Participation Agreement - Deepwater Drilling II LLC and Deepwater Investment Trust 1999-A
EXECUTION COPY
AMENDED AND RESTATED PARTICIPATION AGREEMENT
dated as of December 18, 2001
among
DEEPWATER DRILLING II L.L.C.,
DEEPWATER INVESTMENT TRUST 1999-A,
as Investment Trust,
WILMINGTON TRUST FSB,
not in its individual capacity
except as expressly stated herein, but solely as Investment Trustee,
WILMINGTON TRUST COMPANY,
not in its individual capacity except as expressly
provided herein, but solely as Charter Trustee,
VARIOUS FINANCIAL INSTITUTIONS,
as Certificate Purchasers,
HATTERAS FUNDING CORPORATION,
as the Conduit (Hatteras),
PARADIGM FUNDING LLC,
as the Conduit (Paradigm),
LIBERTY STREET FUNDING CORP.,
as the Conduit (Liberty),
VARIOUS FINANCIAL INSTITUTIONS,
as Liquidity Purchasers,
BANK OF AMERICA, N.A.,
as Administrative Agent
THE ROYAL BANK OF SCOTLAND, NEW YORK BRANCH,
as Co-Syndication Agent
FORTIS CAPITAL CORP.,
as Co-Syndication Agent
THE BANK OF NOVA SCOTIA,
as Co-Documentation Agent
WESTDEUTSCHE LANDESBANK GIROZENTRALE, NEW YORK BRANCH,
as Co-Documentation Agent
THE PERSON NAMED ON SCHEDULE II TO THE INVESTMENT TRUST AGREEMENT,
as Investment Trust Beneficiary
VARIOUS FINANCIAL INSTITUTIONS AS ADMINISTRATORS
AND AS LIQUIDITY AGENTS
solely with respect to Sections 2.15, 9.4, 12.13(b), and 12.13(d)
------------- --- -------- --------
TRANSOCEAN SEDCO FOREX INC. and
CONOCO INC.,
and
solely with respect to Sections 5.2 and 6.4,
------------ ---
RBF DEEPWATER EXPLORATION II INC. and
CONOCO DEVELOPMENT II INC.
<PAGE>
SECTION 1
DEFINITIONS; INTERPRETATION
SECTION 2
COMMITMENTS OF THE PARTIES
SECTION 2.1 Certain Documentation Date Events. . . . . . . . . . . . . . . . 2
SECTION 2.2 Certain Refinancing Date Events. . . . . . . . . . . . . . . . . 2
SECTION 2.3 Contributions by Certificate Purchasers; Advance by the Conduit. 3
SECTION 2.4 Certificates and Payments. . . . . . . . . . . . . . . . . . . . 3
SECTION 2.5 Limitations on Contributions and Advances. . . . . . . . . . . . 4
SECTION 2.6 Application of Proceeds. . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.7 [Intentionally Omitted]. . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.8 Postponement . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.9 Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.10 [Intentionally Omitted]. . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.11 Refinancing Request; Timing of Advances and Contributions. . . . 7
SECTION 2.12 Computations . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.13 Charter Hire Payments. . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.14 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.15 Payments Under the Ship Mortgage; Limitation on Foreclosure. . . 8
SECTION 2.16 Payment to each Conduit on Charter Hire Payment Date . . . . . . 9
SECTION 3
DOCUMENTATION DATE; DOCUMENTATION DATE CONDITIONS PRECEDENT
SECTION 3.1 Documentation Date . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 3.2 Conditions Precedent to Documentation Date . . . . . . . . . . . 9
SECTION 4
EFFECTIVE DATE; REFINANCING DATE CONDITIONS PRECEDENT
SECTION 4.1 Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 4.2 Conditions Precedent to Refinancing Date . . . . . . . . . . . . 12
SECTION 4.3 Head Lease Transaction . . . . . . . . . . . . . . . . . . . . . 15
SECTION 4.4 Replacement Conditions . . . . . . . . . . . . . . . . . . . . . 15
SECTION 4.5 Accounting Changes . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 5
REPRESENTATIONS AND WARRANTIES
SECTION 5.1 Representations and Warranties of Deepwater. . . . . . . . . . . 17
i
<PAGE>
TABLE OF CONTENTS
(Cont.)
Page
----
SECTION 5.2 Representations and Warranties of Members. . . . . . . . . . . . 21
SECTION 5.3 Representations and Warranties of the Investment Trust and
the Investment Trust Beneficiary . . . . . . . . . . . . . . . . 22
SECTION 5.4 Representations and Warranties of the Liquidity Purchasers
and Certificate Purchasers . . . . . . . . . . . . . . . . . . . 23
SECTION 5.5 Representations and Warranties of the Trustees . . . . . . . . . 25
SECTION 6
CERTAIN COVENANTS AND AGREEMENTS
SECTION 6.1 Covenants of Deepwater . . . . . . . . . . . . . . . . . . . . . 27
SECTION 6.2 Certain Covenants of the Charter Trustee, the Investment
Trustee, the Investment Trust and Investment Trust Beneficiary . 31
SECTION 6.3 Covenants of the Funding Participants. . . . . . . . . . . . . . 33
SECTION 6.4 Covenants of the Members . . . . . . . . . . . . . . . . . . . . 34
SECTION 6.5 Hedging Agreements . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 6.6 [Intentionally Omitted]. . . . . . . . . . . . . . . . . . . . . 36
SECTION 6.7 Charter Extension Option . . . . . . . . . . . . . . . . . . . . 36
SECTION 6.8 Excessive Use Indemnity. . . . . . . . . . . . . . . . . . . . . 36
SECTION 7
CERTAIN PROCEDURES
SECTION 7.1 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 7.2 Increased Costs and Reduction of Return. . . . . . . . . . . . . 37
SECTION 7.3 Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 7.4 Inability to Determine Rates . . . . . . . . . . . . . . . . . . 38
SECTION 7.5 Reserves on Base Rate Advances . . . . . . . . . . . . . . . . . 39
SECTION 7.6 Certificates of Funding Participants . . . . . . . . . . . . . . 39
SECTION 7.7 Substitution of Funding Participants;
Change in Applicable Office; Prepayments . . . . . . . . . . . . 39
SECTION 7.8 Legal and Tax Representation . . . . . . . . . . . . . . . . . . 40
SECTION 7.9 Failure of a Certificate Purchaser to Fund . . . . . . . . . . . 40
SECTION 8
PAYMENT OF CERTAIN EXPENSES
SECTION 8.1 Transaction Expenses . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 8.2 Transaction Expenses if Closing does not Occur . . . . . . . . . 42
SECTION 8.3 On-Going Expenses. . . . . . . . . . . . . . . . . . . . . . . . 42
ii
<PAGE>
TABLE OF CONTENTS
(Cont.)
Page
----
SECTION 9
RESTRICTIONS ON TRANSFERS; CHANGE OF CONTROL; MEMBER TRANSFER
SECTION 9.1 Restrictions on the Funding Participants . . . . . . . . . . . . 43
SECTION 9.2 Restrictions on Trustees and Investment Trust Beneficiary. . . . 45
SECTION 9.3 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 9.4 Change of Control. . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 9.5 Member Transfer. . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 10
INDEMNIFICATION
SECTION 10.1 General Indemnity. . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 10.2 General Indemnity Exclusions . . . . . . . . . . . . . . . . . . 48
SECTION 10.3 Proceedings in Respect of Claims . . . . . . . . . . . . . . . . 50
SECTION 10.4 General Tax Indemnity. . . . . . . . . . . . . . . . . . . . . . 51
SECTION 11
AGENTS
SECTION 11.1 Appointment of Administrative Agent and Investment Trust
Beneficiary; No Duties . . . . . . . . . . . . . . . . . . . . . 60
SECTION 11.2 Delegation of Duties . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 11.3 Exculpatory Provisions . . . . . . . . . . . . . . . . . . . . . 61
SECTION 11.4 Reliance by Administrative Agent and the Investment Trust
Beneficiary. . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 11.5 [Intentionally Omitted]. . . . . . . . . . . . . . . . . . . . . 62
SECTION 11.6 Non-Reliance on Administrative Agent or Investment Trust
Beneficiary and Other Funding Participants . . . . . . . . . . . 62
SECTION 11.7 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 11.8 Administrative Agent and Investment Trust Beneficiary. . . . . . 64
SECTION 11.9 Successor Administrative Agent and Investment Trust
Beneficiary. . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 12
MISCELLANEOUS
SECTION 12.1 Survival of Agreements . . . . . . . . . . . . . . . . . . . . . 66
SECTION 12.2 No Broker; etc . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 12.3 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 12.4 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 12.5 Amendments, Waivers and Consents . . . . . . . . . . . . . . . . 68
iii
<PAGE>
TABLE OF CONTENTS
(Cont.)
Page
----
SECTION 12.6 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 12.7 Headings; etc. . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 12.8 Parties in Interest. . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 12.9 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 12.10 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 12.11 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 12.12 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 12.13 Limitations on Recourse. . . . . . . . . . . . . . . . . . . . . 71
SECTION 12.14 Applicable Laws. . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 12.15 Right to Inspect . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 12.16 Accounts, Distribution of Payments and Flow of Funds . . . . . . 73
SECTION 12.17 Attorneys-in-Fact. . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 12.18 Successor Trustees; Jurisdiction of Trust. . . . . . . . . . . . 74
SECTION 12.19 Third-Party Beneficiaries. . . . . . . . . . . . . . . . . . . . 74
SECTION 12.20 Consent to Jurisdiction. . . . . . . . . . . . . . . . . . . . . 74
SECTION 12.21 Deepwater Acknowledgment With Respect to Charter Trust Agreement 75
SECTION 12.22 Appointment of Wilmington Trust FSB as Attorney-in-Fact
on behalf of the Beneficial Owners; Powers of Attorney . . . . . 75
SECTION 12.23 Non-Defaulting Drilling Party's Right to Pursue Contests . . . . 75
SECTION 12.24 Non-Petition . . . . . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 12.25 Payments to Conduits . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 12.26 UCC-1 Authorization. . . . . . . . . . . . . . . . . . . . . . . 76
iv
<PAGE>
EXHIBITS
EXHIBIT A - Form of Funding Indemnity Letter
EXHIBIT B - Form of Notice of Return Rate
EXHIBIT C Form of Opinion of Baker Botts L.L.P., special counsel
to Deepwater
EXHIBIT D Form of Opinion of Wayne K. Anderson, Corporate Counsel
to Conoco
EXHIBIT E Form of Opinion of William E. Turcotte, Associate
General Counsel to Transocean
EXHIBIT F - Form of Opinion of Arias, Fabrega & Fabrega
EXHIBIT G - Form of Opinion of Richards Layton & Finger
EXHIBIT H-1 - Form of Deepwater Member's Secretary's Certificate
EXHIBIT H-2 - Form of Conoco Member Secretary's Certificate
EXHIBIT H-3 - Form of Transocean Member Secretary's Certificate
EXHIBIT H-4 - Form of Conoco's Secretary's Certificate
EXHIBIT H-5 - Form of Transocean's Secretary's Certificate
EXHIBIT H-6 - Form of Deepwater Member's Certificate
EXHIBIT H-7 - Form of Conoco Member Officer's Certificate
EXHIBIT H-8 - Form of Transocean Member Officer's Certificate
EXHIBIT H-9 - Form of Conoco's Officer's Certificate
EXHIBIT H-10 - Form of Transocean's Officer's Certificate
EXHIBIT I-1 - Form of Investment Trustee's Officer's Certificate
EXHIBIT I-2 - Form of Charter Trustee's Officer's Certificate
EXHIBIT J - Form of Refinancing Request
EXHIBIT K - Form of Assignment and Assumption Agreement
EXHIBIT L-1 - Hedging Agreements
EXHIBIT L-2 - Deepwater Hedging Agreements
EXHIBIT M - Form of Subcharter
EXHIBIT N-1 - Special Power of Attorney on Behalf of Wilmington
Trust FSB and the Beneficial Owners
EXHIBIT N-2 - Special Power of Attorney on Behalf of Wilmington Trust
Company
EXHIBIT O - Form of Opinion of Walkers, Cayman counsel to
Transocean
EXHIBIT P - Form of Offer Letter
v
<PAGE>
SCHEDULES
SCHEDULE 1 - List of UCC and Other Necessary Security Filings
SCHEDULE 2 - Funding Participant Notice Addresses, Payment
Instructions and Responsible Officers
SCHEDULE 3 - OFE
SCHEDULE 4 - Terms of Subordination for Subordinated Debt
SCHEDULE 5 - Transaction Documents
vi
<PAGE>
THIS AMENDED AND RESTATED PARTICIPATION AGREEMENT, dated as of December 18,
2001 (this "Agreement" or "Participation Agreement"), is entered into by and
--------- -----------------------
among DEEPWATER DRILLING II L.L.C., a Delaware limited liability company
("Deepwater"), WILMINGTON TRUST FSB, a Federal savings bank, not in its
------------
individual capacity except as expressly provided herein, but solely as trustee
under the Investment Trust Agreement (the "Investment Trustee"), DEEPWATER
------------------
INVESTMENT TRUST 1999-A, a Delaware business trust (the "Investment Trust"),
----------------
WILMINGTON TRUST COMPANY, a Delaware banking corporation, not in its individual
capacity except as expressly provided herein, but solely as trustee under the
Charter Trust Agreement (the "Charter Trustee"), VARIOUS FINANCIAL
----------------
INSTITUTIONS, as Certificate Purchasers (as defined herein), HATTERAS FUNDING
CORPORATION, as the Conduit (Hatteras), LIBERTY STREET FUNDING CORP., as the
Conduit (Liberty), PARADIGM FUNDING LLC, as the Conduit (Paradigm), VARIOUS
FINANCIAL INSTITUTIONS, as Liquidity Purchasers (as defined herein), BANK OF
AMERICA, N.A., as Administrative Agent, the Person named on Schedule II to the
Investment Trust Agreement, as Investment Trust Beneficiary, various
ADMINISTRATORS (as defined herein) and LIQUIDITY AGENTS (as defined herein),
solely with respect to Sections 2.15, 9.4 and 12.13(b), and 12.13(d), TRANSOCEAN
------------- --- -------- --------
SEDCO FOREX INC. and CONOCO INC., and solely with respect to Sections 5.2 and
------------
6.4, RBF DEEPWATER EXPLORATION II INC., a Nevada corporation, and CONOCO
DEVELOPMENT II INC., a Delaware corporation (each, a "Member").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, Deepwater supervised the construction of the Vessel pursuant to
the Construction Contract and the acquisition and installation of the OFE;
WHEREAS, on the Closing Date, the Original Certificate Purchasers made
advances to the Charter Trustee and the Investment Trust (and the Investment
Trust advanced such amounts advanced to it from the Original Certificate
Purchasers to the Charter Trustee) pursuant to the Participation Agreement dated
as of the Closing Date, among Deepwater, the Investment Trust, the Trustees, the
Documentation Agent (as defined therein), various financial institutions, as
Certificate Purchasers, the Drilling Parties, R&B Falcon Corporation and Conoco
Inc., RBF Deepwater Exploration II Inc. and Conoco Development II, Inc. (the
"Original Participation Agreement"), to fund the acquisition of the Drillship
----------------------------------
and certain other costs;
WHEREAS, on the Closing Date, (i) in exchange for the advances made by the
Original Certificate Purchasers to the Charter Trustee and the Investment Trust,
as applicable, the Charter Trustee issued Original Series A Charter Trust
Certificates to the Original Certificate Purchasers and the Investment Trust
issued Original Investment Trust Certificates to the Original Certificate
Purchasers and (ii) in exchange for the advances made by the Investment Trust to
the Charter Trustee, the Charter Trustee issued a Series B Charter Trust
Certificate to the Investment Trust;
WHEREAS, the Charter Trustee advanced to Deepwater all funds received
directly and indirectly from the Original Certificate Purchasers primarily to
reimburse or to pay for costs it incurred in connection with the construction
(and financing thereof) and acquisition of the Drillship;
<PAGE>
WHEREAS, on the Closing Date, the Charter Trustee acquired title to the
Drillship from Deepwater and the Charter Trustee chartered the Drillship to
Deepwater;
WHEREAS, each of the parties hereto desires to refinance the Original
Series A Trust Certificates and the Original Investment Trust Certificates and
otherwise amend and restate the Original Participation Agreement in its entirety
as set forth herein; and
WHEREAS, as of the date hereof, each of the Original Certificate Purchasers
entered into a Consent and Amendment to the Participation Agreement and Certain
Transaction Documents with Deepwater and the Trustees, to, among other things,
consent to the amendments contained herein and the other Transaction Documents;
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1
DEFINITIONS; INTERPRETATION
Unless the context otherwise requires, capitalized terms used and not
otherwise defined in this Agreement have the meanings given to them in Appendix
--------
1 of this Agreement and, for all purposes of this Agreement, the rules of
-
interpretation set forth in such Appendix 1 apply.
-----------
SECTION 2
COMMITMENTS OF THE PARTIES
Subject to the terms and conditions of this Agreement and the other
Transaction Documents and in reliance on the representations and warranties set
forth herein or made pursuant hereto, each of the parties hereto agrees to
participate in the transactions contemplated by this Agreement and the other
Transaction Documents and, among other things, to take each of the actions to be
taken by it on the Documentation Date and the Refinancing Date, as more fully
described in this Section 2.
----------
SECTION 2.1 Certain Documentation Date Events. On the Documentation Date
---------------------------------
each party thereto shall execute each Transaction Document set forth on Schedule
5.
SECTION 2.2 Certain Refinancing Date Events. On the Refinancing Date, the
-------------------------------
following shall occur:
(a) (i) the Certificate Purchasers shall make Contributions to the
Charter Trustee pursuant to Section 2.3(a) in an aggregate amount equal to the
--------------
Series A Portion of the Refinancing Amount and (ii) in exchange for such
Contributions the Charter Trustee shall issue Series A Charter Trust
Certificates to the Certificate Purchasers;
<PAGE>
(b) the Charter Trustee shall apply the Contributions made in clause
------
(a) above to pay, cancel and redeem the Original Series A Trust Certificates;
---
(c) (i) The Conduits or Liquidity Purchasers shall make Advances to the
Investment Trust pursuant to Section 2.3(b) and the Loan Agreement in an
---------------
aggregate amount equal to the Lender Portion of the Refinancing Amount and (ii)
in exchange for such Advances, the Investment Trust shall issue Notes to the
applicable Conduits and/or Liquidity Purchasers;
(d) the Investment Trust shall apply the Advances to pay, cancel and
redeem the Original Investment Trust Certificates provided, that no funds
--------
Advanced by the Conduit (Hatteras) shall be used to purchase any interest of
Bank of America in any of the Original Certificates;
(e) the Series B Charter Trust Certificate issued by the Charter
Trustee to the Investment Trust on the Closing Date shall be amended and
restated to conform to the transactions contemplated by this Agreement, but
shall remain outstanding;
(f) all Fees and Transaction Expenses then due and payable shall be
paid in full by, or on behalf of, Deepwater to the Persons entitled to receive
such payments; and
(g) when the Effective Date has occurred the Investment Trust shall
return the letter of credit maintained pursuant to Section 6.9 of the Original
Participation Agreement to Transocean.
SECTION 2.3 Contributions by Certificate Purchasers; Advance by the
-------------------------------------------------------------
Conduit.
-------
(a) Subject to the terms and conditions of this Agreement, the
Depository Agreement and the Trust Agreements and in reliance on the
representations and warranties set forth herein or made hereto, after receipt of
a Refinancing Request each Certificate Purchaser shall contribute its
Certificate Purchaser Commitment to the Charter Trustee on the Refinancing Date
in immediately available funds (each a "Contribution").
------------
(b) Subject to the terms and conditions of this Agreement, the Loan
Agreement, the Depository Agreement and the Trust Agreements and in reliance on
the representations and warranties set forth herein or made hereto, after
receipt of a Refinancing Request each Liquidity Purchaser shall extend Liquidity
Purchaser Commitments pursuant to each LAPA to make Liquidity Purchases from
time to time in an amount outstanding at any time not to exceed its Liquidity
Purchaser Commitment Amount, and either (x) each Conduit may, in its sole
discretion elect to (A) issue Commercial Paper Notes or (B) sell Percentage
Interests under each LAPA to which it is a party, each in sufficient amount in
the aggregate to generate its Conduit Loan Amount and, from the proceeds
thereof, advance its Conduit Loan Amount to the Investment Trustee on the
Refinancing Date in immediately available funds or (y) each Applicable Liquidity
Purchaser shall make Facility Loans on the Refinancing Date in immediately
available funds pursuant to the Loan Agreement, in sufficient amount in the
aggregate to generate its Conduit's Conduit Loan Amount (each, an "Advance")
-------
each of which such Advance in the aggregate shall equal the Lender Portion of
the Refinancing Amount.
SECTION 2.4 Certificates and Payments.
---------------------------
<PAGE>
(a) Certificate Purchasers. In exchange for each Contribution made by
-----------------------
each Certificate Purchaser pursuant to Section 2.3(a), the Charter Trustee will
--------------
issue and deliver to each such Certificate Purchaser: (i) one Conoco Series A
Charter Trust Certificate representing 40% of such Certificate Purchaser's
Contribution (which together with all other Conoco Series A Charter Trust
Certificates shall have, in the aggregate, a principal amount equal to 40% of
the Series A Portion of the Refinancing Amount) and (ii) one Transocean Series A
Charter Trust Certificate representing 60% of such Certificate Purchaser's
Contribution (which together with all other Transocean Series A Charter Trust
Certificates shall have, in the aggregate, a principal amount equal to 60% of
the Series A Portion of the Refinancing Amount). Each Certificate Purchaser
shall be entitled to receive on the last day of any Return Period in which the
Charter Balance is greater than zero (as measured before giving effect to any
amounts paid in reduction of the Charter Balance on the last day of such Return
Period), a return on its Certificate Purchaser Amount at the Certificate Return
Rate to but excluding the date of payment. Any payment required to be made to
the Certificate Purchasers by the Charter Trustee pursuant to any Transaction
Document shall be made in accordance with the Depository Agreement and Article
IV of the Charter Trust Agreement, as applicable.
(b) Investment Trust. On the Closing Date, the Investment Trust
-----------------
advanced certain funds to the Charter Trustee in exchange for a Series B Trust
Charter Certificate issued by the Charter Trustee. The Investment Trust shall
be entitled to receive on the last day of any Return Period (after January 1,
2002) in which the Lender Balance is greater than zero (as measured before
giving effect to any amounts paid in reduction of the Lender Balance on the last
day of such Return Period), a return on the Lender Balance at the Loan Return
Rate to but excluding the date of payment. Any payment required to be made to
the Investment Trust by the Charter Trustee pursuant to any Transaction Document
shall be made in accordance with the Depository Agreement and Article IV of the
Charter Trust Agreement, as applicable.
(c) Counterpart Certificates. Series A Charter Trust Certificates
-------------------------
shall only be issued by the Charter Trustee in pairs consisting of one
Transocean Series A Charter Trust Certificate and one Conoco Series A Charter
Trust Certificate (each, in relation to the other, a "Counterpart Series A
--------------------
Charter Trust Certificate"). Each Series A Charter Trust Certificate shall bear
-------------------------
an indication of the number assigned to its Counterpart Series A Charter Trust
Certificate.
SECTION 2.5 Limitations on Contributions and Advances.
---------------------------------------------
(a) Limitation on Disbursements and Capitalizations. The aggregate
---------------------------------------------------
amount of Contributions made by the Certificate Purchasers hereunder shall not
exceed the Series A Portion of the Refinancing Amount, and the aggregate amount
of each Contribution made by any Certificate Purchaser hereunder shall not
exceed such Certificate Purchaser's Commitment. The amount of the Advances made
by the Lenders, hereunder and under the Loan Agreement, shall not exceed the
Lender Portion of the Refinancing Amount and the amount of Advances made by each
Lender on the Refinancing Date, hereunder and under the Loan Agreement, shall
not exceed (i) with respect to each Conduit, its Conduit Loan Amount or (ii)
with respect to each Liquidity Purchaser, its Facility Lender Commitment Amount.
(b) Contributions and Advances. The Charter Trustee shall be entitled
---------------------------
to one and only one Contribution from each Certificate Purchaser which shall
occur on the Refinancing
<PAGE>
Date or as otherwise permitted pursuant to Section 2.8. The Investment Trust
-----------
shall be entitled to no more than one and only one Advance from each Conduit or
its Applicable Liquidity Purchaser or Applicable Liquidity Purchasers (if such
Conduit fails to make such Advance), which shall occur on the Refinancing Date
in accordance with the Loan Agreement or as otherwise permitted pursuant to
Section 2.8.
------------
(c) Obligations Several. The obligations of the Funding Participants,
--------------------
the Agents, the Depository and the Trustees under this Agreement and the other
Transaction Documents shall be several and not joint obligations, and no
Participant shall be liable or responsible for the acts or defaults of any other
Participant under any Transaction Document.
SECTION 2.6 Application of Proceeds. On the Refinancing Date:
-------------------------
(a) upon receipt by the Charter Trustee of the Contributions by the
Certificate Purchasers pursuant to Section 2.3(a) and the satisfaction or waiver
--------------
in writing by the Administrative Agent on behalf of the Funding Participants of
each of the applicable conditions set forth in Sections 2.8, 3.2 and 4.2, the
------------ --- ---
Charter Trustee shall pay, cancel and redeem each Original Series A Trust
Certificate; provided that no funds advanced by the Conduit (Hatteras) shall be
-------- ----
used to purchase any interest of Bank of America in any of the Original
Certificates; and
(b) upon receipt by the Investment Trust of the Advances pursuant to
Section 2.3(b) and the Loan Agreement and the satisfaction or waiver in writing
---------------
by the Administrative Agent on behalf of the Funding Participants of each of the
applicable conditions set forth in Sections 2.8, 3.2 and 4.2, the Investment
------------ --- ---
Trust shall pay, cancel and redeem each Original Investment Trust Certificate;
provided that, no funds advanced by the Conduit (Hatteras) shall be used to
-------- ----
purchase any interest of Bank of America in any of the Original Certificates;
SECTION 2.7 [Intentionally Omitted].
SECTION 2.8 Postponement.
------------
(a) If any Certificate Purchasers have made Contributions on the
Refinancing Date and the conditions precedent to such Contribution have not been
satisfied or waived on such date (as such, a "Postponed Contribution"),
----------------------
Deepwater shall pay to the Charter Trustee, for the benefit of such Certificate
Purchaser which has made a Postponed Contribution, yield (the "Postponement
------------
Yield") on such Postponed Contribution at a rate per annum equal to the
------
Certificate Return Rate, from the time such Postponed Contribution is made to
but excluding the first to occur of (i) such Postponed Contribution being repaid
in full, (ii) the Effective Date (whereupon the Certificate Return Rate
determined in accordance with Section 2.4(a) shall apply to any such Postponed
--------------
Contribution) or (iii) the Postponed Contribution is returned to the applicable
Funding Participant. If the Refinancing has not occurred before December 28,
2001, the Charter Trustee shall immediately return the amount of the Postponed
Contribution to the applicable Certificate Purchaser upon its request.
(b) If any Lender has made an Advance on the Refinancing Date and the
conditions precedent to such Advance have not been satisfied or waived on such
date (as such, a "Postponed Advance"), Deepwater shall pay to the Charter
------------------
Trustee, for the benefit of such Lender, interest
<PAGE>
(the "Postponement Interest", and together with the Postponement Yield, the
----------------------
"Postponement Payment") on such Postponed Advance at a rate per annum equal to
---------------------
the Loan Return Rate, from the time such Conduit issues Commercial Paper Notes
or sells Percentage Interests in order to make available such Postponed Advance
or such other Lender makes its Advance to but excluding the first to occur of
(i) such time as such Postponed Advance made or such Commercial Paper Notes are
repaid in full, (ii) the Effective Date (whereupon the Loan Return Rate
determined in accordance with Section 2.4(b) shall apply to any such Postponed
--------------
Advance) or (iii) the Postponed Advance is returned to the applicable Funding
Participant. If the Refinancing has not occurred before December 28, 2001, the
Investment Trustee shall immediately return the amount of the Postponed Advance
to the applicable Funding Participant upon its request.
Neither the Investment Trust nor the Charter Trustee shall be required to
invest the Contributions or the Advances in interest-bearing accounts, but the
Charter Trustee shall, upon the direction of Deepwater (or, if a Charter Event
of Default exists, the Majority Funding Participants), invest such funds in
Permitted Investments to the extent it is able to do so. Amounts held by the
Charter Trustee and the Investment Trust may be pooled for this purpose and, if
so pooled, then the Charter Trustee shall open a separate account for each of
the Postponed Contributions (the "Postponed Contributions Account") and the
--------------------------------
Postponed Advance (the "Postponed Advance Account"), and place the Postponed
--------------------------
Contributions in such Postponed Contributions Account and the Postponed Advance
in such Postponed Advance Account. Any Postponement Payment shall be due and
payable by Deepwater on the Effective Date and such payment shall be an
additional condition precedent to such Effective Date. On the Effective Date,
the Charter Trustee is hereby directed (i) to liquidate any Permitted
Investments then held pursuant to this Section 2.8, (ii) to distribute the
-----------
Postponed Contribution in accordance with Section 2.6(a), (iii) to distribute
--------------
the Postponed Advance in accordance with Section 2.6(b) and (iv) to distribute
--------------
any proceeds of Permitted Investments held pursuant to this Section 2.8: (x)
-----------
with respect to the funds held in the Postponed Contribution Account in excess
of the amount of the Postponed Contributions, to each Certificate Purchaser pro
---
rata (based on the relation that such Certificate Purchaser's Postponed
----
Contribution bears to the aggregate of all Postponed Contributions) and (y)
with respect to the funds held in the Postponed Advance Account in excess of the
amount of the Postponed Advance, to each applicable Conduit and the Liquidity
Purchasers, pro rata (based on the relation that such Conduits or Liquidity
--- ----
Purchaser's Postponed Advance bears to the aggregate of all Postponed Advances),
in each case for application to Deepwater's obligation to pay Postponement Yield
and Postponement Interest, respectively.
If the Refinancing Date has not occurred by December 28, 2001, then (1) the
Postponement Payment shall be due and payable on December 28, 2001 and (2) the
Charter Trustee is hereby directed to liquidate any Permitted Investments then
held pursuant to this Section 2.8 and to pay to (i) each Certificate Purchaser
-----------
on December 28, 2001 (x) the Postponed Contribution funded by such Certificate
Purchaser and (y) the proceeds of any Permitted Investments held pursuant to
this Section 2.8 in the Contribution Account in excess of the amount of the
------------
Postponed Contribution refunded to such Certificate Purchaser pro rata (based on
--------
the relation that such Certificate Purchaser's Postponed Contribution bears to
the aggregate of all Contributions) to be applied to Deepwater's obligation to
pay Postponement Yield to such Certificate Purchaser and (ii) each Conduit or
Liquidity Purchaser, as the case may be, on December 28, 2001 (x) the Postponed
Advance funded by such Conduit or Liquidity Purchaser,
<PAGE>
as the case may be, and (y) the proceeds of any Permitted Investments held
pursuant to this Section 2.8 in the Postponed Advance Account in excess of the
-----------
amount of the Postponed Advance refunded to each applicable Conduit and the
Liquidity Purchasers, pro rata (based on the relation that such Conduits or
--- ----
Liquidity Purchaser's Postponed Advance bears to the aggregate of all Postponed
Advances), to be applied to Deepwater's obligation to pay Postponement Interest
to such Person.
SECTION 2.9 Records. Upon the making of its Contribution, each
-------
Certificate Purchaser shall make a notation in its records indicating the amount
of such Contribution and the Certificate Purchaser Amount of such Certificate
Purchaser as of the Refinancing Date. Each Certificate Purchaser is hereby
authorized to record the date and amount of its Contribution, each continuation
thereof, the date and amount of each payment or capitalization of Series A
Return with respect thereto, the date and amount of each payment or repayment of
Certificate Purchaser Amount of such Certificate Purchaser and the length of
each Return Period with respect thereto, in its records, and any such
recordation shall constitute prima facie evidence of the accuracy of the
information so recorded. The failure to make any recordation described in this
Section 2.9 or any error in such recordation shall not affect the obligation of
------------
the Charter Trustee with respect of such Certificates, or the obligation of
Deepwater to pay Charter Hire in accordance with the Transaction Documents.
SECTION 2.10 [Intentionally Omitted].
SECTION 2.11 Refinancing Request; Timing of Advances and Contributions.
-----------------------------------------------------------
With respect to the Contributions and Advances, Deepwater shall give the
Administrative Agent and Charter Trustee, either of which shall deliver a copy
thereof to the Investment Trustee, the Funding Participants and each other Agent
prior written notice not later than 10:00 a.m., New York time, not less than
three (3) Business Days prior to the proposed Refinancing Date, pursuant to a
Refinancing Request. Any Refinancing Request delivered by Deepwater to the
Charter Trustee later than 4:00 p.m., New York time, on any day shall be deemed
to have been delivered on the next Business Day. Subject to timely delivery of
the Refinancing Request (together with a funding indemnity letter from each of
Conoco and Transocean in the form attached hereto as Exhibit A) and the other
---------
terms and conditions of the Transaction Documents, each Funding Participant
shall make its Contribution or Advance, as applicable, available to the Charter
Trustee and the Investment Trust, respectively, in an account at the Charter
Trustee's corporate trust department designated by the Charter Trustee by 12:00
noon, New York time, on the Refinancing Date, and the Charter Trustee and the
Investment Trust shall apply any such amounts so received not later than 3:00
p.m., New York time, on such Refinancing Date in accordance with, and subject
to, Section 2.6 or 2.8, as applicable.
