Participation Agreement [Appendix I] - Transocean Inc.
APPENDIX 1
to
Participation Agreement
DEFINITIONS AND INTERPRETATION
I. RULES OF INTERPRETATION
A. General Rules of Interpretation. In each Transaction Document,
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unless a clear contrary intention appears:
(i) the singular number includes the plural number and vice versa;
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(ii) reference to any Person (individually or in any particular
capacity) includes such Person's legal representatives, successors and
assigns but, if applicable, only if such legal representatives, successors
and assigns are permitted by the Transaction Documents, and reference to a
Person in a particular capacity excludes such Person in any other capacity
or individually;
(iii) reference to any gender includes the other gender;
(iv) reference to any agreement (including any Transaction Document),
document or instrument means such agreement, document or instrument as
amended or modified and in effect from time to time in accordance with the
terms thereof and, if applicable, the terms of the other Transaction
Documents and reference to any promissory note, certificate or other
instrument includes any promissory note, certificate or other instrument
which is an extension or renewal thereof or a substitute or replacement
therefor;
(v) reference to any Applicable Law means such Applicable Law as
amended, modified, codified, replaced or reenacted, in whole or in part,
and in effect from time to time, including rules and regulations
promulgated thereunder and reference to any section or other provision of
any Applicable Law means that provision of such Applicable Law from time to
time in effect and constituting the substantive amendment, modification,
codification, replacement or reenactment of such section or other
provision;
(vi) reference in any Transaction Document to any Article, Section,
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Appendix, Schedule or Exhibit means such Article or Section thereof or
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Appendix, Schedule or Exhibit thereto;
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(vii) "hereunder", "hereof", "hereto" and words of similar import
shall be deemed references to a Transaction Document as a whole and not to
any particular Article, Section or other provision thereof;
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(viii) "including" (and with correlative meaning "include") means
including without limiting the generality of any description preceding such
term; and
(ix) relative to the determination of any period of time, "from" means
"from and including" and "to" means "to and excluding".
B. Accounting Terms. In each Transaction Document, unless expressly
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otherwise provided, accounting terms shall be construed and interpreted, and
accounting determinations and computations shall be made, in accordance with
GAAP.
C. Legal Representation of the Parties. The Transaction Documents
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were negotiated by the parties with the benefit of legal representation and any
rule of construction or interpretation otherwise requiring the Transaction
Document to be construed or interpreted against any party shall not apply to any
construction or interpretation hereof or thereof.
D. Defined Terms. Unless a clear contrary intention appears, terms
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defined herein have the respective indicated meanings when used in each
Transaction Document.
II. DEFINITIONS
"Account" means each of the Event of Loss Proceeds Account, the
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Reimbursement and Proceeds Account, the Operating Account, the Permitted Contest
Reserve Account, the Drillship Sales Proceeds Account and the Termination
Proceeds Account.
"Account Collateral" has the meaning specified in Section 2.2 of the
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Depository Agreement.
"Accredited Investor" has the meaning specified in Rule 501(a) of the
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Securities Act.
"Acquiring Member" has the meaning specified in Section 9.5 of the
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Participation Agreement.
"Acquiror" means an entity (i) into which another entity is merged or (ii)
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that acquires all or substantially all of the assets or outstanding Voting Stock
of a Person.
"Actual Knowledge" means the actual awareness of a Responsible Officer.
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"Adjustment Date" means the Initial Charter Margin Adjustment Date and
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every sixth Charter Hire Payment Date thereafter.
"Administrative Agent" has the meaning specified in Section 11.1(a) of the
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Participation Agreement.
"Administrator (Hatteras)" has the meaning specified in the preamble to the
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Loan Agreement.
"Administrator (Liberty)" has the meaning specified in the preamble to the
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Loan Agreement.
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"Administrator (Paradigm)" has the meaning specified in the preamble to the
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Loan Agreement.
"Administrators" means each of the Administrator (Hatteras), the
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Administrator (Liberty) and the Administrator (Paradigm).
"Advance" has the meaning specified in Section 2.3(b) of the Participation
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Agreement.
"Affected Funding Participant" is defined in Section 7.7 of the
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Participation Agreement.
"Affiliate" means, when used with respect to any Person, any other Person
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directly or indirectly controlling or controlled by or under direct or indirect
common control with such Person. As used in this definition, the term "control"
shall mean (including the correlative meanings of the terms "controlling,"
"controlled by" and "under common control with"), as used with respect to any
Person, the possession directly or indirectly, of the power to direct or cause
the direction of the management policies of such Person, whether through the
ownership of voting securities or by contract or otherwise.
"After Tax Basis" means, with respect to any payment to be received, the
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amount of such payment increased so that, after deduction of the amount of all
Taxes required to be paid by the recipient calculated at the maximum United
States federal rates then generally applicable to large widely held corporations
and at the marginal state and local rates certified by the recipient as then
applicable to such recipient (less any tax savings realized and the present
value of any tax savings projected to be realized by the recipient as a result
of the payment of the indemnified amount), with respect to the receipt by the
recipient of such amount, such increased payment (as so reduced) is equal to the
payment otherwise required to be made.
"Agents" means the Administrative Agent, the Liquidity Agents and the
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Administrators.
"Affected Party" means each Funding Participant, each permitted assignee
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thereof, each Program Support Provider of each Conduit, and each Affiliate of
the foregoing Persons.
"Alternate Rate Funding" means any Contribution, Advance or Liquidity
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Purchase for which the Series A Return, the Series B Return or any Return Rate,
as applicable, is calculated with reference to an Alternate Rate, as applicable.
"Alternate Rate" means the Alternate Rate (Hatteras), the Alternate Rate
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(Liberty) or the Alternate Rate (Paradigm).
"Alternate Rate (Hatteras)" means, for any day, the higher of: (a) 0.50%
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per annum above the latest Federal Funds Rate and (b) the rate of interest in
effect for such day as publicly announced from time to time by Bank of America
("BofA"), as its "reference rate." (The reference rate is a rate set by BofA
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based upon various factors including BofA's costs and desired return, general
economic conditions and other factors, and is used as a reference point for
pricing some loans, which may be priced at, above or below such announced rate.)
Any change in the reference rate announced by BofA shall take effect at the
opening of business on the day specified in the public announcement of such
change.
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"Alternate Rate (Liberty)" means, for any day, the higher of: (a) 0.50% per
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annum above the latest Federal Funds Rate and (b) the rate of interest in effect
for such day as publicly announced from time to time by Bank of Nova Scotia
("BNS"), as its "reference rate." (The reference rate is a rate set by BNS based
upon various factors including BNS's costs and desired return, general economic
conditions and other factors, and is used as a reference point for pricing some
loans, which may be priced at, above or below such announced rate.) Any change
in the reference rate announced by BNS shall take effect at the opening of
business on the day specified in the public announcement of such change.
"Alternate Rate (Paradigm)" means, for any day, the higher of: (a) 0.50%
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per annum above the latest Federal Funds Rate and (b) the rate of interest in
effect for such day as publicly announced from time to time by Westdeutsche
Landesbank Girozentrale, New York ("West LB"), as its "reference rate." (The
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reference rate is a rate set by West LB based upon various factors including
West LB's costs and desired return, general economic conditions and other
factors, and is used as a reference point for pricing some loans, which may be
priced at, above or below such announced rate.) Any change in the reference
rate announced by West LB shall take effect at the opening of business on the
day specified in the public announcement of such change.
"Applicable Law" means all applicable laws, rules, regulations (including
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Environmental Laws), statutes, treaties, conventions (including, if applicable,
the Safety of Life at Sea Convention) codes, ordinances, permits, certificates,
orders and licenses of, and interpretations by, all Government Authorities, and
applicable judgments, decrees, injunctions, writs, orders or like action of any
court, arbitrator or other administrative, judicial or quasi-judicial tribunal
agency of competent jurisdiction (including those pertaining to health and
safety and those pertaining to the construction, use or operation of the Vessel,
the OFE and any Modifications).
"Applicable Liquidity Purchasers" means, (i) with respect to the Conduit
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(Hatteras), the Liquidity Purchasers (Hatteras), (ii) with respect to the
Conduit (Liberty), the Liquidity Purchasers (Liberty), with respect to the
Conduit (Paradigm), the Liquidity Purchasers (Paradigm).
Applicable Office" means, with respect to each Funding Participant, the
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office, branch or Affiliate of such Funding Participant specified as its
"Applicable Office" to Deepwater, the Charter Trustee and the Investment Trust.
"Applicable Percentage" means:
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(i) with respect to payments made or obligations guaranteed by (A)
Transocean or its Affiliates (other than Deepwater) or (B) Deepwater
pursuant to the terms of Charter Supplement No. 1, 60%; or
(ii) with respect to payments made or obligations guaranteed by (A)
Conoco or its Affiliates (other than Deepwater) or (B) Deepwater pursuant
to the terms of Charter Supplement No. 2, 40%.
"Appraisal" means, with respect to the Drillship, an appraisal delivered on
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the Closing Date, prepared by the Appraiser.
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"Appraiser" means American Appraisal Incorporated.
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"Assigned Contract" has the meaning specified in the seventh recital to the
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Deepwater Assignment.
"Assumption Cure Right" has the meaning set forth in Section 9(a) of the
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Drilling Consent.
"Bank of America" means Bank of America, N.A. and its Affiliates.
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"Bankruptcy Default" means a Charter Default described in Section 4.1(e) or
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(f) of either Charter Supplement No. 1 or Charter Supplement No. 2.
"Base Charter Term" means the period commencing on the Closing Date and
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ending on the fifth anniversary of the Day Rate Commencement Date.
"Base Rate" means a rate per annum equal to LIBOR.
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"Base Rate Funding" means any Contribution, Advance or Liquidity Purchase
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for which the Series A Return, Series B Return or any Return Rate, as
applicable, is calculated with reference to the Base Rate.
"Basic Hire" means the sum of (x) the principal amortization payment due
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and payable on the applicable Charter Hire Payment Date as set forth on Schedule
I to the Master Charter and (y) all accrued and unpaid Charter Return then due
and payable.
"Beneficial Owner Amount" has the meaning specified in Section 3.2 of the
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Charter Trust Agreement.
"Beneficial Owners" means those financial institutions who are parties to
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the Charter Trust Agreement and identified therein as "Beneficial Owners".
"Beneficial Participant" has the meaning specified in Section 3.8(h) of the
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Charter Trust Agreement.
"Board of Governors" means the Board of Governors of the Federal Reserve
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System of the United States of America.
"Borrower" has the meaning specified in the preamble to the Loan Agreement.
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"Borrower Events" has the meaning specified in Section 6.2 of the Loan
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Agreement.
"Builder" means, collectively, Samsung Heavy Industries Co., Ltd., a Korean
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corporation, and Samsung Corporation, a Korean corporation, as builder of the
Vessel.
"Business Day" means (i) except as set forth in clause (ii) below, any day
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excluding (x) Saturday, (y) Sunday, and (z) any day on which banks in New York,
New York, Wilmington, Delaware, Charlotte, North Carolina or Houston, Texas, are
authorized by law to close, and (ii) with respect to all notices and
determinations in connection with and payments of Charter
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Return any day which is a Business Day described in (i) above and which is also
a day for trading by and between banks in U.S. dollar deposits in the London
interbank Eurodollar market.
"Casualty" means any damage or destruction of all or any portion of the
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Drillship as a result of a fire or other casualty aggregating more than
$2,000,000 to repair or replace, which does not constitute an Event of Loss.
"CERCLA" means the Comprehensive Environmental Response, Compensation, and
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Liability Act of 1980, 42 U.S.C. Sec. 9601 et seq., and its implementing
regulations and amendments.
"Certificate" means each Series A Charter Trust Certificate and the Series
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B Charter Trust Certificate.
"Certificate Margin" means 175.0 basis points per annum so long as the
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ratings of both Transocean and Conoco are at or above Investment Grade or
otherwise 225.0 basis points per annum.
"Certificate Purchaser" means those financial institutions who are
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identified in the Charter Trust Agreement as "Beneficial Owners".
"Certificate Purchaser Amount" means, with respect to each Certificate
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Purchaser, at any given time, the aggregate amount of all Contributions made by
such Certificate Purchaser plus accrued but unpaid Postponement Yield due to
such Certificate Purchaser, if any, minus the amount of any distributions paid
to such Certificate Purchaser in reduction of the Charter Balance.
"Certificate Purchaser Balance" means, at any given time, the aggregate of
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all Certificate Purchaser Amounts.
"Certificate Purchaser Commitment" means, with respect to each Certificate
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Purchaser, the amount set forth on Schedule I to the Charter Trust Agreement
opposite the name of each Certificate Purchaser, which amount may be adjusted
pursuant to Section 7.7, 7.9 or 9.1 of the Participation Agreement.
