THIS AGREEMENT is made this 19 day of November, 1999
BETWEEN:
(1) ▇▇▇▇ ▇▇▇▇▇ ENERGY ASA of ▇▇▇▇ Olsens gate 2, 0152 Oslo, Norway,
Oslo, Norway ("FOE")
(2) GLOBAL MARINE INTERNATIONAL DRILLING CORPORATION ("GMIDC") for
and on behalf of BMBF (NO.12) Limited (the "OWNER") and:
(3) GLOBAL MARINE INTERNATIONAL DRILLING CORPORATION acting on its
own behalf ("GMIDC")
BACKGROUND
(A) The Owner and ▇▇▇▇▇▇▇ and ▇▇▇▇▇ Shipbuilding and Heavy
Industries Limited (the "BUILDER") are parties to a
shipbuilding contract originally entered into on 28 March
1998 between GMIDC and the Builder, as amended and as novated
from GMIDC to the Owner.
(B) By an Amendment No. Three to the said Shipbuilding Contract
made or to be made between the Builder and the Owner, it was
or will be agreed that the Owner should make certain payments
to the Builder, such payments to be made on a without
prejudice basis and subject to the Owner's right to be repaid
upon any arbitration award against the Builder pursuant to
the said Shipbuilding Contract.
(C) FOE is the ultimate majority shareholder of the Builder.
(D) It is a condition of the Owner's obligations under Amendment
No. Three referred to above that FOE enters into this
Agreement, and this Agreement is entered into by FOE in
consideration of the foregoing.
1. DEFINED TERMS
1.1 In this Agreement words and expressions which are defined
in the Shipbuilding Contract shall have the meanings given
to them therein. In addition the following words and
expressions shall have the meanings set out below:
"AMENDMENT NO. THREE" means the Amendment No. Three to the
Shipbuilding Contract first referred to in Recital (B);
"SHIPBUILDING CONTRACT" means the contract first referred
to in (A) above including the Amendment No. Three referred
to in (B) above, as the same has been, or may from time to
time further be, novated, supplemented, amended or varied.
"WARRANTY OBLIGATIONS" means the obligations of the Builder
under Clause 16 of the Shipbuilding Contract;
1.2 Clause headings are for ease of reference only and shall
not affect the construction of this Agreement.
2. SUPPORT UNDERTAKING
2.1 Subject to the Owner not being in default in the
performance of its obligations under (i) Clause 8.3 of the
Shipbuilding Contract (as inserted by Amendment No. Three)
and (ii) Clause 2.4 of this Agreement, FOE undertakes to
the Owner to provide to the Builder from time to time any
additional funding required by the Builder to enable the
Builder expeditiously, diligently and (except over the
Christmas holiday period) continuously to complete the
Vessel at the Builder's Queens Island shipyard in
accordance with the terms of the Shipbuilding Contract. If
FOE breaches its obligations under this Clause 2.1 the
Owner shall have the right (but not the obligation) to make
the corresponding payments to the Builder and the damages
for breach payable by FOE to the Owner shall comprise (and
be limited to) any such payments so made by the Owner.
FOE's obligations to put the Builder in funds pursuant to
this Clause 2.1 shall cease upon the Owner exercising its
rights under Clause 15.2(ii) of the Shipbuilding Contract
(but without prejudice to FOE's liability for any breach of
its obligations under this Clause 2.1 which occurs before
such time). FOE undertakes with the Owner to perform the
equivalent agreement with the Owner of Hull No. 1739 in
accordance with its terms (but the Owner acknowledges that
only the owner of Hull No. 1739 or any party entitled under
Clause 9 of that agreement shall be entitled to enforce
that agreement).
2.2
(a) If the Owner believes that FOE is not in compliance with
its obligations under Clause 2.1 the issue shall be
immediately referred to a panel of experts (the "Panel")
consisting of one member appointed by the Owner, one member
appointed by FOE and an independent third party. The Panel
shall determine if FOE is or is not complying with its
obligations under Clause 2.1 in accordance with their terms
and the decision of the Panel shall be final (it acting as
an expert and not as an arbitrator). A determination by
the Panel shall be by majority vote. If the Owner or FOE
fails to appoint its member, the decision of an independent
third party shall be deemed to be a determination by the
Panel.
(b) FOE will procure that the Builder provides to the Panel (on
a confidential basis) all information required by the Panel
for the purposes of any determination. The parties shall
co-operate in good faith to ensure that each determination
by the Panel is made expeditiously (and, in any event,
within 5 Belfast working days of an issue being referred to
it).