------------ ---
SECTION 2.12 Computations.
------------
(a) Determination of Return Rates and Fees. All computations of
-------------------------------------------
accrued amounts pursuant to the Transaction Documents shall be made on the basis
of the actual number of days elapsed in a 360-day year; provided, that any
--------
amount calculated using the Alternate Rate shall be calculated on the basis of
the actual number of days elapsed in a 365-day or 366-day year, as applicable.
The Charter Trustee shall, as soon as practicable, but in no event later than
11:00 a.m., New York time, on the date two (2) Business Days before the
effectiveness of each
<PAGE>
Return Rate, cause to be determined each such Return Rate and notify each
Funding Participant and Deepwater thereof by delivery of a notice of Return Rate
in substantially the form of Exhibit B hereto; provided, however, that the
---------- -------- -------
Administrative Agent shall have the right to determine the Return Rates and to
deliver notice of such Return Rates instead of Charter Trustee in connection
with the Return Period beginning on the Refinancing Date.
(b) Disbursement Information. The Charter Trustee shall deliver the
-------------------------
Disbursement Information to Deepwater and the Depository in accordance with
Section 4.3 of the Depository Agreement.
(c) Conclusive Determinations. All information provided by the Charter
-------------------------
Trustee or Administrative Agent, as the case may be, pursuant to this Section
-------
2.12 for the purposes of any Transaction Document shall be conclusive and
----
binding on the Charter Trustee, the Investment Trust, Deepwater and each Funding
Participant in the absence of manifest error.
SECTION 2.13 Charter Hire Payments. Charter Hire shall be paid by or on
----------------------
behalf of Deepwater in immediately available funds in accordance with the
Depository Agreement and the Charter. All such payments shall be paid by the
Depository to the Trustees, the Investment Trust or each Funding Participant, as
applicable, not later than 2:00 p.m., New York time, on the date due. Funds
received after such time shall for all purposes of the Transaction Documents be
deemed to have been received on the next succeeding Business Day.
SECTION 2.14 Fees.
----
(a) Facility Fee. Deepwater shall pay to each Liquidity Purchaser a
-------------
nonrefundable fee on each Charter Hire Payment Date, commencing with the January
2002 Charter Hire Payment Date, (the "Facility Fee") equal to such Liquidity
------------
Purchaser Commitment Amount for the immediately preceding Return Period
multiplied by .25%.
(b) Program Fee. Deepwater shall pay to each Conduit a nonrefundable
------------
Program Fee on each Charter Hire Payment Date, commencing with the January 2002
Charter Hire Payment Date, for the immediately preceding Return Period pursuant
to the terms of the Conduit Fee Letter.
(c) Upfront Fee. Deepwater shall pay each Certificate Purchaser and
------------
Liquidity Purchaser a non-refundable upfront fee pursuant to the terms of the
Upfront Fee Letters.
SECTION 2.15 Payments Under the Ship Mortgage; Limitation on Foreclosure.
-----------------------------------------------------------
Notwithstanding anything to the contrary in any Transaction Document, all
proceeds from any foreclosure under the Ship Mortgage shall not reduce the
maximum amount owed under the Conoco Guaranty and the Transocean Guaranty unless
such maximum amount payable thereunder is greater than the Charter Balance
(excluding any Purchasing Party Amounts) at the time such proceeds are
distributed to the Funding Participants, in which case such a reduction shall be
permitted only to the extent of such excess; provided, however, that in no event
-------- -------
shall the Charter Trustee, the Investment Trust or the Funding Participants seek
to foreclose upon the Drillship pursuant to the terms of the Ship Mortgage or
the Master Charter unless the Charter Trustee shall first make a demand against
Deepwater (and under the Transocean Guaranty and
<PAGE>
Conoco Guaranty to the extent the obligations owed by Deepwater are guaranteed
thereunder) for any amounts then due and owing under the Transaction Documents;
and provided, further, that in no event shall the Charter Trustee, the
-------- -------
Investment Trust or the Funding Participants seek to foreclose upon the
Drillship pursuant to the terms of the Ship Mortgage following the receipt in
full by such Persons of the Purchase Option Price (whether paid pursuant to the
exercise of the Special Purchase Right under Section 16.4 of the Master Charter
or otherwise).
SECTION 2.16 Payment to each Conduit on Charter Hire Payment Date. With
-----------------------------------------------------
respect to the payment made on the Charter Hire Payment Date occurring on the
Maturity Date, such payment with respect to any outstanding Lender Amount of a
Conduit shall include, in addition to any principal payable on such Charter Hire
Payment Date, fees and interest which are payable by Deepwater under the
Transaction Documents to such Conduit and which will accrue through such Charter
Hire Payment Date and have not been previously paid. On the day which is five
(5) Business Days prior to such Charter Hire Payment Date, each Administrator
shall deliver an invoice to Deepwater setting forth (i) such fees, (ii) interest
accrued through the date of delivery of such invoice and due to such Conduit and
(iii) estimated interest due to such Conduit for the five (5) Business Days
between such date and such Charter Hire Payment Date (the "Estimated Interest
------------------
Period"). Each Conduit and Applicable Liquidity Purchasers hereby agree that if
------
the actual interest payable for the Estimated Interest Period is less than the
estimated interest amount, such Conduit or Applicable Liquidity Purchasers, as
applicable will promptly refund the difference to Deepwater with a reasonably
detailed computation of the calculation of such difference. If, however, the
actual interest payable for the Estimated Interest Period is greater than the
estimated interest amount, Deepwater shall promptly pay the difference to the
applicable Conduit or Applicable Liquidity Purchasers after delivery to
Deepwater of a reasonably detailed computation of such difference.
SECTION 3
Documentation DATE; Documentation DATE CONDITIONS PRECEDENT
SECTION 3.1 Documentation Date.
-------------------
(a) The Documentation Date (the "Documentation Date") shall be December
------------------
18, 2001.
(b) All documents and instruments required to be delivered on the
Documentation Date shall be delivered at the offices of Mayer, Brown & Platt,
1675 Broadway, New York, New York 10019, or at such other location as may be
determined by the Administrative Agent and Deepwater.
SECTION 3.2 Conditions Precedent to Documentation Date. The obligations
-------------------------------------------
of each of the parties hereto to perform its respective obligations as
contemplated in Section 2.1 on the Documentation Date shall be subject to
------------
satisfaction or waiver of the following conditions precedent (provided, that the
--------
obligations of any party shall not be subject to any conditions contained in
this Section 3.2 which are required to be performed or caused to be performed by
-----------
such party or any of its respective Affiliates):
<PAGE>
(a) Each party thereto shall have executed and delivered each of the
Transaction Documents.
(b) All Taxes, fees and other charges due in connection with the
execution, delivery, performance, recording, filing and registration of the
Transaction Documents on the Documentation Date shall have been paid.
(c) [Intentionally Omitted]
(d) All actions required to have been taken by any Government Authority
on or prior to the Documentation Date in connection with the transactions
contemplated by this Agreement and the other Transaction Documents shall have
been taken and all Government Actions required to be in effect on or prior to
the Documentation Date in connection with the transactions contemplated by this
Agreement and the other Transaction Documents shall have been issued or made,
and all such Government Actions shall be in full force and effect on the
Documentation Date. All necessary consents, approvals and authorizations of all
non-Government Authorities required to be obtained, given or made on or prior to
the Documentation Date in connection with the execution and delivery of the
Transaction Documents and transactions contemplated hereby and thereby shall
have been obtained, given or made and shall be in full force and effect.
(e) No action shall have been instituted, nor shall any action or
proceeding be threatened, before any Government Authority, nor shall any order,
judgment or decree have been issued or, to the Actual Knowledge of Deepwater,
proposed to be issued by any Government Authority (i) to set aside, restrain,
enjoin or prevent the performance of this Agreement, any other Transaction
Document or any transaction contemplated hereby or thereby or (ii) which would
have a Material Adverse Effect.
(f) The transactions contemplated by the Transaction Documents do not
and will not (i) violate any Applicable Law, (ii) contravene any charter,
by-laws or other organizational document of Deepwater, the Members, Conoco,
Transocean, the Investment Trust, the Trustees, any Agent or any Funding
Participant, (iii) contravene any contract, agreement or other arrangement to
which Deepwater, the Investment Trust, the Trustees, any Agent or any Funding
Participant is a party or by which any of their respective properties or assets
are bound, or (iv) subject Deepwater, any Member, the Investment Trust, the
Trustees, any Agent or any Funding Participant to any regulations to which such
party had not been subject prior to entering into such Transaction Documents and
which would be materially adverse to such party.
(g) Deepwater, each Member, Conoco and Transocean shall have each
delivered, or shall have caused to be delivered, to the Administrative Agent,
and the Trustees the following, in each case in form and substance satisfactory
to the Administrative Agent (with copies for each Funding Participant):
(i) Organizational Documents. (a) Copies of its articles or
-------------------------
certificate of incorporation, certificate of formation, memorandum of
association or other organizational documents, certified to be true and
complete as of a recent date by the appropriate Government Authority of the
state, province or country of its incorporation or formation and confirmed
by an officer of such entity, (b) copies of its limited liability
<PAGE>
company operating agreement, articles of association or bylaws, as the case
may be, certified by an appropriate officer or representative as of the
Documentation Date to be true and correct and in full force and effect as
of such date and (c) incumbency certificates regarding the officers of such
Person authorized to execute and deliver the Transaction Documents to which
such Person is a party and the other documents and agreements delivered in
connection therewith.
(ii) Resolutions. Copies of resolutions of its members or board
-----------
of directors, as applicable, that, specifically or generally (as part of a
general enabling resolution), approve and adopt the Transaction Documents
and the transactions contemplated therein, and that, specifically or
generally (as part of a general enabling resolution), authorize execution
and delivery thereof, certified by an appropriate officer or representative
as of the Documentation Date to be true and correct and in full force and
effect as of such date.
(iii) Good Standing. Copies of certificates of good standing,
--------------
existence or its equivalent, certified as of a recent date by the
appropriate government authorities of the state, province or country of its
incorporation or formation.
(iv) Officer's or Manager's Certificate. An officer's certificate
----------------------------------
or manager's certificate, dated the Documentation Date, substantially in
the form of Exhibit H.
----------
(h) Each of the Trustees shall have delivered, or shall have caused to
be delivered, to Deepwater, the Members, and each Funding Participant the
following:
(i) Organizational Documents. Copies of its articles of
-------------------------
association or other organizational documents and a copy of the Charter
Trustee's and Investment Trust's certificate of trust (or, if certificates
of trust are not issued in the Charter Trustee's or Investment Trust's
jurisdiction of organization, other similar organizational documents),
together with all amendments in each case certified to be true and complete
as of a recent date by the appropriate Government Authority and (b)
incumbency certificates regarding the officers of such Person authorized to
execute and deliver the Transaction Documents to which such Person is a
party and the other documents and agreements delivered in connection
therewith.
(ii) Resolutions. Copies of resolutions of its board of
-----------
directors, approving and adopting the Transaction Documents and the
transactions contemplated therein, and authorizing execution and delivery
thereof, certified by an appropriate officer as of the Documentation Date
to be true and correct and in full force and effect as of such date.
(iii) Good Standing. Copies of certificates of good standing (or,
-------------
if certificates of good standing are not issued in the Trustees' or
Investment Trust's jurisdiction of organization, some other similar
certificate) or its equivalent with respect to the Trustees and the
Investment Trust, in each case certified as of a recent date by the
appropriate Government Authorities.
(iv) Officer's Certificate. An officer's certificate, dated the
----------------------
Documentation Date, substantially in the form of Exhibit I.
---------
<PAGE>
(i) All Transaction Expenses then due and owing for which Deepwater
has received an invoice at least two (2) Business Days prior to the
Documentation Date and which will not be paid from the proceeds of the
Contribution and Advance shall have been paid by Deepwater.
(j) [Intentionally Omitted].
(k) The representations and warranties of each party set forth in
Section 5 and in any other Transaction Document entered into on or prior to the
----------
Documentation Date shall be true and correct in all material respects as of the
Documentation Date.
(l) [Intentionally Omitted].
(m) [Intentionally Omitted].
(n) Bank of America shall have delivered to the Charter Trustee (with
copies for each Funding Participant), the Investment Trust, Deepwater and the
Members a certificate, in form substantially similar to the form attached hereto
as Exhibit P.
----------
(o) No change in Applicable Laws will have occurred that would make it
illegal for any of the parties to the Transaction Documents to participate in
the transaction.
SECTION 4
EFFECTIVE DATE; REFINANCING DATE CONDITIONS PRECEDENT
SECTION 4.1 Effective Date. The amendments and restatements reflected in
--------------
this Agreement and each of the other Transaction Documents shall be effective on
the date on which each of the conditions precedent detailed in Sections 2.8, 3.2
------------ ---
and 4.2 are satisfied or waived (the "Effective Date"); provided, however, that
--- -------------- -------- -------
if the Effective Date does not occur on or prior to December 28, 2001, then such
amendments and restatements reflected in this Agreement and each of the other
Transaction Documents shall automatically terminate (except as provided in
Section 12.1), ("Termination of Refinancing"), and Lessee shall pay in full all
------------- --------------------------
Transaction Expenses (for which invoices have been received) not theretofore
paid by it; provided, further, that such Termination of Refinancing shall have
-------- -------
no effect on the effectiveness of the Original Transaction Documents, the
documents related thereto or the transactions contemplated therein.
SECTION 4.2 Conditions Precedent to Refinancing Date. The obligations of
----------------------------------------
the parties hereto to enter into the transactions to be entered into and take
the actions to be taken by each such party which are contemplated by Section 2.2
-----------
to occur on the Refinancing Date shall be subject to satisfaction or waiver on
the Refinancing Date of the conditions precedent set forth in Section 3.2 and
-----------
the following conditions precedent; provided, that the obligations of any party
--------
shall not be subject to any condition contained in this Section 4.2 which is
-----------
required to be performed or caused to be performed by such party or any of its
respective Affiliates:
(a) Each Certificate Purchaser shall have funded the Contribution to be
made by it in accordance with Section 2.3(a).
---------------
<PAGE>
(b) Each Certificate Purchaser shall have received its respective
Series A Charter Trust Certificate in accordance with Section 2.4(a).
---------------
(c) The Charter Trustee shall have paid, canceled and redeemed each
Original Series A Charter Trust Certificate in accordance with Section 2.1(c) of
the Charter Trust Agreement.
(d) Each applicable Lender shall have funded its Advance in accordance
with Section 2.3(b) and the Loan Agreement.
---------------
(e) Each Lender shall have received its Note in accordance with Section
2.3 of the Loan Agreement.
(f) The Investment Trust shall have paid, canceled and redeemed each
Original Investment Trust Certificate in accordance with Section 2.1(c) of the
Investment Trust Agreement.
(g) Each Transaction Document listed on Schedule 5 shall have been
----------
executed and delivered by each of the parties thereto and no Charter Default,
Charter Event of Default, Loan Event of Default or Event of Loss shall exist
under any such Transaction Document (as if such Transaction Document was in full
force and effect at such time of execution) or under any Original Transaction
Document.
(h) Deepwater shall have delivered the Refinancing Request in
accordance with Section 2.11 and each Certificate Purchaser, each Lender and
-------------
each Liquidity Agent (with a copy to the Administrator) shall have received a
funding indemnity letter from Transocean and Conoco in the form of Exhibit A not
---------
less than three (3) Business Days prior to the Refinancing Date.
(i) Each of the Services Agreements, the Drilling Contracts, the
Drilling Contract Guaranties and the Drilling Consent shall be in full force and
effect and no default or material breach shall exist thereunder.
(j) All Fees and Transaction Expenses (including registration and
recordation fees under Panamanian Law) then due and owing shall have been paid
in full on or prior to the Refinancing Date.
(k) The Charter Trustee, the Investment Trust and the Administrative
Agent (on behalf of each Funding Participant) shall have received (i) a report
from a nationally recognized insurance broker confirming that the insurance then
in effect satisfies the insurance requirements set forth in Article XIV of the
Master Charter, such report being satisfactory in form and substance to the
Administrative Agent and (ii) certificates of insurance from Deepwater's
insurance broker(s) evidencing that all insurance required under Article XIV of
the Master Charter is in effect and that all premiums have been paid; provided,
--------
however, that nothing in the Transaction Documents shall be deemed to prohibit
-------
the acceptance by the Charter Trustee and Administrative Agent of a single
report satisfying both the conditions set forth in this paragraph (k).
--------------
<PAGE>
(l) Each of the Charter Trustee, the Investment Trust and the Funding
Participants shall have received an Officer's Certificate of Deepwater stating
that the representations and warranties of Deepwater listed in Section 5.1 or in
-----------
any other Transaction Document are true and correct in all material respects as
of the Refinancing Date (except to the extent that such representations and
warranties relate solely to an earlier or to a later date, in which event such
representations and warranties shall be true on and as of such earlier or later
date); provided, however, that if the Refinancing Date occurs within seven (7)
-------- -------
days of the Documentation Date, the delivery by Deepwater of the certificate
listed in Section 3.2(g)(iv) shall be deemed to have satisfied its requirement
------------------
under this paragraph (l).
--------------
(m) All necessary approvals, orders, permits, authorizations, and
consents which are required as of the Refinancing Date on the part of Deepwater,
the Funding Participants, the Administrative Agent, the Investment Trust, the
Trustees or other third parties (except to the extent that such approvals,
orders, permits, authorizations and consents are required as a result of such
Person's status as a trust company or a regulated depository or banking
institution) in connection with any of the transactions contemplated by this
Agreement or in connection with the ownership, use or operation of the Drillship
as of the Refinancing Date shall have been duly obtained, and Deepwater shall
have provided evidence thereof reasonably satisfactory to the Administrative
Agent.
(n) All actions, if any, required to have been taken by any Government
Authority as of the Refinancing Date in connection with the transactions
contemplated by this Agreement shall have been taken and all Government Actions
required to be in effect as of the Refinancing Date in connection with the
transactions contemplated by this Agreement shall have been issued and all such
Government Actions shall be in full force and effect.
(o) As of the Refinancing Date, there shall not have occurred any
material adverse change in the consolidated assets, liabilities, operations,
business or financial condition of: (i) Deepwater from that set forth in its
financial statements for the fiscal quarter ended September 30, 2001, (ii)
Transocean from that set forth in its financial statements for the fiscal
quarter ended September 30, 2001 or (iii) Conoco from that set forth in its
financial statements for the fiscal quarter ended September 30, 2001; provided
that the entry by Conoco into a merger agreement with Phillips Petroleum Company
shall not be considered a material adverse change.
(p) All UCC and other applicable filings listed on Schedule 1 shall
----------
have been duly made at the locations set forth beside the filing on such
schedule. All other filings or recordings of any document in any jurisdiction
which are required to establish the perfected security interests of the Charter
Trustee and the Investment Trust in the Accounts shall have been made.
(q) The Ship Mortgage and the Master Charter shall each have been filed
with the appropriate public register in Panama.
(r) (i) Baker Botts L.L.P., special counsel to Deepwater, shall have
issued its opinion to the effect and in the form set forth in Exhibit C; (ii)
---------
Wayne K. Anderson, in-house counsel to Conoco, shall have delivered his opinion
to the effect and in the form set forth in Exhibit D; (iii) William E. Turcotte,
---------
in-house counsel to Transocean, shall have delivered his opinion to the effect
and in the form set forth in Exhibit E; (iv) Arias, Fabrega & Fabrega,
----------
Panamanian counsel,
<PAGE>
shall have delivered its opinion to the effect and in the form set forth in
Exhibit F; (v) Richards, Layton & Finger, counsel to the Charter Trustee and
-----------
Investment Trust, shall have delivered their opinions to the effect and in the
form set forth in Exhibit G and (vi) Walkers, Cayman Island counsel to
Transocean, shall have delivered their opinions to the effect and in
the form set forth in Exhibit O. Each opinion listed in this clause (r) shall
--------- ----------
be in form and substance reasonably acceptable to the Admininstrators.
(s) Each Administrator shall have received a copy of a rating letter
from its Conduit's Rating Agency or Rating Agencies stating that the applicable
Commercial Paper Notes shall be rated P-1 by Moody's and A-1 by S&P and/or an
equivalent rating from another Rating Agency.
SECTION 4.3 Head Lease Transaction. Deepwater shall, with the consent of
----------------------
each Funding Participant, be permitted to enter into, and to require the Charter
Trustee to enter into, the following transactions (collectively, the "Head Lease
----------
Transaction") on or after the Documentation Date: (i) title to the Drillship
-----------
shall be transferred to the Head Lessor; (ii) the Head Lessor shall charter
(directly or through a sub-charter) the Drillship to the Charter Trustee; (iii)
the Head Lessor shall finance its acquisition of title to the Drillship, in
part, through a loan (the "Head Lease Loan"); (iv) the Head Lessor and the
----------------
Charter Trustee shall enter into arrangements whereby the Charter Trustee's
payment obligations under the Head Lease are defeased (the "Head Lease
-----------
Defeasance Arrangements"); (v) the economic benefit of entering into the Head
------------------------
Lease Transaction shall be paid over to, or otherwise accrue to the benefit of,
Deepwater; and (vi) if the Head Lease Transaction is entered into on or after
the Documentation Date or any Funding Participant reasonably deems it necessary
for the protection of its rights in the Drillship, the Head Lessor shall enter
into the Ship Mortgage. If Deepwater shall have requested the Funding
Participants to consent to the Head Lease Transaction not less than 45 days
prior to the proposed closing date of the Head Lease Transaction (which request
shall be accompanied by drafts of the documents relating thereto), each Funding
Participant agrees to consider such request in good faith. Thereafter,
Deepwater shall promptly provide each Funding Participant with the drafts of the
Head Lease Documents to the extent such drafts are distributed to the other
parties to the Head Lease Transaction. If each Funding Participant in its sole
discretion approves the Head Lease Transaction, the Charter Trustee shall enter
into the Head Lease Transaction on the date proposed by Deepwater.
Notwithstanding the provisions of this Section 4.3, neither the consummation nor
-----------
the failure to consummate the Head Lease Transaction on or before the
Documentation Date shall be a condition to the obligation of any party hereto to
enter into the other transactions contemplated by this Agreement to occur on the
Documentation Date or to execute and deliver the Transaction Documents to be
executed and delivered on the Documentation Date (other than those transactions
or documents reflecting only the Head Lease Transaction).
SECTION 4.4 Replacement Conditions. Deepwater may, in its sole
-----------------------
discretion, elect to replace any Funding Participant that does not consent to
the Head Lease Transaction, that does not consent to an amendment proposed under
Section 4.5, that does not consent to a Qualified Transfer proposed under
------------
Section 9.5 or that does not submit an offer to extend (if such offer is
------------
requested by Deepwater) or rejects Deepwater's offer to extend the Charter Term,
by having another financial institution that meets the conditions set forth in
this Section 4.4 (each financial institution that replaces a Funding
------------
Participant, a "Replacement Funding Participant") purchase such non-consenting
-------------------------------
Funding Participant's interest in accordance with this Section 4.4.
-----------
<PAGE>
Replacement of a Funding Participant by a Replacement Funding Participant shall
be subject to the following conditions precedent (collectively, the "Funding
-------
Participant Replacement Conditions"):
------------------------------------
(i) such replacement does not conflict with any Applicable Law;
(ii) the Replacement Funding Participant that replaces a
Certificate Purchaser shall pay to such Certificate Purchaser the amount of
its outstanding Certificate Purchaser Amount and accrued and unpaid Series
A Return with respect thereto plus, any funding losses incurred by the
Certificate Purchaser pursuant to Section 7.3 as a result of the transfer,
-----------
plus any other accrued and unpaid amounts owed by Deepwater to such
Certificate Purchaser under the Transaction Documents, including any
reasonable expenses relating to its replacement; if such Replacement
Funding Participant does not provide sufficient funds to allow the
Certificate Purchaser being replaced to receive such amounts, Deepwater may
provide funds sufficient to cover the shortfall;
(iii) the Replacement Funding Participant that replaces a Lender
shall pay to such Lender the amount of its outstanding Lender Amount and
its accrued and unpaid Series B Return with respect thereto plus, any
funding losses incurred by such Lender pursuant to Section 7.3 as a result
-----------
of the transfer, plus any other accrued and unpaid amounts owed by
Deepwater to such Lender under the Transaction Documents, including any
reasonable expenses relating to its replacement; if such Replacement
Funding Participant does not provide sufficient funds to allow the Lender
being replaced to receive such amounts, Deepwater may provide funds
sufficient to cover the shortfall; provided that if any Conduit is the
--------
Lender being replaced, Deepwater shall pay to the Conduit any breakage
costs (which are direct loss, costs or expense not consequential loss,
costs or expense) incurred pursuant to such replacement.
(iv) the Replacement Funding Participant shall have agreed to
execute the Assignment and Assumption Agreement in substantially the form
of Exhibit K hereto; and
----------
(v) the requirements set forth in Section 9.1 shall have been
-----------
satisfied; and
(vi) with respect to the replacement of a Liquidity Purchaser,
such Person meets the requirements of the applicable LAPA;
provided that, (i) any replacement of the Conduit (Liberty) shall not be
-------- ----
effective unless The Bank of Nova Scotia is also replaced as a Liquidity
Purchaser, (ii) any replacement of The Bank of Nova Scotia shall not be
effective unless the Conduit (Liberty) is also replaced, (iii) any replacement
of the Conduit (Paradigm) shall not be effective unless Westdeutsche Landesbank
Girozentrale, New York branch is also replaced as a Liquidity Purchaser and (iv)
any replacement of Westdeutsche Landesbank Girozentrale, New York Branch as a
Liquidity Purchaser shall not be effective unless the Conduit (Paradigm) is also
replaced.
SECTION 4.5 Accounting Changes. In the event that Deepwater, or its
-------------------
accountants, shall determine that any change in the applicable rules and
interpretations of the Financial
<PAGE>
Accounting Standards Board and/or the Securities Exchange Commission (the "Lease
------
Accounting Rules") will preclude Deepwater (or raise a substantial question as
-----------------
to whether Deepwater is precluded) from continuing to account for the Charter as
an operating lease with substantially the same financial accounting benefits as
before the change in the Lease Accounting Rules, then Deepwater and each Funding
Participant agree to review in good faith any proposal submitted by Deepwater,
or its accountants, and to negotiate in good faith the structure of the
transactions contemplated by the Transaction Documents.
If each Funding Participant in its sole discretion approves the proposed
amendment or amendments to the Transaction Documents submitted by Deepwater, or
its accountants, the Charter Trustee shall enter into such amendments to the
Transaction Documents on the date proposed by Deepwater. Deepwater may, in its
sole discretion, elect to replace any Funding Participant that does not consent
to the proposed amendment with a Replacement Funding Participant in accordance
with Section 4.4.
------------
SECTION 5
REPRESENTATIONS AND WARRANTIES
SECTION 5.1 Representations and Warranties of Deepwater. Deepwater
-----------------------------------------------
represents and warrants to each of the other parties hereto as of the date
hereof as follows:
(a) Due Organization, etc. Deepwater is a limited liability company
------------------------
duly organized, validly existing and in good standing under the laws of Delaware
and has the power and authority and has all requisite government licenses,
permits and other approvals that are required as of the date hereof to enter
into and perform its obligations under the Transaction Documents to which it is
or will be a party and each other agreement, instrument and document to be
executed and delivered by it in connection with, or as contemplated by, each
such Transaction Document to which it is or will be a party. Deepwater is duly
qualified to transact business and is in good standing as a foreign limited
liability company in every jurisdiction where the nature of its business
requires such qualification.
(b) Authorization; No Conflict. The execution, delivery and
----------------------------
performance by Deepwater of each Transaction Document to which it is or will be
a party (i) is within its company powers under Delaware law and its
organizational documents; (ii) has been duly authorized by all necessary company
action on the part of Deepwater and its Members; (iii) requires no Government
Action by, or filing with, any Government Authority which is required to be
obtained, given or made by Deepwater or its Members as of the date hereof (other
than such Government Action as has been duly obtained, given or made); (iv) does
not and will not contravene, or constitute a default under, any Applicable Law
or its organizational documents, or of any material agreement, judgment,
injunction, order, decree or other instrument binding upon or affecting
Deepwater or the Drillship; and (v) does not and will not result in the
creation, imposition or violation of any Lien on any asset of Deepwater other
than as contemplated or permitted by the terms hereof or of the other
Transaction Documents. Deepwater has obtained all Government Actions necessary
to carry on its business as now conducted, except for those
<PAGE>
Government Actions that are normally obtained at a later time and with respect
to which Deepwater does not anticipate any problems in obtaining.
(c) Enforceability, etc. Each of the Services Agreements, the Drilling
--------------------
Contracts, the Rig Sharing Agreement and the Transaction Documents, to which
Deepwater is or will be a party has been, or as of the Documentation Date will
be, duly executed and delivered by Deepwater and each such document to which
Deepwater is a party constitutes, or upon execution and delivery will
constitute, assuming the due authorization, execution and delivery thereof by
the other parties thereto, a legal, valid and binding obligation enforceable
against Deepwater in accordance with the terms thereof, except as such
enforceability may be limited or denied by (i) applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights and the enforcement of debtors' obligations generally, and (ii) general
principles of equity, regardless of whether enforcement is pursuant to a
proceeding in equity or at law.
(d) Financial Information. The balance sheet of Deepwater for
----------------------
September 30, 2001 fairly presents, in conformity with GAAP consistently
applied, the financial position of Deepwater as of such date. Since September
30, 2001, no event has occurred with respect to the assets, liabilities,
operations, business or financial condition of Deepwater which would have a
Material Adverse Effect.
(e) Litigation. There is no litigation, action, proceeding, or labor
----------
controversy to which Deepwater is a party which, if adversely determined, would
adversely affect the financial condition, operations, assets, business,
properties or prospects of Deepwater or which purports to affect the legality,
validity or enforceability of any of the Transaction Documents, the Services
Agreements, the Drilling Contracts or the Rig Sharing Agreement.
(f) Ownership of Properties. Deepwater has good title to all of its
-------------------------
properties and assets, real and personal, tangible and intangible, of any nature
whatsoever (including patents, trademarks, tradenames, service marks and
copyrights) which it purports to own, free and clear of all Liens (including
infringement claims with respect to patents, trademarks, copyrights and the
like), except for Permitted Liens.
(g) Taxes. Deepwater has filed all tax returns and reports required by
-----
law to have been filed by it and has paid all Taxes thereby shown to be owing,
except for any Taxes which are not yet due or are being contested pursuant to a
Permitted Contest.
(h) Pension and Welfare Plans. As of the date hereof, Deepwater does
---------------------------
not maintain any Plan for the benefit of its employees. Except as provided in
Section 6.1(o), Deepwater will not maintain any Plan for the benefit of its
---------------
employees.
(i) Investment Company Act and Public Utility Holding Company Act.
-------------------------------------------------------------------
Deepwater is not an "investment company" or a company controlled by an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended, or a "holding company" or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company", within the meaning of the Public Utility Holding Act of
1935, as amended.
<PAGE>
(j) Securities Act. Neither Deepwater nor any Person authorized by
---------------
Deepwater to act on its behalf has offered or sold any interest in the Trust
Estate, the Charter Trust, the Investment Trust, the Certificates, the Notes, or
in any similar security (other than the Commercial Paper Notes) relating to the
transactions contemplated by the Transaction Documents, or in any security the
offering of which for the purposes of the Securities Act would be deemed to be
part of the same offering as the offering thereof, or solicited any offer to
acquire any of the same from, any Person other than the parties hereto and not
more than 70 other Institutional Investors, and neither Deepwater nor any Person
authorized by Deepwater to act on its behalf will take any action which would
subject the issuance or sale of any interest in the Trust Estate, the Charter
Trust, the Investment Trust, the Certificates, the Notes, or in any similar
security relating to the Drillship to the provisions of Section 5 of the
Securities Act or require the qualification of any Transaction Document under
the Trust Indenture Act of 1939, as amended. The only Person which has been
authorized to act on behalf of Deepwater for this purpose is Bank of America.
The representation in this paragraph (j) is being given in reliance on the
--------------
certificate delivered pursuant to Section 3.2(n).
---------------
(k) Chief Place of Business; Location of Establishment. Deepwater's
-----------------------------------------------------
chief place of business, chief executive office and office where the documents,
accounts and records relating to the transactions contemplated by this Agreement
and each other Transaction Document are kept is located at c/o Transocean
Offshore Deepwater Drilling, Inc., 4 Greenway Plaza, Houston, Texas 77046.
Deepwater is a Delaware limited liability company.
(l) Business of Deepwater. (i) Deepwater has engaged in no business
-----------------------
activity other than as contemplated by, or in connection with, the Construction
Contract, the Drilling Contracts, the Rig Sharing Agreement, the Services
Agreements, the Drilling Contract Guaranties and the Transaction Documents; (ii)
Deepwater has no subsidiaries; (iii) as of the Closing Date, all of the
membership interests in Deepwater are owned by the Members; and (iv) Deepwater
does not have any Indebtedness except for Permitted Indebtedness.
(m) Bankruptcy. Deepwater has not filed a voluntary petition in
----------
bankruptcy or been adjudicated as bankrupt or insolvent, or filed any petition
or answer seeking any reorganization, liquidation, dissolution or similar relief
under any federal or state bankruptcy, insolvency or other law relating to
relief for debtors, or sought or consented to or acquiesced in the appointment
of any trustee, receiver, conservator or liquidator of all or any part of its
properties or its interest in the Drillship. No court of competent jurisdiction
has entered an order, judgment or decree approving a petition filed against
Deepwater seeking any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under federal bankruptcy or
insolvency act or other law relating to relief for debtors, and no other
liquidator has been appointed for Deepwater or of all or any part of its
properties or its interest in the Drillship and no such action is pending.
