions in
Section 2.3 above, the discharge amount of the Mortgage is the same as the total
amount, and upon receipt thereof, the Mortgagee shall release the Rigs from the
lien of this Mortgage. The Mortgagee expressly does not waive the preferred
status of this Mortgage.
ARTICLE III
PAYMENT COVENANTS
Section 3.1 Payment Obligations. The Owner hereby covenants with the
Mortgagee and the other Term Secured Parties:
(a) to pay and indemnify the Mortgagee and the other Term
Secured Parties for all such reasonable expenses, claims, liabilities, losses,
costs, duties, fees, charges, or other moneys as are stated in this Mortgage to
be payable by the Owner to or recoverable from the Owner by the Mortgagee and
the other Term Secured Parties (or in respect of which the Owner
-4-
agrees in this Mortgage to indemnify the Mortgagee and the other Term Secured
Parties) at the times and in the manner specified in this Mortgage;
(b) to pay interest on any such reasonable expenses, claims,
liabilities, losses, costs, duties, fees, charges or other moneys referred to in
Section 3.1(a) from the date on which demand by the Mortgagee or any other Term
Secured Party is first made to the Owner to reimburse such expenses, claims,
liabilities, losses, costs, duties, fees, charges or other moneys (both before
and after any relevant judgment), at a rate per annum equal at all times to the
lesser of (i) the Alternate Base Rate (as defined in the Term Loan Agreement)
plus 2% and (ii) the Maximum Rate (as defined in the Term Loan Agreement); and
(c) to pay and perform its obligations which may be or become
due or owing to the Mortgagee or any other Term Secured Party, as the case may
be, under this Mortgage and the other Credit Documents to which the Owner is or
is to be a party at the times and in the manner specified herein or therein.
ARTICLE IV
PRESERVATION OF SECURITY
Section 4.1 Owner's Covenants Concerning the Security. It is declared
and agreed that:
(a) the security created by this Mortgage shall be held by the
Mortgagee as a continuing security for the payment of the Secured Indebtedness
and that the security so created shall not be satisfied by any intermediate
payment or satisfaction of any part of the Secured Indebtedness;
(b) the security so created shall be in addition to and shall
not in any way be prejudiced or affected by any of the other Credit Documents;
(c) the Mortgagee shall not have to wait for any Term Secured
Party to enforce any of the other Credit Documents, to the extent it may do so
pursuant to the terms thereof, before enforcing the security created by this
Mortgage;
(d) no failure or delay on the part of the Mortgagee in
exercising any right, power or privilege hereunder and no course of dealing
between the Owner and the Mortgagee or any other Term Secured Party shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege hereunder. The
rights and remedies herein expressly provided are cumulative and not exclusive
of any rights or remedies which the Mortgagee or any other Term Secured Party
would otherwise have. No notice to or demand on the Owner in any case shall
entitle the Owner to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the Mortgagee or the Term
Secured Parties to any other or further action in any circumstances without
notice or demand; and
(e) any waiver by the Mortgagee of any terms of this Mortgage
or any consent given by the Mortgagee under this Mortgage shall only be
effective if given in writing and then only for the purpose and upon the terms
for which it is given.
-5-
Section 4.2 Settlements; No Waiver. Any settlement or discharge under
this Mortgage between the Mortgagee and the Owner shall be conditional upon no
security or payment to the Mortgagee or the Term Secured Parties or any of them
by the Owner, any Credit Party, or any other Person being avoided or set-aside
or ordered to be refunded or reduced by virtue of any provision or enactment
relating to bankruptcy, insolvency, administration or liquidation for the time
being in force and, if such condition is not satisfied, the Mortgagee shall be
entitled to recover from the Owner on demand the value of such security or the
amount of any such payment as if such settlement or discharge had not occurred.
