EXHIBIT 10.11
$200,000,000
J. RAY MCDERMOTT, S.A.
% SENIOR SECURED NOTES DUE 2013
PURCHASE AGREEMENT
November 21, 2003
November 21, 2003
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Dear Sirs and Mesdames:
J. Ray McDermott, S.A., a Panamanian corporation (the "COMPANY"),
proposes to issue and sell to Morgan Stanley & Co. Incorporated (the "INITIAL
PURCHASER") $200,000,000 principal amount of its 11% Senior Secured Notes due
2013 (the "SECURITIES") to be issued pursuant to the provisions of an Indenture
to be dated December 8, 2003 (the "INDENTURE") among the Company, each of the
subsidiaries of the Company named in Schedule A hereto (collectively the
"GUARANTORS") and The Bank of New York, as Trustee (the "TRUSTEE"). The
Securities will be guaranteed (the "INITIAL GUARANTEES") by each Guarantor. The
Company's obligations under the Indenture and the Securities will be secured by
a first priority lien (the "COLLATERAL") on (i) all of the capital stock of
certain Material Subsidiaries (as hereinafter defined) owned directly by the
Company or a Guarantor and (ii) certain marine construction vessels owned by the
Company and its subsidiaries pursuant to a pledge agreement (the "PLEDGE
AGREEMENT"), fleet mortgages and ship mortgages (the "MORTGAGES" and, together
with the Pledge Agreement, the "SECURITY DOCUMENTS").
The Securities will be offered without being registered under the
Securities Act of 1933, as amended (the "SECURITIES ACT"), to qualified
institutional buyers in compliance with the exemption from registration provided
by Rule 144A under the Securities Act and in offshore transactions in reliance
on Regulation S under the Securities Act ("REGULATION S").
The Initial Purchaser and its direct and indirect transferees will be
entitled to the benefits of a Registration Rights Agreement to be dated the
Closing Date among the Company, the Guarantors and the Initial Purchaser (the
"REGISTRATION RIGHTS Agreement"), pursuant to which the Company will agree to
file, within the time periods specified therein, (i) a registration statement
under the Securities Act relating to the Company's 11% Senior Secured Notes due
2013 in a like aggregate principal amount as the Company issued under the
Indenture, identical in all material respects to the Securities and registered
under the Securities Act (the "EXCHANGE SECURITIES"), to be offered in exchange
for the Securities (such offer to exchange being referred to as the "EXCHANGE
Offer") and the guarantees thereof by each of the Guarantors (the "EXCHANGE
GUARANTEES" and, together with the Initial Guarantees, the "GUARANTEES") or (ii)
a shelf registration statement pursuant to Rule 415 under the Securities Act
relating to the resale by certain holders of the Offered Securities and to use
its commercially reasonable
efforts to cause such registration statements to be declared and remain
effective and usable for the periods specified in the Registration Rights
Agreement and to consummate the Exchange Offer.
In connection with the sale of the Securities, the Company has prepared
a preliminary offering memorandum (together with the Offering Memorandum
Supplement dated as of November 21, 2003, the "PRELIMINARY MEMORANDUM") and will
prepare a final offering memorandum (the "FINAL MEMORANDUM" and, with the
Preliminary Memorandum, each a "MEMORANDUM") including a description of the
terms of the Securities, the terms of the offering and a description of the
Company.
1. Representations and Warranties. The Company represents and
warrants to, and agrees with, you that:
(a) the Preliminary Memorandum does not contain and the
Final Memorandum, in the form used by the Initial Purchaser to confirm
sales and on the Closing Date (as defined in Section 4), will not
contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, except
that the representations and warranties set forth in this paragraph do
not apply to statements or omissions in either Memorandum based upon
information relating to the Initial Purchaser furnished to the Company
in writing by the Initial Purchaser expressly for use therein.
(b) The Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the
Republic of Panama, has the corporate power and authority to own its
property and to conduct its business as described in each Memorandum
and is duly qualified to transact business and is in good standing in
each jurisdiction in which the conduct of its business or its ownership
or leasing of property requires such qualification, except to the
extent that the failure to be so qualified or be in good standing would
not have a material adverse effect on the business, condition
(financial or otherwise), earnings or results of operations of the
Company and its subsidiaries, taken as a whole (a "MATERIAL ADVERSE
EFFECT").
(c) Each Material Subsidiary (as defined below) of the
Company has been duly incorporated, is validly existing and in good
standing under the laws of the jurisdiction of its organization, has
the corporate or other organizational power and authority to own its
property and to conduct its business as described in each Memorandum
and is duly qualified to transact business and is in good standing in
each jurisdiction in which the conduct of its business or its ownership
or leasing of property requires such qualification, except to the
extent that the failure to be so qualified or be in good standing would
not have a Material Adverse
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Effect. Except as described in the Final Memorandum, all of the issued
and outstanding capital stock or ownership interests of each Material
Subsidiary has been duly authorized and validly issued, is fully paid
and non-assessable and is owned by the Company, directly or through
subsidiaries, free and clear of any security interest, lien, option,
claim or other encumbrance. For purposes of this Agreement, a "MATERIAL
SUBSIDIARY" is (i) the owner of one or more of the major marine
construction vessels described in each Memorandum as collateral for the
obligations under the Securities and the Exchange Securities or (ii) a
subsidiary of the Company that constitutes a "significant subsidiary"
of the Company within the meaning of Rule 1-02(w) of Regulation S-X of
the 1933 Act and the 1934 Act.
(d) This Agreement has been duly authorized, executed and
delivered by the Company and each Guarantor.
(e) The Securities have been duly authorized and, when
executed and authenticated in accordance with the provisions of the
Indenture and delivered to and paid for by the Initial Purchaser in
accordance with the terms of this Agreement, will be valid and binding
obligations of the Company, enforceable in accordance with their terms,
subject to applicable bankruptcy, insolvency, reorganization,
fraudulent conveyance or transfer, moratorium or similar laws relating
to or affecting creditors' rights generally and general principles of
equity (whether considered in a proceeding at law or in equity), and
will be entitled to the benefits of the Indenture and the Registration
Rights Agreement pursuant to which such Securities are to be issued.
(f) The Initial Guarantee of each Guarantor has been duly
authorized by such Guarantor; and on the Closing Date, will have been
duly executed and delivered by each such Guarantor. When the Offered
Securities have been issued, executed and authenticated in accordance
with the provisions of the Indenture and delivered to and paid for by
the Purchaser in accordance with the terms of this Agreement, the
Initial Guarantee of each Guarantor will constitute valid and legally
binding obligations of such Guarantor, enforceable in accordance with
their terms, subject to bankruptcy, insolvency, reorganization,
fraudulent conveyance or transfer, moratorium or similar laws relating
to or affecting creditors' rights generally and general principles of
equity (whether considered in a proceeding at law or in equity).
(g) On the Closing Date, the Exchange Securities will
have been duly authorized by the Company. When the Exchange Securities
are issued, executed and authenticated in accordance with the terms of
the Exchange Offer and the Indenture, the Exchange Securities will be
entitled to the benefits of the Indenture and will be the valid and
binding obligations of the Company, enforceable against the Company in
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accordance with their terms, subject to applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance or transfer,
moratorium or similar laws relating to or affecting creditors' rights
generally and general principles of equity (whether considered in a
proceeding at law or in equity).
(h) The Exchange Guarantee by each Guarantor has been
duly authorized by such Guarantor; and, when issued, will have been
duly executed and delivered by such Guarantor. When the Exchange
Securities have been issued, executed and authenticated in accordance
with the terms of the Exchange Offer and the Indenture, and when the
Exchange Guarantees have been issued in accordance with the terms of
the Exchange Offer and Indenture, the Exchange Guarantee of each
Guarantor will constitute valid and legally binding obligations of such
Guarantor, enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance or transfer, moratorium or similar laws relating to or
affecting creditors' rights generally and general principles of equity
(whether considered in a proceeding at law or in equity).
(i) Each of the Indenture and the Registration Rights
Agreement has been duly authorized, executed and delivered by, and is a
valid and binding agreement of, the Company and each Guarantor,
enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance or
transfer, moratorium or similar laws relating to or affecting
creditors' rights generally and general principles of equity (whether
considered in a proceeding at law or in equity) and except as rights to
indemnification and contribution under the Registration Rights
Agreement may be limited under applicable law;
(j) Each of the Security Documents has been duly
authorized by the Company and each Guarantor, and when executed and
delivered by the Company and each Guarantor will be a valid and binding
agreement of the Company and each Guarantor party thereto, as
applicable, enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance or transfer, moratorium or similar laws relating to or
affecting creditors' rights generally and general principles of equity
(whether considered in a proceeding at law or in equity); the Security
Documents, when duly executed and delivered, will create valid and
(when all required filings and recordings with respect to, and
deliveries of, Collateral have been made as described in the Security
Documents) perfected security interests or mortgage liens in the
Collateral; each of the representations and warranties made by the
Company and each Guarantor in each Security Document to which it is a
party is true and correct in all material respects as of the Closing
Date, except to the extent that such representations and warranties
expressly
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relate to an earlier date (in which case such representations and
warranties shall be true and correct in all material respects as of
such earlier date).
(k) None of the Company or any of the Material
Subsidiaries is (i) in violation of its organizational documents, (ii)
in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any contract, indenture,
mortgage, loan agreement, note, lease or other instrument to which the
Company or any of the Material Subsidiaries is a party or by which it
or any of them may be bound, or to which any of their property or
assets is subject, except in the case of clause (ii) above for any such
defaults as are disclosed in the Final Memorandum and any such defaults
that would not, in the aggregate, have a Material Adverse Effect, or
(iii) in violation of any applicable law, rule or regulation, or any
judgment, order or decree of any court with jurisdiction over the
Company or any subsidiary of the Company, or other governmental or
regulatory authority with jurisdiction over the Company, any of its
subsidiaries, except for any such violations as are disclosed in the
Final Memorandum and any such violations that would not, in the
aggregate, have a Material Adverse Effect.
(l) No labor dispute with the employees of the Company or
any of the Material Subsidiaries exists or, to the knowledge of the
Company, is imminent, except for any such disputes that would not, in
the aggregate, have a Material Adverse Effect; and the Company is not
aware of any existing or imminent labor disturbance by the employees of
any of its principal suppliers, manufacturers or contractors which
would be expected to result in a Material Adverse Effect;
(m) The Company and the Material Subsidiaries own or
possess, or can acquire on reasonable terms, the material patents,
patent rights, licenses, inventions, copyrights, know-how (including
trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service
marks and trade names (collectively, "patent and proprietary rights")
presently employed by them in connection with the respective businesses
now operated by them, and none of the Company or any of the Material
Subsidiaries has received any notice or is otherwise aware of any
infringement of or conflict with asserted rights of others with respect
to any patent or proprietary rights, or of any facts which would render
any patent and proprietary rights invalid or inadequate to protect the
interest of the Company or any of the Material Subsidiaries and which
infringement or conflict (if the subject of any unfavorable decision,
ruling or finding) or invalidity or inadequacy would result in a
Material Adverse Effect).