Deepwater has not given notice to any Government Authority of insolvency or
pending insolvency, or suspension or pending suspension of operations.
(n) Certain Contracts. From and after the Closing Date, the Services
------------------
Agreements, the Drilling Contracts, the Drilling Contract Guaranties and the Rig
Sharing Agreement are in full force and effect and have not been amended except
as permitted or contemplated by the Transaction Documents. Deepwater is not in
default under, and, to the knowledge of Deepwater, no other Person is in default
under, any of the Services Agreements, the Drilling Contracts, the
<PAGE>
Drilling Contract Guaranties or the Rig Sharing Agreement. The execution,
delivery and performance by Deepwater of its obligations under the Services
Agreements, the Drilling Contracts, the Rig Sharing Agreement, this Agreement
and the other Transaction Documents to which it is a party, will not violate in
any material respect any provisions of any Applicable Law.
(o) Federal Reserve Regulations. Deepwater is not engaged in, and does
---------------------------
not have as one of its activities, the business of extending credit for the
purpose of purchasing or carrying any margin stock, and no proceeds of any
advances made on the Closing Date have been used for a purpose which violates,
or would be inconsistent with, the rules and regulations of the Federal Reserve
Board. Terms for which meanings are provided in Federal Reserve Board
Regulations U or X or any regulations substituted therefor, as from time to time
in effect, are used in this clause (o) with such meanings.
-----------
(p) Absence of Events. No Charter Default or Charter Event of Default
------------------
has occurred and is continuing and Deepwater is not in default in, nor has any
non-permanent waiver been granted to Deepwater with respect to, the performance,
observance or fulfillment of any of the obligations, conditions or covenants
contained in the Construction Contract, the Drilling Contracts, the Rig Sharing
Agreement or the Services Agreements.
(q) Subject to Government Regulation. None of the Investment Trust,
-----------------------------------
the Trustees, any Agent or any Funding Participant, solely by reason of entering
into the Transaction Documents or the consummation of the transactions
contemplated thereby, will become subject to ongoing regulation of its
operations by any Government Authority having jurisdiction over the ownership or
operations of the Drillship solely by reason of any of Deepwater's business
activities or the nature of the Drillship.
(r) Solvency. Deepwater does not have capital unreasonably small in
--------
relation to its business, will not be rendered insolvent by the execution,
delivery and performance of its obligations under the Transaction Documents, and
does not intend to hinder, delay or defraud its creditors by or through the
execution, delivery and performance of the Transaction Documents to which it is
a party, including the Charter. As of the Documentation Date, there were or are
no outstanding subject to Permitted Liens unsatisfied judgments, liens for Taxes
or bankruptcy proceedings against Deepwater.
(s) [Intentionally Omitted].
(t) Accuracy of Information. The cash flow projections contained in
-------------------------
Section IV-6 of the Offering Memorandum, dated as of September, 2001, were
prepared by Deepwater in good faith on the basis of reasonable investigation,
information, assumptions and procedures which Deepwater believed were reasonable
under the facts and circumstances then existing, and since the date of such
projections there has been no change in any of the facts on which such
projections were based that would result in a material adverse change in such
projections.
(u) Title to the Drillship; Documentation; Condition. The Charter
-----------------------------------------------------
Trustee has valid title to the Drillship (including the OFE) and the Drillship
is duly documented in the name of the Charter Trustee under the laws of the
Republic of Panama free and clear of all liens, charges, encumbrances and
security interests other than Permitted Liens.
<PAGE>
(v) Recording of Ship Mortgage. (i) the Ship Mortgage has been
-----------------------------
duly recorded with the appropriate Panamanian authorities in Panama City,
Republic of Panama (which office is the only place in which such recording is
necessary), (ii) the Ship Mortgage constitutes a first naval mortgage on the
Drillship in favor of the Investment Trust and the Hedging Agreement
Counterparties, if any, and, if the Head Lessor is the mortgagor under the Ship
Mortgage, the Charter Trustee, and (iii) no other recordings or periodic
rerecording or filing or periodic filing of the Ship Mortgage are necessary
under existing law to constitute the lien of the Ship Mortgage on the Drillship
(including the OFE) and the Ship Mortgage is in effect.
(w) Other Recordings and Filings. All filings and recordings
-------------------------------
(including filing of the Master Charter in Panama City, Republic of Panama and
all filings of financing statements under the Uniform Commercial Code) have been
duly made in each jurisdiction in which such filings and recordings are required
or reasonably requested by the Charter Trustee or the Investment Trust in order
to perfect the security interests granted by the Deepwater Assignment, the Ship
Mortgage and the other Security Documents and to make such security interests
valid and enforceable.
SECTION 5.2 Representations and Warranties of Members. Each Member,
---------------------------------------------
severally and not jointly, represents and warrants to each of the other parties
hereto as of the date hereof as follows:
(a) Due Organization, etc. Such Member is a corporation duly
------------------------
organized, validly existing and in good standing under the laws of the
respective jurisdiction of its organization and has the power and authority and
has all requisite government licenses, permits and other approvals currently
necessary to enter into and perform its obligations under the Transaction
Documents to which it is or will be a party and each other agreement, instrument
and document to be executed and delivered by it in connection with, or as
contemplated by, each such Transaction Document to which it is or will be a
party. Such Member is duly qualified to transact business in every jurisdiction
where the nature of its business requires such qualification.
(b) Authorization; No Conflict. The execution, delivery and
----------------------------
performance by such Member of each Transaction Document to which it is or will
be a party (i) is within its corporate powers; (ii) has been duly authorized by
all necessary corporate action; (iii) requires no Government Action by, or
filing with, any Government Authority; (iv) does not contravene, or constitute a
default under, any Applicable Law or its organizational documents, or of any
material agreement, judgment, injunction, order, decree or other instrument
binding upon or affecting it; and (v) does not result in the creation,
imposition or violation of any Lien on any of its assets. Such Member possesses
all government licenses, authorizations, consents and approvals required to
carry on its business as now conducted.
(c) Enforceability, etc. Each Transaction Document to which the Member
--------------------
is or will be a party has been, or on or before the Documentation Date will be,
duly executed and delivered by such Member and each such Transaction Document to
which such Member is a party constitutes, or upon execution and delivery will
constitute, assuming the due authorization, execution and delivery thereof by
the other parties thereto, a legal, valid and binding obligation of such Member
enforceable against such Member in accordance with the terms thereof, except as
such enforceability may be limited or denied by (i) applicable bankruptcy,
insolvency,
<PAGE>
reorganization, moratorium or similar laws affecting creditors' rights and the
enforcement of debtors' obligations generally, and (ii) general principles of
equity, regardless of whether enforcement is pursuant to a proceeding in equity
or at law.
(d) Securities Act. Neither such Member nor any Person authorized by
---------------
such Member to act on its behalf has offered or sold any interest in Deepwater,
or in any security (other than the Commercial Paper Notes) relating to the
Drillship, or in any security the offering of which for the purposes of the
Securities Act would be deemed to be part of the same offering as the offering
thereof, or solicited any offer to acquire any of the same from, any Person
other than the parties hereto and not more than 70 other Institutional
Investors, and neither such Member nor any Person authorized by such Member to
act on its behalf will take any action which would subject the issuance or sale
of any interest in Deepwater to the provisions of Section 5 of the Securities
Act or require the qualification of any Transaction Document under the Trust
Indenture Act of 1939, as amended. The representation in this paragraph (d) is
-------------
being given in reliance on the certificate delivered pursuant to Section 3.2(n)
--------------
hereof.
(e) Litigation. To such Member's Actual Knowledge, there is no action
----------
or proceeding pending or threatened to which such Member is or will be a party
before any court or arbitrator or Government Authority that, if adversely
determined, would reasonably be expected to have a material adverse effect on
the property, operations or financial condition of Deepwater.
(f) Assignment. From and after the Closing Date, such Member has not
----------
assigned or transferred to any Person that is not a party hereto, any of its
right, title or interest in or under Deepwater, the Charter, the Drillship, or
the Collateral or any other Transaction Document, except as contemplated by the
Transaction Documents.
(g) Absence of Events. To such Member's Actual Knowledge, no Charter
-------------------
Default or Charter Event of Default has occurred and is continuing, and
Deepwater is not in default in, nor has any non-permanent waiver been granted to
Deepwater with respect to, the performance, observance or fulfillment of any of
the obligations, conditions or covenants contained in the Construction Contract,
Drilling Contracts, the Rig Sharing Agreement or the Services Agreements.
(h) Compliance With Laws. To such Member's Actual Knowledge, Deepwater
--------------------
is currently in compliance, in all material respects, with all Applicable Laws
with respect to the conduct of its business and the ownership of its properties.
SECTION 5.3 Representations and Warranties of the Investment Trust and the
--------------------------------------------------------------
Investment Trust Beneficiary. Each of the Investment Trust and the Investment
------------------------------
Trust Beneficiary (as to clauses (b) through (e) only) represents and warrants
-----------
to each of the other parties hereto as of the date hereof as follows:
(a) Due Organization, etc. It is a business trust duly formed and
------------------------
validly existing and in good standing under the laws of the jurisdiction of its
organization and has the power and authority to enter into and perform its
obligations under the Transaction Documents to which it is or will be a party
and each other agreement, instrument and document to be executed and
<PAGE>
delivered by it in connection with, or as contemplated by, each such Transaction
Document to which it is or will be a party.
(b) Authorization; No Conflict. The execution, delivery and
----------------------------
performance by it of each Transaction Document to which it is or will be a party
(i) is within its powers; (ii) has been duly authorized by all necessary action;
(iii) requires no Government Action by, or filing with, any Government
Authority; (iv) does not contravene, or constitute a default under, any
Applicable Law or its organizational documents, or of any material agreement,
judgment, injunction, order, decree or other instrument binding upon it; and (v)
does not result in the creation, imposition or violation of any Lien on any of
its assets. It possesses all government licenses, authorizations, consents and
approvals required to carry on its business as now conducted.
(c) Enforceability, etc. Each Transaction Document to which it is or
---------------------
will be a party has been, or on or before the Documentation Date will be, duly
executed and delivered by it and each such Transaction Document to which it is a
party constitutes, or upon execution and delivery will constitute, assuming the
due authorization, execution and delivery hereof and thereof by the other
parties hereto and thereto, a legal, valid and binding obligation enforceable
against it in accordance with the terms thereof, except as such enforceability
may be limited or denied by (i) applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights and the
enforcement of debtors' obligations generally, and (ii) general principles of
equity, regardless of whether enforcement is pursuant to a proceeding in equity
or at law.
(d) Assignment. It has not assigned or transferred any of its right,
----------
title or interest in or under the Charter, the Drillship, or the Collateral or
any other Transaction Document, except as expressly contemplated by the
Transaction Documents.
(e) Securities Act. Neither it nor any Person authorized by it to act
---------------
on its behalf has offered or sold any interest in the Trust Estate, the Charter
Trust, the Investment Trust, the Certificates, the Notes, the Commercial Paper
Notes or in any similar security relating to the Drillship, or in any security
the offering of which for the purposes of the Securities Act would be deemed to
be part of the same offering as the offering thereof, or solicited any offer to
acquire any of the same from, any Person other than the parties hereto, and
neither it nor any Person authorized by it to act on its behalf will take any
action which would subject the issuance or sale of any interest in the Trust
Estate, the Charter Trust, the Investment Trust, the Certificates, the Notes,
the Commercial Paper Notes or in any similar security related to the Drillship
to the provisions of Section 5 of the Securities Act or require the
qualification of any Transaction Document under the Trust Indenture Act of 1939,
as amended.
(f) Chief Place of Business; Location of Establishment. The Investment
--------------------------------------------------
Trust represents and warrants that its chief place of business, chief executive
office and office where the documents, accounts and records relating to the
transactions contemplated by this Agreement and each other Transaction Document
are and will be kept is located at Rodney Square North, 1100 North Market
Street, Wilmington, Delaware 19890-0001. The Investment Trust is a Delaware
business trust.
<PAGE>
(g) No Other Activities. It does not hold any assets, conduct any
---------------------
business nor is it party to any document, agreement or instrument other than the
Transaction Documents to which it is, or will be, a party.
SECTION 5.4 Representations and Warranties of the Liquidity Purchasers and
--------------------------------------------------------------
Certificate Purchasers. Each Liquidity Purchaser or Certificate Purchaser, as
-----------------------
applicable, individually and not jointly, represents and warrants to each of the
other parties hereto as of the date hereof as follows:
(a) Due Organization, etc. Such Liquidity Purchaser or Certificate
------------------------
Purchaser, as applicable, is duly organized, validly existing and in good
standing (to the extent relevant under Applicable Law) in the jurisdiction of
its organization and has the power and authority to enter into and perform its
obligations under the Transaction Documents to which it is or will be a party
and each other agreement, instrument and document to be executed and delivered
by it in connection with, or as contemplated by, each such Transaction Document
to which it is or will be a party.
(b) Authorization; No Conflict. The execution, delivery and
----------------------------
performance by such Liquidity Purchaser or Certificate Purchaser, as applicable,
of each Transaction Document to which it is or will be a party (i) is within its
powers; (ii) has been duly authorized by all necessary action; (iii) requires no
Government Action by, or filing with, any Government Authority (it being
understood that such Liquidity Purchaser or Certificate Purchaser, as
applicable, makes no representation or warranty relating to the Drillship or the
Applicable Laws pertaining thereto); (iv) does not contravene, or constitute a
default under, any Applicable Law or its organizational documents, or of any
material agreement, judgment, injunction, order, decree or other instrument
binding upon such Liquidity Purchaser or Certificate Purchaser, as applicable,
and (v) does not result in the creation, imposition or violation of any Lien on
any asset of such Liquidity Purchaser or Certificate Purchaser, as applicable.
(c) Enforceability, etc. Each Transaction Document to which such
---------------------
Liquidity Purchaser or Certificate Purchaser, as applicable, is or will be a
party has been, or on or before the Documentation Date will be, duly executed
and delivered by such Liquidity Purchaser or Certificate Purchaser, as
applicable, and each such Transaction Document to which such Liquidity Purchaser
or Certificate Purchaser, as applicable, is a party constitutes, or upon
execution and delivery will constitute, assuming the due authorization,
execution and delivery hereof and thereof by the other parties hereto and
thereto, a legal, valid and binding obligation enforceable against such
Liquidity Purchaser or Certificate Purchaser, as applicable, in accordance with
the terms thereof, except as such enforceability may be limited or denied by (i)
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
effecting creditors' rights and the enforcement of debtors' obligations
generally, and (ii) general principles of equity, regardless of whether
enforcement is pursuant to a proceeding in equity or at law.
(d) ERISA. Either (x) such Liquidity Purchaser or Certificate
-----
Purchaser, as applicable, is not and will not be making any Contribution or
Advance, as the case may be, with the assets of an "employee benefit plan" (as
defined in Section 3(3) of ERISA) which is subject to Title I of ERISA or a
"plan" (as defined in Section 4975(e)(1) of the Code) or (y) the source of funds
for any Contribution or Advance, as the case may be, made by such Liquidity
Purchaser or
<PAGE>
Certificate Purchaser, as applicable, is an insurance company general account
(as such term is defined in PTE 95-60 (issued July 12, 1995) in respect of which
the reserves and liabilities (as defined by the annual statement for life
insurance companies approved by the National Association of Insurance
Commissioners) (the "NAIC Annual Statement")) for the general account
-----------------------
contract(s) held by or on behalf of any employee benefit plan, together with the
amount of the reserves and liabilities for the general account contract(s) held
by or on behalf of any other employee benefit plans maintained by the same
employer (or affiliate thereof as defined in PTE 95-60) or by the same employee
organization in the general account, do not exceed 10% of the total reserves and
liabilities of the general account (exclusive of separate account liabilities)
plus surplus as set forth in the NAIC Annual Statement filed with the state of
domicile of such Liquidity Purchaser or Certificate Purchaser, as the case may
be.
(e) Securities Act. Neither such Liquidity Purchaser or Certificate
---------------
Purchaser, as the case may be, nor any Person authorized by such Funding
Participant to act on its behalf has offered or sold any interest in the Trust
Estate, the Charter Trust, the Investment Trust, the Certificates, the Notes, or
in any similar security relating to the Drillship (other than the Commercial
Paper Notes), or in any security the offering of which for the purposes of the
Securities Act would be deemed to be part of the same offering as the offering
thereof, or solicited any offer to acquire any of the same from, any Person
other than the parties hereto, and neither such Liquidity Purchaser or
Certificate Purchaser, as the case may be, nor any Person authorized by such
Liquidity Purchaser or Certificate Purchaser, as the case may be, to act on its
behalf will take any action which would subject the issuance or sale of any
interest in the Trust Estate, the Charter Trust, Investment Trust, the
Certificates, the Conduit Notes or in any similar security relating to the
Drillship to the provisions of Section 5 of the Securities Act or require the
qualification of any Transaction Document under the Trust Indenture Act of 1939,
as amended.
(f) Litigation. To the Actual Knowledge of such Liquidity Purchaser or
----------
Certificate Purchaser, as the case may be, there is no action or proceeding
pending or threatened to which the Liquidity Purchaser or Certificate Purchaser,
as the case may be, is or will be a party before any court or arbitrator or
Government Authority that, if adversely determined, would reasonably be expected
to have a material adverse effect on the property, operations or financial
condition of the Liquidity Purchaser or Certificate Purchaser, as the case may
be.
(g) No Other Documents. Such Liquidity Purchaser or Certificate
--------------------
Purchaser, as the case may be, has not authorized, or voted to authorize, the
Charter Trustee or the Investment Trust to execute any document, agreement or
instrument other than the Transaction Documents and the Original Transaction
Documents to which either the Charter Trustee or the Investment Trust is or will
be a party.
SECTION 5.5 Representations and Warranties of the Trustees. Each of the
-----------------------------------------------
Trustees in their respective individual capacities (and where indicated, as
trustee) represents and warrants, severally and not jointly, to each of the
other Participants as of the date hereof as follows:
(a) Due Organization, etc. It is a banking corporation or a Federal
------------------------
savings bank (as applicable), duly organized, validly existing and in good
standing under the laws of the state of its incorporation or the United States
(as applicable), has full corporate power and authority to enter into and
perform its obligations under the Transaction Documents to which it
(individually
<PAGE>
or as trustee, as the case may be) is or will be a party and each other
agreement, instrument and document to be executed and delivered by it
(individually or as trustee, as the case may be) in connection with, or as
contemplated by, each such Transaction Document to which it is or will be a
party.
(b) Authorization; No Conflict. The execution, delivery and
----------------------------
performance by it of each Transaction Document to which it (individually or as
trustee, as the case may be) is or will be a party (i) is within its powers;
(ii) has been duly authorized by all necessary action; (iii) requires no
Government Action by, or filing with, any Government Authority; (iv) does not
contravene or constitute a default under any Applicable Law or its
organizational documents, or of any material agreement, judgment, injunction,
order, decree or other instrument binding upon it (individually or as trustee);
and (v) does not result in the creation, imposition or violation of any Lien on
any of its assets (individually or as trustee).
(c) Enforceability, etc. Each Transaction Document to which it is or
---------------------
will be a party (individually or as trustee, as the case may be) has been or on
or before the Documentation Date will be, duly executed and delivered by it and
each such Transaction Document to which it is a party constitutes, or upon
execution and delivery will constitute, assuming the due authorization,
execution and delivery hereof and thereof by the other parties hereto and
thereto, a legal, valid and binding obligation enforceable against it in
accordance with the terms thereof, except as such enforceability may be limited
or denied by (i) applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors' rights and the enforcement of debtors'
obligations generally, and (ii) general principles of equity, regardless of
whether enforcement is pursuant to a proceeding in equity or at law.
(d) Litigation. There is no action, suit or proceeding pending or, to
----------
its knowledge (individually or as trustee, as the case may be) threatened to
which it (individually or as trustee), or, in the case of the Investment
Trustee, the Investment Trust is or will be a party, before any court or
arbitrator or any Government Authority that, if adversely determined, would
reasonably be expected to materially and adversely affect the ability of it
(individually or as trustee, as the case may be), or, in the case of the
Investment Trustee, the Investment Trust to perform their respective obligations
under each of the Transaction Documents to which it (individually or as trustee,
as the case may be), or, in the case of the Investment Trustee, the Investment
Trust is or is to be a party.
(e) Assignment. It has not assigned or transferred any of its right,
----------
title or interest in or under the Charter, the Drillship or the Collateral,
except as expressly contemplated by the Transaction Documents.
(f) Securities Act. Neither it (individually or as trustee) nor any
---------------
Person authorized by it (individually or as trustee) to act on its behalf has
offered or sold any interest in the Trust Estate, the Investment Trust, the
Certificates or the Notes, or in any similar security relating to the Drillship,
or in any security the offering of which for the purposes of the Securities Act
would be deemed to be part of the same offering as the offering thereof, or
solicited any offer to acquire any of the same from any Person other than the
parties hereto, and neither it (individually or as trustee) nor any Person
authorized by it (individually or as trustee) to act on its behalf will take any
action which would subject the issuance or sale of any interest in the Trust
Estate, the
<PAGE>
Investment Trust, the Certificates or the Notes to the provisions of Section 5
of the Securities Act or require the qualification of any Transaction Document
under the Trust Indenture Act of 1939, as amended.
(g) Chief Place of Business; Location of Establishment. The Charter
-----------------------------------------------------
Trustee's chief place of business and the office where the documents, accounts
and records relating to the Drillship and the transactions contemplated by this
Agreement and the other Transaction Documents are and will be kept is located at
Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001;
the Charter Trustee is a Delaware banking corporation. The Investment Trustee's
chief place of business, chief executive office and the office where the
documents, accounts and records relating to the Drillship and the transactions
contemplated by this Agreement and the other Transaction Documents are and will
be kept is located at 3773 Howard Hughes Parkway, Suite 300 North, Las Vegas,
Nevada 89109. The Investment Trustee is a Federal Savings Bank.
(h) No Other Documents. The Charter Trustee has not executed, and the
-------------------
Investment Trustee has not authorized, or voted to authorize, the Investment
Trust to execute, any document, agreement or instrument other than the
Transaction Documents to which either the Charter Trustee or the Investment
Trust is or will be a party.
SECTION 6
CERTAIN COVENANTS AND AGREEMENTS
SECTION 6.1 Covenants of Deepwater.
------------------------
(a) No Other Business. From the date hereof to the expiration or
-------------------
termination of the Charter Term, Deepwater shall not (i) engage in any business
other than as expressly contemplated by the Transaction Documents, the Head
Lease Documents (if any), the Drilling Contracts, the Rig Sharing Agreement or
the Services Agreements; (ii) become a party to any agreement other than this
Agreement, the other Transaction Documents, the Drilling Contracts, the Rig
Sharing Agreement, the Drilling Contract Guaranties, the Services Agreements,
the Construction Contract, the Construction Documents, the Head Lease Documents
(if any), and any other agreements incidental to the performance of its
obligations hereunder or thereunder; (iii) amend, modify or supplement the
Drilling Contracts, the Rig Sharing Agreement, the Drilling Contract Guaranties,
or the Services Agreements in any manner that would have an adverse effect on
the rights or interests of the Charter Trustee, the Investment Trust or the
Funding Participants without the prior written consent of the Majority Funding
Participants; (iv) make any distributions to its Members so long as an Event of
Loss has occurred or a Material Default or Charter Event of Default has occurred
and is continuing; or (v) incur any Indebtedness other than Permitted
Indebtedness. Deepwater shall provide the Charter Trustee with substantially
final drafts of any amendments, modifications or supplements to the Drilling
Contracts, the Rig Sharing Agreement, the Drilling Contract Guaranties or the
Services Agreements at least ten (10) Business Days prior to the effectiveness
of such amendments, modifications or supplements.
<PAGE>
(b) No Profit-Sharing. From the date hereof to the expiration or
------------------
termination of the Charter Term, Deepwater shall not enter into any partnership,
profit-sharing or royalty arrangement or other similar arrangement whereby
Deepwater's income or profits are, or might be, shared with any other Person, or
enter into any management contract or similar arrangement whereby its business
or operations are managed by any other Person, in each case other than as
provided in the Transaction Documents, the Head Lease Documents, the LLC
Agreement, the Drilling Contracts, the Rig Sharing Agreement, the Services
Agreements or any other agreement incidental to the performance of its
obligations under the Transaction Documents; provided that, notwithstanding the
-------- ----
foregoing, this Section 6.1(b) shall not prohibit profit-sharing arrangements
---------------
made pursuant to a Plan maintained by Deepwater in accordance with Section
-------
6.1(o).
------
(c) No Merger. Deepwater shall not, from the date hereof to the
----------
expiration or termination of the Charter Term, merge with any other entity or
sell all or substantially all of its assets.
(d) No Subsidiaries. Deepwater shall not, from the date hereof to the
----------------
expiration or termination of the Charter Term, form, or cause to be formed, or
own any interest in, any Subsidiaries.
(e) No Abandonment. Deepwater shall not, from the date hereof to the
---------------
expiration or termination of the Charter Term, abandon or agree to abandon the
Drillship other than a tender of an abandonment to an insurer in connection with
obtaining payment from such insurer for an Event of Loss.
(f) Corporate Existence, Etc. Deepwater shall, from the date hereof to
-------------------------
the expiration or termination of the Charter Term, do or cause to be done, in
all material respects, all things necessary to preserve and keep in full force
and effect its rights and powers and franchises as a limited liability company
and its power and authority to perform its obligations under the Transaction
Documents, the Drilling Contracts and the Rig Sharing Agreement, including any
necessary qualification or licensing in any foreign jurisdiction.
(g) Compliance With Laws. Deepwater shall, from the date hereof to the
--------------------
expiration or termination of the Charter Term, comply in all material respects
with all Applicable Laws with respect to the conduct of its business and the
ownership of its properties except in connection with a Permitted Contest.
(h) Change of Name or Location. Deepwater shall, from the date hereof
---------------------------
to the expiration or termination of the Charter Term, furnish to the Charter
Trustee and each Funding Participant notice before any relocation of its chief
executive office, principal place of business or the office where it keeps its
records concerning its accounts or change of its name, identity or limited
liability structure.
(i) No Disposition of the Drillship. Deepwater shall, from the
----------------------------------
date hereof to the expiration or termination of the Charter Term, not sell,
contract to sell, assign, transfer, convey or otherwise dispose of or permit to
be sold, assigned, leased, transferred, conveyed or otherwise disposed of, the
Drillship or any part thereof except as otherwise contemplated by the
Transaction Documents.
<PAGE>
(j) Brokers Fees. Deepwater shall hold the Charter Trustee, the
-------------
Investment Trust and each Funding Participant harmless from and against any
claim, demand or liability for any brokers, finders, or placement fees or
commissions incurred as a result of any action by Deepwater in connection with
the transactions contemplated by the Transaction Documents, except for any such
fee or commission included in Construction Costs; provided, that the covenant
--------
contained in this Section 6.1(j) shall not apply to any claim, demand or
---------------
liability for any brokers, finders or placement fees or commissions: (i) due and
payable to Bank of America in connection with the transactions contemplated by
the Transaction Documents; (ii) due and payable to any broker engaged by the
Trustees, Investment Trust, Funding Participants or Affiliate thereof; or (iii)
due and payable to any broker retained after Deepwater's election of the Return
Option pursuant to Section 20.3 of the Master Charter.
(k) Notice of Material Default, Charter Event of Default or
---------------------------------------------------------------
Environmental Claim; Other Certificates. If a Responsible Officer of Deepwater
----------------------------------------
has Actual Knowledge of a Material Default, Charter Event of Default or
Environmental Claim with respect to the Drillship (to the extent that Deepwater
reasonably expects the cost to remediate or liability to be incurred with
respect to all such Environmental Claims then outstanding to exceed $5,000,000
individually or in the aggregate), Deepwater shall promptly give notice thereof
to each other party to this Agreement.
Deepwater shall, upon the request of the Charter Trustee, (i) advise the
Charter Trustee in writing in reasonable detail of its response to any
Environmental Claim with respect to the Drillship and (ii) provide to the
Charter Trustee prompt notice of the date and location of the next scheduled
dry-docking, if any, of the Drillship prior to such date.
If a default occurs and is continuing with respect to Deepwater's
obligations under any Permitted Indebtedness of the type specified in clause
------
(iii) of the definition of Permitted Indebtedness, Deepwater shall notify the
-----
Trustees of such default promptly after Deepwater obtains Actual Knowledge of
such default and, upon receiving such notice, either of the Trustees may cure
such default at Deepwater's expense.
Deepwater shall furnish to the Charter Trustee and the Investment Trust
(with copies for each Funding Participant) within ninety (90) days after each
anniversary of the Closing Date, the annual confirmation of classification of
the Drillship issued by the Classification Society, and at any other time upon
the request of the Charter Trustee, copies of all certificates issued by the
U.S. Coast Guard or the Classification Society with respect to the Drillship.
(l) Documentation of Drillship and Ship Mortgage. In the event that a
---------------------------------------------
successor trustee to the Charter Trustee shall have been appointed pursuant to
Section 5.10 of the Charter Trust Agreement and Section 12.18, or the Charter
-------------
Trustee shall merge or consolidate with any Person in accordance with Section
5.12 of the Charter Trust Agreement and Section 12.18, Deepwater, at its sole
-------------
expense, shall cause the Drillship to be provisionally documented (if the Head
Lease Transaction has not been entered into) and the Ship Mortgage and the
Charter to be provisionally recorded under the laws of Panama in the name of any
successor trustee within fifteen (15) Business Days of the receipt of written
notice of any such appointment, merger or consolidation; provided that Deepwater
-------- ----
shall not be deemed to be in violation of the covenant contained in this
sentence to the extent that any delay in procuring such provisional
<PAGE>
documentation or recordation results from the failure of any of the Participants
to execute any necessary documents or instruments promptly upon receipt from
Deepwater or to take any other action necessary to effectuate such documentation
or recording promptly upon request by Deepwater. Deepwater, at its sole
expense, shall thereafter cause the Drillship to be duly permanently documented
(if the Head Lease Transaction has not been entered into) and the Ship Mortgage
and the Charter to be duly permanently recorded at least 10 Business Days prior
to the end of the six (6) months following the issuance of the provisional
documentation.
(m) Financial Statements. Deepwater shall, from the date hereof to the
--------------------
expiration or termination of the Charter Term, provide to the Charter Trustee
and each Certificate Purchaser financial statements as follows:
(i) for each fiscal year ended on and after December 30, 1999,
within 120 days after the end of such fiscal year, annual financial
statements including a statement of earnings, a statement of cash flows and
a balance sheet of Deepwater for the fiscal year then ended prepared in
conformity with GAAP, consistently applied, and audited by its independent
outside auditors;
(ii) for each fiscal quarter of Deepwater, within 60 days after
the end of such fiscal quarter, unaudited financial statements, including a
statement of earnings, a statement of cash flows and a balance sheet of
Deepwater for the fiscal quarter then ended prepared in conformity with
GAAP, consistently applied; and
(iii) together with the financial statements required to be
delivered under clauses (i) and (ii) above, a certificate from a member's
----------- ----
representative of Deepwater certifying that no Material Default or Charter
Event of Default has occurred and is then continuing.
(n) Subordinated Operating Expenses. Deepwater shall, from the date
---------------------------------
hereof to the expiration or termination of the Charter Term, maintain the
Services Agreements in effect and shall ensure that to the extent that Operation
and Maintenance Expenses incurred during each Return Period of the Charter Term
(or portion thereof) exceed the total Unsubordinated Operating Expense Amount
for such period, such expenses shall be payable by Deepwater under the Services
Agreements as Subordinated Operating Expenses. In the event that on any Charter
Hire Payment Date there are insufficient funds in the Operating Account to pay
all Subordinated Operating Expenses then due and payable in accordance with
Section 3.4(b) of the Depository Agreement, Deepwater shall be entitled to issue
Subordinated Debt to the Person to whom such Subordinated Operating Expenses are
due in the amount of such shortfall.
(o) Plans. Deepwater shall not, from the date hereof to the expiration
-----
or termination of the Charter Term, maintain any Plan for the benefit of its
employees; provided, however, that, notwithstanding the foregoing, Deepwater may
-------- -------
adopt one or more Plans for the benefit of its employees which are, in the
aggregate, comparable to the Plans maintained by other employers engaged in the
same or similar industry. With respect to any such Plan adopted by Deepwater:
<PAGE>
(i) such Plan shall be operated and administered by Deepwater in
compliance with its terms and with the requirements of any and all
Applicable Laws, in all material respects;
(ii) no material liability pursuant to Titles I or IV of ERISA or
the penalty or excise tax provisions of the Code shall be incurred; and
(iii) no lien pursuant to Titles I or IV of ERISA or Section 412
of the Code shall be imposed on any of the rights, properties or assets of
Deepwater.
(p) Deepwater shall not create or suffer to exist (and shall discharge
promptly) any Lien except any Lien created by, or contemplated in, the
Transaction Documents.
(q) Deepwater shall not incur any indebtedness except for Permitted
Indebtedness.
