-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JLTER2NnTi4zmIYwZPN3YWvo7JqcwGbZZLZVstKl2+rip2hwDkda9FNDRqtgqsFW Wa1o/ZDgGwj2QqmeAgBQ3A== 0000950134-99-000779.txt : 19990210 0000950134-99-000779.hdr.sgml : 19990210 ACCESSION NUMBER: 0000950134-99-000779 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 11 FILED AS OF DATE: 19990209 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NOBLE DRILLING CORP CENTRAL INDEX KEY: 0000777201 STANDARD INDUSTRIAL CLASSIFICATION: DRILLING OIL & GAS WELLS [1381] IRS NUMBER: 730374541 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: SEC FILE NUMBER: 333-72059 FILM NUMBER: 99526528 BUSINESS ADDRESS: STREET 1: 10370 RICHMOND AVE STE 400 CITY: HOUSTON STATE: TX ZIP: 77042 BUSINESS PHONE: 7139743131 MAIL ADDRESS: STREET 1: 10370 RICHMOND AVE STREET 2: STE 400 CITY: HOUSTON STATE: TX ZIP: 77042 S-3 1 FORM S-3 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 9, 1999 FILE NO. 333- ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------- FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 --------------- NOBLE DRILLING CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 73-0374541 (State or other jurisdiction of (I.R.S. employer identification no.) incorporation or organization) 10370 RICHMOND AVENUE JAMES C. DAY SUITE 400 CHAIRMAN AND CHIEF EXECUTIVE OFFICER HOUSTON, TEXAS 77042 NOBLE DRILLING CORPORATION (713) 974-3131 10370 RICHMOND AVENUE, SUITE 400 (Address, including zip code, and telephone number, HOUSTON, TEXAS 77042 including area code, of Registrant's principal (713) 974-3131 executive offices) (Name, address, including zip code, and telephone number, including area code, of agent for service)
--------------- With a copy to: David L. Emmons Thompson & Knight, P.C. 1700 Pacific Avenue, Suite 3300 Dallas, Texas 75201 APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to time after effectiveness If the only securities being registered on this form are being offered pursuant to dividend or interest reinvestment plans, check the following box.[ ] If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [X] If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this form is a post-effective amendment filed pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ] --------------- CALCULATION OF REGISTRATION FEE(1)
- ----------------------------------------------------------------------------------------------------------------------------------- Proposed Maximum Proposed Maximum Title of Each Class of Amount to be Offering Price per Aggregate Offering Amount of Securities to be Registered Registered Unit(1) Price(1) Registration Fee(2) - ----------------------------------------------------------------------------------------------------------------------------------- Debt Securities(3)(4)........................... - ----------------------------------------------------------------------------------------------------------------------------------- Common Stock, par value $.10 per share(4)....... - ----------------------------------------------------------------------------------------------------------------------------------- Preferred Stock, par value $1.00 per share(4)(5) - ----------------------------------------------------------------------------------------------------------------------------------- Depositary Shares(6)............................ - ----------------------------------------------------------------------------------------------------------------------------------- Warrants(7)..................................... - ----------------------------------------------------------------------------------------------------------------------------------- Total........................................... $100,000,000 100% $100,000,000 $27,800 - -----------------------------------------------------------------------------------------------------------------------------------
2 (1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o). In no event will the aggregate initial offering price of all securities issued from time to time pursuant to this Registration Statement exceed $100,000,000. Any securities registered hereunder may be sold separately or as units with other securities registered hereunder. (2) Pursuant to Rule 429 of the Securities Act of 1933, the prospectus included herein also covers $300,000,000 of securities from a previous registration statement (No. 333-68507), as to which a registration fee of $83,400 was paid. (3) Subject to note (1), there are being registered hereunder an indeterminate principal amount of Debt Securities. If any Debt Securities are being issued at an original issue discount, then the offering price shall be in such greater principal amount as shall result in an aggregate initial offering price not to exceed $100,000,000, less the dollar amount of any securities previously issued hereunder. (4) Subject to note (1), there are being registered hereunder an indeterminate number of shares of Common Stock as may be sold, from time to time, by the Registrant. There are also being registered hereunder an indeterminate number of shares of Common Stock as shall be issuable upon conversion or redemption of Preferred Stock or Debt Securities registered hereby. The Common Stock being registered includes associated Preferred Stock purchase rights. (5) Subject to note (1), there are being registered hereunder an indeterminate number of shares of Preferred Stock as may be sold, from time to time, by the Registrant. (6) Subject to note (1), there are being registered hereunder an indeterminate number of Depositary Shares to be evidenced by Depositary Receipts issued pursuant to a Deposit Agreement. In the event the Registrant elects to offer to the public fractional interests in shares of Preferred Stock registered hereunder, Depositary Receipts will be distributed to those persons purchasing such fractional interests, and the shares of Preferred Stock will be issued to the depositary under the Deposit Agreement. (7) Subject to note (1), there are being registered hereunder an indeterminate amount and number of Warrants, representing rights to purchase Preferred Stock, Common Stock or Debt Securities registered hereby or equity securities issued by an unaffiliated corporation or other entity and held by the Registrant. ------------------ Pursuant to Rule 429 under the Securities Act of 1933, the prospectus included in this registration statement will also be used in connection with registration statement No. 333-68507 previously filed by the Registrant on Form S-3. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the SEC, acting pursuant to said section 8(a), may determine. ================================================================================ 3 Subject to Completion Dated February 9, 1999 Preliminary Prospectus $400,000,000 [LOGO] DEBT SECURITIES COMMON STOCK PREFERRED STOCK WARRANTS NOBLE DRILLING CORPORATION ------------------- We may offer from time to time (1) unsecured debt securities consisting of senior notes and debentures and subordinated notes and debentures and/or other unsecured evidences of indebtedness in one or more series; (2) shares of common stock; (3) shares of preferred stock, in one or more series, which may be convertible into or exchangeable for common stock or debt securities; and (4) warrants to purchase debt securities, preferred stock, common stock or other securities. The aggregate initial offering price of the securities that we offer will not exceed $400,000,000. We will offer the securities in amounts, at prices and on terms to be determined by market conditions at the time of our offerings. We will provide the specific terms of the securities in supplements to this Prospectus. You should read this Prospectus and the Prospectus Supplements carefully before you invest in any of our securities. This Prospectus may not be used to consummate sales of our securities unless it is accompanied by a Prospectus Supplement. ------------------- BEFORE INVESTING IN OUR SECURITIES, YOU SHOULD REVIEW THE "RISK FACTORS" SECTION OF THIS PROSPECTUS BEGINNING ON PAGE 4. ------------------- Neither the Securities and Exchange Commission nor any state securities commission has approved of the securities to be issued under this Prospectus or determined if this Prospectus is accurate or adequate. Any representation to the contrary is a criminal offense. ------------------- The information in this Prospectus is incomplete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This Prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. We may not use this Prospectus to sell securities unless we also give prospective investors a Prospectus Supplement. ------------------- This Prospectus is dated February , 1999 4 TABLE OF CONTENTS
PAGE ---- ABOUT THIS PROSPECTUS.....................................................................................................3 WHERE YOU CAN FIND MORE INFORMATION.......................................................................................3 THE COMPANY...............................................................................................................4 RISK FACTORS..............................................................................................................4 Dependance on the Oil and Gas Industry...........................................................................4 Risks of Modification, Refurbishment and Upgrade Projects........................................................4 Early Contract Terminations and Contract Cancelation.............................................................5 A WARNING ABOUT FORWARD-LOOKING STATEMENTS................................................................................5 USE OF PROCEEDS...........................................................................................................5 RATIO OF EARNINGS TO FIXED CHARGES........................................................................................6 DESCRIPTION OF DEBT SECURITIES............................................................................................6 General..........................................................................................................6 Denominations....................................................................................................7 Subordination....................................................................................................8 Consolidation, Merger or Sale....................................................................................8 Modification of Indentures.......................................................................................8 Events of Default................................................................................................8 Covenants........................................................................................................9 Payment and Transfer.............................................................................................9 Global Securities................................................................................................9 Defeasance......................................................................................................11 Meetings........................................................................................................11 Governing Law...................................................................................................12 Notices.........................................................................................................12 DESCRIPTION OF CAPITAL STOCK.............................................................................................12 General.........................................................................................................12 Common Stock....................................................................................................12 Preferred Stock and Depositary Shares...........................................................................13 Warrants........................................................................................................18 Foreign Ownership...............................................................................................18 Preferred Stock Purchase Rights.................................................................................19 PLAN OF DISTRIBUTION.....................................................................................................19 By Agents.......................................................................................................19 By Underwriters.................................................................................................19 Direct Sales....................................................................................................19 General Information.............................................................................................19 LEGAL MATTERS............................................................................................................20 EXPERTS..................................................................................................................20
2 5 ABOUT THIS PROSPECTUS This Prospectus is part of a registration statement that we filed with the Securities and Exchange Commission (the "SEC") utilizing a "shelf" registration process. Under this shelf process, we may, over the next two years, sell different types of the securities described in this Prospectus in one or more offerings up to a total offering amount of $400,000,000. This Prospectus provides you with a general description of the securities we may offer. Each time we sell securities, we will provide a Prospectus Supplement that will contain specific information about the terms of that offering and the securities offered by us in that offering. The Prospectus Supplement may also add, update or change information contained in this Prospectus. You should read both this Prospectus and any Prospectus Supplement together with additional information described under the heading WHERE YOU CAN FIND MORE INFORMATION. WHERE YOU CAN FIND MORE INFORMATION We file annual, quarterly and special reports, proxy statements and other information with the SEC. Our SEC filings are available to the public over the Internet at the SEC's web site at http://www.sec.gov. You may also read and copy any document we file at the SEC's public reference rooms in Washington, D.C., New York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms. The SEC allows us to "incorporate by reference" the information we file with them, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is an important part of this Prospectus, and information that we file later with the SEC will automatically update and supersede this information. We incorporate by reference the documents listed below and any future filings we make with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934 until our offering is completed. o Annual Report on Form 10-K for the year ended December 31, 1997; o Quarterly Reports on Form 10-Q for the quarters ended March 31, 1998, June 30, 1998 and September 30, 1998; and o The descriptions of our Common Stock and Preferred Stock Purchase Rights contained in our Registration Statements filed under Section 12 of the Securities Exchange Act of 1934. You may request a copy of these filings, at no cost, by writing or telephoning us at the following address: Julie J. Robertson Vice President-Administration and Corporate Secretary Noble Drilling Corporation 10370 Richmond Avenue, Suite 400 Houston, Texas 77042 (713) 974-3131 You should rely only on the information incorporated by reference or provided in this Prospectus or any Prospectus Supplement. We have not authorized anyone else to provide you with different information. We are not making an offer of these securities in any state where the offer is not permitted. You should not assume that the information in this Prospectus or any Prospectus Supplement is accurate as of any date other than the date on the front of those documents. 3 6 THE COMPANY Noble Drilling Corporation provides diversified services to the oil and gas industry worldwide, including offshore drilling services, turnkey drilling services and engineering and production management services. Because our drilling fleet is broadly diversified, we are able to provide drilling services in a variety of water depths and operating conditions. We have been providing contract oil and gas drilling services in the United States since 1921 and internationally during various periods since 1939. Our offshore drilling rig fleet consists of 47 units comprising nine semisubmersibles (including three active, three submersibles in various stages of conversion, one semisubmersible being upgraded and two hulls), three dynamically positioned drillships, 32 independent leg cantilevered jackup rigs and three submersibles. These rig counts include three units in which we have a partial ownership interest through joint ventures: one semisubmersible hull, one jackup and one drillship. Under our EVA-4000(TM) program, we have been converting submersible units to semisubmersible units. We have completed two such conversions, the Noble Paul Romano and the Noble Paul Wolff, and we expect to complete and deliver three other converted units, the Noble Jim Thompson, Noble Amos Runner and Noble Max Smith, in 1999. In addition, we are substantially upgrading one of our semisubmersibles. These conversion projects are part of our strategy to increase the number of rigs in our fleet capable of drilling in deeper water. RISK FACTORS Investing in our securities involves a certain amount of risk. You should carefully consider the following factors, among others, before deciding to invest. DEPENDENCE ON THE OIL AND GAS INDUSTRY Our results of operations depend on the levels of activity in offshore oil and gas exploration, development and production in markets worldwide. Both short-term and long-term trends in oil and gas affect that activity. During the second quarter of 1998, demand for offshore drilling rigs began to decrease. As a result, rig utilization and dayrates have declined, starting in mid-1998 domestically and later in 1998 internationally. We believe this decline is largely attributable to declines in oil prices that began in 1997, which prices have remained at low levels as compared to average prices in recent years. Oil and gas prices and market expectations of potential changes in these prices significantly affect the level of activity in oil and gas exploration, development and production. These market prices are extremely volatile. Demand for drilling services depends on a variety of political and economic factors, including worldwide demand for oil and gas, the ability of the Organization of Petroleum Exporting Countries ("OPEC") to set and maintain production levels and pricing, the level of production of non-OPEC countries and the policies of the various governments regarding exploration and development of their oil and gas reserves. We believe that any decrease form current oil and gas prices, or extended periods at current price levels, will further depress the level of exploration and production activity and result in a corresponding decline in demand for our services. The number of completed and pending transactions consolidating oil and gas companies have resulted in, and are likely to continue to result in, reductions in capital spending for exploration and production. These reductions adversely affect the demand for our services. For these reasons, we cannot predict the future level of demand for our drilling services or future conditions in the offshore contract drilling industry. RISKS OF MODIFICATION, REFURBISHMENT AND UPGRADE PROJECTS We have committed and intend to continue to commit a significant amount of our capital resources to modify, refurbish and upgrade certain of our drilling rigs. We have completed the upgrade of two of our shallow water submersible rigs into EVA-4000(TM) design semisubmersible rigs and are similarly upgrading an additional three submersible rigs. In addition, we are substantially upgrading one of our semisubmersibles. These ongoing projects are subject to the risks of delay or cost overruns inherent in large construction and refurbishment projects, including shipyard availability, shortages of materials or skilled labor, unforeseen engineering problems, work stoppages, 4 7 weather interference, unanticipated cost increases, nonavailability of necessary equipment and inability to obtain any of the requisite permits or approvals. Significant delays will hurt our marketing plans for such rigs and may jeopardize the contracts or letters of intent we have negotiated for such rigs. EARLY CONTRACT TERMINATIONS AND CONTRACT CANCELLATION Our term drilling contracts generally contain provisions permitting early termination by the customer without cause upon a specified advance notice to us. In reaction to depressed market conditions, our customers may seek to avoid or reduce their obligations under term drilling contracts. A customer may no longer need a rig, due to a reduction in its exploration, development or production program, or it may seek to obtain a comparable rig at a lower dayrate. A WARNING ABOUT FORWARD-LOOKING STATEMENTS We make forward-looking statements in this document, and in our public documents to which we refer, that are subject to risks and uncertainties in addition to those set forth above. These forward-looking statements include information about possible or assumed future results of our operations. Also, when we use any of the words "believes," "expects," "anticipates" or similar expressions, we are making forward-looking statements. Many possible events or factors could affect our future financial results and performance. This could cause our results or performance to differ materially from those we express in our forward-looking statements. You should consider these risks when you purchase securities. These possible events or factors include the following: o volatility in crude oil and natural gas prices; o heavy demand for the equipment and services that we need in order to finish on schedule the major shipyard refurbishment and conversion projects that are in various stages of completion or that we plan to begin; o potential further deterioration of our customer's demand for our drilling services; o risks associated with turnkey drilling operations; o intense competition in the drilling industry; o political and economic conditions in international markets where we operate; o adverse weather (such as hurricanes) and seas; o operational risks (such as blowouts, fires and loss of production); o early termination provisions generally found in our drilling contracts; o limitations on insurance coverage; and o requirements and potential liability imposed by governmental regulation of the drilling industry (including environmental regulation). USE OF PROCEEDS Unless we specify otherwise in the applicable Prospectus Supplement, the net proceeds (after the payment of offering expenses and underwriting discounts or commissions) we receive from the sale of the securities offered by this Prospectus and any Prospectus Supplement will be used for general corporate purposes. General corporate purposes may include any of the following: o funding capital expenditures; o repaying debt; o investing in or lending money to our subsidiaries; o providing working capital; 5 8 o redeeming our preferred stock (currently, there is none outstanding); or o paying for possible acquisitions or the expansion of our businesses. We may temporarily invest the net proceeds we receive from any offering of securities or use the net proceeds to repay short-term debt until we can use them for their stated purposes. RATIO OF EARNINGS TO FIXED CHARGES The ratio of earnings to fixed charges for each of the periods indicated is as follows:
- ------------------------------------------------------------------------------------------------------------------------- Nine Months Twelve Months Ended December 31, Ended ---------------------------------------------------------------------------------------------- September 30, 1998 1997 1996 1995 1994 1993 - ------------------------------------------------------------------------------------------------------------------------- 12.1 20.6 6.0 1.4 3.1 4.1 - -------------------------------------------------------------------------------------------------------------------------
These computations include us and our subsidiaries, and companies in which we own 50% or less of the outstanding equity. For these ratios, "earnings" is determined by adding "total fixed charges" (excluding interest capitalized), income taxes, minority common stockholders equity in net income and amortization of interest capitalized to income from continuing operations after eliminating equity in undistributed earnings and adding back losses of companies in which at least 20% but less than 50% equity is owned. For this purpose, "total fixed charges" consists of (1) interest on all indebtedness and amortization of debt discount and expense, (2) interest capitalized and (3) an interest factor attributable to rentals. DESCRIPTION OF DEBT SECURITIES Any Debt Securities we offer will be our direct unsecured general obligations. The Debt Securities will be either senior debt securities or subordinated debt securities. The Debt Securities will be issued under one or more separate indentures between us and Chase Bank of Texas, National Association, as Trustee. Senior Debt Securities will be issued under a "Senior Indenture" and Subordinated Debt Securities will be issued under a "Subordinated Indenture". Together the Senior Indenture and the Subordinated Indenture are called "Indentures". We have summarized selected provisions of the Indentures below. The summary is not complete. The forms of the Indentures have been filed as exhibits to the registration statement and you should read the Indentures for provisions that may be important to you. In the summary below, we have included references to section numbers of the applicable Indentures so that you can easily locate these provisions. Capitalized terms used in the summary have the meanings specified in the Indentures. GENERAL The Debt Securities will be our direct, unsecured obligations. The Senior Debt Securities will rank equally with all of our other senior and unsubordinated debt. The Subordinated Debt Securities will have a junior position to all of our Senior Debt. We conduct a substantial part of our operations through our subsidiaries. To the extent of such operations, holders of Debt Securities will have a position junior to the prior claims of creditors of our subsidiaries, including trade creditors, debtholders, secured creditors, taxing authorities and guarantee holders, and any preferred stockholders, except to the extent that we may ourself be a creditor with recognized claims against any subsidiary. 6 9 Our ability to pay principal of and premium, if any, and interest on any Debt Securities is, to a large extent, dependent upon the payment to us of dividends, interest or other charges by our subsidiaries. Three of our subsidiaries recently borrowed $112.25 million, $145 million and $115 million, respectively, in connection with the Noble Paul Romano, Noble Paul Wolff and Noble Jim Thompson conversions from submersibles to EVA-4000(TM) semisubmersibles. The outstanding indebtedness for the Noble Paul Wolff and for the Noble Jim Thompson is guaranteed by us. The outstanding indebtedness for the Noble Paul Romano is non-recourse to us and any of our subsidiaries other than the subsidiary that issued the debt. A Prospectus Supplement and a supplemental indenture relating to any series of Debt Securities being offered will include specific terms relating to the offering. These terms will include some or all of the following: o The title and type of the Debt Securities; o The total principal amount of the Debt Securities; o The percentage of the principal amount at which the Debt Securities will be issued and any payments due if the maturity of the Debt Securities is accelerated; o The dates on which the principal of the Debt Securities will be payable; o The interest rate which the Debt Securities will bear and the interest payment dates for the Debt Securities; o Any optional redemption periods; o Any sinking fund or other provisions that would obligate us to repurchase or otherwise redeem some or all of the Debt Securities; o Any provisions granting special rights to holders when a specified event occurs; o Any changes to or additional Events of Defaults or covenants; o Any special tax implications of the Debt Securities, including provisions for Original Issue Discount Securities, if offered; and o Any other terms of the Debt Securities. None of the Indentures limits the amount of Debt Securities that may be issued. Each Indenture allows Debt Securities to be issued up to the principal amount that may be authorized by us and may be in any currency or currency unit designated by us. Debt Securities of a series may be issued in registered, bearer, coupon or global form. (Sections 201 & 203.) DENOMINATIONS The Prospectus Supplement for each issuance of Debt Securities will state whether the securities will be issued in registered form of $1,000 each or multiples thereof or bearer form of $5,000 each. 7 10 SUBORDINATION Under the Subordinated Indenture, payment of the principal, interest and any premium on the Subordinated Debt Securities will generally be subordinated and junior in right of payment to the prior payment in full of all Senior Debt. The Subordinated Indenture provides that no payment of principal, interest and any premium on the Subordinated Debt Securities may be made in the event: o of any insolvency, bankruptcy or similar proceeding involving us or our property, or o we fail to pay the principal, interest, any premium or any other amounts on any Senior Debt when due. The Subordinated Indenture will not limit the amount of Senior Debt that we may incur. "Senior Debt" is defined to include all notes or other unsecured evidences of indebtedness, including guarantees given by us, for money borrowed by us, not expressed to be subordinate or junior in right of payment to any of our other indebtedness. CONSOLIDATION, MERGER OR SALE Each Indenture generally permits a consolidation or merger between us and another corporation. They also permit the sale by us of all or substantially all of our property and assets. If this happens, the remaining or acquiring corporation shall assume all of our responsibilities and liabilities under the Indentures, including the payment of all amounts due on the Debt Securities and performance of the covenants in the Indentures. However, we will consolidate or merge with or into any other corporation or sell all or substantially all of our assets only according to the terms and conditions of the Indentures. The remaining or acquiring corporation will be substituted for us in the Indentures with the same effect as if it had been an original party to the Indentures. Thereafter, the successor corporation may exercise our rights and powers under any Indenture, in our name or in its own name. Any act or proceeding required or permitted to be done by our Board of Directors or any of our officers may be done by the board or officers of the successor corporation. If we sell all or substantially all of our assets, we shall be released from all our liabilities and obligations under any Indenture and under the Debt Securities. (Sections 801 & 802.) MODIFICATION OF INDENTURES Under each Indenture our rights and obligations and the rights of the holders may be modified with the consent of the holders of a majority in aggregate principal amount of the outstanding Debt Securities of each series affected by the modification. No modification of the principal or interest payment terms, and no modification reducing the percentage required for modifications, is effective against any holder without its consent. (Sections 901 & 902.) EVENTS OF DEFAULT "Event of Default" when used in an Indenture, will mean any of the following: o failure to pay the principal of or any premium on any Debt Security when due; o failure to deposit any sinking fund payment when due; o failure to pay interest on any Debt Security for 30 days; o failure to perform any other covenant in the Indenture that continues for 90 days after being given written notice; o certain events in bankruptcy, insolvency or reorganization of Noble Drilling Corporation; or 8 11 o any other Event of Default included in any Indenture or supplemental indenture. (Section 501.) An Event of Default for a particular series of Debt Securities does not necessarily constitute an Event of Default for any other series of Debt Securities issued under an Indenture. The Trustee may withhold notice to the holders of Debt Securities of any default (except in the payment of principal or interest) if it considers such withholding of notice to be in the best interests of the holders. (Section 602.) If an Event of Default for any series of Debt Securities occurs and continues, the Trustee or the holders of at least 25% in aggregate principal amount of the Debt Securities of the series may declare the entire principal of all the Debt Securities of that series to be due and payable immediately. If this happens, subject to certain conditions, the holders of a majority of the aggregate principal amount of the Debt Securities of that series can void the declaration. (Section 502.) Other than its duties in case of a default, a Trustee is not obligated to exercise any of its rights or powers under any Indenture at the request, order or direction of any holders, unless the holders offer the Trustee reasonable indemnity. (Section 601.) If they provide this reasonable indemnification, the holders of a majority in principal amount of any series of Debt Securities may direct the time, method and place of conducting any proceeding or any remedy available to the Trustee, or exercising any power conferred upon the Trustee, for any series of Debt Securities. (Section 512.) COVENANTS Under the Indentures, we will: o pay the principal of, and interest and any premium on, the Debt Securities when due; o maintain a place of payment; o deliver a report to the Trustee at the end of each fiscal year reviewing our obligations under the Indentures; and o deposit sufficient funds with any paying agent on or before the due date for any principal, interest or premium. PAYMENT AND TRANSFER Principal, interest and any premium on fully registered securities will be paid at designated places. Payment will be made by check mailed to the persons in whose names the Debt Securities are registered on days specified in the Indentures or any Prospectus Supplement. Debt Securities payments in other forms will be paid at a place designated by us and specified in a Prospectus Supplement. (Section 307.) Fully registered securities may be transferred or exchanged at the corporate trust office of the Trustee or at any other office or agency maintained by us for such purposes, without the payment of any service charge except for any tax or governmental charge. (Section 1002.) GLOBAL SECURITIES Certain series of the Debt Securities may be issued as permanent global Debt Securities to be deposited with a depositary with respect to that series. Unless otherwise indicated in the Prospectus Supplement, the following is a summary of the depository arrangements applicable to Debt Securities issued in permanent global form and for which The Depositary Trust Company ("DTC") acts as depositary (the "Global Debt Securities"). Each Global Debt Security will be deposited with, or on behalf of, DTC, as depositary, or its nominee and registered in the name of a nominee of DTC. Except under the limited circumstances described below, Global Debt Securities are not exchangeable for definitive certificated Debt Securities. 9 12 Ownership of beneficial interests in a Global Debt Security is limited to institutions that have accounts with DTC or its nominee ("participants") or persons that may hold interests through participants. In addition, ownership of beneficial interests by participants in a Global Debt Security will be evidenced only by, and the transfer of that ownership interest will be effected only through, records maintained by DTC or its nominee for a Global Debt Security. Ownership of beneficial interests in a Global Debt Security by persons that hold through participants will be evidenced only by, and the transfer of that ownership interest within that participant will be effected only through, records maintained by that participant. DTC has no knowledge of the actual beneficial owners of the Debt Securities. Beneficial owners will not receive written confirmation from DTC of their purchase, but beneficial owners are expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the participants through which the beneficial owners entered the transaction. The laws of some jurisdictions require that certain purchasers of securities take physical delivery of such securities in definitive form. Such laws may impair the ability to transfer beneficial interests in a Global Debt Security. Payment of principal of, and interest on, Debt Securities represented by a Global Debt Security registered in the name of or held by DTC or its nominee will be made to DTC or its nominee, as the case may be, as the registered owner and holder of the Global Debt Security representing those Debt Securities. We have been advised by DTC that upon receipt of any payment of principal of, or interest on, a Global Debt Security, DTC will immediately credit accounts of participants on its book-entry registration and transfer system with payments in amounts proportionate to their respective beneficial interests in the principal amount of that Global Debt Security as shown in the records of DTC. Payments by participants to owners of beneficial interests in a Global Debt Security held through those participants will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers in bearer form or registered in "street name", and will be the sole responsibility of those participants, subject to any statutory or regulatory requirements that may be in effect from time to time. Neither we, any Trustee nor any of our respective agents will be responsible for any aspect of the records of DTC, any nominee or any participant relating to, or payments made on account of, beneficial interests in a permanent Global Debt Security or for maintaining, supervising or reviewing any of the records of DTC, any nominee or any participant relating to such beneficial interests. A Global Debt Security is exchangeable for definitive Debt Securities registered in the name of, and a transfer of a Global Debt Security may be registered to, any person other than DTC or its nominee, only if: o DTC notifies us that it is unwilling or unable to continue as depositary for that Global Debt Security or at any time DTC ceases to be registered under the Exchange Act; o we determine in our discretion that the Global Debt Security shall be exchangeable for definitive Debt Securities in registered form; or o there shall have occurred and be continuing an Event of Default or an event which, with notice or the lapse of time or both, would constitute an Event of Default under the Debt Securities. Any Global Debt Security that is exchangeable pursuant to the preceding sentence will be exchangeable in whole for definitive Debt Securities in registered form, of like tenor and of an equal aggregate principal amount as the Global Debt Security, in denominations specified in the applicable Prospectus Supplement (if other than $1,000 and integral multiples of $1,000). The definitive Debt Securities will be registered by the registrar in the name or names instructed by DTC. We expect that these instructions may be based upon directions received by DTC from its participants with respect to ownership of beneficial interests in the Global Debt Security. Except as provided above, owners of the beneficial interests in a Global Debt Security will not be entitled to receive physical delivery of Debt Securities in definitive form and will not be considered the holders of Debt Securities for any purpose under the Indentures. No Global Debt Security shall be exchangeable except for another Global Debt Security of like denomination and tenor to be registered in the name of DTC or its nominee. Accordingly, each person owning a beneficial interest in a Global Debt Security must rely on the procedures of 10 13 DTC and, if that person is not a participant, on the procedures of the participant through which that person owns its interest, to exercise any rights of a holder under the Global Debt Security or the Indentures. We understand that, under existing industry practices, in the event that we request any action of holders, or an owner of a beneficial interest in a Global Debt Security desires to give or take any action that a holder is entitled to give or take under the Debt Securities or the Indentures, DTC would authorize the participants holding the relevant beneficial interests to give or take that action, and those participants would authorize beneficial owners owning through those participants to give or take that action or would otherwise act upon the instructions of beneficial owners owning through them. DTC has advised us that DTC is a limited purpose trust company organized under the laws of the State of New York, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code and a "clearing agency" registered under the Exchange Act. DTC was created to hold securities of its participants and to facilitate the clearance and settlement of securities transactions among its participants in those securities through electronic book-entry changes in accounts of the participants, thereby eliminating the need for physical movement of securities certificates. DTC's participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. DTC is owned by a number of its participants and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc. and the National Association of Securities Dealers, Inc. Access to DTC's book-entry system is also available to others, such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a participant, either directly or indirectly. The rules applicable to DTC and its participants are on file with the SEC. DEFEASANCE We will be discharged from our obligations on the Debt Securities of any series at any time if we deposit with the Trustee sufficient cash or government securities to pay the principal, interest, any premium and any other sums due to the stated maturity date or a redemption date of the Debt Securities of the series. If this happens, the holders of the Debt Securities of the series will not be entitled to the benefits of the Indenture except for registration of transfer and exchange of Debt Securities and replacement of lost, stolen or mutilated Debt Securities. (Section 401.) Under Federal income tax law as of the date of this Prospectus, a discharge may be treated as an exchange of the related Debt Securities. Each holder might be required to recognize gain or loss equal to the difference between the holder's cost or other tax basis for the Debt Securities and the value of the holder's interest in the trust. Holders might be required to include as income a different amount than would be includable without the discharge. Prospective investors are urged to consult their own tax advisers as to the consequences of a discharge, including the applicability and effect of tax laws other than the Federal income tax law. MEETINGS Each Indenture contains provisions describing how meetings of the Holders of Debt Securities of a series may be convened. A meeting may be called at any time by the Trustee, and also, upon request, by us or the Holders of at least 10% in principal amount of the outstanding Debt Securities of a series. A notice of the meeting must always be given in the manner described under "-Notices" below. Generally speaking, except for any consent that must be given by all Holders of a series as described under "-Modification of Indentures" above, any resolution presented at a meeting of the Holders of a series of Debt Securities may be adopted by the affirmative vote of the Holders of a majority in principal amount of the outstanding Debt Securities of that series, unless the Indenture allows the action to be voted upon to be taken with the approval of the Holders of a different specific percentage of principal amount of outstanding Debt Securities of a series. In that case, the Holders of outstanding Debt Securities of at least the specified percentage must vote in favor of the action. Any resolution passed or decision taken at any meeting of Holders of Debt Securities of any series in accordance with the applicable Indenture will be binding on all Holders of Debt Securities of that series and any related coupons, unless, as discussed in "-Modification of Indentures" above, the action is only effective against Holders that have approved it. The quorum at any meeting 11 14 called to adopt a resolution, and at any reconvened meeting, will be Holders holding or representing a majority in principal amount of the outstanding Debt Securities of a series. GOVERNING LAW Each Indenture and the Debt Securities will be governed by and construed in accordance with the laws of the State of New York. NOTICES Notices to Holders of Debt Securities will be given by mail to the addresses of such Holders as they appear in the Security Register. DESCRIPTION OF CAPITAL STOCK GENERAL As of the date of this Prospectus, we are authorized to issue up to 215,000,000 shares of stock, including up to 200,000,000 shares of Common Stock and up to 15,000,000 shares of Preferred Stock. As of January 31, 1999, we had 131,142,198 shares of Common Stock and no shares of Preferred Stock outstanding. As of that date, we also had approximately 1,918,554 shares of Common Stock reserved for issuance upon exercise of options or in connection with other awards outstanding under various employee or director incentive, compensation and option plans. In addition, we have reserved for issuance shares of Common Stock for our matching fund obligations under our 401(k) savings plan and employee retirement plans. The following summary is not complete. You should refer to the applicable provisions of our Certificate of Incorporation, the Delaware General Corporation Law and the documents we have incorporated by reference for a complete statement of the terms and rights of our capital stock. COMMON STOCK Voting Rights. Each Holder of Common Stock is entitled to one vote per share. Subject to the rights, if any, of the holders of any series of Preferred Stock pursuant to applicable law or the provision of the Certificate of Designations creating that series, all voting rights are vested in the holders of shares of Common Stock. Holders of shares of Common Stock have noncumulative voting rights, which means that the holders of more than 50% of the shares voting for the election of directors can elect 100% of the directors, and the holders of the remaining shares voting for the election of directors will not be able to elect any directors. Dividends. Dividends may be paid to the holders of Common Stock when, as and if declared by the Board of Directors out of funds legally available for their payment, subject to the rights of holders of any Preferred Stock. Rights Upon Liquidation. In the event of our voluntary or involuntary liquidation, dissolution or winding up, the holders of Common Stock will be entitled to share equally in any of our assets available for distribution after the payment in full of all debts and distributions and after the holders of all series of outstanding Preferred Stock, if any, have received their liquidation preferences in full. Miscellaneous. The issued and outstanding shares of Common Stock are fully paid and nonassessable. Holders of shares of Common Stock are not entitled to preemptive rights. Shares of Common Stock are not convertible into shares of any other class of capital stock. Bank One Trust Company, N.A., Oklahoma City, Oklahoma, is the transfer agent and registrar for the Common Stock. The Common Stock is listed on the New York Stock Exchange under the symbol "NE." 12 15 PREFERRED STOCK AND DEPOSITARY SHARES We may issue shares of our Preferred Stock in one or more series. We will determine the dividend, voting, conversion and other rights of the series being offered and the terms and conditions relating to its offering and sale at the time of the offer and sale. We may also issue fractional shares of Preferred Stock that will be represented by Depositary Shares and Depositary Receipts. Description of Preferred Stock. The Certificate of Incorporation authorizes the Board of Directors or a committee of the Board of Directors to cause Preferred Stock to be issued in one or more series, without stockholder action. The Board of Directors is authorized to issue up to 15,000,000 shares of Preferred Stock, and can determine the number of shares of each series, and the rights, preferences and limitations of each series. We may amend the Certificate of Incorporation to increase the number of authorized shares of Preferred Stock in a manner permitted by the Certificate of Incorporation and the Delaware General Corporation Law. As of the date of this Prospectus, we have no shares of Preferred Stock outstanding. The particular terms of any series of Preferred Stock being offered by us under this shelf registration will be described in the Prospectus Supplement relating to that series of Preferred Stock. Those terms may include: o the number of shares of the series of Preferred Stock being offered; o the title and liquidation preference per share of that series of the Preferred Stock; o the purchase price of the Preferred Stock; o the dividend rate (or method for determining such rate); o the dates on which dividends will be paid; o whether dividends on that series of Preferred Stock will be cumulative or non-cumulative and, if cumulative, the dates from which dividends shall commence to accumulate; o any redemption or sinking fund provisions applicable to that series of Preferred Stock; o any conversion provisions applicable to that series of Preferred Stock; o whether we have elected to offer Depositary Shares with respect to that series of Preferred Stock; or o any additional dividend, liquidation, redemption, sinking fund and other rights and restrictions applicable to that series of Preferred Stock. If the terms of any series of Preferred Stock being offered differ from the terms set forth below, those terms will also be disclosed in the Prospectus Supplement relating to that series of Preferred Stock. The following summary is not complete. You should refer to the Certificate of Designations relating to the series of the Preferred Stock for the complete terms of that Preferred Stock. That Certificate of Designations for any series of Preferred Stock will be filed with the SEC promptly after the offering of that series of Preferred Stock. The Preferred Stock will, when issued, be fully paid and nonassessable. Unless otherwise specified in the Prospectus Supplement, in the event we liquidate, dissolve or wind-up our business, each series of Preferred Stock will have the same rank as to dividends and distributions as each other series of the Preferred Stock we may issue in the future. The Preferred Stock will have no preemptive rights. Dividend Rights. Holders of Preferred Stock of each series will be entitled to receive, when, as and if declared by the Board of Directors, cash dividends at the rates and on the dates set forth in the Prospectus Supplement. Dividend rates may be fixed or variable or both. Different series of Preferred Stock may be entitled to dividends at different dividend rates or based upon different methods of determination. Each dividend will be payable to the holders of record as they appear on our stock books (or, if applicable, the records of the Depositary referred to below under "Depositary Shares") on record dates determined by the Board of Directors. Dividends on any series of the Preferred Stock may be cumulative or non-cumulative, as specified in the Prospectus Supplement. If the Board of Directors fails to declare a dividend on any series of Preferred Stock for which dividends are non-cumulative, then the right to receive that dividend will be lost, and we will have no obligation to pay the dividend for that dividend period, whether or not dividends are declared for any future dividend period. 13 16 No full dividends will be declared or paid on any series of Preferred Stock, unless full dividends for the dividend period commencing after the immediately preceding dividend payment date (and cumulative dividends still owing, if any) have been or contemporaneously are declared and paid on all other series of Preferred Stock which have the same rank as, or rank senior to, that series of Preferred Stock. When those dividends are not paid in full, dividends will be declared pro rata, so that the amount of dividends declared per share on that series of Preferred Stock and on each other series of Preferred Stock having the same rank as, or ranking senior to, that series of Preferred Stock will in all cases bear to each other the same ratio that accrued dividends per share on that series of Preferred Stock and the other Preferred Stock bear to each other. In addition, generally, unless full dividends, including cumulative dividends still owing, if any, on all outstanding shares of any series of Preferred Stock have been paid, no dividends will be declared or paid on the Common Stock and generally we may not redeem or purchase any Common Stock. No interest, or sum of money in lieu of interest, will be paid in connection with any dividend payment or payments which may be in arrears. The amount of dividends payable for each dividend period will be computed by annualizing the applicable dividend rate and dividing by the number of dividend periods in a year, except that the amount of dividends payable for the initial dividend period or any period shorter than a full dividend period shall be computed on the basis of a 360-day year consisting of twelve 30-day months and, for any period less than a full month, the actual number of days elapsed in the period. Rights Upon Liquidation. In the event we liquidate, dissolve or wind-up our affairs, either voluntarily or involuntarily, the holders of each series of Preferred Stock will be entitled to receive liquidating distributions in the amount set forth in the Prospectus Supplement relating to each series of Preferred Stock, plus an amount equal to accrued and unpaid dividends, if any, before any distribution of assets is made to the holders of Common Stock. If the amounts payable with respect to Preferred Stock of any series and any stock having the same rank as that series of Preferred Stock are not paid in full, the holders of Preferred Stock and of such other stock will share ratably in any such distribution of assets in proportion to the full respective preferential amounts to which they are entitled. After the holders of each series of Preferred Stock and any stock having the same rank as the Preferred Stock are paid in full, they will have no right or claim to any of our remaining assets. Neither the sale of all or substantially all our property or business nor a merger or consolidation by us with any other corporation will be considered a dissolution, liquidation or winding up by us of our business or affairs. Redemption. Any series of Preferred Stock may be redeemable, in whole or in part, at our option. In addition, any series of Preferred Stock may be subject to mandatory redemption pursuant to a sinking fund. The redemption provisions that may apply to a series of Preferred Stock, including the redemption dates and the redemption prices for that series, will be set forth in the Prospectus Supplement. If a series of Preferred Stock is subject to mandatory redemption, the Prospectus Supplement will specify the year we can begin to redeem shares of the Preferred Stock, the number of shares of the Preferred Stock we can redeem each year, and the redemption price per share. We may pay the redemption price in cash, stock or in cash that we have received specifically from the sale of our capital stock, as specified in the Prospectus Supplement. If the redemption price is to be paid only from the proceeds of the sale of our capital stock, the terms of the series of Preferred Stock may also provide that, if no such capital stock is sold or if the amount of cash received is insufficient to pay in full the redemption price then due, the series of Preferred Stock will automatically be converted into shares of the applicable capital stock pursuant to conversion provisions specified in the Prospectus Supplement. If fewer than all the outstanding shares of any series of Preferred Stock are to be redeemed, whether by mandatory or optional redemption, the Board of Directors will determine the method for selecting the shares to be redeemed, which may be by lot or pro rata or by any other method determined to be equitable. From and after the redemption date, dividends will cease to accrue on the shares of Preferred Stock called for redemption and all rights of the holders of those shares (except the right to receive the redemption price) will cease. In the event that full dividends, including accrued but unpaid dividends, if any, have not been paid on any series of Preferred Stock, we may not redeem that series in part and we may not purchase or acquire any shares of 14 17 that series of Preferred Stock, except by an offer made on the same terms to all holders of that series of Preferred Stock. Conversion Rights. The Prospectus Supplement will state the terms, if any, on which shares of a series of Preferred Stock are convertible into shares of Common Stock or another series of our Preferred Stock. As described under "-Redemption" above, under certain circumstances, Preferred Stock may be mandatorily converted into Common Stock or another series of our Preferred Stock. Voting Rights. Except as indicated below or in the Prospectus Supplement, or except as expressly required by applicable law, the holders of Preferred Stock will not be entitled to vote. Except as indicated in the Prospectus Supplement, in the event we issue full shares of any series of Preferred Stock, each share will be entitled to one vote on matters on which holders of that series of Preferred Stock are entitled to vote. However, as more fully described below under "-Description of Depositary Shares", if we issue Depositary Shares representing a fraction of a share of a series of Preferred Stock, each Depositary Share will, in effect, be entitled to that fraction of a vote, rather than a full vote. Because each full share of any series of Preferred Stock will be entitled to one vote, the voting power of that series will depend on the number of shares in that series, and not on the aggregate liquidation preference or initial offering price of the shares of that series of Preferred Stock. Transfer Agent and Registrar. Bank One Trust Company, N.A., Oklahoma City, Oklahoma will be the transfer agent, registrar and dividend disbursement agent for the Preferred Stock and any Depositary Shares (see the description of Depositary Shares below). The registrar for the Preferred Stock will send notices to the holders of the Preferred Stock of any meetings at which such holders will have the right to elect directors or to vote on any other matter. Description of Depositary Shares. General. We may, at our option, elect to offer fractional shares of Preferred Stock, rather than full shares of Preferred Stock. If we do, we will issue to the public receipts for Depositary Shares, and each of these Depositary Shares will represent a fraction (to be set forth in the Prospectus Supplement) of a share of a particular series of Preferred Stock. The shares of any series of Preferred Stock underlying the Depositary Shares will be deposited under a Deposit Agreement (the "Deposit Agreement") between us and a bank or trust company selected by us (the "Depositary"). Subject to the terms of the Deposit Agreement, each owner of a Depositary Share will be entitled, in proportion to the applicable fractional interest in shares of Preferred Stock underlying that Depositary Share, to all the rights and preferences of the Preferred Stock underlying that Depositary Share. Those rights include dividend, voting, redemption, conversion and liquidation rights. The Depositary Shares will be evidenced by depositary receipts issued pursuant to the Deposit Agreement ("Depositary Receipts"). Depositary Receipts will be issued to those persons who purchase the fractional interests in the Preferred Stock underlying the Depositary Shares, in accordance with the terms of the offering. Copies of the forms of Deposit Agreement and Depositary Receipt are filed as exhibits to the registration statement. The following summary of the Deposit Agreement, the Depositary Shares and the Depositary Receipts is not complete. You should refer to the forms of the Deposit Agreement and Depositary Receipts that are filed as exhibits to the registration statement. Dividends and Other Distributions. The Depositary will distribute all cash dividends or other cash distributions received in respect of the Preferred Stock to the record holders of Depositary Shares relating to that Preferred Stock in proportion to the number of Depositary Shares owned by those holders. If there is a distribution other than in cash, the Depositary will distribute property received by it to the record holders of Depositary Shares that are entitled to receive the distribution, unless the Depositary determines that it is not feasible to make the distribution. If this occurs, the Depositary may, with our approval, sell the property and distribute the net proceeds from the sale to the applicable holders. 15 18 Redemption of Depositary Shares. If a series of Preferred Stock underlying the Depositary Shares is subject to redemption, the Depositary Shares will be redeemed from the proceeds received by the Depositary resulting from the redemption, in whole or in part, of that series of Preferred Stock held by the Depositary. The redemption price per Depositary Share will be equal to the applicable fraction of the redemption price per share payable with respect to that series of the Preferred Stock. Whenever we redeem shares of Preferred Stock that are held by the Depositary, the Depositary will redeem, as of the same redemption date, the number of Depositary Shares representing the shares of Preferred Stock so redeemed. If fewer than all the Depositary Shares are to be redeemed, the Depositary Shares to be redeemed will be selected by lot or pro rata as determined by the Depositary. After the date fixed for redemption, the Depositary Shares called for redemption will no longer be outstanding, and all rights of the holders of those Depositary Shares will cease, except the right to receive any money, securities, or other property upon surrender to the Depositary of the Depositary Receipts evidencing those Depositary Shares. Voting the Preferred Stock. Upon receipt of notice of any meeting at which the holders of Preferred Stock are entitled to vote, the Depositary will mail the information contained in the notice of meeting to the record holders of the Depositary Shares underlying that Preferred Stock. Each record holder of those Depositary Shares on the record date (which will be the same date as the record date for the Preferred Stock) will be entitled to instruct the Depositary as to the exercise of the voting rights pertaining to the amount of the Preferred Stock underlying that holder's Depositary Shares. The Depositary will try, as far as practicable, to vote the number of shares of Preferred Stock underlying those Depositary Shares in accordance with such instructions, and we will agree to take all action which may be deemed necessary by the Depositary in order to enable the Depositary to do so. The Depositary will not vote the shares of Preferred Stock to the extent it does not receive specific instructions from the holders of Depositary Shares underlying the Preferred Stock. Amendment and Termination of the Depositary Agreement. The form of Depositary Receipt evidencing the Depositary Shares and any provision of the Deposit Agreement may be amended at any time by agreement between us and the Depositary. However, any amendment that materially and adversely alters the rights of the holders of Depositary Shares will not be effective unless the amendment has been approved by the holders of at least a majority of the Depositary Shares then outstanding. The Deposit Agreement may be terminated by us or by the Depositary only if (i) all outstanding Depositary Shares have been redeemed or (ii) there has been a final distribution of the underlying Preferred Stock in connection with our liquidation, dissolution or winding up and the Preferred Stock has been distributed to the holders of Depositary Receipts. Resignation and Removal of Depositary. The Depositary may resign at any time by delivering a notice to us of its election to do so. We may remove the Depositary at any time. Any such resignation or removal will take effect upon the appointment of a successor Depositary and its acceptance of its appointment. The successor Depositary must be appointed within 60 days after delivery of the notice of resignation or removal. Miscellaneous. The Depositary will forward to holders of Depository Receipts all reports and communications from us that we deliver to the Depositary and that we are required to furnish to the holders of the Preferred Stock. Neither we nor the Depositary will be liable if either of us is prevented or delayed by law or any circumstance beyond our control in performing our respective obligations under the Deposit Agreement. Our obligations and those of the Depositary will be limited to the performance in good faith of our respective duties under the Deposit Agreement. Neither we nor the Depositary will be obligated to prosecute or defend any legal proceeding in respect of any Depositary Shares or Preferred Stock unless satisfactory indemnity is furnished. We and the Depositary may rely upon written advice of counsel or accountants, or upon information provided by persons presenting Preferred Stock for deposit, holders of Depositary Receipts or other persons believed to be competent and on documents believed to be genuine. 16 19 Description of Permanent Global Preferred Securities. Certain series of the Preferred Stock or Depositary Shares may be issued as permanent global securities to be deposited with a depositary with respect to that series. Unless otherwise indicated in the Prospectus Supplement, the following is a summary of the depositary arrangements applicable to Preferred Stock or Depositary Receipts issued in permanent global form and for which DTC acts as the depositary ("Global Preferred Securities"). Each Global Preferred Security will be deposited with, or on behalf of, DTC or its nominee and registered in the name of a nominee of DTC. Except under the limited circumstances described below, Global Preferred Securities are not exchangeable for definitive certificated Preferred Stock or Depositary Receipts. Ownership of beneficial interests in a Global Preferred Security is limited to institutions that have accounts with DTC or its nominee ("participants") or persons that may hold interests through participants. In addition, ownership of beneficial interests by participants in a Global Preferred Security will be evidenced only by, and the transfer of that ownership interest will be effected only through, records maintained by DTC or its nominee for a Global Preferred Security. Ownership of beneficial interests in a Global Preferred Security by persons that hold through participants will be evidenced only by, and the transfer of that ownership interest within that participant will be effected only through, records maintained by that participant. DTC has no knowledge of the actual beneficial owners of the Preferred Stock or Depositary Shares, as the case may be, represented by a Global Preferred Security. Beneficial owners will not receive written confirmation from DTC of their purchase, but beneficial owners are expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the participants through which the beneficial owners entered the transaction. The laws of some jurisdictions require that certain purchasers of securities take physical delivery of such securities in definitive form. Such laws may impair the ability to transfer beneficial interests in a Global Preferred Security. Payments on Preferred Stock and Depositary Shares represented by a Global Preferred Security registered in the name of or held by DTC or its nominee will be made to DTC or its nominee, as the case may be, as the registered owner and holder of the Global Preferred Security representing the Preferred Stock or Depositary Shares. We have been advised by DTC that upon receipt of any payment on a Global Preferred Security, DTC will immediately credit accounts of participants on its book-entry registration and transfer system with payments in amounts proportionate to their respective beneficial interests in that Global Preferred Security as shown in the records of DTC. Payments by participants to owners of beneficial interests in a Global Preferred Security held through those participants will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers in bearer form or registered in "street name", and will be the sole responsibility of those participants, subject to any statutory or regulatory requirements as may be in effect from time to time. Neither we nor any of our agents will be responsible for any aspect of the records of DTC, any nominee or any participant relating to, or payments made on account of beneficial interests in a Global Preferred Security or for maintaining, supervising or reviewing any of the records of DTC, any nominee or any participant relating to such beneficial interests. A Global Preferred Security is exchangeable for definitive certificated Preferred Stock or Depositary Receipts, as the case may be, registered in the name of, and a transfer of a Global Preferred Security may be registered to, a person other than DTC or its nominee, only if: o DTC notifies us that it is unwilling or unable to continue as Depositary for the Global Preferred Security or at any time DTC ceases to be registered under the Exchange Act; or o We determine in our discretion that the Global Preferred Security shall be exchangeable for definitive Preferred Stock or Depositary Receipts, as the case may be, in registered form. Any Global Preferred Security that is exchangeable pursuant to the preceding sentence will be exchangeable in whole for definitive certificated Preferred Stock or Depositary Receipts, as the case may be, registered by the registrar in the name or names instructed by DTC. We expect that those instructions may be based 17 20 upon directions received by DTC from its participants with respect to ownership of beneficial interests in that Global Preferred Security. Except as provided above, owners of the beneficial interests in a Global Preferred Security will not be entitled to receive physical delivery of certificates representing shares of Preferred Stock or Depositary Shares, as the case may be, and will not be considered the holders of Preferred Stock or Depositary Shares, as the case may be. No Global Preferred Security shall be exchangeable except for another Global Preferred Security to be registered in the name of DTC or its nominee. Accordingly, each person owning a beneficial interest in a Global Preferred Security must rely on the procedures of DTC and, if that person is not a participant, on the procedures of the participant through which that person owns its interest, to exercise any rights of a holder of Preferred Stock or Depositary Shares, as the case may be. We understand that, under existing industry practices, in the event that we request any action of holders, or an owner of a beneficial interest in a Global Preferred Security desires to give or take any action that a holder of Preferred Stock or Depositary Shares, as the case may be, is entitled to give or take, DTC would authorize the participants holding the relevant beneficial interests to give or take that action and those participants would authorize beneficial owners owning through those participants to give or take that action or would otherwise act upon the instructions of beneficial owners owning through them. A brief description of DTC is set forth above under "Description of Debt Securities-Permanent Global Debt Securities." WARRANTS We may issue Warrants for the purchase of Debt Securities, Preferred Stock or Common Stock. We may issue Warrants alone or together with any other securities. Each series of Warrants will be issued under a separate Warrant Agreement (each a "Warrant Agreement") to be entered into between us and a Warrant Agent ("Warrant Agent"). The Warrant Agent will act solely as our agent in connection with the Warrant of such series and will not assume any obligation or relationship of agency for or with holders or beneficial owners of Warrants. Further terms of the Warrants and the applicable Warrant Agreement will be set forth in the applicable Prospectus Supplement. FOREIGN OWNERSHIP The Certificate of Incorporation contains provisions that limit foreign ownership of our capital stock. These provisions protect our ability to continue to own our mobile offshore drilling units as U.S. flag vessels and to comply with certain financial covenants that require us to maintain U.S. citizenship that are contained in certain of our financing agreements. In order to continue to enjoy the benefits of U.S. flag registry for our vessels, we must maintain "United States citizenship" as defined in the Shipping Act, 1916, as amended (the "Shipping Act"). A corporation is not considered a U.S. citizen for these purposes unless, among other things, the controlling interest of the corporation (a majority in the case of non-coastwise trade) is owned by U.S. citizens. Under regulations adopted by the U.S. Maritime Administration to implement the citizenship requirements, the "controlling interest" test is applied to each class of our stock. The Common Stock and Preferred Stock (combining all series of Preferred Stock) are considered to be separate classes of capital stock for this purpose. Under the provisions of the Certificate of Incorporation, (i) any transfer, or attempted or purported transfer, of any shares of our capital stock that would result in the ownership or control by one or more persons who is not a U.S. citizen for purposes of the Shipping Act of an aggregate percentage of the shares of any class of capital stock in excess of a fixed percentage (the "Permitted Percentage") that is equal to 90% of the percentage that would prevent us from being a U.S. citizen (currently 50%) for purposes of the Shipping Act, will, for so long as such excess shall exist, be void and ineffective as against us, and (ii) if at any time ownership of shares of our capital stock (either of record or beneficial) by persons other than U.S. citizens exceeds the Permitted Percentage, we may withhold payment of dividends on such shares determined to be in excess of the Permitted Percentage and may suspend voting rights attributable to such shares. The shares subject to any such withholding of dividends or 18 21 suspension of voting rights would be those foreign-owned shares that our Board of Directors determines became so owned most recently. The Permitted Percentage is currently 45%. PREFERRED STOCK PURCHASE RIGHTS We have a stockholder rights plan which was adopted in 1995 and amended in 1997. Under this plan, one Right (a "Right") is attached to each outstanding share of Common Stock. The Rights are exercisable only if a person or group of affiliated or associated persons acquires beneficial ownership of 15% or more of our outstanding Common Stock or announces a tender offer, the consummation of which would result in ownership by a person or group of 15% or more of our Common Stock. Each Right entitles the registered holder to purchase from us one one-hundredth of a share of Series A Junior Participating Preferred Stock at an exercise price of $120.00. The existence of the Rights may, under certain circumstances, render more difficult or discourage attempts to acquire us. PLAN OF DISTRIBUTION We may sell the offered securities (a) through agents; (b) through underwriters or dealers; or (c) directly to one or more purchasers. BY AGENTS Offered securities may be sold through agents designated by us. The agents agree to use their reasonable best efforts to solicit purchases for the period of their appointment. BY UNDERWRITERS If underwriters are used in the sale, the offered securities will be acquired by the underwriters for their own account. The underwriters may resell the securities in one or more transactions, including negotiated transactions, at a fixed public offering price or at varying prices determined at the time of sale. The obligations of the underwriters to purchase the securities will be subject to certain conditions. The underwriters will be obligated to purchase all the securities of the series offered if any of the securities are purchased. Any initial public offering price and any discounts or concessions allowed or re-allowed or paid to dealers may be changed from time to time. DIRECT SALES Offered securities may also be sold directly by us. In this case, no underwriters or agents would be involved. GENERAL INFORMATION Underwriters, dealers and agents that participate in the distribution of the offered securities may be underwriters as defined in the Securities Act of 1933 (the "Act"), and any discounts or commissions received by them from us and any profit on the resale of the offered securities by them may be treated as underwriting discounts and commissions under the Act. Any underwriters or agents will be identified and their compensation described in a Prospectus Supplement. We may have agreements with the underwriters, dealers and agents to indemnify them against certain civil liabilities, including liabilities under the Act, or to contribute with respect to payments which the underwriters, dealers or agents may be required to make. Underwriters, dealers and agents may engage in transactions with, or perform services for, us or our subsidiaries in the ordinary course of their businesses. 19 22 LEGAL MATTERS Certain legal matters in connection with the Debt Securities we are offering pursuant to this Prospectus will be passed upon for us by our counsel, Thompson & Knight, P.C., located at 1700 Pacific Avenue, Suite 3300, Dallas, Texas 75201. EXPERTS The consolidated financial statements incorporated in this Prospectus by reference to the Annual Report on Form 10-K for the year ended December 31, 1997, have been so incorporated in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting. 20 23 [LOGO] $400,000,000 DEBT SECURITIES COMMON STOCK PREFERRED STOCK WARRANTS -------------- PROSPECTUS -------------- 24 P A R T II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. Except for the SEC registration fee and the NASD filing fee, all expenses are estimated. All such expenses will be paid by the Registrant. SEC registration fee(1)............................................................ $ 111,200 Accounting fees and expenses....................................................... 60,000 Legal fees and expenses............................................................ 85,000 Printing expenses.................................................................. 50,000 Blue sky fees and expenses (including legal fees).................................. 10,000 Miscellaneous...................................................................... 33,800 ---------------------- Total..................................................................... $ 350,000 ======================
- --------------------------- (1) Pursuant to Rule 429 of the Securities Act, this prospectus covers $300,000,000 of securities from a previous registration statement (No. 333-68507), as to which a registration fee of $83,400 was paid, and $100,000,000 of securities from this registration statement, as to which a registration fee of $27,800 was paid. ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. The Registrant is a Delaware corporation. Under Section 145 of the General Corporation Law of the State of Delaware, the Registrant has the power to indemnify its directors and officers, subject to certain limitations. Reference is made to Article VI of the Bylaws of the Registrant, which Article is filed as part of Exhibit 4.8 hereto and provides for indemnification of directors and officers of the Registrant under certain circumstances. The Registrant anticipates that any underwriting agreement will include provisions relating to the indemnification of directors, officers and controlling persons of the Registrant against certain liabilities, including liabilities under the Securities Act of 1933. Pursuant to the General Corporation Law of the State of Delaware, the Certificate of Incorporation of the Registrant, filed as Exhibits 4.1 through 4.8 hereto, limits the personal liability of the directors of the Registrant to the Registrant or its stockholders for monetary damages for breach of fiduciary duty under certain circumstances. The Registrant has entered into an indemnity agreement with each of its directors and officers to supplement the indemnification protection available under the statute, bylaws and certificate of incorporation referred to above. These indemnity agreements generally provide that the Registrant will indemnify the parties thereto to the fullest extent permitted by law. The indemnity agreements were approved and ratified by stockholders of the Registrant in 1996. The Registrant also maintains insurance to protect itself and its directors, officers, employees and agents against expenses, liabilities and losses incurred by such persons in connection with their service in the foregoing capacities. The foregoing summaries are necessarily subject to the complete text of the statute, bylaw, agreements, certificate of incorporation and insurance policy referred to above and are qualified in their entirety by reference thereto. II-1 25 ITEM 16. EXHIBITS. The following exhibits are filed as part of this Registration Statement: NUMBER EXHIBIT 1.1* -- Underwriting Agreement. 4.1 -- Restated Certificate of Incorporation of the Registrant dated August 29, 1985 (filed as Exhibit 3.7 to the Registrant's Registration Statement on Form 10 (No. 0-13857) and incorporated herein by reference). 4.2 -- Certificate of Amendment of Restated Certificate of Incorporation of the Registrant dated May 5, 1987 (filed as Exhibit 4.2 to the Registrant's Registration Statement on Form S-3 (No. 33-67130) and incorporated herein by reference). 4.3 -- Certificate of Amendment of Restated Certificate of Incorporation of the Registrant dated July 31, 1991(filed as Exhibit 3.16 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1991 and incorporated herein by reference). 4.4 -- Certificate of Amendment of Restated Certificate of Incorporation of the Registrant dated September 15, 1994 (filed as Exhibit 3.1 to the Registrant's Quarterly Report on Form 10-Q for the three-month period ended March 31, 1995 and incorporated herein by reference). 4.5 -- Certificate of Designations of Series A Junior Participating Preferred Stock, par value $1.00 per share, of the Registrant dated as of June 29, 1995 (filed as Exhibit 3.2 to the Registrant's Quarterly Report on Form 10-Q for the three-month period ended June 30, 1995 and incorporated herein by reference). 4.6 -- Certificate of Amendment of Certificate of Designations of Series A Junior Participating Preferred Stock of Registrant dated September 5, 1997 (filed as Exhibit 3.6 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1997 and incorporated herein by reference). 4.7 -- Composite copy of the Bylaws of the Registrant as currently in effect (filed as Exhibit 3.7 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1997 and incorporated herein by reference). 4.8 -- Amendment of Articles IV and VI of the Bylaws of the Registrant adopted January 29, 1998 (filed as Exhibit 3.8 to the Registrant's Form 10-K/A (Amendment No. 1) dated June 29, 1998 and incorporated herein by reference). 4.9 -- Form of Senior Indenture (filed as Exhibit 4.9 to the Registrant's Registration Statement on Form S-3 (No. 333-68507) and incorporated herein by reference). 4.10 -- Form of Subordinated Indenture (filed as Exhibit 4.10 to the Registrant's Registration Statement on Form S-3 (No. 333-68507) and incorporated herein by reference). 4.11 -- First Supplemental Indenture dated as of May 30, 1997 to Indenture dated as of October 1, 1993 governing the 9 1/4% Senior Notes due 2003 (filed as Exhibit 4.2 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1997 and incorporated herein by reference). 4.12 -- Indenture dated as of July 1, 1996 governing the 9 1/8% Senior Notes due 2006 (including form of Note)(filed as Exhibit 4.1 to the Registrant's Form 8-K dated July 16, 1996 (date of event: July 1, 1996) and incorporated herein by reference). II-2 26 4.13 -- Credit Agreement, dated as of August 14, 1997, among Noble Drilling Corporation, the lending institutions listed from time to time on Annex I thereto, Credit Lyonnais New York Branch, as Documentation Agent and Christiania Bank Og Kreditkasse ASA, New York Branch, as Arranger and Administrative Agent (filed as Exhibit 4.4 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1997 and incorporated herein by reference). 4.14 -- Rights Agreement dated as of June 28, 1995 between the Registrant and Liberty Bank and Trust Company of Oklahoma City, N.A. (filed as Exhibit 4 to the Registrant's Form 8-K dated June 29, 1995 (date of event: June 28, 1995) and incorporated herein by reference). 4.15 -- Amendment No. 1 to Rights Agreement, dated September 3, 1997, between Noble Drilling Corporation and Liberty Bank and Trust Company of Oklahoma City, N.A. (filed as Exhibit 4.2 to the Registrant's Form 8-A/A (Amendment No. 1) dated September 3, 1997 and incorporated herein by reference). 4.16 -- Summary of Rights to Purchase Preferred Shares, as amended as of September 3, 1997 to conform with Amendment No. 1 to Rights Agreement, dated September 3, 1997 (filed as Exhibit 4.3 to the Registrant's Form 8-K dated September 3, 1997 (date of event: September 3, 1997) and incorporated herein by reference). 4.17 -- Note Purchase Agreement dated as of September 24, 1998, by and among Noble Drilling (Paul Romano) Inc. and each of the note purchasers thereunder. Each note purchaser has entered into a separate Note Purchase Agreement, which agreements are substantially identical in all material respects, except for the principal amount of notes purchased. A schedule identifying each of the note purchasers that entered into a Note Purchase Agreement with Noble Drilling (Paul Romano) Inc. and the principal amount of notes to be purchased by each such note purchaser is included as Schedule A to the Note Purchase Agreement (filed as Exhibit 4.1 to the Registrant's Form 10-Q for the three-month period ended September 30, 1998 and incorporated herein by reference). 4.18 -- Trust Indenture and Security Agreement dated as of November 24, 1998, between Noble Drilling (Paul Romano) Inc. and Chase Bank of Texas, National Association, as Trustee. 4.19 -- First Naval Mortgage covering the Noble Paul Romano dated as of November 24, 1998, made by Noble Drilling (Paul Romano) Inc. in favor of Chase Bank of Texas, National Association, as Indenture Trustee. 4.20 -- Note Purchase Agreement dated as of July 1, 1998, by and among Noble Drilling (Paul Wolff) Ltd., Chase Bank of Texas, National Association, as Trustee, and each of the note purchasers thereunder. Each note purchaser has entered into a separate Note Purchase Agreement, which agreements are substantially identical in all material respects, except for the principal amount of notes purchased. A schedule identifying each of the note purchasers that entered into a Note Purchase Agreement with Noble Drilling (Paul Wolff) Ltd. and the principal amount of notes purchased by each such note purchaser is included as Annex I to the Note Purchase Agreement (filed as Exhibit 4.4 to the Registrant's Form 10-Q for the three-month period ended September 30, 1998 and incorporated herein by reference). 4.21 -- Indenture of First Naval Mortgage, dated as of July 1, 1998, made by Noble Drilling (Paul Wolff) Ltd. in favor of Chase Bank of Texas, National Association, as Trustee (filed as Exhibit 4.5 to the Registrant's Form 10-Q for the three-month period ended September 30, 1998 and incorporated herein by reference). II-3 27 4.22 -- Parent Guaranty, dated as of July 1, 1998, by Noble Drilling Corporation in favor of Chase Bank of Texas, National Association, as Trustee (filed as Exhibit 4.6 to the Registrant's Form 10-Q for the three-month period ended September 30, 1998 and incorporated herein by reference). 4.23 -- Second Amendment, dated September 10, 1998, to Credit Agreement, dated as of August 14, 1997, among Noble Drilling Corporation, the lending institutions listed from time to time on Annex I thereto, Credit Lyonnais, New York Branch, as Documentation Agent, and Christiana Bank Og Kreditkasse ASA, New York Branch, as Administrative Agent (filed as Exhibit 4.7 to the Registrant's Form 10-Q for the three-month period ended September 30, 1998 and incorporated herein by reference). 4.24 -- Note Purchase Agreement dated as of December 21, 1998, by and among Noble Drilling (Jim Thompson) Inc., Chase Bank of Texas, National Association, as Trustee, and each of the note purchasers thereunder. Each note purchaser has entered into a separate Note Purchase Agreement, which agreements are substantially identical in all material respects, except for the principal amount of notes purchased. A schedule identifying each of the note purchasers that entered into a Note Purchase Agreement with Noble Drilling (Jim Thompson) Inc. and the principal amount of notes purchased by each such note purchaser is included as Annex I to the Note Purchase Agreement. 4.25 -- Indenture of First Naval Mortgage, dated as of December 21, 1998, made by Noble Drilling (Jim Thompson) Inc. in favor of Chase Bank of Texas, National Association, as Trustee. 4.26 -- Parent Guaranty, dated as of December 21, 1998, by Noble Drilling Corporation in favor of Chase Bank of Texas, National Association, as Trustee. 5.1 -- Opinion of Thompson & Knight, A Professional Corporation. 12.1 -- Statement re Computation of Ratio of Earnings to Fixed Charges. 23.1 -- Consent of PricewaterhouseCoopers LLP. 23.2 -- Consent of Thompson & Knight, A Professional Corporation (contained in its opinion filed as Exhibit 5.1). 24.1 -- Powers of Attorney (included on signature page). 25.1 -- Form T-1 Statement of Eligibility and Qualification under the Trust Indenture Act of 1939, as amended, with respect to Trustee for Senior Debt Securities. 25.2 -- Form T-1 Statement of Eligibility and Qualification under the Trust Indenture Act of 1939, as amended, with respect to Trustee for Subordinated Debt Securities. * To be filed by amendment or by Form 8-K. ITEM 17. UNDERTAKINGS. (b) Filings incorporating subsequent Exchange Act documents by reference. The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant's Annual Report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (h) Acceleration of effectiveness. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. (i) Rule 430A. The undersigned Registrant hereby undertakes that: (1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this Registration Statement in reliance upon Rule 430A and II-4 28 contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this Registration Statement as of the time it was declared effective. (2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-5 29 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Houston, State of Texas, on the 9th day of February, 1999. NOBLE DRILLING CORPORATION By: /s/ James C. Day ------------------------------------ James C. Day Chairman and Chief Executive Officer Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated. Each person whose signature appears below constitutes and appoints James C. Day, Robert D. Campbell and Byron L. Welliver, and each of them (with full power to each of them to act alone), his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities to sign on his behalf individually and in each capacity stated below any amendment, including post-effective amendments, to this Registration Statement, and to file the same, with all exhibits thereto and other documents in connection therewith with the SEC, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents and either of them, or their substitutes, may lawfully do or cause to be done by virtue hereof.
SIGNATURE TITLE DATE --------- ----- ---- /s/ James C. Day Chairman and Chief Executive February 9, 1999 - ---------------------------------------------- Officer and Director James C. Day (Principal Executive Officer) /s/ Byron L. Welliver Senior Vice President - Finance, February 9, 1999 - ---------------------------------------------- Treasurer and Controller (Principal Byron L. Welliver Financial and Accounting Officer) /s/ Robert D. Campbell President and Director February 9, 1999 - ---------------------------------------------- Robert D. Campbell /s/ Michael A. Cawley Director February 9, 1999 - ---------------------------------------------- Michael A. Cawley /s/ Lawrence J. Chazen Director February 9, 1999 - ---------------------------------------------- Lawrence J. Chazen /s/ Tommy C. Craighead Director February 9, 1999 - ---------------------------------------------- Tommy C. Craighead
II-6 30 /s/ William J. Dore Director February 9, 1999 - ---------------------------------------------- William J. Dore Director - ---------------------------------------------- James L. Fishel /s/ Marc E. Leland Director February 9, 1999 - ---------------------------------------------- Marc E. Leland /s/ William A. Sears Director February 9, 1999 - ---------------------------------------------- William A. Sears
II-7 31 INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION ------ ----------- 1.1* -- Underwriting Agreement. 4.1 -- Restated Certificate of Incorporation of the Registrant dated August 29, 1985 (filed as Exhibit 3.7 to the Registrant's Registration Statement on Form 10 (No. 0-13857) and incorporated herein by reference). 4.2 -- Certificate of Amendment of Restated Certificate of Incorporation of the Registrant dated May 5, 1987 (filed as Exhibit 4.2 to the Registrant's Registration Statement on Form S-3 (No. 33-67130) and incorporated herein by reference). 4.3 -- Certificate of Amendment of Restated Certificate of Incorporation of the Registrant dated July 31, 1991(filed as Exhibit 3.16 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1991 and incorporated herein by reference). 4.4 -- Certificate of Amendment of Restated Certificate of Incorporation of the Registrant dated September 15, 1994 (filed as Exhibit 3.1 to the Registrant's Quarterly Report on Form 10-Q for the three-month period ended March 31, 1995 and incorporated herein by reference). 4.5 -- Certificate of Designations of Series A Junior Participating Preferred Stock, par value $1.00 per share, of the Registrant dated as of June 29, 1995 (filed as Exhibit 3.2 to the Registrant's Quarterly Report on Form 10-Q for the three-month period ended June 30, 1995 and incorporated herein by reference). 4.6 -- Certificate of Amendment of Certificate of Designations of Series A Junior Participating Preferred Stock of Registrant dated September 5, 1997 (filed as Exhibit 3.6 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1997 and incorporated herein by reference). 4.7 -- Composite copy of the Bylaws of the Registrant as currently in effect (filed as Exhibit 3.7 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1997 and incorporated herein by reference). 4.8 -- Amendment of Articles IV and VI of the Bylaws of the Registrant adopted January 29, 1998 (filed as Exhibit 3.8 to the Registrant's Form 10-K/A (Amendment No. 1) dated June 29, 1998 and incorporated herein by reference). 4.9 -- Form of Senior Indenture (filed as Exhibit 4.9 to the Registrant's Registration Statement on Form S-3 (No. 333-68507) and incorporated herein by reference). 4.10 -- Form of Subordinated Indenture (filed as Exhibit 4.10 to the Registrant's Registration Statement on Form S-3 (No. 333-68507) and incorporated herein by reference). . 4.11 -- First Supplemental Indenture dated as of May 30, 1997 to Indenture dated as of October 1, 1993 governing the 9 1/4% Senior Notes due 2003 (filed as Exhibit 4.2 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1997 and incorporated herein by reference). 4.12 -- Indenture dated as of July 1, 1996 governing the 9 1/8% Senior Notes due 2006 (including form of Note)(filed as Exhibit 4.1 to the Registrant's Form 8-K dated July 16, 1996 (date of event: July 1, 1996) and incorporated herein by reference).
32 4.13 -- Credit Agreement, dated as of August 14, 1997, among Noble Drilling Corporation, the lending institutions listed from time to time on Annex I thereto, Credit Lyonnais New York Branch, as Documentation Agent and Christiania Bank Og Kreditkasse ASA, New York Branch, as Arranger and Administrative Agent (filed as Exhibit 4.4 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1997 and incorporated herein by reference). 4.14 -- Rights Agreement dated as of June 28, 1995 between the Registrant and Liberty Bank and Trust Company of Oklahoma City, N.A. (filed as Exhibit 4 to the Registrant's Form 8-K dated June 29, 1995 (date of event: June 28, 1995) and incorporated herein by reference). 4.15 -- Amendment No. 1 to Rights Agreement, dated September 3, 1997, between Noble Drilling Corporation and Liberty Bank and Trust Company of Oklahoma City, N.A. (filed as Exhibit 4.2 to the Registrant's Form 8-A/A (Amendment No. 1) dated September 3, 1997 and incorporated herein by reference). 4.16 -- Summary of Rights to Purchase Preferred Shares, as amended as of September 3, 1997 to conform with Amendment No. 1 to Rights Agreement, dated September 3, 1997 (filed as Exhibit 4.3 to the Registrant's Form 8-K dated September 3, 1997 (date of event: September 3, 1997) and incorporated herein by reference). 4.17 -- Note Purchase Agreement dated as of September 24, 1998, by and among Noble Drilling (Paul Romano) Inc. and each of the note purchasers thereunder. Each note purchaser has entered into a separate Note Purchase Agreement, which agreements are substantially identical in all material respects, except for the principal amount of notes purchased. A schedule identifying each of the note purchasers that entered into a Note Purchase Agreement with Noble Drilling (Paul Romano) Inc. and the principal amount of notes to be purchased by each such note purchaser is included as Schedule A to the Note Purchase Agreement (filed as Exhibit 4.1 to the Registrant's Form 10-Q for the three-month period ended September 30, 1998 and incorporated herein by reference). 4.18 -- Trust Indenture and Security Agreement dated as of November 24, 1998, between Noble Drilling (Paul Romano) Inc. and Chase Bank of Texas, National Association, as Trustee. 4.19 -- First Naval Mortgage covering the Noble Paul Romano dated as of November 24, 1998, made by Noble Drilling (Paul Romano) Inc. in favor of Chase Bank of Texas, National Association, as Indenture Trustee. 4.20 -- Note Purchase Agreement dated as of July 1, 1998, by and among Noble Drilling (Paul Wolff) Ltd., Chase Bank of Texas, National Association, as Trustee, and each of the note purchasers thereunder. Each note purchaser has entered into a separate Note Purchase Agreement, which agreements are substantially identical in all material respects, except for the principal amount of notes purchased. A schedule identifying each of the note purchasers that entered into a Note Purchase Agreement with Noble Drilling (Paul Wolff) Ltd. and the principal amount of notes purchased by each such note purchaser is included as Annex I to the Note Purchase Agreement (filed as Exhibit 4.4 to the Registrant's Form 10-Q for the three-month period ended September 30, 1998 and incorporated herein by reference). 4.21 -- Indenture of First Naval Mortgage, dated as of July 1, 1998, made by Noble Drilling (Paul Wolff) Ltd. in favor of Chase Bank of Texas, National Association, as Trustee (filed as Exhibit 4.5 to the Registrant's Form 10-Q for the three-month period ended September 30, 1998 and incorporated herein by reference).