(n) The Company and the Material Subsidiaries possess
such certificates, authorizations or permits issued by the appropriate
state, federal or foreign regulatory agencies or bodies necessary to
conduct the
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respective businesses now operated by them, except for such
certificates, authorizations or permits of which the failure by the
Company to possess would not have a Material Adverse Effect, and none
of the Company or any of the Material Subsidiaries has received any
notice of proceedings relating to the revocation or modification of any
such certificate, authority or permit which, if the subject of an
unfavorable decision, ruling or finding, would have a Material Adverse
Effect.
(o) The execution and delivery by the Company and each
Guarantor of, and the performance by the Company of its obligations
under, this Agreement, the Indenture, the Registration Rights
Agreement, the Security Documents, the Securities and the Exchange
Securities will not contravene any provision of applicable law or the
articles of incorporation or by-laws of the Company or any indenture,
mortgage, loan agreement, note, lease or other instrument binding upon
the Company or any of its subsidiaries that is material to the Company
and its subsidiaries, taken as a whole, or any judgment, order or
decree of any governmental body, agency or court having jurisdiction
over the Company or any subsidiary, and no consent, approval,
authorization or order of, or qualification with, any governmental body
or agency is required for the issue and sale of the Securities or the
consummation by the Company of the transactions contemplated by this
Agreement, except such as may be contemplated by the Registration
Rights Agreement, required by the securities or Blue Sky laws of the
various states in connection with the offer and sale of the Securities,
or required by Federal and state securities laws with respect to the
Company's obligations under the Registration Rights Agreement.
(p) There has not occurred any material adverse change,
or any development involving a prospective material adverse change, in
the condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, from
that set forth in the Final Memorandum.
(q) Except as set forth in the Final Memorandum, there
are no legal or governmental proceedings pending or threatened to which
the Company or any of its subsidiaries is a party or to which any of
the properties of the Company or any of its subsidiaries is subject
other than proceedings accurately described in all material respects in
each Memorandum and proceedings that would not have a Material Adverse
Effect or have a material adverse effect on the power or ability of the
Company to perform its obligations under this Agreement, the Indenture,
the Registration Rights Agreement, the Security Documents or the
Securities or to consummate the transactions contemplated by the Final
Memorandum.
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(r) Except as described in the Final Memorandum, the
Company and its subsidiaries (i) are in compliance with all applicable
foreign, federal, state and local laws and regulations relating to the
protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants ("ENVIRONMENTAL
LAWS"), (ii) have received all permits, licenses or other approvals
required of them under applicable Environmental Laws to conduct their
respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required
permits, licenses or other approvals or failure to comply with the
terms and conditions of such permits, licenses or approvals would not,
singly or in the aggregate, have a Material Adverse Effect on the
Company and its subsidiaries, taken as a whole.
(s) Except to the extent described in the Final
Memorandum, there are no costs or liabilities associated with
Environmental Laws (including, without limitation, any capital or
operating expenditures required for clean-up, closure of properties or
compliance with Environmental Laws or any permit, license or approval,
any related constraints on operating activities and any potential
liabilities to third parties) which would, singly or in the aggregate,
have a Material Adverse Effect.
(t) The Company and each of its subsidiaries has filed
all foreign, federal or state income and franchise tax returns required
to be filed after giving effect to any applicable extension in the time
for filing (except insofar as the failure to file such returns would
not, in the aggregate have a material adverse effect) and have paid all
material taxes shown thereon as due; and all material tax liabilities
of the Company and the Material Subsidiaries are adequately provided
for on the books of the Company and the Material Subsidiaries.
(u) Except as disclosed in each Memorandum, the Company
and its subsidiaries are insured by recognized, and, to the Company's
knowledge, financially sound institutions with policies in such amounts
and with such deductibles and covering such risks as the Company
generally deems adequate and customary for their businesses. The
Company, in its reasonable judgment, has no reason to believe that it
or any of its subsidiaries will not be able (i) to renew its existing
insurance coverage as and when such policies expire or (ii) to obtain
comparable coverage from similar institutions as may be necessary or
appropriate to conduct its business as now conducted and at a cost that
would not result in a Material Adverse Affect. Except as described in
the Final Memorandum and except for such denials as would not result in
a Material Adverse Effect, neither the Company nor any subsidiary has
been denied any insurance coverage which it has sought or for which it
has applied.
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(v) The Company is not, and after giving effect to the
offering and sale of the Securities and the application of the proceeds
thereof as described in the Final Memorandum will not be, required to
register as an "investment company" as such term is defined in the
Investment Company Act of 1940, as amended.
(w) Neither the Company nor any affiliate (as defined in
Rule 501(b) of Regulation D under the Securities Act, an "AFFILIATE")
of the Company has directly, or through any agent, (i) sold, offered
for sale, solicited offers to buy or otherwise negotiated in respect
of, any security (as defined in the Securities Act) which is or will be
integrated with the sale of the Securities in a manner that would
require the registration under the Securities Act of the Securities or
(ii) offered, solicited offers to buy or sold the Securities by any
form of general solicitation or general advertising (as those terms are
used in Regulation D under the Securities Act) or in any manner
involving a public offering within the meaning of Section 4(2) of the
Securities Act.
(x) None of the Company, its Affiliates or any person
acting on its or their behalf has engaged or will engage in any
directed selling efforts (within the meaning of Regulation S) with
respect to the Securities and the Company and its Affiliates and any
person acting on its or their behalf have complied and will comply with
the offering restrictions requirement of Regulation S, except no
representation, warranty or agreement is made by the Company in this
paragraph with respect to the Initial Purchaser.
(y) It is not necessary in connection with the offer,
sale and delivery of the Securities to the Initial Purchaser in the
manner contemplated by this Agreement to register the Securities under
the Securities Act or to qualify the Indenture under the Trust
Indenture Act of 1939, as amended.
(z) The Securities satisfy the requirements set forth in
Rule 144A(d)(3) under the Securities Act.
(aa) The Company and its subsidiaries and to the knowledge
of the Company, any director, officer, agent, employee or Affiliate of
the Company or any of its subsidiaries are in compliance with the
sanctions regulations and executive orders administered by the Office
of Foreign Assets Control of the U.S. Treasury Department ("OFAC").
2. Agreements to Sell and Purchase. The Company hereby agrees to
sell to the Initial Purchaser, and the Initial Purchaser, upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agrees to purchase from the Company all the Securities at a
purchase price of 93.81% of the principal amount thereof (the "PURCHASE PRICE")
plus accrued interest, if any, to the Closing Date.
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Except as provided herein, the Company hereby agrees that, without the
prior written consent of Morgan Stanley & Co. Incorporated, it will not, during
the period beginning on the date hereof and continuing to and including the date
that is 90 days following the Closing Date, offer, sell, contract to sell or
otherwise dispose of any debt of the Company or warrants to purchase debt of the
Company, in either case substantially similar to the Securities.
3. Terms of Offering. The Initial Purchaser has advised the
Company that the Initial Purchaser will make an offering of the Securities
purchased by the Initial Purchaser hereunder on the terms to be set forth in the
Final Memorandum, as soon as practicable after this Agreement is entered into as
in your judgment is advisable.
4. Payment and Delivery. Payment for the Securities shall be made
to the Company in Federal or other funds immediately available in New York City
against delivery of such Securities for the account of the Initial Purchaser at
10:00 a.m., New York City time, on December 8, 2003, or at such other time on
the same or such other date, not later than December 15, 2003, as shall be
designated in writing by you. The time and date of such payment are hereinafter
referred to as the "CLOSING DATE."
The Securities shall be in definitive form or global form, as specified
by you, and registered in such names and in such denominations as you shall
request in writing not later than one full business day prior to the Closing
Date. The Securities shall be delivered to you on the Closing Date, with any
transfer taxes payable in connection with the transfer of the Securities to the
Initial Purchaser duly paid, against payment of the Purchase Price therefor plus
accrued interest, if any, to the date of payment and delivery.
5. Conditions to the Initial Purchaser's Obligations. The
obligation of the Initial Purchaser to purchase and pay for the Securities on
the Closing Date is subject to the following conditions:
(a) Subsequent to the execution and delivery of this
Agreement and prior to the Closing Date:
(i) there shall not have occurred any
downgrading, nor shall any notice have been given of any
intended or potential downgrading or of any review for a
possible change that does not indicate the direction of the
possible change, in the rating accorded the Company or any of
the Company's securities or in the rating outlook for the
Company by any "nationally recognized statistical rating
organization," as such term is defined for purposes of Rule
436(g)(2) under the Securities Act; and
(ii) there shall not have occurred any change, or
any development involving a prospective change, in the
condition,
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financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a
whole, from that set forth in the Preliminary Memorandum
provided to purchasers of the Securities (exclusive of any
amendments or supplements thereto subsequent to the date of
this Agreement) that, in your reasonable judgment, is material
and adverse and that makes it, in your reasonable judgment,
impracticable to market the Securities on the terms and in the
manner contemplated in the Final Memorandum.
(b) The Initial Purchaser shall have received on the
Closing Date a certificate, dated the Closing Date and signed by an
executive officer of the Company, to the effect set forth in Section
5(a)(i) and to the effect that the representations and warranties of
the Company contained in this Agreement are true and correct as of the
Closing Date and that the Company has complied in all material respects
with all of the agreements on its part to be performed hereunder on or
before the Closing Date.
The officer signing and delivering such certificate may rely
upon the best of his or her knowledge as to proceedings threatened.
(c) The Initial Purchaser shall have received on the
Closing Date an opinion of Baker Botts L.L.P., outside counsel for the
Company, dated the Closing Date, to the effect set forth in Exhibit A.
Such opinion shall be rendered to the Initial Purchaser at the request
of the Company and shall so state therein.
(d) The Initial Purchaser shall have received on the
Closing Date an opinion of John T. Nesser, III, general counsel for the
Company, dated the Closing Date, to the effect set forth in Exhibit B.
Such opinion shall be rendered to the Initial Purchaser at the request
of the Company and shall so state therein.