(c) A failure by FOE to fund the Builder following a
determination by the Panel that it is obliged to do so
shall constitute a breach of Clause 2.1.
(d) The failure by the Builder to complete the Vessel by the
date referred to in Clause 2.4(b)(ii) of Amendment No.
Three shall not per se evidence a breach by FOE of its
obligations under Clause 2.1.
(e) If the Owner and FOE are unable to agree on the identity of
the independent third party member of the Panel before any
matters require determination by the Panel he shall be
appointed by the President for the time being of the Royal
Institute of Naval Architects.
2.3
(a) Subject to the Owner not being in default in the
performance of its obligations under (i) Clause 8.3 of the
Shipbuilding Contract (as inserted by Amendment No. Three)
and (ii) Clause 2.4 of this Agreement, FOE undertakes to
the Owner to provide to the Builder any additional funding
required by the Builder in the absence of which the Builder
would be unable to comply with the Warranty Obligations.
(b) The total liability of FOE under (i) this Clause 2.3 (as
determined in accordance with the following provisions of
this Clause 2.3) and (ii) Clause 2.3 of the equivalent
agreement in respect of Hull No. 1739 shall in no
circumstances whatsoever exceed in aggregate the amount of
Pounds-Sterling 3,000,000.
(c) For the purposes of determining the amount of FOE's
liability under this Clause 2.3 (other than in the
circumstances described in Clause 2.3(d)) only the direct
and necessary costs of the Builder incurred in complying
with the Warranty Obligations shall be taken into account
as amounts for which FOE is, subject always to Clause
2.3(b), liable to fund the Builder.
(d) If the Owner exercises its rights under Clause 16.6 of the
Shipbuilding Contract FOE's liability shall, in addition to
any liability under Clause 2.3(a) but subject always to
Clause 2.3(b), be an amount equal to that for which the
Builder is expressed to be liable under Clause 16.6 of the
Shipbuilding Contract. The liability of FOE under this
Clause 2.3(d) shall, subject always to Clause 2.3(b), be
joint and several with that of the Builder under Clause
16.6 of the Shipbuilding Contract.
2.4 The Owner agrees to make further payments to the Builder
for use exclusively on the completion of the Vessel in
accordance with the Shipbuilding Contract subject to and
upon the following terms and conditions:
(a) such further payments shall be made by the Owner subject to
and conditional upon:
(i) the Owner's and the owner of Hull No. 1739's aggregate
liability of Pounds-Sterling 57,000,000 under the Further
Amount Amendment made by Amendment No. Three and the
equivalent provision of the Hull 1739 Agreement having
been used in full;
(ii) the Builder providing the Owner, not later than 10
Belfast working days after the end of each calendar
month and in form and substance satisfactory to the
Owner (acting reasonably), a statement of monetary
liabilities incurred by the Builder in performing its
obligations under the Shipbuilding Contract and the
shipbuilding contract for Hull No. 1739 since the date
of the last such certificate or (in the case of the
first such certificate) the date of this Agreement;
(iii)the aggregate cost of completing the Vessel in
accordance with the Shipbuilding Contract and the cost
of completing Hull No. 1739 in accordance with its
Shipbuilding contract shall exceed the Contract Price
for the Vessel and the Contract Price for Hull No.
1739 plus agreed Project Change Orders under each
contract by more than Pounds-Sterling 122,000,000, as
determined in accordance with Clause 2.5;
(iv) on each occasion on which the Owner is to make a
payment pursuant to this Clause 2.4, FOE making a
payment to the Builder of an equal amount for use
exclusively on the completion of the Vessel in
accordance with the Shipbuilding Contract;
(v) FOE not being in breach of any of its obligations
under this Agreement;
(vi) the Owner not having exercised its rights under Clause
15.2(ii) of the Shipbuilding Contract and the owner of
Hull No. 1739 not having exercised its equivalent
rights.
(b) the Owner's liability to make payments under this Clause
2.4 shall in no circumstances whatsoever exceed, when
aggregated with equivalent payments made by the owner of
Hull No. 1739 pursuant to Clause 2.4 of that owner's
agreement with FOE, Pounds-Sterling 8,000,000.