33 4.22 -- Parent Guaranty, dated as of July 1, 1998, by Noble Drilling Corporation in favor of Chase Bank of Texas, National Association, as Trustee (filed as Exhibit 4.6 to the Registrant's Form 10-Q for the three-month period ended September 30, 1998 and incorporated herein by reference). 4.23 -- Second Amendment, dated September 10, 1998, to Credit Agreement, dated as of August 14, 1997, among Noble Drilling Corporation, the lending institutions listed from time to time on Annex I thereto, Credit Lyonnais, New York Branch, as Documentation Agent, and Christiana Bank Og Kreditkasse ASA, New York Branch, as Administrative Agent (filed as Exhibit 4.7 to the Registrant's Form 10-Q for the three-month period ended September 30, 1998 and incorporated herein by reference). 4.24 -- Note Purchase Agreement dated as of December 21, 1998, by and among Noble Drilling (Jim Thompson) Inc., Chase Bank of Texas, National Association, as Trustee, and each of the note purchasers thereunder. Each note purchaser has entered into a separate Note Purchase Agreement, which agreements are substantially identical in all material respects, except for the principal amount of notes purchased. A schedule identifying each of the note purchasers that entered into a Note Purchase Agreement with Noble Drilling (Jim Thompson) Inc. and the principal amount of notes purchased by each such note purchaser is included as Annex I to the Note Purchase Agreement. 4.25 -- Indenture of First Naval Mortgage, dated as of December 21, 1998, made by Noble Drilling (Jim Thompson) Inc. in favor of Chase Bank of Texas, National Association, as Trustee. 4.26 -- Parent Guaranty, dated as of December 21, 1998, by Noble Drilling Corporation in favor of Chase Bank of Texas, National Association, as Trustee. 5.1 -- Opinion of Thompson & Knight, A Professional Corporation. 12.1 -- Statement re Computation of Ratio of Earnings to Fixed Charges. 23.1 -- Consent of PricewaterhouseCoopers LLP. 23.2 -- Consent of Thompson & Knight, A Professional Corporation (contained in its opinion filed as Exhibit 5.1). 24.1 -- Powers of Attorney (included on signature page). 25.1 -- Form T-1 Statement of Eligibility and Qualification under the Trust Indenture Act of 1939, as amended, with respect to Trustee for Senior Debt Securities. 25.2 -- Form T-1 Statement of Eligibility and Qualification under the Trust Indenture Act of 1939, as amended, with respect to Trustee for Subordinated Debt Securities.
- -------------------------- * To be filed by amendment or by Form 8-K. EX-4.18 2 TRUST INDENTURE AND SECURITY AGREEMENT - 11/24/98 1 EXHIBIT 4.18 NOBLE DRILLING (PAUL ROMANO) INC. ---------- TRUST INDENTURE AND SECURITY AGREEMENT ---------- Dated as of November 24, 1998 2 TABLE OF CONTENTS
Page ARTICLE 1. DEFINED TERMS.................................................................3 1.1 Special................................................................................3 ARTICLE 2. FORM, EXECUTION, ISSUE AND DELIVERY OF NOTES.................................13 2.1 Issue of Notes........................................................................13 2.2 Authentication of Notes; Denominations of Notes and Form..............................14 2.3 Registration of Notes.................................................................14 2.4 Exchange of Notes.....................................................................15 2.5 Transfer of Notes.....................................................................15 2.6 General Rules.........................................................................16 2.7 Valid Obligations.....................................................................17 2.8 Execution and Delivery................................................................17 2.9 Replacement of Notes..................................................................17 ARTICLE 3. PAYMENTS AND DISTRIBUTION THEREOF............................................17 3.1 Payment by Issuer.....................................................................17 3.2 Delivery Expenses.....................................................................18 3.3 Issue Taxes...........................................................................18 3.4 Required Payments of Notes without Premium............................................18 3.5 Optional Prepayment of the Notes with Make-Whole Amount...............................19 3.6 Required Prepayments of Notes.........................................................20 3.7 Surrender of Notes on Prepayment......................................................20 3.8 Provision for Applicable Make-Whole Amount, Yield Protection Amount and Breakage Amount...................................................................20 Breakage Amount................................................................................23 ARTICLE 4. RECEIPT, DISTRIBUTION AND APPLICATION OF TRUST ESTATE.......................................................................24 4.1 Application of Shell Contract Revenues When No Indenture Event of Default is Continuing..................................................................................24 4.2 (a) Payments in Case of an Early Termination.....................................24 (b) Payments in Case of an Event of Loss..................................................26 (c) Payments in Case of a Partial Event of Loss...........................................26 4.3 Payments During Continuance of an Indenture Event of Default..........................27 4.4 Amounts Held by Trustee...............................................................28 4.5 Allocation of Payments................................................................28 4.6 Method of Payment to Holders..........................................................29 4.7 Method of Payment to Issuer...........................................................29 4.8 Payments for which No Application is Otherwise Provided...............................29
-i- 3 ARTICLE 5. EVIDENCE OF ACTS OF NOTE HOLDERS.............................................29 5.1 Execution by Note Holders or Agents...................................................29 5.2 Future Holders Bound..................................................................30 ARTICLE 6. INDENTURE DEFAULTS - REMEDIES................................................30 6.1 Indenture Events of Default...........................................................30 6.2 Acceleration of Notes.................................................................32 6.3 Annulment of Acceleration of Notes....................................................33 6.4 Default Remedies......................................................................33 6.5 Other Enforcement Rights..............................................................36 6.6 Effect of Sale, etc...................................................................38 6.7 Restoration of Rights and Remedies....................................................38 6.8 Application of Sale Proceeds and Deficiency...........................................38 6.9 Cumulative Remedies...................................................................39 6.10 Limitations on Suits..................................................................39 6.11 Suits for Principal and Interest......................................................39 6.12 Waiver by the Issuer..................................................................40 ARTICLE 7. AFFIRMATIVE COVENANTS........................................................41 7.1 Financial Statements..................................................................41 7.2 Litigation............................................................................43 7.3 Maintenance, Etc......................................................................44 7.4 Environmental Matters.................................................................46 7.5 Further Assurances....................................................................46 7.6 Performance of Obligations............................................................47 7.7 ERISA Information and Compliance......................................................47 7.8 Debt Service Reserve Fund.............................................................47 7.9 Maintenance of Agency.................................................................48 7.10 Additional Assurances.................................................................48 7.11 Year 2000 Compliance..................................................................49 7.12 Change in Location of Collateral or Issuer............................................49 7.13 Change in Issuer's Name...............................................................49 7.14 Corporate Independence................................................................49 7.15 Working Capital Fund..................................................................50 ARTICLE 8. NEGATIVE COVENANTS...........................................................50 8.1 Debt..................................................................................51 8.2 Liens.................................................................................51 8.3 Investments, Loans and Advances.......................................................51 8.4 Dividends, Distributions and Redemptions..............................................51 8.5 Sales and Leasebacks..................................................................51 8.6 Nature of Business....................................................................51 8.7 Limitation on Leases..................................................................52 8.8 Mergers, Etc..........................................................................52 8.9 Proceeds of Notes.....................................................................52 8.10 ERISA Compliance......................................................................52
-ii- 4 8.11 Sale or Discount of Receivables.......................................................53 8.12 Sale of Drilling Rig..................................................................53 8.13 Environmental Matters.................................................................53 8.14 Transactions with Affiliates..........................................................54 8.15 Subsidiaries..........................................................................54 8.16 Location of Issuer....................................................................54 8.17 Acquisition of Notes..................................................................54 8.18 Non-Petition Covenant.................................................................54 ARTICLE 9. THE TRUSTEES.................................................................54 9.1 Certain Duties and Responsibilities of Trustees.......................................54 9.2 Trustees' Compensation and Indemnification............................................56 9.3 Certain Rights of Trustees............................................................56 9.4 Showings Deemed Necessary by a Trustee................................................58 9.5 Status of Monies Received.............................................................58 9.6 Resignation of Trustees...............................................................58 9.7 Removal of Trustees...................................................................58 9.8 Successor Trustee.....................................................................58 9.9 Appointment of Successor Trustees.....................................................59 9.10 Merger or Consolidation of Trustee....................................................59 9.11 Acceptance of Appointment by Successor Trustee........................................59 9.12 Conveyance upon Request of Successor Trustee..........................................59 9.13 Co-Trustees and Additional Trustees...................................................60 9.14 Trustee's Representations and Warranties..............................................60 9.15 Non-Petition Covenant.................................................................61 ARTICLE 10. SUPPLEMENTAL INDENTURES, WAIVERS.............................................61 10.1 Supplemental Indentures Without Note Holders' Consent.................................61 10.2 Waivers and Consents by Note Holders; Supplemental Indentures with Consent........................................................................................62 10.3 Notice of Supplemental Indenture......................................................63 10.4 Solicitation of Note Holders..........................................................63 10.5 Opinion of Counsel Conclusive as to Supplemental Indentures...........................63 10.6 Effect of Supplemental Indentures.....................................................64 10.7 New Notes.............................................................................64 ARTICLE 11. UNCLAIMED MONIES.............................................................64 11.1 Satisfaction and Discharge of Agreement...............................................64 11.2 Return of Unclaimed Monies............................................................65 ARTICLE 12. MISCELLANEOUS................................................................65 12.1 Successors and Assigns................................................................65 12.2 Partial Invalidity....................................................................65 12.3 Communications........................................................................65 12.4 GOVERNING LAW; SUBMISSION TO JURISDICTION.............................................66 12.5 Limitation on Interest................................................................68
-iii- 5 12.6 Counterparts..........................................................................69 12.7 Headings, etc.; Gender................................................................69 12.8 Amendments............................................................................69 12.9 Benefits of Agreement Restricted to Parties and Note Holders..........................69 12.10 Waiver of Notice......................................................................70 12.11 Intentionally Omitted.................................................................70 12.12 Additional Financing Statement Filings................................................70 12.13 Directly or Indirectly................................................................70 12.14 Exhibits, Annexes and Sections........................................................70 12.15 Officers' Certificate and Opinions of Counsel; Statements to be Contained Therein........................................................................................70 12.16 Payment of Expenses, Indemnities, etc.................................................71 12.17 NO ORAL AGREEMENTS....................................................................74 12.18 EXCULPATION PROVISIONS................................................................74 12.19 Trustees Not Engaging in a Trade or Business..........................................75 Annex A-1 -- Form of Series A Note Annex A-2 -- Form of Series B Note Annex B -- Series A Note Payment Schedule Annex C -- Form of Intercompany Subordinated Note Annex D -- Surveys and Inspections Schedule 7.3 -- Insurance Schedule 9.2 -- Trustee Fees
-iv- 6 TRUST INDENTURE AND SECURITY AGREEMENT TRUST INDENTURE AND SECURITY AGREEMENT dated as of November 24, 1998, between NOBLE DRILLING (PAUL ROMANO) INC., a Delaware corporation (the "Issuer"), and CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, a national banking association (the "Trustee"; the Trustee and each other Person accepting trusts created hereby being individually referred to as a "Trustee" and collectively as the "Trustees"). RECITALS: WHEREAS, the defined terms used in this Indenture shall have the respective meanings set forth in Section 1.1 unless elsewhere defined or the context shall otherwise require; WHEREAS, the Issuer is authorized by law, and deems it necessary to borrow money for its proper legal purposes and to mortgage, assign and pledge its Property to secure the payment thereof and to that end, in the exercise of said authority, has duly authorized the execution and delivery of this Indenture providing for the issue of secured promissory notes of the Issuer hereunder; WHEREAS, the Issuer has duly authorized the issuance of (i) its drilling vessel secured notes limited in aggregate original principal amount to Ninety-Five Million, Four Hundred Twelve Thousand, Five Hundred Dollars ($95,412,500) to be known as its Series A Senior Secured Notes, and (ii) its drilling vessel secured notes limited in aggregate original principal amount to Sixteen Million, Eight Hundred Thirty-Seven Thousand, Five Hundred Dollars ($16,837,500), to be known as its Series B Senior Secured Notes on the terms herein provided; WHEREAS, the Notes and the Trustee's Certificate of Authentication thereon are to be substantially in the forms set forth in Annexes A-1 and A-2; and WHEREAS, all acts and proceedings required by law and by the Certificate of Incorporation and Bylaws of the Issuer necessary to make the Notes, when executed by the Issuer and authenticated and delivered by the Trustee, the legal, valid and binding obligations of the Issuer, and all acts and proceedings required by law and by the Certificate of Incorporation and Bylaws of the Issuer necessary to constitute this Indenture a legal, valid and binding agreement for the uses and purposes herein set forth, in accordance with its terms, have been done and taken; and the Issuer has duly authorized, executed and delivered this Indenture; GRANTING CLAUSE: NOW, THEREFORE, THIS INDENTURE WITNESSETH, that to secure the prompt and complete payment of the principal of, and interest and any applicable Make-Whole Amount on, all of the Notes issued and delivered and Outstanding, the payment of all other sums owing hereunder and under all other Credit Documents and the performance of the covenants contained herein and in all other Credit Documents, and in consideration of the premises and of the covenants contained herein, the purchase of the Notes by the Purchasers, and the sum of One Dollar ($1.00) paid by the Trustee to the Issuer at or before the delivery hereof, the receipt and sufficiency whereof are hereby 7 acknowledged, the Issuer has hereby granted, bargained, sold, conveyed, assigned, transferred, mortgaged, affected, pledged, set over, confirmed, granted a continuing security interest in, and hypothecated and does hereby grant, bargain, sell, convey, assign, transfer, mortgage, affect, pledge, set over, confirm, grant a continuing security interest to the Trustee and to any co-trustee or separate trustee hereafter acting pursuant to this Indenture, and to their respective successors and assigns in trust forever, all of its right, title and interest in, to and under the following described Properties (all of such Properties, including without limitation all properties hereafter specifically subjected to the lien of this Indenture by any indenture supplement hereto, being hereinafter collectively referred to as the "Trust Estate"): (a) All equipment, inventory, fixtures and other goods in all forms, wherever located and whether now or hereafter existing, which are owned by the Issuer or in which the Issuer otherwise has any rights and all parts thereof, all accessions thereto, all replacements or substitutions therefor, all accounts now or hereafter arising in connection therewith, and all chattel paper, documents and General Intangibles covering or relating thereto (any and all such equipment, inventory, fixtures, other goods, parts, accessions, replacements, substitutions, accounts, chattel paper, documents and General Intangibles being herein collectively called the "Pledged Equipment"); (b) All accounts, general intangibles (excluding the Shell Contract), chattel paper and documents, now owned or hereafter acquired; (c) The Operating Services Agreement, the Asset Transfer Agreement and the Capital Funding Agreement (when and if executed and delivered); (d) All Properties subjected to the Lien of this Indenture by each supplemental indenture entered into and delivered pursuant to Article 10; (e) All insurance proceeds, condemnation proceeds and the accounts, issues, profits, products, revenues and other income of and from the Shell Contract and the other Properties subjected or required to be subjected to the Lien of this Indenture and all the estate, right, title and interest of every nature whatsoever of the Issuer in and to the same and every part thereof; (f) The Collection Account, the Debt Service Reserve Fund, the Working Capital Account and all other monies now or hereafter paid or deposited or required to be paid or deposited to or with the Trustee pursuant to Section 4.1 or 4.3 hereof or any other term hereof or any term of the other Credit Documents and held or required to be held by any Trustee hereunder; (g) Any and all other Properties and any and all other rights, interests and privileges granted to any Trustee in accordance with the provisions hereof and pursuant to or in connection with the provisions of the other Credit Documents, including but not limited to the First Naval Mortgage; and (h) All proceeds of the foregoing. -2- 8 It is expressly contemplated that additional property may from time to time be pledged, assigned or granted to the Trustee as additional security for the Outstanding Notes, and the term "Trust Estate" as used herein shall be deemed for all purposes hereof to include all such additional property, together with all other property of the types described above related thereto, and all proceeds and replacements of the same. TO HAVE AND TO HOLD, all and singular, the Trust Estate for the uses and purposes and subject to the terms and provisions set forth in this Indenture unto the Trustees and their respective successors in trust, and to their respective assigns forever. IN TRUST NEVERTHELESS, under and subject to the terms and conditions herein set forth and for the equal and proportionate, unless otherwise stated herein, benefit and security of the holders from time to time of the Outstanding Notes and for the enforcement of the prompt and complete payment when due of all sums due in connection with the Outstanding Notes, this Indenture and each of the other Credit Documents and for the performance and observance by the Issuer of the covenants, obligations and conditions to be performed and observed by the Issuer and all other parties, other than the Trustees and the holders of Outstanding Notes, to this Indenture and each of the other Credit Documents; PROVIDED, HOWEVER, that these presents are upon the condition that if the Issuer, its successors or assigns, shall satisfy the conditions set forth in Section 11.1 for a release of the Trust Estate in full, then this Indenture, and the estates and rights assigned in the other Credit Documents, shall cease, determine and be void; otherwise they shall remain and be in full force and effect; IT IS HEREBY FURTHER COVENANTED AND AGREED that all of the Notes are to be issued, authenticated and delivered and that the Trust Estate is to be held and applied by the Trustees, subject to the further covenants, agreements, conditions, uses and trust hereafter set forth. The Issuer for itself and its successors and permitted assigns does hereby covenant and agree with the Trustees and their respective successors in trust for the benefit of all present and future holders of the Outstanding Notes, or any of them, as follows: ARTICLE 1. DEFINED TERMS. 1.1 Special Definitions. For purposes of this Indenture, the following terms shall have the respective meanings (i) set forth below, (ii) set forth in the Section or other part of this Indenture following such term or (iii) provided for in the section or other part of such other Credit Document as may be referred to immediately following such term (such definitions to be equally applicable to both the singular and plural forms of the terms defined): Affiliate -- at any time, and with respect to any Person, any other Person that at such time directly or indirectly through one or more intermediaries Controls, or is Controlled by, or is under common Control with, such first Person. As used in this definition, "CONTROL" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. Unless the context otherwise clearly requires, any reference to an "Affiliate" is a reference to an Affiliate of the Issuer. -3- 9 Asset Purchase Agreement -- the Asset Purchase Agreement with respect to the Series B Notes, dated as of December 15, 1998, among Victory Receivables Corporation, BTM Capital Corporation, Bankers Trust Company, the agent, and the banks party thereto, as from time to time amended, supplemented or modified. Asset Transfer Agreement -- the Asset Transfer Agreement of even date herewith from the Parent to the Issuer covering the Drilling Rig and the Shell Contract. Assignment of Drilling Contract Revenue -- has the meaning set out in Schedule B to the Note Purchase Agreements. Breakage Amount -- the amount determined pursuant to Section 3.8(c). Breakage Party -- has the meaning set out in Section 3.8(c). BTM, Ltd. -- The Bank of Tokyo - Mitsubishi, Ltd., New York Branch. BTMTC -- Bank of Tokyo - Mitsubishi Trust Company. Business Day -- a day other than a Saturday, a Sunday or a day on which banks are required or allowed by law (other than a general banking moratorium or holiday for a period exceeding four (4) consecutive days) to be closed in one or both of the State of Texas and New York. Capital Funding Agreement -- has the meaning set out in Schedule B to the Note Purchase Agreements. Closing Date -- the date of the initial issuance of the Notes. Code -- the Internal Revenue Code of 1986, as amended from time to time. Collateral -- the Trust Estate, and any and all other collateral held by any one or more of the Trustees to secure the Notes or any other obligations created pursuant to the Credit Documents, including without limitation the Credit Documents and all collateral covered thereby. Collection Account -- has the meaning set out in Section 4.1. Consolidated -- the consolidation of any Person with its properly consolidated subsidiaries, in accordance with GAAP. Contested in Good Faith -- actively contested in good faith by appropriate actions or proceedings provided that (i) adequate book reserves have been established with respect thereto as required by GAAP, (ii) the applicable Person's title to, and its right to use, any of its material Property is not materially adversely affected thereby and (iii) the action to be -4- 10 taken will not result in any risk of imposition of civil or criminal penalties on the Trustee or the holders of the Notes or substantial danger of sale, forfeiture or loss of the Drilling Rig. CP Conduit -- Victory Receivables Corporation or any other commercial paper conduit administered by BTMTC (either as agent or as sub-agent) which is an owner and holder of a Series B Note. Credit Documents -- this Indenture, the Note Purchase Agreements, the Notes, the Performance Agreement, the Assignment of Drilling Contract Revenue, the Operating Services Agreement, the Asset Transfer Agreement, the Capital Funding Agreement, if any, the First Naval Mortgage, the SDDI Acknowledgment and Consent, and any and all other agreements or instruments now or hereafter executed and delivered by the Company or the Parent in connection with or a security for the payment and performance of the Notes. Credit Support Party -- BTM, Ltd., BTMTC, BTM Capital Corporation, The Norinchukin Bank, New York Branch, Victory Credit Enhancer LLC and any other financial institutions providing funding, liquidity, credit or asset purchase support with respect to sourcing the funds for the Series B Notes. Debt -- for any Person the sum of the following (without duplication): (i) all obligations of such Person for borrowed money or evidenced by bonds, debentures, notes or other similar instruments (including principal, interest, fees and charges); (ii) all obligations of such Person (whether contingent or otherwise) in respect of bankers' acceptances, letters of credit, surety or other bonds and similar instruments; (iii) all obligations of such Person to pay the deferred purchase price of Property or services (other than for borrowed money); (iv) all obligations under leases which shall have been, or should have been, in accordance with GAAP, recorded as capital leases in respect of which such Person is liable (whether contingent or otherwise); (v) all obligations under leases which require such Person or its Affiliate to make payments over the term of such lease, including payments at termination, which are substantially equal to at least eighty percent (80%) of the purchase price of the Property subject to such lease plus interest at an imputed rate of interest; (vi) all Debt (as described in the other clauses of this definition) and other obligations of others secured by a Lien on any asset of such Person, whether or not such Debt is assumed by such Person; (vii) all Debt (as described in the other clauses of this definition) and other obligations of others guaranteed by such Person or in which such Person otherwise assures a creditor against loss of the debtor or obligations of others; (viii) all obligations or undertakings of such Person to maintain or cause to be maintained the financial position or covenants of others or to purchase the Debt or Property of others; (ix) obligations to deliver goods or services in consideration of advance payments; (x) obligations to pay for goods or services whether or not such goods or services are actually received or utilized by such Person; (xi) any capital stock of such Person in which such Person has a mandatory obligation to redeem such stock; and (xii) all obligations of such Person under Hedging Agreements. Debt Service Reserve Fund -- has the meaning set out in Section 7.8. -5- 11 Default Rate -- 2% per annum above the prematurity interest rate set forth in the Series B Notes; except to the extent a "Default Rate" is called for in the Series A Notes when such rate shall be 2% per annum above the prematurity interest rate set forth in the Series A Notes. Definitive Notes -- Series A Notes in the form of Exhibit A-1 attached hereto and Series B Notes in the form of Exhibit A-2 attached hereto. Drilling Order -- has the meaning attributed thereto in Schedule B to the Note Purchase Agreements. Drilling Rig -- the drilling vessel and all equipment appurtenant thereto known as the "Noble Paul Romano" being the vessel and all equipment and other properties set out and described in the First Naval Mortgage. Environmental Laws -- any and all Governmental Requirements pertaining to health, safety or the environment or the regulation of hazardous substances or pollutants in effect in any and all jurisdictions in which the Issuer is conducting or at any time has conducted business, or where any Property of the Issuer is located, including without limitation, the Oil Pollution Act of 1990 ("OPA"), the Clean Air Act, as amended, the Comprehensive Environ mental, Response, Compensation, and Liability Act of 1980 ("CERCLA"), as amended, the Federal Water Pollution Control Act, as amended, the Occupational Safety and Health Act of 1970, as amended, the Resource Conservation and Recovery Act of 1976 ("RCRA"), as amended, the Safe Drinking Water Act, as amended, the Toxic Substances Control Act, as amended, the Superfund Amendments and Reauthorization Act of 1986, as amended, the Hazardous Materials Transportation Act, as amended, and any other international, federal, local or state environmental conservation or protection laws. The terms "oil" and "discharge" shall have the meanings specified in OPA, the terms "hazardous substance" and "release" (or "threatened release") have the meanings specified in CERCLA, except that "hazardous substance" shall also include petroleum and any fraction thereof, and the terms "solid waste" and "disposal" (or "disposed") have the meanings specified in RCRA; provided, however, that (i) in the event either OPA, CERCLA or RCRA is amended so as to broaden the meaning of any term defined thereby, such broader meaning shall apply subsequent to the effective date of such amendment and (ii) to the extent the laws of the state in which any Property of the Issuer is located establish a meaning for "oil," "discharge," "hazardous substance," "release," "solid waste" or "disposal" which is broader than that specified in either OPA, CERCLA or RCRA, such broader meaning shall apply. ERISA -- the Employee Retirement Income Security Act of 1974, as amended from time to time. ERISA Affiliate -- has the meaning set out in Schedule B to the Note Purchase Agreements. ERISA Event -- (i) a "reportable event" described in Section 4043 (c)(5), (c)(6), (c)(11) or (c)(13) of ERISA and the regulations issued thereunder, (ii) the filing of a notice -6- 12 of intent to terminate a Plan or the treatment of a Plan amendment as a termination under section 4041 of ERISA, (iii) the institution of proceedings by the Pension Benefit Guaranty Corporation ("PBGC") under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan or (iv) the partial or complete withdrawal of Issuer or any ERISA Affiliate from a Multiemployer Plan. Event of Loss -- has the meaning set out in the First Naval Mortgage. Excepted Liens -- (i) Liens for taxes, assessments or other governmental charges or levies not yet due or which are being Contested In Good Faith; (ii) Liens in connection with workmen's compensation, unemployment insurance or other social security, old age pension or public liability obligations not yet due or which are being Contested In Good Faith; (iii) operators', vendors', carriers', warehousemen's, repairmen's, mechanics', workmen's, materialmen's, construction, shipyard liens (during repair or upgrade periods) or other like Liens arising by operation of law in the ordinary course of business or statutory landlord's liens, each of which is in respect of obligations that have not been outstanding more than 60 days (so long as no action has been taken to file or enforce such Liens within said 60 day period) or which are being Contested In Good Faith; (iv) deposits of cash or securities to secure the performance of bids, trade contracts, leases, statutory obligations and other obligations of a like nature incurred in the ordinary course of business; and (v) Liens permitted by the Credit Documents. Exchange Act -- has the meaning set forth in Schedule B to the Note Purchase Agreements. First Naval Mortgage -- has the meaning set forth in Schedule B to the Note Purchase Agreements. GAAP -- those generally accepted accounting principles and practices which are recognized as such by the Financial Accounting Standards Board (or any generally recognized successor) as in effect from time to time. General Intangibles -- all general intangibles related to any property that is part of the Trust Estate, including, without limitation, all (i) letters of credit, bonds, guaranties, purchase or sales agreements and other contractual rights other than the Shell Contract, rights to performance, and claims for damages, refunds (including tax refunds) or other monies due or to become due; (ii) orders, franchises, permits, certificates, licenses, consents, exemptions, variances, authorizations or other approvals by any governmental agency or court; (iii) consulting, engineering and technological information and specifications, design data, patent rights, trade secrets, literary rights, copyrights, trademarks, labels, trade names and other intellectual property; (iv) business records, computer tapes and computer software; (v) goodwill; and (vi) all other intangible personal property, whether similar or dissimilar to the other property that is part of the Trust Estate other than the Shell Contract. Governmental Authority -- the country, the state, county, city and political subdivisions in which any Person or such Person's Property is located or which exercises -7- 13 jurisdiction over any such Person or such Person's Property, and any court, agency, department, commission, board, body, bureau or instrumentality of any of them including monetary authorities which exercises jurisdiction over any such Person or such Person's Property. Unless otherwise specified, all references to Governmental Authority herein shall mean a Governmental Authority having jurisdiction over, where applicable, the Issuer, the Parent or any of their Property or the Trustees or any Note Holder. Governmental Requirements -- any law, statute, code, ordinance, order, determination, rule, regulation, publication, judgment, decree, injunction, franchise, permit, registration, consent, approval, certificate, license, authorization or other directive or requirement (whether or not having the force of law), including, without limitation, Environmental Laws, energy regulations and occupational, safety and health standards or controls, of any Governmental Authority. Hedging Agreements -- any commodity, interest rate or currency swap, cap, floor, collar, forward agreement or other exchange or protection agreements or any option with respect to any such transaction. Indemnified Parties -- has the meaning set out in Section 12.16(b). Indemnity Matters -- any and all actions, suits, proceedings (including any investigations, litigation or inquiries), orders, claims, demands and causes of action made or threatened against a Person and, in connection therewith, all settlements, judgments, losses, liabilities, obligations, damages, penalties, fines (including, without limitation, consequential damages) or reasonable costs and expenses of any kind or nature whatsoever incurred by such Person whether caused by the sole or concurrent negligence (but not gross negligence or willful misconduct) of such Person seeking indemnification. Indenture -- this Trust Indenture and Security Agreement as originally executed or as it may from time to time be supplemented or amended in accordance with the provisions hereof. Indenture Default -- an event or condition the occurrence of which would, with the lapse of time or the giving of notice or both, become an Indenture Event of Default. Indenture Event of Default -- has the meaning set out in Section 6.1. Independent Director -- has the meaning set out in the Certificate of Incorporation of the Issuer, as amended, as it existed on September 22, 1998. Institutional Investor -- has the meaning set out in Schedule B to the Note Purchase Agreements. Issuer -- has the meaning set out in the first paragraph of this Indenture. -8- 14 Investment Grade -- a rating equal to or higher than "BBB-" by Standard & Poor's Rating Services, a division of The McGraw Hill Companies, Inc. or any successor thereto or equal to or higher than "Baa3" by Moody's Investors Service, Inc. or any successor thereto or a comparable rating by another nationally recognized statistical rating organization, which rating and organization are approved by the Majority Holders. Lien -- any interest in Property securing an obligation owed to, or a claim by, a Person other than the owner of the Property, whether such interest is based on the common law, statute or contract, and including but not limited to the security interest or lien arising from a mortgage, encumbrance, pledge, conditional sale or other title retention agreement, trust receipt or a lease, consignment or bailment for security purposes. The term "Lien" shall include reservations, exceptions, encroachments, easements, rights-of-way, covenants, conditions, restrictions, leases and other title exceptions and encumbrances (including, with respect to stock, stockholder agreements, voting trust agreements, buy back agreements and all similar agreements) affecting the Property. For the purposes of this Indenture, a Person shall be deemed to be the owner of any Property which it has acquired or holds subject to a conditional sale agreement, financing lease or other arrangement pursuant to which title to the Property has been retained by or vested in some other Person for security purposes, and such retention or vesting shall constitute a Lien. Liquidity Agreements -- General Liquidity Agreement No. 1, dated as of October 19, 1998, among Victory Receivables Corporation, Bankers Trust Company, as administrator and collateral agent, BTM, Ltd., as agent, The Norinchukin Bank, New York Branch, and the banks parties thereto, as from time to time amended, supplemented or modified, and the Liquidity Agreement, dated as of December 15, 1998, among V Victory Receivables Corporation, Bankers Trust Company, as administrator and collateral agent, BTM, Ltd., as agent, and the banks parties thereto, as from time to time amended, supplemented or modified. Liquidity Documents -- the Victory Credit Agreement, the Liquidity Agreements and the Asset Purchase Agreement. Loss Payment Date -- the date that the Company shall receive the proceeds of any insurance payment or settlement or any condemnation award or other payment in relation to an Event of Loss. MPPAA -- Multiemployer Pension Plan Amendments Act of 1980, as amended. Majority Holders -- at any time, holders of more than fifty-one percent (51%) in aggregate principal amount of all Notes then Outstanding (exclusive of any Notes held by the Issuer or any Affiliate of the Issuer). Make-Whole Amount -- has the meaning set out in Section 3.8. Material -- has the meaning set out in Schedule B to the Note Purchase Agreements. -9- 15 Material Adverse Effect -- has the meaning set out in Schedule B to the Note Purchase Agreements. Maturity Date -- has the meaning set out in Schedule B to the Note Purchase Agreements. Multiemployer Plan -- has the meaning set out in Schedule B to the Note Purchase Agreements. Noble Corp. -- Noble Drilling Corporation, a Delaware corporation. Note Holder -- the owner and holder of a Note registered with the Issuer as provided in Section 2.3. Note Purchase Agreements -- the separate Note Purchase Agreements dated as of September 24, 1998, between the Issuer and each of the Purchasers in respect of the Notes. Notes -- any or all of the Series A Notes and Series B Notes. Operating Services Agreement -- has the meaning set forth in Schedule B to the Note Purchase Agreements. Opinion of Counsel -- an opinion of outside counsel (which may from time to time serve as counsel for the Issuer, for the Trustee or for a Note Holder) reasonably acceptable to the Trustee, which opinion is in scope, form and substance reasonably satisfactory to the Trustee and the Trustee's counsel. outer Continental Shelf -- shall have the meaning assigned to such term in 43 U.S.C. ss.1331. Outstanding -- when used with reference to Notes shall mean, as of any particular time, all Notes authenticated and delivered by the Trustee under this Indenture, except: (a) Notes theretofore canceled by the Trustee or delivered to the Trustee for cancellation; (b) Notes for the payment or prepayment of which moneys in the necessary amount shall have been deposited in trust with the Trustee; provided that if such Notes are to be prepaid prior to the maturity thereof, notice of such prepayment shall have been given as provided in Section 3.5 of this Indenture, or provision satisfactory to the Trustee shall have been made for giving such notice; and (c) Notes in lieu of or in substitution for which other Notes shall have been delivered pursuant to the terms of Section 2.4, 2.5 or 2.9 of this Indenture. Parent -- Noble Drilling (U.S.) Inc., a Delaware corporation. -10- 16 Payment Date -- the twentieth (20th) day of each month of each year beginning in the calendar month following the Closing Date, and continuing through the Maturity Date. Pension Plans -- employee pension benefit plans (as defined in Section 3 of ERISA) to which from time to time the Issuer is required to contribute. Performance Agreement -- has the meaning set forth in Schedule B to the Note Purchase Agreements. Permitted Investments -- (a) direct obligations of the United States of America (including obligations issued or held in book-entry form on the books of the Department of the Treasury of the United States of America and certificates or other instruments evidencing ownership interests in such direct obligations of the United States of America such as CATS, TIGRS, Treasury Receipts and Stripped Treasury Coupons) which mature within one (1) year after the acquisition thereof; (b) obligations for which the timely payment of the principal thereof are fully guaranteed by the United States of America or the Federal Deposit Insurance Corporation, which mature within one (1) year after the acquisition thereof; (c) certificates of deposit of, or time deposits in, any bank (including any Trustee) or trust company organized under the laws of the United States of America or any state thereof whose unsecured obligations are accorded one of the two highest ratings by Standard & Poor's Ratings Services, a division of The McGraw Hill Companies, Inc. or Moody's Investors Service, Inc. and which have capital and unimpaired surplus of at least Five Hundred Million Dollars ($500,000,000), maturing within ninety (90) days after the acquisition thereof; (d) readily marketable commercial paper of corporations doing business in and incorporated under the laws of the United States of America or any State thereof given on the date of the investment a credit rating of at least P-1 by Moody's Investor Services, Inc., or A-1 by Standard & Poor's Ratings Services, a division of The McGraw Hill Companies, Inc. in each case due within 90 days after the date of the making of the investment; and (e) investments in a money-market fund (including any fund for which the Trustee or any Affiliate of the Trustee serves as adviser or sponsor or otherwise receives compensation with respect to such fund) rated AAAm or better by Standard & Poor's Ratings Services, a division of The McGraw Hill Companies, Inc. or Aaa by Moody's Investors Services, Inc. (or equivalent categories that may be established by such rating services). Person -- an individual, partnership, corporation, limited liability company, trust, unincorporated association or organization, government, governmental agency or governmental subdivision. Plans -- employee benefit plans (as defined in Section 3(3) of ERISA) sponsored, maintained or contributed to by the Issuer or an ERISA Affiliate. Pledged Equipment -- has the meaning set forth in Paragraph (a) of the Granting Clause. Property -- any interest in any kind of property or asset, whether real, personal or mixed, and whether tangible or intangible. -11- 17 Purchasers -- each Person named in Schedule A to the Note Purchase Agreements. QPAM -- a "qualified professional asset manager" under Part V of the QPAM Exemption. QPAM Exemption -- has the meaning set out in Schedule B to the Note Purchase Agreements. Regulatory Change -- means, relative to any Credit Support Party: any change in (or the adoption, implementation, change in phase in or commencement of effectiveness of) any (i) United States federal or state law or foreign law applicable to such Credit Support Party; (ii) regulation, interpretation, directive, requirement or request (whether or not having the force of law) applicable to such Credit Support Party of any court, government authority charged with the interpretation or administration of any law referred to in clause (i) above or of any fiscal, monetary or other authority having jurisdiction over such Credit Support Party; (iii) GAAP or regulatory accounting principles applicable to such Credit Support Party; or (iv) any change in the application to such Credit Support Party of any existing law, regulation, interpretation, directive, requirement, request or accounting principles referred to in clause (i), (ii) or (iii) above. Required Holders -- at any time, holders of more than fifty-one percent (51%) in aggregate principal amount of all of the Series A Notes then Outstanding and fifty-one percent (51%) in aggregate principal amount of all Series B Notes then Outstanding (in each case, exclusive of any Notes held by the Issuer or any Affiliate of the Issuer). Responsible Officer -- with respect to any corporation, the chairman or a vice chairman of the board (if an officer), the president, the chief executive officer, the chief financial officer, the chief operating officer, executive vice president, senior vice president, second vice president or any other vice president, the controller, the treasurer, any assistant treasurer or the secretary; and with respect to any Trustee which is a corporation or banking association, any vice president, corporate trust officer or other officer, in each case employed within the corporate trust department of such Trustee. SDDI -- has the meaning set out in Schedule B to the Note Purchase Agreements. SDDI Acknowledgment and Consent - has the meaning set out in Schedule B to the Note Purchase Agreements. Security -- has the same meaning as in Section 2(1) of the Securities Act of 1933, as amended. Series A Notes -- has the meaning set out in Section 2.1(a). Series B Notes -- has the meaning set out in Section 2.1(b). -12- 18 Shell Contract -- has the meaning set out in Schedule B to the Note Purchase Agreements. Shortfall -- has the meaning set out in Section 7.8. Subsidiary -- has the meaning set out in Schedule B to the Note Purchase Agreements. Transaction Document -- has the meaning set out in Section 3.8(b). Trust Estate -- has the meaning set out in the Granting Clause hereof. Trustee -- has the meaning set out in the first paragraph of this Indenture. Trustee Security Document -- has the meaning set out in Section 10.2. UCC -- has the meaning set out in Section 6.4. Victory Credit Agreement -- the Credit Agreement, dated as of October 19, 1998, among Victory Receivables Corporation, Bankers Trust Company, as program administrator, and Victory Credit Enhancer LLC, as from time to time amended, supplemented or modified. Voting Stock -- capital stock of any class or classes of a corporation the holders of which are ordinarily, in the absence of contingencies, entitled to elect a majority of the corporate directors (or Persons performing similar functions). Working Capital Fund -- has the meaning set out in Section 7.15. Written Request -- with respect to any Person a written order or request signed in the name of such Person by a Responsible Officer of such Person (if a corporation) or a general or managing partner (if a partnership) or the manager if a limited liability company or the individual (if an individual). Year 2000 Problem -- the risk that computer hardware or software applications or other data processing capacities used by the Issuer may be unable to recognize and perform properly date-sensitive functions involving certain dates before and any date after December 31, 1999. Yield Protection Amount -- has the meaning set out in Section 3.8(b). ARTICLE 2. FORM, EXECUTION, ISSUE AND DELIVERY OF NOTES. 2.1 Issue of Notes. (a) The Issuer has authorized the issue and sale of Ninety-Five Million, Four Hundred and Twelve Thousand, Five Hundred Dollars ($95,412,500) aggregate original -13- 19 principal amount of its 6.33% Series A Senior Secured Notes due December 20, 2003 (such notes and all notes given in substitution or exchange therefore are herein collectively called the "Series A Notes"). The Series A Notes shall be issuable as fully registered Notes in the form set out in Annex A-1 to this Indenture. (b) The Issuer has also authorized the issue and sale of Sixteen Million, Eight Hundred Thirty-Seven Thousand, Five Hundred Dollars ($16,837,500) aggregate original principal amount of its 6.09% Series B Senior Secured Notes due December 20, 2003 (such notes and all notes given in substitution or exchange therefor are herein collectively called the "Series B Notes"). The Series B Notes shall be issuable as fully registered Notes in the form set out in Annex A-2 of this Indenture. 2.2 Authentication of Notes; Denominations of Notes and Form. (a) Authentication. The Notes shall be of the tenor and purport above recited, and the maturity date of each series of Notes shall be determined, on or prior to the initial issuance of such series, in the manner contemplated by the Note Purchase Agreements. Only such of the Notes as shall bear thereon a certificate in form substantially as set forth in the form of Trustee's Certificate of Authentication contained in Annex A-1 or Annex B-2, as the case may be, executed by the Trustee, shall be valid or become obligatory for any purpose or entitle the holder thereof to any right or benefit under this Indenture, and the Certificate of Authentication by the Trustee upon any such Note executed on behalf of the Issuer as aforesaid shall be conclusive evidence that the Note so authenticated has been duly authenticated and delivered hereunder and that the holder is entitled to the benefits of this Indenture. Subject to the provisions of Section 2.9 respecting Notes issued in replacement of lost or stolen Notes, the aggregate principal amount of all Notes which may be issued and outstanding under this Indenture at any time shall not exceed One Hundred Twelve Million, Two Hundred Fifty Thousand Dollars ($112,250,000) less the aggregate amount of prepayments of principal made on the Notes up to such time. (b) Denominations. The Notes shall be issued in minimum denominations of Five Hundred Thousand Dollars ($500,000); provided, however, that if it is necessary to enable the registration of transfer by a holder of its entire holding of Notes, a Note may be in a denomination which is less than Five Hundred Thousand Dollars ($500,000). (c) Form. All Notes shall be issued in the form of Definitive Notes, duly executed by the Company and authenticated by the Trustee as hereinabove provided. 2.3 Registration of Notes. All Notes issuable under this Indenture shall be registered Notes. The Issuer shall cause to be kept at its agency, maintained pursuant to Section 7.9, a register for the registration and transfer of Notes. The name and address of each holder of record of one or more Notes, each registration of transfer thereof and the name and address of each transferee of one or more Notes shall be registered in such register. The Person in whose name any Note shall be registered shall be deemed and treated as the owner and holder thereof for all purposes of this Indenture, and the Issuer and the Trustee shall not be affected by any notice or knowledge to the contrary. -14- 20 2.4 Exchange of Notes. Upon surrender of any Note at the agency of the Issuer maintained pursuant to Section 7.9, the Issuer, at the request of the holder thereof, will execute and deliver, at the Issuer's expense (except as provided in Section 2.6 below), and the Trustee will authenticate, one or more new Notes payable to such holder in exchange therefor, of like tenor for a like aggregate principal amount in authorized denominations. 2.5 Transfer of Notes. (a) General. Any Note may be transferred at the agency of the Issuer maintained pursuant to Section 7.9, by surrendering such Note for cancellation, accompanied by a written instrument of transfer in a form reasonably satisfactory to the Issuer and the Trustee (which must specify the taxpayer identification number of the transferee), duly executed by the holder of such Note or by its attorney duly authorized in writing. Thereupon the Issuer, at its expense, shall issue in the name of the transferee or transferees, and arrange for the authentication by the Trustee of (and the Trustee shall authenticate) and deliver in exchange therefor, a new Note or Notes, of a like tenor for a like aggregate principal amount, in authorized denominations. (b) Legends. Each Note shall bear a legend in substantially the following form: "THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. THE HOLDER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE ISSUER IS NOT REQUIRED TO REGISTER THE NOTES UNDER THE SECURITIES ACT. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY IN ACCORDANCE WITH AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OR PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EITHER CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION." (c) Subsequent Transferee Representations. Any transferee, by its acceptance of a Note registered in its name (or the name of its nominee), shall be deemed to have made the representations set forth in Sections 6.1 and 6.2 of the Note Purchase Agreements, provided, however, that, such transferee will not be deemed to have made the representation set forth in Section 6.2(c), (d) or (g) unless such transferee shall have made the disclosures referred to therein to the Issuer at least five Business Days prior to its acceptance of such Note and shall have received prior to such acceptance of such Note a certificate from the Issuer stating that (1) the Issuer is neither a "party in interest" (as defined in Section 3(14) of ERISA) nor a "disqualified person" (as defined in Section 4975(e)(2) of the Code), with respect to any plan identified pursuant to Section 6.2(c) or (g) or (2) with respect to any plan identified pursuant to Section 6.2(d) neither the Issuer nor any "affiliate" (as defined in Section V(e) of the QPAM Exemption) has at such time, or has exercised during the immediately preceding one year, the authority to appoint or terminate the QPAM as manager of the assets of any -15- 21 plan identified in writing pursuant to Section 6.2(d) or to negotiate the terms of said QPAM's management agreement on behalf of any such identified plan, and provided, further, that, such transferee will not be deemed to have made the representation set forth in Section 6.2(b), (c) or (d) unless the applicable Prohibited Transaction Class Exemption referred to therein remains in effect at that time or another similar Prohibited Transaction Class Exemption is then available. The Issuer shall exercise reasonable due diligence as is necessary to respond to any such disclosure, provided that, if the Issuer shall not respond within five Business Days following receipt of any such disclosure, it shall be deemed to have made the statement set forth in either clause (1) or (2), as applicable, of this Section 2.5(c). If the Issuer shall respond within five Business Days following receipt of any such prospective transferee disclosure and shall state that the Issuer is unable to make the statement set forth in either clause (1) or (2), as applicable, of this Section 2.5(c) (which statement shall include a description of the basis for its determination), the Trustee shall not be permitted (and the Issuer shall not be required) to register the transfer to such prospective transferee of the Note. 2.6 General Rules. (a) All transfers, exchanges or replacements of Notes pursuant to Section 2.4, Section 2.5 or Section 2.9 shall be made without expense to the holder of the Notes, except that any stamp taxes or other governmental charges required to be paid with respect to the same shall be paid by the Note Holder requesting such transfer, exchange or replacement as a condition precedent to the exercise of such privilege, unless an Indenture Event of Default has occurred and is continuing, in which case Issuer shall be liable for such stamp taxes or other governmental charges. All Notes surrendered for transfer, exchange or replacement shall be canceled and destroyed by the Trustee. Each new Note delivered pursuant to Section 2.4 or Section 2.5 shall be dated and bear interest from the most recent date to which interest has been paid on the surrendered Note or Notes, or dated the date of the surrendered Note or Notes if no interest has been paid thereon. The Trustee shall make a notation on each new Note delivered pursuant to Section 2.4, Section 2.5 or Section 2.9 of the amount of all payments of principal previously made on the old Note or Notes with respect to which such new Note is issued. The Issuer may deposit fully executed but unauthenticated Notes with the Trustee, which shall hold such Notes (as agent of the Issuer) for subsequent authentication and issuance and delivery by the Issuer pursuant to this Article 2. The Issuer shall not be required to register the transfer, exchange or replacement of, pursuant to this Article 2, (i) any Note during the five (5) days preceding the due date of any payment thereon or (ii) any Note after the Issuer shall have given notice pursuant to Article 3 of this Indenture of the prepayment thereof and prior to the prepayment date specified in such notice. (b) With respect to the CP Conduit as a Purchaser, each holder of a Note, by its acceptance of said Note, hereby agrees that until the 368th day following the maturity of the last maturing commercial paper note to be issued by the CP Conduit in connection with its funding of its investment in the Notes, no holder of a Note will institute, nor will said holder join with others in instituting, any involuntary bankruptcy or analogous proceeding against the CP Conduit under any bankruptcy, reorganization, receivership or similar law, domestic or foreign, as now or hereafter in effect. -16- 22 2.7 Valid Obligations. All Notes executed, authenticated and delivered in exchange for, upon transfer of, or in replacement of, other Notes as provided in this Indenture shall be the valid obligations of the Issuer, evidencing the same debt as such other Notes, and shall be entitled to the benefits of this Indenture to the same extent as the Notes in exchange for or upon transfer or replacement of which they were executed and delivered. 2.8 Execution and Delivery. The Notes may be typewritten, printed or lithographed or produced by any other means acceptable to the Trustee, and shall be signed on behalf of the Issuer by the manual signature of one of the Responsible Officers under its corporate seal (which may be printed, engraved or otherwise reproduced thereon or affixed thereto) and attested by the manual signature of the Secretary or one of the Assistant Secretaries of the Issuer. In the case that any of the officers who shall have signed or sealed any of the Notes shall cease to be such officer or officers of the Issuer before the Notes so signed or sealed shall have been delivered by or on behalf of the Issuer, such Notes may nevertheless be delivered and issued and, upon such delivery and issue, shall be binding upon the Issuer as though those who signed or sealed the same had continued to be such officer or officers. 2.9 Replacement of Notes. Upon receipt by the Issuer and the Trustee of evidence reasonably satisfactory to each of them of the ownership of and the loss, theft, destruction or mutilation of any Note and (a) in the case of loss, theft or destruction, (i) if the holder is a Purchaser, its nominee or other nationally recognized bank, insurance company, benefit society or other institutional investor, upon receipt of an unsecured indemnity agreement signed by the holder of the Note in form reasonably satisfactory to the Issuer and the Trustee to save each of them harmless, or (ii) otherwise, upon receipt of such security or indemnity as may be reasonably required by the Issuer or the Trustee to save each of them harmless, or (b) in the case of mutilation, upon surrender and cancellation thereof, the Issuer, at its own expense, will execute and deliver in lieu thereof, and arrange for the authentication by the Trustee of (and the Trustee will authenticate), a new Note of like tenor, dated and bearing interest from the date to which interest has been paid on such lost, stolen, destroyed or mutilated Note or dated the date of such lost, stolen, destroyed or mutilated Note if no interest has been paid thereon. ARTICLE 3. PAYMENTS AND DISTRIBUTION THEREOF. 3.1 Payment by Issuer. Anything in this Indenture or in the Notes to the contrary notwithstanding, but subject to the provisions of Section 12.5 hereof, the Issuer will pay all amounts payable with respect to the Notes held by each Purchaser or other registered holder of Notes (without any presentment of any such Notes and without any notation of such payment being made thereon) in lawful money of the United States of America to the Trustee for payment on behalf of the Issuer as provided in this Article 3 and in Article 4. In any case where the date of maturity of principal of, and interest and any applicable Make-Whole Amount, Yield Protection Amount or Breakage Amount on, the Notes or the date fixed for any prepayment (in whole or in part) of the Notes will not be a Business Day, then payment of such principal of, and interest and any applicable Make-Whole -17- 23 Amount, Yield Protection Amount or Breakage Amount on, the Notes need not be made on such date but may be made on the next succeeding Business Day with the same force and effect as if made on the date of maturity or the date fixed for such prepayment. Each holder of a Note, by its acceptance of such Note, agrees that (i) the Trustee, in its individual capacity, shall not be liable to the holder of any Note for any amounts payable under any Note or this Indenture, and (ii) the Trustee, in its individual capacity, shall not have any liability under this Indenture, except as provided herein. 3.2 Delivery Expenses. If any holder of a Note shall surrender any Note to the Issuer or to the Trustee pursuant to this Indenture, the Issuer will pay the cost of delivering to or from such holder's home office from or to the agency of the Issuer maintained pursuant to Section 7.9, as the case may be, insured to such holder's satisfaction, the surrendered Note and any Note issued in substitution or replacement for the surrendered Note. 3.3 Issue Taxes. The Issuer will pay all taxes, assessments and charges in connection with the issuance and sale of the Notes by the Issuer and in connection with any modification of the Notes and will save each holder of any Note harmless without limitation as to time against any and all liabilities with respect to all such taxes. The obligations of the Issuer under this Section 3.3 shall survive the payment or prepayment of the Notes and the termination of this Indenture. 3.4 Required Payments of Notes without Premium. (a) Scheduled Required Prepayments for Series A Notes. In addition to paying the entire outstanding principal amount of, and the interest due on, the Series A Notes on the Maturity Date, the Issuer agrees to prepay, and there shall become due and payable, principal amounts of the Series A Notes (per $1,000,000 of original principal amount) (together with accrued interest owing thereon) on the Payment Dates (the first of which shall be on the twentieth (20th) day of the calendar month following the Closing Date) as set out on Annex B hereto. (b) Prepayment at Par. Each such prepayment of principal made pursuant to Section 3.4(a) shall be at 100% of the principal amount prepaid, together with interest accrued thereon to the date of prepayment. (c) Prepayment Schedules. Each Series A Note shall have attached thereto a prepayment schedule showing the amounts of principal of such Note required to be prepaid pursuant to Section 3.4(a) and the respective due dates of such amounts. The Trustee shall make a notation on the prepayment schedule attached to each new Series A Note delivered pursuant to Section 2.4, Section 2.5 or Section 2.9 of the amount of all prepayments of principal previously made on the old Series A Note or Notes with respect to which such new Series A Note is issued; provided that the failure of Trustee to make any such notation shall not affect the obligations of the Issuer hereunder or under such Series A Note. (d) Required Prepayments Unaffected by Optional Prepayments. The Issuer's exercise of any prepayment option contained in Section 3.5 shall be applied against the principal amount due at the Maturity Date and the prepayment installments, if any, -18- 24 in the inverse order of maturity, and shall not reduce the Issuer's obligation to make any earlier prepayment as provided in Section 3.4(a). (e) Series B Notes. In addition to paying the entire outstanding principal amount of, and the interest due on, the Series B Notes on the Maturity Date, the Issuer agrees to pay, and there shall become due and payable, unpaid accrued interest on Series B Notes on the Payment Dates. 3.5 Optional Prepayment of the Notes with Make-Whole Amount. None of the Notes may be prepaid except as required or permitted by Section 3.4, this Section 3.5, Section 3.6 or Section 6.2. The Issuer may prepay the Notes in accordance with this Section 3.5 on any Payment Date. (a) The Issuer may, upon notice as provided in Section 3.5(b), prepay all of the Notes in whole or in part, in multiples of One Million Dollars ($1,000,000), together with all interest accrued on the amount so prepaid plus the Make-Whole Amount, if any, determined for the prepayment date with respect to such principal amount. (b) The Issuer will give (or cause to be given) notice of any optional prepayment of the Notes to the Trustee and to each holder of the Notes not less than thirty (30) days nor more than sixty (60) days before the date fixed for prepayment, specifying (i) such date, (ii) the Section of this Indenture under which such prepayment is to be made, (iii) the principal amount of such holder's Notes to be prepaid on such date, in the case of partial prepayments, and (iv) the interest to be paid on the prepayment date with respect to such principal amount being prepaid and shall be accompanied by a certificate of a Responsible Officer as to the estimated Make-Whole Amount, if any, due in connection with such prepayment (calculated as if the date of such notice were the date of the prepayment), setting forth the details of such computation. Two Business Days prior to such prepayment, the Issuer shall deliver to the Trustee and each holder of Notes a certificate of a Responsible Officer specifying in reasonable detail the calculation of such Make-Whole Amount as of the specified prepayment date. Notice of prepayment having been so given, the aggregate principal amount of the Notes specified in such notice, together with the Make-Whole Amount, if any, and accrued interest on such principal amount shall become due and payable on the specified prepayment date. (c) Upon any partial prepayment of the Notes, the principal amount so prepaid shall be allocated to all Notes at the time Outstanding in proportion to the respective outstanding principal amounts thereof, with adjustments to avoid fractions of one dollar ($1). 3.6 Required Prepayments of Notes. The Notes shall be prepaid in full, together with accrued interest thereon to the date of prepayment and (with respect to clause 3.6(a) only) the Breakage Amount, if any, and (with respect to clause 3.6(b) only) the Make-Whole Amount, if any, determined for the prepayment date with respect to the principal amount plus all other amounts payable hereunder to the holders of the Notes and the Trustee: (a) Upon the occurrence of an Event of Loss; or -19- 25 (b) Upon the early termination of the Shell Contract as provided in Section 17E of the Drilling Order. The Issuer will give (or cause to be given) notice of such prepayment under clause (a) or (b) of this Section 3.6 to the Trustee and the holders of the Notes promptly (and in any event within one (1) Business Day) after the occurrence of an Event of Loss or the early termination of the Shell Contract under Section 17E of the Drilling Order, as the case may be, and shall specify the date for such prepayment, which date shall not be less than 30 days nor more than 45 days after the date of such notice, together with the other information specified in Section 3.5(b). In the event the Trustee and the Note Holders have not received the aforesaid notice, such prepayment shall be due and payable 30 days after the occurrence of the event listed in (a) or (b) above. 3.7 Surrender of Notes on Prepayment. Following any prepayment of any Note pursuant to Section 3.5 or Section 3.6, such Note shall, prior to any transfer thereof, be (a) made available to the Trustee for notation on the prepayment schedule attached to such Note of the amount of principal so prepaid or, (b) at the option of the holder thereof and in lieu of the alternative in the foregoing clause (a) of this sentence, held by the holder of such Note who shall make a notation on such schedule of the amount of principal so prepaid. In case the entire principal amount of any Note is prepaid or paid, such Note shall be surrendered promptly at the agency of the Issuer maintained pursuant to Section 7.9, for cancellation, upon Written Request therefor by the Issuer, and shall not be reissued, and no Note shall be issued in lieu of the prepaid or paid principal amount of any Note. 3.8 Provision for Applicable Make-Whole Amount, Yield Protection Amount and Breakage Amount. (a) Applicable Make-Whole Amount. The Issuer acknowledges that the right of each holder of a Note to maintain a rate of return based upon the full term of the Notes and the scheduled prepayments under Section 3.4 is a valuable right, and that the provisions for payment of the Make-Whole Amount by the Issuer in the event that (a) the Notes are otherwise prepaid, or (b) the maturity of the Notes is accelerated, are intended to provide reasonable compensation for the deprivation of such right under such circumstances. The term "MAKE-WHOLE AMOUNT" means, with respect to any Note, an amount equal to the excess, if any, of the Discounted Value of the Remaining Scheduled Payments with respect to the Called Principal of such Note over the amount of such Called Principal, provided that the Make-Whole Amount may in no event be less than zero. For the purposes of determining the Make-Whole Amount, the following terms have the following meanings: "CALLED PRINCIPAL" means, with respect to any Note, the principal of such Note that is to be prepaid pursuant to Section 3.5 or 3.6(b) or has become or is declared to be immediately due and payable pursuant to Section 6.2, as the context requires. "DISCOUNTED VALUE" means, with respect to the Called Principal of any Note, the amount obtained by discounting all Remaining Scheduled Payments with respect to such Called Principal from their respective scheduled due dates to the Settlement Date with respect to such Called Principal, in accordance with accepted financial practice and at a discount -20- 26 factor (applied on the same periodic basis as that on which interest on the Notes is payable) equal to the Reinvestment Yield with respect to such Called Principal. "REINVESTMENT YIELD" means, with respect to the Called Principal of any Note, .32% (with respect to the Series A Notes) and .32% (with respect to the Series B Notes) over the yield to maturity implied by (i) the yields reported, as of 10:00 A.M. (New York City time) on the second Business Day preceding the Settlement Date with respect to such Called Principal, on the display designated as "Page 678" on the Telerate Access Service (or such other display as may replace Page 678 on Telerate Access Service) for actively traded U.S. Treasury securities having a maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date, or (ii) if such yields are not reported as of such time or the yields reported as of such time are not ascertainable, the Treasury Constant Maturity Series Yields reported, for the latest day for which such yields have been so reported as of the second Business Day preceding the Settlement Date with respect to such Called Principal, in Federal Reserve Statistical Release H.15 (519) (or any comparable successor publication) for actively traded U.S. Treasury securities having a constant maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date. Such implied yield will be determined, if necessary, by (a) converting U.S. Treasury bill quotations to bond-equivalent yields in accordance with accepted financial practice and (b) interpolating linearly between (1) the actively traded U.S. Treasury security with the duration closest to and greater than the Remaining Average Life and (2) the actively traded U.S. Treasury security with the duration closest to and less than the Remaining Average Life. "REMAINING AVERAGE LIFE" means, with respect to any Called Principal, the number of years (calculated to the nearest one-twelfth year) obtained by dividing (i) such Called Principal into (ii) the sum of the products obtained by multiplying (a) the principal component of each Remaining Scheduled Payment with respect to such Called Principal by (b) the number of years (calculated to the nearest one-twelfth year) that will elapse between the Settlement Date with respect to such Called Principal and the scheduled due date of such Remaining Scheduled Payment. "REMAINING SCHEDULED PAYMENTS" means, with respect to the Called Principal of any Note, all payments of such Called Principal and interest thereon that would be due after the Settlement Date with respect to such Called Principal if no payment of such Called Principal were made prior to its scheduled due date, provided that if such Settlement Date is not a date on which interest payments are due to be made under the terms of the Notes, then the amount of the next succeeding scheduled interest payment will be reduced by the amount of interest accrued to such Settlement Date and required to be paid on such Settlement Date pursuant to Sections 3.5, 3.6(b) or 6.2. "SETTLEMENT DATE" means, with respect to the Called Principal of any Note, the date on which such Called Principal is to be prepaid pursuant to Section 3.5 or 3.6(b) or has become or is declared to be immediately due and payable pursuant to Section 6.2, as the context requires. (b) Yield Protection Amount. If any Regulatory Change occurring after the date hereof: -21- 27 (i) shall subject any Credit Support Party to any tax, duty or other charge with respect to any Series B Note (or its participation therein), or any of its obligations or right to acquire or hold any Series B Note or to provide funding, liquidity, credit or asset purchase support to the CP Conduit in respect of any of the foregoing (or with respect to its participation in any of the foregoing), or shall change the basis of taxation of payments to the Credit Support Party of the principal or interest on any Series B Note (or its participation in any of the foregoing) or any other amounts due hereunder or under any funding, liquidity, or credit support agreement it may have with the CP Conduit (collectively, a "Transaction Document") or its obligations or rights, if any, to acquire or participate in any Series B Note or to provide funding, liquidity, credit or asset purchase support to the CP Conduit in respect of any of the foregoing (or with respect to its participation in any of the foregoing) (except for changes in the rate of tax on or determined by reference to the overall net income of such Credit Support Party imposed by the United States of America); or (ii) shall impose upon any Credit Support Party, modify or deem applicable any reserve, special deposit or similar requirement against assets of any Credit Support Party, deposits or obligations with or for the account of any Credit Support Party or with or for the account of any Affiliate (or entity deemed by the Federal Reserve Board to be an Affiliate) of any Credit Support Party, or credit extended by any Credit Support Party; or (iii) shall change the amount of capital maintained or required or requested or directed to be maintained by any Credit Support Party; or (iv) shall impose any other condition affecting any Series B Note (or its participation therein) or any of its obligations or right to acquire or hold any Series B Note or to provide funding, liquidity, credit or asset purchase support to the CP Conduit in respect of any of the foregoing (or with respect to its participation in any of the foregoing); and the result of any of the foregoing is or would be (I) to increase the cost to (or impose a cost on) (I) a Credit Support Party funding or acquiring or holding any Series B Note, or loans or other extensions of credit under any Transaction Document or any obligation or commitment of such Credit Support Party with respect to any of the foregoing, or (II) a Credit Support Party for continuing its relationship with the CP Conduit, (II) to reduce the amount of any sum received or receivable by a Credit Support Party as successor in interest to the CP Conduit as a Series B Note Holder under this Indenture, or under any Transaction Document (or its participation in any of the foregoing), or (III) to reduce the rate of return on the capital of such a Credit Support Party as a consequence of its obligations under the Transaction Documents (or its participation therein) to a level below that which such Credit Support Party could otherwise have achieved, -22- 28 in each such case by an amount reasonably deemed by such Credit Support Party to be material, then prior to the next scheduled Payment Date, and in any case within 30 days after demand by such Credit Support Party (which demand shall be accompanied by a statement setting forth in reasonable detail the basis of such demand), the Issuer shall pay directly to the Trustee for the benefit of such Credit Support Party such additional amount or amounts as will compensate such Credit Support Party for such additional or increased cost or such reduction (the "Yield Protection Amount"). The Trustee will deposit such amounts in the Collection Account for distribution in accordance with Article 4. In determining any amount provided for or referred to in this Section 3.8(b), a Credit Support Party may use any reasonable averaging and attribution method that it (in its sole discretion) shall deem applicable. Any Credit Support Party when making a claim under this Section 3.8(b) shall submit to the Issuer and the Trustee a statement as to such increased cost or reduced return (including calculation thereof in reasonable detail), which statement shall, in the absence of error, be conclusive and binding upon the Issuer. No Credit Support Party shall be entitled to recover any Yield Protection Amount under this Section 3.8(b), incurred or accrued more than 180 days prior to the notice described in this Section 3.8(b), unless (i) the Regulatory Change giving rise to such Yield Protection Amount is retroactive in its application to said Credit Support Party, or (ii) said Credit Support Party lacked knowledge of the Regulatory Change. (c) Breakage Amount. Within 30 days after demand by the CP Conduit or any Credit Support Party as successor in interest to the CP Conduit as a Series B Note Holder (a "Breakage Party") (which demand shall be accompanied by a statement in reasonable detail setting forth the basis for such demand) the Issuer shall pay directly to the Trustee for the benefit of such Breakage Party, such amount or amounts as shall compensate such Breakage Party for any loss, cost or expense incurred by such Breakage Party in connection with any Hedging Agreements, as a result of any payment of principal of any Series B Note being received by reason of an Event of Loss. By its purchase of the Series B Notes, the Breakage Party agrees to pay directly to the Trustee, for the benefit of the Issuer, such amount or amounts that it may receive as breakage payments in connection with any Hedging Agreements, as a result of any payment of principal on any Series B Note being received by reason of an Event of Loss. The determination by any such Breakage Party of any such loss, expense or amount shall be presumed correct, absent manifest error. The Trustee will deposit such amounts in the Collection Account for distribution in accordance with Article 4. ARTICLE 4. RECEIPT, DISTRIBUTION AND APPLICATION OF TRUST ESTATE. 4.1 Application of Shell Contract Revenues When No Indenture Event of Default is Continuing. The Trustee shall establish an account styled "Noble/Paul Romano Cash Collateral Account" (the "Collection Account") subject to the Trustee's sole dominion and control. Each payment to the Trustee under any Credit Document and all payments under the Drilling Order, other than payment pursuant to Section 17E of the Drilling Order, shall be deposited with the Trustee in the Collection Account and held in trust by it as part of the Trust Estate and, so long as no Indenture Event of Default shall have occurred and be continuing, applied on the next succeeding Payment Date as follows: -23- 29 first, the amount required to reimburse any Trustee for any unpaid fees for its services under this Indenture and to reimburse any Trustee for any reasonable expenses (including reasonable external attorneys' fees) not previously reimbursed; second, the accrued unpaid interest due and payable to the Note Holders on any of the Notes, allocated among the Notes pursuant to Section 4.5 and distributed to the Note Holders thereof; third, the required prepayments of principal due and payable on the Series A Notes on such Payment Date, allocated among such Notes pursuant to Section 4.5 and distributed to the Note Holders thereof; fourth, the amount required to reimburse an Indemnified Party or other Person entitled to reimbursement under Section 12.16 hereof (except to the extent already provided for in the "first" provision above); fifth, to deposit with the Trustee any amounts previously withdrawn from the Debt Service Reserve Fund which have not been replenished; sixth, the amount required to pay any Yield Protection Amount due to any Credit Support Party; and seventh, the balance, if any, of such payment remaining shall be distributed to the Issuer or its assigns. 4.2 (a) Payments in Case of an Early Termination. Each payment made by SDDI pursuant to an early termination of the Drilling Order in accordance with the provisions of Section 17E of the Drilling Order (an "Early Termination"), together with the net proceeds received by the Trustee upon foreclosure or conveyance in lieu of foreclosure of the Drilling Rig following an Early Termination, shall be deposited with the Trustee in the Collection Account and held in trust by it and applied when received as follows: first, so much of such payment as shall be required to reimburse any Trustee for any unpaid fees for its services under this Indenture or to reimburse any Trustee for any reasonable expenses or indemnity amount (including reasonable external attorneys' fees) or other losses incurred by them (to the extent reimbursable hereunder and not previously reimbursed) shall be distributed to each such Trustee ratably, without priority of one over the other, in the proportion that the amount of the expenses or other loss incurred by such Trustee bears to the aggregate amount of such losses or expenses incurred by all such Trustees; second, so much of such payment remaining as shall be required to prepay the aggregate unpaid principal amount of all Series A Notes then Outstanding, plus accrued but unpaid interest thereon to the date of distribution including interest on past due principal and, to the extent permitted by applicable law, on past due interest (but excluding any Make-Whole Amount) shall be distributed to the holders of the Outstanding Series A Notes; -24- 30 third, so much of such payment remaining as shall be required to prepay the aggregate unpaid principal amount of all Series B Notes then Outstanding, plus accrued but unpaid interest thereon to date of distribution including interest on past due principal and, to the extent permitted by applicable law, on past due interest (but excluding any Make-Whole Amount) shall be distributed to the holders of the Outstanding Series B Notes; fourth, so much of such payment remaining as shall be required to pay any applicable Make-Whole Amount due by virtue of prepayment of the Series A Notes shall be distributed to the holders of the Series A Notes; fifth, so much of such payment remaining as shall be required to pay any applicable Make-Whole Amount due by virtue of prepayment of the Series B Notes shall be distributed to the holders of the Series B Notes; and sixth, so much of such payment remaining as shall be required to reimburse any holders of Outstanding Notes or any Indemnified Party (other than any Trustee) for any reasonable expenses or indemnity amount (including reasonable external attorneys' fees) or other losses incurred by them (to the extent reimbursable hereunder and not previously reimbursed) shall be distributed to each holder and Indemnified Party ratably, without priority of one over the other, in the proportion that the amount of the expenses or other loss incurred by such holder or Indemnified Party bears to the aggregate amount of such losses or expenses incurred by all such holders and Indemnified Parties; seventh, so much of such payments remaining as shall be required to reimburse or pay any other fee or expense to any Person required hereunder or under any other Credit Document, in the proportion that the amount of the fee or expense required to be paid hereunder for any Person bears to the aggregate amount of such fees or expenses incurred for all such Persons; and eighth, so much of such payments remaining as shall be required to pay any applicable Yield Protection Amount shall be distributed to any Credit Support Party; ninth, the balance, if any, of such payment remaining shall be distributed to the Issuer or its assigns. (b) Payments in Case of an Event of Loss. All payments received by the Trustee as proceeds of insurance, condemnation, confiscation or otherwise by reason by an Event of Loss shall be deposited with the Trustee in the Collection Account and held in trust by it and applied when received in the same manner as provided in Section 4.3 below, provided, however, the Make-Whole Amount payments shall not be due. (c) Payments in Case of a Partial Event of Loss. In the event of any accident, occurrence or event resulting in damage to the Drilling Rig that does not constitute an Event of Loss (a "Partial Loss"), and so long as there is no Indenture Event of Default that has occurred and is continuing, then the following provisions shall apply and all proceeds of insurance by reason of such Partial Loss shall be payable to the Trustee as loss payee and shall be applied upon direction by the Trustee as follows: -25- 31 (i) To the Issuer to reimburse the Issuer for the actual costs incurred by the Issuer in connection with the repairs, upon receipt by the Trustee of the following: (a) For progress payments, a certificate signed by a Responsible Officer of the Issuer certifying that all work for which reimbursement is requested has been completed as required by Section 7.3 hereof, in a good and workmanlike manner, the Issuer has expended funds in the full amount of all insurance deductibles and has obtained lien waivers with respect to any liens in excess of $100,000 individually or $2,500,000 in the aggregate that could attach with respect to such work, with such certificate to include an itemization of the costs incurred by the Issuer in connection with the repairs. For all progress payments prior to completion of all required repairs the Trustee shall withhold an amount equal to 10% of the completed repair cost to be disbursed upon final payment as provided under clause (b) below. (b) For final payment (which will include the hold back amount called for in clause (a) above), (A) a certificate signed by a Responsible Officer that all repairs have been completed as required by Section 7.3, in a good and workmanlike manner, has obtained final lien waivers with respect to liens in excess of $100,000 individually or $2,500,000 in the aggregate that could attach with respect to such work, with the certificate to include an itemization of the costs incurred by the Issuer in connection with the repairs; and (B) so long as the Shell Contract is in full force and effect, an International Association of Drilling Contractors Tour Sheet executed by the Issuer and SDDI indicating that full day rate payments under the Shell Contract are accruing currently or, if the Shell Contract is terminated, a written report in form and substance satisfactory to the Required Holders prepared by a third party engineer/surveyor or loss adjustor selected by the Trustee with the consent of the Required Holders, and compensated by the Issuer, certifying that all repairs have been completed as required by Section 7.3 hereof in good and workmanlike manner and final lien waivers obtained. (ii) Any insurance proceeds not paid pursuant to clause (i) above shall be paid pursuant to Section 4.1 or 4.3, as appropriate. 