(e) The Initial Purchaser shall have received on the
Closing Date opinions of Durling & Durling, Panamanian counsel for the
Company, and Walkers, Cayman Islands counsel for the Company, each
dated the Closing Date, to the effect set forth in Exhibit(s) C-1 and
C-2, and C-3, respectively. Such opinions shall be rendered to the
Initial Purchaser at the request of the Company and shall so state
therein.
(f) The Initial Purchaser shall have received on the
Closing Date opinions of Davis Polk & Wardwell, counsel for the Initial
Purchaser, and Gardere Wynne Sewell LLP, maritime counsel for the
Initial Purchaser, dated the Closing Date, to the effect set forth in
Exhibit D-1 and D-2, respectively.
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(g) The Initial Purchaser shall have received on each of
the date hereof and the Closing Date a letter, dated the date hereof or
the Closing Date, as the case may be, in form and substance reasonably
satisfactory to the Initial Purchaser, from PricewaterhouseCoopers LLP,
independent public accountants, containing statements and information
of the type ordinarily included in accountants' "comfort letters" to
initial purchasers with respect to the financial statements and certain
financial information contained in or incorporated by reference into
the Final Memorandum; provided that the letter delivered on the Closing
Date shall use a "cut-off date" not earlier than the date hereof.
(h) Any amounts outstanding under the Company's existing
Credit Facility dated February 10, 2003 shall have been repaid in full
and such credit facility (as well as guarantees thereof and any liens
securing such facility) shall have been terminated concurrently with
the closing hereunder, and the Initial Purchaser shall have received
evidence reasonably satisfactory to them of such repayment and
termination.
(i) The Initial Purchaser shall have received fully
executed original copies of each Security Document; each of the Company
and each Guarantor shall have complied in all material respects with
all agreements or conditions to be performed under the Security
Documents prior to the Closing Date.
(j) Pursuant to escrow arrangements reasonably
satisfactory to counsel for the Initial Purchaser, all liens and
mortgages created or granted pursuant to the Credit Agreement dated as
of February 10, 2003 among the Company, affiliates of the Company, the
lenders party thereto and Citicorp USA, Inc., as administrative agent,
shall be terminated on the Closing Date.
6. Covenants of the Company. In further consideration of the
agreements of the Initial Purchaser contained in this Agreement, the Company
covenants with the Initial Purchaser as follows:
(a) To furnish to you in New York City, without charge,
prior to 10:00 a.m. New York City time on the business day next
succeeding the date of this Agreement and during the period mentioned
in Section 6(c), as many copies of the Final Memorandum and any
supplements and amendments thereto as you may reasonably request.
(b) Before amending or supplementing either Memorandum,
to furnish to you a copy of each such proposed amendment or supplement
and not to use any such proposed amendment or supplement to which you
reasonably object.
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(c) If, during such period after the date hereof and
prior to the date on which all of the Securities shall have been sold
by the Initial Purchaser, any event shall occur or condition exist as a
result of which it is necessary to amend or supplement the Final
Memorandum in order to make the statements therein, in the light of the
circumstances when the Final Memorandum is delivered to a purchaser,
not misleading, or if, in the opinion of counsel for the Initial
Purchaser, it is necessary to amend or supplement the Final Memorandum
to comply with applicable law, forthwith to prepare and furnish, at its
own expense, to the Initial Purchaser, either amendments or supplements
to the Final Memorandum so that the statements in the Final Memorandum
as so amended or supplemented will not, in the light of the
circumstances when the Final Memorandum is delivered to a purchaser, be
misleading or so that the Final Memorandum, as amended or supplemented,
will comply with applicable law.
(d) To cooperate with the Initial Purchaser and counsel
to the Initial Purchaser in connection with the registration or
qualification of the Securities for offer and sale under the securities
or Blue Sky laws of such jurisdictions as you shall reasonably request.
(e) Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay or
cause to be paid all expenses incident to the performance of its
obligations under this Agreement, including: (i) the fees,
disbursements and expenses of the Company's counsel and the Company's
accountants in connection with the issuance and sale of the Securities
and all other fees or expenses in connection with the preparation of
each Memorandum and all amendments and supplements thereto, including
all printing costs associated therewith, and the delivering of copies
thereof to the Initial Purchaser, in the quantities herein above
specified, (ii) all costs and expenses related to the transfer and
delivery of the Securities to the Initial Purchaser, including any
transfer or other taxes payable thereon, (iii) the cost of printing or
producing any Blue Sky or legal investment memorandum in connection
with the offer and sale of the Securities under state securities laws
and all expenses in connection with the qualification of the Securities
for offer and sale under state securities laws as provided in Section
6(d) hereof, including filing fees and the reasonable fees and
disbursements of counsel for the Initial Purchaser in connection with
such qualification and in connection with the Blue Sky or legal
investment memorandum, (iv) any fees charged by rating agencies for the
rating of the Securities, (v) the fees and expenses, if any, incurred
in connection with the admission of the Securities for trading in
PORTAL or any appropriate market system, (vi) the costs and charges of
the Trustee and any transfer agent, registrar or depositary, (vii) the
cost of the preparation, issuance and delivery of the Securities,
(viii) the costs and expenses
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relating to investor presentations on any "road show" undertaken in
connection with the marketing of the offering of the Securities,
including, without limitation, expenses associated with the production
of road show slides and graphics, fees and expenses of any consultants
engaged in connection with the road show presentations with the prior
approval of the Company, travel and lodging expenses of the
representatives and officers of the Company and any such consultants,
and the cost of any aircraft chartered in connection with the road
show; provided that the Initial Purchaser will pay 100% of the costs
and expenses incurred under this paragraph (viii) up to an amount not
to exceed $75,000, (ix) the document production charges and expenses
associated with printing this Agreement and (x) all other cost and
expenses incident to the performance of the obligations of the Company
hereunder for which provision is not otherwise made in this Section. It
is understood, however, that except as provided in this Section and
Section 8, the Initial Purchaser will pay all of its costs and
expenses, including fees and disbursements of its counsel, transfer
taxes payable on resale of any of the Securities by it and any
advertising expenses connected with any offers it may make.
(f) Neither the Company nor any Affiliate will sell,
offer for sale or solicit offers to buy or otherwise negotiate in
respect of any security (as defined in the Securities Act) which could
be integrated with the sale of the Securities in a manner which would
require the registration under the Securities Act of the Securities.
(g) Not to solicit any offer to buy or offer or sell the
Securities by means of any form of general solicitation or general
advertising (as those terms are used in Regulation D under the
Securities Act) or in any manner involving a public offering within the
meaning of Section 4(2) of the Securities Act.
(h) While any of the Securities remain "restricted
securities" within the meaning of the Securities Act, to make
available, upon request, to any seller of such Securities the
information specified in Rule 144A(d)(4) under the Securities Act,
unless the Company is then subject to Section 13 or 15(d) of the
Exchange Act.
(i) If requested by you, to use its commercially
reasonable efforts to permit the Securities to be designated PORTAL
securities in accordance with the rules and regulations adopted by the
National Association of Securities Dealers, Inc. relating to trading in
the PORTAL Market.
(j) None of the Company, its Affiliates or any person
acting on its or their behalf (other than the Initial Purchaser) will
engage in any directed selling efforts (as that term is defined in
Regulation S) with respect to the Securities, and the Company and its
Affiliates and each
13
person acting on its or their behalf (other than the Initial Purchaser)
will comply with the offering restrictions requirement of Regulation S.
(k) During the period of two years after the Closing
Date, the Company will not, and will not permit any of its affiliates
(as defined in Rule 144 under the Securities Act) to resell any of the
Securities which constitute "restricted securities" under Rule 144 that
have been reacquired by any of them.
(l) Not to take any action prohibited by Regulation M
under the Exchange Act in connection with the distribution of the
Securities contemplated hereby.
(m) Neither the Company nor any of its subsidiaries will
take any action in violation of the sanctions regulations and executive
orders administered by the OFAC, nor will the Company nor any of its
subsidiaries permit any director, officer, agent, employee or Affiliate
of the Company or any of its subsidiaries to take any such action; and
the Company will not directly or indirectly use the proceeds from the
sale of the Securities, or lend, contribute or otherwise make available
such proceeds to any subsidiary, joint venture partner or other person
or entity, for the purpose of financing any project or activity in
violation of the sanctions regulations and executive orders
administered by OFAC, including without limitation, any project or
other activity in which a U.S. person is prohibited from engaging under
any sanctions regulations or executive orders administered by OFAC.
7. Offering of Securities; Restrictions on Transfer. (a) The
Initial Purchaser, represents and warrants that it is a qualified institutional
buyer as defined in Rule 144A under the Securities Act (a "QIB"). The Initial
Purchaser agrees with the Company that (i) it will not solicit offers for, or
offer or sell, such Securities by any form of general solicitation or general
advertising (as those terms are used in Regulation D under the Securities Act)
or in any manner involving a public offering within the meaning of Section 4(2)
of the Securities Act and (ii) it will solicit offers for such Securities only
from, and will offer such Securities only to, persons that it reasonably
believes to be (A) in the case of offers inside the United States, QIBs and (B)
in the case of offers outside the United States, to persons other than U.S.
persons ("FOREIGN PURCHASERS," which term shall include dealers or other
professional fiduciaries in the United States acting on a discretionary basis
for foreign beneficial owners (other than an estate or trust)) in reliance upon
Regulation S under the Securities Act that, in each case, in purchasing such
Securities are deemed to have represented and agreed as provided in the Final
Memorandum under the caption "Transfer Restrictions".