Section 4.3 Mortgagee's Rights Not Affected. The rights of the
Mortgagee under this Mortgage and the security hereby constituted shall not be
affected by any act, omission, matter or thing which, but for this provision,
might operate to impair, affect or discharge such rights and security, in whole
or in part, including without limitation, and whether or not known to or
discoverable by the Owner, any Credit Party, the Mortgagee, any Term Secured
Party or any other Person:
(a) any waiver granted to or composition with the Owner, any
Credit Party, or any other Person; or
(b) the taking, variation, compromise, renewal or release of
or refusal or neglect to perfect or enforce any rights, remedies or securities
against any of the Owner, any Credit Party, or any other Person; or
(c) any legal limitation, disability, incapacity or other
circumstances relating to the Owner, any Credit Party, or any other Person; or
(d) any amendment or supplement to the Term Loan Agreement,
any of the other Credit Documents or any other document or security (except that
the Secured Indebtedness shall be defined by reference to the Term Loan
Agreement, other Credit Document or other document or security as amended or
supplemented); or
(e) the dissolution, liquidation, amalgamation, reconstruction
or reorganization of any of the Owner, any Credit Party, or any other Person; or
(f) the unenforceability, invalidity or frustration of any
obligations of any of the Owner, any Credit Party, or any other Person under the
Term Loan Agreement, any of the other Credit Documents, or any other document or
security.
Section 4.4 Moneys Received by Mortgagee. Until the Secured
Indebtedness has been unconditionally and irrevocably paid in full to the
satisfaction of the Mortgagee, any moneys received, recovered or realized under
Article VII relating in whole or in part to the Secured Indebtedness shall be
held in a cash collateral account as security for the Secured Indebtedness and
applied to the Secured Indebtedness in accordance with Section 7.6 of the Term
Loan Agreement.
-6-
ARTICLE V
COVENANTS; REPRESENTATIONS AND WARRANTIES
Section 5.1 Owner's Covenants Concerning the Rigs and Other Matters.
The Owner covenants with the Mortgagee and the other Term Secured Parties that
throughout the Term Loan Facility Period the Owner will:
(a) comply with and satisfy all the requirements and
formalities established by the Ship Mortgage Act and any other pertinent
legislation of the United States to perfect this Mortgage as a legal, valid and
enforceable first (subject only to Permitted Liens) and preferred Lien upon the
Rigs and promptly to furnish to the Mortgagee from time to time such proofs as
the Mortgagee may request for its satisfaction with respect to the compliance by
the Owner with the provisions of this subsection (a);
(b) place, and use due diligence to retain, a properly
certified copy of this Mortgage on board each Rig with her papers and cause such
certified copy of this Mortgage to be exhibited to any and all Persons (and to
any representative of the Mortgagee on demand) having business with such Rig
which might give rise to any Lien thereon other than the Lien of this Mortgage,
Permitted Liens, Liens for wages of the crew (including the master of the Rig),
Liens for general average or salvage, Liens for wages of stevedores when
employed directly by a person listed in Section 31341 of the Ship Mortgage Act
and other maritime Liens incurred in the ordinary course of business provided
such other maritime liens are inferior to the Liens created by this Mortgage
(all such Liens herein collectively called "Excepted Liens"); and to place and
keep prominently displayed in the chart room and in the master's cabin of each
Rig a framed printed notice in plain type in English of such size that the
paragraph of reading matter shall cover a space not less than 6 inches wide and
9 inches high reading as follows:
NOTICE OF MORTGAGE
This Rig is covered by a First Preferred Fleet Mortgage to
Credit Lyonnais New York Branch, as Collateral Agent and
Mortgagee for the benefit of the Term Secured Parties referred
to in the said Mortgage under authority of the United States
Ship Mortgage Act, as amended and recodified as 46 U.S.C.
Section 31301 et seq. Under the terms of the said Mortgage
neither the Owner nor any charterer nor the master of this Rig
nor any other Person has any right, power or authority to
create, incur or permit to be imposed upon this Rig any lien
whatsoever other than for crew's wages and salvage and other
Excepted Liens (as that term is defined in said Mortgage);
(c) at its sole cost and expense and at no cost to the
Mortgagee, cause this Mortgage to be duly filed with the U.S. Coast Guard
National Rig Documentation Center in accordance with the provisions of 46
U.S.C.Section 31321, on the date hereof and subsequently duly recorded, and will
otherwise comply with and satisfy all the applicable provisions of the U.S.
Code, Title 46, Ch. 301 and Ch. 313, as amended, in order to establish, record
and maintain this Mortgage as a first preferred mortgage thereunder upon the
Rigs; and
-7-
(d) do all such other acts and execute all such instruments,
deeds, conveyances, mortgages and assurances as the Mortgagee shall reasonably
require in order to subject the Rigs to the lien of this Mortgage as aforesaid.
Section 5.2 Representations and Warranties. The Owner hereby
represents and warrants to the Mortgagee and covenants with the Mortgagee that:
(a) The Owner is a "citizen" of the United States of America
as defined in 46 U.S.C. Section 802, as amended, duly qualified to engage in the
United States coastwise trade and foreign commerce of the United States, and
shall remain such a citizen during the life of this Mortgage.