"Certificate Purchaser Commitment Percentage" means, with respect to each
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Certificate Purchaser, the percentage beneficial interest held by such
Certificate Purchaser under the Charter Trust Agreement from time to time
determined in accordance with the Charter Trust Agreement.
"Certificate Return Rate" means the Base Rate plus the Certificate Margin
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or, to the extent that the Base Rate is unavailable or illegal, the Alternate
Rate plus the Certificate Margin.
"Change of Control" means (i) as to any Person (including Conoco and
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Transocean), a sale, assignment or transfer by its Affiliates of all or
substantially all of the assets of such Person and its Subsidiaries taken as a
whole (whether in a single transaction or a series of related transactions) to
any "person" or "group" (as the ultimate purchaser, assignee or transferee)
within the meaning of Section 13(d)(3) and Section 14(d)(2) of the Securities
Exchange Act of 1934 other than to its Affiliates; (ii) as to any Person
(including Conoco and Transocean), its
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Affiliates directly or indirectly cease to beneficially own more than 50% of the
outstanding voting stock of such Person; (iii) after the occurrence of the event
described in clause (ii), the first date on which the individuals who are
directors of the relevant entity and whose election or nomination for election
by the stockholders of the relevant entity is approved, or who were elected by
the affirmative vote of, at least two-thirds of the directors who were members
of the board of directors of the relevant entity at the time of such nomination
or election, will cease to constitute a majority of the board of directors of
the relevant entity or its successor by merger, consolidation or sale of assets;
or (iv) with respect to any Person, the liquidation or dissolution of such
Person. For purposes of this definition, relevant entity means either Conoco or
Transocean, or, if there is a Parent of such respective Person, the Parent;
provided that none of the merger of Conoco with Phillips Petroleum Company, any
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acquisition of assets or securities related thereto, any related change of
directors of any entity or related dissolution of any Person shall be a Change
of Control.
"Change of Control Prepayment Amount" has the meaning specified in Section
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9.4 of the Participation Agreement.
"Charter" means both charters created by the Master Charter, as
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supplemented by Charter Supplement No. 1 and Charter Supplement No. 2.
"Charter Balance" means, at any given time, the Certificate Purchaser
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Balance plus the Lender Balance.
"Charter Commencement Date" means the Closing Date.
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"Charter Default" means any event or condition which, with the lapse of
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time or the giving of notice, or both, would constitute a Charter Event of
Default.
"Charter Event of Default" has the meaning specified in Section 16.1 of the
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Master Charter.
"Charter Extension Option" has the meaning specified in Section 20.2 of the
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Master Charter.
"Charter Hire" means Basic Hire plus Supplemental Hire.
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"Charter Hire Payment Date" means the last Business Day of each calendar
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month commencing on the Initial Charter Hire Payment Date, and the last day of
the Charter Term.
"Charter Hire Payment Date Certificate" has the meaning specified in
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Section 3.4(b) of the Depository Agreement.
"Charter Margin" means either or both of the Certificate Margin and the
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Loan Margin.
"Charter Residual Risk Amount" means 18% of the Charter Balance at the
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commencement of the Base Charter Term.
"Charter Return" means the aggregate of the Series A Return and the Series
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B Return.
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"Charter Supplement" means Charter Supplement No. 1 or Charter Supplement
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No. 2.
"Charter Supplement No. 1" means that Amended and Restated Charter
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Supplement No. 1 dated as of the Documentation Date, between the Charter Trustee
and Deepwater.
"Charter Supplement No. 1 Event of Default" has the meaning specified in
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Section 4.1 of Charter Supplement No. 1.
"Charter Supplement No. 1 Payment Date" has the meaning specified in
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Section 3.1 of Charter Supplement No. 1.
"Charter Supplement No. 2" means that Amended and Restated Charter
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Supplement No. 2 dated as of the Documentation Date, between the Charter Trustee
and Deepwater.
"Charter Supplement No. 2 Event of Default" has the meaning specified in
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Section 4.1 of Charter Supplement No. 2.
"Charter Supplement No. 2 Payment Date" has the meaning specified in
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Section 3.1 of Charter Supplement No. 2.
"Charter Supplement Prepayment Amount" has the meaning specified in Section
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4.2(c) of the Depository Agreement.
"Charter Term" has the meaning specified in Section 2.3 of the Master
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Charter.
"Charter Trust" means the trust created pursuant to the Charter Trust
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Agreement.
"Charter Trust Agreement" means that Amended and Restated Charter Trust
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Agreement (Deepwater Charter Trust 1999-A), dated as of the Documentation Date,
between the Charter Trustee, the Certificate Purchasers and the Investment
Trust.
"Charter Trust Certificates" means the Series A Charter Trust Certificates
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and the Series B Charter Trust Certificate.
"Charter Trust Company" has the meaning specified in the preamble to the
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Charter Trust Agreement.
"Charter Trust Estate" has the meaning specified in Section 2.2 of the
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Charter Trust Agreement.
"Charter Trustee" has the meaning specified in the preamble to the
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Participation Agreement.
"Charter Trustee Assignment" means the Amended and Restated Charter Trustee
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Assignment, dated as of the Documentation Date, between the Charter Trustee, the
Investment Trustee and the Hedging Agreement Counterparties (if any).
"Claims" has the meaning specified in Section 10.1 of the Participation
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Agreement.
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"Classification Society" has the meaning specified in Section 10.1 of the
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Master Charter.
"Closing Date" means August 31, 1999.
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"Code" means the Internal Revenue Code of 1986, as amended.
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"Collateral" means the Charter Trustee's rights in the Drillship, the
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Account Collateral, the Collateral Documents and all other assets or property
over which a Lien or security interest has purported to have been granted under
the Security Documents.
"Collateral Documents" has the meaning specified in Section 2.1 of the
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Depository Agreement.
"Commercial Paper Account" has the meaning specified in Section 2.2 of the
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LAPA (Hatteras).
"Commercial Paper Notes" means the Commercial Paper Notes (Hatteras), the
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Commercial Paper Notes (Paradigm) and the Commercial Paper Notes (Liberty).
"Commercial Paper Notes (Hatteras)" shall mean commercial paper notes of
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the Conduit (Hatteras) issued pursuant to and in accordance with its program
documents.
"Commercial Paper Notes (Liberty)" shall mean commercial paper notes of the
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Conduit (Liberty) issued pursuant to and in accordance with its program
documents.
"Commercial Paper Notes (Paradigm)" shall mean commercial paper notes of
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the Conduit (Paradigm) issued pursuant to and in accordance with its program
documents.
"Commitment" means each or all of the Certificate Purchaser Commitment, the
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Liquidity Purchaser Commitment Amount and the Facility Loan Commitment Amount.
"Competitor" means a Person who either (i) is engaged in the exploration,
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development, production, refinement, marketing or retailing of crude oil,
petroleum products, natural gas or gas liquids or in providing marine contract
drilling services for oil, gas or other hydrocarbons or (ii) has a material
interest (whether held directly or indirectly) in, or is otherwise an Affiliate
of, a Person that is engaged in the exploration, development, production,
refinement, marketing or retailing of crude oil, petroleum products, natural gas
or gas liquids or in providing marine contract drilling services for oil, gas or
other hydrocarbons; provided, however, that a Person who is an institutional
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investor or lender which is a passive investor or lender in the financing of
equipment or facilities used in the exploration, development, production,
refinement, marketing or retailing of crude oil, petroleum products, natural gas
or gas liquids or in providing marine contract drilling services for oil, gas or
other hydrocarbons or a passive investor in any Person described in clauses (i)
or (ii) above shall not, solely by the reason of such investment or loan
(including by reason of foreclosing on any facilities used by such Person), be
deemed to be a "Competitor".
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"Condemnation" means (x) the permanent and complete condemnation,
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requisition, confiscation, arrest, seizure or other taking of title or leasehold
interest to the Drillship or any
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transfer made in lieu of any such actual or threatened action or proceeding or
(y) any condemnation other than a requisition of temporary use or requisition of
use for a period scheduled to last beyond the end of the Charter Term or which
in fact is continuing on the last day of the Charter Term even if not scheduled
to last beyond the Charter Term, in either case resulting in the loss of use or
possession of substantially all of the Drillship. A "Condemnation" shall be
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deemed to have occurred on the earliest of the dates that use, title or a
leasehold interest is taken.
"Conduit Advance" has the meaning specified in Section 2.3(b) of the
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Participation Agreement.
"Conduit Fee Letter" means that certain fee letter dated as of the
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Documentation Date made by Deepwater for the benefit of the Conduit (Hatteras),
the Conduit (Paradigm) and the Conduit (Liberty).
"Conduit (Hatteras)" means Hatteras Funding Corporation.
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"Conduit (Liberty)" means Liberty Street Funding Corp.
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"Conduit Loan" has the meaning specified in Section 2.1 of the Loan
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Agreement.
"Conduit Loan Amount" means each of the Conduit Loan Amount (Hatteras),
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Conduit Loan Amount (Liberty) and Conduit Loan Amount (Paradigm).
"Conduit Loan Amount (Hatteras)" means $126,470,589.
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"Conduit Loan Amount (Liberty)" means $50,000,000.
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"Conduit Loan Amount (Paradigm)" means $52,076,267.
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"Conduit Loan Events of Default" has the meaning specified in Section 6.1
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of the Loan Agreement.
"Conduit Notes" has the meaning specified in Section 2.3(a) of the Loan
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Agreement.
"Conduit (Paradigm)" means Paradigm Funding LLC.
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"Conduit Portion" means a fraction, the numerator of which is the aggregate
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face amount of Notes held by a Conduit and the denominator of which is the
aggregate amount of all Notes then outstanding.
"Conduits" means each of the Conduit (Hatteras), the Conduit (Paradigm) and
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the Conduit (Liberty).
"Conoco" means Conoco Inc. (formerly Conoco Energy Company), a Delaware
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corporation.
"Conoco Charter" means the charter created by the Master Charter, as
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supplemented by Charter Supplement No. 2.
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"Conoco Drilling Contract" means that Deepwater Drillship Contract, dated
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as of April 30, 1997, as assigned, amended and restated, between Frontier
Deepwater Drilling Inc. and Deepwater.
"Conoco Drilling Contract Guaranty" means the Amended and Restated
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Deepwater Drillship Project, Conoco Inc. Guaranty, dated as of August 31, 1999,
given by Conoco Inc. in favor of Deepwater.
"Conoco Drilling Party" means Frontier Deepwater Drilling Inc.
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"Conoco Guaranty" means the Amended and Restated Conoco Guaranty, dated as
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of the Documentation Date, given by Conoco in favor of the Trustees, the
Investment Trust, the Administrative Agent, the Funding Participants, the
Hedging Agreement Counterparties, if any, and the other beneficiaries named
therein.
"Conoco Series A Charter Trust Certificate" means each certificate issued
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to a Beneficial Owner from the Charter Trustee pursuant to Section 2.4(a) of the
Participation Agreement and in accordance with the Charter Trust Agreement to
evidence 40% of the Certificate Purchaser Amount of each such Beneficial Owner.
"Conoco Usage" means the number of days, rounded to the nearest day, the
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Drillship has been utilized under the Conoco Drilling Contract.
"Construction Contract" means the Contract for Construction and Sale of a
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103,000 Metric Tons Displacement Drillship (Hull No. 1231), dated February 7,
1997, between the Buyer and the Builder.
"Consumer Price Index" means the Consumer Price Index of all Items for all
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Urban Consumers (1981-1983 = 100) published by the Bureau of Labor Statistics of
the United States Department of Labor, as reported by the Wall Street Journal.
If for any reason the Bureau of Labor Statistics does not furnish the Consumer
Price Index, the parties instead shall mutually select, accept and use such
other index or comparable statistics on the cost of living in Washington, D.C.
that is computed and published by an agency of the United States or a
responsible financial periodical of recognized authority.
"Contract Payments" has the meaning specified in Section 6 of the Deepwater
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Assignment.
"Contribution" has the meaning specified in Section 2.3(a) of the
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Participation Agreement.
"Counterpart Series A Charter Trust Certificate" has the meaning specified
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in Section 2.4(c) of the Participation Agreement.
"Coverage Ratio" means, (i) as of any Charter Hire Payment Date occurring
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on or prior to the third Charter Hire Payment Date, the ratio of (x) the
projected Revenues for the next three calendar months (beginning with the month
following the month in which such Charter Hire Payment Date occurs) to (y) the
aggregate amount of all payments (including projected
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Operation and Maintenance Expenses) that will be required to be made under
clauses "first" through "ninth" of Section 3.4(b) of the Depository Agreement
during such three-month period, and (ii) thereafter, as of any Charter Hire
Payment Date, the ratio of (A) the actual Revenues for the immediately preceding
three calendar months (including the month in which such Charter Hire Payment
Date occurs) to (B) the aggregate amount of all payments under clauses "first"
through "eighth" of Section 3.4(b) of the Depository Agreement that were
actually made during such three-month period or that would have been made during
such period if there had been sufficient funds in the Operating Account at the
time such payments were required to be made.