(b) The Initial Purchaser represents, warrants, and agrees with
respect to offers and sales outside the United States that:
14
(i) the Initial Purchaser understands that no action has
been or will be taken in any jurisdiction by the Company that would
permit a public offering of the Securities, or possession or
distribution of either Memorandum or any other offering or publicity
material relating to the Securities, in any country or jurisdiction
where action for that purpose is required;
(ii) the Initial Purchaser will comply with all applicable
laws and regulations in each jurisdiction in which it acquires, offers,
sells or delivers Securities or has in its possession or distributes
either Memorandum or any such other material, in all cases at its own
expense;
(iii) the Securities have not been registered under the
Securities Act and may not be offered or sold within the United States
or to, or for the account or benefit of, U.S. persons except in
accordance with Rule 144A or Regulation S under the Securities Act or
pursuant to another exemption from the registration requirements of the
Securities Act;
(iv) the Initial Purchaser has offered the Securities and
will offer and sell the Securities (A) as part of their distribution at
any time and (B) otherwise until 40 days after the later of the
commencement of the offering and the Closing Date, only in accordance
with Rule 903 of Regulation S or as otherwise permitted in Section
7(a); accordingly, neither the Initial Purchaser, its Affiliates nor
any persons acting on its or their behalf have engaged or will engage
in any directed selling efforts (within the meaning of Regulation S)
with respect to the Securities, and the Initial Purchaser, its
Affiliates and any such persons have complied and will comply with the
offering restrictions requirement of Regulation S;
(v) the Initial Purchaser (A) has not offered or sold
and, prior to the date six months after the Closing Date, will not
offer or sell any Securities to persons in the United Kingdom except to
persons whose ordinary activities involve them in acquiring, holding,
managing or disposing of investments (as principal or agent) for the
purposes of their businesses or otherwise in circumstances which have
not resulted and will not result in an offer to the public in the
United Kingdom within the meaning of the Public Offers of Securities
Regulations 1995; (B) has complied and will comply with all applicable
provisions of the Financial Services and Markets Act 2000 (the "FSMA")
with respect of anything done by it in relation to the Securities in,
from or otherwise involving the United Kingdom, and (C) will only
communicate or cause to be communicated any invitation or inducement to
engage in investment activity (within the meaning of section 21 of the
FSMA) received by it in connection with the issue or sale of the
Securities in circumstances in which section 21(1) of the FSMA does not
apply to the Company;
15
(vi) the Initial Purchaser understands that the Securities
have not been and will not be registered under the Securities and
Exchange Law of Japan, and represents that it has not offered or sold,
and agrees not to offer or sell, directly or indirectly, any Securities
in Japan or for the account of any resident thereof except pursuant to
any exemption from the registration requirements of the Securities and
Exchange Law of Japan and otherwise in compliance with applicable
provisions of Japanese law; and
(vii) the Initial Purchaser agrees that, at or prior to
confirmation of sales of the Securities, it will have sent to each
distributor, dealer or person receiving a selling concession, fee or
other remuneration that purchases Securities from it during the
restricted period a confirmation or notice to substantially the
following effect:
"The Securities covered hereby have not been
registered under the U.S. Securities Act of 1933 (the
"Securities Act") and may not be offered and sold within the
United States or to, or for the account or benefit of, U.S.
persons (i) as part of their distribution at any time or (ii)
otherwise until 40 days after the later of the commencement of
the offering and the closing date, except in either case in
accordance with Regulation S (or Rule 144A if available) under
the Securities Act. Terms used above have the meaning given to
them by Regulation S."
Terms used in this Section 7(b) have the meanings given to them by Regulation S.
8. Indemnity and Contribution. (a) The Company agrees to
indemnify and hold harmless the Initial Purchaser, each person, if any, who
controls the Initial Purchaser within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, and each affiliate of the
Initial Purchaser within the meaning of Rule 405 under the Securities Act from
and against any and all losses, claims, damages and liabilities (including,
without limitation, any legal or other expenses reasonably incurred in
connection with defending or investigating any such action or claim) caused by
any untrue statement or alleged untrue statement of a material fact contained in
either Memorandum (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto), or caused by any omission or
alleged omission to state therein a material fact necessary to make the
statements therein in the light of the circumstances under which they were made
not misleading, except insofar as such losses, claims, damages or liabilities
are caused by any such untrue statement or omission or alleged untrue statement
or omission based upon information relating to the Initial Purchaser furnished
to the Company in writing by the Initial Purchaser through you expressly for use
therein; provided, however, that the foregoing indemnity agreement with respect
to any Preliminary Memorandum shall not inure to the benefit of the Initial
Purchaser from whom the person asserting any such losses, claims, damages or
liabilities purchased Securities, or
16
any person controlling such Initial Purchaser, if a copy of the Memorandum (as
then amended or supplemented if the Company shall have furnished any amendments
or supplements thereto) was not sent or given by or on behalf of such Initial
Purchaser to such person at or prior to the written confirmation of the sale of
the Securities to such person, and if the Memorandum (as so amended or
supplemented) would have cured the defect giving rise to such losses, claims,
damages or liabilities, unless such failure is the result of noncompliance by
the Company with Section 6(a) hereof.
(b) The Initial Purchaser agrees to indemnify and hold harmless
the Company, its directors, its officers and each person, if any, who controls
the Company within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act to the same extent as the foregoing indemnity
from the Company to the Initial Purchaser, but only with reference to
information relating to the Initial Purchaser furnished to the Company in
writing by the Initial Purchaser expressly for use in either Memorandum or any
amendments or supplements thereto.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to Section 8(a) or 8(b), such person (the
"INDEMNIFIED PARTY") shall promptly notify the person against whom such
indemnity may be sought (the "INDEMNIFYING PARTY") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all such indemnified parties and that all such fees
and expenses shall be reimbursed as they are incurred. Such firm shall be
designated in writing by Morgan Stanley & Co. Incorporated, in the case of
parties indemnified pursuant to Section 8(a), and by the Company, in the case of
parties indemnified pursuant to Section 8(b). The indemnifying party shall not
be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such
17
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by the second
and third sentences of this paragraph, the indemnifying party agrees that it
shall be liable for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more than 30 days after
receipt by such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall not have reimbursed the indemnified party in accordance
with such request prior to the date of such settlement. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
(d) To the extent the indemnification provided for in Section 8(a)
or 8(b) is unavailable to an indemnified party or insufficient in respect of any
losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Initial Purchaser on
the other hand from the offering of the Securities or (ii) if the allocation
provided by clause 8(d)(i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause 8(d)(i) above but also the relative fault of the Company on the one
hand and of the Initial Purchaser on the other hand in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the Initial
Purchaser on the other hand in connection with the offering of the Securities
shall be deemed to be in the same respective proportions as the net proceeds
from the offering of the Securities (before deducting expenses) received by the
Company and the total discounts and commissions received by the Initial
Purchaser bear to the aggregate offering price of the Securities. The relative
fault of the Company on the one hand and of the Initial Purchaser on the other
hand shall be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
or by the Initial Purchaser and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.
(e) The Company and the Initial Purchaser agree that it would not
be just or equitable if contribution pursuant to this Section 8(d) were
determined by pro rata allocation or by any other method of allocation that does
not take account
18
of the equitable considerations referred to in Section 8(d). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages and
liabilities referred to in Section 8(d) shall be deemed to include, subject to
the limitations set forth above, any out-of-pocket legal or other out-of-pocket
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 8, the Initial Purchaser shall not be required to
contribute any amount in excess of the amount by which the total price at which
the Securities resold by it in the initial placement of such Securities were
offered to investors exceeds the amount of any damages that the Initial
Purchaser has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The remedies provided for in this Section 8 are
not exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
(f) The indemnity and contribution provisions contained in this
Section 8 and the representations, warranties and other statements of the
Company contained in this Agreement shall remain operative and in full force and
effect regardless of (i) any termination of this Agreement, (ii) any
investigation made by or on behalf of the Initial Purchaser, any person
controlling the Initial Purchaser or any affiliate of the Initial Purchaser or
by or on behalf of the Company, its officers or directors or any person
controlling the Company and (iii) acceptance of and payment for any of the
Securities.
9. Termination. The Initial Purchaser may terminate this
Agreement by notice given by you to the Company, if after the execution and
delivery of this Agreement and prior to the Closing Date (i) trading generally
shall have been suspended or materially limited on, or by, the New York Stock
Exchange, the Nasdaq National Market, (ii) trading of any securities of
McDermott International, Inc. shall have been suspended on any exchange or in
any over-the-counter market, (iii) a material disruption in securities
settlement, payment or clearance services in the United States shall have
occurred, (iv) any moratorium on commercial banking activities shall have been
declared by Federal or New York State authorities or (v) there shall have
occurred any outbreak or escalation of hostilities, or any change in financial
markets, currency exchange rates or controls or any calamity or crisis that, in
your judgment, is material and adverse and which, singly or together with any
other event specified in this clause (v), makes it, in your judgment,
impracticable or inadvisable to proceed with the offer, sale or delivery of the
Securities on the terms and in the manner contemplated in the Final Memorandum.
10. Effectiveness. This Agreement shall become effective upon the
execution and delivery hereof by the parties hereto.
19
If this Agreement shall be terminated by the Initial Purchaser because
of any failure or refusal on the part of the Company to comply with the terms or
to fulfill any of the conditions of this Agreement the Company will reimburse
the Initial Purchaser for all out-of-pocket expenses (including the fees and
disbursements of its counsel) reasonably incurred by the Initial Purchaser in
connection with this Agreement or the offering contemplated hereunder.
11. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
12. Applicable Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York.
13. Headings. The headings of the sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed a part
of this Agreement.
20
Very truly yours,
J. RAY MCDERMOTT, S.A.
By: /s/Francis S. Kalman
------------------------------------
Name: Francis S. Kalman
Title: Executive Vice President
and Chief Financial Officer
FIRST EMIRATES TRADING
CORPORATION
By: /s/James R. Easter
------------------------------------
Name: James R. Easter
Title: Authorized Representative
J. RAY MCDERMOTT DIVING
INTERNATIONAL, INC.
By: /s/James R. Easter
------------------------------------
Name: James R. Easter
Title: Authorized Representative
J. RAY MCDERMOTT EASTERN
HEMISPHERE LIMITED
By: /s/James R. Easter
------------------------------------
Name: James R. Easter
Title: Authorized Representative
J. RAY MCDERMOTT ENGINEERING,
LLC
By: /s/James R. Easter
------------------------------------
Name: James R. Easter
Title: Authorized Representative
J. RAY MCDERMOTT UNDERWATER
SERVICES, INC.
By: /s/ James R. Easter
------------------------------------
Name: James R. Easter
Title: Authorized Representative
MCDERMOTT MARINE
CONSTRUCTION LIMITED
By: /s/ James R. Easter
------------------------------------
Name: James R. Easter
Title: Authorized Representative
MCDERMOTT MARINE UK LIMITED
By: /s/ James R. Easter
------------------------------------
Name: James R. Easter
Title: Authorized Representative
MCDERMOTT OVERSEAS, INC.
By: /s/ James R. Easter
------------------------------------
Name: James R. Easter
Title: Authorized Representative
MCDERMOTT HOLDINGS (U.K.)
LIMITED
By: /s/ Rudolph D. Hargis Jr.
-------------------------------------
Name: Rudolph D. Hargis Jr.
Title: Authorized Representative
EASTERN MARINE SERVICES, INC.
By: /s/ Francis S. Kalman
------------------------------------
Name: Francis S. Kalman
Title: Authorized Representative
HYDRO MARINE SERVICES, INC.
By: /s/ Francis S. Kalman
------------------------------------
Name: Francis S. Kalman
Title: Authorized Representative
J. RAY MCDERMOTT ENGINEERING
HOLDINGS, INC.