4.3 Payments During Continuance of an Indenture Event of Default. All monies held or realized hereunder or in connection herewith in the Collection Account, Debt Service Reserve Fund, proceeds of insurance, or otherwise (other than Early Termination payments provided for in Section 4.2(a)) by the Trustee after an Indenture Event of Default shall have occurred and be -26- 32 continuing or after the acceleration of the Notes pursuant to Sections 6.2(a) or (b) (including any amounts realized by the Trustee from the exercise of any remedies pursuant to Article 6), as well as all payments or amounts then held or thereafter received by the Trustee as part of the Trust Estate while any such Indenture Event of Default shall be continuing, shall be applied by the Trustee as follows: first, so much of such monies, payments or amounts as shall be required to reimburse any Trustee for its default administration services and the costs and expenses of foreclosure or suit, if any, and the retaking, holding, preparing for sale or other disposition of the Collateral and, to the extent permitted by applicable law, the reasonable external attorneys' fees and legal expenses incurred by any Trustee; second, so much of such monies, payments or amounts remaining as shall be required to reimburse the holders of the Outstanding Notes for all theretofore unreimbursed payments paid by the then existing or prior holders of Outstanding Notes pursuant to any indemnity furnished to any Trustee shall be distributed to such holders ratably, without priority of one over the other, in the proportion that the amount of each such unreimbursed payment of each such holder of a Note bears to the aggregate amount of all such unreimbursed payments by all such holders of Outstanding Notes; third, so much of such monies, payments or amounts remaining as shall be required to pay the unpaid principal balance of all of the Outstanding Notes, plus all accrued and unpaid interest on such principal, plus any applicable Make-Whole Amount shall be distributed to the appropriate holders of such Notes without priority of one such holder over another in the proportion that the amount then owed to such holder bears to the aggregate amount of all such obligations which are then due and payable; fourth, so much of such monies, payments or amounts remaining as shall be required to reimburse any holders of the Outstanding Notes or any Indemnified Party for any expenses or other indemnity amount (including reasonable external attorneys' fees) or other losses incurred by them (to the extent reimbursable hereunder and not previously reimbursed) shall be distributed to each such holder or Indemnified Party, ratably, without priority of one over the other, in the proportion that the amount of the expenses or other loss incurred by such holder or Indemnified Party bears to the aggregate amount of such losses or expenses incurred by all such holders or Indemnified Party; fifth, so much of such monies, payments or amounts remaining as shall be required to pay any other obligations of the Issuer hereunder (other than the obligation of the Issuer under Section 6.4(c)) or under any other Credit Document to the holders of the Outstanding Notes which are then due and payable, shall be distributed to such holders ratably without priority of one such holder over another in the proportion that the amount then owed to such holder bears to the aggregate amount of all such obligations which are then due and payable; sixth, so much of such monies, payments or amounts remaining as shall be required to pay the Series B Note Holders or any Credit Support Party any Yield Protection Amount and/or Breakage Amount due; -27- 33 seventh, so much of such monies, payments or amounts remaining as shall be required to pay the obligations of the Issuer under Section 6.4(c) to the holders of the Outstanding Series B Notes shall be distributed to such holders ratably without priority of one over the other in the proportion that the amount then owed to such holder bears to the aggregate amount of all such obligations; and eighth, the balance, if any, of such monies, payments or amounts shall be distributed to the Issuer or its assigns. 4.4 Amounts Held by Trustee. Any amounts held by the Trustee in the Debt Service Reserve Fund, Working Capital Fund, or pursuant to any other provision hereof or any provision of any other Credit Document providing for amounts to be held by the Trustee which are not distributed pursuant to the other provisions of this Article 4 shall be invested by the Trustee from time to time in Permitted Investments selected by the Issuer. Unless otherwise expressly provided in this Indenture, any income realized as a result of any such Permitted Investment, net of the Trustee's reasonable fees and expenses in making such Permitted Investment, shall be held and applied by the Trustee in the same manner as the principal amount of such Permitted Investment is to be applied and any losses, net of earnings and such reasonable fees and expenses, shall be charged against the principal amount invested. The Trustee shall not be liable for any loss resulting from any investment required to be made by it under this Indenture other than by reason of its willful misconduct or gross negligence, and any such investment may be sold (without regard to its maturity) by the Trustee without instructions whenever the Trustee reasonably believes that such sale is necessary to make a distribution required by this Indenture. 4.5 Allocation of Payments. Each payment applied to the Outstanding Notes pursuant to Articles 3 or 4 shall be allocated among the appropriate Outstanding Notes in proportion to the respective outstanding principal amounts thereof, with adjustments to avoid fractions of one dollar ($1). All payments of principal of the Notes as and when called for hereunder, except those required pursuant to Section 3.4, shall be applied against the principal amount due at maturity and then against the last maturing prepayment installments of principal, if any, provided for in Section 3.4. 4.6 Method of Payment to Holders. The principal of, Yield Protection Amount, Breakage Amount and any Make-Whole Amount and interest on, each Note and all other amounts payable to the holders of the Notes pursuant to this Indenture will be payable at the office of the Trustee which has been designated as the agency of the Issuer in Section 7.9, in United States dollars in immediately available funds, prior to 9:00 a.m. Central time, on the due date thereof. Notwithstanding the foregoing or any provision in any Note to the contrary, the Trustee will pay, if so requested in writing by a holder of an Outstanding Note, all amounts payable by the Trustee hereunder to such holder, by wire transfer of immediately available funds to an account maintained by such holder with any other bank located in the United States. The Trustee acknowledges that the payment instructions given in Schedule A to the Note Purchase Agreements constitute the written notice required by the preceding sentence to make all payments on the Notes as provided therein. The Trustee shall institute the transfer of such funds prior to 11:00 a.m. Central time on such due date in accordance with this section if it has received funds prior to 9:00 a.m. Central time. If the Trustee fails to so institute the transfer of such funds and such funds are not received prior to the end of such due date, the Issuer agrees to compensate the Note Holders for the loss of the use of such funds. -28- 34 4.7 Method of Payment to Issuer. Any amounts distributed hereunder by the Trustee to the Issuer shall be paid to the Issuer or as Issuer may otherwise direct by wire transfer of immediately available funds of the type received by the Trustee at such office and to such account or accounts of such entity or entities as shall be designated by notice from the Issuer to the Trustee from time to time. 4.8 Payments for which No Application is Otherwise Provided. Any payments received by the Trustee for which no provision as to the application thereof is made elsewhere in this Indenture or in any other Credit Document, shall be distributed by the Trustee (a) to the extent received or realized at any time prior to the payment in full of all obligations secured by this Indenture, in the order of priority specified in Section 4.1, 4.2 or 4.3, as appropriate, and (b) to the extent received or realized at any time after payment in full of all such obligations: first, to any continuing amount of the type provided in clause "first", "second" and "fourth" of Section 4.3 and second, to the Issuer or as the Issuer may request. ARTICLE 5. EVIDENCE OF ACTS OF NOTE HOLDERS. 5.1 Execution by Note Holders or Agents. Any request, consent, demand, authorization, direction, notice, waiver or other action provided by this Indenture to be given or taken by holders of the Notes may be embodied in and evidenced by one or more instruments of substantially similar tenor and may be signed or executed by such holders in person or by agent or agents duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Issuer. 5.2 Future Holders Bound. Any request, consent, demand, authorization, direction, notice, waiver or other action of the holder of any Note shall bind every future holder of the same Note and the holder of every Note issued upon registration of transfer thereof or in exchange therefor or in lieu thereof, in respect of anything done or suffered to be done by the Trustee or the Issuer in pursuance of such action irrespective of whether or not any notation in regard thereto is made upon such Note. ARTICLE 6. INDENTURE DEFAULTS - REMEDIES 6.1 Indenture Events of Default. One or more of the following events shall constitute an "Indenture Event of Default": (a) the Issuer shall default in the payment or prepayment when due of any principal of, or interest, or any applicable Make-Whole Amount, Yield Protection Amount, or Breakage Amount on any Note, or any fees or other amount payable by it hereunder or under any other Credit Document and such default, other than a default of a payment or prepayment of principal or applicable Make-Whole Amount and Breakage Amount (which shall have no cure period), shall continue unremedied for a period of five (5) Business Days; or -29- 35 (b) any representation, warranty or certification at any time made or deemed made herein or in any other Credit Document by the Issuer or the Parent, or any certificate furnished to any Purchaser or other holder of any Note or the Trustee pursuant to the provisions hereof or any other Credit Document, shall prove to have been false or misleading as of the time made or furnished in any material respect; or (c) the Issuer shall default in the performance of any of its obligations under Sections 7.3(d)(ii), 7.12 and 7.14, Article 8 or any other Article of this Indenture other than under Article 7 (with the exception of Sections 7.3(d)(ii), 7.12 and 7.14) or in any obligation to maintain insurance as required by this Agreement or the First Naval Mortgage; or the Issuer shall default in the performance of any of its obligations under Article 7 (with the exception of Sections 7.3(d)(ii), 7.12 and 7.14) or any other Credit Document (other than the payment of amounts due which shall be governed by Section 6.1(a)), and such default shall continue unremedied (or unwaived) by Issuer or Parent for a period of thirty (30) days (or, in the case of the Shell Contract (i) such additional time, not to exceed thirty (30) additional days, if Issuer or Parent has promptly commenced and is diligently pursuing a cure or (ii) such shorter period of time as is required to effect a cure under the Shell Contract for a default under the Shell Contract) after the earlier to occur of (x) notice thereof to the Issuer by the Trustee or any Note Holder and (y) the date when a Responsible Officer of the Issuer has actual knowledge of the existence of such default; or (d) the Issuer shall admit in writing its inability to, or be generally unable to, pay its debts as such debts become due; or (e) the Issuer shall (i) apply for or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee or liquidator of itself or of all or a substantial part of its property, (ii) make a general assignment for the benefit of its creditors, (iii) commence a voluntary case under the Federal Bankruptcy Code (as now or hereafter in effect), (iv) file a petition seeking to take advantage of any other law relating to bankruptcy, insolvency, reorganization, winding-up, liquidation or composition or readjustment of debts, (v) fail to controvert in a timely and appropriate manner, or acquiesce in writing to, any petition filed against it in an involuntary case under the Federal Bankruptcy Code, or (vi) take any corporate action for the purpose of effecting any of the foregoing; or (f) a proceeding or case shall be commenced, without the application or consent of the Issuer, in any court of competent jurisdiction, seeking (i) its liquidation, reorganization, dissolution or winding-up, or the composition or readjustment of its debts, (ii) the appointment of a trustee, receiver, custodian, liquidator or the like of the Issuer of all or any substantial part of its assets, or (iii) similar relief in respect of the Issuer under any law relating to bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment of debts, and such proceeding or case shall continue undismissed, or an order, judgment or decree approving or ordering any of the foregoing shall be entered and continue unstayed and in effect, for a period of sixty (60) days; or (iv) an order for relief against the Issuer shall be entered in an involuntary case under the Federal Bankruptcy Code; or -30- 36 (g) a judgment or judgments for the payment of money in excess of $500,000 in the aggregate shall be rendered by a court against the Issuer and the same shall not be discharged (or provision shall not be made for such discharge), or a stay of execution thereof shall not be procured, within thirty (30) days from the date of entry thereof and the Issuer shall not, within said period of thirty (30) days, or such longer period during which execution of the same shall have been stayed, appeal therefrom and cause the execution thereof to be stayed during such appeal; or (h) any of the Credit Documents after delivery thereof shall for any reason, except to the extent permitted by the terms thereof, cease to be in full force and effect and valid, binding and enforceable in accordance with their terms, or cease to create a valid and perfected Lien of the priority required thereby on any of the collateral purported to be covered thereby, or the Issuer or the Parent shall so state in writing; or (i) the Issuer discontinues its usual business; or (j) Parent, SDDI or Shell Oil Company takes, suffers or permits to exist any of the events or conditions referred to in paragraphs (d), (e), or (f) hereof; or (k) an Event of Default shall occur under, and as defined in, the Performance Agreement or the Capital Funding Agreement (after delivery thereof pursuant to the terms of Section 7.8 hereof) or the Parent shall default in the performance of any of its covenants under the Operating Services Agreement, and such default shall continue unremedied for a period of five (5) Business Days in the case of the Operating Services Agreement after the earlier to occur of (i) notice thereof to the Parent by the Trustee or any holder of a Note, or (ii) the Issuer otherwise becoming aware of such default); or (l) the Shell Contract shall for any reason (other than an early termination event as provided in Section 17E of the Drilling Order) terminate or cease to be in full force and effect or SDDI (or any other permitted assignee in accordance with the Shell Contract) ceases to be a party to the Shell Contract; or (m) the Issuer shall cease to be a 100% owned Subsidiary of the Parent or the Parent shall cease to be a 100% owned Subsidiary of Noble Corp.; or (n) The Issuer shall fail to permanently record the First Naval Mortgage at the Public Registry Office of the Republic of Panama within ninety (90) days after the date of its execution. 6.2 Acceleration of Notes. (a) Acceleration by Trustee. If an Indenture Event of Default exists under any of Subsections 6.1(d), (e) or (f), the Notes then Outstanding shall automatically become forthwith due and payable. If any other Indenture Event of Default exists, the Trustee upon written request of the Majority Holders, shall declare the entire principal of and all interest accrued on all the Notes then Outstanding and the applicable Make-Whole Amount, if any, to be, and such Notes shall thereupon -31- 37 become, forthwith due and payable together with all interest accrued thereon and the applicable Make-Whole Amount, if any. In either such case, the Outstanding Notes shall become due and payable without any presentment, demand, protest, notice of protest, notice of acceleration or intention to accelerate or any other notice or declaration of any kind, all of which are hereby expressly waived by the Issuer, and the Issuer will forthwith pay to all holders of the Notes then Outstanding the entire principal of and interest accrued on their respective Notes (but specifically excluding unearned interest) and, to the extent permitted by applicable law and for the reasons set forth in the first sentence of Section 3.8, the applicable Make-Whole Amount, if any, for the then entire outstanding principal of the Notes as of the date of such declaration or automatic acceleration. (b) Acceleration by Individual Holder. Subject to the provisions of Section 6.3, during the existence of an Indenture Event of Default described in Section 6.1(a) or 6.1(c) (to the extent the 6.1(c) Event of Default is with respect to the obligation to maintain or repair the Drilling Rig or to maintain insurance as required by this Indenture or the First Naval Mortgage or to the obligations set forth in Sections 7.12 or 8.19) and irrespective of whether the Trustee shall have declared all the Notes to be due and payable pursuant to Section 6.2(a), any holder of an Outstanding Note which has not consented to a waiver with respect to such Indenture Event of Default described in Section 6.1(a) or 6.1(c) may, at its option, by notice in writing to the Issuer and the Trustee, declare the entire principal of, and all interest accrued on, such holder's Notes then Outstanding and the applicable Make-Whole Amount, if any, to be, and such holder's Notes shall thereupon become, forthwith due and payable together with all interest accrued thereon and the applicable Make-Whole Amount, if any, without any presentment, demand, protest, notice of protest, notice of acceleration or intention to accelerate or any other notice or declaration of any kind, all of which are hereby expressly waived by the Issuer, and the Issuer shall forthwith pay to such holder the entire principal of and interest accrued on its Notes (but specifically excluding unearned interest) and, to the extent permitted by applicable law and for the reasons set forth in the first sentence of Section 3.8, the amount of the applicable Make-Whole Amount, if any, for the then entire outstanding principal of such Notes as of the date of such declaration by such holder. Such Notes shall be surrendered by the holder thereof upon such full payment thereof with a Written Request for such surrender by, and at the sole cost and expense of, the Issuer. (c) Nonwaiver and Expenses. No course of dealing on the part of any holder of the Notes or on the part of any Trustee nor any delay or failure on the part of any holder of the Notes or on the part of any Trustee to exercise any right shall operate as a waiver of such right or otherwise prejudice such holder's rights, powers and remedies. If the Issuer fails to pay when due the principal of, or interest, any applicable Make-Whole Amount, or Yield Protection Amount, or Breakage Amount on any Note, or fails to comply with any other provision of this Indenture, the Issuer will pay to the holders of the Notes and to each Trustee, to the extent permitted by law, such further amounts as shall be sufficient to cover such costs and expenses, including but not limited to reasonable external attorneys' fees, as may be incurred by such holder or by such Trustee, or both, in collecting any sums due on the Notes or in otherwise enforcing any of their rights. 6.3 Annulment of Acceleration of Notes. If (i) a declaration is made pursuant to Section 6.2(a) by the Trustee, then, and in every such case, the Majority Holders may, by written instrument filed with the Issuer and the Trustee, rescind and annul such declaration, and the consequences thereof or (ii) a declaration is made pursuant to Section 6.2(b) by a holder of any of -32- 38 the Notes, then, such holder may, by written instrument filed with the Issuer and the Trustee, rescind and annul such declaration, and the consequences thereof; provided, that at the time such declaration is annulled and rescinded: (a) no judgment or decree has been entered for the payment of any monies due on or pursuant to the Notes or this Indenture; (b) all arrears of interest upon all the Notes and all other sums payable under the Notes and under this Indenture, except any principal of, or interest or any applicable Make-Whole Amount on, the Notes which has become due and payable solely by reason of such declaration under Section 6.2(a) or Section 6.2(b), shall have been duly paid; (c) each and every other Indenture Default and Indenture Event of Default shall have been waived pursuant to Section 10.2 or otherwise made good or cured; and, provided further, that no such rescission and annulment shall (i) extend to or affect any subsequent Indenture Default or Indenture Event of Default or (ii) impair any right consequent thereon. 6.4 Default Remedies. (a) If an Indenture Event of Default exists, each Trustee may exercise (i) all of the rights and remedies granted to such Trustee hereunder and/or under each of the other Credit Documents, and (ii) all of the rights and remedies of a secured party on default under the Uniform Commercial Code in effect in the State of New York or in effect in any other jurisdiction, the laws of which are applicable to the Collateral (the "UCC"). Any Trustee may take possession of all or any part of the Properties covered or intended to be covered by the Lien created by this Indenture or by any other Credit Document, and such Trustee may exclude the Issuer and all Persons claiming under the Issuer wholly or partly therefrom. Without limiting the foregoing, if any Indenture Event of Default exists, any Trustee may from time to time in its discretion, without notice (except as expressly provided in this Section 6.4) do any of the following: (i) subject to compliance with any mandatory legal requirements, take immediate possession of the Collateral, and require the Issuer to, and the Issuer hereby agrees that it will at its expense and upon request of any Trustee forthwith, assemble all or part of the Collateral as reasonably directed by such Trustee and make it available to such Trustee at a place or places to be designated by such Trustee which are reasonably convenient to both parties. In any event, Issuer shall bear the risk of accidental loss or damage to or diminution in value of the Collateral, and Trustee shall have no liability whatsoever for failure to obtain or maintain insurance, nor to determine whether any insurance ever in force is adequate as to amount or as to the risk insured. (ii) either with or without taking possession and either before or after taking possession, and without instituting any legal proceedings whatsoever, subject to compliance with any mandatory legal requirements, dispose of by public or private -33- 39 proceedings conducted at its office, on the premises of the Issuer, at any site where any Collateral is located, or elsewhere, all or any part of the Collateral, as a unit or in parts and separately or in combination with any other Collateral, and by way of one or more contracts (it being agreed that the sale of any part of the Collateral shall not exhaust the Trustee's power of sale, but sales may be made from time to time, and at any time, until all of the Collateral has been sold or until the obligations secured by this Indenture have been paid and performed in full), and at any such sale it shall not be necessary to move any of the Collateral to any location of sale, or to assemble, prepare in any manner or exhibit any of the Collateral (the Issuer hereby acknowledging that the Collateral is not of a type for which moving, assembling, preparation in any manner or exhibition is necessary for a commercially reasonable sale); (iii) buy the Collateral, or any part thereof, at any public sale; (iv) buy the Collateral, or any part thereof, at any private sale if the Collateral is of a type customarily sold in a recognized market or is of a type which is the subject of widely distributed standard price quotations; (v) at its discretion, retain the Collateral in satisfaction of the obligations secured by this Indenture whenever the circumstances are such that any Trustee is entitled to do so under the UCC or otherwise (but under no circumstances will any Trustee be deemed to have elected to retain the Collateral in satisfaction of such obligations unless it shall have sent written notice of such election to the Issuer); (vi) Take possession of all books and records of Issuer pertaining to the Collateral. Each Trustee shall have the authority (subject to compliance with any mandatory legal requirements) to enter upon any real property or improvements thereon in order to obtain any such books or records, or any Collateral located thereon, and remove the same therefrom without liability; (vii) Apply proceeds of the disposition of the Collateral to the obligations hereby secured in the manner set forth in the Trust Indenture and permitted by the UCC or otherwise permitted by law or in equity. Such application may include, without limitation, the reasonable expenses of retaking, holding, preparing for sale or other disposition, and the reasonable external attorneys' fees and legal expenses incurred by each Trustee; (viii) Appoint any Person as agent to perform any act or acts necessary or incident to any sale or transfer by each Trustee of the Collateral. Additionally, any sale or transfer hereunder may be conducted by an auctioneer or any officer or agent of each Trustee; (ix) Receive, change the address for delivery, open and dispose of mail addressed to Issuer, and to execute, assign and endorse negotiable and other instruments for the payment of money, documents of title or other evidences of -34- 40 payment, shipment or storage for any form of Collateral on behalf of and in the name of Issuer; (x) Notify or require Issuer to notify account debtors that the accounts have been assigned to each Trustee and direct such account debtors to make payments on the accounts directly to each Trustee. To the extent each Trustee does not so elect, Issuer shall continue to collect the accounts. Each Trustee or its designee shall also have the right, in its own name or in the name of Issuer, to do any of the following: (A) to demand, collect, receipt for, settle, compromise any amounts due, give acquittance for, prosecute or defend any action which may be in relation to any monies due or to become due by virtue of, the accounts; (B) to sell, transfer or assign or otherwise deal in the accounts or the proceeds thereof or the related goods, as fully and effectively as if each Trustee were the absolute owner thereof; (C) to extend the time of payment of any of the accounts, to grant waivers and make any allowance or other adjustment with reference thereto; (D) to endorse the name of Issuer on notes, checks or other evidences of payments on Collateral that may come into possession of each Trustee; (E) to take control of cash and other proceeds of any Collateral; (F) to sign the name of Issuer on any invoice or bill of lading relating to any Collateral, or any drafts against account debtors or other Persons making payment with respect to Collateral; (G) to send a request for verification of accounts to any account debtor; and (H) to do all other acts and things necessary to carry out the intent of this Indenture; and (xi) Exercise all other rights and remedies permitted by law or in equity. (b) The Issuer agrees that, to the extent notice of sale shall be required by law, at least ten (10) Business Days' notice to the Issuer of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification. The Trustee shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. The Trustee may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. (c) In addition to the foregoing, in the event the Series B Notes are not paid and satisfied in full at maturity thereof and payment and satisfaction thereof is effected through realization upon the Collateral pursuant to this Article 6, the Series B Note Holders shall be entitled to additional compensation from the proceeds of such realization of the Collateral pursuant to Section 4.3 of $3,000,000 to compensate the Series B Note Holders for the additional risk, time and expense. 6.5 Other Enforcement Rights. (a) Each Trustee may, but unless first requested so to do by the Majority Holders and furnished with reasonable indemnity satisfactory to it pursuant to Section 9.3(f) hereof shall not (subject to the provisions of Section 9.1) be under any obligation to, proceed to protect and enforce this Indenture, the Notes and each other Credit Document by suit or suits -35- 41 or proceedings in equity, at law or in bankruptcy, and whether for the specific performance of any covenant or agreement herein or therein provided, or for foreclosure thereunder, or for the appointment of a receiver or receivers for the foreclosure thereunder, or for the appointment of a receiver or receivers for the Trust Estate or other Collateral or any part thereof, for the recovery of judgment for the obligations hereby secured or for the enforcement of any other proper, legal or equitable remedy available under applicable law. (b) In case an Indenture Event of Default has occurred and is continuing and there shall be pending any case or proceedings for the bankruptcy or for the reorganization or arrangement of the Issuer, the Parent or SDDI, under the federal bankruptcy laws or any other applicable law or in connection with the insolvency of the Issuer, the Parent or SDDI, or in case a custodian, receiver or trustee shall have been appointed for the Issuer, the Parent or SDDI, or in case of any other proceedings in respect of the Issuer, the Parent or SDDI, the Trustee may file such proof of claim and other papers or documents as may be necessary or advisable in order to have the claims of any Trustee and of the Note Holders allowed in any judicial proceedings relative to the Issuer, the Parent or SDDI, and, irrespective of whether the principal of all of the Notes shall then be due and payable as therein expressed, by proceedings for the prepayment thereof, by declaration or otherwise, the Trustee shall be entitled and empowered to file and prove a claim for the whole amount of principal, applicable Make-Whole Amount (if any) and interest owing and unpaid in respect of the Notes, and any other sum or sums owing thereon or pursuant thereto or pursuant hereto, and to collect and receive any or other Property payable or deliverable on any such claim, and to distribute the same as provided in Section 4.3; and any receiver, custodian, assignee or trustee in bankruptcy, trustee or debtor in reorganization or trustee or debtor in any proceedings for the adoption of an arrangement is hereby authorized by each holder of any Note, by the acceptance of the Note or Notes held by it, to make such payments to the Trustee, and, in the event that the Trustee shall consent to the making of such payments directly to the Note Holders, to pay to each of the Trustees any amount due it for compensation and expenses, including reasonable external counsel fees, incurred by it up to the date of such distribution; provided, however, that nothing herein contained shall be deemed to authorize or empower the Trustee to consent to accept or adopt, on behalf of any holder of the Notes, any plan of reorganization or readjustment of the Issuer affecting the Notes or the rights of any holder thereof, or to authorize or empower the Trustee to vote in respect of the claim of any holder in any such proceedings. (c) The Issuer hereby irrevocably appoints the Trustee as the Issuer's attorney-in-fact and proxy, with full authority in the place and stead of the Issuer and in the name of the Issuer or otherwise, from time to time during the continuance of an Indenture Event of Default in the Trustee's discretion, to take any action and to execute any instrument which the Trustee may deem necessary or advisable to accomplish the purposes of this Indenture, including, without limitation: (a) to ask, demand, collect, sue for, recover, compound, receive and give acquittance and receipts for monies due and to become due under or in respect of any of the Collateral; and (b) to file any claims or take any action or institute any proceedings which the Trustee may deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce the rights of the Trustee with respect to any of the Collateral. Without limiting the generality of the foregoing and whether -36- 42 or not an Indenture Event of Default shall have occurred and be continuing, the Trustee shall have the right to receive, collect and endorse all checks made payable to the Issuer or the Issuer's order representing payments under the Shell Contract or any payment on account of any of the Collateral and to give full discharge therefor. (d) If the Issuer or the Parent fails to perform any act or to take any action which hereunder or under any other Credit Document to which it is a party, the Issuer or the Parent is required to perform or take, or to pay any money which hereunder or under any other Credit Document the Issuer or the Parent is required to pay, the Trustee, in the Issuer's or the Parent's name or in its own name, may (but shall not be obligated to) following notice to the Issuer or Parent perform or cause to be performed such act or take such action or pay such money, and any expenses so incurred by the Trustee, and any money so paid by the Trustee, shall be a demand obligation owing by the Issuer and shall bear interest from the date of making such payment until paid at the Default Rate and shall be secured by this Indenture and by any other instrument securing the obligations secured hereby. Upon making any such payment, the Trustee shall be subrogated to all of the rights of the Person receiving such payment, which rights will be held by the Trustee to secure the obligations secured hereby. (e) Anything in this Indenture to the contrary notwithstanding, the Majority Holders shall have the right, at any time, by an instrument or instruments in writing, executed and delivered to any Trustee and providing for indemnity satisfactory to it pursuant to Section 9.3(f), to direct the method and place of conducting all proceedings to be taken in connection with the enforcement of the terms and conditions of this Indenture; provided, however, that such direction shall not be otherwise than in accordance with the provisions of law and of this Indenture. 6.6 Effect of Sale, etc. (a) Any sale or sales pursuant to the provisions hereof or of any other Credit Document, whether under the power of sale granted hereby or thereby or pursuant to any legal proceedings, shall operate to divest the Issuer of all right, title, interest, claim and demand whatsoever, either at law or in equity, of, in and to the Trust Estate or other Collateral, or any part thereof, so sold, and any Property so sold shall be free and clear of any and all rights of redemption by, through or under the Issuer. At any such sale, the holder of any Note may bid for and purchase the Property sold and may make payment therefor as set forth below, and any Note Holder so purchasing any such Property, upon compliance with the terms of sale may hold, retain and dispose of such Property without further accountability. (b) The receipt by any Trustee, or by any Person authorized under any judicial proceedings to make any such sale, of the proceeds of any such sale shall be a sufficient discharge to any purchaser of the Trust Estate or other Collateral, or of any part thereof, sold as aforesaid; and no such purchaser shall be bound to see to the application of such proceeds, or be bound to inquire as to the authorization, necessity or propriety of any such sale. In the event that, at any such sale, any holder of Outstanding Notes is the successful purchaser, it may, in paying the purchase price, turn in any of its Notes in lieu of cash in the amount which shall, upon distribution of the net proceeds of such sale, be payable thereon, and if the cash -37- 43 amounts so payable thereon shall be less than the amount due therein, said Notes shall be returned to the holders thereof after a notation of each partial prepayment shall have been made thereon. 6.7 Restoration of Rights and Remedies. If any Trustee shall have instituted any proceeding to enforce any right or remedy under this Indenture or under any other Credit Document and such proceeding shall have been discontinued or abandoned for any reason, or shall have been determined adversely to such Trustee, then and in every such case such Trustee, the Issuer and the holders of the Notes shall, subject to any determination in such proceeding, be restored severally and respectively to their former positions hereunder or under any other Credit Document, and thereafter all rights and remedies of such Trustee shall continue as though no such proceeding had been instituted. 6.8 Application of Sale Proceeds and Deficiency. The proceeds of any exercise of rights with respect to the Trust Estate or any other Collateral, or any part thereof, and the proceeds and the avails or any remedy hereunder shall be paid to and applied as described in Section 4.3. In the event that at any time and from time to time the payments under the Shell Contract then collected by the Trustee and the proceeds of any sale, collection or realization of or upon Collateral by the Trustee are insufficient to pay all the obligations secured by this Indenture, the Issuer shall be liable for the deficiency, together with interest thereon as provided in the governing Credit Documents or (if no interest is so provided) at such other rate as shall be fixed by applicable law, together with the costs of collection and the reasonable fees and disbursements of any external attorneys employed by the Trustee or any holder of an Outstanding Note to collect such deficiency. 6.9 Cumulative Remedies. No delay or omission of any Trustee or of the holder of any Note to exercise any right or power hereunder or under any other Credit Document arising from any Indenture Default or Indenture Event of Default or failure of performance on the part of the Issuer shall exhaust or impair any such right or power or prevent its exercise during the continuance of such Indenture Default or Indenture Event of Default. No waiver by any Trustee, or the holder of any Note, of any such Indenture Default or Indenture Event of Default, whether such waiver be full or partial, shall extend to or be taken to affect any subsequent default, or to impair the rights resulting therefrom except as may be otherwise expressly provided herein. No remedy hereunder or under any other Credit Document is intended to be exclusive of any other remedy but each and every remedy shall be cumulative and in addition to any and every other remedy given hereunder or under any other Credit Document or otherwise existing; nor shall the giving, taking or enforcement of any other or additional security, Collateral or guaranty for the payment of the obligations secured under this Indenture operate to prejudice, waive or affect the security of this Indenture or any other Credit Document or any rights, powers or remedies hereunder or under any other Credit Document, nor shall any Trustee or any holder of any Note be required to first look to, enforce or exhaust such other or additional security, Collateral or guaranties. All covenants, conditions, provisions, warranties, guaranties, indemnities and other undertakings of the Issuer contained in this Indenture, or in any document referred to herein or in any agreement supplementary hereto or in any other Credit Documents shall be deemed cumulative to and not in derogation or substitution of any of the terms, covenants, conditions, or agreements of the Issuer herein contained. To the extent of overlap of any security interest or lien granted hereunder or under any other Credit Document on any particular -38- 44 Collateral, the Trustee may elect to exercise rights and remedies under either or, if appropriate, both of such security interests or liens. 6.10 Limitations on Suits. Except as provided in Section 6.2(b), no holder of any Note issued hereunder shall have the right to institute any suit, action or proceeding at law or in equity, for the execution of any trust or power granted to the Trustees under this Indenture or any other Credit Document or for any other remedy under or upon this Indenture or any other Credit Document, unless (a) the Majority Holders shall have made Written Request upon the applicable Trustee to exercise the powers hereinbefore granted or to institute such action, suit or proceeding in its own name; (b) such holder or said holders shall have offered to such applicable Trustee the indemnity reasonably satisfactory to it as provided under Section 9.3(f); and (c) such applicable Trustee shall have refused or failed to comply with such Written Request for a period of thirty (30) days after such Written Request shall have been received by it. Such notification, request, offer of indemnity and refusal or failure are hereby declared, in every case, to be conditions precedent to the exercise by any holder of a Note of any remedy hereunder; it being understood and intended that no one or more holders of Notes shall have any right in any manner whatever by its or their action to enforce any right under this Indenture or any other Credit Document, except in the manner herein provided, and that all judicial proceedings to enforce any provision of this Indenture or any other Credit Document shall be instituted, had and maintained in the manner herein or any other Credit Document provided and for the equal and proportionate benefit of all holders of the Outstanding Notes. 6.11 Suits for Principal and Interest. Nothing contained in Section 6.10 or in any other provision of this Indenture or in the Notes shall affect or impair the obligation of the Issuer, which is absolute and unconditional, to pay (or cause to be paid from the Trust Estate or other Collateral as in Article 4 provided) the principal of, any applicable Make-Whole Amount and interest on, the Notes to the holders thereof on the dates when due, respectively, and at the place specified in Section 4.6, or affect or impair the right of action, which is also absolute and unconditional, of such holders to institute suit to enforce such payment by virtue of the contract embodied in the Notes. 6.12 Waiver by the Issuer. (a) In granting to the Trustee the power to enforce its rights hereunder without prior judicial process or judicial hearing, the Issuer expressly waives, renounces and knowingly relinquishes (to the extent it may lawfully do so) any legal right which might otherwise require the Trustee to enforce its rights by judicial process. In so providing for non-judicial remedies, the Issuer recognizes and concedes that such remedies are consistent with the usage of trade, are responsive to commercial necessity, and are the result of a bargain at arm's length. Nothing herein is intended to prevent the Trustee or the Issuer from resorting to judicial process. (b) The Issuer by becoming a party to any Credit Document (to the extent that it may lawfully do so) hereby covenants that it will not at any time insist upon or plead, or in any manner claim or take the benefit or advantage of, any stay (except in connection with a pending appeal of a judgment in a legal proceeding), valuation, appraisal, redemption or extension law now or at any time hereafter in force which, but for this waiver, might be applicable to any sale made under any judgment, order or decree based on any of the Notes -39- 45 or this Indenture or any other Credit Document; and the Issuer by becoming a party to any Credit Document (to the extent it may lawfully do so) hereby expressly waives and relinquishes all benefit and advantage of any and all such laws and hereby covenants that it will not hinder, delay or impede the execution of any power herein granted and delegated to any Trustee, but that it will suffer and permit the execution of every such power as though no such law or laws had been made or enacted. (c) The Issuer waives any right to require the Trustee or the holders of the Outstanding Notes to proceed against any other Person, or to exhaust any Collateral or other security for the obligations secured hereby, or to have any other Person joined with the Issuer in any suit arising out of such obligations or the Credit Documents, or to pursue any other remedy in the Trustee's or such holders' power. The Issuer further waives any and all notice of acceptance of this Indenture by any other Person directly or indirectly liable for such obligations from time to time. The Issuer further waives any defense arising by reason of any disability or other defense of any other Person or by reason of the cessation from any cause whatsoever of the liability of any other Person liable for the obligations secured hereby. Until all of such obligations shall have been paid in full, the Issuer shall have no right to subrogation and the Issuer waives the right to enforce any remedy which the Trustee or the holders of the Outstanding Notes have or may hereafter have against any other Person liable for such obligations, and the Issuer waives any benefit of any right to participate in any security whatsoever now or hereafter held by the Trustee or the holders of the Outstanding Notes. The Issuer authorizes the Trustee and the holders of the Outstanding Notes, without notice or demand and without any reservation of rights against the Issuer and without affecting the Issuer's liability hereunder or on the obligations secured hereby, from time to time to (a) take or hold any Property other than the Collateral from any other Person as security for such obligations, and exchange, enforce, waive and release any or all of such Property, (b) apply such Property and direct the order or manner of sale thereof as the Trustee and the Majority Holders may in their discretion determine, and (c) renew, extend for any period, accelerate, modify, compromise, settle or release any of the obligations of any other Person in respect of the obligations secured hereby or other security for such obligations. ARTICLE 7. AFFIRMATIVE COVENANTS. The Issuer covenants and agrees that, so long as any of the commitments are in effect and until payment in full of all Notes issued hereunder, all interest thereon and all other amounts payable by the Issuer hereunder: 7.1 Financial Statements. The Issuer shall deliver, or shall cause to be delivered, to the Trustee and each Note Holder: (a) As soon as available and in any event within 120 days after the end of each fiscal year of the Issuer the audited statements of operations, stockholders' equity and cash flow, of the Issuer for such fiscal year, and the related balance sheet of the Issuer as at the end of such fiscal year, and setting forth in each case in comparative form the corresponding figures for the preceding fiscal year, and accompanied by (i) the related opinion of Price waterhouseCoopers, or such other independent public accountants of recognized national -40- 46 standing acceptable to the Majority Holders, which opinion shall state that said financial statements fairly present the financial condition and results of operations of the Issuer as at the end of, and for, such fiscal year, that such financial statements have been prepared in accordance with GAAP, except for such changes in such principles with which the independent public accountants shall have concurred and footnoted and such opinion shall not contain a "going concern" or scope or like qualification or exception and that the examination of such accountants in connection with such financial statements has been conducted in accordance with generally accepted auditing standards and included such tests of the accounting records and such other auditing procedures as said accountants deemed necessary in the circumstances and (ii) a certificate of such accountants stating that in making the examination necessary for their opinion, they obtained no knowledge, except as specifically stated, of any Indenture Default or Indenture Event of Default. (b) As soon as available and in any event within 120 days after the end of each fiscal year of Noble Corp., the audited consolidated statements of operations, stockholders' equity, and cash flow, of Noble Corp. and its consolidated subsidiaries for such fiscal year, and the related balance sheet of Noble Corp. and its consolidated subsidiaries as at the end of such fiscal year, and setting forth in each case in comparative form the corresponding figures for the preceding fiscal year, and accompanied by the related opinion of Price waterhouseCoopers, or such other independent public accountants of recognized national standing acceptable to the Majority Holders, which opinion shall state that said financial statements fairly present the consolidated financial condition and results of operations of Noble Corp. and its consolidated subsidiaries as at the end of, and for, such fiscal year, that such financial statements have been prepared in accordance with GAAP, except for such changes in such principles with which the independent public accountants shall have concurred and footnoted and such opinion shall not contain a "going concern" or scope or like qualification or exception and that the examination of such accountants in connection with such financial statements has been conducted in accordance with generally accepted auditing standards and included such tests of the accounting records and such other auditing procedures as said accountants deemed necessary in the circumstances. (c) As soon as available and in any event within 120 days after the end of each fiscal year of the Parent, the unaudited consolidated statements of operations, of the Parent and its consolidated subsidiaries for such fiscal year and the related consolidated balance sheets of the Parent and its consolidated subsidiaries as at the end of such fiscal year, and setting forth in each case in comparative form, the corresponding figures for the preceding fiscal year, and accompanied by the certificate of a Responsible Officer, which certificate shall state that said financial statements fairly present the consolidated financial condition and results of operations of the Parent and its consolidated subsidiaries as at the end of, and for, such fiscal year and that such financial statements have been prepared in accordance with GAAP (exclusive of footnotes), as at the end of, and for, such period. (d) As soon as available and in any event within 60 days after the end of each of the first three fiscal quarterly periods of each fiscal year of the Issuer the unaudited statements of operations and cash flows of the Issuer for such period and for the period from the beginning of the respective fiscal year to the end of such period, and the related balance sheets -41- 47 as at the end of such period, and setting forth in each case in comparative form the corresponding figures for the corresponding period in the preceding fiscal year, accompanied by the certificate of a Responsible Officer, which certificate shall state that said financial statements fairly present the consolidated financial condition and results of operations of the Issuer in accordance with GAAP, as at the end of, and for, such period (subject to normal year-end audit adjustments) and further stating whether there existed as of the date of such financial statements and whether, to the best of such officer's knowledge, there exists on the date of the certificate or existed at any time during the period covered by such financial statements any Indenture Default or Indenture Event of Default and, if any such condition or event exists on the date of the certificate, specifying the nature and period of existence thereof and the action the Issuer is taking and proposes to take with respect thereto. (e) As soon as available and in any event within 60 days after the end of each of the first three fiscal quarterly periods of each fiscal year of the Parent, the unaudited consolidated statements of operations of the Parent and its consolidated subsidiaries for such period and for the period from the beginning of the respective fiscal year to the end of such period, and the related consolidated balance sheets as at the end of such period, and setting forth in each case, in comparative form the corresponding figures for the corresponding period in the preceding fiscal year, accompanied by the certificate of a Responsible Officer, which certificate shall state that said financial statements fairly present the consolidated financial condition and results of operations of the Parent and its consolidated subsidiaries in accordance with GAAP, as at the end of, and for, such period (subject to normal year-end audit adjustments). (f) As soon as available and in any event within 60 days after the end of each of the first three fiscal quarterly periods of each fiscal year of Noble Corp. the unaudited consolidated statements of operations and cash flows of Noble Corp. and its consolidated subsidiaries for such period and for the period from the beginning of the respective fiscal year to the end of such period, and the related consolidated balance sheets as at the end of such period and setting forth in each case in comparative form the corresponding figures for the corresponding period in the preceding fiscal year. (g) Within the period provided in paragraph (a) above, a certificate of a Responsible Officer of the Issuer stating whether there existed as of the date of such financial statements and whether, to the best of such officer's knowledge, there exists on the date of the certificate or existed at any time during the period covered by such financial statements any Indenture Default or Indenture Event of Default and, if any such condition or event exists on the date of the certificate, specifying the nature and period of existence thereof and the action the Issuer is taking and proposes to take with respect thereto. (h) Promptly and in any event within three (3) Business Days after the Issuer knows that any Indenture Default or Indenture Event of Default or any Material Adverse Effect has occurred, a notice of such Indenture Default or Indenture Event of Default or Material Adverse Effect, and promptly and in any event within three (3) Business Days after the Issuer knows of any material default under the Shell Contract or the Operating -42- 48 Services Agreement a notice of such default, in each case, describing the same in reasonable detail and the action the Issuer proposes to take with respect thereto. (i) Promptly upon its becoming available, each financial statement, report, notice or proxy statement sent by the Issuer, the Parent or Noble Corp. to stockholders generally and each regular or periodic report and any registration statement, prospectus or written communication (other than transmittal letters) in respect thereof filed by the Issuer, the Parent or Noble Corp. with or received by the Issuer, the Parent or Noble Corp. in connection therewith from any securities exchange or the SEC or any successor agency. (j) From time to time such other information regarding the business, affairs or financial condition of the Issuer, the Parent or information from Noble Corp. reasonably related to the Issuer or the Parent (including, without limitation, any Plan or Multiemployer Plan and any reports or other information required to be filed under ERISA) as any Purchaser or other Note Holder or the Trustee may reasonably request. 7.2 Litigation. The Issuer shall promptly give to the Trustee and each registered Note Holder notice of any litigation or proceeding against or adversely affecting the Issuer or the Parent in which the amount involved is not covered in full by insurance or in which the Issuer has received notice from any insurer reserving its rights or contesting coverage under any policy (subject to normal and customary deductibles and for which the insurer has not assumed the defense), or in which injunctive or similar relief is sought and which could reasonably be expected to result in a Material Adverse Effect. The Issuer will promptly notify the Trustee and each registered Note Holder of all claims, judgments, Liens or other encumbrances affecting any Property of the Issuer if the aggregate value of such claims, judgments, Liens or other encumbrances affecting such Property shall exceed $500,000. 7.3 Maintenance, Etc. (a) The Issuer shall: (i) preserve and maintain its corporate existence and all of its material rights, privileges, licenses and franchises; (ii) keep proper books of record and account in which full, true and correct entries will be made of all dealings or transactions of, or in relation to its business and activities in accordance with GAAP consistently applied; (iii) comply with all Governmental Requirements if failure to comply with such requirements will have a Material Adverse Effect; (iv) pay and discharge all taxes, assessments and governmental charges or levies imposed on it or on its income or profits or on any of its Property, all trade accounts payable in accordance with usual and customary business terms and all claims for work, labor or materials prior to the date on which any Lien (other than Liens for obligations that have not been outstanding more than 60 days, unless action has been taken to file or enforce such Liens) or penalties attach thereto, except for any such tax, assessment, charge, levy, account payable or claim, the payment of which is being Contested In Good Faith; (v) permit any holder of the Notes or its representative to visit and inspect, under the Issuer's guidance, any of the properties of the Issuer, to examine all of its books of account, records, reports and other papers, to make copies and extracts therefrom and to discuss its affairs, finances and accounts with its officers, employees, and independent public accountants (and by this provision the Issuer authorizes said accountants to discuss with any -43- 49 holder of the Notes the finances and affairs of the Issuer) all at such reasonable time, upon reasonable notice and as often as may be reasonably requested; provided that the Issuer shall not be required to pay or reimburse any Note Holder for expenses which such holder may incur in connection with any such visitation or inspection, except that if such visitation or inspection is made during any period when an Indenture Default or an Indenture Event of Default shall have occurred and be continuing, the Issuer agrees to reimburse such holder for all such expenses promptly upon demand, and (vi) keep, or cause to be kept, insured by financially sound and reputable insurers all Property of a character usually insured by Persons engaged in the same or similar business similarly situated against loss or damage of the kinds and in the amounts customarily insured against by such Persons and carry such other insurance as is usually carried by such Persons and as required by each of the Shell Contract and the First Naval Mortgage including, without limitation, the insurance described on Schedule 7.3 hereto. (b) Contemporaneously with the delivery of the financial statements required by Section 7.1 to be delivered for each year, the Issuer will furnish or cause to be furnished to the Trustee a certificate of insurance coverage from each insurer in form and substance satisfactory to the Trustee and the Required Holders. (c) The Issuer will maintain the Drilling Rig and all equipment used in connection therewith in a good running order, repair and first class condition and in compliance with the Shell Contract and all Governmental Requirements and within the class designation as on the Closing Date and with all equipment capable of operation within the tolerances designated on the Closing Date and at all times registered as a vessel under the laws of Panama and otherwise operate its Properties or cause such Properties to be operated in United States territorial waters in the Gulf of Mexico or in the Gulf of Mexico on or above the outer Continental Shelf of the United States and as set forth in Section 1 of the Drilling Order and in accordance with the Shell Contract and the practices of the industry and in compliance with all other applicable contracts and agreements and otherwise in a careful efficient manner and in compliance in all material respects with all Governmental Requirements. The Issuers' maintenance obligations hereunder shall include, without limitation, causing the surveys and inspections referred to in Annex D hereto to be timely conducted and satisfactorily passed with the 5 year surveys and inspections conducted and passed prior to the Maturity Date. In the event of any damage to the Drilling Rig from any casualty having a repair cost in excess of $250,000, the Issuer shall give prompt written notice thereof to the Trustee, which notice shall set forth in reasonable detail the nature and extent of the damage, an estimate of the cost of repairs and an estimate of the length of time necessary to repair such damage. Such notice shall also state whether the Issuer considers such damage to constitute an Event of Loss, which statement shall not, however, be determinative. With respect to any casualty damage, regardless of whether insurance proceeds are available, the Issuer shall promptly and diligently repair the Drilling Rig or cause the Drilling Rig to be repaired to the same condition as it was before such damage and in compliance with the foregoing requirements of this Section 7.3(c), free and clear of all liens and encumbrances other than -44- 50 Excepted Liens. At the request of the Trustee, all contracts for any such repairs shall be assigned to the Trustee as part of the Trust Estate as security for Issuer's obligations hereunder. Such assignment may be effected by a blanket assignment and by specific assignments with respect to third party contracts in excess of $100,000. In the event of any damage that constitutes an Event of Loss, then the Issuer shall be relieved of the foregoing repair obligations upon repayment in full of all principal, interest and all other amounts payable under the Notes and the other Credit Documents in compliance with the provisions of Section 3.6 hereof. (d)(i) The Issuer will maintain the Shell Contract and the Operating Services Agreement in full force and effect and comply with all terms and provisions thereof and enforce the compliance of SDDI and the Parent in accordance with their respective terms except for immaterial variances and immaterial waivers. In furtherance of the foregoing, Issuer shall: (A) pursue all reasonable efforts with respect to collecting dayrate payments due under the Shell Contract in accordance with prudent business practices, and (B) collect all dayrate payments due under the Shell Contract not later than sixty days after the date due, unless on such due date and continuing through and until the date on which such dayrate payment is made, the Debt Service Reserve Fund shall equal two (2) months worth of payments required on the Notes or, if the Capital Funding Agreement is then in effect, no amount shall have been drawn thereunder and not reinstated. (ii) The Operating Services Agreement will not be amended or modified without the approval of the Required Holders. The maintenance, repair and insurance requirement provisions of the Shell Contract will not be amended or modified without the approval of the Required Holders and the Shell Contract will not otherwise be amended or modified without the approval of the Required Holders if such other amendment or modification will reduce or impair the rentals or other payments of SDDI thereunder, including, without limitation, the termination payments called for in Section 17E of the Drilling Order, or will change the payment terms or the term of the Shell Contract, or will increase the material obligations of the contractor thereunder or will otherwise materially impair the value, operational capabilities and useful life of the Drilling Rig or the Shell Contract. Without the consent of all of the Note Holders, the Issuer will not consent to the assignment by SDDI (except to permitted assignees in accordance with the Shell Contract) of the Shell Contract. (e) Promptly after the submission to SDDI of each monthly billing under the Shell Contract, the Issuer shall supply the Trustee with a copy thereof, which billing shall clearly set out the amount of the billing and the due date thereof. 7.4 Environmental Matters. (a) The Issuer will operate the Property in compliance with Environmental Laws such that any noncompliance will not have a Material Adverse Effect, and will establish and implement such procedures as may be reasonably necessary to continuously determine and assure that any failure of the following does not have a Material Adverse Effect: (i) all Property of the Issuer and the operations conducted thereon and other activities of the Issuer -45- 51 are in compliance with and do not violate the requirements of any Environmental Laws, (ii) no oil, hazardous substances or solid wastes are disposed of, discharged or otherwise released except in compliance with Environmental Laws, (iii) no hazardous substance will be released in a quantity equal to or exceeding that quantity which requires reporting pursuant to Section 103 of CERCLA, and (iv) no oil, oil and gas exploration and production wastes or hazardous substance is discharged or released so as to pose an imminent and substantial endangerment to public health or welfare or the environment which will result in damages recoverable under the OPA. (b) The Issuer will promptly notify the Trustee and the registered Note Holders in writing of any threatened action, investigation or inquiry by any Governmental Authority of which the Issuer has knowledge in connection with any Environmental Laws, excluding routine testing and corrective action. 7.5 Further Assurances. The Issuer will cure promptly any defects in the creation and issuance of the Notes and the execution and delivery of the Credit Documents and this Indenture. The Issuer at its expense will promptly execute and deliver to the Trustee upon request all such other documents, agreements and instruments to comply with or accomplish the covenants and agreements of the Issuer in the Credit Documents and this Indenture, or to further evidence and more fully describe the Collateral intended as security for the Notes, or to correct any omissions in the Credit Documents, or to state more fully the security obligations set out herein or in any of the Credit Documents, or to perfect, protect or preserve any Liens created pursuant to any of the Credit Documents, or to make any recordings, to file any notices or obtain any consents, all as may be necessary or appropriate in connection therewith. To facilitate assembling the Collateral upon the occurrence of an Indenture Event of Default and making it available to the Indenture Trustee at a place to be designated by the Indenture Trustee which is reasonably convenient, the Issuer has agreed to, among other things, move the Drilling Rig under certain conditions as specified in Section 3.3(c) of the First Naval Mortgage. In addition and in connection therewith, the Issuer acknowledges that the Indenture Trustee and the Note Holders have certain rights under and pursuant to the Operating Services Agreement which rights shall be exercisable under the circumstances and in accordance with the terms of the Operating Services Agreement without any demand on, or legal or other proceeding or action against, the Issuer. 7.6 Performance of Obligations. The Issuer will pay the Notes according to the reading, tenor and effect thereof; and the Issuer will perform every act and discharge all of the obligations to be performed and discharged by it under the Credit Documents including, without limitation, this Indenture, at the time or times and in the manner specified. 7.7 ERISA Information and Compliance. The Issuer will furnish to the Trustee and the Note Holders (i) immediately upon becoming aware of the occurrence of any ERISA Event or of any "prohibited transaction," as described in section 406 of ERISA or in section 4975 of the Code, in connection with any Plan or any trust created thereunder, a written notice signed by a Responsible Officer specifying the nature thereof, what action the Issuer or the ERISA Affiliate is taking or proposes to take with respect thereto, and, when known, any action taken or proposed by the Internal Revenue Service, the Department of Labor or the PBGC with respect thereto, and (ii) immediately upon receipt thereof, copies of any notice of the PBGC's intention to terminate or to have a trustee -46- 52 appointed to administer any Plan. With respect to each Plan (other than a Multiemployer Plan), the Issuer will, and will cause each ERISA Affiliate to, (i) satisfy in full and in a timely manner without giving rise to any Lien, all of the contribution and funding requirements of section 412 of the Code (determined without regard to subsections (d), (e), (f) and (k) thereof) and of section 302 of ERISA (determined without regard to sections 303, 304 and 306 of ERISA), and (ii) pay, or cause to be paid, to the PBGC in a timely manner, all premiums required pursuant to sections 4006 and 4007 of ERISA. 7.8 Debt Service Reserve Fund. The Trustee shall establish an account styled "Noble/Paul Romano Debt Service Reserve Fund" (the "Debt Service Reserve Fund"), subject to the Trustee's sole dominion and control. From the proceeds received by the Issuer, upon the issuance of the Notes pursuant hereto and pursuant to the Note Purchase Agreements, Issuer shall deposit or cause to be deposited an amount in the Debt Service Reserve Fund equal to two (2) months worth of prepayments required on the Notes pursuant to Section 3.4(a) and (b). Five (5) Business Days prior to a Payment Date, the Trustee shall determine whether the sums received in the Collection Account pursuant to Section 4.1, 4.2 or 4.3 since the last preceding Payment Date together with the Working Capital Reserve Fund provided pursuant to Section 7.15 below will be sufficient to cover the required payments of principal and interest due on the Notes under Article 3 hereof on the next Payment Date. In the event the Trustee determines that insufficient funds are available as aforesaid, the Trustee will give notice to the Issuer and each Note Holder three (3) Business Days prior to the Payment Date that a shortfall (a "Shortfall") exists, the amount thereof, the basis for such Shortfall and the Trustee's intention to draw on the Debt Service Reserve Fund to cover such Shortfall. In such event, the Trustee will transfer an amount equal to the lesser of (i) the Shortfall and (ii) the balance in the Debt Service Reserve Fund to the Collection Account on the Business Day next preceding the Payment Date. Thereafter, from time to time, any Shortfall in the Debt Service Reserve Fund shall be replenished as provided in Section 4.1. In the event (A) the Parent executes and delivers the Capital Funding Agreement together with an opinion of counsel for the Parent in form and substance reasonably satisfactory to the Trustee as to the authorization and enforceability of the Capital Funding Agreement upon the Parent, (B) no Indenture Default or Indenture Event of Default exists and is continuing hereunder and (C) the then outstanding senior unsecured debt securities of Noble Corp. are rated Investment Grade, the Trustee shall distribute to the Issuer, upon the Issuer's request, all sums then held in the Debt Service Reserve Fund and such account shall be closed but if such debt securities of Noble Corp. at any time thereafter are not rated Investment Grade or are not rated then Issuer and Parent shall immediately re-open and fund the Debt Service Reserve Fund and or provide comparable security (as in a letter of credit) to the satisfaction of the Majority Holders. 7.9 Maintenance of Agency. So long as any of the Notes remain Outstanding, the Issuer will maintain a single agency where: (i) the Notes may be presented for payment, and (ii) the Notes may be presented for registration of transfer, exchange or replacement as in Article 2 provided. The Issuer hereby designates the principal corporate trust office of the Trustee in Houston, Texas, as its agency for each such purpose. The Issuer will give to the Trustees and the holders of the Notes prior written notice of any change of location of any such agency, which shall be located in the United States. In case the Issuer shall fail to maintain such agency or shall fail to give such notices of any change of the location thereof, presentations and demands may be made and notice may be served -47- 53 at the address specified for the Issuer in or pursuant to Section 12.3. Notice and demands to or upon the Issuer in respect to the Notes or this Indenture may also be served at such address. 7.10 Additional Assurances. The Issuer will cause this Indenture, any and all supplemental indentures, mortgages, security agreements, instruments of further assignment, financing statements and continuation statements at all times to be kept recorded and filed in such manner and in such places as may be required by law to fully preserve and protect the rights of the holders of the obligations secured hereby as a first priority security interest and the Trustees hereunder and under all other documents and instruments evidencing or securing the obligations secured hereby (including, without limitation, documents and instruments granting Liens to the Trustees with respect to the Trust Estate). The Issuer will, at its expense and at any time and from time to time, promptly execute and deliver all further instruments and documents and take all further action that may be necessary or desirable or that the Trustee may request in order to (a) perfect and protect the Liens and other rights created or purported to be created hereby and by the other Credit Documents and the first priority of such Liens and other rights; (b) enable the Trustee to exercise and enforce its rights and remedies hereunder in respect of the Collateral; or (c) otherwise effect the purposes of this Indenture, including, without limitation: (i) executing and filing such supplements to this Indenture and such financing or continuation statements (or amendments thereto) as may be necessary or desirable or that the Trustee may reasonably request in order to perfect and preserve the Liens created or purported to be created hereby or thereby; and (ii) furnishing to the Trustee from time to time such other information in connection with the Collateral as the Trustee may reasonably request, all in reasonable detail. The Issuer will furnish to the Trustee any information which the Trustee may from time to time reasonably request concerning any covenant, provision or representation contained herein or concerning any other matter in connection with the Collateral. 7.11 Year 2000 Compliance. The Issuer shall take appropriate steps to assess, quantify, address and resolve its business and financial risks resulting from the Year 2000 Problem, including those business and economic risks resulting from the failure of key suppliers, vendors and customers of the Issuer to properly assess, quantify, address and resolve the Year 2000 Problem. 7.12 Change in Location of Collateral or Issuer. The Drilling Rig shall be kept at all times in United States territorial waters in the Gulf of Mexico or in the Gulf of Mexico on or above the outer Continental Shelf of the United States and as set forth in Section 1 of the Drilling Order. Issuer will not, without the Required Holders' prior written consent, change the location of any of the other Collateral to any state, county or other jurisdiction in which Trustee has not already filed a financing statement or taken other necessary steps to perfect its first priority security interests in the Collateral or to maintain such perfection. Issuer will give Trustee and each Note Holder thirty (30) days' prior written notice of (i) the opening or closing of any place of Issuer's business or (ii) any change in the location of Issuer's chief executive office or address. 7.13 Change in Issuer's Name. Issuer will not change its name or identity without notifying Trustee of such change in writing at least thirty (30) days prior to the effective date of such change. Without the express written consent of the Majority Holders, however, Issuer will not engage in any other business or transaction under any name other than Issuer's name hereunder. -48- 54 7.14 Corporate Independence. Until 367 days have elapsed following payment and satisfaction of all Notes, the Issuer shall not change its legal structure to anything other than a corporation and shall observe the applicable legal requirements for the recognition of the Issuer as a legal entity separate and apart from Parent and its Affiliates, including, without limitation, compliance with the following: (i) the Issuer shall maintain separate corporate records, books of account and financial statements (each of which shall be sufficiently full and complete to permit a determination of the Issuer's assets and liabilities and to permit a determination of the obligees thereon and the time for performance on each of the Issuer's obligations) from those of the Parent and its Affiliates; (ii) the Issuer shall not commingle any of its assets or funds with those of the Parent or any of its Affiliates; (iii) the board of directors of the Issuer shall be elected independently from the board of directors of the Parent and any of its Affiliates and shall at all times include at least one Independent Director (except in the case of death, incapacity, resignation or removal, and in any such case said Independent Director shall be promptly replaced); (iv) the board of directors and stockholders of the Issuer shall hold all regular and special meetings appropriate to authorize corporate actions. Regular meetings of directors will be held at least annually. The board of directors may act from time to time through one or more committees of the board in accordance with the Issuer's by-laws. Appropriate minutes of all meetings of board of directors (and committees thereof) and of the stockholders' meetings shall be kept by the Issuer; (v) the Issuer shall act solely in its own corporate name and through its own authorized officers and agents. Neither the Parent nor any of its Affiliates shall be appointed agent of the Issuer; (vi) the Issuer will maintain a separate office which shall be physically separate from space occupied by the Parent, or any of its Affiliates (but may be separate space occupied solely by the Issuer at the offices of the Parent or any of its Affiliates) and shall be identified as the Issuer's office so it can be identified by outsiders; (vii) the Issuer shall at all times hold itself out to the public under the Issuer's own name as a legal entity separate and distinct from Parent and its Affiliates (the foregoing to include, but not be limited to, use of materially separate and distinct letterhead and telephone number(s)); (viii) all financial reports prepared by the Issuer shall comply with GAAP and shall be issued separately from any reports prepared for Parent and any of its Affiliates; and -49- 55 (ix) Parent's financial reports shall disclose the separateness of the Issuer as required by GAAP and that the Collateral is owned by the Issuer and is not available to creditors of Parent or any of its Affiliates. 7.15 Working Capital Fund. The Trustee shall establish an account styled "Noble/Paul Romano Working Capital Fund" (the "Working Capital Fund"), subject to the Trustee's sole dominion and control. From the proceeds received by the Issuer, upon the issuance of the Notes pursuant hereto and pursuant to the Note Purchase Agreements, Issuer shall deposit or cause to be deposited an amount in the Working Capital Fund equal to $1,950,000. Five (5) Business Days prior to the first two Payment Dates, the Trustee shall determine whether the sums in the Collection Account will be sufficient to cover the required payments of principal and interest due on the Notes under Article 3 hereof on the next Payment Date. In the event the Trustee determines that insufficient funds are available as aforesaid, the Trustee will draw on the Working Capital Fund. In such event, the Trustee will transfer an amount equal to the lesser of (i) the amount necessary to pay the principal and interest due on the Notes under Article 3 and (ii) the balance in the Working Capital Fund to the Collection Account on the Business Day next preceding the Payment Date. Following the second Payment Date, if the funds in the Collection Account are otherwise sufficient to pay the amounts required under Article 3, and no Indenture Default or Indenture Event of Default shall have occurred and be continuing, the Trustee shall release any funds remaining in the Working Capital Fund to the Collection Account. ARTICLE 8. NEGATIVE COVENANTS. The Issuer covenants and agrees that, so long as any of the commitments under the Note Purchase Agreements are in effect and until payment in full of Notes issued hereunder, all interest thereon and all other amounts payable by the Issuer hereunder, without the prior written consent of the Majority Holders (except for Sections 8.12, 8.13, 8.17 and 8.18 which shall require the prior written consent of the Required Holders): 8.1 Debt. The Issuer will not incur, create, assume, suffer to exist or otherwise become liable in respect of any Debt, except: (a) the Notes or other indebtedness arising under the Credit Documents; (b) accounts payable (for the deferred purchase price of Property or services) from time to time incurred in the ordinary course of business which, if greater than 60 days past the invoice or billing date, are being Contested In Good Faith; and (c) Debt owing to the Parent evidenced by subordinated promissory notes in the form attached hereto as Annex C. 8.2 Liens. The Issuer will not create, incur, assume or permit to exist any Lien on any of its Properties (now owned or hereafter acquired), or upon any income or profits therefrom except: (a) Liens securing the payment of the Notes; and -50- 56 (b) during the period up to but not including the Maturity Date, Excepted Liens. 8.3 Investments, Loans and Advances. The Issuer will not make or permit to remain outstanding any loans or advances to or investments in any Person, except that the foregoing restriction shall not apply to: (a) accounts receivable arising in the ordinary course of business; and (b) Permitted Investments made pursuant to the requirements of this Indenture. 8.4 Dividends, Distributions and Redemptions. In the event of the occurrence and during the continuance of an Indenture Default or Indenture Event of Default, the Issuer will not declare or pay any dividend, purchase, redeem or otherwise acquire for value any of its stock now or hereafter outstanding, return any capital to its stockholders or make any distribution of its assets to its stockholders. 8.5 Sales and Leasebacks. The Issuer will not enter into any arrangement, directly or indirectly, with any Person whereby the Issuer shall sell or transfer any of its Property, whether now owned or hereafter acquired, and whereby the Issuer shall then or thereafter rent or lease as lessee such Property or any part thereof or other Property which the Issuer intends to use for substantially the same purpose or purposes as the Property sold or transferred. 8.6 Nature of Business. The Issuer will not engage directly or indirectly in any business or activity except owning and operating the Drilling Rig and activities incidental thereto. 8.7 Limitation on Leases. The Issuer will not create, incur, assume or suffer to exist any obligation for the payment of rent or hire of Property of any kind whatsoever (real or personal including capital leases), under leases or lease agreements which would cause the aggregate amount of all payments made by the Issuer pursuant to all such leases or lease agreements to exceed $500,000 in any period of twelve consecutive calendar months during the life of such leases. 8.8 Mergers, Etc. The Issuer will not merge into or with or consolidate with any other Person, or sell, lease or otherwise dispose of (whether in one transaction or in a series of transactions) all or substantially all of its Property to any other Person. 8.9 Proceeds of Notes. The Issuer will not permit the proceeds of the Notes to be used for any purpose other than those permitted by the Note Purchase Agreements. Neither the Issuer nor any Person acting on behalf of the Issuer has taken or will take any action which might cause any of the Credit Documents to violate Regulation T, U or X or any other regulation of the Board of Governors of the Federal Reserve System or to violate Section 7 of the Securities Exchange Act of 1934 or any rule or regulation thereunder, in each case as now in effect or as the same may hereinafter be in effect. 8.10 ERISA Compliance. The Issuer will not at any time: -51- 57 (a) engage in, or permit any ERISA Affiliate to engage in, any transaction in connection with which the Issuer or any ERISA Affiliate could be subjected to either a civil penalty assessed pursuant to section 502(c), (i) or (l) of ERISA or a tax imposed by Chapter 43 of Subtitle D of the Code that is Material; (b) terminate, or permit any ERISA Affiliate to terminate, any Plan in a manner, or take any other action with respect to any Plan, which could result in any liability of the Issuer or any ERISA Affiliate to the PBGC that is Material; (c) fail to make, or permit any ERISA Affiliate to fail to make, full payment when due of all amounts which, under the provisions of any Plan, agreement relating thereto or applicable law, the Issuer or any ERISA Affiliate is required to pay as contributions thereto to the extent that such failure could reasonably be expected to result in a liability of the Issuer or any ERISA Affiliate that is Material; (d) permit to exist, or allow any ERISA Affiliate to permit to exist, any accumulated funding deficiency within the meaning of Section 302 of ERISA or section 412 of the Code, whether or not waived, with respect to any Plan; (e) permit, or allow any ERISA Affiliate to permit, the actuarial present value of the benefit liabilities under any Plan maintained by the Issuer or any ERISA Affiliate which is regulated under Title IV of ERISA to exceed the current value of the assets (computed on a plan termination basis in accordance with Title IV of ERISA) of such Plan allocable to such benefit liabilities by an amount which in the event of the termination of such Plan would be Material. The term "actuarial present value of the benefit liabilities" shall have the meaning specified in section 4041 of ERISA; (f) contribute to or assume an obligation to contribute to, or permit any ERISA Affiliate to contribute to or assume an obligation to contribute to, any Multiemployer Plan if a future withdrawal or partial withdrawal from such Plan could reasonably be expected to result in a withdrawal liability assessment which is Material; (g) acquire, or permit any ERISA Affiliate to acquire, an interest in any Person that causes such Person to become an ERISA Affiliate with respect to the Issuer or any ERISA Affiliate if such Person sponsors, maintains or contributes to, or at any time in the six-year period preceding such acquisition has sponsored, maintained, or contributed to, (1) any Multiemployer Plan, if a Material withdrawal liability has been assessed by such Plan against such ERISA Affiliate or Person or if a future withdrawal or partial withdrawal from such Plan could reasonably be expected to result in a withdrawal liability assessment which is Material or (2) any other Plan that is subject to Title IV of ERISA under which the actuarial present value of the benefit liabilities under such Plan exceeds the current value of the assets (computed on a plan termination basis in accordance with Title IV of ERISA) of such Plan allocable to such benefit liabilities by an amount which in the event of the termination of such Plan would be Material; -52- 58 (h) incur, or permit any ERISA Affiliate to incur, a Material liability to or on account of a Plan under sections 515, 4062, 4063, 4064, 4201 or 4204 of ERISA; (i) contribute to or assume an obligation to contribute to, or permit any ERISA Affiliate to contribute to or assume an obligation to contribute to, any employee welfare benefit plan, as defined in section 3(1) of ERISA, including, without limitation, any such plan maintained to provide benefits to former employees of such entities, that may not be terminated by such entities without any Material liability; or (j) amend or permit any ERISA Affiliate to amend, a Plan resulting in an increase in current liability such that the Issuer or any ERISA Affiliate is required to provide security to such Plan under section 401(a)(29) of the Code. 8.11 Sale or Discount of Receivables. The Issuer will not discount or sell (with or without recourse) any of its notes receivable or accounts receivable. 8.12 Sale of Drilling Rig. The Issuer will not sell, lease, charter, assign, convey, dispose or otherwise transfer the Drilling Rig or any interest therein; provided, however, this covenant shall not apply to attendant equipment to the Drilling Rig which is obsolete or which is replaced by equipment of equal or greater value. 8.13 Environmental Matters. The Issuer will not cause or permit any of its Property to be in violation of, or do anything or permit anything to be done which will subject any such Property to any remedial obligations under any Environmental Laws, assuming disclosure to the applicable Governmental Authority of all relevant facts, conditions and circumstances, if any, pertaining to such Property where such violations or remedial obligations would have a Material Adverse Effect. 8.14 Transactions with Affiliates. The Issuer will not enter into any transaction, including, without limitation, any purchase, sale, lease or exchange of Property or the rendering of any service, with any Affiliate unless such transactions are otherwise permitted under this Indenture or the other Credit Documents, are in the ordinary course of its business and are upon fair and reasonable terms no less favorable to it than it would obtain in a comparable arm's length transaction with a Person not an Affiliate. 8.15 Subsidiaries. The Issuer has no subsidiaries and shall not create or acquire any subsidiaries. 8.16 Location of Issuer. The Issuer will not cause or permit any change to be made in its corporate name or identity or any change to be made in the address of its chief executive office or principal place of business (presently being the address set forth in Section 12.3), unless the Issuer shall have first notified the Trustee and each Note Holder of such change at least thirty (30) days prior to the effective date of such change and shall have first taken all action required by the Trustee for the purpose of further perfecting or protecting the rights of the Trustee in the Collateral. In any notice furnished pursuant to this subsection 8.16, the Issuer will state that the notice is required by this Indenture and contains facts that may require additional filings of financing statements. -53- 59 8.17 Acquisition of Notes. The Issuer will not, directly or indirectly through any of its Affiliates or otherwise, purchase, redeem, prepay or otherwise acquire any of the Outstanding Notes except upon payment or prepayment of the Notes in accordance with the terms of this Indenture and the Notes. In case the Issuer or any of its Affiliates acquires any Notes, such Notes shall thereupon be delivered to the Trustee for cancellation and no Notes shall be issued in substitution therefor. 8.18 Non-Petition Covenant. With respect to the CP Conduit as a Purchaser, the Issuer hereby agrees that until the 368th day following the maturity of the last maturing commercial paper note to be issued by the CP Conduit in connection with its funding of its investment in the Notes, the Issuer will not institute, and will not join with others in instituting, any involuntary bankruptcy or analogous proceeding against the CP Conduit under any bankruptcy, reorganization, receivership or similar law, domestic or foreign, as now or hereafter in effect. 8.19 Jurisdiction of Registration. The Issuer shall not change the jurisdiction of registration of the Drilling Rig to another jurisdiction, unless the Issuer has given the Trustee and the Note Holders not less than 60 days prior written notice, the Required Holders have consented (which consent shall not be unreasonably withheld) and the Issuer has furnished the Trustee and the Note Holders with a new replacement ship mortgage acceptable to the Trustee and the Required Holders and appropriate opinions of counsel, acceptable in form and substance to the Required Holders, with respect to such mortgage and the filing and first priority thereof. ARTICLE 9. THE TRUSTEES. 9.1 Certain Duties and Responsibilities of Trustees. (a) Except during the continuance of an Indenture Event of Default: (i) each Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against such Trustee; and (ii) each Trustee may conclusively rely, in good faith, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to such Trustee and conforming to the requirements of this Indenture or other Credit Documents; but in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to such Trustee, such Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture. (b) In case an Indenture Event of Default has occurred and is continuing, each Trustee shall exercise such of the rights and powers vested in it by this Indenture for the benefit of the holders of the Notes, and use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. -54- 60 (c) No provision of this Indenture shall be construed to relieve any Trustee from liability for its own negligence or its own willful misconduct, or the inaccuracy of any of its representations or warranties made in Section 9.14, except that: (i) no Trustee which is a corporation or banking association shall be liable for any error of judgment made in good faith by an officer of such Trustee unless it shall be proved that such Trustee was negligent in ascertaining material facts; and (ii) no Trustee shall be liable to the holder of any Note with respect to any action taken or omitted to be taken by it, in good faith after an Indenture Event of Default shall have occurred in accordance with the direction of the Majority Holders relating to the method and place of conducting any proceeding for any remedy available to such Trustee. (d) No provision of this Indenture shall require any Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (e) Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to any Trustee shall be subject to the provisions of this Section 9.1. (f) The Trustee shall give to the holder of each Note written notice of each and every Indenture Default or Indenture Event of Default of which one of its Responsible Officers has actual knowledge within three (3) days of obtaining such actual knowledge unless the same shall be cured during such period. 