(b) The Owner lawfully owns and is lawfully possessed of the
whole (100%) of each of the Rigs free from any Lien whatsoever other than the
lien of this Mortgage and Excepted Liens, and the Owner will warrant and defend
the title to, and possession of, each of the Rigs and every part thereof for the
benefit of the Mortgagee, against the claims and demands of all persons
whomsoever.
(c) Except for Excepted Liens, prior to and as of the date of
this Mortgage, the Owner is not aware of any maritime Liens, prior mortgages or
other obligations or liability on the Rig. The Mortgagee acknowledges that is
has received written notice complying with the disclosure requirements of
Section 31323 of the Ship Mortgage Act.
ARTICLE VI
PROTECTION OF SECURITY
Section 6.1 Mortgagee's Rights. The Mortgagee shall without prejudice
to its other rights and powers under this Mortgage and the other Credit
Documents be entitled (but not bound) at any time and as often as may be
reasonably necessary to take any such action as it may in the reasonable
exercise of its discretion think fit for the purpose of protecting or
maintaining the security created by this Mortgage and the other Credit Documents
(including, without limitation, any actions entitled under the Term Loan
Agreement) and all reasonable expenses, liabilities, or losses (including,
without limitation, reasonable legal fees) so incurred by the Mortgagee and the
other Term Secured Parties in or about the protection or maintenance of the said
security together with interest payable thereon according to Section 3.1(b)
shall be repayable to it by the Owner on demand; provided that if no Event of
Default exists, the Mortgagee shall give the Owner written notice and
opportunity to take such action on the Mortgagee's behalf prior to taking any
such action; provided further, however, to the extent this Mortgage states that
the Mortgagee may take any action during the occurrence and continuance of an
Event of Default (including, without limitation, under Article VII hereof), the
Mortgagee shall not be entitled to take such action unless an Event of Default
shall have occurred and be continuing.
ARTICLE VII
ENFORCEABILITY AND MORTGAGEE'S POWERS
Section 7.1 Events of Default. During the continuance of any of the
Events of Default specified in the Term Loan Agreement but without the necessity
for any court order or declaration in any jurisdiction to the effect that an
Event of Default has occurred, the security
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constituted by this Mortgage shall become immediately enforceable and the
Mortgagee shall be entitled, as and when it may see fit, to put into force and
exercise all or any of the powers possessed by it as mortgagee of the Rigs or
otherwise and in particular:
(a) to exercise all the rights and remedies in foreclosure and
otherwise given to mortgagees by applicable law including the provisions of the
Ship Mortgage Act or any other applicable law including the laws of any other
applicable jurisdiction;
(b) to take possession of the Rigs or any of them whether
actually or constructively and/or otherwise to take control of such Rigs
wherever located and cause the Owner or any other Person in possession of the
Rigs forthwith upon demand to surrender the same to the Mortgagee without legal
process and without liability of the Mortgagee for any losses or damages
incurred thereby and without having to render accounts to the Owner in
connection therewith;
(c) to require that all policies, contracts, certificates of
entry and other records relating to the Insurance Policies (including details of
and correspondence concerning outstanding claims) be forthwith delivered to or
to the order of the Mortgagee;
(d) to collect, recover, compromise and give a good discharge
for any and all moneys or claims for moneys then outstanding or thereafter
arising under the Insurance Policies or any Requisition Compensation and to
permit any brokers through whom collection or recovery is effected to charge the
usual brokerage therefor;
(e) to take over or institute (if necessary using the name of
the Owner) all such proceedings in connection with any Rig, the Insurance
Policies, or any Requisition Compensation as the Mortgagee thinks reasonably
necessary and to discharge, compound, release or compromise claims against the
Owner in respect of any Rig which have given or may give rise to any charge or
Lien on such Rig or which are or may be enforceable by proceedings against such
Rig;
(f) following acceleration of the Term Loans, to sell any Rig
or any share therein, upon advance notice of ten (10) consecutive days published
in any newspaper authorized to publish legal notices of that kind in the hailing
port and the places of sale of the Rigs and by sending notice of such sale at
least fourteen (14) days prior to the date fixed for such sale to the Owner, and
each other Person entitled to notice under applicable Legal Requirements, free
from any claim of or by the Owner of any nature whatsoever, and with or (subject
to the rights of third parties under applicable law) without the benefit of any
charter party or other contract for her employment, by public auction or private
contract at such place and upon such commercially reasonable terms (including,
without limitation, on terms such that payment of some or all of the purchase
price be deferred) as the Mortgagee in its absolute discretion may determine