2.5 A determination of the circumstances referred to in Clause
2.4 (a) (iii) (a "Specified Cost Overrun") shall be
conclusively determined by a certificate from KPMG
(auditors to the Builder), provided that:
(a) if the CFO of Global Marine Inc. and the CFO of FOE agree
that a Specified Cost Overrun has occurred or is likely to
occur and that the Builder requires cash to complete the
Vessel and Hull No. 1739, the Owner and FOE shall be
obliged to make payments in accordance with Clause 2.4
before the issue of the KPMG Certificate to the extent
necessary to satisfy such cash requirement (subject always
to the limit referred to in Clause 2.4 (b));
(b) if one or other but not both of the CFO's of Global Marine
Inc. and FOE believes (acting reasonably) that the
circumstances referred to in sub-clause (a) apply the
matter shall be referred to the Panel referred to in Clause
2.2 and a determination by the Panel that such
circumstances do apply shall oblige the Owner and FOE to
make payments as referred to in sub-clause (a) above;
(c) if, upon issuance of the KPMG Certificate the Specified
Cost Overrun is less than the aggregate amount paid by the
Owner and FOE pursuant to sub-clauses (a) and/or (b) above
FOE shall forthwith be obliged to make an adjusting payment
to the Owner to put the Owner in the position it would have
been in had this Clause 2.5 operated without reference to
this proviso.
3. FURTHER UNDERTAKINGS
Subject to the Owner not being in default of the
performance of its obligations under (i) Clause 8.3 of the
Shipbuilding Contract (as inserted by Contract Amendment
Number Three) and (ii) Clause 2.4 of this Agreement, FOE
hereby further undertakes with the Owner that until
Delivery FOE will:
(a) maintain the Builder as its indirect, majority owned
subsidiary;
(b) save in circumstances in which the Owner has exercised
its rights under Clause 15.2(ii) of the Shipbuilding
Contract, ensure that the Builder is not (i) made
subject to any receivership, administrative
receivership, administration, voluntary arrangement or
liquidation proceedings (other than as may be
initiated by the Owner or any company in the Global
Marine group) or (ii) otherwise insolvent;
(c) provide, and procure that the Builder shall provide,
to the Owner such financial or other information as
the Owner (or GMIDC on behalf of the Owner) shall
reasonably require in order to demonstrate compliance
by FOE with its undertakings set out at this clause 3.
4. INTEREST
FOE irrevocably and unconditionally undertakes to pay
to the Owner on demand interest on any amount due
under this Agreement and remaining unpaid (as well
after as before any judgment or arbitration award) at
the rate of LIBOR plus 2 percent.
5. NATURE OF OBLIGATIONS
FOE's obligation to make payments under this Agreement
shall be absolute and unconditional under any and all
circumstances and shall not be subject to any right of
set off or counterclaim. The obligations of FOE under
this Agreement shall not be affected by, nor shall FOE
be discharged or have any claim against the Owner or
GMIDC arising out of, any matter or thing which might,
but for this provision, operate to affect such
obligations, or give rise to such discharge or claim.
6. PAYMENTS
6.1 All payments to be made by FOE under this Agreement
shall be made in full without set-off or counterclaim
in immediately available funds and free and clear of
all taxes levies and other charges. If FOE is obliged
by law to deduct any tax or make any other deduction
or withholding from any such payment FOE shall
increase such payment so that the Owner receives the
amount it would have received had no such deduction or
withholding been necessary.
6.2 If following the making of any increased payment by
FOE pursuant to Clause 6.1 the Owner receives or is
granted a credit against, remission for or repayment
of any increased payment made by FOE the Owner shall:
(a) give to FOE a certificate setting out the basis of the
computation of the amount of any credit, remission or
repayment referred to in this Clause 6.2; and
(b) to the extent that it is satisfied that it can do so
without prejudice to the retention of such credit,
remission or repayment, promptly reimburse FOE with
such amount as the Owner shall determine and certify
to FOE (such determination as so certified to be
conclusive in the absence of manifest error) to be
such proportion of such credit, remission or repayment
as will leave the Owner, after such reimbursement, in
the same net after tax position as it would have been
in had no such deduction or withholding been required
to be made,
PROVIDED THAT:
(i) the Owner shall be the sole judge (acting in good
faith) of the amount of any such credit,
remission or repayment and of the date on which
it is received;
(ii) the Owner shall have an absolute discretion as to
the order and manner in which it employs or
claims tax credits and allowances available to
it;
(iii)the Owner shall not be obliged to disclose to FOE
any information regarding the tax affairs or tax
computations.