By: /s/ Francis S. Kalman
------------------------------------
Name: Francis S. Kalman
Title: Authorized Representative
J. RAY MCDERMOTT FAR EAST, INC.
By: /s/ Francis S. Kalman
------------------------------------
Name: Francis S. Kalman
Title: Authorized Representative
J. RAY MCDERMOTT HOLDINGS, INC.
By: /s/ Francis S. Kalman
------------------------------------
Name: Francis S. Kalman
Title: Authorized Representative
J. RAY MCDERMOTT INTERNATIONAL
VESSELS, LTD.
By: /s/ Francis S. Kalman
------------------------------------
Name: Francis S. Kalman
Title: Authorized Representative
J. RAY MCDERMOTT
INTERNATIONAL, INC.
By: /s/ Francis S. Kalman
------------------------------------
Name: Francis S. Kalman
Title: Authorized Representative
J. RAY MCDERMOTT MIDDLE EAST,
INC.
By: /s/ Francis S. Kalman
------------------------------------
Name: Francis S. Kalman
Title: Authorized Representative
J. RAY MCDERMOTT, INC.
By: /s/ Francis S. Kalman
------------------------------------
Name: Francis S. Kalman
Title: Authorized Representative
MCDERMOTT CASPIAN
CONTRACTORS, INC.
By: /s/ Francis S. Kalman
------------------------------------
Name: Francis S. Kalman
Title: Authorized Representative
MCDERMOTT GULF OPERATING
COMPANY, INC.
By: /s/ Francis S. Kalman
------------------------------------
Name: Francis S. Kalman
Title: Authorized Representative
MCDERMOTT OLD JV OFFICE, INC.
By: /s/ Francis S. Kalman
------------------------------------
Name: Francis S. Kalman
Title: Authorized Representative
MCDERMOTT WEST INDIES COMPANY
By: /s/ Francis S. Kalman
------------------------------------
Name: Francis S. Kalman
Title: Authorized Representative
MENTOR SUBSEA TECHNOLOGY
SERVICES, INC.
By: /s/ Francis S. Kalman
------------------------------------
Name: Francis S. Kalman
Title: Authorized Representative
NORTH ATLANTIC VESSEL, INC.
By: /s/ Francis S. Kalman
------------------------------------
Name: Francis S. Kalman
Title: Authorized Representative
OPI VESSELS, INC.
By: /s/ Francis S. Kalman
------------------------------------
Name: Francis S. Kalman
Title: Authorized Representative
SPARTEC, INC.
By: /s/ Francis S. Kalman
------------------------------------
Name: Francis S. Kalman
Title: Authorized Representative
J. RAY MCDERMOTT INVESTMENTS
B.V.
By: /s/ Francis S. Kalman
------------------------------------
Name: Francis S. Kalman
Title: Authorized Representative
MCDERMOTT INTERNATIONAL
MARINE INVESTMENTS N.V.
By: /s/ Francis S. Kalman
------------------------------------
Name: Francis S. Kalman
Title: Authorized Representative
VARSY INTERNATIONAL B.V.
By: /s/ Francis S. Kalman
------------------------------------
Name: Francis S. Kalman
Title: Authorized Representative
CHARTERING COMPANY
(SINGAPORE) PTE. LTD.
By: /s/ Francis S. Kalman
------------------------------------
Name: Francis S. Kalman
Title: Authorized Representative
J. RAY MCDERMOTT (AUST.)
HOLDING PTY. LIMITED
By: /s/ Francis S. Kalman
------------------------------------
Name: Francis S. Kalman
Title: Authorized Representative
J. RAY MCDERMOTT INTERNATIONAL
SERVICES LIMITED
By: /s/ Francis S. Kalman
------------------------------------
Name: Francis S. Kalman
Title: Authorized Representative
MCDERMOTT INDUSTRIES (AUST.)
PTY LIMITED
By: /s/ Francis S. Kalman
------------------------------------
Name: Francis S. Kalman
Title: Authorized Representative
MCDERMOTT SOUTH EAST ASIA PTE.
LTD.
By: /s/ Francis S. Kalman
------------------------------------
Name: Francis S. Kalman
Title: Authorized Representative
MENTOR ENGINEERING
CONSULTANTS LIMITED
By: /s/ Francis S. Kalman
------------------------------------
Name: Francis S. Kalman
Title: Authorized Representative
MCDERMOTT FAR EAST, INC.
By: /s/ Francis S. Kalman
------------------------------------
Name: Francis S. Kalman
Title: Authorized Representative
J. RAY MCDERMOTT CONTRACTORS,
INC.
By: /s/ Liane K. Hinrichs
------------------------------------
Name: Liane K. Hinrichs
Title: Authorized Representative
MCDERMOTT OFFSHORE SERVICES
COMPANY, INC.
By: /s/ Liane K. Hinrichs
------------------------------------
Name: Liane K. Hinrichs
Title: Authorized Representative
OCEANIC RED SEA COMPANY
By: /s/ Liane K. Hinrichs
------------------------------------
Name: Liane K. Hinrichs
Title: Authorized Representative
Accepted as of the date hereof
MORGAN STANLEY & CO.
INCORPORATED
By: /s/ Robert J. Voreyen
----------------------------------
Name: Robert J. Voreyen
Title: Managing Director
SCHEDULE A
GUARANTORS
Chartering Company (Singapore) Pte. Ltd. (Singapore)
Eastern Marine Services, Inc. (Panama)
First Emirates Trading Corporation (United Arab Emirates)
Hydro Marine Services, Inc.* (Panama)
J. Ray McDermott (Aust.) Holding Pty. Limited (Australia)
J. Ray McDermott Contractors, Inc.* (Panama)
J. Ray McDermott Diving International, Inc. (Panama)
J. Ray McDermott Eastern Hemisphere Limited (Mauritius)
J. Ray McDermott Engineering, LLC (Texas)
J. Ray McDermott Engineering Holdings, Inc. (Delaware)
J. Ray McDermott Far East, Inc. (Panama)
J. Ray McDermott Holdings, Inc.* (Delaware)
J. Ray McDermott International Services Limited (United Kingdom)
J. Ray McDermott International Vessels, Ltd.* (Cayman Islands)
J. Ray McDermott International, Inc.* (Panama)
J. Ray McDermott Investments B.V. (Netherlands)
J. Ray McDermott Middle East, Inc.* (Panama)
J. Ray McDermott Underwater Services, Inc. (Panama)
J. Ray McDermott, Inc.* (Delaware)
McDermott Caspian Contractors, Inc. (Panama)
McDermott Far East, Inc. (Panama)
McDermott Gulf Operating Company, Inc. (Panama)
McDermott Holdings (U.K.) Limited (United Kingdom)
McDermott Industries (Aust.) Pty Limited (Australia)
McDermott International Marine Investments N.V. (Netherlands Antilles)
McDermott Marine Construction Limited (United Kingdom)
McDermott Marine UK Limited (United Kingdom)
McDermott Offshore Services Company, Inc. (Panama)
McDermott Old JV Office, Inc. (Panama)
McDermott Overseas, Inc. (Panama)
McDermott South East Asia Pte. Ltd. (Singapore)
McDermott West Indies Company (United Arab Emirates)
Mentor Engineering Consultants Limited (United Kingdom)
Mentor Subsea Technology Services, Inc. (Delaware)
North Atlantic Vessel, Inc. (Panama)
Oceanic Red Sea Company (United Arab Emirates)
OPI Vessels, Inc.* (Delaware)
SparTEC, Inc. (Delaware)
Varsy International B.V. (Netherlands Antilles)
- ------------------
* a "Material Subsidiary"
EXHIBIT A
OPINION OF OUTSIDE COUNSEL FOR THE COMPANY
The opinion of the counsel for the Company, to be delivered pursuant to
Section 5(c) of the Purchase Agreement shall be to the effect that:
A. Each of the Purchase Agreement, the Indenture and the
Registration Rights Agreement has been duly authorized, executed and delivered
by each of J. Ray McDermott Engineering Holdings, Inc., a Delaware corporation
("JRMEHI"), J. Ray McDermott Holdings, Inc., a Delaware corporation ("JRMHI"),
J. Ray McDermott, Inc., a Delaware corporation ("JRMI"), Mentor Subsea
Technology Services, Inc., a Delaware corporation ("MENTOR") and OPI Vessels,
Inc., a Delaware corporation ("OPI" and, together with JRMEHI, JRMHI, JRMI and
Mentor, the "DELAWARE GUARANTORS"). The Indenture is a valid and binding
agreement of the Company and each Guarantor, enforceable in accordance with its
terms, subject to the effects of (a) any applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium and other laws relating to or
affecting creditors' rights generally, (b) general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law) and (c) any implied covenants of good faith and fair dealing.
B. When executed and authenticated in accordance with the
provisions of the Indenture and delivered to and paid for by the Initial
Purchaser in accordance with the terms of the Purchase Agreement, the Securities
will be entitled to the benefits of the Indenture and will be valid and binding
obligations of the Company, enforceable in accordance with their terms, subject
to the effects of (a) any applicable bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium and other laws relating to or affecting
creditors' rights generally, (b) general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or at law) and (c)
any implied covenants of good faith and fair dealing.
C. The Initial Guarantee of each of the Delaware Guarantors has
been duly authorized, executed and delivered by such Delaware Guarantor. When
the Securities have been duly issued, executed and authenticated in accordance
with the provisions of the Indenture and delivered to and paid for by the
Initial Purchaser in accordance with the terms of this Agreement, the Initial
Guarantee of each Guarantor will constitute a valid and legally binding
obligation of each Guarantor, enforceable in accordance with its terms, subject
to the effects of (a) any applicable bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium and other laws relating to or affecting
creditors' rights generally, (b) general principles of equity (regardless of
whether enforcement is considered in a
proceeding in equity or at law) and (c) any implied covenants of good faith and
fair dealing.
D. When the Exchange Securities are issued, executed and
authenticated in accordance with the terms of the Exchange Offer and the
Indenture, the Exchange Securities will be entitled to the benefits of the
Indenture and will be the valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms, subject to the
effects of (a) any applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium and other laws relating to or affecting creditors' rights
generally, (b) general principles of equity (regardless of whether enforcement
is considered in a proceeding in equity or at law) and (c) any implied covenants
of good faith and fair dealing.