with power to postpone any such sale, without being answerable for any loss
occasioned by such sale or resulting from postponement thereof, except in the
case of gross negligence or willful misconduct, and/or itself to purchase such
Rig at any such public auction and to set off the purchase price against all or
any part of the Secured Indebtedness in the manner specified in Section 7.6 of
the Term Loan Agreement; provided, however that in the event any such Rig shall
-9-
be offered for sale by private sale, no newspaper publication of notice shall be
required, nor notice of adjournment of sale;
(g) subject to the rights of any charter, to manage, insure,
maintain and repair any Rig and to charter, employ, sail or lay up any Rig in
such manner, upon such terms and for such period as the Mortgagee deems
reasonably expedient; and for the purposes aforesaid the Mortgagee shall be
entitled to do all acts and things reasonably incidental or conducive thereto
and in particular to enter into such arrangements respecting such Rig, and the
insurance, management, maintenance, repair, classification, chartering and
employment of such Rig, in all respects as if the Mortgagee were the owner of
such Rig and without being responsible for any loss thereby incurred;
(h) to recover from the Owner on demand any liabilities,
losses and reasonable expenses as may be incurred by the Mortgagee in or about
the exercise of the power vested in the Mortgagee under Section 7.1(g);
(i) generally and in addition, but not in lieu of any of the
above rights, to recover from the Owner on demand any liabilities, losses and
reasonable expenses incurred by the Mortgagee in or about or incidental to the
exercise by it of any of the powers aforesaid; and
(j) generally, take any other action or exercise any other
right permitted by applicable law.
Section 7.2 Sufficiency of Payments Received. The Mortgagee shall not
be obliged to make any enquiry as to the nature or sufficiency of any payment
received by it under this Mortgage or to make any claim, take any action or
enforce any rights and benefits assigned to the Mortgagee by this Mortgage or to
which the Mortgagee may at any time be entitled hereunder.
Section 7.3 Mortgagee, Term Secured Parties Not Liable. Neither the
Mortgagee, the Term Secured Parties, nor any of their agents, managers,
officers, employees, delegates and advisers shall be liable for any expense,
claim, liability, loss, cost, damage or expense incurred or arising in
connection with the exercise or purported exercise of any rights, powers and
discretions under this Mortgage in the absence of its, his, or her gross
negligence or wilful misconduct.
Section 7.4 No Mortgagee-in-Possession. To the fullest extent
permitted by law, the Mortgagee shall not by reason of the taking possession of
any Rig be liable to account as mortgagee-in-possession or for anything except
actual receipts or be liable for any loss upon realization or for any default or
omission for which a mortgagee-in-possession might be liable.
Section 7.5 Purchaser's Rights on Sale. Upon any sale of any Rig or
any share therein by the Mortgagee, the purchaser shall not be bound to see or
inquire whether the Mortgagee's power of sale has arisen in the manner provided
in this Mortgage and the sale shall be deemed to be within the power of the
Mortgagee and the receipt of the Mortgagee for the purchase money shall
effectively discharge the purchaser who shall not be concerned with the manner
of application of the proceeds of sale or be in any way answerable therefor.
-10-
Section 7.6 Divestiture of Owner's Rights. A sale of any Rig made in
pursuance of this Mortgage, whether under the power of sale hereby granted or
any judicial proceedings, shall operate to divest all right, title and interest
of any nature whatsoever of the Owner therein and thereto, and shall bar the
Owner, its successors and assigns, and all Persons claiming by, through or under
them. No purchaser shall be bound to inquire whether notice has been given or
whether any default has occurred, or as to the propriety of the sale, or as to
application of the proceeds thereof.
ARTICLE VIII
FURTHER ASSURANCES
Section 8.1 Perfection and Preservation of the Collateral. The Owner
shall execute and do all such assurances, acts and things as the Mortgagee may
reasonably require for:
(a) perfecting or protecting the security created (or intended
to be created) by this Mortgage; or
(b) preserving or protecting any of the rights of the
Mortgagee and the other Term Secured Parties under this Mortgage; or
(c) ensuring that the security constituted by this Mortgage
and the covenants and obligations of the Owner under this Mortgage shall inure
to the benefit of any transferee, successor or assignee of the Mortgagee as is
referred to in Section 12.1; or
(d) enforcing the security constituted by this Mortgage on or
at any time after the same shall have become enforceable; or
(e) the exercise of any power, authority or discretion vested
in the Mortgagee under this Mortgage,
in any such case, forthwith upon demand by the Mortgagee and at the expense of
the Owner; provided, however, that, to the extent this Mortgage states that the
Mortgagee may direct the Owner to take an action during the occurrence and
continuance of an Event of Default (including, without limitation, under Section
7 hereof), the Mortgagee shall not be entitled to request the Owner to take such
action unless an Event of Default shall have occurred and be continuing.