SECTION 6.2 Certain Covenants of the Charter Trustee, the Investment
-------------------------------------------------------------
Trustee, the Investment Trust and Investment Trust Beneficiary. Each of the
------------------------------------------------------------------
Charter Trustee, the Investment Trustee, the Investment Trust and the Investment
Trust Beneficiary (solely in his capacity as Investment Trust Beneficiary),
severally and not jointly, covenants as follows:
(a) Maintenance of Existence. The Investment Trust shall maintain its
-------------------------
existence as a Delaware business trust and its qualification to do business in
each jurisdiction in which the failure to have such a qualification may have a
material adverse effect on the performance of its obligations under the
Transaction Documents. The Charter Trustee and the Investment Trustee shall
each maintain its existence and its qualification to do business in each
jurisdiction in which the failure to have such qualification may have a material
adverse effect on the performance of its obligations under the Transaction
Documents.
(b) Indebtedness; Other Business. None of the Investment Trust, the
------------------------------
Investment Trust Beneficiary (solely in his capacity as Investment Trust
Beneficiary) nor the Trustees shall contract for, create, incur or assume any
Indebtedness, or enter into any business or other activity, other than pursuant
to, or as contemplated by, the Transaction Documents and the Head Lease
Documents.
(c) Change of Chief Place of Business. Each of the Trustees in their
-----------------------------------
respective individual capacities shall give prompt notice to Deepwater if any of
the Investment Trust's or Trustees' chief place of business or chief executive
office or the office where the records concerning the accounts or contract
rights relating to the Drillship are kept, shall cease to be located at the
address set forth in Section 12.3.
-------------
(d) No Voluntary Bankruptcy by Investment Trust. None of the
------------------------------------------------
Investment Trust or the Investment Trust Beneficiary (solely in his capacity as
Investment Trust Beneficiary) shall (i) commence any case, proceeding or other
action under any existing or future law, relating to bankruptcy, insolvency,
reorganization, arrangement, winding-up, liquidation, dissolution, composition
or other relief with respect to it or its debts, (ii) seek appointment of a
receiver, trustee, custodian or other similar official for them or for all or
any substantial part of its assets or property or (iii) take any action in
furtherance of, or indicating its consent to, approval of, or acquiescence in,
any of the acts set forth in this Section 6.2.
------------
<PAGE>
(e) No Voluntary Bankruptcy by Charter Trustee. The Charter Trustee,
--------------------------------------------
in its individual capacity or as trustee, shall not (i) commence any case,
proceeding or other action under any existing or future law, relating to
bankruptcy, insolvency, reorganization, arrangement, winding-up, liquidation,
dissolution, composition or other relief with respect to it, its debts, (ii)
seek appointment of a receiver, trustee, custodian or other similar official for
it or for all or any substantial part of its assets or property or (iii) take
any action in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in this Section 6.2.
------------
(f) No Voluntary Bankruptcy by Investment Trustee. The Investment
--------------------------------------------------
Trustee, in its individual capacity or as trustee, shall not (i) commence any
case, proceeding or other action under any existing or future law, relating to
bankruptcy, insolvency, reorganization, arrangement, winding-up, liquidation,
dissolution, composition or other relief with respect to it, its debts, the
Investment Trust or the Investment Trust's debts, (ii) seek appointment of a
receiver, trustee, custodian or other similar official for all or any
substantial part of its or the Investment Trust's assets or property or (iii)
take any action in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in this Section 6.2.
------------
(g) No Sale of Drillship. None of the Trustees, the Investment Trust
----------------------
nor the Investment Trust Beneficiary shall transfer all or any of its interest
in the Drillship or the Transaction Documents except as expressly permitted in
the Transaction Documents.
(h) Trust Agreements. Without prejudice to any right of either of the
-----------------
Trustees under the Trust Agreements to resign as trustee or the Investment Trust
Beneficiary to resign as Investment Trust Beneficiary, or the right of the
Funding Participants under the Trust Agreements to remove either of the Trustees
as trustee, and in each case subject to the terms of the Transaction Documents,
none of the Trustees, the Investment Trust nor the Investment Trust Beneficiary
shall (i) terminate or revoke the trusts created by the Trust Agreements before
the later of the expiration or termination of the Charter or the payment in full
of the obligations under the Certificates or the Notes, (ii) amend, modify,
supplement, terminate or revoke or otherwise modify any provision of any
Transaction Document (other than the Ship Mortgage) or any Head Lease Document
in any manner that would have an adverse effect on the rights or interests of
Deepwater without the prior written consent of Deepwater, or (iii) amend, modify
or supplement the Ship Mortgage without Deepwater's prior written consent.
(i) Liens. None of the Investment Trust Beneficiary, either Trustee
-----
(in its individual capacity or as beneficiary or trustee as the case may
be) nor the Investment Trust shall create or suffer to exist (and shall
discharge promptly) any Trust Lien; provided, however, that such Trustee or the
-------- -------
Investment Trust shall not be required to remove a Trust Lien if it is being
contested pursuant to a Permitted Contest and is bonded to the satisfaction of
Deepwater.
(j) Change of Jurisdiction of the Trustees. Neither Trustee (in its
-----------------------------------------
individual capacity) shall (i) without sixty (60) days' prior written notice to
Deepwater and the Participants, change its jurisdiction of incorporation or
organization (individually or as trustee) or (ii) change the jurisdiction of the
Investment Trust or the trust created by the Charter Trust Agreement, in any
case, without the consent of Deepwater and the Administrative Agent.
<PAGE>
(k) Quiet Enjoyment. So long as no Charter Event of Default shall have
---------------
occurred and be continuing and Deepwater shall have received no notice thereof,
none of the Investment Trust Beneficiary, either Trustee (in its individual,
beneficiary or trustee capacities as the case may be) nor the Investment Trust
shall take any action to interfere with or otherwise disturb Deepwater's, its
agents' or its permitted subcharterers' full use and possession of the Drillship
or do or cause to be done any act which would deprive Deepwater, its agents, or
its permitted subcharterers of the full use and possession of the Drillship on
the terms provided for in the Transaction Documents.
(l) Notices. The Charter Trustee shall deliver a copy of any notices,
-------
financial statements or any other documents, received by the Charter Trustee
from Deepwater, any guarantor under the Transocean Guaranty or Conoco Guaranty
or any Drilling Party, to each Funding Participant at its address set forth in
Schedule 2.
-----------
(m) Compliance by Charter Trustee. Subject to the terms of Section
-------------------------------- -------
12.13, the Investment Trust agrees that it shall not instruct, or vote to
-----
instruct, the Investment Trust Beneficiary or the Charter Trustee to take any
action inconsistent with, contrary to or in violation of the Transaction
Documents or the Charter Trustee's obligations thereunder, and each of the
Investment Trust and Investment Trust Beneficiary agrees that it shall instruct,
or vote to instruct, the Charter Trustee to take any affirmative action
necessary to satisfy the Charter Trustee's obligations under the Drilling
Consent (including any obligation to enter into an assumption agreement,
replacement drilling contract or similar arrangement and with respect to a
Non-Defaulting Drilling Party, the Cross-Default cure provision and the
assignment of rights and interests upon election and satisfaction of the
Purchase Option, all in accordance with the terms of the Drilling Consent).
SECTION 6.3 Covenants of the Funding Participants.
-----------------------------------------
Each Funding Participant, as applicable, individually and not jointly,
covenants as follows:
(a) Trust Agreements. Without prejudice to any right of the Trustees
-----------------
under the Trust Agreements to resign as Trustees or the Investment Trust
Beneficiary to resign as Investment Trust Beneficiary, or the right of the
Funding Participants under the Trust Agreements to remove the Trustees, and in
each case subject to the terms of the Transaction Documents, such Funding
Participant hereby agrees with Deepwater (i) not to terminate or revoke the
trusts created by the Trust Agreements before the later of the expiration or
termination of the Charter Term or the payment in full of the obligations under
the Certificates and the Notes, and (ii) not to amend, modify, supplement,
terminate or revoke or otherwise modify any provision of any Transaction
Document or any Head Lease Document in any manner that would have an adverse
effect on the rights or interests of Deepwater, the Drilling Parties, Conoco or
Transocean without the prior written consent of Deepwater, the Drilling Parties,
Conoco or Transocean, respectively.
(b) Compliance by Charter Trustee and Investment Trust. Subject to the
--------------------------------------------------
terms of Section 12.13, each Funding Participant agrees that it shall not
--------------
instruct, or vote to instruct, the Charter Trustee, the Investment Trust or the
Investment Trust Beneficiary to take any action inconsistent with, contrary to
or in violation of the Transaction Documents or the Charter
<PAGE>
Trustee's or the Investment Trust's or the Investment Trust Beneficiary's
obligations thereunder, and each Funding Participant agrees that it shall
instruct, or vote to instruct, the Investment Trust, the Charter Trustee or the
Investment Trust Beneficiary to take any affirmative action necessary to satisfy
the Investment Trust's and the Charter Trustee's and the Investment Trust's
Beneficiary's obligations under the Drilling Consent (including any obligation
to enter into an assumption agreement, replacement drilling contract or similar
arrangement and with respect to a Non-Defaulting Drilling Party, the
Cross-Default cure provision and the assignment of rights and interests upon
election and satisfaction of the Purchase Option, all in accordance with the
terms of the Drilling Consent).
(c) Liens. Each Funding Participant, as applicable, agrees that it
-----
shall not create or suffer to exist (and shall discharge promptly) any Funding
Participant Lien attributable to it; provided, however, that no Funding
-------- -------
Participant, as applicable, shall be required to remove a Funding Participant
Lien attributable to it if it is being contested pursuant to a Permitted Contest
and is bonded to the satisfaction of Deepwater.
(d) No Voluntary Bankruptcy. Each Funding Participant agrees that it
-------------------------
shall not (i) commence any case, proceeding or other action under any existing
or future law, relating to bankruptcy, insolvency, reorganization, arrangement,
winding-up, liquidation, dissolution, composition or other relief with respect
to the Charter Trustee's, Investment Trust's or Investment Trust Beneficiary's
debts, or (ii) seek appointment of a receiver, trustee, custodian or other
similar official for the Charter Trustee or the Investment Trust or the
Investment Trust Beneficiary or for all or any substantial part of either or
both of their assets or property and each Funding Participant shall not take any
action in furtherance of, or indicating its consent to, or approval of, any of
the acts set forth in this Section 6.3(d).
----------------
(e) Quiet Enjoyment. Each Funding Participant agrees that so long as
----------------
no Charter Event of Default shall have occurred and be continuing and Deepwater
shall have received no notice thereof, such Funding Participant shall not take
any action to interfere with or otherwise disturb Deepwater's, its agents' or
its permitted subcharterers' full use and possession of the Drillship or do or
cause to be done any act which would deprive Deepwater, its agents, or its
permitted subcharterers of the full use and possession of the Drillship on the
terms provided for in the Transaction Documents.
(f) Securities. It shall not, nor shall it permit anyone authorized to
----------
act on its behalf to, take any action which would subject the issuance or sale
of any Certificates, Notes or Commercial Paper Notes, or any security or lease
the offering of which, for purposes of the Securities Act or any state
securities laws, would be deemed to be a part of the same offering as the
offering of the aforementioned items, to the registration requirements of
Section 5 of the Securities Act or any state securities laws.
SECTION 6.4 Covenants of the Members. As the sole obligation of the
---------------------------
Members under this Agreement, each of the Members, severally and not jointly,
covenants as follows:
(a) Bankruptcy. Such Member agrees that it shall not (i) commence any
----------
case, proceeding or other action under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, arrangement, winding-up,
<PAGE>
liquidation, dissolution, composition or other relief with respect to Deepwater
or its debts; (ii) seek appointment of a receiver, trustee, custodian or other
similar official for Deepwater or for all or any substantial part of its
property; or (iii) vote its interest as a member of Deepwater to, or to
otherwise, cause Deepwater to file a voluntary petition in bankruptcy or an
answer seeking reorganization in a proceeding under any bankruptcy, insolvency
or similar laws or an answer admitting the material obligations of a petition
filed against Deepwater in any such proceeding.
(b) No Amendment to LLC Agreement. Other than in connection with a
---------------------------------
transfer of an ownership interest permitted by Section 6.4(c) or a transaction
--------------
permitted by Section 6.1(b), such Member agrees that it will not amend the LLC
--------------
Agreement as in effect on the Documentation Date, in a manner that has an
adverse effect on the rights or interests of the Trustees, the Investment Trust,
the Funding Participants, or their respective rights under the Transaction
Documents or the obligations of Deepwater thereunder, in each case, without the
prior written consent of the Charter Trustee, such consent not to be
unreasonably withheld.
(c) Maintenance of Membership Interests. Other than in connection with
-----------------------------------
a Qualified Transfer, such Member agrees that it shall not sell, assign or
transfer any of its interest in Deepwater if the result of such sale, assignment
or transfer is to cause the aggregate membership interests in Deepwater of such
Member and its Affiliates to be less than 40% of all of the Membership interests
in Deepwater.
(d) Compliance by Deepwater. Subject to the terms of Section 12.13,
------------------------- -------------
such Member agrees that it shall not instruct Deepwater to take any action
inconsistent with, contrary to or in violation of the Transaction Documents or
Deepwater's obligations thereunder.
(e) Securities. It shall not, nor shall it permit anyone authorized to
----------
act on its behalf to, take any action which would subject the issuance or sale
of any Certificates, Notes or any security or lease the offering of which, for
purposes of the Securities Act or any state securities laws, would be deemed to
be a part of the same offering as the offering of the aforementioned items, to
the registration requirements of Section 5 of the Securities Act or any state
securities laws.
SECTION 6.5 Hedging Agreements. At any time after the Closing Date, if
-------------------
Deepwater has arranged for one or more interest rate swaps in an aggregate
notional principal amount of up to $195,000,000 in substantially the form of
Exhibit L-1 hereto (the "Hedging Agreements") to be entered into by one or more
------------ ------------------
Hedging Agreement Counterparties, then upon the written request from Deepwater
the Charter Trustee shall enter into such Hedging Agreements and, concurrently
therewith, Deepwater and the Charter Trustee shall enter into one or more
matching interest rate swaps in substantially the form of Exhibit L-2 hereto
-----------
(the "Deepwater Hedging Agreements"); provided that, at the time any Hedging
------------------------------ -------- ----
Agreements are entered into after the Effective Date, each of the Hedging
Agreement Counterparties shall be a Funding Participant or an Affiliate thereof
and each of the Hedging Agreement Counterparties shall have executed
acknowledgments to the Depository Agreement, the Charter Trustee Assignment and
any other appropriate Transaction Document. The Charter Trustee is hereby
instructed and agrees to deposit all amounts owed to Deepwater under the
Deepwater Hedging Agreements (the "Deepwater Hedge Payments") and all amounts
------------------------
paid to the Charter Trustee under the Hedging Agreements with the Depository to
be applied pursuant to the Depository Agreement, as applicable. All Deepwater
Hedge Payments
<PAGE>
deposited pursuant to the preceding sentence shall satisfy, to the extent so
deposited, the obligations of the Charter Trustee under the Deepwater Hedging
Agreements. All payments made to the Hedging Agreement Counterparties of amounts
owed to the Hedging Agreement Counterparties under the Hedging Agreements
pursuant to the Depository Agreement shall satisfy the corresponding obligations
of Deepwater under the Deepwater Hedging Agreements. If a Responsible Officer of
Deepwater has Actual Knowledge of a Charter Event of Default or Event of Loss,
Deepwater shall promptly give notice thereof to each of the Hedging Agreement
Counterparties. In addition, Deepwater shall provide to each of the Hedging
Agreement Counterparties a copy of any notice of its election to exercise its
Special Purchase Right under Section 16.4 of the Master Charter. The Charter
Trustee shall provide to each of the Hedging Agreement Counterparties a copy of
any notice given to Deepwater under Article XVI of the Master Charter.
SECTION 6.6 [Intentionally Omitted].
SECTION 6.7 Charter Extension Option. In the event that Deepwater elects
------------------------
the Charter Extension Option in accordance with Section 20.2 of the Master
Charter, Deepwater may, in its sole discretion, elect to replace any Funding
Participant that does not submit an offer to extend or whose offer to extend is
rejected by Deepwater by having a Replacement Funding Participant purchase such
non-consenting Funding Participant's interest in accordance with this Agreement.
Replacement of a Funding Participant by a Replacement Funding Participant shall
be accomplished in accordance with Section 4.4.
------------
SECTION 6.8 Excessive Use Indemnity. In the event that (a) Deepwater
-------------------------
elects the Return Option and (b) after paying to the Charter Trustee all amounts
due under Section 20.3 of the Master Charter, including Net Sales Proceeds and
the Residual Guaranty Amount, the Charter Trustee has not received sufficient
funds to reduce the Charter Balance (excluding any Purchasing Party Amount) to
zero, then Deepwater shall deliver a report from an independent appraiser
acceptable to the Majority Funding Participants establishing whether or not the
decline in the fair market value of the Drillship from the anticipated fair
market value of the Drillship as of the Scheduled Charter Expiration Date in the
Appraiser's report delivered pursuant to Section 3.2(f) of the Original
Participation Agreement was due to wear and tear on the Drillship in excess of
ordinary wear and tear. Deepwater shall pay to the Charter Trustee promptly
after receipt of such report an amount equal to the amount, if any, of the
decline in the fair market value of the Drillship that the appraiser has
attributed to such excess wear and tear; provided, however, that the amount owed
-------- -------
by Deepwater pursuant to this Section 6.8 shall in no event exceed the amount of
-----------
funds necessary to reduce the Charter Balance (excluding any Purchasing Party
Amount) to zero and to pay all accrued and unpaid Charter Return after
Deepwater's payment of all amounts due under Section 20.3 of the Master Charter.
The appraiser's determination shall be absolute and final and not contested by
any of the parties hereto, absent manifest error.
<PAGE>
SECTION 7
CERTAIN PROCEDURES
SECTION 7.1 Illegality. If after the Documentation Date the adoption of
----------
any Applicable Law, or any change in any Applicable Law, or in the
interpretation or administration by any central bank or other Government
Authority of any Applicable Law, has made it unlawful, or it is asserted by any
central bank or other Government Authority that it is unlawful, for any
Liquidity Purchaser or Certificate Purchaser or its Applicable Office to make or
continue Base Rate Fundings (an "Illegality Event") then, on written notice
----------------
thereof by such Funding Participant to Deepwater and the Charter Trustee, any
obligation of such Funding Participant to make Base Rate Fundings shall be
suspended to the extent necessary to comply with any such Applicable Law until
such Funding Participant notifies the Charter Trustee and Deepwater that such
Illegality Event no longer exists.
If an Illegality Event occurs, upon written notice of such Illegality Event
from the affected Funding Participant to Deepwater (with a copy to the Charter
Trustee), all Base Rate Fundings of such Funding Participant then outstanding
shall automatically be converted to an Alternate Rate Funding, either on the
last day of the Return Period thereof, if such Funding Participant may lawfully
continue to maintain such Base Rate Fundings to such day, or immediately, if
such Funding Participant may not lawfully continue to maintain such Base Rate
Funding.
If the obligation of any Liquidity Purchaser or Certificate Purchaser to
make or maintain Base Rate Fundings has been terminated or suspended in
accordance with this Section 7.1, Deepwater may elect, by giving notice to such
-----------
Funding Participant through the Charter Trustee or the Investment Trust that all
Fundings which would otherwise be made by such Funding Participant as Base Rate
Fundings shall be made instead as Alternate Rate Fundings.
Before giving any notice to Deepwater, the Charter Trustee or the
Investment Trust under this Section 7.1, the affected Funding Participant shall
-----------
designate a different Applicable Office with respect to its Base Rate Fundings
if such designation will avoid or cure the Illegality Event and will not, in the
judgment of the Funding Participant, be illegal or otherwise disadvantageous to
the Funding Participant.
SECTION 7.2 Increased Costs and Reduction of Return. If due to either
----------------------------------------
(i) the adoption of or any change in or in the interpretation by any Government
Authority of any law or regulation or (ii) the compliance by any Affected Party
with any guideline or request from any central bank or other Government
Authority (whether or not having the force of law), any Affected Party becomes
subject to any Tax, duty or other charge (other than Taxes for which
indemnification is provided under Section 10.4) such that there shall be any
------------
increase in the cost to any Affected Party of agreeing to make or making,
continuing, funding or maintaining any Fundings, or otherwise with respect to
any commitment to, or funding of, any Conduit by an Affected Party (in such
capacity) then, subject to Section 7.6, Deepwater shall be liable for, and shall
-----------
from time to time, upon written demand from such Affected Party (with a copy of
such demand to be sent to the Charter Trustee), pay to the Charter Trustee for
the account of such Affected Party additional amounts equal to the amount of
such increased costs.
<PAGE>
(b) If (i) the adoption of any Applicable Law relating to the adequacy
of any Affected Party's capital, (ii) any change in any such Applicable Law,
(iii) any change in the interpretation or administration of any such Applicable
Law by any central bank or other Government Authority charged with the
interpretation or administration thereof, or (iv) compliance by any Affected
Party (or its Applicable Office) or any corporation controlling any Affected
Party with any such Applicable Law, affects or would affect the amount of
capital required or expected to be maintained by any Affected Party or any
corporation controlling any Affected Party such that the return on capital of
such Affected Party is reduced as a consequence of such Affected Party's
commitment or obligations under this Agreement, the Loan Agreement or the LAPA
(or any other Conduit program document by an Affected Party (in such capacity))
to a level below that which such Affected Party could have achieved but for such
adoption or change (taking into consideration such Affected Party's or such
corporation's policies with respect to capital adequacy and such Affected
Party's reasonably expected return on capital), then upon written notice from
such Affected Party to Deepwater (with a copy to the Charter Trustee) Deepwater
shall, subject to Section 7.6, pay to such Affected Party additional amounts
------------
sufficient to compensate such Affected Party for such reduction in return.
(c) Any Affected Party affected by a change as described in
subparagraphs (a) or (b) shall, pursuant to Section 7.6, deliver to Deepwater
------- --- -----------
and the Charter Trustee as promptly as practicable a certificate setting forth
in reasonable detail the amount actually imposed or assessed and in the case of
the occurrence of an event described in Section 7.2(a) or (b), setting forth in
-------------- ---
reasonable detail such increased amounts or the amount required to compensate
such Affected Party for such reduced return and the basis for the determination
of such amounts.
SECTION 7.3 Funding Losses. Deepwater shall reimburse each Affected Party
--------------
and hold each Affected Party harmless from any direct loss or expense (as
opposed to consequential loss or expense) which the Affected Party may sustain
or incur as a consequence of: (a) the failure of Deepwater to make on a timely
basis any payment which it is required to make under the Transaction Documents
which is to be applied to the payment of principal of any Funding; (b) the
failure of Deepwater to accept, continue or convert the proceeds of any
Contribution or Advance paid to the Charter Trustee or Investment Trust, as the
case may be after Deepwater has given (or is deemed to have given) a Refinancing
Request; (c) the failure of Deepwater to make any payment which it is required
to make under the Transaction Documents which is to be applied to the prepayment
of any Funding in accordance with any notice delivered pursuant to this
Agreement or any Transaction Document; (d) the prepayment or other payment
(including after acceleration thereof) of a Funding on a day that is not the
last day of the relevant Return Period; (e) the sale or transfer of a Series A
Charter Trust Certificate or Note pursuant to Sections 4.4, 7.7 or 9.4, the
------------ --- ---
automatic conversion of any Base Rate Funding to an Alternate Rate Funding or a
conversion of a Funding bearing interest at the CP Rate to a Base Rate Funding
or Alternate Rate Funding on a day that is not the last day of the relevant
Return Period, including any such loss or expense arising from the liquidation
or reemployment of funds obtained by it to maintain its Base Rate Fundings or
from fees payable to terminate the deposits from which such funds were obtained;
or (f) the prepayment or other payment (including after acceleration thereof) of
a Conduit Loan on a day other than when due. For purposes of calculating
amounts payable by Deepwater to the Affected Party other than the Conduit under
this Section 7.3 except with respect to clause (f) above and under Sections 2.4
----------- ------------
and 2.8, each Base Rate Funding made by an Affected Party (and each related
---
reserve, special deposit or similar requirements) shall be
<PAGE>
conclusively deemed to have been funded at the LIBOR used in determining the
applicable Return Rate for such Base Rate Funding by a matching deposit or other
borrowing in the interbank Eurodollar market for a comparable amount and for a
comparable period, whether or not such Base Rate Funding is in fact so funded.
SECTION 7.4 Inability to Determine Rates. If the Charter Trustee or the
-----------------------------
Majority Funding Participants determine that for any reason adequate and
reasonable means do not exist for determining the Base Rate for any requested
Return Period with respect to a proposed Base Rate Funding by reason of any
changes arising after the Documentation Date affecting the interbank Eurodollar
market, the Charter Trustee will promptly so notify Deepwater and each Funding
Participant. Thereafter, the obligation of the Liquidity Purchasers or
Certificate Purchasers to make or maintain Base Rate Fundings hereunder shall be
suspended until the Charter Trustee, upon the instruction of the Majority
Funding Participants, revokes such notice in writing. Upon receipt of such
notice, Deepwater may revoke any Refinancing Requests then submitted by it. If
Deepwater does not revoke any such Refinancing Request, each Liquidity Purchaser
and Certificate Purchaser shall make, convert or continue its Funding, as the
case may be, as proposed by Deepwater, in the amount specified in the applicable
notice submitted by Deepwater, but such Fundings shall be made, converted or
continued as Alternate Rate Fundings instead of Base Rate Fundings.
SECTION 7.5 Reserves on Base Rate Advances. If after the date hereof any
------------------------------
Liquidity Purchasers or Certificate Purchasers shall be required under
regulations of the Federal Reserve Board or any other applicable Government
Authority to maintain reserves with respect to liabilities or assets consisting
of or including Eurocurrency funds or deposits (currently known as "Eurocurrency
------------
Liabilities"), Deepwater shall pay to such Funding Participant additional costs
-----------
on the unpaid principal amount of each Base Rate Funding equal to the actual
costs of such reserves maintained and allocated to such Base Rate Funding by
such Funding Participant, payable on each date on which interest is payable on
such Base Rate Funding, provided Deepwater shall have received at least 15 days'
prior written notice (with a copy to the Charter Trustee) of such additional
costs from the Funding Participant. If a Funding Participant fails to give
notice 15 days prior to the relevant Charter Hire Payment Date, such additional
costs shall be payable 15 days from receipt of such notice.
SECTION 7.6 Certificates of Funding Participants. Any Affected Party
---------------------------------------
claiming reimbursement or compensation under this Section 7 shall deliver to
---------
Deepwater (with a copy to the Charter Trustee) a certificate setting forth in
reasonable detail the amount payable to such Affected Party hereunder and the
basis for the determination of such amount and such certificate shall be
conclusive and binding on Deepwater in the absence of manifest error. Deepwater
shall not be obligated to compensate any Affected Party for any costs incurred
more than 120 days before the date on which such Affected Party first notifies
Deepwater of its intent to make such a claim or it notifies Deepwater of an
event that entitles it to compensation.
SECTION 7.7 Substitution of Funding Participants; Change in Applicable
-------------------------------------------------------------
Office; Prepayments. Upon the receipt by Deepwater from any Funding Participant
-------------------
(an "Affected Funding Participant") of a claim for compensation under Section
------------------------------ -------
7.2, Deepwater may: (i) request the Affected Funding Participant to use
---
commercially reasonable efforts to obtain a replacement bank or financial
institution satisfactory to Deepwater (a "Substitute Funding Participant") to
------------------------------
<PAGE>
acquire and assume all or a ratable part of all of such Affected Funding
Participant's Certificate Purchaser Amount or Lender Amount, as the case may be,
and Liquidity Purchaser Commitment Amount and Facility Loan Commitment Amount,
as the case may be, so long as the Affected Funding Participant is paid its
Certificate Purchaser Amount or Lender Amount, as the case may be, accrued and
unpaid Charter Return on such amount, any funding losses incurred by it pursuant
to Section 7.3 as a result of the substitution and any other accrued and unpaid
-----------
amount owed to it by Deepwater under the Transaction Documents; (ii) request one
or more of the other Funding Participants, as applicable, to acquire and assume
all or part of such Affected Funding Participant's Certificate Purchaser Amount
or Lender Amount, as the case may be, and Liquidity Purchaser Commitment Amount
and Facility Loan Commitment Amount, as the case may be, so long as the Affected
Funding Participant is paid its Certificate Purchaser Amount or Lender Amount,
as the case may be, accrued and unpaid Charter Return on such amount, any
funding losses incurred by it pursuant to Section 7.3 as a result of the
------------
substitution and any other accrued and unpaid amount owed to it by Deepwater
under the Transaction Documents; (iii) designate a Substitute Funding
Participant and require the Affected Funding Participant to sell all of its
interests in its Certificate Purchaser Amount or Lender Amount, as the case may
be, and Liquidity Purchaser Commitment Amount and Facility Loan Commitment
Amount, as the case may be, to such Substitute Funding Participant for an amount
equal to its Certificate Purchaser Amount or Lender Amount, as the case may be,
accrued and unpaid Charter Return, any funding losses incurred by it pursuant to
Section 7.3 as a result of the substitution and all other accrued and unpaid
------------
amounts owed to it by Deepwater under the Transaction Documents; (iv) request
the Affected Funding Participant to designate a different Applicable Office if
such designation will avoid the need for, or reduce the amount of, such
compensation and will not be illegal or otherwise disadvantageous to the
Affected Funding Participant; or (v) make payments to the Charter Trustee which
are equal to the amounts necessary for the Charter Trustee to prepay all or a
portion of the Certificate Purchaser Amount or Lender Amount, as the case may
be, of the Affected Funding Participant Purchaser, together with accrued and
unpaid Charter Return attributable to the amount being prepaid and any funding
losses incurred by the Affected Funding Participant pursuant to Section 7.3 as a
-----------
result of the prepayment; provided that in the case of clauses (i), (ii), (iii)
-------- ---- ------- --- ---- -----
or (iv) above, if such Substitute Funding Participant is a Liquidity Purchaser,
----
such action shall be subject to approval by the Rating Agencies rating the
Commercial Paper Notes and the applicable Administrator and subject to the
---
provisions of each respective LAPA; provided further, that (i) any replacement
-------- -------
of the Conduit (Liberty) shall not be effective unless The Bank of Nova Scotia
is also replaced as a Liquidity Purchaser, (ii) any replacement of The Bank of
Nova Scotia shall not be effective unless the Conduit (Liberty) is also
replaced, (iii) any replacement of the conduit (Paradigm) shall not be effective
unless Westdeutsche Landesbank Girozentrale, New York Branch is also replaced as
a Liquidity Purchaser and (iv) any replacement of Westdeutsche Landesbank
Girozentrale, New York Branch as a Liquidity Purchaser shall not be effective
unless the Conduit (Paradigm) is also replaced; provided further, that in the
-------- -------
event that Conduit (Liberty) is replaced pursuant to this Section 7.3, (i)
Conduit (Hatteras) shall, subject to approval from the Rating Agencies, increase
its Conduit Loan Amount under the Loan Agreement in an amount equal to the
portion of Bank of America N.A.'s Facility Loan Commitment Amount with respect
to Conduit (Liberty) and (ii) Bank of America N.A. shall, subject to approval
from the Rating Agencies, increase its Liquidity Purchaser Commitment Amount
with respect to Conduit (Hatteras) in an amount equal to its terminated
Liquidity Purchaser Commitment Amount with respect to Conduit (Liberty). The
<PAGE>
Affected Funding Participant shall take any commercially reasonable actions
necessary to carry out a request or election made by Deepwater in accordance
with this Section 7.7 at Deepwater's sole cost and expense. Any designation of
-----------
a Substitute Funding Participant under this Section 7.7 shall be subject to the
-----------
prior written consent of the Charter Trustee which consent shall not be
unreasonably withheld, delayed or conditioned.
SECTION 7.8 Legal and Tax Representation. Deepwater acknowledges and
-------------------------------
agrees that none of the Trustees, the Investment Trust, any Agent or any Funding
Participant has made any representation or warranty concerning the tax,
accounting or legal characteristics of the Charter or any of the other
Transaction Documents, and that Deepwater has obtained and relied on such tax,
accounting and legal advice regarding the Charter and the other Transaction
Documents as its deems appropriate. Each of the Charter Trustee, Investment
Trust and each Funding Participant acknowledges and agrees that it has obtained
and reviewed the Transaction Documents and the various items delivered in
connection therewith, and on such tax, accounting and legal advice regarding the
Charter and the other Transaction Documents as it deems appropriate.
SECTION 7.9 Failure of a Certificate Purchaser to Fund. If a Contribution
------------------------------------------
is to be made in accordance with the terms and conditions hereof and if the
Charter Trustee determines that any Certificate Purchaser (each such Certificate
Purchaser a "Defaulting Certificate Purchaser") will not make available all or a
--------------------------------
portion of its Contribution (the "Defaulted Amount"), the Charter Trustee shall
----------------
promptly so notify Deepwater and each other Certificate Purchaser (each, a
"Non-Defaulting Certificate Purchaser") and shall specify the additional amounts
------------------------------------
required to be funded by each such Non-Defaulting Certificate Purchaser pursuant
to this Section 7.9. Each such Non-Defaulting Certificate Purchaser as soon as
-----------
practical after receipt of notice but not before the Refinancing Date, shall
transfer to the Charter Trustee, in immediately available funds, its pro rata
share of the Defaulted Amount, determined in the same proportion that such
Non-Defaulting Certificate Purchaser's Certificate Purchaser Commitment bears to
the aggregate Certificate Purchaser Commitments of all such Non-Defaulting
Certificate Purchasers; provided, that such amount, together with all amounts
--------
previously funded by each such Non-Defaulting Certificate Purchaser, shall not
exceed such Non-Defaulting Certificate Purchaser's Certificate Purchaser
Commitment. If the Defaulted Amount cannot be fully funded by the
Non-Defaulting Certificate Purchasers, the Charter Trustee shall so notify
Deepwater and the Non-Defaulting Certificate Purchasers and give to all such
Non-Defaulting Certificate Purchasers the opportunity to increase their
respective Certificate Purchaser Commitments by notice in writing to the Charter
Trustee; provided, that should the aggregate proposed increased Certificate
--------
Purchaser Commitments by one or more Non-Defaulting Certificate Purchasers
exceed the Defaulted Amount, the Charter Trustee shall increase the Certificate
Purchaser Commitments of the participating Non-Defaulting Certificate Purchasers
on a pro-rata basis in accordance with the respective amounts by which such
Non-Defaulting Certificate Purchasers have offered to participate, it being
understood that in no event shall the aggregate amount funded by any Certificate
Purchaser exceed the amount of such Certificate Purchaser's Certificate
Purchaser Commitment after giving effect to any increase in such Certificate
Purchaser Commitment pursuant to this sentence. If the Non-Defaulting
Certificate Purchasers do not increase their commitments by an amount sufficient
to fund the entire Defaulted Amount, then Deepwater shall have the right to
elect to fund any such shortfall and shall thereafter be deemed to be a
Certificate Purchaser for all purposes of the Transaction Documents and shall be
entitled to receive yield on the amount so
<PAGE>
funded in an amount equal to the applicable Charter Return; provided, however,
-------- -------
that Deepwater shall not be deemed to be a Certificate Purchaser for purposes of
the definition of "Majority Funding Participants".