"Covered Assets" shall mean, with respect to each Conduit, the loans made
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by such Conduit to the Investment Trust and notes related thereto.
"CP Rate" for any Return Period for any Conduit Loan means, the per annum
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rate equivalent to the "weighted average cost" (as defined below) related to the
issuance of the Commercial Paper Notes by the applicable Conduit that are
allocated, in whole, or in part, by such Conduit or its Administrator to fund or
maintain such Conduit Loan (and which may also be allocated in part to the
funding of other assets of such Conduit); provided, however, that if any
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component of such rate is a discount rate, in calculating the "CP Rate" for such
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Conduit Loans for such Return Period, a Conduit shall for such component use the
rate resulting from converting such discount rate to an interest bearing
equivalent rate per annum. As used in this definition, a Conduit's "weighted
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average cost" shall consist of (w) the daily weighted average interest rate (or
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discount) paid to purchasers of the Commercial Paper Notes, together with the
Dealer Fee, to the extent allocated, in whole or in part, to such Commercial
Paper Notes by such Conduit or its Administrator, (x) certain documentation and
transaction costs associated with the issuance of such Commercial Paper Notes,
(y) any incremental out-of-pocket carrying costs incurred with respect to
Commercial Paper Notes allocated to such Conduit Loans and maturing on dates
other than those on which corresponding funds are received by the Conduit and
(z) the actual interest rate paid on other borrowings by the Conduit, including
borrowings to fund small or odd dollar amounts are not easily accommodated in
the commercial paper market.
"Credit Support" means (i) any direct or indirect payment by one Drilling
---------------
Party or its Affiliates to the other Drilling Party for the purpose of allowing
such payee Drilling Party to meet its obligations under its respective Drilling
Contract or (ii) any guaranty or other credit support by one Drilling Party or
its Affiliates of the obligations of the other Drilling Party or its Affiliates
for the purpose of allowing such benefited Drilling Party to meet its
obligations under its respective Drilling Contract.
"Cross Charter Default" means, with respect to a Charter Supplement, the
-----------------------
Charter Event of Default listed in Section 4.1(k) thereof.
"Day Rate" means the daily rate payable to Deepwater under the Drilling
---------
Contracts for the use of the Drillship.
"Day Rate Commencement Date" means March 31, 1999.
-----------------------------
"Dealer Fee" has the meaning specified in each related Conduit Fee Letter.
-----------
"Deepwater" has the meaning specified in the preamble to the Participation
---------
Agreement.
12
<PAGE>
"Deepwater Assignment" means the Assignment Agreement, dated as of the
---------------------
Closing Date, between Deepwater and the Charter Trustee.
"Deepwater Hedging Agreements" has the meaning specified in Section 6.5 of
-----------------------------
the Participation Agreement.
"Deepwater Obligations" means all of Deepwater's obligations (monetary or
----------------------
otherwise) arising under, or in connection with, the Transaction Documents.
"Deepwater Person" means Deepwater, any permitted subcharterer or any other
----------------
Person (other than the Charter Trustee, the Investment Trustee, the Investment
Trust or any Funding Participant) using or in possession of the Drillship or any
officer, director, employee or agent of any of the foregoing.
"Default" means a Charter Default.
-------
"Defaulted Amount" has the meaning specified in Section 7.9 of the
-----------------
Participation Agreement.
"Defaulting Certificate Purchaser" has the meaning specified in Section 7.9
--------------------------------
of the Participation Agreement.
"Defaulting Drilling Party" means (i) Frontier Deepwater Drilling Inc.,
---------------------------
where a Charter Supplement No. 2 Event of Default exists (but not a Charter
Supplement No.1 Event of Default, other than a Cross Charter Default thereunder)
or would exist but for the exercise of the Assumption Cure Right, the
Non-Assumption Cure Right or the provision of Credit Support (except such
Charter Event of Default arising solely from the Cross Charter Default
thereunder) or (ii) R&B Falcon Drilling (International & Deepwater) Inc., where
a Charter Supplement No. 1 Event of Default exists (but not a Charter
Supplement No. 2 Event of Default, other than a Cross Charter Default
thereunder) or would exist but for the exercise of the Assumption Cure Right,
the Non-Assumption Cure Right or the provision of Credit Support (except such
Charter Event of Default arising solely from a Cross Charter Default
thereunder).
"Deposited Amounts" has the meaning specified in Section 2.1 of the
------------------
Depository Agreement.
"Depository" has the meaning specified in the preamble to the Depository
----------
Agreement.
"Depository Agreement" means the Amended and Restated Depository Agreement,
--------------------
dated as of the Documentation Date, among Deepwater, the Charter Trustee, the
Investment Trust and the Depository.
"Disbursement Certificate" means an Event of Loss Certificate, a
-------------------------
Reimbursement and Proceeds Certificate, a Payment Date Certificate, a Permitted
Contest Reserve Certificate, a Trustee Default Notice, a Hedging Agreement
Default Notice, a Drillship Sales Proceeds Certificate, a Termination Proceeds
Certificate or a Permitted Contest Reserve Certificate.
13
<PAGE>
"Disbursement Information" has the meaning specified in Section 4.3 of the
-------------------------
Depository Agreement.
"Documentation Date" has the meaning specified in Section 3.1(a) of the
-------------------
Participation Agreement.
"Dollars", "US$" and "$" means dollars in lawful currency of the United
------- --- -
States.
"Drawn Rate" means the Base Rate plus the Loan Margin or, to the extent
-----------
that the Base Rate is unavailable or illegal, the Alternate Rate.
"Drilling Consent" means the Amended and Restated Acknowledgment and
-----------------
Consent Agreement, dated as of the Documentation Date, by and among R&B Falcon
Drilling (International & Deepwater) Inc., Frontier Deepwater Drilling Inc.,
Deepwater, the Charter Trustee and the Investment Trust.
"Drilling Contract" means the Conoco Drilling Contract or the R&B Falcon
------------------
Drilling Contract.
"Drilling Contract Guaranty" means the Conoco Drilling Contract Guaranty or
--------------------------
the Transocean Drilling Contract Guaranty.
"Drilling Party" means Frontier Deepwater Drilling Inc. or R&B Falcon
---------------
Drilling (International & Deepwater) Inc. or, when used in the plural, both
Frontier Deepwater Drilling Inc. and R&B Falcon Drilling (International &
Deepwater) Inc.
"Drilling Services Agreement Contractor" means R&B Falcon Drilling Co.
-----------------------------------------
"Drillship" means the Vessel together with the OFE.
---------
"Drillship Sales Proceeds" has the meaning specified in Section 3.6(a) of
--------------------------
the Depository Agreement.
"Drillship Sales Proceeds Account" has the meaning specified in Section
-----------------------------------
3.6(a) of the Depository Agreement.
"Drillship Sales Proceeds Certificate" has the meaning specified in Section
------------------------------------
3.6(b) of the Depository Agreement.
"Effective Date" has the meaning specified in Section 4.1 of the
---------------
Participation Agreement.
"Eligible Asset" shall mean loans secured by interests in the Collateral,
---------------
including, but not limited to, any Covered Assets, which meet the criteria set
forth in each Conduit's credit and investment policy, as amended from time to
time, as of the date a loan is made in relation to such Eligible Asset or is
purchased by any Conduit.
"Environmental Claim" means any Claim arising out of or attributable to any
-------------------
Environmental Event or Hazardous Activity.
14
<PAGE>
"Environmental Event" means (i) any activity, occurrence or condition that
--------------------
violates or results in noncompliance with any Environmental Law; (ii) any
release of or potential release of any Hazardous Substance or Oil from the
Drillship; (iii) any incident in which any Hazardous Substance or Oil is
released or threatened to be released from a vessel other than the Drillship and
which involves a collision between the Drillship and such other vessel or some
incident of navigation or operation, in either case, in connection with which
the Drillship is actually or potentially liable to be arrested and/or the
Drillship or Deepwater and/or any operator or manager is at fault or allegedly
at fault or otherwise liable to any legal or administrative action; or (iv) any
other incident in which any Hazardous Substance or Oil is released or threatened
to be released otherwise than from the Drillship in connection with which the
Drillship is actually or potentially liable to be arrested and/or where
Deepwater and/or any operator or manager of the Drillship is at fault or
allegedly at fault or otherwise liable to any legal or administrative action.
"Environmental Law" means all applicable international, foreign, federal,
------------------
state and local laws, regulations, conventions, treaties, written governmental
agreements and written governmental policies that are legally binding, statutes,
ordinances, codes, rules, directives, orders, decrees, judicial and
administrative judgments and rules of common law, whether now or hereafter in
effect, that relate in any way to Oil or any Hazardous Substance in connection
with the regulation or protection of human health, natural resources or the
environment.
"ERISA" means the Employee Retirement Income Security Act of 1974.
-----
"Estimated Interest Period" has the meaning specified in Section 2.16 of
---------------------------
the Participation Agreement.
"Eurocurrency Liabilities" has the meaning specified in Section 7.5 of the
-------------------------
Participation Agreement.
"Event of Default" means a Charter Event of Default.
------------------
"Event of Loss" means a Condemnation or the occurrence of an event that
---------------
results or would result in the termination of either Drilling Contract pursuant
to Section 2.2.2 thereof.
"Event of Loss Certificate" has the meaning specified in Section 3.2(b) of
--------------------------
the Depository Agreement.
"Event of Loss Proceeds Account" has the meaning specified in Section
----------------------------------
3.2(a) of the Depository Agreement.
"Excepted Rights" means, as to any Participant, the exclusive right of such
---------------
Participant to (i) retain all Excluded Amounts owing to it and (ii) to demand,
collect or commence any action in equity or at law to obtain such payments and
to enforce any judgment with respect thereto.
"Excess Charter Return" means, for any Return Period, an amount equal to
-----------------------
the excess of (i) an amount equal to the product of the applicable Return Rate
times the Charter Balance set forth on Schedule I to the Master Charter opposite
the Charter Hire Payment Date under the heading "Charter Balance" over (ii) an
amount equal to the product of the applicable Return Rate
15
<PAGE>
times the actual Charter Balance (or portion thereof) allocable to such Return
Period as of the first day of such Return Period.
"Excess Funds" means (i) with respect to the Conduit (Hatteras), (a) prior
-------------
to a Foreclosure Event (as defined in the LAPA (Hatteras)), all funds not
required after giving effect to all amounts on deposit in the Commercial Paper
Account (Hatteras) to pay or provide for the payment of all Commercial Paper
Notes (Hatteras) of the Conduit (Hatteras) maturing on the date of such
determination or that have previously matured but remain unpaid and (b) after
the occurrence of a Foreclosure Event (as defined in the LAPA (Hatteras)), means
all funds not required to pay or provide for the payment of all Outstanding
Commercial Paper Notes of the Conduit (Hatteras) or Commercial Paper Notes of
the Conduit (Hatteras) that have previously matured but remain unpaid, (ii) with
respect to the Conduit (Liberty) and the Conduit (Paradigm), all funds of such
Conduit which may be used to make the applicable payment and which are not
required to repay the Face Amount of the Commercial Paper Notes and other
obligations of each Conduit under its program documents when due; provided, that
-------- ----
after giving effect to such payment either (x) such Conduit could issue
Commercial Paper Notes or obtain loans under its program documents (assuming
such outstanding Commercial Paper Notes and other obligations matured at such
time) in accordance with the program documents or (y) all Commercial Paper Notes
and other obligations are paid in full.
"Excluded Accounts" means (i) the Permitted Contest Reserve Account; (ii)
------------------
the Event of Loss Proceeds Account and (iii) the Reimbursement and Proceeds
Account.
"Excluded Amounts" means
-----------------
(i) all indemnity payments and expenses to which any Indemnitee is
entitled pursuant to the Transaction Documents;
(ii) any amounts payable under any Transaction Document to reimburse the
Charter Trustee, any Agent or any other Participant (including the
reasonable expenses of any such Person incurred in connection with any
such payment) for performing any of the obligations of Deepwater under
and as permitted by any Transaction Document;
(iii) any insurance proceeds (or payments with respect to risks
self-insured or policy deductibles) under liability policies payable
to the Charter Trustee, any Agent or any other Participant (or any
such Person's successors, assigns, agents, trustees, officers,
directors or employees);
(iv) any insurance proceeds under policies maintained by the Charter
Trustee, any Agent or any other Participant and not required to be
maintained by Deepwater under the Charter;
(v) any amount payable by Deepwater pursuant to Sections 3.2(i) and 4.2(j)
of the Participation Agreement, whether or not such amounts are or can
be characterized as a Supplemental Hire; and
16
<PAGE>
(vi) any payments of interest, yield or Charter Return on payments referred
to in clauses (a) through (e) above.