6.3 If any sum due from FOE to the Owner under this
Agreement or under any order or judgment relating to
this Agreement has to be converted from the
contractual currency into another currency, FOE shall
indemnify the Owner against the loss arising when the
amount of the payment actually received by the Owner
is converted into the contractual currency at the rate
of exchange reasonably available to the Owner. This
clause 6.3 creates a separate liability of FOE which
is distinct from its other liabilities under this
Agreement and which shall not be merged in any
judgment or order relating to those other liabilities.
7 WARRANTIES
FOE hereby warrants to the Owner that it has full
power to enter into and perform its obligations under
this Agreement and that this Agreement has been
validly created, constitutes binding and enforceable
obligations of FOE and does not conflict with any law
or regulation binding on FOE or the Builder or with
any contract to which FOE or the Builder is
respectively a party.
8 NOTICES
8.1 All notices or other communications under this
Agreement shall be in writing. Any such notice will be
deemed to be given as follows:
(i) if by letter, when delivered; and
(ii) if by facsimile, when a positive transmission
report is received.
However, a notice given in accordance with the above
but received on a non-business day or after business
hours in the place of receipt will only be deemed to
be given on the next such business day.
8.2 The address and facsimile number of each party to this
Agreement for all notices under this Agreement are as
follows:
(a) FOE ▇▇▇▇ ▇▇▇▇▇ Energy ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇
▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇
Fax No. ▇▇ ▇▇ ▇▇ ▇▇ ▇▇ ▇▇
Attention: ▇▇▇ ▇. Gjortz
(b) the Owner BMBF (No.12) Limited
c/o Barclays Mercantile Business Finance Limited
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
England
Fax: ▇(▇▇) ▇▇▇▇▇ ▇▇▇▇▇▇
Attention: Company Secretary
Referring to: "Schedule number 52/5050 5371-3"
With copies to:Global Marine International Drilling Corporation
▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Fax: (▇▇▇▇) ▇▇ ▇▇▇ ▇▇▇
Attention: Mr ▇▇▇▇▇ ▇▇▇▇▇▇
and
Global Marine Inc.
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇) ▇▇▇ ▇▇▇ ▇▇▇▇
Attention: General Counsel
and
Global Marine Drilling Company
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇) ▇▇▇ ▇▇▇ ▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
(Manager Construction and Marine Projects)
9 ASSIGNMENT: THIRD PARTY RIGHTS
9.1 The Owner may assign or transfer all or any part of its
rights under this Agreement to GMIDC or any other company
in the Global Marine group.
9.2 As an alternative to taking rights by assignment, GMIDC and
any other member of the Global Marine group shall have the
right to enforce FOE's obligations under this Agreement.
In connection with this:
(a) GMIDC acknowledges on behalf of itself and each other
member of the Global Marine group its reliance on this
clause 9.2;
(b) FOE shall not be liable to pay more than once the
amounts due from FOE under this Agreement;
(c) this Agreement shall not be amended, varied or waived
by the Owner without the prior written consent of
GMIDC.
9.3 In the absence of any assignment (pursuant to Clause 9.1)
or the exercise of rights by any party as third party
beneficiary (pursuant to Clause 9.2) GMIDC shall, until the
Owner notifies FOE to the contrary, be entitled to exercise
all rights under this Agreement on behalf of the Owner.
9.4 FOE, GMIDC (on its own behalf and not on behalf of the
Owner) and the Owner each agree that if at any time the
Owner shall serve a Put Notice under and in accordance with
the Put Option Agreement, then, automatically and without
the need for the Owner to take any further action, the
following provisions of this Clause 9.4 shall have effect:
(i) the Owner shall be treated as having released and
discharged FOE from all its obligations,
liabilities, claims and demands (past present and
future) under this Agreement as from time to time
amended and supplemented (other than this Clause 9.4);
(ii) the Owner shall be treated as having been released
and discharged from all obligations, liabilities,
claims and demands, (past, present and future) under
this Agreement as from time to time amended and
supplemented;
(iii) GMIDC (in its own right and not on behalf of the
Owner) shall be treated as having the benefit of all
of the Specified Rights to the exclusion of the
Owner and FOE shall be treated as assuming towards
GMIDC in its own right all obligations and
liabilities corresponding to the Specified Rights;
and
(iv) GMIDC shall be treated as having assumed all of the
Specified Obligations (including, without
limitation, the obligation to make all payments
otherwise payable by the Owner under this Agreement)
and FOE shall be treated as having the benefit of
all rights and claims corresponding to the Specified
Obligations.
such that, with effect from the Further Novation Time and
regardless of any non-compliance with any of the terms of
this Agreement, this Agreement (other than this Clause 9.4)
shall cease to have effect as between FOE and the Owner.