In the event of any funding of all or a portion of the Defaulted Amount by
the Non-Defaulting Certificate Purchasers, the following rules shall apply
notwithstanding any other provision in any Transaction Document:
(i) The Certificate Purchaser Commitment of the Defaulting
Certificate Purchaser shall be decreased in an amount equal to the total
aggregate increase, if any, in the Certificate Purchaser Commitments of the
Non-Defaulting Certificate Purchasers pursuant to this Section 7.9 and the
-----------
Certificate Purchaser Commitment Percentages of the Certificate Purchasers
shall be revised accordingly; provided, that nothing shall preclude any
--------
party from pursuing any rights or remedies it may have against the
Defaulting Certificate Purchaser in connection with its failure to make a
Contribution;
(ii) [Intentionally Omitted];
(iii) A Defaulting Certificate Purchaser shall not have the right
to fund its Defaulted Amount without the written consent of Deepwater and
then only to the extent such Defaulted Amount has not been funded by the
Non-Defaulting Certificate Purchasers in a manner that resulted in a
decrease in such Defaulting Certificate Purchaser's Certificate Purchaser
Commitment Percentage;
(iv) If and to the extent that the Defaulted Amount is not funded
in full by the Non-Defaulting Certificate Purchasers, the Charter Trustee,
after providing written notice thereof to Deepwater, may delete funds from
the Refinancing Request so that the total Contribution specified in the
Refinancing Request equals the aggregate revised Contributions for the
Refinancing Date and shall so notify all Certificate Purchasers thereof;
and
(v) The Non-Defaulting Certificate Purchasers shall not be
responsible for any damages suffered by Deepwater or any of Deepwater's
Affiliates as a result of the Defaulting Certificate Purchaser's failure to
so fund. The Defaulting Certificate Purchasers shall not be responsible for
any consequential or special damages suffered by Deepwater or any of
Deepwater's Affiliates as a result of its failure to fund.
SECTION 8
PAYMENT OF CERTAIN EXPENSES
SECTION 8.1 Transaction Expenses. In the event that the transactions
---------------------
contemplated hereby are consummated, Deepwater shall pay or cause to be paid all
Transaction Expenses in accordance with Sections 3.2(i) and 4.2(j), all Fees in
--------------- ------
accordance with Sections 2.14 and 4.2(j) and all other fees, expenses and costs
------------- ------
in accordance with the Transaction Documents. Deepwater may pay any such
Transaction Expenses out of the proceeds of Contributions and Advances made
available in accordance with Section 2.3. Any Transaction Expenses or Fees
------------
<PAGE>
submitted to Deepwater which were not paid on the Refinancing Date shall be paid
by Deepwater promptly after receipt of an invoice therefor.
SECTION 8.2 Transaction Expenses if Closing does not Occur. In the event
----------------------------------------------
that the transactions contemplated hereby are not consummated for any reason
Deepwater shall promptly pay all of the Transaction Expenses submitted to
Deepwater as they become due.
SECTION 8.3 On-Going Expenses. Deepwater shall, promptly upon demand, pay
-----------------
or reimburse the Charter Trustee, the Investment Trust, each Affected Party, the
Agents or the other Persons entitled thereto for all other out-of-pocket
expenses (including counsel fees) reasonably incurred in connection with: (a)
entering into, or the giving or withholding of, any future amendments,
supplements, waivers or consents with respect to the Transaction Documents, to
the extent required by the terms of the Transaction Documents, the Services
Agreements, the Drilling Contracts, the Rig Sharing Agreement or the Drilling
Contract Guaranties, or requested or consented to by Deepwater (whether or not
consummated); (b) the negotiation and documentation of any restructuring or
"workout" whether or not consummated, of any Transaction Document to the extent
requested or consented to by Deepwater; (c) the enforcement, attempted
enforcement or preservation of the rights or remedies under the Transaction
Documents, the Services Agreements, the Drilling Contracts, the Rig Sharing
Agreement or the Drilling Contract Guaranties; (d) further assurances requested
by Deepwater pursuant to Section 12.11; (e) any transfer by the Charter Trustee,
-------------
the Investment Trust or any Funding Participant of any interest in the
Transaction Documents during the continuance of a Charter Event of Default; (f)
the ongoing fees (if any) and expenses of any Agent, the Trustees and the
Depository pursuant to separate agreements entered into by Deepwater with such
Persons; (g) the costs and expenses associated with the Documentation Date and
the Refinancing Date, including fees and expenses of U.S. and Panamanian
counsel, recordation and recording fees and all other out-of-pocket expenses of
the parties hereto in connection with the Documentation Date and the Refinancing
Date and the transactions contemplated herein (h) any reasonable legal fees and
expenses incurred by a single counsel to any Conduit and its Applicable
Liquidity Purchasers and related Agents in connection with the extension of the
LAPAs, and (i) any fees and expenses incurred by each Liquidity Agent in
connection with establishing and maintaining a segregated trust account pursuant
to the applicable sections of the LAPA it is party to (provided, that Deepwater
--------
shall only be responsible for fees and expenses of one U.S. counsel and one
Panamanian counsel for all of the Funding Participants (other than the Conduits
in the case of the U.S. counsel), the Agents, the Trustees and the Investment
Trust).
SECTION 9
RESTRICTIONS ON TRANSFERS; CHANGE OF CONTROL; MEMBER TRANSFER
SECTION 9.1 Restrictions on the Funding Participants. A Funding
--------------------------------------------
Participant, including a Purchasing Party, may transfer all or a portion of its
interest in its Series A Charter Trust Certificates, Notes or Commitments, as
the case may be, in the following circumstances:
(a) in the case of a Funding Participant that is not a Purchasing
Party, such Person obtains the prior written consent of Deepwater and transfers
its interests in its Series A Charter
<PAGE>
Trust Certificates, Notes, Loans or Commitments, as the case may be, to a
transferee that has executed an Assignment and Assumption Agreement in
substantially the form of Exhibit K by which such transferee assumes the duties
---------
and obligations of the transferring Funding Participant; provided that if any
-------- ----
Conduit transfers its interests in its Notes, Loans or Commitments to an
Affiliate or any Program Support Provider or if any Liquidity Purchaser
transfers its interests in its Notes, Loans or Commitments to its Conduit, such
Funding Participant will not be restricted by the provisions set forth in this
Section 9.1;
------------
(b) in the case of any Certificate Purchaser, including any Purchasing
Party, such Person transfers all or a portion of its interest in its Series A
Charter Trust Certificates and the following conditions are satisfied:
(i) such transfer is equal to such Certificate Purchaser's then
outstanding Certificate Purchaser Amount;
(ii) if the transferee is an Affiliate of a Certificate Purchaser
and does not otherwise qualify under clause (iii) below, such Certificate
Purchaser unconditionally and irrevocably guarantees the payment and
performance obligations of the transferee;
(iii) if the transferee is an Affiliate of a Certificate
Purchaser, such transferee has a capital and surplus of at least $250
million or a tangible net worth of at least $100 million; or
(iv) if the transferee is not an Affiliate of a Certificate
Purchaser, the transferee, or a party unconditionally and irrevocably
guaranteeing the payment and performance obligations of the transferee
pursuant to a guaranty in form and substance satisfactory to Deepwater,
meets the following criteria:
(1) the transferee or guarantor of the payment and
performance obligations of the transferee, if any, has a capital and
surplus of at least $400 million or a net worth of at least $150
million;
(2) each of the transferee and the guarantor of the payment
and performance obligations of the transferee, if any, is an
institutional investor;
(3) Deepwater, Conoco and Transocean have not previously been
involved in material litigation with the proposed transferee or
guarantor of the payment and performance obligations of the
transferee, if any, and are not currently involved in material
litigation proceedings with the proposed transferee or guarantor of
the payment and performance obligations of the transferee, if any;
(4) on the date of such transfer the transferee provides
evidence satisfactory to Deepwater that it is not subject to or is
exempt from United States withholding taxes;
(5) neither such transferee or guarantor nor any of its
Affiliates is a Competitor; and
<PAGE>
(6) on the date of such transfer, the transferee certifies,
in writing, that no facts exist that would permit such transferee to make a
claim against Deepwater for increased costs, indemnities or other additional
amounts under Section 7.
----------
(c) in the case of any Liquidity Purchaser, such person meets the
requirements contained in Section 10 of the applicable LAPA.
Any transfer of an interest in a Series A Charter Trust Certificate, a
Note, Loan or Commitment by a Funding Participant in violation of the foregoing
restrictions shall be null and void, and the transferor and any guarantor
thereof shall remain liable under the Transaction Documents. A Funding
Participant that intends to transfer an interest in its Series A Charter Trust
Certificates (including a sale of a participation in any such Certificate
pursuant to Section 3.8(h) of the Trust Agreement or Section 3.8(h) of the
Investment Trust Agreement, respectively, or a pledge thereof) and has an
interest in Notes must transfer the same percentage interest in both its Series
A Trust Certificates and Notes together to the same purchaser or transferee in a
single transaction.
Notwithstanding any other provision in this Section 9.1, any Funding
------------
Participant may at any time create a security interest in, or pledge, all or any
portion of its rights under its Series A Charter Trust Certificate or Notes, as
the case may be, together with the rights evidenced by such certificates, in
favor of (i) any Federal Reserve Bank in accordance with Regulation A of the FRB
or U.S. Treasury Regulation 31 C.F.R. Section 203.14, and (ii) with respect to
any Conduit, any Program Support Provider, and such Person may enforce such
pledge or security interest in any manner permitted under Applicable Law.
SECTION 9.2 Restrictions on Trustees and Investment Trust Beneficiary.
------------------------------------------------------------
The Charter Trustee shall not resign as Charter Trustee, the Investment Trustee
shall not resign as Investment Trustee and the Investment Trust Beneficiary
shall not resign as Investment Trust Beneficiary, unless and until a successor
has been appointed which is a Person who has agreed to act as Charter Trustee,
Investment Trustee and Investment Trust Beneficiary as applicable, and is
reasonably acceptable to Deepwater.
SECTION 9.3 Expenses. All reasonable and documented costs and expenses
--------
(including counsel fees and disbursements) of the parties thereto in connection
with any transfer permitted by Section 9.1 or Section 9.2 (excluding reasonable
----------- -----------
out-of-pocket costs and expenses relating to any transfer by a Conduit, which
such costs and expenses shall be the responsibility of Deepwater) shall be the
responsibility of the transferor.
SECTION 9.4 Change of Control.
-------------------
If a Prepayment Change of Control Trigger Event occurs, (i) the Person
suffering such Prepayment Change of Control Trigger Event must notify in writing
(the "Prepayment Change of Control Trigger Event Notice"), each Funding
-------------------------------------------------------
Participant and the Charter Trustee of the occurrence of such Prepayment Change
of Control Trigger Event within ten (10) days of the occurrence of such event
and (ii) each Funding Participant shall have the right, by written notice (the
"Prepayment Notice") delivered to Deepwater, the relevant Purchasing Party, the
------------------
Charter Trustee and the Investment Trust within 10 days of receipt of the
Prepayment Change of Control
<PAGE>
Trigger Event Notice, to require such Purchasing Party to purchase (x) (1) such
Funding Participant's Conoco Series A Charter Trust Certificates, if any, and
(2) 40% of such Funding Participant's Notes (where Conoco is the Purchasing
Party), if any, or (y) (1) such Funding Participant's Transocean Series A
Charter Trust Certificates, if any, and (2) 60% of such Funding Participant's
Notes (where Transocean is the Purchasing Party), if any, on a date set forth in
the Prepayment Notice which shall be no more than 7 Business Days from the
delivery of the Prepayment Notice to the Purchasing Party. On the date set forth
in the Prepayment Notice, the Purchasing Party shall make payments in
immediately available funds to the Charter Trustee in its individual capacity,
as agent for the Purchasing Party, which will remit such amounts to the selling
Funding Participant(s) in an aggregate amount equal to (i) where Transocean is
the Purchasing Party, (x) in exchange for the Transocean Series A Charter Trust
Certificates of a selling Certificate Purchaser, the outstanding principal
balance of the Transocean Series A Charter Trust Certificates of such
Certificate Purchaser, together with the accrued and unpaid Charter Return
thereon and any funding losses incurred by such Certificate Purchaser pursuant
to Section 7.3 as a result of the prepayment of such Transocean Series A Charter
-----------
Trust Certificates and (y) 60% of the then outstanding Lender Amount of the
applicable Lender, together with the accrued and unpaid Charter Return thereon
and any funding losses incurred by the Lenders pursuant to Section 7.3 as a
-----------
result of the prepayment of the Notes and (ii) where Conoco is Purchasing Party,
(x) in exchange for the Conoco Series A Charter Trust Certificates of such
Certificate Purchaser, the outstanding principal balance of the Conoco Series A
Charter Trust Certificates of such Certificate Purchaser, together with the
accrued and unpaid Certificate Return thereon and any funding losses incurred by
such Certificate Purchaser pursuant to Section 7.3 as a result of the prepayment
-----------
of such Conoco Series A Charter Trust Certificates and (y) 40% of the then
outstanding Lender Amount of the applicable Lender, together with the accrued
and unpaid Charter Return thereon and any funding losses incurred by the Lenders
pursuant to Section 7.3 as a result of the prepayment of the Notes (the amounts
-----------
specified in clauses (i) and (ii), collectively being, the "Change of Control
------------ ---- -----------------
Prepayment Amount"). The Purchasing Party shall make payment to the Charter
------------------
Trustee in its individual capacity, in immediately available funds, in the
amount of the Change of Control Prepayment Amount. Upon receipt of such payment
from the Purchasing Party, the Charter Trustee, as agent for the Purchasing
Party, shall pay the Series A Portion of the Change of Control Prepayment Amount
to the applicable Certificate Purchasers requiring prepayment pursuant to this
Section 9.4 and shall pay the Lender Portion of the Change of Control Prepayment
-----------
Amount to the Investment Trust, which, in turn, shall pay such amount to the
applicable Lenders requiring prepayment pursuant to this Section 9.4.
------------
The Commitments and any outstanding Certificate Purchaser Amounts or Lender
Amount of any Purchasing Party receiving its interest in the Series A Charter
Trust Certificates and/or Notes pursuant to this Section 9.4 shall not be
-----------
counted in determining any actions which require the vote of the "Majority
Funding Participants," nor shall a Purchasing Party, to the extent its interest
is acquired pursuant to this Section 9.4, be considered a Funding Participant
-----------
for purposes of any voting provisions of the Transaction Documents. In
addition, a Purchasing Party, to the extent it receives its interest in the
Series A Charter Trust Certificates and/or Notes pursuant to this Section 9.4,
-----------
shall not be considered a "Funding Participant" for the purposes of receiving
distributions under the Depository Agreement but shall instead receive payments
thereunder in respect of the Purchased Interest only as a "Purchasing Party"
thereunder. As a point of clarification only, except to the extent provided
above, the outstanding Certificate
<PAGE>
Purchaser Amount relating to the Series A Charter Trust Certificates purchased
by the Purchasing Party shall continue to be deemed a "Certificate Purchaser
Amount" and shall be included as a part of the Certificate Purchaser Balance and
the outstanding Lender Amounts relating to the Notes purchased by the Purchasing
Party shall continue to be deemed "Lender Amounts" and shall be included as part
of the "Lender Balance" and, as such, each shall be included in the calculation
of any Purchase Option Price, Termination Value, Residual Guaranty Amount,
Charter Balance or other amount having the Certificate Purchaser Balance and/or
Lender Balance, as the case may be, as a component thereof. The foregoing
restrictions and limitations with respect to voting rights and the receipt of
distributions under the Depository Agreement are applicable only in so far as
the Purchasing Party (or any of its Affiliates) remains the holder of such
Purchased Interest. Any transferee of a Purchasing Party (other than a
transferee which is, or is an Affiliate of, Conoco, Transocean or Deepwater) of
its Purchased Interest (i) shall become a "Funding Participant" for all purposes
under the Transaction Documents, (ii) shall not be deemed to be a "Purchasing
Party" and (iii) shall not be subject to any such restrictions or limitations
not otherwise applicable to a Funding Participant. Transferees which are
Affiliates of Conoco, Transocean or Deepwater following the transfer of all or
any portion of a Purchased Interest shall be deemed to be Purchasing Parties to
the extent of the interest transferred.
If either Conoco or Transocean is required to make purchases set forth
above then the following events shall automatically be deemed to have occurred
immediately after such purchases:
(i) the Rig Sharing Agreement and (a) if Transocean is the
Purchasing Party, the Transocean Charter, the R&B Falcon Drilling
Contract and the Transocean Drilling Contract Guaranty shall
terminate or (b) if Conoco is the Purchasing Party, the Conoco
Charter, the Conoco Drilling Contract and the Conoco Drilling
Contract Guaranty shall terminate;
(ii) the non-purchasing party will be treated as having entered
into a subcharter, substantially in the form attached hereto as
Exhibit M, with the Purchasing Party imposing on the Purchasing
----------
Party the same obligations it had under the terminated Drilling
Contract and Rig Sharing Agreement;
(iii) the non-purchasing party shall have the right to exclusive
possession of the Drillship for the remainder of the Charter
Term; and
(iv) The obligations of such Purchasing Party listed in Sections
2(a)(i)(x)(A), 2(a)(i)(y)(A), 2(a)(ii)(A)(1), 2(a)(ii)(B)(1),
2(a)(vi) and 2(a)(v) of (a) the Transocean Guaranty, if
Transocean is the Purchasing Party or (b) the Conoco Guaranty, if
Conoco is the Purchasing Party, shall be terminated.
The rights and obligations imposed under this Section 9.4 shall at all
-----------
times be subject to the Special Purchase Right of Deepwater pursuant to Section
16.4 of the Master Charter.
SECTION 9.5 Member Transfer. Any Member or its affiliates (the "Acquiring
--------------- ---------
Member") may acquire from any other Member or its affiliates (the "Selling
------ -------
Member") all or any
------
<PAGE>
part of the membership interest in Deepwater (a "Qualified Transfer") so long as
------------------
(a) at such time, no Charter Event of Default has occurred and is continuing;
(b) such Acquiring Member has assumed all obligations of the Selling Member
under its existing Drilling Contract, related Charter Supplement, Drilling
Consent and Service Agreements and the Transaction Documents to which it is a
party pursuant to an assignment and assumption agreement acceptable to the
Funding Participants; (c) such Acquiring Member's Guarantor has assumed all
obligations of the Guarantor related to the Selling Member under its Drilling
Contract Guaranty and, as applicable, the Conoco Guaranty or Transocean
Guaranty; and (d) such Acquiring Member has obtained the consent of each
Participant for such Qualified Transfer; provided, that Deepwater will have the
--------
right to replace any Participant that does not consent to such Qualified
Transfer pursuant to Section 4.4.
------------
SECTION 10
INDEMNIFICATION
SECTION 10.1 General Indemnity. Deepwater hereby agrees to indemnify, on
-----------------
an After-Tax Basis, each of the Trustees (in their trust and individual
capacities, respectively), the Investment Trust, each Affected Party, the
Depository, each Agent (in its agent and individual capacities), the Hedging
Agreement Counterparties (if any), Affiliates and the permitted successors and
assigns of the foregoing and their respective officers, directors, employees,
agents (each an "Indemnified Party" and, collectively, the "Indemnified
------------------ -----------
Parties") from and against any and all claims, damages, losses, liabilities,
-------
demands, suits, judgments, causes of action, legal proceedings, whether civil or
criminal, penalties, fines and other sanctions, and any reasonable and
documented costs and expenses in connection with any of the foregoing
("Claims"), which may be asserted against such Indemnified Party arising out of:
(a) the condition, ownership, construction, purchase, delivery,
nondelivery, subcharter, charter, acceptance, rejection, possession, return,
abandonment, disposition, use or operation of the Drillship;
(b) any defect in the Drillship arising from the material or any
articles used therein or from the design, testing, or use thereof or from any
maintenance, service, repair, overhaul or testing of the Drillship;
(c) any failure by Deepwater or either Member to perform or observe any
covenant, condition or agreement contained in any of the Transaction Documents,
or the falsity of any of Deepwater's or either Member's representations and
warranties;
(d) the transactions contemplated by the Transaction Documents;
(e) any Environmental Claims arising from or relating to the
construction, use, operation, ownership, maintenance, chartering or return of
the Drillship;
(f) the exercise by such Indemnified Party of remedies in the event of
a default under the Transaction Documents and the enforcement of any security or
other rights with respect thereto;
<PAGE>
(g) any violation of Applicable Law by Deepwater or a Member with
respect to the transactions contemplated by the Transaction Documents;
(h) any Liens which Deepwater or any Member is required to remove; or
(i) any obligation asserted to be owed by the Indemnified Party
under any Assigned Contract as a result of the assignment of such Assigned
Contract pursuant to the Deepwater Assignment.
SECTION 10.2 General Indemnity Exclusions. Notwithstanding the provisions
----------------------------
of Section 10.1, Deepwater shall not be obligated to indemnify an Indemnified
-------------
Party under Section 10.1 for any Claim that is attributable to any of the
-------------
following:
(a) acts, events or circumstances occurring after the expiration or
earlier termination of the Charter and the return of the Drillship, when
required in accordance with the Charter;
(b) Taxes, loss of tax benefits and the cost and expense of tax
controversies (whether or not indemnified by Deepwater under Section 10.4 and
------------
other provisions of the Transaction Documents) (except (A) Taxes, penalties,
interest or charges of any nature whatsoever to the extent necessary to make any
required payment on an After Tax Basis, (B) Taxes that are governmental charges
incidental to any Government Action or proceeding that is in the nature of court
costs, filing fees, recording fees, postage, stamps, duties, license fees and
other similar charges);
(c) increased costs, losses or expenses for which compensation is
provided under Sections 2.8, 2.14, 6.8, 7.1, 7.2, 7.3, 7.4, 7.5, 8.1, 8.2, 8.3,
------------ ---- --- --- --- --- --- --- --- --- ---
9.3 and 9.4;
--- ---
(d) the gross negligence, willful misconduct or breach of any covenant,
representation or warranty under any Transaction Document by such Indemnified
Party to the extent that such Claim arises out of or is caused by an act,
misrepresentation, breach or omission of such Indemnified Party where such act,
misrepresentation, breach or omission, (x) is in breach or violation of the
express covenants, representations or warranties of such Indemnified Party under
the Transaction Documents or, (y) constitutes gross negligence or willful
misconduct of such Indemnified Party (other than gross negligence or willful
misconduct imputed as a matter of law to such Indemnified Party solely by reason
of entering into the Transaction Documents or consummation of the transactions
contemplated thereby) or (z) is in violation of any Applicable Law and such
violation causes such Claim;
(e) transfers (direct or indirect) by: (i) the Charter Trustee or the
Investment Trust of either of their interests in the Drillship or any portion
thereof (other than any such transfer pursuant to Sections 15.2, 16.4, 20.1 or
20.3 of the Master Charter, Sections 4.2 or 4.4 of either Charter Supplement No.
1 or Charter Supplement No. 2) or (ii) a Funding Participant of all or any
portion of its interest in the Trust Estate, the Investment Trust or the
Transaction Documents, other than (x) a transfer upon an exercise of remedies
after a Charter Event of Default has occurred and is continuing and either
Charter Supplement No. 1 or Charter Supplement No. 2 has been declared in
default or (y) transfers of Commercial Paper Notes or by the Conduits to any
Program Support Providers;
<PAGE>
(f) any amount for which such Indemnified Party has agreed to make
payment without a right of reimbursement from Deepwater;
(g) any Claim resulting from the imposition of any Lien which such
Indemnified Party is responsible for or is required to lift and discharge;
(h) any Claim arising out of or related to an inspection of the
Drillship by or on behalf of an Indemnified Party, unless at the time of such
inspection a Charter Event of Default has occurred and is continuing or unless
and to the extent such Claim arises from the gross negligence or willful
misconduct of Deepwater or its agents; and
(i) any Claim for an amount of Basic Hire, Termination Value, Charter
Return, Charter Balance, Residual Guaranty Amount, or Postponement Yield, or an
amount due under the Deepwater Hedging Agreements or the Hedging Agreements.
SECTION 10.3 Proceedings in Respect of Claims. With respect to any amount
--------------------------------
that Deepwater is requested by an Indemnified Party to pay by reason of Section
-------
10.1, such Indemnified Party shall, if so requested by Deepwater and prior to
----
any payment, submit such additional information to Deepwater as Deepwater may
reasonably request and which is in the possession of such Indemnified Party to
substantiate properly the requested payment. In case any action, suit or
proceeding shall be brought against any Indemnified Party in respect of any
Claim, such Indemnified Party shall notify Deepwater of the commencement
thereof, and Deepwater shall be entitled, at its expense, to participate in,
and, to the extent that Deepwater desires to, assume and control the defense
thereof; provided, however, that Deepwater shall have acknowledged in writing
-------- -------
its obligation to indemnify such Indemnified Party in respect of such action,
suit or proceeding under Section 10.1, such acknowledgment to be conditioned on
------------
the accuracy, timeliness and completeness of the information provided to
Deepwater by such Indemnified Party with respect to the Claim; and, provided
--------
further, that Deepwater shall not be entitled to assume and control the defense
-------
of any such action, suit or proceeding if and to the extent that, (A) in the
reasonable opinion of such Indemnified Party, (x) such action, suit or
proceeding involves any possibility of imposition of criminal liability or any
material risk of material civil liability on such Indemnified Party or (y) the
control of such action, suit or proceeding would involve a conflict of interest
(in which case each Indemnified Party may retain separate counsel at the expense
of Deepwater), (B) such proceeding involves Claims not indemnified by Deepwater
which Deepwater and the Indemnified Party have been unable to sever from the
indemnified claim(s), or (C) a Charter Event of Default has occurred and is
continuing. Deepwater shall keep such Indemnified Party fully apprised of the
status of such action, suit or proceeding and shall provide such Indemnified
Party with all information with respect to such action suit or proceeding as
such Indemnified Party shall reasonably request. The Indemnified Party may
participate in a reasonable manner at its own expense and with its own counsel
in any proceeding conducted by Deepwater in accordance with the foregoing.
No Indemnified Party shall enter into any settlement or other compromise
with respect to any Claim which is entitled to be indemnified under Section 10.1
------------
without the prior written consent of Deepwater, which consent shall not be
unreasonably withheld, unless such Indemnified Party waives its right to be
indemnified under Section 10.1 with respect to such Claim.
-------------
<PAGE>
Upon payment in full of any Claim by Deepwater pursuant to Section 10.1 to
------------
or on behalf of an Indemnified Party, Deepwater, without any further action,
shall be subrogated to any and all claims that such Indemnified Party may have
relating thereto to the extent of such payment, and such Indemnified Party shall
execute such instruments of assignment and conveyance, evidence of claims and
payment and such other documents, instruments and agreements as may be
reasonably necessary to preserve any such claims and otherwise cooperate with
Deepwater and give such further assurances as are reasonably necessary or
advisable to enable Deepwater vigorously to pursue such claims.
Any amount payable to an Indemnified Party pursuant to Section 10.1 shall
------------
be paid to such Indemnified Party promptly upon receipt of a written demand
therefor from such Indemnified Party accompanied by a written statement
describing in reasonable detail the basis for such indemnity and the computation
of the amount so payable.
SECTION 10.4 General Tax Indemnity. (a) Without regard to any of the
-----------------------
exclusions set forth in Section 10.4(b), if any amount payable by Deepwater as
---------------
Charter Hire (or by the Charter Trustee to the Investment Trust or any Funding
Participant) under the Transaction Documents or otherwise payable by Deepwater
under the Head Lease Documents becomes subject to any Tax imposed by way of
withholding at the source, Deepwater shall hold harmless the Indemnified Party
against such Tax, and, if such withholding is required, shall, at the same time
that any such payment is due and payable, either (i) pay such Tax directly to
the appropriate taxing authority, (ii) indemnify such Person for such Tax, or
(iii) pay an additional amount, such that the net amount actually received by
each Indemnified Party entitled thereto, free and clear of, and without
deduction for, any and all Taxes imposed by withholding will equal the amount
then due absent such withholding and shall pay any additional Taxes payable in
respect of such payment, indemnity or additional amount, as the case may be, by
each Indemnified Party. In the event Deepwater is required to make any payment
or indemnity pursuant to this paragraph in respect of withholding Taxes on any
payment made to any Indemnified Party, Deepwater shall not be treated as
responsible for such withholding Taxes (1) if such withholding Taxes would not
have been imposed but for (x) the failure of the Indemnified Party or a Related
Indemnified Party to be incorporated in the United States or any state in the
United States (it being understood that, for this purpose, the Charter Trust
shall not be treated as failing to be incorporated in the United States or any
state in the United States merely as a result of the organization of the Charter
Trust under the laws of Panama) or (y) the amount payable to such Indemnified
Party being attributable to a permanent establishment of the Indemnified Party
or a Related Indemnified Party in any jurisdiction other than the United States
(unless such permanent establishment results solely from the location of all or
any part of the Drillship in, such jurisdiction) (it being understood that, for
this purpose, amounts payable to the Charter Trustee shall not be treated as
attributable to a permanent establishment of the Charter Trust in Panama merely
as a result of the organization of the Charter Trust under the laws of Panama
and/or the making of payments and the performance of its obligations by the
Charter Trustee in accordance with, and as contemplated by, the Transaction
Documents ("Permitted Charter Trustee Acts")), (2) if such withholding Tax
---------------------------------
results from a breach of any covenant or undertaking in Section 10.4(i) of such
---------------
Indemnified Party or any of its Related Indemnified Parties, (3) with respect to
any such Tax imposed in respect of any transferee of such Indemnified Party to
the extent of the excess of such Taxes over the amount of such Taxes that would
have been imposed and indemnified hereunder had such original Indemnified Party
from which such Indemnified Party derives its interest not
<PAGE>
sold, assigned, transferred or otherwise disposed of all or a portion of its
interest in the Drillship or Transaction Documents (unless such transferee
acquired its interest pursuant to the transferor's exercise of remedies), (4) if
such withholding Tax results from (x) the gross negligence, willful misconduct
or fraud of such Indemnified Party or any of its Related Indemnified Parties or
(y) the inaccuracy or breach of a representation, warranty, covenant or any
undertaking of such Indemnified Party or any of its Related Indemnified Parties,
(5) if such withholding Taxes are imposed by a taxing authority of or in a
country other than the United States or Panama and would not have been imposed
but for activities, property or operations of the Indemnified Party or any of
its Related Indemnified Parties that are unrelated to the transactions
contemplated by the Transaction Documents, or (6) if such withholding Taxes are
imposed by a taxing authority in Panama as a result of the Indemnified Party's
(or a Related Indemnified Party's) direction that Deepwater make payments to an
account located in Panama (except if such direction is made while a Charter
Event of Default exists). If, for any reason, Deepwater is required to make any
payment to an Indemnified Party or to a taxing authority on behalf of any
Indemnified Party pursuant to this Section 10.4(a) with respect to, or as a
--------------
result of, any withholding Tax imposed with respect to any payment of Charter
Hire by Deepwater (or by the Charter Trustee to the Investment Trust or any
Funding Participant) pursuant to the Transaction Documents or other payment by
Deepwater under the Head Lease Documents, which withholding Tax is not the
responsibility of Deepwater under this Section 10.4(a), then such Indemnified
---------------
Party shall pay to Deepwater on written demand an amount which equals on an
After-Tax Basis such additional amount paid by Deepwater with respect to, or as
a result of, such withholding Tax plus interest at (i) the Certificate Return
Rate or Loan Return Rate, as the case may be, during the period commencing on
the date Deepwater shall have paid an amount pursuant to the first sentence of
this paragraph and ending on the date Deepwater demands in writing payment of
such amount pursuant to this sentence and (ii) the Overdue Rate from the period
commencing five Business Days following the date Deepwater shall have demanded
in writing such payment to the date Deepwater actually receives such payment.