E. The Exchange Guarantee of each of the Delaware Guarantors has
been duly authorized by such Delaware Guarantor. When the Exchange Securities
have been duly issued, executed and authenticated in accordance with the terms
of the Exchange Offer and the Indenture, and when the Exchange Guarantees have
been duly executed and delivered in accordance with the terms of the Exchange
Offer and the Indenture, the Exchange Guarantee of each Guarantor will
constitute a valid and legally binding obligation of such Guarantor, enforceable
in accordance with its terms, subject to the effects of (a) any applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium and
other laws relating to or affecting creditors' rights generally, (b) general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law) and (c) any implied covenants of good faith and
fair dealing.
F. Each of the Security Documents to which a Delaware Guarantor
is a party has been duly authorized, executed and delivered by such Delaware
Guarantor. Each of the New York or U.S. maritime law governed Security Documents
to which either the Company or a Guarantor is a party is a valid and binding
agreement of such entity, enforceable in accordance with its terms, subject to
the effects of (a) any applicable bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium and other laws relating to or affecting
creditors' rights generally, (b) general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or at law) and (c)
any implied covenants of good faith and fair dealing. The Pledge Agreement is
effective to create, in favor of the Trustee for the benefit of the Secured
Parties, as security for the Secured Obligations, a valid security interest
under Article 9 of the Uniform Commercial Code as in effect in the State of New
York (the "NEW YORK UCC") in all of the respective rights, titles and interests
of the Company and the Guarantors party thereto in the Pledged Equity Interests
(as such term is defined in the Security Documents) listed on Schedule 1 to the
Pledge Agreement. Assuming that certificates evidencing all the Pledged Equity
Interests, in each
2
case accompanied by instruments of transfer in blank duly executed, have been
delivered on or prior to the date hereof to the Trustee, and have been
continuously held by the Trustee since such delivery, in each case in the State
of New York, (i) the security interest in the Pledged Equity Interests is
perfected by control (within the meaning of Section 8-106 of the New York UCC)
of such Pledged Equity Interests and (ii) assuming the absence of notice of any
adverse claim thereto on the part of any Secured Party, the Trustee will be a
protected purchaser (within the meaning of Section 8-303(a) of the New York UCC)
of such security interest in such Pledged Equity Interests.
G. No consent, approval, authorization or order of, or
qualification with, any U.S. or Texas governmental body or agency is required
for the performance by the Company or any Guarantor of its obligations under the
Purchase Agreement, the Indenture, the Registration Rights Agreement, the
Security Documents or the Securities, except such as may be required by the
securities or Blue Sky laws of the various states in connection with the offer
and sale of the Securities and by Federal and state securities laws with respect
to the Company's obligations under the Registration Rights Agreement.
H. The Company is not, and after giving effect to the offering
and sale of the Securities and the application of the proceeds thereof as
described in the Final Memorandum will not be, required to register as an
"investment company" as such term is defined in the Investment Company Act of
1940, as amended.
I. The statements relating to legal matters, documents or
proceedings included in the Final Memorandum under the caption "Description of
Notes" fairly summarize in all material respects such matters, documents or
proceedings.
J. Based upon (A) the accuracy of the representations and
warranties of the Company in Sections 1(w), 1(x) or 1(z) of the Purchase
Agreement, (B) compliance by the Company with 6(f), 6(g) and 6(j) of the
Purchase Agreement, (C) compliance by the Initial Purchaser in Section 7 of the
Purchase Agreement, (D) compliance by the Initial Purchaser with the offering
and transfer procedures described in the Final Memorandum, (E) the accuracy of
the representations and warranties made in accordance with the Final Memorandum
by the investors to whom you initially resell Securities and (F) receipt by the
investors to whom you initially resell Securities of copies of the Final
Memorandum prior to the effectiveness of such resale, it is not required in
connection with the offer, sale and delivery of the Securities to the Initial
Purchaser under the Purchase Agreement or in connection with the initial resale
of such Securities by the Initial Purchaser in accordance with Section 7 of the
Purchase Agreement to register the Securities under the Securities Act of 1933
or to qualify the Indenture under the Trust Indenture Act of 1939, it being
understood that no opinion is expressed as to any subsequent resale of any
Security.
3
K. Nothing has come to the attention of such counsel that causes
such counsel to believe that the Final Memorandum (except for the financial
statements, the notes thereto and the auditors' report thereon, and financial
schedules and other accounting, financial and statistical data, as to which such
counsel need not comment) when issued contained, or as of the date such opinion
is delivered contains, any untrue statement of a material fact or omitted or
omits to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
Such counsel may state that they have participated in conferences with
officers and other representatives of the Company, representatives of the
independent public accountants for the Company, your representatives and your
counsel at which conferences the contents of the Final Memorandum and related
matters were discussed, and that they did not independently verify the
information in the Final Memorandum and are not passing upon, and do not assume
any responsibility for, the accuracy, completeness or fairness of the statements
contained in the Final Memorandum (except to the extent set forth in paragraph I
above).
In giving the foregoing opinions, such counsel may rely on certificates
of representatives of the Company and the Guarantors and of public officials, as
well as the representations and warranties contained in this Agreement, with
respect to the accuracy of the factual matters contained therein, and may state
that the opinions assume (i) that each party to, or issuer of, as applicable,
the Purchase Agreement, the Registration Rights Agreement, the Indenture, the
Securities, the Initial Guarantees, the Exchange Securities, the Exchange
Guarantees and the Security Documents (collectively, the "Transaction
Documents"), other than the Delaware Guarantors, has all necessary power and
authority to enter into the Transaction Documents and to perform its obligations
thereunder, (ii) the due authorization, execution and delivery of the
Transaction Documents by each party thereto (other than the Delaware
Guarantors), (iii) that each Transaction Document constitutes the valid and
legally binding obligation of each party thereto (other than the Company and the
Guarantors), and (iv) the genuineness of all signatures, the conformity to
authentic, original documents of all documents submitted to such counsel as
certified or photostatic copies and the authenticity of all documents submitted
to such counsel as originals.
In giving the foregoing opinions, such counsel may further state that,
except where otherwise expressly stated, the opinions expressed are based on and
are limited to the laws of the State of Texas, the General Corporation Law of
the State of Delaware and the contract law of the State of New York, in each
case as currently in effect.
4
EXHIBIT B
OPINION OF JOHN T. NESSER, III
The opinion of John T. Nesser, III, to be delivered pursuant to Section 5(d) of
the Purchase Agreement shall be to the effect that:
A. Each of the Delaware Guarantors has been duly incorporated, is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, and has the corporate power or other
organizational power and authority to own its property and to conduct its
business as described in the Final Memorandum; all of the issued shares of
capital stock of each of the Delaware Guarantors have been duly and validly
authorized and issued, are fully paid and nonassessable, and (except as set
forth in the Final Memorandum or contemplated by the Security Documents) are
owned directly or indirectly by the Company, free and clear of all liens,
encumbrances, equities or similar claims.
B. (i) None of the Delaware Guarantors is in violation of its
certificate of incorporation or bylaws, in each case as amended to date, (ii) to
the knowledge of such counsel, neither the Company nor any Material Subsidiary
is in default in the performance or observance of any obligation, agreement,
covenant or condition contained in any indenture, mortgage, loan agreement,
note, lease or other agreement or instrument to which the Company or any of the
Material Subsidiaries is a party or by which it or any of them may be bound, or
to which any of their property or assets is subject, except in the case of
clause (ii) above for any such defaults, as are disclosed in the Final
Memorandum and any such defaults that would not have a Material Adverse Effect
and (iii) to the knowledge of such counsel neither the Company nor any Material
Subsidiary is in violation of any applicable law, rule or regulation, or any
judgment, order or decree of any court with jurisdiction over the Company or any
subsidiary of the Company, or other governmental or regulatory authority with
jurisdiction over the Company or any of its subsidiaries, except for any such
defaults that would not have a Material Adverse Effect.
C. The Company and the Material Subsidiaries possess such
certificates, authorizations or permits issued by the appropriate state or
federal regulatory agencies or bodies necessary to conduct the respective
businesses now operated by them, except for such certificates, authorizations or
permits of which the failure by the Company to possess would not have a Material
Adverse Effect, and, to the knowledge of such counsel, except as disclosed in
the Final Memorandum, none of the Company or any of the Material Subsidiaries
has received any notice of proceedings relating to the revocation or
modification of any such certificate, authority or permit which, if the subject
of an unfavorable decision, ruling or finding, would have a Material Adverse
Effect.
D. Except as disclosed in the Final Memorandum, there are no
legal or governmental proceedings pending or, to the knowledge of such counsel,
threatened to which the Company or any of its subsidiaries is a party or to
which any of the properties of the Company or any of its subsidiaries is subject
other than proceedings described in the Final Memorandum and proceedings that
would not have a Material Adverse Effect, or have a material adverse effect on
the power or ability of the Company to perform its obligations under this
Agreement, the Indenture, the Registration Rights Agreement, the Security
Documents or the Securities or to consummate the transactions contemplated by
the Final Memorandum.
E. The statements in the Final Memorandum under the captions
"Business--Legal Proceedings," "Business--Governmental Regulation" and
"Transactions with Affiliates" are accurate and fairly summarize in all material
respects the matters referred to therein.
F. The execution and delivery by the Company and each Delaware
Guarantor of, and the performance by the Company of its obligations under, the
Purchase Agreement, the Registration Rights Agreement, the Indenture, the
Securities and the Security Documents will not contravene any provision of
applicable law or, to the knowledge of such counsel, any indenture, mortgage,
loan agreement, note, lease or other instrument binding upon the Company or any
of its subsidiaries that is material to the Company and its subsidiaries, taken
as a whole, or, to the knowledge of such counsel, any judgment, order or decree
of any governmental body, agency or court having jurisdiction over the Company
or any subsidiary, except for any such contravention as would not have a
Material Adverse Effect.
G. Nothing has come to the attention of such counsel that causes
such counsel to believe that the Final Memorandum (except for the financial
statements, the notes thereto and the auditors' report thereon, and financial
schedules and other accounting, financial and statistical data included therein,
as to which such counsel need not comment) when issued contained, or as of the
date such opinion is delivered contains, any untrue statement of a material fact
or omitted or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
In giving the foregoing opinions, such counsel may state that, except
where otherwise expressly stated, the opinions expressed are based on and are
limited to the laws of the State of Louisiana and the General Corporation Law of
the State of Delaware, in each case as currently in effect.
2
Such counsel may also state that phrases such as "to my knowledge,"
"known to me" and those with equivalent words refer to the conscious awareness
of information by such counsel, without any independent investigation.
3
EXHIBIT C-1
OPINION OF DURLING & DURLING
The opinion of the counsel for the Company, to be delivered pursuant to Section
5(e) of the Purchase Agreement shall be to the effect that:
MORGAN STANLEY etc.