------------ ---
"Extension Notice" has the meaning specified in Section 20.2 of the Master
-----------------
Charter.
"Extension Term" means any period which immediately follows the end of the
---------------
Base Charter Term with respect to which Deepwater has requested an extension of
the Charter Term pursuant to Section 20.2 of the Master Charter, and such
request has been granted pursuant to such Section 20.2.
"Face Amount" shall mean with respect to Commercial Paper Notes issued on a
-----------
discount basis, the face amount thereof and with respect to Commercial Paper
Notes issued on an interest-bearing basis, the amount of principal plus interest
payable at maturity in respect of such Commercial Paper Notes.
"Facility Fee" has the meaning specified in Section 2.14 of the
-------------
Participation Agreement.
"Facility Loan" has the meaning specified in Section 2.1(b) of the Loan
--------------
Agreement.
"Facility Loan Commitment" means the percentage set forth on the Schedules
-------------------------
to the Loan Agreement under the heading "Facility Loan Commitment" opposite the
names of each Liquidity Purchaser.
"Facility Loan Commitment Amount" means the amounts set forth on the
----------------------------------
Schedules to the Loan Agreement under the heading "Facility Loan Commitment
Amount" opposite the names of each Liquidity Purchaser.
"Facility Note" has the meaning specified in Section 2.3(b) of the Loan
--------------
Agreement.
"Federal Funds Rate" means, for any day, the rate set forth in the weekly
--------------------
statistical release designated as H.15(519), or any successor publication,
published by the Federal Reserve Bank of New York (including any such successor
"H.15(519)") on the preceding Business Day opposite the caption "Federal Funds
(Effective)"; or, if for any relevant day such rate is not so published on any
such preceding Business Day, the rate for such day shall be the arithmetic mean
as determined by the Charter Trustee of the rates for the last transaction in
overnight Federal Funds arranged prior to 9 a.m. (New York City time) on that
day by each of the three leading brokers of Federal Funds transactions in New
York City selected by the Charter Trustee.
"Fees" means each fee set forth in Section 2.14(b) of the Participation
----
Agreement or in each Fee Letter.
"Fee Letters" means the Upfront Fee Letters and the Conduit Fee Letter.
------------
"Force Majeure Event" means any excused or permissible delay under the
---------------------
Drilling Contracts, if fulfillment has been delayed, hindered or prevented by
any circumstance of whatsoever nature, including financial or economic
conditions in general, hostilities, restraints of rulers or people, revolution,
civil commotion, strike, labor disturbances, epidemic, accident, fire,
lightning, flood, wind, storm, earthquake, explosion, blow-out, crater,
blockade, embargo, lack
17
<PAGE>
of or failure of transportation facilities, inability, despite Deepwater's best
efforts, to arrange or secure importation, exportation or permits, or any law,
proclamation, regulation, ordinance, demand or requirement of any government or
any government agency having or claiming to have jurisdiction over the
operations of or with respect to the Drillship or any part thereof, or over
Deepwater or any act of God, or any other act of government or act or omission
of a supplier.
"Frontier Deepwater Drilling Inc." means Frontier Deepwater Drilling Inc.,
--------------------------------
a Delaware corporation.
"Frontier Portion" means with respect to any Return Period, a fraction, the
----------------
numerator of which is the number of hours, rounded to the nearest half hour, the
Drillship has been utilized under the Conoco Drilling Contract during the
relevant Return Period and the denominator of which is the product of the actual
number of days in such Return Period and 24 hours.
"Funding" means Contributions, Advances and/or Liquidity Purchases.
-------
"Funding Participant" means any or all Liquidity Purchasers, Conduits and
--------------------
Certificate Purchasers.
"Funding Participant Liens" means Liens on or against any or all of the
---------------------------
Drillship, the Trust Estate, the Investment Trust, the Charter or any payment of
Charter Hire which results from (a) any act or omission of, or any Claim against
any Funding Participant in any case unrelated to the transactions contemplated
by the Transaction Documents (including any Liens arising as a result of a
voluntary transfer of all or any portion of either Trust Estate, other than any
voluntary transfer after a Charter Event of Default or a transfer to Deepwater
pursuant to the Charter), (b) any Tax owed by any such Person, except for any
Tax required to be paid by Deepwater under the Transaction Documents, including
any Tax for which Deepwater is obligated to indemnify such Person under the
General Tax Indemnity, or (c) any act or omission of such Person that is in
breach of any of the covenants or agreements of the Transaction Documents.
"Funding Participant Replacement Conditions" has the meaning specified in
--------------------------------------------
Section 4.4 of the Participation Agreement.
"GAAP" means United States generally accepted accounting principles
----
(including principles of consolidation and characterization), in effect from
time to time, consistently applied.
"General Indemnity" means the indemnity provided by Deepwater to various
------------------
parties pursuant to Section 10.1 (subject to Section 10.2) of the Participation
Agreement.
"General Tax Indemnity" means the indemnity provided by Deepwater to
-----------------------
various parties pursuant to Section 10.4 of the Participation Agreement.
"Government Action" means all permits, authorizations, registrations,
------------------
consents, approvals, waivers, exceptions, variances, orders, judgments, decrees,
licenses, exemptions, publications, filings, notices to and declarations of or
with, or required by, any Government Authority, or required by any Applicable
Law, and shall include, without limitation, all
18
<PAGE>
environmental and operating permits and licenses that are required for the full
use and operation of the Drillship (or any part thereof).
"Government Authority" means any nation or government, any state, county,
---------------------
province, municipality or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Guarantor's Percentage" means
-----------------------
(i) with respect to Conoco, (a) its Applicable Percentage of the Charter
Balance minus the Certificate Purchaser Amounts and Lender Amounts
-----
purchased by Conoco pursuant to Section 9.4 of the Participation Agreement
divided by (b) 100% of the Charter Balance; provided, however, that in no
----------- -------- -------
event shall the percentage calculated by this clause (i) be less than 0%;
----------
and
(ii) with respect to Transocean, (a) its Applicable Percentage of the
Charter Balance minus the Certificate Purchaser Amounts and Lender Amounts
-----
purchased by Transocean pursuant to Section 9.4 of the Participation
Agreement divided by (b) 100% of the Charter Balance; provided, however,
----------- -------- -------
that in no event shall the percentage calculated by this clause (ii) be
-----------
less than 0%.
"Guaranty" by any Person, means any obligation or arrangement, contingent
--------
or otherwise, of such Person directly or indirectly guaranteeing or otherwise
becoming contingently liable upon any Indebtedness or other obligation of any
other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
secure, purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation of such other Person (whether arising
by virtue of partnership arrangements, by agreement to keep-well, to purchase
assets, goods, securities or services, to provide collateral security, to
take-or-pay, or to maintain financial statement conditions or otherwise) or (ii)
to the extent that such an arrangement would be considered to be a guaranty
under GAAP, entered into for the purpose of assuring in any other manner the
obligee of such Indebtedness or other obligation of the payment thereof or to
protect such obligee against loss in respect thereof (in whole or in part);
provided, that the term Guaranty shall not include endorsements for collection
--------
or deposit in the ordinary course of business. The term "Guaranty" used as a
verb has a corresponding meaning.
"Hazardous Activity" means any activity, process, procedure or undertaking
-------------------
that directly or indirectly (i) produces, generates or creates any Hazardous
Substance; (ii) causes or results in (or threatens to cause or result in) the
Release of any Hazardous Substance into the environment (including air, surface
water, groundwater, drinking water, land (including surface or subsurface) and
plant, aquatic and animal life); (iii) involves the containment or storage of
any Hazardous Substance; or (iv) would be regulated as hazardous waste
treatment, storage or disposal within the meaning of any Environmental Law.
"Hazardous Substance" means any of the following: (i) explosives,
--------------------
radioactive materials, asbestos, polychlorinated biphenyls, lead and radon gas;
or (ii) any substance, material, product, derivative, compound, mixture,
mineral, chemical, waste, gas, medical waste, or pollutant, in
19
<PAGE>
each case whether naturally occurring, human-made or the by-product of any
process, that is considered under any applicable Environmental Law to be toxic,
corrosive, flammable, carcinogenic, mutagenic or hazardous to the environment or
human health; provided, however, that the term "Hazardous Substance"
-------- -------
specifically does not include Oil.
"Head Lease" means the lease agreement (if any) under which the Charter
-----------
Trustee leases the Drillship from the Head Lessor in accordance with Section 4.3
of the Participation Agreement.
"Head Lease Defeasance Arrangements" has the meaning specified in Section
------------------------------------
4.3 of the Participation Agreement.
"Head Lease Documents" means the Head Lease, the Head Lease Loan, the Head
---------------------
Lease Defeasance Agreement and any other documents entered into in connection
with the Head Lease Transaction.
"Head Lease Loan" has the meaning specified in Section 4.3 of the
-----------------
Participation Agreement.
"Head Lease Transaction" has the meaning specified in Section 4.3 of the
------------------------
Participation Agreement.
"Head Lessor" means the lessor under the Head Lease.
------------
"Hedging Agreement Counterparty" means the counterparty under any Hedging
--------------------------------
Agreement.
"Hedging Agreement Default Notice" means a notice given by each Hedging
-----------------------------------
Agreement Counterparty, if any, setting forth disbursements to be made to such
Hedging Agreement Counterparty as indicated in either Section 4.2(b), Section
4.2(c) or Section 4.2(d) of the Depository Agreement.
"Hedging Agreement Obligations" means all of the obligations (monetary or
-------------------------------
otherwise) of the Charter Trustee arising under or in connection with the
Hedging Agreements.
"Hedging Agreements" has the meaning specified in Section 6.5 of the
-------------------
Participation Agreement.
"Illegality Event" has the meaning specified in Section 7.1 of the
-----------------
Participation Agreement.
"Indebtedness" of any Person means at any date, without duplication, (i)
------------
all obligations of such Person for borrowed money; (ii) all obligations of such
Person evidenced by bonds, debentures, notes or similar instruments; (iii)
whether or not so included as liabilities in accordance with GAAP, all
obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary course of
business; (iv) all obligations of such Person to reimburse any bank or other
Person in respect of amounts payable under a banker's acceptance; (v) all
obligations of such Person, contingent or otherwise,
20
<PAGE>
relative to the face amount of all letters of credit, whether or not drawn; (vi)
all indebtedness (including indebtedness arising under title retention or
conditional sales agreements) secured by a Lien on any asset of any Person,
whether or not such indebtedness is assumed by such Person or is of limited
recourse (provided, that, for purposes of this clause (vi), non-recourse
-------- ------------
indebtedness in excess of the value of the asset securing such indebtedness
shall not be counted); (vii) all obligations of such Person as lessee under
leases which have been or should be, in accordance with GAAP, recorded as
capital or operating leases; and (viii) all indebtedness of others Guaranteed by
such Person.
"Indemnified Party" has the meaning specified in Section 10.1 of the
------------------
Participation Agreement.
"Initial Charter Hire Payment Date" means the last Business Day of the
-------------------------------------
first full calendar month following the Closing Date.
"Initial Charter Margin Adjustment Date" means October 1, 2001.
------------------------------------------
"Institutional Investor" means any Accredited Investor, excluding any
-----------------------
individual or natural person.
"Insurance Beneficiary" has the meaning specified in Section 14.2(d) of the
---------------------
Master Charter.
"Insurance Requirements" means all terms and conditions of any insurance
-----------------------
policy either required by the Master Charter to be maintained by Deepwater and
all requirements of the issuer of any such policy; provided, however, that if
-------- -------
Deepwater is entitled to self-insure certain risks in lieu of maintaining the
insurance coverages required under Article XIV of the Master Charter, "Insurance
Requirements" means the standard terms of any insurance policies (including
casualty and general liability) and all requirements commonly prescribed by the
issuers of such policies which otherwise would be required to be maintained by
Deepwater absent the permitted self-insurance.
"Interim Class Certificate" means a certificate issued by the
---------------------------
Classification Society evidencing the class of the Drillship to be delivered by
the Builder to Deepwater.
"Inverse R&B Usage Ratio" means the R&B Usage Ratio minus one.
-------------------------- -----
"Investment Companies Act" means the Investment Companies Act of 1940, as
--------------------------
amended, together with the rules and regulations promulgated thereunder.
"Investment Grade" means BBB- and Baa3 by S&P and Moody's, respectively or
-----------------
any equivalent rating by any other nationally recognized rating agency.
"Investment Trust" means Deepwater Investment Trust 1999-A, a Delaware
-----------------
business trust.