(b) Except as provided in Section 10.4(a) and 10.4(c), Deepwater agrees
--------------- -------
to indemnify, defend and hold harmless on an After-Tax Basis each Indemnified
Party against any and all Taxes, imposed against or payable by, or imposed on
payments to or from, Deepwater or any Indemnified Party, or imposed against all
or any part of, or interest in, the Drillship by any federal, state or local
taxing authority of or within the United States and by any jurisdiction outside
of the United States if the Drillship or Deepwater is located in such
jurisdiction, upon or with respect to or in connection with, based upon or
measured by, in whole or in part:
(i) the Drillship or any part thereof or interest therein;
(ii) the manufacture, purchase, financing, refinancing, ownership,
delivery, redelivery, transport, location, leasing, subleasing, possession,
registration, use, operation, condition, maintenance, repair, return,
abandonment, preparation, storage, transfer of title, sale, acceptance,
importation, exportation, rejection or other disposition of or action or
event with respect to the Drillship or any part thereof or interest
therein;
(iii) the hire, receipts, income or earnings arising from the
purchase, financing, ownership, delivery, redelivery, leasing, subleasing,
possession, use, operation, return,
<PAGE>
storage, transfer of title, sale or other disposition of the Drillship or
any part thereof or interest therein;
(iv) the Contributions, Certificates, their issuance,
modification, refinancing or acquisition, or the payments of any amounts
thereon or with respect thereto;
(v) the Advances, Notes, their issuance, modification, refinancing
or acquisition, or the payments of any amounts thereon or with respect
thereto;
(vi) the Transaction Documents or the Head Lease Documents or
amendments or supplements thereto, their execution or the transactions
contemplated thereby or any proceeds or payments under any thereof; or
(vii) otherwise with respect to or in connection with the
transactions contemplated or effected by or resulting from the Transaction
Documents or the Head Lease Documents or the exercise of rights and
remedies thereunder or the enforcement thereof.
(c) Exclusions. Except as provided in Section 10.4(a), the indemnity
---------- ---------------
provided for in Section 10.4(b) above shall not apply to any of the following:
---------------
(i) Taxes (other than Taxes that are sales, use or rental Taxes)
imposed by the United States federal government on, based on, or measured
by or with respect to the gross or net income, or gross or net receipts or
that are in the nature of, or are imposed with respect to, capital, net
worth, excess profits, accumulated earnings, capital gains, franchise or
conduct of business of such Indemnified Party; provided, that this Section
-------- -------
10.4(c)(i) shall not be interpreted to exclude any amounts necessary to
---------
make any payment on an After-Tax Basis;
(ii) Taxes imposed by (x) any state or local taxing authority in
the United States (other than Taxes that are sales, use, rental, stamp,
property (tangible or intangible) or similar Taxes imposed as a result of a
Deepwater Person's activities in (including being incorporated in, or
making payments from), or the location of the Drillship or any portion
thereof in, such state or local jurisdiction) or (y) any jurisdiction
outside of the United States other than any Taxes imposed as a result of a
Deepwater Person's activities in (including being incorporated in, having a
permanent establishment or other residence in, or making payments from), or
the location of the Drillship or any portion thereof in, such jurisdiction
outside of the United States or Taxes imposed by Panama merely as a result
of the organization of the Charter Trust under the laws of Panama and/or
the performance by the Charter Trustee of Permitted Charter Trustee Acts;
provided, that this Section 10.4(c)(ii) shall not be interpreted to exclude
-------- -------------------
any amounts necessary to make any payment on an After-Tax Basis;
(iii) Taxes imposed on or against or payable by such Indemnified
Party to the extent of the excess of such Taxes over the amount of such
Taxes that would have been imposed and indemnified hereunder had there not
been a transfer by the original Indemnified Party (from which such
Indemnified Party derives its interest) of any interest
<PAGE>
in the Drillship, the Certificates, the Notes, the Trust Estate, the
Investment Trust, any Indemnified Party or the Transaction Documents or the
Head Lease Documents; except (x) if such transferee acquired its interest
in connection with the exercise of remedies with respect to a Charter Event
of Default or (y) to the extent necessary to make indemnity payments to the
transferee on an After-Tax Basis;
(iv) Taxes imposed with respect to any period (except during the
exercise of remedies pursuant to the Charter in connection with the
occurrence and continuance of a Charter Event of Default) more than one
year after the expiration or earlier termination of the Charter and, where
required, the return of the Drillship pursuant to Section 20.3 of the
Master Charter (but not to the extent attributable to events occurring on
or prior to such date);
(v) Taxes resulting from (x) the gross negligence, willful
misconduct or fraud of the Indemnified Party or any of its Related
Indemnified Parties (except as solely attributed to such Party by virtue of
its having executed the Transaction Documents), (y) the inaccuracy or
breach of a representation, warranty or covenant under the Transaction
Documents or the Head Lease Documents or any undertaking required by the
Transaction Documents or the Head Lease Documents of such Indemnified Party
or any of its Related Indemnified Parties (unless such inaccuracy or breach
is caused by Deepwater's breach of any representation, warranty or covenant
under the Transaction Documents or a breach by Deepwater or an Affiliate of
Deepwater under the Head Lease Documents), or (z) in the case of any
Indemnified Party, any Liens attributable to such Indemnified Party or a
Related Indemnified Party;
(vi) Taxes that result from (x) a voluntary transfer or other
voluntary disposition by the Indemnified Party or a Related Indemnified
Party of all or any portion of its interest in the Drillship, the Trust
Estate, the Investment Trust, any Indemnified Party, the Certificates, the
Notes, the Transaction Documents or the Head Lease Documents (other than a
transfer or disposition resulting from (A) any Charter, substitution, or
maintenance of, or any modification to the Drillship or any portion
thereof, (B) Deepwater's exercise of any purchase or termination option,
(C) an Event of Loss or (D) the exercise of remedies under the Charter
following a Charter Event of Default) or (y) an involuntary transfer or
other involuntary disposition by the Indemnified Party or a Related
Indemnified Party of all or any part of an interest in the Drillship, the
Trust Estate, the Investment Trust, any Indemnified Party, the
Certificates, the Notes, the Transaction Documents or the Head Lease
Documents (other than any such transfer or disposition that occurs while a
Charter Event of Default has occurred and is continuing) in connection with
any bankruptcy or other proceeding for the relief of debtors in which an
Indemnified Party is the debtor or any foreclosure by a creditor of an
Indemnified Party that is in each case unrelated to the transactions
contemplated by the Transaction Documents or the Head Lease Documents;
(vii) Taxes imposed on the Charter Trustee in its individual
capacity with respect to any fees received by or payable to the Charter
Trustee for services rendered;
<PAGE>
(viii) Taxes that would not have been imposed but for an amendment
to any Transaction Document or Head Lease Document not requested or
consented to or acquiesced in by Deepwater in writing, other than any
amendment (A) that may be necessary or appropriate to, and is in conformity
with, any amendment to any Transaction Document or Head Lease Document
initiated or requested by or consented to by any Deepwater Person in
writing, (B) to any Transaction Document or Head Lease Document due to, or
in connection with there having occurred, a Charter Event of Default or (C)
that is required by Applicable Law or the terms of the Transaction
Documents or the Head Lease Documents is executed in connection with any
other amendment to the Transaction Documents or the Head Lease Documents
that is required by Applicable Law;
(ix) Taxes to the extent actually utilized on a current basis by
an Indemnified Party or an Affiliate of such Indemnified Party as a credit
against Taxes not indemnifiable by Deepwater hereunder;
(x) Taxes to the extent resulting from or measured by income,
assets, activities, or other matters of or relating to the Indemnified
Party or a Related Indemnified Party that are unrelated to the transactions
contemplated by the Transaction Documents (except to the extent necessary
to make a payment on an After-Tax Basis (which shall be calculated assuming
the Indemnified Party is taxable at the highest marginal rate in the
applicable jurisdiction));
(xi) any Taxes, while such Taxes are being contested in accordance
with the contest provisions of Section 10.4(f);
(xii) any interest, penalties or additions to Tax that result from
the failure of an Indemnified Party to file any return properly and timely,
unless such failure is caused by the failure of Deepwater to fulfill its
obligations, if any, under this Agreement with respect to such return
(including the provision of information sufficient to enable such
Indemnified Party to file such return);
(xiii) Taxes that would not have been imposed but for the
Indemnified Party or a Related Indemnified Party having its tax residence,
place of business, situs of organization, place of management or controls,
permanent establishment or other presence in the taxing jurisdiction
(unless such tax residence, place of business, situs of organization, place
of management or control, permanent establishment or other presence results
from the presence or activities of Deepwater or any Deepwater Person
(including the making of payments unless directed by the Charter Trustee or
any Funding Participant to make payment to an account located in Panama
(except if such direction is made while a Charter Event of Default exists))
in such jurisdiction it being understood that, for this purpose, the
Charter Trustee shall not be treated as having any such presence in Panama
merely as a result of the trust being formed pursuant to the Charter Trust
Agreement under the laws of Panama and/or the performance by the Charter
Trustee of Permitted Charter Trustee Acts).
(d) Calculation of Payments. Any payment that Deepwater shall be
-------------------------
required to make to or for the account of any Indemnified Party with respect to
any Tax that is subject to
<PAGE>
indemnification under this Section 10.4 shall be paid on an After-Tax Basis. If
------------
an Indemnified Party or any Affiliate of such Indemnified Party who files any
tax return on a combined, consolidated, unitary or similar basis with such
Indemnified Party shall actually realize any saving of any Tax not indemnified
by Deepwater pursuant to the Transaction Documents (by way of credit (including
any foreign tax credit), deduction, exclusion from income or otherwise) by
reason of any amount with respect to which Deepwater has indemnified such
Indemnified Party pursuant to this Section 10.4, and such tax saving was not
------------
taken into account in determining the amount payable by Deepwater on account of
such indemnification, such Indemnified Party shall pay to Deepwater, so long as
no Charter Event of Default shall have occurred and be continuing (but shall be
required to make such payment at such time as the Charter Event of Default shall
have been cured or at the time Deepwater shall have fulfilled all of its
obligations arising upon such Charter Event of Default), within 30 days after
such Indemnified Party shall have actually realized such tax saving, the amount
of such saving, together with the amount of any tax saving resulting from any
payment pursuant to this sentence; provided, that Deepwater shall not be
--------
entitled to receive an amount in excess of all amounts previously paid by
Deepwater pursuant to this Section 10.4, to such Indemnified Party or to the
------------
relevant taxing authority on behalf of such Indemnified Party (less the
aggregate amount of all prior payments by such Indemnified Party to Deepwater
under this Section 10.4(d)) (but any excess amount described in this proviso
----------------
shall reduce pro tanto any amount that Deepwater is subsequently obligated to
--- -----
pay to such Indemnified Party pursuant to Section 10.4).
--------------
(e) Payment. Deepwater shall pay any Tax for which it is liable
-------
pursuant to this Section 10.4 directly to the appropriate taxing authority or
------------
upon demand of an Indemnified Party to such Indemnified Party in immediately
available funds within 30 days of a written demand, but in no event more than
two Business Days prior to the date such Tax is due (including all extensions),
or, in the case of Taxes which are being contested, more than two Business Days
prior to the time such contest is finally resolved. Any such demand shall
specify in reasonable detail the calculation of the payment and the facts upon
which the right to payment is based. Each Indemnified Party shall promptly
forward to Deepwater any notice, bill or advice received by it from the relevant
taxing authority concerning any Tax against which Deepwater may be required to
indemnify hereunder. Deepwater upon the reasonable written request of an
Indemnified Party shall furnish such Indemnified Party with the original or a
certified copy of a receipt (if any is reasonably available to Deepwater) for
Deepwater's payment of any Tax that is subject to indemnification pursuant to
this Section 10, or such other evidence of payment of such Tax as is reasonably
----------
acceptable to such Indemnified Party (and reasonably available to Deepwater).
(f) Contest. If a written claim is made against an Indemnified Party
-------
or if any proceeding shall be commenced against any Indemnified Party (including
a written notice of such proceeding), for any Taxes with respect to which
Deepwater may be liable for payment or indemnity hereunder or if any Indemnified
Party shall determine that any Tax as to which Deepwater may have an indemnity
obligation hereunder shall be payable, such Indemnified Party shall promptly
notify Deepwater in writing and shall not take any action with respect to such
claim, proceeding or Tax without the consent of Deepwater for 30 days after the
receipt of such notice by Deepwater; provided, however, that, in the case of any
-------- -------
such claim or proceeding, if action shall be required by law or regulation to be
taken prior to the end of such 30-day period, such Indemnified Party shall, in
such notice to Deepwater, so inform Deepwater, and no action
<PAGE>
shall be taken with respect to such claim or Tax without the consent of
Deepwater before the end of such shorter period. If, within 30 days of receipt
of such notice from the Indemnified Party (or such shorter period as the
Indemnified Party has notified Deepwater is required by law or regulation for
the Indemnified Party to commence such contest), Deepwater shall request in
writing that such Indemnified Party contest the imposition of such Tax, the
Indemnified Party shall, at the expense of Deepwater, in good faith contest
(including, without limitation, by pursuit of appeals), and shall not settle
without Deepwater's good faith consent (or (i) if such contest can be pursued in
the name of Deepwater and independently from any other proceeding involving a
tax liability, other than a net income or withholding Tax, of such Indemnified
Party, the Indemnified Party shall, at Deepwater's sole discretion, allow
Deepwater to contest, (ii) if such contest involves a Tax, other than a net
income or withholding Tax, which must be pursued in the name of the Indemnified
Party, but can be pursued independently from any other proceeding involving a
tax liability of such Indemnified Party, the Indemnified Party shall allow
Deepwater to contest in the name of the Indemnified Party unless, in the good
faith judgment of the Indemnified Party, such contest by Deepwater could have a
material adverse impact on the business or operations of the Indemnified Party,
in which case the Indemnified Party may control such contest or (iii) in the
case of any contest, the Indemnified Party may request Deepwater to contest) the
validity, applicability or amount of such Taxes by, in the sole discretion of
the Person conducting such contest, (i) resisting payment thereof, (ii) not
paying the same except under protest, if protest is necessary and proper, (iii)
if the payment be made, using reasonable efforts to obtain a refund thereof in
appropriate administrative and judicial proceedings; or (iv) taking such other
action as is reasonably requested by Deepwater from time to time.
Notwithstanding the foregoing provisions of this Section 10.4(f), such
---------------
Indemnified Party shall not be required to take any administrative or judicial
or other action and Deepwater shall not be able to contest such claim in its own
name or that of the Indemnified Party unless (A) Deepwater shall have agreed to
pay, and shall pay, to such Indemnified Party on demand all reasonable
out-of-pocket costs, losses and expenses that such Indemnified Party may incur
in connection with contesting such Taxes, including all reasonable legal,
accounting and investigatory fees and disbursements (including reasonable
allocated time charges of internal counsel of such Indemnified Party), (B) the
action to be taken will not result in any material imminent danger of sale,
forfeiture or loss of the Drillship or any part thereof or interest therein or
risk of criminal liability, (C) if such contest shall involve the payment of the
Tax prior to the contest, Deepwater shall, at its option, either (x) pay or
reimburse the Indemnified Party for such Taxes or (y) provide to the Indemnified
Party an interest-free advance in an amount equal to the Tax which the
Indemnified Party is required to pay (with no additional net after-tax cost to
such Indemnified Party), (D) Deepwater shall have provided to such Indemnified
Party an opinion of independent tax counsel selected by Deepwater, and
reasonably satisfactory to the Indemnified Party that a Reasonable Basis exists
to contest such claim, and (E) if such contest is controlled by Deepwater,
Deepwater shall have acknowledged, in writing, its liability for such indemnity
in the event such contest is unsuccessful. In no event shall an Indemnified
Party be required to appeal an adverse judicial determination to the United
States Supreme Court. The Indemnified Party shall consult in good faith with
Deepwater regarding the conduct of any contest controlled by such Indemnified
Party and shall allow Deepwater to participate in the conduct of any such
contest unless the Indemnified Party shall in good faith determine that allowing
Deepwater to participate in the conduct of such contest could have a material
adverse impact on the business or operations of the Indemnified Party. The
parties agree that an Indemnified Party may at any time
<PAGE>
decline to take further action with respect to the contest of any claim for a
Tax and may settle such claim, if such Indemnified Party shall waive its rights
to any indemnity from Deepwater that otherwise would be payable in respect of
such claim (or any logically related claim) and shall pay to Deepwater any
amount previously paid or advanced by Deepwater pursuant to this Section 10.4(f)
---------------
other than clause (A) of this paragraph (by way of indemnification or advance
-----------
for the payment of a Tax) with respect to such Taxes.
If an Indemnified Party shall fail to perform its obligations under this
Section 10.4(f), such failure shall not discharge, diminish or relieve Deepwater
---------------
of any liability for indemnification that it may have to such Indemnified Party
hereunder, unless the contest of a claim is precluded as a result of such
failure; provided, that any payment by Deepwater to such Indemnified Party
--------
pursuant hereto shall not be deemed to constitute a waiver or release of any
right or remedy (including any remedy of damages) that Deepwater may have
against such Indemnified Party.
(g) Refund. If an Indemnified Party shall receive a refund of (or
------
receive a credit against, or any other current reduction in, any Tax not
indemnified by Deepwater under this Section 10.4, in respect of) all or part of
------------
any Taxes which Deepwater shall have paid on behalf of such Indemnified Party or
for which Deepwater shall have reimbursed, advanced funds to or indemnified such
Indemnified Party (or would have received such a refund, credit or reduction but
for a counterclaim or other claim not indemnified by Deepwater hereunder (a
"deemed refund")), within 30 days of such receipt (or, in the case of a deemed
--------------
refund, within 30 days of the final determination of such deemed refund), such
Indemnified Party shall pay or repay to Deepwater an amount equal to the amount
of such refund or deemed refund, plus any net tax benefit (taking into account
any Taxes incurred by such Indemnified Party by reason of the receipt of such
refund, credit or reduction or deemed refund) realized by such Indemnified Party
as a result of any payment by such Indemnified Party made pursuant to this
sentence; provided, however, that such Indemnified Party shall not be obligated
-------- -------
to make any payment pursuant to this sentence to the extent that the amount of
such payment would exceed (x) the amount of all prior payments made by Deepwater
to such Indemnified Party pursuant to this Section 10.4 less (y) the amount of
------------
all prior payments by such Indemnified Party to Deepwater pursuant to this
Section 10.4(g); provided, further, however, that such Indemnified Party shall
---------------- -------- ------- -------
not be obligated to make any payment to Deepwater pursuant to this sentence
while a Charter Event of Default is continuing, but shall be required to make
such payment at such time as the Charter Event of Default is cured or at the
time Deepwater shall have fulfilled all its obligations arising upon such
Charter Event of Default. If, in addition to such refund, credit or reduction
or deemed refund, as the case may be, such Indemnified Party shall receive (or
would have received but for a counterclaim or other claim not indemnified by
Deepwater hereunder) an amount representing interest on the amount of such
refund, credit or reduction, or deemed refund, as the case may be, such
Indemnified Party shall pay to Deepwater within 30 days of such receipt or, in
the case of a deemed refund, within 30 days of the final determination of such
deemed refund, that proportion of such interest that shall be fairly
attributable to Taxes paid, reimbursed or advanced by Deepwater prior to the
receipt of such refund or deemed refund.
(h) Reports. Deepwater will provide such information as may be
-------
available to it and reasonably requested in writing by an Indemnified Party that
is required to enable an Indemnified Party to fulfill its tax filing
requirements with respect to the transactions contemplated by the
<PAGE>
Transaction Documents. If any return, statement or report is required to be made
or filed with respect to any Tax imposed on or indemnified against by Deepwater
under this Section 10.4, Deepwater shall promptly notify the appropriate
-------------
Indemnified Party of such requirement and (i) to the extent permitted by law
(unless otherwise requested by the Indemnified Party) or required by law, make
and file in its own name such return, statement or report and furnish the
relevant Indemnified Party with a copy of such return, statement or report, (ii)
where such return, statement or report is required to be in the name of or filed
by such Indemnified Party or the Indemnified Party otherwise requests that such
return, statement or report be filed in its name, prepare and furnish such
return, statement or report for filing by such Indemnified Party in such manner
as shall be satisfactory to such Indemnified Party and send the same to the
Indemnified Party for filing no later than 15 days prior to the due date or
(iii) where such return, statement or report is required to reflect items in
addition to Taxes imposed on or indemnified against under this Section 10.4 as
------------
determined by such Indemnified Party, provide such Indemnified Party with
information within a reasonable time, sufficient to permit such return,
statement or report to be properly made and timely filed with respect thereto.
If an Indemnified Party fails to file a return after it has been properly
prepared by Deepwater in accordance with this Section 10.4(h) and furnished to
---------------
such Indemnified Party at least 15 days prior to the due date of such return,
Deepwater shall not be liable for Taxes imposed as a result of the failure to
file. Each Indemnified Party shall furnish Deepwater, at the request and
expense of Deepwater, with such information, not within the control of
Deepwater, as is in such Indemnified Party's control and is reasonably available
to such Indemnified Party and necessary for Deepwater to comply with its
obligations under this Section 10.4(h).
----------------
(i) Forms, etc. Each Indemnified Party agrees to furnish to Deepwater
------------
from time to time, at Deepwater's timely made written request and expense, such
duly executed and properly completed forms as may be necessary or appropriate in
order to claim any reduction of or exemption from any withholding or other Tax
imposed by any taxing authority in respect of any payments otherwise required to
be made by Deepwater pursuant to the Transaction Documents, which reduction or
exemption may be available to such Indemnified Party. Each Indemnified Party
agrees that it will use its reasonable best efforts to the extent permitted by
Applicable Law (and to the extent such Indemnified Party is entitled to do so)
to file returns or tax declarations that would minimize any indemnity payable by
Deepwater; provided, that Deepwater shall indemnify the Indemnified Party for
--------
any cost resulting from such Indemnified Party's filing of such return or
declaration. Notwithstanding the foregoing, no Indemnified Party shall be
required to furnish any form or file any return or tax declaration if it has
determined in its reasonable good faith judgment that furnishing the form or
filing the return or tax declaration could have a material adverse impact on the
business or operations of such Indemnified Party or any Related Indemnified
Party, unless the Indemnified Party is indemnified in a manner reasonably
satisfactory to such Indemnified Party by Deepwater for such material adverse
impact.
(j) Records. In addition to its obligations under the first sentence
-------
of Section 10.4(h), Deepwater shall make available for inspection and copying by
---------------
an Indemnified Party such records that are regularly maintained by Deepwater in
the ordinary course of its business as may be reasonably necessary to enable
such Indemnified Party to fulfill its tax return filing obligations, subject to
reasonable confidentiality requirements of Deepwater.
<PAGE>
(k) Non-Parties. If an Indemnified Party is not a party to this
-----------
Agreement, Deepwater may require the Indemnified Party to agree in writing, in a
form reasonably acceptable to Deepwater, to the terms of this Section 10.4 prior
------------
to making any payment to such Indemnified Party under this Section 10.4.
------------
(l) Verification. The results of all computations required under this
------------
Section 10.4, together with a statement describing in reasonable detail the
-------------
manner in which such computations were made, shall be delivered to Deepwater in
writing. If Deepwater so requests within 30 days after receipt of such
computations, any determination shall be reviewed by a nationally recognized
independent public accounting firm mutually acceptable to the relevant
Indemnified Party and Deepwater who shall be asked to verify, after consulting
with Deepwater and the relevant Indemnified Party whether the relevant
Indemnified Party's computations are correct, and to report its conclusions to
both Deepwater and the relevant Indemnified Party. Subject to satisfactory
confidentiality agreements, the relevant Indemnified Party and Deepwater hereby
agree to provide such accountants with all information and materials as shall be
reasonably necessary or desirable in connection herewith. The fees of the
accountants in verifying an adjustment pursuant to this Section 10.4 shall be
------------
paid by Deepwater, unless such verification discloses an error adverse to
Deepwater in an amount greater than 4.0% of the amount of the indemnity payment
as determined by the accounting firm, in which case such fees shall be paid by
the relevant Indemnified Party. Any information provided to such accountants by
any Person shall be and remain the exclusive property of such Person and shall
be deemed by the parties to be (and the accountants will confirm in writing that
they will treat such information as) the private, proprietary and confidential
property of such Person, and no Person other than such Person and the
accountants shall be entitled thereto, and all such materials shall be returned
to such Person. Such accounting firm shall be requested to make its
determination within 30 days of Deepwater's request to such accounting firm for
review. In the event such independent public accounting firm shall determine
that such computations are incorrect, then such firm shall determine what it
believes to be the correct computations. The computations of the independent
public accounting firm shall be final, binding and conclusive upon Deepwater and
the relevant Indemnified Party, and Deepwater shall not have any right to
inspect the books, records, tax returns or other documents of or relating to the
relevant Indemnified Party to verify such computations or for any other purpose.
The parties hereby agree that the independent public accounting firm's sole
responsibility shall be to verify the computation of any amounts payable under
this Section 10.4 and that matters of interpretation of this Agreement and the
-------------
other Transaction Documents are not within the scope of such independent public
accounting firm's responsibilities.
(m) Restructuring For Withholding Taxes. Each party covered by this
--------------------------------------
Section 10.4 agrees to use reasonable efforts to investigate alternatives for
-------------
reducing any withholding Taxes that are indemnified against hereunder or imposed
on Charter Hire (or payments by the Charter Trustee to the Investment Trust or
any Funding Participant) (whether or not indemnifiable hereunder) and to use
reasonable efforts to reduce any withholding Taxes that are indemnified against
hereunder, including, without limitation, negotiating in good faith to relocate
or restructure any Advance or Contribution (which relocation or restructuring
shall be at Deepwater's expense) or the domicile of the Investment Trust or the
Charter Trustee, but no Party shall be obligated to take any such action as such
Party determines will be adverse to its business or financial or commercial
interest.
<PAGE>
SECTION 11
AGENTS
SECTION 11.1 Appointment of Administrative Agent and Investment Trust
------------------------------------------------------------
Beneficiary; No Duties.
------------------------
(a) Each Funding Participant hereby designates and appoints Bank of
America as administrative agent of such Funding Participant under the
Transaction Documents, and each Funding Participant irrevocably authorizes Bank
of America to act as the administrative agent for such Funding Participant, to
take such action on its behalf under the provisions of the Transaction Documents
and to exercise such powers and perform such duties as are expressly delegated
to such administrative agent by the terms of this Agreement and the other
Transaction Documents, together with such other powers as are reasonably
incidental thereto (together with any successors and assigns, in such capacity,
the "Administrative Agent").
---------------------
(b) Each Funding Participant hereby designates and appoints Donald
Puglisi as investment trust beneficiary of such Funding Participant under the
Transaction Documents and Donald Puglisi hereby accepts such designation and
appointment and hereby agrees to act as the investment trust beneficiary for
such Funding Participants, and each such Funding Participant irrevocably
authorizes Donald Puglisi to act as the investment trust beneficiary for such
Funding Participant, to take such action on its behalf under the provisions of
the Transaction Documents and to exercise such powers and perform such duties as
are expressly delegated to such investment trust beneficiary by the terms of
this Agreement and the other Transaction Documents, together with such other
powers as are reasonably incidental thereto (together with any successors and
assigns, in such capacity, the "Investment Trust Beneficiary"); provided, that
---------------------------- --------
(1) any action to be taken or consent to be given under the Transaction
Documents shall only be taken or given, as the case may be, upon direction of
the Majority Funding Participants, (2) any notice received by the Investment
Trust Beneficiary under the Investment Trust Agreement shall be promptly
delivered to each Funding Participant by the Investment Trust Beneficiary and
(3) upon the written instructions at any time and from time to time of the
Majority Funding Participants, the Investment Trust Beneficiary shall take such
of the following actions as may be specified in such instructions: (x) give such
notice or direction or exercise such right or power under the Investment Trust
Agreement, the Participation Agreement and any other Transaction Document, as
shall be specified in such instructions; (y) approve as satisfactory to it all
matters required by the terms of any Transaction Document to be satisfactory to
the Investment Trust Beneficiary; and (z) any other action as specified by the
Investment Trust Beneficiary acting at the request of the Majority Funding
Participants.
Notwithstanding any provision to the contrary herein or elsewhere in the
Transaction Documents, neither the Administrative Agent nor the Investment Trust
Beneficiary shall not have any duties or responsibilities except those expressly
set forth herein or therein, or any fiduciary relationship with any Funding
Participant, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into the Transaction Documents or
otherwise exist against either the Administrative Agent or the Investment Trust
Beneficiary, as the case may be.
<PAGE>
SECTION 11.2 Delegation of Duties. Each of the Administrative Agent and
---------------------
the Investment Trust Beneficiary may execute any of its duties under this
Agreement and the other Transaction Documents by or through agents or
attorneys-in-fact, and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. Neither the Administrative Agent nor the
Investment Trust Beneficiary shall be responsible for the negligence or
misconduct of any agents or attorneys-in-fact selected by it with reasonable
care.
SECTION 11.3 Exculpatory Provisions. Neither the Administrative Agent,
-----------------------
the Investment Trust Beneficiary nor any of their officers, directors,
employees, agents, attorneys-in-fact or Affiliates shall be (i) liable for any
action taken or omitted to be taken by it or such Person under or in connection
with the Transaction Documents (except for its or such Person's own gross
negligence or willful misconduct), or (ii) except as expressly set forth in the
Transaction Documents, responsible in any manner to any Funding Participant for
any recitals, statements, representations or warranties made by Deepwater or any
officer thereof contained in the Transaction Documents or in any certificate,
report, statement or other document referred to or provided for in, or received
by such Administrative Agent, Investment Trust Beneficiary or any of their
officers, directors, employees, agents, attorneys-in-fact or Affiliates, under
or in connection with, the Transaction Documents, or for the validity,
effectiveness, genuineness, enforceability or sufficiency of the Transaction
Documents, including the Series A Charter Trust Certificates and the Notes, or
for any failure of Deepwater to perform its obligations hereunder or thereunder.
Neither the Administrative Agent, the Investment Trust Beneficiary nor any of
their officers, directors, employees, agents, attorneys-in-fact or Affiliates
shall be under any obligation to any Funding Participant to ascertain or to
inquire as to the observance or performance of any of the agreements contained
in, or conditions of, the Transaction Documents, or to inspect the properties,
books or records of Deepwater.
SECTION 11.4 Reliance by Administrative Agent and the Investment Trust
------------------------------------------------------------
Beneficiary. Each of the Administrative Agent and the Investment Trust
-----------
Beneficiary shall be entitled to rely, and shall be fully protected in relying,
upon any note, writing, resolution, notice, consent, certificate, affidavit,
letter, cablegram, telegram, telecopy, telex, facsimile or teletype message,
statement, order or other document or conversation reasonably believed by it to
be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to Deepwater), independent accountants and other
experts selected by such Administrative Agent or Investment Trust Beneficiary,
as the case may be. Each of the Administrative Agent and the Investment Trust
Beneficiary may deem and treat the registered owner of any Certificate or Note
as the owner thereof for all purposes unless a written notice of assignment,
negotiation or transfer thereof shall have been filed with such Administrative
Agent or Investment Trust Beneficiary. Each of the Administrative Agent and the
Investment Trust Beneficiary shall be fully justified in failing or refusing to
take any action under the Transaction Documents unless it shall first receive
such advice or concurrence of the Majority Funding Participants, as they deem
appropriate and, if they so request, they shall first be indemnified to their
satisfaction against any and all liability and expense which may be incurred by
them by reason of taking or continuing to take any such action. Each of the
Administrative Agent and the Investment Trust Beneficiary shall in all cases be
fully protected in acting, or in refraining from acting, under the Transaction
Documents, the Series A Charter Trust Certificates and the Notes in accordance
with a request of the Majority Funding Participants, and such request and any
action taken or failure to act
<PAGE>
pursuant thereto shall be binding upon all the Funding Participants and all
future holders of the Series A Charter Trust Certificates and the Notes, as the
case may be.
SECTION 11.5 [Intentionally Omitted].
SECTION 11.6 Non-Reliance on Administrative Agent or Investment Trust
------------------------------------------------------------
Beneficiary and Other Funding Participants. Each Funding Participant expressly
---------------------------------------
acknowledges that neither the Administrative Agent, the Investment Trust
Beneficiary nor any of their officers, directors, employees, agents,
attorneys-in-fact or Affiliates have made any representation or warranty to it,
and that no act by the Administrative Agent, the Investment Trust Beneficiary,
or any of their officers, directors, employees, agents, attorneys-in-fact or
Affiliates, as the case may be, hereinafter taken, including any review of the
affairs of Deepwater and its Affiliates, shall be deemed to constitute any
representation or warranty by the Administrative Agent or the Investment Trust
Beneficiary, as the case may be, to any Funding Participant. Each Funding
Participant represents to the Administrative Agent and the Investment Trust
Beneficiary that it has, independently and without reliance upon the
Administrative Agent, the Investment Trust Beneficiary, or any other Funding
Participant, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, financial and other condition and creditworthiness of
Deepwater and its Affiliates, the value of and title to any collateral, and all
applicable bank regulatory laws relating to the transactions contemplated hereby
and by the other Transaction Documents and has made its own decision to make its
Certificate Purchaser Amount and/or Lender Amount, as the case may be, available
hereunder and enter into this Agreement and the other Transaction Documents to
which it is a party as a Funding Participant. Each Funding Participant also
represents that it will, independently and without reliance upon the
Administrative Agent, the Investment Trust Beneficiary, or any other Funding
Participant, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit analysis, appraisals
and decisions in taking or not taking action under this Agreement and the other
Transaction Documents to which it is a party as a Funding Participant, and to
make such investigation as it deems necessary to inform itself as to the
business, operations, property, financial and other condition and
creditworthiness of Deepwater and its Affiliates. Except for notices, reports
and other documents expressly required to be furnished to the Funding
Participants by the Administrative Agent or the Investment Trust Beneficiary
hereunder, neither the Administrative Agent nor the Investment Trust Beneficiary
shall have any duty or responsibility to provide any Funding Participant with
any credit or other information concerning the business, operations, property,
financial and other condition or creditworthiness of Deepwater or its
Affiliates, which may come into the possession of the Administrative Agent, the
Investment Trust Beneficiary or any of their officers, directors, employees,
agents, attorneys-in-fact or Affiliates.