9.5 Where a Put Notice is issued, on the Settlement Date in
respect thereof GMIDC shall make a payment to the Owner
equal to the aggregate of all payments previously made by
the Owner to FOE under this Agreement (and which have not
otherwise been effectively reimbursed to the Owner by GMIDC
or other members of the Global Marine group).
9.6 Clause 6.1 of the Put Option Agreement shall apply to
GMIDC's obligations under Clause 9.5 as it applies to the
obligations of the Put Party under the Put Option
Agreement.
9.7 For the purposes of this Clause 9:
(i) the term "FURTHER NOVATION TIME" shall mean the time
at which a Put Notice is served;
(ii) the term "PUT NOTICE" shall have the meaning given to
it in the Put Option Agreement;
(iii) the term "PUT OPTION AGREEMENT" shall mean the Put
Option Agreement dated 9th December 1998 between the
Builder, the Owner and the Put Party;
(iv) the term "PUT PARTY" shall mean Global Marine U.K. Limited;
(v) the term "SETTLEMENT DATE" means the day falling ten
(10) Working Days (as defined in the Put Option
Agreement) after the date on which the Further
Novation Time falls, provided that if a Termination
Event has occurred and is continuing under the Lease
(as defined in the Put Option Agreement) such period
shall be five (5) Working Days;
(vi) the term "SPECIFIED RIGHTS" shall mean all the rights
and claims of the Owner expressed to be granted
under, or otherwise arising under, out of or in
connection with, this Agreement (excluding Clause
9.4, 9.5 and 9.6) as from time to time amended and
supplemented (which rights shall, for the avoidance
of doubt, include rights corresponding to obligations
arising under this Agreement or or before the Further
Novation Time including rights in respect of
liabilities of FOE to pay amounts which have then
fallen due but have not been paid by FOE); and
(vii) the term "SPECIFIED OBLIGATIONS" shall mean all the
obligations and liabilities of the Owner expressed to
be imposed under, or otherwise arising under, out of
or in connection with, this Agreement as from time to
time amended and supplemented (which obligations and
liabilities shall, for the avoidance of doubt,
include obligations and liabilities arising under
this Agreement on or before the Further Novation Time
which have not been performed on or before the
Further Novation Time including obligations and
liabilities in respect of amounts which have then
fallen due to be paid to FOE but not paid).
10 FURTHER ASSURANCE
FOE agrees to execute such further documents as the Owner
or GMIDC may reasonably require to give full effect to this
Agreement and the benefits intended to be conferred on the
Owner and GMIDC by this Agreement. Without prejudice to
the generality, such documents shall include those, if any,
necessary to give effect to Clause 9.2 as a result of the
coming into force in England of the Contracts (Rights of
Third Parties) Act.
11 CURE
Neither party shall be considered to be in default or
breach of its obligations under this Agreement (or in the
case of the Owner, Amendment No. Three) until it has been
so notified by the party to whom the obligations are owed
of such default and that default remains unremedied for 3
Belfast working days.
12 COUNTERPARTS
This Agreement may be executed by the parties in several
counterparts so that such counterparts taken together and
executed by both parties shall constitute the same
document.
13 LAW AND ARBITRATION
Clause 20 of the Shipbuilding Contract shall apply to this
Agreement as if set out in full with any necessary
amendments.
IN WITNESS whereof this Agreement has been executed and delivered as a
Deed by FOE and signed on behalf of the Owner on the date at the beginning
of this Agreement.
SIGNED by )
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ) /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
)
for and on behalf of )
▇▇▇▇ ▇▇▇▇▇ ENERGY ASA )
SIGNED by )
▇▇▇▇▇ ▇▇▇▇▇▇▇ ) /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
for and on behalf of )
GLOBAL MARINE )
INTERNATIONAL DRILLING )
CORPORATION acting on )
behalf of BMBF (NO.12) Limited)
SIGNED by )
▇▇▇▇▇ ▇▇▇▇▇▇▇ ) /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
for and on behalf of )
GLOBAL MARINE )
INTERNATIONAL DRILLING )
CORPORATION acting on its)
own behalf )