21
<PAGE>
"Investment Trust Agreement" means the Amended and Restated Investment
----------------------------
Trust Agreement (Deepwater Investment Trust 1999-A) dated as of the
Documentation Date, between Wilmington Trust FSB, as trustee, and the Investment
Trust Beneficiary.
"Investment Trust Amount" means, with respect to the Investment Trust, at
-------------------------
any given time, the aggregate amount advanced by the Lenders minus any
-----
distributions made which have the effect of reducing the Lender Balance, plus
----
any Postponement Interest capitalized pursuant to Section 2.8 of the
Participation Agreement.
"Investment Trust Beneficiary" has the meaning specified in Section 11.1(b)
----------------------------
of the Participation Agreement.
Investment Trustee" has the meaning specified in the preamble to the
-------------------
Participation Agreement.
"LAPA (Hatteras)" means the Liquidity Asset Purchase Agreement, dated as of
---------------
the Documentation Date among the Conduit (Hatteras), the Liquidity Purchasers
(Hatteras), the Liquidity Agent (Hatteras) and the Administrator (Hatteras).
"LAPA (Liberty)" means the Liquidity Asset Purchase Agreement, dated as of
---------------
the Documentation Date among the Conduit (Liberty), the Liquidity Purchasers
(Liberty) and the Liquidity Agent (Liberty) and the Administrator (Liberty).
"LAPA (Paradigm)" means the Liquidity Asset Purchase Agreement, dated as of
---------------
the Documentation Date among the Conduit (Paradigm), the Liquidity Purchasers
(Paradigm) and the Liquidity Agent (Paradigm) and the Administrator (Paradigm).
"LAPAs" means each of LAPA (Hatteras), LAPA (Liberty) and LAPA (Paradigm).
-----
"Lender Amount" means, with respect to each Lender, the aggregate
--------------
outstanding amount of its Notes.
"Lender Balance" means, at any given time, the aggregate amount of all
---------------
Lender Amounts plus any Postponement Interest capitalized pursuant to Section
2.8 of the Participation Agreement.
"Lenders (Hatteras)" has the meaning specified in the preamble to the Loan
-------------------
Agreement.
"Lenders (Liberty)" has the meaning specified in the preamble to the Loan
------------------
Agreement.
"Lenders (Paradigm)" has the meaning specified in the preamble to the Loan
-------------------
Agreement.
"Lender Portion" means, with respect to any amount, ninety seven percent
---------------
(97%) of such amount.
"Lenders" means each of Lenders (Hatteras), Lenders (Paradigm) and Lenders
-------
(Liberty).
22
<PAGE>
"LIBOR" means, for any Return Period, the rate per annum equal to the
-----
offered rate (rounded upwards, if necessary, to the next higher 1/100th of 1%)
which appears on the Telerate Page 3750, British Bankers Association Interest
Settlement Rates (or such other system for the purpose of displaying rates of
leading reference banks in the London interbank market that replaces such
system) as of 11:00 a.m. (London time) for deposits in Dollars on the day two
(2) Business Days prior to the first day of such Return Period in an amount
approximately equal to the principal amount of the Certificate Purchaser Amounts
and Lender Amounts to which such Return Period is to apply and for a period
corresponding as nearly as possible to such Return Period; provided, that, if no
--------
such rate appears on Telerate Page 3750 it shall be (i), so long as any Hedging
Agreements are in effect, the "Floating Rate" as defined in the Hedging
Agreements or (ii) if no Hedging Agreements are in effect, the rate of interest
then offered to prime banks in the London interbank Eurodollar market by Bank of
America for deposits in U.S. Dollars.
"Lien" means any mortgage, pledge, lien, charge, encumbrance, lease,
----
sublease, charter, subcharter, right, security interest, rights in rem of any
kind or claim of whatever nature or description against any property or asset.
"Liquidity Agent (Hatteras)" has the meaning specified in the Preamble to
----------------------------
the Loan Agreement.
"Liquidity Agent (Liberty)" has the meaning specified in the Preamble to
---------------------------
the Loan Agreement.
"Liquidity Agent (Paradigm)" has the meaning specified in the Preamble to
----------------------------
the Loan Agreement.
"Liquidity Agents" means each of the Liquidity Agent (Hatteras), the
-----------------
Liquidity Agent (Paradigm) and the Liquidity Agent (Liberty).
"Liquidity Purchase" means the purchase of a Percentage Interest under any
-------------------
LAPA (and as described in the Loan Agreement) by the Applicable Liquidity
Purchaser.
"Liquidity Purchaser Advance" has the meaning specified in Section 2.3(b)
-----------------------------
of the Participation Agreement.
"Liquidity Purchaser (Hatteras)" means each financial institution listed on
------------------------------
the signature page of the LAPA (Hatteras) under the caption "Liquidity
Purchasers," and each other financial institution that has become a "Liquidity
Purchaser," under the LAPA (Hatteras).
"Liquidity Purchaser (Liberty)" has the meaning specified in the preamble
-------------------------------
to the Loan Agreement.
"Liquidity Purchaser (Paradigm)" has the meaning specified in the preamble
-------------------------------
to the Loan Agreement.
"Liquidity Purchaser Commitment" means each Liquidity Purchaser's
--------------------------------
obligation (i) to purchase Percentage Interests under each LAPA from the
respective Conduit and (ii) to make Facility Loans under the Loan Agreement.
23
<PAGE>
"Liquidity Purchaser Commitment Amount" means, with respect to each
----------------------------------------
Liquidity Purchaser, the amount set forth on the signature pages to each LAPA
opposite the name of such Liquidity Purchaser, which amount may be adjusted
pursuant to each LAPA.
Liquidity Purchaser Commitment Percentage" means, with respect to each
--------------------------------------------
Liquidity Purchaser, the percentage set forth on the signature pages to each
LAPA opposite the name of such Liquidity Purchaser, which amount may be adjusted
pursuant to each LAPA.
"Liquidity Purchaser Portion" means a fraction, the numerator of which is
-----------------------------
the aggregate face amount of Notes held by all Liquidity Purchasers and the
denominator of which is the aggregate face amount of all Notes then outstanding
"Liquidity Purchasers" means each of the Liquidity Purchasers (Hatteras),
---------------------
the Liquidity Purchasers (Paradigm) and the Liquidity Purchasers (Liberty).
"LLC Agreement" means the LLC Agreement, dated as of April 30, 1997,
--------------
between the Members.
"Loan Agreement" means the Loan Agreement, dated the date hereof, among the
--------------
Borrower, each Conduit, each Administrator, each Liquidity Agent and each
Liquidity Purchaser.
"Loan Margin" means 100.0 basis points per annum so long as the ratings of
------------
both Transocean and Conoco are at or above Investment Grade or otherwise 150.0
basis points per annum.
"Loan Return Rate" means (i) with respect to Lender Amounts of the
------------------
Liquidity Purchasers, the Drawn Rate and (ii) with respect to Lender Amounts of
each Conduit, the CP Rate to the extent such Lender Amount is funded through the
issuance of Commercial Paper Notes and the Drawn Rate (subject to Section 2.5 of
the Loan Agreement) to the extent such Lender Amount is otherwise funded.
"Loans" means the Conduit Loans and the Facility Loans.
-----
"Majority Funding Participants" means, as of the date of determination, the
-----------------------------
Funding Participants that have an aggregate of Certificate Purchaser Amounts,
Lender Amounts and unfunded Commitments that in the aggregate represent more
than 50% of the sum of Charter Balance and all unfunded Commitments. For
purposes of this definition, no Purchasing Party shall be considered a "Funding
Participant" and any interest of any Purchasing Party shall be subtracted from
the outstanding Charter Balance solely for the calculation of Majority Funding
Participants.
"Mandatory Funding Event" has the meaning specified in Schedule 2 to the
-------------------------
LAPA (Hatteras).
"Marketing Period" means the period commencing on the date which is 180
-----------------
days prior to the Scheduled Charter Expiration Date and ending on the Scheduled
Charter Expiration Date.
24
<PAGE>
"Master Charter" means the bareboat Amended and Restated Master Charter and
--------------
Sale and Purchase Agreement for a Vessel, dated as of the Documentation Date,
among Deepwater and the Charter Trustee, excluding both Charter Supplement No. 1
and Charter Supplement No. 2.
"Material Adverse Effect" means, with respect to Conoco, Transocean or
-------------------------
Deepwater, an event or events, condition or conditions, circumstance or
circumstances which individually or in the aggregate could be reasonably
expected to:
(iii) have a material adverse effect on the financial condition,
business, assets or operations of Conoco, Transocean or Deepwater;
(iv) have a material adverse effect on Deepwater's, Conoco's or
Transocean's ability to perform its respective obligations under the
Transaction Documents to which it is a party;
(v) have a material adverse effect on the title, priority or
perfection of the Participants' interest in the Drillship;
(vi) have a material adverse effect on the validity, legality or
enforceability of any material provision of any Transaction Document or on
the rights or remedies of any of the Participants under the Transaction
Documents;
(vii) have a material adverse effect on the value, utility or
remaining useful life of the Drillship; or
(viii) result in criminal liability or material civil liability to any
Indemnitee or forfeiture or loss of the Drillship.
"Material Default" means a Charter Default described in Section 4.1(a), (e)
----------------
or (f) of either Charter Supplement No. 1 or Charter Supplement No. 2.
"Maturity Date" means the last day of the Charter Term.
--------------
"Maximum Residual Guaranty Amount" means as of any date the sum of:
-----------------------------------
(i) the Charter Balance on such date (reduced by any payment of Charter
Supplement Prepayment Amount of Termination Value under Section 4.2(c) of
the Depository Agreement), plus any accrued and unpaid Charter Return,
minus the Charter Residual Risk Amount as of such date; and
-----
(ii) all accrued and unpaid Supplemental Hire (not included in clause
(i)).
"Member" means each of RBF Deepwater Exploration II Inc. and Conoco
------
Development II Inc.
"Minimum Specifications" means each of the following criteria with respect
-----------------------
to the Drillship: (i) upon final sea trial, speed shall not be more than two
(2) knots lower than the
25
<PAGE>
guaranteed speed specified in Paragraph 2 of Article I of the Construction
Contract; (ii) actual fuel consumption shall not be more than ten percent (10%)
in excess of the guaranteed fuel consumption specified in Paragraph 2 of Article
I of the Construction Contract; (iii) the capacity of the "Extended Well Test"
tanks, including slop tanks, shall not be less than 14,310 cubic meters; and
(iv) the actual displacement of the Drillship shall not vary by more than 3,500
metric tons (whether higher or lower) from the guaranteed displacement of the
Drillship specified in Paragraph 2 of Article I of the Construction Contract.
"Modifications" has the meaning specified in Section 11.1 of the Master
-------------
Charter.
"Moody's" means Moody's Investors Service, Inc.
-------
"NAIC Annual Statement" has the meaning specified in Section 5.4(d) of the
----------------------
Participation Agreement.
"Net Sales Proceeds" has the meaning specified in Section 20.3(iii) of the
-------------------
Master Charter.
"Non-Assumption Cure Right" has the meaning specified in Section 16.5(a) of
-------------------------
the Master Charter.
"Non-Defaulting Certificate Purchaser" has the meaning specified in Section
------------------------------------
7.9 of the Participation Agreement.
"Non-Defaulting Drilling Party" means (i) Frontier Deepwater Drilling Inc.,
-----------------------------
provided that no Charter Supplement No. 2 Event of Default exists (except such
Charter Event of Default arising solely from the Cross Charter Default
thereunder) or (ii) R&B Falcon Drilling (International & Deepwater) Inc.,
provided that no Charter Supplement No. 1 Event of Default exists (except such
Charter Event of Default arising solely from the Cross Charter Default
thereunder).
"Non-Recourse Party" means any Member, its respective Affiliates and its
-------------------
past, present or future officers, directors, employees, shareholders, agents or
representatives.
"Note Payment" means Basic Hire due and payable under the Charter,
-------------
excluding any accrued and unpaid Series A Return then due and payable.
"Notes" has the meaning specified in Section 2.3(b) of the Loan Agreement.
-----
"Obligation" has the meaning specified in Section 22.1 of the Master
----------
Charter.
"OFE" means owner-furnished equipment, more specifically described in
---
Schedule 3 to the Participation Agreement.
"Officer's Certificate" means a certificate signed by any individual
----------------------
holding the office of vice president, treasurer, assistant treasurer or higher,
which certificate shall certify as true and correct the subject matter being
certified to in such certificate.
26
<PAGE>
"Oil" means oil of any kind or in any form, including but not limited to
---
petroleum, fuel oil, sludge, oil refuse, and oil mixed with wastes other than
dredged spoil, but not including petroleum (including crude oil or any fraction
thereof) which is specifically listed or designated as a hazardous substance
under subparagraphs (A) through (F) of Section 101(14) of CERCLA.
"Operating Account" has the meaning specified in Section 3.4(a) of the
------------------
Depository Agreement.