SECTION 11.7 Indemnification. The Funding Participants (excluding any
---------------
Purchasing Party and each Conduit) severally agree to indemnify each of the
Administrative Agent, in its capacity as such, and the Investment Trust
Beneficiary, in its capacity as such (to the extent each of the Administrative
Agent and the Investment Trust Beneficiary are not reimbursed by Deepwater
within a reasonable period after demand has been made to Deepwater for those
amounts owing by Deepwater, and without limiting the obligation of Deepwater to
do so), ratably according to their respective Certificate Purchaser Amounts or
Lender Amounts, as the case may be, from and against any and all liabilities,
obligations, losses, damages, penalties,
<PAGES>
actions, judgments, suits, costs, expenses or disbursements of any kind
whatsoever which may at any time (including, without limitation, at any time
following the payment of the Series A Charter Trust Certificates or the Conduit
Notes) be imposed on, incurred by or asserted against the Administrative Agent
or the Investment Trust Beneficiary in any way relating to or arising out of the
Transaction Documents, or any documents contemplated by or referred to herein or
therein or any action taken or omitted by the Administrative Agent or the
Investment Trust Beneficiary under or in connection with any of the foregoing;
provided that no Funding Participant shall be liable for the payment of any
--------
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from either the
Administrative Agent's or the Investment Trust Beneficiary's, as the case may
be, gross negligence or willful misconduct; and provided, further, that neither
-------- -------
the Administrative Agent nor the Investment Trust Beneficiary shall make any
claim under this Section 11.7 for any claim or expense indemnified against by
------------
Deepwater or its Affiliates without first making demand on such Person for
payment of such claim or expense (unless such demand shall then be prohibited by
Applicable Law). Whenever, at any time after the Administrative Agent or the
Investment Trust Beneficiary, as the case may be, has received from any Funding
Participant such Funding Participant's ratable share of amounts owing to the
Administrative Agent or the Investment Trust Beneficiary, as the case may be,
pursuant to this Section 11.7, the Administrative Agent or the Investment Trust
-------------
Beneficiary, as the case may be, shall receive any reimbursement from Deepwater
on account of such amounts, the Administrative Agent or the Investment Trust
Beneficiary, as the case may be, shall distribute to such Funding Participant
its ratable share thereof in like funds as received; provided, however, that in
-------- -------
the event that the receipt by the Administrative Agent or the Investment Trust
Beneficiary, as the case may be, of such reimbursement is required by law or
court or administrative order to be returned, such Funding Participant shall
return to the Administrative Agent or the Investment Trust Beneficiary, as the
case may be, any portion thereof previously distributed by the Administrative
Agent or the Investment Trust Beneficiary, as the case may be, to it in like
funds as such reimbursement is required to be returned by the Administrative
Agent or the Investment Trust Beneficiary, as the case may be.
SECTION 11.8 Administrative Agent and Investment Trust Beneficiary. The
------------------------------------------------------
Administrative Agent, the Investment Trust Beneficiary and their Affiliates may
make loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in and generally engage in any kind of business with
Deepwater, Conoco, Transocean and their Affiliates as though the Administrative
Agent and the Investment Trust Beneficiary were not the Administrative Agent or
Investment Trust Beneficiary hereunder and without notice to or the consent of
the Funding Participants. It is understood and acknowledged by each Funding
Participant that an Affiliate of the Administrative Agent or Investment Trust
Beneficiary, as the case may be, may also separately be a Funding Participant.
It is further understood and acknowledged by each Funding Participant that,
pursuant to the activities referenced in this Section 11.8, the Administrative
------------
Agent, the Investment Trust Beneficiary and their Affiliates may receive
information regarding Deepwater, Conoco, Transocean and their Affiliates
(including information that may be subject to confidentiality obligations in
favor of Deepwater, Conoco, Transocean and their Affiliates) and acknowledge
that the Administrative Agent or the Investment Trust Beneficiary, as the case
may be, shall be under no obligation to provide such information to them. With
respect to its Certificate Purchaser Amount, if any, or Lender Amount, if any,
the Administrative Agent and the Investment Trust Beneficiary shall have the
<PAGE>
same rights and powers under this Agreement as any other Funding Participant and
may exercise the same as though it were not the Administrative Agent or
Investment Trust Beneficiary, as the case may be.
SECTION 11.9 Successor Administrative Agent and Investment Trust
--------------------------------------------------------
Beneficiary.
------------
(a) At any time during the term of this Agreement, the Administrative
Agent may resign upon thirty (30) days' notice to the Funding Participants and
Deepwater. If the Administrative Agent resigns herewith, the Majority Funding
Participants shall appoint from among the Funding Participants a successor
administrative agent which successor administrative agent shall be approved by
Deepwater (which approval shall not be unreasonably withheld or delayed). If no
successor is appointed prior to the effective date of the resignation of the
corresponding Administrative Agent, such Administrative Agent may appoint, after
consulting with the Funding Participants and Deepwater, a successor
administrative agent from among the Funding Participants (with such Funding
Participant's consent). Upon the successor administrative agent's acceptance of
its appointment as successor administrative agent hereunder (i) such successor
administrative agent shall succeed to all the rights, powers and duties of the
retiring Administrative Agent and the term "Administrative Agent" shall mean
--------------------
such successor administrative agent and (ii) such retiring Administrative
Agent's appointment, powers and duties as a administrative agent shall be
terminated. After the retiring Administrative Agent's resignation herewith, the
provisions of this Section 11 shall inure to its benefit as to any actions taken
----------
or omitted to be taken by it while it was a Administrative Agent hereunder and
under the other Transaction Documents. If no successor agent has accepted
appointment by the date which is forty-five (45) days following the notice of
resignation, the resignation shall thereupon become effective and the Funding
Participants shall perform all of the duties of such Administrative Agent
hereunder and under the other Transaction Documents until such time, if any, as
the Majority Funding Participants appoint a successor administrative agent as
provided for above.
(b) At any time during the term of this Agreement, the Investment Trust
Beneficiary may resign upon thirty (30) days' notice to the Funding Participants
and Deepwater. So long as no Charter Default or Charter Event of Default has
occurred and is continuing, Deepwater may, for any reason, replace the
Investment Trust Beneficiary. If the Investment Trust Beneficiary resigns or is
removed herewith, the Majority Funding Participants shall appoint from among the
Funding Participants a successor investment trust beneficiary which successor
investment trust beneficiary shall be approved by Deepwater (which approval
shall not be unreasonably withheld or delayed). If no successor investment
trust beneficiary is appointed prior to the effective date of the resignation of
the corresponding Investment Trust Beneficiary, such Investment Trust
Beneficiary may appoint, after consulting with the Funding Participants and
Deepwater, a successor collateral agent from among the Funding Participants.
Upon the successor investment trust beneficiary's acceptance of its appointment
as successor investment trust beneficiary hereunder (i) such successor
investment trust beneficiary shall succeed to all the rights, powers and duties
of the retiring Investment Trust Beneficiary and the term "Investment Trust
----------------
Beneficiary" shall mean such successor investment trust beneficiary and such
-----------
successor Investment Trust Beneficiary Acknowledges that it takes its interest
in the Investment Trust subject to the pledge set forth in Section 8.12 of the
Investment Trust Agreement and (ii) such retiring Investment Trust Beneficiary's
appointment, powers and duties as a investment trust beneficiary shall be
terminated. After the retiring Investment Trust Beneficiary's resignation
<PAGE>
herewith, the provisions of this Section 11 shall inure to its benefit as to any
----------
actions taken or omitted to be taken by it while it was a Investment Trust
Beneficiary hereunder and under the other Transaction Documents. If no
successor investment trust beneficiary has accepted appointment by the date
which is forty-five (45) days following the notice of resignation, the
resignation shall thereupon become effective and the Funding Participants shall
perform all of the duties of such Investment Trust Beneficiary hereunder and
under the other Transaction Documents until such time, if any, as the Majority
Funding Participants appoint a successor investment trust beneficiary as
provided for above.
SECTION 12
MISCELLANEOUS
SECTION 12.1 Survival of Agreements. The representations, warranties,
------------------------
covenants, indemnities and agreements of the parties provided for in the
Transaction Documents, and the parties' obligations under any and all thereof,
shall survive the execution and delivery of this Agreement, the transfer of the
Drillship to the Head Lessor (if applicable), the lease of the Drillship by the
Head Lessor (if any) to the Charter Trustee and the charter of the Drillship by
the Charter Trustee to Deepwater, the construction of the Drillship, any
disposition of any interest of the Charter Trustee or the Investment Trust in
the Drillship, the payment of the Advances and/or Contributions and shall be and
continue in effect notwithstanding any investigation made by any party and the
fact that any party may waive compliance with any of the other terms, provisions
or conditions of any of the Transaction Documents. Except as expressly provided
herein, it is expressly understood and agreed that the indemnification
obligations of Deepwater under Section 10 shall survive the expiration or
-----------
termination of the Charter or either Charter Supplement and the other
Transaction Documents and the payment by Deepwater Conoco, or Transocean of all
amounts due thereunder for a period of three (3) years (but shall continue in
full force and effect following such date with respect to any Claim asserted
prior to such date) and shall be separate and independent from any remedy under
the Charter or any other Transaction Document.
SECTION 12.2 No Broker; etc. Each of the parties hereto represents to the
---------------
others that it has not retained or employed any broker, finder or financial
advisor, other than Bank of America, to act on its behalf in connection with
this Agreement or the transactions contemplated herein, nor has it authorized
any broker, finder or financial adviser retained or employed by any other Person
so to act. Any party who is in breach of this representation shall indemnify
and hold the other parties harmless from and against any cost or liability
arising out of such breach of this representation.
SECTION 12.3 Notices. Unless otherwise specifically provided herein, all
-------
notices, consents, directions, approvals, instructions, requests and other
communications required or permitted by the terms hereof to be given to any
Person shall be given in writing by United States mail, by nationally recognized
courier service, by hand or by facsimile communication and any such notice shall
become effective one (1) Business Day after delivery to a nationally recognized
courier service specifying overnight delivery or, if delivered by hand, when
received, or, if sent by facsimile communication, when confirmed by electronic
or other means during
<PAGE>
business hours on a Business Day (or, if confirmed after business hours or on a
non-Business Day, on the next Business Day) and shall be directed to the address
of such Person as indicated:
If to Deepwater, to it at:
Attn: Treasury Dept.
c/o Transocean Offshore Deepwater Drilling Inc.
4 Greenway Plaza
Houston, Texas 77046
Telephone: (713) 232-7500
Telecopier: (713) 232-7766
with copies to:
Attn: Wayne K. Anderson, Esq.
Corporate Counsel
Conoco Inc.
Charter Number 523126
600 North Dairy Ashford
Houston, Texas 77079
Telephone: (281) 293-3890
Telecopier: (281) 293-3700
Attn: General Counsel
c/o Transocean Offshore Deepwater Drilling Inc.
4 Greenway Plaza
Houston, Texas 77046
Telephone: (713) 232-7500
Telecopier: (713) 232-7600
If to the Investment Trust, to it at:
Attn: Corporate Trust Administration
Wilmington Trust FSB
3773 Howard Hughes Parkway, Suite 300 North
Las Vegas, Nevada 89109
Telephone: (702) 866-2200
Telecopier: (702) 866-2244
If to the Charter Trustee, to it at:
Attn: Corporate Trust Administration
Wilmington Trust Company
1100 North Market Street
Wilmington, DE, 19890
Telephone: (302) 651-1000
Telecopier: (302) 651-8882
<PAGE>
If to the Investment Trustee, to it at:
Attn: Corporate Trust Administration
Wilmington Trust FSB
3773 Howard Hughes Parkway, Suite 300 North
Las Vegas, Nevada 89109
Telephone: (702) 866-2200
Telecopier: (702) 866-2244
If to any Member, to it at:
Conoco Development II Inc.
600 North Dairy Ashford
Houston, Texas 77079
Telephone: (281) 293-3890
Telecopier: (281) 293-3700
Attn: Assistant Secretary
or
RBF Deepwater Exploration II Inc.
c/o Transocean Offshore Deepwater Drilling Inc.
4 Greenway Plaza
Houston, Texas 77046
Attention: Treasury Department
Telephone: (713) 232-7500
Telecopier: (713) 232-7766
If to the Investment Trust Beneficiary at:
850 Library Avenue, Suite 204
P.O. Box 885
Newark, Delaware 19715
Telephone: (302) 738-6680
Telecopier: (302) 738-7210
If to a Funding Participant, to it at the address set forth in Schedule 2.
----------
SECTION 12.4 Counterparts. This Agreement may be executed by the parties
------------
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute but
one and the same agreement.
SECTION 12.5 Amendments, Waivers and Consents. Except as otherwise
-----------------------------------
expressly provided herein or in any other Transaction Document, no amendment,
waiver or termination of any provision of this Agreement or any other
Transaction Document (other than a LAPA), and no consent with respect to any
departure by any Person therefrom, shall be effective unless the same shall be
in writing and signed by the Majority Funding Participants, and the applicable
Person and acknowledged by the Trustees, and then any such waiver or consent
shall be effective
<PAGE>
only in the specific instance and for the specific purpose for which given;
provided, however, that if any amendment, waiver, consent, termination or other
-------- -------
modification of any Transaction Document materially affects any Conduit, such
Conduit must consent thereto and each applicable Rating Agency must provide
prior written confirmation that the rating of the Commercial Paper Notes of such
Conduit will not be downgraded, suspended or withdrawn as a result thereof, and
no such waiver, amendment or consent shall, unless in writing and signed by all
Funding Participants and acknowledged by the Trustees, do any of the following:
(a) change the Commitment of any Funding Participant (except with the
written consent of such Funding Participant) except as provided in Section 7.9;
-----------
(b) postpone or delay any date fixed by any Transaction Document for
any payment of Charter Return, or any fees or other amounts due to any Funding
Participant under any Transaction Document (except, with respect to amounts owed
only to a particular Funding Participant, with the written consent of such
Funding Participant);
(c) reduce (i) the amount of any outstanding Contributions or Advances
or the rate of the Charter Return, or (ii) any fees or other amounts payable to
any Funding Participant under any Transaction Document (except, with respect to
amounts owed only to a particular Funding Participant, with the written consent
of such Funding Participant);
(d) postpone or reduce the payment obligations of Deepwater pursuant to
any Transaction Document (except, with respect to amounts owed only to a
particular Funding Participant, with the written consent of such Funding
Participant);
(e) change the aggregate percentage which is required for the Funding
Participants (or any of them) to take any action hereunder or under the
Transaction Documents;
(f) amend this Section or any provision in this Agreement or in any
-------
other Transaction Document providing for consent or other action by all Funding
Participants;
(g) discharge the Conoco Guaranty (other than pursuant to Section
-------
9.4(iv)), the Transocean Guaranty (other than pursuant to Section 9.4(iv)) or
------- ---------------
either Drilling Contract Guaranty (other than pursuant to Section 9.4(i)), or
--------------
release the Lien of the Ship Mortgage or any material portion of any other
Collateral or subordinate or take any action, including the issuance of
additional instruments or documents, which results in the subordination of the
interest of any Funding Participant in any Collateral (including taking any
action which has the effect of altering the subordination of payments under the
Transaction Documents made to a Purchasing Party in any way that may be
detrimental to the interests of any Funding Participant);
(h) amend the definition of "Certificate Return Rate", "Loan Return
----------------------- -----------
Rate", "Drawn Rate", "Return Rate", "CP Rate", "Certificate Margin", "Base
----- ----------- ------------ -------- ------------------ ----
Rate", "Alternate Rate", "Federal Funds Rate", "Charter Residual Risk Amount",
---- --------------- ------------------ ----------------------------
"Coverage Ratio", "Residual Guaranty Amount", "Majority Funding Participants",
--------------- ------------------------ -----------------------------
"Charter Return", "Series A Return", "Series B Return", "Charter Margin", "Loan
--------------- --------------- --------------- -------------- ----
Margin" or "Return Period"; or
------ --------------
(i) amend Section 14.1 of the Master Charter or Article 3 of the
Depository Agreement;
<PAGE>
provided, further, that no amendment, waiver or consent shall, unless in
-------- -------
writing and signed by the Trustees in addition to the appropriate number of
Funding Participants or the Hedging Agreement Counterparties, as applicable,
affect the rights or duties of the Trustees under this Agreement or any other
Transaction Document or the Hedging Agreement Counterparties, respectively.
SECTION 12.6 Confidentiality. Each party hereto agrees to exercise
---------------
commercially reasonable efforts to keep any non-public information delivered or
made available by Deepwater to it which is indicated or stated in writing to be
confidential information, confidential from anyone other than persons employed
or retained by such Participant who are or are expected to become engaged in
evaluating, approving, structuring or administering any of the Transaction
Documents (such Persons to likewise be under similar obligations of
confidentiality with respect to such information); provided, however, that
-------- -------
nothing herein shall prevent any party hereto from disclosing such information
(i) to any other party hereto, (ii) upon the order of any court or
administrative agency, (iii) upon the request or demand of any regulatory agency
or authority having jurisdiction over such Participant, (iv) which has been
publicly disclosed, (v) to the extent reasonably required in connection with any
litigation to which any party or its Affiliates may be a party, (vi) to the
extent reasonably required in connection with the exercise of any remedy
hereunder or under any other Transaction Document, (vii) to such party's legal
counsel, independent auditors and to such party's Affiliates, (viii) to any
actual or proposed assignee or other transferee of all or part of its rights
hereunder which has agreed in writing to be bound by the provisions of this
Section 12.6 and (ix) except as otherwise required by Applicable Law; provided,
------------- --------
however, that, should disclosure of any such confidential information be
-------
required by virtue of clause (ii) or (v) of the immediately preceding proviso,
such party shall notify Deepwater (if such notification is not prohibited by
Applicable Law) of the same so as to allow Deepwater to seek a protective order
or to take any other appropriate action; provided, further, that no such party
-------- -------
shall be required to delay compliance with any directive to disclose beyond the
last date such delay is legally permissible any such information so as to allow
Deepwater to effect any such action and provided, further, that if Deepwater
-------- -------
exercises the Return Option, no Participant thereafter shall be bound by the
terms of this Section 12.6 with respect to any information regarding the
-------------
Drillship (excluding, however, any information regarding the Drilling
Contracts). Notwithstanding the foregoing any Conduit or Administrator may
disclose:
(A) to such Conduit's commercial paper dealers or placement agents and
to investors and prospective investors in such Commercial Paper Notes,
information concerning the transaction, as required by such Conduits agreements
with such dealers or placement agents;
(B) to Moody's and S&P (or any successor or other rating agency that
maintains a rating of such Conduit's Commercial Paper Notes), any information,
in connection with such rating agency's review and maintenance of its rating of
such Commercial Paper Notes; and
(C) to any Program Support Provider or other entity that issues a
financial guaranty insurance policy or other credit enhancement facility for the
account of such Conduit or any provider of corporate management services to such
Conduit, and such Conduit's certified public accountants, any information, in
connection with the provision and administration of credit facilities or
corporate management services or accounting services, as applicable, to or on
<PAGE>
behalf of such Conduit; provided, that each such Person described in clauses (A)
-------- -----------
- (C) agrees to be bound by the provisions of this Section 12.6.
--- -------------
SECTION 12.7 Headings; etc. The Table of Contents and headings of the
---------------
various Sections of this Agreement are for convenience of reference only and
shall not modify, define, expand or limit any of the terms or provisions hereof.
SECTION 12.8 Parties in Interest. Except as expressly provided herein,
---------------------
none of the provisions of this Agreement are intended for the benefit of any
Person except the parties hereto.
SECTION 12.9 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS
-------------
OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE (INCLUDING SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW BUT EXCLUDING, TO THE MAXIMUM EXTENT PERMITTED BY LAW, ALL OTHER
CHOICE OF LAW AND CONFLICTS OF LAW RULES). THIS AGREEMENT HAS BEEN DELIVERED IN
THE STATE OF NEW YORK.
SECTION 12.10 Severability. Any provision of this Agreement that is
------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 12.11 Further Assurances. The parties hereto shall promptly cause
------------------
to be taken, executed, acknowledged or delivered, at the expense of Deepwater,
all such further acts, conveyances, documents and assurances as any of the
parties may from time to time reasonably request in order to carry out and
effectuate the intent and purposes of this Agreement, the other Transaction
Documents and the transactions contemplated hereby and thereby (including the
preparation, execution and filing of any and all Uniform Commercial Code
financing statements and other filings or registrations which the parties hereto
may from time to time request to be filed or effected). Deepwater will, at its
own expense and without need of any prior request from any other party, take
such action as may be necessary (including any action specified in the preceding
sentence), or (if the Investment Trust or the Trustees shall so request) as so
requested, in order to (i) maintain and protect all security interests provided
for hereunder or under any other Transaction Document and (ii) allow the Charter
Trustee to accurately and correctly execute any Disbursement Certificates
allowed to be executed by it in accordance with the terms of the Depository
Agreement.
SECTION 12.12 Waiver of Jury Trial. TO THE EXTENT PERMITTED BY APPLICABLE
--------------------
LAW, EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THE TRANSACTION
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 12.13 Limitations on Recourse. The Funding Participants, the
-------------------------
Trustees and the Investment Trust agree that their rights in respect of the
obligations of Deepwater to pay
<PAGE>
Charter Hire, and any claim or liability under this Agreement or any other
Transaction Document shall be limited to satisfaction out of, and enforcement
against, the Collateral. The Funding Participants, the Trustees and the
Investment Trust hereby acknowledge and agree that none of the Non-Recourse
Parties shall have any liability to all or any of the Funding Participants, the
Trustees or the Investment Trust for the payment of any sums now or hereafter
owing by Deepwater under this Agreement or any other Transaction Document or for
the performance of any of the obligations of Deepwater contained herein or
therein or shall otherwise be liable or responsible with respect thereto (such
liability, including such as may arise by operation of law, being hereby
expressly waived), except as provided in this Section 12.13. If (i) any Charter
-------------
Event of Default shall occur and be continuing or (ii) any claim of any Funding
Participant, the Investment Trust and the Trustees against or alleged liability
to such Persons of Deepwater shall be asserted under this Agreement or any other
Transaction Document, the Funding Participants, the Trustees and the Investment
Trust agree that they shall not have the right to proceed directly or indirectly
against the Non-Recourse Parties or against their respective properties and
assets (other than the Collateral) for the satisfaction of any of the
obligations of Deepwater to pay Charter Hire or of any such claim or liability
or for any deficiency judgment (except to the extent enforceable out of the
Collateral) in respect of such obligations or any such claim or liability. The
foregoing notwithstanding, it is expressly understood and agreed that nothing
contained in this Section 12.13 shall be deemed to (a) release any Non-Recourse
-------------
Party from liability for its fraudulent actions or willful misconduct or (b)
limit or affect the obligations of any Non-Recourse Party in accordance with the
terms of this Agreement or any other Transaction Document creating such
obligation to which such Non-Recourse Party is a party, including, without
limitation, the obligations of Conoco or Transocean under the Drilling Contract
Guaranties or with respect to payment of the Residual Guaranty Amount, or the
obligations of the Drilling Parties under the Drilling Contracts. The foregoing
acknowledgments, agreements and waivers shall be enforceable by any Non-Recourse
Party.
(b) Deepwater, Conoco and Transocean hereby acknowledge and agree that
none of the Agents, the Trustees and the Funding Participant shall have any
personal liability whatsoever to Deepwater, Conoco, Transocean or their
respective successors or assigns for any claim based on or in respect of this
Agreement or arising from the transactions contemplated hereby. Subject to
Section 6.1 of the Master Charter, the sole recourse of Deepwater, Conoco or
Transocean or any Person claiming through or on behalf thereof for any such
claims arising hereunder will be to the Trust Estate. Each of Deepwater, Conoco
and Transocean further acknowledges and agrees that it has no rights (as
third-party beneficiary or otherwise) or standing under any agreement between
the Trustees and any or all of the Investment Trust, the Agents, or the Funding
Participants, which agreements are not by their terms intended for the benefit
of other parties other than Sections 5.2, 5.3, 5.4 and 5.5 of the Charter Trust
Agreement and Sections 5.2, 5.3, 5.4 and 5.5 of the Investment Trust Agreement.
(c) It is expressly understood and agreed by the parties hereto that
(a) this Agreement and the other Transactions Documents executed by either
Trustee, are not being executed in such Trustee's respective personal
capacities, except as expressly stated herein or therein, but solely (i) in the
case of Wilmington Trust Company, (x) as charter trustee under the Charter Trust
Agreement and, (y) solely with respect to the Depository Agreement, as
Depository and Securities Intermediary thereunder, and (ii) in the case of
Wilmington Trust FSB, as investment trustee under the Investment Trust Agreement
and (b) under no circumstances shall either Trustee be personally liable for the
<PAGE>
payment of any indebtedness or expenses of the Charter Trust or the Investment
Trust, as applicable, or be liable for the breach or failure of any obligation,
representation, warranty or covenant made or undertaken by the Charter Trustee
or Investment Trust, as applicable, under this Agreement, any other Transaction
Document or any related agreement, except to the extent of the Charter Trust
Estate and the Investment Trust Estate, respectively.
(d) Notwithstanding any provision of this Agreement or any other
Transaction Document to the contrary, each party hereto agrees that each Conduit
shall only be required to pay (a) any fees or liabilities that it may incur
hereunder only to the extent such Conduit has Excess Funds and (b) any expenses,
indemnities or other liabilities under any other Transaction Document only to
the extent such Conduit has Excess Funds; provided, however, that if such
-------- -------
Conduit has insufficient funds to make any payments required by this Agreement
or any Transaction Document to any party hereto, such Persons shall not be
excused from the performance of their respective obligations hereunder. In
addition, no amount owing by any Conduit hereunder in excess of the liabilities
that such Conduit is required to pay in accordance with the preceding sentence
shall constitute a claim (as defined in Section 101 to Title 11 of the United
States Code) against such Conduit. No recourse shall be had for the payment of
any amount owing hereunder or for the payment of any fee hereunder or any other
obligation of or claim against, any Conduit arising out of or based upon this
Agreement or any Transaction Document, against any stockholder, employee,
officer, director, manager or incorporator of any Conduit or Affiliate thereof;
provided, however, that the foregoing shall not relieve any such person or
-------- -------
entity of any liability they might otherwise have as a result of fraudulent
actions or omissions taken by them. Any and all claims against any Conduit by
any other Person shall be subordinate to the claims of the holders of the
Commercial Paper Notes of such Conduit. The obligations under this Section
-------
12.13(d) shall survive the termination of this Agreement.
-------
SECTION 12.14 Applicable Laws. Nothing in this Agreement or any other
----------------
Transaction Document shall be construed to constitute or to require either the
Trustees, Investment Trust or Deepwater to take or omit any action which would
constitute a violation of, or subject the Trustees, Investment Trust or
Deepwater to a penalty under, the laws of the United States of America.
SECTION 12.15 Right to Inspect. Upon reasonable notice and at such times
----------------
and places as shall not unduly interfere with the commercial utilization or
operation of the Drillship (it being understood that Deepwater shall be under no
obligation to interrupt or delay any operation of the Drillship or to otherwise
incur any out-of-pocket expense or loss of revenue), but in no event more than
once in any twelve-month period, Deepwater shall afford representatives of the
Charter Trustee (together with representatives of the Funding Participants and
the Investment Trustees) reasonable access to the Drillship, its logs and papers
for the purpose of inspecting the same. Any such inspection shall be subject to
any required Government Approvals and shall be at the sole risk and expense of
the Charter Trustee, the Funding Participants and the Investment Trustees, as
applicable, unless a Charter Event of Default has occurred and is continuing, in
which case any such inspection shall be at the expense of Deepwater and may
occur more than once per year upon reasonable notice after such Charter Event of
Default. Upon written request by the Trustees, Deepwater shall give the
Trustees prior written notice of the time and location of the Drillship's next
scheduled dry-docking.
<PAGE>
SECTION 12.16 Accounts, Distribution of Payments and Flow of Funds.
----------------------------------------------------------
Pursuant to the Deepwater Assignment, Deepwater has assigned its right to
receive payment of all Deposited Amounts to the Charter Trustee and the
Investment Trust. Each of the Trustees, the Investment Trust and Deepwater
hereby agrees (severally and not jointly) to deposit, or to cause to be
deposited, all Account Collateral of any kind received by it promptly (but not
later than six (6) Business Days after receipt) into the Accounts established
pursuant to the Depository Agreement to be applied as set forth in the
Depository Agreement.
SECTION 12.17 Attorneys-in-Fact. Subject to the terms of the Transaction
-----------------
Documents, without in any way limiting the obligations of Deepwater hereunder,
Deepwater hereby appoints each of the Charter Trustee and the Investment Trust
as its agent and attorney-in-fact, with full power and authority at any time
during which Deepwater is obligated to deliver possession of the Drillship to
the Charter Trustee in connection with the exercise of remedies after the
occurrence of a Charter Event of Default, to demand and take possession of the
Drillship in the name and on behalf of Deepwater from whomsoever shall be at the
time in possession thereof in accordance with the Transaction Documents.
SECTION 12.18 Successor Trustees; Jurisdiction of Trust. Notwithstanding
-----------------------------------------
the provisions of the Trust Agreement, so long as no Charter Event of Default
shall have occurred and be continuing, (i) no successor or replacement Charter
Trustee or Investment Trustee shall be appointed without the prior written
consent of Deepwater (which consent shall not be unreasonably withheld or
delayed) and (ii) the jurisdiction in which the trusts under the Trust
Agreements are created shall not be changed without the prior written consent of
Deepwater.
SECTION 12.19 Third-Party Beneficiaries. Each of the Funding Participants
-------------------------
agrees that the Drilling Parties shall be third-party beneficiaries of the
covenant contained in Section 6.3(b) and each shall be entitled to rely on and
--------------
enforce such covenant as though such Drilling Party were a party to this
Agreement. Each of the parties hereto agrees that the Hedging Agreement
Counterparties shall be third-party beneficiaries of the covenant contained in
Sections 10 and 12.5 and shall be entitled to rely on and enforce such covenants
---------- ----
as though the Hedging Agreement Counterparties were parties to this Agreement.
SECTION 12.20 Consent to Jurisdiction. Each of the parties hereto (i)
-------------------------
hereby irrevocably submits to the nonexclusive jurisdiction of the Supreme Court
of the State of New York, New York County (without prejudice to the right of any
party to remove to the United States District Court for the Southern District of
New York) and to the jurisdiction of the United States District Court for the
Southern District of New York, for the purposes of any suit, action or other
proceeding arising out of this Agreement, the other Transaction Documents, or
the subject matter hereof or thereof or any of the transactions contemplated
hereby or thereby brought by any of the parties hereto or their successors or
assigns, (ii) hereby irrevocably agrees that all claims in respect of such suit,
action or proceeding may be heard and determined in such New York State court
or, to the fullest extent permitted by Applicable Law, in such Federal court and
(iii) to the extent permitted by Applicable Law, hereby irrevocably waives, and
agrees not to assert, by way of motion, as a defense, or otherwise, in any such
suit, action or proceeding any claim that it is not personally subject to the
jurisdiction of the above-named courts, that the suit, action or proceeding is
brought in an inconvenient forum, that the venue of the suit, action or
proceeding is improper or that this Agreement, the other Transaction Documents,
or the subject
<PAGE>
matter hereof or thereof may not be enforced in or by such court. A final
judgment obtained in respect of any action, suit or proceeding referred to in
this Section 12.20 shall be conclusive and may be enforced in other
--------------
jurisdictions by suit on the judgment or in any manner as provided by and
subject to Applicable Law. Each of the parties hereto hereby consents to
service of process in connection with the subject matter specified in the first
sentence of this Section 12.20 in connection with the above mentioned courts in
-------------
New York by registered mail, Federal Express, DHL or similar courier at the
address to which notices to it are to be given, it being agreed that service in
such manner shall constitute valid service upon such party or its respective
successors or assigns in connection with any such suit, action or proceeding
only; provided, however, that nothing in this Section 12.20(i) shall affect the
-------- ------- ----------------
right of any of such party or its respective successors or assigns to serve
legal process in any other manner permitted by law or affect the right of any of
such parties or its respective successors or assigns to bring any suit, action
or proceeding against any other one of such parties or its respective property
in the courts of other jurisdictions.
SECTION 12.21 Deepwater Acknowledgment With Respect to Charter Trust
-----------------------------------------------------------
Agreement. Deepwater hereby agrees and consents to the provisions of Section
---------
8.1(a) of the Charter Trust Agreement in respect of Deepwater's obligations to
reimburse the Charter Trustee's reasonable fees and expenses.
SECTION 12.22 Appointment of Wilmington Trust FSB as Attorney-in-Fact on
-----------------------------------------------------------
behalf of the Beneficial Owners; Powers of Attorney. Each of the Beneficial
-------------------------------------------------------
Owners identified in the Charter Trust Agreement, by its respective signature
below, hereby appoints Wilmington Trust FSB as attorney-in-fact solely for the
purpose of, in its name, place and stead, executing and delivering the Charter
Trust Agreement. Wilmington Trust FSB is further authorized and directed by
each such Beneficial Owner to execute and deliver the power of attorney
substantially in the form attached hereto as Exhibit N-1, in favor of the
-----------
Persons listed therein, for the purpose of having the Charter Trust Agreement
duly executed and delivered by each such Beneficial Owner. Such appointment
shall not be construed to be a "statutory short form power of attorney" as
defined in Section 5-1501 of the New York General Obligations Law. Further,
Wilmington Trust Company shall execute and deliver the Power of Attorney
attached hereto as Exhibit N-2, both in its individual capacity, as expressly
-----------
provided in such Exhibit N-2, and as Charter Trustee.