ARTICLE IX
POWER OF ATTORNEY
Section 9.1 Owner's Attorney. The Owner, by way of security and in
order to more fully secure the performance of the Owner's obligations under this
Mortgage, hereby irrevocably appoints the Mortgagee as its attorney for the
duration of the Term Loan Facility Period for the purposes of:
(a) doing in its name all acts and executing, signing and (if
required) registering in its name all documents which the Owner itself could do,
execute, sign or register in relation to any Rig (including without limitation,
transferring title to such Rig to a third party);
-11-
(b) executing, signing, perfecting, doing and (if required)
registering every such further assurance document, act, or thing as is referred
to in Section 8.1; and
(c) demanding, collecting, receiving, compromising, and suing
for all freights, hires, earnings, issues, revenues and income of any Rig;
provided, however, that such powers shall not be exercisable by or on behalf of
the Mortgagee unless an Event of Default shall have occurred and be continuing
(and, in the case exercised with respect to an action contemplated by Section
7.1(f), unless the Term Loans shall have been accelerated).
Section 9.2 Third Parties. The exercise of such power as is referred to
in Section 9.1(a) by or on behalf of the Mortgagee shall not put any Person
dealing with the Mortgagee upon any enquiry as to whether this Mortgage has
become enforceable nor shall such Person be in any way affected by notice that
this Mortgage has not become enforceable and, in relation to Sections 9.1(a),
9.1(b) and 9.1(c), the exercise by the Mortgagee of such power shall be
conclusive evidence as against third parties of its right to exercise the same.
ARTICLE X
EXPENSES AND INDEMNITIES
Section 10.1 Mortgage Preparation. The Owner agrees to pay all
reasonable out-of-pocket costs and expenses of the Mortgagee in connection with
the negotiation, preparation, execution and delivery of this Mortgage and any
amendment, waiver, release or consent relating thereto (including, without
limitation, the reasonable fees and disbursements of counsel and any valuation
fees) and, after the occurrence and during the continuance of an Event of
Default, each of the Mortgagee and the Term Secured Parties in connection with
the enforcement of this Mortgage (including, without limitation, the actual
reasonable fees and disbursements of counsel for the Mortgagee and the Term
Secured Parties).
Section 10.2 Owner's Indemnity. WITHOUT LIMITING THE FOREGOING SECTION
10.1, THE OWNER HEREBY FURTHER INDEMNIFIES THE MORTGAGEE, EACH OTHER TERM
SECURED PARTY, AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES,
REPRESENTATIVES AND AGENTS FROM AND HOLDS HARMLESS AND AGREES TO DEFEND EACH OF
THEM AGAINST ANY AND ALL LOSSES, LIABILITIES, OBLIGATIONS, CLAIMS, DAMAGES, OR
REASONABLE EXPENSES INCURRED BY ANY OF THEM, AS A RESULT OF, OR ARISING OUT OF,
OR IN ANY WAY RELATED TO, OR BY REASON OF, (A) ANY INVESTIGATION, LITIGATION OR
OTHER PROCEEDING (WHETHER OR NOT THE MORTGAGEE IS A PARTY THERETO) RELATED TO
THE ENTERING INTO AND/OR PERFORMANCE OF THIS MORTGAGE HEREUNDER OR THE
CONSUMMATION OF ANY TRANSACTIONS CONTEMPLATED HEREBY, WHETHER INITIATED BY THE
OWNER OR ANY OTHER PERSON, INCLUDING WITHOUT LIMITATION, THE ACTUAL REASONABLE
FEES AND DISBURSEMENTS OF COUNSEL INCURRED IN CONNECTION WITH ANY SUCH
INVESTIGATION, LITIGATION OR OTHER PROCEEDING OR (B) ANY PERSONAL INJURY TO OR
DEATH OF OR ANY LOSS OR DAMAGE TO PROPERTY OF ANY PERSON OR (C) THE ACTUAL OR
ALLEGED PRESENCE OF HAZARDOUS MATERIALS IN THE AIR, SURFACE WATER, GROUNDWATER,