"Operation and Maintenance Expenses" means all amounts necessary for
-------------------------------------
Deepwater to man, victual, navigate, operate, supply, fuel, repair, maintain the
Drillship in accordance with the requirements of the Drilling Contracts and the
Charter and shall include, without limitation, payments under Deepwater's
contracts for marine and drilling services, payments to any Permitted Service
Provider, premiums on insurance policies, fees, costs and expenses in connection
with any Deepwater Hedging Agreements or Hedging Agreements (excluding amounts
payable in connection with an early termination), property and other taxes
(other than income taxes), costs of fuel and fuel supply, waste disposal,
expenses for repairs and maintenance required in order to maintain the Drillship
in accordance with the Drilling Contracts and in accordance with the Charter
(including expenses for inspections and drydocking maintenance), the costs of
all Modifications required or permitted under the Charter and all shore-based
support expenses and warehouse costs attributable to any of the foregoing;
provided, however, that Operation and Maintenance Expenses shall not include any
-------- -------
amounts for which Deepwater is entitled to a Reimbursement.
"Optional Modifications" has the meaning specified in Section 11.1 of the
-----------------------
Master Charter.
"Original Certificate Purchasers" mean the Persons specified in the
---------------------------------
Original Participation Agreement as certificate purchasers therein.
"Original Certificates" means the Original Series A Trust Certificate and
----------------------
the Original Investment Trust Certificate.
"Original Charter Supplement" shall mean the Original Charter Supplement
-----------------------------
No. 1 or the Original Charter Supplement No. 2.
"Original Charter Supplement No. 1" shall mean the Original Charter
-------------------------------------
Supplement No. 1, dated the Closing Date, between the Charter Trustee and
Deepwater.
"Original Charter Supplement No. 2" shall mean the Original Charter
-------------------------------------
Supplement No. 2, dated the Closing Date, between the Charter Trustee and
Deepwater.
"Original Charter Trust Agreement" means the Charter Trust Agreement, dated
--------------------------------
the Closing Date, among the beneficial owners named therein, Charter Trustee and
Investment Trust.
"Original Conoco Guaranty" means the Conoco Guaranty as defined in the
--------------------------
Original Participation Agreement.
27
<PAGE>
"Original Depository Agreement" means the Depository Agreement, dated the
-------------------------------
Closing Date, among Deepwater, the Charter Trustee, the Investment Trust and the
Depository.
"Original Drilling Consent" means the Acknowledgment and Consent Agreement,
-------------------------
dated as of the Closing Date, by and among R&B Falcon Drilling (International &
Deepwater) Inc., Frontier Deepwater Drilling Inc., Deepwater, the Charter
Trustee and the Investment Trust.
"Original Investment Trust Agreement" means the Investment Trust Agreement,
-----------------------------------
dated the Closing Date, among the Original Certificate Purchasers, the
Investment Trustee and a co-investment trustee.
"Original Investment Trust Certificates" means each certificate issued to
----------------------------------------
the Original Certificate Purchasers by the Investment Trust pursuant to Section
2.1(d) of the Original Participation Agreement and in accordance with the
Original Trust Agreements.
"Original Master Charter" has the meaning specified in the first recital to
-----------------------
the Master Charter.
"Original Participation Agreement" has the meaning specified in the second
---------------------------------
recital to the Participation Agreement.
"Original Series A Trust Certificate" means each certificate issued to the
------------------------------------
Original Certificate Purchasers by the Charter Trustee pursuant to Section
2.1(b) of the Original Participation Agreement and in accordance with the
Original Charter Trust Agreement.
"Original Series B Trust Certificate" means the certificate issued to the
-------------------------------------
Investment Trust pursuant to Section 2.1(f) of the Original Participation
Agreement and in accordance with the Original Charter Trust Agreement.
"Original Transaction Documents" means:
--------------------------------
(i) the Original Participation Agreement;
(ii) the Original Charter Trust Agreement;
(iii) the Original Investment Trust Agreement;
(iv) the Deepwater Hedging Agreements, if any;
(v) the Hedging Agreements, if any;
(vi) the Original Drilling Consent;
(vii) the Original Master Charter;
(viii) the Original Charter Supplement No. 1;
(ix) the Original Charter Supplement No. 2;
(x) the Protocol of Delivery and Acceptance;
(xi) the Security Documents as defined in the Original Participation
Agreement;
(xii) the Original Certificates;
(xiii) the Original Conoco Guaranty; and
(xiv) the R&B Falcon Guaranty as defined in the Original
Participation Agreement.
28
<PAGE>
"Other Supplement" (i) when used in Charter Supplement No. 1, means Charter
----------------
Supplement No. 2 or (ii) when used in Charter Supplement No. 2, means Charter
Supplement No. 1.
"Outstanding" has the meaning specified in Schedule 2 to the LAPA
-----------
(Hatteras).
"Overdue Rate" means either Return Rate, as applicable, plus two percent
-------------
(2%) per annum.
"Parent" means, with respect to any Person, a corporation that is the
------
direct or indirect beneficial owner of more than 50% of the outstanding Voting
Stock of such Person and that has reporting obligations under Section 13 of the
Securities Exchange Act of 1934, as amended.
"Partial Condemnation" means the condemnation, requisition for use,
---------------------
confiscation, arrest, seizure or other taking of title or leasehold interest in
the Drillship or any transfer made in lieu of any such actual or threatened
action or proceeding which does not constitute a Condemnation.
"Participants" means the Certificate Purchasers, the Conduits, the
------------
Liquidity Purchasers, the Trustees and the Investment Trust, collectively.
"Participation Agreement" means the Amended and Restated Participation
------------------------
Agreement, dated as of the Documentation Date, among Deepwater, the Trustees,
the Investment Trust, the Administrative Agent, the Conduits, the Liquidity
Purchasers, the Certificate Purchasers, the Administrators, the Liquidity
Agents, Investment Trust Beneficiary, Transocean, Conoco, RBF Deepwater
Exploration II Inc. and Conoco Development II Inc.
"Payment Date Certificate" has the meaning specified in Section 3.4(b) of
--------------------------
the Depository Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
----
succeeding to any or all of its functions under ERISA.
"Percentage Interests" has the meaning set forth in the applicable LAPA.
---------------------
"Permitted Charterer" means any Person that is or should be consolidated
--------------------
with Conoco or Transocean for financial reporting purposes in accordance with
GAAP.
"Permitted Contest" means a test, challenge, appeal or proceeding for
------------------
review of any Applicable Law, so long as (x) such test, challenge, appeal or
proceeding shall be prosecuted diligently and in good faith in appropriate
proceedings and (y) such test, challenge, appeal or proceeding and any
non-compliance with Applicable Law during the pendency thereof does not (i) pose
any significant risk of foreclosure, forfeiture or loss of the Drillship or any
material part thereof, (ii) pose any material risk of a loss of priority of the
Lien of the Ship Mortgage (or any other Lien on the Drillship) or any other
Collateral, (iii) pose any material risk of any criminal liability or any
material civil liability being imposed on either Trustee, the Investment Trust,
the Administrative Agent, the Collateral Agent or any Funding Participant, (iv)
interfere in any material manner with the use or operation of the Drillship or
(v) pose any material risk of interference with the payment of Charter Hire.
29
<PAGE>
"Permitted Contest Reserve Account" has the meaning specified in Section
------------------------------------
3.5(a) of the Depository Agreement.
"Permitted Contest Reserve Amount" means, as of the date of calculation, an
--------------------------------
amount equal to Deepwater's reasonable estimate of its potential or actual
liability or additional costs and expenses that it will be required to incur but
only to the extent that (a) such liability or costs and expenses exceed $500,000
with respect to a single Permitted Contest or $2,000,000 with respect to all
pending Permitted Contests and (b) such Claims are not covered by insurance
policies required to be maintained by Deepwater under the Master Charter which
are then in effect (except that all Claims as to which the insurer has issued a
denial of coverage or as to which it has reserved its rights, shall be deemed
not to be covered by insurance for the purposes of this clause (b)).
"Permitted Contest Reserve Certificate" has the meaning specified in
----------------------------------------
Section 3.5(b) of the Depository Agreement.
"Permitted Indebtedness" means (i) Subordinated Debt, (ii) Indebtedness
-----------------------
arising under the Transaction Documents and (iii) any other Indebtedness owed to
any Person other than a Member or Affiliate of a Member in an aggregate amount
not to exceed $500,000 (provided that, (x) if such Indebtedness is in the form
--------
of a loan, such limit shall be calculated by reference to the principal of such
loan and (y) if such Indebtedness is in the form of a lease, such limit shall be
calculated by reference to the present value as of the date of determination of
all lease payments discounted at the then applicable Federal Funds Rate plus
sixty (60) basis points).
"Permitted Investments" has the meaning specified in Section 6.1 of the
----------------------
Depository Agreement.
"Permitted Liens" means (i) the respective rights and interests of the
----------------
Participants, as provided in any of the Transaction Documents; (ii) any Lien as
permitted and contemplated by the Transaction Documents; (iii) Liens for Taxes
either not yet due or being contested pursuant to a Permitted Contest; (iv)
Liens of suppliers, mechanics, crew, repairers, employees, or operators of port
authorities, Liens for salvage, general or particular average, or other similar
Liens securing the payment of the price of goods or services rendered arising in
the ordinary course of business and for amounts the payment of which is either
not yet delinquent or is being diligently contested pursuant to a Permitted
Contest; (v) Liens arising out of judgments or awards which are being appealed
in good faith or with respect to which at the time there shall have been secured
a stay of execution; (vi) salvage and similar rights of insurers under policies
of insurance maintained with respect to the Drillship; (vii) Liens securing
Permitted Indebtedness; (viii) any other Lien with respect to which a bond or
other security shall have been provided either (x) through a normal and
customary letter of undertaking issued by the protection and indemnity club
providing the coverage maintained under Section 14.1(f) of the Master Charter or
(y) by a surety and in a form, both of which are acceptable to the Majority
Funding Participants in their sole discretion; (ix) Trust Liens; and (x) Funding
Participant Liens.
"Permitted Service Provider" has the meaning specified in Section 7(b) of
----------------------------
the Drilling Consent.
30
<PAGE>
"Person" means any individual, corporation, partnership, joint venture,
------
limited liability company, association, joint-stock company, trust,
unincorporated organization, Government Authority or any other entity.
"Placement Agent" means Bank of America.
----------------
"Plan" means at any time an employee pension benefit plan which is covered
----
by Title IV of ERISA or subject to the minimum funding standards under Section
412 of the Code.
"Post Cure Payment Notice" has the meaning specified in Section 4.2(d) of
--------------------------
the Depository Agreement.
"Postponed Advance" has the meaning specified in Section 2.8 of the
------------------
Participation Agreement.
"Postponed Advance Account" has the meaning specified in Section 2.8 of the
-------------------------
Participation Agreement.
"Postponed Advance Date" has the meaning specified in Section 2.8 of the
------------------------
Participation Agreement.
"Postponed Contribution" has the meaning specified in Section 2.8 of the
-----------------------
Participation Agreement.
"Postponed Contribution Account" has the meaning specified in Section 2.8
--------------------------------
of the Participation Agreement.
"Postponement Interest" has the meaning specified in Section 2.8 of the
----------------------
Participation Agreement.
"Postponement Payment" has the meaning specified in Section 2.8 of the
---------------------
Participation Agreement.
"Postponement Yield" has the meaning specified in Section 2.8 of the
-------------------
Participation Agreement.
"Prepayment Change of Control Trigger Event" means the occurrence of a
----------------------------------------------
Change of Control of either Conoco or Transocean unless (a) the rating of such
person is not less than (i) in the case of Conoco, Baa2 from Moody's and BBB
from S&P or (ii) in the case of Transocean, is not less than Baa2 from Moody's
and BBB from S&P or (b) in the event that such person is merged into or acquired
by an Acquiror (i) in the case of an Acquiror of Conoco, such Acquiror has a
rating of not less than Baa2 from Moody's and not less than BBB from S&P (ii) in
the case of an Acquiror of Transocean, such Acquiror has a rating of not less
than Baa2 from Moody's and BBB from S&P, provided that the Acquiror assumes the
--------
obligations of the acquired company under the Transaction Documents pursuant to
an assumption agreement and delivers an opinion of counsel in connection
therewith, each in substantially the form satisfactory to the Majority Funding
Participants, or (c) Conoco or Transocean, as applicable, will provide to the
Majority Funding Participants simultaneously with a Change of Control credit
support
31
<PAGE>
acceptable to the Majority Funding Participants for any obligations of such
person under the Transaction Documents reasonably equivalent to that in effect
immediately prior to the Change of Control.
"Prepayment Change of Control Trigger Event Notice" has the meaning
-------------------------------------------------------
specified in Section 9.4(a) of the Participation Agreement.