9.2 Trustees' Compensation and Indemnification. The Issuer covenants and agrees to pay to each Trustee promptly (and in any event within 30 days after receipt of any invoice or other statement or notice) and each Trustee shall be entitled to the fees and expenses determined as provided in Schedule 9.2 hereto for all services rendered and expenses incurred by it in the execution of the trusts hereby created and in the exercise and performance of any of the powers and duties hereunder of such Trustee, which compensation shall not be limited by any provisions of law in regard to the compensation of a trustee of an express trust, and the Issuer will pay or reimburse each Trustee promptly (and in any event within 30 days after receipt of any invoice or other statement or notice) for all reasonable expenses, disbursements and advances incurred or made by such Trustee in accordance with any of the provisions of this Indenture (including the reasonable compensation and the expenses and disbursements of its external counsel and of all Persons not regularly in its employ) except any such expense, disbursement or advance as may arise from its gross negligence (but not mere negligence) or bad faith or wilful misconduct. Subject to Section 9.3(f), each Trustee agrees that it shall have no right against any holder of any Note for the payment of compensation for its services hereunder or any expenses or disbursements incurred in connection with the exercise and performance of its powers and duties hereunder or any indemnification against liability which it may incur in the exercise and performance of such powers and duties but on the contrary, shall look solely -55- 61 to the Issuer for such payment and indemnification and that it shall have no Lien on or security interest in the Collateral as security for such compensation, expenses, disbursements and indemnification except to the extent provided for in Section 4.3. 9.3 Certain Rights of Trustees. (a) No Trustee shall be responsible for any recitals herein or for insuring all or any portion of the Trust Estate nor shall any Trustee be bound to ascertain or inquire as to the performance or observance of any covenants, conditions or agreement contained herein. Except in the case of an Indenture Default or Indenture Event of Default of which a Responsible Officer of the Trustee has actual knowledge, the Trustee shall be deemed to have knowledge of an Indenture Default or Indenture Event of Default only upon receipt of written notice thereof from the Issuer or any holder of a Note; provided, however, that the Trustee shall be deemed to have actual knowledge of (i) any failure to receive payments under the Shell Contract when due, if the Trustee shall have received a copy of the billing for such payment pursuant to Section 7.3(e) above, (ii) sums required to be deposited in the Debt Service Reserve Fund and sums actually deposited, and (iii) of the principal of, any applicable Make-Whole Amount or interest on, any Note on the date any such payment is due. (b) No Trustee makes any representation, or warranty as to the validity, sufficiency or enforceability of this Indenture, the Notes, the Note Purchase Agreements or any other Credit Documents, or as to the title, operation, merchantability or fitness for use or purpose, value, compliance with specifications, condition, design, quantity, durability or otherwise with respect to the Drilling Rig or any other Collateral or any substitute therefor. No Trustee shall be accountable to anyone for the use or application of any of the Notes of the proceeds thereof or for the use or application of any Collateral or the proceeds thereof which shall be released from the Lien and security interest in favor of such Trustee held in trust under the terms hereof, in accordance with the provisions of this Indenture. (c) Each Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice request, direction, consent, order, bond, note or other paper or document believed by it, in good faith, to be genuine and to have been signed or presented by the proper party or parties. (d) Any request, direction or authorization by the Issuer shall be sufficiently evidenced by a request, direction or authorization in writing, delivered to a Trustee, and signed in the name of such party by a Responsible Officer; and any resolution of the Board of Directors of the Issuer or any committee thereof shall be sufficiently evidenced by a copy of such resolution certified by its Secretary or an Assistant Secretary to have been duly adopted and to be in full force and effect on the date of such certification, and delivered to such Trustee. (e) Any Trustee may consult with counsel, appraisers, engineers, accountants and other skilled persons to be selected by such Trustee, and the written advice of any thereof shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon. -56- 62 (f) No Trustee shall be under any obligation to take any action to protect, preserve or enforce any rights or interests in the Collateral or to take any action towards the execution or enforcement of the trusts hereunder or otherwise hereunder, whether on its own motion or on the request of any other Person, if it shall have notified the holders of the Notes that the same, in the opinion of such Trustee, may involve pecuniary loss, liability or expense, unless the Issuer or one or more holders of the Notes shall offer and furnish reasonable security or indemnity reasonably satisfactory to such Trustee against pecuniary loss, liability and expense to such Trustee. With respect to any original Purchasers of the Notes or any other Institutional Investor an indemnity agreement by such Purchaser, in form and substance reasonably satisfactory to such Trustee, will satisfy such requirement without any bond, security or third party indemnity. (g) No Trustee shall be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, note or other paper or document, unless requested in writing to do so by the Majority Holders and such holders shall have tendered funds to pay expenses to be incurred in performing such duties. (h) Any Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and such Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed by it with due care. (i) The provisions of paragraphs (c) through (h), inclusive, of this Section 9.3, shall be subject to the provisions of Section 9.1. (j) No Trustee need post any bond for any action taken under this Indenture. 9.4 Showings Deemed Necessary by a Trustee. Anything else in this Indenture contained to the contrary notwithstanding, each Trustee shall have the right, but shall not be required, to demand in respect of the withdrawal of any cash (other than payments out of the Collection Account or the Debt Service Reserve Fund or the Working Capital Fund), the release of any Property or the subjection of any after acquired Property to any Lien to be held by such Trustee pursuant to the terms hereof, or any other action whatsoever within the purview hereof, any showings, certificates, opinions, appraisals or other information which such Trustee may deem reasonably necessary or appropriate in addition to the matters required by the terms hereof as a condition precedent to such action. 9.5 Status of Monies Received. All monies received by a Trustee shall, until used or applied as herein provided, be held in trust for the purposes for which they were received, but, if such Trustee is a bank, need not be segregated in any manner from any other monies, except to the extent required by law, and may be deposited by such Trustee under such general conditions as may be (if such Trustee is a bank) prescribed by law and such Trustee's trust department, and such Trustee shall be under no liability for interest on any monies received by it hereunder except as provided in Section 4.4. Any Trustee which is a trust company, banking corporation or banking association and any affiliated corporation may be interested in any financial transaction with the Issuer or any of its -57- 63 Affiliates; and any such Trustee may act as depository or otherwise in respect to other Securities of the Issuer or any of its Affiliates, all with the same rights which it would have if not a Trustee; provided that such Trustee shall not exercise any right of setoff against any part of the Trust Estate. 9.6 Resignation of Trustees. Any Trustee may resign and be discharged of the trusts hereby created by mailing notice to the Issuer and to all holders of Notes specifying the time and date (not earlier than sixty (60) days after the date of such notice) when such resignation shall take effect. Such resignation shall take effect upon the appointment, qualification and acceptance of a successor trustee as herein provided. 9.7 Removal of Trustees. Any Trustee may be removed, with or without cause, and a successor Trustee may be appointed at any time by the Majority Holders and delivered to each other Trustee and the Issuer, and, in the case of the appointment of a successor Trustee, to such successor Trustee. 9.8 Successor Trustee. Each Trustee appointed in succession of the Trustee named in this Indenture, or its successor in trust, shall be a trust company, banking corporation or banking association organized under the laws of the United States of America, in good standing and having a capital and unimpaired surplus aggregating at least $500,000,000, if there be such a trust company, banking corporation or banking association qualified, able and willing to accept the trusts upon reasonable or customary terms; and otherwise having the highest capital of such trust companies, banking corporations or banking associations that are qualified, able and willing to accept the trusts upon reasonable or customary terms. 9.9 Appointment of Successor Trustees. If a Trustee shall have given notice of resignation pursuant to Section 9.6 or if notice of removal shall have been given to a Trustee and the Issuer pursuant to Section 9.7 and such notice does not appoint a successor Trustee or if such notice of removal appointed a successor Trustee and such successor shall not have accepted such appointment within fifteen (15) days after the giving of such notice of removal, a successor Trustee may be appointed by the Majority Holders with the consent of the Issuer not to be unreasonably withheld. If no such appointment shall have been made within twenty-five (25) days after the giving of such notice of resignation or the giving of such notice of removal, a successor Trustee may be appointed by the holder of any Outstanding Note or, upon application of the retiring Trustee, by any court of competent jurisdiction. 9.10 Merger or Consolidation of Trustee. Any corporation into which a Trustee which is a corporation, or any successor to it in the trusts created by this Indenture, may be merged or consolidated or with which it or any successor to it may be consolidated or any corporation resulting from any merger or consolidation to which such Trustee or any successor to it shall be a party or any state or national bank or trust company succeeding to the corporate trust business of the Trustee as a whole or substantially as a whole (provided such corporation which is a successor to the Trustee shall be a corporation organized under the laws of any state of the United States of America or of the United States of America, having a capital and surplus of at least $500,000,000 and such corporation which is a successor to any other Trustee shall be permitted by law to perform its obligations hereunder), shall be the successor to such Trustee under this Indenture without the execution or filing of any paper or any further act on the part of any of the parties hereto. The Issuer covenants that in -58- 64 case of any such merger, consolidation or transfer of the corporate trust business it will, upon the request of the merged, consolidated or transferred corporation, execute, acknowledge and cause to be recorded or filed suitable instruments in writing to confirm the estates, rights and interests of such corporation as such Trustee under this Indenture. 9.11 Acceptance of Appointment by Successor Trustee. Any new Trustee appointed pursuant to any of the provisions hereof shall execute, acknowledge and deliver to the Issuer an instrument accepting such appointment; and thereupon such new Trustee, without any further act, deed or conveyance, shall become vested with all the estates, Properties, rights, powers and trusts of its predecessor in the rights hereunder with like effect as if originally named as Trustee herein; but, nevertheless upon the Written Request of the Issuer or the successor Trustee, the Trustee ceasing to act, upon payment of fees and expenses due to it, shall execute and deliver an instrument transferring to such successor Trustee, upon the trusts herein expressed, all the estates, Properties, rights, powers, and trusts of the Trustee so ceasing to act, and shall duly assign, transfer and deliver any of the Property of the Trust Estate and monies held by such Trustee to the successor Trustee so appointed in its or his place. Upon acceptance of appointment by a successor Trustee as provided in this Section 9.11, the successor Trustee shall give to the Note Holders written notice of the succession of such Trustee to the trusts hereunder. Neither failure so to mail nor any defect in the notice so mailed shall affect the sufficiency of the proceedings in question. 9.12 Conveyance upon Request of Successor Trustee. Should any deed, conveyance or instrument in writing from the Issuer be required by any successor Trustee for more fully and certainly vesting in and confirming to such new Trustee such estates, Properties, rights, powers and trusts, then upon request of such successor Trustee any and all such deeds, conveyances and instruments in writing shall be made, executed, acknowledged and delivered, and, if and where appropriate, shall be caused to be recorded and filed, by the Issuer. 9.13 Co-Trustees and Additional Trustees. (a) Delivery of Documents. Anything herein contained to the contrary notwithstanding, if, at any time or times, in order to conform with any law of any jurisdiction in which the Issuer shall then own or hold any Collateral, the Trustee shall be advised by counsel satisfactory to it that it is necessary or prudent in the interest of the holders of the Notes so to do, the Trustee shall execute and deliver any and all instruments and agreements necessary or proper to appoint, on behalf of the Trustee, the Note Holders and the Issuer, another trust company, banking corporation or banking association, or one or more other Persons approved by the Trustee either to act as co-trustee or co-trustees hereunder, jointly with the Trustee, or its successors, or to act as separate trustee or trustees hereunder; and the trust company, banking corporation or banking association, or the Person or Persons so appointed shall be such co-trustee or co-trustees, or separate trustee or trustees, with such powers, duties and discretion as shall be specified in the said instruments or agreements of appointment, executed as aforesaid. It shall not be necessary for any holder of a Note or the Issuer or any other Person other than the Trustee to execute and deliver any such instruments or agreements. -59- 65 (b) Exercise of Powers. The rights, powers, duties and obligations conferred or imposed upon the Trustee shall be conferred and imposed upon, and exercised or performed by the Trustee, or jointly by the Trustee and any co-trustee or co-trustees or separate trustee or trustees appointed pursuant to this Section 9.13 as provided herein or in the instrument or agreement appointing such co-trustee or co-trustees or separate trustee or trustees, except to the extent that under the law of any jurisdiction in which any particular act or acts are to be performed the Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations shall be exercised and performed by such co-trustee or co-trustees or separate trustee or trustees. (c) Trustee Attorney-in-Fact. Any co-trustee or co-trustees or separate trustee or trustees appointed hereunder may at any time by an instrument in writing, and each Trustee by this Indenture does hereby, constitute the Trustee, or its successor in the trusts hereunder, his, their or its agent or attorney-in-fact, with full power and authority, to the extent which may be permitted by law, to do any and all acts and things and exercise any and all discretion authorized or permitted by him, them or it, for and on behalf of him, them or it, and in his, their or its name. (d) Resignation of Co-Trustee or Separate Trustee. Each co-trustee or separate trustee appointed pursuant to the provisions of this Section 9.13 may resign and may be removed by the Trustee, and the successors to such trustees may be appointed by the Trustee as set forth in the first paragraph of this Section 9.13. 9.14 Trustee's Representations and Warranties. The Trustee represents, warrants and covenants that: (a) Organization, Etc. It is a national banking association duly chartered, validly existing and in good standing under the laws of the United States of America, and has all requisite power, authority and legal right under the laws of the State of Texas and the United States to execute, deliver and carry out the terms of each of the Credit Documents to which it is a party. Its principal place of business is located at its street address set forth in Section 12.3. (b) Authorization, Etc. It has duly authorized, executed and delivered this Indenture and the other Credit Documents to which it is a party and this Indenture and the other Credit Documents constitute legal, valid and binding obligations, enforceable against it in accordance with the terms thereof. (c) No Violation. The execution and delivery of, and performance of its obligations under, this Indenture and the other Credit Documents to which it is a party will not result in any violation of, or be in conflict with, or constitute a default under, any of the provisions of its articles of association or by-laws, or of any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, lease, note or bond purchase agreement, license or bank loan or credit agreement or other agreement to which it is a party or by which it is bound, or any law, judgment, governmental rule, regulation or order of any government or governmental authority or agency governing the banking or trust powers of the Trustee. -60- 66 (d) No Consents or Approvals. Neither the execution and delivery by it, in its individual capacity or as Trustee, as the case may be, of this Indenture nor the consummation of any of the transactions contemplated thereby requires the consent or approval of, the giving of notice to, or the registration with, any federal or State governmental authority or agency pursuant to any federal or State law governing the banking or trust powers of Trustee. (e) Capitalization. It has unimpaired capital and surplus aggregating at least $500,000,000. 9.15 Non-Petition Covenant. With respect to the CP Conduit as a Purchaser, the Trustee hereby agrees that until the 368th day following the maturity of the last maturing commercial paper note to be issued by the CP Conduit in connection with its funding of its investment in the Notes, the Trustee will not institute, and will not join with others in instituting, any involuntary bankruptcy or analogous proceeding against the CP Conduit under any bankruptcy, reorganization, receivership or similar law, domestic or foreign, as now or hereafter in effect. ARTICLE 10. SUPPLEMENTAL INDENTURES, WAIVERS. 10.1 Supplemental Indentures Without Note Holders' Consent. The Issuer and the Trustee from time to time and at any time, subject to the restrictions in this Indenture contained, may, without consent from the holder of any Note, enter into an indenture or indentures supplemental hereto and which thereafter shall form a part hereof for any one or more or all of the following purposes: (a) to add to the Trust Estate held by the Trustees pursuant to the terms hereof additional Property hereafter acquired by the Issuer and intended to be subjected to this Indenture, and to correct and amplify the description of any Property subject to this Indenture; (b) to cure any ambiguity or cure, correct or supplement any defective provisions of this Indenture or any supplement hereto; provided, that the same shall in no respect be adverse to the interests of the holders of the Series A Notes or the Series B Notes; and (c) to appoint a co-trustee or co-trustees, or a separate trustee or trustees, pursuant to Section 9.13. and the Issuer covenants to perform all requirements of any such supplemental indenture. No restrictions or obligations imposed upon the Issuer may, except as otherwise proved in this Indenture, be waived or modified by such supplemental indentures or otherwise. 10.2 Waivers and Consents by Note Holders; Supplemental Indentures with Consent. (a) Subject to the provisions of the following subsection 10.2(b), upon the waiver or consent of the Majority Holders (unless it is specifically required that the Required Holders act): (i) the Trustee shall execute an appropriate instrument permitting any Person to take any action prohibited, or omit the taking of any action required, by any of the provisions of this Indenture or any indenture supplemental hereto, or any other Credit Document to which the Trustee is a party or of -61- 67 which the Trustee is a third party beneficiary or which is granted in favor of the Trustee ("Trustee Security Document"), or (ii) the Issuer and the Trustee may enter into an indenture or indentures supplemental hereto or to a Trustee Security Document for the purpose of adding, changing or eliminating any provisions of this Indenture or of any indenture supplemental hereto or to a Trustee Security Document or modifying in any manner the rights of the holders of the Notes or the rights and obligations of the Issuer; provided, that no such waiver, consent or supplemental indenture or amendment shall (A) impair or affect the right of any Note Holder to receive payments of the principal of and payments of the interest and any applicable Make-Whole Amount (if any), Yield Protection Amount or Breakage Amount, if any, on any Note held by it, as therein and herein provided including, without limitation, the timing of any such payment or the principal amount of any Note or rate of interest thereon, without the consent of such holder, (B) permit the creating of any Lien with respect to any of the Trust Estate, without the consent of the holders of all the Notes at the time Outstanding, (C) deprive the holder of any Note of the benefit of the Liens held by the Trustee pursuant to the terms of this Indenture or any other Credit Document without the consent of such holder, (D) amend Article 2, Article 3, Article 4 or Article 6 (other than an amendment of the nature described, and permitted by the provisions of, Section 10.1), without the consent of the holders of all of the Notes at the time Outstanding, (E) reduce the aforesaid percentage of the aggregate principal amount of Notes, the holders of which are required to consent to any such waiver or supplemental indenture or amendment pursuant to this Section 10.2, without the consent of the holders of all of the Notes at the time Outstanding, or (F) modify the rights, duties, or immunities of any Trustee, without the consent of such Trustee. The holder of any Notes may specify that any such waiver or consent shall be effective only with respect to a portion of the Notes held by it (in which case it shall specify by dollar amount the aggregate principal amount of Notes with respect to which such waiver or consent shall be effective) and in the event of any such specification such holder shall be deemed to have given such waiver or consent only with respect to the portion of Notes so specified. (b) Notwithstanding the provisions of the foregoing subsection 10.2(a) (and in addition to, and not in limitation of, any provisions of this Indenture, the Note Purchase Agreements or any other Credit Documents specifically requiring that the Required Holders act), (i) so long as there is no Indenture Event of Default continuing hereunder, the Trustee shall not enter into any indenture supplemental hereto (except as permitted by the foregoing Section 10.1), or agree to any amendment, modification or waiver of any of the terms, conditions or provisions of this Indenture or any indenture supplemental hereto, or any Trustee Security Document without the consent of the Required Holders, and (ii) regardless of the existence and continuance of any Indenture Event of Default, the Trustee shall not (A) agree to any amendment, modification or waiver of any of the terms, conditions or provisions of Section 12.16 of this Indenture, section 6 of the Performance Agreement or section 5 of the Operating Services Agreement, the effect of which would be to reduce, modify or amend any indemnities payable by the Issuer or the Parent to any Note Holder (except to add additional indemnities by the Issuer or the Parent), (B) agree to any amendment of the definition of Indenture Event of Default or (C) agree to any amendment, modification or waiver of any of the terms, conditions, or provisions of Sections 7.3(c), 7.3(d)(i), 7.4(a) or 7.12 of this Indenture, sections 2.3, 3.3(c), 2.4, 2.9 or 2.13 of the First Naval Mortgage, section 2(a) of the Performance Agreement or section 1(b) of the Operating Services Agreement. -62- 68 10.3 Notice of Supplemental Indenture. Promptly after the execution by the Issuer and the Trustee of any supplemental indenture or promptly after the execution by the Trustee of an appropriate instrument or permission pursuant to the provisions of Section 10.2, the Trustee shall give written notice, setting forth in general terms the substance of such supplemental indenture or instrument, together with a conformed copy thereof to each holder of the Notes. Any failure of the Trustee to give such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture or instrument. 10.4 Solicitation of Note Holders. So long as there are any Notes Outstanding, the Issuer will not solicit, request or negotiate for or with respect to any proposed waiver or amendment of any of the provisions of this Indenture or the Notes unless each holder of the Notes shall be informed thereof by the Issuer and shall be afforded the opportunity of considering the same and shall be supplied by the Issuer with sufficient information to enable it to make an informed decision with respect thereto. The Issuer will not, directly or indirectly, pay or cause to be paid any remuneration, whether by way of supplemental or additional interest, fee or otherwise, to any holder of Notes as consideration for or as an inducement to entering into by any holder of Notes of any waiver or amendment of any of the provisions of this Indenture or of any Note unless such remuneration is concurrently offered to be paid, on the same terms, ratably to the holders of all Notes then Outstanding even if such holder did not consent to such waiver or amendment. Such remuneration will not be inferred solely from the participation by a holder of the Notes in an existing or future loan to or investment in or with the Issuer or any of its Affiliates. 10.5 Opinion of Counsel Conclusive as to Supplemental Indentures. The Trustee is hereby authorized to join with the Issuer in the execution of any such supplemental indenture authorized or permitted by the terms of this Indenture and to make the further agreements and stipulations which may be therein contained, and the Trustee may receive an Opinion of Counsel as conclusive evidence that any supplemental indenture executed pursuant to the provisions of this Article 10 complies with the requirements of this Article 10. 10.6 Effect of Supplemental Indentures. Upon the execution of any supplemental indenture pursuant to the provisions of this Article 10, this Indenture shall be deemed to be modified and amended in accordance therewith and the respective rights, duties and obligations under this Indenture of the Issuer, the Trustees and all holders of Notes thereunder shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modification and amendment, and all the terms and conditions of any such supplemental indenture shall be deemed to be part of the terms and conditions of this Indenture for any and all purposes. 10.7 New Notes. Notes executed and delivered after the execution of any supplemental indenture pursuant to the provisions of this Article 10 may bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If such supplemental indenture shall so provide, new Notes, so modified as to conform, in the opinion of the Trustee and the Board of Directors of the Issuer to any modification or amendment of this Indenture contained in any such supplemental indenture, may be prepared by the Issuer, executed and delivered without cost to the holders of Notes, upon surrender of such Notes, in equal aggregate principal amounts. -63- 69 ARTICLE 11. UNCLAIMED MONIES. 11.1 Satisfaction and Discharge of Agreement. If at any time (a) the Issuer shall pay and discharge the entire indebtedness on all Notes hereunder by paying or causing to be paid as provided in Article 4 the principal of, and any applicable Make-Whole Amount, Yield Protection Amount and Breakage Amount and interest on, all Notes hereunder, as and when the same become due and payable or (b) all such Notes shall have been repurchased by the Issuer or an Affiliate of the Issuer and canceled as herein provided (other than any Notes which shall have been destroyed, lost or stolen and which shall have been replaced as provided in Section 2.9); and if the Issuer shall also pay or cause to be paid all other sums payable hereunder by the Issuer (including, without limitation, fees and expenses of the Trustees), and the Issuer shall fully and faithfully discharge, and cause to be faithfully discharged, every other obligation herein and in each of the other Credit Documents contained, then and in that case this Indenture shall cease, determine, and become null and void, and thereupon each Trustee shall, upon Written Request of the Issuer or any other party to the Credit Documents forthwith execute proper instruments acknowledging satisfaction of and discharging this Indenture and releasing all Liens held by it pursuant to the terms hereof and any other Credit Document, including the First Naval Mortgage; provided, however, that in no event shall the trusts created by this Indenture continue beyond the expiration of twenty-one (21) years after the death of the last to die of all descendants living on the date of execution of this Indenture of Joseph P. Kennedy, late father of the late President of the United States, John F. Kennedy. The satisfaction and discharge of this Indenture shall be without prejudice to the rights of each Trustee under Section 9.2 to charge and be reimbursed by the Issuer for any expenditures which it may thereafter incur in connection herewith. 11.2 Return of Unclaimed Monies. Notwithstanding any provisions of this Indenture, any monies deposited with any Trustee in trust for the payment of the principal of, or interest or any applicable Make-Whole Amount on, any Notes and remaining unclaimed for two (2) years after the last date on which any such principal, interest or any applicable Make-Whole Amount shall have become due and payable (whether at maturity or upon optional or required prepayment or by declaration as provided in this Indenture), shall then be repaid to the Issuer upon its Written Request, unless otherwise required by mandatory provisions of applicable escheat or abandoned property laws, and the holders of such Notes, unless otherwise required by mandatory provisions of applicable escheat or abandoned property laws, shall thereafter be entitled to look only to the Issuer for repayment thereof, and all liability of such Trustee with respect to such monies shall thereupon cease; provided, however, that before the repayment of such monies to the Issuer, as aforesaid, such Trustee shall (at the cost of the Issuer) first mail to all holders of the Notes then Outstanding at their addresses as set forth in the register required to be maintained pursuant to Section 2.3, a notice that said monies remain unclaimed and that, after a date named in said notice, which date shall not be less than ten (10) or more than twenty (20) days after the date of the first mailing of such notice, the balance of such monies then unclaimed will be returned to the Issuer. In the event of the repayment of any such monies to the Issuer as aforesaid, the holders of the Notes in respect of which such monies were deposited shall thereafter be deemed to be unsecured creditors of the Issuer for amounts equivalent to the respective amounts deposited for the payment of such Notes and so repaid to the Issuer (without interest thereon and subject to applicable escheat and abandoned property laws). -64- 70 ARTICLE 12. MISCELLANEOUS. 12.1 Successors and Assigns. Whenever any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party; and all the covenants, promises and agreements in this Indenture contained by or on behalf of the Issuer, by or on behalf of a Trustee or by or on behalf of a Purchaser, shall bind and inure to the benefit of the respective successors and assigns of such parties whether so expressed or not; provided; however, that the Issuer shall not assign or transfer any of its rights or delegate any of its duties or obligations under the Credit Documents without the prior written consent of the Majority Holders. 12.2 Partial Invalidity. Any provision of this Indenture that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall (to the full extent permitted by law) not invalidate or render unenforceable such provision in any other jurisdiction. 12.3 Communications. All communications provided for herein shall be in writing or by telecommunication device capable of creating a written record and shall be deemed to have been given when delivered personally or otherwise actually received by such Person listed below at its address set forth below: If to the Issuer: If by mail: Noble Drilling (Paul Romano) Inc. 10370 Richmond Avenue, Suite 581 Houston, Texas 77042 Attention: President If by personal delivery: Noble Drilling (Paul Romano) Inc. 10370 Richmond Avenue, Suite 581 Houston, Texas 77042 Attention: President in either case with a copy to: Robert D. Campbell, Esq. Thompson & Knight, P.C. 1700 Pacific Avenue, Suite 3300 Dallas, Texas 75201 -65- 71 If to the Trustee: If by mail or personal delivery: Chase Bank of Texas, National Association 600 Travis, Suite 1150, 11th Floor Houston, Texas 77002 Attention: Mauri Cowen Corporate Trust Dept. or to either such party at such other address as such party may designate by notice duly given in accordance with this Section to the other party. Where this Indenture provides for any communication to holders of Notes, such communication shall be deemed to have been given when delivered personally or otherwise actually received by such holder at its last address as it appears in the register required to be maintained pursuant to Section 2.3. 12.4 GOVERNING LAW; SUBMISSION TO JURISDICTION. (a) THIS INDENTURE AND THE NOTES (INCLUDING, BUT NOT LIMITED TO, THE VALIDITY AND ENFORCEABILITY HEREOF AND THEREOF) SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK OTHER THAN CONFLICT OF LAW RULES THEREOF THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE. (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THE CREDIT DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS INDENTURE, EACH OF THE ISSUER AND THE TRUSTEES HEREBY ACCEPTS FOR ITSELF AND (TO THE EXTENT PERMITTED BY LAW) IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH OF THE ISSUER AND THE TRUSTEES HEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS. THIS SUBMISSION TO JURISDICTION IS NONEXCLUSIVE AND DOES NOT PRECLUDE THE PARTIES FROM OBTAINING JURISDICTION OVER OTHER PARTIES IN ANY COURT OTHERWISE HAVING JURISDICTION. (c) THE ISSUER HEREBY IRREVOCABLY DESIGNATES CT CORPORATION LOCATED AT 1633 BROADWAY, NEW YORK, NEW YORK 10019, AS THE DESIGNEE, APPOINTEE AND AGENT OF THE ISSUER TO RECEIVE, FOR AND ON BEHALF OF THE ISSUER, SERVICE OF PROCESS IN SUCH JURISDICTION IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THE CREDIT DOCUMENTS. IT IS UNDERSTOOD THAT A COPY OF SUCH PROCESS SERVED ON SUCH AGENT WILL BE PROMPTLY FORWARDED BY OVERNIGHT COURIER TO THE ISSUER AT ITS ADDRESS SET FORTH IN SECTION 12.3 HEREOF, BUT THE FAILURE OF THE ISSUER TO RECEIVE SUCH COPY SHALL NOT AFFECT IN ANY WAY THE SERVICE OF SUCH -66- 72 PROCESS. THE ISSUER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE ISSUER AT ITS SAID ADDRESS, SUCH SERVICE TO BECOME EFFECTIVE THIRTY (30) DAYS AFTER SUCH MAILING. (d) NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE ISSUER OR THE TRUSTEES OR ANY HOLDER OF A NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE ISSUER IN ANY OTHER JURISDICTION, INCLUDING WITHOUT LIMITATION, THE COMMENCEMENT OF ENFORCEMENT PROCEEDINGS UNDER THE CREDIT DOCUMENTS IN ALL APPLICABLE JURISDICTIONS. (e) EACH OF THE ISSUER AND THE TRUSTEES HEREBY (I) IRREVOCABLY AND UNCONDITIONALLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN; (II) IRREVOCABLY WAIVE, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES; (III) CERTIFY THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR AGENT OF COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, AND (IV) ACKNOWLEDGE THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION 12.4. 12.5 Limitation on Interest. (a) It is the intent of the parties hereto to comply strictly with applicable usury laws, and the parties hereto stipulate and agree that none of the terms and provisions contained in this Indenture, the Notes or any other Credit Documents shall ever be construed to create a contract to pay, for the use, forbearance or detention of money, interest in excess of the maximum amount of interest permitted to be charged by applicable law from time to time in effect. If any excess of interest in such respect is hereby provided for or shall be adjudicated to be so provided, in this Indenture, in any Note or otherwise in connection with the Credit Documents, the provisions of this Section 12.5 shall govern and prevail, and neither the Issuer nor any present or future guarantors, endorsers, or other Persons hereafter becoming liable for payment of the Notes shall ever be obligated to pay the excess amount of such interest. The provisions of this Section 12.5 shall control over all other provisions of the Credit Documents which may be in conflict or apparent conflict herewith. Each of the Trustees and the holders of the Notes expressly disavows any intention to charge, collect or contract for excessive unearned interest or finance charges in the event the maturity of any of the Notes is accelerated. If the maturity of a Note is accelerated for any reason, any amounts held to constitute interest (including any applicable Make-Whole Amount, Yield -67- 73 Protection Amount or Breakage Amount due upon acceleration if such applicable Make-Whole Amount, Yield Protection Amount or Breakage Amount is held to constitute interest under applicable law) which are then unearned and have theretofore been collected by any Trustee or the holder of such Note shall be applied as of the date of receipt thereof to reduce the principal balance thereof then outstanding and if the principal of the Notes has been paid in full, any remaining excess shall be forthwith paid to the Issuer. If any Trustee or any holder of any Note shall receive, collect or apply monies which are deemed to constitute interest which would otherwise increase the interest on such Note to an amount in excess of that permitted to be charged by applicable law then in effect, all such sums deemed to constitute interest in excess of such legal limit shall be applied to reduce the principal balance thereof then outstanding or immediately returned to the Issuer or the other payor thereof upon such determination. All sums paid or agreed to be paid to any Trustee or holder of any Note for the use, forbearance or detention of sums due hereunder shall, to the extent permitted by law applicable to such party, be amortized, prorated, allocated and spread throughout the full term of the indebtedness evidenced by the Notes until payment in full so that the rate or amount of interest on account of any indebtedness hereunder does not exceed the maximum amount allowed by such applicable law. If at any time and from time to time (i) the amount of interest payable to any holder of a Note on any date shall be pursuant to this Section 12.5 be limited and (ii) in respect of any subsequent interest computation period the amount of interest otherwise payable to such holder would be less than the amount of interest payable to such holder computed at the maximum lawful rate applicable to such holder, then the amount of interest payable to such holder in respect to such subsequent interest computation period shall continue to be computed at the maximum lawful rate applicable to such holder until the total amount of interest payable to such holder shall equal the total amount of interest which would have been payable to such holder if the total amount of interest had been computed without giving effect to this Section 12.5. As used in this section the term "applicable law" means the laws of the State of New York or the laws of the United States of America, whichever laws allow the greater interest, as such laws now exist or may be changed or amended or come into effect in the future. (b) All proceeds of the sale of the Notes are to be delivered by the Purchasers to the Issuer and used by the Issuer as represented in Section 5.14 of the Note Purchase Agreements. (c) Notwithstanding any term or provision contained in this Indenture, the Notes or any other Credit Document to the contrary the Make-Whole Amount, Yield Protection Amount and/or Breakage Amount shall be charged and payable only to the extent permitted by applicable law. 12.6 Counterparts. This Indenture may be executed, acknowledged and delivered in any number of counterparts, each of such counterparts constituting an original but all together only one Indenture; provided, however, that this Indenture shall not be deemed to be delivered until at least one counterpart shall have been executed by the Issuer and the Trustee and a counterpart so executed shall have been delivered to the Trustee at its principal place of business specified in Section 12.3. -68- 74 12.7 Headings, etc.; Gender. Any headings or captions preceding the text of the several sections hereof are intended solely for convenience of reference and shall not constitute a part of this Indenture nor shall they affect its meaning, construction or effect. Each covenant contained in this Indenture shall be construed (absent an express contrary provision therein) as being independent of each and every other covenant contained herein and compliance with any one covenant shall not (absent such an express contrary provision) be deemed to excuse compliance with any and all other covenants. All references herein or in any other Credit Document to the masculine, feminine or neuter gender shall also include and refer to each other gender not so referred to. 12.8 Amendments. This Indenture may, subject to the provisions of Article 10 hereof, from time to time and at any time, be amended or supplemented by an instrument or instruments in writing executed by the parties hereto. 12.9 Benefits of Agreement Restricted to Parties and Note Holders. Nothing in this Indenture expressed or implied is intended or shall be construed to give to any Person other than the Issuer, the Trustees, the Credit Support Parties and the holders of the Notes, any legal or equitable right, remedy or claim under or in respect of this Indenture or any covenant, condition or provision therein or herein contained; and all such covenants, conditions and provisions are and shall be held to be for the sole and exclusive benefit of the Issuer, the Trustees and the holders of the Notes issued hereunder. 12.10 Waiver of Notice. Whenever in this Indenture the giving of notice by mail or otherwise is required, the giving of such notice may be waived in writing by the Person or Persons entitled to receive such notice. 12.11 Intentionally Omitted. 12.12 Additional Financing Statement Filings. The Issuer hereby authorizes the Trustee to file, without the signature of the Issuer where permitted by law, one or more financing or continuation statements, and amendments thereto, relating to the Collateral. The Issuer further agrees that a carbon, photographic or other reproduction of any Credit Document or any financing statement describing any Collateral is sufficient as a financing statement and may be filed in any jurisdiction the Trustee may deem appropriate. 12.13 Directly or Indirectly. Where any provision in this Indenture refers to action to be taken by any Person, or which such Person is prohibited from taking, such provision shall be applicable whether such action is taken directly or indirectly by such Person, including actions taken by or on behalf of any partnership in which such Person is a general partner. 12.14 Exhibits, Annexes and Sections. All references herein to Exhibits, Annexes or Sections shall be to the Exhibits and Annexes attached to this Indenture and to the Sections hereof unless the context otherwise requires reference to an exhibit, annex to or section of another document. All Exhibits and Annexes attached to this Indenture are made a part hereof for all purposes. The words "this Indenture," "this instrument," "herein," "hereof," "hereby," "hereunder," and words of similar import refer to this Indenture as a whole and not to any particular subdivision unless expressly so limited. The phrases "this section" and "this subsection" and similar phrases refer -69- 75 only to the sections or subsections hereof in which such phrases occur. The word "or" is not exclusive. 12.15 Officers' Certificate and Opinions of Counsel; Statements to be Contained Therein. (a) Upon any request, application or demand by the Issuer to the Trustee to take any action under any of the provisions of this Indenture, the Issuer shall furnish to the Trustee a certificate signed by two of its Responsible Officers stating that all conditions precedent provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent (to which a legal opinion is reasonably appropriate) have been complied with, except that in the case of any such request, application or demand as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular request, application or demand, no additional certificate or opinion need be furnished. (b) Each certificate or opinion provided for in this Indenture and delivered to the Trustee with respect to compliance with a condition or covenant provided for in this Indenture shall include (i) a statement that the person making such certificate or opinion has read such covenant or condition, (ii) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based, (iii) a statement that, in the opinion of such person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with, and (iv) a statement as to whether or not, in the opinion of such person, such condition or covenant has been complied with. (c) Any certificate, statement or opinion of an officer of the Issuer may be based, insofar as it relates to legal matters, upon a certificate or opinion of or representations by counsel, unless such officer has actual knowledge that the certificate or opinion or representations with respect to the matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous. Any certificate, statement or opinion of counsel may be based, insofar as it relates to factual matters, upon information with respect to which is in the possession of the Issuer, upon the certificate, statement or opinion of or representations by a Responsible Officer or Officers of the Issuer, unless such counsel has actual knowledge that the certificate, statement or opinion or representations with respect to the matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous. (d) Any certificate, statement or opinion of an officer of the Issuer or of counsel may be based, insofar as it relates to accounting matters, upon a certificate or opinion of or representations by an accountant or firm of accountants in the employ of the Issuer or an Affiliate thereof, unless such officer or counsel, as the case may be, has actual knowledge that the certificate or opinion or representations with respect to the accounting matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous. -70- 76 (e) Any certificate or opinion of any independent firm of public accountants filed with the Trustee shall contain a statement that such firm is independent. 12.16 Payment of Expenses, Indemnities, etc. The Issuer agrees: (a) to pay all reasonable expenses of the Trustees in the administration (both before and after the execution hereof and including advice of counsel as to the rights and duties of the Trustees and the Note Holders with respect thereto) of, and in connection with the negotiation, investigation, preparation, execution and delivery of, recording or filing of, preservation of rights under, enforcement of, and refinancing, renegotiation or restructuring of, any Credit Document and any proposed amendment, waiver or consent, whether or not adopted, relating thereto (including, without limitation, travel, photocopy, mailing, courier, telephone and other similar expenses of the Trustees, the reasonable fees and disbursements of external counsel and other outside consultants for the Trustees and, in the case of enforcement, the reasonable fees and disbursements of external counsel for the Trustees and any of the Note Holders; provided that to the extent it is feasible and a conflict of interest does not exist in the reasonable judgment of the Series A Note Holders or Series B Note Holders as applicable, the Series A Note Holders shall all use the same counsel and the Series B Note Holders shall all use the same counsel); and promptly reimburse the Trustees and the Note Holders for all amounts expended, advanced or incurred by the Trustees and any of the Note Holders to satisfy any obligation of the Issuer under this Indenture or any other Credit Document, including without limitation, all costs and expenses of foreclosure; (b) TO INDEMNIFY EACH TRUSTEE, EACH NOTE HOLDER AND EACH CREDIT SUPPORT PARTY AND EACH OF THEIR AFFILIATES AND EACH OF THEIR OFFICERS, DIRECTORS, EMPLOYEES, REPRESENTATIVES, AGENTS, ATTORNEYS, ACCOUNTANTS AND EXPERTS ("INDEMNIFIED PARTIES") FROM, HOLD EACH OF THEM HARMLESS AGAINST AND PROMPTLY UPON DEMAND PAY OR REIMBURSE EACH OF THEM FOR, THE INDEMNITY MATTERS WHICH MAY BE INCURRED BY OR ASSERTED AGAINST OR INVOLVE ANY OF THEM (WHETHER OR NOT ANY OF THEM IS DESIGNATED A PARTY THERETO) AS A RESULT OF, ARISING OUT OF OR IN ANY WAY RELATED TO (I) ANY ACTUAL OR PROPOSED USE BY THE ISSUER OF THE PROCEEDS OF ANY OF THE NOTES, (II) THE EXECUTION, DELIVERY AND PERFORMANCE OF THE CREDIT DOCUMENTS, (III) THE OPERATIONS OF THE BUSINESS OF THE ISSUER OR ANY AFFILIATE THEREOF (IV) THE FAILURE OF THE ISSUER OR ANY AFFILIATE THEREOF TO COMPLY WITH THE TERMS OF ANY CREDIT DOCUMENT INCLUDING, WITHOUT LIMITATION, THE PERFORMANCE AGREEMENT OR THIS INDENTURE, OR WITH ANY GOVERNMENTAL REQUIREMENT, (V) ANY INACCURACY OF ANY REPRESENTATION OR ANY BREACH OF ANY WARRANTY OR COVENANT OF THE ISSUER OR ANY AFFILIATE THEREOF SET FORTH IN ANY OF THE CREDIT DOCUMENTS, (VI) ANY ASSERTION THAT THE TRUSTEE OR THE NOTE HOLDERS WERE NOT ENTITLED TO RECEIVE THE PROCEEDS RECEIVED PURSUANT TO THE CREDIT DOCUMENTS OR (VI) ANY OTHER ASPECT OF THE CREDIT DOCUMENTS, INCLUDING, WITHOUT LIMITATION, THE REASONABLE FEES AND DISBURSEMENTS OF COUNSEL AND ALL OTHER EXPENSES INCURRED IN CONNECTION WITH INVESTIGATING, DEFENDING OR PREPARING TO DEFEND ANY SUCH ACTION, SUIT, PROCEEDING (INCLUDING ANY INVESTIGATIONS, LITIGATION OR INQUIRIES) OR CLAIM AND INCLUDING ALL INDEMNITY MATTERS ARISING BY REASON OF -71- 77 THE ORDINARY NEGLIGENCE OF ANY INDEMNIFIED PARTY, BUT EXCLUDING ALL INDEMNITY MATTERS ARISING SOLELY BY REASON OF CLAIMS BETWEEN THE NOTE HOLDERS OR A NOTE HOLDER AND A NOTE HOLDER'S SHAREHOLDER OR SOLELY BY REASON OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT ON THE PART OF THE INDEMNIFIED PARTY; AND (c) TO INDEMNIFY AND HOLD HARMLESS THE INDEMNIFIED PARTIES FROM AND AGAINST ANY AND ALL LOSSES, CLAIMS, COST RECOVERY ACTIONS, ADMINISTRATIVE ORDERS OR PROCEEDINGS, DAMAGES AND LIABILITIES TO WHICH ANY SUCH PERSON MAY BECOME SUBJECT IN CONNECTION WITH THIS INDENTURE, THE NOTE PURCHASE AGREEMENTS OR ANY OTHER CREDIT DOCUMENT (I) UNDER ANY ENVIRONMENTAL LAW, (II) AS A RESULT OF THE BREACH OR NON-COMPLIANCE BY THE ISSUER OR ANY AFFILIATE THEREOF WITH ANY ENVIRONMENTAL LAW APPLICABLE TO THE ISSUER OR ANY AFFILIATE THEREOF, (III) DUE TO PAST OWNERSHIP BY THE ISSUER OR ANY AFFILIATE THEREOF OF ANY OF THEIR PROPERTIES OR PAST ACTIVITY ON ANY OF THEIR PROPERTIES WHICH, THOUGH LAWFUL AND FULLY PERMISSIBLE AT THE TIME, COULD RESULT IN PRESENT OR FUTURE LIABILITY, (IV) THE PRESENCE, USE, RELEASE, DISCHARGE, STORAGE, TREATMENT OR DISPOSAL OF HAZARDOUS SUBSTANCES OR OIL ON OR AT ANY OF THE PROPERTIES NOW OR FORMERLY OWNED OR OPERATED BY THE ISSUER OR ANY AFFILIATE THEREOF, OR (V) ANY OTHER ENVIRONMENTAL, HEALTH OR SAFETY CONDITION IN CONNECTION WITH THE CREDIT DOCUMENTS, PROVIDED, HOWEVER, NO INDEMNITY SHALL BE AFFORDED UNDER THIS SECTION 12.16 IN RESPECT OF ANY PROPERTY FOR ANY OCCURRENCE ARISING SOLELY FROM THE ACTS OR OMISSIONS (IN EACH CASE CONSTITUTING GROSS NEGLIGENCE OR WILFUL MISCONDUCT) OF A TRUSTEE OR ANY NOTE HOLDER ARISING DURING THE PERIOD AFTER WHICH SUCH PERSON, ITS SUCCESSORS OR ASSIGNS SHALL HAVE OBTAINED POSSESSION OF SUCH PROPERTY (WHETHER BY FORECLOSURE OR DEED IN LIEU OF FORECLOSURE, AS MORTGAGEE-IN-POSSESSION OR OTHERWISE). (d) So long as no Indenture Default or Indenture Event of Default has occurred and is continuing, no Indemnified Party may settle any claim to be indemnified without the consent of the indemnitor, such consent not to be unreasonably withheld; provided, that the indemnitor may not reasonably withhold consent to any settlement that an Indemnified Party proposes, if the indemnitor does not have the financial ability to pay all its obligations outstanding and asserted against the indemnitor at that time, including the maximum potential claims against the Indemnified Party to be indemnified pursuant to this Section 12.16. (e) In the case of any indemnification hereunder, an Indemnified Party shall give notice to the Issuer of any claim or demand being made against it; provided, however, that the failure to give such notice shall not release the Issuer from any of its obligations, except to the extent that failure to give notice of any action, suit or proceeding against such Indemnified Party shall prevent the Issuer's ability to contest such claim or demand. Subject to the provisions of the following paragraph, the Issuer shall at its sole cost and expense be entitled to control, and shall assume full responsibility for, the defense of such claim or liability; provided that the Issuer shall keep the Indemnified Party which is the subject of such proceeding fully apprised of the status of such proceeding and shall provide such Indemnified -72- 78 Party with all information with respect to such proceeding as such Indemnified Person shall reasonably request. Notwithstanding any of the foregoing to the contrary, the Issuer shall not be entitled to control and assume responsibility for the defense of such claim or liability if (i) an Indenture Event of Default shall have occurred and be continuing, (ii) such proceeding will involve any possibility of the sale, forfeiture or loss of, or the creation of any Lien (other than an Excepted Lien or a Lien which is adequately bonded to the satisfaction of such Indemnified Party) on, the Trust Estate or any part thereof, (iii) in the good faith opinion of such Indemnified Party, there exists an actual or potential conflict of interest such that it is advisable for such Indemnified Person to retain control of such proceeding or (iv) such claim or liability involves the possibility of criminal sanctions or liability to such Indemnified Party. In the circumstances described in clauses (i) - (iv), the Indemnified Party shall be entitled to control and assume responsibility for the defense of such claim or liability at the expense of the Issuer. In addition, any Indemnified Party may participate in any proceeding controlled by the Issuer, at its own expense in respect of any such proceeding as to which the Issuer shall have acknowledged in writing its obligation to indemnify the Indemnified Party, and at the expense of the Issuer in respect of any such proceeding as to which the Issuer shall not have so acknowledged its obligation to the Indemnified Party, the Issuer may in any event participate in all such proceedings at its own cost. Nothing contained herein shall be deemed to require an Indemnified Party to contest any claim or demand or to assume responsibility for or control of any judicial proceeding with respect thereto. (f) THE FOREGOING INDEMNITIES SHALL EXTEND TO THE INDEMNIFIED PARTIES NOTWITHSTANDING THE SOLE OR CONCURRENT NEGLIGENCE OF EVERY KIND OR CHARACTER WHATSOEVER, WHETHER ACTIVE OR PASSIVE, WHETHER AN AFFIRMATIVE ACT OR AN OMISSION, INCLUDING WITHOUT LIMITATION, ALL TYPES OF NEGLIGENT CONDUCT IDENTIFIED IN THE RESTATEMENT (SECOND) OF TORTS OF ONE OR MORE OF THE INDEMNIFIED PARTIES OR BY REASON OF STRICT LIABILITY IMPOSED WITHOUT FAULT ON ANY ONE OR MORE OF THE INDEMNIFIED PARTIES. TO THE EXTENT THAT AN INDEMNIFIED PARTY IS FOUND TO HAVE COMMITTED AN ACT OF GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, THIS CONTRACTUAL OBLIGATION OF INDEMNIFICATION AS TO SUCH INDEMNIFIED PARTY SHALL CONTINUE BUT SHALL ONLY EXTEND TO THE PORTION OF THE CLAIM THAT IS DEEMED TO HAVE OCCURRED BY REASON OF EVENTS OTHER THAN THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE INDEMNIFIED PARTY. (g) The Issuer's obligations under this Section 12.16 shall survive any termination of this Indenture or any other Credit Document and the payment of the Notes and shall continue thereafter in full force and effect. (h) The Issuer shall pay any amounts due under this Section 12.16 within thirty (30) days of the receipt by the Issuer of notice of the amount due. (i) If any amounts due by the Issuer to the Trustees or any Note Holder under this Section 12.16 or any other provision of this Agreement or any other Credit Document is not paid on the date due, such amounts shall bear interest and Issuer agrees to pay such amounts with interest at the Default Rate from the due date of such payable until paid. -73- 79 12.17 NO ORAL AGREEMENTS. THE CREDIT DOCUMENTS EMBODY THE ENTIRE AGREEMENT AND UNDERSTANDING BETWEEN THE PARTIES AND SUPERSEDE ALL OTHER AGREEMENTS AND UNDERSTANDINGS BETWEEN SUCH PARTIES RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF. THE CREDIT DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPO RANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. 12.18 EXCULPATION PROVISIONS. EACH OF THE PARTIES HERETO SPECIFICALLY AGREES THAT IT HAS A DUTY TO READ THIS INDENTURE AND THE OTHER CREDIT DOCUMENTS AND AGREES THAT IT IS CHARGED WITH NOTICE AND KNOWLEDGE OF THE TERMS OF THIS INDENTURE AND THE OTHER CREDIT DOCUMENTS; THAT IT HAS IN FACT READ THIS INDENTURE AND IS FULLY INFORMED AND HAS FULL NOTICE AND KNOWLEDGE OF THE TERMS, CONDITIONS AND EFFECTS OF THIS INDENTURE; THAT IT HAS BEEN REPRESENTED BY INDEPENDENT LEGAL COUNSEL OF ITS CHOICE THROUGHOUT THE NEGOTIATIONS PRECEDING ITS EXECUTION OF THIS INDENTURE AND THE OTHER CREDIT DOCUMENTS; AND HAS RECEIVED THE ADVICE OF ITS ATTORNEY IN ENTERING INTO THIS INDENTURE AND THE OTHER CREDIT DOCUMENTS; AND THAT IT RECOGNIZES THAT CERTAIN OF THE TERMS OF THIS INDENTURE AND THE OTHER CREDIT DOCUMENTS RESULT IN ONE PARTY ASSUMING THE LIABILITY INHERENT IN SOME ASPECTS OF THE TRANSACTION AND RELIEVING THE OTHER PARTY OF ITS RESPONSIBILITY FOR SUCH LIABILITY. EACH PARTY HERETO AGREES AND COVENANTS THAT IT WILL NOT CONTEST THE VALIDITY OR ENFORCEABILITY OF ANY EXCULPATORY PROVISION OF THIS INDENTURE AND THE OTHER CREDIT DOCUMENTS ON THE BASIS THAT THE PARTY HAD NO NOTICE OR KNOWLEDGE OF SUCH PROVISION OR THAT THE PROVISION IS NOT "CONSPICUOUS." 12.19 Trustees Not Engaging in a Trade or Business. The trusts created hereunder have been organized for the purposes described herein with no objective by the Trustees to engage in the conduct of a trade or business. The Trustees shall report the trusts for federal income tax purposes as a "grantor trust" subject to the provisions of Subchapter J, subpart E of the Code unless otherwise required. [Signature Pages Start Next Page] -74- 80 IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed by their respective officers thereunto duly authorized, and their respective corporate seals to be hereunder affixed and attested, all as of the day and year first written above. Witnesses to all Signatures - ------------------------------------ - ------------------------------------ ATTEST: NOBLE DRILLING (PAUL ROMANO) INC. By /s/ Byron L. Welliver - ------------------------------------ ------------------------------------ Name: Name: Byron L. Welliver Title: Title: Senior Vice President (seal) ATTEST: CHASE BANK OF TEXAS, NATIONAL ASSOCIATION By /s/ Mauri J. Cowen - ------------------------------------ ------------------------------------ Name: Name: Mauri J. Cowen Title: Title: Senior Vice President and Trust Officer (seal) -75- 81 ANNEX A-1 NOBLE DRILLING (PAUL ROMANO) INC. No. AR-_____ 6.33% SERIES A SENIOR SECURED NOTE DUE DECEMBER 20, 2003 $ ------------------ ------------------ THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. THE HOLDER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE ISSUER IS NOT REQUIRED TO REGISTER THIS SECURITY UNDER THE SECURITIES ACT. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) IN ACCORDANCE WITH AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, OR (2) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION. NOBLE DRILLING (PAUL ROMANO) INC., a Delaware corporation (the "Company"), for value received, hereby promises to pay to _________________________ or registered assigns the principal sum of _________________________ Dollars ($__________) on December 20, 2003, and to pay interest (computed on the basis of a 360-day year of twelve 30-day months) on the unpaid principal balance thereof from the date of this Note at the rate of 6.33% per annum, monthly on the twentieth (20th) day of each month of each year, commencing on December 20, 1998, until the principal amount hereof shall become due and payable and to pay on demand interest on any overdue principal, including any overdue prepayment of principal, and (to the extent permitted by applicable law) on any applicable Make-Whole Amount or overdue installment of interest, at a rate of interest per annum equal to the Default Rate; provided that interest on this Note shall in no event exceed the maximum rate permitted by applicable law, and this Note is expressly made subject to Section 12.5 of the Indenture. Payments of principal, applicable Make-Whole Amount, if any, or other amounts due hereon, and interest shall be made in any coin or currency of the United States of America as at the time of payment is legal tender for the payment of public and private debts in installments in such manner and at such place as provided in Section 4.6 of the Indenture. This Note is one of an issue of Series A Senior Secured Notes of the Company issued in an aggregate original principal amount limited to $95,412,500 under the Trust Indenture and Security Agreement of the Company (said indenture, together with all agreements and indentures supplemental thereto being herein called the "Indenture") dated as of November 24, 1998, with Chase Bank of Texas, National Association as Trustee and is entitled to the benefits thereof. Reference is hereby made to the Indenture for a description of certain rights, obligations and duties of the parties thereto and for the meanings assigned to terms used and not defined in this Note. As provided 82 in the Indenture, this Note is subject to optional prepayment. The Company agrees to make required prepayments on account of this Note in accordance with the prepayment schedule attached to this Note and in accordance with the provisions of the Indenture. This Note is secured as set forth in the Indenture and in the separate Note Purchase Agreements dated as of September 24, 1998, between the Company and each of the Purchasers (listed on Schedule A attached thereto). This Note is a registered Note and is transferable only by surrender thereof at the agency of the Company maintained pursuant to Section 7.9 of the Indenture, duly endorsed or accompanied by a written instrument of transfer duly executed by the registered holder of this Note or its attorney duly authorized in writing. Following any partial prepayment of this Note, this Note shall, prior to any transfer hereof, be (a) made available to the Trustee for notation on the prepayment schedule attached hereto of the amount of principal so prepaid or, (b) at the option of the holder hereof and in lieu of the alternative in the foregoing clause (a), held by the holder who shall make a notation of such schedule of the amount of principal so prepaid. In case the entire principal amount on this Note is prepaid or paid, this Note shall, upon written request therefor by the Company, be surrendered promptly at the agency of the Company maintained pursuant to Section 7.9 of the Indenture, for cancellation. In any case where the date of maturity of any interest, applicable Make-Whole amount, or other amount due hereon, or principal owed with respect to this Note or the date fixed for any prepayment (in whole or in part) of this Note will not be a Business Day, then payment of such interest, applicable Make-Whole Amount, or other amount due hereon, or principal need not be made on such date but may be made on the next succeeding Business Day with the same force and effect as if made on the date of maturity or the date fixed for such prepayment. Under certain circumstances, as specified in the Indenture, the principal of this Note (together with interest accrued thereon and any applicable Make-Whole Amount) may be declared due and payable in the manner and with the effect provided in the Indenture. This Note and the Indenture are governed by, and shall be construed and enforced in accordance with, the law of the State of New York applicable to contracts made and to be performed entirely within such state and applicable federal law. Dated: ATTEST: NOBLE DRILLING (PAUL ROMANO) INC. By - ------------------------------------ ------------------------------------ Secretary Name: ------------------------------- Title: ------------------------------ [CORPORATE SEAL] -2- 83 This is one of the Series A Notes described in the Indenture referred to herein. CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, as Trustee By ---------------------------------------- Name: ----------------------------------- Its: ------------------------------------ -3- 84 PREPAYMENT SCHEDULE TO NOTE NO. AR-_______________ (SERIES A) In addition to paying the entire outstanding principal amount of, and the interest due on, this Note on _______________, 20__, the maturity date hereof, the Company agrees to prepay, and there shall become due and payable, principal amounts of this Note on the last day of each month, in each year, beginning on ___________, 1998, as follows:
Date Due Amount Due - -------- ----------
-4- 85 ASSIGNMENT FORM To assign this Note, fill in the form below: (I) or (we) assign and transfer this Note to - -------------------------------------------------------------------------------- (Insert assignee's soc. sec. or tax I.D. no.) - -------------------------------------------------------------------------------- (Print or type assignee's name, address and zip code) and irrevocably appoint -------------------------------------------------------- to transfer this Note on the books of the Company. The agent may substitute another to act for him. Date: Your Signature: -------------------------------------------- (Sign exactly as your name appears on the face of this Note) Signature Guarantee: --------------------------------------- -5- 86 ANNEX A-2 NOBLE DRILLING (PAUL ROMANO) INC. No. BR-_____ 6.09% SERIES B SENIOR SECURED NOTE DUE DECEMBER 20, 2003 $ ---------------- ----------------------- THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. THE HOLDER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE ISSUER IS NOT REQUIRED TO REGISTER THIS SECURITY UNDER THE SECURITIES ACT. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) IN ACCORDANCE WITH AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, OR (2) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION. NOBLE DRILLING (PAUL ROMANO) INC., a Delaware corporation (the "Company"), for value received, hereby promises to pay to _________________________ or registered assigns the principal sum of _________________________ Dollars ($__________) on December 20, 2003, and to pay interest (computed on the basis of a 360-day year of twelve 30-day months) on the unpaid principal balance thereof from the date of this Note at the rate of 6.09% per annum, monthly on the twentieth (20th) day of each month of each year, commencing on December 20, 1998, until the principal amount hereof shall become due and payable and to pay on demand interest on any overdue principal, including any overdue prepayment of principal, and (to the extent permitted by applicable law) on any applicable Make-Whole Amount or overdue installment of interest, at a rate of interest per annum equal to the Default Rate; provided that interest on this Note shall in no event exceed the maximum rate permitted by applicable law, and this Note is expressly made subject to 12.5 of the Indenture. Payments of principal, applicable Make-Whole Amount, if any, or other amounts due hereon, and interest shall be made in any coin or currency of the United States of America as at the time of payment is legal tender for the payment of public and private debts in such manner and at such place as provided in Section 4.6 of the Indenture. This Note is one of an issue of Series B Senior Secured Notes of the Company issued in an aggregate original principal amount limited to $16,837,500 under the Trust Indenture and Security Agreement of the Company (said indenture, together with all agreements and indentures supplemental thereto being herein called the "Indenture") dated as of November 24, 1998, with Chase Bank of Texas, National Association as Trustee and is entitled to the benefits thereof. Reference is hereby -6- 87 made to the Indenture for a description of certain rights, obligations and duties of the parties thereto and for the meanings assigned to terms used and not defined in this Note. As provided in the Indenture, this Note is subject to optional prepayment. This Note is secured as set forth in the Indenture and in the separate Note Purchase Agreements dated as of September 24, 1998, between the Company and each of the Purchasers (listed on Schedule A attached thereto). This Note is a registered Note and is transferable only by surrender thereof at the agency of the Company maintained pursuant to Section 7.9 of the Indenture, duly endorsed or accompanied by a written instrument of transfer duly executed by the registered holder of this Note or its attorney duly authorized in writing. Following any partial prepayment of this Note, this Note shall, prior to any transfer hereof, be (a) made available to the Trustee for notation on the prepayment schedule attached hereto of the amount of principal so prepaid or, (b) at the option of the holder hereof and in lieu of the alternative in the foregoing clause (a), held by the holder who shall make a notation of such schedule of the amount of principal so prepaid. In case the entire principal amount on this Note is prepaid or paid, this Note shall, upon written request therefor by the Company, be surrendered promptly at the agency of the Company maintained pursuant to Section 7.9 of the Indenture, for cancellation. In any case where the date of maturity of any interest, applicable Make-Whole Amount, or other amounts due hereon, or principal owed with respect to this Note or the date fixed for any prepayment (in whole or in part) of this Note will not be a Business Day, then payment of such interest, applicable Make-Whole Amount, or other amounts due hereon, or principal need not be made on such date but may be made on the next succeeding Business Day with the same force and effect as if made on the date of maturity or the date fixed for such prepayment. Under certain circumstances, as specified in the Indenture, the principal of this Note (together with interest accrued thereon and any applicable Make-Whole Amount) may be declared due and payable in the manner and with the effect provided in the Indenture. This Note and the Indenture are governed by, and shall be construed and enforced in accordance with, the law of the State of New York applicable to contracts made and to be performed entirely within such state and applicable federal law. Dated: ATTEST: NOBLE DRILLING (PAUL ROMANO) INC. By - ------------------------------------ ------------------------------------ Secretary Name: ------------------------------- Title: ------------------------------ [CORPORATE SEAL] -7- 88 This is one of the Series B Notes described in the Indenture referred to herein. CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, as Trustee By ----------------------------------------- Name: ------------------------------------ Its: ------------------------------------- -8- 89 PAYMENTS OF PRINCIPAL
Date of Principal Amount Payment Amount Paid Remaining Unpaid Authorized Signature - ---------------------- -------------------------- ------------------------------ -----------------------------------
-9- 90 ASSIGNMENT FORM To assign this Note, fill in the form below: (I) or (we) assign and transfer this Note to - -------------------------------------------------------------------------------- (Insert assignee's soc. sec. or tax I.D. no.) - -------------------------------------------------------------------------------- (Print or type assignee's name, address and zip code) and irrevocably appoint -------------------------------------------------------- to transfer this Note on the books of the Company. The agent may substitute another to act for him. Date: Your Signature: --------------------------------------------- (Sign exactly as your name appears on the face of this Note) Signature Guarantee: ---------------------------------------- -10- EX-4.19 3 FIRST NAVAL MORTGAGE DATED 11/24/98 1 ================================================================================ EXHIBIT 4.19 FIRST NAVAL MORTGAGE Made by Noble Drilling (Paul Romano) Inc. In Favor of Chase Bank of Texas, National Association, as Indenture Trustee on Noble Paul Romano Dated as of November 24, 1998 ================================================================================ 2 First Naval Mortgage Mortgagor: Noble Drilling (Paul Romano) Inc. 10370 Richmond Avenue Suite 581 Houston, Texas 77042 Mortgagor's Interest in the Vessel: 100% Mortgagee: Chase Bank of Texas, National Association 600 Travis, Suite 1150 11th Floor Houston, Texas 77002 Amount of Mortgage: $112,250,000.00 Maturity Date: Five years from the "Closing Date" (as defined in the Trust Indenture refined to below) THIS FIRST NAVAL MORTGAGE dated as of the 24th day of November, 1998 (as amended, supplemented or otherwise modified from time to time, the "Mortgage") is made and given by Noble Drilling (Paul Romano) Inc., a Delaware corporation (the "Mortgagor"), whose address is set forth above, to Chase Bank of Texas, National Association, as Indenture Trustee for any and all future holders of the Notes (as such term is hereinafter defined), whose address is set forth above (hereinafter referred to, together with its successors and assigns, as the "Mortgagee"). RECITALS A. Of even date herewith, Mortgagor and Chase Bank of Texas, National Association have entered into that certain Trust Indenture and Security Agreement (as the same may be amended, supplemented, restated or otherwise modified from time to time, the "Trust Indenture"). Pursuant to the terms and conditions contained in the Trust Indenture, Mortgagor entered into those certain Note Purchase Agreements dated September 24, 1998 (the "Note Purchase Agreements") wherein certain lenders (the "Lenders") have agreed to make a term loan to Mortgagor in the aggregate principal amount of $112,250,000.00, as evidenced by those certain Series A Senior Secured Notes in the original principal amount of $95,412,500 and those certain Series B Senior Secured Notes in the original principal amount of $16,837,500 (the promissory notes referred to above, as the same may be amended, supplemented, restated or otherwise modified from time to time, being herein collectively referred to as the "Notes"). The Series A Senior Secured Notes are payable in installments of interest at a rate per 3 annum (based on a 360 day year of twelve thirty day months) determined in accordance with the following formula: 6.33% per annum plus an additional 3 basis points to be added on the 16th day of each calendar month hereafter if the Closing has failed to occur prior thereto; and payments of principal in accordance with the provisions of an amortization schedule attached attached to each of the Notes, and the Series B Senior Secured Notes provide for the monthly payment of interest at a rate per annum (based on a 360 day year of twelve thirty day months) determined in accordance with the following formula: the rate reported at 2:00 p.m. United States eastern time on the Business Day immediately before the Closing Date (as defined in the Trust Indenture) on the PX1 government page of the Bloomberg Service as the yield to maturity for the five year on-the-run U.S. Treasury security, plus 164 basis points; with principal payable at maturity. Copies of the Trust Indenture, Note Purchase Agreements and the Notes are on file at the offices of Mortgagee at the address above, where they may be consulted for the full text thereof. The Trust Indenture, Note Purchase Agreements and the Notes, by reference, are incorporated herein. B. Mortgagee has requested pursuant to the terms of the Trust Indenture that Mortgagor execute and deliver this Mortgage, and Mortgagor has agreed to enter into this Mortgage on the vessel "Noble Paul Romano", duly documented in the name of Mortgagor under the laws and flag of the Republic of Panama Patente No. 27264-HT, bearing international call letters HP-9320, of 13,665 gross tonnage, 4,099 net tonnage, 93.68 meters in length, 100.05 meters in width, 39.62 meters in depth, and title registered at Filing Card N-21215, Roll 61088, Frame 0012 on July 24, 1998 (together with the Equipment, as defined below, the "Vessel"). C. Now, therefore, in consideration of the premises and of other valuable consideration, receipt of which is hereby acknowledged, Mortgagor hereby agrees as follows: ARTICLE I GRANTING CLAUSE AND DEFINITIONS Section 1.1 Granting Clause. To secure the full and timely payment of and the full and timely performance and discharge of the Obligations (as hereinafter defined), Mortgagor hereby Mortgages and executes and constitutes a First Naval Mortgage in accordance with the provisions of Chapter V Title IV of Book Second of the Code of Commerce and other pertinent legislation of the Republic of Panama in favor of Mortgagee, its successors and assigns, upon the whole of the Vessel, together with its boilers, engines, machinery, masts, spars, sails, riggings, boats, anchors, cables, chains, tackle, tools, pumps and pumping equipment, apparel, furniture, fittings and equipment, spare parts, capstans, outfit, tanks and tank batteries, fixtures, valves, fittings, draw works, machinery and parts, meters, apparatus, equipment, appliances, tools, implements, cables, wires, derricks, towers, casing, tubing and rods, and all other appurtenances thereunto appertaining or belonging, whether now owned or hereafter acquired, whether or not on board the Vessel, and all additions, improvements, renewals and replacements hereafter made in or to the Vessel or any part thereof, or in or to any said appurtenances (the "Equipment"). TO HAVE AND TO HOLD all and singular the above mortgaged and described property unto Mortgagee, its successors and assigns, forever upon the terms herein set forth; PROVIDED, HOWEVER, and these presents are on the condition that if the Obligations are paid and performed in accordance with the terms thereof and this Mortgage, then these -2- 4 presents and the estates and rights hereunder shall cease, terminate and be void, otherwise to be and remain in full force and effect. Section 1.2 Definitions. As used in this Mortgage, the terms "Lenders", "Mortgage", "Mortgagor", "Mortgagee", "Note Purchase Agreements", "Notes", "Trust Indenture", and "Vessel" shall have the meanings assigned to them in the recitals hereto. Any capitalized term used in this Mortgage and not defined herein shall have the meaning assigned to such term in the Trust Indenture. As used herein, the following terms shall have the following meanings: "Dollars" or "$" means the lawful currency of the United States of America. "Equipment" shall have the meaning set forth in Section 1.1 hereof. "Event of Loss" shall mean any one of the following events: (i) actual total loss or destruction of the Vessel or any accident, occurrence or event resulting in a constructive total loss or an agreed or compromised total loss of the Vessel; or (ii) substantial damage to the Vessel, the repair of which is uneconomical as determined in good faith by the Mortgagor, including, but not limited to, any event pursuant to which insurance proceeds are available which are not applied to repair the Vessel or any other event resulting for any reason whatsoever in the Vessel being permanently rendered unfit for normal use; or (iii) the condemnation, confiscation, requisition, seizure, detention, forfeiture, purchase or other taking of title to or use of the Vessel (unless in the case of a requisition, seizure, detention, or forfeiture, such action is revoked within thirty (30) days or such shorter period within which SDDI may terminate the Shell Contract as an event of force majeure) except the requisition of the use of the Vessel by any Governmental Authority of the United States or any state thereof on a basis not involving requisition of title to or seizure or forfeiture of the Vessel. "Event of Default" shall have the meaning set forth in Section 3.1 hereof. "Notice of Entitlement to Terminate" shall have the meaning set forth in the Performance Agreement. "Obligations" shall mean (i) the payment when due of all indebtedness evidenced by the Notes in the aggregate principal sum of $112,250,000.00 USD, interest (including post-petition interest) as set forth in the Notes and the Trust Indenture, and premiums (including Make-Whole Amount), penalties and late charges thereon, (ii) all other indebtedness and other sums (including, without limitation, all expenses, attorneys' fees, other fees, indemnifications, reimbursements, damages, other monetary liabilities, and other charges) that may and shall become due hereunder or under the Notes, the Trust Indenture or the other Credit Documents, and (iii) any and all renewals, modifications, amendments, extensions for any period, supplements or restatements of any of the foregoing. "Master's Wages" shall have the meaning set forth in Section 2.6 hereof. -3- 5 ARTICLE II REPRESENTATIONS, WARRANTIES AND COVENANTS In order to induce Mortgagee to accept this Mortgage as collateral security for the Obligations, Mortgagor represents and warrants to Mortgagee and covenants and agrees with Mortgagee that: Section 2.1 Legal Existence; Citizenship and Authorization. Mortgagor is a corporation duly organized and validly existing under the laws of the state of Delaware; and except as permitted by the Trust Indenture, shall maintain its corporate existence during the term of this Mortgage; and is duly qualified to engage in the trade in which the Vessel operates. Mortgagor is duly authorized to mortgage the Vessel, and all action necessary and required by law for the execution and delivery of this Mortgage has been duly and effectively taken by it, and this Mortgage is the valid and enforceable obligation of Mortgagor. All necessary consents and approvals of any Governmental Authority or any other entity to the entering into and performance of this Mortgage have been duly obtained or given and the entering into and performance of this Mortgage does not and will not contravene the terms of or constitute a default under (with or without giving of notice or lapse of time or both) any material agreement, instrument or document to which Mortgagor is a party or by which it or its properties are bound or affected after giving effect to the use of the proceeds of the Notes. Section 2.2 Ownership of Vessel; Warranty and Defense of Title. Mortgagor is the sole owner of the whole of the Vessel and is lawfully possessed of the whole of the Vessel, free from any Lien whatsoever other than the Lien of this Mortgage, and the Liens permitted by Section 2.6 hereof not in excess of $5,000,000, and Mortgagor will warrant and defend the title to and possession of the Vessel and every part thereof for the benefit of Mortgagee against the claims and demands of all other Persons whomsoever, subject to the Liens and other matters permitted by the Trust Indenture or this Mortgage. Section 2.3 Compliance with Laws. (a) Documentation. The Vessel is, and during the term of this Mortgage shall continue to be, duly and lawfully registered under the laws and flag of the Republic of Panama, and Mortgagor will comply with and satisfy all of the provisions of the laws of the Republic of Panama in order that the Vessel shall continue to be documented pursuant to the laws of the Republic of Panama as a vessel of the Republic of Panama under the Republic of Panama flag. (b) Laws, Treaties and Conventions. The Vessel shall, and Mortgagor covenants that it will in the operation of the Vessel, at all times comply in all material respects with all applicable laws, treaties and conventions and rules and regulations issued thereunder, and shall have on board as and when required thereby valid certificates showing compliance therewith, except when (i) the use or title of the Vessel has been taken, requisitioned or chartered by any Governmental Authority, (ii) there has been an Event of Loss, or (iii) there has been any other -4- 6 partial loss or damage with respect to the Vessel and Mortgagor shall be in compliance with its obligations under Sections 4.2(c) and 7.3(c) of the Trust Indenture. Section 2.4 Operation of Vessel. Mortgagor will not (except during any period when the use or title to the Vessel has been taken, requisitioned or chartered by any Governmental Authority) cause or permit the Vessel to be operated in any manner contrary to applicable law or regulation, will not abandon the Vessel in any non-United States port (unless an Event of Loss has occurred as to the Vessel or the safety or welfare of Mortgagor's employees on the Vessel is endangered), will not engage in any unlawful trade, violate any law or carry any cargo that will expose the Vessel to penalty, forfeiture or capture and will not do, or suffer or permit to be done, anything which can or may injuriously affect the documentation of the Vessel under the existing laws and regulations of the Republic of Panama or the United States of America. Without limiting the generality of the foregoing, the Mortgagor shall not charter the Vessel to, or permit the Vessel to serve under any contract with, a person included within the definition of (i) "national" of a "designated foreign country," or "specially designated national" of a "designated foreign county," in the Foreign Assets Control Regulations or the Cuban Assets Control Regulations of the United States Treasury Department, 31 C.F.R. Parts 500 and 515, in each case as amended, (ii) "Government of Libya," "entity of the Government of Libya" or "Libyan entity" in the Libyan Sanctions Regulations of the United States Treasury Department, 31 C.F.R. Part 550, as amended, or (iii) "Government of Iraq," "entity of the Government of Iraq" or "Iraqi Government entity" in the Iraqi Sanctions Regulations, 31 C.F.R. Part 575, as amended, all within the meaning of said Regulations or of any regulations, interpretations or rulings issued thereunder, or engage in any transaction that violates any provision of said Regulations or that violates any provision of the Iranian Transactions Regulations, 31 C.F.R. Part 560, as amended, the Transaction Control Regulations, 31 C.F.R. Part 505, as amended, the Foreign Assets Control Regulations, 31 C.F.R. Part 500, as amended, or Executive Orders 12810 and 12831, or call at a Cuban port to load or discharge cargo or to effect repairs on the Vessel. Furthermore, the Mortgagor shall keep the Vessel at all times in United States territorial waters in the Gulf of Mexico or in the Gulf of Mexico on or above the outer Continental Shelf of the United States and as set forth in Section 1 of the Drilling Order. Section 2.5 Claims, Taxes, Fees. etc. Mortgagor will pay and discharge or cause to be paid and discharged prior to delinquency, all claims against, and fees, taxes, assessments, governmental charges, fines and penalties imposed on, the Vessel, its cargoes or any income therefrom; provided, that nothing in this Section 2.5 shall require Mortgagor to pay any such claim, fee, tax, assessment, governmental charge, fine or penalty so long as the validity thereof shall be contested by it in good faith and by appropriate proceedings, and, provided, further, that such contest shall not subject the Vessel, or any part thereof, to arrest, attachment, forfeiture or loss or subject the Mortgagee or any Lender to the risk of any civil or criminal liability. Section 2.6 Liens. Neither Mortgagor, any charterer or subcharterer, the master of the Vessel nor any other Person has or shall have any right, power or authority to create, incur or permit to be placed or imposed or continued upon the Vessel and Mortgagor shall not permit to exist on the Vessel any Lien whatsoever other than the Lien of this Mortgage and the following: -5- 7 (i) Liens for wages of the crew (including wages of a master to the extent provided by law, "Master's Wages"), general average and salvage (including contract salvage) which shall not have been due and payable for forty-five (45) days after termination of a voyage or which shall then be contested by Mortgagor in good faith and by appropriate proceedings; provided that such contest shall not subject the Vessel to arrest, attachment, forfeiture or loss or subject the Mortgagee or any Lender to the risk of any civil or criminal liability; (ii) Liens for wages of the crew (including Master's Wages) and salvage (including contract salvage) which are either unclaimed or covered by insurance; (iii) Liens incident to current operations of Mortgagor in the ordinary course of business (except for wages of the crew including Master's Wages and salvage) or liens covered by insurance and any deductible applicable thereto; (iv) Liens for repairs the payment for which is either not overdue or is being contested by Mortgagor in good faith and by appropriate proceedings; provided that such contest shall not subject the Vessel to arrest, attachment, forfeiture or loss or subject the Mortgagee or any Lender to risk of any civil or criminal liability; (v) Liens arising by reason of an actual or constructive total loss or an agreed or compromised total loss of the Vessel; (vi) Liens permitted by the Trust Indenture; provided that the Liens stated to be permitted by the foregoing subparagraphs (i) through (iv) shall, unless they constitute a Lien for damage arising out of tort, for wages of a stevedore when employed directly by Mortgagor, master, ship's husband, or agent, for wages of the crew (including Master's Wages), for general average, or for salvage (including contract salvage), be permitted only to the extent such Liens are either accrued but not yet due or are subordinate to the Lien of this Mortgage. Nothing contained in this Section 2.6 constitutes a waiver by Mortgagee of Mortgagee's preferred status. If any such Lien is placed on the Vessel which is not subordinate to the Lien of this Mortgage, Mortgagor will promptly after becoming aware of such Lien notify Mortgagee. Section 2.7 Notice of Mortgage. Mortgagor will at all times carry on board the Vessel (with the ship's papers) a certified copy of this Mortgage and any amendments and supplements hereto and any assignments hereof, and will exhibit or cause to be exhibited the same to any Person having business with the Vessel which might give rise to a Lien upon the Vessel or to the sale, conveyance, mortgage or lease thereof and, on demand, to any representative of Mortgagee. Mortgagor will also place and keep prominently displayed on the Vessel a framed printed notice in plain type of such size that the paragraph of reading matter shall cover a space of not less than six inches wide by nine inches high (or such other dimensions as may be required by law) reading as follows: -6- 8 "NOTICE OF MORTGAGE This Vessel is owned by Noble Drilling (Paul Romano) Inc. and is subject to a First Naval Mortgage in favor of Chase Bank of Texas, National Association, as Indenture Trustee, as Mortgagee, a certified copy of which Mortgage is kept with this Vessel's papers. Under the terms of said Mortgage, neither the owner, any charterer or subcharterer, the master of this Vessel nor any