SURFACE OR SUBSURFACE OF ANY RIG, FACILITY OR LOCATION AT ANY TIME OWNED OR
OPERATED BY THE OWNER OR ANY OF ITS AFFILIATES, THE GENERATION, STORAGE,
TRANSPORTATION OR DISPOSAL OF HAZARDOUS MATERIALS AT ANY RIG, FACILITY OR
LOCATION AT ANY TIME OWNED OR OPERATED BY THE OWNER OR ANY OF ITS AFFILIATES,
THE NON-COMPLIANCE OF
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ANY RIG, FACILITY OR LOCATION AT ANY TIME OWNED OR OPERATED BY THE OWNER OR ANY
OF ITS AFFILIATES WITH FEDERAL, STATE AND LOCAL LAWS, REGULATIONS, AND
ORDINANCES (INCLUDING APPLICABLE PERMITS THEREUNDER) APPLICABLE TO ANY SUCH RIG,
FACILITY OR LOCATION, OR ANY VIOLATION OR ALLEGED VIOLATION OF ANY ENVIRONMENTAL
LAWS ASSERTED AGAINST THE OWNER, ANY OF ITS AFFILIATES, OR ANY RIG, FACILITY OR
LOCATION AT ANY TIME OWNED OR OPERATED BY THE OWNER OR ANY OF ITS AFFILIATES,
INCLUDING, IN EACH CASE, WITHOUT LIMITATION, THE ACTUAL REASONABLE FEES AND
DISBURSEMENTS OF COUNSEL AND OTHER CONSULTANTS INCURRED IN CONNECTION WITH ANY
SUCH INVESTIGATION, LITIGATION OR OTHER PROCEEDING. TO THE EXTENT THAT THE
UNDERTAKING TO INDEMNIFY, PAY OR HOLD HARMLESS AND DEFEND THE MORTGAGEE SET
FORTH IN THIS SECTION 10.2 MAY BE UNENFORCEABLE BECAUSE IT IS VIOLATIVE OF ANY
LAW OR PUBLIC POLICY, THE OWNER SHALL MAKE THE MAXIMUM CONTRIBUTION TO THE
PAYMENT AND SATISFACTION OF EACH OF THE INDEMNIFIED LIABILITIES WHICH IS
PERMISSIBLE UNDER APPLICABLE LAW. SUCH OBLIGATION TO INDEMNIFY, HOLD HARMLESS
AND DEFEND THE MORTGAGEE AND OTHER PERSONS SET OUT ABOVE SHALL APPLY
IRRESPECTIVE OF THE NEGLIGENCE OR STRICT LIABILITY OF THE MORTGAGEE OR ANY OTHER
INDEMNIFIED PERSON, UNLESS SUCH LOSS OR INJURY ARISES DIRECTLY OUT OF THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF MORTGAGEE OR SUCH OTHER INDEMNIFIED PERSON.
Section 10.3 Payment Currency. If, under any applicable law or
regulation, and whether pursuant to a judgment being made or registered against
the Owner or the liquidation of the Owner or for any other reason, any payment
under or in connection with this Mortgage is made in a currency (the "Payment
Currency") other than the currency in which such payment is due under or in
connection with this Mortgage (the "Contractual Currency"), then to the extent
that the amount of such payment actually received by the Mortgagee, when
converted into the Contractual Currency at the rate of exchange, (a) falls short
of the amount due under or in connection with this Mortgage, the Owner, as a
separate and independent obligation, shall indemnify and hold harmless the
Mortgagee against the amount of such shortfall or (b) exceeds the amount due
under or in connection with this Mortgage, the Mortgagee shall reimburse the
Owner the excess. For the purposes of this Section 10.3, "rate of exchange"
means the rate at which the Mortgagee is able on the date of such payment (or,
if it is not practicable for the Mortgagee to purchase the contractual currency
with the Payment Currency on the date of such payment, at the rate of exchange
as soon afterwards as is practicable for the Mortgagee to do so) to purchase the
Contractual Currency with the Payment Currency and shall take into account any
premium and other costs of exchange with respect thereto.
ARTICLE XI.
COMMUNICATIONS
Section 11.1 Notices. All notices required to be given to the
Mortgagee shall be made to the following address:
Credit Lyonnais New York Branch
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇▇
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17th Floor - Syndications
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
All other notices shall be made to the addresses given in Section 11.2 of the
Term Loan Agreement.