"Prepayment Notice" has the meaning specified in Section 9.4(a) of the
------------------
Participation Agreement.
"Program Fee" means the Program Fee (Hatteras), the Program Fee (Liberty)
------------
and the Program Fee (Paradigm).
"Program Fee (Hatteras)" means the fee payable to the Conduit (Hatteras) in
----------------------
accordance with the Conduit Fee Letter (Hatteras).
"Program Fee (Liberty)" means the fee payable to the Conduit (Liberty) in
-----------------------
accordance with the Conduit Fee Letter (Liberty).
"Program Fee (Paradigm)" means the fee payable to the Conduit (Paradigm) in
----------------------
accordance with the Conduit Fee Letter (Paradigm).
"Program Support Provider" shall mean any Person now or hereafter, directly
------------------------
in support of the transactions contemplated by the Transaction Documents or
generally in support of a Conduit extending credit or having a commitment to
extend credit to or for the account of, or to make purchases from such Conduit
or issuing a letter of credit, surety bond or other instrument to support any
obligations arising under or in connection with such Conduit's commercial paper
program (except to the extent such general support does not cover this
transaction), as well as any such Person now or hereafter acting as agent for
such Conduit or for any of the foregoing Persons, including, without limitation,
the Liquidity Purchasers and Agents of such Conduit.
"Protocol of Delivery and Acceptance" means the Protocol of Delivery and
--------------------------------------
Acceptance, entered into by the Charter Trustee and Deepwater on the Closing
Date.
"Purchase Notice" has the meaning specified in Section 20.1 of the Master
----------------
Charter.
"Purchase Option" has the meaning specified in Section 20.1 of the Master
----------------
Charter.
"Purchase Option Date" has the meaning specified in Section 20.1 of the
----------------------
Master Charter.
"Purchase Option Price" has the meaning specified in Section 20.1 of the
-----------------------
Master Charter.
"Purchased Interest" means (i) where Transocean is a Purchasing Party, the
-------------------
Certificate Purchaser Amounts relating to the Transocean Series A Charter Trust
Certificates and the Lender Amounts related to the Notes purchased by Transocean
pursuant to Section 9.4 of the Participation Agreement or (ii) where Conoco is a
Purchasing Party, the Certificate Purchaser Amounts relating to the Conoco
Series A Charter Trust Certificates and the Lender Amounts
32
<PAGE>
related to the Notes purchased by Conoco pursuant to Section 9.4 of the
Participation Agreement.
"Purchasing Party" means (i) Conoco or Transocean, if and only if such
-----------------
Person has suffered a Prepayment Change of Control Trigger Event and has or is
required to purchase any Purchased Interest under Section 9.4 of the
Participation Agreement or (ii) Deepwater or any Affiliate of any of the
foregoing to the extent such Person obtains an interest, directly or indirectly,
in a Purchased Interest.
"Purchasing Party Amount" means, at any given time with respect to any
-------------------------
Purchasing Party, its Purchased Interest minus the amount of any distributions
paid to such Purchasing Party in reduction of its allocated portion of the
Certificate Purchaser Amounts or the Lender Amounts, as the case may be.
"Qualified Transfer" has the meaning specified in Section 9.5 of the
-------------------
Participation Agreement.
"R&B Falcon Drilling Contract" means that Deepwater Drillship Contract,
-------------------------------
dated as of April 30, 1997, as amended and restated, between R&B Falcon Drilling
(International & Deepwater) Inc. and Deepwater.
"R&B Falcon Drilling Contract Guaranty" has the meaning specified in the
----------------------------------------
Original Participation Agreement.
"R&B Falcon Drilling (International & Deepwater) Inc." means R&B Falcon
--------------------------------------------------------
Drilling (International & Deepwater) Inc., a Delaware corporation.
"R&B Falcon Drilling Party" means R&B Falcon Drilling (International &
----------------------------
Deepwater) Inc.
"R&B Falcon Guaranty" means the R&B Falcon Guaranty as defined in the
---------------------
Original Participation Agreement.
"R&B Portion" means, with respect to any Return Period, a fraction, the
------------
numerator of which is the number of hours, rounded to the nearest half hour, the
Drillship has been utilized under the R&B Falcon Drilling Contract during the
relevant Return Period and the denominator of which is the product of the actual
number of days in such Return Period and 24 hours.
"R&B Usage" means the number of days, rounded to the nearest full day, the
----------
Drillship has been utilized under the R&B Falcon Drilling Contract.
"R&B Usage Ratio" means, from time to time, a fraction (expressed as a
-----------------
percentage) the numerator of which is the maximum number of days during which
R&B Falcon Drilling (International & Deepwater) Inc. is obligated, pursuant to
the terms of the Rig Sharing Agreement, to use the Drillship commencing on the
most recent Adjustment Date preceding the date the rate of the Charter Margin is
to be determined and ending on the scheduled termination of the Drilling
Contracts divided by the total number of days remaining during such period under
----------
the Drilling Contracts.
33
<PAGE>
"Rating Agency" and "Rating Agencies" means S&P and/or Moody's and/or, with
------------- ---------------
respect to any Conduit, any other rating agency rating the Commercial Paper
Notes of any applicable Conduit, as applicable.
"Reasonable Basis" means a reasonable basis within the meaning of Section
-----------------
6662(d)(2)(B)(ii)(II) of the Code or any regulations thereunder.
"Refinancing Amount" means $237,215,675.
-------------------
"Refinancing Date" means December __, 2001.
-----------------
"Refinancing Request" means each written request by Deepwater setting
--------------------
forth, among other things, the Refinancing Date or, if the Contributions and
Advances are postponed under Section 2.8 of the Participation Agreement, the
Refinancing Request issued under such Section, in each case in substantially the
form of Exhibit J to the Participation Agreement with appropriate provisions and
insertions.
"Reimbursement and Proceeds Account" has the meaning specified in Section
------------------------------------
3.3(a) of the Depository Agreement.
"Reimbursement and Proceeds Certificate" has the meaning specified in
-----------------------------------------
Section 3.3(b) of the Depository Agreement.
"Reimbursements" has the meaning specified in Section 3.3(a) of the
--------------
Depository Agreement.
"Related Indemnified Party" means the Affiliates of an Indemnified Party,
---------------------------
the officers, directors, employees and agents of the Indemnified Party and its
Affiliates and, in the case of the Funding Participants and their Related
Indemnified Parties, the Charter Trustee and, in the case of the Charter Trustee
and the Investment Trust, the Funding Participants and their Related Indemnified
Parties.
"Related Party" means (i) with respect to Charter Supplement No. 1 and the
--------------
charter created thereby, Transocean and its Affiliates (other than Deepwater) or
(ii) with respect to Charter Supplement No. 2 and the charter created thereby,
Conoco and its Affiliates (other than Deepwater).
"Release" means any release, pumping, pouring, emptying, injecting,
-------
escaping, leaching, dumping, seepage, spill, leak, flow, discharge, disposal or
emission of Oil or a Hazardous Substance.
"Replacement Funding Participant" has the meaning specified in Section 4.4
--------------------------------
of the Participation Agreement.
"Required Modifications" has the meaning specified in Section 11.1 of the
-----------------------
Master Charter.
34
<PAGE>
"Residual Guaranty Amount" means, (i) upon sale of the Charter Trustee's
--------------------------
interest in the Drillship pursuant to Deepwater's exercise of its Return Option,
the sum of:
(A) the Charter Balance on such date (reduced by any payment of Charter
Supplement Prepayment Amount of Termination Value under Section 4.2(c) of
the Depository Agreement), plus any accrued and unpaid Charter Return,
minus the Net Sales Proceeds; and
-----
(B) all accrued and unpaid Supplemental Hire;
provided, however, that in no event shall the amount calculated in this clause
-------- -------
(i) exceed the Maximum Residual Guaranty Amount; or (ii) if the Charter
Trustee's interest in the Drillship is not sold on or prior to the Scheduled
Charter Expiration Date in accordance with Section 20.3 of the Master Charter,
the Maximum Residual Guaranty Amount.
"Responsible Officer" means, with respect to any matter (i) if a natural
--------------------
Person, such Person; or (ii) if not a natural Person, a senior financial or
legal officer or such other officer of such Person, who in the normal course of
his operational duties would have knowledge of such matter.
"Return Notice" has the meaning specified in Section 20.3 of the Master
--------------
Charter.
"Return Option" has the meaning specified in Section 20.3 of the Master
--------------
Charter.
"Return Period" means with respect to any determination of Charter Return
--------------
(i) the period commencing on and including the Refinancing Date and ending on
but excluding the last day of the month in which the Refinancing Date occurs,
and (ii) thereafter with respect to the Charter Balance, the calendar month
preceding the month in which the Charter Hire Payment Date occurs; provided,
--------
that the last Return Period shall end on the last day of the Charter Term.
"Return Rates" means the Certificate Return Rate and the Loan Return Rate.
-------------
"Revenues" means all amounts received by Deepwater from whatever source,
--------
including all revenues from the Drilling Contracts but excluding (i) those
amounts to be deposited, pursuant to the Depository Agreement, into the Event of
Loss Proceeds Account, Reimbursement and Proceeds Account, Permitted Contest
Reserve Account, Drillship Sales Proceeds Account or the Termination Proceeds
Account, (ii) those amounts which, on the date of payment or receipt, may be
properly distributed to Deepwater (or as directed by Deepwater) under the
Depository Agreement, (iii) those amounts received by Deepwater from the Members
as capital contributions and (iv) those amounts received by Deepwater that
constitute proceeds of Subordinated Debt and (v) proceeds of Casualties and
Condemnations up to $2,000,000 an occurrence.
"Rig Sharing Agreement" means that Rig Sharing Agreement, dated as of April
---------------------
30, 1997, among the Conoco Drilling Party, the R&B Falcon Drilling Party and
Deepwater.
"S&P" means Standard & Poor's Ratings Services, a division of The
---
McGraw-Hill Companies, Inc.
35
<PAGE>
"Scheduled Charter Expiration Date" means, with respect to the Base Charter
---------------------------------
Term, the scheduled expiration of the Base Charter Term and with respect to any
Extension Term, the scheduled expiration of any Extension Term.
"Securities Act" means the Securities Act of 1933, as amended, together
---------------
with the rules and regulations promulgated thereunder.
"Securities Intermediary" means Wilmington Trust Company, a Delaware
------------------------
banking corporation, as securities intermediary and depository under the
Depository Agreement.
"Security Documents" means the collective reference to the Ship Mortgage,
-------------------
the Deepwater Assignment, the Depository Agreement, the Drilling Contract
Guaranties, the Charter Trustee Assignment, the Charter and all other security
documents granting or perfecting a Lien on any asset or assets of any Person to
secure the Deepwater Obligations, the Series A Obligations or the Series B
Obligations.
"Selling Member" has the meaning specified in Section 9.5 of the
---------------
Participation Agreement.
"Series A Charter Trust Certificates" means the Conoco Series A Trust
---------------------------------------
Certificates and the Transocean Series A Trust Certificates.
"Series A Obligations" means the obligations (monetary or otherwise) owed
----------------------
by the Charter Trustee to the Beneficial Owners as evidenced by the Series A
Charter Trust Certificates.
"Series A Portion" means, with respect to any amount, three percent (3%) of
----------------
such amount.
"Series A Return" means:
-----------------
(i) except where clause (ii) of this definition is applicable, for any
Return Period, an amount equal to the product of the applicable Certificate
Return Rate times the Certificate Purchaser Balance (or portion thereof)
allocable to such Return Period or
(ii) where one, but not both, of the Charter Supplements has been
accelerated pursuant to Section 4.2(a) thereof, Series A Return accruing
after the termination of the accelerated Charter Supplement shall be
calculated as, for any Return Period, an amount equal to the product of the
applicable Certificate Return Rate times the Certificate Purchaser Balance
that would have been in effect on such date, but for the acceleration.
"Series B Charter Trust Certificate" means the certificate issued to the
-------------------------------------
Investment Trust from the Charter Trustee pursuant to Section 2.1(f) of the
Original Participation Agreement and in accordance with the Original Trust
Agreements to evidence the Investment Trust Amount.
"Series B Obligations" means those obligations owed by the Charter Trustee
---------------------
to the Investment Trust as evidenced by the Series B Charter Trust Certificate.
Any event which reduces the obligations owed by Deepwater to the holders of the
Notes shall reduce the Series B Obligations to the same extent.
36
<PAGE>
"Series B Return" means
-----------------
(i) except where clause (ii) of this definition is applicable, for any
Return Period, an amount equal to the product of the applicable Loan Return
Rate times the Lender Balance (or portion thereof) allocable to such Return
Period or
(ii) where one, but not both, of the Charter Supplements has been
accelerated pursuant to Section 4.2(a) thereof, Series B Return accruing
after the termination of the accelerated Charter Supplement shall be
calculated as, for any Return Period, an amount equal to the product of the
applicable Loan Return Rate times the Lender Balance that would have been
in effect on such date, but for the acceleration.