other person has any right, power or authority to create, incur or permit to be placed or imposed upon this Vessel any lien whatsoever other than the lien of said Mortgage, liens for wages, general average or salvage, and certain other liens permitted by the provisions of said Mortgage." Section 2.8 Libel or Attachment. If a libel or any similar legal action is filed against the Vessel or if the Vessel shall be attached, levied upon or taken into custody by virtue of any proceeding in any court or tribunal, Mortgagor will promptly notify Mortgagee thereof by telegram, cable or facsimile, confirmed by letter addressed to Mortgagee, and within thirty (30) days after any such libel (other than (i) a libel involving claims less than $2,500,000 or (ii) a libel involving claims equal to or in excess of $2,500,000 and where the Mortgagee has not received a reservation of rights notice, or similar communication from its insurance carrier contesting or denying coverage), levy, attachment or taking into custody, Mortgagor will cause the Vessel to be released and will promptly notify Mortgagee of such release in the manner aforesaid. In the event that the Vessel shall not be released within fifteen (15) days after such libel, levy, attachment or action to take the Vessel into custody, or at any time Mortgagee receives a Notice of Entitlement to Terminate with respect to any such libel, levy, attachment, or action to take the Vessel into custody, Mortgagor does hereby authorize and empower Mortgagee, in the name of Mortgagor, or its successor or assigns, to apply for and receive possession of and to take possession of the Vessel with all the rights and powers that Mortgagor, or its successors or assigns, might have, possess or exercise in any such event; and this power of attorney shall be irrevocable and may be exercised not only by Mortgagee hereinabove named but also by any one such appointee or the appointees of Mortgagee, with full power of substitution, to the same extent as if the said appointee or appointees had been named as one of the attorneys above named by express designation. Section 2.9 Maintenance of Vessel. Except as to such period as (i) the use or title of the Vessel has been taken, requisitioned or chartered by a Governmental Authority, (ii) there has been actual or constructive total loss or an agreed or compromised total loss of the Vessel, or (iii) there has been any other partial loss or damage with respect to the Vessel and Mortgagor shall be in compliance with its obligations under Sections 4.2(c) and 7.3(c) of the Trust Indenture, Mortgagor will, at all times and without cost or expense to Mortgagee, maintain and preserve, or cause to be maintained and preserved, the Vessel in good running order and repair, so that the Vessel shall be tight, staunch, strong and well and sufficiently tackled, appareled, furnished, equipped and in every respect seaworthy and in first class order and operating condition and in full compliance with and able to perform all operations under the Shell Contract; and otherwise in compliance with the provisions of the Trust Indenture. Section 2.10 Inspection. Weather permitting, Mortgagor will permit Mortgagee, any Lender or its representative to visit and inspect the Vessel, under the Mortgagor's guidance, to -7- 9 examine all of its books of account, records, reports and other papers, to make copies and extracts therefrom and to discuss its affairs, finances and accounts with its officers, employees, and independent public accountants (and by this provision the Mortgagor authorizes said accountants to discuss with Mortgagee or any Lender the finances and affairs of the Mortgagor) all at such reasonable time, upon reasonable notice and as often as may be reasonably requested; provided that the Mortgagor shall not be required to pay or reimburse any Lender for expenses which such Lender may incur in connection with any such visitation or inspection, except that if such visitation or inspection is made during any period when an Indenture Default or an Indenture Event of Default shall have occurred and be continuing, the Mortgagor agrees to reimburse such Lender for all such expenses promptly upon demand. Section 2.11 Sale or Other Disposition of Vessel. Except as allowed in the Trust Indenture, Mortgagor will not sell, mortgage, transfer or in any other way dispose of all or any part of the Vessel without the prior written consent of Mortgagee. Section 2.12 Notice. Mortgagor shall notify the Mortgagee forthwith by facsimile thereafter confirmed by letter of: (a) any casualty event in excess of $250,000 with respect to the Vessel; and (b) any occurrence in respect of the Vessel that is or is likely, by the passing of time or otherwise, to become an Event of Loss; and (c) any material requirement or recommendation made by any insurer or classification society or by any competent authority which is not complied with within a reasonable time; and (d) any arrest, governmental detention, or attachment of the Vessel or the assertion or purported assertion of any lien against the Vessel; and (e) any intended dry docking of the Vessel, as to which the Mortgagor shall give the Mortgagee 30 days' prior notice, provided, that in the event of any emergency dry docking of the Vessel, the Mortgagor shall promptly notify the Mortgagee; and (f) any intended deactivation or lay-up of the Vessel. Section 2.13 Insurance. (a) All Risk Property Insurance. Mortgagor shall, at its own expense, keep the Vessel insured, in lawful money of the United States, against all such risks (including without limitation, hull and machinery/increased value, protection and indemnity risk, pollution liability, war risks and, when laid up, port risk insurance as well as such excess policies over and above protection and indemnity and general liability coverage which shall represent collective limits of not less than $400,000,000), in such form and with such insurance companies or underwriters as required under Section 2.13(f) as shall be at least as protective as insurance maintained by prudent owners of vessels and equipment similar to the Vessel, engaged in international contract offshore -8- 10 oil and gas operations, and in any event all as reasonably acceptable to Mortgagee and in compliance with the Shell Contract. Without limiting the generality of the foregoing, with respect to hull and machinery/increased value insurance, including war risk, the Mortgagor shall insure the Vessel for an amount which is at least equal to the Obligations plus $250,000. Such insurance shall cover marine and war risk perils, on hull and machinery, with per occurrence deductibles not in excess of $250,000 and shall be maintained in the broadest forms available in the American and British insurance markets. The Mortgagor shall maintain protection and indemnity (or its equivalent) insurance, including war risk protection and indemnity (or its equivalent) coverage in an amount not less than $400,000,000. The Mortgagor shall maintain coverage against pollution liability in an amount not less than $400,000,000 (or such greater amount as may be required from time to time under Oil Pollution Act of 1990 or other environmental laws). All of the foregoing insurance shall have a per occurrence deductible not to exceed $250,000 and be placed through such underwriters or associations reasonably acceptable to the Mortgagee. The Vessel shall not operate in or proceed into any area then excluded by trading warranties under its marine or war risk policies (including protection indemnity or its equivalent) without satisfying the conditions of the relevant policies, evidence of which shall be furnished to the Mortgagee. (b) Liability; Workers' Compensation. Mortgagor shall maintain at all times such worker's compensation, employer's liability, and longshoreman and harbor worker's insurance as shall be required by applicable law. Mortgagor shall also maintain public liability insurance together with umbrella liability coverage as insured against by prudent owners of vessels and equipment similar to the Vessel. Such policies shall provide that any loss under such insurance may be paid directly to the entity to whom any liability covered by such policies has been incurred. (c) Payment Provisions. All payments made under policies of insurance maintained under this Section shall be applied as set forth in Section 4.2 of the Trust Indenture. (d) Constructive Total Loss. In the case of an Event of Loss that is a constructive total loss of the Vessel, Mortgagee shall have the right (but only with prior written consent of Mortgagor unless an Indenture Event of Default has occurred and is continuing) to join in Mortgagor's claim for a constructive total loss of the Vessel, and if both (i) such claims are accepted by all underwriters under all policies then in force as to the Vessel and (ii) payment in full is made in cash under such policies to Mortgagee in an amount at least equal to the then outstanding amount of the Obligations, then Mortgagee shall have the right to abandon the Vessel to the underwriters under such policies, free from the Lien of this Mortgage. (e) Agreed Total Loss. Mortgagee shall not have the right to enter into an agreement or compromise providing for an agreed or compromised total loss of the Vessel without the prior written consent of Mortgagor unless an Indenture Event of Default has occurred and is continuing. If Mortgagor shall have given its prior consent thereto, or an Indenture Event of Default has occurred and is continuing, Mortgagee shall have the right in its discretion to enter into an agreement or compromise providing for an agreed or compromised total loss of the Vessel, provided the same is agreed to by underwriters under all applicable policies. -9- 11 (f) Insurers. All insurance required under this Section 2.13 shall be placed and kept with such insurance companies, Lloyd's Syndicates, underwriters' associations, clubs or underwriting funds as are reputable, generally recognized within the industry, and (i) in the case of hull and machinery insurance, rated by either Standard & Poors Rating Services, a division of the McGraw Hill Companies, Inc. ("S&P") or Moody's Investors Services, Inc. ("Moody's) with at least the equivalent to an S&P rating of BBB (and with at least 75% of the companies, determined by dollar amount of policy coverage, rated by S&P or Moody's with at least the equivalent to an S&P rating of A) or, if not rated by S&P or Moody's then rated "excellent" or better by A.M. Best, and (ii) in the case of protection and indemnity risk insurance, rated by either S&P or Moody's with at least the equivalent to an S&P rating of BBB. (g) Taking by United States. During the continuance of a taking, requisition or charter of the use of the Vessel by any governmental body of the United States of America, the provisions of this Section 2.13 shall be deemed to have been complied with in all respects as to the Vessel if the United States Government or any such governmental body shall have agreed (i) to reimburse Mortgagee and Mortgagor for loss or damage resulting from the risks indicated in paragraphs (a) and (b) of this Section 2.13, or (ii) that Mortgagee and Mortgagor shall be entitled to just compensation therefor. In the event of any taking, requisition, charter or loss of the Vessel contemplated by this paragraph (g), Mortgagor shall promptly furnish to Mortgagee a sworn certificate of an officer of Mortgagor stating that such taking, requisition, charter or loss has occurred and, if there shall have been a taking, requisition or charter of the Vessel, that the United States Government or governmental body has agreed (i) to reimburse Mortgagor for loss or damage resulting from the risks indicated in the above-mentioned paragraphs (a) and (b) or (ii) that Mortgagor or Mortgagee, as the case may be, is entitled to just compensation therefor. (h) Mortgage Provisions. All insurance required under this Section 2.13 shall be taken out in the name of Mortgagor or on its behalf by an Affiliate of Mortgagor. Mortgagee and each Lender shall be named as an additional insured under all liability policies (other than workers' compensation and similar insurance), and Mortgagee shall be named as the sole loss payee under all physical damage policies with respect to the Vessel. All policies for such insurance shall also provide that (i) there shall be no recourse against Mortgagee (or its assignee) or any Lender for the payment of premiums or commissions, (ii) if such policies provide for the payment of club calls, assessments or advances, there shall be no recourse against Mortgagee (or its assignee) or any Lender for the payment thereof. All policies shall provide that the insurers shall provide to Mortgagee (or its assignee) and each Lender 30 days prior notice of any material change in the coverage of such insurance as well as ten (10) days prior written notice of any cancellation of such insurance in the event of non-payment of premiums and seven (7) days prior written notice of any cancellation of such insurance for war risk. (i) Compliance. Mortgagor shall not do any act, nor permit any act to be done, whereby any insurance required by this Section 2.13 shall or may be suspended, impaired or defeated, or permit the Vessel to engage in any voyage, to engage in any activity or to carry any cargo not permitted under the policies of insurance then in effect without first procuring comparable insurance for such voyage, activity or the carriage of such cargo. -10- 12 (j) Policies. Mortgagor, upon execution of this Mortgage, shall deliver to Mortgagee certificates of insurance, evidencing the insurance maintained under this Section 2.13. Mortgagor, upon the request of Mortgagee, will promptly deliver to Mortgagee true copies of such policies. (k) Opinion and Certificates. At such times as Mortgagee may reasonably request, Mortgagor shall furnish or cause to be furnished to Mortgagee a detailed certificate or opinion (signed by a reputable insurance broker) as to the insurance maintained by Mortgagor pursuant to this Section 2.13, specifying the respective policies of insurance covering the same and attaching certificates of confirmation evidencing the same and stating with regard to the insurance maintained by Mortgagor pursuant to this Section 2.13 the amounts, deductibles, and the risks against which such insurance is issued. (l) Obligation to Collect. Mortgagor shall, at no cost or expense to Mortgagee, have the duty and responsibility to make all proofs of loss and take any and all other steps necessary as a prudent owner or as reasonably directed by Mortgagee to effect collections from underwriters for any loss under any insurance on or in respect of the Vessel or the operation thereof. Section 2.14 Change of Flag, Port of Documentation or Name. Mortgagor will not change or transfer the flag, port of documentation or the name of the Vessel, except in strict compliance with Section 7.3 of the Trust Indenture. ARTICLE III REMEDIES; APPLICATION OF PROCEEDS Section 3.1 Sale, Etc. If an Event of Default shall have occurred and be continuing, Mortgagee may, to the fullest extent permitted by and in accordance with applicable law: (a) exercise all the rights and remedies in foreclosure and otherwise given to mortgagees by the laws of the Republic of Panama, and by the applicable laws of any other applicable jurisdiction; (b) bring suit at law, in equity or in admiralty or initiate and prosecute such other judicial, extrajudicial, or administrative proceedings as it may consider appropriate to recover any and all sums due, or declared due, in respect of the Obligations, with the right to enforce payment of said sums against any assets of Mortgagor, whether they are covered by this Mortgage or otherwise; (c) to the extent permitted by and in accordance with any applicable law, take possession of the Vessel, with or without legal proceedings, at any place where it may be found, and Mortgagor or any Person in possession of the Vessel, forthwith upon request by Mortgagee, as mortgage creditor, shall deliver possession to Mortgagee on demand of Mortgagee, and -11- 13 Mortgagee shall have the right, subject to applicable law, without being responsible for loss or damage to lay up, hold, charter, lease, operate or otherwise use the Vessel for such period and under such conditions as it may deem most expedient for its interest, accounting only for net profits, if any, arising from such use and charging against all receipts from such use or from the sale of the Vessel by court proceedings or pursuant to subsection (d) below, all costs, expenses, charges, damages or losses by reason of such use; and if at any time Mortgagee shall avail itself of the right herein given to it to take the Vessel and shall take it, Mortgagee shall have the right to dock the Vessel at any dock, pier or other premises owned or leased by Mortgagor without charge, or at any other place at the cost and expense of Mortgagor; (d) to the extent permitted by and in accordance with any applicable law, sell the Vessel at public or private sale, by sealed bids or otherwise, on such terms and conditions as Mortgagee deems best, free of any claim, lien, commitment or encumbrance, regardless of the nature thereof, in favor of Mortgagor and, except as provided by law, any other person, upon advance notice of ten (10) consecutive days published in any newspaper authorized to publish legal notices of that kind in the port of registry and the place of sale of the Vessel and by sending notice of such sale at least twenty (20) days prior to the date fixed for such sale, by telegraph, cable, telefax or telex, confirmed by mail, to Mortgagor. In the event that the Vessel shall be offered for sale by private sale, no newspaper publication of notice shall be required, nor notice of adjournment of sale. Sale may be held at such place and at such time as Mortgagee by notice may have specified, or may be adjourned by Mortgagee from time to time by announcement at the time and place appointed for such sale or for such adjourned sale, and without further notice or publication Mortgagee may make any such sale at the time and place to which the same shall be so adjourned; and any sale may be conducted without bringing the Vessel to the place designated for such sale and in such manner as Mortgagee may deem to be for its best advantage, and Mortgagee may become the purchaser at any public sale, and shall have the right to credit on the purchase price any and all sums of money due hereunder or under any other Credit Document. Without limiting the generality of the foregoing, Mortgagee shall be entitled to exercise all the rights and remedies available to it under Articles 1527 and 1527-A of the Code of Commerce of the Republic of Panama; (e) manage, insure, maintain and repair the Vessel and charter, employ, sail or lay up the Vessel in such manner, upon such terms and for such period as the Mortgagee deems reasonably expedient; and for the purposes aforesaid the Mortgagee shall be entitled to do all acts and things reasonably incidental or conducive thereto and in particular to enter into such arrangements respecting such Vessel, and the insurance, management, maintenance, repair, classification, chartering and employment of such Vessel, in all respects as if the Mortgagee were the owner of such Vessel and without being responsible for any loss thereby incurred; (f) recover from the Mortgagor on demand any liabilities, losses and reasonable expenses as may be incurred by the Mortgagee in or about the exercise of the power vested in the Mortgagee hereunder; -12- 14 (g) generally, recover from the Mortgagor on demand any liabilities, losses and reasonable expenses incurred by the Mortgagee in or about or incidental to the exercise by it of any of the powers aforesaid; (h) not be required to have the Vessel marshaled (upon any sale of the Vessel) or be required to realize on any other collateral prior to its realization on the Vessel; and (i) exercise any other rights it may have under applicable law or any other Credit Document. As used in this Mortgage, "Event of Default" shall mean the occurrence of an Indenture Event of Default under the Trust Indenture. Section 3.2 Finality of Sale. A sale of the Vessel made in pursuance of this Mortgage, whether under the power of sale hereby granted or any judicial proceedings, shall operate to divest all right, title and interest of any nature whatsoever of Mortgagor therein and thereto, and shall bar Mortgagor, its successors and assigns, and all Persons claiming by, through or under them. No purchaser shall be bound to inquire whether notice has been given or whether any default has occurred, or as to the propriety of the sale, or as to application of the proceeds thereof. Section 3.3 Powers and Rights of Mortgagee Upon Notice of Default. During the occurrence and continuance of an Event of Default, Mortgagee shall have the following powers and rights: (a) Sale. Mortgagor does hereby irrevocably appoint Mortgagee and its successors and assigns the true and lawful attorney of Mortgagor, in its name and stead, for the purpose of Sections 3.1 and 3.2, to make all necessary transfers of the Vessel, and for that purpose Mortgagee shall execute all necessary instruments of assignment and transfer (including bills of sale), Mortgagor hereby ratifying and confirming all that its said attorney shall lawfully do by virtue hereof. Nevertheless, Mortgagor shall, if so requested by Mortgagee, ratify and confirm any sale of the Vessel by executing and delivering to the purchaser thereof such proper bills of sale, conveyances, instruments of transfer and releases as may be designated in such request. (b) Revenues and proceeds of Vessel; Prior Liens. (i) Mortgagee is hereby irrevocably appointed attorney-in-fact of Mortgagor, with the power, among other things, so long as an Event of Default has occurred and is continuing, in the name of Mortgagor to demand, collect, receive, compromise and sue for, so far as may be permitted by law, all freights, hire, earnings, issues, revenues, income and profits of the Vessel, and all amounts due from underwriters under any insurance thereon as payment of losses or as return premiums or otherwise, salvage awards and recoveries, recoveries in general average or otherwise, and all other sums due or to become due in respect of the Vessel or in respect of any insurance thereon from any person whomsoever, and to make, give and execute in the name of Mortgagor -13- 15 acquittances, receipts, releases or other discharges for the same, whether under seal or otherwise, and to endorse and accept in the name of Mortgagor all checks, notes, drafts, warrants, agreements and all other instruments in writing with respect to the foregoing, Mortgagor hereby confirming and ratifying the same. (ii) So long as an Event of Default has occurred and is continuing, Mortgagee is hereby irrevocably authorized to pay or furnish indemnity in the proper amounts against any Liens which have or may (in the reasonable opinion of Mortgagee) have priority over the Lien of this Mortgage and which are not permitted under this Mortgage or the Trust Indenture. (c) Additional Rights. Mortgagor covenants and agrees that in addition to any and all other rights, powers and remedies elsewhere in this Mortgage granted to and conferred upon Mortgagee, Mortgagee in any suit to enforce any of its rights, powers or remedies shall be entitled as a matter of right and not as a matter of discretion (i) to seek the appointment of a receiver or receivers of the Vessel and any receiver or receivers so appointed shall have full right and power to use and operate the Vessel as shall be ordered by any court having jurisdiction, (ii) to a decree ordering and directing the sale and disposal of the Vessel, and Mortgagee may become the purchaser at such sale and shall have the right to credit against the purchase price any and all sums of money due hereunder, and (iii) to have full rights and remedies at law and in equity including, without limitation, specific performance of the covenants hereof including, without limitation, the following paragraph of this Section 3.3(c). Mortgagor further covenants and agrees that if (i) an Indenture Event of Default under Section 6.1(a), (d), (e), (f), (j), (l) or (m) has occurred and is continuing or (ii) any other Indenture Event of Default has occurred and is continuing which has resulted in acceleration of the maturity of the Obligations, then Mortgagor shall, upon the request of Mortgagee and at the direction of Majority Holders, immediately move the Vessel to such United States port or other location within the territorial waters of the United States subject to the in rem admiralty jurisdiction of the United States federal courts as Mortgagee may designate in its sole and absolute discretion. (d) Notice to Mortgagor. Mortgagee shall notify Mortgagor promptly after taking any action permitted by this Section 3.3. Section 3.4 Restoration of Position. In case Mortgagee shall have proceeded to enforce any right, power or remedy under this Mortgage by foreclosure, entry or otherwise, and such proceeding shall have been discontinued or abandoned for any reason or shall have been determined adversely to Mortgagee, then and in every such case Mortgagor and Mortgagee shall, subject to any determination in such proceeding, be restored to their former positions and rights hereunder with respect to the property subject or intended to be subject to this Mortgage, and all rights, remedies and powers of Mortgagee shall, subject to any determination in such proceeding, continue as if no such proceedings had been taken. -14- 16 Section 3.5 Application of Proceeds. The proceeds of any sale and net earnings derived from the operation, use, charter, or any other employment of the Vessel by Mortgagee, as mortgage creditor, and within any of the powers and authority above given, as well as the proceeds of any judgment which Mortgagee may obtain by reason of the breach or failure to perform any of the terms of this Mortgage, as well as the proceeds of any claim for damage received by Mortgagee while exercising the powers and the authorities above given shall be applied as follows: (i) to the payment of all charges and expenses, including the costs of any public or private sale or sales, the cost of replevying or taking possession of the Vessel which may be incurred or paid out by Mortgagee, as mortgage creditor, and the expenses and reasonable administrator and external attorneys' fees incurred on foreclosure or in the protection of the rights and interests of Mortgagee founded upon this Mortgage; (ii) to pay or to furnish indemnity in the proper amounts against any Liens which have or may (in the reasonable opinion of Mortgagee) have priority over the Lien of this Mortgage and which are not Liens permitted under this Mortgage; and (iii) to deliver to the Mortgagee for application as provided in the Trust Indenture. Section 3.6 Waiver. (a) To the extent now or at any time hereafter enforceable under applicable law, the Mortgagor covenants that it will not at any time insist upon or plead, or in any manner whatsoever claim or take any benefit or advantage of, any stay or extension law now or at any time hereafter in force, nor claim, take nor insist upon any benefit or advantage of or from any law now or hereafter in force providing for the valuation or appraisement of the Vessel or any part thereof, prior to any sale or sales thereof to be made pursuant to any provision herein contained, or to the decree, judgment or order of any court of competent jurisdiction, nor, after such sale or sales, claim or exercise any right under any statute now or hereafter made or enacted by any state or otherwise to redeem the property so sold or any part thereof, and hereby expressly waives for itself and on behalf of each and every Person, all benefit and advantage of any such law or laws, and covenants that it will not invoke or utilize any such law or laws or otherwise hinder, delay or impede the execution of any power herein granted and delegated to the Mortgagee, but will suffer and permit the execution of every such power as though no such law or laws had been made or enacted. (b) The Mortgagor waives any right to require the Mortgagee or the Lenders to proceed against any other Person, or to exhaust any other Collateral or other security for the obligations secured hereby, or to have any other Person joined with the Mortgagor in any suit arising out of the Obligations or the other Credit Documents, or to pursue any other remedy in the Mortgagee's or the Lenders' power. The Mortgagor further waives any and all notice of acceptance of this Mortgage by any other Person directly or indirectly liable for such obligations from time to time. The Mortgagor further waives any defense arising by reason of any disability or other defense of any other Person or by reason of the cessation from any cause whatsoever of the liability of any other Person liable for the Obligations secured hereby. Until all of such -15- 17 Obligations shall have been paid in full, the Mortgagor shall have no right to subrogation and the Mortgagor waives the right to enforce any remedy which the Mortgagee or the Lenders have or may hereafter have against any other Person liable for such obligations, and the Mortgagor waives any benefit of any right to participate in any security whatsoever now or hereafter held by the Mortgagee or the Lenders. The Mortgagor authorizes the Mortgagee and the Lenders, without notice or demand and without any reservation of rights against the Mortgagor and without affecting the Mortgagor's liability hereunder or on the obligations secured hereby, from time to time to (a) take or hold any Property other than the Collateral from any other Person as security for such obligations, and exchange, enforce, waive and release any or all of such Property, (b) apply such Property and direct the order or manner of sale thereof as the Mortgagee and the Lenders may in their discretion determine, and (c) renew, extend for any period, accelerate, modify, compromise, settle or release any of the obligations of any other Person in respect of the obligations secured hereby or other security for such obligations. ARTICLE IV GENERAL POWERS OF MORTGAGEE Section 4.1 General Powers of Mortgagee. (a) Arrest or Detention of Vessel. In the event that the Vessel shall be arrested or detained by a marshal or other officer of any court of law, equity or admiralty jurisdiction in any country or nation of the world or by any government or other entity and shall not be released from arrest or detention within fifteen (15) days from the date of arrest or detention or upon Mortgagee's receipt of a Notice of Entitlement to Terminate as a result of such detention or arrest, Mortgagor does hereby authorize and empower Mortgagee, in the name of Mortgagor, or its successors or assigns, to apply for and receive possession of and to take possession of the Vessel with all the rights and powers that Mortgagor, or its successors or assigns, might have, possess or exercise in any such event; and this power of attorney shall be irrevocable and may be exercised not only by Mortgagee but also by its appointee or appointees, with full power of substitution, to the same extent as if the said appointee or appointees had been named as the attorney above named by express designation. (b) Suits. Mortgagor also authorizes and empowers Mortgagee or its appointees or any of them to appear in the name of Mortgagor, its successors or assigns, in any court of any country or nation of the world where a suit is pending against the Vessel because of or on account of any alleged Lien against the Vessel from which the Vessel has not been released in accordance with the terms of this Mortgage and to take such proceedings as to it may seem proper towards the defense of such suit and the discharge of such Lien. (c) Reimbursement of Expenses. If Mortgagor fails to perform any obligation or covenant under this Mortgage, Mortgagee shall have the right, but not the obligation, to perform or take such actions to comply with the terms of this Mortgage, and all amounts reasonably expended in connection with such conduct shall be a demand obligation of Mortgagor -16- 18 owing to Mortgagee at the Default Rate specified in the Trust Indenture and shall be secured by the Lien of this Mortgage. ARTICLE V SUNDRY PROVISIONS Section 5.1 Release. If the Obligations shall have been fully satisfied and discharged to the satisfaction of the Trustee then this Mortgage and the estate and rights hereunder shall cease, determine, and become null and void; and Mortgagee, on the request of Mortgagor and at Mortgagor's cost and expense, shall forthwith cause satisfaction and discharge of this Mortgage to be entered upon its and other appropriate records and shall execute and deliver to Mortgagor such instruments as may be necessary in Mortgagor's reasonable opinion to duly acknowledge the satisfaction and discharge of this Mortgage. Upon any termination of this Mortgage or release of the Vessel as permitted by the Trust Indenture, Mortgagee will, at the expense of Mortgagor, execute and deliver to Mortgagor such documents and take such other actions as Mortgagor shall reasonably request to evidence the termination of this Mortgage or the release of the Vessel, as the case may be. Section 5.2 Right of Peaceful Enjoyment. During the term of this Mortgage and so long as no Event of Default shall have occurred and be continuing, Mortgagor shall have full and peaceful enjoyment, use, right to possession and control of the Vessel subject to the terms of the Credit Documents. Section 5.3 Cumulative Remedies; No Waiver. Each and every power and remedy herein given to Mortgagee shall be cumulative and shall be in addition to every other power and remedy herein or in any other Credit Document or now or hereafter existing at law, in equity, in admiralty, or by statute, and each and every power and remedy whether herein given or given in any other Credit Document or otherwise existing may be exercised from time to time and as often and in such order, or in the alternative as may be deemed expedient by Mortgagee, and the exercise or the beginning of the exercise of any power or remedy shall not be construed to be a waiver of the right to exercise at the same time or thereafter any other power or remedy. No course of dealing on the part of Mortgagee, its officers, employees, consultants or agents, nor any delay or omission by Mortgagee in the exercise of any right or power or in the pursuance of any remedy shall operate as a waiver of any such right, power or remedy. Section 5.4 Further Assurances. In the event that this Mortgage, or any provisions hereof, shall be deemed invalid in whole or in part by reason of any present or future law or any decision of any court having jurisdiction, or if the documents at any time held by Mortgagee shall be deemed by Mortgagee for any reason insufficient to carry out the rights and powers granted to Mortgagee herein, then, from time to time, Mortgagor will do, execute, acknowledge and deliver, or cause to be done, executed, acknowledged and delivered, such other and further assurances and documents as in the opinion of Mortgagee may reasonably be required in order to more effectively subject the -17- 19 Vessel to the Lien of this Mortgage or more effectively subject the Vessel to the performance of the terms and provisions of this Mortgage, or to enable this Mortgage to continuously enjoy the status of a first preferred ship mortgage. Section 5.5 Survival of Agreements. All representations, warranties, covenants and agreements herein contained or made in writing in connection with this Mortgage shall survive the execution of this Mortgage and shall continue in full force and effect until all sums secured hereby shall have been paid in full, and the same shall bind and inure to the benefit of the respective successors and assigns of Mortgagor and Mortgagee. Section 5.6 Notices. All notices, requests and demands to or upon the respective parties hereto to be effective shall be in writing (including by facsimile transmission), and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when actually delivered or in the case of facsimile transmission, when received and telephonically confirmed, addressed as follows or to such other address as may be hereafter notified by the respective parties hereto or any assignee thereof or successor thereto: Mortgagor: Noble Drilling (Paul Romano) Inc. 10370 Richmond Avenue Suite 581 Houston, Texas 77042 Facsimile No. 713-974-3181 Attention: President Mortgagee: Chase Bank of Texas, National Association 600 Travis Street, Suite 1150 11th Floor Houston, Texas 77002 Attention: Mauri Cowen Corporate Trust Department Section 5.7 Counterparts. This instrument may be executed in any number of counterparts, and each of such counterparts shall for all purposes be deemed to be an original. Section 5.8 Section Headings. The section headings used in this Mortgage are for convenience of reference only and are not to affect the construction of or be taken into consideration in interpreting this Mortgage. SECTION 5.9 GOVERNING LAW. THIS MORTGAGE, AND ALL OF THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER, AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS, SHALL BE GOVERNED BY THE LAWS OF THE REPUBLIC OF PANAMA AND, BY THE MARITIME LAWS OF THE UNITED STATES OF AMERICA OR THE STATE OF NEW YORK AS MAY BE APPLICABLE. -18- 20 Section 5.10 Jurisdiction. (a) Any legal action or proceeding with respect to this Mortgage may be brought in the courts of the United States for the Southern District of New York and the Mortgagor hereby accepts for itself and its property, generally and unconditionally, the non-exclusive jurisdiction of such court. The Mortgagor further irrevocably consents to the service of process out of such court in any such action or proceeding in the manner provided for in the Trust Indenture. Nothing herein shall affect the right of the Mortgagee to serve process in any other manner permitted by law or to commence legal proceedings or otherwise proceed against the Mortgagor in any other jurisdiction. (b) Without prejudice to the generality of Clause 5.10(a), the Mortgagee shall have the right to arrest and take action against the Vessel at whatever place such Vessel shall be found lying and for the purpose of any action which the Mortgagee may bring before the courts of such jurisdiction or other judicial authority and for the purpose of any action which the Mortgagee may bring against such Vessel, any writ, notice, judgment or other legal process or documents may (without prejudice to any other method of service under applicable law) be served upon the master of such Vessel (or upon anyone acting as the master) and such service shall be deemed good service on the Mortgagor for all purposes. (c) Each of the parties hereto stipulates that, when the Vessel is located on the Outer Continental Shelf within the jurisdiction of the United States Federal District Courts under 43 U.S.C. ss.ss.1331(1) and 1349(b)(1), (i) that the United States Federal District Courts shall have "in rem" admiralty jurisdiction over the Vessel and (ii) that the Vessel is present within the territorial jurisdiction of said courts for all purposes, including the enforcement of any maritime liens or other remedies hereunder. Section 5.11 Amendments and Waivers. None of the terms or provisions of this Mortgage may be waived, amended, supplemented or otherwise modified except if made in compliance with the terms and provisions of the Trust Indenture. Section 5.12 Termination. The grant of the Liens hereunder and all of Mortgagee's rights, powers and remedies in connection therewith, shall unless otherwise provided in the Trust Indenture or this Mortgage, remain in full force and effect until payment in full of (A) the Notes under the terms thereof or of the Trust Indenture, and (B) all Obligations then due and owing under the Trust Indenture, the Notes and the other Credit Documents. Upon the payment in full of (A) the Notes under the terms thereof or of the Trust Indenture, and (B) all Obligations then due and owing under the Trust Indenture, the Notes and the other Credit Documents, Mortgagor shall be entitled to the return, upon its request and at its expense, of the Vessel free and clear of all liens created by this Mortgage. Section 5.13 Trust Indenture. This Mortgage is issued pursuant to the terms, conditions and provisions of the Trust Indenture. Section 5.14 Severability. In the event that any provision of this Mortgage or the Trust Indenture or the Notes shall be deemed invalid or unenforceable by reason of any present or future -19- 21 law or any decision of any authoritative court, the validity and enforceability of the other provisions hereof or thereof shall not be affected thereby. Section 5.15 Power to Record. Mortgagee and Mortgagor declare that they hereby confer a special Power of Attorney on Roy Phillipps P., a lawyer of Panama, Republic of Panama, empowering him to take all necessary steps to file and register this First Naval Mortgage in the appropriate registries of the Republic of Panama. [Signature Pages Begin Next Page] -20- 22 IN WITNESS WHEREOF, Mortgagor has caused this Mortgage to be duly executed as of the day and year first above written. MORTGAGOR: NOBLE DRILLING (PAUL ROMANO) INC. By: /s/ Byron L. Welliver ------------------------------- Name: Byron L. Welliver Title: Senior Vice President THE STATE OF TEXAS ) ) COUNTY OF HARRIS ) THIS INSTRUMENT was acknowledged before me on __________, 1998, by _____________________________, ___________________________________ of Noble Drilling (Paul Romano) Inc., a Delaware corporation on behalf of such corporation, and after having first been duly authorized by said corporation to do so. AND THE said ___________ did further produce to me sufficient proof that he is the duly elected ___________ of said corporation and that he was duly authorized by said corporation to execute the foregoing Mortgage, and I the notary hereby certify that the signature of the said ______________ on the foregoing Mortgage was placed thereon in my presence and is therefore authentic. ------------------------------ Notary Public in and for the State of Texas Printed Name of Notary: ------------------------------ My Commission Expires: ------------------------------ Signature Page - 1 23 MORTGAGEE: CHASE BANK OF TEXAS, National Association, as Indenture Trustee, By: /s/ Mauri J. Cowen -------------------------------------- Name: Mauri J. Cowen Title: Vice President and Trust Officer THE STATE OF TEXAS ) ) COUNTY OF HARRIS ) THIS INSTRUMENT was acknowledged before me on __________, 1998, by _____________________________, __________________ of Chase Bank of Texas, National Association, a national banking association, on behalf of such association, and after having first been duly authorized by said association to do so. AND THE said ___________ did further produce to me sufficient proof that he is the duly elected ___________ of said association and that he was duly authorized by said association to execute the foregoing Mortgage, and I the notary hereby certify that the signature of the said ______________ on the foregoing Mortgage was placed thereon in my presence and is therefore authentic. ------------------------------ Notary Public in and for the State of Texas Printed Name of Notary: ------------------------------ My Commission Expires: ------------------------------ Signature Page - 2 EX-4.24 4 NOTE PURCHASE AGREEMENT DATED 12/21/98 1 EXHIBIT 4.24 ================================================================================ NOBLE DRILLING (JIM THOMPSON) INC., $115,000,000 Fixed Rate Senior Secured Notes -------------- NOTE PURCHASE AGREEMENT -------------- Dated as of December 21, 1998 ================================================================================ 2 TABLE OF CONTENTS SECTION 1. AUTHORIZATION, PURCHASE AND SALE OF NOTES.............................................................. 1 1.01 Authorization and Commitment to Purchase................................................................. 1 1.02 Disbursement of Funds.................................................................................... 2 1.03 Interest................................................................................................. 2 SECTION 2. FEES; COMMITMENTS...................................................................................... 3 2.01 Fees..................................................................................................... 3 2.02 Termination of Commitments............................................................................... 3 SECTION 3. PAYMENTS............................................................................................... 3 3.01 Voluntary Prepayments.................................................................................... 3 3.02 Mandatory Repayments..................................................................................... 5 3.03 Method and Place of Payment.............................................................................. 8 3.04 Net Payments............................................................................................. 8 3.05 Purchase of Notes........................................................................................ 9 SECTION 4. CONDITIONS PRECEDENT................................................................................... 9 4.01 Execution of Agreement................................................................................... 9 4.02 No Default; Representations and Warranties............................................................... 9 4.03 Officers Certificate..................................................................................... 10 4.04 Opinions of Counsel...................................................................................... 10 4.05 Corporate Proceedings.................................................................................... 10 4.06 Construction Contract.................................................................................... 10 4.07 Adverse Change, etc...................................................................................... 10 4.08 Litigation............................................................................................... 11 4.09 Approvals................................................................................................ 11 4.10 Fees..................................................................................................... 11 4.11 Guaranties............................................................................................... 11 4.12 Insurance Report......................................................................................... 11 4.13 Assignment of Insurances................................................................................. 11 4.14 Mortgages................................................................................................ 11 4.15 Purchase Permitted By Applicable Law, etc................................................................ 12 4.16 Sale of Other Notes...................................................................................... 12 4.17 Private Placement Number................................................................................. 12 SECTION 5. REPRESENTATIONS, WARRANTIES AND AGREEMENTS............................................................. 12 5.01 Corporate Status......................................................................................... 12 5.02 Corporate Power and Authority............................................................................ 13 5.03 No Violation............................................................................................. 13 5.04 Litigation............................................................................................... 13 5.05 Use of Proceeds; Margin Regulations...................................................................... 13 5.06 Governmental Approvals................................................................................... 14 5.07 Investment Company Act................................................................................... 14 5.08 Public Utility Holding Company Act....................................................................... 14 5.09 True and Complete Disclosure............................................................................. 14 5.10 Financial Condition...................................................................................... 14 5.11 Tax Returns and Payments................................................................................. 15 5.12 Employee Benefit Plans................................................................................... 15 5.13 Subsidiaries............................................................................................. 15
(i) 3 5.14 Patents, etc............................................................................................. 15 5.15 Pollution and Other Regulations.......................................................................... 15 5.16 Properties............................................................................................... 16 5.17 Labor Relations.......................................................................................... 16 5.18 Existing Indebtedness.................................................................................... 17 5.19 Rig Classification....................................................................................... 17 5.20 Security Interests....................................................................................... 17 5.21 Foreign Assets Control Regulations, etc.................................................................. 17 5.22 Compliance with Laws, etc................................................................................ 17 5.23 Offering of the Notes.................................................................................... 17 SECTION 6.AFFIRMATIVE COVENANTS................................................................................... 18 6.01 Information Covenants.................................................................................... 18 6.02 Books, Records and Inspections........................................................................... 18 6.03 Maintenance of Property; Insurance....................................................................... 18 6.04 Payment of Taxes......................................................................................... 18 6.05 Consolidated Corporate Franchises........................................................................ 19 6.07 Good Repair.............................................................................................. 19 6.08 End of Fiscal Years; Fiscal Quarters..................................................................... 19 6.09 Use of Proceeds.......................................................................................... 19 6.10 ERISA.................................................................................................... 19 6.11 Earnings Concentration Account........................................................................... 20 6.12 Further Assurances....................................................................................... 20 6.13 Nature of Business....................................................................................... 20 SECTION 7.NEGATIVE COVENANTS...................................................................................... 21 7.01 Changes in Business...................................................................................... 21 7.02 Consolidation, Merger, Sale of Assets, etc............................................................... 21 7.03 Indebtedness............................................................................................. 21 7.04 Liens.................................................................................................... 22 7.05 Restricted Payments...................................................................................... 23 7.06 Restrictions on Subsidiaries............................................................................. 23 7.07 Transactions with Affiliates............................................................................. 23 7.08 Vessel Management........................................................................................ 23 SECTION 8.EVENTS OF DEFAULT....................................................................................... 24 8.01 Payments................................................................................................. 24 8.02 Representations, etc..................................................................................... 24 8.03 Covenants................................................................................................ 24 8.04 Default Under Other Agreements........................................................................... 24 8.05 Bankruptcy, etc.......................................................................................... 24 8.06 Parent Guaranty.......................................................................................... 25 8.07 Judgments................................................................................................ 25 8.08 Employee Benefit Plans................................................................................... 25 8.09 Change of Control........................................................................................ 26 8.10 Vessel in Class.......................................................................................... 26 SECTION 9.DEFINITIONS............................................................................................. 26 SECTION 10.THE TRUSTEE............................................................................................ 36 10.01 Appointment.............................................................................................. 36 10.02 Nature of Duties......................................................................................... 37 10.03 Lack of Reliance on the Trustee.......................................................................... 37
(ii) 4 10.04 Certain Rights of the Trustee............................................................................ 38 10.05 Reliance................................................................................................. 38 10.06 Indemnification.......................................................................................... 38 10.07 The Trustee in Its Individual Capacity................................................................... 39 10.08 Holders.................................................................................................. 39 10.09 Resignation by the Trustee; Removal...................................................................... 39 10.10 Concentration Account.................................................................................... 40 10.11 Insurance................................................................................................ 40 10.12 Knowledge of Default..................................................................................... 40 SECTION 11.MISCELLANEOUS.......................................................................................... 41 11.01 Payment of Expenses, etc................................................................................. 41 11.02 Right of Setoff.......................................................................................... 42 11.03 Notices.................................................................................................. 42 11.04 Successors and Assigns - Representations of the Purchasers............................................... 42 11.05 No Waiver; Remedies Cumulative........................................................................... 44 11.06 Payments Pro Rata........................................................................................ 44 11.07 Computations............................................................................................. 45 11.08 Governing Law; Submission to Jurisdiction; Venue; Waiver of Jury Trial................................... 45 11.09 Counterparts............................................................................................. 46 11.10 Effectiveness............................................................................................ 46 11.11 Headings Descriptive..................................................................................... 46 11.12 Amendment or Waiver...................................................................................... 46 11.13 Survival................................................................................................. 47 11.14 Domicile of Notes........................................................................................ 47 11.15 Confidentiality.......................................................................................... 47 11.16 (a) Registration of Notes, etc........................................................................... 48
ANNEX I -- Commitments ANNEX II -- Purchaser Addresses EXHIBIT A-1 -- Form of Series A Note EXHIBIT A-2 -- Form of Series B Note EXHIBIT A-3 -- Form of Series C Note EXHIBIT A-4 -- Form of Series D Note EXHIBIT B-1 -- Form of Opinion of Thompson & Knight, P.C. EXHIBIT B-2 -- Form of Opinion of Watson, Farley & Williams EXHIBIT B-3 -- Form of Opinion of Roy Phillipps EXHIBIT B-4 -- Form of Opinion of White & Case EXHIBIT C -- Form of Officers' Certificate EXHIBIT D-1 -- Form of Parent Guaranty EXHIBIT D-2 -- Form of Subsidiary Limited Recourse Guaranty EXHIBIT E-1 -- Form of Mortgage EXHIBIT E-2 -- Form of First Preferred Fleet Mortgage EXHIBIT E-3 -- Form of First Preferred Mortgage EXHIBIT F -- Assignments of Insurances (iii) 5 FIXED RATE SENIOR SECURED NOTES December 21, 1998 To Each of the Purchasers Named in Annex I Attached Hereto: Ladies and Gentlemen: The undersigned, Noble Drilling (Jim Thompson) Inc., a corporation organized and existing under the laws of the State of Delaware (the "Company") agrees with the purchasers named in annex I attached hereto and any successors and assigns thereof as holders of the Notes (each a "Purchaser" and, collectively, the "Purchasers") and the Company and the Purchasers agree with Chase Bank of Texas, National Association, as Trustee as follows: SECTION 1. AUTHORIZATION, PURCHASE AND SALE OF NOTES. 1.01 Authorization and Commitment to Purchase. (a) The Company will authorize the issue and sale of $115,000,000 aggregate principal amount of its Fixed Rate Senior Secured Notes due April 1, 2002, October 1, 2004, January 1, 2009, and January 1, 2009, respectively, which Notes shall be divided among Series A Notes, Series B Notes, Series C Notes and Series D Notes according to the Commitments of the Purchasers set forth on Annex I hereto. The Notes shall be substantially in the form of (i) Exhibit A-1, if issued pursuant to the Series A Commitment (each a "Series A Note" and, collectively, the "Series A Notes"), (ii) Exhibit A-2, if issued pursuant to the Series B Commitment (each a "Series B Note" and, collectively, the "Series B Notes"), (iii) Exhibit A-3, if issued pursuant to the Series C Commitment (each a "Series C Note" and, collectively, the "Series C Notes") and (iv) Exhibit A-4, if issued pursuant to the Series D Commitment (each a "Series D Note" and, collectively, the "Series D Notes" and, together with the Series A Notes, the Series B Notes and the Series C Notes, each a "Note" and, collectively, the "Notes"), in each case with blanks appropriately completed in conformity therewith. (b) The Company agrees to sell and, subject to and upon the terms and conditions herein set forth, each Purchaser severally but not jointly agrees to purchase on the Closing date from the Company, at the closing provided for in Section 1.02, for a purchase price equal to 100% of the principal amount thereof, Series A Notes in a principal amount equal to each such Purchaser's Series A Commitment, which Series A Notes (i) shall, in the aggregate for all Purchasers, be equal to the Total Series A Commitment and (ii) shall not exceed for any Purchaser the Series A Commitment of such Purchaser on the Closing date Once repaid, the Series A Notes issued hereunder may not be reissued. (c) The Company agrees to sell and, subject to and upon the terms and conditions herein set forth, each Purchaser severally but not jointly agrees to purchase, on the 6 Closing date, for a purchase price equal to 100% of the principal amount thereof, Series B Notes in a principal amount equal to each such Purchaser's Series B Commitment, which Series B Notes (i) shall, in the aggregate for all Purchasers, be equal to the Total Series B Commitment and (ii) shall not exceed for any Purchaser the Series B Commitment of such Purchaser on the Closing date. Once repaid, the principal of Series B Notes issued hereunder may not be reissued. (d) The Company agrees to sell and, subject to and upon the terms and conditions herein set forth, each Purchaser severally but not jointly agrees to purchase, on the Closing date, for a purchase price equal to 100% of the principal amount thereof, Series C Notes in a principal amount equal to each such Purchaser's Series C Commitment, which Series C Notes (i) shall, in the aggregate for all Purchasers, be equal to the Total Series C Commitment and (ii) shall not exceed for any Purchaser the Series C Commitment of such Purchaser on the Closing date. Once repaid, the Series C Notes issued hereunder may not be reissued. (e) The Company agrees to sell and, subject to and upon the terms and conditions herein set forth, each Purchaser severally but not jointly agrees to purchase, on the Closing date, for a purchase price equal to 100% of the principal amount thereof, Series D Notes in a principal amount equal to such Purchaser's Series D Commitment, which Series D Notes (i) shall, in the aggregate for all Purchasers, be equal to the total Series D Commitment and (ii) shall not exceed for any Purchaser the Series D Commitment of such Purchaser on the Closing date. Once repaid, the Series D Notes issued hereunder may not be reissued. 1.02 Disbursement of Funds. The sale and purchase of the Notes to be purchased by you and the other Purchasers shall occur at the offices of White & Case LLP, 1155 Avenue of the Americas, New York, New York 10036, at 10:00 a.m., New York City time, at a closing (the "CLOSING") on December 22, 1998 or on such other Business Day thereafter on or prior to January 15, 1999 as may be agreed upon by the Company and you and the other Purchasers. At the Closing the Company will deliver to each Purchaser the Notes to be purchased by such Purchaser in the form of a single Note (or such greater number of Notes in denominations of at least $100,000 as you may request) dated the date of the Closing and registered in your name (or in the name of your nominee). If at the Closing the Company shall fail to tender such Notes to you as provided above in this Section 1.02, or any of the conditions specified in Section 4 shall not have been fulfilled to your satisfaction, you shall, at your election, be relieved of all further obligations under this Agreement, without thereby waiving any rights you may have by reason of such failure or such nonfulfillment. On the Closing date, each Purchaser will make available to the Company, in Dollars and immediately available funds to the account of the Company specified to the Purchasers in writing, its pro rata share of the Total Commitment on such date. 1.03 Interest. (a) The unpaid principal amount of each Note shall bear interest from the Closing date until maturity (whether by acceleration or otherwise) at a rate per annum which shall at all times be (i) in the case of Series A Notes, the Series A Rate, (ii) in the case of Series B Notes, the Series B Rate, (iii) in the case of Series C Notes, the Series C Rate and (iv) in the case of Series D Notes, the Series D Rate. -2- 7 (b) All overdue principal and, to the extent permitted by law, overdue interest in respect of each Note and any other overdue amount payable hereunder shall bear interest at a rate per annum equal to 2% per annum in excess of the interest rate applicable to such Notes at maturity, with such interest payable on demand. (c) Interest shall accrue from and including the Closing date to but excluding the date of repayment of the Notes and shall be payable quarterly in arrears on each Scheduled Repayment Date, upon prepayment (on the amount prepaid) and at maturity (whether by acceleration or otherwise) and, after such maturity, on demand. (d) All computations of interest hereunder shall be made in accordance with Section 11.07. SECTION 2. FEES; COMMITMENTS. 2.01 Fees. (a) The Company shall pay to the Trustee (x) on the Effective Date, for its own account and/or for distribution to the Arrangers, such Fees as heretofore agreed in writing by the Company and the Arrangers and (y) for its own account such other fees as agreed to in writing between the Company and the Trustee, when and as due. (b) All computations of Fees shall be made in accordance with Section 11.07. 2.02 Termination of Commitments. The Total Commitment (and the Commitments of each Purchaser) shall terminate in its entirety on the earlier of (i) January 15, 1999 and (ii) the Closing date (immediately after giving effect to the purchase of the Notes on such date). SECTION 3. PAYMENTS. 3.01 Voluntary Prepayments. (a) The Company shall have the right to prepay the Notes pro rata among each Series of Notes, in whole or in part, from time to time on any Business Day after January 1, 2001 at 100% of the outstanding principal balance of such Series of Notes (or portion thereof) plus accrued interest and the Make-Whole Amount. The Company shall give the Purchasers written notice (or telephonic notice promptly confirmed in writing) of its intent to prepay the Notes and the amount of such prepayment, which notice shall be given by the Company not less than 30 nor more than 60 days prior to the date of such prepayment; (x) each partial prepayment of Notes shall be in an aggregate principal amount of at least $10,000,000 and, if greater, in an integral multiple of $100,000, provided that no partial prepayment of Notes shall reduce the aggregate principal amount of the Notes outstanding to an amount less than $10,000,000; (y) each prepayment of Notes in a Series shall be applied pro rata among the Purchasers which have Notes of such Series outstanding; and (z) each voluntary prepayment of any Series of Notes pursuant to this Section 3.01 shall be applied to reduce the then remaining Scheduled Repayments of such Series pro rata based on the then remaining amount of each Scheduled Repayment after giving effect to all prior reductions thereto. (b) The term "MAKE-WHOLE AMOUNT" means, with respect to any Note, an amount equal to the excess, if any, of the Discounted Value of the Remaining -3- 8 Scheduled Payments with respect to the Called Principal of such Note over the amount of such Called Principal, provided that the Make-Whole Amount may in no event be less than zero. For the purposes of determining the Make-Whole Amount, the following terms have the following meanings: "CALLED PRINCIPAL" means, with respect to any Note, the principal of such Note that is to be prepaid pursuant to Section 3.01 or has become or is declared to be immediately due and payable pursuant to Section 8, as the context requires. "DISCOUNTED VALUE" means, with respect to the Called Principal of any Note, the amount obtained by discounting all Remaining Scheduled Payments with respect to such Called Principal from their respective scheduled due dates to the Settlement Date with respect to such Called Principal, in accordance with accepted financial practice and at a discount factor (applied on the same periodic basis as that on which interest on the Notes is payable) equal to the Reinvestment Yield with respect to such Called Principal. "REINVESTMENT YIELD" means, with respect to the Called Principal of any Note, 0.50% over the yield to maturity implied by (i) the yields reported, as of 10:00 A.M. (New York City time) on the second Business Day preceding the Settlement Date with respect to such Called Principal, on the display designated as "Page 500" on the Telerate Access Service (or such other display as may replace Page 500 on Telerate Access Service) for actively traded U.S. Treasury securities having a maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date, or (ii) if such yields are not reported as of such time or the yields reported as of such time are not ascertainable including by way of interpolation, the Treasury Constant Maturity Series Yields reported, for the latest day for which such yields have been so reported as of the second Business Day preceding the Settlement Date with respect to such Called Principal, in Federal Reserve Statistical Release H.15 (519) (or any comparable successor publication) for actively traded U.S. Treasury securities having a constant maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date. Such implied yield will be determined, (A) if necessary, by (x) converting U.S. Treasury bill quotations to bond-equivalent yields in accordance with accepted financial practice and (y) interpolating linearly between (1) the actively traded U.S. Treasury security with the duration closest to and greater than the Remaining Average Life and (2) the actively traded U.S. Treasury security with the duration closest to and less than the Remaining Average Life and (B) by converting all such implied yields to a quarterly payment basis in accordance with accepted financial practice. "REMAINING AVERAGE LIFE" means, with respect to any Called Principal, the number of years (calculated to the nearest one-twelfth year) obtained by dividing (i) such Called Principal into (ii) the sum of the products obtained by multiplying (a) the principal component of each Remaining Scheduled Payment with respect to such Called Principal by (b) the number of years (calculated to the nearest one-twelfth year) that will elapse between the Settlement Date with -4- 9 respect to such Called Principal and the scheduled due date of such Remaining Scheduled Payment. "REMAINING SCHEDULED PAYMENTS" means, with respect to the Called Principal of any Note, all payments of such Called Principal and interest thereon that would be due after the Settlement Date with respect to such Called Principal if no payment of such Called Principal were made prior to its scheduled due date, provided that if such Settlement Date is not a date on which interest payments are due to be made under the terms of the Notes, then the amount of the next succeeding scheduled interest payment will be reduced by the amount of interest accrued to such Settlement Date and required to be paid on such Settlement Date pursuant to Section 3.01 or Section 8. "SETTLEMENT DATE" means, with respect to the Called Principal of any Note, the date on which such Called Principal is to be prepaid pursuant to Section 3.01 or has become or is declared to be immediately due and payable pursuant to Section 8, as the context requires. 3.02 Mandatory Repayments. (a) In addition to any other mandatory repayments pursuant to this Section 3.02, on each date set forth below, the Company shall pay interest on and principal of the Series A Notes, to the extent then outstanding, in the amount set forth opposite such date (each such repayment, as the same may be reduced from time to time pursuant to Section 3.01, a "Series A Scheduled Repayment" and each such date a "Series A Scheduled Repayment Date"):
- -------------------------------------------------------------------------------------------------------- Series A Scheduled Repayment Date Interest Payment Principal Payment Total Payment - -------------------------------------------------------------------------------------------------------- April 1, 1999 $247,083 $ 0 $ 247,083 July 1, 1999 $222,375 $ 0 $ 222,375 October 1, 1999 $222,375 $1,265,531 $1,487,906 January 1, 2000 $203,614 $1,284,292 $1,487,906 April 1, 2000 $184,574 $1,303,332 $1,487,906 July 1, 2000 $165,252 $1,322,654 $1,487,906 October 1, 2000 $145,644 $1,342,262 $1,487,906 January 1, 2001 $125,745 $1,362,161 $1,487,906 April 1, 2001 $105,551 $1,382,355 $1,487,906 July 1, 2001 $ 85,057 $1,402,848 $1,487,906 October 1, 2001 $ 64,260 $1,423,646 $1,487,906 January 1, 2002 $ 43,154 $1,444,751 $1,487,906 April 1, 2002 $ 21,736 $1,466,170 $1,487,906
(b) In addition to any other mandatory repayments pursuant to this Section 3.02, on each date set forth below, the Company shall pay interest on and principal of the Series B Notes, to the extent then outstanding, in the amount set forth opposite such date (each such repayment, as the same may be reduced from time to time pursuant to Section 3.01, a "Series B Scheduled Repayment" and each such date a "Series B Scheduled Repayment Date"): -5- 10
- -------------------------------------------------------------------------------------------------------- Series B Scheduled Repayment Date Interest Payment Principal Payment Total Payment - -------------------------------------------------------------------------------------------------------- April 1, 1999 $747,778 $ 0 $ 747,778 July 1, 1999 $673,000 $ 0 $ 673,000 October 1, 1999 $673,000 $ 0 $ 673,000 January 1, 2000 $673,000 $ 0 $ 673,000 April 1, 2000 $673,000 $ 0 $ 673,000 July 1, 2000 $673,000 $ 0 $ 673,000 October 1, 2000 $673,000 $ 0 $ 673,000 January 1, 2001 $673,000 $ 0 $ 673,000 April 1, 2001 $673,000 $ 0 $ 673,000 July 1, 2001 $673,000 $ 0 $ 673,000 October 1, 2001 $673,000 $ 0 $ 673,000 January 1, 2002 $673,000 $ 0 $ 673,000 April 1, 2002 $673,000 $ 0 $ 673,000 July 1, 2002 $673,000 $3,706,410 $4,379,410 October 1, 2002 $610,640 $3,768,770 $4,379,410 January 1, 2003 $547,230 $3,832,180 $4,379,410 April 1, 2003 $482,754 $3,896,656 $4,379,410 July 1, 2003 $417,192 $3,962,217 $4,379,410 October 1, 2003 $350,528 $4,028,881 $4,379,410 January 1, 2004 $282,742 $4,096,667 $4,379,410 April 1, 2004 $213,816 $4,165,594 $4,379,410 July 1, 2004 $143,730 $4,235,680 $4,379,410 October 1, 2004 $ 72,464 $4,306,945 $4,379,410
(c) In addition to any other mandatory repayments pursuant to this Section 3.02, on each date set forth below, the Company shall pay interest on and principal of the Series C Notes, to the extent then outstanding, in the amount set forth opposite such date (each such repayment, as the same may be reduced from time to time pursuant to Section 3.01, a "Series C Scheduled Repayment" and each such date a "Series C Scheduled Repayment Date"):
- -------------------------------------------------------------------------------------------------------- Series C Scheduled Repayment Date Interest Payment Principal Payment Total Payment - -------------------------------------------------------------------------------------------------------- April 1, 1999 $791,111 $0 $791,111 July 1, 1999 $712,000 $0 $712,000 October 1, 1999 $712,000 $0 $712,000 January 1, 2000 $712,000 $0 $712,000 April 1, 2000 $712,000 $0 $712,000 July 1, 2000 $712,000 $0 $712,000 October 1, 2000 $712,000 $0 $712,000 January 1, 2001 $712,000 $0 $712,000 April 1, 2001 $712,000 $0 $712,000 July 1, 2001 $712,000 $0 $712,000 October 1, 2001 $712,000 $0 $712,000 January 1, 2002 $712,000 $0 $712,000 April 1, 2002 $712,000 $0 $712,000 July 1, 2002 $712,000 $0 $712,000 October 1, 2002 $712,000 $0 $712,000 January 1, 2003 $712,000 $0 $712,000 April 1, 2003 $712,000 $0 $712,000
-6- 11 July 1, 2003 $712,000 $ 0 $ 712,000 October 1, 2003 $712,000 $ 0 $ 712,000 January 1, 2004 $712,000 $ 0 $ 712,000 April 1, 2004 $712,000 $ 0 $ 712,000 July 1, 2004 $712,000 $ 0 $ 712,000 October 1, 2004 $712,000 $ 0 $ 712,000 January 1, 2005 $712,000 $2,035,590 $2,747,590 April 1, 2005 $675,766 $2,071,824 $2,747,590 July 1, 2005 $638,888 $2,108,702 $2,747,590 October 1, 2005 $601,353 $2,146,237 $2,747,590 January 1, 2006 $563,150 $2,184,440 $2,747,590 April 1, 2006 $524,267 $2,223,323 $2,747,590 July 1, 2006 $484,692 $2,262,899 $2,747,590 October 1, 2006 $444,412 $2,303,178 $2,747,590 January 1, 2007 $403,416 $2,344,175 $2,747,590 April 1, 2007 $361,689 $2,385,901 $2,747,590 July 1, 2007 $319,220 $2,428,370 $2,747,590 October 1, 2007 $275,995 $2,471,595 $2,747,590 January 1, 2008 $232,001 $2,515,589 $2,747,590 April 1, 2008 $187,224 $2,560,367 $2,747,590 July 1, 2008 $141,649 $2,605,942 $2,747,590 October 1, 2008 $ 95,263 $2,652,327 $2,747,590 January 1, 2009 $ 48,052 $2,699,539 $2,747,590
(d) In addition to any other mandatory repayments pursuant to this Section 3.02, on each date set forth below, the Company shall pay interest on and principal of the Series D Notes, to the extent then outstanding, in the amount set forth opposite such date (each such repayment, as the same may be reduced from time to time pursuant to Section 3.01, a "Series D Scheduled Repayment" and each such date a "Series D Scheduled Repayment Date"):
- -------------------------------------------------------------------------------------------------------- Series D Scheduled Repayment Date Interest Payment Principal Payment Total Payment - -------------------------------------------------------------------------------------------------------- April 1, 1999 $402,778 $0 $402,778 July 1, 1999 $362,500 $0 $362,500 October 1, 1999 $362,500 $0 $362,500 January 1, 2000 $362,500 $0 $362,500 April 1, 2000 $362,500 $0 $362,500 July 1, 2000 $362,500 $0 $362,500 October 1, 2000 $362,500 $0 $362,500 January 1, 2001 $362,500 $0 $362,500 April 1, 2001 $362,500 $0 $362,500 July 1, 2001 $362,500 $0 $362,500 October 1, 2001 $362,500 $0 $362,500 January 1, 2002 $362,500 $0 $362,500 April 1, 2002 $362,500 $0 $362,500 July 1, 2002 $362,500 $0 $362,500 October 1, 2002 $362,500 $0 $362,500 January 1, 2003 $362,500 $0 $362,500 April 1, 2003 $362,500 $0 $362,500 July 1, 2003 $362,500 $0 $362,500 October 1, 2003 $362,500 $0 $362,500 January 1, 2004 $362,500 $0 $362,500 April 1, 2004 $362,500 $0 $362,500
-7- 12 July 1, 2004 $362,500 $ 0 $ 362,500 October 1, 2004 $362,500 $ 0 $ 362,500 January 1, 2005 $362,500 $ 0 $ 362,500 April 1, 2005 $362,500 $ 0 $ 362,500 July 1, 2005 $362,500 $ 0 $ 262,500 October 1, 2005 $362,500 $ 0 $ 362,500 January 1, 2006 $362,500 $ 0 $ 362,500 April 1, 2006 $362,500 $ 0 $ 362,500 July 1, 2006 $362,500 $ 0 $ 362,500 October 1, 2006 $362,500 $ 0 $ 362,500 January 1, 2007 $362,500 $ 0 $ 362,500 April 1, 2007 $362,500 $ 0 $ 362,500 July 1, 2007 $362,500 $ 0 $ 362,500 October 1, 2007 $362,500 $ 0 $ 362,500 January 1, 2008 $362,500 $ 0 $ 362,500 April 1, 2008 $362,500 $ 0 $ 362,500 July 1, 2008 $362,500 $ 0 $ 362,500 October 1, 2008 $362,500 $ 0 $ 362,500 January 1, 2009 $362,500 $20,000,000 $20,362,500
(e) Notwithstanding anything to the contrary contained elsewhere in this Agreement, (i) all then outstanding principal amount of the Series A Notes shall be repaid in full on the Series A Maturity Date, (ii) all then outstanding principal amount of the Series B Notes shall be repaid in full on the Series B Maturity Date and (iii) all then outstanding principal amount of the Series C Notes and the Series D Notes shall be repaid in full on the Final Maturity Date. (f) On the date on which any Change of Control occurs, unless otherwise agreed by a Purchaser in regard to Notes held by it, the outstanding Notes, if any, shall become due and payable in full at 100% of the outstanding principal balance of each Series of Notes plus accrued interest and the Make-Whole Amount. (g) Each prepayment of any Series of Notes pursuant to this Section 3.02 shall be applied pro rata among the Purchasers which have outstanding Notes of such Series. 3.03 Method and Place of Payment. Except as otherwise specifically provided herein, all payments under this Agreement shall be made to the Purchasers (based on their pro rata shares) not later than 1:00 P.M. (New York time) on the date when due and shall be made in immediately available funds and in Dollars at the Payment Office, subject to 11.06(b). Any payments under this Agreement which are made later than 1:00 P.M. (New York time) shall be deemed to have been made on the next succeeding Business Day. Whenever any payment to be made hereunder shall be stated to be due on a day which is not a Business Day, such payment shall instead be made on the immediately succeeding Business Day without including the days elapsed in the computation of interest payable on such immediately succeeding Business Day. 3.04 Net Payments. All payments made by the Company hereunder or under any Note will be made without setoff, counterclaim or other defense. All such payments will be made free and clear of, and without deduction or withholding for, any present or future taxes, levies, imposts, duties, fees, assessments or other charges of whatever nature now -8- 13 or hereafter imposed by any jurisdiction or by any political subdivision or taxing authority thereof or therein with respect to such payments (but excluding, except as provided in the second succeeding sentence, any tax imposed on or measured by the net income or net profits of a Purchaser pursuant to the laws of the jurisdiction in which it is organized or managed and controlled or the jurisdiction in which the principal office or applicable lending office of such Purchaser is located or any subdivision thereof or therein) and all interest, penalties or similar liabilities with respect thereto (all such non-excluded taxes, levies, imposts, duties, fees, assessments or other charges being referred to collectively as "Taxes"). If any Taxes are so levied or imposed, the Company agrees to pay the full amount of such Taxes, and such additional amounts, if any, as may be necessary so that every payment of all amounts due under this Agreement or under any Note, after withholding or deduction for or on account of any Taxes, will not be less than the amount provided for herein or in such Note. If any amounts are payable in respect of Taxes pursuant to the preceding sentence, the Company agrees to reimburse each Purchaser, upon the written request of such Purchaser, for taxes imposed on or measured by the net income or net profits of such Purchaser pursuant to the laws of the jurisdiction in which the principal office or applicable lending office of such Purchaser is located or under the laws of any political subdivision or taxing authority of any such jurisdiction in which the principal office or applicable lending office of such Purchaser is located and for any withholding of taxes as such Purchaser shall determine are payable by, or withheld from, such Purchaser in respect of such amounts so paid to or on behalf of such Purchaser pursuant to the preceding sentence and in respect of any amounts paid to or on behalf of such Purchaser pursuant to this sentence. The Company will furnish to the Trustee within 45 days after the date the payment of any Taxes is due pursuant to applicable law certified copies of tax receipts evidencing such payment by the Company. The Company agrees to indemnify and hold harmless each Purchaser, and reimburse such Purchaser upon its written request, for the amount of any Taxes so levied or imposed and paid by such Purchaser. 3.05 Purchase of Notes. The Company will not and will not permit any Affiliate to purchase, redeem, prepay or otherwise acquire, directly or indirectly, any of the outstanding Notes except upon the payment or prepayment of the Notes in accordance with the terms of this Agreement and the Notes. The Company will promptly cancel all Notes acquired by it or any Affiliate pursuant to any payment, prepayment or purchase of Notes pursuant to any provision of this Agreement and no Notes may be issued in substitution or exchange for any such Notes. SECTION 4. CONDITIONS PRECEDENT. The occurrence of the Effective Date pursuant to Section 11.10 and the Commitments of the Purchasers to purchase their respective Notes hereunder are subject to the satisfaction, at the time of the occurrence of each such event, of each of the following conditions at Closing: 4.01 Execution of Agreement. (i) The Effective Date shall have occurred as provided in Section 11.10 and (ii) there shall have been delivered to each Purchaser the -9- 14 appropriate Note executed by the Company, and in the amount, maturity and as otherwise provided herein. 4.02 No Default; Representations and Warranties. On the Closing date, (i) there shall exist no Default or Event of Default and (ii) all representations and warranties contained herein or in the other Credit Documents in effect at such time shall be true and correct in all material respects as though such representations and warranties were made on the Closing date (except to the extent that such representations and warranties expressly relate to the Effective Date, in which case they shall be true and correct in all material respects as of the Effective Date). 4.03 Officer's Certificate. On the Effective Date, the Trustee shall have received a certificate dated such date signed by the President, any Vice President or the Treasurer of the Company stating that all of the applicable conditions set forth in Sections 4.02, 4.07, 4.08(a) and 4.09 exist as of such date. 4.04 Opinions of Counsel. On the Effective Date, the Trustee shall have received opinions, addressed to the Trustee and each of the Purchasers and dated the Effective Date, from (i) Thompson & Knight, P.C., counsel to the Company, which opinion shall cover the matters contained in Exhibit B-1, (ii) Watson, Farley & Williams, special maritime counsel to the Purchasers, covering the matters set forth in Exhibit B-2, (iii) Roy Phillipps, Panamanian counsel to the Company, which opinion shall cover the matters contained in Exhibit B-3 and (iv) White & Case LLP, special counsel to the Purchasers, which opinion shall cover the matters contained in Exhibit B-4, each of which opinions shall be in form and substance reasonably satisfactory to the Purchasers. 4.05 Corporate Proceedings. (a) On the Effective Date, the Trustee shall have received from each Credit Party a certificate, dated the Effective Date, signed by the President, any Vice President, the Treasurer or the Secretary or other appropriate representative of such Credit Party in the form of Exhibit C with appropriate insertions and deletions, together with copies of the certificate of incorporation, memorandum and articles of association, by-laws, and resolutions, or such other administrative approval, of such Credit Party referred to in such certificate and all of the foregoing shall be reasonably satisfactory to the Purchasers. (b) On the Effective Date, all corporate and legal proceedings and all instruments and agreements in connection with the transactions contemplated by this Agreement and the other Credit Documents shall be reasonably satisfactory in form and substance to the Purchasers, and each Purchaser shall have received all information and copies of all certificates, documents and papers, including good standing certificates and any other records of corporate proceedings and governmental approvals, if any, which a Purchaser may have reasonably requested in connection therewith, such documents and papers, where appropriate, to be certified by proper corporate or governmental authorities. (c) The Company shall not have changed its jurisdiction of incorporation or been a party to any merger or consolidation and shall not have succeeded to all or any -10- 15 substantial part of the liabilities of any other entity, at any time following December 31, 1997. 4.06 Construction Contract. On or prior to the Effective Date, there shall have been delivered to the Trustee a copy, certified as true and correct by an appropriate officer of the Company of the Construction Contract. 4.07 Adverse Change, etc. On the Effective Date, (a) no Material Adverse Effect shall have occurred since December 31, 1997 or (b) no Purchaser shall have become aware of any facts or conditions not previously known which such Purchaser shall determine in its reasonable business judgment (i) has, or is reasonably likely to have, a material adverse effect on the rights or remedies of the Purchasers hereunder or under any other Credit Document, or on the ability of the Company or the Parent Guarantor to perform their respective obligations to them, or (ii) has, or is reasonably likely to have, a Material Adverse Effect. 4.08 Litigation. On the Effective Date, there shall be no actions, suits or proceedings pending or threatened (a) with respect to this Agreement or any other Credit Document or the transactions contemplated hereby or thereby or (b) which any Purchaser shall determine in its reasonable business judgment is reasonably likely to (i) have a Material Adverse Effect or (ii) have a Material Adverse Effect on the rights or remedies of the Purchasers hereunder or under any other Credit Document or on the ability of the Company or the Parent Guarantor to perform their respective obligations to the Purchasers hereunder or under any other Credit Document. 4.09 Approvals. On the Effective Date, all necessary governmental and third party approvals in connection with the transactions contemplated by the Credit Documents and otherwise referred to herein or therein shall have been obtained and remain in effect, and all applicable waiting periods shall have expired without any action being taken by any competent authority which restrains or prevents such transactions or imposes, in the reasonable business judgment of any Purchaser, materially adverse conditions upon the consummation of such transactions. 4.10 Fees. On the Effective Date, the Company shall have paid to the Trustee all Fees and expenses (including the fees and expenses of each special counsel to the Purchasers) agreed upon by such parties to be paid on or prior to such date. 4.11 Guaranties. On the Effective Date (i) Parent Guarantor shall have duly authorized, executed and delivered the Parent Guaranty in the form of Exhibit D-1 hereto (as modified, amended or supplemented from time to time in accordance with the terms thereof and hereof, the "Parent Guaranty"), and (ii) each Subsidiary Guarantor shall have duly authorized, executed and delivered the Subsidiary Limited Recourse Guaranty in the form of Exhibit D-2 hereto in each case with blanks appropriately completed in conformity therewith (as modified, amended or supplemented from time to time in accordance with the terms thereof and hereof, the "Subsidiary Guaranty"). 4.12 Insurance Report. On or prior to the Effective Date, each Purchaser shall have received a detailed report from Aon Risk Services of Texas, Inc. or another firm of -11- 16 independent marine insurance brokers reasonably acceptable to the Purchasers with respect to the insurance maintained in connection with the Mortgaged Rigs, together with a certificate from such broker certifying that such insurances are placed with such insurance companies and/or underwriters and/or clubs, in such amounts, against such risks, and in such form, as are normally insured against by similarly situated insureds. 4.13 Assignment of Insurances. On the Effective Date, the Assignments of Insurances in the form of Exhibit F (as modified, amended or supplemented from time to time in accordance with the terms thereof and hereof, the "Assignments of Insurances") shall be in full force and effect. 4.14 Mortgages. On the Effective Date, mortgages (in each case substantially in the form of Exhibits E-1, E-2 and E-3, respectively, as modified, amended, or supplemented from time to time in accordance with the terms thereof and hereof, the "Mortgages") shall have been executed and delivered to the satisfaction of the Purchasers with respect to the (i) Vessel, the Noble Eddie Paul (Official No. 570632), the Noble Bill Jennings (Official No. 568214), the Noble Tom Jobe (Official No. 653116) and (ii) the Noble John Sandifer (Official No. 569799), each documented under the laws and flag of the Republic of Panama or the United States of America as appropriate (collectively, including the Vessel, the "Mortgaged Rigs") and shall otherwise be in full force and effect and all actions necessary, desirable or otherwise reasonably requested by any Purchaser to provide the Trustee with a perfected first priority security interest in all Collateral purported to be covered by the Mortgages shall have been taken. 4.15 Purchase Permitted By Applicable Law, etc. On the date of the Closing the purchase of Notes shall (i) be permitted by the laws and regulations of each jurisdiction to which each Purchaser is subject, without recourse to provisions (such as Section 1405(a)(8) of the New York Insurance Law) permitting limited investments by insurance companies without restriction as to the character of the particular investment, (ii) not violate any applicable law or regulation (including, without limitation, Regulation T, U or X of the Board of Governors of the Federal Reserve System) and (iii) not subject such Purchaser to any tax, penalty or liability under or pursuant to any applicable law or regulation, which law or regulation was not in effect on the date hereof. If requested by a Purchaser, such Purchaser shall have received a certificate from one of the officers specified in Section 4.03 certifying as to such matters of fact as you may reasonably specify to enable it to determine whether such purchase is so permitted. 