ARTICLE XII
ASSIGNMENTS
Section 12.1 Assignees. This Mortgage shall be binding upon and shall
inure to the benefit of the Owner, the Mortgagee and the Term Secured Parties
and their respective transferees, successors and permitted assigns, and
references in this Mortgage to any of them shall be construed accordingly.
Section 12.2 No Assignment by Owner. Except as permitted by the Term
Loan Agreement, the Owner may not assign or transfer any of the Rigs or its
rights and/or obligations under this Mortgage.
ARTICLE XIII
WAIVER; AMENDMENT
Section 13.1 No Waiver. None of the terms and conditions of this
Mortgage may be changed, waived, modified or varied in any manner whatsoever
unless in writing duly signed by the Owner and the Mortgagee (with the consent
of either the Required Term Lenders or, to the extent required by Section 11.1
of the Term Loan Agreement, all of the Term Lenders).
ARTICLE XIV
MISCELLANEOUS
Section 14.1 Governing Law. This Mortgage shall be governed by the
federal maritime laws of the United States of America and to the extent
necessary by the laws of the State of New York.
Section 14.2 No Invalidity, Etc. If at any time any one or more of the
provisions in this Mortgage is or becomes invalid, illegal or unenforceable in
any respect under any law or regulation, the validity, legality and
enforceability of the remaining provisions of this Mortgage shall not be in any
way affected or impaired thereby.
Section 14.3 Delegation of Powers. The Mortgagee, at any time and from
time to time, may delegate by power of attorney or in any other manner to any
Person or Persons all or any of the powers, authorities and discretions which
are for the time being exercisable by the Mortgagee under this Mortgage in
relation to the Rigs. Any such delegation may be made upon such terms and
subject to such regulations as the Mortgagee may think fit. The Mortgagee shall
not be in any way liable or responsible to the Owner for any loss or damage
arising from any act, default, omission or misconduct on the part of any such
delegate (other than gross negligence or willful misconduct); provided such
delegation has been made in good faith.
-14-
Section 14.4 Counterparts. This instrument may be executed in any
number of counterparts, and each of such counterparts shall for all purposes be
deemed to be an original.
Section 14.5 Mortgagee. For purposes of the Ship Mortgage Act, the
"mortgagee" under this Mortgage is Credit Lyonnais New York Branch, in its
capacity as Collateral Agent.
ARTICLE XV
JURISDICTION
Section 15.1 New York. Any legal action or proceeding with respect to
this Mortgage may be brought in the courts of the United States or State of New
York sitting in New York City in the Borough of Manhattan and the Owner hereby
accepts for itself and its property, generally and unconditionally, the
non-exclusive jurisdiction of such court. The Owner further irrevocably consents
to the service of process out of such court in any such action or proceeding in
the manner provided for in the Term Loan Agreement. Nothing herein shall affect
the right of the Mortgagee to serve process in any other manner permitted by law
or to commence legal proceedings or otherwise proceed against the Owner in any
other jurisdiction.
Section 15.2 Power to Seize Rig or Take Action. Without prejudice to
the generality of Section 15.1, the Mortgagee shall have the right to arrest and
take action against any Rig or the Owner at whatever place such Rig or the Owner
shall be found and for the purpose of any action which the Mortgagee may bring
before the courts of such jurisdiction or other judicial authority and for the
purpose of any action which the Mortgagee may bring against such Rig, any writ,
notice, judgment or other legal process or documents may (without prejudice to
any other method of service under applicable law) be served upon the master of
such Rig (or upon anyone acting as the master) and such service shall be deemed
good service on the Owner for all purposes.
IN WITNESS whereof the Owner has caused this Mortgage to be executed
the day and year first before written.
[OWNER]
By:______________________________
Name:____________________________
Title: __________________________
-▇▇-
▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇▇▇ )
)
COUNTY OF ▇▇▇▇▇▇ )
On this 20th day of June, 2002 before me personally appeared
______________________________ to me known who being by me duly sworn did depose
and say that he is the ______________________________, of [Owner], the company
described in and which executed the foregoing instrument; and that he signed his
name thereto pursuant to authority granted to him by the _________________ of
said company; and that said instrument is the act and deed of the company.