------------
SECTION 12.23 Non-Defaulting Drilling Party's Right to Pursue Contests.
----------------------------------------------------------
Where a Non-Defaulting Drilling Party has exercised its Assumption Cure Right,
if the Charter Trustee, Investment Trust and the Funding Participants have opted
not to pursue remedies against (i) where Frontier Deepwater Drilling is a
Defaulting Drilling Party, Conoco for any failure to make payments due under the
Conoco Guaranty or the Conoco Drilling Contract Guaranty following a demand for
payment thereunder, or (ii) where R&B Falcon Drilling (International &
Deepwater) Inc. is a Defaulting Drilling Party, Transocean for any failure to
make payments due under the Transocean Guaranty or the Transocean Drilling
Contract Guaranty following a demand for payment thereunder, such Non-Defaulting
Drilling Party shall have the right to pursue any and all claims of the Charter
Trustee, Investment Trust and the Funding Participants under any such Guaranty;
provided, however that such Non-Defaulting Drilling Party shall not have the
-------- -------
right in any way to settle or compromise any such claim pursued under this
Section for less than the full amount owed under any such Guaranty unless each
-------
of the Funding Participants has consented to
<PAGE>
such settlement or compromise. Notwithstanding anything to the contrary in this
Section, all amounts received by the Non-Defaulting Drilling Party as a result
-------
of the pursuit of any claims hereunder shall be deposited into the appropriate
Account under the Depository Agreement, as though such amounts had been paid by,
where clause (i) above applies, Conoco and, where clause (ii) above applies,
Transocean.
SECTION 12.24 Non-Petition. Each party hereto hereby agrees that it shall
------------
not institute against, or join or assist any other person in instituting
against, any Conduit any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceeding or other proceedings under any federal or state
bankruptcy or similar law, for one year and a day after the latest maturing
commercial paper note issued by such Conduit is paid. This Section 12.24 shall
-------------
survive the termination of this Agreement.
SECTION 12.25 Payments to Conduits. Notwithstanding anything in the
----------------------
Transaction Documents to the contrary, all payments to each of the Conduit
(Paradigm) and the Conduit (Liberty) under the Transaction Documents shall be
paid to the applicable Administrator pursuant to the Depository Agreement for
the benefit of such Conduits.
SECTION 12.26 UCC-1 Authorization. Each of Deepwater and the Charter
--------------------
Trustee authorize the filing of UCC-1 Statements as required to perfect and
continue the security interests created in the Transaction Documents.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this PARTICIPATION
AGREEMENT to be duly executed by their respective officers and thereunto duly
authorized as of the day and year first above written.
<PAGE>
DEEPWATER DRILLING II L.L.C.
By: /s/ TIM JURAN
---------------------------------------
Name: Tim Juran
Title: Manager
<PAGE>
DEEPWATER INVESTMENT TRUST 1999-A
WILMINGTON TRUST FSB, not in its
individual capacity, but solely as
Investment Trustee
By: /s/ JAMES P. LAWLER
-------------------------------------
Name: James P. Lawler
Title: Vice President
<PAGE>
WILMINGTON TRUST FSB, not in its individual
capacity, except as specified herein,
but solely as Investment Trustee
By: /s/ JAMES P. LAWLER
---------------------------------------
Name: James P. Lawler
Title: Vice President
<PAGE>
INVESTMENT TRUST BENEFICIARY
By: /s/ DONALD J. PUGLISI
---------------------------------------
Name: Donald J. Puglisi
Title: Investment Trust Beneficiary
<PAGE>
WILMINGTON TRUST COMPANY, not in its
individual capacity, except as specified
herein, but solely as Charter Trustee
By: /s/ JAMES A. HANLEY
---------------------------------------
Name: James A. Hanley
Title: Financial Services Officer
<PAGE>
TRANSOCEAN SEDCO FOREX, INC., with respect to
Sections 2.15, 9.4, 12.13(b) and
-------------- --- --------
12.13(d) only
--------
By: /s/ Eric B. Brown
----------------------------------------
Name: ERIC B. BROWN
Title: Senior Vice President, General
Counsel and Corporate Secretary
<PAGE>
CONOCO INC., with respect to Sections 2.15,
-------------
9.4, 12.13(b) and 12.13(d) only
--- -------- --------
By: /s/ R.W. GOLDMAN
----------------------------------------
Name: R.W. Goldman
Title:
<PAGE>
RBF DEEPWATER EXPLORATION II INC., with
respect to Sections 5.2 and 6.4 only
------------- ---
By: /s/ W. DENNIS HEAGNEY
----------------------------------------
Name: W. Dennis Heagney
Title: Vice President
<PAGE>
CONOCO DEVELOPMENT II INC., with respect to
Sections 5.2 and 6.4 only
------------- ---
By: /s/ Robert
----------------------------------------
Name:
Title:
<PAGE>
BANK OF AMERICA, N.A.,
as Administrative Agent
By: /s/ ALBERT Z. NORONA
----------------------------------------
Name: Albert Z. Norona
Title: Vice President
<PAGE>
HATTERAS FUNDING CORPORATION, as the
Conduit (Hatteras)
By: /s/ CHRIS T. BURT
----------------------------------------
Name: Chris T. Burt
Title: Vice President
<PAGE>
BANK OF AMERICA, N.A., as Administrator
(Hatteras)
By: /s/ M. RANDALL ROSS
----------------------------------------
Name: M. Randall Ross
Title: Principal
BANK OF AMERICA, N.A., as Liquidity Agent
(Hatteras)
By: /s/ M. RANDALL ROSS
----------------------------------------
Name: M. Randall Ross
Title: Principal
<PAGE>
LIBERTY STREET FUNDING CORP., as the
Conduit (Liberty)
By: /s/ ANDREW L. STIDD
----------------------------------------
Name: Andrew L. Stidd
Title: President
<PAGE>
THE BANK OF NOVA SCOTIA, as Administrator
(Liberty)
By: /s/ N. BELL
----------------------------------------
Name: N. Bell
Title: Assistant Agent
THE BANK OF NOVA SCOTIA, as Liquidity Agent
(Liberty)
By: /s/ N. BELL
----------------------------------------
Name: N. Bell
Title: Assistant Agent
<PAGE>
PARADIGM FUNDING LLC, as the Conduit
(Paradigm)
By: /s/ EVELYN ECHEVARRIA
----------------------------------------
Name: Evelyn Echevarria
Title: Vice President
<PAGE>
WESTDEUTSCHE LANDESBANK GIROZENTRALE
NEW YORK BRANCH, as Administrator (Paradigm)
By: /s/ CHRISTIAN BRUNE
----------------------------------------
Name: Christian Brune
Title: Associate Director Securitization
By: /s/ VIOLET DIAMANT
----------------------------------------
Name: Violet Diamant
Title: Associate Director Securitization
WESTDEUTSCHE LANDESBANK GIROZENTRALE
NEW YORK BRANCH, as Liquidity Agent
(Paradigm)
By: /s/ CHRISTIAN BRUNE
----------------------------------------
Name: Christian Brune
Title: Associate Director Securitization
By: /s/ VIOLET DIAMANT
----------------------------------------
Name: Violet Diamant
Title: Associate Director Securitization
<PAGE>
BANK OF AMERICA, N.A., as a Liquidity
Purchaser
By: /s/ CLAIRE M. LIU
----------------------------------------
Name: Claire M. Liu
Title: Managing Director
<PAGE>
THE BANK OF NOVA SCOTIA, as a Liquidity
Purchaser
By: /s/ N. BELL
----------------------------------------
Name: N. Bell
Title: Assistant Agent
<PAGE>
DEN NORSKE BANK ASA, as a Liquidity Purchaser
By: /s/ BARBARA GRONQUIST
----------------------------------------
Name: Barbara Gronquist
Title: Senior Vice President
By: /s/ HANS JORGEN ORMAR
----------------------------------------
Name: Hans Jorgen Ormar
Title: Vice President
<PAGE>
FORTIS CAPITAL CORP., as a Liquidity Purchaser
By: /s/ JOHN C. PRENATA
----------------------------------------
Name: John C. Prenata
Title: Executive Vice President
FORTIS CAPITAL CORP., as a Certificate
Purchaser
By: /s/ JOHN C. PRENATA
----------------------------------------
Name: John C. Prenata
Title: Executive Vice President
By: /s/ C. TURTON
----------------------------------------
Name: C. Turton
Title: Managing Director
<PAGE>
NATEXIS BANQUES POPULAIRES, as a Liquidity
Purchaser
By: /s/ TIMOTHY L. POLVADO
----------------------------------------
Name: Timothy L. Polvado
Title: Vice President and Group Manager
By: /s/ LOUIS P. LAVILLE, III
----------------------------------------
Name: Louis P. Laville, III
Title: Vice President and Group Manager
<PAGE>
THE ROYAL BANK OF SCOTLAND PLC, as a
Liquidity Purchaser
By: /s/ SCOTT BARTON
----------------------------------------
Name: Scott Barton
Title: Sr. Vice President
THE ROYAL BANK OF SCOTLAND PLC, as a
Liquidity Purchaser
By: /s/ SCOTT BARTON
----------------------------------------
Name: Scott Barton
Title: Sr. Vice President
<PAGE>
SUNTRUST BANK, as a Liquidity Purchaser
By: /s/ JOSEPH M. MCGREEVY
----------------------------------------
Name: Joseph M. McGreevy
Title: Assistant Vice President
<PAGE>
WESTDEUTSCHE LANDESBANK GIROZENTRALE
NEW YORK BRANCH, as a Liquidity Purchaser
By: /s/ CHRISTIAN BRUNE
----------------------------------------
Name: Christian Brune
Title: Associate Director Securitization
<PAGE>
SCHEDULE 1
List of UCC and Other Necessary Security Filings
UCC-1 financing statements covering the assignment of Account Collateral under
the Depository Agreement, naming Deepwater as the debtor and the Depository, for
the benefit of the Charter Trustee, as the secured party filed with the Delaware
Secretary of State.
UCC-1 financing statements covering the assignment of the Assigned Contracts
referenced in the Deepwater Assignment, naming Deepwater as the debtor and the
Charter Trustee as the secured party filed with the Delaware Secretary of State.
A UCC-1 financing statement, covering the Drillship and naming Deepwater as the
debtor and the Charter Trustee as the secured party, filed with the Delaware
Secretary of State.
UCC-1 financing statements covering the assignment of Account Collateral under
the Depository Agreement, naming Charter Trustee as the debtor and the
Depository, for the benefit of the Investment Trust and Hedging Agreement
Counterparties, if any, as the secured party filed with the Delaware Secretary
of State.
UCC-1 financing statements covering the assignment of the Assigned Contracts and
Contract Payments referenced in the Charter Trustee Assignment, naming Charter
Trustee as the debtor and the Investment Trust, for itself and on behalf of the
Hedging Agreement Counterparties, if any, as the secured party filed with the
Delaware Secretary of State.
A UCC-1 financing statement, covering the Drillship and naming Charter Trustee
as the debtor and the Investment Trust and Hedging Agreement Counterparties, if
any, as the secured parties, filed with the Delaware Secretary of State.
Master Charter. Filing in Panama.
Charter Supplement No. 1. Filing in Panama.
Charter Supplement No. 2. Filing in Panama.
First Addendum to Ship Mortgage. Filing in Panama.
<PAGE>
SCHEDULE 2
FUNDING PARTICIPANT NOTICE ADDRESSES,
PAYMENT INSTRUCTIONS AND RESPONSIBLE OFFICERS
BANK OF AMERICA, N.A.
GENERAL INFORMATION:
--------------------
DOMESTIC LENDING OFFICE: EURODOLLAR LENDING OFFICE:
------------------------- ---------------------------
Name: Bank of America, N.A. Name:
333 Clay Street, Suite 4550 Address:
Address: Houston, TX 77002
ADDRESS FOR NOTICES:
NAME: Ramon Garcia
-----
ADDRESS: Bank of America Plaza
-------- 901 Main Street
Dallas, TX 75202-3714
TEL #: 214-209-2119
------
FAX #: 214-290-9462
------
ADMINISTRATIVE CONTACT PERSON:
NAME: Ramon Garcia
-----
ADDRESS: Bank of America Plaza
-------- 901 Main Street
Dallas, TX 75202-3714
TEL #: 214-209-2119
------
FAX #: 214-290-9462
------
TAXPAYER ID #:
---------------------------------
PAYMENT INSTRUCTIONS (FOR US DOLLARS):
--------------------------------------
Bank of America
ABA #: 111000012
Account #: 1292000883
Account Name: Transocean
Attention: Corporate Loan Funds
<PAGE>
Bank of America, National Association as Liquidity Agent (Hatteras)
Independence Center, NC1-001-15-04
101 N. Tryon Street
Charlotte, NC 28255
Attention: Angela Berry/Kelly Weaver
Tel: 704-388-6483
Fax: 704-409-0014
Re: Deepwater Drilling
Bank of America, National Association as Administrator (Hatteras)
Interstate Tower, NC1-005-15-01
121 West Trade Street
Charlotte, NC 28255
Attention: M. Randall Ross
Telephone: 704-386-8234
Facsimile: 704-386-0892
Re: Deepwater Drilling
Hatteras Funding Corporation
c/o Global Securitization Services, LLC
114 West 47th Street, Suite 1715
New York, NY 10036
Attention: Christopher T. Burt
Tel: 212-302-5151
Fax: 212-302-8767
Address for Wires:
U.S. Bank N.A.
Corporate Trust Services
100 Wall Street
New York, NY 10005
Attention: Rosalyn Calendar
ABA No.: 091-000-022
Account No.: 1731 0185 1827
Account Name: Hatteras Funding Corporation
Account No.: 770 864 72
Account Name: Hatteras Funding AccuTrust
Reference: Deepwater Drilling
<PAGE>
DEN NORSKE BANK, A.S.A.
-----------------------
GENERAL INFORMATION:
--------------------
DOMESTIC LENDING OFFICE: EURODOLLAR LENDING OFFICE:
----------------------- ---------------------------
Name: Den Norske Bank, A.S.A. Name:
Address: 200 Park Ave., 31st Floor Address:
New York, NY 10666
ADDRESS FOR NOTICES:
NAME: Anny Peralta
----
ADDRESS: 200 Park Ave., 31st Floor
------- New York, NY 10666
TEL #: 212-681-3842
-----
FAX #: 212-681-4123
-----
ADMINISTRATIVE CONTACT PERSON:
NAME: Anny Peralta
----
ADDRESS: 200 Park Ave., 31st Floor
------- New York, NY 10666
TEL #: 212-681-3842
-----
FAX #: 212-681-4123
-----
TAXPAYER ID #:
-----------------------------
PAYMENT INSTRUCTIONS (FOR US DOLLARS):
-------------------------------------
Bank of New York
ABA #: 021 000018
Account #: dnbaus 33
Account Name: den norske bank
Further Credit To: Deepwater Drilling A/C # 13216999
Attn: Anny Peralta
<PAGE>
FORTIS CAPITAL CORP.
GENERAL INFORMATION:
-------------------
DOMESTIC LENDING OFFICE: EURODOLLAR LENDING OFFICE:
------------------------- ---------------------------
Name: Fortis Capital Corp. Name:
Address: 3 Stamford Plaza Address:
301 Tresser Blvd., 9th Floor
Stanford, CT 06901
ADDRESS FOR NOTICES:
NAME:
-----
ADDRESS:
-------
TEL #:
-----
FAX #:
-----
ADMINISTRATIVE CONTACT PERSON:
NAME: Frank Campanelli
----
ADDRESS: 3 Stamford Plaza
------- 301 Tresser Boulevard, 9th Floor
Stamford, CT 06901-3239
TEL #: 203-705-5936
-----
FAX #: 203-705-5888
-----
TAXPAYER ID #:
-------------------------------
PAYMENT INSTRUCTIONS (FOR US DOLLARS):
-------------------------------------
Chase Manhattan Bank
ABA #: 021 000 021
For Credit To: Fortis Capital Corp.
Acct #: 001 1 624 418
Ref: Deepwater Drilling II
<PAGE>
NATEXIS BANQUES POPULAIRES
GENERAL INFORMATION:
-------------------
DOMESTIC LENDING OFFICE: EURODOLLAR LENDING OFFICE:
----------------------- ---------------------------
Name: Natexis Banques Populaires Name:
Address: Southwest Representative Office Address:
333 Clay Street, Suite 4340
Houston, TX 77002
ADDRESS FOR NOTICES:
NAME: Tanya Mcallister
----
ADDRESS: Southwest Representative Office
------- 333 Clay Street, Suite 4340
Houston, TX 77002
TEL #: 713-759-9447
-----
FAX #: 713-759-9908
-----
ADMINISTRATIVE CONTACT PERSON:
-----------------------------
NAME: Tanya McAllister
-----
ADDRESS: Southwest Representative Office
------- 901 Main Street
Houston, TX 77002
TEL #: 713-759-9447
-----
FAX #: 713-759-9908
-----
TAXPAYER ID #: 52-2257782
---------------------------
PAYMENT INSTRUCTIONS (FOR US DOLLARS):
-------------------------------------
JP Morgan/Chase New York
ABA Routing # 021-000021
To Further Credit:
Natexis Banques Populaires
Account # 544-775-330
Ref: Deepwater Investment Trust 1999-A, Houston Office
<PAGE>
THE BANK OF NOVA SCOTIA
GENERAL INFORMATION:
-------------------
DOMESTIC LENDING OFFICE: EURODOLLAR LENDING OFFICE:
----------------------- ---------------------------
Name: The Bank of Nova Scotia Name: Same as Domestic Lending
Atlanta Agency Office
Address: 600 Peachtree St. N.E., Suite 2700 Address: Same as Domestic Lending
Atlanta, GA 30308 Office
ADDRESS FOR NOTICES:
NAME: Phyllis Walker
-----
ADDRESS: 600 Peachtree ST. N.E., Suite 2700
------- Atlanta, Ga 30308
TEL #: 404-877-1552
------
FAX #: 404-888-8998
------
ADMINISTRATIVE CONTACT PERSON:
NAME: Phyllis Walker
-----
ADDRESS: 600 Peachtree ST. N.E., Suite 2700
-------- Atlanta, GA 30308
TEL #: 404-877-1552
-----
FAX #: 404-888-8998
-----
TAXPAYER ID #: 13-4941099
-------------
PAYMENT INSTRUCTIONS (FOR US DOLLARS):
-------------------------------------
The Bank of Nova Scotia, New York Agency
ABA #: 026 002 532
For Credit to BNS Atlanta Agency, Acct # 0606634
Re: Deepwater Drilling II L.L.C.
<PAGE>
SUNTRUST BANK
GENERAL INFORMATION:
-------------------
DOMESTIC LENDING OFFICE: EURODOLLAR LENDING OFFICE:
----------------------- ---------------------------
Name: Suntrust Bank Name:
Address: 303 Peachtree St. N.E., 10th Floor Address:
Atlanta, GA 30308
ADDRESS FOR NOTICES:
NAME:
---------------------------
ADDRESS:
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TEL #:
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FAX #:
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ADMINISTRATIVE CONTACT PERSON:
NAME: Roshawn Orise
ADDRESS: 303 Peachtree Street N.E., 10th Floor
Atlanta, GA 30308
TEL #: 404-230-1939
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FAX #: 404-575-2730
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TAXPAYER ID #: 58-0466330
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PAYMENT INSTRUCTIONS (FOR US DOLLARS):
-------------------------------------
Suntrust Bank
Bank Address: Same As Domestic Lending Office
ABA #: 061-000-104
Account # 9088-000-112
Account Name: Wire Clearing
Attn: Corporate Banking
Ref: Deepwater Drilling
<PAGE>
THE ROYAL BANK OF SCOTLAND PLC
GENERAL INFORMATION:
-------------------
DOMESTIC LENDING OFFICE: EURODOLLAR LENDING OFFICE:
------------------------- ---------------------------
Name: The Royal Bank of Scotland Name: Same as Domestic Lending
New York Branch Office
Address: 65 East 55th Street, 21st Floor Address: Same as Domestic Lending
New York, NY 10022 Office
ADDRESS FOR NOTICES:
NAME:
--------------------------------------
ADDRESS:
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TEL #:
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FAX #:
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ADMINISTRATIVE CONTACT PERSON:
NAME: Sheila Shaw and Juanita Baird
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ADDRESS: Same As Domestic Lending Office
-------
TEL #: 212-401-1406
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FAX #: 212-401-1494
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TAXPAYER ID #: 135 63 4601
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PAYMENT INSTRUCTIONS (FOR US DOLLARS):
-------------------------------------
Chase Manhattan Bank, New York
ABA 021000021
Account Name: NWB PLC-NY Commercial Lending
Account #: 400931052
Ref: Deepwater Drilling II L.L.C.
<PAGE>
WESTDEUTSCHE LANDESBANK GIROZENTRALE, NEW YORK BRANCH
GENERAL INFORMATION:
-------------------
DOMESTIC LENDING OFFICE: EURODOLLAR LENDING OFFICE:
------------------------- ---------------------------
Name: West LB, New York Branch Name:
Address: 1211 Avenue of the America Address:
New York, NY 10036
ADDRESS FOR NOTICES:
NAME: Violet Diamant
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ADDRESS: 1211 Avenue of the Americas
------- New York, NY 10036
TEL #: 212-852-6394
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FAX #: 212-852-5971
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ADMINISTRATIVE CONTACT PERSON:
NAME: Rahel Avigdor
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ADDRESS: 1211 Avenue of the Americas
------- New York, NY 10036
TEL #: 212-597-8347
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FAX #: 212-852-5971
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TAXPAYER ID #: 52-2283708
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PAYMENT INSTRUCTIONS (FOR US DOLLARS):
Chase Manhattan
Bank Address: 4 Chase Metro Tech Centre
ABA#: 021000021
Acct #: 9201060663
Account Name: WestLB New York
Ref: Name of Deal/Paradigm Funding
<PAGE>
SCHEDULE 3
----------
[Intentionally Omitted]
-----------------------
<PAGE>
SCHEDULE 4
----------
SUBORDINATION PROVISIONS
The payment of the principal of and interest on and all other amounts
payable under any Subordinated Debt shall be expressly subordinated in right of
payment to the payment in full of all Senior Liabilities, as hereinafter
defined, to the extent and in the manner set forth in the following Sections 1
----------
through 9 (collectively, the "Subordination Provisions").
---------
1. Subordination. Except as hereinafter expressly otherwise provided, or as
-------------
the Majority Funding Participants may expressly consent to in writing, the
payment of all Junior Liabilities (as hereinafter defined) shall be
postponed and subordinated to the payment in full of all Senior Liabilities
and no payments or other distributions whatsoever in respect of any Junior
Liabilities shall be made, nor shall any property or assets of Deepwater be
applied to the purchase or other acquisition or retirement of any Junior
Liabilities; except, that so long as no Event of Loss, Material Default, or
------
Charter Event of Default (each as defined in the Participation Agreement
referenced in Section 9 below) exists, any and all payments or other
---------
distributions in respect of the Junior Liabilities are permitted to be made
to the extent that any such payment would be permitted by the terms of the
Depository Agreement.
2. Bankruptcy, Insolvency, Etc. If an Event of Default listed in Section
---------------------------
4.1(e) or (f) of either Charter Supplement No. 1 or Charter Supplement No.
2 (each, an "Insolvency Event") occurs in respect of Deepwater, the Senior
Liabilities shall first be paid in full in accordance with their terms or
to the extent recoverable against assets of Deepwater before the holder of
any Junior Liability (each, a "Junior Creditor") shall be entitled to
receive and to retain any payment or distribution in respect of such Junior
Liability. If an Insolvency Event occurs in respect of Deepwater, each
Junior Creditor shall promptly file a claim or claims in the proceedings
related to such Insolvency Event, for the full outstanding amount of the
Junior Liability attributable to such Junior Creditor, and shall use
commercially reasonable efforts to cause said claim or claims to be
approved and shall cause all payments and other distributions in respect
thereof to be made directly to Depository. If an Insolvency Event occurs in
respect of Deepwater, Deepwater shall agree that Depository (if the
Depository Agreement is in full force and effect, otherwise Administrative
Agent) may, at its sole discretion, in the name of Deepwater, any Junior
Creditor or otherwise, demand, sue for, collect, receive and receipt for
any and all such payments or distributions, and file, prove and vote or
consent in any such proceedings with respect to any and all claims of any
Junior Creditor relating to the Junior Liabilities.
3. Payments Held in Trust. If any Junior Creditor receives any payment or
----------------------
other distribution of any kind or character from Deepwater, or from any
other source whatsoever, in respect of any of the Junior Liabilities, other
than as expressly permitted by the terms hereof, such payment or other
distribution shall be received in trust for the Funding Participants and
promptly turned over by the Junior Creditor to Depository (if the
Depository Agreement is in full force and effect, otherwise to
Administrative Agent).
<PAGE>
All Junior Creditors will mark their books and records so as clearly to
indicate that the Junior Liabilities are subordinated in accordance with
these Subordination Provisions and will execute such further documents or
instruments and take such further action as Depository (if the Depository
Agreement is in full force and effect, otherwise Administrative Agent) may
reasonably from time to time request to carry out the intent of these
Subordination Provisions.
4. Application of Payments; No Subrogation. All payments and distributions
---------------------------------------
received by any Beneficiary (as hereinafter defined) in respect to the
Junior Liabilities, to the extent received in or converted into cash, may
be applied by such Beneficiary first to the payment of any and all expenses
(including reasonable attorneys' fees and out-of-pocket expenses) paid or
incurred by such Beneficiary in enforcing these Subordination Provisions or
in endeavoring to collect or realize upon any of the Junior Liabilities or
any security therefor, and any balance thereof shall, solely as between the
Junior Creditors and the Beneficiaries, if held by either Trustee or a
Funding Participant while the Depository Agreement is in full force and
effect, be paid to Depository and shall be applied in accordance with the
Depository Agreement and, if paid to Administrative Agent, shall be applied
toward the payment of, or retained as security for, the discharge of Senior
Liabilities remaining unpaid to the extent recoverable against assets of
Deepwater; provided, that notwithstanding any such payments or
distributions received by any Beneficiary in respect of the Junior
Liabilities and so applied by any such Beneficiary toward the payment of
Senior Liabilities, the Junior Creditors shall be subrogated to the then
existing rights of such Beneficiary, if any, in respect of the Senior
Liabilities only at such time as these Subordination Provisions shall have
been discontinued and Beneficiaries shall have received payment of the full
amount of the Senior Liabilities and all obligations of the Funding
Participants to fund Advances shall have terminated.
5. Waivers by the Junior Creditors. The Junior Creditors hereby waive: (a)
-------------------------------
notice of acceptance by any Beneficiary of these Subordination Provisions;
(b) notice of the existence, creation, non-payment, amendment, supplement,
increase or waiver of all or any of the Senior Liabilities; and (c) all
diligence in collection or protection of, or realization upon, the Senior
Liabilities (or any portion thereof) or any security therefore.
6. Obligations of the Junior Creditors. The Junior Creditors will not, without
-----------------------------------
prior written consent of the Majority Funding Participant: (a) except as
permitted by the Participation Agreement, transfer or assign, or
subordinate to any Liabilities other than the Senior Liabilities, any
Junior Liabilities or any rights in respect thereof; (b) take any
collateral security for any Junior Liabilities; (c) commence, or join with
any other creditor in commencing, any bankruptcy, reorganization or
insolvency proceedings with respect to Deepwater; (d) amend, supplement or
modify any of the terms or provisions of any instrument or document
evidencing any of the Junior Liabilities in a manner inconsistent herewith
or prohibited by the Participation Agreement; or (e) upon the occurrence
and continuation of any Event of Default in respect of any of the Senior
Liabilities, attempt to enforce or collect any of the Junior Liabilities or
any rights in respect thereof prior to the payment in full of all Senior
Liabilities.
<PAGE>
7. Rights of Beneficiaries. Beneficiary in accordance with the terms of the
-----------------------
Transaction Documents may, from time to time, whether before or after any
discontinuance of these Subordination Provisions, at their sole discretion
and without notice to the Junior Creditors, take any or all of the
following actions: (a) retain or obtain a security interest in any property
to secure any of the Senior Liabilities (provided that this clause (a) does
not and shall not be deemed to constitute a grant of, or consent to, a lien
or security interest on any property of the Junior Creditors); (b) retain
or obtain the primary or secondary obligations of any other obligor or
obligors with respect to any of the Senior Liabilities; (c) extend or renew
for one or more periods (whether or not longer than the original period),
alter or exchange any of the Senior Liabilities, or release or compromise
any obligation of any nature of any obligor with respect to any of the
Senior Liabilities; (d) release its security interest in, or surrender,
release or permit any substitution or exchange for all or any part of any
property (provided, that this clause (d) does not and shall not be deemed
to constitute a grant of, or consent to, a lien or security interest on any
property of Deepwater) securing any of the Senior Liabilities, or extend or
renew for one or more periods (whether or not longer than the original
period), or release, compromise, alter or exchange any obligations of any
nature of any obligor with respect to any such property (provided that this
clause (d) does not and shall not be deemed to constitute an agreement to
release, compromise, alter or exchange any obligations of any nature of the
Junior Creditors with respect to any such property of the Junior
Creditors); and (e) release, compromise, alter or exchange any guarantee
obligations or other obligations of any nature of any obligor under the
Transaction Documents or any documents to which Deepwater is a party.
8. Transfer of Senior Liabilities. Subject to the provisions of the
------------------------------
Participation Agreement and the other Transaction Documents, any
Beneficiary may from time to time, whether before or after any
discontinuance of these Subordination Provisions, without notice to
Deepwater (subject to the express provisions of the Participation
Agreement) or the Junior Creditors, assign or transfer any or all of the
Senior Liabilities, or any interest therein, and, notwithstanding any such
assignment or transfer or any subsequent assignment or transfer thereof,
such Senior Liabilities shall be and remain Senior Liabilities for the
purposes of these Subordination Provisions, and every immediate and
successive assignee or transferee of any of the Senior Liabilities or of
any interest therein shall, to the extent of the interest of such assignee
or transferee in the Senior Liabilities, be entitled to the benefits of
these Subordination Provisions, to the same extent as if such assignee or
transferee were the transferring Beneficiary to the extent of the interest
transferred.
9. Definitions. Unless otherwise defined herein, terms used herein have the
-----------
meanings assigned to such terms in Appendix 1 of that certain Amended and
Restated Participation Agreement, dated the date hereof (the "Participation
-------------
Agreement"), among Deepwater Drilling II L.L.C., a Delaware limited
---------
liability company, Wilmington Trust FSB, a Federal savings bank, not in its
individual capacity except as expressly provided, but solely as trustee
under the Investment Trust Agreement, Deepwater Investment Trust 1999-A, a
Delaware business trust, Wilmington Trust Company, a Delaware banking
corporation, not in its individual capacity except as expressly provided,
but solely as Charter Trustee, various financial institutions, as
Certificate Purchasers, Hatteras Funding
<PAGE>
Corporation, as the Conduit (Hatteras), Liberty Street Funding Corp., as
the Conduit (Liberty), Paradigm Fundings LLC, as the Conduit (Paradigm),
various financial institutions, as Liquidity Purchasers, Bank of America
N.A., as Administrative Agent, the Investment Trust Beneficiary, various
Administrators and Liquidity Agents, solely with respect to Sections 2.15,
9.4, 12.13(b) and 12.13(d) thereof, Transocean Sedco Forex Inc. and Conoco
Inc., and solely with respect to Sections 5.2 and 6.4, RBF Deepwater
Exploration II Inc. and Conoco Development II Inc.
a) "Junior Liabilities" means all Liabilities of
-------------------
Deepwater under or in connection with any
Subordinated Debt.
b) "Liabilities" means collectively all
-----------
obligations of Deepwater, howsoever created,
arising or evidenced, whether direct or indirect,
absolute or contingent, or now or hereafter
existing, or due or to become due.
c) "Senior Liabilities" means collectively all
-------------------
Liabilities owed to any of the Beneficiaries under
the Transaction Documents; it being expressly
understood and agreed that the term "Senior
------
Liabilities", as used herein, shall include any
-----------
and all Charter Return or interest accruing on any
of the Senior Liabilities after the commencement
of any proceedings referred to in Section 2,
---------
notwithstanding any provision or rule of law which
might restrict the rights of any Beneficiary, as
against Deepwater or anyone else, to collect
Charter Return or interest.
d) "Beneficiary" means any or all of the Charter
-----------
Trustee, the Investment Trustee, the Investment
Trust Beneficiary, the Investment Trust, any
Agent, the Depository or any Funding Participant
or any other Indemnified Party (as defined in the
Participation Agreement).
<PAGE>
Transaction Documents
----------------------
(i) the Participation Agreement;
(ii) the Charter Trust Agreement;
(iii) the Investment Trust Agreement;
(iv) the Deepwater Hedging Agreements, if any;
(v) the Hedging Agreements, if any;
(vi) the Drilling Consent;
(vii) the Master Charter;
(viii) Charter Supplement No. 1;
(ix) Charter Supplement No. 2;
(x) the Security Documents;
(xi) the Series A Charter Trust Certificates;
(xii) the Series B Charter Trust Certificate;
(xiii) Loan Agreement;
(xiv) [Intentionally Omitted];
(xv) Fee Letters;
(xvi) Notes
(xvii) the Conoco Guaranty; and
(xviii) the Transocean Guaranty.