4.16 Sale of Other Notes. Contemporaneously with the Closing the Company shall sell to each Purchaser and each Purchaser shall purchase the Notes to be purchased by it at the Closing as specified in Annex I. 4.17 Private Placement Number. A Private Placement number issued by Standard & Poor's CUSIP Service Bureau (in cooperation with the Securities Valuation Office of the National Association of Insurance Commissioners) shall have been obtained for the Notes. The acceptance of the benefits of the Notes shall constitute a representation and warranty by the Company to the Trustee and each of the Purchasers that all of the applicable -12- 17 conditions specified above exist as of that time. All of the certificates, legal opinions and other documents and papers referred to in this Section 4, unless otherwise specified, shall be delivered at the Closing for the account of each of the Purchasers and, except for the Notes, in sufficient counterparts or copies for each of the Purchasers and shall be satisfactory in form and substance to the Purchasers. SECTION 5. REPRESENTATIONS, WARRANTIES AND AGREEMENTS. In order to induce the Purchasers to enter into this Agreement and to purchase the Notes, the Company makes the following representations and warranties to, and agreements with, the Purchasers and the Trustee, all of which shall survive the execution and delivery of this Agreement and the purchase of the Notes: 5.01 Corporate Status. The Company (i) is a duly organized and validly existing company in good standing under the laws of the jurisdiction of its organization and has the corporate power and authority to own its property and assets and to transact the business in which it is engaged, except in such case where the failure to be duly organized and validly existing in good standing and to have such corporate power and authority (x) is not reasonably likely to have a Material Adverse Effect or (y) is not reasonably likely to have a material adverse effect on the rights or remedies of the Purchasers or on the ability of the Company to perform its obligations to them hereunder and under the other Credit Documents to which it is a party, and (ii) has duly qualified and is authorized to do business and is in good standing in all jurisdictions where it is required to be so qualified and where the failure to be so qualified would have a Material Adverse Effect. 5.02 Corporate Power and Authority. The Company has the corporate power and authority to execute, deliver and carry out the terms and provisions of the Credit Documents to which it is a party and has taken all necessary corporate action to authorize the execution, delivery and performance of the Credit Documents to which it is a party. The Company has duly executed and delivered each Credit Document to which it is a party and each such Credit Document constitutes the legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws generally affecting creditors' rights and by equitable principles (regardless of whether enforcement is sought in equity or at law). 5.03 No Violation. Neither the execution, delivery and performance by the Company of the Credit Documents to which it is a party nor compliance with the terms and provisions thereof, nor the consummation of the transactions contemplated therein (i) will contravene any applicable provision of any law, statute, rule, regulation, order, writ, injunction or decree of any court or governmental instrumentality of the United States or any State thereof, (ii) will result in any breach of any of the terms, covenants, conditions or provisions of, or constitute a default under, or result in the creation or imposition of (or the obligation to create or impose) any Lien upon any of the property or assets of the Company pursuant to the terms of, any indenture, mortgage, deed of trust, agreement or other instrument to which the Company is a party or by which it or any of its property or -13- 18 assets are bound or to which it is subject, other than Permitted Liens, or (iii) will violate any provision of the memorandum and articles of association of the Company. 5.04 Litigation. There are no actions, suits or proceedings pending or, to the knowledge of the Company, after due inquiry, threatened with respect to the Company (i) that are likely to have a Material Adverse Effect or (ii) that are reasonably likely to have a Material Adverse Effect on the rights or remedies of the Purchasers or on the ability of the Company to perform its obligations to them hereunder and under the other Credit Documents to which it is a party. 5.05 Use of Proceeds; Margin Regulations. (a) The proceeds of all Notes shall be used as contemplated by Section 7.05 to fund costs and expenses incurred by the Company and its Affiliates in connection with the conversion of the Vessel from a submersible offshore drilling rig to a Noble Drilling EVA-4000(tm) semisubmersible drilling rig. (b) Neither the purchase of any Note hereunder, nor the use of the proceeds thereof, will violate or be inconsistent with the provisions of Regulation T, U or X of the Board of Governors of the Federal Reserve System and no part of the proceeds of any Note will be used to purchase or carry any Margin Stock in violation of Regulation U or to extend credit for the purpose of purchasing or carrying any Margin Stock. 5.06 Governmental Approvals. Except for the orders, consents, approvals, licenses, authorizations, validations, recordings, registrations and exemptions that have already been duly made or obtained and remain in full force and effect, no order, consent, approval, license, authorization, or validation of, or filing, recording or registration with, or exemption by, any foreign or domestic governmental or public body or authority, or any subdivision thereof, is required to authorize or is required in connection with (i) the execution, delivery and performance of any Credit Document, (ii) the legality, validity, binding effect or enforceability of any Credit Document or (iii) completion of the Project. 5.07 Investment Company Act. The Company is not an "investment company" or a company "controlled" by an "investment company," within the meaning of the Investment Company Act of 1940, as amended. 5.08 Public Utility Holding Company Act. The Company is not a "holding company," or a "subsidiary company" of a "holding company," or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company," within the meaning of the Public Utility Holding Company Act of 1935, as amended. 5.09 True and Complete Disclosure. All information (taken as a whole) heretofore or contemporaneously furnished by or on behalf of the Company or its Affiliates or any agent thereof, including the Arrangers, in writing to any Purchaser for purposes of or in connection with this Agreement or any transaction contemplated herein is, and all other such information (taken as a whole) hereafter furnished by or on behalf of the Company in writing to any Purchaser will be, true and accurate in all material respects on the date as of which such information is dated or certified and not incomplete by omitting to state any material fact necessary to make such information (taken as a whole) -14- 19 not misleading at such time in light of the circumstances under which such information was provided. There is no fact known to the Company which is reasonably likely to have a Material Adverse Effect, which has not been disclosed herein or in such other documents, certificates and statements furnished to the Trustee and the Purchasers for use in connection with the transactions contemplated hereby. 5.10 Financial Condition. On and as of the Effective Date, on a pro forma basis after giving effect to all Indebtedness incurred, and to be incurred, by the Company in connection herewith, (x) the sum of the assets, at a fair valuation, of the Company will exceed its debts, (y) the Company will not have incurred or intended to, or believe that it will, incur debts beyond its ability to pay such debts as such debts mature and (z) the Company will not have unreasonably small capital with which to conduct its business. Nothing has occurred since the incorporation of the Company that (x) has had or is reasonably likely to have a Material Adverse Effect on the rights or remedies of the Purchasers hereunder or under any other Credit Document, or on the ability of the Company to perform its obligations to them, or (y) has had or is reasonably likely to have a Material Adverse Effect. There were as of the Effective Date no liabilities or obligations with respect to the Company of a nature (whether absolute, accrued, contingent or otherwise and whether or not due) which, either individually or in aggregate, would be material to the Company. 5.11 Tax Returns and Payments. The Company has filed all tax returns, domestic and foreign, required to be filed by it and has paid all material taxes and assessments payable by it which have become due, other than those not yet delinquent and except for those contested in good faith for which adequate reserves have been provided in accordance with GAAP. The Company has paid, or has provided adequate reserves (in the good faith judgment of the management of the Company) for the payment of, all federal, state and foreign income taxes applicable for all prior fiscal years and for the current fiscal year to the date hereof. 5.12 Employee Benefit Plans. (a) Neither the Company nor any ERISA Affiliate has ever maintained or contributed to (or had an obligation to contribute to) any Plan or any Foreign Pension Plan where any current or reasonably foreseeable liability of the Company with respect to such Plan or such Foreign Pension Plan would be reasonably likely to have a Material Adverse Effect. All contributions required to be made with respect to (i) any employee pension benefit plan (as defined in Section 3(2) of ERISA) maintained or contributed to by (or to which there is an obligation to contribute of) the Company or an ERISA Affiliate and (ii) any Foreign Pension Plan have been timely made except any such failures to contribute which would not individually or in the aggregate be reasonably likely to have a Material Adverse Effect. The Company may cease contributions to or terminate any employee benefit plan (within the meaning of Section 3(3) of ERISA) maintained or contributed to by (or to which there is an obligation to contribute of) it without incurring any liability which, individually or in the aggregate would be reasonably likely to have a Material Adverse Effect. (b) Each Foreign Pension Plan has been maintained in substantial compliance with its terms and with the requirements of any and all applicable laws, statutes, rules, -15- 20 regulations and orders and has been maintained, where required, in good standing with applicable regulatory authorities. (c) In reliance upon the representations of the Purchasers herein, the execution and delivery of this Agreement and the issuance and sale of the Notes hereunder will be exempt from, or will not involve any transaction which is subject to, the prohibitions of either Section 406 of ERISA or Section 4975 of the Code and will not involve any transaction in connection with which a penalty could be imposed under Section 502(i) of ERISA or a tax could be imposed pursuant to Section 4975 of the Code. 5.13 Subsidiaries. The Company has no Subsidiaries on the Effective Date. 5.14 Patents, etc. The Company has obtained all patents, trademarks, service marks, trade names, copyrights, licenses and other rights, free from burdensome restrictions, that are necessary for the operation of its business taken as a whole as presently conducted, and the Company knows of no such rights the absence of which would be reasonably likely to have a Material Adverse Effect. 5.15 Pollution and Other Regulations. (a) The Company is in compliance with all applicable Environmental Laws governing its business for which failure to comply is reasonably likely to have a Material Adverse Effect, and the Company is not liable for any material penalties, fines or forfeitures for failure to comply with any of the foregoing. All licenses, permits, registrations or approvals required for the business of the Company, as conducted as of the Effective Date, under any Environmental Law have been secured and the Company is in substantial compliance therewith, except such licenses, permits, registrations or approvals the failure to secure or to comply therewith is not likely to have a Material Adverse Effect. The Company is not in any respect in noncompliance with, breach of or default under any applicable writ, order, judgment, injunction, or decree to which the Company is a party or which would affect the ability of the Company to operate the Vessel or facility owned or operated by the Company and no event has occurred and is continuing which, with the passage of time or the giving of notice or both, would constitute noncompliance, breach of or default thereunder, except in each such case, such noncompliance, breaches or defaults as are not likely to, in the aggregate, have a Material Adverse Effect. There are as of the Effective Date no Environmental Claims pending or, to the knowledge, after due inquiry, of the Company, threatened, against the Company wherein an unfavorable decision, ruling or finding would be reasonably likely to have a Material Adverse Effect. There are no facts, circumstances, conditions or occurrences on the Vessel or facility owned or operated by the Company that is reasonably likely (i) to form the basis of an Environmental Claim against the Company or the Vessel or facility owned by the Company, or (ii) to cause the Vessel or facility owned or operated by the Company to be subject to any restrictions on its ownership, occupancy, use or transferability under any Environmental Law, except in each such case, such Environmental Claims or restrictions that individually or in the aggregate are not reasonably likely to have a Material Adverse Effect. (b) Hazardous Materials have not at any time been (i) generated, used, treated or stored on, or transported to or from, the Vessel or facility at any time owned or operated by the Company or (ii) released on or from the Vessel or any such facility, in each case -16- 21 where, to the Company's knowledge, after due inquiry, such occurrence or event individually or in the aggregate is reasonably likely to have a Material Adverse Effect. 5.16 Properties. The Company has title to all material properties owned by it free and clear of all Liens, other than Permitted Liens. Noble Drilling (U.S.) Inc. ("NDUS") as contractor under the SDDI Contract has duly assigned or transferred the SDDI Contract to the Company (after appropriate notice to the counterparties thereto). 5.17 Labor Relations. The Company is not engaged in any unfair labor practice that is reasonably likely to have a Material Adverse Effect. There is (i) no unfair labor practice complaint pending against the Company or threatened against the Company, before the National Labor Relations Board, and no grievance or arbitration proceeding arising out of or under any collective bargaining agreement is so pending against the Company or, to the Company's knowledge, after due inquiry, threatened against any of them, (ii) no strike, labor dispute, slowdown or stoppage pending against the Company or, to the Company's knowledge, after due inquiry, threatened against the Company and (iii) no union representation petition existing with respect to the employees of the Company and no union organizing activities are taking place, except with respect to any matter specified in clause (i), (ii) or (iii) above, either individually or in the aggregate, such as is not reasonably likely to have a Material Adverse Effect. 5.18 Existing Indebtedness. The Company has no Indebtedness (other than the Notes) on the Effective Date. 5.19 Rig Classification. Each Mortgaged Rig is classified in the highest class available for rigs of its age and type with the American Bureau of Shipping, Inc, Bureau Veritas, Det Norske Veritas, Lloyd's Register of Shipping, or another internationally recognized classification society reasonably acceptable to the Trustee, free of any material requirements or recommendations, provided that the Vessel may be out of class as a result of, and pending the completion of, the Project. 5.20 Security Interests. On and after the Effective Date, each of the Security Documents creates, as security for the Obligations purported to be secured thereby, a valid and enforceable perfected first priority security interest in and Lien on all of the Collateral subject thereto, to the extent perfection of a security interest or Lien is governed by Article 8 or Article 9 of the UCC (as defined in the applicable Security Documents), the Ship Mortgage Act (as defined in the Mortgages, if any), or comparable provisions under the laws of the Republic of Panama, Liberia or any other jurisdiction in which any Mortgaged Rig is registered, and subject to no other Liens (except that the Collateral may be subject to Permitted Liens), in favor of the Trustee for the benefit of the Purchasers. No filings or recordings are required in order to perfect the security interests created under any Security Document except for filings or recordings required in connection with any such Security Document which shall have been made upon or prior to (or are the subject of arrangements, satisfactory to the Trustee, for filing on or promptly after the date of) the execution and delivery thereof. 5.21 Foreign Assets Control Regulations, etc. Neither the sale of the Notes by the Company hereunder nor its use of the proceeds thereof will violate the Trading with -17- 22 Enemy Act, as amended, or any of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive order relating thereto. 5.22 Compliance with Laws, etc. The Company is not in violation of (i) any laws, ordinances, governmental rules or regulations to which it is subject or by which it or any of its properties might be bound, (ii) any order, judgment or decree of any court, arbitrator or administrative or governmental body to which it is subject or by which it or any of its properties might be bound, (iii) any term of any contract, agreement or other instrument to which it is a party or by which it or any of its properties might be bound, or (iv) any term of its memorandum and articles of association; where, in each case, such violation might reasonably be expected to have a Material Adverse Effect. 5.23 Offering of the Notes. Neither the Company nor any agent acting on its behalf has, directly or indirectly, offered the Notes or any similar security of the Company for sale to, or solicited any offers to buy the Notes or any similar security of the Company from, or otherwise approached or negotiated with respect thereto with, any Person other than 29 Institutional Investors, and neither the Company nor any agent acting on its behalf has taken or will take any action directly or indirectly, which would require the registration of the Notes under the provisions of section 5 of the Securities Act of 1933, as amended, or under the provisions of any securities or Blue Sky law of any applicable jurisdiction relating to securities offered to the public. SECTION 6. AFFIRMATIVE COVENANTS. The Company covenants and agrees that on the Effective Date and thereafter for so long as this Agreement is in effect and until the Notes (together with interest), Fees and all other Obligations incurred hereunder, are paid in full: 6.01 Information Covenants. The Company will furnish to the Trustee (with sufficient copies for each of the Purchasers, and the Trustee will promptly forward to each of the Purchasers): (a) Notice of Default or Litigation. Promptly, and in any event within (x) five days after a member of the senior management of the Company obtains knowledge thereof, notice of the occurrence of any event which constitutes a Default or Event of Default, which notice shall specify the nature thereof, the period of existence thereof and what action the Company proposes to take with respect thereto and (y) ten Business Days after a member of the senior management of the Company obtains knowledge thereof, notice of the commencement of or any significant development in any litigation or governmental proceeding pending against the Company which is likely to have a Material Adverse Effect or is likely to have a material adverse effect on the ability of the Company to perform its obligations hereunder or under any other Credit Document. (b) Other Information. From time to time, such other information or documents (financial or otherwise) as the Trustee or any Purchaser may reasonably request. -18- 23 6.02 Books, Records and Inspections. The Company will, upon reasonable notice to the Senior Vice President-Finance, Controller or any other Authorized Officer of the Company, permit officers and designated representatives of the Trustee (at the expense of the Trustee, but after the occurrence and during the continuance of a Default or an Event of Default, at the expense of the Company) or any Purchaser (at the expense of such Purchaser but after the occurrence and during the continuance of a Default or an Event of Default at the expense of the Company), to the extent necessary, to examine the books of account of the Company and discuss the affairs, finances and accounts of the Company with, and be advised as to the same by, its and their officers and independent accountants, all at such reasonable times and intervals and to such reasonable extent as the Trustee or the Purchaser may desire. 6.03 Maintenance of Property; Insurance. There will at all times be maintained on behalf of the Company in full force and effect insurance in such amounts with carriers of such insurance industry ratings, covering such risks and liabilities and with such deductibles or self-insured retentions as are in accordance with normal industry practice for similarly situated insureds. 6.04 Payment of Taxes. The Company will pay and discharge all taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits, or upon any properties belonging to it, prior to the date on which penalties attach thereto, and all lawful claims which, if unpaid, might become a Lien or charge upon any properties of the Company, provided that the Company shall not be required to pay any such tax, assessment, charge, levy or claim which is being contested in good faith and by proper proceedings if it has maintained adequate reserves with respect thereto in accordance with GAAP. 6.05 Consolidated Corporate Franchises. The Company will do all things necessary to preserve and keep in full force and effect its corporate existence, material rights and authority, unless the failure to do so is not reasonably likely to have a Material Adverse Effect, provided that any transaction permitted by Section 7.02 will not constitute a breach of this Section 6.05. 6.06 Compliance with Statutes, etc. The Company will comply with all applicable statutes, regulations and orders of, and all applicable restrictions imposed by, all governmental bodies, domestic or foreign, in respect of the conduct of its business and the ownership of its property other than those the non-compliance with which would not have a Material Adverse Effect or would not have a material adverse effect on the ability of the Company to perform its obligations under any Credit Document to which it is party. 6.07 Good Repair. Except in the event the Vessel has been damaged or has suffered a casualty as to which (within a reasonable period of time) the Company has not made a determination whether to replace or repair, or if the determination to replace or repair has been made, as to which such replacement or repairs are being undertaken, subject to availability of equipment, materials and/or repair facilities, the Company will keep its properties and equipment used or useful in its business, in whomsoever's possession they may be, in good repair, working order and condition, normal wear and -19- 24 tear excepted, and, subject to Section 7.02, see that from time to time there are made in such properties and equipment all needful and proper repairs, renewals, replacements, extensions, additions, betterments and improvements thereto, (i) to the extent and in the manner useful or customary for companies in similar businesses and (ii) to the extent the failure to do so is reasonably likely to cause a Material Adverse Effect. 6.08 End of Fiscal Years; Fiscal Quarters. The Company will, for financial reporting purposes, cause (i) its fiscal years to end on December 31 of each year and (ii) its fiscal quarters to end on March 31, June 30, September 30 and December 31 of each year. 6.09 Use of Proceeds. All proceeds of the Notes shall be used as provided in Section 5.05. 6.10 ERISA. As soon as possible and, in any event, within 10 days after the Company or any ERISA Affiliate knows or has reason to know that: (a) a material contribution required to be made with respect to (i) any employee pension benefit plan (as defined in Section 3(2) of ERISA) maintained or contributed to by (or to which there is an obligation to contribute of) the Company or an ERISA Affiliate or (ii) any Foreign Pension Plan has not been timely made or (b) the Company may incur any material liability pursuant to any employee welfare benefit plan (as defined in Section 3(1) of ERISA) that provides benefits to retired employees or other former employees (other than as required by Section 601 of ERISA) or any employee pension benefit plan (as defined in Section 3(2) of ERISA), the Company will deliver to each of the Purchasers a certificate of the Senior Vice President-Finance or Controller of the Company setting forth details as to such occurrence and the action, if any, that the Company or such ERISA Affiliate is required or proposes to take, together with any notices required or proposed to be given to or filed with or by the Company, the ERISA Affiliate, a plan participant or the plan administrator. 6.11 Earnings Concentration Account. The Company, shall maintain with the Trustee a trust account (the "Concentration Account"), as provided in Section 10.10. The Company shall cause all payments made under the SDDI Contract to be deposited into the Concentration Account. Until the Company or any Purchaser has given the Trustee notice, pursuant to Section 10.12, of the occurrence of a Default or an Event of Default, any and all funds in the Concentration Account may from time to time be freely disbursed to the Company as provided in Section 10.10. Following the occurrence of a Default or an Event of Default, the Company shall have no right to receive funds from the Concentration Account, and such funds shall be held by the Trustee as security or applied to the outstanding Obligations as Required Purchasers may direct. 6.12 Further Assurances. (a) The Company will at the expense of the Company, make, execute, endorse, acknowledge, file and/or deliver to the Trustee, from time to time such vouchers, invoices, schedules, confirmatory assignments, conveyances, financing statements, transfer endorsements, power of attorney, certificates, real property surveys, reports and other assurances or instruments and take such further steps relating to the Collateral as the Trustee or any Purchaser may reasonably require. -20- 25 (b) The Company agrees that each action required above by this Section 6.12 shall be completed as soon as possible, but in no event later than 60 days after such action is requested to be taken by the Trustee or the Required Purchasers, provided that in no event shall the Company be required to take action, other than using its reasonable commercial efforts, to obtain consents or other actions from third parties with respect to its compliance with this Section 6.12 (c) The Trustee hereby agrees that, so long as there exists no Default or Event of Default, it will, after written notification from the Company of the occurrence of the Project Completion Date, upon the request of and at the expense of the Company, release, from the respective Mortgages each Mortgaged Rig other than the Vessel (collectively, the "Pre-Delivery Mortgaged Rigs") and release each Subsidiary Guarantor from its Subsidiary Guaranty, whereafter such Subsidiary Guarantor shall have no further obligation with respect to the security interests theretofore maintained for the benefit of the Secured Creditors in such rigs and the insurances thereon or its guaranty under such Subsidiary Guaranty. 6.13 Nature of Business. The Company shall: (i) do all such things as are necessary to maintain its corporate existence, except this paragraph shall not prevent the Company from entering into any transaction permitted by Section 7.02; (ii) ensure that it has the right and is duly qualified to conduct its business as it is conducted in all applicable jurisdictions and will obtain and maintain all rights necessary for the conduct of its business, except where such failure to do so could reasonably be expected to not result in a Material Adverse Effect; (iii)at all times comply with all laws and with all rules, regulations and orders made by any governmental authority applicable to it or to any or all of its property, except for those being contested in good faith by appropriate proceedings and except where such failure to do so could reasonably be expected to not result in a Material Adverse Effect; and (iv) own or have a leasehold interest in all of its property, except where the failure to do so could reasonably be expected to not result in a Material Adverse Effect. SECTION 7. NEGATIVE COVENANTS. The Company hereby covenants and agrees that as of the Effective Date and thereafter for so long as this Agreement is in effect and until the Notes (together with interest), Fees and all other Obligations incurred hereunder, are paid in full: 7.01 Changes in Business. The Company will not materially alter the character of its business taken as a whole from that conducted at the Effective Date. 7.02 Consolidation, Merger, Sale of Assets, etc. The Company will not wind up, liquidate or dissolve its affairs, or enter into any transaction of merger or consolidation, -21- 26 sell or otherwise dispose of all or any part of its property or assets, including the Vessel (other than inventory or obsolete equipment or excess equipment no longer needed in the conduct of the business in the ordinary course of business) or agree to do any of the foregoing at any future time, except that the following shall be permitted: (a) the Company may be merged or consolidated with or into, or be liquidated into, the Parent Guarantor; provided, however, that the Parent Guarantor shall have assumed the obligations of the Company hereunder in writing and shall have delivered to the Trustee an opinion of counsel to the effect that the obligations of the Company have been duly and validly assumed and constitute valid and binding obligations of the Parent Guarantor enforceable against Parant Guarantor in accordance with its terms. (b) Restricted Payments permitted pursuant to Section 7.05; and (c) so long as no Default or Event of Default exists or would result therefrom, the Company may, on or after January 1, 2001, sell or dispose of the Vessel ,provided that the Company shall prepay the Notes in full with the proceeds of such sale or disposition or otherwise pursuant to Section 3.01. 7.03 Indebtedness. The Company will not contract, create, incur, assume or suffer to exist any Indebtedness, except: (a) Indebtedness incurred pursuant to this Agreement and the other Credit Documents; and (b) Indebtedness (i) of not to exceed $10,000,000 in the aggregate outstanding at any one time owed to the Parent Guarantor incurred in connection with working capital advances for operation of the Vessel, (ii) owed to the Parent Guarantor for advances for repairs to the Vessel or (iii) owed to the Parent Guarantor for advances for upgrades to the Vessel, in each case to the extent such Indebtedness is subordinated to the obligations of the Company hereunder on terms of subordination approved by the Required Purchasers. 7.04 Liens. The Company will not create, incur, assume or suffer to exist any Lien upon or with respect to any property or assets (real or personal, tangible or intangible) of the Company, whether now owned or hereafter acquired or sell any such property or assets subject to an understanding or agreement, contingent or otherwise, to repurchase such property or assets (including sales of accounts receivable or notes with recourse to the Company) or assign any right to receive income, or file or permit the filing of any financing statement under the UCC or any other similar notice of Lien under any similar recording or notice statute, except: (a) Liens for taxes not yet due or Liens for taxes being contested in good faith and by appropriate proceedings for which adequate reserves (in the good faith judgment of the management of the Company) have been established; (b) Liens imposed by law or arising by operation of law which were incurred in the ordinary course of business, such as carriers', warehousemen's and mechanics' Liens, statutory landlord's Liens, maritime Liens and other similar Liens arising in the ordinary -22- 27 course of business, and (x) which do not in the aggregate materially detract from the value of the Company's property or assets or materially impair the use thereof in the operation of the business of the Company or (y) which are being contested in good faith by appropriate proceedings (including the providing of bail), which proceedings have the effect of preventing the forfeiture or sale of the property or assets subject to such Lien or procuring the release of the property or assets subject to such Lien from arrest or detention; and (z) in each case not incurred or made, as the case may be, in connection with (i) the borrowing of money, (ii) the obtaining of advances or credit or (iii) the payment of deferred purchase price of property pursuant to the Credit Documents; (c) Liens created in favor of the Purchasers; (d) Liens arising from judgments, decrees or attachments (or securing of appeal bonds with respect thereto) to the extent not covered by insurance (or, if insured, only to the extent the insurer has admitted coverage in writing), so long as the obligations in connection therewith do not exceed $5,000,000 in the aggregate and otherwise in circumstances not constituting an Event of Default under Section 8.07; (e) any interest or title of a lessor or charterer under any lease permitted by this Agreement; (f) immaterial Liens on any assets of the Company other than the Collateral, so long as the obligations in connection therewith do not exceed $500,000 in the aggregate; (g) Liens (other than any Lien imposed by ERISA) incurred or deposits made in the ordinary course of business consistent with past practices and securing obligations not to exceed $5,000,000 in the aggregate (i) in connection with workers' compensation, unemployment insurance and other types of social security or retirement benefits, or (ii) to secure the performance of tenders, statutory obligations, surety bonds, appeal bonds, bids, leases (other than Capital Leases), performance bonds, purchase, construction or sales contracts and other similar obligations, in each case not incurred or made, as the case may be, in connection with (x) the borrowing of money, (y) the obtaining of advances or credit or (z) the payment of the deferred purchase price of property; (h) leases or subleases granted to others, easements, rights-of-way, restrictions and other similar charges, encumbrances or minor title defects, in each case incidental to, and not interfering with, or reasonably likely to interfere with, the ordinary conduct of the business of the Company; or (i) Liens on the Vessel arising in connection with the Construction Contract prior to the Project Completion Date or, after the Project Completion Date, Liens on the Vessel arising from repairs, to the extent payments therefor are not delinquent and further to the extent that of 100% of the costs of such repairs are insured and the insurer has admitted coverage in writing. 7.05 Restricted Payments. The Company will not make any Restricted Payments, except: -23- 28 (a) On the Closing date, the Company shall use the proceeds of the sale of the Notes to pay a dividend to NDUS which will in turn be used to repay indebtedness incurred by NDUS in connection with the conversion of the Vessel. (b) So long as no Default or Event of Default exists or would result therefrom, to the extent the Company is the beneficial owner of the funds in the Concentration Account, the Company may pay Dividends to its parent with any funds in such Concentration Account. 7.06 Restrictions on Subsidiaries. The Company shall not create any Subsidiaries. 7.07 Transactions with Affiliates. The Company will not transfer the Vessel to any Affiliate or enter into any transaction or series of transactions after the Effective Date whether or not in the ordinary course of business, with any Affiliate other than on terms and conditions as favorable to the Company as would be obtainable by the Company at the time in a comparable arm's-length transaction with a Person other than an Affiliate, provided that the foregoing restrictions shall not apply to (i) employment arrangements entered into in the ordinary course of business with officers of the Company or (ii) customary fees paid to members of the Board of Directors of the Company. 7.08 Vessel Management. The Company shall not contract out the management of the Vessel except to an Affiliate. SECTION 8. EVENTS OF DEFAULT. Upon the occurrence of any of the following specified events (each an "Event of Default"): 8.01 Payments. The Company shall (a) default in the payment when due of any principal of the Notes or any Make-Whole Amount or (b) default in the payment when due, and such default shall continue for more than five Business Days, of any interest, Fees or other amounts owing hereunder or under any other Credit Document; or 8.02 Representations, etc. Any representation, warranty or statement made by Parent Guarantor or the Company in any Credit Document or in any statement or certificate delivered or required to be delivered pursuant hereto or thereto shall prove to be untrue in any material respect on the date as of which made or deemed made; or 8.03 Covenants. The Company shall (a) default in the due performance or observance by it of any term, covenant or agreement contained in Section 6.08 or Section 7 or (b) default in the due performance or observance by it of any term, covenant or agreement (other than those referred to in Section 8.01, 8.02 or clause (a) of this Section 8.03) contained in this Agreement or the Mortgage on the Vessel and such default shall continue unremedied for a period of at least 30 days after the earlier of the date on which an officer of the Company has actual knowledge thereof or the date of notice to the Company by the Trustee or any Purchaser; or -24- 29 8.04 Default Under Other Agreements. (a) Parent Guarantor or any of its Subsidiaries shall (i) default in any payment with respect to any Indebtedness (other than the Obligations) beyond the period of grace, if any, applicable thereto or (ii) default in the observance or performance of any agreement or condition relating to any such Indebtedness or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or holders of such Indebtedness (or a trustee or agent on behalf of such holder or holders) to cause any such Indebtedness to become due prior to its stated maturity; or (b) any such Indebtedness of Parent Guarantor or any of its Subsidiaries shall be declared to be due and payable, or required to be prepaid other than by a regularly scheduled required prepayment, prior to the stated maturity thereof, provided that it shall not constitute an Event of Default pursuant to this Section 8.04 unless the aggregate amount of all Indebtedness referred to in clauses (a) and (b) above with respect to Parent Guarantor and its Subsidiaries that is recourse to the Parent Guarantor, or any Subsidiary of the Parent Guarantor, other than the obligor thereunder exceeds $25,000,000 at any one time; or 8.05 Bankruptcy, etc. The Parent Guarantor or any of its Subsidiaries (other than an Insignificant Subsidiary) shall commence a voluntary case concerning itself under Title 7 or 11 of the United States Code entitled "Bankruptcy", as now or hereafter in effect, or any successor thereto (the "Bankruptcy Code"); or an involuntary case is commenced against the Parent Guarantor or any of its Subsidiaries (other than an Insignificant Subsidiary) and the petition is not controverted within 10 days, or is not dismissed within 60 days, after commencement of the case; or a custodian (as defined in the Bankruptcy Code) is appointed for, or takes charge of, all or substantially all of the property of the Parent Guarantor or any of its Subsidiaries (other than an Insignificant Subsidiary); or the Parent Guarantor or any of its Subsidiaries (other than an Insignificant Subsidiary) commences any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction whether now or hereafter in effect relating to the Parent Guarantor or any of its Subsidiaries (other than an Insignificant Subsidiary); or there is commenced against the Parent Guarantor or any of its Subsidiaries (other than an Insignificant Subsidiary) any such case or proceeding which remains undismissed for a period of 60 days; or the Parent Guarantor or any of its Subsidiaries (other than an Insignificant Subsidiary) is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered; the Parent Guarantor or any of its Subsidiaries (other than an Insignificant Subsidiary) suffers any appointment of any custodian or the like for it or any substantial part of its property to continue undischarged or unstayed for a period of 60 days; or the Parent Guarantor or any of its Subsidiaries (other than an Insignificant Subsidiary) makes a general assignment for the benefit of creditors; or any corporate action is taken by the Parent Guarantor or any of its Subsidiaries (other than an Insignificant Subsidiary) for the purpose of effecting any of the foregoing; or 8.06 Parent Guaranty. The Parent Guaranty or any provision thereof shall cease to be in full force and effect, or the Parent Guarantor or any Person acting by or on behalf of the Parent Guarantor shall deny or disaffirm all or any portion of the Parent -25- 30 Guarantor's obligation thereunder, or the Parent Guarantor shall (i) default in the observance of any term, covenant or agreement contained in Sections 11(g) or 12 of the Parent Guaranty or in the obligation to make any payment thereunder or (ii) default in the observance of any other term, covenant or agreement contained in the Parent Guaranty and such default shall continue unremedied for a period of at least 30 days after the earlier of the date on which an officer of the Parent Guarantor has actual knowledge thereof or the date of notice to the Parent Guarantor or the Company by the Trustee or any Purchaser; or 8.07 Judgments. One or more judgments or decrees shall be entered against the Parent Guarantor or any of its Subsidiaries involving a liability of $25,000,000 or more in the aggregate for all such judgments and decrees (not paid or to the extent not covered by insurance or, if insured, only to the extent the insurer has admitted coverage in writing) and any such judgments or decrees shall not have been vacated, discharged or stayed or bonded pending appeal within 60 days from the entry thereof; or 8.08 Employee Benefit Plans. Each of the following shall occur: (a)(i) A contribution required to be made with respect to any (x) employee pension benefit plan (as defined in Section 3(2) of ERISA) maintained or contributed to by (or to which there is an obligation to contribute of) the Parent Guarantor, any of its Subsidiaries or an ERISA Affiliate or (y) Foreign Pension Plan has not been timely made or (ii) the Parent Guarantor or any of its Subsidiaries has incurred or is likely to incur liabilities pursuant to one or more employee welfare benefit plans (as defined in Section 3(1) of ERISA) that provide benefits to retired employees or other former employees (other than as required by Section 601 of ERISA) or employee pension benefit plans (as defined in Section 3(2) of ERISA); and (b) there shall result from any such event or events the imposition of a Lien, the granting of a security interest, or a liability or a material risk of incurring a liability; and (c) such Lien, security interest or liability, individually or in the aggregate when combined with all other such Liens, security interests or liabilities, will, in the opinion of the Required Purchasers, have a Material Adverse Effect; or 8.09 Change of Control. Any Change of Control shall occur; or 8.10 Vessel in Class. Any insurance required to be maintained by the terms of the Mortgages shall cease to be in full force and effect or, at any time after the Project Completion Date the Vessel no longer is classified in the highest class available for rigs of its age and type with the American Bureau of Shipping, Inc., Bureau Veritas, Det Norske Veritas, Lloyd's Register of Shipping, or another internationally recognized classification society reasonably acceptable to the Purchasers; then, and in any such event, and at any time thereafter, if any Event of Default shall then be continuing, the Trustee shall, upon the written request of the Required Purchasers, by written notice to the Company, take any or all of the following actions, without prejudice to the rights of the Trustee or any Purchaser to enforce its claims against the Company , except as otherwise specifically provided for in this Agreement (provided that, if an Event of Default specified in Section 8.05 shall occur with respect to Parent Guarantor or any of its Subsidiaries (other than an Insignificant Subsidiary), the result which would occur upon the giving of written notice by the Trustee as specified in clauses (i) and (ii) -26- 31 below shall occur automatically without the giving of any such notice): (i) declare the Notes and all Obligations owing hereunder to be due, whereupon the same shall become, forthwith due and payable in the full at 100% of the outstanding principal balance of the respective Series of Notes plus accrued interest and the Make-Whole Amount without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Company; (ii) declare any other obligations owing hereunder to be due, whereupon the same shall become, forthwith due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Company; (iii) apply any amounts held as cash collateral to repay Obligations, and (iv) exercise all available rights and remedies under the Mortgage. Notwithstanding the foregoing, nothing herein shall impair the right of any Purchaser to accelerate its own Notes if an Event of Default under Section 8.01 shall occur and be continuing. SECTION 9. DEFINITIONS. As used herein, the following terms shall have the meanings herein specified unless the context otherwise requires. Defined terms in this Agreement shall include in the singular number the plural and in the plural the singular: "Affiliate" shall mean, with respect to any Person, any other Person directly or indirectly controlling (including but not limited to all directors and officers of such Person), controlled by, or under direct or indirect common control with such Person. A Person shall be deemed to control (x) a corporation if such Person possesses, directly or indirectly, the power (i) to vote 25% or more of the securities having ordinary voting power for the election of directors of such corporation or (ii) to direct or cause the direction of the management and policies of such corporation, whether through the ownership of voting securities, by contract or otherwise or (y) any partnership, association joint venture, limited liability company or other entity in which such person, directly or indirectly through one or more subsidiaries, has more than a 25% equity interest. "Agreement" shall mean this Note Purchase Agreement, as the same may be from time to time further modified, amended and/or supplemented. "Approved Bank" shall have the meaning provided in the definition of "Cash Equivalents." "Approved Company" shall have the meaning provided in the definition of "Cash Equivalents." "Arrangers" shall mean Christiania Bank og Kreditkasse ASA, New York Branch and Kramer, Clark & Company, Inc. "Assignments of Insurances" shall mean the Assignments of Insurances substantially in the form of Exhibit F. "Authorized Officer" shall mean any senior officer of the Company designated as such in writing to the Trustee by the Company. -27- 32 "Bankruptcy Code" shall have the meaning provided in Section 8.05. "Business Day" shall mean any day excluding Saturday, Sunday and any day which shall be in the City of New York a legal holiday or a day on which banking institutions are authorized by law or other governmental actions to close. "Capital Lease" as applied to any Person shall mean any lease of any property (whether real, personal or mixed) by that Person as lessee which, in conformity with GAAP, is accounted for as a capital lease on the balance sheet of that Person. "Capitalized Lease Obligations" shall mean all obligations under Capital Leases of the Company in each case taken at the amount thereof accounted for as liabilities in accordance with GAAP "Cash Equivalents" shall mean (i) securities issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof (provided that the full faith and credit of the United States of America is pledged in support thereof) having maturities of not more than four years from the date of acquisition, or repurchase obligations with respect thereto, (ii) U.S. dollar denominated time deposits, certificates of deposit, bankers' acceptances and Eurocurrency deposits of (x) any Purchaser, (y) any domestic commercial bank of recognized standing having capital and surplus in excess of $100,000,000 or (z) any bank (or the parent company of such bank) whose short-term commercial paper rating from Standard & Poor's Rating Group ("S&P") is at least A-1 or the equivalent thereof or from Moody's Investors Service, Inc. ("Moody's") is at least P-1 or the equivalent thereof (any such bank, an "Approved Bank"), in each case with maturities of not more than one year from the date of acquisition, (iii) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clause (i) above entered into with any bank meeting the qualifications specified in clause (ii) above, (iv) commercial paper issued by any Purchaser or Approved Bank or by the parent company of any Purchaser or Approved Bank and commercial paper issued by, or guaranteed by, any corporation with a short-term commercial paper rating of at least A-1 or the equivalent thereof by S&P or at least P-1 or the equivalent thereof by Moody's (any such company, an "Approved Company"), or guaranteed by any industrial company with a long term unsecured debt rating of at least A or A2, or the equivalent of each thereof, from S&P or Moody's, as the case may be, and in each case maturing within one year after the date of acquisition and (v) investments in money market mutual funds having assets in excess of $100,000,000. "CERCLA" shall mean the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. ss. 9601 et seq. "Change of Control" shall mean (a) Parent Guarantor shall at any time cease to own, either directly or indirectly, 100% of the capital stock of the Company or (b) any "person" (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), is or becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under said Exchange Act), directly or indirectly, of more than 50% of the total voting power of the Voting Stock of Parent Guarantor or (c) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board -28- 33 of Directors of the Company (together with any new directors whose election by such Board of Directors or whose nomination for election by the stockholders of the Company was approved by a vote of a majority of the directors of the Company then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors of the Company then in office. "Claims" shall have the meaning provided in the definition of "Environmental Claims." "Closing" shall have the meaning provided in Section 1.02. "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time and the regulations promulgated and the rulings issued thereunder. Section references to the Code are to the Code, as in effect on the Effective Date and any subsequent provisions of the Code, amendatory thereof, supplemental thereto or substituted therefor. "Collateral" shall mean cash in the Concentration Account, the Assignments of Insurances and the Mortgaged Rigs and the proceeds of each thereof. "Commitment" shall mean, with respect to each Purchaser, the sum of such Purchaser's Series A Commitment, Series B Commitment, Series C Commitment and Series D Commitment. "Company" shall have the meaning provided in the first paragraph of this Agreement. "Confidential Information" shall have the meaning provided in Section 11.15. "Concentration Account" shall have the meaning provided in Section 6.11. "Construction Contract" shall mean the Agreement for the Semi-Submersible Conversion of the Mobile Offshore Drilling Unit "Jim Thompson", dated August 29, 1997, between NDUS, an Affiliate of the Company, and Ham Marine, Inc., relating to the Project. "Credit Documents" shall mean this Agreement, the Notes, the Mortgages, the Assignments of Insurances, the Parent Guaranty, each Subsidiary Guaranty and any documents executed in connection herewith and therewith. "Credit Party" shall mean Parent Guarantor, each Subsidiary Guarantor and the Company. "Default" shall mean any event, act or condition which with notice or lapse of time, or both, would constitute an Event of Default. "Dividends" shall mean to declare or pay on the part of the Company any dividends (other than dividends payable solely in capital stock of such Person) or return -29- 34 any capital to, its stockholders or authorize or make any other distribution, payment or delivery of property or cash to its stockholders as such, or redeem, retire, purchase or otherwise acquire, directly or indirectly, for a consideration, any shares of any class of its capital stock now or hereafter outstanding (or any warrants for or options or stock appreciation rights in respect of any of such shares), or set aside any funds for any of the foregoing purposes. "Dollars" shall mean freely transferable lawful money of the United States. "Effective Date" shall have the meaning provided in Section 11.10. "Eligible Transferee" shall mean and include a commercial bank, financial institution or other "accredited investor" (as defined by Regulation D of the Securities Act of 1933). "Environmental Claims" means any and all administrative, regulatory or judicial actions, suits, demands, demand letters, claims, liens, notices of noncompliance or violation, investigations (other than internal reports prepared by the Company solely in the ordinary course of such Person's business and not in response to any third party action or request of any kind) or proceedings relating in any way to any Environmental Law or any permit issued, or any approval given, under any such Environmental Law (hereafter, "Claims"), including, without limitation, (a) any and all Claims by governmental or regulatory authorities for enforcement, cleanup, removal, response, remedial or other actions or damages pursuant to any applicable Environmental Law, and (b) any and all Claims by any third party seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief resulting from Hazardous Materials arising from alleged injury or threat of injury to health, safety or the environment. "Environmental Law" means any applicable Federal, state, foreign or local statute, law, rule, regulation, ordinance, code, guide, policy and rule of common law now or hereafter in effect and in each case as amended, and any judicial or administrative interpretation thereof, including any judicial or administrative order, consent decree or judgment, relating to the environment, or Hazardous Materials, including, without limitation, CERCLA; RCRA; the Federal Water Pollution Control Act, as amended, 33 U.S.C. ss. 1251 et seq.; the Toxic Substances Control Act, 15 U.S.C. ss. 7401 et seq.; the Clean Air Act, 42 U.S.C. ss. 7401 et seq.; the Safe Drinking Water Act, 42 U.S.C. ss. 3808 et seq.; the Oil Pollution Act of 1990, 33 U.S.C. ss. 2701 et seq. and any applicable state and local or foreign counterparts or equivalents. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder. Section references to ERISA are to ERISA, as in effect at the Effective Date and any subsequent provisions of ERISA, amendatory thereof, supplemental thereto or substituted therefor. "ERISA Affiliate" shall mean each person (as defined in Section 3(9) of ERISA) which together with the Parent Guarantor or any of its Subsidiaries would be deemed to be a "single employer" (i) within the meaning of Sections 414(b), (c), (m) and (o) of the -30- 35 Code or (ii) as a result of the Company being or having been a general partner of such person. "Event of Default" shall have the meaning provided in Section 8. "Fees" shall mean all amounts payable pursuant to, or referred to in, Section 2.01. "Final Maturity Date" shall mean January 1, 2009. "Foreign Pension Plan" means any plan, fund (including, without limitation, any superannuation fund) or other similar program established or maintained outside the United States of America by the Company primarily for the benefit of employees of the Company residing outside the United States of America, which plan, fund or other similar program provides, or results in, retirement income, a deferral of income in contemplation of retirement or payments to be made upon termination of employment, and which plan is not subject to ERISA or the Code. "GAAP" shall mean generally accepted accounting principles in the United States of America as in effect from time to time. "Hazardous Materials" means (a) any petroleum or petroleum products, radioactive materials, asbestos in any form that is or could become friable, urea formaldehyde foam insulation, transformers or other equipment that contained electric fluid containing levels of polychlorinated biphenyls, and radon gas; (b) any chemicals, materials or substances defined as or included in the definition of "hazardous substances," "hazardous waste," "hazardous materials," "extremely hazardous waste," "restricted hazardous waste," "toxic substances," "toxic pollutants," "contaminants," or "pollutants," or words of similar import, under any applicable Environmental Law; and (c) any other chemical, material or substance, exposure to which is prohibited, limited or regulated by any governmental authority. "Indebtedness" of any Person shall mean without duplication (i) all indebtedness of such Person for borrowed money, (ii) the deferred purchase price of assets or services which in accordance with GAAP would be shown on the liability side of the balance sheet of such Person, (iii) the face amount of all letters of credit issued for the account of such Person and, without duplication, all drafts drawn thereunder, (iv) all Indebtedness of a second Person secured by any Lien on any property owned by such first Person, whether or not such indebtedness has been assumed, (v) all Capitalized Lease Obligations of such Person, (vi) all net obligations of such Person under Interest Rate Agreements and (vii) all Contingent Obligations (as defined in the Parent Guaranty) of such Person (other than such Contingent Obligations arising from the guaranty by such Person of Permitted Indebtedness of the Company and/or its Subsidiaries) provided that Indebtedness shall not include trade payables and accrued expenses, in each case arising in the ordinary course of business. "Insignificant Subsidiary" shall mean any Subsidiary of the Parent Guarantor which has assets of not greater than $5,000,000 in the aggregate and which, if aggregated with all other Subsidiaries of the Parent Guarantor with respect to which an event -31- 36 described in Section 8.05 has occurred and is continuing, would have assets of not greater than $25,000,000. "Institutional Investor" shall mean (a) any original purchaser of a Note, (b) any holder of a Note holding more than 4% of the aggregate principal amount of the Notes then outstanding, and (c) any bank, trust company, savings and loan association or other financial institution, any pension plan, any investment company, any insurance company, any broker or dealer, or any other similar financial institution or entity, regardless of legal form. "Interest Rate Agreement" shall mean any interest rate swap agreement, any interest rate cap agreement, any interest rate collar agreement or other similar agreement or arrangement designed to protect the Company against interest rate risk. "Investments" shall mean and include (i) lending money or credit or making advances to any Person (net of any repayments or returns thereof), (ii) purchasing or acquiring any stock, obligations or securities of, or any other interest in, or making capital contributions to any Person, or (iii) guaranteeing the debt or obligations of any other Person. "Lien" shall mean any mortgage, pledge, security interest, security title, encumbrance, lien or charge of any kind (including any agreement to give any of the foregoing, any conditional sale or other title retention agreement or any lease in the nature thereof). "Make-Whole Amount" shall have the meaning provided in Section 3.01(b). "Margin Stock" shall have the meaning provided in Regulation U. "Material Adverse Effect" shall mean a material adverse effect on (a) the business, operations, affairs, financial condition, assets or properties of the Company or the Parent Guarantor and its Subsidiaries taken as a whole, or (b) the ability of the Company to perform its obligations under this Agreement and the Notes, or the ability of the Parent Guarantor to perform its obligations under the Parent Guaranty or the ability of any Subsidiary Guaranty to perform its obligations under its Subsidiary Guaranty or (c) the validity or enforceability of this Agreement, the Notes, the Parent Guaranty or a Subsidiary Guarantor. "Mortgages" shall have the meaning provided in Section 4.14. "Mortgaged Rig" shall have the meaning provided in Section 4.14; provided that such rigs shall constitute Mortgaged Rigs only for so long as the Mortgage thereon is required to remain in effect pursuant to the terms of this Agreement. ""NDAHC" shall mean Noble Drilling Asset Holding Corporation, a Delaware corporation. "NDUS" shall have the meaning provided in Section 5.16. -32- 37 "Note" shall have the meaning provided in Section 1.01. "Notice Office" shall mean the office of the Trustee set forth below its signature hereto, or such other office as the Trustee may designate to the Company from time to time. "Obligations" shall mean (i) all amounts, direct or indirect, contingent or absolute, of every type or description, and at any time existing, owing to the Trustee or any Purchaser pursuant to the terms of this Agreement or any other Credit Document (other than the Parent Guaranty) and (ii) each and every obligation of the Company or NDAHC or NDUS as owners under the Mortgages. "Parent Guarantor" means Noble Drilling Corporation, a Delaware corporation. "Parent Guaranty" shall have the meaning provided in Section 4.11(i) "Payment Office" shall mean the office of the Trustee set forth below its signature hereto, or such other office as the Trustee may designate to the Company from time to time. "Permitted Indebtedness" shall mean Indebtedness permitted by Section 7.03. "Permitted Indebtedness" shall mean Indebtedness permitted by Section 7.03. "Permitted Investments" shall mean and include the following: (a) the Company may make Investments in cash and Cash Equivalents; (b) the Company may acquire and hold receivables owing to them, if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; (c) the Company may make loans and advances to employees in the ordinary course of business or in connection with employee relocation in an aggregate principal amount not to exceed $500,000 at any time outstanding; and (d) the Company may acquire and own investments (including debt obligations) received in connection with the bankruptcy or reorganization of suppliers and customers and in settlement of delinquent obligations of, and other disputes with, customers and suppliers arising in the ordinary course of business. "Permitted Liens" shall mean Liens permitted by Section 7.04. "Person" shall mean any individual, partnership, joint venture, firm, corporation, association, limited liability company, trust or other enterprise or any government or political subdivision or any agency, department or instrumentality thereof. "Plan" shall mean any multiemployer or single-employer plan as defined in Section 4001 of ERISA, which is maintained or contributed to by (or to which there is an obligation to contribute of) the Company or an ERISA Affiliate. -33- 38 "Pre-Delivery Mortgaged Rigs" shall have the meaning provided in Section 6.12(c). "Project" shall mean the upgrade of the Vessel from a submersible drilling rig to a Noble Drilling EVA-4000(tm) semisubmersible drilling rig. "Project Completion Date" shall mean the date upon which all work relating to the Project has been completed in accordance with the Construction Contract and the Vessel has been delivered by the Shipyard to the Company free from any Lien or other claim of the Shipyard. "Purchaser" shall have the meaning provided in the first paragraph of this Agreement. "RCRA" shall mean the Resource Conservation and Recovery Act, as amended, 42 U.S.C. ss. 6901 et seq. "Regulation U" shall mean Regulation U of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or a portion thereof establishing margin requirements. "Replaced Purchaser" shall have the meaning provided in Section 1.06. "Replacement Purchaser" shall have the meaning provided in Section 1.06. "Required Purchasers" shall mean Purchasers whose outstanding Commitments (or, if after the Total Commitment has been terminated, outstanding Notes) constitute greater than 66 2/3% of the sum of the Total Commitment (or, if after the Total Commitment has been terminated, the total principal balance of all outstanding Notes, other than those held by the Company or any Affiliate, at such time). "Restricted Payments" shall mean any Dividend or Investment, other than Permitted Investments. "Scheduled Repayment" shall mean a Series A Scheduled Repayment, a Series B Scheduled Repayment or a Series C Scheduled Repayment. "Scheduled Repayment Date" shall mean a Series A Scheduled Repayment Date, a Series B Scheduled Repayment Date or a Series C Scheduled Repayment Date. "SDDI Contract" shall mean (i) that certain Marine Drilling Order dated October 14, 1998 by NDUS and accepted and approved by SDDI, and (ii) that certain Master Drilling Agreement dated June 1, 1997 between SDDI and NDUS, to the extent, but only to the extent, such Drilling Order completes a contract under the Master Drilling Agreement and/or is otherwise applicable thereto, in each as from time to time amended or supplemented. -34- 39 "SEC" shall mean the Securities and Exchange Commission or any successor thereto. "Secured Creditors" shall have the meaning assigned to such term in the respective Security Documents. "Security Documents" shall mean the Mortgages and the Assignments of Insurances. "Series" shall mean the respective series of Notes issued pursuant to this Agreement, with their being four separate Series, i.e., Series A Notes, Series B Notes, Series C Notes and Series D Notes. "Series A Commitment" shall mean, with respect to each Purchaser, the amount set forth opposite such Purchaser's name in Annex I directly below the column entitled "Series A Commitment," as the same may be reduced from time to time pursuant to Section 2.02. "Series A Maturity Date" shall mean April 1, 2002. "Series A Note" shall have the meaning provided in Section 1.01. "Series A Rate" shall mean 5.93% per annum. "Series A Scheduled Repayment" shall have the meaning provided in Section 3.02. "Series A Scheduled Repayment Date" shall have the meaning provided in Section 3.02. "Series B Commitment" shall mean, with respect to each Purchaser, the amount set forth opposite such Purchaser's name in Annex I directly below the column entitled "Series B Commitment," as the same may be reduced from time to time pursuant to Section 2.02. "Series B Maturity Date"shall mean October 1, 2004. "Series B Note" shall have the meaning provided in Section 1.01. "Series B Rate" shall mean 6.73% per annum. "Series B Scheduled Repayment" shall have the meaning provided in Section 3.02. "Series B Scheduled Repayment Date" shall have the meaning provided in Section 3.02. "Series C Commitment" shall mean, with respect to each Purchaser, the amount set forth opposite such Purchaser's name in Annex I directly below the column entitled -35- 40 "Series C Commitment," as the same may be reduced from time to time pursuant to Section 2.02. "Series C Note" shall have the meaning provided in Section 1.01. "Series C Rate" shall mean 7.12% per annum. "Series C Scheduled Repayment" shall have the meaning provided in Section 3.02. "Series C Scheduled Repayment Date" shall have the meaning provided in Section 3.02. "Series D Commitment" shall mean, with respect to each Purchaser, the amount set forth opposite such Purchaser's name in Annex I directly below the column entitled "Series D Commitment," as the same may be reduced from time to time pursuant to Section 2.02. "Series D Note" shall have the meaning provided in Section 1.01. "Series D Rate" shall mean 7.25% per annum. "Series D Scheduled Repayment" shall have the meaning provided in Section 3.02. "Series D Scheduled Repayment Date" shall have the meaning provided in Section 3.02. "Shipyard" means the shipyard of Friede Goldman Offshore-West, where the Project is being undertaken. "Subsidiary" of any Person shall mean and include (i) any corporation more than 50% of whose stock of any class or classes having by the terms thereof ordinary voting power to elect a majority of the directors of such corporation (irrespective of whether or not at the time stock of any class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time owned by such Person directly or indirectly through one or more Subsidiaries and (ii) any partnership, association, joint venture, limited liability company or other entity in which such Person directly or indirectly through one or more Subsidiaries, has more than a 50% equity interest at the time. "Subsidiary Guarantor" shall mean NDAHC and NDUS. "Subsidiary Guaranty" shall have the meaning provided in Section 4.11. "Taxes" shall have the meaning provided in Section 3.04(a). "Total Commitment" shall mean, at any time, the sum of the Commitments of each of the Purchasers. -36- 41 "Total Series A Commitment" shall mean, at any time, the sum of the Series A Commitments of the Purchasers. "Total Series B Commitment" shall mean, at any time, the sum of the Series B Commitments of the Purchasers. "Total Series C Commitment" shall mean, at any time, the sum of the Series C Commitments of the Purchasers. "Total Series D Commitment" shall mean, at any time, the sum of the Series D Commitments of the Purchasers. "Trustee" shall have the meaning provided in the first paragraph of this Agreement and shall include any successor to the Trustee appointed pursuant to Section 10.09. "UCC" shall mean the Uniform Commercial Code. "Vessel" shall mean the offshore drilling rig "Noble Jim Thompson" registered under the laws and flag of the Republic of Panama (Official No.27476-HT). "Voting Stock" shall mean, with respect to any corporation, the outstanding stock of all classes (or equivalent interests) which ordinarily, in the absence of contingencies, entitles holders thereof to vote for the election of directors (or Persons performing similar functions) of such corporation, even though the right so to vote has been suspended by the happening of such a contingency. "Written" or "in writing" shall mean any form of written communication or a communication by means of telex or facsimile transmission. SECTION 10. THE TRUSTEE. 10.01 Appointment. (a) The Purchasers hereby designate Chase Bank of Texas, National Association as Trustee (for purposes of this Agreement, the term "Trustee" shall also refer to Chase Bank of Texas, National Association in its capacity as Trustee pursuant to the Credit Documents) to act as specified herein and in the other Credit Documents. Each Purchaser hereby irrevocably authorizes, and each holder of any Note by the acceptance of such Note shall be deemed irrevocably to authorize, the Trustee to enter into and take such action on its behalf under the provisions of this Agreement, the other Credit Documents and any other instruments and agreements referred to herein or therein and to exercise such powers and to perform such duties hereunder and thereunder as are specifically delegated to or required of the Trustee by the terms hereof and thereof and such other powers as are reasonably incidental thereto. The Trustee may perform any of its duties hereunder by or through its respective officers, directors, agents, employees or Affiliates. (b) If an Event of Default shall occur and be continuing, upon the written request of the Required Purchasers, and upon being secured or indemnified to its satisfaction pursuant to Section 10.06(c), the Trustee shall proceed to protect and enforce the rights of -37- 42 the Purchasers under this Agreement and the Credit Documents by a suit or action at law or in equity, either for the specific performance of any covenant or agreement contained herein or therein, or in aid of the execution of any power herein or therein granted, or by any other appropriate judicial or non-judicial proceedings for the enforcement of any other legal or equitable remedy. (c) The Trustee hereby represents to the Company and each Purchaser that it is duly authorized to enter into this Agreement and each Credit Document to which it is a party, has duly executed and delivered each such document and each constitutes a valid and binding agreement of the Trustee enforceable in accordance with its terms, except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moritorium or similar laws generally affecting creditors' rights and by equitable principles (regardless of whether enforcement is sought in equity or at law). 10.02 Nature of Duties. The Trustee shall not have any duties or responsibilities except those expressly set forth in this Agreement and the other Credit Documents. Neither the Trustee nor any of its respective officers, directors, agents, employees or Affiliates shall be liable for any action taken or omitted by it or them hereunder or under any other Credit Document or in connection herewith or therewith, unless caused by its or their gross negligence or willful misconduct. The duties of the Trustee shall be mechanical and administrative in nature; the Trustee shall not have by reason of this Agreement or any other Credit Document a fiduciary relationship in respect of any Purchaser or the holder of any Note; and nothing in this Agreement or any other Credit Document, expressed or implied, is intended to or shall be so construed as to impose upon the Trustee any obligations in respect of this Agreement or any other Credit Document except as expressly set forth herein or therein. 10.03 Lack of Reliance on the Trustee. Independently and without reliance upon the Trustee, each Purchaser and the holder of each Note, to the extent it deems appropriate, has made and shall continue to make (i) its own independent investigation of the financial condition and affairs of the Credit Parties in connection with the purchase of the Notes and the taking or not taking of any action in connection herewith and (ii) its own appraisal of the creditworthiness of the Credit Parties and, except as expressly provided in this Agreement, the Trustee shall not have any duty or responsibility, either initially or on a continuing basis, to provide any Purchaser or the holder of any Note with any credit or other information with respect thereto, whether coming into its possession before the purchase of the Notes or at any time or times thereafter. The Trustee shall not be responsible to any Purchaser or the holder of any Note for any recitals, statements, information, representations or warranties herein or in any document, certificate or other writing delivered in connection herewith or for the execution, effectiveness, genuineness, validity, enforceability, perfection, collectibility, priority or sufficiency of this Agreement or any other Credit Document or the financial condition of the Credit Parties or be required to make any inquiry concerning either the performance or observance of any of the terms, provisions or conditions of this Agreement or any other Credit Document, or the financial condition of the Credit Parties or the existence or possible existence of any Default or Event of Default. -38- 43 10.04 Certain Rights of the Trustee. If the Trustee shall request instructions from the Required Purchasers with respect to any act or action (including failure to act) in connection with this Agreement or any other Credit Document, the Trustee shall be entitled to refrain from such act or taking such action unless and until the Trustee shall have received instructions from the Required Purchasers; and the Trustee shall not incur liability to any Person by reason of so refraining. Without limiting the foregoing, neither any Purchaser nor the holder of any Note shall have any right of action whatsoever against the Trustee as a result of the Trustee acting or refraining from acting hereunder or under any other Credit Document in accordance with the instructions of the Required Purchasers. 10.05 Reliance. The Trustee shall be entitled to rely, and shall be fully protected in relying, upon any note, writing, resolution, notice, statement, certificate, telex, teletype or telecopier message, cablegram, radiogram, order or other document or telephone message signed, sent or made by any Person that the Trustee believed to be the proper Person, including, without limitation, counsel to Credit Parties, and, with respect to all legal matters pertaining to this Agreement and any other Credit Document and its duties hereunder and thereunder, upon advice and statements of legal counsel to the Trustee. 10.06 Indemnification. (a) The Company shall pay to the Trustee from time to time such compensation for its services as shall have been agreed to by the Company and the Trustee. The Company shall reimburse the Trustee upon request for all reasonable out-of-pocket expenses incurred or made by it, including costs of enforcement of the Credit Documents, in addition to the compensation for its services. Such expenses shall include the reasonable compensation and expenses, disbursements and advances of the Trustee's agents, counsel, accountants and experts. The Company shall defend and indemnify the Trustee against any and all loss, liability or expense (including reasonable attorneys' fees) incurred by the Trustee in connection with the administration of this trust and the performance of their duties hereunder except for any loss, liability or expense which is ultimately adjudicated to have been caused by the gross negligence or willful misconduct of the Trustee. The Trustee shall notify the Company of any claim for which it may seek indemnity promptly upon obtaining actual knowledge thereof; provided, however, that any failure so to notify the Company shall not relieve the Company or any Subsidiary Guarantor of its indemnity obligations hereunder. The Company shall defend the claim and the indemnified party shall provide reasonable cooperation at the Company's expense in the defense. Such indemnified parties may have separate counsel and the Company and the Subsidiary Guarantors, as applicable shall pay the fees and expenses of such counsel; provided, however, that the Company shall not be required to pay such fees and expenses if it assumes such indemnified parties' defense and, in such indemnified parties' reasonable judgment, there is no conflict of interest between the Company and the Subsidiary Guarantors, as applicable, and such parties in connection with such defense. The Company's payment obligations pursuant to this Section shall survive the satisfaction, expiration or termination of this Agreement, any rejection or termination of this Agreement under any bankruptcy law or the resignation or removal of the Trustee. -39- 44 (b) The rights, privileges, protections and benefits given to the Trustee, including, without limitation, its rights to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder. (c) The Trustee shall not be required to expend or risk its own funds or to otherwise incur any financial liability in the performance of any of its duties hereunder or under the Credit Documents or in the exercise of its rights, remedies or powers hereunder or under any of the Credit Documents. The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Agreement or any other applicable Credit Document at the request or direction of any of the Purchasers, unless such Purchasers shall have offered to the Trustee security or indemnity reasonably satisfactory to the Trustee against the costs, expenses and liabilities which might reasonably by incurred by it in compliance with such request or direction. 10.07 The Trustee in Its Individual Capacity. In the event that the Trustee purchases or otherwise acquires any Notes under this Agreement, the Trustee shall have the rights and powers specified herein for a "Purchaser" and may exercise the same rights and powers as though it were not performing the duties specified herein; and the term "Purchasers," "Required Purchasers," "holders of Notes" or any similar terms shall, unless the context clearly otherwise indicates, include the Trustee in its individual capacity; provided, that any action taken in respect of funds in the Concentration Account shall be for the pro rata benefit of all Purchasers. The Trustee may accept deposits from, lend money to, and generally engage in any kind of banking, trust or other business with the Credit Parties or any Affiliate thereof as if it were not performing the duties specified herein, and may accept fees and other consideration from the Credit Parties for services in connection with this Agreement and otherwise without having to account for the same to the Purchasers. 10.08 Holders. The Trustee may deem and treat the payee of any Note as the owner thereof for all purposes hereof unless and until a written notice of the assignment, transfer or endorsement thereof, as the case may be, shall have been filed with the Trustee. Any request, authority or consent of any Person who, at the time of making such request or giving such authority or consent, is the holder of any Note shall be conclusive and binding on any subsequent holder, transferee, assignee or indorsee, as the case may be, of such Note or of any Note or Notes issued in exchange therefor. 10.09 Resignation by the Trustee; Removal. (a) The Trustee may resign from the performance of all its functions and duties hereunder and/or under the other Credit Documents (and shall so resign in the event the Trustee shall fail to have a combined capital and surplus of less than $500,000,000) at any time by giving 15 Business Days' prior written notice to the Company and the Purchasers. Such resignation shall take effect upon the appointment of a successor Trustee pursuant to clauses (b) and (c) below or as otherwise provided below. (b) Upon any such notice of resignation, the Required Purchasers shall appoint a successor Trustee hereunder or thereunder who shall be a commercial bank or trust company authorized by law to accept the obligations contemplated hereby and having a combined capital and surplus of at least $500,000,000 as set forth in its most recently -40- 45 published annual report of condition and being rated at lease "A" by a recognized rating agency and reasonably acceptable to the Company. (c) If a successor Trustee shall not have been so appointed within such 15 Business Day period, the Trustee, with the consent of the Company, shall then appoint a successor Trustee who shall serve as Trustee hereunder or thereunder until such time, if any, as the Required Purchasers appoint a successor Trustee as provided above. (d) The holders of a majority in aggregate principal amount of the Notes at the time outstanding may at any time remove the Trustee and appoint a successor trustee by delivering to the Trustee so removed, to the successor trustee so appointed and to the Company and to any Purchasers not joining in such notice written notice of such removal. Any removal of the Trustee and any appointment of a successor trustee shall become effective upon acceptance of appointment by the successor trustee. 10.10 Concentration Account (a) The Trustee shall establish the Concentration Account into which the Company or its successor and assignee shall deposit any and all payments made to it under the SDDI Contract. The Trustee is hereby instructed to disburse all funds deposited with it and credited to the Concentration Account prior to 2:00 P.M local time on any Business Day to the Company to such account as the Company shall designate in writing to the Trustee from time to time on the same Business Day. Funds received and deposited after 2:00 P.M. local time shall be so disbursed prior to 2:00 P.M. of the next Business Day. Receipt of such funds by the Company shall constitute a representation and warranty by the Company to each Purchaser and the Trustee that no Default or Event of Default has occurred and is continuing. (b) Following the occurrence of a Default or an Event of Default the Company shall have no right to receive funds from the Concentration Account and such funds shall be held by the Trustee as security and applied by the Trustee to outstanding obligations as Required Purchasers may direct. The Trustee shall mark its books and records to indicate that following receipt of notification of the occurrence and continuance of a Default or an Event of Default and the Concentration Account shall be under the exclusive dominion and control of the Trustee and the Company shall have no control whatsoever over funds or items deposited in the Concentration Account. 10.11 Insurance. The Trustee is not responsible for effecting, maintaining or renewing any policies of insurance of the Company or any Affiliate of the Company or for the sufficiency of any insurance policy coverage. 10.12 Knowledge of Default. The Trustee shall not be deemed to have knowledge of any Default or Event of Default hereunder unless and until a corporate trust officer of the Trustee who is responsible for the account established hereby shall have actual knowledge of such Default or Event of Default or shall have received written notice thereof from the Company or any Purchaser. -41- 46 SECTION 11. MISCELLANEOUS. 11.01 Payment of Expenses, etc. The Company agrees to (and to cause each other Credit Party, in respect of the Credit Document to which it is a party, to): (i) whether or not the transactions herein contemplated are consummated, pay all reasonable out-of-pocket costs and expenses of the Purchasers in connection with the negotiation, preparation, execution and delivery of the Credit Documents and the documents and instruments referred to therein and any amendment, waiver or consent (whether or not ultimately executed) relating thereto (including, without limitation, the reasonable fees and disbursements of White & Case LLP and Watson, Farley & Williams) and of the Trustee and, after the occurrence and during the continuance of a Default or an Event of Default, each of the Purchasers and the Trustee in connection with the enforcement of the Credit Documents and the documents and instruments referred to therein (including, without limitation, the actual reasonable fees and disbursements of external counsel for the Trustee and, the Purchasers), provided that to the extent it is feasible and a conflict of interest does not exist in the reasonable discretion of the Trustee, the Purchasers and their counsel, the Purchasers shall use the same counsel in connection with the foregoing; (ii) pay and hold each of the Purchasers and the Trustee harmless from and against any and all present and future stamp and other similar taxes with respect to the foregoing matters and save each of the Purchasers harmless from and against any and all liabilities with respect to or resulting from any delay or omission (other than to the extent attributable to such Purchaser) to pay such taxes; and (iii) defend and indemnify each Purchaser and the Trustee and their respective officers, directors, employees, representatives and agents from and hold each of them harmless against any and all losses, liabilities, claims, damages or expenses incurred by any of them as a result of, or arising out of, or in any way related to, or by reason of, (a) any investigation, litigation or other proceeding (whether or not any Purchaser is a party thereto) related to the entering into and/or performance of any Credit Document or the use of the proceeds of any Notes hereunder or the consummation of any transactions contemplated in any Credit Document, whether initiated by Parent Guarantor, the Company or any other Person, including, without limitation, the actual reasonable fees and disbursements of external counsel incurred in connection with any such investigation, litigation or other proceeding (but excluding any such losses, liabilities, claims, damages or expenses to the extent incurred by reason of the gross negligence, willful misconduct, unlawful act or material breach of the terms of this Agreement of the Person to be indemnified), (b) the ownership, management, transportation, operation or conduct of the Vessel or the Mortgaged Rigs, including without limitation any claims of workmen, seamen, contractors and subcontractors, vendors, customers, and any and all Persons, whether or not based on negligence or theories of strict liability or (c) the actual or alleged presence of Hazardous Materials in the air, surface water, groundwater, surface or subsurface of the Mortgaged Rigs or any facility or location at any time owned or operated by the Company, the generation, storage, transportation or disposal of Hazardous Materials at the Mortgaged Rigs or any facility or location at any time owned or operated by the Company, the non-compliance of the Mortgaged Rigs or any facility or location at any time owned or operated by the Company with federal, state and local laws, regulations, and ordinances (including applicable permits thereunder) applicable to the Mortgaged Rigs or any such facility or location, or any Environmental Claim asserted against the Company, the Mortgaged Rigs or any facility or location at any time owned or operated by the Company, including, in each case, without limitation, the actual reasonable fees and disbursements of external -42- 47 counsel and other consultants incurred in connection with any such investigation, litigation or other proceeding (but excluding any losses, liabilities, claims, damages or expenses to the extent incurred by reason of the gross negligence, willful misconduct, unlawful act or material breach of the terms of this Agreement of the Person to be indemnified). To the extent that the undertaking to indemnify, pay or hold harmless the Trustee or any Purchaser set forth in the preceding sentence may be unenforceable because it is violative of any law or public policy, the Company shall make the maximum contribution to the payment and satisfaction of each of the indemnified liabilities which is permissible under applicable law. 11.02 Right of Setoff. In addition to any rights now or hereafter granted under applicable law or otherwise, and not by way of limitation of any such rights, if an Event of Default then exists, each Purchaser is hereby authorized at any time or from time to time, without presentment, demand, protest or other notice of any kind to the Company or to any other Person, any such notice being hereby expressly waived, to set off and to appropriate and apply any and all deposits (general or special) and any other Indebtedness at any time held or owing by such Purchaser (including without limitation by branches and agencies of such Purchaser wherever located) to or for the credit or the account of the Company against and on account of the Obligations and liabilities of the Company to such Purchaser under this Agreement or under any of the other Credit Documents, including, without limitation, all interests in Obligations of the Company purchased by such Purchaser pursuant to Section 11.06(b), and all other claims of any nature or description arising out of or connected with this Agreement or any other Credit Document, irrespective of whether or not such Purchaser shall have made any demand hereunder and although said Obligations, liabilities or claims, or any of them, shall be contingent or unmatured. Without limiting the foregoing, each Purchaser agrees to use reasonable efforts to notify the Company of any exercise of such Purchaser's right of setoff granted hereby. 11.03 Notices. Except as otherwise expressly provided herein, all notices and other communications provided for hereunder shall be in writing (including telex or telecopier communication) and mailed or sent by overnight delivery services, telexed, telecopied or delivered by hand, if to the Company or any other Credit Party, at the address specified opposite its signature below or in the other relevant Credit Documents, as the case may be; if to any Purchaser, at its address specified for such Purchaser on Annex II if to the Trustee, at the address specified below its signature below; or, at such other address as shall be designated by any party in a written notice to the other parties hereto. All such notices and communications shall be effective when received and, in the case of notice by telecopier, after confirmation of such receipt has been given by the recipient, excluding by way of automatic receipt produced by telecopier. 