And the said ___________________________ did further produce to me
sufficient proof that he is the ___________________________ of said company and
that he was duly authorized by the said company to execute the foregoing
mortgage, and I the notary hereby certify that the signature of the said
______________________ on the foregoing mortgage is authentic.
______________________________
Notary Public
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EXHIBIT A
Official
Rig Name Owner Flag Number
-------- ----- ---- ------
EXHIBIT B
List of Term Lenders
Credit Lyonnais New York Branch
1301 Avenue of the Americas
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
EXHIBIT K
FORM OF JOINDER AGREEMENT
[Material Subsidiary][Permitted Holding Company], a __________________
corporation (the "Company"), hereby agrees with Credit Lyonnais New York Branch,
as Administrative Agent (the "Administrative Agent") under the Term Loan
Agreement dated as of June 20, 2002 among Pride Offshore, Inc., a Delaware
corporation [which is the direct or indirect shareholder of the Company][which
is a wholly-owned subsidiary of the Company], the Guarantors party thereto, the
Term Lenders parties thereto, and Credit Lyonnais New York Branch, as
Administrative Agent and Collateral Agent (as such agreement is amended from
time to time in accordance with its terms, the "Term Loan Agreement";
capitalized terms used herein and not otherwise defined having the meanings set
forth therein), as follows:
The Company hereby agrees and confirms that, as of the date hereof, it
(a) intends to be a party to the Term Loan Agreement and undertakes to perform
all the obligations expressed therein, respectively, of a Guarantor, (b) agrees
to become a Guarantor pursuant to the terms of Article VIII of the Term Loan
Agreement [and accede to the Agreement as the Parent Company]* and to be bound
by the terms of the Agreement as a Guarantor [and Parent Company] pursuant to
Section 5.13 of the Agreement, and (c) confirms that the representations and
warranties set forth in the Agreement with respect to the Company are true and
correct in all material respects as of the date of this Joinder Agreement.
[Subsidiary's][Permitted Holding Company's] administrative details are
as follows:
Address:
Fax No:
Attention:
[Subsidiary][Permitted Holding Company] irrevocably appoints CT
Corporation System (the "Process Agent"), with an office on the date hereof at
▇▇▇ ▇▇▇▇▇▇ ▇▇▇., ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇, as its agent to receive on its
behalf and on behalf of its property service of copies of any summons or
complaint or any other process which may be served in any action. Such service
may be made by mailing or delivering a copy of such process to
[Subsidiary][Permitted Holding Company] in care of the Process Agent at the
Process Agent's above address, and [Subsidiary][Permitted Holding Company]
hereby irrevocably authorizes and directs the Process Agent to accept such
service on its behalf. As an alternative method of service, each
[Subsidiary][Permitted Holding Company] also irrevocably consents to the service
of any and all process in any such action or proceeding by the mailing of copies
of such process to it at the address specified for it above.
This Joinder Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
______________
* Include if Person delivering Joinder Agreement is a Permitted Holding
Company.
IN WITNESS WHEREOF this Joinder Agreement was executed and delivered as
of the _____ day of ___________________, 200__.
[SUBSIDIARY]
[PERMITTED HOLDING COMPANY]
By:______________________________
Name:____________________________
Title: __________________________
-2-
SCHEDULE 4.17
INITIAL MORTGAGED TERM LOAN FACILITY RIGS
RIG REGISTERED OWNER FLAG OFFICIAL OR HOME PORT CLASS LOCATION OPERATING STATUS
--- ---------------- ---- -------------- --------- ----- -------- ----------------
PATENT NUMBER
-------------
Marine 305 Pride Offshore Vanuatu 1027 Port Vila yes SE Asia operating
International LLC
Pride Arizona Pride Offshore, Inc. US 638626 Houston yes GOM stacked
Pride Florida Pride Offshore, Inc. US 641802 Houston yes GOM operating
Pride Georgia Pride Offshore, Inc. US 638954 Houston yes GOM stacked
Pride Illinois Pride Offshore, Inc. US 523782 Houston yes GOM stacked
Pride Kentucky Pride Offshore, Inc. US 560547 Houston yes GOM stacked
Pride Michigan Pride Offshore, Inc. US 567686 Houston yes GOM stacked
Pride Missouri Pride Offshore, Inc. US 652045 Houston yes GOM operating
Pride Nebraska Pride Offshore, Inc. US 631372 Houston yes GOM operating
Pride North America Pride North America LLC Vanuatu 1055 Port Vila yes W. Africa operating
Pride Wisconson Pride Offshore, Inc. Panama 8142-PEXT-7 Panama City yes GOM shipyard