Gentlemen:
This opinion is furnished to you pursuant to Section 5(e) of the
Purchase Agreement dated as of November 21, 2003 (the "PURCHASE AGREEMENT",
between J. Ray McDermott, S. A., a Panamanian corporation (the "COMPANY") and
Morgan Stanley & Co. Incorporated (the "Initial Purchaser") of US$ 200,000,000
principal amount of ____% Senior Secured Notes due 2013 (the "SECURITIES") to be
issued pursuant to the provisions of an Indenture to be dated December 8, 2003
(the "INDENTURE") among the Company, each of the subsidiaries of the Company
namely, J. Ray McDermott International, Inc. ("JRMII"), J. Ray McDermott
Contractors, Inc. ("JRMCI"), J. Ray McDermott Middle East, Inc. ("JRMMEI") and
Hydro Marine Services, Inc. ("HYDRO MARINE") (collectively, the "PANAMANIAN
GUARANTORS") and The Bank of New York, as Trustee (the "TRUSTEE").
We have acted as Panamanian counsel to the Company and the Panamanian
Guarantors in connection with the execution and delivery by the Company and the
Panamanian Guarantors of the Purchase Agreement, the Indenture, the Registration
Rights Agreement, the Security Documents, the Exchange Securities, and the
Securities. In that regard, we have examined originals or copies, certified or
otherwise identified to our satisfaction of such documents, corporate records,
certificates of public officials and other instruments and have conducted such
other investigations of fact and law as we have deemed necessary for the purpose
of this opinion.
In rendering this opinion we have relied on certificates of
representatives of the Company and the Guarantor and of public officials, as
well as the representations and warranties contained in the Purchase Agreement,
with respect to the accuracy of the factual matters contained therein, and have
assumed (i) that each party to, or issuer of, as applicable, the Purchase
Agreement, the Registration Rights Agreement, the Indenture, the Securities, the
Initial Guarantees, the Exchange Securities, the Exchange Guarantees and the
Security Documents (collectively the "Transaction Documents"), other than the
Company and the Panamanian Guarantors, has all necessary power and authority to
enter into the Transaction Documents and to perform its obligations thereunder,
(ii) the due
authorization, execution and delivery of the Transaction Documents by each party
thereto (other than the Company and the Panamanian Guarantors) and (iii) the
genuineness of all signatures, the conformity to authentic, original of all
documents submitted to us as certified or photostatic copies and the
authenticity of all documents submitted to us as originals. Further, we have
conducted no independent, factual investigation of our own, but rather have
relied solely upon the foregoing documents, the statements and information set
forth therein and the additional matters recited or assumed therein, all of
which we assume to be true, complete and accurate in all material respects.
Based on the foregoing, we are of the opinion that:
(a) The Company has been duly incorporated, is validly existing as
a corporation in good standing under the laws of the Republic of Panama, and has
the corporate power and authority to own its property and to conduct its
business as described in the Final Memorandum.
(b) Each of JRMII, JRMCI, JRMMEI and Hydro Marine has been duly
incorporated, is validly existing as a corporation in good standing under the
laws of the Republic of Panama, and has the corporate or other organizational
power and authority to own its property and to conduct its business as described
in the Final Memorandum. Except as described in the Final Memorandum, all of the
issued and outstanding stock or ownership interests of each Panamanian Guarantor
has been duly authorized and validly issued, is fully paid and nonassessable,
and (except as set forth in the Final Memorandum or contemplated by the Security
Documents) is owned directly or indirectly by the Company, free and clear of all
liens, encumbrances, equities or similar claims.
(c) The execution and delivery of each of the Purchase Agreement,
the Registration Rights Agreement and the Indenture has been duly authorized by
the Company and the Panamanian Guarantors
(d) The Securities and the Exchange Securities have been duly
authorized by the Company.
(e) The execution and delivery of the Initial Guarantee of each of
the Panamanian Guarantors has been duly authorized by such Panamanian Guarantor.
(f) The Exchange Guarantee of each of the Panamanian Guarantors
has been duly authorized by such Panamanian Guarantor.
(g) The execution and delivery of each of the Security Documents
to which either the Company or a Panamanian Guarantor is a party has been duly
authorized by such entity.
2
(h) Except for the proper notation in the Stock Register of the
Company and of each of the Panamanian Guarantors it is not necessary or
advisable under the law of Panama that any document be filed, registered or
recorded in any public office of Panama, or any other actions be taken in Panama
in order to ensure the validity, effectiveness, priority, perfection,
admissibility into evidence or enforceability against third parties of the
Pledge Agreement under the laws of Panama.
(i) The execution and delivery by the Company and the Panamanian
Guarantors of, and the performance by the Company and the Panamanian Guarantors
of its obligations under, the Purchase Agreement, the Indenture, the
Registration Rights Agreement, the Security Documents, the Exchange Securities
and the Securities will not contravene any provision of applicable law or the
articles of incorporation or by-laws of the Company or, to the best of our
knowledge, any indenture, mortgage, loan, note, lease, agreement or other
instrument binding upon the Company or any of its subsidiaries that is material
to the Company and its subsidiaries, taken as a whole, or, to the best of our
knowledge, any judgment, order or decree of any governmental body, agency or
court having jurisdiction over the Company or any subsidiary, and no consent,
approval, authorization or order of, or qualification with, any governmental
body or agency of the Republic of Panama is required for the issue and sale of
the Securities or the consummation by the Company of the transactions
contemplated by the Purchase Agreement.
(j) None of the Company or any of the Panamanian Guarantors is in
violation of its organizational documents, in each case as amended to date.
(k) The statements in the Final Memorandum under the caption
"Certain Tax Considerations," insofar as such statements constitute a summary of
the Panamanian tax laws referred to therein, are accurate and fairly summarize
in all material respects the Panamanian tax laws referred to therein.
(l) The choice of New York law as the governing law of the Pledge
Agreement and the U.S. Mortgages is a valid choice of law and will be recognized
and given effect to by the courts of Panama.
(m) The irrevocable submission by the Company and the Panamanian
Guarantors to the non-exclusive jurisdiction of the Supreme Court of the State
of New York sitting in New York County and of the United States District Court
of the Southern District of New York is a valid submission to the jurisdiction
of such courts.
(n) A final and conclusive judgment obtained in the Supreme Court
of the State of New York sitting in New York County, the United States District
Court of the Southern District of New York and any appellate court or body
3
thereto against the Company or the Panamanian Guarantors, arising out of or in
relation to the Security Documents would be enforceable against the Company and
the Panamanian Guarantors in the courts of Panama without further review of the
merits, provided t hat the judgment of Panamanian courts would be reciprocally
recognized, conclusive and enforceable in said court sitting in the State of New
York or outside Panama. The Supreme Court of Panama is authorized to issue a
writ of exequatur in respect of final judgment rendered in a foreign
jurisdiction only if (a) such judgment arises out of an in personam action, (b)
the Party against whom the judgment was rendered, or its agent, was personally
served in such action within such foreign jurisdiction, (c) the obligation in
respect of which the judgment was obtained is lawful in Panama and (d) such
judgment has been properly authenticated by diplomatic or consular officers of
Panama.
(o) There is no tax, deduction or withholding imposed by the
government of Panama or any political subdivision thereof or therein either (i)
on or by virtue of the execution or delivery of the Security Documents or (ii)
on any payment to be made by the Company or the Panamanian Guarantors under the
Security Documents.
We are members of the bar of Panama and the opinions expressed above
are limited to matters governed by Panamanian law. This opinion is to be
governed by and construed in accordance with the laws of Panama and is limited
to and is given on the basis of the current law and practice in Panama.
Very truly yours,
4
EXHIBIT C-2
OPINION OF DURLING & DURLING
The opinion of the counsel for the Company, to be delivered pursuant to Section
5(e) of the Purchase Agreement shall be to the effect that:
To Morgan Stanley etc.
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section 5(e) of the
Purchase Agreement dated as of November 21, 2003 (the "Purchase Agreement",
between J. Ray McDermott, S. A., a Panamanian corporation (the "Company") and
Morgan Stanley & Co. Incorporated (the "Initial Purchaser") of US$ 200,000,000
principal amount of ____% Senior Secured Notes due 2013 (the "Securities") to be
issued pursuant to the provisions of an Indenture to be dated December 8, 2003
(the "Indenture") among the Company, each of the subsidiaries of the Company
namely, J. Ray McDermott International, Inc. ("JRMII"), J. Ray McDermott
Contractors, Inc. ("JRMCI"), J. Ray McDermott Middle East, Inc. ("JRMMEI") and
Hydro Marine Services, Inc. ("Hydro Marine") (collectively, the "Panamanian
Guarantors") and The Bank of New York, as Trustee (the "Trustee").
We have acted as Panamanian counsel to the Panamanian Guarantors in
connection with the execution and delivery of the First Naval Fleet Mortgages
described in Schedule attached hereto (collectively, the "Panamanian Fleet
Mortgages"). In that regard, we have examined originals or copies, certified or
otherwise identified to our satisfaction, of such documents, corporate records,
certificates of public officials and other instruments for the purpose of this
opinion.
In rendering this opinion we have assumed (i) that each party to the
Panamanian Fleet Mortgages has all necessary power, authority and legal right to
enter into the Panamanian Fleet Mortgages to which is a party and to perform its
obligation thereunder, (ii) the due authorization, execution and delivery of the
Panamanian Fleet Mortgages by each party hereto, (iii) that each Panamanian
Fleet Mortgages constitutes the legal, valid, binding and enforceable obligation
of each party thereto, and (iv) the genuineness of all signatures, the
conformity to authentic, original documents of all documents submitted to us as
certified or photostatic copies and the authenticity of all documents submitted
to us as originals. As to certain factual matters, we are relying on
certificates of officers of the Panamanian Guarantors. Further, we have
conducted no
independent, factual investigation of our own, but rather have relied solely
upon the foregoing documents, the statements and information set forth therein
and the additional matters recited or assumed therein, all of which we assume to
be true, complete and accurate in all material respects.
Based on the foregoing, we are of the opinion that:
1. Each of the Panamanian Guarantors is a corporation validly
existing and in good standing under the laws of Panama and has the corporate
power and authority (a) to own its property and assets and to carry on its
business as now conducted and as proposed to be conducted and (b) to execute,
deliver and perform its obligations under each of the Panamanian Fleet Mortgages
to which it is a party.
2. The execution, delivery and performance by the Panamanian
Guarantors of each of the Panamanian Fleet Mortgages to which it is a party and
the transactions contemplated thereby, (a) have been duly authorized by all
requisite corporate and, if required, stockholder action and (b) will not
violate any provision of Panamanian law, statute, rule or regulation or the
certificate of incorporation, by-laws or other constitutive documents of each of
the Panamanian Guarantors.