11.04 Successors and Assigns - Representations of the Purchasers. (a) This Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective successors and assigns of the parties hereto, provided that the Company may not assign or transfer any of its rights or obligations hereunder without the prior written consent of the Purchasers. -43- 48 (b) Each Purchaser represents as to itself that it is purchasing the Notes for its own account or for one or more separate accounts maintained by it or for the account of one or more pension or trust funds and not with a view to the distribution thereof, provided that the disposition of its or their property shall at all times be within its or their control. Each Purchaser understands that the Notes have not been registered under the Securities Act of 1933, as amended, and may be resold only if registered pursuant to the provisions of said Securities Act or if an exemption from registration is available, except under circumstances where neither such registration nor such an exemption is required by law and that the Company is not required to register the Notes. (c) Each Purchaser represents that at least one of the following statements is an accurate representation as to each source of funds (a "Source") to be used by such Purchaser to pay the purchase price of the Notes to be purchased by it hereunder: (i) if such Purchaser is an insurance company, the Source does not include assets allocated to any separate account maintained by it in which any employee benefit plan (or its related trust) has any interest, other than a separate account that is maintained solely in connection with your fixed contractual obligations under which the amounts payable, or credited, to such plan and to any participant or beneficiary of such plan (including any annuitant) are not affected in any manner by the investment performance of the separate account; or (ii) the Source is either (i) an insurance company pooled separate account, within the meaning of Prohibited Transaction Exemption ("PTE") 90-1 (issued January 29, 1990), or (ii) a bank collective investment fund, within the meaning of the PTE 91-38 (issued July 12, 1991) and, except as you have disclosed to the Company in writing pursuant to this paragraph (ii), no employee benefit plan or group of plans maintained by the same employer or employee organization beneficially owns more than 10% of all assets allocated to such pooled separate account or collective investment fund; or (iii) the Source constitutes assets of an "investment fund" (within the meaning of Part V of PTE 84-14, the "QPAM Exemption") managed by a "qualified professional asset manager" or "QPAM" (within the meaning of Part V of the QPAM Exemption), no employee benefit plan's assets that are included in such investment fund, when combined with the assets of all other employee benefit plans established or maintained by the same employer or by an affiliate (within the meaning of Section V(c)(1) of the QPAM Exemption) of such employer or by the same employee organization and managed by such QPAM, exceed 20% of the total client assets managed by such QPAM, the conditions of Part I(c) and (g) of the QPAM Exemption are satisfied, and (i) the identity of such QPAM and (ii) the names of all employee benefit plans whose assets are included in such investment fund have been disclosed to the Company in writing pursuant to this clause (iii); or (iv) the Source is an insurance company general account, as such term is defined in PTE 95-60 (issued July 12, 1995) and as of the date of this Agreement there is no employee benefit plan with respect to which the aggregate amount of -44- 49 such general account's reserves and liabilities for the contracts held by or on behalf of such employee benefit plan and all other employee benefit plans maintained by the same employer (and affiliates thereof as defined in Section V(a)(1) of PTE 95-60) or by the same employee organization (in each case determined in accordance with the provisions of PTE 95-60) exceeds 10% of the total reserves and liabilities of such general account (as determined under PTE 95-60) (exclusive of separate account liabilities) plus surplus as set forth in the National Association of Insurance Commissioners Annual Statement filed with the state of domicile of such Purchaser; or (v) the Source is the assets of one or more employee benefit plans which are managed by an "in-house asset manager," as that term is defined in PTE 96-23 (issued April 10, 1996), the conditions of Part (I)(a), (b), (c), (g) and (h) of such exemption have been met with respect to the purchase of the Notes and the names of all employee benefit plans whose assets are included in the transaction have been disclosed to the Company in writing pursuant to this clause (v); or (vi) the Source is a governmental plan; or (vii) the Source is one or more employee benefit plans, or a separate account or trust fund comprised of one or more employee benefit plans, each of which has been identified to the Company in writing pursuant to this clause (vii) (viii) the Source does not include assets of any employee benefit plan, other than a plan exempt from the coverage of ERISA, or (ix) The Source constitute an asset of an "investment fund" (within the meaning of Part V of PTE-84-14, the "QPAM Exemption") managed by a "Qualified Professional Asset Manager" or "QPAM" within the meaning of Part V of the QPAM Exemption" and the purchaser of such Notes is exempt under PTE-84-14. As used in this Section 11.04, the terms "EMPLOYEE BENEFIT PLAN", "GOVERNMENTAL PLAN", "PARTY IN INTEREST" and "SEPARATE ACCOUNT" shall have the respective meanings assigned to such terms in Section 3 of ERISA. 11.05 No Waiver; Remedies Cumulative. No failure or delay on the part of the Trustee or any Purchaser in exercising any right, power or privilege hereunder or under any other Credit Document and no course of dealing between the Company and the Trustee or any Purchaser shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder or under any other Credit Document preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder or thereunder. The rights and remedies herein expressly provided are cumulative and not exclusive of any rights or remedies which the Trustee or any Purchaser would otherwise have. No notice to or demand on the Company in any case shall entitle the Company to any other or further notice or demand in similar or other -45- 50 circumstances or constitute a waiver of the rights of the Trustee or the Purchasers to any other or further action in any circumstances without notice or demand. 11.06 Payments Pro Rata. Home Office Payment. (a) The Trustee agrees that promptly after its receipt of any funds in respect of any Obligations of the Company hereunder, it shall distribute such payment to the Purchasers (other than any Purchaser that has expressly waived its right to receive its pro rata share thereof) pro rata based upon their respective shares, if any, of the Obligations with respect to which such payment was received. (b) So long as the original Purchaser or its nominee shall be the holder of any Note, and notwithstanding anything contained herein or in such Note to the contrary, the Company will pay all sums becoming due on such Note for principal, Make-Whole Amount, if any, and interest by the method and at the address specified for such purpose below its name in Annex II, or by such other method or at such other address as such Purchaser shall have from time to time specified to the Company in writing for such purpose, without the presentation or surrender of such Note or the making of any notation thereon, except that upon written request of the Company made concurrently with or reasonably promptly after payment or prepayment in full of any Note, any such Purchaser shall surrender such Note for cancellation, reasonably promptly after any such request, to the Trustee. Prior to any sale or other disposition of any Note held by a Purchaser or its nominee such Purchaser will, at its election, either endorse thereon the amount of principal paid thereon and the last date to which interest has been paid thereon or surrender such Note to the Trustee in exchange for a new Note or Notes pursuant to Section 11.16. The Company will afford the benefits of this Section 11.06(b) to any Institutional Investor that is the direct or indirect transferee of any Note purchased by such Purchasers under this Agreement and that has made the same agreement relating to such Note such Purchasers have made in this Section 11.06(b). 11.07 Computations. All computations of interest hereunder shall be made on the basis of a 360 day year of twelve 30 day months. 11.08 Governing Law; Submission to Jurisdiction; Venue; Waiver of Jury Trial. (a) This Agreement and the other Credit Documents and the rights and obligations of the parties hereunder and thereunder shall be construed in accordance with and be governed by the internal law of the state of New York. Any legal action or proceeding with respect to this Agreement or any other Credit Document may be brought in the courts of the state of New York or of the United States for the Southern District of New York, and, by execution and delivery of this Agreement, the Company hereby irrevocably accepts for itself and in respect of its property, generally and unconditionally, the non-exclusive jurisdiction of the aforesaid courts. The Company further irrevocably consents to the service of process out of any of the aforementioned courts in any such action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to the Company located outside New York City and by hand delivery to the Company located within New York City, at its address for notices pursuant to Section 11.03, such service to become effective 7 days after such mailing. Nothing herein shall affect the right of the Trustee or any Purchaser to serve process in any other manner -46- 51 permitted by law or to commence legal proceedings or otherwise proceed against the Company in any other jurisdiction. (b) The Company hereby irrevocably waives any objection which it may now or hereafter have to the laying of venue of any of the aforesaid actions or proceedings arising out of or in connection with this Agreement or any other Credit Document brought in the courts referred to in clause (a) above and hereby further irrevocably waives and agrees not to plead or claim in any such court that any such action or proceeding brought in any such court has been brought in an inconvenient forum. (c) Each of the parties to this Agreement hereby irrevocably waives all right to a trial by jury in any action, proceeding or counterclaim arising out of or relating to this Agreement, the other Credit Documents or the transactions contemplated hereby or thereby. (d) Any payment on account of an amount that is payable hereunder in Dollars which is made to or for the account of any Purchaser in the lawful currency of any other jurisdiction ("Currency"), whether as a result of any judgment or order or the enforcement thereof or the realization of any security or the liquidation of the Person obligated to make such payment shall constitute a discharge of the such Person's obligation under this Agreement and the other Credit Documents or the Notes only to the extent of the amount of Dollars which such Purchaser could purchase in the London foreign exchange markets with the amount of other Currency in accordance with normal banking procedures at the rate of exchange prevailing on the first day (other than a Saturday or Sunday) on which banks in London are generally open for business following receipt of the payment first referred to above. If the amount of Dollars that could be so purchased is less than the amount of Dollars originally due to such Purchaser, the Person obligated hereunder to make such payment shall indemnify and save harmless such Purchaser from and against all loss or damage arising out of or as a result of such deficiency. This indemnity shall constitute an obligation separate and independent from the other obligations contained in this Agreement, the other Credit Documents or the Notes, shall give rise to a separate and independent cause of action, shall apply irrespective of any indulgence granted by such Purchaser from time to time and shall continue in full force and effect notwithstanding any judgment or order for a liquidated sum in respect of an amount due hereunder or under any judgment or order. 11.09 Counterparts. This Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. A set of counterparts executed by all the parties hereto shall be lodged with the Company and the Trustee. 11.10 Effectiveness. This Agreement shall become effective on the date (the "Effective Date") on which (i) the Company, the Trustee and each of the Purchasers shall have signed a copy hereof (whether the same or different copies) and shall have delivered the same to the Trustee at the Payment Office of the Trustee or, in the case of the Purchasers, shall have given to the Trustee telephonic (confirmed in writing), written telex or facsimile transmission notice (actually received) at such office that the same has -47- 52 been signed and mailed to it and (ii) the Company shall have fully satisfied each of the conditions set forth in Section 4. 11.11 Headings Descriptive. The headings of the several sections and subsections of this Agreement are inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Agreement. 11.12 Amendment or Waiver. Neither this Agreement nor any other Credit Document nor any terms hereof or thereof may be changed, waived, discharged or terminated unless such change, waiver, discharge or termination is in writing signed by the Company; the Trustee and the Required Purchasers, provided that no such change, waiver, discharge or termination shall, without the consent of each Purchaser affected thereby, (i) extend the maturity date of any Series of Notes, or reduce the rate or extend the time of payment of interest (other than as a result of waiving the applicability of any post-default increase in interest rates) or Fees thereon, or reduce the principal amount thereof, (ii) change the timing of payment or the amount of either the principal or the Make-Whole Amount (iii) amend, modify or waive any provision of this Section, (iv) reduce the percentage specified in the definition of Required Purchasers, (v) consent to the assignment or transfer by the Company of any of its rights and obligations under this Agreement, or (vi) release the Lien on the Collateral or release the Parent Guarantor from the Parent Guaranty or a Subsidiary Guarantor from a Subsidiary Guaranty, in each case otherwise than as contemplated by Section 6.12(c). 11.13 Survival. All indemnities, representations and warranties set forth herein including, without limitation, in Section 1.04, 3.04, 10.06 or 11.01 shall survive the execution and delivery of this Agreement and the purchase and repayment of the Notes. 11.14 Domicile of Notes. Each Purchaser may transfer and carry its Notes at, to or for the account of any branch office, subsidiary or Affiliate of such Purchaser, provided that the Company shall not be responsible for costs arising under Section 3.04 resulting from any such transfer (other than a transfer pursuant to Section 1.05(a)) to the extent not otherwise applicable to such Purchaser prior to such transfer. 11.15 Confidentiality. For the purposes of this Section 11.15, "CONFIDENTIAL INFORMATION" means information delivered to a Purchaser by or on behalf of the Company or any Subsidiary in connection with the transactions contemplated by or otherwise pursuant to this Agreement that is proprietary in nature and that was clearly marked or labeled or otherwise adequately identified when received by a Purchaser as being confidential information of the Company or such Subsidiary, provided that such term does not include information that (a) was publicly known or otherwise known to such Purchaser prior to the time of such disclosure, (b) subsequently becomes publicly known through no act or omission by such Purchaser or any person acting on its behalf, (c) otherwise becomes known to such Purchaser other than through disclosure by the Company or any Subsidiary or (d) constitutes financial statements delivered to such Purchaser hereunder that are otherwise publicly available. Each Purchaser will maintain the confidentiality of such Confidential Information in accordance with procedures adopted by it in good faith to protect confidential information of third parties delivered to it, provided that such Purchaser may deliver or disclose Confidential Information to (i) its -48- 53 directors, officers, employees, agents, attorneys and affiliates (to the extent such disclosure reasonably relates to the administration of the investment represented by such Purchaser's Notes), (ii) such Purchaser's financial advisors and other professional advisors who agree to hold confidential the Confidential Information substantially in accordance with the terms of this Section 11.15, (iii) any other holder of any Note, (iv) any Institutional Investor to which a Purchaser sells or offers to sell such Note or any part thereof or any participation therein (if such Person has agreed in writing prior to its receipt of such Confidential Information to be bound by the provisions of this Section 11.15), (v) any Person from which a Purchaser offers to purchase any security of the Company (if such Person has agreed in writing prior to its receipt of such Confidential Information to be bound by the provisions of this Section 11.15), (vi) any federal or state regulatory authority having jurisdiction over such Purchaser, (vii) the National Association of Insurance Commissioners or any similar organization, or any nationally recognized rating agency that requires access to information about such Purchaser's investment portfolio or (viii) any other Person to which such delivery or disclosure may be necessary or appropriate (w) to effect compliance with any law, rule, regulation or order applicable to such Purchaser, (x) in response to any subpoena or other legal process, (y) in connection with any litigation to which such Purchaser is a party or (z) if an Event of Default has occurred and is continuing, to the extent such Purchaser may reasonably determine such delivery and disclosure to be necessary or appropriate in the enforcement or for the protection of the rights and remedies under its Notes and this Agreement. Each holder of a Note, by its acceptance of a Note, will be deemed to have agreed to be bound by and to be entitled to the benefits of this Section 11.15 as though it were a party to this Agreement. On reasonable request by the Company in connection with the delivery to any holder of a Note of information required to be delivered to such holder under this Agreement or requested by such holder (other than a holder that is a party to this Agreement or its nominee), such holder will enter into an agreement with the Company embodying the provisions of this Section 11.15. 11.16 (a) Registration of Notes, etc. The Company thereby appoints the Trustee as its agent solely for purposes of this Section 11.16, to maintain a register for the registration and registration of transfers of Notes. The name and address of each holder of one or more Notes, each transfer thereof and the name and address of each transferee of one or more Notes shall be registered in such register. Prior to due presentment for registration of transfer, the Person in whose name any Note shall be registered shall be deemed and treated as the owner and holder thereof for all purposes hereof, and the Company shall not be affected by any notice or knowledge to the contrary. The Company shall cause the Trustee to give to any holder of a Note that is an Institutional Investor promptly upon request therefor, a complete and correct copy of the names and addresses of all registered holders of Notes. (b) Upon surrender of any Note at the office of the Trustee for registration of transfer or exchange (and in the case of a surrender for registration of transfer, duly endorsed or accompanied by a written instrument of transfer duly executed by the registered holder of such Note or his attorney duly authorized in writing and accompanied by the address for notices of each transferee of such Note or part thereof), the Company shall execute and deliver, at the Company's expense (except as provided below), one or -49- 54 more new Notes (as requested by the holder thereof) in exchange therefor, in an aggregate principal amount equal to the unpaid principal amount of the surrendered Note. Each such new Note shall be payable to such Person as such holder may request and shall be of the same Series and substantially in the form of the Note so surrendered. Each such new Note shall be dated and bear interest from the date to which interest shall have been paid on the surrendered Note or dated the date of the surrendered Note if no interest shall have been paid thereon. The Company may require payment of a sum sufficient to cover any stamp tax or governmental charge imposed in respect of any such transfer of Notes. Notes shall not be transferred in denominations of less than $100,000, provided that if necessary to enable the registration of transfer by a holder of its entire holding of Notes, one Note may be in a denomination of less than $100,000. Any transferee, by its acceptance of a Note registered in its name (or the name of its nominee), shall be deemed to have made the representations set forth in Section 11.04(b) and (c); provided, however, that the Trustee shall not be permitted to register the transfer of any Note without the prior written consent of the Company if a transferee makes the representation set forth in clauses (ii), (iii), (v) or (vii) of Section 11.04(c) as to its source of funds to be used by it to pay the purchase price of such Note and the Company states to the Trustee that it has reasonably determined (based on an opinion of counsel provided to the Trustee at the cost of the Company) that such transfer would result in a prohibited transaction under Section 406(a)(1)(A)-(D) of ERISA or Section 4975(c)(1)(A)-(D) of the Code. (c) Upon receipt by the Company of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of any Note (which evidence shall be, in the case of an Institutional Investor, notice from such Institutional Investor of such ownership and such loss, theft, destruction or mutilation), and (i) in the case of loss, theft or destruction, such Person's own unsecured agreement of indemnity shall be deemed to be satisfactory, or (ii) in the case of mutilation, upon surrender and cancellation thereof, the Company at its own expense shall execute and deliver, in lieu thereof, a new Note, in the same principal amount and Series dated and bearing interest from the date to which interest shall have been paid on such lost, stolen, destroyed or mutilated Note or dated the date of such lost, stolen, destroyed or mutilated Note if no interest shall have been paid thereon. -50- 55 If you are in agreement with the foregoing, please sign the form of agreement on the accompanying counterpart of this Agreement and return it to the Company, whereupon the foregoing shall become a binding agreement between you and the Company. Address: NOBLE DRILLING (JIM THOMPSON) INC. 10370 Richmond Avenue, Suite 400 Houston, TX 77042 By: /s/ BYRON L. WELLIVER --------------------------- Name: Byron L. Welliver Title: Senior Vice President with a copy to: 10370 Richmond Avenue, Suite 400 Houston, TX 77042 Attn: Byron L. Welliver Telephone: (713) 974-3131 Facsimile: (713) 974-3181 The foregoing is hereby agreed to as of the date hereof. [NAME OF EACH PURCHASER] By: --------------------------------- Name: Title: By: --------------------------------- Name: Title: -51- 56 CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, as Trustee By: /s/ MAURI J. COWEN --------------------------------- Name: Mauri J. Cowen Title: Vice President and Trust Officer Address: Chase Bank of Texas, National Association Global Trust Department 600 Travis, Suite 1150, 11th floor Houston, TX 77002 Attn: Ms. Mauri J. Cowen Vice President and Trust Officer Telephone: (713) 216-6686 Telecopy: (713) 216-5476 -52- 57 ANNEX I COMMITMENTS
PURCHASER Series A Series B Series C Series D - --------- Commitment Commitment Commitment Commitment ---------- ---------- ---------- ---------- USAA Life Insurance $20,000,000 Company USAA Life Insurance $20,000,000 Company The Variable Annuity $20,000,000 Life Insurance Company John Hancock Mutual $11,000,000 Life Insurance Company John Hancock Mutual $ 6,000,000 Life Insurance Company John Hancock Mutual $ 2,000,000 Life Insurance Company Investors Partner Life $ 500,000 Insurance Company John Hancock $ 500,000 Variable Life Insurance Company Great-West Life & $10,000,000 Annuity Insurance Company The Great-West Life $ 5,000,000 Assurance Company
58 ANNEX I
PURCHASER Series A Series B Series C Series D - --------- Commitment Commitment Commitment Commitment ---------- ---------- ---------- ---------- Principal Life $ 6,000,000 Insurance Company on Behalf of One or More Separate Accounts Principal Life $ 4,000,000 Insurance Company on Behalf of One or More Separate Accounts Nationwide Life $ 6,500,000 Insurance Company Nationwide Life and $ 3,500,000 Annuity Insurance Company TOTALS: $15,000,000 $40,000,000 $40,000,000 $20,000,000
59 ANNEX II INFORMATION RELATING TO THE PURCHASERS NAME OF PURCHASER (1) All payments by wire transfer of immediately available funds to: with sufficient information to identify the source and application of such funds. (2) All notices of payments and written confirmations of such wire transfers: (3) All other communications: EX-4.25 5 INDENTURE OF FIRST NAVAL MORTGAGE DATED 12/21/98 1 EXHIBIT 4.25 INDENTURE OF FIRST NAVAL MORTGAGE NOBLE DRILLING (JIM THOMPSON) INC. as Owner - and - CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, AS TRUSTEE as Mortgagee NOBLE JIM THOMPSON Dated December 21, 1998 2 INDEX
CLAUSE SUBJECT MATTER PAGE - ------ -------------- ---- 1 REPRESENTATIONS AND COVENANTS..........................................................................2 2 DEFINITIONS AND INTERPRETATION.........................................................................4 3 MORTGAGE...............................................................................................6 4 PAYMENT COVENANTS......................................................................................7 5 PRESERVATION OF SECURITY...............................................................................8 6 INSURANCE..............................................................................................9 7 RIG COVENANTS.........................................................................................12 8 PROTECTION OF SECURITY................................................................................17 9 ENFORCEABILITY AND MORTGAGEE'S POWERS.................................................................18 10 APPLICATION OF MONEYS.................................................................................20 11 FURTHER ASSURANCES....................................................................................21 12 POWER OF ATTORNEY.....................................................................................21 13 INDEMNITIES...........................................................................................22 14 EXPENSES..............................................................................................23 15 COMMUNICATIONS........................................................................................24 16 ASSIGNMENTS...........................................................................................24 17 TOTAL AMOUNT, ETC.....................................................................................24 18 WAIVER; AMENDMENT.....................................................................................24 19 MISCELLANEOUS.........................................................................................24 20 JURISDICTION..........................................................................................25
EXHIBIT 1 FORM OF NOTE PURCHASE AGREEMENTS AND THE FORM OF SERIES A NOTE, SERIES B NOTE, SERIES C NOTE AND SERIES D NOTE 3 THIS INDENTURE OF FIRST NAVAL MORTGAGE made and entered into this 21st day of December, 1998, between NOBLE DRILLING (JIM THOMPSON) INC., a corporation duly constituted and existing in conformity with the laws of Delaware with its registered office at 10370 Richmond Avenue, Suite 400, Houston, Texas 77042 (hereinafter called the "Owner") and CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, as Trustee for the Purchasers (as defined herein) having its office at 600 Travis, Suite 1150, 11th Floor, Houston, Texas TX 77002, United States of America (hereinafter called the "Mortgagee"), on the Panamanian rig NOBLE JIM THOMPSON of 13,665.00 gross registered tons, 4,099.00 net registered tons and with a length of 93.68m, a breadth of 100.05m and a depth of 39.62m and Provisional Patente Number 27476-HT (hereinafter called the "Rig"), duly registered under the laws and flag of the Republic of Panama, the detailed description of which is hereinafter more particularly set forth. W I T N E S S E T H : WHEREAS (A) The Owner is the sole owner of the whole of the rig NOBLE JIM THOMPSON documented under the laws and flag of the Republic of Panama. (B) Pursuant to several Note Purchase Agreements each dated as of December 21, 1998, entered into among (i) the Owner, as issuer (ii) the respective purchasers set out in Annex I thereto (collectively, the "Purchasers") and (iii) the Mortgagee, as trustee for the Purchasers (in such capacity, the "Trustee") (the form of which Note Purchase Agreements (without exhibits B through F thereto) is annexed hereto as Exhibit 1), the Owner has agreed to issue and the Purchasers have agreed to purchase certain Fixed Rate Senior Secured Notes the latest majority of which are due April 1, 2002, October 1, 2004, January 1, 2009 and January 1, 2009 (collectively, the "Notes"), divided among Series A Notes, Series B Notes, Series C Notes and Series D Notes according to the Commitments of the Purchasers set forth in Annex I thereto, in an aggregate principal amount of $115,000,000. As required by Article 1515 Section 3 of the Commercial Code of Panama, the dates on which payments of principal in respect of the Notes are due may be determined from the provisions of the Note Purchase Agreements and the Notes. (C) The Owner, in order to secure (i) the full and prompt payment when due of (x) the principal of and interest on the Notes issued under the Note Purchase Agreements (y) all other obligations and indebtedness (including, without limitation, indemnities, Fees and interest thereon) of the Owner to the Secured Creditors (as hereinafter defined), whether now existing or hereafter incurred under, arising out of or in connection with the Note Purchase Agreements and this Mortgage and the due performance and compliance with all of the terms, conditions and agreements contained in the Note Purchase Agreements and this Mortgage; (ii) any and all sums advanced by the Mortgagee in order to preserve the Collateral (as hereinafter defined) or preserve its security interest in the Collateral; (iii) in the event of any proceeding for the collection or enforcement of any indebtedness, obligations, or liabilities of the Owner referred to in clause (i) above, after an Event of Default shall have occurred and be continuing, the reasonable expenses of the Mortgagee of re-taking, holding, preparing for sale or lease, selling or otherwise disposing of or 4 realizing on the Collateral, or of any exercise by the Mortgagee of its rights hereunder, together with reasonable attorneys' fees of counsel to the Mortgagee and court costs; and (iv) all amounts paid by any Indemnitee as to which such Indemnitee has the right to reimbursement under Clause 13 of this Mortgage (all such obligations, liabilities, sums and expenses referred to in clauses (i) through (iv) above being collectively referred to as the "Obligations"). It is acknowledged and agreed that the "Obligations" shall include extensions of credit of the types described above, whether outstanding on the date of this Mortgage or extended from time to time after the date of this Mortgage. NOW, THEREFORE, the appearing parties, each in the name and on behalf of his respective principal, state that they hereby execute this Indenture of First Naval Mortgage pursuant to the following representations: 1 REPRESENTATIONS AND COVENANTS 1.01 The Owner represents and covenants to the Mortgagee that: a. the Owner is the sole and absolute owner of the Rig, registered under the laws and the flag of the Republic of Panama; b. the Owner, as sole legal and beneficial owner of the Rig, has received and presently possesses a Provisional Patente of Navigation for the Rig, duly issued by the Republic of Panama under No. 27476-HT; c. neither the whole nor any share in the Rig is subject to any Security Interest (as defined herein) (except for Permitted Liens and the lien of this Mortgage); d. the Owner has not sold or transferred, or agreed to sell or transfer, title to the Rig or any share therein; e. the Owner is a corporation duly organized and validly existing and in good standing under the laws of Delaware; f. the Owner has full power and authority (i) to execute and deliver this Mortgage, (ii) to mortgage the Rig as security for the Obligations and (iii) to comply with the provisions of, and perform all its obligations under, this Mortgage; g. the Owner has complied with all statutory and other material requirements relative to the ownership, registration and operation of the Rig; h. the Owner has taken all necessary action to authorize the execution and delivery of this Mortgage and this Mortgage constitutes the legal, valid and binding obligation of the Owner enforceable against the Owner in accordance with its terms (except to the extent limited by applicable bankruptcy, reorganization, insolvency, moratorium or other laws of general application relating to or affecting the 2 5 enforcement of creditors' rights as from time to time in effect and general equitable principles) and when preliminarily registered with the Public Registry in Panama through the Panamanian Consulate in Houston, Texas will create a legal, valid and enforceable first priority mortgage lien on the Rig subject only to the permanent registration of this Mortgage in the Public Registry in Panama within six months of the date of the preliminary registration; i. the entry into and performance by the Owner of this Mortgage does not and will not during the Security Period (as defined herein) violate in any respect (i) any law or regulation of any governmental or official authority or body, or (ii) any of the constitutive documents of the Owner including the Certificate of Incorporation or the Memorandum of Articles and Association, as amended from time to time, or (iii) any material agreement, contract or other undertaking to which the Owner is a party or which is binding upon the Owner or any of its assets; j. all consents, licenses, approvals and authorizations required in connection with the entry into, performance, validity and enforceability of this Mortgage and the transactions contemplated hereby and thereby have been obtained and are in full force and effect and will be so maintained during the Security Period; k. save for such registrations and filings as are referred to in this Mortgage, it is not necessary for the legality, validity, enforceability or admissibility in evidence of this Mortgage that it or any document relating thereto be registered, filed, recorded or enrolled with any court or authority in any relevant jurisdiction or that any stamp, registration or similar taxes be paid on or in relation to this Mortgage; l. the Owner is in compliance with all applicable Environmental Laws and all Environmental Approvals (as defined herein) relating to the Rig, its operation and management and the business of the Owner (as now conducted and as reasonably anticipated to be conducted in the future) have been obtained and complied with; m. no Environmental Claim has been made or threatened against the Owner or otherwise in connection with the Rig; n. no Environmental Incident (as defined herein) which has resulted, or which could reasonably be expected to result, in an Environmental Claim in excess of US$200,000 has occurred; and o. the Owner hereby affirms as its representations all of the statements contained in the "WHEREAS" clauses of this Mortgage. 1.02 The representations and warranties of the Owner set out in Clause 1.01 shall survive the execution of this Mortgage and the purchase of the Notes. 3 6 2 DEFINITIONS AND INTERPRETATION 2.01 In this Mortgage unless the context otherwise requires, the following expressions shall have the following meanings: "Default Rate" shall mean the rate of interest calculated in accordance with Section 1.03(b) of the Note Purchase Agreements; "Environmental Approvals" means all approvals, licenses, permits, exemptions or authorization required under applicable Environmental Laws; "Environmental Incident" means (i) any release of Hazardous Materials from the Rig, (ii) any incident in which Hazardous Materials are released from a vessel other than the Rig and which involves collision between the Rig and such other vessel or some other incident of navigation or operation, in either case, where the Rig or the Owner are actually or allegedly at fault or otherwise liable (in whole or in part) or (iii) any incident in which Hazardous Materials are released from a vessel other than the Rig and where the Rig is actually or potentially liable to be arrested as a result and/or where the Owner is actually or allegedly at fault or otherwise liable (and, in each such case, "release" shall mean disposing, discharging, injecting, spilling, leaking, leaching, dumping, emitting, escaping, emptying, seeping, placing and the like, into or upon any land or water or air, or otherwise entering into the environment); "Indemnitee" shall have the meaning set forth in Section 13.01; "Insurances" includes all policies and contracts of insurance (which expression includes all entries of the Rig in a protection and indemnity association) which are from time to time taken out or entered into in respect of the Rig or otherwise by the Owner (whether in the sole name of the Owner or in the joint names of the Owner and the Mortgagee and all benefits thereof (including claims of whatsoever nature and return of premiums); "ISM Code" means in relation to its application to the Owner, the Rig and its operation: (a) The International Management Code for the Safe Operation of Ships and for Pollution Prevention, currently known or referred to as the `ISM Code', adopted by the Assembly of the International Maritime Organisation by Resolution A.741(18) on 4 November 1993 and incorporated on 19 May 1994 into chapter IX of the International Convention for the Safety of Life at Sea 1974 (SOLAS 1974); and (b) all further resolutions, circulars, codes, guidelines, regulations and recommendations which are now or in the future issued by or on behalf of the International Maritime Organisation or any other entity with responsibility for implementing the ISM Code, including without limitation, the `Guidelines on implementation or administering of the International Safety Management (ISM) 4 7 Code by Administrations' produced by the International Maritime Organisation pursuant to Resolution A.788(19) adopted on 25 November 1995, as the same may be amended, supplemented or replaced from time to time; "Major Casualty" means any casualty to the Rig in respect whereof the claim or the aggregate of the claims against all insurers, before adjustment for any relevant franchise or deductible, exceeds Five Hundred Thousand United States Dollars (US$500,000) or the equivalent in any other currency; "Note Purchase Agreements" means, collectively, the several Note Purchase Agreements, each dated as of December 21, 1998 among the Owner, the respective Purchasers and the Mortgagee first referred to in Recital (B) hereto, as further amended, restated or supplemented from time to time; "Obligations" shall have the meaning provided in Recital (C) hereto; "Protection and Indemnity Risks" means the usual risks covered by protection and indemnity associations of international repute including the proportion not recoverable in case of collision under the ordinary running-down clause (unless such is recoverable under the relevant hull and machinery coverage); "Requisition Compensation" means all moneys or other compensation payable during the Security Period by reason of requisition for title or other compulsory acquisition of the Rig otherwise than by requisition for hire; "Rig" means the vessel described in Recital (A) hereto and includes any share or interest therein and her engines, machinery, boats, tackle, outfit, spare gear, fuel, consumable or other stores, belongings and appurtenances whether on board or ashore and whether now owned or hereafter acquired (but excluding therefrom any leased equipment not affixed to the Rig and owned by third parties); "Secured Creditors" shall mean the Purchasers and the Mortgagee; "Security Interest" means a mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement, title retention or other security interest or arrangement of any kind whatsoever; "Security Period" means the period from the date of the Note Purchase Agreements and ending on the date all and any amounts together with interest, fees and all other obligations under the Credit Documents are indefeasibly paid in full; "Total Loss" means (a) the actual, constructive, arranged, agreed, or compromised total loss of the Rig; (b) the requisition for title or other compulsory acquisition or forfeiture of the Rig otherwise than by requisition for hire; (c) the capture, seizure, arrest, detention or confiscation of the Rig by any government or by persons acting or purporting to act on 5 8 behalf of any government unless the Rig be released from such capture, seizure, arrest or detention within sixty (60) days after the occurrence thereof; "United States Dollars" and "US$" means the lawful currency of the United States of America; "War Risks" includes the risk of mines and all risks excluded from the standard form of American marine policy by the free of capture and seizure clause. 2.02 Except where otherwise expressly provided herein or unless the context otherwise requires, words and expressions defined in the Note Purchase Agreements shall bear the same meanings when used in this Mortgage. 2.03 In this Mortgage: (a) Clause headings are inserted for convenience only and shall not affect the construction of this Mortgage and, unless otherwise specified, all references to Clauses are to clauses of this Mortgage; (b) unless the context otherwise requires, words denoting the singular number shall include the plural and vice versa; (c) references to persons include bodies corporate and unincorporated; (d) references to assets include property, rights and assets of every description; (e) references to any document are to be construed as references to such document as amended or supplemented from time to time; and (f) references to any enactment include re-enactments, amendments and extensions thereof. 3 MORTGAGE 3.01 In order to secure the Obligations the Owner has granted and mortgaged and hereby does by these presents grant and mortgage unto the Mortgagee, its successors and assigns, in accordance with the provisions of Chapter V, Title IV of Book Second of the Code of Commerce and pertinent provisions of the Civil Code and other legislation of the Republic of Panama, the whole of the Rig, the detailed description of which is as follows: offshore drilling rig vessel NOBLE JIM THOMPSON; gross tonnage approximately 13,665.00; net tonnage approximately 4,099.00; length overall 93.68 meters, breadth 100.05 meters; depth 39.62 meters; built in 1982 by Ingalls Shipbuilding of the United States of America; radio call letters HP-9401; 6 9 TO HAVE AND TO HOLD the same unto the Mortgagee, its successors and assigns forever, upon the terms herein set forth for the enforcement of the Obligations. PROVIDED ONLY and the condition of these presents is such that if the Owner or its successors and assigns shall pay or cause to be repaid to the Secured Creditors and their respective successors or assigns the Obligations in their entirety as and when the same shall become due and payable in accordance with the terms of the Note Purchase Agreements, the Notes and this Mortgage and shall observe and comply with the covenants, terms and conditions contained in the Note Purchase Agreements, the Notes and this Mortgage, expressed or implied to be performed, observed or complied with by and on the part of the Owner and its successors and assigns, then these presents and the rights hereunder shall cease, determine and be void upon the discharge of this Mortgage by the Mortgagee and, in such event, the Mortgagee agrees to furnish, execute and record, at the expense of the Owner, all such documents as the Owner may reasonably require to discharge this Mortgage, otherwise to be and remain in full force and effect. Notwithstanding anything to the contrary herein it is not intended that any provision of this Mortgage shall waive the priority and preferred status of this Mortgage and that if any provision or part thereof herein shall be construed as waiving the priority and preferred status of this Mortgage then such provision shall to such extent be void and of no effect. 3.02 The Owner shall remain liable to perform all the obligations assumed by it in relation to the Rig and none of the Secured Creditors shall be under any obligation of any kind whatsoever in respect thereof or be under any liability whatsoever in event of any failure by the Owner to perform its obligations in respect thereof. 3.03 This Mortgage, when it shall have been duly executed and signed on behalf of the parties, shall be provisionally registered through the Panamanian Consulate at Houston, Texas and thereafter within six (6) months permanently registered in the Public Registry in Panama. 4 PAYMENT COVENANTS 4.01 The Owner hereby covenants with the Secured Creditors: (a) to pay and indemnify the Secured Creditors for all such expenses, claims, liabilities, losses, costs, duties, fees, charges or other moneys as are stated in the Note Purchase Agreements, the Notes and this Mortgage to be payable by the Owner to or recoverable from the Owner by the Secured Creditors (or in respect of which the Owner agrees in this Mortgage to indemnify any of the Secured Creditors) at the times and in the manner specified in the Note Purchase Agreements, the Notes and this Mortgage; (b) to pay interest on any such expenses, claims, liabilities, losses, costs, duties, fees, charges or other moneys referred to in Clause 4.01(a) from the date on which the relevant expense, claim, liability, loss, cost, duty, fee, charge or other money is 7 10 paid by any Secured Creditor (both before and after any relevant judgment) at the Default Rate; and (c) to pay and perform its obligations which may be or become due or owing to any Secured Creditor, as the case may be, under the Note Purchase Agreements, the Notes and this Mortgage at the times and in the manner specified herein or therein. 5 PRESERVATION OF SECURITY 5.01 It is declared and agreed that: (a) the security created by this Mortgage shall be held by the Mortgagee as a continuing security for the performance of the Obligations and that the security so created shall not be satisfied by any intermediate payment or satisfaction of any part of the Obligations; (b) the security so created shall be in addition to and shall not in any way be prejudiced or affected by any of the other Security Documents; (c) the Mortgagee shall not be bound to enforce any of the other Security Documents before enforcing the security created by this Mortgage; (d) no failure or delay on the part of the Mortgagee in exercising any right, power, privilege or remedy hereunder and no course of dealing between Owner and Mortgagee shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power, privilege or remedy hereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder. The rights and remedies herein expressly provided are cumulative and not exclusive of any rights or remedies which the Mortgagee would otherwise have. No notice to or demand on the Owner in any case shall entitle the Owner to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of the Mortgagee to any other or further action in any circumstances without notice or demand; and (e) any waiver by the Mortgagee of any terms of this Mortgage or any consent given by the Mortgagee under this Mortgage shall only be effective if given in writing and then only for the purpose and upon the terms for which it is given. 5.02 It shall be a condition of any settlement or discharge under this Mortgage between the Mortgagee and the Owner that no security or payment to the Secured Creditors or any of them by the Credit Parties or any other person is avoided or set-aside or ordered to be refunded or reduced by virtue of any provision or enactment relating to bankruptcy, insolvency, administration or liquidation for the time being in force and, if such condition is not satisfied, the Mortgagee shall be entitled to recover from the Owner on demand the value of such security or the amount of any such payment as if such settlement or discharge had not occurred. 8 11 5.03 The rights of the Secured Creditors under this Mortgage and the security hereby constituted shall not be affected by any act, omission, matter or thing which, but for this provision, might operate to impair, affect or discharge such rights and security, in whole or in part, including without limitation, and whether or not known to or discoverable by the Credit Parties, the Secured Creditors or any other person: (a) any waiver granted to or composition with the Credit Parties or any other person; or (b) the taking, variation, compromise, renewal or release of or refusal or neglect to perfect or enforce any rights, remedies or securities against any of the Credit Parties or any other persons; or (c) any legal limitation, disability, incapacity or other circumstances relating to the Credit Parties or any other person; or (d) any amendment or supplement to the Note Purchase Agreements, the Notes, any of the other Credit Documents or any other document or security; or (e) the dissolution, liquidation, amalgamation, reconstruction or reorganization of any of the Credit Parties or any other person; or (f) the unenforceability, invalidity or frustration of any obligations of the Credit Party or any other person under the Note Purchase Agreements, the Notes, any of the other Credit Documents or any other document or security. 6 INSURANCE 6.01 The Owner covenants with the Mortgagee throughout the Security Period that: (a) The Owner shall, at its own expense, when and so long as any Obligation remains outstanding, insure the Rig and keep her insured, or cause the Rig to be insured, in lawful money of the United States, in such amounts, for such risks (including without limitation, hull and machinery, Protection and Indemnity Risks, pollution liability, and War Risks), in the broadest forms available in the American, British and Scandinavian insurance markets or in such other major international markets acceptable to the Mortgagee (including without limitation, the form of the loss payable clause and the designation of named assureds), and with such first class insurance companies, underwriters, funds, mutual insurance associations or clubs, as shall be reasonably satisfactory to the Mortgagee. The Owner shall insure the Rig and keep her insured, or cause the Rig to be insured (1) with respect to hull and machinery, including War Risks, for an amount which is not less than her agreed value as set forth in the applicable policies, provided, however, the aggregate amount of such insurances in respect of the Mortgaged Rigs shall never be less than 100% of the aggregate unpaid principal amount of the Notes 9 12 outstanding from time to time, with a deductible amount not greater than U.S.$1,000,000 per occurrence, except if losses in excess of U.S.$25,000 per occurrence for all vessels and rigs insured by the Parent Guarantor or its Affiliates shall exceed an aggregate amount of U.S.$4,000,000 during any twelve month period, thereafter the deductible amount shall be not greater than U.S.$50,000 per occurrence, and (2) with respect to Protection and Indemnity Risks and excess liability coverage for an amount not less than U.S.$400,000,000, with a deductible amount not greater than U.S.$100,000 per occurrence. In addition, the Owner shall, at its own expense, furnish to the Mortgagee a mortgagee's single interest policy providing coverage in respect of the Mortgaged Rigs in an aggregate amount equal to 100% of the aggregate unpaid principal amount of the Notes outstanding from time to time (or in lieu of such mortgagee's interest insurance Owner shall cause the hull and machinery insurances for the Mortgaged Rigs to be endorsed to afford breach of warranty coverage for the benefit of the Mortgagee). Such mortgagee's interest insurance and any additional insurance policies for the benefit of the Mortgagee shall be maintained in the broadest form available in the American, British and Scandinavian markets or other major international markets acceptable to the Mortgagee through underwriters acceptable to the Mortgagee. The Rig shall not operate in or proceed into any area then excluded by trading warranties under its marine or war risk policies (including protection and indemnity) without satisfying the conditions of the relevant policies evidence of which shall be furnished to the Mortgagee. (b) The policy or policies of insurance shall be issued by responsible underwriters reasonably acceptable to the Mortgagee, shall contain conditions, terms, stipulations and insuring covenants satisfactory to the Mortgagee, and shall be kept in full force and effect by the Owner so long as the Credit Documents and the Obligations shall be outstanding. All such policies, binders and other interim insurance contracts shall be executed and issued in the name of the Owner and shall, to the extent required herein, provide that the Mortgagee shall be the loss payee for distribution to the Secured Creditors and the Owner as their interests may appear, and shall provide for at least ten (10) (in case of War Risks, seven (7)) days' prior notice to be given to the Mortgagee by the underwriters or association in the event of cancellation of the policy. The Mortgagee, as Trustee for the Purchasers shall be named as an additional assured on all such policies and insurance contracts, but without liability of the Mortgagee, or the Purchasers for premiums or calls. Upon request of the Mortgagee, the Owner shall cause complete certified copies of all such policies, binders and other interim insurance contracts to be delivered to the Mortgagee. Originals shall also be provided upon the request of the Mortgagee. The Owner shall furnish to the Mortgagee annually a detailed report signed by a firm of marine insurance brokers satisfactory to the Mortgagee as to the insurance maintained in respect of the Rig, as to their opinion as to the adequacy thereof and as to compliance with the provisions of this Clause 6.01. 10 13 Unless otherwise required by the Mortgagee, by notice to the underwriters (which notice shall be given by the Mortgagee only upon the written request of the Required Purchasers following the occurrence of an Event of Default), although the following insurance is payable to the Mortgagee, (i) any loss under any insurance on the Rig with respect to Protection and Indemnity Risks may be paid directly to the Owner to reimburse it for any loss, damage or expense incurred by it and covered by such insurance or to the person to whom any liability covered by such insurance has been incurred and (ii) in the case of any loss (other than a loss covered by (i) above or by the next following paragraph of this Clause 6.01(b)) under any insurance with respect to the Rig involving any damage to the Rig, the underwriters may pay directly for the repair, salvage or other charges involved or, if the Owner shall have first fully repaired the damage or paid the salvage or other charges, may pay the Owner as reimbursement therefor; provided, however, that if such damage involves a before deductible loss in excess of US$5,000,000.00, the underwriters shall not make such payment without first obtaining the written consent thereto of the Mortgagee (which consent shall not be unreasonably withheld); provided, further, so long as the Mortgagee shall not have received notice from the Owner or any Secured Creditor that an Event of Default has occurred and is continuing, the Mortgagee shall make available to the Owner by an appropriate payment order directed to the interested underwriter the proceeds of any such payment in respect of damage in excess of U.S.$5,000,000 to reimburse the Owner in whole or in part for any expenditures the Owner may have made for repairing the Rig and/or to pay any third party claim, provided the Owner shall have furnished to the Mortgagee a copy of a proof of loss and an adjustment of claim prepared by such underwriter with respect to such expenditures. If the Owner does not effect repairs to the Rig or pay third party claims, the Mortgagee shall be entitled to receive the proceeds of any insurance applicable to such loss and upon payment shall credit the net proceeds of any insurance in accordance with Clause 10.01. Any loss covered by this paragraph which is paid to the Mortgagee but which might have been paid, in accordance with the provisions of this paragraph, directly to the Owner or others, shall be paid by the Mortgagee to, or as directed by, the Owner and all other payments to the Mortgagee of losses covered by this paragraph shall be applied by the Mortgagee in accordance with Clause 10.01. In the event of a Total Loss, all insurance payments therefor shall be paid to the Mortgagee. The Owner shall not declare or agree with the underwriters that the Rig is a Total Loss without the prior written consent of the Mortgagee. (c) In the event of a Total Loss of the Rig, the Mortgagee shall retain out of the insurance payments received on account of such loss any sum or sums that shall be or become owing to the Secured Creditors under the Credit Documents, whether or not the same shall be then due and payable, together with accrued interest and the cost, if any, of collecting the insurance, and pay the balance as provided in Clause 10. 11 14 (d) The Owner shall comply with and satisfy all of the provisions of each applicable law, regulation, proclamation or order concerning financial responsibility for liabilities imposed on the Owner or the Rig with respect to the carriage of passengers or pollution, and will maintain, or cause to be maintained, all certificates or other evidence of financial responsibility as may be required by each such law, regulation, proclamation or order with respect to the trade in which the Rig from time to time is engaged. (e) The Owner shall renew all such insurances as they expire and so as to insure that there is no gap in coverage, keep the Mortgagee advised of the progress of such renewals, and shall provide evidence of such renewal in writing to the Mortgagee as and when each such renewal is effected. (f) The Owner shall punctually pay all premiums, calls, contributions or other sums payable in respect of all such insurances and produce all relevant receipts when so required by the Mortgagee. (g) The Owner shall arrange for the execution of such guarantees as may from time to time be required by any protection and indemnity or war risks association. (h) The Owner shall not employ the Rig or suffer the Rig to be employed otherwise than in conformity with the terms of the instruments of insurance aforesaid relative to the Rig (including any warranties, express or implied, therein) without first obtaining the consent to such employment of the insurers and complying with such requirements as to extra premium or otherwise as the insurers may prescribe. 7 RIG COVENANTS 7.01 The Owner covenants with the Mortgagee that throughout the Security Period the Owner will: (a) keep the Rig registered in its name as a Panamanian flag vessel and do or allow to be done nothing whereby such registration may be forfeited or imperilled; (b) not without the previous consent in writing of the Mortgagee change the name of the Rig or make any modification to the Rig which would adversely alter the structure, type or performance characteristics of the Rig or which would materially reduce the value of the Rig; (c) keep the Rig in a good and efficient state of repair consistent with first-class ship-ownership and management practice employed by owners of drilling rigs of similar size and type and so as to maintain her in the highest class available for rigs of its age and type with American Bureau of Shipping, Bureau Veritas, Det norske Veritas, Lloyd's Register of Shipping or another internationally recognized classification society reasonably acceptable to the Mortgagee free of recommendations and qualifications and change of class, save those approved in 12 15 writing by the Mortgagee and so as to comply with all applicable laws, treaties and conventions of the Republic of Panama and other applicable jurisdictions, and rules and regulations issued thereunder, and have on board as and when required thereby valid certificates showing compliance therewith; (d) procure that all repairs to or replacement of any damaged, worn or lost parts or equipment in such manner (both as regards workmanship and quality of materials) as to not materially diminish the value of the Rig and not to remove any material part of, or item of equipment owned by the Owner installed on, the Rig unless (i) the part or item so removed is forthwith replaced by a suitable part or item which is in the same condition as or better condition than the part or item removed, is free from any Security Interest (other than Permitted Liens) in favor of any person other than the Mortgagee and becomes on installation on the Rig the property of the Owner and subject to the security constituted by this Mortgage or (ii) the removal will not materially diminish the value of the Rig; (e) submit the Rig to such periodical or other surveys as may be required for classification purposes and if so required to supply to the Mortgagee copies of all survey reports issued in respect thereof; (f) permit the Mortgagee by independent surveyors to board the Rig at all reasonable times and upon reasonable notice for the purpose of inspecting her condition or for the purpose of satisfying themselves in regard to proposed or executed repairs and to afford all proper facilities for such inspections, provided that unless an Event of Default shall have occurred and be continuing, the cost of any such inspection more frequently than once per calendar year shall be for the account of the Mortgagee; (g) promptly pay and discharge all debts, damages and liabilities whatsoever which have given or may give rise to maritime or possessory liens (other than Permitted Liens) on or claims enforceable against the Rig and all tolls, dues, taxes, assessments, governmental charges, fines and penalties lawfully charged on or in respect of the Rig and all other expenses whatsoever in respect of the Rig and in the event of arrest of the Rig pursuant to legal process, or in the event of her detention in exercise or purported exercise of any such lien or claim as aforesaid, procure the release of the Rig from such arrest or detention forthwith upon receiving notice thereof by providing bail or otherwise as the circumstances may require; (h) not employ the Rig or allow her employment in any trade or business which is unlawful under the laws of any relevant jurisdiction or in carrying illicit or prohibited goods or in any manner whatsoever which can reasonably be expected to render her liable to destruction, seizure or confiscation and in the event of hostilities in any part of the world (whether war be declared or not) not employ the Rig or suffer her employment in carrying any contraband goods or to enter or trade to any zone which is declared a war zone by any government or by the War Risks 13 16 insurers of the Rig unless there shall have been effected by the Owner (at its expense) such special, additional or modified insurance cover as the Mortgagee may reasonably require; (i) promptly furnish to the Mortgagee all such information as it may from time to time require regarding the Rig, her employment, position and engagements, particulars of all towages and salvages and, upon the request of the Mortgagee in writing, copies of all charters and other contracts for her employment or otherwise howsoever concerning her; (j) notify the Mortgagee forthwith by telecopy thereafter confirmed by letter of: (i) any casualty to the Rig which is or is likely to be a Major Casualty; and (ii) any occurrence in consequence whereof the Rig has become or could, by the passing of time or otherwise, become a Total Loss; and (iii) any requirement or recommendation made by any insurer or classification society or by any competent authority which is not complied with in full; and (iv) any arrest of the Rig or the exercise or purported exercise of any lien on the Rig or any requisition of the Rig for hire; and (v) any intended dry docking of the Rig, as to which the Owner shall give the Mortgagee 30 days prior notice, provided, that in the event of any emergency dry docking of the Rig, the Owner shall immediately notify the Mortgagee; and (vi) any intended deactivation or lay-up of the Rig (other than for normal periods of inactivity between contracts for the Rig during which periods the Rig remains manned) and obtain the prior written consent of the Mortgagee; (k) keep proper books of account in respect of the Rig and as and when the Mortgagee may so reasonably require make such books available for inspection on behalf of the Mortgagee and furnish satisfactory evidence that the wages and allotments and the insurance of the master and crew are being regularly paid and that all deductions from crew's wages in respect of tax and/or social security liability are being properly accounted for and that the master has no claim for disbursements other than those incurred by him in the ordinary course of trading on the voyage then in progress; (l) comply with the provisions of Section 7 of the Note Purchase Agreements, all of which are expressly incorporated in this Mortgage; 14 17 (m) not without the previous consent in writing of the Mortgagee (such consent not to be unreasonably withheld), put the Rig into the possession of any person for the purpose of work being done upon her if the aggregate amount at any time due and payable in respect thereof shall or is likely to exceed Five Million United States Dollars (US$5,000,000.00) (or the equivalent in any other currency) unless (i) such person shall first have given to the Mortgagee and in terms satisfactory to it a written undertaking not to exercise any lien on the Rig for the cost of such work or otherwise or (ii) the cost of such work shall be fully covered by applicable insurance; (n) comply with and satisfy all the provisions of applicable laws and regulations of the Republic of Panama, as at any time amended, in order to establish and maintain this Mortgage as a first priority naval mortgage thereunder upon the Rig and upon all renewals, improvements and replacements made in or to the same, and promptly to furnish to the Mortgagee from time to time such proofs as the Mortgagee may request for its satisfaction with respect to the compliance by the Owner with the provisions of this sub-clause, including, appropriate certificates of the Public Registry showing that this Mortgage has been duly registered and filed and is a first and absolute lien on the Rig; (o) place, and use due diligence to retain, a properly certified copy of this Mortgage on board the Rig with her papers and cause such certified copy of this Mortgage to be exhibited to any and all persons having business with the Rig which might give rise to any lien thereon other than a lien for crew's wages and salvage and to any representative of the Mortgagee on demand and to place and keep prominently displayed in the chart room and in the master's cabin of the Rig a framed printed notice in plain type in English of such size that the paragraph of reading matter shall cover a space not less than 6 inches wide and 9 inches high reading as follows: "NOTICE OF MORTGAGE This Rig is subject to an Indenture of First Naval Mortgage in favor of CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, as Trustee for the Purchasers defined in said Mortgage, in conformity with the provisions of Chapter V, Title IV of Book Second of the Code of Commerce, and the pertinent provisions of the Civil Code and other legislation of the Republic of Panama. Under the terms of said Mortgage neither the owner, any charterer, the Master of the Rig nor any other person shall have the right, power or authority to create, incur or permit to be placed upon the Rig any other lien whatsoever other than for current crew's wages and salvage and Permitted Liens (as that term is defined in said Mortgage)." (p) comply, or procure compliance with, the ISM Code (upon said code becoming legally applicable to the Rig), all Environmental Laws and Environmental 15 18 Approvals relating to the Rig, its operation or management and the business of the Owner from time to time; (q) notify the Mortgagee forthwith upon: (i) any Environmental Claim which could reasonably be expected to result in damages in excess of US$1,000,000 being or made against the Owner, or otherwise in connection with the Rig; or (ii) any Environmental Incident occurring, and keep the Mortgagee advised, in writing on such regular basis and in such detail as the Mortgagee shall require, of the Owner's response to such Environmental Claim or Environmental Incident. (r) not sell, mortgage or transfer the Rig (other than as permitted by the Note Purchase Agreements) without the written consent of the Mortgagee having first been obtained, and any such written consent to any one such sale, mortgage or transfer shall not be construed to be a waiver of this provision with respect to any subsequent proposed sale, mortgage or transfer. Any such sale, mortgage or transfer shall be subject to the provisions of this Mortgage and the lien it creates. The Owner shall not (a) charter the Rig to, or permit the Rig to serve under any contract with, a person included within the definition of (i) "national" of a "designated foreign country", or "specially designated national" of a "designated foreign country", in the Foreign Assets Control Regulations or the Cuban Assets Control Regulations of the United States Treasury Department, 31 C.F.R. Parts 500 and 515, in each case as amended, (ii) "Government of Libya", "entity of the Government of Libya" or "Libya entity" in the Libyan Sanctions Regulations of the United States Treasury Department, 31 C.F.R. Part 550, as amended, (iii) "Government of Iraq", "entity of the Government of Iraq" or "Iraqi Government entity" in the Iraqi Sanctions Regulations, 31 C.F.R. Part 575, as amended, (iv) "Government of Iran" or "entity owned or controlled by the Government of Iran", in the Iranian Transactions Regulations, 31 C.F.R. Part 560, as amended, (v) "Government of Angola or UNITA", "entity of the Government of Angola or UNITA" or "Angola or UNITA entity" in the UNITA (Angola) Sanctions Regulations, 31 C.F.R. Part 590, as amended, (vi) "Government of Sudan" in Executive Order 13067, as amended, and any regulations issued pursuant thereto, or (vii) "Government of the Federal Republic of Yugoslavia (Serbia and Montenegro)", "Government of the Republic of Serbia", or "Government of the Republic of Montenegro" in Executive Order 13088, as amended, and any regulations issued pursuant thereto, all within the meaning of said Regulations or of any regulations, interpretations or rulings issued thereunder or (b) engage in any transaction that violates any provision of said Regulations, or that violates any provision of regulations promulgated from time to time by the Office of Foreign Assets Control, U.S. Department of Treasury, or that violates any Executive Order issued pursuant to the International Emergency Economic Powers Act (50 16 19 U.S.C. 1701 et seq.), the National Emergencies Act (50 U.S.C. 1601 et seq.), or the Trading With the Enemy Act (50 U.S.C. App. 1 et seq.), or (c) call at a Cuban port to load or discharge cargo or to effect repairs on any Rig if such transaction or violation listed in (a) - (c) could (i) expose the Mortgagee to any penalty, sanction or investigation or (ii) jeopardize the lien created by this Mortgage or (iii) have a material adverse effect on the Owner or the operation of the Rig; (s) shall not cause or permit the Rig to be operated in any manner contrary to law (except where the failure to operate in compliance with any law would not have a material adverse effect on the Owner or the Rig, or would not have an adverse effect on the lien of this Mortgage), shall not abandon the Rig in a foreign port and shall not engage in any unlawful trade or violate any law or carry any cargo that shall expose the Rig to forfeiture or capture. 8 PROTECTION OF SECURITY 8.01 The Mortgagee shall without prejudice to its other rights and powers under this Mortgage and the other Credit Documents be entitled (but not bound) at any time and as often as may be necessary (but unless an Event of Default shall have occurred and be continuing with prior written notice to the Owner) to take any such action as it may in the reasonable exercise of its discretion think fit for the purpose of protecting or maintaining the security created by this Mortgage and the other Credit Documents (including, without limitation, such action as is referred to in Clause 8.02) and each and every expense, liability, or loss (including, without limitation, reasonable legal fees) so incurred by the Secured Creditors in or about the protection or maintenance of the said security together with interest payable thereon under Clause 4.01(b) shall be repayable to it by the Owner on demand. 8.02 Without prejudice to the generality of Clause 8.01: (a) if the Owner does not comply with the provisions of Clause 6 or any of them the Mortgagee shall be entitled (but not bound) to effect or to replace and renew and thereafter to maintain the Insurances in such manner it, in its discretion, may think fit and to require that all policies, contracts and other records relating to the Insurances (including details of any correspondence concerning outstanding claims) be forthwith delivered to such brokers as the Mortgagee may nominate and, upon the direction of the Mortgagee to collect, recover, compromise and give a good discharge for all claims then outstanding or thereafter arising under the Insurances or any of them and to take over or institute (if necessary using the name of the Owner) all such proceedings in connection therewith as the Mortgagee in its absolute discretion, may think fit and to permit the brokers through whom the collection or recovery is effected to charge the usual brokerage therefor; (b) if the Owner does not comply with the provisions of Clause 7.01(d) and/or 7.01(f) or any of them, the Mortgagee shall be entitled (but not bound) to arrange for the 17 20 carrying out of such repairs to and/or surveys of the Rig as it deems expedient or necessary; and (c) if the Owner does not comply with the provisions of Clause 7.01(g) or any of them, the Mortgagee shall be entitled (but not bound) to pay and discharge all such debts, damages and liabilities and all such tolls, dues, taxes, assessments, charges, fines, penalties and other outgoings as are therein mentioned and/or to take any such measures as it deems expedient or necessary for the purpose of securing the release of the Rig. 9 ENFORCEABILITY AND MORTGAGEE'S POWERS 9.01 Upon the happening of any of the Events of Default specified in the Note Purchase Agreements but without the necessity for any court order or declaration in any jurisdiction to the effect that an Event of Default has occurred (and whether prior to or after the Mortgagee or the Required Purchasers having served on the Owner any such notice as is referred to in Section 8 of the Note Purchase Agreements) the security constituted by this Mortgage shall become immediately enforceable and the Mortgagee shall be entitled, as and when it may from time to time see fit, to put into force and exercise all or any of the powers possessed by it as mortgagee of the Rig or otherwise and in particular: (a) to exercise all the rights and remedies in foreclosure and otherwise given to mortgagees by the laws of the Republic of Panama or other applicable laws; (b) to take possession of the Rig whether actually or constructively and/or otherwise to take control of the Rig wherever the Rig may be and cause the Owner or any other person in possession of the Rig forthwith upon demand to surrender the same to the Mortgagee without legal process and without liability of the Mortgagee for any losses or damages incurred thereby and without having to render accounts to the Owner in connection therewith; (c) to require that all policies, contracts, certificates of entry and other records relating to the Insurances (including details of and correspondence concerning outstanding claims) be forthwith delivered to or to the order of the Mortgagee; (d) to collect, recover, compromise and give a good discharge for or procure that the Mortgagee collect, recover, compromise and give good discharge for any and all moneys or claims for moneys then outstanding or thereafter arising under the Insurances or any Requisition Compensation and to permit any brokers through whom collection or recovery is effected to charge the usual brokerage therefor; (e) to take over or institute (if necessary using the name of the Owner) all such proceedings in connection with the Rig, the Insurances, or any Requisition Compensation as the Mortgagee in its absolute discretion thinks fit and to discharge, compound, release or compromise claims against the Owner in respect 18 21 of the Rig which have given or may give rise to any charge or lien on the Rig or which are or may be enforceable by proceedings against the Rig; (f) to sell the Rig or any share therein free from any claim of or by the Owner of any nature whatsoever, and with or without the benefit of any charterparty or other contract for her employment, by public auction or private contract at such place and upon such terms (including, without limitation, on terms such that payment of some or all of the purchase price be deferred) as the Mortgagee in its absolute discretion may determine with power to postpone any such sale, without being answerable for any loss occasioned by such sale or resulting from postponement thereof, and/or itself to purchase the Rig at any such public auction and to set off the purchase price against all or any part of the Obligations, subject to notice of sale being given by the Mortgagee to the Owner and other mortgagees of record, if any, by airmail, postage pre-paid and by publication once in a newspaper of general circulation in the City of Panama, Republic of Panama, not less than twenty (20) calendar days in advance of the sale, to satisfy the requirement of notice of sale contained in Article 1527 of the Panama Code of Commerce. Such notice shall be necessary only in respect of the initial date of sale; (g) to manage, insure, maintain and repair the Rig and to charter, employ, sail or lay up the Rig in such manner, upon such terms and for such period as the Mortgagee in its absolute discretion deems expedient and for the purposes aforesaid the Mortgagee shall be entitled to do all acts and things incidental or conducive thereto and in particular to enter into such arrangements respecting the Rig, and the insurance, management, maintenance, repair, classification, chartering and employment of the Rig, in all respects as if the Mortgagee were the owner of the Rig and without being responsible for any loss thereby incurred; (h) to recover from the Owner on demand any expenses, liabilities or losses as may be incurred by the Mortgagee in or about the exercise of the power vested in the Mortgagee under Clause 9.01(g); and (i) generally, to recover from the Owner on demand each and every expense, liability or loss incurred by the Mortgagee in or about or incidental to the exercise by it of any of the powers aforesaid. 9.02 The Mortgagee shall not be obliged to make any enquiry as to the nature or sufficiency of any payment received by it under this Mortgage or to make any claim, take any action or enforce any rights and benefits assigned to the Mortgagee by this Mortgage or to which the Mortgagee may at any time be entitled hereunder. 9.03 Neither the Secured Creditors nor their agents, managers, officers, employees, delegates and advisers shall be liable for any expense, claim, liability, loss, cost, damage or expense incurred or arising in connection with the exercise or purported exercise of any rights, powers and discretions under this Mortgage in the absence of gross negligence or willful misconduct. 19 22 9.04 The Mortgagee shall not by reason of the taking possession of the Rig be liable to account as mortgagee-in-possession or for anything except actual receipts or be liable for any loss upon realization or for any default or omission for which a mortgagee-in-possession might be liable. 9.05 Upon any sale of the Rig or any share therein by the Mortgagee the purchaser shall not be bound to see or enquire whether the power of sale of the Mortgagee has arisen in the manner provided in this Mortgage and the sale shall be deemed to be within the power of the Mortgagee and the receipt of the Mortgagee for the purchase money shall effectively discharge the purchaser who shall not be concerned with the manner of application of the proceeds of sale or be in any way answerable therefor. 10 APPLICATION OF MONEYS 10.01 (a) All moneys received by the Mortgagee or any other Secured Creditor, including, without limitation, in respect of sale of the Rig or any part thereof, in respect of recovery under the Insurances, or in respect of Requisition Compensation, shall be applied in the following manner: (i) first, to the payment of all amounts owing the Mortgagee or any other Secured Creditors of the type described in clauses (ii), (iii) and (iv) of Recital (C); (ii) second, to the extent moneys remain after the application pursuant to the preceding clause (i), in retention of an amount equal to any part or parts of the outstanding Obligations as is or are not then due and payable but which will or may become due and payable in the future, and upon same becoming due and payable, in payment to the Purchasers as provided in Clause 10.01(c), with each Purchaser receiving an amount equal to such Obligations held by it or, if the proceeds are insufficient to pay in full all such Obligations, its Pro Rata Share (as defined below) of the amount remaining to be distributed; and (iii) third, to the extent moneys remain after the application pursuant to the preceding clauses (i) and (ii), and following the termination of this Mortgage pursuant to Clause 3.01, any surplus then remaining shall be paid to the Owner, subject, however, to the rights of the holder of any then existing Lien of which the Mortgagee has actual notice (without investigation). (b) For purposes of this Mortgage "Pro Rata Share" shall mean, when calculating a Purchaser's portion of any distribution or amount in respect of any Obligations, the amount (expressed as a percentage) equal to a fraction the numerator of which is the then unpaid amount of such Obligations owing to or held by such Purchaser and the denominator of which is the then outstanding amount of all such Obligations. For purposes of determining the amount payable to each Purchaser, 20 23 the Mortgagee shall be entitled to request each Purchaser to furnish it with written notice of the amount of Obligations then owed to it and, to the extent not inconsistent with the Note Purchase Agreements, shall be entitled to rely upon the amounts stated therein in making such distribution. (c) All payments required to be made to Purchasers hereunder shall be made to the Mortgagee for the account of the Secured Creditors. 11 FURTHER ASSURANCES 11.01 The Owner shall execute and do all such assurances, acts and things as the Mortgagee in its absolute discretion may require for: (a) perfecting or protecting the security created (or intended to be created) by this Mortgage; or (b) preserving or protecting any of the rights of the Mortgagee and the other Secured Creditors under this Mortgage; or (c) ensuring that the security constituted by this Mortgage and the covenants and obligations of the Owner under this Mortgage shall inure to the benefit of any transferee, successor or assignee of the Mortgagee; or (d) enforcing the security constituted by this Mortgage on or at any time after the same shall have become enforceable; or (e) the exercise of any power, authority or discretion vested in the Mortgagee under this Mortgage, in any such case, forthwith upon demand by the Mortgagee and at the expense of the Owner. 12 POWER OF ATTORNEY 12.01 The Owner, by way of security and in order to more fully secure the performance of the Obligations under this Mortgage, hereby irrevocably appoints the Mortgagee as its attorney for the duration of the Security Period for the purposes of: (a) doing in its name all acts and executing, signing and (if required) registering in its name all documents which the Owner itself could do, execute, sign or register in relation to the Rig (including without limitation, transferring title to the Rig to a third party), provided, however, that such power shall not be exercisable by or on behalf of the Mortgagee until this Mortgage shall have become immediately enforceable pursuant to Clause 9.01 and at all times thereafter; and 21 24 (b) executing, signing, perfecting, doing and (if required) registering every such further assurance document, act or thing as is referred to in Clause 11. 12.02 The exercise of such power as is referred to in Clause 12.01(a) by or on behalf of the Mortgagee shall not put any person dealing with the Mortgagee upon any enquiry as to whether this Mortgage has become enforceable nor shall such person be in any way affected by notice that this Mortgage has not become enforceable and, in relation to both Clauses 12.01(a) and 12.01(b), the exercise by the Mortgagee of such power shall be conclusive evidence as against third parties of its right to exercise the same. 13 INDEMNITIES 13.01 The Owner will indemnify and save harmless each of the Secured Creditors and each agent or attorney appointed by such Secured Creditor under or pursuant to this Mortgage (each an "Indemnitee") from and against any and all expenses, claims, liabilities, losses, taxes, costs, duties, fees and charges suffered, incurred or made by such Secured Creditor or such agent or attorney in good faith: (a) in the exercise or purported exercise of any rights, powers or discretions vested in them pursuant to this Mortgage; or (b) in the preservation or enforcement of the rights of the Mortgagee under this Mortgage; or (c) on the release of the Rig from the security created by this Mortgage, and the Secured Creditors and each such agent or attorney may retain and pay all sums in respect of the same out of money received under the powers conferred by this Mortgage. All such amounts recoverable by a Secured Creditors or such agent or attorney shall be recoverable on a full indemnity basis. 13.02 Without limiting the foregoing Clause 13.01, the Owner hereby further indemnifies and holds harmless each of the Secured Creditors and their respective officers, directors, employees, attorneys and agents from and against any and all liabilities, losses, obligations, claims, damages, penalties, causes of action, costs and expenses (including, without limitation, reasonable attorneys' fees and expenses, consultant fees, investigation and laboratory fees) imposed upon or incurred by or asserted against them, or any of them, by reason of (a) an actual, alleged or threatened occurrence or incident, including, without limitation, any Environmental Incident; (b) any personal injury (including wrongful death) or property damage (real or personal) or economic damage arising out of or related to occurrence or incident, including, without limitation, any Environmental Incident; (c) any Environmental Claim brought or threatened, or settlement reached; or (d) any violation of laws, orders, regulations, requirements or demands of government authorities relating to occurrence or incident, including, without limitation, any Hazardous Materials at, or discharged from the Rig. 22 25 13.03 If, under any applicable law or regulation, and whether pursuant to a judgment being made or registered against the Owner or the liquidation of the Owner or for any other reason, any payment under or in connection with this Mortgage is made or fails to be satisfied in a currency (the "payment currency") other than the currency in which such payment is due under or in connection with this Mortgage (the "contractual currency"), then to the extent that the amount of such payment actually received by the Mortgagee, when converted into the contractual currency at the rate of exchange, falls short of the amount due under or in connection with this Mortgage, the Owner, as a separate and independent obligation, shall indemnify and hold harmless the Mortgagee against the amount of such shortfall. For the purposes of this Clause 13.03, "rate of exchange" means the rate at which the Mortgagee is able on the date of such payment (or, if it is not practicable for the Mortgagee to purchase the contractual currency with the payment currency on the date of such payment, at the rate of exchange as soon afterwards as is practicable for the Mortgagee to do so) to purchase the contractual currency with the payment currency and shall take into account any premium and other costs of exchange with respect thereto. 14 EXPENSES 14.01 The Owner shall pay to any Secured Creditor or the Mortgagee on demand all costs, fees and expenses, including, but not limited to, legal fees and expenses and valuation fees and Taxes thereon incurred by any Secured Creditor or for which any Secured Creditor may become liable in connection with: (a) the negotiation, preparation and execution of this Mortgage; and/or (b) the preserving or enforcing of, or attempting to preserve or enforce, any of its rights under this Mortgage. 14.02 The Owner shall pay to the Mortgagee on demand all costs, fees and expenses (including, but not limited to, legal fees and expenses) and Taxes thereon incurred by any Secured Creditor in connection with: (a) any variation of, or amendment or supplement to, any of the terms of this Mortgage requested by the Owner, necessary or advisable under applicable law or initiated during the occurrence and continuation of an Event of Default; and/or (b) any consent or waiver required from the Mortgagee in relation to this Mortgage, and in each case, regardless of whether the same is actually implemented, completed or granted, as the case may be. 14.03 The Owner shall pay promptly all stamp, documentary and other like duties and Taxes to which this Mortgage may be subject or give rise and shall indemnify the Mortgagee on demand against any and all liabilities with respect to or resulting from any delay or omission on the part of the Owner to pay any such duties or Taxes. 23 26 15 COMMUNICATIONS 15.01 All notices required to be given to the Mortgagee shall be made to the following address: Chase Bank of Texas, National Association Global Trust Department 600 Travis Suite 1150, 11th Floor Houston, Texas 77002 Attention: Ms. Mauri J. Cowen Vice President and Trust Officer Telephone: (713) 216-6686 Facsimile: (713) 216-5476 All other notices shall be made to the addresses provided for in Section 11.03 of the Note Purchase Agreements. 16 ASSIGNMENTS 16.01 This Mortgage shall be binding upon and shall inure to the benefit of the Secured Creditors and their respective transferees, successors and permitted assigns, and references in this Mortgage to any of them shall be construed accordingly. 16.02 The Owner may not assign or transfer all or any part of its rights and/or obligations under this Mortgage. 16.03 Pursuant to Section 11.04 of the Note Purchase Agreements, each Purchaser has the right to assign or transfer all or any part of its rights and/or obligations under its Note Purchase Agreement on the terms therein provided. The Mortgagee shall notify the Owner promptly following any such assignment, transfer or change. 17 TOTAL AMOUNT, ETC. 17.01 The total amount of this Mortgage is One Hundred and Fifteen Million United States Dollars (US$115,000,000) of principal plus interest, premiums, fees, commissions and performance of mortgage covenants. The discharge amount is the same as the total amount. 18 WAIVER; AMENDMENT 18.01 None of the terms and conditions of this Mortgage may be changed, waived, modified or varied in any manner whatsoever unless in writing duly signed by the Owner and the Mortgagee (with the consent of the Required Purchasers). 19 MISCELLANEOUS 19.01 This Mortgage shall be governed by the laws of the Republic of Panama. 24 27 19.02 If at any time any one or more of the provisions in this Mortgage is or becomes invalid, illegal or unenforceable in any respect under any law or regulation, the validity, legality and enforceability of the remaining provisions of this Mortgage shall not be in any way affected or impaired thereby. 19.03 The Mortgagee, at any time and from time to time, may delegate by power of attorney or in any other manner to any person or persons all or any of the powers, authorities and discretions which are for the time being exercisable by the Mortgagee under this Mortgage in relation to the Rig. Any such delegation may be made upon such terms and subject to such regulations as the Mortgagee may think fit. The Mortgagee shall not be in any way liable or responsible to the Owner or any Secured Creditor for any loss or damage arising from any act, default, omission or misconduct on the part of any such delegate. 