"Services Agreements" means the Marine Services Agreement, dated as of
--------------------
April 30, 1997, between Deepwater and Conoco Shipping Company, and the Drilling
Services Agreement, dated as of April 30, 1997, between Deepwater and R&B Falcon
Drilling Co.
"Settlement Date" has the meaning specified in Section 15.2 of the Master
----------------
Charter.
"Ship Mortgage" means a first priority Panamanian mortgage over the Vessel,
-------------
given by the Charter Trustee in favor of the Investment Trust and the Hedging
Agreement Counterparties, if any as amended by the First Addendum to Naval
Mortgage.
"Slot" has the meaning specified in Section 4(a) of the Rig Sharing
----
Agreement.
"Special Purchase Right" has the meaning specified in Section 16.4 of the
------------------------
Master Charter.
"Special Purchase Right Notice" has the meaning specified in Section 16.4
-------------------------------
of the Master Charter.
"Special Purchase Right Payment Amount" has the meaning specified in
-----------------------------------------
Section 16.4 of the Master Charter.
"Special Purchase Right Payment Date" has the meaning specified in Section
------------------------------------
16.4 of the Master Charter.
"Subordinated Debt" means Indebtedness of Deepwater to its Members or
------------------
Affiliates of its Members which is by its terms expressly subordinate to all
payments of Charter Hire (including Basic Hire and all amounts due and owing by
Deepwater to the other parties under the Transaction Documents) (as more fully
set forth on Schedule 4 to the Participation Agreement) and is payable only out
of funds available for distribution under clauses "eighth" and "ninth" of
Section 3.4(b) of the Depository Agreement.
"Subordinated Notes" means promissory notes or other instruments evidencing
------------------
Subordinated Debt.
"Subordinated Operating Expenses" means those fees, costs and expenses
---------------------------------
payable to Affiliates of Transocean and Conoco under the Services Agreements.
37
<PAGE>
"Subsidiary" means, with respect to a Person, any corporation or other
----------
entity of which securities or other ownership interests having ordinary voting
power to elect a majority of the board of directors or other persons performing
similar functions are at the time directly or indirectly owned by such Person.
"Substitute Funding Participant" is defined in Section 7.7 of the
--------------------------------
Participation Agreement.
"Supplement Date" has the meaning specified in Section 15.2 of the Master
----------------
Charter.
"Supplemental Hire" means all amounts, liabilities and obligations (other
------------------
than Basic Hire) which Deepwater assumes, agrees or is otherwise obligated to
pay to the Charter Trustee, the Investment Trust, any Funding Participant or any
other Person under, and subject to, the Charter or any of the other Transaction
Documents, including breakage costs, indemnities, damages and expenses.
"Supplemental Hire" shall include all fees, costs and expenses and other amounts
payable by Deepwater during the Base Charter Term to the Charter Trustee under
the Deepwater Hedging Agreements.
"Swap Termination Amount" means an amount due and payable by the Charter
-------------------------
Trustee under Section 6(d) or (e) of the Hedging Agreements.
"Tax" or "Taxes" means any and all license, registration, mortgage or
--- -----
security filing fees, stamp duties and documentation fees and all taxes,
assessments, levies, sales, use or transfer tax, imposts, duties, charges, fees
or withholdings of any nature whatsoever, together with all penalties, fines or
interest thereon or other additions thereto, imposed by any federal, state or
local government, political subdivision, or taxing authority in the United
States, or by any governmental or taxing authority of or in a foreign country or
possession or territory or any international authority.
"Tax Claim" means a claim for Taxes under the General Tax Indemnity.
----------
"Termination of Refinancing" has the meaning specified in Section 4.1 of
----------------------------
the Participation Agreement.
"Termination Proceeds" has the meaning specified in Section 3.7(a) of the
---------------------
Depository Agreement.
"Termination Proceeds Account" has the meaning specified in Section 3.7(a)
-----------------------------
of the Depository Agreement.
"Termination Proceeds Certificate" has the meaning specified in Section
----------------------------------
3.7(b) of the Depository Agreement.
"Termination Value" means on any date, an amount equal to the Charter
------------------
Balance on such date.
"Transaction Documents" means:
----------------------
(i) the Participation Agreement;
38
<PAGE>
(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) LAPAs;
(xv) Fee Letters;
(xvi) Notes
(xvii) the Conoco Guaranty; and
(xviii) the Transocean Guaranty.
"Transaction Expenses" means:
---------------------
(i) the fees and expenses of Mayer, Brown & Platt, special
counsel to Certificate Purchasers, Liquidity Purchasers and
Administrative Agent, Baker Botts, L.L.P., special counsel
to Deepwater, Watson, Farley & Williams, special maritime
counsel to the Certificate Purchasers, the Conduit,
Liquidity Purchasers, and Administrative Agent, Mayer, Brown
& Platt, special counsel to each of the Conduit (Liberty)
and the Conduit (Paradigm) (including any fees incurred in
connection with extension of each applicable LAPA),
Cadwalader, Wickersham and Taft, special counsel to the
Conduit (Hatteras), (including any fees incurred in
connection with extension of the LAPA (Hatteras)), Arias,
Fabrega & Fabrega, Panamanian counsel to the Liquidity
Purchasers, the Conduit and the Certificate Purchasers,
Benedetti & Benedetti, special Panamanian counsel to
Deepwater, and Walkers, Cayman Islands counsel to
Transocean;
(ii) the fees and expenses of the Placement Agent other than
legal fees and expenses;
(iii) the fees and expenses of the Administrative Agent other than
legal fees and expenses;
(iv) the fees and expenses of the Investment Trust Beneficiary
other than legal fees and expenses;
(v) the fees and expenses of the Trustees;
(vi) the fees and expenses of Delaware counsel to the Investment
Trustee, the Charter Trustee and the Depository;
(vii) certain other expenses incurred in connection with the
negotiation and execution of the Transaction Documents and
the transactions contemplated thereby (including fees or
expenses incurred in connection
39
<PAGE>
with the translation, documentation or recordation of the
Ship Mortgage); and
(viii) the fees and expenses of one local counsel, if any, to the
Funding Participants, the Trustees, the Investment Trust and
the Administrative Agent in connection with the review of
the Head Lease Documents, if any.
"Transfer Restrictions" means the restrictions on transfer of interest
----------------------
imposed on the Trustees and Funding Participants pursuant to Section 9 of the
Participation Agreement.
"Transocean" means Transocean Sedco Forex Inc., an exempt company formed
----------
under the laws of the Cayman Islands.
"Transocean Charter" means the charter created by the Master Charter, as
-------------------
supplemented by Charter Supplement No. 1.
"Transocean Drilling Contract Guaranty" means that Deepwater Drillship
----------------------------------------
Project, Transocean Guaranty, dated as of the Documentation Date given by
Transocean in favor of Deepwater.
"Transocean Guaranty" means the Transocean Guaranty, dated as of the
--------------------
Documentation Date, given by Transocean in favor of the Trustees, the Investment
Trust, the Administrative Agent, the Liquidity Purchasers, the Conduit, the
Certificate Purchasers and the other beneficiaries named therein.
"Transocean Series A Charter Trust Certificate" means each certificate
--------------------------------------------------
issued to a Beneficial Owner from the Charter Trustee pursuant to Section 2.4(a)
of the Participation Agreement and in accordance with the Charter Trust
Agreement to evidence the 60% of the Certificate Purchaser Amount of each such
Beneficial Owner.
"Trust Agreements" means the Charter Trust Agreement and the Investment
-----------------
Trust Agreement.
"Trust Estate" means the sum of $1.00 (receipt of which from the Original
-------------
Certificate Purchasers is hereby acknowledged by the Charter Trustee) and all
estate, right, title and interest of the Charter Trustee and/or the Investment
Trust in, to and under (1) the Charter, (2) the Depository Agreement, (3) the
Drillship and (4) each other Transaction Document to which the Charter Trustee
and/or the Investment Trust is a party.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended,
---------------------
together with the rules and regulations promulgated thereunder.
"Trust Liens" means Liens on or against any or all of the Drillship, the
------------
Trust Estate, the Charter Trust, the Investment Trust, the Charter or any
payment of Charter Hire which result from (a) any act or omission of, or any
Claim against, the Investment Trust, the Investment Trust Beneficiary or the
Trustees in any case unrelated to the transactions contemplated by the
Transaction Documents (including any Liens arising as a result of a voluntary
transfer of the Drillship or all or any portion of the Trust Estate other than
any voluntary transfer after a Charter
40
<PAGE>
Event of Default), (b) any Tax owed by any such Person, except for any Tax
required to be paid by Deepwater under the Transaction Documents, including any
Tax for which Deepwater is obligated to indemnify such Person under the General
Tax Indemnity, or (c) any act or omission of such Person that is in breach of
any of the covenants or agreements of the Transaction Documents.
"Trustee Default Notice" has the meaning specified in Section 4.2(a) of the
----------------------
Depository Agreement.
"Trustee Disbursement Notice (Both Supplements)" has the meaning specified
-----------------------------------------------
in Section 4.2(b) of the Depository Agreement.
"Trustee Disbursement Notice (Either Supplement)" has the meaning specified
-----------------------------------------------
in Section 4.2(c) of the Depository Agreement.
"Trustees" means the Charter Trustee and the Investment Trustee.
--------
"Uniform Commercial Code" and "UCC" means the Uniform Commercial Code as in
----------------------- ---
effect in any applicable jurisdiction.
"United States" and "U.S." shall mean the United States of America.
-------------- ----
"Unsubordinated Operating Expense Amount" means, for each day during any
------------------------------------------
Return Period (or portion thereof) during the Charter Term, $12,000 of Operation
and Maintenance Expenses to be adjusted from time to time as follows: (i)
commencing in the year 2000 on every January 1 during the Charter Term the
"Unsubordinated Operating Expense Amount" shall be adjusted upwards or downwards
by an amount determined in accordance with the following equation: (a) the
Consumer Price Index for December 31 of the most recently ended calendar year
shall be divided by the Consumer Price Index for December 31 of the calendar
year immediately preceding the most recently ended calendar year and (b) the
quotient obtained through the calculation set forth in clause (a) (expressed as
a percentage) shall be multiplied by the "Unsubordinated Operating Expense
Amount" (taking into account all prior adjustments) for the immediately
preceding calendar year; and (ii) for any period during which the Day Rate is
reduced pursuant to the Drilling Contract during the Charter Term, the
Unsubordinated Operating Expense Amount shall be adjusted downwards by an amount
determined in accordance with the following equation: (x) the Day Rate after
such reduction divided by the Day Rate before such reduction and (y) the
quotient (expressed as a percentage) determined in clause (x) shall be
multiplied by the Unsubordinated Operating Expense Amount (taking into account
all prior adjustments) in effect immediately prior to the reduction of Day Rate.
"Upfront Fee Letters" means certain fee letters dated the Documentation
---------------------
Date, each made by Deepwater in favor of each Lender, respectively.
"Vessel" means the 727-foot double-hulled vessel, bearing Hull No. 1231,
------
without the OFE, constructed pursuant to the Construction Contract.
"Voting Stock" means the shares of capital stock of a corporation having
-------------
ordinary voting power to elect a majority of the board of directors of such
corporation, but excluding any other
41
<PAGE>
class or classes of stock that have or might have voting power upon the
occurrence of a contingency.
"War Risk Policy" means a marine "all risk" insurance policy that covers
-----------------
war risks, confiscation, expropriation, nationalization and deprivation risks
for operations of the Drillship outside the United States that complies with
Section 14.1(e) of the Charter and contains the terms of such policy as in
effect on the Documentation Date.
"Warranties" means all of the right, title and interest in, to and under
----------
any warranty, covenant, representation, service life policy, performance
guaranty, indemnity or product support agreement of any contractor,
subcontractor, manufacturer, materialman, supplier, vendor or any other Person
(excluding Conoco, Frontier Deepwater Drilling Inc., R&B Falcon Drilling
(International & Deepwater) Inc., Transocean, Deepwater, the Members, the
Investment Trust, the Trustees and the Certificate Purchasers) (collectively,
the "Warrantors") contained in any contract or agreement, including the
----------
Construction Contract, to the extent that such contracts and agreements relate
to the Vessel, the OFE or any part thereof; provided, however, that the
-------- -------
definition of "Warranties" shall not include adjustments to the contract price
pursuant to Article III of the Construction Contract.
"Warrantors" has the meaning specified in the definition "Warranties".
---------- ----------
"Wilmington Trust Company" means Wilmington Trust Company, a Delaware
--------------------------
banking company.
42