3. Each Panamanian Fleet Mortgage constitutes a legal, valid and
binding obligation of the Panamanian Guarantors party thereto, enforceable
against such Panamanian Guarantors in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization and other similar laws
affecting creditors' rights generally and to the applicability of general
principles of equity.
4. Each Panamanian Guarantors has record title to 100% of each of
the vessels that is identified as owned by it on Schedule attached hereto and
each vessel is permanently registered in the name of such Panamanian Guarantors
under the Panamanian flag.
5. On account of their preliminary registration in the Public
Registry Office of the Republic of Panama, the Panamanian Fleet Mortgages
constitute legal and valid mortgages over the vessels described therein and will
so constitute as long as the Panamanian Fleet Mortgages are filed for final
registration at the Panama Public Registry Office within six months from the
date of its preliminary registration and the definite registration is completed.
Upon such permanent registration, the Panamanian Fleet Mortgages will rank from
the date of preliminary registration as first mortgages over the vessels
described therein.
6. Other than the permanent registration of the Panamanian Fleet
Mortgages in the Public Registry Office of Panama, no action, consent or
approval of, registration or filing with or any other action by any Panamanian
governmental authority or regulatory body is or will be required in connection
2
with the Panamanian Fleet Mortgages or the exercise by the Mortgagee of its
rights thereunder.
7. Save for customary mortgage registration fees, and a stamp tax
at the rate of US$0.10 for each US$100 of the face value of the obligations
evidenced in the Panamanian Fleet Mortgages which may be levied in the event
that any of the Panamanian Fleet Mortgages is submitted before any
administrative or judicial authority in Panama, no stamp, registration or
similar tax or charge is required to be paid in the Republic of Panama on or in
relation to any of the Panamanian Fleet Mortgages. Payment of the above stamp
tax is not applicable upon registration of the Panamanian Fleet Mortgages.
8. No taxes of the Republic of Panama are imposed by withholding
or otherwise on any payment to be made by any Panamanian Guarantors under any of
the Panamanian Fleet Mortgages or are imposed on or by virtue of the execution
or delivery of the Panamanian Fleet Mortgages by any Panamanian Guarantors.
We are members of the bar of Panama, and the opinions expressed above
are limited to matters governed by Panamanian law. This opinion is to be
governed by and construed in accordance with the laws of Panama and is limited
to and is given on the basis of the current law and practice in Panama.
Very truly yours,
3
EXHIBIT C-3
OPINION OF WALKERS
The opinion of Walkers, to be delivered pursuant to Section 5(e) of the Purchase
Agreement shall be to the effect that:
1) J. Ray McDermott International Vessels Limited ("JRMIVL") has been duly
incorporated, is validly existing as an exempted company in good
standing under the laws of the Cayman Islands, and has the corporate or
other organizational power and authority to own its property and to
conduct its business. Based solely on our review of the Register of
Members and except as described in the Final Memorandum, all of the
issued and outstanding ownership interests of JRMIVL has been duly
authorized and validly issued, is fully paid and nonassessable, and
(except as set forth in the Final Memorandum or contemplated by the
Security Documents) is owned free and clear of all liens, encumbrances,
equities or similar claims.
2) Each of the Purchase Agreement, the Registration Rights Agreement and
the Indenture has been duly authorized and executed by JRMIVL.
3) The Initial Guarantee of JRMIVL has been duly authorized and executed
by JRMIVL.
4) The Exchange Guarantee of JRMIVL has been duly authorized by JRMIVL.
5) Each of the Security Documents to which JRMIVL is a party has been duly
authorized and executed by JRMIVL.
6) The execution, delivery and performance of the Purchase Agreement, the
Indenture, the Registration Rights Agreement and the Security
Documents, the consummation of the transactions contemplated thereby
and the compliance by JRMIVL with the terms and provisions thereof do
not:
(a) contravene any law, public rule or regulation applicable to
JRMIVL which is currently in force; or
(b) contravene the memorandum and articles of association of
JRMIVL.
7) Neither the execution, delivery or performance of any of the Purchase
Agreement, the Indenture, the Registration Rights Agreement and the
Security Documents to which JRMIVL is a party nor the consummation or
performance of any of the transactions contemplated thereby by JRMIVL,
requires the consent or approval of, the giving of notice to, or the
registration with, or the taking of any other action in respect of any
Cayman Islands governmental or judicial authority or agency.
8) There are no stamp duties (other than the stamp duties mentioned in
qualification 2 in Schedule 3 hereto), income taxes, withholdings,
levies, registration taxes, or other duties or similar taxes or charges
now imposed, or which under the present laws of the Cayman Islands
could in the future become imposed, in connection with the enforcement
or admissibility in evidence of the Security Documents or on any
payment to be made by JRMIVL or any other person pursuant to the
Documents. The Cayman Islands currently have no form of income,
corporate or capital gains tax and no estate duty, inheritance tax or
gift tax.
9) A judgment obtained in a foreign court will be recognized and enforced
in the courts of the Cayman Islands without any re-examination of the
merits at common law, by an action commenced on the foreign judgment
debt in the Grand Court of the Cayman Islands, where the judgment is
final and in respect of which the foreign court had jurisdiction over
the defendant according to Cayman Islands conflict of law rules and
which is conclusive, for a liquidated sum not in respect of penalties
or taxes or a fine or similar fiscal or revenue obligations, and which
was neither obtained in a manner, nor is of a kind enforcement of which
is contrary to natural justice or the public policy of the Cayman
Islands.
10) Other than to enter particulars of the security interest created by
JRMIVL pursuant to the Security Documents in the Register of Mortgages
and Charges maintained by JRMIVL to comply with Section 54 of the
Companies Law (2003 Revision) of the Cayman Islands, it is not
necessary or advisable under the laws of the Cayman Islands that any of
the Documents or any document relating thereto be registered or
recorded in any public office or elsewhere in the Cayman Islands in
order to ensure the validity, effectiveness or enforceability of any of
the Documents.
11) It is not necessary under the law of the Cayman Islands (i) in order to
enable any party to the agreement to enforce their rights under the
Security Documents or (ii) solely by reason of the execution, delivery
and performance of the Security Documents that the parties to the
Security Documents should be licensed, qualified or otherwise entitled
to carry on business in the Cayman Islands or any other political
subdivision thereof. Except as hereinafter indicated, it is not
necessary or advisable in order to ensure the legality, validity,
enforceability or admissibility in evidence of the Security Documents
in the Cayman Islands that the same be filed, notarized, recoded or
enrolled with any government authority.
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12) JRMIVL has executed an effective submission to the jurisdiction of the
courts of the jurisdictions specified in the Security Documents.
13) JRMIVL is subject to civil and commercial law with respect to its
obligations under the Security Documents and neither JRMIVL nor any of
its assets is entitled to immunity from suit or enforcement of a
judgment on the grounds of sovereignty or otherwise in the courts of
the Cayman Islands in proceedings against JRMIVL in respect of any
obligations under the Purchase Agreement, the Indenture, the
Registration Rights Agreement and the Security Documents, which
obligations constitute private and commercial acts rather than
governmental or public acts.
In giving the foregoing opinions, such counsel may state that, except
where otherwise expressly stated, the opinions expressed are based on and are
limited to the laws of the Cayman Islands, as currently in effect.
In giving the foregoing opinions, such counsel may rely on certificates
of representatives of the Company and the Guarantors and of public officials, as
well as the representations and warranties contained in this Agreement, with
respect to the accuracy of the factual matters contained therein, and may state
that the opinions assume (i) that each party to, or issuer of, as applicable,
the Purchase Agreement, the Registration Rights Agreement, the Indenture, the
Securities, the Initial Guarantees, the Exchange Securities, the Exchange
Guarantees and the Security Documents (collectively, the "TRANSACTION
DOCUMENTS"), other than JRMIVL, has all necessary power and authority to enter
into the Transaction Documents and to perform its obligations thereunder, (ii)
the due authorization, execution and delivery of the Transaction Documents by
each party thereto (other than JRMIVL) and (iii) the genuineness of all
signatures, the conformity to authentic, original documents of all documents
submitted to such counsel as certified or photostatic copies and the
authenticity of all documents submitted to such counsel as originals.
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EXHIBIT D-1
OPINION OF DAVIS POLK & WARDWELL
The opinion of Davis Polk & Wardwell to be delivered pursuant to
Section 5(f) of the Purchase Agreement shall be to the effect that:
A. The statements relating to legal matters, documents or
proceedings included in the Final Memorandum under the captions "Description of
Notes," "Private Placement" and "Transfer Restrictions," fairly summarize in all
material respects such matters, documents or proceedings.
B. Nothing has come to the attention of such counsel to cause
such counsel to believe that (except for the financial statements and financial
schedules and other accounting, financial and statistical data, as to which such
counsel need not express any belief) the Final Memorandum when issued contained,
or as of the date such opinion is delivered contains, any untrue statement of a
material fact or omitted or omits to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
With respect to the matters referred to in the paragraph above, Davis
Polk & Wardwell may state that their beliefs are based upon their participation
in the preparation of the Final Memorandum (and any amendments or supplements
thereto) and review and discussion of the contents thereof, but are without
independent check or verification except as specified.
C. Based upon the representations, warranties and agreements of
the Company in Sections 1(w), 1(x), 1(z), 6(f), 6(g) and 6(j) of the Purchase
Agreement and of the Initial Purchaser in Section 7 of the Purchase Agreement,
it is not necessary in connection with the offer, sale and delivery of the
Securities to the Initial Purchaser under the Purchase Agreement or in
connection with the initial resale of such Securities by the Initial Purchaser
in accordance with Section 7 of the Purchase Agreement to register the
Securities under the Securities Act of 1933, it being understood that no opinion
is expressed as to any subsequent resale of any Security.
EXHIBIT D-2
OPINION OF GARDERE WYNNE SEWELL LLP
The opinion of Gardere Wynne Sewell LLP to be delivered pursuant to
Section 5(f) of the Purchase Agreement shall be to the effect that:
A. Each of the Vessels listed on schedule __ hereto is duly
documented in the name of the Guarantor listed opposite such vessel on such
schedule. The Mortgages have been duly filed for recording with the U.S. Coast
Guard National Vessel Documentation Center and constitute valid and enforceable
first priority preferred ship mortgages on the Vessels.
B. The Panama Mortgages constitute foreign preferred ship
mortgages under 46 U.S.C. 31301(6)(B).