EXHIBIT B
[FIRST RESERVE CORPORATION LETTERHEAD]
February 26, 2002
CONFIDENTIAL
Deutsche Banc Xxxx. Xxxxx Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Offering (the "Offering") by Pride International, Inc. ("PDE")
of up to $250,000,000 of its 2.5% Convertible Senior Notes
due 2007 (the "Notes").
Ladies and Gentlemen:
This letter (the "Letter"), when agreed to and accepted by you, will
evidence the agreement between you and First Reserve Fund IX, L.P. ("First
Reserve") regarding First Reserve's commitment (the "Commitment") to purchase up
to Seven Million Eight Hundred Seventy Four Thousand Fifteen (7,874,015) shares
of PDE common stock concurrently with the Offering. As described in PDE's
Offering Memorandum of even date herewith and disclosed in a PDE press release
with today's date, certain of the Note purchasers (the "Purchasers," which term
may include you to the extent you have a long position in the Notes) may desire
to sell short shares of PDE common stock in connection with their purchase of
the Notes (the "Short Sales"), and you will coordinate matching an appropriate
number of the Short Sales with First Reserve's Commitment.
You are representing and warranting the following to First Reserve in
connection with the Short Sales:
(a) In connection with your solicitation of indications of interest in
the Offering, you have advised each of the Purchasers that wishes to effect a
Short Sale to First Reserve that any order for a Short Sale placed through you
in connection with the Offering where First Reserve is to be the purchaser is
subject to the conditions precedent that you complete the purchase, as the
initial purchaser under the Purchase Agreement between you and PDE of even date
herewith (the "Purchase Agreement"), of the Notes in the Offering. You will only
accept Short Sales on behalf of First Reserve (i) from a party that is a
Purchaser, and (ii) for a number of shares of PDE common stock requested to be
sold in a particular Short Sale that does not exceed the number of
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shares of PDE common stock into which the Notes purchased by the Purchaser
electing such Short Sale are initially convertible.
(b) You will not charge any party any commission or fees in connection
with the Short Sales.
(c) You will not permit Purchasers outside the United States that are
purchasing the Notes in reliance upon Regulation S of the Securities Act of 1933
(the "Securities Act") to engage in any Short Sales to First Reserve.
(d) You have conducted and will conduct the Offering and the execution
of the Short Sale orders in compliance in all material respects with all
applicable U.S. federal and state securities laws and similar laws of any
foreign jurisdiction. In addition, and without limiting the foregoing, you are
representing and warranting to us that:
(i) you do not have any intent to manipulate the price of
any securities of PDE, or to create a false or misleading appearance of active
trading, or a false or misleading appearance with respect to the market for
securities of PDE, or to raise or depress the price of any security of PDE for
the purpose of inducing the purchase or sale of any PDE security, or to
otherwise violate the provisions of Sections 9, 10(b) or 15(c) of the Securities
Exchange Act of 1934 (the "Exchange Act");
(ii) you will effect the Short Sales after trading hours on
the New York Stock Exchange (the "NYSE") on the date hereof, or prior to the
opening of trading on February 27, 2002, consistent with market practices;
(iii) the price of the Short Sales will not be reported on
the NYSE composite tape;
(iv) the Notes are being offered and sold only to
(A) qualified institutional buyers, as defined in Rule
144A(a)(1), or to offerees or purchasers that you reasonably believe are
qualified institutional buyers, in transactions exempt from registration under
Rule 144A; or
(B) persons not deemed to be "U.S. persons" for purpose
of Rule 902(o)(2) or 902(o)(7) of Regulation S under the Securities Act, during
a distribution described above in subclause d(iv)(A) above.
At the closing of the Offering, you will deliver to First Reserve a
written opinion of your legal counsel, Xxxxx Xxxx & Xxxxxxxx, which may rely on
the factual representations in this Letter and may assume the absence of
manipulative intent or manipulative effect by all parties to the Short Sales, to
the effect that the Short Sales are exempt from Regulation M under the
Securities Exchange Act of 1934 (the "Exchange Act").