19.04 The appearing parties hereby confer a special power of attorney on Roy Phillipps P., lawyer of Panama, Republic of Panama authorizing him to take all necessary steps to record this Indenture of First Naval Mortgage in the appropriate registries of the City of Panama, and to substitute this Power of Attorney herein granted. 19.05 A certification or determination by the Mortgagee as to any matter provided for in this Mortgage shall, in the absence of manifest error, be conclusive and binding on the Owner. 19.06 The Mortgagee declares that it accepts the naval mortgage hereby created under the terms above set forth. 20 JURISDICTION 20.01 The Owner agrees that the Mortgagee shall have the liberty but shall not be obliged to take any proceedings in the courts of any country to protect or enforce the security constituted by this Mortgage or to enforce any provisions of this Mortgage or to enforce the Obligations and for the purpose of any proceedings for such enforcement the Owner hereby submits to the jurisdiction of the courts of any country of the choice of the Mortgagee. 20.02 Without prejudice to the generality of Clause 20.01, the Mortgagee shall have the right to arrest and take action against the Rig at whatever place the Rig shall be found lying and for the purpose of any action which the Mortgagee may bring before the courts of such jurisdiction or other judicial authority and for the purpose of any action which the Mortgagee may bring against the Rig, any writ, notice, judgment or other legal process or documents may (without prejudice to any other method of service under applicable law) be served upon the master of the Rig (or upon anyone acting as the master) and such service shall be deemed good service on the Owner for all purposes. 20.03 The Owner agrees that should the Mortgagee bring a legal action or proceedings against it or its assets in relation to any matters arising out of or in connection with this Mortgage, no immunity from such legal action or proceedings (which shall be deemed to include, 25 28 without limitation, suit, attachment prior to judgment, other attachment, the obtaining of judgment, execution or other enforcement) shall be claimed by or on behalf of the Owner or with respect of its assets, and the Owner hereby irrevocably waives any such right of immunity which it or its assets now has or may hereafter acquire and the Owner hereby consents generally in respect of any legal action or proceedings arising out of or in connection with this Mortgage to the giving out of any relief or the issue of any process in connection with such action or proceedings including, without limitation, the making, enforcement or execution or attachment against any property whatsoever of any order or judgment which may be made or given in such action or proceedings. IN WITNESS whereof the Owner and the Mortgagee have duly executed these presents the day and year first before written. NOBLE DRILLING (JIM THOMPSON) INC. By: /s/ BYRON L. WELLIVER ----------------------------------- Name: Byron L. Welliver Title: Senior Vice President CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, as Trustee By: /s/ MAURI J. COWEN ----------------------------------- Name: Mauri J. Cowen Title: Vice President and Trust Officer 26 EX-4.26 6 FORM OF PARENT GUARANTY DATED 12/21/98 1 EXHIBIT 4.26 EXHIBIT D-1 FORM OF PARENT GUARANTY GUARANTY, dated as of December 21, 1998, by NOBLE DRILLING CORPORATION ("Parent Guarantor"), a Delaware corporation, in favor of CHASE BANK OF TEXAS, National Association, as trustee ("Trustee") for the benefit of the Purchasers. All capitalized terms used herein and not otherwise defined shall have the meanings provided such terms in the Agreement referred to below. W I T N E S S E T H : WHEREAS, Noble Drilling (Jim Thompson) Inc. (the "Company") has entered into a Note Purchase Agreement (the "Agreement"), dated the date hereof, among the Company, the Trustee and the Purchasers, pursuant to which the Company is to issue and sell, and the Purchasers are to purchase, the Notes referred to therein; WHEREAS, Parent Guarantor will obtain benefits from the purchase of the Notes by the Purchasers, and it is a condition precedent to the purchase of the Notes by the Purchasers that Parent Guarantor execute and deliver this Guaranty guaranteeing the Obligations of the Company under the Agreement and the Notes; WHEREAS, Parent Guarantor may reasonably be expected to benefit, either directly or indirectly, from this Guaranty; NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Parent Guarantor hereby agrees as follows: 1. The Guaranty. In order to induce the Purchasers to enter into the Agreement and to purchase the Notes, and in recognition of the direct benefits to be received by Parent Guarantor from the proceeds of the Notes, Parent Guarantor hereby unconditionally and irrevocably guarantees, as primary obligor and not merely as surety the full and prompt payment when due, whether upon maturity, acceleration or otherwise, of any and all of the (x) Obligations and (y) all other obligations (including which but for the automatic stay under Section 362(a) of the Bankruptcy Code, would become due) and liabilities owing by the Company to the Purchasers under the Agreement (including, without limitation, indemnities and interest thereon) now existing or hereafter incurred under arising out of or in connection with the Agreement or any other Credit Document and the due performance and compliance with the terms of the Credit Documents by the Company and each Subsidiary Guarantor (collectively, the "Guaranteed Obligations"), 2 EXHIBIT D-1 Page 2 and additionally Parent Guarantor hereby unconditionally and irrevocably guarantees the performance of all obligations and covenants of the Company under the SDDI Contract. If any of the Guaranteed Obligations becomes due and payable hereunder, Parent Guarantor unconditionally promises to pay such indebtedness to Secured Creditors, or order, on demand, together with (without duplication) any and all expenses which may be incurred by Secured Creditors in collecting any of the Guaranteed Obligations. This Guaranty is a continuing one and all liabilities to which it applies or may apply under the terms hereof shall be conclusively presumed to have been created in reliance hereon. If a claim is ever made upon any Secured Creditor for repayment or recovery of any amount or amounts received in payment or on account of any of the Guaranteed Obligations and any of the aforesaid payees repays all or part of said amount by reason of (i) any judgment, decree or order of any court or administrative body having jurisdiction over such payee or any of its property, including, but not limited to any repayment by reason of a preferential payment or fraudulent transfer or (ii) any settlement or compromise of any such claim effected by such payee with any such claimant (including the Company), then and in such event Parent Guarantor agrees that any such judgment, decree, order, settlement or compromise shall be binding upon Parent Guarantor, notwithstanding any revocation of this Guaranty or any other instrument evidencing any liability of the Company, and Parent Guarantor shall be and remain liable to the aforesaid payees hereunder for the amount so repaid or recovered to the same extent as if such amount had never originally been received by any such payee. 2. Bankruptcy. Additionally, Parent Guarantor unconditionally and irrevocably guarantees the payment of any and all of the Guaranteed Obligations to the Secured Creditors whether or not due or payable by the Company upon the occurrence in respect of the Company of any of the events specified in Section 8.05 of the Agreement, and unconditionally promises to pay such indebtedness on demand, in Dollars. 3. Nature of Liability. The liability of Parent Guarantor hereunder is exclusive and independent of any security for or other guaranty of the Guaranteed Obligations whether executed by Parent Guarantor, any other guarantor or by any other party, and the liability of Parent Guarantor hereunder is not affected or impaired by (a) any direction as to application of payment by the Company or by any other party or (b) any other continuing or other guaranty, undertaking or maximum liability of a guarantor or of any other party as to the Guaranteed Obligations or (c) any payment on or in reduction of any such other guaranty or undertaking or (d) any dissolution, termination or increase, decrease or change in personnel by the Company. 4. Absolute and Independent Obligation. No invalidity, irregularity or unenforceability of all or any part of the Guaranteed Obligations or of any security therefor shall affect, impair or be a defense to this Guaranty and this Guaranty shall be primary, absolute and unconditional notwithstanding the occurrence of any event or the existence of any other circumstances which might constitute a legal or equitable 3 EXHIBIT D-1 Page 3 discharge of a surety or guarantor except irrevocable payment in full of the Guaranteed Obligations. The obligations of Parent Guarantor hereunder are independent of the obligations of the Company, any other guarantor or any other Person and a separate action or actions may be brought and prosecuted against Parent Guarantor whether or not action is brought against the Company or any such other guarantor or Person and whether or not the Company, or any such other guarantor or other Person be joined in any such action or actions. Parent Guarantor waives, to the full extent permitted by law, the benefit of any statute of limitations affecting its liability hereunder or the enforcement hereof. 5. Authorization. Parent Guarantor authorizes the Secured Creditors without notice or demand (except as shall be required by applicable statute and cannot be waived), and without affecting or impairing its liability hereunder, from time to time to: (a) change the manner, place or terms of payment of, and/or change or extend the time of payment of, renew, increase, accelerate or alter, any of the Guaranteed Obligations (including any increase or decrease in the rate of interest thereon), any security therefor, or any liability incurred directly or indirectly in respect thereof, and the Guaranty herein made shall apply to the Guaranteed Obligations as so changed, extended, renewed or altered; (b) take and hold security for the payment of the Guaranteed Obligations and sell, exchange, release, surrender, realize upon or otherwise deal with in any manner and in any order any property by whomsoever at any time pledged or mortgaged to secure, or howsoever securing, the Guaranteed Obligations or any liabilities (including any of those hereunder) incurred directly or indirectly in respect thereof or hereof, and/or any offset thereagainst; (c) exercise or refrain from exercising any rights against any Credit Party or others or otherwise act or refrain from acting; (d) release or substitute any one or more endorsers, guarantors, the Company or other obligors; (e) settle or compromise any of the Guaranteed Obligations, any security therefor or any liability (including any of those hereunder) incurred directly or indirectly in respect thereof or hereof, and may substitute the payment of all or any part thereof to the payment of any liability (whether due or not) of the Company to its creditors other than the Secured Creditors; (f) apply any sums by whomsoever paid or howsoever realized to any liability or liabilities of the Company to the Secured Creditors regardless of what liability or liabilities of the Company remain unpaid; 4 EXHIBIT D-1 Page 4 (g) consent to or waive any breach of, or any act, omission or default under, this Agreement, any other Credit Document or any of the instruments or agreements referred to herein or therein, or otherwise amend, modify or supplement this Agreement, any other Credit Document or any of such other instruments or agreements; and/or (h) take any other action which would, under otherwise applicable principles of common law, give rise to a legal or equitable discharge of Parent Guarantor from its liabilities under this Guaranty. 6. Reliance. It is not necessary for the Secured Creditors to inquire into the capacity or powers of the Company or the officers, directors, partners or agents acting or purporting to act on its behalf, and any Guaranteed Obligations made or created in reliance upon the professed exercise of such powers shall be guaranteed hereunder. 7. Subordination. Any of the indebtedness of the Company now or hereafter owing to Parent Guarantor is hereby subordinated to the Guaranteed Obligations. Prior to the transfer by Parent Guarantor of any note or negotiable instrument evidencing any of the indebtedness of the Company to Parent Guarantor, Parent Guarantor shall mark such note or negotiable instrument with a legend that the same is subject to this subordination. Without limiting the generality of the foregoing, Parent Guarantor hereby agrees with the Secured Creditors that it will not exercise any right of subrogation which it may at any time otherwise have as a result of this Guaranty (whether contractual, under law or otherwise) until all Guaranteed Obligations have been irrevocably paid in full in cash. 8. Waiver. (a) Parent Guarantor waives any right (except as cannot be waived under law) to require any Secured Creditor to (i) proceed against the Company, any other guarantor or any other party, (ii) proceed against or exhaust any security held from the Company, any other guarantor or any other party or (iii) pursue any other remedy in any Secured Creditor's power whatsoever. Parent Guarantor waives any defense based on or arising out of any defense of the Company, any other guarantor or any other party, other than irrevocable payment in full of the Guaranteed Obligations, based on or arising out of the disability of the Company, any other guarantor or any other party, or the unenforceability of the Guaranteed Obligations or any part thereof from any cause, or the cessation from any cause of the liability of the Company other than irrevocable payment in full of the Guaranteed Obligations. The Secured Creditors may, at their election, foreclose on any security held by the Collateral Trustee or any other Secured Creditor by one or more judicial or nonjudicial sales, whether or not every aspect of any such sale is commercially reasonable (to the extent such sale is permitted by applicable law), or exercise any other right or remedy the Secured Creditors may have against the Company or any other party, or any security, without affecting or impairing in 5 EXHIBIT D-1 Page 5 any way the liability of Parent Guarantor hereunder except to the extent the Guaranteed Obligations have been irrevocably paid. (b) Parent Guarantor waives all presentments, demands for performance, protests and notices (except notices expressly provided for in the Credit Documents to be provided to Parent Guarantor), including, without limitation, notices of nonperformance, notices of protest, notices of dishonor, notices of acceptance of this Guaranty, and notices of the existence, creation or incurring of new or additional Guaranteed Obligations. Parent Guarantor assumes all responsibility for being and keeping itself informed of the Company's financial condition and assets, and of all other circumstances, bearing upon the risk of nonpayment of the Guaranteed Obligations and the nature, scope and extent of the risks which Parent Guarantor assumes and incurs hereunder, and agrees that the Secured Creditors shall have no duty to advise Parent Guarantor of information known to them regarding such circumstances or risks. (c) Until such time as the Guaranteed Obligations have been irrevocably paid in full in cash , Parent Guarantor hereby waives all rights of subrogation which it may at any time otherwise have as a result of this Guaranty (whether contractual, under law, or otherwise) to the claims of the Secured Creditors against the Company or any other guarantor of the Guaranteed Obligations and all contractual, statutory or common law rights of reimbursement, contribution or indemnity from the Company or any other guarantor which it may at any time otherwise have as a result of this Guaranty. 9. Enforcement. The Secured Creditors agree that this Guaranty may be enforced only by the action of the Trustee, in each case acting upon the instructions of the Required Purchasers and no Secured Creditor shall have any right individually to seek to enforce or to enforce this Guaranty or to realize upon the security to be granted by the Security Documents, it being understood and agreed that such rights and remedies may be exercised by the Trustee for the benefit of the Secured Creditors upon the terms of this Guaranty and the Security Documents. 10. Representations, Warranties and Agreements. In order to induce the Purchasers to accept this Guaranty and to purchase the Notes, Parent Guarantor makes the following representations and warranties to, and agreements with, the Purchasers, all of which shall survive the execution and delivery of this Guaranty: (a) Corporate Status. Parent Guarantor is a duly organized and validly existing corporation in good standing under the laws of the jurisdiction of its organization and has the corporate power and authority to own its property and assets and to transact the business in which it is engaged. (b) Corporate Power and Authority. Parent Guarantor has the corporate power and authority to execute, deliver and carry out the terms and provisions 6 EXHIBIT D-1 Page 6 hereof and has taken all necessary corporate action to authorize the execution, delivery and performance hereof. Parent Guarantor has duly executed and delivered this Guaranty and such Guaranty constitutes the legal, valid and binding obligation of Parent Guarantor enforceable against Parent Guarantor in accordance with its terms, except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws generally affecting creditors' rights and by equitable principles (regardless of whether enforcement is sought in equity or at law). (c) No Violation. Neither the execution, delivery and performance by Parent Guarantor of this Guaranty nor compliance with the terms and provisions hereof, nor the consummation of the transactions contemplated herein (i) will contravene any applicable provision of any law, statute, rule, regulation, order, writ, injunction or decree of any court or governmental instrumentality , (ii) will result in any breach of any of the terms, covenants, conditions or provisions of, or constitute a default under, or result in the creation or imposition of (or the obligation to create or impose) any Lien upon any of the property or assets of Parent Guarantor pursuant to the terms of, any indenture, mortgage, deed of trust, agreement or other instrument to which Parent Guarantor or any of its Subsidiaries is a party or by which they or any of their respective property or assets are bound or to which they are subject, or (iii) will violate any provision of the Certificate of Incorporation or Bylaws of Parent Guarantor. (d) Litigation. There are no actions, suits or proceedings pending or, to the knowledge of Parent Guarantor, after due inquiry, threatened with respect to Parent Guarantor or its Subsidiaries that are reasonably likely to have a material adverse effect on the rights or remedies of the Purchasers or on the ability of Parent Guarantor to perform its obligations to them hereunder. (e) Governmental Approvals. Except for the orders, consents, approvals, licenses, authorizations, validations, recordings, registrations and exemptions that have already been duly made or obtained and remain in full force and effect, no order, consent, approval, license, authorization, or validation of, or filing, recording or registration with, or exemption by, any foreign or domestic governmental or public body or authority, or any subdivision thereof, is required to authorize or is required in connection with (i) the execution, delivery and performance hereof, or (ii) the legality, validity, binding effect or enforceability hereof. (f) Investment Company Act. Neither the Parent Guarantor nor any other Credit Party is an "investment company" or a company "controlled" by an "investment company," within the meaning of the Investment Company Act of 1940, as amended. 7 EXHIBIT D-1 Page 7 (g) Public Utility Holding Company Act. Neither the Parent Guarantor nor any other Credit Party is a "holding company," or a "subsidiary company" of a "holding company," or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company," within the meaning of the Public Utility Holding Company Act of 1935, as amended. (h) True and Complete Disclosure. All information (taken as a whole) heretofore or contemporaneously furnished by or on behalf of Parent Guarantor in writing to the Trustee or any Purchaser for purposes of or in connection with the Agreement, this Guaranty or any transaction contemplated herein is, and all other such information (taken as a whole) hereafter furnished by or on behalf of Parent Guarantor in writing to any Purchaser will be, true and accurate in all material respects on the date as of which such information is dated or certified and not incomplete by omitting to state any material fact necessary to make such information (taken as a whole) not misleading at such time in light of the circumstances under which such information was provided. There is no fact known to Parent Guarantor which is reasonably likely to have a material adverse effect on the rights or remedies of the Purchasers or on the ability of any Credit Party to perform its respective obligations under any Credit Document to them, which has not been disclosed herein or in such other documents, certificates and statements furnished to the Trustee and the Purchasers for use in connection with the transactions contemplated hereby. (i) Financial Condition; Financial Statements. (i) On and as of the Effective Date, on a pro forma basis after giving effect to all Indebtedness incurred, and to be incurred, by the Credit Parties in connection herewith, (x) the sum of the assets, at a fair valuation, of Parent Guarantor on a consolidated basis taken as a whole will exceed its debts, (y) Parent Guarantor on a consolidated basis taken as a whole will not have incurred or intended to, or believe that it will, incur debts beyond its ability to pay such debts as such debts mature and (z) Parent Guarantor on a consolidated basis taken as a whole will not have unreasonably small capital with which to conduct its business. (ii)(A) The consolidated balance sheet of Parent Guarantor at December 31, 1997 and the related consolidated statements of operations and cash flows of Parent Guarantor for the fiscal year, as the case may be, ended as of said date, which have been examined by Price Waterhouse LLP, independent certified public accountants, who delivered an unqualified opinion in respect thereto, and (B) the consolidated balance sheet of Parent Guarantor as of March 31, 1998, copies of which have heretofore been furnished to each Purchaser, present fairly the financial position of such entities at the dates of said statements and the results for the period covered thereby in accordance with GAAP, except to the extent provided in the notes to said financial statements and, in the case of the March 31, 8 EXHIBIT D-1 Page 8 1998 statements, subject to normal and recurring year-end audit adjustments. All such financial statements have been prepared in accordance with generally accepted accounting principles and practices consistently applied except to the extent provided in the notes to said financial statements. Nothing has occurred since December 31, 1997 that has had or is reasonably likely to have a Material Adverse Effect on the rights or remedies of the Purchasers hereunder, or on the ability of Parent Guarantor to perform its obligations to them. (iii) Except as reflected in the financial statements and the notes thereto described in clause (ii) above, there were as of the Effective Date no liabilities or obligations with respect to Parent Guarantor of a nature (whether absolute, accrued, contingent or otherwise and whether or not due) which, either individually or in aggregate, would be material to Parent Guarantor on a consolidated basis and its Subsidiaries taken as a whole, except as incurred subsequent to March 31, 1998 in the ordinary course of business consistent with past practices. (j) Tax Returns and Payments. The Parent Guarantor and each of its Subsidiaries has filed all federal income tax returns and all other material tax returns, domestic and foreign, required to be filed by it and has paid all material taxes and assessments payable by it which have become due, other than those not yet delinquent and except for those contested in good faith. The Parent Guarantor and each of its Subsidiaries has paid, or has provided adequate reserves (in the good faith judgment of the management of the Parent Guarantor) for the payment of, all federal, state and foreign income taxes applicable for all prior fiscal years and for the current fiscal year to the date hereof. (k) Employee Benefit Plans. (i) Neither the Parent Guarantor nor any of its Subsidiaries nor any ERISA Affiliate has ever maintained or contributed to (or had an obligation to contribute to) any Plan or any Foreign Pension Plan where any current or reasonably foreseeable liability of the Parent Guarantor or any of its Subsidiaries with respect to such Plan or such Foreign Pension Plan would be reasonably likely to have a Material Adverse Effect. All contributions required to be made with respect to (x) any employee pension benefit plan (as defined in Section 3(2) of ERISA) maintained or contributed to by (or to which there is an obligation to contribute of) the Parent Guarantor, any of its Subsidiaries or an ERISA Affiliate and (y) any Foreign Pension Plan have been timely made except any such failures to contribute which would not individually or in the aggregate be reasonably likely to have a Material Adverse Effect. The Parent Guarantor and its Subsidiaries may cease contributions to or terminate any employee benefit plan (within the meaning of Section 3(3) of ERISA) maintained or contributed to by (or to which there is an obligation to contribute of) them without incurring any 9 EXHIBIT D-1 Page 9 liability which, individually or in the aggregate would be reasonably likely to have a Material Adverse Effect. (ii) Each Foreign Pension Plan has been maintained in material compliance with its terms and with the requirements of any and all applicable laws, statutes, rules, regulations and orders and has been maintained, where required, in good standing with applicable regulatory authorities. (l) Pollution and Other Regulations. (i) The Parent Guarantor and its Subsidiaries are in compliance with all applicable Environmental Laws governing its business for which failure to comply is reasonably likely to have a Material Adverse Effect, and neither the Parent Guarantor nor any of its Subsidiaries are liable for any material penalties, fines or forfeitures for failure to comply with any of the foregoing. All licenses, permits, registrations or approvals required for the business of the Parent Guarantors and its Subsidiaries, as conducted as of the Effective Date, under any Environmental Law have been secured and the Parent Guarantor and its Subsidiaries are in compliance therewith, except such licenses, permits, registrations or approvals the failure to secure or to comply therewith is not likely to have a Material Adverse Effect. The Parent Guarantor and its Subsidiaries are not in any respect in noncompliance with, breach of or default under any applicable writ, order, judgment, injunction, or decree to which the Parent Guarantor or any such Subsidiary is a party or which would affect the ability of the Parent Guarantor and its Subsidiaries to operate the Mortgaged Rigs or any facility and no event has occurred and is continuing which, with the passage of time or the giving of notice or both, would constitute noncompliance, breach of or default thereunder, except in each such case, such noncompliance, breaches or defaults as are not likely to, in the aggregate, have a Material Adverse Effect. There are as of the Effective Date no Environmental Claims pending or, to the knowledge, after due inquiry, of the Parent Guarantor, threatened, against the Parent Guarantor or any of its Subsidiaries wherein an unfavorable decision, ruling or finding would be reasonably likely to have a Material Adverse Effect. There are no facts, circumstances, conditions or occurrences on any real property, drilling rig or facility owned or operated by the Parent Guarantor or any of its Subsidiaries that is reasonably likely (x) to form the basis of an Environmental Claim against the Parent Guarantor, any Mortgaged Rig or facility owned by any Credit Party, or (y) to cause the Vessel or facility to be subject to any restrictions on its ownership, occupancy, use or transferability under any Environmental Law, except in each such case, such Environmental Claims or restrictions that individually or in the aggregate are not reasonably likely to have a Material Adverse Effect. (ii) Hazardous Materials have not at any time been (x) generated, used, treated or stored on, or transported to or from, any drilling rig or facility including the 10 EXHIBIT D-1 Page 10 Mortgaged Rigs at any time owned or operated by the Parent Guarantor or any of its Subsidiaries or (y) released on or from any such drilling rig or facility, in each case where, to the Parent Guarantor's knowledge, after due inquiry, such occurrence or event individually or in the aggregate is reasonably likely to have a Material Adverse Effect. (m) Properties. The Parent Guarantor and its Subsidiaries have title to all material properties owned by them , free and clear of all Liens, other than Permitted Liens. (n) Labor Relations. Neither the Parent Guarantor nor any of its Subsidiaries is engaged in any unfair labor practice that is reasonably likely to have a Material Adverse Effect. There is (i) no unfair labor practice complaint pending against the Parent Guarantor or any of its Subsidiaries or threatened against the Parent Guarantor or any of its Subsidiaries, before the National Labor Relations Board, and no grievance or arbitration proceeding arising out of or under any collective bargaining agreement is pending against the Parent Guarantor or any of its Subsidiaries or, to the Parent Guarantor's knowledge, after due inquiry, threatened against any of them, (ii) no strike, labor dispute, slowdown or stoppage is pending against the Parent Guarantor or any of its Subsidiaries or, to the Parent Guarantor's knowledge, after due inquiry, threatened against the Parent Guarantor or any of its Subsidiaries and (iii) no union representation petition existing with respect to the employees of the Parent Guarantor or its Subsidiaries and no union organizing activities are taking place, except with respect to any matter specified in clause (i), (ii) or (iii) above, either individually or in the aggregate, such as is not reasonably likely to have a Material Adverse Effect. (o) Rig Classification. Each Mortgaged Rig is classified in the highest class available for rigs of its age and type with the American Bureau of Shipping, Inc, Bureau Veritas, Det Norske Veritas, Lloyd's Register of Shipping, or another internationally recognized classification society reasonably acceptable to the Trustee, free of any material requirements or recommendations, provided that the Vessel may be out of class as a result of, and pending the completion of the Project. (p) Patents, etc. The Parent Guarantor has obtained all patents, trademarks, service marks, trade names, copyrights, licenses and other rights, free from burdensome restrictions, that are necessary for the operation of its business taken as a whole as presently conducted, and Parent Guarantor knows of no such rights the absence of which would be reasonably likely to have a Material Adverse Effect. 11 EXHIBIT D-1 Page 11 (q) Representations In Mortgages. The Parent Guarantor hereby confirms each representation and warranty of the Company and NDAHC and NDUS set forth in the Mortgages. 11. Affirmative Covenants. Parent Guarantor covenants and agrees that on the Effective Date and thereafter for so long as this Agreement is in effect and until the Notes (together with interest), Fees and all other Obligations incurred hereunder, are irrevocably paid in full: (a) Information Covenants. Parent Guarantor will furnish to the Trustee (with sufficient copies for each of the Purchasers, and the Trustee will promptly forward to each of the Purchasers): (i) Annual Financial Statements. Within 120 days after the close of each fiscal year of Parent Guarantor, the consolidated balance sheet of Parent Guarantor and its Subsidiaries, as at the end of such fiscal year and the related consolidated statements of income and retained earnings and of cash flows for such fiscal year, in each case setting forth comparative consolidated figures for the preceding fiscal year, and examined by independent certified public accountants of recognized national standing whose opinion shall not be qualified as to the scope of audit and as to the status of Parent Guarantor and its Subsidiaries as a going concern shall state that such financial statements present fairly, in all material respects, the financial position of the companies being reported upon and their results of operations and cash flows and have been prepared in conformity with GAAP, and that the examination of such accountants in connection with such financial statements has been made in accordance with generally accepted auditing standards, and that such audit provides a reasonable basis for such opinion in the circumstances. Such opinion shall be accompanied by a certificate of such accountants stating that they have reviewed this Agreement and stating further whether, in making their audit, they have become aware of any condition or event that then constitutes a Default or an Event of Default, and, if they are aware that any such condition or event then exists, specifying the nature and period of the existence thereof (it being understood that such accountants shall not be liable, directly or indirectly, for any failure to obtain knowledge of any Default or Event of Default unless such accountants should have obtained knowledge thereof in making an audit in accordance with GAAP or did not make such an audit), (ii) Quarterly Financial Statements. As soon as available and in any event within 60 days after the close of each of the first three quarterly accounting periods in each fiscal year, the consolidated balance sheet of Parent Guarantor and its Subsidiaries, as at the end of such quarterly period and the related consolidated 12 EXHIBIT D-1 Page 12 statements of income and retained earnings and of cash flows for such quarterly period and for the elapsed portion of the fiscal year ended with the last day of such quarterly period, in each case setting forth comparative consolidated figures for the related period in the prior fiscal year, subject to changes resulting from audit and normal year-end audit adjustments. (iii) Compliance Certificate. At the time of the delivery of the financial statements provided for in clauses (i) and (ii) above, a certificate of Parent Guarantor signed by its Senior Vice President-Finance, Controller or other Authorized Officer setting forth the calculations required to establish whether Parent Guarantor was in compliance with the provisions of Section 12 hereof as at the end of such fiscal period or year, as the case may be. (iv) Notices. Promptly, and in any event (i) within ten Business Days after Parent Guarantor obtains knowledge thereof, notice of the commencement of or any significant development in any litigation or governmental proceeding pending against Parent Guarantor which is likely to have a Material Adverse Effect or (ii) within five days after Parent Guarantor obtains knowledge thereof, notice of any Default or Event of Default or a default or event of default under the Parent Guaranty. (v) Other Information. From time to time, such other information or documents (financial or otherwise) as the Trustee or any Purchaser may reasonably request. (b) Books, Records, Inspection. The Parent Guarantor will, upon reasonable notice to the Senior Vice President-Finance, Controller or any other Authorized Officer of the Parent Guarantor, permit officers and designated representatives of the Trustee (at the expense of the Trustee, but after the occurrence and during the continuance of a Default or any Event of Default, at the expense of the Parent Guarantor) or any Purchaser (at the expense of such Purchaser but after the occurrence and during the continuance of a Default or an Event of Default at the expense of the Parent Guarantor), to the extent necessary, to examine the books of account of the Parent Guarantor and discuss the affairs, finances and accounts of the Parent Guarantor with, and be advised as to the same by, its and their officers and independent accountants, all at such reasonable times and intervals and to such reasonable extent as the Trustee or the Purchaser may desire. (c) Maintenance of Property; Insurance. There will at all times be maintained in full force and effect insurance on the Mortgaged Rigs in such amounts with carriers of such insurance industry ratings, covering such risks and liabilities and with such deductibles or self-insured retentions as are in accordance with normal industry practice for similarly situated insureds. 13 EXHIBIT D-1 Page 13 (d) Payment of Taxes. The Parent Guarantor will and will cause each of its Subsidiaries to pay and discharge all material taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits, or upon any properties belonging to it or its Subsidiaries, prior to the date on which penalties attach thereto, and all lawful claims which, if unpaid, might become a Lien or charge upon any properties of the Parent Guarantor or its Subsidiaries, provided that the Company shall not be required to pay any such tax, assessment, charge, levy or claim which is being contested in good faith and by proper proceedings if it has maintained adequate reserves (in the good faith judgment of the management of the Parent Guarantor) with respect thereto. (e) Consolidated Corporate Franchises. The Parent Guarantor will do, and will cause each Credit Party to do, all things necessary to preserve and keep in full force and effect its corporate existence, material rights and authority, unless the failure to do so is not reasonably likely to have a Material Adverse Effect, provided that any transaction permitted by Section 7.02 of the Agreement will not constitute a breach of this clause (d). (f) Compliance with Statutes, etc. The Parent Guarantor and its Subsidiaries will comply with all applicable statutes, regulations and orders of, and all applicable restrictions imposed by, all governmental bodies, domestic or foreign, in respect of the conduct of their business and the ownership of their property other than those the non-compliance with which would not have a Material Adverse Effect or would not have a material adverse effect on the ability of any Credit Party to perform its business or its respective obligations under any Credit Document to which it is a party. (g) Good Repair. Except in the event any Mortgaged Rig has been damaged or has suffered a casualty as to which (within a reasonable period of time) management has not made a determination whether to replace or repair, or if the determination to replace or repair has been made, as to which such replacement or repairs are being undertaken, subject to availability of equipment, materials and/or repair facilities, the Parent Guarantor will, and will cause each Credit Party to, keep the Mortgaged Rigs, in whomsoever's possession they may be, in good repair, working order and condition, normal wear and tear excepted, and, subject to Section 7.02 of the Agreement, see that from time to time there are made in such properties and equipment all needful and proper repairs, renewals, replacements, extensions, additions, betterments and improvements thereto, (i) to the extent and in the manner useful or customary for companies in similar businesses and (ii) to the extent the failure to do so is reasonably likely to cause a Material Adverse Effect. 14 EXHIBIT D-1 Page 14 (h) End of Fiscal Years; Fiscal Quarters. The Parent Guarantor will, for financial reporting purposes, cause (i) its and its Subsidiaries fiscal years to end on December 31 of each year and (ii) its fiscal quarters to end on March 31, June 30, September 30 and December 31 of each year. (i) ERISA. As soon as possible and, in any event, within 10 days after the Parent Guarantor, any of its Subsidiaries or any ERISA Affiliate knows or has reason to know that: (a) a material contribution required to be made with respect to (i) any employee pension benefit plan (as defined in Section 3(2) of ERISA) maintained or contributed to by (or to which there is an obligation to contribute of) the Parent Guarantor, any of its Subsidiaries or an ERISA Affiliate or (ii) any Foreign Pension Plan has not been timely made or (b) the Parent Guarantor or any of its Subsidiaries may incur any material liability pursuant to any employee welfare benefit plan (as defined in Section 3(1) of ERISA) that provides benefits to retired employees or other former employees (other than as required by Section 601 of ERISA) or any employee pension benefit plan (as defined in Section 3(2) of ERISA), the Parent Guarantor or the Company will deliver to each of the Purchasers a certificate of the Senior Vice President-Finance or Controller of the Parent Guarantor setting forth details as to such occurrence and the action, if any, that the Parent Guarantor, such Subsidiary or such ERISA Affiliate is required or proposes to take, together with any notices required or proposed to be given to or filed with or by the Parent Guarantor, such Subsidiary, the ERISA Affiliate, a plan participant or the plan administrator. (j) Further Assurances. (i) The Parent Guarantor will, and will cause each other Credit Party to, at the expense of such Credit Party, make, execute, endorse, acknowledge, file and/or deliver to the Trustee, from time to time such vouchers, invoices, schedules, confirmatory assignments, conveyances, financing statements, transfer endorsements, power of attorney, certificates, real property surveys, reports and other assurances or instruments and take such further steps relating to the Trustee or any Purchaser may reasonably require. (ii) The Parent Guarantor agrees that each action required above by this clause (i) shall be completed as soon as possible, but in no event later than 30 days after such action is requested to be taken by the Trustee or the Required Purchasers, provided that in no event shall the Parent Guarantor or any of its Subsidiaries be required to take any action, other than using its reasonable commercial efforts without any material expenditure, to obtain consents or other actions from third parties with respect to its compliance with this clause (i). 12. Negative Covenants. Parent Guarantor hereby covenants and agrees that as of the Effective Date and thereafter for so long as this Guaranty is in effect and until all Obligations guaranteed hereunder are irrevocably paid in full: 15 EXHIBIT D-1 Page 15 (a) Changes in Business. The Parent Guarantor will not materially alter the character of its business taken as a whole from that conducted at the Effective Date. (b) Consolidation, Merger, Sale of Assets, etc. The Parent Guarantor will not and will not permit any Credit Party to wind up, liquidate or dissolve its affairs, or enter into any transaction of merger or consolidation, sell or otherwise dispose of all or any part of the Collateral or agree to do any of the foregoing at any future time, except that the following shall be permitted: (i) any Subsidiary Guarantor may be merged into the Parent Guarantor or any other Credit Party and the Company may be merged into the Parent Guarantor; provided, however, that the surviving company shall have assumed the obligations of the Subsidiary Guarantor under the Subsidiary Guaranty in writing and shall have delivered to the Trustee an opinion of counsel to the effect that the obligations of the Subsidiary Guarantor under the Subsidiary Guaranty have been duly and validly assumed and constitute valid and binding obligations of the surviving company enforceable in accordance with their terms; and (ii) so long as no Default or Event of Default exists or would result therefrom, on or after June 1, 2001 the Credit Parties may sell the Mortgaged Rigs for cash at fair market value, provided that the proceeds of any such disposition shall be applied to prepay the Notes in full in accordance with Section 3.01 of the Agreement. (c) Interest Coverage Ratio. The Parent Guarantor shall not permit the ratio at the end of each fiscal quarter of (i) Adjusted Consolidated EBITDA to (ii) Consolidated Interest Expense for the period of the four most recently completed consecutive fiscal quarters of the Company to be less than 3.00:1.00. (d) Leverage Ratio. The Parent Guarantor shall not permit the Leverage Ratio as of the end of any fiscal quarter to be more than 0.40:1.00. (e) Net Worth. The Parent Guarantor shall not permit Consolidated Net Worth as of the end of any fiscal quarter to be less than $812,382,000 plus 50% of Consolidated Net Income (determined on a cumulative basis) for all Cumulative Net Income Periods ending prior to the date of determination for which Consolidated Net Income was a positive number. 13. Miscellaneous. (a) Calculations; Computations. (a) The financial statements to be furnished to the Purchasers pursuant hereto shall be made and prepared in accordance with 16 EXHIBIT D-1 Page 16 GAAP consistently applied throughout the periods involved (except as set forth in the notes thereto or as otherwise disclosed in writing by Parent Guarantor to the Purchasers), provided that (x) except as otherwise specifically provided herein, all computations determining compliance with Section 12, including definitions used therein, shall utilize accounting principles and policies in effect at the time of the preparation of, and in conformity with those used to prepare, the December 31, 1997 and March 31, 1998 historical financial statements of the Company delivered to the Purchasers pursuant to Section 10(i), and (y) that if at any time the computations determining compliance with Section 12 utilize accounting principles different from those utilized in the financial statements furnished to the Purchasers, such financial statements shall be accompanied by reconciliation work-sheets. (b) Notices. All notices and other communications provided for hereunder shall be given as set forth in the Agreement (i) to Guarantor at the address set forth below its execution hereof, and (ii) to Trustee and/or Purchasers at the addresses set forth in the Agreement. (c) Benefit of Agreement. This Guaranty shall be binding upon and inure to the benefit of and be enforceable by the respective successors and assigns of the parties hereto, provided that Parent Guarantor may not assign or transfer any of its rights or obligations hereunder without the prior written consent of the Purchasers. (d) Governing Law; Submission to Jurisdiction; Venue; Waiver of Jury Trial. (i) THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE INTERNAL LAW OF THE STATE OF NEW YORK. Any legal action or proceeding with respect to this Guaranty may be brought in the courts of the state of New York or of the United States for the Southern District of New York, and, by execution and delivery of this Guaranty, the Parent Guarantor hereby irrevocably accepts for itself and in respect of its property, generally and unconditionally, the non-exclusive jurisdiction of the aforesaid courts. The Parent Guarantor further irrevocably consents to the service of process out of any of the aforementioned courts in any such action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to the Parent Guarantor located outside New York City and by hand delivery to the Company located within New York City, at its address for notices pursuant to Section 13(b) above, such service to become effective 7 days after such mailing. Nothing herein shall affect the right of the Trustee or any Purchaser to serve process in any other manner permitted by law or to commence legal proceedings or otherwise proceed against Parent Guarantor in any other jurisdiction. 17 EXHIBIT D-1 Page 17 (ii) The Parent Guarantor hereby irrevocably waives any objection which it may now or hereafter have to the laying of venue of any of the aforesaid actions or proceedings arising out of or in connection with this Guaranty brought in the courts referred to in clause (i) above and hereby further irrevocably waives and agrees not to plead or claim in any such court that any such action or proceeding brought in any such court has been brought in an inconvenient forum. (iii) The Parent Guarantor by its acceptance hereof, hereby irrevocably waives all right to a trial by jury in any action, proceeding or counterclaim arising out of or relating to this Guaranty or the transactions contemplated hereby. (e) Headings Descriptive. The headings of the several sections and subsections of this Guaranty are inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Guaranty. 14. Definitions. As used herein, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the term defined): "Adjusted Consolidated EBITDA" shall mean for any period, Consolidated EBITDA for such period, less cash dividends and cash taxes paid during such period. "Capital Lease" as applied to any Person shall mean any lease of any property (whether real, personal or mixed) by that Person as lessee which, in conformity with GAAP, is accounted for as a capital lease on the balance sheet of that Person. "Capitalized Lease Obligations" shall mean all obligations under Capital Leases of the Parent Guarantor or any of its Subsidiaries in each case taken at the amount thereof accounted for as liabilities in accordance with GAAP. "Consolidated EBIT" shall mean, for any period, (A) the sum of the amounts for such period of (i) Consolidated Net Income, (ii) provisions for taxes based on income, (iii) Consolidated Interest Expense, (iv) amortization or write-off of deferred financing costs to the extent deducted in determining Consolidated Net Income and (v) losses on sales of assets (excluding sales in the ordinary course of business) and other extraordinary losses less (B) the amount for such period of gains on sales of assets (excluding sales in the ordinary course of business) and other extraordinary gains, all as determined on a consolidated basis in accordance with GAAP. 18 EXHIBIT D-1 Page 18 "Consolidated EBITDA" shall mean, for any period, the sum of the amounts for such period of (i) Consolidated EBIT, (ii) depreciation expense of the Parent Guarantor and its Subsidiaries and (iii) amortization expense of the Parent Guarantor and its Subsidiaries, all as determined on a consolidated basis in accordance with GAAP. "Consolidated Indebtedness" shall mean, as at any date of determination, the aggregate stated balance sheet amount of all Indebtedness (including the Notes) of the Parent Guarantor and its Subsidiaries on a consolidated basis as determined in accordance with GAAP, excluding all Contingent Obligations relating to the Indebtedness of any Person which is included in the calculation of Consolidated Indebtedness of the Parent Guarantor and its Subsidiaries. "Consolidated Interest Expense" shall mean, for any period, total interest expense (including that attributable to Capital Leases) of the Parent Guarantor and its Subsidiaries in accordance with GAAP on a consolidated basis with respect to all outstanding Indebtedness of the Parent Guarantor and its Subsidiaries, provided that for purposes of this definition only, "Indebtedness" shall be deemed to include all indebtedness of the Parent Guarantor and its Subsidiaries which is otherwise excluded pursuant to clause (y) of the proviso contained in the definition of "Indebtedness". "Consolidated Net Income" shall mean for any period, the net income (or loss) of the Parent Guarantor and its Subsidiaries on a consolidated basis for such period taken as a single accounting period determined in conformity with GAAP. "Consolidated Net Worth" shall mean, at any time, shareholder's equity of the Parent Guarantor and its Subsidiaries on a consolidated basis determined in accordance with GAAP. "Contingent Obligations" shall mean as to any Person any obligation of such Person guaranteeing or intending to guarantee any Indebtedness, leases, dividends or other obligations ("primary obligations") of any other Person (the "primary obligor") in any manner, whether directly or indirectly, including, without limitation, any obligation of such Person, whether or not contingent, (a) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (b) to advance or supply funds (i) for the purchase or payment of any such primary obligation or (ii) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (c) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or 19 EXHIBIT D-1 Page 19 (d) otherwise to assure or hold harmless the owner of such primary obligation against loss in respect thereof, provided, however, that the term Contingent Obligation shall not include endorsements of instruments for deposit or collection in the ordinary course of business. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which such Contingent Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such Person is required to perform thereunder) as determined by such Person in good faith. "Cumulative Net Income Period" shall mean each period consisting of a fiscal quarter of the Company ending after March 31, 1998. "GAAP" shall mean generally accepted accounting principles in the United States of America as in effect from time to time. "Indebtedness" of any Person shall mean without duplication (i) all indebtedness of such Person for borrowed money, (ii) the deferred purchase price of assets or services which in accordance with GAAP would be shown on the liability side of the balance sheet of such Person, (iii) the face amount of all letters of credit issued for the account of such Person and, without duplication, all drafts drawn thereunder, (iv) all Indebtedness of a second Person secured by any Lien on any property owned by such first Person, whether or not such indebtedness has been assumed, (v) all Capitalized Lease Obligations of such Person, (vi) all obligations of such Person to pay a specified purchase price for goods or services whether or not delivered or accepted, (vii) all net obligations of such Person under Interest Rate Agreements and (viii) all Contingent Obligations of such Person (other than Contingent Obligations arising from the guaranty by such Person of Permitted Indebtedness of the Company and/or its Subsidiaries) provided that Indebtedness shall not include (x) trade payables and accrued expenses, in each case arising in the ordinary course of business and (y) indebtedness incurred by non-Credit Party Subsidiaries of the Parent Guarantor which is non-recourse to the Parent Guarantor or any other Subsidiary of the Parent Guarantor. "Interest Rate Agreement" shall mean any interest rate swap agreement, any interest rate cap agreement, any interest rate collar agreement or other similar agreement or arrangement designed to protect the Parent Guarantor against interest rate risk. "Leverage Ratio" shall mean, at any date of determination, the ratio of Consolidated Indebtedness on such date to Total Capitalization on such date. 20 EXHIBIT D-1 Page 20 "Non-Recourse Subsidiary" shall mean any Subsidiary of the Parent Guarantor which is the obligor with respect to any Indebtedness which is excluded from the definition of "Indebtedness" pursuant to clause (y) of the proviso contained therein. "Total Capitalization" shall mean, at any time, the sum of Consolidated Indebtedness and Consolidated Net Worth at such time. 21 EXHIBIT D-1 Page 21 IN WITNESS WHEREOF, Parent Guarantor has caused multiple counterparts of this Agreement to be duly executed and delivered as of the date first above written. NOBLE DRILLING CORPORATION By /s/ Byron L. Welliver ---------------------------------- Address for Notices: Byron L. Welliver, Senior Vice President- Finance 10370 Richmond Avenue, Suite 400 Houston, TX 77042 Attn: Byron L. Welliver Telephone: (713) 974-3131 Facsimile: (713) 974-3181 Accepted and Agreed to: CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, as Trustee By: /s/ Mauri J. Cowen --------------------------------- Mauri J. Cowen Vice President and Trust Officer EX-5.1 7 OPINION OF THOMPSON & KNIGHT 1 Exhibit 5.1 [LETTERHEAD OF THOMPSON & KNIGHT, P.C.] February 9, 1999 Noble Drilling Corporation 10370 Richmond Avenue, Suite 400 Houston, Texas 77042 Re: Noble Drilling Corporation Registration Statement on Form S-3 Ladies and Gentlemen: We have acted as counsel to Noble Drilling Corporation, a Delaware corporation (the "Company"), in connection with the preparation and filing of the Company's Registration Statement on Form S-3 (the "Registration Statement") to be filed with the Securities and Exchange Commission (the "Commission") on February 9, 1999 under the Securities Act of 1933, as amended (the "Securities Act"). The Registration Statement relates to the issuance and sale from time to time, pursuant to the General Rules and Regulations promulgated under the Securities Act, of up to $100,000,000 aggregate gross proceeds of (i) debt securities, which may be either senior (the "Senior Debt Securities") or subordinated (the "Subordinated Debt Securities" and, together with the Senior Debt Securities, the "Debt Securities"), (ii) shares of common stock, par value $.10 per share, of the Company (the "Common Stock"), (iii) shares of preferred stock, par value $1.00 per share, of the Company (the "Preferred Stock"), which may be issued in the form of depositary shares evidenced by depositary receipts (the "Depositary Shares"), (iv) warrants to purchase Debt Securities (the "Debt Warrants"), shares of Common Stock (the "Common Stock Warrants") and shares of Preferred Stock (the "Preferred Stock Warrants" and, together with the Debt Warrants and the Common Stock Warrants, the "Securities Warrants") of the Company, (v) Debt Securities, Common Stock and Preferred Stock that may be issued upon exercise of the Securities Warrants and (vi) such indeterminate amount of Offered Securities (as defined below) as may be issued in exchange for or upon conversion of, as the case may be, the Offered Securities. Pursuant to Rule 429 of the Securities Act, the prospectus included in the Registration Statement (the "Prospectus") will also be used in connection with registration statement No. 333-68507 filed on December 8, 1998, by the Company on Form S-3, pursuant to which the Company registered $300,000,000 of securities. The Debt Securities, Common Stock, Preferred Stock, Depositary Shares and Securities Warrants are hereinafter referred to collectively as the "Offered Securities." The Offered Securities will be sold or delivered from time to time as set forth in the Registration Statement, any amendment thereto, the Prospectus and supplements to the Prospectus (the "Prospectus Supplements"). The Senior Debt Securities will be issued under an Indenture to be entered into between the Company and Chase Bank of Texas, National Association, as Trustee (the "Senior Indenture"). The Subordinated Debt Securities will be issued under an Indenture to be entered into between the Company and the Trustee (the "Subordinated Indenture"). The forms of the Senior Indenture and Subordinated Indenture (collectively, the "Indentures") are included as exhibits to the Registration Statement. This opinion is delivered in accordance with the requirements of Item 601(b)(5) of Regulation S-K under the Securities Act. In connection with this opinion, we have examined originals or copies, certified or otherwise 2 Noble Drilling Corporation February 9, 1999 Page 2 identified to our satisfaction, of the Registration Statement and such agreements, certificates of public officials, certificates of trustees, certificates of officers or other representatives of the Company and others, and such other documents, certificates and records as we have deemed necessary or appropriate as a basis for the opinions set forth herein. In our examination, we have assumed the legal capacity of all natural persons, the genuineness of all signatures, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified, conformed or photostatic copies and the authenticity of the originals of such latter documents. In making our examination of executed documents and documents to be executed, we have assumed that the parties thereto had or will have the power, corporate, trust or other, to enter into and perform all obligations thereunder and have also assumed the due authorization by all requisite action, corporate or other, and execution and delivery by such parties of such documents and the validity and binding effect thereof on such parties. As to any facts material to the opinions expressed herein which were not independently established or verified, we have relied upon oral or written statements and representations of officers and other representatives of the Company, trustees and others. Based upon the foregoing, and subject to the qualifications and limitations set forth herein, we are of the opinion that: 1. The Debt Securities have been duly authorized by the Company and, (i) when the Registration Statement has become effective under the Securities Act, (ii) when the Indenture or Indentures, as the case may be, have been duly executed and delivered by the parties thereto and (iii) when the Debt Securities have been duly executed and authenticated in accordance with the terms of the Indentures and delivered and sold and upon payment in full therefor as contemplated by the Registration Statement, such Debt Securities will constitute valid and legally binding obligations of the Company enforceable in accordance with their terms and entitled to the benefits of such Indentures. 2. The shares of Common Stock being registered under the Registration Statement have been duly authorized by the Company and (i) when the Registration Statement has become effective under the Act and (ii) when the shares of Common Stock have been delivered by the Company upon purchase thereof and payment in full therefor as contemplated by the Registration Statement, such shares of Common Stock will be validly issued, fully paid and nonassessable. 3. The shares of Preferred Stock being registered under the Registration Statement will be duly authorized by the Company, validly issued, fully paid and nonassessable when (i) the Registration Statement has become effective under the Act, (ii) a certificate of designations relating to the series of the Preferred Stock being issued, in a form to be included as an exhibit of the Registration Statement, has been duly filed with the Secretary of State of Delaware and (iii) the shares of Preferred Stock have been delivered by the Company upon purchase thereof and payment in full therefor as contemplated by the Registration Statement. 4. The Securities Warrants have been duly authorized by the Company and (i) when the Registration Statement has become effective under the Act, (ii) upon the execution and delivery of a debt warrant agreement, common stock warrant agreement or preferred stock warrant agreement, as the case may be, relating to such Securities Warrants in a form to be included as an exhibit to the Registration Statement, and (iii) when such Securities Warrants have been duly executed, countersigned, delivered and sold in the applicable form and as contemplated by the Registration Statement, such Securities Warrants will constitute valid and 3 Noble Drilling Corporation February 9, 1999 Page 3 legally binding obligations of the Company enforceable against the Company in accordance with their terms. The opinions expressed above are limited by and subject to the following qualifications: (a) We express no opinion other than as to the federal securities laws of the United States of America, the laws of the State of New York and the General Corporation Law of the State of Delaware; provided, however, we have assumed, without investigation, that the laws of the State of New York are identical in all respects to the laws of the State of Texas. (b) In rendering the opinions expressed herein, we have assumed that no action heretofore taken by the Board of Directors of the Company in connection with the matters described or referred to herein will be modified, rescinded or withdrawn after the date hereof. (c) The opinions expressed in paragraphs 1 and 4 above are subject to the qualification that the validity and binding effect of the Securities and the Indentures may be limited or affected by (i) bankruptcy, insolvency, reorganization, fraudulent transfer or conveyance, receivership, moratorium and other similar laws relating to or affecting creditors' rights generally, (ii) general principles of equity, regardless of whether applied in a proceeding in equity or at law and (iii) an implied covenant of good faith and fair dealing. We hereby consent to the filing of this opinion with the Commission as Exhibit 5.1 to the Registration Statement. We also consent to the reference to our firm under the caption "Legal Matters" in the Registration Statement. In giving this consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act or the Rules and Regulations of the Commission promulgated thereunder. This opinion is expressed as of the date hereof unless otherwise expressly stated, and we disclaim any undertaking to advise you of any subsequent changes of the facts stated or assumed herein or any subsequent changes in applicable law. Very truly yours, THOMPSON & KNIGHT, P.C. By: /s/ David L. Emmons ---------------------------------- Shareholder EX-12.1 8 COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES 1 EXHIBIT 12.1 NOBLE DRILLING CORPORATION COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (Dollar Amounts in Thousands)
NINE MONTHS ENDED SEPTEMBER, 30 YEAR ENDED DECEMBER 31, ----------------- ------------------------------------------------------------ 1998 1997 1996 1995 1994 1993 ----------------- -------- -------- -------- -------- -------- Earnings: Income before income taxes and extraordinary charge....................(1) $186,434 $379,613 $101,959 $ 4,866 $ 27,195 $ 24,415 Add: Interest on indebtedness and amortization of debt expense and discount.......................... 3,402 12,894 18,758 12,156 12,351 8,038 Interest component of rent expense...... 1,898 2,128 1,668 731 457 -- Equity in losses of joint ventures...... 2,888 528 -- -- -- -- Minority interest....................... -- 256 428 214 169 232 -------- -------- -------- -------- -------- -------- Earnings as adjusted.............. $194,622 $395,419 $122,813 $ 17,967 $ 40,172 $ 32,685 ======== ======== ======== ======== ======== ======== Fixed Charges: Interest on indebtedness and amortization of debt expense and discount.......................... $ 3,402 $ 12,894 $ 18,758 $ 12,156 $ 12,351 $ 8,038 Capitalized interest.................... 10,845 4,218 -- -- -- -- Interest component of rent expense...... 1,898 2,128 1,668 731 457 -- -------- -------- -------- -------- -------- -------- Fixed charges ........ $ 16,145 $ 19,240 $ 20,426 $ 12,887 $ 12,808 $ 8,038 ======== ======== ======== ======== ======== ======== Ratio of earnings to fixed charges......(2) 12.1 20.6 6.0 1.4 3.1 4.1 ======== ======== ======== ======== ======== ========
(1) Included in the 1997 amount is a non-recurring gain of $197,676,000 related to the sale of the Company's mat-supported jackup rigs. (2) Excluding a non-recurring gain of $197,676,000 related to the sale of the Company's mat-supported jackup rigs, the ratio of earnings to fixed charges for 1997 was 10.3. EX-23.1 9 CONSENT OF PRICEWATERHOUSECOOPERS LLP 1 Exhibit 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Prospectus constituting part of this Registration Statement on Form S-3 of our report dated January 29, 1998 appearing on page 24 of Noble Drilling Corporation's Annual Report for the year ended December 31, 1997. We also consent to the reference to us under the heading "Experts" in such Prospectus. PRICEWATERHOUSECOOPERS LLP Houston, Texas February, 1999 EX-25.1 10 T-1 SENIOR NOTES 1 EXHIBIT 25.1 =============================================================================== SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------- FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) ____ ----------------------- CHASE BANK OF TEXAS, NATIONAL ASSOCIATION (Exact name of trustee as specified in its charter) 74-0800980 (I.R.S. Employer Identification Number) 712 MAIN STREET, HOUSTON, TEXAS 77002 (Address of principal executive offices) (Zip code) LEE BOOCKER, 712 MAIN STREET, 26TH FLOOR HOUSTON, TEXAS 77002 (713) 216-2448 (Name, address and telephone number of agent for service) NOBLE DRILLING CORPORATION (Exact name of obligor as specified in its charter) DELAWARE 73-0374541 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 10370 RICHMOND AVENUE HOUSTON, TEXAS 77042 (Address of principal executive offices) (Zip code) SENIOR DEBT SECURITIES (Title of indenture securities) =============================================================================== 2 ITEM 1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE: (a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT IS SUBJECT. Comptroller of the Currency, Washington, D.C. Federal Deposit Insurance Corporation, Washington, D.C. Board of Governors of the Federal Reserve System, Washington, D.C. (b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS. The trustee is authorized to exercise corporate trust powers. ITEM 2. AFFILIATIONS WITH THE OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION. The obligor is not an affiliate of the trustee. (See Note on Page 7.) ITEM 3. VOTING SECURITIES OF THE TRUSTEE. FURNISH THE FOLLOWING INFORMATION AS TO EACH CLASS OF VOTING SECURITIES OF THE TRUSTEE. COL. A COL. B TITLE OF CLASS AMOUNT OUTSTANDING Not applicable by virtue of Form T-1 General Instruction B and response to Item 13. ITEM 4. TRUSTEESHIPS UNDER OTHER INDENTURES. IF THE TRUSTEE IS A TRUSTEE UNDER ANOTHER INDENTURE UNDER WHICH ANY OTHER SECURITIES, OR CERTIFICATES OF INTEREST OR PARTICIPATION IN ANY OTHER SECURITIES, OF THE OBLIGOR ARE OUTSTANDING, FURNISH THE FOLLOWING INFORMATION: (a) TITLE OF THE SECURITIES OUTSTANDING UNDER EACH SUCH OTHER INDENTURE. Not applicable by virtue of Form T-1 General Instruction B and response to Item 13. 3 ITEM 4. (CONTINUED) (b) A BRIEF STATEMENT OF THE FACTS RELIED UPON AS A BASIS FOR THE CLAIM THAT NO CONFLICTING INTEREST WITHIN THE MEANING OF SECTION 310(B)(1) OF THE ACT ARISES AS A RESULT OF THE TRUSTEESHIP UNDER ANY SUCH OTHER INDENTURE, INCLUDING A STATEMENT AS TO HOW THE INDENTURE SECURITIES WILL RANK AS COMPARED WITH THE SECURITIES ISSUED UNDER SUCH OTHER INDENTURE. Not applicable by virtue of Form T-1 General Instruction B and response to Item 13. ITEM 5. INTERLOCKING DIRECTORATES AND SIMILAR RELATIONSHIPS WITH OBLIGOR OR UNDERWRITERS. IF THE TRUSTEE OR ANY OF THE DIRECTORS OR EXECUTIVE OFFICER OF THE TRUSTEE IS A DIRECTOR, OFFICER, PARTNER, EMPLOYEE, APPOINTEE, OR REPRESENTATIVE OF THE OBLIGOR OR OF ANY UNDERWRITER FOR THE OBLIGOR, IDENTIFY EACH SUCH PERSON HAVING ANY SUCH CONNECTION AND STATE THE NATURE OF EACH SUCH CONNECTION. Not applicable by virtue of Form T-1 General Instruction B and response to Item 13. ITEM 6. VOTING SECURITIES OF THE TRUSTEE OWNED BY THE OBLIGOR OR ITS OFFICIALS. FURNISH THE FOLLOWING INFORMATION AS TO THE VOTING SECURITIES OF THE TRUSTEE OWNED BENEFICIALLY BY THE OBLIGOR AND EACH DIRECTOR, PARTNER AND EXECUTIVE OFFICER OF THE OBLIGOR.
COL. A COL. B COL. C COL. D PERCENTAGE OF VOTING SECURITIES REPRESENTED BY AMOUNT OWNED AMOUNT GIVEN IN NAME OF OWNER TITLE OF CLASS BENEFICIALLY COL. C ------------- -------------- ------------ -----------------
Not applicable by virtue of Form T-1 General Instruction B and response to Item 13. 4 ITEM 7. VOTING SECURITIES OF THE TRUSTEE OWNED BY UNDERWRITERS OR THEIR OFFICIALS. FURNISH THE FOLLOWING INFORMATION AS TO THE VOTING SECURITIES OF THE TRUSTEE OWNED BENEFICIALLY BY EACH UNDERWRITER FOR THE OBLIGOR AND EACH DIRECTOR, PARTNER AND EXECUTIVE OFFICER OF EACH SUCH UNDERWRITER.
COL. A COL. B COL. C COL. D PERCENTAGE OF VOTING SECURITIES REPRESENTED BY AMOUNT OWNED AMOUNT GIVEN IN NAME OF OWNER TITLE OF CLASS BENEFICIALLY COL. C ------------ -------------- ------------ -----------------
Not applicable by virtue of Form T-1 General Instruction B and response to Item 13. ITEM 8. SECURITIES OF THE OBLIGOR OWNED OR HELD BY THE TRUSTEE. FURNISH THE FOLLOWING INFORMATION AS TO THE SECURITIES OF THE OBLIGOR OWNED BENEFICIALLY OR HELD AS COLLATERAL SECURITY FOR OBLIGATIONS IN DEFAULT BY THE TRUSTEE.
COL. A COL. B COL. C COL. D AMOUNT OWNED WHETHER THE BENEFICIALLY OR PERCENT OF SECURITIES HELD AS COLLATERAL CLASS ARE VOTING SECURITY FOR REPRESENTED BY OR NONVOTING OBLIGATIONS IN AMOUNT GIVEN TITLE OF CLASS SECURITIES DEFAULT IN COL. C -------------- ------------ ------------------ --------------
Not applicable by virtue of Form T-1 General Instruction B and response to Item 13. 5 ITEM 9. SECURITIES OF UNDERWRITERS OWNED OR HELD BY THE TRUSTEE. IF THE TRUSTEE OWNS BENEFICIALLY OR HOLDS AS COLLATERAL SECURITY FOR OBLIGATIONS IN DEFAULT ANY SECURITIES OF AN UNDERWRITER FOR THE OBLIGOR, FURNISH THE FOLLOWING INFORMATION AS TO EACH CLASS OF SECURITIES OF SUCH UNDERWRITER ANY OF WHICH ARE SO OWNED OR HELD BY THE TRUSTEE.
COL. A COL. B COL. C COL. D AMOUNT OWNED BENEFICIALLY OR PERCENT OF HELD AS COLLATERAL CLASS NAME OF ISSUER SECURITY FOR REPRESENTED BY AND AMOUNT OBLIGATIONS IN AMOUNT GIVEN TITLE OF CLASS OUTSTANDING DEFAULT BY TRUSTEE IN COL. C -------------- ----------- ------------------ --------------
Not applicable by virtue of Form T-1 General Instruction B and response to Item 13. ITEM 10. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF VOTING SECURITIES OF CERTAIN AFFILIATES OR SECURITY HOLDERS OF THE OBLIGOR. IF THE TRUSTEE OWNS BENEFICIALLY OR HOLDS AS COLLATERAL SECURITY FOR OBLIGATIONS IN DEFAULT VOTING SECURITIES OF A PERSON WHO, TO THE KNOWLEDGE OF THE TRUSTEE (1) OWNS 10% OR MORE OF THE VOTING SECURITIES OF THE OBLIGOR OR (2) IS AN AFFILIATE, OTHER THAN A SUBSIDIARY, OF THE OBLIGOR, FURNISH THE FOLLOWING INFORMATION AS TO THE VOTING SECURITIES OF SUCH PERSON.
COL. A COL. B COL. C COL. D AMOUNT OWNED BENEFICIALLY OR PERCENT OF HELD AS COLLATERAL CLASS NAME OF ISSUER SECURITY FOR REPRESENTED BY AND AMOUNT OBLIGATIONS IN AMOUNT GIVEN TITLE OF CLASS OUTSTANDING DEFAULT BY TRUSTEE IN COL. C -------------- ----------- ------------------- --------------
Not applicable by virtue of Form T-1 General Instruction B and response to Item 13. 6 ITEM 11. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF ANY SECURITIES OF A PERSON OWNING 50% OR MORE OF THE VOTING SECURITIES OF THE OBLIGOR. IF THE TRUSTEE OWNS BENEFICIALLY OR HOLDS AS COLLATERAL SECURITY FOR OBLIGATIONS IN DEFAULT ANY SECURITIES OF A PERSON WHO, TO THE KNOWLEDGE OF THE TRUSTEE, OWNS 50% OR MORE OF THE VOTING SECURITIES OF THE OBLIGOR, FURNISH THE FOLLOWING INFORMATION AS TO EACH CLASS OF SECURITIES OR SUCH PERSON ANY OF WHICH ARE SO OWNED OR HELD BY THE TRUSTEE.
COL. A COL. B COL. C COL. D AMOUNT OWNED BENEFICIALLY OR PERCENT OF HELD AS COLLATERAL CLASS NAME OF ISSUER SECURITY FOR REPRESENTED BY AND AMOUNT OBLIGATIONS IN AMOUNT GIVEN TITLE OF CLASS OUTSTANDING DEFAULT BY TRUSTEE IN COL. C --------------- ----------- ------------------ --------------
Not applicable by virtue of Form T-1 General Instruction B and response to Item 13. ITEM 12. INDEBTEDNESS OF THE OBLIGOR TO THE TRUSTEE. EXCEPT AS NOTED IN THE INSTRUCTIONS, IF THE OBLIGOR IS INDEBTED TO THE TRUSTEE, FURNISH THE FOLLOWING INFORMATION:
COL. A COL. B COL. C NATURE OF AMOUNT INDEBTEDNESS OUTSTANDING DATE DUE ------------ ----------- ---------
Not applicable by virtue of Form T-1 General Instruction B and response to Item 13. ITEM 13. DEFAULTS BY THE OBLIGOR. (a) STATE WHETHER THERE IS OR HAS BEEN A DEFAULT WITH RESPECT TO THE SECURITIES UNDER THIS INDENTURE. EXPLAIN THE NATURE OF ANY SUCH DEFAULT. There is not, nor has there been, a default with respect to the securities under this indenture. (See Note on Page 7.) 7 ITEM 13. (CONTINUED) (b) IF THE TRUSTEE IS A TRUSTEE UNDER ANOTHER INDENTURE UNDER WHICH ANY SECURITIES, OR CERTIFICATES OF INTEREST OR PARTICIPATION IN ANY OTHER SECURITIES, OF THE OBLIGOR ARE OUTSTANDING, OR IS TRUSTEE FOR MORE THAN ONE OUTSTANDING SERIES OF SECURITIES UNDER THE INDENTURE, STATE WHETHER THERE HAS BEEN A DEFAULT UNDER ANY SUCH INDENTURE OR SERIES, IDENTIFY THE INDENTURE OR SERIES AFFECTED, AND EXPLAIN THE NATURE OF ANY SUCH DEFAULT. There has not been a default under any such indenture or series. (See Note on Page 7.) ITEM 14. AFFILIATIONS WITH THE UNDERWRITERS. IF ANY UNDERWRITER IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION. Not applicable by virtue of Form T-1 General Instruction B and response to Item 13. ITEM 15. FOREIGN TRUSTEE. IDENTIFY THE ORDER OR RULE PURSUANT TO WHICH THE FOREIGN TRUSTEE IS AUTHORIZED TO ACT AS SOLE TRUSTEE UNDER INDENTURES QUALIFIED OR TO BE QUALIFIED UNDER THE ACT. Not applicable. ITEM 16. LIST OF EXHIBITS. LIST BELOW ALL EXHIBITS FILED AS PART OF THIS STATEMENT OF ELIGIBILITY. o 1. A copy of the articles of association of the trustee now in effect. # 2. A copy of the certificate of authority of the trustee to commence business. * 3. A copy of the certificate of authorization of the trustee to exercise corporate trust powers issued by the Board of Governors of the Federal Reserve System under date of January 21, 1948. + 4. A copy of the existing bylaws of the trustee. 5. Not applicable. 6. The consent of the United States institutional trustees required by Section 321(b) of the Act. []7. A copy of the latest report of condition of the trustee published pursuant to law or the requirements of its supervising or examining authority. 8 8. Not applicable. 9. Not applicable. NOTE REGARDING INCORPORATED EXHIBITS Effective January 20, 1998, the name of the Trustee was changed from Texas Commerce Bank National Association to Chase Bank of Texas, National Association. The exhibits incorporated herein by reference, except for Exhibit 7, were filed under the former name of the Trustee. o Incorporated by reference to exhibit bearing the same designation and previously filed with the Securities and Exchange Commission as exhibits to the Form S-3 File No. 33-56195. # Incorporated by reference to exhibit bearing the same designation and previously filed with the Securities and Exchange Commission as exhibits to the Form S-3 File No. 33-42814. * Incorporated by reference to exhibit bearing the same designation and previously filed with the Securities and Exchange Commission as exhibits to the Form S-11 File No. 33-25132. + Incorporated by reference to exhibit bearing the same designation and previously filed with the Securities and Exchange Commission as exhibits to the Form S-3 File No. 33-65055. [] Incorporated by reference to exhibit bearing the same designation and previously filed with the Securities and Exchange Commission as exhibits to the Form S-3 File No. 333-52197. NOTE In as much as this Form T-1 is filed prior to the ascertainment by the trustee of all facts on which to base responsive answers to Items 2 and 13, the answers to said Items are based on incomplete information. Such Items may, however, be considered as correct unless amended by an amendment to this Form T-1. 9 SIGNATURE PURSUANT TO THE REQUIREMENTS OF THE TRUST INDENTURE ACT OF 1939 THE TRUSTEE, CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, FORMERLY KNOWN AS TEXAS COMMERCE BANK NATIONAL ASSOCIATION, A NATIONAL BANKING ASSOCIATION ORGANIZED AND EXISTING UNDER THE LAWS OF THE UNITED STATES OF AMERICA, HAS DULY CAUSED THIS STATEMENT OF ELIGIBILITY TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO AUTHORIZED, ALL IN THE CITY OF HOUSTON, AND STATE OF TEXAS, ON THE 8th DAY OF FEBRUARY, 1999. CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, AS TRUSTEE By: /s/ MAURI COWEN -------------------------------- Mauri Cowen Vice President and Trust Officer 10 EXHIBIT 6 Securities and Exchange Commission Washington, D.C. 20549 Gentlemen: The undersigned is to be the trustee under an Indenture between Noble Drilling Corporation, a Delaware corporation (the "Company"), and Chase Bank of Texas, National Association, as Trustee, to be entered into in connection with the issuance of the Company's Senior Debt Securities. In accordance with Section 321(b) of the Trust Indenture Act of 1939, the undersigned hereby consents that reports of examinations of the undersigned, made by Federal or State authorities authorized to make such examinations, may be furnished by such authorities to the Securities and Exchange Commission upon its request therefor. Very truly yours, CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, as Trustee By: /s/ MAURI COWEN --------------------------- Mauri Cowen Vice President and Trust Officer EX-25.2 11 T-1 SUBORDINATED NOTES 1 EXHIBIT 25.2 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------- FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) ____ ----------------------- CHASE BANK OF TEXAS, NATIONAL ASSOCIATION (Exact name of trustee as specified in its charter) 74-0800980 (I.R.S. Employer Identification Number) 712 MAIN STREET, HOUSTON, TEXAS 77002 (Address of principal executive offices) (Zip code) LEE BOOCKER, 712 MAIN STREET, 26TH FLOOR HOUSTON, TEXAS 77002 (713) 216-2448 (Name, address and telephone number of agent for service) NOBLE DRILLING CORPORATION (Exact name of obligor as specified in its charter) DELAWARE 73-0374541 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 10370 RICHMOND AVENUE HOUSTON, TEXAS 77042 (Address of principal executive offices) (Zip code) SUBORDINATED DEBT SECURITIES (Title of indenture securities) ================================================================================ 2 ITEM 1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE: (a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT IS SUBJECT. Comptroller of the Currency, Washington, D.C. Federal Deposit Insurance Corporation, Washington, D.C. Board of Governors of the Federal Reserve System, Washington, D.C. (b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS. The trustee is authorized to exercise corporate trust powers. ITEM 2. AFFILIATIONS WITH THE OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION. The obligor is not an affiliate of the trustee. (See Note on Page 7.) ITEM 3. VOTING SECURITIES OF THE TRUSTEE. FURNISH THE FOLLOWING INFORMATION AS TO EACH CLASS OF VOTING SECURITIES OF THE TRUSTEE. COL. A COL. B TITLE OF CLASS AMOUNT OUTSTANDING -------------- ------------------ Not applicable by virtue of Form T-1 General Instruction B and response to Item 13. ITEM 4. TRUSTEESHIPS UNDER OTHER INDENTURES. IF THE TRUSTEE IS A TRUSTEE UNDER ANOTHER INDENTURE UNDER WHICH ANY OTHER SECURITIES, OR CERTIFICATES OF INTEREST OR PARTICIPATION IN ANY OTHER SECURITIES, OF THE OBLIGOR ARE OUTSTANDING, FURNISH THE FOLLOWING INFORMATION: (a) TITLE OF THE SECURITIES OUTSTANDING UNDER EACH SUCH OTHER INDENTURE. Not applicable by virtue of Form T-1 General Instruction B and response to Item 13. 3 ITEM 4. (CONTINUED) (b) A BRIEF STATEMENT OF THE FACTS RELIED UPON AS A BASIS FOR THE CLAIM THAT NO CONFLICTING INTEREST WITHIN THE MEANING OF SECTION 310(b)(1) OF THE ACT ARISES AS A RESULT OF THE TRUSTEESHIP UNDER ANY SUCH OTHER INDENTURE, INCLUDING A STATEMENT AS TO HOW THE INDENTURE SECURITIES WILL RANK AS COMPARED WITH THE SECURITIES ISSUED UNDER SUCH OTHER INDENTURE. Not applicable by virtue of Form T-1 General Instruction B and response to Item 13. ITEM 5. INTERLOCKING DIRECTORATES AND SIMILAR RELATIONSHIPS WITH OBLIGOR OR UNDERWRITERS. IF THE TRUSTEE OR ANY OF THE DIRECTORS OR EXECUTIVE OFFICER OF THE TRUSTEE IS A DIRECTOR, OFFICER, PARTNER, EMPLOYEE, APPOINTEE, OR REPRESENTATIVE OF THE OBLIGOR OR OF ANY UNDERWRITER FOR THE OBLIGOR, IDENTIFY EACH SUCH PERSON HAVING ANY SUCH CONNECTION AND STATE THE NATURE OF EACH SUCH CONNECTION. Not applicable by virtue of Form T-1 General Instruction B and response to Item 13. ITEM 6. VOTING SECURITIES OF THE TRUSTEE OWNED BY THE OBLIGOR OR ITS OFFICIALS. FURNISH THE FOLLOWING INFORMATION AS TO THE VOTING SECURITIES OF THE TRUSTEE OWNED BENEFICIALLY BY THE OBLIGOR AND EACH DIRECTOR, PARTNER AND EXECUTIVE OFFICER OF THE OBLIGOR.
COL. A COL. B COL. C COL. D PERCENTAGE OF VOTING SECURITIES REPRESENTED BY AMOUNT OWNED AMOUNT GIVEN IN NAME OF OWNER TITLE OF CLASS BENEFICIALLY COL. C ------------- -------------- ------------ -----------------
Not applicable by virtue of Form T-1 General Instruction B and response to Item 13. 4 ITEM 7. VOTING SECURITIES OF THE TRUSTEE OWNED BY UNDERWRITERS OR THEIR OFFICIALS. FURNISH THE FOLLOWING INFORMATION AS TO THE VOTING SECURITIES OF THE TRUSTEE OWNED BENEFICIALLY BY EACH UNDERWRITER FOR THE OBLIGOR AND EACH DIRECTOR, PARTNER AND EXECUTIVE OFFICER OF EACH SUCH UNDERWRITER.
COL. A COL. B COL. C COL. D PERCENTAGE OF VOTING SECURITIES REPRESENTED BY AMOUNT OWNED AMOUNT GIVEN IN NAME OF OWNER TITLE OF CLASS BENEFICIALLY COL. C ------------- -------------- ------------ -----------------
Not applicable by virtue of Form T-1 General Instruction B and response to Item 13. ITEM 8. SECURITIES OF THE OBLIGOR OWNED OR HELD BY THE TRUSTEE. FURNISH THE FOLLOWING INFORMATION AS TO THE SECURITIES OF THE OBLIGOR OWNED BENEFICIALLY OR HELD AS COLLATERAL SECURITY FOR OBLIGATIONS IN DEFAULT BY THE TRUSTEE.
COL. A COL. B COL. C COL. D AMOUNT OWNED WHETHER THE BENEFICIALLY OR PERCENT OF SECURITIES HELD AS COLLATERAL CLASS ARE VOTING SECURITY FOR REPRESENTED BY OR NONVOTING OBLIGATIONS IN AMOUNT GIVEN TITLE OF CLASS SECURITIES DEFAULT IN COL. C -------------- ------------ ------------------ ---------------
Not applicable by virtue of Form T-1 General Instruction B and response to Item 13. 5 ITEM 9. SECURITIES OF UNDERWRITERS OWNED OR HELD BY THE TRUSTEE. IF THE TRUSTEE OWNS BENEFICIALLY OR HOLDS AS COLLATERAL SECURITY FOR OBLIGATIONS IN DEFAULT ANY SECURITIES OF AN UNDERWRITER FOR THE OBLIGOR, FURNISH THE FOLLOWING INFORMATION AS TO EACH CLASS OF SECURITIES OF SUCH UNDERWRITER ANY OF WHICH ARE SO OWNED OR HELD BY THE TRUSTEE.
COL. A COL. B COL. C COL. D AMOUNT OWNED BENEFICIALLY OR PERCENT OF HELD AS COLLATERAL CLASS NAME OF ISSUER SECURITY FOR REPRESENTED BY AND AMOUNT OBLIGATIONS IN AMOUNT GIVEN TITLE OF CLASS OUTSTANDING DEFAULT BY TRUSTEE IN COL. C -------------- ------------ ------------------ ------------------
Not applicable by virtue of Form T-1 General Instruction B and response to Item 13. ITEM 10. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF VOTING SECURITIES OF CERTAIN AFFILIATES OR SECURITY HOLDERS OF THE OBLIGOR. IF THE TRUSTEE OWNS BENEFICIALLY OR HOLDS AS COLLATERAL SECURITY FOR OBLIGATIONS IN DEFAULT VOTING SECURITIES OF A PERSON WHO, TO THE KNOWLEDGE OF THE TRUSTEE (1) OWNS 10% OR MORE OF THE VOTING SECURITIES OF THE OBLIGOR OR (2) IS AN AFFILIATE, OTHER THAN A SUBSIDIARY, OF THE OBLIGOR, FURNISH THE FOLLOWING INFORMATION AS TO THE VOTING SECURITIES OF SUCH PERSON.
COL. A COL. B COL. C COL. D AMOUNT OWNED BENEFICIALLY OR PERCENT OF HELD AS COLLATERAL CLASS NAME OF ISSUER SECURITY FOR REPRESENTED BY AND AMOUNT OBLIGATIONS IN AMOUNT GIVEN TITLE OF CLASS OUTSTANDING DEFAULT BY TRUSTEE IN COL. C -------------- ------------ ------------------ ------------------
Not applicable by virtue of Form T-1 General Instruction B and response to Item 13. 6 ITEM 11. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF ANY SECURITIES OF A PERSON OWNING 50% OR MORE OF THE VOTING SECURITIES OF THE OBLIGOR. IF THE TRUSTEE OWNS BENEFICIALLY OR HOLDS AS COLLATERAL SECURITY FOR OBLIGATIONS IN DEFAULT ANY SECURITIES OF A PERSON WHO, TO THE KNOWLEDGE OF THE TRUSTEE, OWNS 50% OR MORE OF THE VOTING SECURITIES OF THE OBLIGOR, FURNISH THE FOLLOWING INFORMATION AS TO EACH CLASS OF SECURITIES OR SUCH PERSON ANY OF WHICH ARE SO OWNED OR HELD BY THE TRUSTEE.
COL. A COL. B COL. C COL. D AMOUNT OWNED BENEFICIALLY OR PERCENT OF HELD AS COLLATERAL CLASS NAME OF ISSUER SECURITY FOR REPRESENTED BY AND AMOUNT OBLIGATIONS IN AMOUNT GIVEN TITLE OF CLASS OUTSTANDING DEFAULT BY TRUSTEE IN COL. C -------------- ------------ ------------------ ------------------
Not applicable by virtue of Form T-1 General Instruction B and response to Item 13. ITEM 12. INDEBTEDNESS OF THE OBLIGOR TO THE TRUSTEE. EXCEPT AS NOTED IN THE INSTRUCTIONS, IF THE OBLIGOR IS INDEBTED TO THE TRUSTEE, FURNISH THE FOLLOWING INFORMATION:
COL. A COL. B COL. C NATURE OF AMOUNT INDEBTEDNESS OUTSTANDING DATE DUE ------------ ----------- --------
Not applicable by virtue of Form T-1 General Instruction B and response to Item 13. ITEM 13. DEFAULTS BY THE OBLIGOR. (a) STATE WHETHER THERE IS OR HAS BEEN A DEFAULT WITH RESPECT TO THE SECURITIES UNDER THIS INDENTURE. EXPLAIN THE NATURE OF ANY SUCH DEFAULT. There is not, nor has there been, a default with respect to the securities under this indenture. (See Note on Page 7.) 7 ITEM 13. (CONTINUED) (b) IF THE TRUSTEE IS A TRUSTEE UNDER ANOTHER INDENTURE UNDER WHICH ANY SECURITIES, OR CERTIFICATES OF INTEREST OR PARTICIPATION IN ANY OTHER SECURITIES, OF THE OBLIGOR ARE OUTSTANDING, OR IS TRUSTEE FOR MORE THAN ONE OUTSTANDING SERIES OF SECURITIES UNDER THE INDENTURE, STATE WHETHER THERE HAS BEEN A DEFAULT UNDER ANY SUCH INDENTURE OR SERIES, IDENTIFY THE INDENTURE OR SERIES AFFECTED, AND EXPLAIN THE NATURE OF ANY SUCH DEFAULT. There has not been a default under any such indenture or series. (See Note on Page 7.) ITEM 14. AFFILIATIONS WITH THE UNDERWRITERS. IF ANY UNDERWRITER IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION. Not applicable by virtue of Form T-1 General Instruction B and response to Item 13. ITEM 15. FOREIGN TRUSTEE. IDENTIFY THE ORDER OR RULE PURSUANT TO WHICH THE FOREIGN TRUSTEE IS AUTHORIZED TO ACT AS SOLE TRUSTEE UNDER INDENTURES QUALIFIED OR TO BE QUALIFIED UNDER THE ACT. Not applicable. ITEM 16. LIST OF EXHIBITS. LIST BELOW ALL EXHIBITS FILED AS PART OF THIS STATEMENT OF ELIGIBILITY. o 1. A copy of the articles of association of the trustee now in effect. # 2. A copy of the certificate of authority of the trustee to commence business. * 3. A copy of the certificate of authorization of the trustee to exercise corporate trust powers issued by the Board of Governors of the Federal Reserve System under date of January 21, 1948. + 4. A copy of the existing bylaws of the trustee. 5. Not applicable. 6. The consent of the United States institutional trustees required by Section 321(b) of the Act. [ ] 7. A copy of the latest report of condition of the trustee published pursuant to law or the requirements of its supervising or examining authority. 8 8. Not applicable. 9. Not applicable. NOTE REGARDING INCORPORATED EXHIBITS Effective January 20, 1998, the name of the Trustee was changed from Texas Commerce Bank National Association to Chase Bank of Texas, National Association. The exhibits incorporated herein by reference, except for Exhibit 7, were filed under the former name of the Trustee. o Incorporated by reference to exhibit bearing the same designation and previously filed with the Securities and Exchange Commission as exhibits to the Form S-3 File No. 33-56195. # Incorporated by reference to exhibit bearing the same designation and previously filed with the Securities and Exchange Commission as exhibits to the Form S-3 File No. 33-42814. * Incorporated by reference to exhibit bearing the same designation and previously filed with the Securities and Exchange Commission as exhibits to the Form S-11 File No. 33-25132. + Incorporated by reference to exhibit bearing the same designation and previously filed with the Securities and Exchange Commission as exhibits to the Form S-3 File No. 33-65055. [ ] Incorporated by reference to exhibit bearing the same designation and previously filed with the Securities and Exchange Commission as exhibits to the Form S-3 File No. 333-52197. NOTE Inasmuch as this Form T-1 is filed prior to the ascertainment by the trustee of all facts on which to base responsive answers to Items 2 and 13, the answers to said Items are based on incomplete information. Such Items may, however, be considered as correct unless amended by an amendment to this Form T-1. 9 SIGNATURE PURSUANT TO THE REQUIREMENTS OF THE TRUST INDENTURE ACT OF 1939 THE TRUSTEE, CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, FORMERLY KNOWN AS TEXAS COMMERCE BANK NATIONAL ASSOCIATION, A NATIONAL BANKING ASSOCIATION ORGANIZED AND EXISTING UNDER THE LAWS OF THE UNITED STATES OF AMERICA, HAS DULY CAUSED THIS STATEMENT OF ELIGIBILITY TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO AUTHORIZED, ALL IN THE CITY OF HOUSTON, AND STATE OF TEXAS, ON THE 8th DAY OF FEBRUARY, 1999. CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, AS TRUSTEE By: /s/ MAURI COWEN ------------------------------------ Mauri Cowen Vice President and Trust Officer 10 EXHIBIT 6 Securities and Exchange Commission Washington, D.C. 20549 Gentlemen: The undersigned is to be the trustee under an Indenture between Noble Drilling Corporation, a Delaware corporation (the "Company"), and Chase Bank of Texas, National Association, as Trustee, to be entered into in connection with the issuance of the Company's Subordinated Debt Securities. In accordance with Section 321(b) of the Trust Indenture Act of 1939, the undersigned hereby consents that reports of examinations of the undersigned, made by Federal or State authorities authorized to make such examinations, may be furnished by such authorities to the Securities and Exchange Commission upon its request therefor. Very truly yours, CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, as Trustee By: /s/ MAURI COWEN ----------------------------------- Mauri Cowen Vice President and Trust Officer -----END PRIVACY-ENHANCED MESSAGE-----