In connection with the Offering, we are representing and covenanting to
you the following:
(1) Subject to your consummating the purchase of the Notes, First
Reserve agrees that it will purchase from accounts of Purchasers designated by
you (the "Short Sellers") up to Seven Million Eight Hundred Seventy Four
Thousand Fifteen (7,874,015) shares of PDE
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common stock at a price per share of $12.70,an amount equal to 97% of the
closing trading price of PDE common stock on the NYSE on February 26, 2002. The
aggregate net price that First Reserve shall be obligated to pay to the Short
Sellers shall not exceed $100,000,000. The purchases by First Reserve will be
confirmed, if at all, prior to the open of trading on the NYSE on February 27,
2002. First Reserve will have no obligation to purchase any shares of PDE common
stock to the extent purchases have not been confirmed to First Reserve by such
time;
(2) Assuming the accuracy of your representations and warranties
contained in this letter and those of PDE contained in the Purchase Agreement,
First Reserve will not take any actions that will cause the consummation of the
Short Sales to result in the violation of any applicable U.S. federal and state
securities laws and similar laws of any foreign jurisdiction;
(3) The shares of PDE common stock purchased from Short Sellers will be
treated by First Reserve as "restricted securities" within the meaning of Rule
144 under the Securities Act, and will be subject to the provisions of Rule 144
applicable to restricted securities, including without limitation the holding
period requirements, as though such securities were acquired from PDE or an
affiliate of PDE on the date of First Reserve's purchase of such securities;
(4) First Reserve will only hold the shares of PDE common stock
purchased from Short Sellers in physical form; and the certificates evidencing
such shares will bear a legend, in addition to any legend required by the Second
Amended and Restated Shareholders Agreement of PDE to be entered into at the
time of the Offering, to the effect that such shares are "restricted securities"
within the meaning of Rule 144, and will be subject to the provisions of Rule
144 applicable to restricted securities, including without limitation the
holding period requirements, as though such securities were acquired from PDE or
an affiliate of PDE on the date of First Reserve's purchase of such securities;
and
(5) First Reserve is an "accredited investor" as that term is defined
in Rule 501(a)(3) of Regulation D under the Securities Act; the shares of PDE
common stock purchased from Short Sellers are being acquired by First Reserve
for its own account and with no current intention of distributing or reselling
such shares or any part thereof in any transaction that would be in violation of
the Securities Act, without prejudice, however, to the rights of First Reserve
at all times to sell or otherwise dispose of all or any part of such shares in
an offering registered under the Securities Act, or under an exemption from
registration available under the Securities Act, to the extent permitted by any
lock-up or standstill agreement with you or PDE. First Reserve and its advisors
have reviewed, to their satisfaction, the business, management and financial
information made available by or on behalf of PDE and have had an opportunity to
ask questions of, and receive answers from, PDE and its management and advisors
concerning the business, management and financial affairs of PDE.
You agree to indemnify and hold harmless First Reserve, its general
partner, the general partner of such general partner, and the officers and
directors of such general partner, and each person, if any, who controls First
Reserve within the meaning of either Section 15 of the Securities Act or Section
20 of the Exchange Act from and against any and all losses, claims, damages,
liabilities and expenses arising out of or based upon any inaccuracy or breach
of your representations and warranties in this Letter.
First Reserve agrees to indemnify and hold you harmless, and each
person, if any, who controls you within the meaning of either Section 15 of the
Securities Act , or Section 20 of the Exchange Act from and against any and all
losses, claims, damages, liabilities and expenses
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arising out of or based upon any inaccuracy or breach of First Reserve's
representations and warranties in this Letter.
THIS LETTER SHALL BE GOVERNED BY AND INTERPRETED UNDER THE LAWS OF THE
STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CHOICE OF LAWS PROVISIONS
THEREOF THAT WOULD APPLY THE SUBSTANTIVE LAWS OF ANY OTHER JURISDICTION.
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Please sign and date this Letter in the spaces provided below as
confirmation of our mutual understandings and agreements. Thank you.
Very truly yours,
FIRST RESERVE FUND IX, L.P.
By: First Reserve GP IX, L.P.
general partner
By: First Reserve GP IX, Inc.
general partner
By: /s/ Xxxxxx X. Xxxxxxx
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Name: Xxxxxx X. Xxxxxxx
Title: Managing Director
AGREED AND ACCEPTED
DEUTSCHE BANC ALEX. BROWN INC.
By: /s/ X. Xxxxxxxx Xxx
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Name: X. Xxxxxxxx Xxx
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Title: Managing Director
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and
By: /s/ Xxxxxxx Xxxxxx
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Name: Xxxxxxx Xxxxxx
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Title: Director
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Date: February 27, 2002
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